KushCo (KSHB) 10-Q 11 Jan 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Nov. 30, 2016shares
Document and Entity Information:
Entity Registrant Name	Kush Bottles, Inc.
Document Type	10-Q
Document Period End Date	Nov. 30, 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	49,391,896
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	2,017
Document Fiscal Period Focus	Q1

Kush Bottles, Inc. - Condensed

Kush Bottles, Inc. - Condensed Consolidated Balance Sheets - USD ($)		Nov. 30, 2016	Aug. 31, 2016
Current Assets:
Cash		$ 2,000,439	$ 1,027,003
Accounts receivable, net of allowance		266,018	199,844
Prepaids		882,227	596,456
Inventory		1,236,720	1,142,458
TOTAL CURRENT ASSETS		4,385,404	2,965,761
Goodwill		2,376,589	2,376,589
Deposits		12,220	12,220
Property and equipment, net		593,234	273,597
Total Assets		7,367,447	5,628,167
Current Liabilities:
Accounts payable		546,332	369,636
Accrued expenses and other current liabilities		437,750	549,101
Line of credit
Notes payable- related parties
Notes payable- current portion		20,637	20,247
Total Current Liabilities		1,004,719	938,984
LONG-TERM DEBT
Notes payable		33,950	39,307
TOTAL LIABILITIES		1,038,669	978,291
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock	[1]
Common stock	[2]	49,390	48,300
Additional paid-in capital		7,118,054	5,278,284
Accumulated deficit		(838,666)	(676,708)
Total Stockholders' Equity		6,328,778	4,649,876
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 7,367,447	$ 5,628,167
[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, 49,391,896 and 48,300,162 shares issued and outstanding, respectively.

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Nov. 30, 2016	Aug. 31, 2016
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	49,391,896	48,300,162
Common Stock, Shares Outstanding	49,391,896	48,300,162

Kush Bottles, Inc. - Condensed4

Kush Bottles, Inc. - Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Income Statement
REVENUE	$ 2,472,295	$ 1,720,581
COST OF GOODS SOLD	1,637,652	1,148,209
GROSS PROFIT	834,643	572,372
OPERATING EXPENSES
Depreciation	9,304	5,890
Stock compensation expense	115,244
Selling, general and administrative	847,076	559,283
Total Operating Expenses	971,624	565,173
INCOME (LOSS) FROM OPERATIONS	(136,981)	7,199
OTHER INCOME (EXPENSES)
Other income	(23,944)	19
Interest expense	(1,033)	(2,298)
Total Other Income (Expense)	(24,977)	(2,279)
INCOME (LOSS) BEFORE INCOME TAXES	(161,958)	4,920
PROVISION FOR INCOME TAXES
NET INCOME (LOSS)	$ (161,958)	$ 4,920
BASIC INCOME (LOSS) PER SHARE	$ 0	$ 0
DILUTED INCOME (LOSS) PER SHARE	$ 0	$ 0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC	48,713,496	46,132,779
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED	50,511,299	47,054,237

Kush Bottles, Inc. - Condensed5

Kush Bottles, Inc. - Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS)	$ (161,958)	$ 4,920
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Depreciation	29,735	19,788
Stock compensation expense	115,244
Changes in operating assets and liabilities
Accounts receivable	(66,174)	(12,100)
Prepaids	(366,550)	8,320
Inventory	(94,262)	(257,281)
Deposits
Accounts payable	176,696	328,410
Accrued expenses and other current liabilities	(111,351)	26,736
Net cash used in operating activities	(478,620)	118,793
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(164,976)	(47,282)
Net cash used in investing activities	(164,976)	(47,282)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of related party loan		(33,332)
Repayment of notes payable	(4,967)	(12,442)
Proceeds from sale of stock	1,621,999	71,000
Net cash provided by financing activities	1,617,032	25,226
NET INCREASE IN CASH	973,436	96,737
Cash, beginning of period	1,027,003	201,259
Cash, end of period	2,000,439	297,996
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	1,033	2,298
Cash paid for income taxes
NON-CASH INVESTING AND FINANCING ACTIVITIES
Prepaid services paid in stock	$ 103,617

