Schwazze, Formerly Operating as Medicine Man Technologies, Inc., Provides Business Update and Announces Strong Third Quarter 2020 Financial Results

Revenues grew 39% year over year with significant contribution from Mesa Organics and Purplebees

Company to Host Conference Call and Webcast Today at 4:30 p.m. ET

DENVER--(BUSINESS WIRE)-- Schwazze, formerly operating as Medicine Man Technologies Inc. (OTCQX:SHWZ) ("Schwazze " or “the Company"), today provided a business update and announced strong financial results for its third quarter ended September 30, 2020.

Justin Dye, Chairman and Chief Executive Officer of Schwazze shared, “We are pleased with our progress in the third quarter. We continued to grow revenue and meaningfully narrow our net loss. Our third quarter performance demonstrates the team’s ability to implement our operating playbook and successfully integrate strategically attractive and accretive acquisitions such as Mesa Organics and Purplebee’s, which have proven to be an excellent strategic fit, into our operations.”

Dye continued, “We are eager to complete our acquisitions of Star Buds’ 14 Colorado locations during the fourth quarter. Star Buds is one of the most recognized and successful retail cannabis operators in North America. These acquisitions position us to become a cannabis leader in Colorado by combining their industry expertise with our best-in-class playbook. Together, we are creating the next era of cannabis that lowers the barrier of acceptance for mainstream America and accelerates innovation in health, happiness and quality of life for consumers.”

Business Update

  • On November 5, 2020, the Company announced that it has received satisfactory proof of funds acknowledgement from Star Buds in anticipation of closing the pending transactions. This acknowledgment enables companies to begin preparing for a fourth quarter 2020 closing of the acquisitions of 13 retail operations located throughout the Colorado front-range and one cultivation facility in Denver.
    • Star Buds is one of the most recognized and successful retail cannabis operators in North America based on revenue-per-location and profit. Upon completion of this transaction, the Company will be one the first publicly traded companies with full seed to sale operations in Colorado consisting of 17 dispensaries, manufacturing, and cultivation.
    • Based on the consolidated, unaudited 2019 results the Company received from Star Buds, these acquisitions collectively earned approximately $50M in revenue with a strong EBITDA margin.
    • The proforma revenue for the combined companies for 2020 will be approximately $90M and the combined companies will be profitable and cash flow positive after the completion of the acquisition.
  • On September 9, 2020, the Company announced that Nirup Krishnamurthy, Chief Integration and Information Officer, was named Chief Operating Officer, and Jeff Garwood, former GE executive, was appointed to the Schwazze Board of Directors.
    • Nirup Krishnamurthy has since assumed oversight of Schwazze’s business units including retail, manufacturing, cultivation, wholesale sales, and marketing to drive operational excellence throughout field operations. He has also continued to be responsible for the alignment and prioritization of the ongoing integration of the Company’s acquisitions and for driving technology innovation across the organization. Krishnamurthy joined Schwazze earlier this year, bringing more than 25 years of experience in operations, innovation, technology, integration and M&A at Fortune 500 companies including United Airlines, Northern Trust Bank and former grocery retailer The Great Atlantic & Pacific Tea Company (A&P).
    • Jeff Garwood is a recognized visionary business leader bringing 30 years of extensive experience across finance and operations to the Company and now serves on the Audit and Compensation Committees. He is the founder and the managing member of Liberation Capital, LLC, a private equity fund focused on providing modular, repeatable waste to value project finance, where he has been active with its investments for 10 years. Garwood is also the co-owner of Zysense, an entity providing high precision measurement instruments for research. Prior to Liberation Capital, he held a variety of senior leadership positions with General Electric, including President and CEO of GE Water and Process Technologies, President and CEO of GE Fanuc, and President of Garrett Aviation.

Third Quarter 2020 Financial Results
Total revenue increased by $2,091,505, or approximately 39%, to $7,430,374 during the three months ended September 30, 2020 as compared to $5,338,869 during the three months ended September 30, 2019. Product sales increased by approximately 168% to $7,409,719 from $2,760,196 in the third quarter 2019 while consulting and licensing fees decreased to $20,655 from $2,563,478 in the third quarter 2019. The increase in product sales can largely be attributed to the revenue associated with the acquisition of Mesa Organics in April 2020. The third quarter 2019 included $1,782,457 in revenue awarded in litigation and other operating revenue of $15,195 (both of which the Company views as non-recurring).

Cost of goods and services, consisting of expenses related to delivery of services and product procurement, was $4,648,910 during the three months ended September 30, 2020, as compared to $2,786,244 during the same period in 2019. This increase was due to increased sales of product.

