Operator: Greetings, and welcome to the Second Quarter of 2020 Conference Call and Webcast for Schwazze, formerly operating as Medicine Man Technologies, Inc. This conference call and webcast is being hosted by Chief Executive Officer, Justin Dye; and Chief Financial Officer, Nancy Huber. Following the presentation, management will take questions submitted via the web link found on Schwazze's Investor Relations website and in 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. The words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions, as they relate to Schwazze, are as such, a forward-looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties that may cause actual results to differ from those anticipated by Schwazze at this time. In addition, other risks are more fully described in Schwazze's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov, or on the company's Investor Relations website. During management's prepared remarks and in answering investor questions, there will also be discussion of potential acquisitions. These acquisitions are conditioned upon the satisfaction or mutual waiver of certain closing conditions, including, but not limited to, regulatory approval relating to all applicable filings and expiration or early termination of any applicable waiting periods; regulatory approval of the Marijuana Enforcement Division and applicable local licensing authority approval; receipt of all material necessary third-party consents and approvals; each party's compliance in all material aspects -- respects with the respective obligations under the term sheet; a tax structure that is satisfactory to both the company and the targets; the execution of leases and employment agreements that are mutually acceptable to each party; and the execution of definitive agreements between the respective parties. I would now like to turn the call over to Chairman and Chief Executive Officer, Justin Dye. Please go ahead, sir.

Justin Dye: Good afternoon and thank you for joining us. Today, I'll provide an update on our business' second quarter performance and the broader market. As you know, both recreational and medical cannabis were deemed essential businesses by the State of Colorado at the onset of COVID-19. This allowed the entire cannabis supply chain to remain open and operational from the very beginning of the pandemic, which was a shot in the arm for the industry. According to industry analytics, the Colorado cannabis market grew more than 19% year-over-year from the first half of 2019 to the first half of 2020. Outpacing 2019 growth rates, Colorado also saw its pace of sales growth increase sequentially quarter-over-quarter in 2020, with more than 22% growth, and more specifically, they saw second quarter growth of 25% year-over-year. In addition to sustained industry growth during a global pandemic, we're seeing a more favorable regulatory environment that may present access to more main street banking options and even federal legalization. Last week, an analyst who followed the cannabis industry shared the same sentiment that I want to echo today. As we evaluate the cannabis landscape since the COVID-19 pandemic hit globally in early 2020, we try to frame where the newly deemed essential industry stands with potential catalysts for the next lag hire. We see favorable legalization and regulatory easing at both the state and federal levels, while demand remains robust and growing beyond being recession-resilient. While we have witnessed the unprecedented effects of the COVID pandemic, I believe the cannabis industry is at a turning point. At a local, state and federal level, we believe cannabis has the potential to provide job growth and tax revenue, which in the long term could serve as a means to further legalize cannabis across the country. Now, switching gears. I'd like to focus on key milestones that we accomplished throughout the second quarter. Despite the challenges brought on by COVID-19, we continued executing our operating playbook and advancing our acquisition strategy. On April the 20, we completed the acquisition of Mesa Organics and its Purplebee's business, which included retail dispensary locations, manufacturing and supply chain business, brands and a formidable team. As a reminder, Mesa Organics operates four dispensaries throughout Southern Colorado in Pueblo, Ordway, Rocky Ford and Los Animas. It also operates as Purplebee's, a leading pure CO2 and ethanol extractor, manufacturer of cannabis distillate and a white label producer for leading cannabis brands across the state of Colorado. The purchase consideration was approximately $2.6 million in cash and approximately $2.6 million in shares of common stock, subject to certain holdback and adjustment provisions. The transaction has already proven to be an excellent strategic fit for us and is already positively affecting our financial results. As we've outlined on prior calls, we continue to implement our operating playbook that incorporates best practices in retail operations, merchandising and product development, lean manufacturing and leveraging data to improve performance. While leveraging the strong team at Mesa Organics and Purplebee's, we started incorporating lean principles and using data to drive growth, productivity and quality. Additionally, we're leveraging retail merchandising best practices in our four Mesa Organics dispensaries. I'm very pleased to report that we're starting to see the impact of these changes on sales and margins. As such, through Mesa Organics and Purplebee's contributions starting second quarter, our topline and gross profit more than tripled, while our net loss narrowed sharply compared to prior year. Additionally, on June 8, we signed definitive acquisition agreements for 14 Starbuds locations in Colorado. Starbuds is one of the most recognized and successful retail cannabis operators in North America based on revenue per location and profit and is home to a wide selection of strains, concentrates, edibles, tinctures with best-in-class customer service. This transaction consists of 13 retail operations and one cultivation throughout the Colorado front range. Based on the consolidated unaudited 2019 results, these acquisitions generated approximately $50 million in revenue with strong EBITDA margins. We look forward to adding these acquisitions to our company and continue to implement our operating playbook and growth plan. This pending acquisition adds to our size and scale in the state of Colorado. We have already submitted the change of ownership applications with the Colorado Marijuana Enforcement Division for the 14 Starbuds locations and expect the transactions to close in the coming months. Upon completion of this transaction, we will be one of the first publicly traded companies with full seed-to-sale operations in Colorado with 17 dispensaries, manufacturing and cultivation. Additionally, we see opportunity to improve margin in a multipronged approach in conjunction with revenue growth. First and foremost, we're focused on driving margin improvement through our operating playbook that is being implemented throughout the organization. From rethinking our retail operations and bringing new products to market to putting more emphasis on our manufacturing partnerships and better aligning our service offerings, we believe that there is an opportunity to drive operational improvement. We're focused on driving growth, leveraging our cost structure and driving value to the bottom line. In addition to the rigorous merger and acquisition work throughout the second quarter, our team continues to make great headway in building out our capabilities to scale the business. We're focused on people, process and technology to enable the business to scale quickly. In the second quarter of this year, we implemented a new human capital management tool to help grow our workforce and drive productivity. We are also making progress in rolling out our comprehensive ERP system with the first phase going live July 1 and implementation expected to continue throughout 2020. Also, we created a best-in-class integration playbook that has delivered a smooth integration of Purplebee's and Mesa Organics into Schwazze. We will continue this framework for the Starbuds acquisitions. Our integration capabilities, coupled with a dedicated focus, to accurately track and capture synergies within our platform has improved our acquisition performance since becoming part of the Schwazze family. All in all, I'm very pleased with our execution, energy and passion that I'm seeing across all areas of our business. Finally, I'd like to provide an update on our acquisition strategy. We remain in active negotiations with the following previously announced acquisitions, Roots Rx, MedPharm and Canyon Cultivation. And while we're making progress on our platform, we've also announced that we will not be proceeding with the previously announced targets, including Dabble Extracts, Los Sueños Farms and Medically Correct. We've also decided to let the term sheet with the Medicine Man dispensaries expire at the end of the month. Following the signing of the Colorado House Bill 19-1090 last year, the company quickly moved forward on numerous term sheets with Colorado cannabis operators, despite having conducted limited due diligence. However, after spending time on diligence and negotiations, the parties chose not to continue to pursue the transactions. We wish these operators all the best as we each move forward with our respective businesses. We will continue to be inquisitive and evaluate opportunities that fit our strategy of providing the most trusted products and experiences for consumers. In summary, our direction is unchanged. We're moving forward and working to make 2020 a milestone year for our employees, our stakeholders, our communities and above all, our customers. Let me now turn the call over to our CFO, Nancy Huber to review our second quarter financials in greater detail.

