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GigCapital, Inc. Announces Contribution to Trust Account and Provides Kaleyra Financial Information
PALO ALTO, Calif.–(BUSINESS WIRE)–GigCapital, Inc. (NYSE: GIG, GIG.U, GIG.RT, and GIG.WS) (“GigCapital”),
a Technology, Media and Telecom (TMT) Private-to-Public Equity (PPE)
corporation, previously announced that it will hold a special meeting of
stockholders (the “Special Meeting”) on June 5, 2019, at 10:00 a.m.,
local time, at the office of GigCapital, located at 2479 E. Bayshore
Rd., Suite 200, Palo Alto, California 94303, to vote on a proposal to
amend (the “Charter Amendment”) the Company’s amended and restated
certificate of incorporation to extend the date (the “Extension”) by
which the Company has to consummate its business combination with
Kaleyra S.p.A. (“Kaleyra”) for an additional six months, from June 12,
2019 to December 12, 2019 (the “Extended Date”).
GigCapital today announced that if the stockholders approve the Charter
Amendment, GigAcquisitions, LLC (the “Sponsor”) and the other founders
of GigCapital (the “Founders”) collectively have agreed to contribute to
GigCapital as a loan $240,000 for each calendar month, or portion
thereof, that is needed by GigCapital to complete the business
combination with Kaleyra (each, a “Contribution”). The Contributions are
conditional upon the implementation of the Extension. The Contributions
will not occur if the Charter Amendment is not approved or the Extension
is not completed for any reason. The Contributions will be deposited
into the trust account established in connection with GigCapital’s
initial public offering (the “Trust Account”). As a result, the amount
in the Trust Account following a Contribution for redemption of shares
of GigCapital’s common stock issued in its initial public offering
(each, a “Public Share”) that are not redeemed in connection with the
stockholder vote to approve the Extension, will be increased. The amount
of the Contributions will not bear interest and will be repayable by
GigCapital upon consummation of the business combination with Kaleyra.
If the Extension is implemented, the Sponsor and Founders will make the
first Contribution on or before June 12, 2019. GigCapital will announce
by the end of each calendar month whether there will be a subsequent
Contribution made, and any subsequent Contributions will be made on or
before the tenth of a subsequent month. The Sponsor will have the sole
discretion to determine whether to continue extending for additional
months until the Extended Date, and if the Sponsor determines not to
continue extending for additional months, the obligation of the Sponsor
and Founders to make additional Contributions will terminate and
GigCapital will dissolve and liquidate in accordance with its amended
and restated certificate of incorporation.
As previously stated by GigCapital in its proxy statement for the
Special Meeting, the sole purpose of the Charter Amendment is to allow
Kaleyra sufficient time to prepare the required financial statements
needed before GigCapital can seek stockholder approval of the business
combination with Kaleyra. Kalerya has been diligently working to prepare
those financial statements, and GigCapital anticipates being able to
move forward with the consummation of the business combination on the
timeline previously announced when the parties announced the
transaction. Kaleyra has provided GigCapital with the following
unaudited pro forma consolidated financial information for fiscal years
2017 and 2018, and consolidated financial information for its first
fiscal quarter of 2019, all based on U.S. GAAP, as approved by the
Kaleyra board of directors:
2017 – | Revenues — $77.6 million |
Adjusted EBITDA — $4.3 million | |
2018 – | Revenues — $98.5 million |
Adjusted EBITDA — $7.4 million |
Q1 2019 – |
Revenues — $27.7 million (up more than 35% from Q1 2018 pro forma revenues of $20.4 million) |
Kaleyra is in the process of finalizing its consolidated financial
information for its first fiscal quarter of 2019 based on U.S. GAAP as
one of its final steps of preparing financial statements for inclusion
in the proxy statement being prepared for approval by the GigCapital
stockholders of the business combination, and when completed and filed
as part of that proxy statement, further disclosure will be made
regarding expenses, net income and Adjusted EBITDA for the first fiscal
quarter of 2019.