Gross profit was $2,781,464 during the three months ended September 30, 2020 as compared to $2,552,625 during the same period in 2019, an increase of $228,839. Gross profit margin decreased to approximately 37% of revenue from nearly 48% of revenue during the same period in 2019. However, excluding the $1,782,457 in revenue awarded in litigation during the third quarter 2019, gross profit increased by $2,011,296, while gross profit margin increased by approximately 260 basis points, mostly driven by the strength of the Mesa Organics acquisition.

Total operating expenses were $6,400,290 during the three months ended September 30, 2020, as compared to operating expenses of $3,478,232 during the same period in 2019, an increase of $2,922,058. This increase was due to increased selling, general and administrative expenses, professional service fees, salaries, benefits and related employment costs and non-cash, stock-based compensation.

Total other income was $704,615 during the three months ended September 30, 2020 as compared to net other expenses of $902,371 during the same period in 2019. This represents an improvement of $1,606,986. The increase in other income, net was primarily due to an unrecognized loss on derivative liabilities and lower interest expense coupled with unrealized gain on investments.

As a result, we generated a net loss of $2,914,211 during the three months ended September 30, 2020 (or a loss of approximately $0.07 per share on a basic weighted average), as compared to a net loss of $1,827,978 (or a loss of approximately $0.05 per share on a basic weighted average) during the three months ended September 30, 2019. However, excluding $1,782,457 in revenue awarded in litigation during the third quarter 2019, net loss narrowed significantly on a year-over-year basis.

Conference Call and Webcast Scheduled for Third Quarter 2020
Schwazze will host a conference call and webcast today at 4:30 p.m. ET.

Investors interested in participating in the conference call can dial 201-389-0879 or listen to the webcast from the Company's “Investors” website at https://ir.schwazze.com. The webcast will later be archived as well.

Following their prepared remarks, Chief Executive Officer Justin Dye and Chief Financial Officer Nancy Huber will also answer investor questions. Investors may submit questions in advance or during the conference call itself through the weblink: http://public.viavid.com/index.php?id=141477. This weblink has also been posted to the Company’s “Investors” website.

About Schwazze
Medicine Man Technologies, Inc. is now operating under its new trade name, Schwazze. Schwazze is executing its strategy to become a leading vertically integrated cannabis holding company with a portfolio consisting of top-tier licensed brands spanning cultivation, extraction, infused-product manufacturing, dispensary operations, consulting, and a nutrient line. Schwazze leadership includes Colorado cannabis leaders with proven expertise in product and business development as well as top-tier executives from Fortune 500 companies. As a leading platform for vertical integration, Schwazze is strengthening the operational efficiency of the cannabis industry in Colorado and beyond, promoting sustainable growth and increased access to capital, while delivering best-quality service and products to the end consumer. The corporate entity continues to be named Medicine Man Technologies, Inc.

Forward-Looking Statements
This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential," or similar words. Forward-looking statements are not guarantees of future 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 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) our inability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (ii) difficulties in obtaining financing on commercially reasonable terms; (iii) changes in the size and nature of our competition; (iv) loss of one or more key executives or scientists; and (v) difficulties in securing regulatory approval to market our products and product candidates. 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.

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED BALANCE SHEET

Expressed in U.S. Dollars

 

 

 

September 30,
2020

 

 

December 31,
2019

 

 

 

(Unaudited)

 

 

(Audited)

 

Assets

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,981,688

 

 

$

11,853,627

 

Accounts receivable, net of allowance for doubtful accounts

 

 

812,212

 

 

 

313,317

 

Accounts receivable – related party

 

 

91,990

 

 

 

72,658

 

Inventory

 

 

2,151,612

 

 

 

684,940

 

Notes receivable – related party

 

 

283,849

 

 

 

767,695

 

Prepaid expenses and other current assets

 

 

254,602

 

 

 

529,416

 

Prepaid acquisition costs (Note 11)

 

 

 

 

 

1,347,462

 

Total current assets

 

 

6,575,953

 

 

 

15,569,115

 

Non-current assets

 

 

 

 

 

 

 

 

Fixed assets, net of accumulated depreciation of $893,964 and $159,354, respectively

 

 

2,719,154

 

 

 

239,078

 

Goodwill

 

 

17,445,843

 

 

 

12,304,306

 

Intangible assets, net of accumulated amortization of $24,771 and $19,811, respectively

 

 

70,329

 

 

 

75,289

 

