In the following interview of co-Founder, Director & CEO of Alan Lien, of Solis Tek Inc. [OTC: SLTK] readers are introduced to a rapidly growing, highly specialized, lighting & indoor horticulture equipment manufacturer selling primarily into the marijuana / cannabis industry in the U.S. Alan and his team are excited about the launch of their high-margin nutrients / fertilizer segment this year, and the rollout of expanded sales across the U.S. and Canada.
Peter Epstein, CFA, MBA and Epstein Research [ER] have not prior or existing relationship with any company or person associated with Solis Tek.
Alan, Please describe Solis Tek to readers unfamiliar with the Company
Solis Tek Inc. [OTC: SLTK] is focused on the research, design, development and manufacturing of advanced, energy efficient greenhouse indoor horticulture lighting and ancillary equipment. SolisTek’s vision is to apply the latest advances in high efficiency lighting and controls technology, as well as effective manufacturing techniques to deliver differentiated products with clear benefits at competitive prices. We currently sell most of our specialized equipment into the marijuana (cannabis) industry. High value crops benefit most from our world-class lighting & controls technology.
We are also very excited about our new line of nutrients / fertilizers launching this year. We believe gross margin in this segment will be higher than in our equipment sales.
What makes Solis Tek’s products superior?
Innovation. Most products in the industry are just copies of what was initially popular. But, products that were first to market typically leave room for improvements. That’s where we differentiate ourselves, we make improvements, others typically don’t. So, we feel there’s space for innovation on both existing and new product offerings. Our research & development oriented team understands how and why products work, so that we can determine what will make them better. A deep fundamental understanding of the relationship between plant biology and light science is a key driver in our success.
Without product innovation, companies are forced to compete solely on price, which determines volume. In that setting, the only way to increase revenues is by cutting price to generate more unit sales, at the expense of your gross margin. At Solis Tek, we haven’t put an emphasis on marketing, instead we were laser focused on educating our customers on the superiority of our equipment, building our reputation and brand names. That has allowed us to avoid the retail trap of frequent heavy discounting to move product.
Who are your competitors?
We believe our main competitors are Gavita, Nanolux and Dim Lux Lighting. All are lighting companies that copy each other’s fundamental designs, which are just repackaged products originally used as supplemental lighting for greenhouses. See this article I wrote on Linked-in. Even though we think we are taking market share, there seems to be a lot of demand to go around, at least for top-tier companies like Solis Tek.
Besides cannabis growers, what other markets is Solis Tek pursuing?
Food. Sustainable food growth is a trillion dollar industry. With the advanced technology and complex cultivation knowledge we’ve gained from cannabis, the hardest plant in the world to grow optimally, and our strong manufacturing capabilities, we will be ready to take on that market when the time is right. However, for now the cannabis train is charging ahead, so our focus needs to stay here, to continue innovating and winning new customers.
Can you tell us more about Solis Tek’s emerging fertilizers / nutrients segment?
Yes, we’re very excited about this. We have fertilizers, nutrient additives & pesticides in the works, each unique formulations, being developed in-house by our Chief Technology Officer Matt Geschke. Most of the hundreds of different brands of nutrients are formulated by the same entities, firms that can be counted on one hand. We have found that there aren’t really that many unique products in out there, let alone products having our sales channels to leverage marketing efforts. Solis Tek uses product testers that give us instant feedback on what works and what doesn’t, and we have a strong Formulator in Matt to expertly correct (strengthen, weaken or remix) formulations in real time.
Once again, our competition is typically not innovating, they change brands if sales disappoint. As resellers, their margins are not nearly what we hope to achieve in this important new segment. Solis Tek will be manufacturing and distributing all fertilizers and nutrients in- house. This will give us the opportunity to have a competitive advantage on cost, quality and range of offerings.
Canada is obviously an important market in the cannabis industry, is Solis Tek selling any products there?
Solis Tek products are in Canada. Our distributor there is Rambridge Wholesale.
Are there other foreign markets that could possibly be served?
We are currently rekindling our relationship with Australia. There was some movement and acquisitions done with our original distributor, a snag in the relationship two years ago. Since then, we have re-engaged with them in testing and certifying our products. We currently have a UK distributor who is growing brandname recognition little by little in what is a much smaller market in the EU in general.
Most of our focus will continue to be on the fastest growing cannabis market in the world, the United States of America. South America is an interesting territory as well, but climates there are generally favorable towards growing outdoors, without much need for high performance quality lighting. But, our nutrients line is something that we can start marketing there.
Please explain how the Company sources products from China.
Our sourcing capabilities are incredibly important. I have strong relationships in China. I come from a family with a 25-year background in manufacturing. The idea of entering the cannabis space was co-Founder Alvin Hao’s, but I was able to identify and locate manufacturers supplying the lighting brands in the marijuana industry 8 years ago. We needed to be different and innovative, and we felt that none of what was coming out of Chinese factories was exciting. So, we found a power supply company and taught them from the ground up how to make what became the most reliable lights in the industry.
Readers should visit Solis Tek’s website for more information.