Reaffirmation of 2019 Outlook
Kaleyra management reaffirms its outlook on U.S. GAAP revenue and
Adjusted EBITDA for the full-year 2019 as previously set forth using
Italian GAAP in the investor presentation related to the business
combination with GigCapital filed with the Securities and Exchange
Commission (SEC) on February 26, 2019. This guidance is subject to the
risks and uncertainties described in the “Forward-Looking Statements”
below.
“We are very pleased to provide this initial presentation of our
financial performance to the public and GigCapital’s stockholders. The
preliminary consolidated and pro forma results that we are reporting
today for fiscal year 2018, which includes strong annual revenue growth
of nearly 30% from the prior fiscal year to approximately $100 million
and accelerating Adjusted EBITDA, as well as growth of approximately 35%
for the first quarter of 2019 from the first quarter year ago to more
than $27 million, demonstrates the strength of our business and
financial model,” said Mr. Dario Calogero, Kaleyra’s Founder and current
Chairman of the Board and Chief Executive Officer. “We believe Kaleyra’s
future is bright. We move in a high growth market space at the
intersection between enterprise interactive services and mobile users,
where our platform is increasingly supporting thousands of enterprises
to smoothly interact with their consumers, using their mobile devices,
taking advantage of our omnichannel communication platform worldwide.
The pending combination with GigCapital will serve as a catalyst for the
next phase of growth within the rapidly expanding Cloud Communications
for Enterprises market. GigCapital’s powerful leadership team of
successful corporate executives with extensive technology public-market
operational and entrepreneurial expertise, along with a deep bench of
industry experts at their disposal, are already helping shape our future
as we prepare to become a publicly traded company. I look forward to
sharing our story with the investment community going forward.”
“I want to congratulate Dario and his team for their swift completion of
the preparation of the U.S. GAAP compliant results. We know this was a
challenging assignment given the many international acquisitions the
company has made in recent years and the stringent reporting
requirements under U.S. GAAP. Their ability to present this preliminary
information to investors in a short time period should give the market
confidence that their team is fully prepared to move forward as a U.S.
GAAP compliant publicly listed company,” said Dr. Avi Katz, Founder,
Executive Chairman of the Board, and Chief Executive Officer of
GigCapital, Inc. and Sole Manager of GigAcquisitions, LLC. “Once this
combination is approved by GigCapital’s stockholders, which we believe
will happen in just a few months, Kaleyra will have a stronger financial
structure to achieve its growth objectives. Furthermore, the combination
is a testament to the GigCapital team’s unique Private-to-Public Equity
(PPE) and Mentor-Investor platforms, which the GigCapital
Group plans to quickly replicate through new PPE enterprises as it looks
to partner with the many late-stage growth technology companies that
have expressed interest in our model to accelerate their path to a U.S.
public listing. We are happy to offer current GigCapital stockholders a
meaningful financial incentive, since we want them to stay as our
stockholders and minimize their redemption so they can continue to
benefit from Kaleyra’s potential long-term fundamental opportunity as we
move closer to consummation of the combination.”
SEC Filing
A Current Report on Form 8-K has been filed today with the SEC,
accompanied by this press release, which can be accessed through the
SEC’s website at www.sec.gov.
Disclaimer
This communication shall neither constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which the offer, solicitation,
or sale would be unlawful prior to the registration or qualification
under the securities laws of any such jurisdiction.
Additional Information About the Transaction and Where To Find It
Additional information about the proposed business combination with
Kaleyra and related transactions will be described in GigCapital’s
preliminary proxy statement relating to the proposed business
combination and the respective businesses of GigCapital and Kaleyra,
which GigCapital will file with the SEC. The proposed business
combination and related transactions will be submitted to stockholders
of GigCapital for their consideration. GigCapital’s stockholders and
other interested persons are advised to read, once available, the
preliminary proxy statement and any amendments thereto and, once
available, the definitive proxy statement, in connection with
GigCapital’s solicitation of proxies for its special meeting of
stockholders to be held to approve, among other things, the proposed
business combination and related transactions, because these documents
will contain important information about GigCapital, Kaleyra and the
proposed business combination and related transactions. The definitive
proxy statement will be mailed to stockholders of GigCapital as of a
record date to be established for voting on the proposed business
combination and related transactions.
