UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported):
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) | |
| ( | ||
| (Registrant’s Telephone Number, Including Area Code) | ||
| Not Applicable | ||
| (Former Name or Former Address, if Changed Since Last Report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange On Which Registered | ||
| Not applicable | Not applicable | Not applicable |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On March 29, 2023, Medicine Man Technologies, Inc. (the “Company”) issued a press release announcing results for its fourth quarter and year ended December 31, 2022. A copy of the press release is attached as Exhibit 99.1, and the information contained therein is incorporated herein by reference.
The Company will host a conference call and webcast to discuss its results for the fourth quarter and year ended December 31, 2022 on March 29, 2023 at 5:00 pm Eastern Time.
This Current Report on Form 8-K and the press release attached hereto as Exhibit 99.1 are being furnished by the Company pursuant to Item 2.02. In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K, including Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. In addition, this information shall not be deemed incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Press Release, dated March 29, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MEDICINE MAN TECHNOLOGIES, INC. | ||
| By: | /s/ Daniel R. Pabon | |
| Date: March 29, 2023 | Daniel R. Pabon | |
| General Counsel | ||
Exhibit 99.1
| NEWS RELEASE | OTCQX: SHWZ | |
| FOR IMMEDIATE RELEASE | NEO: SHWZ |
SCHWAZZE ANNOUNCES FOURTH QUARTER 2022 & YEAR-END 2022 RESULTS
Record 2022 Revenue Increases 47% to $159.4 Million Compared to $108.4 Million in 2021
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 – 5:00 pm ET
DENVER, CO – March 29, 2023 – Medicine Man Technologies Inc. operating as Schwazze, (OTCQX:SHWZ; NEO:SHWZ) ("Schwazze" or the “Company"), today announced financial results for the fourth quarter (“Q4 2022”) and for the year ended December 31, 2022 (“2022”).
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 and New 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 and New 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 December 31, 2021 to 41 dispensaries as of December 31, 2022. The Company now has five operating cultivation facilities and two manufacturing assets in Colorado and New Mexico. In Q1 2023, the Company subsequently announced the opening of two additional New Mexico retail locations and entry into a definitive agreement to acquire two retail dispensaries in Colorado from Smokey’s Cannabis, which will bring the total dispensary count to 45.
Recent Developments
| · | Rolled out enhanced custom eCommerce platform in New Mexico for R.Greenleaf |
| · | Opened two new R.Greenleaf locations in New Mexico – Paseo and Carlsbad |
| · | 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 under R.Greenleaf banner located in or near the University of New Mexico, Los Lunas, Clovis, Ruidoso, Sunland Park and Alamogordo |
| · | Acquired two retail dispensaries in Boulder, Colorado |
| · | Acquired an indoor cultivation facility in Denver, Colorado |
| · | Acquired two Emerald Field retail dispensaries in Glendale and Manitou Springs, Colorado |
| · | Acquired one retail dispensary and one indoor cultivation facility in Denver, Colorado |
| · | Acquired two retail dispensaries in Aurora and Denver, Colorado |
| · | Negotiated exclusive licensing, manufacturing and distribution agreement with Lowell Farms and launched premium pre-rolls in both Colorado and New 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 Justin Dye, CEO of Schwazze. “To date, we have opened, acquired, or announced pending acquisitions of 45 dispensaries with five operating cultivation and two manufacturing facilities across Colorado and New Mexico. We believe our retail brands are really connecting with customers. Schwazze is well-positioned to play offense in this challenging environment. As market forces become more favorable, we believe Schwazze will emerge with a much stronger position which will reward shareholders. For now, we will keep executing our strategy and playbook.”
“While we had seasonally lower quarter over quarter revenues, we recorded a solid fourth quarter and outpaced retail sales in the state of Colorado by 11%, despite a challenging environment and continued price compression,” said Nirup Krishnamurthy, President of Schwazze. “Along with our New Mexico operations, revenue for the year increased by 47%, with retail sales growing 92% over the prior year with solid execution. In addition, we are focused on building a high-quality house of product brands that deliver good value to our customers. These results could not be achieved without the hard work and dedication of the entire Schwazze team.”
2022 Results of Operations
Consolidated revenues for 2022, totaled $159.4 million, increasing $51.0 million or 47% over 2021 revenues of $108.4 million. This increase was influenced by several factors, including consummation of identified acquisitions, new store openings, entrance into the New Mexico market, and adult-use legalization taking effect in New Mexico in 2022. Based on publicly available sales data, management estimates that overall cannabis sales in the New Mexico market increased approximately 75% as compared to 2021 sales because of increased adult-use recreational cannabis sales following its legalization in April 2022.
