SCHWAZZE ANNOUNCES FOURTH QUARTER 2022 & YEAR-END 2022 RESULTS
OTCQX: SHWZ
NEO: SHWZ
Record 2022 Revenue Increases 47% to
Company Continues to Grow Positive Cash Flow from Operations in Fourth Quarter and Year-End 2022
Expansion into New Mexico Market as well as Colorado Acquisitions Add 23 Retail Dispensaries, One Manufacturing and Four Operating Cultivation Facilities
Conference Call & Webcast Scheduled for Today –
Full Year 2022 Financial Summary:
- Revenues of
$159.4 million , an increase of 47% compared to$108.4 million in 2021 - Gross Profit of
$85.0 million , an increase of 72% compared to$49.4 million in 2021 - Net Loss of
($18.5) million compared to Net Income of$14.5 million for 2021, driven by an impairment charge of$8.0 million , interest expense of$30.1 million , and loss on disposition of assets of$4.7 million - Adjusted EBITDA of
$52.0 million was 33% of revenue, compared to$32.2 million and 30% of revenue in 2021 - Cash Flow from operations was
$11.4 million compared to$8.4 million in 2021 - Retail Sales of
$141.3 million , an increase of 92% compared to$73.8 million in 2021 - Two-year stacked identical retail sales ("Stacked IDs")(1) for
Colorado andNew Mexico were 7.9%
Q4 2022 Financial Summary:
- Revenues of
$40.1 million , an increase of 51% compared to$26.5 million in Q4 2021 - Gross Profit of
$23.0 million , an increase of 89% compared to Q4 2021 - Net Loss of (
$27.3 ) compared to Net Income of$12.8 million for Q4 2021 - Adjusted EBITDA of
$13.3 million was 33% of revenue, compared to$7.5 million and 28% of revenue for Q4 2021 - Cash Flow from operations for the quarter was
$5.4 compared to$3.6 million for Q4 2021 - Retail sales of
$36.9 million , an increase of 87% over$19.7 million for Q4 2021 - Stacked IDs(1) for
Colorado andNew Mexico were 5.3%
Accomplishments for 2022 and Q1 2023
In 2022, the Company completed seven acquisitions and opened six new stores not related to acquisitions, which increased the Company's retail presence from 18 dispensaries as of
Recent Developments
- Rolled out enhanced custom eCommerce platform in
New Mexico forR.Greenleaf - Opened two new
R.Greenleaf locations inNew Mexico – Paseo andCarlsbad - Signed definitive agreement to acquire two retail dispensaries in Garden City and
Fort Collins, Colorado , two attractive markets currently not served
2022 Business Highlights and Significant Achievements
- Entered the
New Mexico market with the acquisition of ten retail locations, four indoor cultivation facilities and one manufacturing facility, establishing Schwazze as a regionally focused multi-state operator (MSO) - Opened six new stores in
New Mexico underR.Greenleaf banner located in or near theUniversity of New Mexico ,Los Lunas ,Clovis ,Ruidoso ,Sunland Park andAlamogordo - Acquired two retail dispensaries in
Boulder, Colorado - Acquired an indoor cultivation facility in
Denver, Colorado - Acquired two
Emerald Field retail dispensaries inGlendale andManitou Springs, Colorado - Acquired one retail dispensary and one indoor cultivation facility in
Denver, Colorado - Acquired two retail dispensaries in
Aurora andDenver, Colorado - Negotiated exclusive licensing, manufacturing and distribution agreement with Lowell Farms and launched premium pre-rolls in both
Colorado andNew Mexico - Launched new and enhanced custom eCommerce platform for Star Buds
"In 2022, Schwazze continued to execute its strategy to "go deep" in our operating states and build customer loyalty and share," stated
"While we had seasonally lower quarter over quarter revenues, we recorded a solid fourth quarter and outpaced retail sales in the state of
2022 Results of Operations
Consolidated revenues for 2022, totaled
Cost of goods and services for 2022, totaled
Gross profit increased to
Operating expenses for 2022, totaled
Other expense for 2022 was
As a result of the factors discussed above, Schwazze generated a net loss of
Adjusted EBITDA for the year was
For 2022, the Company generated positive operating cash flow of
|
(1) |
Stacked IDs are presented as a percentage that indicates the relative increase or decrease to revenue for certain retail stores from the previous two years. Stacked IDs are calculated by comparing revenue from sales for all dispensaries owned by the Company and open for operations for more than one year against the revenue from the sales for the same dispensaries for the previous two years. When the Company reports Stacked IDs for stores that it has not owned for more than one year, the comparison is made against validated sales data from prior owners of such stores provided to the Company upon acquisition and/or publicly available sales and revenue data. The Company did not own all the assets and entities in part of 2022, 2021 and 2020 and is using unaudited numbers for this comparison. |
|
Adjusted EBITDA represents income (loss) from operations, as reported, before tax, adjusted to exclude non-recurring items, other non-cash items, including stock-based compensation expense, depreciation, and amortization, and further adjusted to remove acquisition and capital raise related costs, and other one-time expenses, such as severance, retention, and employee relocation. The Company uses adjusted EBITDA as it believes it better explains the results of its core business. |
|
Webcast –
Investors and stakeholders may participate in the conference call by dialing 416-764-8650 or by dialing North American toll free 1-888-664-6383 or listen to the webcast from the Company's website at https://ir.schwazze.com The webcast will be available on the Company's website and on replay until
Following their prepared remarks, Company management will answer investor questions. Investors may submit questions in advance or during the conference call itself through the weblink: https://app.webinar.net/x0q6rpnP84n This weblink has been posted to the Company's website and will be archived on the website. All Company SEC filings can also be accessed on the Company website at https://ir.schwazze.com/sec-filings.