Stockholders may also obtain a copy of the preliminary or definitive
proxy statement, once available, as well as other documents filed with
the SEC by GigCapital, without charge, at the SEC’s website located at www.sec.gov
or by directing a request to Tara McDonough, Vice President and Chief
Financial Officer, GigCapital, Inc., 2479 E. Bayshore Rd., Suite 200
Palo Alto, CA 94303, or by telephone at (650) 276-7040.
Participants in the Solicitation
Kaleyra, GigCapital and their respective directors and executive
officers and other persons may be deemed to be participants in the
solicitations of proxies from GigCapital’s stockholders in respect of
the proposed business combination and related transactions. Information
regarding GigCapital’s directors and executive officers is available in
its Form 10-K filed with the SEC on December 6, 2018. Additional
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests will be contained in
the preliminary and definitive proxy statements related to the proposed
business combination and related transactions when it becomes available,
and which can be obtained free of charge from the sources indicated
above.
About GigCapital, Inc.
GigCapital,
Inc. (NYSE: GIG, GIG.U, GIG.RT, and GIG.WS), is a Private-to-Public
Equity (PPE) company, (also known as a Blank-Check or Special Purpose
Acquisition Company (“SPAC”)), sponsored by GigAcquisitions, LLC, and
sole-managed by GigFounders, LLC (www.gigfoundersglobal.com).
All were founded in 2017 by Dr. Avi Katz. The GigCapital Group companies
are led by an affiliated team of technology industry experts, deploying
a unique Mentor-Investors methodology to partner with exceptional
privately-held and non-U.S. public technology companies of dedicated
solid entrepreneurs. The GigCapital Group companies offer financial,
operational and executive mentoring to U.S. and global private, and
non-U.S. public companies, in order to accelerate their path from
inception and as a privately-held entity into the growth-stage as a
publicly traded company in the U.S. The partnership of the GigCapital
Group with these companies continues through an organic and roll-up
strategy growth post the transition to a public company. For more
information, visit www.gigcapitalglobal.com.
“Private-to-Public Equity (PPE)” and “Mentor-Investor” are trademarks of
GigFounders, LLC, used pursuant to agreement.
About Kaleyra
Kaleyra is a global group specializing in providing mobile messaging
services for financial institutions and multiple other types of
enterprises of all sizes. Through its proprietary platform, Kaleyra
manages multi-channel integrated communication services on a global
scale, comprising messages, push notifications, e-mail, instant
messaging, voice services and chatbots. Kaleyra’s technology today makes
it possible to manage huge volumes of messages, with some 2 billion
notifications a month. For more information: www.kaleyra.com
Non-GAAP Financial Measure and Related Information
This communication includes reference to adjusted EBITDA, a financial
measure that is not prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”). Adjusted EBITDA is defined as of any
date of calculation, the consolidated pro forma earnings of Kaleyra and
its subsidiaries, before finance income and finance cost (including bank
charges), tax, depreciation and amortization calculated from the audited
consolidated financial statements of such party and its subsidiaries
(prepared in accordance with local GAAP), plus (i) transaction expenses
of Kaleyra and GigCapital, (ii) without duplication of clause (i),
severance or change of control payments, (iii) any expenses related to
company restructuring, (iv) any compensation expenses relating to stock
options, restricted stock units, restricted stock or similar equity
interests as may be issued by the post-combination company or any of its
subsidiaries to their employees and (v) any provision for the write down
of assets. The pro forma earnings of Kaleyra, which is an Italian
company, and its subsidiaries, which include subsidiaries outside of the
U.S., may not be prepared in conformance with Article 11 of Regulation
S-X of the SEC. Adjusted EBITDA is being used to determine whether
conditions have been achieved that would result in the issuance of the
earn-out and the vesting of the Deferred Shares. GigCapital management
believes that this non-GAAP measure of Kaleyra’s financial results will
provide useful information to management and investors regarding certain
financial and business trends relating to Kaleyra’s anticipated
financial condition and results of operations. Investors should not rely
on any single financial measure to evaluate Kaleyra’s anticipated
business.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of U.S. federal securities laws regarding the proposed
transactions with Kaleyra, the Charter Amendment, Extension,
Contributions and GigCapital. Such forward-looking statements include,
but are not limited to, statements regarding the approval of the Charter
Amendment, implementation of the Extension, payment of the
Contributions, closing of the combination and the expectations, hopes,
beliefs, intentions, plans, prospects or strategies regarding the
business combination and future business plans of the Kaleyra and
GigCapital management teams. Any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements.