Cost of goods and services for 2022, totaled $74.3 million compared to cost of goods and services of $59.1 million in 2021, representing an increase of $15.2 million, or approximately 26%. This increase is primarily due to the New Mexico acquisition and subsequent opening of six new stores in 2022.
Gross profit increased to $85.0 million for the year compared to $49.4 million in 2021. Gross profit margin rose as a percentage of revenue from 46% to 53%, with improvements in our cost structure, buying power and retail playbook.
2
Operating expenses for 2022, totaled $72.2 million, compared to operating expenses of $38.9 million during 2021, representing an increase of $33.2 million or approximately 85%. This increase was largely due to increased selling, general and administrative expenses related to acquisition growth, the New Mexico market entry, and includes certain one-time impairment charges for 2022.
Other expense for 2022 was ($16.4) million, compared to other income of $8.5 million in 2021. This is largely driven by non-cash debt related interest obligations and a one-time disposition of assets.
As a result of the factors discussed above, Schwazze generated a net loss of ($18.5) million for 2022 compared to net income of $14.5 million for 2021.
Adjusted EBITDA for the year was $52.0 million representing 33% of revenue, compared to $32.2 million and 30% in 2021. This is derived from Operating Income and adjusting one-time expenses, merger and acquisition and capital raising costs, non-cash related compensation costs, and depreciation and amortization. See the financial table for Adjusted EBITDA below for details and a reconciliation to net income (loss).
For 2022, the Company generated positive operating cash flow of $11.4 million compared to $8.4 million for 2021 and had $38.9 million in cash and cash equivalents as of December 31, 2022.
Forrest Hoffmaster, CFO for Schwazze commented, “Despite the challenging economic backdrop, we’ve delivered an excellent year resulting in the continued generation of operating cash flows from our acquired businesses. This allows us to not only meet our borrowing obligations but reinvest in infrastructure improvements and in our strategy to go deep in both Colorado and New Mexico.”
| (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 – March 29, 2023 – 5:00 pm ET
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 April 5, 2023, and may be accessed by dialing 1-416-764-8677 or North American toll free 1-888-390-0541 / 592815 #.
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 Colorado and New Mexico and will continue to take its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale. The Company is committed to unlocking the full potential of the cannabis plant to improve the human condition. Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company's leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector. Schwazze is passionate about making a difference in our communities, promoting diversity and inclusion, and doing our part to incorporate climate-conscious best practices.
3
Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth.
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 Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.
Investors Joanne Jobin Investor Relations Joanne.jobin@schwazze.com 647 964 0292 |
Legal Christine Jones Chief Legal Counsel Christine.Jones@schwazze.com 303 809 2697 |
Media Julie Suntrup, Schwazze Vice President, Marketing & Merchandising julie.suntrup@schwazze.com 303 371 0387 |
4
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
| December 31, | December 31, | |||||||
| 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 $39,270 and gain of $216,771, respectively | 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 $4,899,977 and $1,988,973, respectively | 27,089,026 | 10,253,226 | ||||||
| Investments | 2,000,000 | — | ||||||
| Goodwill | 94,643,581 | 43,316,267 | ||||||
| Intangible assets, net accumulated amortization of $16,290,862 and $7,652,750, respectively | 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, $0.001 par value. 10,000,000 shares authorized; 86,994 shares issued as of December 31, 2022 and December 31, 2021, 86,050 outstanding at December 31, 2022 and 82,594 outstanding at December 31, 2021. | 87 | 87 | ||||||
| Common stock, $0.001 par value. 250,000,000 shares authorized; 56,069,212 shares issued and 54,741,506 shares outstanding at December 31, 2022 and 45,455,490 shares issued and 45,484,314 shares outstanding as of December 31, 2021. | 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 December 31, 2022 and 517,044 shares held as of December 31, 2021 | (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
5
MEDICINE MAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) AND INCOME
For the Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
| Qtr Ended | Qtr Ended | Year Ended | Year Ended | |||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 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
6
MEDICINE MAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters & Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
| Qtr Ended | Qtr Ended | Year Ended | Year Ended | |||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 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
7
MEDICINE MAN TECHNOLOGIES, INC.
Adjusted EBITDA Reconciliation
Non-GAAP measurement
(UNAUDITED)
| Qtr Ended | Qtr Ended | Year Ended | Year Ended | |||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 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
8