Note 1 - Nature of Business and

Note 1 - Nature of Business and Significant Accounting Policies	3 Months Ended
	Nov. 30, 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 Company’s 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 Company’s 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. 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. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Our operating results for the three-month period ended November 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ended August 31, 2017, or for any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended August 31, 2016. 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. Cash and Cash Equivalents The Company considers cash and cash equivalents to consist of cash on hand and investments having an orginal maturity of 90 days or less that are readily convertible into cash. As of November 30, 2016 and August 31, 2016, the Company had $2,000,439 and $1,027,003, respectively. 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 Company’s allowance for doubtful accounts was $ 2,000 as of November 30, 2016 and August 31, 2016, respectively. Inventory Inventories are stated at the lower of cost or net realizable value using the first-in first out (FIFO) method. The Company’s inventory consists of finished goods of $ 1,236,720 and $ 1,142,458 as of November 30, 2016 and August 31, 2016, respectively. Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, after the asset is placed in service. Asset lives range from 3 to 7 years. Gains and losses from the retirement or disposition of property and equipment are included in operations in the period incurred. Maintenance and repairs are expensed as incurred. Fair Value of Financial Instruments The fair value of certain of our financial instruments, including cash and cash equivalents, receivables, other current assets, accounts payable, accrued compensation and employee benefits, other accrued liabilities and notes payable, approximate their carrying amounts because of the short-term maturity of these instruments. Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable, which are generally not collateralized. Our policy is to place our cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure. The Company generally does not require collateral from its customers, but its credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. The Company maintains allowances for potential credit losses. A significant portion of the Company’s revenues are derived from the sales of products to the purveyors of cannabis products and services. Goodwill and Other Long-Lived Assets Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. The Company’s management assess goodwill for impairment on an annual basis during the fourth quarter using an August 1 measurement date unless circumstances require a more frequent measurement. When evaluating goodwill for impairment, the Company may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, the Company determines it is not more likely than not that the fair value of goodwill is less than its carrying value, it would bypass the two-step impairment test. Events and circumstances the Company considers in performing the "step zero" qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and the overall financial performance of the reporting units. If the Company concludes that it is more likely than not that a reporting unit's fair value is less than its carrying amount, it would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the goodwill by using discounted cash flow valuation model. These methods require estimates of future revenues, profits, capital expenditures, working capital, and other relevant factors. The Company estimates these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. For fiscal 2016, the Company began its assessment with the step zero qualitative analysis because the fair value substantially exceeded the carrying value goodwill. After evaluating and weighing all relevant events and circumstances, the Company concluded that it is not more likely than not that the fair value of goodwill was less its carrying amounts. Consequently, the Company did not perform a step one quantitative analysis in fiscal 2016. 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: November 30, 2016 November 30, 2015 Net income (loss) $ (161,958) $ 4,920 Weighted average common shares outstanding for basic EPS 48,713,496 46,132,779 Net effect of dilutive options 1,797,803 921,458 Weighted average common shares outstanding for diluted EPS 50,511,299 47,054,237 Basic earnings (loss) per share $ (0.00) $ 0.00 Diluted earnings (loss) per share $ (0.00) $ 0.00 Comprehensive Income (loss) Comprehensive income (loss) is the change in the Company’s equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. During the quarters ended November 30, 2016 and 2015, the Company had no elements of comprehensive income or loss. Revenue Recognition It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 605 "Revenue Recognition". Four basic criteria must be met before revenue can be recognized; (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding fixed nature in selling prices of the products delivered and the collectability of those amounts. The Company has not implemented any specific rebate programs. Provisions for discounts to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. During the quarters ended November 30, 2016 and 2015, we had provisions for sales discounts of $19,457 and $19,034, respectively. The Company has not established a formal customer incentive program, but considers and accomodates discounts to certain customers on a case by case basis, including by way of example, for volume shipping or for certain new customers with orders over a specific discretionary dollar threshold. As of November 30, 2016 and August 31, 2016, the Company had a refund allowance of $0. Consistent with ASC 605-15-25-1, the Company considers factors such as historical return of products, estimated remaining shelf life, price changes from competitors, and introductions of competing products in establishing a refund allowance. The Company recognizes revenues as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. The Company defers any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. Warranty Costs The Company has not had any historical warranty related expenditures from the sales of its products, which if incurred would result in the return of any defective products by customers. Business Combinations Accounting for our acquisitions requires the Company to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations and comprehensive income (loss). Accounting for business combinations requires the Company’s management to make significant estimates and assumptions, especially at the acquisition date including its estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and contingent consideration, where applicable. If management cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, the Company will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Subsequent to the measurement period, changes in the estimates of such contingencies will affect earnings and could have a material effect on the Company’s results of operations and financial position. Examples of critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to: (i) future expected cash flows from product sales; (ii) the acquired company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. In addition, any uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. If applicable, the Company would reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to its preliminary estimates being recorded to goodwill provided that we are within the measurement period. Subsequent to the measurement period or the final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect the Company’s provision for income taxes in our consolidated statements of income and comprehensive income and could have a material impact on our results of operations and financial position. Share-based Compensation The Company account for its stock based award 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 estimates 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 consolidated statements of operations. Advertising The Company conducts advertising for the promotion of its services. In accordance with ASC Topic 720-35-25, advertising costs are charged to operations when incurred. Income Taxes The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized. The Company applies the provisions of ASC 740, "Accounting for Uncertainty in Income Taxes". The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the three months ended November 30, 2015 and the fiscal year ended August 31, 2015, nor were any interest or penalties accrued as of November 30, 2016 and August 31, 2016. 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 Company’s 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 Company’s 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 management’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Application of Valuation Hierarchy A financial instrument’s 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. Note Payable – Vehicle Loan. The Company had no financial assets or liabilities that are measured at fair value on a recurring basis as of November 30, 2016 and August 31, 2016. 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. Recently Issued Accounting Pronouncements In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory" as part of its simplification initiatives. The update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than deferring the recognition until the asset has been sold to an outside party as is required under current GAAP. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a modified retrospective basis through a cumulative-effect adjustment to retained earnings, and early adoption is permitted. The Company is currently evaluating the effect that this update will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.” The update is intended to reduce diversity in practice in how certain transactions are classified and will make eight targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the amendments will apply prospectively as of the earliest date practicable. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures. 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, Compensation—Stock 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 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	3 Months Ended
	Nov. 30, 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 three months ended November 30, 2016 and 2015, three vendors accounted for approximately 47% and 55%, respectively, of total inventory purchases. Customer Concentrations During the three months ended November 30, 2016 and 2015, one customer represented 11% and 13% of the Company's revenues, respectively.

