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.
