Document and Entity Information
Document and Entity Information | 9 Months Ended |
May 31, 2016shares | |
Document and Entity Information: | |
Entity Registrant Name | Kush Bottles, Inc. |
Document Type | 10-Q |
Document Period End Date | May 31, 2016 |
Trading Symbol | kshb |
Amendment Flag | false |
Entity Central Index Key | 1,604,627 |
Current Fiscal Year End Date | --08-31 |
Entity Common Stock, Shares Outstanding | 47,407,541 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Kush Bottles, Inc. - Condensed
Kush Bottles, Inc. - Condensed Consolidated Balance Sheets - USD ($) | May 31, 2016 | Aug. 31, 2015 | |
Current Assets: | |||
Cash | $ 354,247 | $ 201,259 | |
Accounts receivable, net of allowance | 212,355 | 146,392 | |
Prepaids | 520,574 | 153,389 | |
Inventory | 1,063,657 | 662,368 | |
TOTAL CURRENT ASSETS | 2,150,833 | 1,163,408 | |
Goodwill | 2,376,589 | 2,376,589 | |
Deposits | 12,220 | ||
Property and equipment, net | 225,962 | 205,271 | |
Total Assets | 4,765,604 | 3,745,268 | |
Current Liabilities: | |||
Accounts payable | 267,087 | 377,199 | |
Accrued expenses and other current liabilities | 371,760 | 391,334 | |
Line of credit | 240,000 | 85,000 | |
Notes payable- related parties | 75,000 | ||
Notes payable- current portion | 19,554 | 27,394 | |
Total Current Liabilities | 898,401 | 955,927 | |
LONG-TERM DEBT | |||
Notes payable | 44,885 | 54,585 | |
TOTAL LIABILITIES | 943,286 | 1,010,512 | |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS' EQUITY | |||
Preferred stock | [1] | ||
Common stock | [2] | 47,408 | 46,133 |
Additional paid-in capital | 4,483,376 | 3,437,070 | |
Accumulated deficit | (708,466) | (748,447) | |
Total Stockholders' Equity | 3,822,318 | 2,734,756 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 4,765,604 | $ 3,745,268 | |
[1] | $0.001 par value; 10,000,000 shares authorized, No shares issued and outstanding | ||
[2] | $0.001 par value; 265,000,000 shares authorized, 47,407,541 and 46,132,779 shares issued and outstanding, respectively. |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | May 31, 2016 | Aug. 31, 2015 |
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 265,000,000 | 265,000,000 |
Common Stock, Shares Issued | 47,407,541 | 46,132,779 |
Common Stock, Shares Outstanding | 47,407,541 | 46,132,779 |
Kush Bottles, Inc. - Condensed4
Kush Bottles, Inc. - Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2016 | May 31, 2015 | May 31, 2016 | May 31, 2015 | |
Income Statement | ||||
REVENUE | $ 2,322,638 | $ 1,198,083 | $ 5,841,168 | $ 2,477,702 |
COST OF GOODS SOLD | 1,588,302 | 779,652 | 3,941,189 | 1,585,170 |
GROSS PROFIT | 734,336 | 418,431 | 1,899,979 | 892,532 |
OPERATING EXPENSES | ||||
Depreciation | 6,542 | 8,514 | 18,489 | 16,297 |
Stock compensation expense | 42,723 | 60,100 | ||
Selling, general and administrative | 656,642 | 484,778 | 1,763,948 | 1,125,881 |
Total Operating Expenses | 705,907 | 493,292 | 1,842,537 | 1,142,178 |
INCOME (LOSS) FROM OPERATIONS | 28,429 | (74,861) | 57,442 | (249,646) |
OTHER INCOME (EXPENSES) | ||||
Other income | 12,980 | |||
Interest expense | (5,145) | (1,532) | (17,461) | (4,305) |
Total Other Income (Expense) | (5,145) | (1,532) | (17,461) | 8,675 |
INCOME (LOSS) BEFORE INCOME TAXES | 23,284 | (76,393) | 39,981 | (240,971) |
PROVISION FOR INCOME TAXES | ||||
NET INCOME (LOSS) | $ 23,284 | $ (76,393) | $ 39,981 | $ (240,971) |
BASIC INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
DILUTED INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC | 46,525,540 | 42,284,342 | 46,667,750 | 41,726,721 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED | 47,578,327 | 42,284,342 | 47,720,537 | 41,726,721 |
Kush Bottles, Inc. - Condensed5
Kush Bottles, Inc. - Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | ||
May 31, 2016 | May 31, 2015 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
NET INCOME (LOSS) | $ 39,981 | $ (240,971) | |
Adjustments to reconcile net income (loss) to net cash (used in) operating activities: | |||
Depreciation | 58,278 | 16,297 | |
Stock compensation expense | 60,100 | ||
Changes in operating assets and liabilities | |||
Accounts receivable | (65,963) | 37,575 | |
Prepaids | (334,935) | (2,256) | |
Inventory | (401,289) | (83,914) | |
Deposits | (12,220) | ||
Accounts payable | (110,111) | 10,507 | |
Accrued expenses and other current liabilities | 75,622 | 9,855 | |
Net cash used in operating activities | (690,537) | (252,907) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Acquisition of Company | [1] | (273,725) | |
Purchase of property and equipment | (78,969) | (63,226) | |
Net cash used in investing activities | (78,969) | (336,951) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Repayment of related party loan | (75,000) | (50,000) | |
Drawdown on line of credit | 155,000 | ||
Proceeds from notes payable | 56,086 | ||
Repayment of notes payable | (17,541) | (8,712) | |
Proceeds from sale of stock | 860,035 | 702,001 | |
Net cash provided by financing activities | 922,494 | 699,375 | |
NET INCREASE IN CASH | 152,988 | 109,517 | |
Cash, beginning of period | 201,259 | 23,004 | |
Cash, end of period | 354,247 | 132,521 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Cash paid for interest | 17,461 | 4,305 | |
Cash paid for income taxes | |||
[1] | Acquisition of Dank Bottles, LLC |
Note 1 - Nature of Business and