Note 3 - Related-party Transact

Note 3 - Related-party Transactions	3 Months Ended
	Nov. 30, 2016
Notes
Note 3 - Related-party Transactions	NOTE 3 – RELATED-PARTY TRANSACTIONS The Company leases its California and Colorado facilities from related parties. During the three months ended November 30, 2016 and 2015, the Company made rent payments of $50,700 and $42,300, respectively, to these related parties.

Note 4 - Property and Equipment

Note 4 - Property and Equipment	3 Months Ended
	Nov. 30, 2016
Notes
Note 4 - Property and Equipment	NOTE 4 – PROPERTY AND EQUIPMENT The major classes of fixed assets consist of the following as of November 30, 2016 November 30, 2016 August 31, 2016 Office Equipment $ 78,996 $ 71,507 Machinery and equipment 472,806 147,577 Leasehold improvements 63,822 63,323 Vehicles 132,522 116,592 748,146 398,999 Accumulated Depreciation (154,912) (125,402) $ 593,234 $ 273,597 Depreciation expense was $29,735 and $19,788, for the three months ended November 30, 2016 and 2015, respectively.

Note 5 - Accrued Expenses and O

Note 5 - Accrued Expenses and Other Current Liabilities	3 Months Ended
	Nov. 30, 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: November 30, 2016 August 31, 2016 Customer deposits $ 261,029 $ 260,409 Accrued compensation 88,114 178,769 Credit card liabilities 34,139 67,813 Deferred rent 28,756 18,810 Sales tax payable 25,712 23,300 $ 437,750 $ 549,101