About Schwazze
Schwazze (OTCQX: SHWZ; NEO: SHWZ) is building a premier vertically integrated regional cannabis company with assets in
Forward-Looking Statements
This press release contains "forward-looking statements." Such statements may be preceded by the words "may," "will," "could," "would," "should," "expect," "intends," "plans," "strategy," "prospects," "anticipate," "believe," "approximately," "estimate," "predict," "project," "potential," "continue," "ongoing," or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are not guarantees of future events or performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control and cannot be predicted or quantified. Consequently, actual events and results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) regulatory limitations on our products and services and the uncertainty in the application of federal, state, and local laws to our business, and any changes in such laws; (ii) our ability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (iii) our ability to identify, consummate, and integrate anticipated acquisitions; (iv) general industry and economic conditions; (v) our ability to access adequate capital upon terms and conditions that are acceptable to us; (vi) our ability to pay interest and principal on outstanding debt when due; (vii) volatility in credit and market conditions; (viii) the loss of one or more key executives or other key employees; and (ix) other risks and uncertainties related to the cannabis market and our business strategy. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Years Ended
Expressed in
|
|
|
|||||
|
2022 |
2021 |
|||||
|
(Audited) |
(Audited) |
|||||
|
ASSETS |
||||||
|
Current assets |
||||||
|
Cash and cash equivalents |
$ |
38,949,253 |
$ |
106,400,216 |
||
|
Accounts receivable, net of allowance for doubtful accounts |
4,471,978 |
3,866,828 |
||||
|
Inventory |
22,554,182 |
11,121,997 |
||||
|
Note receivable - current, net |
11,944 |
— |
||||
|
Note receivable - related party |
— |
— |
||||
|
Marketable securities, net of unrealized loss of |
454,283 |
493,553 |
||||
|
Prepaid expenses and other current assets |
5,293,393 |
2,523,214 |
||||
|
Total current assets |
71,735,033 |
124,405,808 |
||||
|
Non-current assets |
||||||
|
Fixed assets, net accumulated depreciation of |
27,089,026 |
10,253,226 |
||||
|
Investments |
2,000,000 |
— |
||||
|
|
94,643,581 |
43,316,267 |
||||
|
Intangible assets, net accumulated amortization of |
107,726,718 |
97,582,330 |
||||
|
Note receivable – noncurrent, net |
— |
143,333 |
||||
|
Accounts receivable – litigation |
— |
303,086 |
||||
|
Other noncurrent assets |
1,527,256 |
514,962 |
||||
|
Operating lease right of use assets |
18,199,399 |
8,511,780 |
||||
|
Total non-current assets |
251,185,980 |
160,624,984 |
||||
|
Total assets |
$ |
322,921,013 |
$ |
285,030,792 |
||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
|
Current liabilities |
||||||
|
Accounts payable |
$ |
7,886,893 |
$ |
2,548,885 |
||
|
Accounts payable - related party |
22,380 |
36,820 |
||||
|
Accrued expenses |
10,314,958 |
5,592,222 |
||||
|
Derivative liabilities |
16,508,253 |
34,923,013 |
||||
|
Notes payable - related party |
— |
134,498 |
||||
|
Lease liabilities - current |
3,139,289 |
— |
||||
|
Current portion of long term debt |
2,250,000 |
— |
||||
|
Income taxes payable |
7,297,815 |