Nancy Huber: Thank you, Justin. And let me echo your earlier sentiments regarding the second quarter as we generated very encouraging results, continuing the revenue growth we saw in the first quarter. Once again, each business segment grew from the prior year. As we indicated on our first quarter conference call, we've been fortunate that COVID-19 has not had a negative impact on our businesses, and our supply chain remained solid during this time. For the second quarter, revenue was $5.4 million, a 209% increase over the same period last year of $1.8 million. Notably, product sales rose nearly 263%, which can largely be attributed to the revenue associated with the acquisition of Mesa Organics in April 2020. Without the acquisition, sales for product sales rose 61% over the same period a year ago. The cost in goods and services totaled $3.1 million compared to $1.1 million in the year ago period. This 186% increase was due primarily to increased sale of products. As a percentage of revenue, cost of goods and services decreased 5 percentage points to 57% versus 62% in the prior year second quarter. Gross profit was $2.3 million compared to $0.7 million for the second quarter last year. Gross profit increased to 43% of revenue from 38% of revenue during the same period in 2019. The acquired businesses did not have a material effect on the gross margin of the business. Operating expenses were $8.7 million compared to $9 million in the same period last year. The decrease was primarily attributed to the derivative expense for contingent compensation in the prior year coupled with a decrease in professional services. This was partially offset by higher salaries, SG&A and non-cash stock-based compensation associated with activities related to building infrastructure and ensuring a seamless integration of acquisitions in the pipeline. As we have discussed previously, we have built a robust platform, including teams for M&A, integration, marketing and merchandising, FP&A, IT, HR and more. This will help us facilitate our closing on acquisitions and then enable us to integrate them quickly. We view this platform as an investment in our future that will facilitate sustainable organic growth and acquisition growth. Net other expense totaled $0.2 million compared to net other expense of $0.5 million for the second quarter last year. This represented an improvement of $0.2 million. The decrease in other expenses net was primarily due to lower interest expense, coupled with unrealized gain on investments, offset by an unrecognized loss on derivative liabilities. Net loss was $6.6 million or a loss of $0.16 per share on a basic and diluted weighted average compared to a net loss of $8.8 million or a loss of $0.30 per share for the year ago period. We had $5.4 million classified as cash and cash equivalents as of June 30th, 2020. As we navigate through the pandemic, we continuously review our cash needs. And have contingency plans in place, should we need additional cash resources. We will also likely need to raise additional capital to fund the acquisitions on which we have entered into binding term sheets, and may explore capital-raising transactions in the form of debt, equity or both. We cannot state with certainty today, how much additional capital we may need. However, upon successful completion of our planned acquisitions, we believe we will generate positive cash flow from operations. And we expect that we will not need to raise additional capital to execute, on the ongoing business operations. This is because the revenue generated from the fully integrated acquisitions will be sufficient to allow us to implement the current business operations. Now I'd like to hand the call back over to, Justin for his closing comments.