Note 6 - Stockholders' Equity

Note 6 - Stockholders' Equity	3 Months Ended
	Nov. 30, 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 November 30, 2016 and August 31, 2016, 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 November 30, 2016 and August 31, 2016, 49,391,896 and 48,300,162 shares were issued and outstanding, respectively. During the three months ended , the Company sold 1,039,095 shares of its common stock to investors in exchange for cash of $ 1,621,999 . Share-based Compensation The Company recorded compensation expense of $115,244 and $0 for the quarters ended November 30, 2016 and 2015, respectively, in connection with the issuance of shares of common stock and options to purchase common stock. During the quarter ended November 30, 2016, the Company issued 52,639 shares of common stock to consultants in exchange for $31,283 of services rendered and $103,617 of prepaid services, for a total of $134,900. The $103,617 of prepaid services is included in prepaid expenses and other current assets on the condensed consolidated balance sheet as of November 30, 2016. 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. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the quarters ended November 30, 2016 and 2015: November 30, 2016 November 30, 2015 Expected term (years) 1-4 N/A Expected volatility 60% N/A Weighted-average volatility 60% N/A Risk-free interest rate 0.85%-1.57% N/A Dividend yield 0% N/A Expected forfeiture rate 33% N/A The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on management's analysis of historical volatility for comparable companies. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. During the quarter ended November 30, 2016, the Company issued 431,500 stock options pursuant to the Company’s 2016 Stock Incentive Plan, which was adopted on February 9, 2016. A summary of the Company’s stock option activity during the quarter ended November 30, 2016 is presented below: Weighted Weighted Average Average Remaining Aggregate No. of Exercise Contractual Intrinsic Options Price Term Value Balance Outstanding, August 31, 2016 2,039,000 $ 0.57 5.91 years $ 2,283,680 Granted 431,500 1.83 9.78 years - Exercised - - - - Forfeited (15,000) 1.00 - - Balance Outstanding, November 30, 2016 2,455,500 $ 0.79 6.56 years $ 6,338,132 Exercisable, November 30, 2016 1,238,750 $ 0.25 3.61 years $ 3,866,384 The weighted-average grant-date fair value of options granted during the quarter ended November 30, 2016 and 2015, was $0.74 and $0, respectively. The weighted-average grant-date fair value of options forfeited during the quarter ended November 30, 2016 was $0.46. There were no options exercised during the quarter ended November 30, 2016. A summary of the status of the Company’s non-vested options as of August 31, 2016, and changes during the year ended August 31, 2016, is presented below: Weighted Average No. of Grant-Date Options Fair Value Nonvested at August 31, 2016 909,000 $ 221,227 Granted 431,500 214,322 Vested (108,750) (83,961) Forfeited (15,000) (6,970) Nonvested at November 30, 2016 1,216,750 $ 344,618 As of November 30, 2016, there was $344,618 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.3 years. The total fair value of shares vested during the quarter ended November 30, 2016 was $83,961. This amount is included in stock compensation expense on the consolidated statements of operations.

Note 7 - Commitments and Contin

Note 7 - Commitments and Contingencies	3 Months Ended
	Nov. 30, 2016
Notes
Note 7 - Commitments and Contingencies	NOTE 7 – COMMITMENTS AND CONTINGENCIES Lease The Company’s corporate head-quarters and primary distribution center is located in Santa Ana, California. The California facility lease expires on August 1, 2018 and requires monthly payments of $10,000 in fiscal 17 and $11,000 in fiscal 18, for a total of $ 222,000 in lease commitments through the end of term. On April 1, 2016, the Company entered into a new sublease agreement for a facility located in Woodinville, Washington. The lease commenced on July 15, 2016 and expires on January 31, 2020, and requires escalating monthly payments that range between $14,985 and $16,022, for a total of $ 588,881 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. On September 1, 2016, the Colorado facility lease was amended to include additional office space. The lease runs through March 31, 2020 and requires escalating monthly payments, ranging between $4,800 and $7,300, for a total of $285,600 in future lease commitments through the end of the term. During the quarters ended November 30, 2016 and 2015, the Company recognized $ 94,418 and $ 48,516 , respectively, of rental expense, related to its office, retail and warehouse space. Minimum future commitments under non-cancelable operating leases and other obligations were as follows at November 30, 2016: 2017 $ 387,295 2018 370,570 2019 277,372 2020 61,244 $ 1,096,481 Other Commitments In the ordinary course of business, the Company may enter into contractual purchase obligations and other agreements that are legally binding and specify certain minimum payment terms. The Company had no such agreements as of November 30, 2016. 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 November 30, 2016.

Note 8 - Subsequent Events

Note 8 - Subsequent Events	3 Months Ended
	Nov. 30, 2016
Notes
Note 8 - Subsequent Events	NOTE 8 – SUBSEQUENT EVENTS Subsequent issuance of Common Stock Subsequent to November 30, 2016 and through the date of this filing, the Company sold 315,500 shares of its common stock to investors in exchange for cash consideration of $631,000.

Note 1 - Nature of Business a14

Note 1 - Nature of Business and Significant Accounting Policies: Nature of Business (Policies)	3 Months Ended
	Nov. 30, 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 Company’s 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)	3 Months Ended
	Nov. 30, 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 Company’s 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)	3 Months Ended
	Nov. 30, 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. 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)	3 Months Ended
	Nov. 30, 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. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Our operating results for the three-month period ended November 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ended August 31, 2017, or for any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended August 31, 2016.