The words “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words does
not mean that a statement is not forward-looking. The forward-looking
statements contained in this press release are based on certain
assumptions and analyses made by the management of GigCapital and/or
Kaleyra in light of their respective experience and their perception of
historical trends, current conditions and expected future developments
and their potential effects on Kaleyra and GigCapital as well as other
factors they believe are appropriate in the circumstances. There can be
no assurance that future developments affecting Kaleyra or GigCapital
will be those anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond the control of
the parties) or other assumptions that may cause actual results or
performance to be materially different from those expressed or implied
by these forward-looking statements, including that the GigCapital
stockholders will approve the Charter Amendment and the transaction, the
ability of the post-combination company to meet the NYSE listing
standards, and that Kaleyra will have sufficient capital upon the
approval of the transaction to operate as anticipated. Should one or
more of these risks or uncertainties materialize, or should any of the
assumptions being made prove incorrect, actual results may vary in
material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws.
KALEYRA S.PA. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands) (Unaudited) |
|||||||||
Years Ended December 31, | |||||||||
2018 | 2017 | ||||||||
Revenue (1) | $ | 77,949 | $ | 43,214 | |||||
Revenue – Solutions Infini prior to acquisition | 16,919 | 29,297 | |||||||
Revenue – Buc Mobile prior to acquisition | 3,650 | 5,052 | |||||||
Total Non-GAAP Revenue | $ | 98,518 | $ | 77,563 | |||||
Net Income (loss) (1) | $ | (7,219 | ) | $ | 509 | ||||
Adjustments to net Income (loss): | |||||||||
Income tax expense (benefit) | 1,341 | 493 | |||||||
Other income, net | (371 | ) | (334 | ) | |||||
Interest expense, net | 442 | 219 | |||||||
Foreign currency loss | 32 | 640 | |||||||
Depreciation and amortization | 1,581 | 347 | |||||||
Non-GAAP EBITDA | $ | (4,194 | ) | $ | 1,874 | ||||
Loss on equity investments prior to acquisitions | $ | 1,053 | $ | 36 | |||||
EBITDA for pre-acquisition period of subsidiaries | 1,207 | 1,374 | |||||||
Non-cash compensation expense | 1,170 | 550 | |||||||
Non-cash stock option expense | 6,638 | 135 | |||||||
Acquisition transaction costs | 1,537 | 306 | |||||||
Non-GAAP adjusted EBITDA | $ | 7,411 | $ | 4,275 | |||||
(1) Per unaudited US GAAP financial statements as of December 31, 2018 and 2017 |
Contacts
GigCapital:
Darrow Associates, Inc.
Jim Fanucchi
+1
(408) 404-5400
[email protected]
Additional Investor Contact:
MacKenzie Partners, Inc.
Bob
Marese/Dan Sullivan
+1 (212) 929-5500
[email protected]
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Cannabis
Medical Cannabis Market Report 2024-2030: Asia-Pacific Set to Witness Robust Growth, Driven by R&D Discovery Initiatives
Cannabis
Rubicon Organics Reports Q1 2024 Financial Results
SCHWAZZE
Schwazze Announces First Quarter 2024 Financial Results
Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time
DENVER, May 15, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the first quarter ended March 31, 2024.