Note 1 - Nature of Business and Significant Accounting Policies | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 1 - Nature of Business and Significant Accounting Policies | NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Kush Bottles, Inc. (the Company) was incorporated in the state of Nevada on February 26, 2014. The Company specializes in the wholesale distribution of packaging supplies for the cannabis industry. The Companys wholly owned subsidiary Kim International Corporation (KIM), a California corporation, was originally incorporated as Hy Gro Economics Corporation ("Hy Gro") on December 2, 2010. On October 30, 2012, Hy Gro amended its articles of incorporation to reflect a name change to KIM International Corporation (KIM). Recapitalization On March 4, 2014, the shareholders of KIM exchanged all 10,000 of their common shares for 32,400,000 common shares of Kush Bottles, Inc. The operations of KIM became the operations of Kush after the share exchange and accordingly the transaction is accounted for as a recapitalization of KIM whereby the historical financial statements of KIM are presented as the historical financial statements of the combined entity. Subsequent to the share exchange, the members of KIM owned 32,400,000 of shares of Companys common stock, effectively obtaining operational and management control of Kush. Kush had no operations prior to the share exchange. As a result of the recapitalization, KIM was the acquiring entity in accordance with ASC 805, Business Combinations. The accumulated losses of KIM were carried forward after the completion of the share exchange. Operations prior to the share exchange were those of KIM. All reference to common stock shares and per share amounts have been restated to effect the recapitalization which occurred on March 4, 2014. Acquisition of Dank Bottles, LLC On April 10, 2015, the Company entered into an equity purchase agreement to acquire all of the issued and outstanding membership interests in Dank Bottles, LLC ("Dank"), a Colorado limited liability company, effectively making Dank a wholly owned subsidiary of the Company. In exchange for the purchased interests, the Company paid cash consideration of $ 373,725 and issued 3,500,000 shares of common stock to the sellers of Dank. Of the $373,725 of cash consideration, $ 273,725 was paid on April 10, 2015 and the remaining $100,000 is to be paid in 10 monthly installments beginning on July 31, 2015 and ending April 30, 2016. As of May 31, 2016, the balanced owed to these sellers is $ 25,002 and is included in current liabilies on the consolidated balance sheet. The following table summarizes the total consideration paid by each major class of consideration, including non-cash consideration paid: Consideration paid: Cash $ 273,725 Note payable, short-term 100,000 3,500,000 Common shares of Kush Bottles, Inc. 2,169,650 Total consideration $ 2,543,375 On the date of acquisition, there was no public market for the Company's common stock and, as such, we evaluated the best evidence to estimate the common stock's fair value. The common stock was valued using the market approach. The market approach bases the valuation measurement on what other similar enterprises or comparable transactions indicate the value to be. From the period of inception to April 10, 2015, the Company had sold 1,471,112 shares of its common stock to accredited investors for cash of $ 912,000 , at a weighted average offering price of $ 0.6199 per share. Accordingly, the Company has valued the price of the common stock issued in conjunction with these transactions at $ 0.6199 per share. The Company considers these transactions preceding the acquisition the best evidence of fair value for the common stock. The following table summarizes the purchase price allocation, and the estimated fair values of the net assets acquired, liabilities assumed, identifiable intangible assets, and goodwill that resulted from the acquisition of Dank as of April 10, 2015: Cash and cash equivalents $ 73,505 Accounts receivable, net 71,667 Inventory 300,901 Prepaid expenses 9,848 Property and equipment, net 76,767 532,688 Accounts payable 230,600 Customer deposits 72,585 Payroll liabilities 9,889 Notes payable, short-term 52,828 365,902 Goodwill 2,376,589 Total consideration $ 2,543,375 The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805, Business Combinations. As of April 10, 2015, the assets acquired, including the identifiable intangible assets, and liabilities assumed from Dank were recorded at their respective fair values. Any excess of the purchase price for the acquisition over the net fair value of Dank identified tangible and intangible assets acquired and liabilities assumed were recorded as goodwill. The fair value measurements utilize estimates based on key assumptions of the Acquisition, and historical and current market data. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes include the activity of the Company and its wholly owned subsidiaries KIM and Dank have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. The following (a) balance sheets as of May 31 2016 (unaudited) and August 31, 2015, which have been derived from audited financial statements, and (b) the unaudited interim statements of operations and cash flows of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31, 2016 are not necessarily indicative of results that may be expected for the year ending August 31, 2016. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended August 31, 2015 included in the Companys Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on November 30, 2015. There have been no significant changes to such accounting policies during the nine months ended May 31, 2016. Going Concern Matters The accompanying condensed consolidated financial statements were prepared on a going concern basis In order to continue as a going concern, the Company needs to achieve a sustained profitable level of operations or the Company will need, among other things, additional capital resources. Managements plans to continue as a going concern include raising additional capital through increased sales of product and by sale of restricted common shares. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its revenue targets for profitability or eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounts Receivable Trade accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis, thus trade receivables do not bear interest. Trade accounts receivables are periodically evaluated for collectability based on past credit history and their current financial condition. The Companys allowance for doubtful accounts was $ 4,860 and $ 5,080 as of and August 31, 2015, respectively. Inventory Inventories are stated at the lower of cost or net realizable value using the first-in first out (FIFO) method. The Companys inventory consists of finished goods of $ 1,063,657 and $ 662,368 as of May 31, 2016 and August 31, 2015, respectively. Earnings (Loss) Per Share The Company computes net loss per share under Accounting Standards Codification subtopic 260-10, "Earnings per Share" (ASC 260-10). Basic net income (loss) per common share is computed by dividing net loss by the weighted average number of shares of common stock. Diluted net loss per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method. The following table sets forth the calculation of basic and diluted earnings per share: Three months ended Nine months ended May 31, 2016 May 31, 2015 May 31, 2016 May 31, 2015 Net income (loss) $ 23,384 $ (76,393) $ 39,981 $ (240,971) Weighted average common shares outstanding for basic EPS 46,525,540 42,284,342 46,667,750 41,726,721 Net effect of dilutive options 1,052,787 - 1,052,787 - Weighted average common shares outstanding for diluted EPS 47,578,327 42,284,342 47,720,537 41,726,721 Basic earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) Diluted earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) Potentially dilutive securities, which were not included in the computation of diluted earnings per share because either the effect would have been anti-dilutive or the options exercise prices were greater than the average market price of the common stock, were 1,052,787 and 0 for the three and nine months ended May 31, 2016 and 2015, respectively. Comprehensive Income (loss) Comprehensive income (loss) is the change in the Companys equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. During the nine months ended May 31, 2016 and 2015, the Company had no elements of comprehensive income or loss. Share-based Compensation The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, "Compensation", which requires fair value measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including restricted stock awards. The Company bases the fair value of stock using the stock price on the date of the approval of the award. The fair value is then expensed over the requisite service periods of the awards, which is generally the performance period and the related amount is recognized in the condensed consolidated statements of operations. Fair Value of Financial Instruments The Company adopted ASC 820 which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under this standard certain assets and liabilities must be measured at fair value, and disclosures are required for items measured at fair value. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Companys financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Companys cash is based on quoted prices and therefore classified as Level 1. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect managements assumptions about the assumptions that market participants would use in pricing the asset or liability. A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. Advances from Related Party. Note Payable Vehicle Loan. Line of Credit Payable. The Company had no financial assets or liabilities that are measured at fair value on a recurring basis as of May 31, 2016 and August 31, 2015. Segment Information The Company is organized as a single operating segment, whereby its chief operating decision maker assesses the performance of and allocates resources to the business as a whole. Reclassification Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss. Recently Issued Accounting Pronouncements In May 2016, accounting guidance was issued to clarify the not yet effective revenue recognition guidance issued in May 2014. This additional guidance does not change the core principle of the revenue recognition guidance issued in May 2014, rather, it provides clarification of accounting for collections of sales taxes as well as recognition of revenue (i) associated with contract modifications, (ii) for noncash consideration, and (iii) based on the collectability of the consideration from the customer. The guidance also specifies when a contract should be considered completed for purposes of applying the transition guidance. The effective date and transition requirements for this guidance are the same as the effective date and transition requirements for the guidance previously issued in 2014, which is effective for interim and annual periods beginning on or after December 15, 2017. The Company not yet determined the impact that this new guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In April 2015, the FASB issued ASU 2015-03 , Interest- Imputation of Interest (Subtopic 835-30) In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern Risks and Uncertainties Other Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Note 2 - Concentrations of Risk
Note 2 - Concentrations of Risk | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 2 - Concentrations of Risk | NOTE 2 CONCENTRATIONS OF RISK Supplier Concentrations The Company purchases inventory from various suppliers and manufacturers. For the nine months ended May 31, 2016 and 2015, two vendors accounted for approximately 32% and 50%, respectively, of total inventory purchases. Customer Concentrations For the nine months ended May 31, 2015, Dank represented 20% of the Company's revenues. On April 10, 2015, the Company acquired Dank. During the nine months ended May 31, 2016, there were no customers which represented over 10% of the Company's revenues. |
Note 3 - Related-party Transact
Note 3 - Related-party Transactions | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 3 - Related-party Transactions | NOTE 3 RELATED-PARTY TRANSACTIONS As a result of the Dank acquisition on April 10, 2015, the Company owed $100,000 to the sellers of Dank. The balance on this loan was $0 and $75,000 as of May 31, 2016 and August 31, 2015, respectively. The Company leases its California and Colorado facilities from related parties. During the nine months ended May 31, 2016 and 2015, the Company made rent payments of $127,800 and $76,100, respectively, to these related parties. On May 13, 2016, the Company amended the Board of Directors Services Agreement with Greg Gamet dated May 4, 2015. The Directors compensation was revised to include a new compensation arrangement that effectively supersedes the original compensation terms. Effective May 13, 2016, the Board approved the issuance of 250,000 stock options to acquire unrestricted common stock at an exercise price of $1.00 per share, with 50% of such stock options vesting on May 13, 2017 and none before this date and the remaining 50% of such stock options vesting ratably in 4 quarterly installments over the following 12 months. |
