Kush Bottles Achieves Record Third Quarter And Nine Month Financial Results; Third Quarter Revenues Jump 94% As Company Sees Strong Growth Ahead

Highlights:

- Q316 revenues increased 94% year-over-year; 23% sequentially

- Company achieves record Q316 net income, representing its third consecutive profitable quarter

- Sales from new product line launched in Q316 beginning to ramp-up

- Company achieves record gross profit of $734,336 in Q316

- Looking ahead, Company sees accelerating revenue and earnings growth

LOS ANGELES, July 6, 2016 /PRNewswire/ -- Kush Bottles, Inc. (OTCQB: KSHB), America's premier supplier of packaging, accessories, and branding solutions for the legal cannabis industry, today reported record financial results for its third quarter and nine months ended May 31, 2016 and provided a positive outlook for the balance of the fiscal year and 2017.

Record Third Quarter Revenues Supported by Aggressive Geographic Expansion Strategy, Launch of a New Product Line, and New Online Technology
Revenues for the three months ended May 31, 2016 jumped to $2,322,638, a 94% increase over revenues of $1,198,083 in the year-ago quarter, and were 29% higher sequentially than revenues of $1,798,539 for the second quarter ended February 29, 2016.  The revenue growth was primarily attributable to the Company's continued sales growth across California, Oregon, Washington, and Colorado as well as modest but early sales from the launch of a new product line and the implementation of a new custom packaging website. 

Kush Bottles launched their new product line, BudGloves™, in April 2016. These premium quality gloves, created by Kush Bottles, meet the specific requirements of the cannabis industry and provides customers with an affordable and effective solution for handling cannabis plants, extracts and other products. They are powderless, non-stick, food-safe, and manufactured to meet industrial-grade standards.

In May, the Company implemented a new website that allows customers to submit design inquiries so they may customize the packaging of their specific brand. This new site has helped increase the number of return customers, attracted new first-time customers, enables scalability and has lead to higher website conversion rates and an overall return on investment.

Kush Bottles Achieves Record Third Quarter 2016 Net Income
The Company achieved record net income of $23,284, or $0.00 per share, compared with a net loss of ($76,393), or ($0.00) per share, in the year-ago quarter.  For the third quarter ended May 31, 2016, cost of goods sold increased to $1,588,302 from $779,652 a year earlier due to substantially higher revenues.  Gross profit for the third quarter ended May 31, 2016 rose to $734,336, for a 32% gross margin compared with $418,431 and a 35% gross margin in the year-ago quarter.  The substantial increase in gross profits was primarily due to the Company's continued penetration of the California, Oregon, Washington and Colorado markets.

Selling, general, and administrative expenses for the third quarter ended May 31, 2016 increased 35% to $656,642 compared with $484,778 in the year-ago quarter ended May 31, 2015.  The increase in expenses was primarily due to the hiring of new staff to help support the Company's rapid growth.

Strengthening of Balance Sheet
As of the end of the third quarter ended May 31, 2016, Kush Bottles reported $354,247 in cash and total current assets of $2,150,833, compared with $201,259 and $1,163,408, respectively, at the beginning of the current fiscal year. Current liabilities decreased from $955,927 in the first quarter to $898,401 at the end of the third quarter of 2016.  The Company ended the third quarter with a working capital surplus of $1,252,432.

Kush Bottles CEO Sees Strong Growth Ahead
Commenting on Kush Bottles' record financial results, Nicholas Kovacevich, Co-Founder and CEO, said, "Our record third quarter results demonstrate the scalability of our business plan but more importantly, it signifies even more impressive results that lay ahead in the fourth quarter and as we enter into 2017. This is our third consecutive quarter of profitability and we are pleased to see the trend line is accelerating as our business scales upon broad-based growth and expanded product lines.

"We are aggressively growing our business with innovative and advanced products and a new custom packaging site that better serve our customers and enhance their overall shopping experience, while providing an array of choices. We have also made it easier for customers to make their purchase online and pick it up in person and pay with cash, as many banks are still prohibited—under federal regulation—from opening bank accounts for cannabis-related businesses.

"Additionally in the third quarter, Kush Bottles was listed as one of the Top 100 Publicly Traded Companies in Orange County, as reported by the Orange County Business Journal. Kush Bottles was ranked fifth overall for year-over-year asset growth at 896% and seventh overall for year-over-year revenue growth at 135%.

"Looking ahead, our mastery of the regulatory landscape across 25 states and Washington D.C. provides Kush Bottles with a major competitive advantage as we continue to expand our business across the United States.  We are extremely well positioned to leverage the cannabis industry's organic growth, increasing legalization in additional states, as well as expanded legalization within states where cannabis is already legal in some form.  We believe our current aggressive expansion strategy and proven business model in a rapidly-growing cannabis industry has set the ideal framework for our employees, customers and shareholders to thrive in the coming quarters," concluded Mr. Kovacevich."

Company Achieves Record Nine-Month Financial Results
For the nine months ended May 31, 2016, revenues increased by more than 136% to $5,841,168 from $2,477,702 in the year-earlier period.

