U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 25, 2017
MEDICINE MAN TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada | 000-55450 | 46-5289499 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer ID No.) |
4880 Havana Street
Suite 201
Denver, Colorado 80239
(Address of principal executive offices)
(303) 371-0387
(Issuer’s Telephone Number)
___________________________________
(Former Address)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
This Amendment is being filed to provide the information required by Item 9.01(a) of this Report, including independent audit of the financial statements of Denver Consulting Group for the fiscal years ended December 31, 2016 and 2015 and notes thereto, along with unaudited interim periods financial statements for the nine months ended September 30, 2017 and 2016, and pro forma consolidated financial statements applicable to this transaction.
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Filed herewith and incorporated herein by reference are the financial statements of Denver Consulting Group for the Years ended December 31, 2016 and 2015, and for the Nine Months ended September 30, 2017 and 2016.
(b) Proforma Financial Information
Filed herewith as Exhibit 99.3 and incorporated herein by reference are the combined unaudited pro forma financial statements of Medicine Man Technologies, Inc. and Denver Consulting Group for the periods ended September 30, 2017 and December 31, 2016.
(d) Financial Statements and Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to its report to be signed on its behalf by the undersigned hereunto duly authorized.
MEDICINE MAN TECHNOLOGIES, INC. | ||
(Registrant) | ||
Dated: January 19, 2018 | By: | /s/ Brett Roper |
Brett Roper,
Chief Executive Officer |
||
Dated: January 19, 2018 | By: | /s/ Jonathan Sandberg |
Jonathan Sandberg,
Chief Financial Officer |
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Exhibit 99.1
DENVER CONSULTING GROUP LLC
BALANCE SHEETS
Expressed in U.S. Dollars
See accompanying notes to the financial statements
1 |
DENVER CONSULTING GROUP LLC
STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME
(UNAUDITED)
For the Nine Months Ended September 30, 2017 and December 31, 2015
Expressed in U.S. Dollars
Nine Months Ended September, 30 | ||||||||
2017 | 2016 | |||||||
Operating revenues | ||||||||
Consulting services | $ | 981,598 | $ | 341,625 | ||||
Consulting services - related party | 16,998 | 38,743 | ||||||
Total revenue | 998,596 | 380,368 | ||||||
Cost of services | ||||||||
Subcontractors | $ | 68,069 | $ | 17,356 | ||||
Salaries | 214,767 | 191,132 | ||||||
Licensing, subscriptions and permits | 500 | 2,491 | ||||||
Total cost of services | 283,336 | 210,978 | ||||||
Gross profit | $ | 715,260 | $ | 169,390 | ||||
Operating expenses | ||||||||
General and administrative | $ | 103,589 | $ | 77,753 | ||||
Professional services | 21,546 | 6,413 | ||||||
Insurance | 33,344 | 13,180 | ||||||
Travel | 27,511 | 43,272 | ||||||
Advertising and promotion | 21,996 | 53,138 | ||||||
Total operating expenses | 207,985 | 193,756 | ||||||
(Loss) Income from operations | $ | 507,275 | $ | (24,366 | ) | |||
Other income/expense | ||||||||
Interest expense | $ | 689 | $ | – | ||||
Total other expense | 689 | – | ||||||
Net income (loss) before income taxes | $ | 506,586 | $ | (24,366 | ) | |||
Income tax expense | – | – | ||||||
Net (loss) income | $ | 506,586 | $ | (24,366 | ) |
See accompanying notes to the financial statements
2 |
DENVER CONSULTING GROUP
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2017 and 2016
Expressed in U.S. Dollars
2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net income for the period | $ | 506,586 | $ | (24,366 | ) | |||
Adjustments to reconcile net income to net cash | ||||||||
provided by operating activities | ||||||||
Depreciation and amortization | 7,252 | – | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (37,670 | ) | 25,566 | |||||
Customer deposits | (50,775 | ) | 70,415 | |||||
Other assets | 3,007 | (3,520 | ) | |||||
Accounts payable and other liabilities | (10,418 | ) | 2,041 | |||||
Net cash earned (used) from operating activities | 417,982 | 70,136 | ||||||
Cash flows from investing activities | ||||||||
