Revenue for the quarter was $10.36 million, up 249% compared to the previous year. Gross margins were 28.1%, down from 35.6% in the same period last year. The lower gross margins were attributed to increased business in vaporizer and cartridge products, which are lower margin products.
Still, the company reported a net loss for the quarter of approximately $920,000, compared to the previous year’s net income of $3,619. The losses could be attributed to the jump in operating expenses which ballooned from $1 million for the second quarter of 2017 to $3.7 million for the same time period in 2018. The gross profit of $2.9 million in 2018 was better than last year’s $1 million for the same time period an increase of 270%, but not enough to overcome the costs.
The company’s cash balance was $7.1. million, up from the previous year’s total of $0.9 million. The increase in cash on hand was due to a $6 million equity investment by the company’s strategic partner, Merida Capital Partners. As of reporting, the company has $15.3 million in working capital, compared to the $3.4 million that the company had as of August 31, 2017.
In the second quarter, the company hired Kyle Heverly as its Regional Sales Director and tasked him with expanding the company’s physical presence on the East Coast. Donald H. Hunter, who formerly served as Senior Executive of Harbor Global Company Limited and The Pioneer Group, Inc., was appointed to the Board of Directors. In addition to continuing to serve as Chief Financial Officer, Jim McCormick was also appointed as the company’s Chief Operating Officer.
“We have made significant headway expanding our offering to encompass a comprehensive portfolio of solutions that power the cannabis industry and position Kush Bottles as a critical link in the cannabis supply chain,” commented Kush Bottles CEO Nick Kovacevich. “By staying on top of industry trends and developments and proactively building a dynamic and flexible business, we have increased the number of customers, average order size, and order volume in all our markets.This strategy has also broadened our client base and provided improved revenue stability to the Company. ”
Kush Bottles stock is currently trading at $5.04 per share, down from its 52-week high of $8.51, but still well above its two-year average. There is one analyst covering the stock with a price target of $9.50.