Justin Dye: Thanks, Nancy. Let me conclude our remarks with a glimpse into the third quarter, as we are encouraged by what we're seeing, thus far. In July, product sales from Mesa Organics increased year-over-year, due in part to the year-over-year expansion of dispensary locations, while Purplebee's benefited from product expansion and additional white labeling opportunities. The business is a clear winner. And we're proud to have it, as a part of our expanding portfolio. As we continue to expand on our seed-to-sale platform, we are refocusing some of the expertise that we have in our professional services. And cultivation services areas, to internal projects. As such, we do expect our revenues related to those specific services, to decrease in the coming months, while these new projects should generate increased revenues and savings in other areas of the business. Looking ahead, we aim to close on Starbuds and additional acquisitions over the coming months. These acquisitions will help us increase our collective efficiencies and profit margin over time, like what we've experienced to date with Mesa Organics and Purplebee's. To conclude, I believe we have accomplished a lot, in our four months as a plant-touching company. And we're just at the beginning of this journey. Our intention is to build a company that's positioned to become a market leader, not only in Colorado, but across the nation. This will be accomplished by bringing together experienced, profitable cannabis pioneers, into a single publicly traded organization. These entities will be supported by our team and infrastructure that we have built, so that we can promote their strong performance and operating excellence, while driving sustainable EBITDA and long-term success. To get there, we're constantly re-evaluating what makes the most sense for us, in terms of acquisition potential. And if circumstances dictate, as they have in a few cases recently, we will change course, if we think that will be the best outcome. Our acquisition pipeline is far from static rather, it's dynamic and evolving. And therefore, we will only act upon the opportunities that we think best suit our needs. And which provide us with the greatest possibilities. So with that, let me thank our investors, for their continued support and express my enthusiasm for sharing further updates, on our progress, as appropriate. I would also like to thank, all of our employees, and all of our leaders in the organization, for a great Q2 performance. We'd now be happy to take your questions. To ask a question, please click on the link on the Investor Relations portion of our website and submit.

A - Raquel Fuentes: Thank you, Justin. Our first question that we have, is, your announced acquisition targets have changed throughout 2020. What gives you confidence in your acquisition strategy? What have you learned from these experiences? How do you ensure, that you do not get off track again?

Justin Dye: As discussed in my prepared remarks, following the signing of Colorado House Bill 19-1090 last year, the company quickly moved forward on a number of the term sheets, without conducting, deep diligence. So we had conducted limited due diligence. However, after spending time on diligence and negotiations, parties have chosen not to continue to pursue the transactions. We're going to continue to be focused on doing what's best for our company and our shareholders. While these deals didn't move forward, I remain very confident, in our ability to build a winning platform with strategic profitable cannabis operators. Our acquisition pipeline is very dynamic and is evolving. And therefore, we will only act upon, the best opportunities to build capabilities for the business and create shareholder value. We'll continue to re-evaluate, what makes the most sense for us in terms of acquisitions. And as circumstances dictate, we'll change course as we need to. And be adaptable. But I'm very confident in our future, and I think our future is very bright on the M&A front.

Raquel Fuentes: Thank you. Next question. There has been some recent coverage related to the company changes and the decline in the stock price. Justin, what do you say to those that might be questioning, if the company can deliver?

