The parent company of online cannabis advertising giant Weedmaps – California-based WM Technology Inc. (Nasdaq: MAPS) – plans to raise $224.3 million by more than doubling the number of shares issued to date to stockholders, the company said in a pair of prospectus filings with securities regulators this month.
The two prospectuses from Weedmaps would add a total of 112.8 million new shares of stock to the market, on top of the existing 97.7 million shares that are already circulating.
The first prospectus, which proposes to issue 110.8 million new shares of Class A Common Stock, asserts that the move would bring in almost $225 million to the company from exercise of connected warrants, assuming that they’re all exercised in full for cash. The influx of funds will be used for “general corporate purposes,” according to the filing, which was submitted to the U.S. Securities and Exchange Commission on Dec. 9.
The second prospectus, which proposes yet another 1.9 million Class A Common Stock shares be issued, would not raise any funds for the company, according to the document.
The move by Weedmaps suggests that the company is in need of capital in order to continue expanding its footprint, even as the tech business faces at least two shareholder lawsuits – both related to charges that Weedmaps lied to inflate its user numbers – as well as flattening revenue as the cannabis tech firm struggles to maintain its footing.
At the end of September, Weedmaps had $45 million in the bank and total liabilities of $58.6 million, according to its latest quarterly financial filing.
But Weedmaps has struggled to retain and collect from its cannabis client base, the company said in the prospectuses. That’s directly led to a tougher bottom line for Weedmaps.
“Our revenue declined in 2023 compared with 2022 and remained relatively flat when compared with 2021,” Weedmaps wrote, referring to its net income of $2 million last year, up from a net loss of $4 million in 2022.
“Average monthly paying clients for the nine months ended September 30, 2024 decreased 10% to 5,027 average monthly paying clients from 5,555 average monthly paying clients in the same period in 2023,” the documents stated.
The decline was blamed on the removal of marijuana companies that hadn’t paid their advertising bills, the sunsetting of certain Weedmaps business products, and “expected client churn due to continued industry challenges, such as price deflation and ongoing consolidation.”
The company also faced a warning from the Nasdaq in October this year, the company disclosed, due to its stock price falling below $1 per share.
“We currently do not meet, and may not regain compliance with, the listing standards of the Nasdaq Stock Market LLC … and as a result our Class A Common Stock may be delisted,” Weedmaps stated.
On Oct. 9, Weedmaps said, it was notified by the Nasdaq that its stock trading price for the prior 30 days had been below “the minimum closing bid price required for continued listing on the Nasdaq,” and that Weedmaps had 180 days to get the share price back up above $1 for at least 10 consecutive business days.
Weedmaps appears to have already solved the issue, given that its stock price jumped back above the $1 mark on Nov. 18 and hasn’t fallen below that mark since.
The prospectuses also offer a glimpse into the inner workings of Weedmaps, and notes that there’s been yet another headcount reduction in the past year, to 427 employees as of Sept. 30, down from 440 as of Dec. 31, 2023.
But as cannabis continues gaining mainstream acceptance in the U.S., Weedmaps said its business model will continue evolving as well, with an expected pivot eventually into TV and radio advertising.
“Over the longer term, we expect to shift and accelerate our marketing spend to additional online and traditional channels, such as broadcast television or radio, as they become available to us,” Weedmaps stated.
Weedmaps also confirmed in the prospectuses that its pricing for online cannabis ads for dispensaries and brands often wind up as bidding wars, a practice that has created ill will among a good bit of its California customer base, sources have previously told Green Market Report.
“We have a fixed inventory of featured listing and display advertising in each market, and price is generally determined through a competitive auction process that reflects local market demand,” Weedmaps wrote.
CEO Doug Francis pulled in a base salary last year of just over $1 million, the company disclosed, along with a signing bonus of $700,000 in August 2023. After his appointment as CEO was confirmed this year, his pay package included a new base salary of $750,000 as well as an annual target bonus equal to 100% of his salary, along with $3.9 million worth of Weedmaps stock. Francis currently owns 4.7 million shares of Class A Common Stock.
Also last month, Weedmaps hired a new chief technology officer, Sarah Griffis, at a base salary of $400,000 and with an annual targeted bonus of 50% of her salary, the company disclosed in a separate filing with the SEC.
[[{“value”:”The regulatory filings also provided a glimpse into the inner workings of the company.
The post Weedmaps to more than double its outstanding shares to raise $224 million appeared first on Green Market Report.”}]] Read More
