Attached files
| file | filename |
|---|---|
| EX-99.2 - FINANCIAL STATEMENTS - Medicine Man Technologies, Inc. | medman_8ka-ex9902.htm |
| EX-99.1 - FINANCIAL STATEMENTS - Medicine Man Technologies, Inc. | medman_8ka-ex9901.htm |
| 8-K/A - FORM 8-K AMENDMENT - Medicine Man Technologies, Inc. | medman_8ka.htm |
Exhibit 99.3
MEDICINE MAN TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
Expressed in U.S. Dollars
| Medicine Man Tech | Denver Consulting Group | Eliminations | Acquisition | Total | ||||||||||||||||||||||
| September 30, 2017 | September 30, 2017 | September 30, 2017 | September 30, 2017 | September 30, 2017 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 826,257 | $ | 216,129 | $ | 114,502 | $ | – | $ | 927,884 | ||||||||||||||||
| Accounts receivable, net | 356,940 | 83,234 | 83,234 | – | 356,940 | |||||||||||||||||||||
| Accounts receivable - related party | 41,962 | – | – | – | 41,962 | |||||||||||||||||||||
| Inventory | 87,685 | – | – | – | 87,685 | |||||||||||||||||||||
| Short-term note receivable | 286,455 | – | – | – | 286,455 | |||||||||||||||||||||
| Other assets | 106,811 | 1,116 | 1,116 | – | 106,811 | |||||||||||||||||||||
| Total current assets | 1,706,110 | 300,479 | 198,852 | – | 1,807,737 | |||||||||||||||||||||
| Non-current assets | ||||||||||||||||||||||||||
| Fixed assets, net accumulated depreciation | $ | 155,529 | $ | 26,833 | $ | 26,833 | $ | – | $ | 155,529 | ||||||||||||||||
| Intangible assets, net accumulated amortization | 89,340 | – | – | – | 89,340 | |||||||||||||||||||||
| Goodwill | 6,301,080 | – | – | 3,003,226 | 9,304,306 | |||||||||||||||||||||
| Total non-current assets | 6,545,949 | 26,833 | 26,833 | 3,003,226 | 9,549,175 | |||||||||||||||||||||
| Total assets | $ | 8,252,059 | $ | 327,312 | $ | 225,685 | $ | 3,003,226 | $ | 11,356,912 | ||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||
| Accounts payable | $ | 44,189 | $ | 435 | $ | 435 | $ | – | $ | 44,189 | ||||||||||||||||
| Accounts payable - related party | 9,776 | – | – | – | 9,776 | |||||||||||||||||||||
| Derivative liability | 159,105 | – | – | – | 159,105 | |||||||||||||||||||||
| Other liabilities | – | 23,857 | 9,157 | – | 14,700 | |||||||||||||||||||||
| Total current liabilities | 213,070 | 24,292 | 9,592 | – | 227,770 | |||||||||||||||||||||
| Long-term liabilities | ||||||||||||||||||||||||||
| Note payable - related party | $ | 58,280 | $ | – | $ | – | $ | – | $ | 58,280 | ||||||||||||||||
| Convertible loan | 675,000 | – | – | – | 675,000 | |||||||||||||||||||||
| Total long-term liabilities | 733,280 | – | – | – | 733,280 | |||||||||||||||||||||
| Total liabilities | 946,350 | 24,292 | 9,592 | – | 961,050 | |||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||
| Common stock $0.01 par value | $ | 20,246 | $ | – | $ | – | $ | 2,258 | $ | 22,504 | ||||||||||||||||
| Additional paid-in capital | 11,345,374 | – | – | 3,000,968 | 14,346,342 | |||||||||||||||||||||
| Additional paid-in capital - Warrants | 2,100,318 | – | – | – | 2,100,318 | |||||||||||||||||||||
| Shareholder distributions | – | (268,975 | ) | (268,975 | ) | – | – | |||||||||||||||||||
| Accumulated other comprehensive income (loss) | – | – | – | – | – | |||||||||||||||||||||
| Retained earnings | (6,160,229 | ) | 571,995 | 485,068 | – | (6,073,302 | ) | |||||||||||||||||||
| Total shareholders' equity | 7,305,709 | 303,020 | 216,093 | 3,003,226 | 10,395,862 | |||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 8,252,059 | $ | 327,312 | $ | 225,685 | $ | 3,003,226 | $ | 11,356,912 | ||||||||||||||||
See accompanying notes to the financial statements
| 1 |
MEDICINE MAN TECHNOLOGIES, INC.
STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME
(UNAUDITED)
For the Nine Months Ended September 30, 2017
Expressed in U.S. Dollars
| Medicine Man Tech | Denver Consulting Group | Eliminations | Acquisition | Total | ||||||||||||||||
| September 30, 2017 | September 30, 2017 | September 30, 2017 | September 30, 2017 | September 30, 2017 | ||||||||||||||||
| Operating revenues | ||||||||||||||||||||
| Product sales | $ | 506,900 | $ | – | $ | – | $ | – | $ | 506,900 | ||||||||||
| Product sales - related party | 184,711 | – | – | – | 184,711 | |||||||||||||||
| Licensing fees | 848,816 | – | – | – | 848,816 | |||||||||||||||
| Consulting fees | 805,086 | 981,598 | 134,692 | – | 1,651,992 | |||||||||||||||
| Consulting fees - related party | – | 16,998 | – | – | 16,998 | |||||||||||||||
| Seminar fees | 6,239 | – | – | – | 6,239 | |||||||||||||||
| Total revenue | 2,351,752 | 998,596 | 134,692 | – | 3,215,656 | |||||||||||||||
| Cost of services | ||||||||||||||||||||
| Cost of services | $ | 694,018 | $ | – | $ | – | $ | – | $ | 694,018 | ||||||||||
| Cost of services - related party | 40,327 | – | – | – | 40,327 | |||||||||||||||
| Subcontractors | – | 68,069 | 47,043 | – | 21,026 | |||||||||||||||
| Salaries | – | 214,767 | – | – | 214,767 | |||||||||||||||
| Licensing, subscriptions and permits | – | 500 | – | – | 500 | |||||||||||||||
| Total cost of services | 734,345 | 283,336 | 47,043 | – | 970,638 | |||||||||||||||
| Gross profit | $ | 1,617,407 | $ | 715,260 | $ | 87,649 | $ | – | $ | 2,245,018 | ||||||||||
| Operating expenses | ||||||||||||||||||||
| General and administrative | $ | 735,018 | $ | 103,589 | $ | 722 | $ | – | $ | 837,885 | ||||||||||
| Professional services | 384,278 | 21,546 | – | – | 405,824 | |||||||||||||||
| Insurance | – | 33,344 | – | – | 33,344 | |||||||||||||||
| Acquisition costs | 141,301 | – | – | – | 141,301 | |||||||||||||||
| Stock based compensation | 4,644,318 | – | – | – | 4,644,318 | |||||||||||||||
| Officers/Directors incentive compensation | 90,823 | – | – | – | 90,823 | |||||||||||||||
| Travel | – | 27,511 | – | – | 27,511 | |||||||||||||||
| Advertising | 136,436 | 21,995 | – | – | 158,431 | |||||||||||||||
| Salaries | 220,365 | – | – | – | 220,365 | |||||||||||||||
| Total operating expenses | $ | 6,352,539 | $ | 207,985 | $ | 722 | $ | – | $ | 6,559,802 | ||||||||||
| Income from operations | $ | (4,735,132 | ) | $ | 507,275 | $ | 86,927 | $ | – | $ | (4,314,784 | ) | ||||||||
| Other income/expense | ||||||||||||||||||||
| Interest income | $ | (22,439 | ) | $ | – | $ | – | $ | – | $ | (22,439 | ) | ||||||||
| Net loss on derivative | 4,706 | – | – | – | 4,706 | |||||||||||||||
| Interest expense related to convertible notes | 66,965 | – | – | – | 66,965 | |||||||||||||||
| Loss on management fee contracts | 70,257 | – | – | – | 70,257 | |||||||||||||||
| Net unrealized loss on available for sale securities | 14,457 | – | – | – | 14,457 | |||||||||||||||
| Other income | (219 | ) | 689 | – | – | 470 | ||||||||||||||
| Total other expense | $ | 133,727 | $ | 689 | $ | – | $ | – | $ | 134,416 | ||||||||||
| Net income (loss) before income taxes | $ | (4,868,859 | ) | $ | 506,586 | $ | 86,927 | $ | – | $ | (4,449,200 | ) | ||||||||
| Income tax expense | – | – | – | – | – | |||||||||||||||
| Net income (loss) | $ | (4,868,859 | ) | $ | 506,586 | $ | 86,927 | $ | – | $ | (4,449,200 | ) | ||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||||||||
| Net unrealized (loss) on available for sale securities | – | – | – | – | – | |||||||||||||||
| Total other comprehensive income (loss), net of tax | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
| Comprehensive loss | $ | (4,868,859 | ) | $ | 506,586 | $ | 86,927 | $ | – | $ | (4,449,200 | ) | ||||||||
See accompanying notes to the financial statements
| 2 |
MEDICINE MAN TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
Expressed in U.S. Dollars
| Medicine Man Tech | Denver Consulting Group | Eliminations | Acquisition | Total | ||||||||||||||||||||||
| December 31, 2016 | December 31, 2016 | December 31, 2016 | December 31, 2016 | December 31, 2016 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 351,524 | $ | 32,495 | $ | – | $ | – | $ | 384,019 | ||||||||||||||||
| Accounts receivable, net | 25,000 | 45,564 | – | – | 70,564 | |||||||||||||||||||||
| Available for sale securities | 13,998 | – | – | – | 13,998 | |||||||||||||||||||||
| Short-term note receivable | 264,016 | – | – | – | 264,016 | |||||||||||||||||||||
| Other assets | 27,479 | 4,123 | – | – | 31,602 | |||||||||||||||||||||
| Total current assets | 682,017 | 82,182 | – | – | 764,199 | |||||||||||||||||||||
