Cannabis packaging company Kush Bottles Inc. (OTCQB:KSHB) released third-quarter earnings today, boosting its revenue 173% year-over-year to US$12.9mln.
The California-based company said its net loss in the quarter (ended May 31, 2018) was approximately US$2.16 million compared to net income of US$6,119 in the fiscal third quarter of 2017. Kush sells packaging, containers, and other ancillary products for the cannabis industry.
“We reported strong revenue growth of 173%, reaching $12.9 million in the third fiscal quarter of 2018, up from approximately $4.7 million in the same period of last year," said chairman and chief executive officer, Nick Kovacevich. "This was driven by organic growth across all our major markets and product lines as well as the inclusion of our new operating company Summit Innovations.”
Kush said its cash balance was US$3.6mln as of May 31, 2018 compared to US$900,000 as of August 31, 2017. The firms said the increase was a result of a US$6.0mln equity investment by private equity fund Merida Capital Partners in February, 2018.
The company said its gross margins were 28.3%, compared with 35.5% in the prior year period. The change was attributed to increased business in the lower margin vaporizer and cartridge product segments.
Working capital was $15.8 million as of May 31, 2018 compared to $3.4 million at August 31, 2017.
In a conference call on Thursday, Kovacevich spoke about the acquisition of Summit Innovations LLC, marking Kush Bottles’ entry into the hydrocarbon and solvent market. Kush has also launched a new division, Koleto Packaging Solutions, that will be the "innovation arm" of Kush Bottles.
"As we head toward the end of our fiscal year we look forward to driving continued organic and acquisitive growth, supported by our strong leadership team and expanded, diversified offering."
Looking for new opportunities
The company recently announced it was looking for new opportunities after raising US$36mln in a registered direct offering (US$32.9 before the end of the third fiscal quarter). The deal includes 7.5 million shares of its common stock and warrants to purchase 3.75 million shares at a combined price of US$4.80.
The company plans to use the proceeds for working capital, product development, acquisitions and other opportunities.
Shares of Kush closed down 0.19% at US$5.21 on Thursday.