2,027,741 |
||||
|
Total current liabilities |
47,419,588 |
45,263,179 |
||||
|
Long term debt, net of debt discount and issuance costs |
125,521,520 |
97,482,468 |
||||
|
Lease liabilities |
17,314,464 |
8,715,480 |
||||
|
Deferred income taxes, net |
502,070 |
— |
||||
|
Total long-term liabilities |
143,338,054 |
106,197,948 |
||||
|
Total liabilities |
190,757,642 |
151,461,127 |
||||
|
Commitments and contingencies (Note 17) |
— |
— |
||||
|
Stockholders' equity |
||||||
|
Preferred stock, |
87 |
87 |
||||
|
Common stock, |
56,353 |
45,485 |
||||
|
Additional paid-in capital |
180,381,640 |
162,815,097 |
||||
|
Accumulated deficit |
(46,241,582) |
(27,773,968) |
||||
|
Common stock held in treasury, at cost, 920,149 shares held as of |
(2,033,127) |
(1,517,036) |
||||
|
Total stockholders' equity |
132,163,371 |
133,569,665 |
||||
|
Total liabilities and stockholders' equity |
$ |
322,921,013 |
$ |
285,030,792 |
||
|
See accompanying notes to the consolidated financial statements |
||||||
MEDICINE MAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) AND INCOME
For the Years Ended
Expressed in
|
Qtr Ended |
Qtr Ended |
Year Ended |
Year Ended |
|||||
|
|
|
|
|
|||||
|
2022 |
2021 |
2022 |
2021 |
|||||
|
(Un-audited) |
(Un-audited) |
(Audited) |
(Audited) |
|||||
|
Operating revenues |
||||||||
|
Retail |
$ |
36,868,429 |
$ |
19,677,130 |
$ |
141,254,893 |
$ |
73,761,010 |
|
Wholesale |
3,158,670 |
6,779,126 |
17,819,938 |
34,434,091 |
||||
|
Other |
120,188 |
59,722 |
304,388 |
225,138 |
||||
|
Total revenue |
40,147,287 |
26,515,978 |
159,379,219 |
108,420,239 |
||||
|
Total cost of goods and services |
17,176,229 |
14,373,780 |
74,349,421 |
59,066,545 |
||||
|
Gross profit |
22,971,058 |
12,142,198 |
85,029,798 |
49,353,694 |
||||
|
Operating expenses |
||||||||
|
Selling, general and administrative expenses |
9,152,587 |
3,035,837 |
29,398,324 |
16,616,306 |
||||
|
Professional services |
993,215 |
880,238 |
6,722,554 |
5,346,934 |
||||
|
Loss on impairment |
8,011,405 |
- |
8,011,405 |
- |
||||
|
Salaries |
6,435,095 |
3,437,676 |
25,369,968 |
11,943,409 |
||||
|
Stock based compensation |
883,890 |
1,172,291 |
2,672,713 |
5,037,879 |
||||
|
Total operating expenses |
25,476,192 |
8,526,042 |
72,174,964 |
38,944,528 |
||||
|
Income from operations |
(2,505,134) |
3,616,156 |
12,854,834 |
10,409,166 |
||||
|
Other income (expense) |
||||||||
|
Interest expense, net |
(6,827,557) |
(2,487,533) |
(30,139,645) |
(7,014,279) |
||||
|
Gain on forfeiture of contingent liabilities |
- |
- |
- |
- |
||||
|
Unrealized gain on derivative liabilities |
(9,690,200) |
14,093,391 |
18,414,760 |
15,061,142 |
||||
|
Other income |
3,736 |
- |
24,136 |
- |
||||
|
Loss on business disposition |
(4,684,366) |
- |
(4,684,366) |
- |
||||
|
Gain on sale of assets |
- |
- |
- |
242,494 |
||||
|
Unrealized (loss) gain on investments |
3,083 |
6,086 |
(39,270) |
216,771 |
||||
|
Total other (expense) income |
(21,195,304) |
11,611,944 |
(16,424,385) |
8,506,128 |
||||
|
Pre-tax net (loss) income |
$ |
(23,700,438) |
$ |
15,228,100 |
$ |
(3,569,551) |
$ |
18,915,294 |
|
Provision for income taxes |
3,638,695 |
2,398,259 |
14,898,064 |
4,396,164 |
||||
|
Net (loss) income |
$ |
(27,339,133) |
$ |
12,829,841 |
$ |
(18,467,615) |
$ |
14,519,130 |
|
Less: Accumulated preferred stock dividends for the period |
(2,508,677) |
