KushCo Archives - Green Market Report

StaffStaffJanuary 22, 2019
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8min2030

It’s time for your Daily Hit of cannabis financial news for January 22, 2019.

On The Site

Tilray, Inc. (TLRY) has entered into an agreement to acquire all of the issued and outstanding securities of cannabis cultivator Natura Naturals Holdings Inc. in a deal valued at $35 million, but could ultimately grow to $70 million.

Under the terms of the agreement, Tilray will deliver C$35 million at closing. This will be made up of C$15 million in cash and C$20 million in Tilray Class 2 common stock. The statement said that if  Natura reaches certain quarterly production milestones over the following twelve-month period, up to C$35 million of Tilray common stock may become payable resulting in a total purchase price of C$70 million if fully achieved.

In Other News

KushCo Holdings, Inc. (OTCQB: KSHB) closed a registered direct offering of 6,476,190 shares of common stock and warrants to purchase 3,238,095 shares of common stock with a combined purchase price of $5.25 per share on January 18, 2019.  The warrants have an exercise price of $5.75 per share, are immediately exercisable and will expire five years from the date of issuance. The gross proceeds of the offering are approximately $34,000,000 before deducting placement agent fees and other estimated offering expenses. The Company intends to use the net proceeds for general corporate purposes, including, among other things, working capital, product development, acquisitions, capital expenditures, and other business opportunities.

Harvest Health & Recreation Inc. (CSE: HARV, OTCQX: HTHHF) is trading on, the OTCQX Best Market. Harvest Health & Recreation (Harvest) upgraded to the higher visibility OTCQX Best Market and is trading under the symbol “HTHHF.”

Village Farms International, Inc. (TSX: VFF) (OTCQX: VFFIF) announced that it has filed an application to list its common shares on NASDAQ Capital Market under the symbol “VFF”. Village Farms’ common shares will continue to be listed on the Toronto Stock Exchange (TSX), also under the symbol “VFF”.

Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQB: FLOOF) announced a new licensing agreement and Brand Partnership for cannabis-product fulfillment in Nevada with California-based, Old Pal, the popular lifestyle cannabis brand that offers the most affordable legal cannabis in the state of California. Flower One is now licensed to produce, manufacture and distribute the entire Old Pal product line to Nevada’s 130 cannabis retailers, marking Old Pal’s first out-of-state expansion and entry into the Nevada market.

Canopy Rivers Inc. (TSXV: RIV) completed an equity investment in 10663522 Canada Inc., or “Herbert”, a unique brand platform that focuses on the adult-use cannabis beverage and edibles market. Canopy Rivers subscribed for C$1,500,000 of preferred shares in Herbert, and received incremental warrants entitling the Company to increase its economic interest in Herbert under certain circumstances, as well as other governance-related rights.

CannaRoyalty Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF) announced that its wholly-owned subsidiary, CRHC Holdings Corp., has completed the sale of 51% of its 10% equity stake in Bodhi Research & Development Inc. to Green Relief Inc. Pursuant to the previously disclosed agreement, Green Relief has purchased from CRHC and other vendors, 51% of all outstanding common stock of Bodhi Research. As consideration for the Share Purchase, Green Relief has paid CRHC $1.74 million in Green Relief common shares.

 


Debra BorchardtDebra BorchardtJanuary 8, 2019
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3min2712

Cannabis packaging company KushCo Holdings, Inc. (OTCQB: KSHB) reported that revenue rose 186% in the fiscal first quarter of 2019 to $25.3 million. Revenue increased by 26.5% sequentially from $20 million in the fourth fiscal quarter of 2018.

The net loss was approximately $8.2 million compared to net income of $0.1 million in the first quarter of fiscal 2018. The company reported that it had a net loss per share of -$0.10 which missed analyst estimates by $0.07. Analysts according to Yahoo Finance estimated a loss of three cents per share for the quarter.

The company said it had to weather several challenges. Cash dropped to $3 million as of November 30, 2018, versus $13.5 million as of August 31, 2018. KushCo said that rapid demand for product and timing of inventory purchases leading up to Chinese New Year resulted in a decreased cash position and overall working capital headwinds. Gross profits were equal to 12.8%, compared with 34.8% in the prior year period.

“We acknowledge the impact that our dramatic growth has had on our gross margins, in particular, the utilization of air freight and additional cost incurring quality control measures at our receiving warehouse to meet demand,” said CEO Nick Kovacevich. “We have implemented a number of strategic operational initiatives that will drive our gross margins back towards 30% as we scale the business, with improvements in margins expected in the second half of fiscal 2019. These efforts are centered on supply chain fortification including upgrading our China-based producers to support higher volumes.”