“We delivered another period of revenue growth in Q1 as we further refined our retail strategy while contending with the prolonged competitive challenges in Colorado and New Mexico,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Throughout the quarter, we continued to sharpen our pricing and promotional efforts while enhancing the in-store experience, widening assortment, improving in-stock position, and advancing our loyalty program to attract and retain new customers. We also strengthened our wholesale business with quarter-over-quarter growth, while surpassing 30% total door penetration across both states.”
“The Colorado market remains highly competitive with more than 680 active recreational licenses, underscoring the importance of delivering an exceptional customer experience and fully integrated retail support program. Although retail pricing has recently stabilized, Colorado sales in Q1 were down 10% year-over-year due to lower volumes. Nonetheless, we significantly outpaced the market as our sales were up 9%, demonstrating the effectiveness of our operating playbook to compete in challenging environments. We expect to continue driving improvements in customer acquisition, retention, and loyalty as we further increase market share in the state.”
“In New Mexico, the proliferation of new licenses continued to outpace state cannabis sales as store count in Q1 increased 31% year-over-year while the market grew only 13%. In addition to pricing and promotional efforts, we’ve focused on driving traffic into our stores by expanding assortment with high quality flower and delivering an elevated customer experience. The New Mexico regulatory body has also increased its license enforcement efforts in recent months, contributing to more than 70 store closures and a 33% sequential decrease in net new store openings in the first quarter. We will continue to support the New Mexico Cannabis Control Division as it develops its regulatory framework.”
“Over the past four years we have rapidly scaled our footprint through 13 acquisitions, building a leading retail presence in both Colorado and New Mexico. We are beginning to see positive momentum from our pricing and promotional strategy and will remain focused on driving operating efficiencies while further optimizing our assets as we consolidate cultivation facilities and eliminate underperforming stores that do not meet our high-margin thresholds. We believe these initiatives, coupled with our operating playbook and strict cost controls, will enable us to return to stronger levels of profitability moving forward.”
First Quarter 2024 Financial Summary
$ in Thousands USD |
Q1 2024 |
Q4 2023 |
Q1 2023 |
Total Revenue |
$41,601 |
$43,325 |
$40,001 |
Gross Profit |
$17,934 |
$7,034[1] |
$21,849 |
Operating Expenses |
$20,643 |
$23,276 |
$16,199 |
Income (Loss) from Operations |
$(2,709) |
$(16,242) |
$5,650 |
Adjusted EBITDA[2] |
$7,341 |
$10,953 |
$14,525 |
Operating Cash Flow |
$(3,700) |
$3,452 |
$(880) |
Recent Highlights
- Announced the grand opening of a medical and recreational dispensary in March under the Everest Apothecary banner in Las Cruces, New Mexico, increasing the Company’s retail footprint to 34 stores across the state.
- Increased wholesale penetration in the first quarter to more than 30% of total doors in Colorado and New Mexico.
- Lowell Herb Co. pre-roll sales increased more than 3x quarter-over-quarter in Colorado, where it continues to be the #1 pre-roll in the state.
- Wana gummy sales up more than 2x quarter-over-quarter in New Mexico.
First Quarter 2024 Financial Results
Total revenue in the first quarter of 2024 increased 4% to $41.6 million compared to $40.0 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period, partially offset by continued pricing pressure and the proliferation of new licenses in New Mexico.
Gross profit for the first quarter of 2024 was $17.9 million or 43.1% of total revenue, compared to $21.8 million or 54.6% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure in New Mexico, as well as higher medical sales mix in Colorado.
____________________________ |
1 Q4 2023 Gross Profit includes one-time, non-cash inventory adjustments of approximately $13.1 million comprised of $3.1 million of product consolidation, obsolescence, and shrinkage expenses, $4.3 million of net realizable value adjustments, and $5.8 million of fair value adjustments on acquired inventory in New Mexico in 2023. |
Operating expenses for the first quarter of 2024 were $20.6 million compared to $16.2 million for the same quarter last year. The year-ago period benefitted from a payroll tax credit of $3.9M. The remaining increase was primarily driven by personnel expenses and four-wall SG&A costs associated with 21 additional stores in Colorado and New Mexico that are still ramping.
