Medicine Man Technologies, Inc., operating as Schwazze SHWZ announced its preliminary financial results Thursday for the third quarter ended Sept. 30, 2024. The Colorado-based cannabis company reported revenue of approximately $42 million, which compares to revenue of $46.75 million in the same period last year.

"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," stated 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."

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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:

• Adjusted EBITDA of approximately $11 million, compared to $14.12 million in the third quarter of 2023.
• Cash flow from operations of approximately $200,000, compared to $6.95 million in the same period last year.

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

This compares to cash and cash equivalents of $12.3 million and total debt of $163.4 million at the end of the previous quarter (June 30, 2024). On Dec. 31, 2023, the debt amounted to $156.8 million, indicating continued growth.

Update On Delayed Filing

As previously announced on April 8, 2024, Schwazze dismissed BF Borgers CPA PC as its registered public accountant and engaged Baker Tilly US, LLP as its new 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% 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 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.

Price Action

Schwazze shares closed Thursday's market session flat at 15 cents per share.

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