Purchase of assets | $ | – | $ | (65,939 | ) | |||
Net cash used in investing activities | – | (65,939 | ) | |||||
Cash flows from financing activities | ||||||||
Short term debt | $ | (30,820 | ) | $ | 30,820 | |||
Distributions to shareholders | (203,528 | ) | (31,200 | ) | ||||
Net cash earned (used) for financing activities | (234,348 | ) | (380 | ) | ||||
Net decrease in cash and cash equivalents | $ | 183,634 | $ | 3,817 | ||||
Cash and cash equivalents - beginning of year | 32,495 | 19,563 | ||||||
Cash and cash equivalents - end of year | $ | 216,129 | $ | 23,380 |
See accompanying notes to the financial statements
3 |
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
Organization and Nature of Operations:
Business Description – Business Activity: In August 2014, Denver Consulting Group (“DCG”) was registered as an LLC in Colorado, established by a partnership group of experienced cannabis business professionals who recognized the need for quality compliance and operational consulting to support the wave of marijuana legalization both nationally and globally. DCG provides both medical and retail marijuana organizations with proven methods to improve operations, increase compliance with all state and local regulations, train staff, develop customized compliant packaging solutions, increase security, helps build brands to create customer loyalty, and more. The company offers its services to virtually every type of business in the cannabis industry, including growers, manufacturers, processors, and retailers.
The ownership group of DCG is comprised of seven members. The primary founding members, Greg Gamet, Justin Jones, and Bryan Sullivan co-founded JGB Ventures, LLC (dba. DANK) and opened DANK Medical Dispensary in September of 2009. Jay Griffin and Dan Glenn joined the DANK team in 2010 and 2013, respectively, as operational managers responsible for full implementation of compliant standard operating procedures and the health and safety of the patients they served. In January 2014, DANK was issued one of the first five recreational dispensary licenses in Colorado.
Being involved in the everyday operations of two successful branches of DANK, the owners noticed a lack of American distribution companies providing quality child safe packaging for the cannabis industry. In the same year (2014), Kush Bottles Colorado was founded to fill this void and quickly became the industry leader in child safe packaging. The continual success of both DANK dispensaries combined with Kush Bottles organically created an extensive network of cannabis professionals whom continually turned to Greg, Justin, and the other owners as the leading experts in running successful, compliant, holistic cannabis businesses. Recognizing yet another unmet need in the cannabis industry, Frank Falconer joined the team and created the founding ownership group of Denver Consulting Group at the end of 2014. Ryan Lewis joined in 2015 as the final owner after just half of a year of providing exemplary consulting as one of the company’s first employees.
DCG’s founding vision was to work with clients to develop custom business strategies based on industry best practices for the burgeoning cannabis industry. Their expertise in cannabis regulations, dispensary compliance, overall business operations and marijuana cultivation have ensured the successes of clients in the continually evolving cannabis industry. DCG has also provided general consultation to help new potential cannabis business owners and investors start up successful ventures, streamline and improve current operations, and enhance revenues at several other cannabis-related companies nationwide. Overall, consulting services have ranged from licensing & application support, including all documentation surrounding cultivation, dispensary, and processing Standard Operating Procedures such as employee handbooks, compliance logs, and training manuals, to new marijuana business plans including cultivation, security, operations, staffing, sales tracking, accounting, site selection and community outreach, to Seed to Sale METRC Training, MED Compliance Audits, Staffing, Operation & Security Plans for existing operations.