Loss from operations for the first quarter of 2024 was $2.7 million compared to income from operations of $5.6 million in the same quarter last year. Net loss was $16.1 million for the first quarter of 2024 compared to net income of $1.7 million for the same quarter last year.
Adjusted EBITDA for the first quarter of 2024 was $7.3 million compared to $14.5 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses associated with the 21 additional stores that are still ramping.
As of March 31, 2024, cash and cash equivalents were $13.2 million compared to $19.2 million on December 31, 2023. Total debt as of March 31, 2024, was $159.7 million compared to $156.8 million on December 31, 2023.
Conference Call
The Company will conduct a conference call today, May 15, 2024, at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2024.
Schwazze management will host the conference call, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing [email protected].
Date: Wednesday, May 15, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (888) 664-6383
International dial-in: (416) 764-8650
Conference ID: 84167910
Webcast: SHWZ Q1 2024 Earnings Call
The conference call will also be broadcast live and available for replay on the investor relations section of the Company’s website at https://ir.schwazze.com.
Toll-free replay number: (888) 390-0541
International replay number: (416) 764-8677
Replay ID: 167910
If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
About Schwazze
Schwazze (OTCQX: SHWZ) (Cboe CA: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to explore taking 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.
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.
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. To learn more about Schwazze, visit https://schwazze.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include financial outlooks; any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of our management team for future operations; expectations in connection with the Company’s previously announced business plans; any statements regarding future economic conditions or performance; and statements regarding the intent, belief or current expectations of our management team. 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. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Therefore, 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.
Investor Relations Contact
Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
[email protected]
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended March 31, 2024 and December 31, 2023
Expressed in U.S. Dollars
March 31, |
December 31, |
||||
2024 |
2023 |
||||
ASSETS
|
|||||
Current Assets |
|||||
Cash & Cash Equivalents |
$ |
13,151,317 |
$ |
19,248,932 |
|
Accounts Receivable, net of Allowance for Doubtful Accounts |
3,356,032 |
4,261,159 |
|||
Inventory |
26,382,184 |
25,787,793 |
|||
Marketable Securities, net of Unrealized Loss of $347,516 and Loss of $1,816, respectively |
108,583 |
456,099 |
|||
Prepaid Expenses & Other Current Assets |
3,502,310 |
3,914,064 |
|||
Total Current Assets |
46,500,426 |
53,668,047 |
|||
Non-Current Assets |
|||||
Fixed Assets, net Accumulated Depreciation of $10,061,700 and $8,741,782, respectively |
31,326,000 |
31,113,630 |
|||
Investments |
2,000,000 |
2,000,000 |
|||
Investments Held for Sale |
– |
202,111 |
|||
Goodwill |
67,492,705 |
67,499,199 |
|||
Intangible Assets, net Accumulated Amortization of $36,483,160 and $32,706,765, respectively |