Note 1 - Nature of Business a18

Note 1 - Nature of Business and Significant Accounting Policies: Use of Estimates (Policies)	3 Months Ended
	Nov. 30, 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 a19

Note 1 - Nature of Business and Significant Accounting Policies: Cash and Cash Equivalents (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers cash and cash equivalents to consist of cash on hand and investments having an orginal maturity of 90 days or less that are readily convertible into cash. As of November 30, 2016 and August 31, 2016, the Company had $2,000,439 and $1,027,003, respectively.

Note 1 - Nature of Business a20

Note 1 - Nature of Business and Significant Accounting Policies: Accounts Receivable (Policies)	3 Months Ended
	Nov. 30, 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 Company’s allowance for doubtful accounts was $ 2,000 as of November 30, 2016 and August 31, 2016, respectively.

Note 1 - Nature of Business a21

Note 1 - Nature of Business and Significant Accounting Policies: Inventory (Policies)	3 Months Ended
	Nov. 30, 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 Company’s inventory consists of finished goods of $ 1,236,720 and $ 1,142,458 as of November 30, 2016 and August 31, 2016, respectively.

Note 1 - Nature of Business a22

Note 1 - Nature of Business and Significant Accounting Policies: Property and Equipment (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Property and Equipment	Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, after the asset is placed in service. Asset lives range from 3 to 7 years. Gains and losses from the retirement or disposition of property and equipment are included in operations in the period incurred. Maintenance and repairs are expensed as incurred.

Note 1 - Nature of Business a23

Note 1 - Nature of Business and Significant Accounting Policies: Fair Value of Financial Instruments (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Fair Value of Financial Instruments	Fair Value of Financial Instruments The fair value of certain of our financial instruments, including cash and cash equivalents, receivables, other current assets, accounts payable, accrued compensation and employee benefits, other accrued liabilities and notes payable, approximate their carrying amounts because of the short-term maturity of these instruments.
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 Company’s 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 Company’s 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 management’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Application of Valuation Hierarchy A financial instrument’s 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. Note Payable – Vehicle Loan. The Company had no financial assets or liabilities that are measured at fair value on a recurring basis as of November 30, 2016 and August 31, 2016.

Note 1 - Nature of Business a24

Note 1 - Nature of Business and Significant Accounting Policies: Concentration of Risk (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Concentration of Risk	Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable, which are generally not collateralized. Our policy is to place our cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure. The Company generally does not require collateral from its customers, but its credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. The Company maintains allowances for potential credit losses. A significant portion of the Company’s revenues are derived from the sales of products to the purveyors of cannabis products and services.

Note 1 - Nature of Business a25

Note 1 - Nature of Business and Significant Accounting Policies: Goodwill and Other Long-lived Assets (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Goodwill and Other Long-lived Assets	Goodwill and Other Long-Lived Assets Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. The Company’s management assess goodwill for impairment on an annual basis during the fourth quarter using an August 1 measurement date unless circumstances require a more frequent measurement. When evaluating goodwill for impairment, the Company may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, the Company determines it is not more likely than not that the fair value of goodwill is less than its carrying value, it would bypass the two-step impairment test. Events and circumstances the Company considers in performing the "step zero" qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and the overall financial performance of the reporting units. If the Company concludes that it is more likely than not that a reporting unit's fair value is less than its carrying amount, it would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the goodwill by using discounted cash flow valuation model. These methods require estimates of future revenues, profits, capital expenditures, working capital, and other relevant factors. The Company estimates these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. For fiscal 2016, the Company began its assessment with the step zero qualitative analysis because the fair value substantially exceeded the carrying value goodwill. After evaluating and weighing all relevant events and circumstances, the Company concluded that it is not more likely than not that the fair value of goodwill was less its carrying amounts. Consequently, the Company did not perform a step one quantitative analysis in fiscal 2016.

