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Schwazze Completes Latest Financing Round
Press Release | 03/02/2021
Schwazze, formerly operating as Medicine Man Technologies Inc. (OTCQX: SHWZ) ("Schwazze" or “the Company"), today announced that it has closed its most recent tranche of preferred equity, increasing the total capital raised to date through its private placement offering to $56 million. CRW Capital Cann Holding, LLC (“CRW”) led this investment round of $34 million along with an affiliate of Dye Capital & Company (“Dye Capital”) and other unaffiliated investors.
Over the last three months, the Company raised a total of $71 million in financing split between this private placement offering and debt financing of $15 million. The first $10 million of this debt financing will be funded immediately while the remaining $5 million will be funded as part of the closing of an identified acquisition.
“We think that the combination of Schwazze and Star Buds will provide an outstanding base from which to create a true leader in the Colorado cannabis market, and we are excited to be an active partner to the Company as they pursue their bold vision in the years to come,” said Jeff Cozad, President of CRW.
“This funding enables our team to close on the remaining Star Buds stores in Colorado and provide additional capital for growth. Our team members and investors are focused on taking care of our loyal customers and positioning Schwazze as one of the leading cannabis seed-to-sale companies in Colorado. We look forward to building a purpose-driven, innovative company in Colorado and beyond,” said Justin Dye, Chief Executive Officer of Schwazze.
From mid-December 2020 through this financing closing, the Company raised $21.9 million of preferred equity and convertible debt which has since been converted into preferred equity.
In the private placement, the Company issued and sold an aggregate of approximately 56,000 shares of Series A Cumulative Convertible Preferred Stock at a price of $1,000 per share under a securities purchase agreement with Dye Capital and CRW managed funds as well as subscription agreements with unaffiliated investors. Among other terms, each share of Preferred Stock (i) earns an annual dividend of 8% on the “preference amount,” which initially is equal to the $1,000 per-share purchase price and subject to increase, by having such dividends automatically accrete to, and increase, the outstanding preference amount; (ii) is entitled to a liquidation preference under certain circumstances, (iii) is convertible into shares of the Company’s common stock by dividing the preference amount by $1.20 per share under certain circumstances, and (iv) is subject to a redemption right or obligation under certain circumstances. The material terms of the preferred stock are described in the Company’s Current Report on Form 8-K filed on December 22, 2020.
The securities were offered by the Benchmark Company LLC and DelMorgan Group LLC.
An affiliate of Altmore Capital provided the Company with up to $15.0 million in debt that will mature in four years. The loan will earn 15% annual interest and the Company will begin to amortize the principle in its third year. There are fees, financial covenants, and prepayment fees associated with the note as well as a security agreement. The material terms of the debt will be described in a 8-K to be filed by the Company on or about March 4, 2021.
The securities offered in the private placement described above have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Investor Conference Participation
Schwazze will be participating in the Needham 2nd Annual Virtual Cannabis Conference on Wednesday, March 3, 2021. Institutional investors interested in scheduling a meeting with the executive leadership team should contact their Needham representative.
About Schwazze
Schwazze (OTCQX: SHWZ) is focused on building the premier vertically integrated cannabis company in Colorado. The company's leadership team has deep expertise in the mainstream CPG, retail, and product development at Fortune 500 companies as well as in the cannabis sector. The organization has a high-performance culture and a focus on analytical decision making, supported by data. Customer-centric thinking inspires Schwazze’s strategy and provides the foundation for the company’s operational playbooks.
Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc.
Forward-Looking Statements
This press release contains "forward-looking statements." Such statements may be preceded by the words "may," "will," "plans," "”position" "predicts," or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control and cannot be predicted or quantified. Consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) our inability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (ii) difficulties in obtaining financing on commercially reasonable terms; (iii) changes in the size and nature of our competition; (iv) loss of one or more key executives or scientists; (v) difficulties in securing regulatory approval to market our products and product candidates; and (vi) actual shareholder returns, (vii) our ability to successfully close on the second $5 million tranche under the loan described above, and (viii) our ability to successfully expand in Colorado and outside the state.. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210302005539/en/
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Winged Chocolate Edibles Wins Prestigious Nexty Award in partnership with First Foods Group’s Third-Generation Master Chocolatier.
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I have listened to it also a few times and that was why I have been going way out on a limb with some pretty wild and bold predictions for earnings. If I am wrong so be it but earnings should still be fantastic either way even if they are softer than what outrageous predictions I have made. 2021 is going to be dynamite for sure!
