Medicine Man (SHWZ) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.2

Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined balance sheet as of March 31, 2020 and the unaudited pro forma condensed combined statements of operations for each of the three months ended March 31, 2020 and for the year ended December 31, 2019 combine the financial statements of Medicine Man Technologies, Inc. (“Medicine Man”) and Mesa Organics, Ltd. (“Mesa”) giving effect to the transaction described in the Merger Agreement, as if they had occurred on January 1, 2019 in respect of the unaudited pro forma condensed combined statements of operations and on March 31, 2020 in respect of the unaudited pro forma condensed combined balance sheet.

The unaudited pro forma condensed combined financial information should be read in conjunction with:

· Medicine Man’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2019, as contained in the Form 10-K filed on March 31, 2020 with the United States Securities and Exchange Commission (the “SEC”).

· Medicine Man’s unaudited condensed consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2020, as contained in its Quarterly Report on Form 10-Q filed on May 14, 2020 with the SEC.

· Mesa’s audited financial statements as of and for the year ended December 31, 2019, contained elsewhere herein.

· Mesa’s unaudited condensed financial statements as of and for the three months ended March 31, 2020 and 2019, contained elsewhere herein.

· the other information contained in or incorporated by reference into this filing.

The final purchase consideration and the allocation of the purchase consideration may materially differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition.

The unaudited pro forma adjustments give effect to events that are directly attributable to the transaction and are based on available data and certain assumptions that management believes are factually supportable. In addition, with respect to the unaudited condensed combined statements of operations, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and to aid you in your analysis of the financial aspects of the acquisition. The unaudited pro forma condensed combined financial information described above has been derived from the historical financial statements of Medicine Man and Mesa and the related notes included elsewhere in this Form 8-K. The unaudited pro forma condensed combined financial information is based on Medicine Man’s accounting policies. Further review may identify additional differences between the accounting policies of Medicine Man and Mesa. The unaudited pro forma adjustments and the pro forma condensed combined financial information don’t reflect the impact of synergies or post-transaction management actions and are not necessarily indicative of the financial position or results of operations that may have actually occurred had the transaction taken place on the dates noted, or of Medicine Man’s future financial position or operating results.

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Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

March 31, 2020

	Medicine Man			Mesa		Pro Forma Adjustments				Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	9,075,427		$	472,445	$	(472,445	)	(A)	$	6,961,362
							(2,612,018	)	(B)
							497,953		(C)
Accounts receivable, net of allowance for doubtful accounts		511,984			732,665		(732,665	)	(A)		985,278
							473,294		(C)
Accounts receivable – related party		59,512			–		–				59,512
Inventory		642,689			2,121,253		(2,121,253	)	(A)		4,379,611
							3,736,922		(C)
Note receivable – related party		767,695			–		–				767,695
Other assets		707,706			36,447		(36,447	)	(A)		707,706
Prepaid acquisition costs		1,269,367			–		–				1,269,367
Total current assets		13,034,380			3,362,810		(1,266,659	)			15,130,531
Non-current assets:
Fixed assets, net accumulated depreciation		541,791			1,638,082		(1,638,082	)	(A)		1,650,906
							1,109,115		(C)
Goodwill		12,304,306			–		1,837,354		(C)		14,141,660
Intangible assets, net of amortization		73,641			17,315		(17,315	)	(A)		2,743,941
							2,670,300		(C)
Investment		435,898			–		–				435,898
Accounts receivable - litigation		3,063,968			–		–				3,063,968
Deferred tax assets, net		268,423			–		–				268,423
Notes receivable – noncurrent, net		242,959			–		–				242,959
Operating lease right of use assets		63,925			–		–				63,925
Total non-current assets		16,994,911			1,655,397		3,961,372				22,611,680
Total assets	$	30,029,291		$	5,018,207	$	2,694,713			$	37,742,211
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,182,832		$	2,331,141	$	(2,331,141	)	(A)	$	4,102,933
							2,920,101		(C)
Accounts payable – related party		2,500			–		–				2,500
Accrued expenses		1,194,032			637,088		(637,088	)	(A)		1,194,032
Derivative liabilities		1,118,783			–		–				1,118,783
Income taxes payable		1,940			–		–				1,940
Total current liabilities		3,500,087			2,968,229		(48,128	)			6,420,188
Non-current liabilities:
Lease liabilities		75,838			–		–				75,838
Note(s) payable		–			196,831		(196,831	)	(A)		–
Total non-current liabilities		75,838			196,831		(196,831	)			75,838
Total liabilities		3,575,925			3,165,060		(244,959	)			6,496,026
Stockholders’ equity:
Common stock $0.001 par value. 250,000,000 authorized, 39,952,628 were issued and outstanding at March 31, 2020 and 2,554,750 were issued proforma at March 31, 2020.		39,953			–		2,555		(D)		42,508
Additional paid-in capital		51,609,200			1,202,164		(1,202,164	)	(A)		56,399,464
							4,790,264		(D)
Accumulated equity (deficit)		(24,195,787	)		404,887		(404,887	)	(A)		(24,195,787	)
Common stock held in treasury, at cost, 257,732 shared held at March 31, 2020.		(1,000,000	)		–		–				(1,000,000	)
Net income		–			246,096		(246,096	)	(A)		–
Total stockholders’ equity		26,453,366			1,853,147		2,939,672				31,246,185
Total liabilities and stockholders’ equity	$	30,029,291		$	5,018,207	$	2,694,713			$	37,742,211

