Medicine Man Technologies, Inc. [SHWZ] Filings

10-Q 1 shwz-20230930x10q.htm 10-Q

Table of Contents

Tony

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________.

Commission File Number 000-55450

MEDICINE MAN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada

46-5289499

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer Identification No.)

865 North Albion Street

Suite 300

Denver, Colorado

80220

(Address of principal executive offices)

(Zip Code)

(303) 371-0387

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	Large accelerated Filer ☐	Accelerated Filer ☐
	Non-accelerated Filer ☒	Smaller reporting company ☒
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1st, 2023, the Registrant had 72,591,605 shares of Common Stock outstanding.

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TABLE OF CONTENTS


		Page
Part I – FINANCIAL INFORMATION

	Cautionary Note About Forward Looking Statements	3
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50

Part II – OTHER INFORMATION

Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
	Signatures	55

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CAUTIONARY NOTE ABOUT FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “become,” “develop,” “build,” 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 based upon our current assumptions, expectations, and beliefs concerning future developments and their potential effect on our business. Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors which may cause actual events or our actual results, performance, or achievements to be materially different from the future events, results, performance, or achievements expressed or implied by any forward-looking statements. There can be no assurance that future events, results, performance, or achievements will be in accordance with our expectations or that the effect of future events, results, performance, or achievements will be those anticipated by us.

Factors and risks that may cause or contribute to actual events, results, performance, or achievements differing from these forward-looking statements include, but are not limited to, the following:

●

regulatory limitations on our products and services;

●

our ability to identify, consummate, and integrate anticipated acquisitions;

●

general industry and economic conditions;

●

our ability to access adequate capital upon terms and conditions that are acceptable to us;

●

our ability to pay interest and principal on outstanding debt when due;

●

volatility in credit and market conditions; and

●

other risks and uncertainties related to the cannabis market and our business strategy.

We operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this Quarterly Report on Form 10-Q are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved.

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties, and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, a change in events, conditions, circumstances, or assumptions underlying such statements, or otherwise.

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Part I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Expressed in U.S. Dollars


	September 30,		December 31,
	2023		2022
	(Unaudited)		(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	19,624,615	$	38,949,253
Accounts receivable, net of allowance for doubtful accounts		5,049,869		4,471,978
Inventory		32,767,841		22,554,182
Note receivable - current, net		—		11,944
Marketable securities, net of unrealized loss of $1,816 and loss of $39,270, respectively		456,099		454,283
Prepaid expenses and other current assets		6,485,896		5,293,393
Total current assets		64,384,320		71,735,033
Non-current assets
Fixed assets, net accumulated depreciation $8,065,794 and $4,899,977, respectively		32,139,192		27,089,026
Investments		2,000,000		2,000,000
Goodwill		76,578,654		94,605,301
Intangible assets, net accumulated amortization of $28,828,713 and $16,290,862, respectively		168,822,669		107,726,718
Note receivable – noncurrent, net		1,313		—
Deferred tax assets, net		50,467		—
Other noncurrent assets		1,298,950		1,527,256
Operating lease right of use assets		25,315,122		18,199,399
Total non-current assets		306,206,367		251,147,700
Total assets	$	370,590,687	$	322,882,733

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	11,665,499	$	10,701,281
Accounts payable - related party		22,073		22,380
Accrued expenses		9,430,875		7,462,290
Derivative liabilities		2,022,248		16,508,253
Lease liabilities - current		4,721,713		3,139,289
Current portion of long term debt		4,250,000		2,250,000
Income taxes payable		18,283,784		7,297,815
Total current liabilities		50,396,192		47,381,308
Long term debt, net of debt discount and issuance costs		150,878,200		125,521,520
Lease liabilities		23,525,633		17,314,464
Deferred income taxes, net		—		502,070
Total long-term liabilities		174,403,833		143,338,054
Total liabilities	$	224,800,025	$	190,719,362

Stockholders' equity
Preferred stock, $0.001 par value. 10,000,000 shares authorized; 86,494 shares issued and 86,494 shares outstanding as of September 30, 2023, and 86,994 shares issued and 86,994 shares outstanding as of December 31, 2022.		87		87
Common stock, $0.001 par value. 250,000,000 shares authorized; 72,607,621 shares issued and 72,591,605 shares outstanding as of September 30, 2023, and 56,352,545 shares issued and 55,212,547 shares outstanding as of December 31, 2022.		72,607		56,353
Additional paid-in capital		199,177,342		180,381,641
Accumulated deficit		(51,426,247)		(46,241,583)
Common stock held in treasury, at cost, 920,150 shares held as of September 30, 2023, and 920,150 shares held as of December 31, 2022.		(2,033,127)		(2,033,127)
Total stockholders' equity		145,790,662		132,163,371
Total liabilities and stockholders' equity	$	370,590,687	$	322,882,733

See accompanying notes to the condensed consolidated financial statements

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MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME

For the Periods Ended September 30, 2023 and 2022


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Operating revenues
Retail	$	41,951,969	$	39,759,734	$	115,871,037	$	104,386,464
Wholesale		4,701,268		3,335,252		13,034,676		14,661,268
Other		93,698		96,000		217,258		184,200
Total revenue		46,746,935		43,190,986		129,122,971		119,231,932
Total cost of goods and services		25,308,972		20,715,192		60,133,091		60,661,933
Gross profit		21,437,963		22,475,794		68,989,880		58,569,999
Operating expenses
Selling, general and administrative expenses		9,639,268		6,594,311		28,693,517		20,114,335
Professional services		767,822		1,507,149		2,443,046		5,609,579
Salaries		4,545,439		3,159,578		17,700,403		15,697,294
Stock based compensation		(2,438,073)		99,898		622,162		1,788,823
Total operating expenses		12,514,456		11,360,936		49,459,128		43,210,031
Income from operations		8,923,507		11,114,858		19,530,752		15,359,968
Other income (expense)
Interest expense, net		(8,320,397)		(8,500,235)		(23,956,691)		(23,312,088)
Unrealized gain on derivative liabilities		4,516,237		4,816,668		14,486,005		28,104,960
Other loss		—		—		—		20,400
Unrealized gain (loss) on investments		—		(28,541)		1,816		(42,353)
Total other income (expense)		(3,804,160)		(3,712,108)		(9,468,870)		4,770,919
Pre-tax net income		5,119,347		7,402,750		10,061,882		20,130,887
Provision for income taxes		5,441,809		5,593,513		15,246,546		11,259,369
Net income (loss)	$	(322,462)	$	1,809,237	$	(5,184,664)	$	8,871,518

Less: Accumulated preferred stock dividends for the period		(1,547,369)		(1,784,113)		(5,930,646)		(5,294,132)
Net income (loss) attributable to common stockholders	$	(1,869,831)	$	25,124	$	(11,115,310)	$	3,577,386

Earnings (loss) per share attributable to common shareholders
Basic (loss) earnings per share	$	(0.02)	$	—	$	(0.14)	$	0.07
Diluted (loss) earnings per share	$	(0.03)	$	—	$	(0.14)	$	0.03

Weighted average number of shares outstanding – basic		87,202,537		51,232,943		78,635,841		50,615,437
Weighted average number of shares outstanding – diluted		87,202,537		137,954,532		78,635,841		137,337,027
Comprehensive (loss) income	$	(322,462)	$	1,809,237	$	(5,184,664)	$	8,871,518

See accompanying notes to the condensed consolidated financial statements

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MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2023 and 2022


							Additional							Total
	Preferred Stock			Common Stock			Paid in		Accumulated		Treasury Stock			Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Shares	Cost		Equity
Balance, December 31, 2021	86,994	$	87	45,484,314	$	45,485	$	162,815,097	$	(27,773,968)	517,044	$	(1,517,036)	$	133,569,665

Net income (loss)	—		—	—		—		—		8,871,518	—		—		8,871,518
Issuance of stock as payment for acquisitions	—		—	9,742,204		9,742		15,090,258		—	—		—		15,100,000
Issuance of common stock as compensation to employees, officers and/or directors	—		—	510,525		374		615,057		—	—		—		615,431
Return of common stock as compensation to employees, officers and/or directors	—		—	—		—		—		—	369,415		(473,642)		(473,642)
Stock based compensation expense related to common stock options	—		—	196,085		196		1,834,208		—	—		—		1,834,404

Balance, September 30, 2022	86,994	$	87	55,933,128	$	55,797	$	180,354,620	$	(18,902,450)	886,459	$	(1,990,678)	$	159,517,376


							Additional							Total
	Preferred Stock			Common Stock			Paid in		Accumulated		Treasury Stock			Stockholders’
	Shares	Value		Shares	Value		Capital		Deficit		Shares	Cost		Equity
Balance, December 31, 2022	86,994	$	87	56,352,545	$	56,353	$	180,381,641	$	(46,241,583)	920,150	$	(2,033,127)	$	132,163,371

Net income (loss)	—		—	—		—				(5,184,664)	—		—		(5,184,664)
Issuance of stock as payment for acquisitions	—		—	14,992,354		14,992		17,277,998		—	—		—		17,292,990
Issuance of common stock as compensation to employees, officers and/or directors	—		—	748,210		748		682,870		—	—		—		683,618
Conversion of preferred stock to common stock	(500)		(1)	514,512		515		(514)		—	—		—		—
Stock based compensation expense related to common stock options	—		—	—				835,347			—		—		835,347

Balance, September 30, 2023	86,494	$	87	72,607,621	$	72,607	$	199,177,342	$	(51,426,247)	920,150	$	(2,033,127)	$	145,790,662

See accompanying notes to the condensed consolidated financial statements

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MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months Ended September 30, 2023 and 2022

Expressed in U.S. Dollars


							Additional							Total
	Preferred Stock			Common Stock			Paid in		Accumulated		Treasury Stock			Stockholders’
	Shares	Value		Shares	Value		Capital		Deficit		Shares	Cost		Equity
Balance, June 30, 2022	86,994	$	87	55,449,065	$	55,450	$	179,979,063	$	(20,711,687)	886,459	$	(1,990,678)	$	157,332,235