The company made quite a few changes as it navigates through its growing pains. It engaged a new Warehouse Management System provider and GoLeanSixSigma.com as consultants to build scalable and sustainable processes that maximize efficiency. KushCo initiated a second international expansion with a new office in the Jiangbei District of Ningbo, China, establishing a physical presence that it said will facilitate stronger manufacturing relationships and maintain consistent high-quality standards. The company also appointed Christopher Tedford as Chief Financial Officer, and in turn allowing Jim McCormick to focus exclusively on the Chief Operating Officer role

Kovacevich went on to say, “We are also improving operational processes through the rollout of a new Warehouse Management System, which will allow us to improve inventory accuracy, expand gross margins through a more efficient supply chain and support the overall scaling of our business.”


StaffStaffNovember 26, 2018
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3min4660

KushCo Holdings, Inc. (OTCQB: KSHB) reported that its revenue was up 177% to $52.1 million for its fiscal year 2018 ending August 31, 2018. The net loss, including $1.0 million in depreciation expense, was $23.9 million in SG&A, and $1.6 million in provisions for income tax, was approximately $10.2 million compared to net income of $69,000 in fiscal 2017.

Gross margins were 24.2% versus 35.2% for fiscal 2017, the company attributed it to the year-end inventory adjustments of $2.8 million. Kushco said that excluding this year-end adjustment, gross margins for the year would have been 30%.

“We are exceptionally pleased with the financial results we achieved during the fiscal year with revenues of $52.1 million, representing 177% growth compared to approximately $18.8 million in fiscal 2017,” said Nick Kovacevich, Chairman, and Chief Executive Officer. “Our strong revenue growth was the result of dramatic growth in our most critical markets, with growing customer numbers, an increasingly diversified offering and expanded facility capabilities. Our growth was further supported by an expanded global presence with recently-opened offices in Canada and China. While we are disappointed with the impact our dramatic growth has had on margins, we believe they are short-term consequences and we’re pleased to have already implemented several initiatives to improve margins on a go-forward basis.”

The company said that its cash balance was $13.5 million as of August 31, 2018, compared to $900,000 at August 31, 2017. The increase was mostly as a result of a registered direct offering for approximately $32.9 million in net proceeds in June 2018 and a $6.0 million equity investment by the company’s strategic partner, Merida Capital Partners in February 2018. The working capital was $40.2 million as of August 31, 2018, compared to $3.4 million at August 31, 2017. 

“Our dramatic expansion of services has enabled us to enter new markets and reach a wider customer base. This drove a number of positive trends within the business in 2018, including strong growth in customer numbers, increased spending per customer, increased product consumption and the continued investment in geographic expansion and broader product offerings. To support this growth, we have implemented several initiatives designed to improve efficiencies and to establish, build and refine stronger, scalable and sustainable processes. These steps are expected to set us up to continue to effectively capitalize on the continued growth of the industry, and we hope to achieve between $110 million and $120 million in topline revenue during fiscal year 2019,” concluded Mr. Kovacevich.


StaffStaffNovember 6, 2018
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3min2630

It’s time for your Daily Hit of cannabis financial news for November 6, 2018.

On The Site

Millions of Americans will head to the polls to cast their vote in the U.S. 2018 Midterm Elections. As is often said, many are calling this one of the most important elections in a generation; and for the cannabis industry, it might actually be true.

On the ballot in four U.S. states are measures that are measures that would legalize either adult-use or medical cannabis in some shape or fashion. Those four key states are Michigan, North Dakota, Utah, and Missouri. Here’s a quick look at each ballot initiative and their odds of successfully passing.

In Other News

Insys Therapeutics

Insys Therapeutics (INSY)  reported its earnings for the quarter ending September 2018 after the close of the market on Monday. The biotech firm delivered a quarterly loss of $0.37 per share missing the Zacks Consensus Estimate of a loss of $0.20. A year ago the company reported a loss of $0.21 for the same time period.

The company also delivered revenues of $18.35 million, which also fell short of Zack’s estimate by 18%. Last year, Insys reported revenues of $30.67 million for the same quarter. The company also said that it was reviewing its portfolio of opioid assets including Subsys.

“With a number of clinical and regulatory milestones to achieve over the next few quarters, including the completion of the CBD and epinephrine studies and filing the naloxone NDA, we believe this is the appropriate time to evaluate strategic alternatives for our opioid-related assets,” the company said.

KushCo Holdings

KushCo Holdings, Inc. (OTCQB: KSHB)  formed a new Advisory Board to provide strategic advice and expertise to help accelerate growth, manage risk and enhance operational performance. Its first three appointments are Matthew Morgan, an entrepreneur and business consultant with leadership experience in the cannabis and other CPG industries, Eric Smith, an industry veteran in the Liquefied Petroleum Gas industry, and Ali Jahangiri, a digital publishing pioneer who has established and grown several businesses.


StaffStaffSeptember 25, 2018
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5min4310

It’s time for your Daily Hit of cannabis financial news for September 25, 2018.