If someone buys that last 10,000 at $2.40 by CSTI, we could be off to the races.
A good recap of the movement of last week in cannabis stocks
https://talkmarkets.com/content/stocks--equities/cannabis-central-mso-pot-stock-sub-index-declined-74-last-week?post=300059
I stand corrected, I meant to say revenues of 17-18 million in the 4th quarter, not the 1st quarter. Remember the previous 6 Starbuds didn’t get finalized until near the end of December.
For the 1st quarter, I predict revenues of 24 million because the last 2 Starbuds deal was finalized until mid February so the company won’t get the benefit of those 2 stores for the whole first quarter.
Like I said, I believe the company is doing better than expected. Justin put out numbers that he knows that he could achieve without disappointing shareholders. He is a conservative leader and he has not shown one bit of hype in any past press releases.
We are just guessing right now because until we see the financials when the earnings come out, we don’t know exact numbers to breakdown everything.
I believe your revenue numbers are in the ballpark and give a good synopsis of what we are looking at.
Drugdoctor, I got your private message but since I don't pay for the premium package, I can't respond privately. But I agree with you totally.
Stevenrisk, I am only going to make one comment today about all the discussion happening right now. I have stated before that I believe you are a excellent informative investor and you evaluating the deals are an asset for those not so knowledgeable.
But I along with some others have a difference of opinion on what these preferred deals mean to the end of the bottom line for us. I don't care about the 8% interest on the preferred stock because this company's common stock price is going to take off this year at some point at a growth of 500%-1000% which would put it at a stock price of a medium of approximately $20.00 a share. At that point I can evaluate the situation and either cash out entirely, partially or hold on to my entire investment based on the fundamentals at that time. I believe we could see $40-$50 a share sometime in 2022.
I started an investment in this company many years back but flipped it mostly but then when all those deals were being announced I started to accumulate shares at a higher price. Once more informative details were announced how the deals were structured by the previous CEO, the price went south and I was underwater and thought the stock price would go to pennies. Then Dye came along and rescued the company and I started to add to my position and now have a position that I am thrilled with at a great price.
You can beat this preferred share debate to death and many of us don't give a crap about it. If you don't have enough shares to satisfy what you want to own and want to get some cheaper, then go ahead and keep up your game and hope for a price drop. But there are many on this board that are going to grab more of them now because the wait is almost over for fantastic news to send this higher.
When you put up $30 million to rescue a company, then I want to see you take no interest on your investment and see how you like it. Stock price appreciation is one way to have your investment grow, but so is interest on your investment.
Many of us have been here a long time and when newbies come on this board we take a slow acceptance to them especially when they start asking a lot of questions. We do our homework here and debate it with much vigor and come to our own conclusions and each make investment decisions on our own evaluations.
I believe you are an asset to this board because you are knowledgeable about equity investment and experienced in trading. But this topic of the preferred stock is over for me so I am not going to be responding to it any further. I wish you along with everyone else here good luck with their investment and hope to see all of us make money.
I bought some of it, I think it is really ready for a breakout to the upside. You are right, buyers have been slowly creeping up. Their Southeast Edibles website is just awesome looking and professional. I really think we are in for a surprise come earnings. The new First Foods Group website is really nice too. I don't believe they would be putting in the effort if something good wasn't transpiring. I like the promoting they have been doing on social media also. They just appear to be doing all the right things to move forward and as history has showed us, not wastefully spending money or diluting the shares to pay bills which I what I really like and interested me in the company.
I was thinking $17-$18 mil in q1 but like I said I am overly optimistic
I am going to go out far on a limb here but because of the confidence that I have in Dye, I am going to make a prediction on the upcoming earnings. I believe the company is doing much better than expected.
I predict that year end will be between break even and a loss of -.04 due to getting all the other write offs done and additional hiring of staff.
Then I say for the first quarter that we are going to see a blowout of a earnings between .10-.12 profit a share. Call me crazy but either I will look like a genius or a big fool. Just wanted to put it out there because that how confident I am that we are in the cusp of great things happening more quickly than expected. With the increased revenues Dye has been stating in interviews I believe he is trying to give us an expectation to see better profits than originally expected.
The fact that insiders hold 35% of the float gives me all the reason to own this stock and even a bigger amount upon conversion of preferred shares. Also the fact that the CEO has put up about $30 million dollars to make this work is another incredible confidence booster.