Related Parties – Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. We disclose related party transactions that are outside of normal compensatory agreements, such as salaries or board of director fees. We had related party transactions with the following individuals / companies:
· | JGB Ventures LLC – Greg Gamet, partner of DCG, has a 36% ownership; Justin Jones, partner of DCG, has a 36% ownership; Jay Griffin, partner of DCG, has a 10% ownership; |
· | Kush Bottles – Bryan Sullivan, Greg Gamet, Justin Jones and Frank Falconer own 100% of the business |
· | Cannascore – Bryan Sullivan, Greg Gamet, Ryan Lewis and Frank Falconer own 80% of the business |
· | Sullivan Law – Bryan Sullivan, has a 100% ownership of the business |
· | Elm Properties – Bryan Sullivan owns 20%, Greg Gamet owns 40% and Justin Jones owns 40%. |
Going Concern – The financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.
4 |
The Company had Net (loss) income of $506,586 and $(24,366) at September 30, 2017 and September 30, 2016, respectively, and further gains are anticipated in the development of our business. Accordingly, there is no substantial doubt about our ability to continue as a going concern.
Recently Issued Accounting Standards –
FASB ASU 2017-01 “Clarifying the Definition of a Business (Topic 805)” – In January 2017, the FASB issued 2017-1. The new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. The ASU is effective for annual reporting periods beginning after December 15, 2017, and for interim periods within those years. Adoption of this ASU is not expected to have a significant impact on our consolidated results of operations, cash flows and financial position.
FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – In August 2016, the FASB issued 2016-15. Stakeholders indicated that there is a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Adoption of this ASU will not have a significant impact on our statement of cash flows.
FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” – In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.
1. | Liquidity and Capital Resources : |
Cash Flows – During the year ending September 30, 2017 and September 30, 2016, respectively, the Company primarily utilized cash and cash equivalents and profits from operations to fund its operations.
Cash and cash equivalents are carried at cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $216,129 and $32,495 classified as cash and cash equivalents as of September 30, 2017 and December 31, 2016 respectively.
2. | Critical Accounting Policies and Estimates : |
Basis of Presentation: These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for annual financial statements.
Fair Value Measurements: Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.
5 |
Our financial instruments include cash, accounts receivable, fixed assets, other assets, accounts payable, note payable, deferred revenue, accrued liabilities and other assets. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. Our derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.
Accounts receivable: The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable related to consulting revenues are recorded at the time the milestone is achieved, resulting in funds being due, services are delivered and payment is reasonably assured. Consulting revenues are generally collected from 1 to 30 days after the invoice is sent. As of September 30, 2017, and December 31, 2016, respectively, the Company had accounts receivable of $83,234 and $45,564. The company wrote off $0 of its accounts receivable during the current year. The company will continue to evaluate the need for recognizing an additional allowance in the future.
Other assets: As of September 30, 2017 and December 31, 2016, respectively other assets was $1,116 and $4,123 of which included security deposits and prepaid expenses.
Accounts payable: Accounts payable at September 30, 2017 and December 31, 2016 was $435 and $1,282, respectively and were comprised of operating accounts payable for various professional services incurred during the ordinary course of business.
Payroll and payroll tax accrual: As of September 30, 2017 and December 31, 2016, respectively was $0 and $8,907 of which was the final payroll and payroll tax payments for September 30, 2017 and December 31, 2016, respectively
Other liabilities: As of September 30, 2017 and December 31, 2016, respectively other liabilities was $0 and $664. This was solely comprised of accrued interest.
Revenue recognition and related allowances: Revenue from consulting services is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved. The point at which the Company recognizes revenue meets all four revenue recognition criteria. The Company’s contracts provide evidence that an arrangement exists, the price is fixed and the collectability is assured.
Costs of Services Sold – Costs of services sold are comprised of salaries for employees, contractor expenses and licensing fees incurred while supporting the sale of the Company’s services.
General & Administrative Expenses – General and administrative expense are comprised of all expenses not linked to the formation of the Company’s services.
Advertising and Promotional Costs: Advertising and promotional costs are expensed as incurred and were $21,996 and $53,138 during the years ended September 30, 2017 and September 30, 2016, respectively.
