Medicine Man (SHWZ) 8-K/A Financial Statements and Exhibits

Exhibit 99.3

Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 and the unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2021 and for the year ended December 31, 2020 combine the financial statements of Medicine Man Technologies, Inc. (“Medicine Man”) and RGA giving effect to the transaction described in the Agreements, as if they had occurred on January 1, 2020 in respect of the unaudited pro forma condensed combined statements of operations and on September 30, 2021 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, 2020, as contained in the Form 10-K filed on March 31, 2021 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 nine months ended September 30, 2021, as contained in its Quarterly Report on Form 10-Q filed on November 15, 2021 with the SEC.

· RGA’s audited financial statements as of and for the year ended December 31, 2020, contained elsewhere herein.

· RGA’s unaudited condensed financial statements as of September 30, 2021 and for the nine months ended September 30, 2021, 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 RGA 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 RGA. The unaudited pro forma adjustments and the pro forma condensed combined financial information do not 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

September 30, 2021

						Transaction
						Accounting				Pro Forma
	Medicine Man			RGA		Adjustments				Combined
ASSETS
Current assets:
Cash and cash equivalents	$	21,168,816		$	16,159,480	$	(16,159,480	)	(A)	$	21,168,816
Accounts receivable, net of allowance for doubtful accounts		3,530,520			82,599		(82,599	)	(A)		3,530,520
Inventory		10,678,381			883,172		–				11,561,553
Notes receivable – related party		–			9,744		(9,744	)	(A)		–
Prepaid expenses and other current assets		2,579,035			39,912		(39,912	)	(A)		2,579,035
Total current assets		37,956,752			17,174,907		(16,291,735	)			38,839,924
Non-current assets:
Fixed assets, net		8,805,348			2,596,067		–				11,401,415
Goodwill		42,090,944			–		38,452,909		(C)		80,543,853
Intangible assets, Net		98,072,970			–		–				98,072,970
Investment		487,467			–		–				487,467
Note receivable - noncurrent, net		179,167			47,188		(47,188	)	(A)		179,167
Accounts receivable – litigation		3,063,968			–		–				3,063,968
Operating lease right of use assets		3,626,617			–		–				3,626,617
Other assets		448,062			67,852		–				515,914
Total non-current assets		156,774,543			2,711,107		38,405,721				197,891,371
Total assets	$	194,731,295		$	19,886,014	$	22,113,986			$	236,731,295
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	953,467		$	582,559	$	(582,559	)	(A)	$	953,467
Accounts payable – related party		87,143			–		–				87,143
Accrued expenses		11,660,237			284,148		(284,148	)	(A)		11,660,237
Seller note payable		–			–		17,000,000		(B)		17,000,000
Convertible note payable		–			–		25,000,000		(B)		25,000,000
Note payable- related party		134,498			–		–				134,498
Note payable					55,340		(55,340	)	(A)		–
Deferred rent		–			67,366		(67,366	)	(A)		–
Derivative liabilities		79,730			–		12,723,535		(B)		12,803,265
Income taxes payable		1,029,482			3,302,437		(3,302,437	)	(A)		1,029,482
Total current liabilities		13,944,556			4,291,850		50,431,685				68,668,092
Noncurrent liabilities:
Long term debt		59,246,338			581,255		(581,255	)	(A)		59,246,338
Lease liabilities		3,807,306			–		–				3,807,306
Total noncurrent liabilities		63,053,644			581,255		–				63,053,644
Total liabilities		76,998,200			4,873,105		50,431,685				132,302,990
Stockholders’ equity
Common stock $0.001 par value, 250,000,000 authorized, 45,139,297 shares issued and 44,400,853 shares outstanding at September 30, 2021, and 42,601,773 shares issued and 42,169,041 outstanding at December 31, 2020, respectively.		45,140			–		–				45,140
Preferred Stock $0.001 par value, 10,000,000 authorized, 82,838 shares issued and outstanding at September 30, 2021, and 10,000,000 shares authorized; 19,716 shares issued and outstanding at December 31, 2020.		87					–				87
Additional paid-in capital		165,393,733			–		(34,000,000	)	(B)		131,393,733
Accumulated equity (deficit)		(46,188,829	)		15,012,909		5,682,301		(A)		(25,493,619	)
Common stock held in treasury, at cost, 517,044 shares held at September 30, 2021 and 432,732 shares held at December 31, 2020		(1,517,036	)		–		–				(1,517,036	)
Total stockholders' equity		117,733,095			15,012,909		(28,317,699	)			104,428,305
Total liabilities and stockholders’ equity	$	194,731,295		$	19,886,014	$	22,113,986			$	236,731,295