Investment

 

 

527,575

 

 

 

406,774

 

Accounts receivable – litigation

 

 

3,063,968

 

 

 

3,063,968

 

Deferred tax assets, net

 

 

268,423

 

 

 

268,423

 

Notes receivable – noncurrent, net

 

 

247,272

 

 

 

241,711

 

Operating lease right of use assets

 

 

1,650,117

 

 

 

59,943

 

Other assets

 

 

127,999

 

 

 

 

Total non-current assets

 

 

26,120,680

 

 

 

16,659,492

 

Total assets

 

$

32,696,633

 

 

$

32,228,607

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

2,957,390

 

 

$

699,961

 

Accounts payable – related party

 

 

127,694

 

 

 

15,372

 

Accrued expenses

 

 

1,426,315

 

 

 

1,091,204

 

Derivative liabilities

 

 

782,896

 

 

 

3,773,382

 

Income taxes payable

 

 

 

 

 

1,940

 

Total current liabilities

 

 

5,294,295

 

 

 

5,581,859

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

Lease liabilities

 

 

1,684,005

 

 

 

66,803

 

Total noncurrent liabilities

 

 

1,684,005

 

 

 

66,803

 

Total liabilities

 

 

6,978,300

 

 

 

5,648,662

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Common stock $0.001 par value, 250,000,000 authorized, 42,194,878 shares issued and 41,762,146 shares outstanding at September 30, 2020, and 39,952,628 shares issued and outstanding at December 31, 2019.

 

 

42,195

 

 

 

39,953

 

Additional paid-in capital

 

 

60,714,343

 

 

 

50,356,469

 

Accumulated deficit

 

 

(33,705,705

)

 

 

(22,816,477

)

Common stock held in treasury, at cost, 432,732 shares held at September 30, 2020 and December 31, 2019.

 

 

(1,332,500

)

 

 

(1,000,000

)

Total shareholders' equity

 

 

25,718,333

 

 

 

26,579,945

 

Total liabilities and stockholders’ equity

 

$

32,696,633

 

 

$

32,228,607

 

See accompanying notes to the financial statements

MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME

For the Three and Nine Months Ended September 30, 2020 and 2019

Expressed in U.S. Dollars

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

7,094,896

 

 

$

2,147,182

 

 

$

14,292,374

 

 

$

4,743,391

 

Product sales – related party, net

 

 

314,823

 

 

 

613,014

 

 

 

484,930

 

 

 

893,084

 

Consulting and licensing services

 

 

20,655

 

 

 

781,021

 

 

 

1,267,587

 

 

 

1,657,286

 

Litigation revenue

 

 

 

 

 

1,782,457

 

 

 

 

 

 

1,782,457

 

Other operating revenues

 

 

 

 

 

15,195

 

 

 

12,946

 

 

 

23,946

 

Total revenue

 

 

7,430,374

 

 

 

5,338,869

 

 

 

16,057,837

 

 

 

9,100,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods and services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods and services

 

 

4,648,910

 

 

 

2,786,244

 

 

 

9,904,131

 

 

 

5,471,369

 

Total cost of goods and services

 

 

4,648,910

 

 

 

2,786,244

 

 

 

9,904,131

 

 

 

5,471,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

2,781,464

 

 

 

2,552,625

 

 

 

6,153,706

 

 

 

3,628,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

1,298,693

 

 

 

718,990

 

 

 

3,054,091

 

 

 

1,092,702

 

Professional services

 

 

1,769,455

 

 

 

837,940

 

 

 

5,390,186

 

 

 

3,602,772

 

Salaries, benefits and related expenses

 

 

1,878,156

 

 

 

980,432

 

 

 

5,973,482

 

 

 

1,862,990

 

Stock based compensation

 

 

1,453,986

 

 

 

940,870

 

 

 

5,815,808

 

 

 

3,166,276

 

Derivative expense – contingent compensation

 

 

 

 

 

 

 

 

 

 

 

5,400,559

 

Total operating expenses

 

 

6,400,290

 

 

 

3,478,232

 

 

 

20,233,567

 

 

 

15,125,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

(3,618,826

)

 

 

(925,607

)

 

 

(14,079,861

)

 

 

(11,496,504

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on forfeiture of contingent consideration

 

 

 

 

 

 

 

 

1,462,636

 

 

 

 

Interest income (expense), net

 

 

10,131

 

 

 

36,462

 

 

 

46,726

 

 

 

(155,815

)

Other income (expense)

 

 

 

 

 

 

 

 