Income taxes: The Company has adopted SFAS No. 109 – “Accounting for Income Taxes”. ASC Topic 740 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
3. | Members’ Equity : |
At September 30, 2017 and December 31, 2016, respectively, the Company had $268,975 and $65,447 in distributions to the partners of the company.
6 |
4. | Fixed Assets : |
The Company depreciates their fixed assets on a straight-line basis over its expected useful lives. The Company’s capitalization policy is to capitalize all assets over $3,000.
Depreciation expense for the period ending September 30, 2017 and December 31, 2016, respectively was $7,252 and $34,736.
September 30, 2017 | December 31, 2016 | |||||||
Computer equipment | $ | 21,286 | $ | 21,286 | ||||
Furniture & fixtures | 5,665 | 5,665 | ||||||
Leasehold improvements | 51,726 | 51,726 | ||||||
Less: accumulated amortization | (51,844 | ) | (44,592 | ) | ||||
$ | 26,833 | $ | – |
5. | Short-term Note Payable: |
At September 30, 2017 and December 31, 2016, respectively, the Company had $0 and $30,820 of finished goods inventory. The note payable is a balance that is due to two partners of the Company, Justin Jones and Greg Gamet.
6. | Customer Deposits: |
At September 30, 2017 and December 31, 2016, respectively, the Company had customer deposits balance of $23,856 and $74,632. These deposits represent customer payments on contracts that the company has not performed services on.
7. | Related Party Transactions: |
As of September 30, 2017 and September 30, 2016, respectively, the Company has five related parties, JGB Ventures LLC, Kush Bottles, Cannascore, Sullivan Law and Elm Properties. As of September 30, 2017 and 2016, the Company had related party sales of $16,998 and $38,743.
8. | Commitments and Concentrations : |
Office Lease – Denver, Colorado – The Company entered into a lease for office space at 4821 East 38 th Ave, Denver, Colorado 80207. The lease period started April 1, 2015 and terminated June 30, 2017. The Company’s rent expense during the years ended September 30, 2017 and September 30, 2016, respectively, was $43,004 and $19,920.
9. | Income Tax: |
The Company was formed at inception and remains a Limited Liability Company under the IRS Code. As a result, in lieu of corporate income taxes, the partners are taxed on their proportionate share of the Company's Income. Therefore, no provision for income taxes exist and no deferred tax asset exist as these both are the responsibility and benefit of partners, the owner. As such, the Company during the years ended September 30, 2017 and December 31, 2016, had $0 and $0 tax liability and $0 and $0 deferred tax asset as a result.
10. | Subsequent event: |
As of September 30, 2017, there are no material subsequent events.
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Exhibit 99.2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Denver Consulting Group LLC:
We have audited the accompanying balance sheets of Denver Consulting Group LLC (“the Company”) as of December 31, 2016 and 2015 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Denver Consulting Group LLC, as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles in the United States of America.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting. Accordingly, we express no such opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
Lakewood, CO
January 18, 2018
1 |
DENVER CONSULTING GROUP LLC
BALANCE SHEETS
Expressed in U.S. Dollars
December 31, 2016 | December 31, 2015 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 32,495 | $ | 19,563 | ||||
Accounts receivable, net | 45,564 | 43,502 | ||||||
Total current assets | 78,059 | 63,065 | ||||||
Non-current assets | ||||||||
Fixed assets, net accumulated depreciation of $44,592 and $0 | $ | 34,085 | $ | – | ||||
Other assets | 4,123 | 2,274 | ||||||
Total non-current assets | 38,208 | 2,274 | ||||||
