Attached files
| file | filename |
|---|---|
| EX-99.2 - SUCCESS NUTRIENTS FINANCIAL STATEMENTS - Medicine Man Technologies, Inc. | medman_ex9902.htm |
| EX-99.1 - PONO PUBLICATIONS FINANCIAL STATEMENTS - Medicine Man Technologies, Inc. | medman_ex9901.htm |
| 8-K/A - FORM 8-K/A - Medicine Man Technologies, Inc. | medman_8ka.htm |
Exhibit 99.3
Combined Pro forma financials for the six months ended June 30, 2017 and year ended December 31, 2016
(Unaudited)
MEDICINE MAN TECHNOLOGIES, INC.
BALANCE SHEETS
Expressed in U.S. Dollars
| Medicine Man Tech | Success | Pono | Acquisition | Eliminations | Total | |||||||||||||||||||
| June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 162,554 | $ | 26,631 | $ | 11,414 | – | $ | – | $ | 200,599 | |||||||||||||
| Accounts receivable, net | 169,035 | 62,365 | – | – | – | 231,400 | ||||||||||||||||||
| Accounts receivable - related party | – | 24,294 | – | – | – | 24,294 | ||||||||||||||||||
| Intercompany receivable | 1,000 | 55,858 | – | – | (56,858 | ) | – | |||||||||||||||||
| Available for sale securities | 17,701 | – | – | – | – | 17,701 | ||||||||||||||||||
| Inventory | – | 92,798 | 16,376 | – | – | 109,174 | ||||||||||||||||||
| Short-term note receivable | 278,893 | – | – | – | – | 278,893 | ||||||||||||||||||
| Other assets | 32,667 | 17,340 | – | – | – | 50,007 | ||||||||||||||||||
| Total current assets | 661,850 | 279,285 | 27,790 | – | (56,858 | ) | 912,067 | |||||||||||||||||
| Non-current assets | ||||||||||||||||||||||||
| Fixed assets, net accumulated depreciation | $ | 137,111 | $ | 16,922 | $ | – | – | $ | – | $ | 154,033 | |||||||||||||
| Intangible assets, net accumulated amortization | 3,443 | 69,426 | – | – | – | 72,869 | ||||||||||||||||||
| Goodwill | – | – | – | 6,301,080 | – | 6,301,080 | ||||||||||||||||||
| Total non-current assets | 140,554 | 86,348 | – | 6,301,080 | – | 6,527,982 | ||||||||||||||||||
| Total assets | $ | 802,404 | $ | 365,633 | $ | 27,790 | $ | 6,301,080 | $ | (56,858 | ) | $ | 7,440,049 | |||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||
| Accounts payable | $ | 29,059 | $ | 2,288 | $ | 981 | $ | – | $ | – | $ | 32,328 | ||||||||||||
| Other liabilities | – | 3,467 | 1,486 | – | – | 4,953 | ||||||||||||||||||
| Intercompany accounts payable | 55,858 | 6,760 | – | – | (62,618 | ) | – | |||||||||||||||||
| Total current liabilities | 84,917 | 12,515 | 2,467 | – | (62,618 | ) | 37,281 | |||||||||||||||||
| Long-term liabilities | ||||||||||||||||||||||||
| Note payable - related party | $ | – | $ | 58,280 | $ | – | $ | – | $ | – | $ | 58,280 | ||||||||||||
| Derivative liability | 23,017 | – | – | – | – | $ | 23,017 | |||||||||||||||||
| Convertible loan | 675,000 | – | – | – | – | 675,000 | ||||||||||||||||||
| Total long-term liabilities | 698,017 | 58,280 | – | – | – | 756,297 | ||||||||||||||||||
| Total liabilities | 782,934 | 70,795 | 2,467 | – | (62,618 | ) | 793,578 | |||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||
| Common stock $0.01 par value | $ | 19,118 | $ | 10,000 | $ | 10,000 | $ | – | $ | (20,000 | ) | $ | 19,118 | |||||||||||
| Additional paid-in capital | 3,706,635 | 150,000 | – | 6,301,080 | 175,921 | 10,333,636 | ||||||||||||||||||
| Additional paid-in capital - Warrants | 2,100,318 | – | – | – | – | 2,100,318 | ||||||||||||||||||
| Shareholder distributions | – | (64,037 | ) | (27,445 | ) | – | 91,482 | – | ||||||||||||||||
| Accumulated other comprehensive income (loss) | (14,854 | ) | – | – | – | – | (14,854 | ) | ||||||||||||||||
| Retained earnings | (5,791,747 | ) | 198,875 | 42,768 | – | (241,643 | ) | (5,791,747 | ) | |||||||||||||||
| Total shareholders' equity | 19,470 | 294,838 | 25,323 | 6,301,080 | 5,760 | 6,646,471 | ||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 802,404 | $ | 365,633 | $ | 27,790 | $ | 6,301,080 | $ | (56,858 | ) | $ | 7,440,049 | |||||||||||
See accompanying notes to the financial statements
| 1 |
MEDICINE MAN TECHNOLOGIES, INC.
STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME
For the Six Months Ended June 30, 2017
Expressed in U.S. Dollars
| Medicine Man Tech | Success | Pono | Acquisition | Eliminations | Total | |||||||||||||||||||
| June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | June 30, 2017 | |||||||||||||||||||
| Operating revenues | ||||||||||||||||||||||||
| Product sales | $ | 229,214 | $ | 397,532 | $ | 126,604 | $ | – | $ | (307,355 | ) | $ | 445,995 | |||||||||||
| Product sales - related party | 122,944 | 122,944 | – | – | (41,574 | ) | 204,314 | |||||||||||||||||
| Consulting fees | 565,796 | 55,806 | – | – | (44,806 | ) | 576,796 | |||||||||||||||||
| Licensing fees | 501,313 | – | – | – | – | 501,313 | ||||||||||||||||||
| Seminar fees | 4,222 | – | – | – | – | 4,222 | ||||||||||||||||||
| Total revenue | 1,423,489 | 576,282 | 126,604 | – | (393,735 | ) | 1,732,640 | |||||||||||||||||
| Cost of services | ||||||||||||||||||||||||
| Cost of services | $ | 411,124 | $ | 92,641 | $ | 43,693 | $ | – | $ | (87,057 | ) | $ | 460,401 | |||||||||||
| Cost of services - related party | 26,036 | 26,036 | – | – | (6,625 | ) | 45,447 | |||||||||||||||||
| Total cost of services | 437,160 | 118,677 | 43,693 | – | (93,682 | ) | 505,848 | |||||||||||||||||
| Gross profit | $ | 986,329 | $ | 457,605 | $ | 82,911 | $ | – | $ | (300,053 | ) | $ | 1,226,792 | |||||||||||
| Operating expenses | ||||||||||||||||||||||||
| General and administrative | $ | 435,296 | $ | 128,580 | $ | 46,289 | $ | – | $ | (94,485 | ) | $ | 515,680 | |||||||||||
| Professional services | 233,483 | 94,271 | 36,418 | – | (64,460 | ) | 299,712 | |||||||||||||||||
| One-time acquisition cost | 98,701 | – | – | – | – | 98,701 | ||||||||||||||||||
| Advertising | 89,509 | 53,394 | 26,735 | – | (39,104 | ) | 130,534 | |||||||||||||||||
| Stock based compensation | 4,480,318 | – | – | – | – | 4,480,318 | ||||||||||||||||||
| Salaries | 64,447 | 126,636 | – | – | (69,738 | ) | 121,345 | |||||||||||||||||
| Total operating expenses | $ | 5,401,754 | $ | 402,881 | $ | 109,442 | $ | – | $ | (267,787 | ) | $ | 5,646,290 | |||||||||||
| Income from operations | $ | (4,415,425 | ) | $ | 54,724 | $ | (26,531 | ) | $ | – | $ | (32,266 | ) | $ | (4,419,498 | ) | ||||||||
| Other income/expense | ||||||||||||||||||||||||
| Interest income | $ | (14,877 | ) | $ | – | $ | – | $ | – | $ | – | $ | (14,877 | ) | ||||||||||
| Net gain on derivative | (131,382 | ) | – | – | – | – | (131,382 | ) | ||||||||||||||||
| Interest expense related to convertible notes | 44,329 | – | – | – | – | 44,329 | ||||||||||||||||||
| Loss on management fee contracts | 70,257 | – | – | – | – | 70,257 | ||||||||||||||||||
| Net unrealized gain on available for sale securities | (262 | ) | – | – | – | – | (262 | ) | ||||||||||||||||
| Other income | (219 | ) | (434 | ) | (13 | ) | – | (221 | ) | (887 | ) | |||||||||||||
| Total other expense | $ | (32,154 | ) | $ | (434 | ) | $ | (13 | ) | $ | – | $ | (221 | ) | $ | (32,822 | ) | |||||||
| Net income (loss) before income taxes | $ | (4,383,271 | ) | $ | 55,158 | $ | (26,518 | ) | $ | – | $ | (32,045 | ) | $ | (4,386,676 | ) | ||||||||
| Income tax expense | – | – | – | – | – | – | ||||||||||||||||||
| Net income (loss) | $ | (4,383,271 | ) | $ | 55,158 | $ | (26,518 | ) | $ | – | $ | (32,045 | ) | $ | (4,386,676 | ) | ||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||