32,621

 

 

 

 

Unrealized gain (loss) on derivative liabilities

 

 

684,422

 

 

 

(197,526

)

 

 

1,527,850

 

 

 

(452,090

)

Unrealized gain (loss) on investments

 

 

10,062

 

 

 

(741,307

)

 

 

120,800

 

 

 

(1,458,037

)

Total other income (expense)

 

 

704,615

 

 

 

(902,371

)

 

 

3,190,633

 

 

 

(2,065,942

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2,914,211

)

 

$

(1,827,978

)

 

$

(10,889,228

)

 

$

(13,562,446

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

$

(0.07

)

 

$

(0.05

)

 

$

(0.26

)

 

$

(0.44

)

Weighted average number of shares outstanding - basic and diluted

 

 

41,568,147

 

 

 

35,115,889

 

 

 

41,242,0411

 

 

 

31,136,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

(2,914,211

)

 

$

(1,827,978

)

 

$

(10,889,228

)

 

$

(13,562,446

)

See accompanying notes to the financial statements

MEDICINE MAN TECHNOLOGIES, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

For the Nine months Ended September 30, 2020 and 2019

Expressed in U.S. Dollars

 

 

 

Common Stock

 

Additional
Paid-in

 

Accumulated

 

Total
Stockholders'

 

 

Shares

 

Value

 

Capital

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

27,753,310

 

 

$

27,875

 

 

$

22,886,624

 

 

$

(5,840,735

)

 

$

17,073,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(13,562,446

)

 

 

(13,562,446

)

Issuance of common stock in connection with sales made under private or public offerings

 

 

9,800,000

 

 

 

9,800

 

 

 

19,590,200

 

 

 

 

 

 

19,600,000

 

Issuance of common stock in connection with the exercise of common stock purchase warrants

 

 

452,426

 

 

 

452

 

 

 

601,274

 

 

 

 

 

 

601,726

 

Issuance of common stock as compensation to employees, officers and/or directors

 

 

1,190,000

 

 

 

1,190

 

 

 

2,723,710

 

 

 

 

 

 

2,724,900

 

Issuance of common stock in exchange for consulting, professional and other services

 

 

173,775

 

 

 

173

 

 

 

305,348

 

 

 

 

 

 

305,521

 

Stock based compensation expense related to common stock options

 

 

 

 

 

 

 

 

1,196,376

 

 

 

 

 

 

1,196,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

 

 

39,369,511

 

 

$

39,490

 

 

$

47,303,532

 

 

$

(19,403,181

)

 

$

27,939,841

 

 

 

Common Stock

 

Additional
Paid-in

 

Accumulated

 

Treasury Stock

 

Total
Stockholders'

 

 

Shares

 

Value

 

Capital

 

Deficit

 

Shares

 

Cost

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at, December 31, 2019

 

 

39,952,628

 

 

$

39,953

 

 

$

50,356,469

 

 

$

(22,816,477

)

 

 

257,732

 

 

$

(1,000,000

)

 

$

26,579,945

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(10,889,228

)

 

 

 

 

 

 

 

 

(10,889,228

)

Issuance of common stock as payment for Mesa

 

 

2,554,750

 

 

 

2,555

 

 

 

4,167,253

 

 

 

 

 

 

 

 

 

 

 

 

4,169,808

 

Return of common stock as compensation to employees, officers and/or directors

 

 

(500,000

)

 

 

(500

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(500

)

Issuance of common stock in connection with sales made under private or public offerings

 

 

187,500

 

 

 

187

 

 

 

374,813

 

 

 

 

 

 

 

 

 

 

 

 

375,000

 

Return of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

175,000

 

 

 

(332,500

)

 

 

(332,500

)

Stock based compensation expense related to common stock options

 

 

 

 

 

 

 

 

5,815,808

 

 

 

 

 

 

 

 

 

 

 

 

5,815,808

 

Balance, September 30, 2020

 

 

42,194,878

 

 

$

42,195

 

 

 

60,714,343

 

 

$

(33,705,705

)

 

 

432,732

 

 

$

(1,332,500

)

 

$

25,718,333

 

See accompanying notes to the financial statements

MEDICINE MAN TECHNOLOGIES, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

For the Three months Three September 30, 2020 and 2019

Expressed in U.S. Dollars

 

 

 

Common Stock

 

Additional
Paid-in

 

Accumulated

 

Treasury Stock

 

Total
Stockholders'

 

 

Shares

 

Value

 

Capital

 

Deficit

 

Shares

 

Cost

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at, June 30, 2019

 