Total assets | $ | 116,267 | $ | 65,339 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,282 | $ | 4,418 | ||||
Payroll and payroll tax accrual | 8,907 | 7,425 | ||||||
Related party loan payable | 30,820 | – | ||||||
Customer deposits | 74,632 | 26,056 | ||||||
Other liabilities | 664 | – | ||||||
Total current liabilities | 116,305 | 37,899 | ||||||
Total liabilities | 116,305 | 37,899 | ||||||
Commitments and contingencies, note 8 | ||||||||
Members’ equity | ||||||||
Distributions | $ | (65,447 | ) | $ | (43,402 | ) | ||
Retained earnings | 65,409 | 70,842 | ||||||
Total shareholders' equity | (38 | ) | 27,440 | |||||
Total liabilities and stockholders’ equity | $ | 116,267 | $ | 65,339 |
See accompanying notes to the financial statements
2 |
DENVER CONSULTING GROUP LLC
STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME
For the Twelve Months Ended December 31, 2016 and December 31, 2015
Expressed in U.S. Dollars
December 31, 2016 | December 31, 2015 | |||||||
Operating revenues | ||||||||
Consulting services | $ | 525,999 | $ | 386,124 | ||||
Consulting services - related party | 54,708 | 51,251 | ||||||
Total revenue | 580,707 | 437,375 | ||||||
Cost of services | ||||||||
Subcontractors | $ | 17,714 | $ | 35,530 | ||||
Salaries | 251,055 | 151,560 | ||||||
Licensing, subscriptions and permits | 4,109 | 14,706 | ||||||
Total cost of services | 272,878 | 201,796 | ||||||
Gross profit | $ | 307,829 | $ | 235,579 | ||||
Operating expenses | ||||||||
General and administrative | $ | 126,191 | $ | 39,368 | ||||
Professional services | 18,083 | 7,950 | ||||||
Insurance | 20,425 | 4,797 | ||||||
Travel | 71,699 | 59,763 | ||||||
Advertising and promotion | 76,200 | 80,008 | ||||||
Total operating expenses | 312,598 | 191,886 | ||||||
(Loss) Income from operations | $ | (4,769 | ) | $ | 43,693 | |||
Other income/expense | ||||||||
Interest expense | $ | 664 | $ | – | ||||
Total other expense | 664 | – | ||||||
Net income (loss) before income taxes | $ | (5,433 | ) | $ | 43,693 | |||
Income tax expense | – | – | ||||||
Net (loss) income | $ | (5,433 | ) | $ | 43,693 |
See accompanying notes to the financial statements
3 |
DENVER CONSULTING GROUP LLC
STATEMENT OF CASH FLOWS
For the Twelve Months Ended December 31, 2016 and December 31, 2015
Expressed in U.S. Dollars
December 31, 2016 | December 31, 2015 | |||||||
Cash flows from operating activities | ||||||||
Net income for the period | $ | (5,433 | ) | $ | 43,693 | |||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 44,592 | – | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (2,062 | ) | (39,042 | ) | ||||
Other assets | (1,849 | ) | (2,274 | ) | ||||
Accounts payable | (3,136 | ) | 4,418 | |||||
Customer deposits | 48,576 | 4,550 | ||||||
Other liabilities | 2,146 | 5,541 | ||||||
Net cash earned from operating activities | 82,834 | 16,886 | ||||||
Cash flows from investing activities | ||||||||
Purchase of assets | $ | (78,677 | ) | $ | – | |||
Net cash used in investing activities | (78,677 | ) | – | |||||
Cash flows from financing activities | ||||||||
Distributions to owners | $ | (22,045 | ) | $ | (1,402 | ) | ||
Short-term debt | 30,820 | – | ||||||
Net cash earned (used) for financing activities | 8,775 | (1,402 | ) | |||||
Net decrease in cash and cash equivalents | $ | 12,932 | $ | 15,484 | ||||
Cash and cash equivalents - beginning of year | 19,563 | 4,079 | ||||||
Cash and cash equivalents - end of year | $ | 32,495 | $ | 19,563 |
See accompanying notes to the financial statements
4 |
DENVER CONSULTING GROUP
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Twelve Months Ended December 31, 2016 and December 31, 2015
Expressed in U.S. Dollars
Distributed
Equity |
Additional
Paid-in Capital |
Accumulated
Earnings (Loss) |
Total
Equity |
|||||||||||||
Balance - January 1, 2015 | (42,000 | ) | – | 27,149 | 27,149 | |||||||||||
Distributions to owners | (1,402 | ) | – | – | (1,402 | ) | ||||||||||
Net (loss) for the period | – | – | 43,693 | 43,693 | ||||||||||||
