Medicine Man Tech Inc

Good afternoon. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Schwa's fourth quarter conference call. Note that all lines have been placed on mute to prevent any background noise. And if at any time during this call you require immediate assistance, please press star zero for the operator. And I would like to turn the conference over to Joanne Jobin, Investor Relations Officer. Please go ahead.

Greetings and welcome to the year-end 2021 conference call and webcast for Schwoz. We are being hosted by Justin Dye, Chairman and Chief Executive Officer, and Nancy Huber, Chief Financial Officer. Following their presentation, management will take questions submitted via the link found on Schwoz's Investor Relations website and in the earnings press release. I would also like to remind you that management's prepared remarks and answers to your submitted questions may contain forward-looking statements, which are subject to risks and uncertainties. Examples of forward-looking statements include, among others, statements regarding federal and state legislation and regulation, and Schwoz's future results of operations and financial position, business strategy and plans. and objectives for future operations. The words expect, anticipate, could, enable, estimate, intend, accept, believe, potential, will, should, project, position, objective, determine, vision, and similar expressions, as they're related to Schwarz, are, as such, a forward-looking statement. Investors are cautioned. that all forward-looking statements involve risks and uncertainties that may cause actual events, results, performance, or achievements to differ from those anticipated by Schwoz at this time. Additional information concerning factors that could cause events, results, performance, or achievements to differ materially is available in Schwoz's earnings release made available before this call and available on Schwoz's investor relations website and in the form 10-K for the year ended December 31st, 2021. In addition, other information is more fully described in Schwoz's public filing with the U.S. Security and Exchange Commission. which can be viewed at www.sec.gov or on the company's investor relations website. Also, Schwoz may discuss non-GAAP financial measures during today's call. A reconciliation of the differences between the non-GAAP financial measure disclosed during the call with the most directly comparable GAAP measure can be found in the Schwoz Earnings Press Release made available before this call and available on Schwoz's Investor Relations website and in the form 10-K for the year ended December 31st, 2021. I would now like to turn the call over to CEO and Chairman Justin Dye.