Note 4 - Property and Equipment
Note 4 - Property and Equipment | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 4 - Property and Equipment | NOTE 4 PROPERTY AND EQUIPMENT The major classes of fixed assets consist of the following as of May 31, 2016 May 31, 2016 August 31, 2015 Office Equipment $ 49,987 $ 28,955 Machinery and equipment 114,157 68,173 Leasehold improvements 48,566 32,780 Vehicles 116,592 140,609 329,302 270,517 Accumulated Depreciation (103,340) (65,246) $ 225,962 $ 205,271 Depreciation expense was $58,278 and $16,297, for the nine months ended May 31, 2016 and 2015, respectively. |
Note 5 - Accrued Expenses and O
Note 5 - Accrued Expenses and Other Current Liabilities | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 5 - Accrued Expenses and Other Current Liabilities | NOTE 5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: May 31, 2016 August 31, 2015 Customer deposits $ 121,431 $ 177,493 Accrued compensation 150,005 144,428 Credit card liabilities 78,260 56,748 Sales tax payable 22,064 12,665 $ 371,760 $ 391,334 |
Note 6 - Stockholders' Equity
Note 6 - Stockholders' Equity | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 6 - Stockholders' Equity | NOTE 6 STOCKHOLDERS' EQUITY Preferred Stock The authorized preferred stock is 10,000,000 shares with a par value of $0.001. As of May 31, 2016 and August 31, 2015, the Company has no shares of preferred stock issued or outstanding. Common Stock The authorized common stock is 265,000,000 shares with a par value of $0.001. As of May 31, 2016 and August 31, 2015, 47,407,541 and 46,132,779 shares were issued and outstanding, respectively. During the nine months ended , the Company sold 1,074,512 restricted shares of common stock to accredited investors in exchange for cash of $ 860,035 . During the nine months ended May 31, 2016, the Company issued 172,500 restricted shares of common stock and 2,750 unrestricted shares of common stock in exchange for $ 118,123 of services rendered, of which $ 95,197 was included in accrued expenses as of August 31, 2015. On March 17, 2016, the Company issued 25,000 restricted shares of common stock, valued at $ 32,250 , as partial payment for the development of specific machinery and equipment. Stock Options The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. During the nine months ended May 31, 2016, the Company issued 520,000 stock options pursuant to the Companys 2016 Stock Incentive Plan, which was adopted on February 9, 2016. A summary of the Companys stock option activity during the period ended May 31, 2016 and August 31, 2015 is presented below: Weighted Weighted Average Average Remaining Aggregate No. of Exercise Contractual Intrinsic Options Price Term Value Balance Outstanding, August 31, 2015 1,000,000 $ 0.05 3.46 years $ 595,000 Granted 520,000 1.00 9.99 years 114,400 Exercised - - - - Balance Outstanding, May 31, 2016 1,520,000 $ 0.38 5.25 years $ 1,284,400 Exercisable, May 31, 2016 1,080,000 $ 0.12 3.32 years $ 1,187,600 As of May 31, 2016, there was $204,450 of unrecognized compensation cost related to non-vested share-based stock options. |
Note 7 - Commitments and Contin
Note 7 - Commitments and Contingencies | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 7 - Commitments and Contingencies | NOTE 7 COMMITMENTS AND CONTINGENCIES Lease The Companys corporate head-quarters and primary distribution center is located in Santa Ana, California. The California facility lease expires on August 1, 2017 and requires monthly payments of $9,000 in fiscal 16 and $10,000 in fiscal 17 for a total of $147,000 in lease commitments through the end of term. The Company also leases a facility located in Auburn, Washington, on a month to month basis for $2,074 per month. On April 1, 2016, the Company entered into a new sublease agreement for a facility located in Woodinville, Washington. The lease commences on July 1, 2016 and expires on January 31, 2020, and requires escalating monthly payments that range between $14,985 and $16,022, for a total of $633,836 in future lease commitments through the end of the lease term. Effective April 10, 2015, the Company assumed the facility lease in Denver, Colorado, which is the headquarters of operations for its wholly-owned subsidiary, Dank. The lease runs through March 31, 2020 and requires escalating monthly payments, ranging between $4,800 and $5,800, for a total of $258,600 in future lease commitments through the end of the term. During the nine months ended May 31, 2016 and 2015, the Company recognized $153,625 and $91,564 respectively, of rental expense, related to its office, retail and warehouse space. Litigation The Company may be subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. The Company had no pending legal proceedings or claims as of May 31, 2016 and August 31, 2015. |
Note 8 - Subsequent Events
Note 8 - Subsequent Events | 9 Months Ended |
May 31, 2016 | |
Notes | |
Note 8 - Subsequent Events | NOTE 8 SUBSEQUENT EVENTS Subsequent to May 31, 2016 and through the date of this filing, the Company sold 102,500 restricted shares of common stock to accredited investors in exchange for cash consideration of $81,500. On June 6, 2016, the Company paid $120,000 towards its outstanding line of credit facility and obtained a 90-day extension on the facility, with an amended maturity date on September 1, 2016. |
Note 1 - Nature of Business a14