Net income (loss)	—		—	—		—		—		1,809,237	—		—		1,809,237
Issuance of stock as payment for acquisitions	—		—	—		—		—		—	—		—		—
Issuance of common stock as compensation to employees, officers and/or directors	—		—	287,978		151		230,273		—	—		—		230,424
Stock based compensation expense related to common stock options	—		—	196,085		196		145,284		—					145,480

Balance, September 30, 2022	86,994	$	87	55,933,128	$	55,797	$	180,354,620	$	(18,902,450)	886,459	$	(1,990,678)	$	159,517,376


							Additional							Total
	Preferred Stock			Common Stock			Paid in		Accumulated		Treasury Stock			Stockholders’
	Shares	Value		Shares	Value		Capital		Deficit		Shares	Cost		Equity
Balance, June 30, 2023	86,994	$	87	71,730,449	$	71,730	$	201,116,605	$	(51,103,785)	920,150	$	(2,033,127)	$	148,051,510

Net income (loss)	—		—	—		—		—		(322,462)	—		—		(322,462)
Issuance of stock as payment for acquisitions	—		—	—		—				—	—		—		—
Issuance of common stock as compensation to employees, officers and/or directors	—		—	362,660		363		286,139		—	—		—		286,501
Conversion of preferred stock to common stock	(500)		(1)	514,512		515		(514)		—	—		—		—
Stock based compensation expense related to common stock options	—		—	—		—		(2,224,888)			—		—		(2,224,888)

Balance, September 30, 2023	86,494	$	87	72,607,621	$	72,607	$	199,177,342	$	(51,426,247)	920,150	$	(2,033,127)	$	145,790,662

See accompanying notes to the condensed consolidated financial statements

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MEDICINE MAN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Periods Ended September 30, 2023 and 2022


	For the Nine Months Ended
	September 30,
	2023		2022
Cash flows from operating activities
Net income (loss) for the period		(5,184,664)		8,871,518
Adjustments to reconcile net income (loss) to cash for operating activities
Depreciation and amortization		15,703,668		8,329,767
Non-cash interest expense		3,003,386		3,137,021
Non-cash lease expense		5,756,492		3,910,679
Deferred taxes		(552,537)		—
Change in derivative liabilities		(14,486,005)		(28,104,960)
Amortization of debt issuance costs		1,264,537		1,264,538
Amortization of debt discount		6,269,584		5,505,420
(Gain) loss on investment, net		(1,816)		42,353
Stock based compensation		835,347		811,897
Changes in operating assets and liabilities (net of acquired amounts):
Accounts receivable		206,179		(1,100,055)
Inventory		(4,883,659)		2,898,959
Prepaid expenses and other current assets		(1,192,503)		(3,377,844)
Other assets		228,306		(179,072)
Change in operating lease liabilities		(5,078,622)		(11,938,634)
Accounts payable and other liabilities		(4,124,458)		8,802,231
Income taxes payable		10,985,969		1,560,630
Net cash provided by (used in) operating activities		8,749,202		434,448

Cash flows from investing activities:
Collection of notes receivable		10,631		—
Cash consideration for acquisition of business, net of cash acquired		(15,813,028)		(56,875,923)
Purchase of fixed assets		(6,766,759)		(12,511,389)
Purchase of intangible assets		(2,700,000)		(2,825)
Net cash provided by (used in) investing activities		(25,269,156)		(69,390,137)

Cash flows from financing activities:
Payment on notes payable		(3,488,302)		—
Proceeds from issuance of common stock, net of issuance costs		683,618		1,280,660
Net cash provided by (used in) financing activities		(2,804,684)		1,280,660

Net (decrease) in cash and cash equivalents		(19,324,638)		(67,675,029)
Cash and cash equivalents at beginning of period		38,949,253		106,400,216
Cash and cash equivalents at end of period	$	19,624,615	$	38,725,187

Supplemental disclosure of cash flow information:
Cash paid for interest	$

Medicine Man Technologies, Inc. [SHWZ] Filings
10-Q	[2023-11-14]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-29]
10-Q	[2022-11-10]
10-Q	[2022-08-11]
10-Q	[2022-05-16]
10-K	[2022-03-31]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
10-Q	[2021-05-13]
10-K	[2021-03-31]
10-Q	[2020-11-16]
10-Q	[2020-08-14]
10-Q	[2020-05-14]
10-K	[2020-03-30]
10-Q	[2019-11-12]
10-Q	[2019-08-14]
10-Q	[2019-05-20]
10-K	[2019-04-16]
10-Q	[2018-11-08]
10-Q	[2018-08-08]
10-Q	[2018-05-03]
10-K	[2018-03-27]
10-Q	[2017-11-09]
10-Q	[2017-08-17]
10-Q	[2017-05-16]
10-K	[2017-04-17]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-16]
10-K	[2016-04-14]
10-Q	[2015-11-12]
S-1	[2015-04-14]