See notes to the unaudited pro forma condensed combined financial information.

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Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Three Months Ended March 31, 2020

	Medicine Man			Mesa		Pro Forma Adjustments			Pro Forma Combined
Operating revenues
Product sales	$	2,418,235		$	2,678,141	$	–		$	5,096,376
Product sales – related party		110,696			–		–			110,696
Consulting and licensing services		661,257			–		–			661,257
Other operating revenues		12,946			–		–			12,946
Total revenue		3,203,134			2,678,141		–			5,881,275
Cost of goods and services
Cost of goods and services		2,148,535			1,869,034		–			4,017,569
Total cost of goods and services		2,148,535			1,869,034		–			4,017,569
Gross profit		1,054,599			809,107		–			1,863,706
Operating expenses
Selling, general and administrative		657,763			426,289		–			1,084,052
Professional services		1,248,988			–		–			1,248,988
Salaries		1,997,036			36,104		–			2,033,140
Stock-based compensation		1,252,731			–		–			1,252,731
Depreciation and amortization expense		9,156			100,618		13,873	(A)		123,647
Total operating expenses		5,165,674			563,011		13,873			5,742,558
Income (loss) from operations		(4,111,075	)		246,096		(13,873	)		(3,878,852	)
Other income/expenses
Interest income (expense)		48,042			–		–			48,042
Gain on forfeiture of contingent consideration		1,462,636			–		–			1,462,636
Unrealized gain (loss) on derivative liabilities		1,191,963			–		–			1,191,963
Unrealized gain (loss) on investment		29,124			–		–			29,124
Total other income (expense)		2,731,765			–		–			2,731,765
Loss before income taxes		(1,379,310	)		246,096		(13,873	)		(1,147,087	)
Provision for income tax (benefit) expense		–			–		–			–
Net income (loss)	$	(1,379,310	)	$	246,096	$	(13,873	)	$	(1,147,087	)
(Loss) per share
Basic and fully diluted:
Weighted average number of shares outstanding		39,952,628					2,554,750	(D)		42,507,378
(Loss) per share	$	(0.03	)						$	(0.03	)

See notes to the unaudited pro forma condensed combined financial information

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Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2019

	Medicine Man			Mesa			Pro Forma Adjustments			Pro Forma Combined
Operating revenues
Product sales, net	$	6,468,230		$	7,843,311		$	–		$	14,311,541
Product sales – related party, net		1,351,578			–			–			1,351,578
Litigation revenue		1,782,457			–			–			1,782,457
Licensing, consulting and Cultivation Max fees		2,767,649			–			–			2,767,649
Other operating revenues		31,041			–			–			31,041
Total operating revenues		12,400,955			7,843,311			–			20,244,266
Cost of goods and services
Cost of goods and services		7,616,221			4,110,953			–			11,727,174
Total cost of goods and services		7,616,221			4,110,953			–			11,727,174
Gross profit		4,784,734			3,732,358						8,517,092
Operating expenses
Selling, general and administrative		2,199,609			863,898			–			3,063,507
Professional services		3,357,877			–			–			3,357,877
Salaries, benefits and related expenses		3,567,535			169,357			–			3,736,892
Stock-based compensation		7,279,363			–			–			7,279,363
Depreciation and amortization expense		61,708			357,664			100,332	(A)		519,704
Derivative expense – contingent compensation		5,400,559			–			–			5,400,559
Total operating expenses		21,866,651			1,390,919			100,332			23,357,902
(Loss) Income from operations		(17,081,917	)		2,341,439			(100,332	)		(14,840,810	)
Other income (expense)
Bad debt expense		(151,169	)		–			–			(151,169	)
Gain (loss) on sale of assets		–			(50,810	)		–			(50,810	)
Unrealized gain on derivative liabilities		1,627,177			–			–			1,627,177
Unrealized loss on marketable securities		(1,792,569	)		–			–			(1,792,569	)
Interest expense		(160,195	)		–			–			(160,195	)
Total other expense		(476,756	)		(50,810	)		–			(527,566	)
Income before income tax expense		(17,558,673	)		2,290,629			(100,332	)		(15,368,376	)
Income tax benefit		582,931			–			–			582,931
Net (loss) income	$	(16,975,742	)	$	2,290,629		$	(100,332	)	$	(14,785,445	)
(Loss) per share
Basic and fully diluted:
Weighted average number of shares outstanding		33,740,557						2,554,750	(D)		36,295,307
(Loss) per share	$	(0.50	)							$	(0.41	)