Note 1 - Nature of Business a26

Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share (Policies)	3 Months Ended
	Nov. 30, 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: November 30, 2016 November 30, 2015 Net income (loss) $ (161,958) $ 4,920 Weighted average common shares outstanding for basic EPS 48,713,496 46,132,779 Net effect of dilutive options 1,797,803 921,458 Weighted average common shares outstanding for diluted EPS 50,511,299 47,054,237 Basic earnings (loss) per share $ (0.00) $ 0.00 Diluted earnings (loss) per share $ (0.00) $ 0.00

Note 1 - Nature of Business a27

Note 1 - Nature of Business and Significant Accounting Policies: Comprehensive Income (loss) (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Comprehensive Income (loss)	Comprehensive Income (loss) Comprehensive income (loss) is the change in the Company’s equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. During the quarters ended November 30, 2016 and 2015, the Company had no elements of comprehensive income or loss.

Note 1 - Nature of Business a28

Note 1 - Nature of Business and Significant Accounting Policies: Revenue Recognition (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Revenue Recognition	Revenue Recognition It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 605 "Revenue Recognition". Four basic criteria must be met before revenue can be recognized; (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding fixed nature in selling prices of the products delivered and the collectability of those amounts. The Company has not implemented any specific rebate programs. Provisions for discounts to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. During the quarters ended November 30, 2016 and 2015, we had provisions for sales discounts of $19,457 and $19,034, respectively. The Company has not established a formal customer incentive program, but considers and accomodates discounts to certain customers on a case by case basis, including by way of example, for volume shipping or for certain new customers with orders over a specific discretionary dollar threshold. As of November 30, 2016 and August 31, 2016, the Company had a refund allowance of $0. Consistent with ASC 605-15-25-1, the Company considers factors such as historical return of products, estimated remaining shelf life, price changes from competitors, and introductions of competing products in establishing a refund allowance. The Company recognizes revenues as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. The Company defers any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Note 1 - Nature of Business a29

Note 1 - Nature of Business and Significant Accounting Policies: Warranty Costs (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Warranty Costs	Warranty Costs The Company has not had any historical warranty related expenditures from the sales of its products, which if incurred would result in the return of any defective products by customers.

Note 1 - Nature of Business a30

Note 1 - Nature of Business and Significant Accounting Policies: Business Combinations (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Business Combinations	Business Combinations Accounting for our acquisitions requires the Company to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations and comprehensive income (loss). Accounting for business combinations requires the Company’s management to make significant estimates and assumptions, especially at the acquisition date including its estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and contingent consideration, where applicable. If management cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, the Company will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Subsequent to the measurement period, changes in the estimates of such contingencies will affect earnings and could have a material effect on the Company’s results of operations and financial position. Examples of critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to: (i) future expected cash flows from product sales; (ii) the acquired company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. In addition, any uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. If applicable, the Company would reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to its preliminary estimates being recorded to goodwill provided that we are within the measurement period. Subsequent to the measurement period or the final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect the Company’s provision for income taxes in our consolidated statements of income and comprehensive income and could have a material impact on our results of operations and financial position.

Note 1 - Nature of Business a31

Note 1 - Nature of Business and Significant Accounting Policies: Share-based Compensation (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Share-based Compensation	Share-based Compensation The Company account for its stock based award 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 estimates 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 consolidated statements of operations.

Note 1 - Nature of Business a32

Note 1 - Nature of Business and Significant Accounting Policies: Advertising (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Advertising	Advertising The Company conducts advertising for the promotion of its services. In accordance with ASC Topic 720-35-25, advertising costs are charged to operations when incurred.

Note 1 - Nature of Business a33

Note 1 - Nature of Business and Significant Accounting Policies: Income Taxes (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Income Taxes	Income Taxes The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized. The Company applies the provisions of ASC 740, "Accounting for Uncertainty in Income Taxes". The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the three months ended November 30, 2015 and the fiscal year ended August 31, 2015, nor were any interest or penalties accrued as of November 30, 2016 and August 31, 2016.

Note 1 - Nature of Business a34

Note 1 - Nature of Business and Significant Accounting Policies: Segment Information (Policies)	3 Months Ended
	Nov. 30, 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 a35

Note 1 - Nature of Business and Significant Accounting Policies: Recently Issued Accounting Pronouncements (Policies)	3 Months Ended
	Nov. 30, 2016
Policies
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory" as part of its simplification initiatives. The update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than deferring the recognition until the asset has been sold to an outside party as is required under current GAAP. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a modified retrospective basis through a cumulative-effect adjustment to retained earnings, and early adoption is permitted. The Company is currently evaluating the effect that this update will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.” The update is intended to reduce diversity in practice in how certain transactions are classified and will make eight targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the amendments will apply prospectively as of the earliest date practicable. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures. 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, Compensation—Stock 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 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 a36

