Denver, CO (GLOBE NEWSWIRE) — Medicine Man Technologies Inc. (OTCQB: MDCL), one of the United States’ leading cannabis branding and consulting companies, reported financial results for the quarter ended June 30, 2017.
Financial and Business Highlights:
- Revenues increased by 489% to $882,353 in the second quarter of 2017, from $149,766 in the corresponding period in 2016, driven by higher consulting-based revenues and the contribution of the newly acquired Pono Publications and Success Nutrient businesses
- The acquisitions of Pono Publications and Success Nutrients provide industry leading cannabis cultivation technologies and products. These businesses generated $352,158 of revenue in the second quarter of 2017, providing full-quarter contributions to Company revenue
- Brett Roper named as Chief Executive Officer at the first annual shareholders meeting, replacing Andrew Williams who assumed Brett Roper’s prior role as Chairperson of the Board of Directors
- Named recognized cannabis cultivation expert, Joshua Haupt, as Chief Cultivation Officer
- The Company experienced extraordinary one-time expenses related to acquisition costs and stock compensation totaling $4,579,019, which accounted for more than the entire net loss in the second quarter of 2017
- Subsequent to the end of the second quarter, Medicine Man completed the acquisition of Denver Consulting Group in July 2017
- Demand for services and recent acquisitions have allowed our Company to grow from 5 full time and 2 part time positions at year end 2016 to 19 full time and 2 part time positions as of this date
- We have increased our Board of Directors to five persons, three of which are independent and held our first annual shareholder meeting in Denver on June 3, 2017
During the second quarter of 2017, Medicine Man added 13 new clients, spanning the states of Florida, Arkansas, Ohio, Michigan, Nevada, and California. Subsequent to the end of the quarter, the Company added one Ohio based processing application group, three Arkansas based dispensary application groups, two Florida based application groups, and two Michigan cultivation/processor application group, and one Canadian cultivation entity bringing our total active clients number (including DCG Legacy Clients) up to 44. Revenue generation for the Company is expected to run through the entirety of the general application process as determined by each state.
The initial Cultivation Max harvest clients in Nevada are expected later in the third quarter of 2017, from which Medicine Man expects to earn initial revenues beginning in the fourth quarter of this year.
The Company remains encouraged by the prospects for rapid expansion of its product and service footprint resulting from recent acquisitions. Medicine Man continues to experience a robust pace of inquiries on the west coast and elsewhere in the United States for its services, driven by its Denver Consulting Group division, the Company’s internal marketing and event presence, and its Three A Light publication and Success Nutrients business presence.
Results of Operations for the three months ended June 30, 2017 and 2016
During the three months ended June 30, 2017, Medicine Man generated revenues of $882,353, which represented an increase of 489% over the same period in 2016. Second quarter 2017 revenue consisted of consulting/licensing fees of $527,895, product sales of $352,158 and the balance from fees arising from our participation in cannabis seminars. In the three months ended June 30, 2016, revenue totaled $149,766, consisting of $142,986 from consulting/licensing fees, and the balance from seminars.
Cost of services, consisting of expense related to delivery of services and product procurement, was $272,001 during the three months ended June 30, 2017, compared to $44,177 during the comparable period in 2016, with the increase largely attributable to the addition of product procurement expenses and increases in wages. The Company notes that during the second quarter of 2017, Medicine Man had eight full-time and two part-time employees, as compared to three full-time and two part-time employees in the second quarter of 2016.
Operating expenses during the three months ended June 30, 2017, were $5,172,869, including a one-time stock compensation expense of $4,480,318, compared with $207,059 in the corresponding period in 2016. General and administrative expense in the three months ended June 30, 2017 totaled $331,425, compared to $197,879 during the three months ended June 30, 2016. Increased operating expenses during the three months ended June 30, 2017 included professional fees of $141,953 and advertising expense of $56,025. Advertising expense during the three months ended June 30, 2016 totaled $9,180. During the three months ended June 30, 2017, the Company incurred $98,701 in one-time acquisition costs related to the Pono and Success acquisitions.
Net loss for the three months ended June 30, 2017 was $4,494,435, or $0.23 per share, compared to net loss of $99,662, or $0.01 per share, during the three months ended June 30, 2016, primarily due to one-time costs related to stock compensation.
Source: Nasdaq Two