On The Site

Aurora Cannabis

Aurora Cannabis Inc. (ACBFF) released its fourth quarter and fiscal year-end financial results following the market close on Tuesday. For the fiscal year ending 2018, Aurora reported total revenue of C$55 million versus fiscal 2017’s total revenue of C$18 million. The net income for the year was C$69 million versus the previous year’s loss of C$12 million. Aurora also reported a gross profit of C$43 million for the year versus last year’s gross profit of C$16 million.

For the fourth quarter of 2018, the company reported that its revenue increased 223% to C$19.1 million from last year’s C$5.9 million for the same time period. Fourth quarter net income increased to C$79 million, versus a net loss of C$20 million for the previous year. It was 16% better than the previous quarter’s revenue of C$16.1 million. Gross margins improved to 74% from the third quarter’s gross margin of 59%.

High Times

Longtime cannabis publication High Times has acquired print magazine Dope Media in a deal valued at $11.2 million. The deal is a combination of stock and cash. High Times has been building a portfolio of cannabis titles including Green Rush Daily and Culture. High Times said that there would be no staff changes at this time. DOPE’s CEO, George Jage, founders Dave Tran, James Zachondi, and Evan Carter will all remain.

Scott McGovern, the founder of Green Rush Daily was named Executive Vice President at High Times when his company was acquired. However, McGovern is already out of the company and only worked at High Times for about a year. He is now the Co-founder of a blockchain news site call Blockler.

Separately GeekWire reported that cannabis review website Leafly ousted its CEO Chris Jeffrey, who wasn’t even in the position for a year. Privateer Holdings that owns Leafly issued this statement to Geekwire,” “This morning the Board of Directors of Leafly removed Chris Jeffrey from his role as Chief Executive Officer. The Board made the decision to replace Mr. Jeffrey as CEO after careful consideration due to concerns about his management of the company.”

In Other News

Green Thumb Industries Inc.

Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF), a national cannabis consumer packaged goods company and owner-operator of the high growth national retail chain RISE™ dispensaries, today announced that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. to purchase, on a bought deal an aggregate of 3,250,000 subordinate voting shares  of the company at a price of CAD $20.00 per Offered Security for aggregate gross proceeds of CAD $65 million. The deal is expected to close on or about October 17.

KushCo Holdings

KushCo Holdings, Inc. (KSHB) has entered into a strategic transaction with Smoke Cartel (SMKC) to sell Roll-uh-Bowl, an online distribution platform for retail sales of collapsible and unbreakable medical-grade silicone water pipes. KushCo will transfer ownership of all Roll-uh-Bowl assets, including inventory, branding materials, the website, and social media, in exchange for shares of Smoke Cartel valued at $1,500,000 plus the value of inventory. KushCo will also build a referral landing page into the Kush Bottles website to direct customers to Smoke Cartel when searching for wholesale glass & smoking accessories.


Debra BorchardtDebra BorchardtSeptember 18, 2018
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3min7651

KushCo Holdings, Inc. (KSHB) formerly known as Kush Bottles said that it is expecting to report a 171% increase in annual revenue to over $51 million for the fiscal year ended August 31st, 2018. The stock popped over 8% to lately trade at $5.23 on the news.

“Our fiscal year 2018 revenue serves as a historic milestone, not just for KushCo Holdings, but for the entire cannabis industry,” said Nick Kovacevich, CEO, and Chairman of KushCo Holdings. “We believe that no U.S. based public cannabis-related company has ever before generated this level of annual sales revenue. Building on the Company’s year to date momentum, our expected fourth quarter achievement of approximate revenues in excess of $19 million is a testament to the highly innovative and strategic work by our team, completing and integrating key acquisitions, and the effectiveness of our sales model in meeting the evolving needs of the market. We are witnessing just how our scale allows us to leverage synergies which benefit both us and our great customers.”

The news wasn’t all good. KushCo gave the market a heads up on a balance sheet hit. The company said that it expects to take a $1.8 million inventory adjustment charge resulting largely from opening multiple new distribution centers and its lack of a global warehouse management system. KushCo said that the situation would be addressed with software solutions being evaluated for implementation in the first half of the 2019 fiscal year.

The company experienced significant growth and blamed the problems on “growing pains.” KushCo opened several new distribution centers including Worcester, Massachusetts and Las Vegas, Nevada.

It has been an incredibly busy year for the cannabis packaging pioneer. The company acquired Zack Darling Creative Associates and its wholly-owned subsidiary, The Hybrid Creative, in order to offer brand strategy, creative design and marketing, web application development, and e-commerce solutions to cannabis and non-cannabis clients. It also launched Kush Energy, a new division focused on supplying the cannabis industry with tested, ultra-high purity solvents and hydrocarbons and went global by launching Kush Supply Co. Canada headquartered in Toronto.

In addition to all of those efforts, the company also started Koleto Packaging Solutions, the research, and development arm focused on developing innovative packaging products and creating Intellectual Property.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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