This isn’t a garbage company that appoints a CEO without investing his own hard earned money and continues to issue himself shares so he can walk away with a golden parachute without turning the company profitable.
Dye is a rock star and a quality person to do what he has done here and will be well deserving of the windfall at the end of this journey.
I get it and it wasn't meant to personal. But you have stated a few times since investing in SHWZ about the dilution issue. From my personal standpoint and by many others here, we aren't concerned about it because it is Dye getting the benefit.
And yes, Dye did adjust the shares to relate to the PPS for the amount of cash he put in as any smart investor/management team would do.
Didn't mean to put words in your mouth, I was just kind of summarizing how you seemed to be expressing your thoughts.
Keep up your great due diligence!
All the upward trading today was predicated against the 27,000 shares at $2.33 thru CSTI. He was there at the opening and they were just waiting for him to come off his limit but he did not budge. If he is there on Monday and he gets taken out, we could get the reversal we are hoping for.
Everything you stated is accurate. Dye did issue more preferred shares (to himself) because the price of the stock currently was lower than when these Starbuds deals were originally negotiated (around $2.80 a share back then). So on that issue, you are correct.
Now the issue that I am concerned about is nothing. Dye put up the money and he deserves a respectable payout because this had become a dumpster fire. Dye has everything to lose because if his investment goes down the drain, he is out a boat load of cash. I want the guy who has the most to gain and having the most risk having his butt on the line. While you are correct about the dilution, I could care less because it is not hedge funds or someone else financing these deals. Do you really think Dye is going to convert his preferred shares and start liquidating anytime soon? I sure don't and I don't expect Dye to convert them until SHWZ gets a outrageous takeover for the company which he approves of. The company that would propose a takeover would have the dilution factored into the takeover price.
Stevenrisk, you are a great informative investor (like many on this chat board) but you keep seeing this dilution as a scary negative. It would be if it wasn't Dye who was getting preferred shares but Dye does deserve a premium for what he has done here and what his is risking. If it was hedge funds/equity firms putting up the cash for preferred shares then I would worry because they would be looking to convert for an out as soon as their profit percentage reached a certain point. That would put considerable downward risk on the share price because it would spook investors that the hedge funds/equity firms wanted out and know something that we don't.
Many of us here on this chat board who have been here for a long time have been waiting for an opportunity like this and are thrilled that Dye has come on board. Many of us have stated to stop worrying about the preferred share dilution because it is miniscule in the sense of the overall picture. And I can guarantee you if Dye wasn't putting up the cash, the dilution would be even greater if we had outside investors putting up the money. One final note, you wouldn't have invested in SHWZ if Dye didn't come along because this stock would have gone down to about 10 cents a share due to the terms of the previous management agreed to when originally making those previous deals.
Dye has been funding most of the acquisitions and the price and terms of the Starbuds deals have already been set. I am convinced the financing is already there for Starbuds through Dye Capital.
So if Dye has some other possible deals in the works, they don't have to dilute the company with more shares since each share will be worth more so I don't want deals done quickly. Let's get those deals done first and then the stock price will make it easier to do other deals. Also when the Starbuds deals get finalized, the company will be profitable and they can use those profits to get other deals done.
I know we want to see something happen more quickly, but patience my friend. Right now if they announced a deal, the cannabis stock market sector is fighting headwinds and we wouldn't rise that much. We had that pop due to the REDDIT crowd and it died out fast. I believe the cannabis sector is going to really take off in the near future but only the companies that are profitable will get the benefit. But if Dye can get all the deals (possible new acquisitions) lined up at the right time and suddenly the Federal government legalizes cannabis, you will see a rocket ship with this stock. Once it becomes legalized, then the exchanges will be able to list American cannabis companies on the exchanges and SHWZ will have all the qualifications to get listed promptly.
Comparing SHWZ to a great majority of other cannabis companies is not compatible because SHWZ has one of the best management teams in the business. Dye is calculated and patient and doesn't fall for the hype. He builds companies based on valuations and foundations which is what is happening here. Like I stated before, he makes announcements when they need to be done and not before.
As far as your question of a "bought deal", there are so many garbage cannabis companies out there and I am sure Dye will do his due diligence before completing one. He was shown that first hand once he came on board of SHWZ and after getting deeper into the books, realized how much crap is out there and the previous management agreed to. Thankfully, he was able to terminate many of those deals. I don't believe we will see any of those previous deals resurrected. The only one that I would have liked to see get done (if the financials were right) was Medpharm but that won't happen now because the ex-CEO has a piece of that. I believe if SHWZ gets into the medical aspect of cannabis with an acquisition, that would be the final piece of the puzzle other than Federal legalization of cannabis.