Note 1 - Nature of Business and Significant Accounting Policies: Earnings (loss) Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Schedule of Earnings Per Share, Basic and Diluted	November 30, 2016 November 30, 2015 Net income (loss) $ (161,958) $ 4,920 Weighted average common shares outstanding for basic EPS 48,713,496 46,132,779 Net effect of dilutive options 1,797,803 921,458 Weighted average common shares outstanding for diluted EPS 50,511,299 47,054,237 Basic earnings (loss) per share $ (0.00) $ 0.00 Diluted earnings (loss) per share $ (0.00) $ 0.00

Note 4 - Property and Equipme37

Note 4 - Property and Equipment: Property, Plant and Equipment (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Property, Plant and Equipment	November 30, 2016 August 31, 2016 Office Equipment $ 78,996 $ 71,507 Machinery and equipment 472,806 147,577 Leasehold improvements 63,822 63,323 Vehicles 132,522 116,592 748,146 398,999 Accumulated Depreciation (154,912) (125,402) $ 593,234 $ 273,597

Note 5 - Accrued Expenses and38

Note 5 - Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Schedule of Accrued Liabilities	November 30, 2016 August 31, 2016 Customer deposits $ 261,029 $ 260,409 Accrued compensation 88,114 178,769 Credit card liabilities 34,139 67,813 Deferred rent 28,756 18,810 Sales tax payable 25,712 23,300 $ 437,750 $ 549,101

Note 6 - Stockholders' Equity_

Note 6 - Stockholders' Equity: Schedule of Assumptions Used (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Schedule of Assumptions Used	November 30, 2016 November 30, 2015 Expected term (years) 1-4 N/A Expected volatility 60% N/A Weighted-average volatility 60% N/A Risk-free interest rate 0.85%-1.57% N/A Dividend yield 0% N/A Expected forfeiture rate 33% N/A

Note 6 - Stockholders' Equity40

Note 6 - Stockholders' Equity: Schedule of Stockholders Equity (Tables)	3 Months Ended
	Nov. 30, 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, 2016 2,039,000 $ 0.57 5.91 years $ 2,283,680 Granted 431,500 1.83 9.78 years - Exercised - - - - Forfeited (15,000) 1.00 - - Balance Outstanding, November 30, 2016 2,455,500 $ 0.79 6.56 years $ 6,338,132 Exercisable, November 30, 2016 1,238,750 $ 0.25 3.61 years $ 3,866,384

Note 6 - Stockholders' Equity41

Note 6 - Stockholders' Equity: Schedule of Nonvested Share Activity (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Schedule of Nonvested Share Activity	Weighted Average No. of Grant-Date Options Fair Value Nonvested at August 31, 2016 909,000 $ 221,227 Granted 431,500 214,322 Vested (108,750) (83,961) Forfeited (15,000) (6,970) Nonvested at November 30, 2016 1,216,750 $ 344,618

Note 7 - Commitments and Cont42

Note 7 - Commitments and Contingencies: Other Commitments (Tables)	3 Months Ended
	Nov. 30, 2016
Tables/Schedules
Other Commitments	2017 $ 387,295 2018 370,570 2019 277,372 2020 61,244 $ 1,096,481

Note 1 - Nature of Business a43

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 a44

Note 1 - Nature of Business and Significant Accounting Policies: Acquisition of Dank Bottles, Llc (Details) - USD ($)	Nov. 30, 2016	Aug. 31, 2016	Apr. 11, 2015	Apr. 10, 2015
Common Stock, Shares Issued	49,391,896	48,300,162
Dank Bottles, LLC
CashConsiderationPaid			$ 373,725
Common Stock, Shares Issued				3,500,000

Note 1 - Nature of Business a45

Note 1 - Nature of Business and Significant Accounting Policies: Accounts Receivable (Details)	Nov. 30, 2016USD ($)
Details
Allowance for Doubtful Accounts Receivable	$ 2,000

Note 1 - Nature of Business a46

Note 1 - Nature of Business and Significant Accounting Policies: Inventory (Details) - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Details
Inventory, Finished Goods, Gross	$ 1,236,720	$ 1,142,458