(7,346,153) |
(7,802,809) |
(7,346,153) |
||||
|
Net income attributable to common stockholders |
$ |
(29,847,810) |
$ |
5,483,688 |
$ |
(26,270,424) |
$ |
7,172,977 |
|
Earnings (loss) per share attributable to common shareholders |
||||||||
|
Basic (loss) earnings per share |
$ |
(0.53) |
$ |
0.12 |
$ |
(0.49) |
$ |
0.17 |
|
Diluted (loss) earnings per share |
$ |
(0.53) |
$ |
(0.07) |
$ |
(0.49) |
$ |
(0.06) |
|
Weighted average number of shares outstanding - basic |
56,377,351 |
44,145,709 |
54,154,047 |
43,339,092 |
||||
|
Weighted average number of shares outstanding - diluted |
56,377,351 |
102,175,575 |
54,154,047 |
101,368,958 |
||||
|
Comprehensive (loss) income |
$ |
(29,847,810) |
$ |
5,483,688 |
$ |
(26,270,424) |
$ |
7,172,977 |
|
See accompanying notes to the consolidated financial statements |
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters & Years Ended
Expressed in
|
Qtr Ended |
Qtr Ended |
Year Ended |
Year Ended |
|||||
|
|
|
|
|
|||||
|
2022 |
2021 |
2022 |
2021 |
|||||
|
(Un-audited) |
(Un-audited) |
(Audited) |
(Audited) |
|||||
|
Cash flows from operating activities: |
||||||||
|
Net income (loss) for the period |
$ |
(27,339,133) |
$ |
12,829,841 |
$ |
(18,467,615) |
$ |
14,519,130 |
|
Adjustments to reconcile net income to cash for operating activities |
||||||||
|
Depreciation and amortization |
2,682,686 |
797,037 |
11,012,453 |
8,576,865 |
||||
|
Non-cash interest expense |
981,369 |
- |
4,118,391 |
- |
||||
|
Impairment of goodwill and intangibles |
8,011,080 |
- |
8,011,080 |
- |
||||
|
Non-cash lease expense |
481,779 |
- |
975,561 |
- |
||||
|
Deferred taxes |
(2,712,010) |
- |
(2,712,010) |
- |
||||
|
Loss on disposition of business units |
4,684,369 |
- |
4,684,369 |
- |
||||
|
Change in derivative liabilities |
9,690,200 |
(14,093,391) |
(18,414,760) |
(15,061,142) |
||||
|
Amortization of debt issuance costs |
421,513 |
- |
1,686,049 |
- |
||||
|
Amortization of debt discount |
1,979,193 |
- |
7,484,613 |
- |
||||
|
Loss (gain) on investment, net |
(3,083) |
(6,086) |
39,270 |
(216,771) |
||||
|
Loss on sale of asset |
- |
49,985 |
- |
(242,494) |
||||
|
Stock based compensation |
(662,307) |
1,172,291 |
812,073 |
5,037,879 |
||||
|
Changes in operating assets and liabilities (net of acquired amounts): |
||||||||
|
Accounts receivable |
1,567,747 |
2,424,575 |
467,692 |
244,929 |
||||
|
Inventory |
(2,039,758) |
(1,674,942) |
789,399 |
(4,703,186) |
||||
|
Prepaid expenses and other current assets |
(14,880) |
55,821 |
(2,631,612) |
(1,909,014) |
||||
|
Other assets |
(69,610) |
(60,900) |
(1,009,794) |
(457,083) |
||||
|
Operating leases right of use assets and liabilities |
999,798 |
23,010 |
1,075,093 |
137,139 |
||||
|
Accounts payable and other liabilities |
3,076,355 |
1,062,106 |
8,204,141 |
493,719 |
||||
|
Deferred revenue |
- |
- |
- |
(50,000) |
||||
|
Income taxes payable |
3,709,444 |
998,259 |
5,270,074 |
2,027,741 |
||||
|
Net cash (used) provided by operating activities |
$ |
5,444,752 |
$ |
3,577,606 |
$ |
11,394,467 |
$ |
8,397,712 |
|
Cash flows from investing activities: |
||||||||
|
Collection of notes receivable |
- |
- |
- |
181,911 |
||||
|
Cash consideration for acquisition of business, net of cash acquired |
(2,785,997) |
(3,750,929) |
(62,371,226) |
(75,678,000) |
||||
|
Purchase of fixed assets |
(2,300,191) |
(1,768,427) |
