Release – Schwazze Announces Preliminary Third Quarter 2024 Financial Results

Research News and Market Data on SHWZ

DENVER, Nov. 07, 2024 (GLOBE NEWSWIRE) — Medicine Man Technologies, Inc., operating as Schwazze, (OTC: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced preliminary financial and operational results for the third quarter ended September 30, 2024.

“We continued to generate momentum from our retail growth and optimization initiatives in Q3, reflected by our ability to outpace two highly competitive markets while generating sequential improvements in profitability and positive cash flow from operations,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Our efforts to sharpen our pricing and promotional strategy, elevate the in-store experience, and improve product quality, assortment and in-stock positions are yielding positive results. I’m proud of our team’s hard work and dedication to drive these improvements in the overall customer experience, which has led to increased store traffic in both Colorado and New Mexico. Over the past year, our focused efforts to optimize our operations have built a solid foundation, setting the stage for sustained growth and enhanced levels of profitability in the year ahead.

“Due to our ongoing re-review process with our new auditor, Baker Tilly, we expect a delay in filing our Form 10-Q for the quarter ended September 30, 2024. Our team, in close collaboration with Baker Tilly, is making every effort to complete this re-review promptly. We expect to release our unaudited third quarter results and host a conference call in the coming weeks to discuss our financial and operational performance in greater detail.”

Q3 2024 Preliminary Financial Results

Based on preliminary and unaudited results, the Company expects to report the following for the third quarter ended September 30, 2024:

  • Revenue of approximately $42 million
  • Adjusted EBITDA of approximately $11 million
  • Cash flow from operations of approximately $0.2 million

At quarter end, the Company held cash and cash equivalents of approximately $11 million with principal amount of debt outstanding of approximately $196 million.

Update on Delayed Filing

As previously announced on April 8, 2024, Schwazze dismissed BF Borgers CPA PC (“BF Borgers”) as its independent registered public accountant and engaged Baker Tilly US, LLP (“Baker Tilly”) as its new independent accountant. Subsequent to the transition, on May 3, 2024, the SEC issued an Order against BF Borgers for systemic failures in meeting PCAOB standards, which impacted over 1,500 SEC filings and affected at least 75 percent of BF Borgers’ 369 clients.

As a result of the SEC Order, Schwazze’s new auditor needs additional time to complete its prior period review, which includes re-auditing the Company’s fiscal year 2023 financial statements and re-reviewing the closing of its 2022 balance sheet prior to filing its 2024 Annual Report. Baker Tilly is actively working to re-audit the Company’s financial statements for the associated periods.

Due to the ongoing re-review process, Schwazze anticipates a delay in filing its Quarterly Report on Form 10-Q for the three- and nine-months ending September 30, 2024. Moreover, the Company expects to simultaneously file its Quarterly Report on Form 10-Q for the three months ending March 31, 2024, and June 30, 2024.

About Schwazze

Schwazze (OTC: 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
ir@schwazze.com

Release – Schwazze Announces Second Quarter 2024 Financial Results

Research News and Market Data on SHWZ

Growth and Restructuring Initiatives Lead to Quarter-over-Quarter Growth Across all Key Financial Metrics in Q2

Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time

DENVER, Aug. 13, 2024 (GLOBE NEWSWIRE) — Medicine Man Technologies, Inc., operating as Schwazze, (OTC: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the second quarter ended June 30, 2024.

“We made solid progress on our growth and optimization initiatives in Q2 and generated sequential quarterly growth across all key financial metrics while advancing our retail strategy,” said Forrest Hoffmaster, Interim CEO of Schwazze. “During the quarter, we continued to deepen our customer understanding, sharpen our pricing and promotional strategy, enhance the in-store experience, and improve our assortment and in-stock positions. These efforts drove increased store traffic and market share expansion in both Colorado and New Mexico. In our wholesale business, we generated our second consecutive period of quarter-over-quarter growth in both states with penetration growth and catalog expansion while improving wholesale margins.”

“To drive growth in the competitive Colorado environment, we continued to elevate the retail experience and loyalty offerings to improve customer acquisition and retention. As a result, we outpaced the market on a year-over-year basis and generated 6% growth in a market that declined 11% during the same period. As part of our restructuring initiative, we shuttered our non-plant touching wholesale operation in Denver and eliminated three underperforming stores that no longer met our high-margin expectations. We continue to evaluate our asset base to ensure we’re running as efficiently as possible while maximizing output.”