Note 1 - Nature of Business and Significant Accounting Policies: Nature of Business (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Nature of Business | Nature of Business Kush Bottles, Inc. (the Company) was incorporated in the state of Nevada on February 26, 2014. The Company specializes in the wholesale distribution of packaging supplies for the cannabis industry. The Companys wholly owned subsidiary Kim International Corporation (KIM), a California corporation, was originally incorporated as Hy Gro Economics Corporation ("Hy Gro") on December 2, 2010. On October 30, 2012, Hy Gro amended its articles of incorporation to reflect a name change to KIM International Corporation (KIM). |
Note 1 - Nature of Business a15
Note 1 - Nature of Business and Significant Accounting Policies: Recapitalization (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Recapitalization | Recapitalization On March 4, 2014, the shareholders of KIM exchanged all 10,000 of their common shares for 32,400,000 common shares of Kush Bottles, Inc. The operations of KIM became the operations of Kush after the share exchange and accordingly the transaction is accounted for as a recapitalization of KIM whereby the historical financial statements of KIM are presented as the historical financial statements of the combined entity. Subsequent to the share exchange, the members of KIM owned 32,400,000 of shares of Companys common stock, effectively obtaining operational and management control of Kush. Kush had no operations prior to the share exchange. As a result of the recapitalization, KIM was the acquiring entity in accordance with ASC 805, Business Combinations. The accumulated losses of KIM were carried forward after the completion of the share exchange. Operations prior to the share exchange were those of KIM. All reference to common stock shares and per share amounts have been restated to effect the recapitalization which occurred on March 4, 2014. |
Note 1 - Nature of Business a16
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Acquisition of Dank Bottles, Llc | Acquisition of Dank Bottles, LLC On April 10, 2015, the Company entered into an equity purchase agreement to acquire all of the issued and outstanding membership interests in Dank Bottles, LLC ("Dank"), a Colorado limited liability company, effectively making Dank a wholly owned subsidiary of the Company. In exchange for the purchased interests, the Company paid cash consideration of $ 373,725 and issued 3,500,000 shares of common stock to the sellers of Dank. Of the $373,725 of cash consideration, $ 273,725 was paid on April 10, 2015 and the remaining $100,000 is to be paid in 10 monthly installments beginning on July 31, 2015 and ending April 30, 2016. As of May 31, 2016, the balanced owed to these sellers is $ 25,002 and is included in current liabilies on the consolidated balance sheet. The following table summarizes the total consideration paid by each major class of consideration, including non-cash consideration paid: Consideration paid: Cash $ 273,725 Note payable, short-term 100,000 3,500,000 Common shares of Kush Bottles, Inc. 2,169,650 Total consideration $ 2,543,375 On the date of acquisition, there was no public market for the Company's common stock and, as such, we evaluated the best evidence to estimate the common stock's fair value. The common stock was valued using the market approach. The market approach bases the valuation measurement on what other similar enterprises or comparable transactions indicate the value to be. From the period of inception to April 10, 2015, the Company had sold 1,471,112 shares of its common stock to accredited investors for cash of $ 912,000 , at a weighted average offering price of $ 0.6199 per share. Accordingly, the Company has valued the price of the common stock issued in conjunction with these transactions at $ 0.6199 per share. The Company considers these transactions preceding the acquisition the best evidence of fair value for the common stock. The following table summarizes the purchase price allocation, and the estimated fair values of the net assets acquired, liabilities assumed, identifiable intangible assets, and goodwill that resulted from the acquisition of Dank as of April 10, 2015: Cash and cash equivalents $ 73,505 Accounts receivable, net 71,667 Inventory 300,901 Prepaid expenses 9,848 Property and equipment, net 76,767 532,688 Accounts payable 230,600 Customer deposits 72,585 Payroll liabilities 9,889 Notes payable, short-term 52,828 365,902 Goodwill 2,376,589 Total consideration $ 2,543,375 The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805, Business Combinations. As of April 10, 2015, the assets acquired, including the identifiable intangible assets, and liabilities assumed from Dank were recorded at their respective fair values. Any excess of the purchase price for the acquisition over the net fair value of Dank identified tangible and intangible assets acquired and liabilities assumed were recorded as goodwill. The fair value measurements utilize estimates based on key assumptions of the Acquisition, and historical and current market data. |
Note 1 - Nature of Business a17
Note 1 - Nature of Business and Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes include the activity of the Company and its wholly owned subsidiaries KIM and Dank have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. The following (a) balance sheets as of May 31 2016 (unaudited) and August 31, 2015, which have been derived from audited financial statements, and (b) the unaudited interim statements of operations and cash flows of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended May 31, 2016 are not necessarily indicative of results that may be expected for the year ending August 31, 2016. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended August 31, 2015 included in the Companys Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on November 30, 2015. There have been no significant changes to such accounting policies during the nine months ended May 31, 2016. |
Note 1 - Nature of Business a18