| Net unrealized (loss) on available for sale securities | (10,551 | ) | – | – | – | – | (10,551 | ) | ||||||||||||||||
| Total other comprehensive income (loss), net of tax | $ | (10,551 | ) | $ | – | $ | – | $ | – | $ | – | $ | (10,551 | ) | ||||||||||
| Comprehensive loss | $ | (4,393,822 | ) | $ | 55,158 | $ | (26,518 | ) | – | $ | (32,045 | ) | $ | (4,397,227 | ) | |||||||||
See accompanying notes to the financial statements
| 2 |
MEDICINE MAN TECHNOLOGIES, INC.
STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME
For the Twelve Months Ended December 31, 2016
Expressed in U.S. Dollars
| Medicine Man Tech | Success | Pono | Eliminations | Acquisition | Total | |||||||||||||||||||
| December 31, 2016 | December 31, 2016 | December 31, 2016 | December 31, 2016 | December 31, 2016 | December 31, 2016 | |||||||||||||||||||
| Operating revenues | ||||||||||||||||||||||||
| Product sales | $ | – | $ | 520,140 | $ | 359,346 | $ | – | $ | – | $ | 879,486 | ||||||||||||
| Product sales - related party | – | 259,152 | 1,146 | – | – | 260,298 | ||||||||||||||||||
| Licensing fees | 589,721 | – | – | 589,721 | ||||||||||||||||||||
| Promotional sales | – | – | 2,316 | – | – | 2,316 | ||||||||||||||||||
| Seminar fees | 41,735 | – | – | – | – | 41,735 | ||||||||||||||||||
| Total operating revenues | 631,456 | 779,292 | 362,808 | – | – | 1,773,556 | ||||||||||||||||||
| Cost of goods | ||||||||||||||||||||||||
| Cost of goods | $ | 462,182 | $ | 152,574 | $ | 73,148 | $ | – | $ | – | $ | 687,904 | ||||||||||||
| Cost of goods - related party | – | 70,185 | 119 | – | – | 70,304 | ||||||||||||||||||
| Total cost of goods | 462,182 | 222,759 | 73,267 | – | – | 758,208 | ||||||||||||||||||
| Gross profit | $ | 169,274 | $ | 556,533 | $ | 289,541 | $ | – | $ | – | $ | 1,015,348 | ||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| General and administrative | $ | 382,641 | $ | 107,961 | $ | 93,792 | $ | – | $ | – | $ | 584,394 | ||||||||||||
| Professional services | – | 52,730 | 85,875 | – | – | 138,605 | ||||||||||||||||||
| Advertising | 311,522 | 16,172 | 121,194 | – | – | 448,888 | ||||||||||||||||||
| Stock based compensation | 627,200 | – | – | – | – | 627,200 | ||||||||||||||||||
| Salaries | – | 121,742 | – | – | – | 121,742 | ||||||||||||||||||
| Total operating expenses | $ | 1,321,363 | $ | 298,605 | $ | 300,861 | $ | – | $ | – | $ | 1,920,829 | ||||||||||||
| Income from operations | $ | (1,152,089 | ) | $ | 257,928 | $ | (11,320 | ) | $ | – | $ | – | $ | (905,481 | ) | |||||||||
| Other income/expense | ||||||||||||||||||||||||
| Interest income | $ | (14,016 | ) | $ | – | $ | – | $ | – | $ | – | $ | (14,016 | ) | ||||||||||
| Net loss on derivative liability | 191,095 | – | – | – | – | 191,095 | ||||||||||||||||||
| Net loss on available for sale securities | 9,950 | – | – | – | – | 9,950 | ||||||||||||||||||
| Interest expense related to convertible notes | 22,248 | – | – | – | – | 22,248 | ||||||||||||||||||
| Interest expense related to derivative liability | 102,907 | – | – | – | – | 102,907 | ||||||||||||||||||
| Other income | – | (373 | ) | 214 | – | – | (159 | ) | ||||||||||||||||
| Total other expense | $ | 312,184 | $ | (373 | ) | $ | 214 | $ | – | $ | – | $ | 312,025 | |||||||||||
| Net income (loss) before income taxes | $ | (1,464,273 | ) | $ | 258,301 | $ | (11,534 | ) | $ | – | $ | – | $ | (1,217,506 | ) | |||||||||
| Income tax expense | – | – | – | – | – | – | ||||||||||||||||||