Balance - December 31, 2015 | (43,402 | ) | – | 70,842 | 69,440 | |||||||||||
Distributions to owners | (22,045 | ) | – | – | (22,045 | ) | ||||||||||
Net income for the period | – | – | (5,433 | ) | (5,433 | ) | ||||||||||
Balance - December 31, 2016 | (65,447 | ) | – | 65,409 | (38 | ) |
See accompanying notes to the financial statements
5 |
NOTES TO THE FINANCIAL STATEMENTS
Organization and Nature of Operations:
Business Description – Business Activity: In August 2014, Denver Consulting Group (“DCG”) was registered as an LLC in Colorado, established by a partnership group of experienced cannabis business professionals who recognized the need for quality compliance and operational consulting to support the wave of marijuana legalization both nationally and globally. DCG provides both medical and retail marijuana organizations with proven methods to improve operations, increase compliance with all state and local regulations, train staff, develop customized compliant packaging solutions, increase security, helps build brands to create customer loyalty, and more. The company offers its services to virtually every type of business in the cannabis industry, including growers, manufacturers, processors, and retailers.
The ownership group of DCG is comprised of seven members. The primary founding members, Greg Gamet, Justin Jones, and Bryan Sullivan co-founded JGB Ventures, LLC (dba. DANK) and opened DANK Medical Dispensary in September of 2009. Jay Griffin and Dan Glenn joined the DANK team in 2010 and 2013, respectively, as operational managers responsible for full implementation of compliant standard operating procedures and the health and safety of the patients they served. In January 2014, DANK was issued one of the first five recreational dispensary licenses in Colorado.
Being involved in the everyday operations of two successful branches of DANK, the owners noticed a lack of American distribution companies providing quality child safe packaging for the cannabis industry. In the same year (2014), Kush Bottles Colorado was founded to fill this void and quickly became the industry leader in child safe packaging. The continual success of both DANK dispensaries combined with Kush Bottles organically created an extensive network of cannabis professionals whom continually turned to Greg, Justin, and the other owners as the leading experts in running successful, compliant, holistic cannabis businesses. Recognizing yet another unmet need in the cannabis industry, Frank Falconer joined the team and created the founding ownership group of Denver Consulting Group at the end of 2014. Ryan Lewis joined in 2015 as the final owner after just half of a year of providing exemplary consulting as one of the company’s first employees.
DCG’s founding vision was to work with clients to develop custom business strategies based on industry best practices for the burgeoning cannabis industry. Their expertise in cannabis regulations, dispensary compliance, overall business operations and marijuana cultivation have ensured the successes of clients in the continually evolving cannabis industry. DCG has also provided general consultation to help new potential cannabis business owners and investors start up successful ventures, streamline and improve current operations, and enhance revenues at several other cannabis-related companies nationwide. Overall, consulting services have ranged from licensing & application support, including all documentation surrounding cultivation, dispensary, and processing Standard Operating Procedures such as employee handbooks, compliance logs, and training manuals, to new marijuana business plans including cultivation, security, operations, staffing, sales tracking, accounting, site selection and community outreach, to Seed to Sale METRC Training, MED Compliance Audits, Staffing, Operation & Security Plans for existing operations.