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Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 30, 2021

							Transaction
							Accounting				Pro Forma
	Medicine Man			RGA			Adjustments				Combined
Operating revenues:
Product sales, net	$	54,083,880		$	22,816,040		$	–			$	76,899,920
Product sales – related party, net		27,654,965			–			–				27,654,965
Other operating revenues		165,416			–			–				165,416
Total revenue		81,904,261			22,816,040			–				104,720,301
Cost of goods and services:
Cost of goods and services		44,692,765			4,309,472			–				49,002,237
Gross profit		37,211,496			18,506,568			–				55,718,064
Operating expenses:
Selling, general and administrative expenses		13,580,469			8,919,467			–				22,499,936
Professional services		4,466,696			–			–				4,466,696
Salaries, benefits and related expenses		8,505,733			–			–				8,505,733
Stock based compensation		3,865,588			–			–				3,865,588
Transaction costs								337,631.00				337,631
Depreciation		–			397,808			–				397,808
Total operating expenses		30,418,486			9,317,275			337,631				40,073,392
Income from operations (loss)		6,793,010			9,189,293			(337,631	)			15,644,672
Other income (expense):
Interest expense		(4,526,746	)		(3,391	)		(212,500	)	(D)		(4,742,637	)
Interest expense								(2,408,250	)	(E)		(2,408,250	)
Amortization of debt discount		–			–			(827,030	)	(F)		(827,030	)
Gain (loss) on sale of assets		242,494			–			–				242,494
Unrealized gain (loss) on derivative liabilities		967,751			–			–				967,751
Unrealized gain (loss) on investments		210,685			–			–				210,685
Total other income (expense)		(3,105,816	)		(3,391	)		(3,447,780	)			(6,556,987	)
Income (loss) before income tax expense		3,687,194			9,185,902			(3,785,411	)			9,087,685
Income tax benefit (expense)		(1,997,905	)		(1,023,148	)		–				(3,021,053	)
Net income (loss)	$	1,689,289		$	8,162,754		$	(3,785,411	)		$	6,066,632
Earnings (loss) per share attributable to common stockholders:
Basic earning (loss) per share	$	0.04			–			–			$	0.04
Diluted earning (loss) per share	$	0.03			–			–			$	0.03
Weighted average number of shares outstanding - basic		42,903,008			–			–			$	42,903,008
Weighted average number of shares outstanding - diluted		56,688,640			–			–			$	56,688,640

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Medicine Man Technologies, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2020

