SANTA ANA, Calif., Jan. 11, 2017 /PRNewswire/ -- Kush Bottles, Inc. (OTCQB: KSHB), a provider of packaging, supplies, accessories and branding solutions for the regulated cannabis industry, reported financial results for its first fiscal quarter ended November 30, 2016.
First Quarter Fiscal 2017 Financial Highlights vs. First Quarter Fiscal 2016
-- Revenue up 44% to $2.47 million
-- Gross margin up 50 basis points to 33.8%
-- Net loss, including $0.12 million in non-cash stock compensation,
$30,000 in depreciation and $24,000 for a non-recurring expense, was
$(0.16) million compared to net income of $5,000
-- Record cash balance of $2.0 million compared to $0.30 million
-- Working capital up significantly to a record $3.38 million compared to
$0.26 million
Executive Commentary
"Our first fiscal quarter began on a strong note, with record revenue and the strongest cash and working capital positions in our company's history," said Nick Kovacevich, co-founder and CEO of Kush Bottles. "This was driven by continued growth in California and Washington. More specifically, our customer base, average order size and number of orders continue to climb, and our e-commerce revenues also continue to increase. Our custom branded packaging revenues increased nearly three times from last year and our SKU count grew by 73%.
"During the quarter, we implemented a new cloud-based accounting, CRM and ERP system which we expect will improve our ability to scale. Our new larger facility in Washington has helped to accommodate continued growth, and we also expanded our sales force to penetrate the new states that legalized cannabis in the November 2016 election.
"As we look towards the remainder of 2017, we believe we are well-positioned to capitalize on the growth opportunities which exist in the developing, regulated cannabis industry. We have increased our customer base, which exceeds 3,000 producers, processers and retailers, and we've created one of the largest product libraries in the industry, with distribution spanning across 28 states and Canada. Also, we have doubled our revenue for two consecutive years, and we believe we remain in the early stages of our growth."
First Quarter Fiscal 2017 Financial Results
Total revenue in the first fiscal quarter of 2017 increased 44% to $2.47 million compared to $1.72 million in the first fiscal quarter of 2016. The increase was primarily attributed to growth in the number of customers, average order size and order volume in the Company's largest markets, as well as continued growth in other states with emerging legalized cannabis programs.
Gross margin in the first fiscal quarter of 2017 increased 50 basis points to 33.8% compared to 33.3% in the first fiscal quarter of 2016.
Operating expenses in the first fiscal quarter of 2017 increased to $0.97 million compared to $0.56 million in the first fiscal quarter of 2016. This was primarily due to a $0.12 million increase in non-cash stock compensation expense and a $0.15 million increase in payroll and related expenses due to an expansion of the Company's sales force and operational personnel.
Net loss in the first fiscal quarter of 2017 was $(0.16) million or $(0.00) per share, compared to net income of $5,000 or $0.00 per share in the first fiscal quarter of 2016. Net loss in the first fiscal quarter of 2017 included $0.12 million in non-cash stock compensation, $30,000 in depreciation and $24,000 for a non-recurring expense. Excluding these charges, net income would have been approximately $7,000 or $0.00 per share.
At November 30, 2016, cash increased significantly to $2.00 million compared to $0.30 million as of November 30, 2015. Total debt was reduced to $55,000 compared to $0.20 million in the first fiscal quarter of 2016.
Working capital was up significantly to $3.38 million as of November 30, 2016 compared to $0.26 million as of November 30, 2015, primarily driven by the increase in cash.
About Kush Bottles
Kush Bottles, Inc. (OTCQB: KSHB) provides packaging products and solutions to producers, processers and retailers operating in the regulated medical and recreational cannabis industry. Founded in 2010, Kush Bottles has sold more than 100 million bottles and regularly services more than 3,000 customers across the United States and Canada. The company primarily services the business-to-business market, which includes legally operated medical and adult-use dispensaries, growers and marijuana-infused product (MIP) manufacturers. Kush Bottles aims to be the gold standard for responsible branding and packaging in the cannabis industry.
Kush Bottles has no direct involvement with cannabis plants or extracts.
The company has been featured in media nationwide, including CNBC, Los Angeles Times, TheStreet.com, Entrepreneur, and Inc. Magazine. For more information, visit www.kushbottles.com or call (888)-920-5874.
Connect
Website: www.kushbottles.com
Instagram: instagram.com/kushbottles
Facebook: facebook.com/kushbottles
Twitter: twitter.com/kushbottles
Forward Looking Statement
This press release may include predictions, estimates or other information that might be considered forward-looking within the meaning of applicable securities laws. While these forward-looking statements represent our current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as: "potential," "look forward," "believe," "dedicated," "building," or variations of such words and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are often discussed in filings we make with the United States Securities and Exchange Commission (SEC), available at: www.sec.gov, and on our website, at: www.kushbottles.com.