Note 1 - Nature of Business a47

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
	Nov. 30, 2016	Nov. 30, 2015
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED	50,511,299	47,054,237
BASIC INCOME (LOSS) PER SHARE	$ 0	$ 0
DILUTED INCOME (LOSS) PER SHARE	$ 0	$ 0
Earnings Per Share
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ (161,958)	$ 4,920
Weighted Average Number of Shares Outstanding, Basic	48,713,496	46,132,779
Net Effect of Dilutive Options	1,797,803	921,458
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- DILUTED	50,511,299	47,054,237
BASIC INCOME (LOSS) PER SHARE	$ 0	$ 0
DILUTED INCOME (LOSS) PER SHARE	$ 0	$ 0

Note 3 - Related-party Transa48

Note 3 - Related-party Transactions (Details) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Details
Related Party Tax Expense, Due to Affiliates, Current	$ 50,700	$ 42,300

Note 4 - Property and Equipme49

Note 4 - Property and Equipment: Property, Plant and Equipment (Details) - Fixed Assets - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Furniture and Fixtures, Gross	$ 78,996	$ 71,507
Machinery and Equipment, Gross	472,806	147,577
Leasehold Improvements, Gross	63,822	63,323
Public Utilities, Property, Plant and Equipment, Vehicles	132,522	116,592
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(154,912)	(125,402)
Property, Plant and Equipment, Other, Gross	$ 593,234	$ 273,597

Note 5 - Accrued Expenses and50

Note 5 - Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Details) - Accrued Expenses and other current liabilities - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Customer Deposits, Current	$ 261,029	$ 260,409
Accrued Compensation	88,114	178,769
Other Liabilities	34,139	67,813
Deferred Tax Liabilities, Net, Current	28,756	18,810
Taxes Payable, Current	$ 25,712	$ 23,300

Note 6 - Stockholders' Equity (

Note 6 - Stockholders' Equity (Details) - USD ($)	3 Months Ended
	Nov. 30, 2016	Aug. 31, 2016
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	49,391,896	48,300,162
Weighted Average Number of Shares, Restricted Stock	1,039,095
Cash	$ 1,621,999
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 344,618

Note 6 - Stockholders' Equity52

Note 6 - Stockholders' Equity: Schedule of Assumptions Used (Details)	3 Months Ended
	Nov. 30, 2016
Details
Expected Term Years, Minimum	1
Expected Term Years, Maximum	4
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	60.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate	60.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum	0.85%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum	1.57%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Expected Forfeiture Rate	33.00%

Note 6 - Stockholders' Equity53

Note 6 - Stockholders' Equity: Schedule of Stockholders Equity (Details) - USD ($)	3 Months Ended	20 Months Ended
	Nov. 30, 2016	Aug. 31, 2016
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	2,455,500	2,039,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.79	$ 0.57
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	6 years 6 months 22 days	5 years 10 months 28 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	$ 6,338,132	$ 2,283,680
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	431,500
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 1.83
Weighted Average Remaining Contractual Term Granted	9 years 9 months 11 days
Stock Issued During Period, Shares, Share-based Compensation, Forfeited	(15,000)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 1
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	1,238,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 0.25
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	3 years 7 months 10 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value	$ 3,866,384

Note 6 - Stockholders' Equity54

Note 6 - Stockholders' Equity: Schedule of Nonvested Share Activity (Details) - USD ($)	3 Months Ended
	Nov. 30, 2016	Aug. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	431,500
Nonvested
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	1,216,750	909,000
Nonvested Weighted Average Grant Date Fair Value	$ 344,618	$ 221,227
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	431,500
Weighted Average Grant Date Fair Value Granted	$ 214,322
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	(108,750)
Weighted Average Grant Date Fair Value Vested	$ (83,961)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(15,000)
Weighted Average Grant Date Fair Value Fofeited	$ (6,970)

Note 7 - Commitments and Cont55

Note 7 - Commitments and Contingencies (Details) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Details
Other Commitment	$ 222,000
Future Minimum Sublease Rentals, Sale Leaseback Transactions	588,881
Operating Leases, Rent Expense	$ 94,418	$ 48,516

Note 7 - Commitments and Cont56

Note 7 - Commitments and Contingencies: Other Commitments (Details)	Nov. 30, 2016USD ($)
Details
Operating Leases, Future Minimum Payments, Due in Rolling Year Two	$ 387,295
Operating Leases, Future Minimum Payments, Due in Rolling Year Three	370,570
Operating Leases, Future Minimum Payments, Due in Rolling Year Four	277,372
Operating Leases, Future Minimum Payments, Due in Rolling Year Five	61,244
Operating Leases, Future Minimum Payments Due	$ 1,096,481