Related Parties – Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. We disclose related party transactions that are outside of normal compensatory agreements, such as salaries or board of director fees. We had related party transactions with the following individuals / companies:
· | JGB Ventures LLC – Greg Gamet, partner of DCG, has a 36% ownership; Justin Jones, partner of DCG, has a 36% ownership; Jay Griffin, partner of DCG, has a 10% ownership; |
· | Kush Bottles – Bryan Sullivan, Greg Gamet, Justin Jones and Frank Falconer own 100% of the business |
· | Cannascore – Bryan Sullivan, Greg Gamet, Ryan Lewis and Frank Falconer own 80% of the business |
· | Sullivan Law – Bryan Sullivan, has a 100% ownership of the business |
· | Elm Properties – Bryan Sullivan owns 20%, Greg Gamet owns 40% and Justin Jones owns 40%. |
Going Concern – The financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.
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The Company had Net (loss) income of $(5,433) and $43,693 at December 31, 2016 and December 31, 2015, respectively, and further gains are anticipated in the development of our business. Accordingly, there is no substantial doubt about our ability to continue as a going concern.
Recently Issued Accounting Standards –
FASB ASU 2017-01 “Clarifying the Definition of a Business (Topic 805)” – In January 2017, the FASB issued 2017-1. The new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. The ASU is effective for annual reporting periods beginning after December 15, 2017, and for interim periods within those years. Adoption of this ASU is not expected to have a significant impact on our consolidated results of operations, cash flows and financial position.
FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – In August 2016, the FASB issued 2016-15. Stakeholders indicated that there is a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Adoption of this ASU will not have a significant impact on our statement of cash flows.
FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” – In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.
1. | Liquidity and Capital Resources : |
Cash Flows – During the year ending December 31, 2016 and December 31, 2015, respectively, the Company primarily utilized cash and cash equivalents and profits from operations to fund its operations.
Cash and cash equivalents are carried at cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $32,495 and $19,563 classified as cash and cash equivalents as of December 31, 2016 and December 31, 2015, respectively.
2. | Critical Accounting Policies and Estimates : |
Basis of Presentation: These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for annual financial statements.
Fair Value Measurements: Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.
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Our financial instruments include cash, accounts receivable, fixed assets, other assets, accounts payable, note payable, deferred revenue, accrued liabilities and other assets. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. Our derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.
Accounts receivable: The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable related to consulting revenues are recorded at the time the milestone is achieved, resulting in funds being due, services are delivered and payment is reasonably assured. Consulting revenues are generally collected from 1 to 30 days after the invoice is sent. As of December 31, 2016, and December 31, 2015, respectively, the Company had accounts receivable of $45,564 and $43,502. The company wrote off $0 of its accounts receivable during the current year. The company will continue to evaluate the need for recognizing an additional allowance in the future.
Other assets: As of December 31, 2016, and December 31, 2015, respectively other assets was $4,123 and $2,274 of which included security deposits and prepaid expenses.
Accounts payable: Accounts payable at December 31, 2016 and December 31, 2015 was $1,282 and $4,418, respectively and were comprised of operating accounts payable for various professional services incurred during the ordinary course of business.
Payroll and payroll tax accrual: As of December 31, 2016, and December 31, 2015, respectively was $8,907 and $7,425 of which was the final payroll and payroll tax payments for December 31, 2016, and December 31, 2015, respectively
Other liabilities: As of December 31, 2016, and December 31, 2015, respectively other liabilities was $664 and $0. This was solely comprised of accrued interest.
Revenue recognition and related allowances: Revenue from consulting services is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved. The point at which the Company recognizes revenue meets all four revenue recognition criteria. The Company’s contracts provide evidence that an arrangement exists, the price is fixed and the collectability is assured.
Costs of Services Sold – Costs of services sold are comprised of salaries for employees, contractor expenses and licensing fees incurred while supporting the sale of the Company’s services.
General & Administrative Expenses – General and administrative expense are comprised of all expenses not linked to the formation of the Company’s services.
Advertising and Promotional Costs: Advertising and promotional costs are expensed as incurred and were $76,200 and $80,008 during the years ended December 31, 2016 and December 31, 2015, respectively.