See notes to the unaudited pro forma condensed combined financial information

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Medicine Man Technologies, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

(USD and shares in 000’s except for per share amounts)

Note 1. Basis of Presentation

The unaudited pro forma condensed combined financial information set forth herein is based upon the consolidated financial statements of Medicine Man Technologies, Inc. and Mesa Organics, Ltd. The unaudited pro forma condensed combined financial information is presented as if the transaction had been completed on January 1, 2019 with respect to the unaudited pro forma condensed combined statements of operations for each of the three months ended March 31, 2020 and for the year ended December 31, 2019 and on March 31, 2020 in respect of the unaudited pro forma condensed combined balance sheet.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations had the transaction occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the completion of the transactions.

We have accounted for the acquisition in this unaudited pro forma condensed combined financial information using the acquisition method of accounting, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”). In accordance with ASC 805, we use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.

Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are factually supportable and directly attributable to the transaction. Pro forma adjustments reflected in the pro forma condensed combined statements of operations are based on items that are factually supportable, directly attributable to the transaction and expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from the transaction, including potential synergies that may be generated in future periods.

Note 2. Description of the Transaction

On April 20, 2020, Medicine Man Technologies, Inc. operating its business under the trade name Schwazze (the “Company”) consummated the merger (the “Merger”) with Mesa Organics, Ltd. (“Mesa”). On April 20, 2020, the Parties entered into an amendment to the Merger Agreement. The aggregate purchase price is $2,643,314 of cash and 2,594,754 shares of the Company’s common stock, par value $0.001 per share. Upon consummation of the Merger, the Company acquired ownership of Mesa’s subsidiaries, which are in the business of owning and operating certain marijuana establishments in the state of Colorado, pursuant to the MED and local license.

Note 3. Purchase Price Allocation

The fair value of the consideration transferred was valued as of the date of the acquisition as follows:

Mesa Organics, Ltd. Purchase Price Allocation
Cash	$	2,646,314
Common stock		4,930,033
Working capital adjustment		(171,510	)
Other Non-Interest Bearing Liabilities Assumed		2,920,101
Total Purchase Consideration	$	10,324,938

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The preliminary allocation for the consideration recorded for the acquisition is as follows:

Current assets	$	4,708,169
Net fixed assets		1,109,115
Intangible assets		2,670,300
Goodwill		1,837,354
Total Purchase Consideration	$	10,324,938

The purchase price allocation is preliminary. The purchase price allocation will continue to be preliminary until a third-party valuation is finalized and the fair value and useful life of the assets acquired is determined. The amounts from the final valuation may significantly differ from the preliminary allocation.

Note 4. Pro Forma Adjustments

The following pro forma adjustments give effect to the transaction.

Unaudited Pro Forma Condensed Combined Balance Sheet – As of March 31, 2020

Note A	To remove Mesa Organics, Ltd. assets, liabilities, and equity.
Note B	To record cash consideration paid.
Note C	To record assets acquired and liabilities assumed from Mesa Organics Ltd.
Note D	To record common stock issued as consideration.

Unaudited Pro Forma Condensed Combined Statement of Operations – For The Three Months Ended March 31, 2020

Note A To record depreciation/amortization expense.

Unaudited Pro Forma Condensed Combined Statement of Operations – For The Year Ended December 31, 2019

Note A To record depreciation/amortization expense.

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