(14,811,580) |
(5,638,085) |
||||
|
Purchase of intangible assets |
- |
- |
- |
(29,580) |
||||
|
Investment in private entity |
- |
- |
(2,000,000) |
- |
||||
|
Net cash used in investing activities |
$ |
(5,086,188) |
$ |
(5,519,356) |
$ |
(79,182,806) |
$ |
(81,163,754) |
|
Cash flows from financing activities: |
||||||||
|
Proceeds from issuance of debt |
- |
87,172,805 |
- |
132,517,383 |
||||
|
Repayment of notes payable |
(134,498) |
- |
(134,498) |
(4,865,502) |
||||
|
Proceeds from issuance of common stock, net of issuance costs |
- |
345 |
471,874 |
50,283,142 |
||||
|
Net cash provided by financing activities |
$ |
(134,498) |
$ |
87,173,150 |
$ |
337,376 |
$ |
177,935,023 |
|
Net (decrease) increase in cash and cash equivalents |
224,066 |
85,231,400 |
(67,450,963) |
105,168,981 |
||||
|
Cash and cash equivalents at beginning of period |
38,725,187 |
21,168,816 |
106,400,216 |
1,231,235 |
||||
|
Cash and cash equivalents at end of period |
$ |
38,949,253 |
$ |
106,400,216 |
$ |
38,949,253 |
$ |
106,400,216 |
|
Supplemental disclosure of cash flow information: |
||||||||
|
Cash paid for interest |
$ |
2,184,305 |
$ |
1,896,250 |
$ |
15,423,990 |
$ |
5,759,220 |
|
Cash paid for income taxes |
$ |
2,500,000 |
$ |
2,100,000 |
$ |
12,340,000 |
$ |
2,100,000 |
|
See accompanying notes to the consolidated financial statements |
Adjusted EBITDA Reconciliation
Non-GAAP measurement
(UNAUDITED)
|
Qtr Ended |
Qtr Ended |
Year Ended |
Year Ended |
|||||
|
|
|
|
|
|||||
|
2022 |
2021 |
2022 |
2021 |
|||||
|
(Un-audited) |
(Un-audited) |
(Un-audited) |
(Un-audited) |
|||||
|
Net income (loss) |
$ |
(27,339,133) |
$ |
12,829,841 |
$ |
(18,467,615) |
$ |
14,519,130 |
|
Interest expense, net |
6,827,558 |
2,487,533 |
30,139,645 |
7,014,279 |
||||
|
Provision for income taxes |
3,638,695 |
2,398,259 |
14,898,064 |
4,396,164 |
||||
|
Other (income) expense, net of interest expense |
14,367,746 |
(14,099,477) |
(13,715,260) |
(15,520,407) |
||||
|
Depreciation and amortization |
3,701,128 |
797,037 |
12,524,677 |
8,576,865 |
||||
|
Earnings before interest, taxes, depreciation and amortization (EBITDA) (non-GAAP measure) |
$ |
1,195,994 |
$ |
4,413,193 |
$ |
25,379,511 |
$ |
18,986,031 |
|
Non-cash stock compensation |
883,890 |
1,172,291 |
2,672,713 |
5,037,879 |
||||
|
Deal related expenses |
1,914,820 |
712,049 |
6,822,111 |
2,779,151 |
||||
|
Capital raise related expenses |
(257,271) |
256,321 |
533,958 |
1,512,565 |
||||
|
Inventory adjustment to fair market value for purchase accounting |
- |
- |
6,541,651 |
2,164,686 |
||||
|
One-time cultivation asset impairment |
- |
- |
329,210 |
- |
||||
|
One-time goodwill impairment |
8,011,405 |
- |
8,011,405 |
- |
||||
|
Severance |
263,374 |
5,053 |
334,910 |
166,557 |
||||
|
Retention program expenses |
- |
1,188 |
- |
90,250 |
||||
|
Employee relocation expenses |
(3,750) |
2,428 |
15,360 |
40,819 |
||||
|
Other non-recurring items |
1,276,064 |
939,717 |
1,369,386 |
1,388,150 |
||||
|
Adjusted EBITDA (non-GAAP measure) |
$ |
13,284,526 |
$ |
7,502,240 |
$ |
52,010,215 |
$ |
32,166,088 |
|
Revenue |
$ |
40,147,287 |
$ |
26,515,978 |
$ |
159,379,219 |
$ |
108,420,239 |
|
Adjusted EBITDA as a Percentage of Revenue |
33.1 % |
28.3 % |
32.6 % |
29.7 % |
|
See accompanying notes to the consolidated financial statements |
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