Note 1 - Nature of Business and Significant Accounting Policies: Going Concern Matters (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Going Concern Matters | Going Concern Matters The accompanying condensed consolidated financial statements were prepared on a going concern basis In order to continue as a going concern, the Company needs to achieve a sustained profitable level of operations or the Company will need, among other things, additional capital resources. Managements plans to continue as a going concern include raising additional capital through increased sales of product and by sale of restricted common shares. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its revenue targets for profitability or eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 1 - Nature of Business a19
Note 1 - Nature of Business and Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Note 1 - Nature of Business a20
Note 1 - Nature of Business and Significant Accounting Policies: Accounts Receivable (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Accounts Receivable | Accounts Receivable Trade accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis, thus trade receivables do not bear interest. Trade accounts receivables are periodically evaluated for collectability based on past credit history and their current financial condition. The Companys allowance for doubtful accounts was $ 4,860 and $ 5,080 as of and August 31, 2015, respectively. |
Note 1 - Nature of Business a21
Note 1 - Nature of Business and Significant Accounting Policies: Inventory (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Inventory | Inventory Inventories are stated at the lower of cost or net realizable value using the first-in first out (FIFO) method. The Companys inventory consists of finished goods of $ 1,063,657 and $ 662,368 as of May 31, 2016 and August 31, 2015, respectively. |
Note 1 - Nature of Business a22
Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Earnings (loss) Per Share | Earnings (Loss) Per Share The Company computes net loss per share under Accounting Standards Codification subtopic 260-10, "Earnings per Share" (ASC 260-10). Basic net income (loss) per common share is computed by dividing net loss by the weighted average number of shares of common stock. Diluted net loss per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method. The following table sets forth the calculation of basic and diluted earnings per share: Three months ended Nine months ended May 31, 2016 May 31, 2015 May 31, 2016 May 31, 2015 Net income (loss) $ 23,384 $ (76,393) $ 39,981 $ (240,971) Weighted average common shares outstanding for basic EPS 46,525,540 42,284,342 46,667,750 41,726,721 Net effect of dilutive options 1,052,787 - 1,052,787 - Weighted average common shares outstanding for diluted EPS 47,578,327 42,284,342 47,720,537 41,726,721 Basic earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) Diluted earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) Potentially dilutive securities, which were not included in the computation of diluted earnings per share because either the effect would have been anti-dilutive or the options exercise prices were greater than the average market price of the common stock, were 1,052,787 and 0 for the three and nine months ended May 31, 2016 and 2015, respectively. |
Note 1 - Nature of Business a23
Note 1 - Nature of Business and Significant Accounting Policies: Comprehensive Income (loss) (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Comprehensive Income (loss) | Comprehensive Income (loss) Comprehensive income (loss) is the change in the Companys equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. During the nine months ended May 31, 2016 and 2015, the Company had no elements of comprehensive income or loss. |
Note 1 - Nature of Business a24
Note 1 - Nature of Business and Significant Accounting Policies: Share-based Compensation (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Share-based Compensation | Share-based Compensation The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, "Compensation", which requires fair value measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including restricted stock awards. The Company bases the fair value of stock using the stock price on the date of the approval of the award. The fair value is then expensed over the requisite service periods of the awards, which is generally the performance period and the related amount is recognized in the condensed consolidated statements of operations. |
Note 1 - Nature of Business a25
Note 1 - Nature of Business and Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted ASC 820 which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under this standard certain assets and liabilities must be measured at fair value, and disclosures are required for items measured at fair value. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Companys financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Companys cash is based on quoted prices and therefore classified as Level 1. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect managements assumptions about the assumptions that market participants would use in pricing the asset or liability. A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. Advances from Related Party. Note Payable Vehicle Loan. Line of Credit Payable. The Company had no financial assets or liabilities that are measured at fair value on a recurring basis as of May 31, 2016 and August 31, 2015. |
Note 1 - Nature of Business a26
Note 1 - Nature of Business and Significant Accounting Policies: Segment Information (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Segment Information | Segment Information The Company is organized as a single operating segment, whereby its chief operating decision maker assesses the performance of and allocates resources to the business as a whole. |
Note 1 - Nature of Business a27
Note 1 - Nature of Business and Significant Accounting Policies: Reclassification (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Reclassification | Reclassification Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss. |
Note 1 - Nature of Business a28
Note 1 - Nature of Business and Significant Accounting Policies: Recently Issued Accounting Pronouncements (Policies) | 9 Months Ended |