Company Contact
Ryan Selewicz
Director of Marketing
714-243-4017
ryan@kushbottles.com
Investor Relations
Liolios
Cody Slach or Sean Mansouri
949-574-3860
ir@kushbottles.com
KUSH BOTTLES, INC
Condensed Consolidated Balance Sheets
(Unaudited)
November 30, August 31,
2016 2016
---- ----
ASSETS
CURRENT ASSETS
Cash $2,000,439 $1,027,003
Accounts
receivable, net of
allowance 266,018 199,844
Prepaid expenses
and other current
assets 882,227 596,456
Inventory 1,236,720 1,142,458
---------
Total Current Assets 4,385,404 2,965,761
--------- ---------
Goodwill 2,376,589 2,376,589
Deposits 12,220 12,220
Property and
equipment, net 593,234 273,597
---------------
TOTAL ASSETS $7,367,447 $5,628,167
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $546,332 $369,636
Accrued expenses
and other current
liabilties 437,750 549,101
Notes payable -
current portion 20,637 20,247
Total Current Liabilities 1,004,719 938,984
--------- -------
LONG-TERM DEBT
Notes payable 33,950 39,307
-------------
TOTAL LIABILITIES 1,038,669 978,291
--------- -------
COMMITMENTS and CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock,
$0.001 par value,
10,000,000 shares
authorized, no
shares issued and
outstanding - -
Common stock,
$0.001 par value,
265,000,000 shares
authorized,
49,391,896 and
48,300,162 shares
issued and
outstanding,
respectively 49,390 48,300
Additional paid-in
capital 7,118,054 5,278,284
Accumulated deficit (838,666) (676,708)
---------------
Total Stockholders' Equity 6,328,778 4,649,876
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $7,367,447 $5,628,167
========== ==========
KUSH BOTTLES, INC
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
November 30,
------------
2016 2015
---- ----
REVENUE $2,472,295 $1,720,581
COST OF GOODS SOLD 1,637,652 1,148,209
--------- ---------
GROSS PROFIT 834,643 572,372
------- -------
OPERATING EXPENSES
Depreciation 9,304 5,890
Stock
compensation
expense 115,244 -
Selling,
general and
administrative 847,076 559,283
Total Operating Expenses 971,624 565,173
------- -------
INCOME (LOSS) FROM OPERATIONS (136,981) 7,199
-------- -----
OTHER INCOME (EXPENSES)
Other income
(expense) (23,944) 19
Interest
expense, net (1,033) (2,298)
-------------
Total Other Income (Expenses) (24,977) (2,279)
------- ------
INCOME (LOSS) BEFORE INCOME
TAXES (161,958) 4,920
PROVISION FOR INCOME TAXES - -
--- ---
NET INCOME (LOSS) $(161,958) $4,920
========= ======
BASIC INCOME (LOSS) PER SHARE $0.00 $(0.00)
===== ======
DILUTED INCOME (LOSS) PER
SHARE $0.00 $(0.00)
===== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC 48,713,496 46,132,779
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
DILUTED 50,511,299 47,054,237
========== ==========
KUSH BOTTLES, INC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
November 30,
------------
2016 2015
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(161,958) $4,920
Adjustments to
reconcile net
income (loss) to
net
cash provided by
(used in)
operating
activities:
Depreciation 29,735 19,788
Stock
compensation
expense 115,244 -
Changes in
operating assets
and liabilities
Accounts
receivable (66,174) (12,100)
Prepaids (366,550) 8,320
Inventory (94,262) (257,281)
Accounts
payable 176,696 328,410
Accrued
expenses and
other
current
liabilities (111,351) 26,736
Net cash provided by
(used in) operating
activities (478,620) 118,793
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of
property and
equipment (164,976) (47,282)
------------
Net cash used in
investing activities (164,976) (47,282)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of
related party
loan - (33,332)
Repayment of
notes payable (4,967) (12,442)
Proceeds from
sale of stock 1,621,999 71,000
--------------
Net cash provided by
financing activities 1,617,032 25,226
--------- ------
NET INCREASE IN CASH 973,436 96,737
CASH AT BEGINNING OF PERIOD 1,027,003 201,259
--------- -------
CASH AT END OF PERIOD $2,000,439 $297,996
========== ========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW
INFORMATION:
CASH PAID FOR:
Interest $1,033 $2,298
====== ======
Income taxes $ - $ -
========================== ========================
NON-CASH INVESTING AND FINANCING ACTIVITIES
Prepaid
services
paid in
stock $103,617 $ -
======== =======================
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SOURCE Kush Bottles, Inc.