Justin Dye: Yeah. Thank you. I first want to mention that, we've only been a plant-touching company for approximately four months now. I'd have to say, we've accomplished a lot in these last few months. Our first closing and integration, a new ERP system, a new human resources system, implementing our operating playbooks, and adding additional definitive agreements that we announced all with the backdrop of this pandemic. So the team's executed at a very high level despite all of this and the circumstances. Recently, I've had to take a moment to remind myself of how young the company is and that we're just getting started really. As it relates specifically to the changes we've had, I would say, this is normal in every start-up, early-stage company. We've had aggressive strategy. While some might see these changes as setbacks, each of the deals were certainly worth evaluating. We've learned a lot looking at each one of these deals, and we believe we're pursuing the things that – the opportunities that create the most value for our shareholders and drive the bottom line. The Board, myself, our leadership team is committed to building a leading platform and is focused on delivering most trusted products and experiences through leading with cultivation, manufacturing and retail operations. So we feel good. We've been executing, and I think our general view is, we're very proud of what we've gotten done.

Raquel Fuentes: Thank you. The next question that's come in, how has Schwazze fund the acquisition of the Colorado locations of Starbuds?

Nancy Huber: So as we talked earlier, we do anticipate that we'll need funds to close the Starbuds acquisition and working capital, and we're exploring capital-raising transactions in the form of equity and debt. We do believe that we'll close the Starbuds acquisition in the coming months. And once we've closed that acquisition, we believe we will generate positive cash flow from operations and do not expect a need to raise additional capital to execute our ongoing business operations.

Raquel Fuentes: Thank you. The next question that comes in, with the changes in the acquisition partners, what will your new footprint and revenue look like now?

Nancy Huber: So just specifically talking about the Starbuds acquisition, assuming we acquire that as closing in the next couple of months, we would have 17 dispensaries, a cultivation and a manufacturing facility. For – if you look back in 2019, and look at the pro forma revenue from then, that would be about a $70 million company for Schwazze, Mesa Organics and Starbuds together. Late in 2019 and in early 2020, Mesa Organics opened three additional dispensaries. So as you review the revenue, we certainly anticipate that the revenue will increase from 2019 based on that, as well as the fact that, we're experiencing a very successful 2020 so far. And then obviously, as we add scale to the company, we have an expectation that the company will move from negative to positive EBITDA with the closing of the Starbuds acquisitions.

Raquel Fuentes: Great. Thank you. Next question that comes in. Can you provide any insight on the profit margins in Mesa Organics during Q2? Is that level of performance sustainable? And how are the newest locations performing?

Nancy Huber: So we don't specifically talk about our separate margins in our businesses. But as we -- as I indicated in my earlier remarks, the acquisition didn't have a material effect on the margin that we would have reported without those businesses. So you can calculate what those margins look like. We do, however, feel like as we implement our operating playbook both at the dispensaries and lean manufacturing and continued operating playbook execution in the MIP that we'll see those margins continue to improve. We're really pleased with the progress of the new dispensaries. We believe we have expectations that are set appropriately for the revenue there based on the environment. The two stores, for example, just opened as the pandemic started and are doing well.

Raquel Fuentes: Great. Next question that's come in. Can you tell us a bit more about the 2020 performance of Starbuds?

Nancy Huber: So we're not able to talk about the Starbuds performance at this time. I can say that we're pleased to add their Colorado locations to our portfolio. The company brings a wealth of expertise and some of the best customer service that I've seen in terms of the cannabis stores that I visited, and we believe their retail footprint is exceptional. And with that, we would become the fourth largest dispensary operator in the state. So we're really looking forward to having them as part of the company.

Raquel Fuentes: Great. Thank you. Next question. Justin, has your timetable for closing other transaction changed? When can we expect the next transaction?

Justin Dye: Yes. Let me tell you what we can share. We continue to work aggressively to close on the Starbuds acquisition. We feel very good about that. Additionally, our corporate development team remains engaged in negotiations with the additional acquisitions partners, and we look forward to sharing more updates with you and as we can going forward. So we'll continue to update shareholders once we can.

Raquel Fuentes: Great. We've got time for one more question. I understand recreational delivery is going live in Colorado on January 1, 2021. How is Schwazze preparing for this change?

Justin Dye: Great, great question. You know, when we think about consumers in today's world, we know that they want multiple ways to shop and multiple ways to receive products, so an omnichannel approach as they buy products and experience cannabis. As we look toward the changes related to rec delivery, we're really -- we've got a to game plan on multiple fronts. As with no things related to cannabis in Colorado, it's up to the local jurisdictions to opt in, and this is the case with delivery as well. We're working with local municipalities to ensure this customer benefit is able to be implemented where we operate. When it comes to the delivery capability, we're working with partners on the last-mile options as we speak and have a strategy around e-commerce, but it includes delivery. So we're excited about the opportunity to provide an omnichannel approach for our customers, and we look forward to sharing more details in coming releases and coming research. Okay.

Justin Dye: Well, I'd like to thank everyone for your interest in Schwazze and joining us today. We look forward to providing additional information on our business in the future. Thank you very much.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.