“In New Mexico, state cannabis sales were up 7% across a store base that was 20% higher year-over-year in Q2. The state’s regulatory body continued to increase its enforcement, helping lead to a reduction in net new store openings, which we anticipate will flip from positive to negative in the back half of the year. Our consistent efforts to optimize our pricing and promotional strategy, expand assortment with high-quality flower, and deliver an enhanced customer experience is generating momentum. In the second quarter, we grew revenue 9% sequentially compared to the state’s 2%, demonstrating the effectiveness of our operating playbook to compete in challenging environments.”

“Looking ahead, we will continue to refine our retail strategy while further driving operating efficiencies across our retail, cultivation, and manufacturing assets. Our recent debt restructuring provides us with the financial flexibility to execute our strategic growth initiatives in Colorado and New Mexico. Over the past year, our consistent efforts to optimize operations have established a solid foundation, positioning us for continued growth and stronger levels of profitability in the second half of 2024.”

Recent Highlights

  • In July 2024, Schwazze extended the maturities of its original $15.0 million Altmore, LLC Loan Agreement and its $17.0 million Reynold Greenleaf & Associates LLC Promissory Note to November 2025 (both previously due in February 2025) in a step toward addressing future debt obligations.
  • Announced the grand opening of a medical and recreational dispensary in June under the R. Greenleaf banner in Bernalillo, New Mexico, increasing the Company’s retail footprint to 35 stores across the state.
  • Closed the Company’s Colorado distribution center and shuttered its non-plant touching wholesale operations, The Big Tomato, in Colorado to concentrate on core business operations.
  • Closed three underperforming Colorado dispensaries and streamlined the Company’s corporate office support structure to strengthen its retail forward strategy.
  • Increased wholesale penetration during the quarter to approximately 34% and 35% of total doors in Colorado and New Mexico, respectively.
  • Expanded wholesale catalog in New Mexico with the launch of Lowell Farms pre-rolls.
  • Generated 28% sequential wholesale unit growth in New Mexico with Wana gummies.

1 Adjusted EBITDA is a non-GAAP measure as defined by the SEC, and represents earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share-based compensation, one-time transaction related expenses, or other non-operating costs. The Company uses Adjusted EBITDA as it believes it better explains the results of its core business. See “ADJUSTED EBITDA RECONCILIATION (NON-GAAP)” section herein for an explanation and reconciliations of non-GAAP measure used throughout this release.

Second Quarter 2024 Financial Results

Total revenue in the second quarter of 2024 increased 2% to $43.2 million compared to $42.4 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 lower wholesale revenue and continued pricing pressure from the proliferation of new licenses in New Mexico.

Gross profit for the second quarter of 2024 was $19.0 million or 44.0% of total revenue, compared to $23.0 million or 54.4% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure and greater mix of third-party purchasing in New Mexico to broaden assortment in the state, as well as higher medical sales mix in Colorado.

Operating expenses for the second quarter of 2024 were $21.8 million compared to $18.1 million for the same quarter last year. The increase was primarily driven by four-wall SG&A costs associated with five additional stores in Colorado and New Mexico, as well as non-recurring professional service fees related to prior period workpaper review stemming from work required to comply with SEC based on their Order against BF Borgers.

Loss from operations for the second quarter of 2024 was $2.7 million compared to income from operations of $5.0 million in the same quarter last year. Net loss was $13.9 million for the second quarter of 2024 compared to $6.6 million for the same quarter last year.

Adjusted EBITDA for the second quarter of 2024 was $9.0 million compared to $13.8 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses.

As of June 30, 2024, cash and cash equivalents were $12.3 million compared to $19.2 million on December 31, 2023. Total debt as of June 30, 2024, was $163.4 million compared to $156.8 million on December 31, 2023.

Conference Call

The Company will conduct a conference call today, August 13, 2024, at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 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 ir@schwazze.com.