| Non-current assets | ||||||||||||||||||||||||||
| Fixed assets, net accumulated depreciation | $ | 42,126 | $ | 34,085 | $ | – | $ | – | $ | 76,211 | ||||||||||||||||
| Intangible assets, net accumulated amortization | 3,708 | – | – | – | 3,708 | |||||||||||||||||||||
| Goodwill | – | – | – | 3,003,226 | 3,003,226 | |||||||||||||||||||||
| Total non-current assets | 45,834 | 34,085 | – | 3,003,226 | 3,083,145 | |||||||||||||||||||||
| Total assets | $ | 727,851 | $ | 116,267 | $ | – | $ | 3,003,226 | $ | 3,847,344 | ||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||
| Derivative liability | $ | 294,002 | $ | – | $ | – | $ | – | $ | 294,002 | ||||||||||||||||
| Accounts payable - related party | – | 1,282 | – | – | 1,282 | |||||||||||||||||||||
| Short-term loan payable | – | 30,820 | – | – | 30,820 | |||||||||||||||||||||
| Customer deposits | – | 74,632 | – | – | 74,632 | |||||||||||||||||||||
| Other liabilities | 175 | 9,571 | – | – | 9,746 | |||||||||||||||||||||
| Total current liabilities | 294,177 | 116,305 | – | – | 410,482 | |||||||||||||||||||||
| Long-term liabilities | ||||||||||||||||||||||||||
| Convertible loan | $ | 810,000 | $ | – | $ | – | $ | – | $ | 810,000 | ||||||||||||||||
| Total long-term liabilities | 810,000 | – | – | – | 810,000 | |||||||||||||||||||||
| Total liabilities | 1,104,177 | 116,305 | – | – | 1,220,482 | |||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||
| Common stock $0.01 par value | $ | 10,403 | $ | – | $ | – | $ | 2,258 | $ | 12,661 | ||||||||||||||||
| Additional paid-in capital | 1,026,052 | – | – | 3,000,968 | 4,027,020 | |||||||||||||||||||||
| Distributions | – | (65,447 | ) | – | – | (65,447 | ) | |||||||||||||||||||
| Accumulated other comprehensive income (loss) | (4,303 | ) | – | – | – | (4,303 | ) | |||||||||||||||||||
| Retained earnings | (1,408,478 | ) | 65,409 | – | – | (1,343,069 | ) | |||||||||||||||||||
| Total shareholders' equity | (376,326 | ) | (38 | ) | – | 3,003,226 | 2,626,862 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 727,851 | $ | 116,267 | $ | – | $ | 3,003,226 | $ | 3,847,344 | ||||||||||||||||
See accompanying notes to the financial statements
| 3 |
Basis of Presentation
On May 5, 2017, the Company entered into a Merger Agreement with Denver Consulting Group, LLC, a Colorado corporation, in order to facilitate our acquisition of this entity. Also, on or about May 5, 2017, a majority of the holders of our Common Stock ratified in writing their approval of the proposed Merger with Denver Consulting Group, LLC (hereinafter referred to as the “DCG Transaction.”) The Transaction become effective on July 21, 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”).
At the Effective Time we issued an aggregate of 2,258,065 shares of our Common Stock to the DCG members in exchange for 100% of the ownership of the company. DCG became a wholly owned subsidiary of our Company.
On the Effective Date the Company assumed assets and liabilities related to revenue transactions, and all of their plans of operation.
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
The pro forma financial statements have been compiled from and include:
| a) | an unaudited pro forma balance sheet combining the unaudited balance sheets as of September 30, 2017 and giving effect to the transaction as if it occurred on September 30, 2017, |
| a. | the Medicine Man Tech column represents only the Medicine Man Tech figures at September 30, 2017 |
| b. | the Denver Consulting Group column represents the consolidation of this acquisition |
| c. | the Eliminations column represents the elimination of the consolidation. This elimination represents the elimination of the period from July 21, 2017 to September 30, 2017 where DCG activity is shown in both the DCG column and the MMT column. |
| b) | an unaudited pro forma statement of operations combining the unaudited statement of operations for the nine months ended September 30, 2017, |
| a. | the Medicine Man Tech column represents the consolidated Medicine Man Tech figures at September 30, 2017, which includes DCG from July 21, 2017 forward |
| b. | the Denver Consulting Group column represents the consolidation of this acquisition |
| c. | the Eliminations column represents the eliminations of the consolidation. This elimination represents the elimination of the period from July 21, 2017 to September 30, 2017 where DCG activity is shown in both the DCG column and the MMT column. |
Based on the review of the accounting policies of DCG 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 DCG 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 DCG and accounting policies.
| 4 |