Income taxes: The Company has adopted SFAS No. 109 – “Accounting for Income Taxes”. ASC Topic 740 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
3. | Members’ Equity : |
At December 31, 2016 and December 31, 2015, respectively, the Company had $22,045 and $1,402 in distributions to the partners of the Company. There are seven partners of the Company; Greg Gamet, Justin Jones, Bryan Sullivan, Jay Griffin, Dan Glenn, Frank Falconer and Ryan Lewis.
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4. | Fixed Assets : |
The Company depreciates their fixed assets on a straight-line basis over its expected useful lives. The Company’s capitalization policy is to capitalize all assets over $3,000.
Depreciation expense for the period ending December 31, 2016 and December 31, 2015, respectively was $44,592 and $0.
December 31, 2016 | December 31, 2015 | |||||||
Computer equipment | $ | 21,286 | $ | 6,623 | ||||
Furniture & fixtures | 5,665 | 3,233 | ||||||
Leasehold improvements | 51,726 | – | ||||||
Less: accumulated amortization | (44,592 | ) | (9,856 | ) | ||||
$ | 34,085 | $ | – |
5. | Related Party Note Payable: |
At December 31, 2016 and December 31, 2015, respectively, the Company had $30,820 and $0 of finished goods inventory. The note payable is a balance that is due to two partners of the Company, Justin Jones and Greg Gamet.
6. | Customer Deposits: |
At December 31, 2016 and December 31, 2015, respectively, the Company had customer deposits balance of $74,632 and $26,056. These deposits represent customer payments on contracts that the company has not performed services on.
7. | Related Party Transactions: |
As of December 31, 2016, and December 31, 2015, respectively, the Company has five related parties, JGB Ventures LLC, Kush Bottles, Cannascore, Sullivan Law and Elm Properties. As of December 31, 2016, and 2015, the Company had related party sales of $54,708 and $51,251.
8. | Commitments and Concentrations : |
Office Lease – Denver, Colorado – The Company entered into a lease for office space at 4821 East 38 th Ave, Denver, Colorado 80207. The lease period started April 1, 2015 and will terminate March 31, 2020, resulting in the following future commitments:
2017 fiscal year | $ | 37,008 | ||
2018 fiscal year | 37,008 | |||
2019 fiscal year | 37,008 | |||
2020 fiscal year | 37,008 |
The Company’s rent expense during the years ended December 31, 2016 and December 31, 2015, respectively, was $29,172 and $0.
9. | Income Tax: |
The Company was formed at inception and remains a Limited Liability Company under the IRS Code. As a result, in lieu of corporate income taxes, the partners are taxed on their proportionate share of the Company's Income. Therefore, no provision for income taxes exist and no deferred tax asset exist as these both are the responsibility and benefit of partners, the owner. As such, the Company during the years ended December 31, 2016 and December 31, 2015, had $0 and $0 tax liability and $0 and $0 deferred tax asset as a result.
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10. | Subsequent event: |
Subsequent to year-end, on May 5, 2017, we entered into an Acquisition Agreement with Medicine Man Technologies, Inc., a Colorado corporation. The ratification of the acquisition of this company requires the approval of the holders of a majority of our shareholders, which will be submitted for such approval at our annual shareholder meeting to be held in June 2017.
This transaction will become effective 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 State and Nevada Secretary of State, respectively, which is expected to upon ratification by our shareholders.
Upon effectiveness, we will issue an aggregate of 2,258,065 shares of our Common Stock to Denver Consulting Group partners in exchange for 100% of the company.
On July 21, 2017, Medicine Man Technologies, Inc., executed the applicable Share Exchange Agreement and on July 25, 2017, they filed the Statement of Share Exchange with the Colorado Secretary of State’s office, which was the final condition that was needed to be met to make the acquisition final.
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Exhibit 99.3
MEDICINE MAN TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
Expressed in U.S. Dollars
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
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.
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