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Wednesday, October 28, 2020

Core Team Shake-up at Kush Bottles Inc (OTCMKTS:KSHB)

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Kush Bottles Inc (OTCMKTS:KSHB) has been fighting to hold at key support. Kush Bottles Inc was one of the most exciting and interesting movers last Fall as we moved through “the big vote” period when 8 of 9 US states voted to increase their relative degree of marijuana legality. However, the stock has been weakening in the aftermath, and one way to spark some new faith from the market is by making some changes at the top. That’s why it’s interesting to see the company’s latest announcement: that it has appointed industry veteran, Mr. Jim McCormick, as Chief Financial Officer, effective August 1, 2017.

According to the release, Mr. Chris Martin, Kush Bottles’ previous CFO, will consult for the Company for approximately three months to ensure a smooth transition period. “Mr. McCormick has extensive CFO experience and has demonstrated financial and strategic leadership in his previous roles in the cannabis and tobacco industries. In his role as Chief Financial Officer, Jim McCormick will lead Kush Bottles’ financial operations. He will also be responsible for managing liquidity, balance sheet risk, and capital market transactions to ensure Kush Bottles remains well positioned to capitalize on growth opportunities. He will report directly to Nick Kovacevich, co-founder and CEO.”

Kush Bottles Inc (OTCMKTS:KSHB) provides packaging products and solutions to producers, processors, and retailers operating in the regulated medical and recreational cannabis industry.

KSHB sells primarily into the b2b market, which includes legally operating medical and adult-use dispensaries, growers, and MIP producers (Marijuana Infused Products) in states with marijuana programs.

It offers pop top bottles; child resistant exit, paper exit, and foil barrier bags; tubes; and polystyrene, polypropylene, or silicone containers to urban farmers, greenhouse growers, and medical and recreational cannabis dispensaries.

According to the company’s press messaging, “Founded in 2010, Kush Bottles has sold more than 100 million bottles and regularly services thousands of customers across the United States and Canada. The company primarily services the B2B market, which includes legally operated medical and adult-use dispensaries, growers and marijuana-infused product manufacturers. Kush Bottles aims to be the gold standard for responsible branding and packaging in the cannabis industry.”

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As we discussed above, the company made a key change at the top, installing a new CFO with serious chops in the tobacco and cannabis industries, as well some connections that could pay off in terms of future legislative agenda and how the company’s fits into the ever evolving obstacles inherent in the cannabis game.

Nick Kovacevich, Co-Founder & CEO, Kush Bottles, commented, “I am pleased to welcome Jim to the Kush Bottles team. Jim is a highly successful senior leader with extensive CFO experience at both start-ups and global companies, complemented by an entrepreneurial spirit. His deep cross-functional understanding of developing and executing financial strategies is expected to help drive sustainable revenue and earnings performance at Kush Bottles. Furthermore, his lobbying experience and network from his time working in both the cannabis and tobacco sectors will be useful assets to the Company as we navigate the complexities of the cannabis industry.”

Traders will note -8% stripped out of shares of the stock over the past week, but this action is running counter to the larger trend in the name going back to last year, since when investors in KSHB have realized significant gains. Market participants may want to pay attention to this stock. KSHB is a stock whose past is littered with sudden rips. In addition, the company has benefitted from a jump in recent trading volume to the tune of 65% beyond its prior sustained average level.

It pays to take note of this fact due to the tiny float size in the stock (of 9.7M shares). This type of thing is something to watch out for: a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.

Currently trading at a market capitalization of $113.6M, Kush Bottles Inc has a chunk ($727K) of cash on the books, which compares with about $682K in total current liabilities. One should also note that debt has been growing over recent quarters. KSHB is pulling in trailing 12-month revenues of $12.5M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 103.2%. We will update the story again soon as developments transpire. For continuing coverage on shares of $KSHB stock, as well as our other breakout picks, sign up for our free newsletter today and get our next hot stock pick!

Disclosure: we hold no position in $KSHB, either long or short, and we have not been compensated for this article.

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