Something appears to be happening here, volume has picked up for the past week or so and the buyer keeps raising the price.
I think we just need it to break $.30 and then we could get some momentum
Here come the panic buyers...LOL! The only thing it looks like I might have gotten right today was saying that I believed the market was oversold and we could get a reversal and it could be happening now.
I am still speechless, that was so unexpected and insane. Just think about this, the stock has lost a 1/3 of it's share price within 24 hours and yet it is one of the best and most promising cannabis companies in the market.
I wish I was smart as Drugdoctor and took his panic announcement!
Good call Doctor, I am just glad I was able to grab a big amount on that unexpected crash.
Just funny to see that OTCX is keeping the pressure on the sell side. The last time he was this aggressive was when the ex-insiders were bailing.
I was right there with you. Just a great opportunity. $2.16 is the 50 day average so we should be great here.
There must have been a ton of sell stops because the volume spiked huge. I was so happy to have cash waiting to grab them but I never would have imagined that scenario would take place. Honestly, that caught me by surprise and that doesn't happen often. If I had any idea of this happening, I sure wouldn't have been buying higher for sure.
Sometimes the market just gets you fooled and it did me this time.
I was wrong about the bottom, but I grabbed a boat load on that panic. I think I just won the lottery......yahoo!
If you are interested in owning some cheap shares, now is a great opportunity. I see $2.50 as the floor (if a panic happens...LOL...that's for you Doctor) before what should be a great bounce in my opinion. I hope you get them at $2.50. I am ok with what I grabbed earlier.
Funny Doctor, you have your fun today but I was right yesterday about what was about to transpire. There is no panic in this stock today and we have a new base around here. I do not expect a selloff and think we might even see some bargain hunters at the end of the day come in.
Some of your teasing is making the slow day go by faster.....LOL
I wish you luck on the lower bids my friend, I grabbed a few more at $2.69 after my first purchase
I had to laugh knowing what I said yesterday that I sound like a hypocrite, but I believe this market selloff this morning was too extensive and we have bottomed for awhile and will rebound. SHWZ is definitely oversold based on valuation and with the news due out within the next few weeks, I expect really surprising positive earnings along with the Starbuds deals getting done so it was worth diving in for some more. I believe we could see $5.00 once the news comes out.
Just too tempting so I grabbed a bunch at $2.69 today, I think the turn is coming soon
My guess was the buyer was NITE since he was aggressive earlier in the day and then showed his bid of 10,000 at $2.71. I stated earlier that I believe there were big buyers around just waiting to pick off any sellers if they panicked and they did.
Drugdoctor, I respect your incredible knowledge of this stock but this is the scenario in my opinion and having worked in the market for 30 years, I have much experience with this. Basically he dropped his price almost 10% with that order. 10% in a $3.00 stock in a matter of a minute is huge and a panic.
When the seller goes from a $2.96 limit to a market sell in a matter of 5 minutes, then that is a panic because he wants out at all costs and is worried about the other seller, he will get screwed and he did. GTSM had 2 sellers, one with 25,000 and another with 5,000.
He came off his limit from $2.96 to $2.91 although there was CTSI with 17,500 at $2.90. He first should have matched at $2.90 so if there was a really big buyer it would have enticed them with a real sizeable offer since we had some aggressive buyers earlier in the day (one might have been you).
Taking a stock down $.19 in a matter of a minute when you have buyers reloading bids constantly for a few minutes with the volume we have had is just plain stupid. What was the rush to unload today? Sell what you can today at a reasonable price and then sell the rest tomorrow probably at a higher price. This stock is in an upward price pattern. It's not December 31st and you have to be out for tax purposes. The seller panicked because the NASDAQ was getting killed and he followed suit. This is not a NASDAQ stock, this is OTCBB.
I was basically giving a play by play of what was going to happen just before it did because I have seen it thousands and thousands of times. There are just so many idiots in the market today.
Then the 5,000 share seller crapped his pants and followed at $2.73. After he sold stock, the offer was $2.85 for the last 2 minutes of the day. I am shocked that some buyer didn't buy 100 shares to mark it up to make their portfolio look good and make the sellers look stupid.
