Kush Bottles Inc (OTCMKTS:KSHB) Just Put Out Its Numbers: Here's What's Important

Kush Bottles Inc (OTCMKTS:KSHB) just put out results from the second fiscal quarter 2017, and the company is running up on the back of release. At time of writing – mid market US on Wednesday – price is up just shy of 10% on the open, and the company is trading for a market cap of more than $145 million at $2.94 a share.After covering the stock on a few occasions over the last six months, and with it failing to turn around (or at least maintain any upside momentum post-turnaround) we've been waiting for it to run and validate some of our longer term expectations. It now looks as though we've got a bottoming out in and around the March 22 lows ($1.74 a share) and that we may see this one finally start to pick up some sustainable upside strength. Current levels, at circa $3, represent key resistance, but if we can get a break today, there's a relatively clean run towards $3.5 initially, and $4.6 beyond that.Anyway, here's a look at the numbers that the company has just put out, and what we're looking for near term as potentially catalyzing a sustained run through, and beyond, the just mentioned key levels.For those new to the company, it's a cannabis play at heart, having basically pivoted to accommodate the coming recreational and medical marijuana industry boom. It used to make packaging for anything consumable, or anything that needed to be sent through the mail without giving out a smell, or leaking or that sort of thing. Now, it follows this model, but targets the cannabis space directly and primarily.That's interesting for us, because as we've said on numerous occasions over the past twelve months and more, any company with a legitimate tie to the cannabis space (and a half way decent management) could become a strong industry player across the next ten years. This one's got the tie, and as the timely pivot from wider market packaging to cannabis focus showed us, management has half an idea what it's doing.So what do the numbers say?Well, they hint at the fact that the company is pushing in the right direction. Revenues for the second quarter of 2017 (which for the purposes of this company's reporting, ended February 28, 2017) came in at $3 million, representing a 65% gain year over year. Gross margins also increased, hitting just short of 36% for the period. Net income dipped slightly, but this is to be expected as the company ramps up in to an expanding market.Most importantly right now, and the metric everyone in the space was looking for, cash came in at $2.8 million – up from the $1 million recorded at August 31, 2016, and working capital comparison sits at $4.6 million and $2.03 million respectively.These aren’t big numbers, sure. But that's not too much of a concern right now. For the small companies in this space we're looking at trends, and this one seems to be heading in the right direction across all the most important metrics.Dilution is still a risk, even with the cash on hand just mentioned. There's a cost to meeting industry expansion, and this cost generally has to be shouldered by shareholders by way of dilutive equity issues. If the company can put the capital raised to good use, however, it should negate any such issue.So what are we looking for going forward?It's all about maintaining a presence right now. The company needs to be smart about its commercialization (read: innovative marketing capital allocation) and get the most for its cash in terms of ROI. Any updates that point towards management's recognition of (and execution towards) this aim should serve to reinforce a buy thesis.We will be updating our subscribers as soon as we know more. For the latest updates on KSHB, sign up below!Disclosure: We have no position in KSHB and have not been compensated for this article.