Date: Tuesday, August 13, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (844) 825-9789
International dial-in: (412) 317-5180
Conference ID: 10191294
Webcast: SHWZ Q2 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: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 10191294

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

About Schwazze

Schwazze (OTC: 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
ir@schwazze.com

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Release – Schwazze Sets Second Quarter 2024 Conference Call for August 13, 2024 at 5:00 P.M. ET

Research News and Market Data on SHWZ

DENVER, July 30, 2024 (GLOBE NEWSWIRE) — Medicine Man Technologies, Inc., operating as Schwazze, (OTC: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), will host a conference call on Tuesday, August 13, 2024 at 5:00 p.m. Eastern time to discuss its financial and operational results for the second quarter ended June 30, 2024. The Company’s results will be reported in a press release prior to the call.

The Schwazze management team 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 ir@schwazze.com.

Date: Tuesday, August 13, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (844) 825-9789
International dial-in: (412) 317-5180
Conference ID: 10191294
Webcast: SHWZ Q2 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: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 10191294

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

About Schwazze

Schwazze (OTC: SHWZ) (Cboe CA: 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.

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 http://www.schwazze.com/.

Investor Relations Contact

Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
ir@schwazze.com

Release – Schwazze Announces Transition to OTC Expert Market and Provides Update on Delayed Filing

Research News and Market Data on SHWZ

DENVER, July 01, 2024 (GLOBE NEWSWIRE) — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced that its common stock will soon transition to the OTC Expert Market, under the ticker symbol “SHWZ” due to the Company’s delayed filing of its Form 10-Q for the period ended March 31, 2024, with the Securities and Exchange Commission (“SEC”). The delay was a result of an SEC Order regarding the Company’s previous auditor, BF Borgers CPA PC (“BF Borgers”), who was dismissed as Schwazze’s auditor prior to the SEC’s Order.

As previously announced on April 8, 2024, Schwazze dismissed BF Borgers as its independent registered public accountant and engaged Baker Tilly US, LLP (“Baker Tilly”) as its new independent accountant. Subsequent to the transition, on May 3, 2024, the SEC issued an Order to BF Borgers and its owner citing the deliberate and systemic failures to comply with Public Company Accounting Oversight Board (“PCAOB”) standards in its audits and reviews, which were incorporated in more than 1,500 SEC filings from January 2021 through June 2023 and affected at least 75 percent of BF Borgers’ 369 clients.

As a result of the SEC Order, the Company’s new auditor needs additional time to complete its prior period review before the Company files its Quarterly Report for the three months ended March 31, 2024. In addition, Baker Tilly is re-auditing its fiscal year 2023 financial statements and re-review the closing of its 2022 balance sheet prior to filing its 2024 Annual Report. Baker Tilly is actively working to re-audit the Company’s financial statements for the associated periods.

The Company intends to complete the necessary work to be current in its reporting obligations with the SEC in the coming months.

“Our decision to dismiss BF Borgers as our auditor was a strategic move to bolster our accounting rigor and it proved to be the right decision given the SEC’s subsequent charges on BF Borgers,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Although our OTC listing was affected by BF Borgers’ actions, we are diligently working with our new auditor to complete the re-audit process in an efficient and timely manner. We are also pursuing recoveries for all fees related to BF Borgers.”

As a result of the delayed filing, Schwazze has sought from, and is in communication with, the Ontario Securities Commission (“OSC”) concerning the availability of a management cease trade order (“MCTO”) in respect of the missed deadline for the Quarterly Report ended March 31, 2024. If an MCTO is granted, it is expected that the general investing public will continue to be able to trade in the Company’s listed common shares, however, the Company’s Named Executive Officers will not be able to trade in the Company’s common shares. The Company confirms it will comply with the provisions of the alternative information guidelines under National Policy 12-203 – Management Cease Trade Orders for so long as an MCTO remains in effect.

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
ir@schwazze.com

Release – Schwazze Announces First Quarter 2024 Financial Results

Research News and Market Data on SHWZ

DENVER, May 15, 2024 /CNW/ – 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

  • 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. 
2  Adjusted EBITDA is a non-GAAP measure as defined by the SEC, and represents earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share-based compensation, one-time transaction related expenses, or other non-operating costs. The Company uses Adjusted EBITDA as it believes it better explains the results of its core business. See “ADJUSTED EBITDA RECONCILIATION (NON-GAAP)” section herein for an explanation and reconciliations of non-GAAP measure used throughout this release.