I always enjoy the banter with all of you and giving my perspective. We are on the same team here because we are always working together to keep everyone informed and wanting to hit that homerun. I was trying to inform any of our regulars here if they wanted to buy cheap, it was coming. I was just trying to give a teaching lesson for some of those who aren't as experienced to see these situations transpire before they become reality.
I have enough stock so I won't buy anymore unless we see another acquisition other than Starbuds, then I might jump in for more. I will make plenty of cash on what I have.
Congrats if you grabbed some with the GTSM seller panicking seller at the market just now. NITE back as a big buyer now we have a floor again.
There you go, GTSM is starting to panic and lowers to 25,000 at $2.85
Just how obvious VERT is...VERT is offering at $2.87 and someone puts in a market order to buy so he sells 100 at $2.87 and about 2,500 up to $2.89, with CSTI has 17,500 at $2.90. Then it sells down to $2.85 on a small amount and then GTSM lowers his 25,000 from $2.96 to $2.92 and VERT lowers his offer to $2.86. It is so obvious the game he plays. Now we need for a big buyer to come in with 50,000 to buy up to $2.92 and VERT will crap his pants.
Just a heads up the games these guys play. OTCX and CDEL has bids of a 1,000 each but I believe they are not showing bigger size to get the sellers to panic so they can pick them off.
Just now VERT lowers to $2.85
And you have VERT shorting it because of the big size offers higher.
I still have the stock on my screen and radar but was disappointed in the last earnings report. Right now the stock appears to have flatlined and I don't see much movement. I sold a little to early (still made a nice profit) but if a significant selloff should happen then I would consider jumping back in. I would need to see earnings show some growth again before considering getting in on a valuation basis. I believe the stock is fairly valued but I haven't seen anything to grab my interest in owning it again currently.
I like you Doctor more than I like NITE, so I would rather you get them instead
If this stock goes to $20 (which is a given in my opinion), I don't care about the conversion of the preferred stock. Dye will deserve every penny of it and he has already proven himself by what he did at Albertson's.
Stevenrisk, you are a great analyst and fact finder, but I am opinionated and know the story of what is happening here because I have been invested from the beginning and have been through all the garbage previously.
The fact is that the preferred shares of course are convertible but Dye is putting the money up himself and he has the most to gain. I don't want venture capitalists investing here because they will ruin everything because they won't care about us the little guy.
My opinion is that Dye walked away from Albertsons because he made the incredible turnaround of that company and left just before the company listed on NYSE because he doesn't want his hands tied by board members he couldn't deal with since the company was going public and then all the big numb nuts put their two cents into what should be his decisions. Albertsons (stock symbol ACI) hasn't done squat since it has listed. The big chains were given a golden ring to make money since COVID because they were deemed a necessary business. Albertsons hasn't been able to capitalize on that scenario. I have no knowledge of what Dye walked away from Albertsons with, but I would assume he got some options in Albertsons stock because of the job he did there before leaving.
I believe Dye came to SHWZ because he wanted to be the guy to run the whole show without interference because he is brilliant at what he does. With the amount of money he has been able to invest in SHWZ, he has earned the equity power and the right to make a killing with stock equity conversion. But for the time being and the price we are at, we have no dilution (in theory) for quite some time because Dye isn't going to be selling shares until we get that big takeover of the company from one of the cannabis giants for about $50 a share in my opinion.
You can blink and we can have the Starbuds news come out.
I have stated before that I believe that the Starbuds news will come earlier than expected and that will drive the price up and then we will get another announcement of another acquisition once the price is higher so any possible dilution will be at less expense to existing shareholders.
Just my gut feeling. Dye hasn't let me down yet on what I have been projecting on the future and I think he has a much bigger plan than we realize but just needs to get the Starbuds deals done.
On another positive note, that article that I posted earlier today was showing all the equity offerings by other cannabis companies which are totally diluting their shareholders without enhancing share price for those holders. With these Starbuds deals, Dye hasn't diluted our equity once and when the company comes out with the next financial report that will blow the doors off in my opinion (I am expecting a big surprise), the market will finally realize what is happening here and the blastoff will really begin.
Interesting article about cannabis
https://www.channelchek.com/news-channel/Cannabis_Fundamentals_Not_Hype_Important_to_Investors
Considering what an ugly day it was in the sector and the market, it didn't turn out as bad as it look it was going to.
Throw those low bids in tomorrow because I think we could get a downward push early in the morning before a respectable turnaround.