| Net (loss) | $ | (1,464,273 | ) | $ | 258,301 | $ | (11,534 | ) | $ | – | $ | – | $ | (1,217,506 | ) | |||||||||
See accompanying notes to the financial statements
| 3 |
Basis of Presentation
On February 27, 2017, we entered into a Merger Agreement with Pono Publications Ltd. (“Pono”), as well as a Share Exchange Agreement with Success Nutrients, Inc. (“SN”), each a Colorado corporation, in order to facilitate our acquisition of both of these entities. Also, on February 27, 2017, a majority of the holders of our Common Stock ratified in writing their approval of the proposed Merger with Pono and Share Exchange with Success Nutrients (hereinafter referred to as the “Pono Transaction” and “SN Transaction,” respectively, and jointly referred to as the “Transactions.”) The Transactions become effective on June 7, 2017 upon the filing of Statement of Merger with the Secretary of State in Colorado and Statement of Share Exchange and Articles of Exchange with the Colorado Secretary and (the “Effective Time”). For accounting purposes, the effective date of these Transactions was April 1, 2017.
At the Effective Time we issued an aggregate of 7,000,000 shares of our Common Stock to the Pono and SN stockholders in exchange for 100% of the issued and outstanding shares of Pono and SN’s capital stock. SN became a wholly owned subsidiary of our Company and Pono was consolidated into the operations of our wholly owned subsidiary, Medicine Man Consulting, Inc., a Colorado corporation. All our current management remained in place, but Charles Haupt was added as a member of our Board of Directors and Josh Haupt became our Chief Cultivation Officer.
On the Effective Date we assumed all of SN and Pono’s assets, liabilities and plans of operation. All liabilities were paid in full.
Our current stockholders were diluted by the issuance of shares of our Common Stock in the Transactions and may be diluted by future issuances of securities and sales of our securities to satisfy our working capital needs
These pro forma financial statements have been compiled from and include:
| a) | an unaudited pro forma balance sheet combining the unaudited balance sheets of SN and Pono as of June 30, 2017 and December 31, 2016, giving effect to the transaction as if it occurred on June 31, 2017 and December 31, 2016 |
| b) | an unaudited pro forma statement of operations combining the unaudited statement of operations of SN and Pono for the six months ended June 30, 2017, and for the twelve months ending December 31, 2016. |
| c) | an unaudited pro forma statement of cash flows combining the unaudited statement of operations of SN and Pono for the six months ended June 30, 2017, and for the twelve months ending December 31, 2016 |
Based on the review of the accounting policies of SN – Pono and Medicine Man Technologies, there are no material accounting differences between the accounting policies of the companies. The unaudited pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of Medicine Man Technologies.
The acquisition column represents the Medicine Man Technologies acquisition of both Success Nutrients and Pono Publications during 2017.
It is management’s opinion that these pro forma financial statements include all adjustments necessary for the fair presentation, in all material respects, of the proposed transaction described above in accordance with US GAAP applied on a basis consistent with SN - Pono and accounting policies.
| 4 |