Cost of goods increased to $3,941,189 from $1,585,170 in the year-ago period.  Gross profit for the nine months ended May 31, 2016 rose to $1,899,979 for a 33% gross margin, compared with $892,532 for a 36% gross margin in the year-ago nine month period.

Operating expenses for the nine months ended May 31, 2016 increased 57% to $1,763,948 compared with $1,125,881 a year ago.  The Company posted record net income of $39,981, or ($0.00) per share, compared with a loss of ($240,971), or ($0.01) per basic share, in the year-ago nine month period.

About Kush Bottles, Inc.
Kush Bottles (OTCQB: KSHB) is a premier packaging supplier, offering certified child-resistant and custom-branded solutions in all states that permit medical or recreational cannabis use. With over 100 million bottles sold, the company is respected for its quality products, exceptional customer service, fast deliveries, and innovative custom design and branding solutions.

Kush Bottles is one of the few cannabis-focused businesses that is publicly traded and has demonstrated profitability and revenue growth without direct involvement with cannabis plants or extracts. The Company has been featured in media nationwide, including CNBC, Los Angeles Times, TheStreet.com, and Inc. Magazine. For more information, please visit www.kushbottles.com or call (888)-920-5874.

Connect:
Website: www.kushbottles.com 
Facebook: facebook.com/kushbottles 
Twitter: twitter.com/kushbottles 
Instagram: instagram.com/kushbottles 
Blog: blog.kushbottles.com 

Forward Looking Statement
This release may include certain forward-looking statements within the meaning of applicable securities laws. While these statements represent the Company's current judgments, they are subject to risks and uncertainties that could cause actual results to differ. Risks and uncertainties include price volatility, product demand, competition, and other factors. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect opinions only as of the date of this release. The Company is not obligated to revise any forward-looking statements in light of any new information.

Investor/Media Contact:
Phillip Sugarman, Vice President, Investor Relations
Phone: 818-280-6800
psugarman@irpartnersinc.com                                   

(Financial Tables Follow)

 


KUSH BOTTLES, INC

Condensed Consolidated Balance Sheets

(Unaudited)












May 31,


August 31,





2016


2015

                                     ASSETS





CURRENT ASSETS













Cash


$     354,247


$     201,259


Accounts receivable, net of allowance


212,355


146,392


Prepaids


520,574


153,389


Inventory


1,063,657


662,368










Total Current Assets


2,150,833


1,163,408


 

Goodwill


 

2,376,589


 

2,376,589


Deposits


12,220


-


Property and equipment, net


225,962


205,271










TOTAL ASSETS


$  4,765,604


$  3,745,268








                             LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES













Accounts payable


$     267,087


$     377,199


Accrued expenses and other current liabilities


371,760


391,334


Line of credit


240,000


85,000


Notes payable - related parties


-


75,000


Notes payable - current portion


19,554


27,394










Total Current Liabilities


898,401


955,927








LONG-TERM DEBT













Notes payable


44,885


54,585










TOTAL LIABILITIES


943,286


1,010,512






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,





47,407,541 and 46,132,779 shares issued and outstanding, respectively

46,133








Additional paid-in capital


4,483,376


3,437,070








Accumulated deficit


(708,466)


(748,447)










Total Stockholders' Equity


3,822,318


2,734,756










TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY


$  4,765,604


$  3,745,268

 


KUSH BOTTLES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)










For the Three Months Ended


For the Nine Months Ended




May 31,


May 31,




2016


2015


2016


2015











REVENUE

$        2,322,638


$      1,198,083


$        5,841,168


$      2,477,702

COST OF GOODS SOLD

1,588,302


779,652


3,941,189


1,585,170











GROSS PROFIT

734,336


418,431


1,899,979


892,532











OPERATING EXPENSES



















Depreciation

6,542


8,514


18,489


16,297


Stock compensation expense

42,723


-


60,100


-


Selling, general and administrative

656,642


484,778


1,763,948


1,125,881













Total Operating Expenses

705,907


493,292


1,842,537


1,142,178











INCOME (LOSS) FROM OPERATIONS

28,429


(74,861)


57,442


(249,646)












OTHER INCOME (EXPENSES)



















Other income

-


-




12,980












Interest expense

(5,145)


(1,532)


(17,461)


(4,305)













Total Other Income (Expenses)

(5,145)


(1,532)


(17,461)


8,675











INCOME (LOSS) BEFORE INCOME TAXES

23,284


(76,393)


39,981


(240,971)











PROVISION FOR INCOME TAXES

-


-


-


-











NET INCOME (LOSS)

$             23,284


$          (76,393)


$             39,981


$        (240,971)











BASIC INCOME (LOSS) PER SHARE

$                 0.00


$              (0.00)


$                 0.00


$              (0.01)











DILUTED INCOME (LOSS) PER SHARE

$                 0.00


$              (0.00)


$                 0.00


$              (0.01)











WEIGHTED AVERAGE NUMBER OF








COMMON SHARES OUTSTANDING - BASIC

46,525,540


42,284,342


46,667,750


41,726,721











WEIGHTED AVERAGE NUMBER OF








COMMON SHARES OUTSTANDING - DILUTED

47,578,327


42,284,342


47,720,537


41,726,721

 

 

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SOURCE Kush Bottles, Inc.