 

31,769,511

 

 

$

31,890

 

 

$

31,170,261

 

 

$

(17,575,203

)

 

 

 

 

$

 

 

$

13,626,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(1,827,978

)

 

 

 

 

 

 

 

 

(1,827,978

)

Issuance of common stock in connection with sales made under private of public offerings

 

 

7,600,000

 

 

 

7,600

 

 

 

16,133,271

 

 

 

 

 

 

 

 

 

 

 

 

16,140,871

 

Issuance of common stock in connection with the exercise of common stock purchase warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as compensation to employees, officers and/or directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in exchange for consulting, professional, and other services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense related to common stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

 

 

39,369,511

 

 

$

39,490

 

 

$

47,303,532

 

 

$

(19,403,181

)

 

 

 

 

$

 

 

$

27,939,841

 

 

 

Common Stock

 

Additional
Paid-in

 

Accumulated

 

Treasury Stock

 

Total
Stockholders'

 

 

Shares

 

Value

 

Capital

 

Deficit

 

Shares

 

Cost

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at, June 30, 2020

 

 

42,194,878

 

 

$

42,195

 

 

$

59,260,357

 

 

$

(30,791,494

)

 

 

257,732

 

 

$

(1,000,000

)

 

$

27,511,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(2,914,211

)

 

 

 

 

 

 

 

 

(2,914,211

)

Issuance of common stock as payment for Mesa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return of common stock as compensation to employees, officers and/or directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection with sales made under private or public offerings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

175,000

 

 

 

(332,500

)

 

 

(332,500

)

Stock based compensation expense related to common stock options

 

 

 

 

 

 

 

 

1,453,986

 

 

 

 

 

 

 

 

 

 

 

 

1,453,986

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2020

 

 

42,194,878

 

 

$

42,195

 

 

 

60,714,343

 

 

$

(33,705,705

)

 

 

432,732

 

 

$

(1,332,500

)

 

$

25,718,333

 

See accompanying notes to the financial statements

MEDICINE MAN TECHNOLOGIES, INC.

STATEMENT OF CASH FLOWS

For the Nine months Ended September 30, 2020 and 2019

Expressed in U.S. Dollars

 

 

 

2020

 

2019

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income for the period

 

$

(10,889,228

)

 

$

(13,562,446

)

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

322,292

 

 

 

45,768

 

Common stock issued in exchange for fees and services

 

 

 

 

 

210,521

 

Derivative expense

 

 

 

 

 

5,400,559

 

Loss on change in derivative liabilities

 

 

(2,990,486

)

 

 

452,091

 

Loss on investment, net

 

 

(120,800

)

 

 

1,458,037

 

Stock based compensation

 

 

5,815,808

 

 

 

3,921,276

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Note receivable

 

 

 

 

 

 

Accounts receivable

 

 

1,292,509

 

 

 

(2,868,093

)

Inventory

 

 

271,305

 

 

 

81,530

 

Prepaid expenses and other current assets

 

 

274,814

 

 

 

(629,032

)

Other assets

 

 

(127,999

)

 

 

 

Operating lease right of use assets and liabilities

 

 

27,028

 

 

 

(67,839

)

Accounts payable and other liabilities

 

 

(177,295

)

 

 

878,066

 

Income taxes payable

 

 

(1,940

)

 

 

 

Net cash used from operating activities

 

 

(6,303,992

)

 

 

(4,679,562

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(976,685

)

 

 

(7,312

)

Cash consideration for acquisition of business

 

 

(2,609,500

)

 

 

 

Cash acquired in acquisition of business

 

 

 

 

 

 

Repayment (issuance) of notes receivable

 

 

478,285

 

 

 

(632,053

)

Investment proceeds

 

 

 

 

 

 

Net cash used in investing activities

 

 

(3,107,900

)

 

 

(639,365

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs and returns

 

 

42,000

 

 

 

19,600,000

 

Proceeds from exercise of common stock purchase warrants, net of issuance costs

 

 

 

 

 

601,726

 

Net cash earned for financing activities

 

 

42,000

 

 

 

20,201,726

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(9,369,892

)

 

 

14,882,799

 

Cash and cash equivalents - beginning of period

 

 

12,351,580

 

 

 

321,788

 

Cash and cash equivalents - end of period

 

$

2,981,688

 

 

$

15,204,587

 

See accompanying notes to the financial statements

Raquel Fuentes
Senior Director, Corporate Communications
303-371-0387
Raquel@Schwazze.com

Source: Schwazze