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 ir@schwazze.com.

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
ir@schwazze.com

MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended March 31, 2024 and December 31, 2023
Expressed in U.S. Dollars

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Release – Schwazze Announces Management Changes to Support The Next Phase Of Company’s Growth

Research, News, and Market Data on SHWZ

October 12, 2022

OTCQX: SHWZ
NEO: SHWZ

DENVER, Oct. 12, 2022 /CNW/ – Medicine Man Technologies operating as Schwazze, (OTCQX: SHWZ) (NEO: SHWZ) (“Schwazze” or the “Company”), announces the following leadership changes within the Company’s team:

President

Nirup Krishnamurthy, Chief Operating Officer, will become President of Schwazze effective immediately. Nirup will assume oversight and responsibility for strategic planning, growth initiatives in core markets, and operational execution. He will work with the Executive Leadership Team (“ELT”) to accelerate innovation, growth, and performance. The ELT will report directly to him.  Nirup will continue to report directly to Justin Dye, Chairman and CEO of Schwazze. 

Nirup joined Schwazze in 2020, bringing more than 25 years of experience in innovation, technology, retail operations and M&A at Fortune 500 companies. Nirup has played an integral role in building the Company and growing revenue from $9 million to a run-rate of $176 million and run-rate EBITDA of $60 million.  Under his leadership, Schwazze has grown from less than 20 employees to over 725 today.  Prior to joining the Company, he held C-level roles with United Airlines, Northern Trust Bank and former national grocery retailer A&P. He earned a bachelor’s in Mechanical Engineering and a doctorate in Industrial Engineering from State University of New York, Buffalo.

Chief Financial Officer

Nancy Huber, Chief Financial Officer, has announced that she will be retiring from Schwazze due to personal reasons. Nancy will remain with the Company as CFO for an indefinite period of time while an active search for her replacement is being conducted and to ensure an orderly transition of responsibilities.

Nancy was appointed to the position of CFO in 2019 and her breadth and depth of experience in financial oversight of publicly held companies has been instrumental in helping Schwazze grow into the multi-faceted, vertical operator that it is today; from less than 20 employees in 2019 to over 725 in two states today.

Nancy’s background includes 30+ years in multifunctional management, strategic planning, IPOs, mergers and acquisitions, SEC reporting, investor relations, intellectual property and systems implementation. Nancy earned her bachelor’s in chemical engineering from Purdue University and an MBA from the Kellogg School of Management.

The Board of Directors thanks Nancy for her important contributions to the Company and wishes her well in her future endeavors.  Effective immediately, a search for a CFO has been initiated by the Board.

Justin Dye, Chairman stated: “I am very pleased to announce Nirup’s promotion to President of Schwazze.  Nirup has delivered results and been a strong leader for the Company. There will be continuity of strategy under Nirup’s leadership, which I am confident will lead to Company growth.  On behalf of Schwazze’s Board of Directors, we look forward to his expanded leadership role within the Company supporting our continued development into the most Admired Cannabis Companies in the industryI will continue my role as CEO and Chairman of the Board of Directors providing strategic direction and oversight.” Justin continued; “I would also like to acknowledge the hard work, dedication, and leadership that Nancy has brought to the Company as CFO. We are sad to see her leave her position as a key member of our leadership team. I would like to thank her personally, for her time here at Schwazze and on behalf of the Board, we wish her the very best in her future.

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. 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 “plan,” “will,” “may,”, “predicts,” or similar words. 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) 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; (v) difficulties in securing regulatory approval to market our products and product candidates; (vi) our ability to successfully execute our growth strategy in Colorado and outside the state, (vii) our ability to consummate the acquisition described in this press release or to identify and consummate future acquisitions that meet our criteria, (viii) our ability to successfully integrate acquired businesses and realize synergies therefrom, (ix) the ongoing COVID-19 pandemic, * the timing and extent of governmental stimulus programs, (xi) the uncertainty in the application of federal, state and local laws to our business, and any changes in such laws, and * out ability to satisfy the closing conditions for the private finding described in this press release. 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.

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SOURCE Medicine Man Technologies, Inc.