							Transaction
							Accounting				Pro Forma
	Medicine Man			RGA			Adjustments				Combined
Operating revenues:
Product sales, net	$	21,371,408		$	21,871,582						$	43,242,990
Product sales – related party, net		1,170,398			–			–				1,170,398
Consulting and licensing services		1,425,778			–			–				1,425,778
Other operating revenues		33,268			–			–				33,268
Total revenue		24,000,852			21,871,582			–				45,872,434
Cost of goods and services:
Cost of goods and services		17,226,486			5,167,096			–				22,393,582
Gross profit		6,774,366			16,704,486			–				23,478,852
Operating expenses:
Selling, general and administrative expenses		3,054,091			7,225,782			–				10,279,873
Professional services		5,390,186			–			–				5,390,186
Salaries, benefits and related expenses		5,973,482			–			–				5,973,482
Stock based compensation		5,815,808			400,000			–				6,215,808
Transaction costs								337,631				337,631
Depreciation		–			332,206			–				332,206
Total operating expenses		20,233,567			7,957,988			337,631				28,529,186
Income from operations (loss)		(13,459,201	)		8,746,498			(337,631	)			(5,050,334	)
Other income (expense):
Gain on forfeiture of contingent consideration		1,462,636			–			–				1,462,636
Interest expense		(41,460	)		(57,100	)		(283,333	)	(D)		(381,893	)
Interest expense		–			–			(3,211,000	)	(E)		(3,211,000	)
Amortization of debt discount		–			–			(1,102,706	)	(F)		(1,102,706	)
Other income (expense)		32,621			–			–				32,621
Unrealized gain (loss) on derivative liabilities		1,263,264			–			–				1,263,264
Unrealized gain (loss) on investments		(129,992	)		–			–				(129,992	)
Total other income (expense)		2,587,069			(57,100	)		(4,597,039	)			(2,067,070	)
Income (loss) before income tax expense		(10,872,132	)		8,689,398			(4,934,670	)			(7,117,404	)
Income tax benefit (expense)		899,109			(3,269,618	)		–				(2,370,509	)
Net income (loss)	$	(9,973,023	)	$	5,419,780		$	(4,934,670	)		$	(9,487,913	)
Earnings (loss) per share attributable to common stockholders:
Basic earning (loss) per share	$	(0.47	)		–			–			$	(0.47	)
Diluted earning (loss) per share	$	(0.47	)		–			–			$	(0.47	)
Weighted average number of shares outstanding - basic		41,217,026			–			–			$	41,217,026
Weighted average number of shares outstanding - diluted		41,217,026			–			–			$	41,217,026

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Medicine Man Technologies, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

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 MCG, LLC. The unaudited pro forma condensed combined financial information is presented as if the transaction had been completed on January 1, 2020 with respect to the unaudited pro forma condensed combined statements of operations for each of the nine months ended September 30, 2021 and for the year ended December 31, 2020 and on September 30, 2021 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 February 10, 2022, Medicine Man Technologies, Inc. operating its business under the trade name Schwazze (the “Company”) consummated the Agreement with MCG. The aggregate purchase price is $29,000,000, which comprised of cash and stock in Medicine Man, Inc.

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Note 3. Purchase Price Allocation

The fair value of the consideration transferred was valued as of the date of the acquisition as follows. The source of the cash that funded the purchase was debt taken out by Medicine Man prior to the acquisition.

MCG Purchase Consideration
Cash	$	16,008,000
Stockholders’ Equity		12,992,000
Total Purchase Consideration	$	29,000,000

The preliminary allocation for the consideration recorded for the acquisition is as follows if the acquisition had taken place as of September 30, 2021:

Current Assets	$	1,045,482
Property and Equipment		1,062,549
Goodwill		26,699,969
Other Assets		192,000
Total	$	29,000,000

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 September 30, 2021

Note A To remove MCG assets, liabilities, and equity not purchased pursuant to the asset purchase agreements.

Note B To record purchase consideration and transaction financing. The purchase consideration included cash and a common stock in Medicine Man. The transaction financing consisted of convertible notes (which the Company determined included an embedded derivative). The convertible notes were allocated pro-rata to the transaction based on the amount of cash used to fund the transaction.

Note C To record assets acquired and liabilities assumed from MCG at preliminary estimated fair value. The Company has not completed its purchase price allocation and the amounts noted are preliminary.

Unaudited Pro Forma Condensed Combined Statement of Operations – For The Nine Months Ended September 30, 2021 

Note D To record interest on convertible notes.

Note E To record amortization of debt discount related to the derivative associated with the convertible note.

Unaudited Pro Forma Condensed Combined Statement of Operations – For The Year Ended December 31, 2020

Note D To record interest on convertible notes.

Note E To record amortization of debt discount related to the derivative associated with the convertible note.  

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