Hello and thank you for joining us this afternoon. I will provide a business update and our CFO, Nancy Huber, We'll review our year-end financial results in detail before I conclude our presentation with some final thoughts. We would then be happy to take your questions. In a truly transformational year, which continued into the first quarter of this year, 2022, our business continued to deliver strong operating results, and our team continued to execute our operating playbook. Our growth plans remain on schedule. We remain enthusiastic about our expanding future, these factors give us confidence that we are building a unique, differentiated business that is poised for profitable growth. In 2021, and including the first quarter of 2022, we announced or completed the following transactions. On March 23 this year, the company's common trading shares commenced trading under the symbol SHWZ onto the NEO. a tier one Canadian stock exchange based in Toronto, Ontario. In March, we also signed definitive documents to acquire all the assets of Urban Health and Wellness Inc. The proposed transaction includes the adult use urban dispensary, as well as 7,200 square feet indoor cultivation facility, both located in Denver, Colorado. On February 16th, we announced the acquisition of the assets of Brow 2 LLC, a Denver based cultivation asset, which includes a 37,000 square foot building for indoor cultivation and equipment. In February, we also acquired Emerald Fields, the owner and operator of two retail cannabis dispensaries located in Manitou Springs in Glendale, Colorado. We officially became a regional multi-state operator. when we announced closing of the New Mexico operating assets of Reynolds Greenleaf and Associates LLC and the equity of Elemental Kitchen and Laboratories LLC. This transaction included 10 Greenleaf licensed medical cannabis dispensaries, four cultivation facilities, three operating, one in development, and one manufacturing location. The state of New Mexico currently allows medical cannabis and has approved adult use recreational cannabis sales expected to commence tomorrow, April 1st, 2022. Along with our newly formed MSO status, we formed a strong Schwoz New Mexico leadership team under the leadership of Steve Pair as our New Mexico division president, along with Alex Walter-Hahn and Jacob White, both from our Greenleaf & Associates team. We also announced we are adding additional key roles at Schwoz to support our significant expansion within manufacturing, cultivation, and information technologies. Key members included Dave Kaufman as VP of Manufacturing and Supply Chain, Robert Pisali as VP of Cultivation. In late January, we announced the acquisition of the assets of Drift, which consists of two cannabis dispensaries located in Boulder, Colorado. In December of 2021, we announced the acquisition of the assets of the Smoking Gun, a dispensary located on a prime retail corner in the greater Denver metro area. Our most important announcement of the year occurred in early December when we announced a transformative $95 million raise of convertible debt for Schwoz M&A initiatives and expansion plans. This raise also introduced new institutional investors to the company, At that time, we made the announcement agreeing to purchase the New Mexico assets, transitioning Schwoz into a regional operator status. In August, we commenced our product home delivery service to residences in the city of Aurora, Colorado, and are continuing to look into ways to expand the service into other jurisdictions as delivery is approved. In July, we closed the acquisition of Southern Colorado Growers, which includes 34 acres of land with outdoor cultivation capacity, as well as indoor greenhouse and hoop house cultivation facilities and equipment. This purchase was the company's first major move into cultivation, which provides high-end premium cannabis directly to our Starbuds dispensaries and also provides significant production of biomass for our Purple Bees extraction and manufacturing facility. We launched our wholly-owned research and development subsidiary, Schwoz Biosciences LLC in May of 2021. And during 2021, Schwoz completed the acquisition of the remaining seven Starbuds dispensaries and the rebannering of four Mesa Organics retail dispensaries to Starbuds. As you can see by this report, our leadership team, our board of directors placed a premium on execution. To summarize, since April 2020, Schwartz has acquired or announced the planned acquisition of 33 cannabis dispensaries, as well as seven cultivation facilities and two manufacturing assets in Colorado and New Mexico. Most importantly, we continue to build our house of retail brands with Emerald Fields and our Greenleaf dispensaries, and we also continue to successfully expand the Purple Bees vape brand in all our dispensaries and across the state of Colorado. Now that we have the retail square footage and the grow capability, we expect to commence additional flower branding in our dispensaries in 2022. Year over year, our revenue increased to $108.4 million compared to $24 million during the same period last year, representing a 352% increase. The company's adjusted EBITDA for the year was $32.2 million, representing 29.7% of revenue. Proforma identicals for 2021, which includes performance before acquisition in 2020 and 21, show an average basket size that increased to 59.70, up 9.5%. Recorded customer visits totaled 1,375,589, up 3.8% compared to year-end 2020. Year-over-year identical sales were 13.3%. Since completing our acquisitions, we continue to generate approximately 68% of our revenue from retail, 32% from wholesale. We expect the contribution from the retail segment to continue to grow as we add to our dispensary count and add recreational sales in New Mexico. Through the implementation of our operating playbook, we've been able to effectively contribute to growth and efficiencies in our manufacturing and retail locations. At our Purple Bees Manufacturing Division, we implemented our MRP system, improving our ability for production planning and making cost decisions with real-time information. We held our first vendor summit in September, attended by approximately 83 suppliers from across Colorado, reviewing our product plans and discussing partnering opportunities and how to grow our vendors' business as well as ours. In retail, we're reviewing our product categories, aligning product assortment across our dispensaries. Along with strong revenue growth and adjusted EBITDA results, we continue to be encouraged with our retail results with our two-year stacked IDs at 47.3%, which we believe better represent market growth due to COVID-19 impact and stimulus packages. and demonstrates that we continue to outpace the Colorado market as reported by the PDS analytics by 19.8%. In 2022, we will continue to cycle COVID-19 retail numbers for the first half of the year. So we anticipate growth in Colorado market to be challenging this year. We anticipate the opening of the adult use market in New Mexico will offset some of that slower growth in Colorado. As mentioned earlier, we continue to strengthen our Colorado and New Mexico management teams. All come with great experience in their respective fields and will add necessary horsepower to critical areas to drive growth, execution, and support acquisitions in Colorado and New Mexico. We also plan to add a distribution center in Colorado as part of our retail wholesale playbook expansion. As for the federal and state government laws regarding cannabis legislation, there continues to be a lot of discussion but no significant movement or changes on any of the federal acts. Although it looks like the House may pass the Moore Act again this week or next, we remain skeptical it will pass the Senate. We expect that all parties will continue to look at financial and legal reform and cannabis laws and perhaps pass either the Moore Act or the Safe Banking Act or something similar as we continue to invest and reinvest in our customers and communities. On a positive note, more states continue to legalize both medical and adult use cannabis. As always, we will closely monitor any federal and state changes that would impact our industry and are poised to make any changes that are necessary. We have recently started home delivery products to Aurora, a suburb of Denver, Colorado, and we are looking to expand this service into other jurisdictions as delivery is approved. Turning to the future, As we are now a regional operator, we will continue to evaluate additional opportunities across the cannabis industry in the areas of cultivation, manufacturing, and retail dispensaries in other states. Our current criteria for potential acquisitions includes revenue growth or growth potential, EBITDA profitability with synergy opportunities, attractive acquisition prices that are accretive to our shareholders, provides additional brands and products, and attractive retail locations with good real estate. Any announcements regarding expansion intentions will be made once we've reached definitive agreements with prospective partners. Let me also reiterate that we believe our home state of Colorado continues to represent attractive geographies to build out our platform as it provides us with the opportunity to acquire targets that are sophisticated and profitable and have already weathered the early boom and bust cycle of the industry. Our entry into New Mexico will provide exciting additional opportunities as the state turns from medical only to medical and recreational adult use by April the 1st. And now I'd like to turn the discussion over to Nancy to continue our financial review.