162,391,482 |
166,167,877 |
|||
Other Non-Current Assets |
1,328,187 |
1,263,837 |
|||
Operating Lease Right of Use Assets |
34,575,832 |
34,233,142 |
|||
Deferred Tax Assets, net |
992,144 |
1,996,489 |
|||
Total Non-Current Assets |
300,106,350 |
304,476,285 |
|||
Total Assets |
$ |
346,606,776 |
$ |
358,144,332 |
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|||||
Current Liabilities |
|||||
Accounts Payable |
$ |
9,443,233 |
$ |
13,341,561 |
|
Accrued Expenses |
8,106,618 |
7,774,691 |
|||
Derivative Liabilities |
1,319,845 |
638,020 |
|||
Lease Liabilities – Current |
5,186,316 |
4,922,724 |
|||
Current Portion of Long Term Debt |
29,579,713 |
3,547,011 |
|||
Income Taxes Payable |
28,235,039 |
25,232,782 |
|||
Total Current Liabilities |
81,870,764 |
55,456,789 |
|||
Non-Current Liabilities |
|||||
Long Term Debt, net of Debt Discount & Issuance Costs |
130,120,753 |
153,262,203 |
|||
Lease Liabilities – Non-Current |
30,735,072 |
30,133,452 |
|||
Total Non-Current Liabilities |
160,855,825 |
183,395,655 |
|||
Total Liabilities |
$ |
242,726,589 |
$ |
238,852,444 |
|
Stockholders’ Equity |
|||||
Preferred Stock, $0.001 Par Value. 10,000,000 Shares Authorized; 82,185 Shares Issued and |
|||||
82,185 Outstanding as of March 31, 2024 and 85,534 Shares Issued and 85,534 Outstanding as of |
|||||
December 31, 2023. |
82 |
86 |
|||
Common Stock, $0.001 Par Value. 250,000,000 Shares Authorized; 79,168,539 Shares Issued |
|||||
and 78,248,389 Shares Outstanding as of March 31, 2024 and 74,888,392 Shares Issued |
|||||
and 73,968,242 Shares Outstanding as of December 31, 2023. |
79,169 |
74,888 |
|||
Additional Paid-In Capital |
202,677,665 |
202,040,968 |
|||
Accumulated Deficit |
(96,843,602) |
(80,790,927) |
|||
Common Stock Held in Treasury, at Cost, 920,150 Shares Held as of March 31, 2024 and |
|||||
920,150 Shares Held as of December 31, 2023. |
(2,033,127) |
(2,033,127) |
|||
Total Stockholders’ Equity |
103,880,187 |
119,291,888 |
|||
Total Liabilities & Stockholders’ Equity |
$ |
346,606,776 |
$ |
358,144,332 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Operating Revenues |
|||||
Retail |
$ |
37,633,252 |
$ |
35,820,111 |
|
Wholesale |
3,898,320 |
4,058,925 |
|||
Other |
69,421 |
121,900 |
|||
Total Revenue |
41,600,993 |
40,000,936 |
|||
Total Cost of Goods & Services |
23,667,319 |
18,152,163 |
|||
Gross Profit |
17,933,674 |
21,848,773 |
|||
Operating Expenses |
|||||
Selling, General and Administrative Expenses |
11,835,818 |
10,100,934 |
|||
Professional Services |
1,671,881 |
1,187,364 |
|||
Salaries |
6,880,988 |
4,695,971 |
|||
Stock Based Compensation |
253,916 |
214,544 |
|||
Total Operating Expenses |
20,642,603 |
16,198,813 |
|||
Income from Operations |
(2,708,929) |
5,649,960 |
|||
Other Income (Expense) |
|||||
Interest Expense, net |
(8,307,369) |
(7,745,854) |
|||
Unrealized Gain (Loss) on Derivative Liabilities |
(681,825) |
8,501,685 |
|||
Other Loss |
10,500 |
– |
|||
Loss on Investment |
(33,382) |
– |
|||
Unrealized Gain on Investment |
(347,516) |
1,816 |
|||
Total Other Income (Expense) |
(9,359,592) |
757,647 |
|||
Pre-Tax Net Income (Loss) |
(12,068,521) |
6,407,607 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Less: Accumulated Preferred Stock Dividends for the Period |
(2,155,259) |
(2,029,394) |
|||
Net Income (Loss) Attributable to Common Stockholders |
$ |
(18,207,934) |
$ |
(283,965) |
|
Earnings (Loss) per Share Attributable to Common Stockholders |
|||||