May 31, 2016 | |
Policies | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2016, accounting guidance was issued to clarify the not yet effective revenue recognition guidance issued in May 2014. This additional guidance does not change the core principle of the revenue recognition guidance issued in May 2014, rather, it provides clarification of accounting for collections of sales taxes as well as recognition of revenue (i) associated with contract modifications, (ii) for noncash consideration, and (iii) based on the collectability of the consideration from the customer. The guidance also specifies when a contract should be considered completed for purposes of applying the transition guidance. The effective date and transition requirements for this guidance are the same as the effective date and transition requirements for the guidance previously issued in 2014, which is effective for interim and annual periods beginning on or after December 15, 2017. The Company not yet determined the impact that this new guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In April 2015, the FASB issued ASU 2015-03 , Interest- Imputation of Interest (Subtopic 835-30) In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern Risks and Uncertainties Other Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Note 1 - Nature of Business a29
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc: Business Acquisition, Pro Forma Information (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Business Acquisition, Pro Forma Information | Consideration paid: Cash $ 273,725 Note payable, short-term 100,000 3,500,000 Common shares of Kush Bottles, Inc. 2,169,650 Total consideration $ 2,543,375 |
Note 1 - Nature of Business a30
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc: Business Combination, Separately Recognized Transactions (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Business Combination, Separately Recognized Transactions | Cash and cash equivalents $ 73,505 Accounts receivable, net 71,667 Inventory 300,901 Prepaid expenses 9,848 Property and equipment, net 76,767 532,688 Accounts payable 230,600 Customer deposits 72,585 Payroll liabilities 9,889 Notes payable, short-term 52,828 365,902 Goodwill 2,376,589 Total consideration $ 2,543,375 |
Note 1 - Nature of Business a31
Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Schedule of Earnings Per Share, Basic and Diluted | Three months ended Nine months ended May 31, 2016 May 31, 2015 May 31, 2016 May 31, 2015 Net income (loss) $ 23,384 $ (76,393) $ 39,981 $ (240,971) Weighted average common shares outstanding for basic EPS 46,525,540 42,284,342 46,667,750 41,726,721 Net effect of dilutive options 1,052,787 - 1,052,787 - Weighted average common shares outstanding for diluted EPS 47,578,327 42,284,342 47,720,537 41,726,721 Basic earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) Diluted earnings (loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.01) |
Note 4 - Property and Equipme32
Note 4 - Property and Equipment: Property, Plant and Equipment (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Property, Plant and Equipment | May 31, 2016 August 31, 2015 Office Equipment $ 49,987 $ 28,955 Machinery and equipment 114,157 68,173 Leasehold improvements 48,566 32,780 Vehicles 116,592 140,609 329,302 270,517 Accumulated Depreciation (103,340) (65,246) $ 225,962 $ 205,271 |
Note 5 - Accrued Expenses and33
Note 5 - Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Schedule of Accrued Liabilities | May 31, 2016 August 31, 2015 Customer deposits $ 121,431 $ 177,493 Accrued compensation 150,005 144,428 Credit card liabilities 78,260 56,748 Sales tax payable 22,064 12,665 $ 371,760 $ 391,334 |
Note 6 - Stockholders' Equity_
Note 6 - Stockholders' Equity: Schedule of Stockholders Equity (Tables) | 9 Months Ended |
May 31, 2016 | |
Tables/Schedules | |
Schedule of Stockholders Equity | Weighted Weighted Average Average Remaining Aggregate No. of Exercise Contractual Intrinsic Options Price Term Value Balance Outstanding, August 31, 2015 1,000,000 $ 0.05 3.46 years $ 595,000 Granted 520,000 1.00 9.99 years 114,400 Exercised - - - - Balance Outstanding, May 31, 2016 1,520,000 $ 0.38 5.25 years $ 1,284,400 Exercisable, May 31, 2016 1,080,000 $ 0.12 3.32 years $ 1,187,600 |
Note 1 - Nature of Business a35
Note 1 - Nature of Business and Significant Accounting Policies: Recapitalization (Details) | Mar. 04, 2014shares |
Details | |
Common Shares Exchanged | 10,000 |
Owned Shares of Company Stock | 32,400,000 |
Note 1 - Nature of Business a36
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc (Details) - USD ($) | May 31, 2016 | Mar. 17, 2016 | Aug. 31, 2015 | Apr. 11, 2015 | Apr. 10, 2015 |
Cash Consideration Paid | $ 273,725 | ||||
Common Stock, Shares Issued | 47,407,541 | 25,000 | 46,132,779 | ||
Total Current Liabilities | $ 898,401 | $ 955,927 | |||
Common Stock, Par Value | $ 0.001 | $ 0.001 | |||
Dank Bottles, LLC | |||||
Cash Consideration Paid | $ 373,725 | $ 273,725 | |||
Common Stock, Shares Issued | 3,500,000 | ||||
Total Current Liabilities | $ 25,002 | ||||
Shares Sold to Accredited Investors | 1,471,112 | ||||
Shares Sold for Cash | $ 912,000 | ||||
Weighted Average Offering Price | $ 0.6199 | ||||
Common Stock, Par Value | $ 0.6199 |
Note 1 - Nature of Business a37
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc: Business Acquisition, Pro Forma Information (Details) | May 31, 2016USD ($) |
Details | |
Cash Consideration Paid | $ 273,725 |
Short Term Note Payable | 100,000 |
Consideration Paid for Common Shares | 2,169,650 |
Consideration Paid | $ 2,543,375 |
Note 1 - Nature of Business a38
Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc: Business Combination, Separately Recognized Transactions (Details) - USD ($) | May 31, 2016 | Aug. 31, 2015 | Apr. 10, 2015 |
Accounts receivable, net of allowance | $ 212,355 | $ 146,392 | |
Inventory | 1,063,657 | 662,368 | |
Prepaids | 520,574 | 153,389 | |
Property and equipment, net | 225,962 | 205,271 | |
Goodwill | $ 2,376,589 | $ 2,376,589 | |
Dank Bottles, LLC | |||
Cash Equivalents, at Carrying Value | $ 73,505 | ||
Accounts receivable, net of allowance | 71,667 | ||
Inventory | 300,901 | ||
Prepaids | 9,848 | ||
Property and equipment, net | 76,767 | ||
Accounts Payable, Current | 230,600 | ||
Customer Deposits, Current | 72,585 | ||
Accounts Payable and Accrued Liabilities | 9,889 | ||
Short Term Notes Payable | 52,828 | ||
Goodwill | 2,376,589 | ||
Total Consideration | $ 2,543,375 |
Note 1 - Nature of Business a39
Note 1 - Nature of Business and Significant Accounting Policies: Going Concern Matters (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
May 31, 2016 | May 31, 2015 | May 31, 2016 | May 31, 2015 | Aug. 31, 2015 | |
Details | |||||
NET INCOME (LOSS) | $ 23,284 | $ (76,393) | $ 39,981 | $ (240,971) | |
Accumulated deficit | $ 708,466 | $ 708,466 | $ 748,447 |
Note 1 - Nature of Business a40
Note 1 - Nature of Business and Significant Accounting Policies: Accounts Receivable (Details) - USD ($) | May 31, 2016 | Aug. 31, 2015 |
Details | ||
Allowance for Doubtful Accounts Receivable | $ 4,860 | $ 5,080 |
Note 1 - Nature of Business a41
Note 1 - Nature of Business and Significant Accounting Policies: Inventory (Details) - USD ($) | May 31, 2016 | Aug. 31, 2015 |
Details | ||
Inventory, Finished Goods, Gross | $ 1,063,657 | $ 662,368 |
Note 1 - Nature of Business a42
Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2016 | May 31, 2015 | May 31, 2016 | May 31, 2015 | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED | 47,578,327 | 42,284,342 | 47,720,537 | 41,726,721 |
BASIC INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
DILUTED INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
Earnings Per Share | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 23,384 | $ (76,393) | $ 39,981 | $ (240,971) |
Weighted Average Number of Shares Outstanding, Basic | 46,525,540 | 42,284,342 | 46,667,750 | 41,726,721 |
Net Effect of Dilutive Options | 1,052,787 | 1,052,787 | ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED | 47,578,327 | 42,284,342 | 47,720,537 | 41,726,721 |
BASIC INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
DILUTED INCOME (LOSS) PER SHARE | $ 0 | $ 0 | $ 0 | $ (0.01) |
Note 1 - Nature of Business a43
Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share (Details) - shares | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,052,787 | 0 |
Note 3 - Related-party Transa44
Note 3 - Related-party Transactions (Details) - USD ($) | 9 Months Ended | |||
May 31, 2016 | May 31, 2015 | Aug. 31, 2015 | Apr. 10, 2015 | |
Details | ||||
Related Party Transaction, Due from (to) Related Party | $ 100,000 | |||
Loan Balance | $ 0 | $ 75,000 | ||
Related Party Tax Expense, Due to Affiliates, Current | $ 127,800 | $ 76,100 |
Note 4 - Property and Equipme45
Note 4 - Property and Equipment: Property, Plant and Equipment (Details) - Fixed Assets - USD ($) | May 31, 2016 | Aug. 31, 2015 |
Furniture and Fixtures, Gross | $ 49,987 | $ 28,955 |
Machinery and Equipment, Gross | 114,157 | 68,173 |
Leasehold Improvements, Gross | 48,566 | 32,780 |
Public Utilities, Property, Plant and Equipment, Vehicles | 116,592 | 140,609 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (103,340) | (65,246) |
Property, Plant and Equipment, Other, Gross | $ 225,962 | $ 205,271 |
Note 4 - Property and Equipme46
Note 4 - Property and Equipment (Details) - USD ($) | 9 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Details | ||
Depreciation | $ 58,278 | $ 16,297 |
Note 5 - Accrued Expenses and47
Note 5 - Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Details) - Accrued Expenses and other current liabilities - USD ($) | May 31, 2016 | Aug. 31, 2015 |
Customer Deposits, Current | $ 121,431 | $ 177,493 |
Accrued Compensation | 150,005 | 144,428 |
Other Liabilities | 78,260 | 56,748 |
Taxes Payable, Current | $ 22,064 | $ 12,665 |
Note 6 - Stockholders' Equity (
Note 6 - Stockholders' Equity (Details) - USD ($) | 9 Months Ended | ||||
May 31, 2016 | Mar. 17, 2016 | Aug. 31, 2015 | |||
Details | |||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 | |||
Common Unit, Authorized | 265,000,000 | ||||
Common Stock, Par Value | $ 0.001 | $ 0.001 | |||
Common Stock, Shares Issued | 47,407,541 | 25,000 | 46,132,779 | ||
Weighted Average Number of Shares, Restricted Stock | 1,074,512 | ||||
Cash | $ 860,035 | ||||
Restricted Common Stock Shares Issued | 172,500 | ||||
Unrestricted Common Stock Shares Issued | 2,750 | ||||
Stock Issued During Period, Value, Issued for Services | $ 118,123 | ||||
Accrued Liabilities, Current | $ 95,197 | ||||
Common stock | 47,408 | [1] | $ 32,250 | $ 46,133 | [1] |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 204,450 | ||||
[1] | $0.001 par value; 265,000,000 shares authorized, 47,407,541 and 46,132,779 shares issued and outstanding, respectively. |
Note 6 - Stockholders' Equity49
Note 6 - Stockholders' Equity: Schedule of Stockholders Equity (Details) - USD ($) | 8 Months Ended | 9 Months Ended |
Aug. 31, 2015 | May 31, 2016 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,000,000 | 1,520,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.05 | $ 0.38 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years 5 months 16 days | 5 years 3 months |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 595,000 | $ 1,284,400 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 520,000 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 1 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term | 9 years 11 months 26 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 1,080,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.12 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 3 years 3 months 25 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 1,187,600 |
Note 7 - Commitments and Cont50
Note 7 - Commitments and Contingencies (Details) - USD ($) | 9 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Details | ||
Other Commitment | $ 147,000 | |
Ground Leases, Net | 2,074 | |
Future Minimum Sublease Rentals, Sale Leaseback Transactions | 633,836 | |
Operating Leases, Rent Expense | $ 153,625 | $ 91,564 |