Basic Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.01) |
|
Diluted Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.06) |
|
Weighted Average Number of Shares Outstanding – Basic |
76,006,932 |
55,835,501 |
|||
Weighted Average Number of Shares Outstanding – Diluted |
76,006,932 |
101,608,278 |
|||
Comprehensive Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Cash Flows from Operating Activities: |
|||||
Net Income (Loss) for the Period |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities |
|||||
Depreciation & Amortization |
5,096,314 |
6,151,395 |
|||
Non-Cash Interest Expense |
1,031,431 |
991,184 |
|||
Non-Cash Lease Expense |
2,871,226 |
2,251,459 |
|||
Deferred Taxes |
1,004,345 |
(637,225) |
|||
Loss on Investment |
202,111 |
– |
|||
Change in Derivative Liabilities |
681,825 |
(8,501,685) |
|||
Amortization of Debt Issuance Costs |
421,512 |
421,513 |
|||
Amortization of Debt Discount |
2,303,246 |
1,999,933 |
|||
(Gain) Loss on Investments, net |
347,516 |
(1,816) |
|||
Stock Based Compensation |
640,974 |
214,544 |
|||
Changes in Operating Assets & Liabilities (net of Acquired Amounts): |
|||||
Accounts Receivable |
905,127 |
(118,181) |
|||
Inventory |
(587,900) |
(3,023,251) |
|||
Prepaid Expenses & Other Current Assets |
411,754 |
(3,036,801) |
|||
Other Assets |
(64,350) |
360,674 |
|||
Change in Operating Lease Liabilities |
(2,348,703) |
(1,531,765) |
|||
Accounts Payable & Other Liabilities |
(3,566,401) |
(3,464,671) |
|||
Income Taxes Payable |
3,002,257 |
5,299,403 |
|||
Net Cash Provided by (Used in) Operating Activities |
(3,700,390) |
(879,861) |
|||
Cash Flows from Investing Activities: |
|||||
Collection of Notes Receivable |
– |
10,631 |
|||
Purchase of Fixed Assets |
(1,532,287) |
(2,913,394) |
|||
Net Cash Provided by (Used in) Investing Activities |
(1,532,287) |
(2,902,763) |
|||
Cash Flows from Financing Activities: |
|||||
Payment on Notes Payable |
(864,938) |
– |
|||
Net Cash Provided by (Used in) Financing Activities |
(864,938) |
– |
|||
Net (Decrease) in Cash & Cash Equivalents |
(6,097,615) |
(3,782,624) |
|||
Cash & Cash Equivalents at Beginning of Period |
19,248,932 |
38,949,253 |
|||
Cash & Cash Equivalents at End of Period |
$ |
13,151,317 |
$ |
35,166,628 |
|
Supplemental Disclosure of Cash Flow Information: |
|||||
Cash Paid for Interest |
$ |
4,515,205 |
$ |
6,540,748 |
MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Interest Expense, net |
8,307,369 |
7,745,854 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Other (Income) Expense, net of Interest Expense |
1,052,223 |
(8,503,501) |
|||
Depreciation & Amortization |
5,618,834 |
6,612,814 |
|||
Earnings Before Interest, Taxes, Depreciation and |
|||||
Amortization (EBITDA) (non-GAAP) |
$ |
2,909,905 |
$ |
12,262,774 |
|
Non-Cash Stock Compensation |
253,916 |
214,544 |
|||
Deal Related Expenses |
637,761 |
1,195,802 |
|||
Capital Raise Related Expenses |
20,760 |
35,068 |
|||
Severance |
484,561 |
118,436 |
|||
Retention Program Expenses |
807,500 |
280,632 |
|||
Pre-Operating & Dark Carry Expenses |
1,053,837 |
391,917 |
|||
One-Time Legal Settlements |
417,653 |
– |
|||
Other Non-Recurring Items |
754,751 |
25,707 |
|||
Adjusted EBITDA (non-GAAP) |
$ |
7,340,644 |
$ |
14,524,880 |
|
Revenue |
41,600,993 |
40,000,936 |
|||
Adjusted EBITDA Percent |
17.6 % |
36.3 % |
View original content:https://www.prnewswire.co.uk/news-releases/schwazze-announces-first-quarter-2024-financial-results-302146858.html
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