LOS ANGELES--(BUSINESS WIRE)--MedMen Enterprises Inc. (“MedMen” or the “Company”) (CSE: MMEN) (OTCQX: MMNFF) (FSE: A2JM6N) today released its consolidated financial results for the second quarter of fiscal 2019. All financial information for the 13-week period ended December 29, 2018 is reported in U.S. dollars, unless otherwise indicated.
Management Commentary
“Our strong second quarter results support MedMen’s commitment to drive strong retail and sales performance, while efficiently scaling the Company and executing on our growth strategy,” said Adam Bierman, MedMen chief executive officer and co-founder. “As we emphasized last quarter, we are in a new phase of growth, one focused on continuing to operationalize our industry-leading retail footprint and increasing our profitability. We are confident in the team we’ve built to drive our success.”
After going public almost one year ago, MedMen has established a track record of growth and success. With approximately 7% market share in California, the largest cannabis market in the U.S., the Company is planning to open 16 new locations across the U.S. in calendar 2019. Of the 16 new locations, 12 will be based in Florida, where MedMen is licensed for up to 30 locations. Additionally, four retail sites in Florida are expected to open in the next 90 days in the following locations: Key West, Orlando, West Palm Beach, and St. Petersburg.
Second Quarter 2019 Overview
Financial Results:
- Systemwide sales revenue of $29.9 million, which represents at 39.1% quarter-over-quarter increase over fiscal 2019 first quarter ended September 30, 2018.
- Gross profit margin improved to 53% from 45% in the prior quarter due to unrealized gain on changes in fair value of biological assets.
- Company’s eight retail locations in California reported a combined $23.7 million in revenue, a 28% quarter-over-quarter increase.
Corporate Developments:
- Signed definitive agreement in December to acquire PharmaCann in an all-stock transaction. The transaction will double MedMen’s geographic footprint to 12 states, which account for over 50% of the U.S. population.
- Expanded California footprint into Northern California through the signing of definitive agreements for the acquisitions of a retail license in Emeryville and a microbusiness license for retail, distribution, cultivation and manufacturing cannabis onsite in San Jose. The first transaction closed in Q2 2019 and the second transaction closed in Q3 2019.
- Signed definitive agreement to acquire the retail operations and license for a store in Santa Ana, California, through an all-stock transaction with Captor Capital Corp. This location was already operating under the MedMen brand through a management contract. Transaction closed in Q3 2019.
- Closed on acquisition of Omaha Management Services, LLC, which owns Monarch, a Arizona-based vertically-integrated medical license holder with a flagship retail location in Scottsdale, plus cultivation and processing operations.
Brand Strategy:
- Launched a comprehensive suite of new cannabis products under the brand [statemade], which are currently being sold in MedMen’s Nevada stores.
- Announced the completion of investment in California-based flower brand Old Pal, which provides every day, high-quality cannabis flower for customers.
People:
- Appointed Michael Kramer as chief financial officer. Mr. Kramer offers three decades of retail experience and has excelled in both operational and financial roles, including as CFO of high-profile retailers such as Apple Retail Inc., Forever 21, and Abercrombie & Fitch.
- Appointed Ben Cook as chief operating officer. Mr. Cook has extensive experience leading omnichannel distribution, global market expansion and supply chain optimization. His experience executing complex strategies for global, high-growth companies, including Apple, Sam’s Club, and Target is invaluable to MedMen’s growing multi-state operations and expansion plans.
Capital Markets and Financing Activities:
- Announced relationship with newly formed Treehouse Real Estate Investment Trust (“Treehouse”), a cannabis-focused REIT that has now raised $133 million to acquire properties from MedMen and other cannabis real estate.
- Closed a $77 million senior secured term loan with funds managed by Hankey Capital and with an affiliate of Stable Road Capital.
- Closed, on December 5, a $56 million bought deal equity financing, issuing 13,640,000 units at a price per unit of $4.11, with each unit being comprised of one Class B subordinate voting share and one Class B subordinate voting share purchase warrant. The exercise price of such warrants is US$5.16 per share and they are exercisable for a term expiring on September 27, 2021.
- Uplisted to the OTCQX® Best Market by OTC Markets Group under the ticker symbol “MMNFF” on October 24.
Subsequent Events
Corporate Developments:
- Closed acquisition of Seven Point, a licensed medical cannabis dispensary located in Oak Park, Illinois.
- Closed acquisition of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up,” in a cash and stock transaction valued at $33 million on February 12, 2019. Level Up holds licenses for two vertically-integrated operations in Arizona, including retail locations in Scottsdale and Tempe and 25,000 square feet of cultivation and production capacity in Tempe and Phoenix. The Company also received a 40% stake in top-selling brand K.I.N.D. Concentrates, which is currently distributed in over 90% of the dispensaries in Arizona.
Capital Markets and Financing Activities:
- Completed the sale of three properties to Treehouse for net proceeds of approximately $18.4 million, after repayment of debt.
Second Quarter Fiscal Year 2019 Review
In an effort to increase transparency, provide a better understanding of MedMen’s business, and ensure sales comparability between years, the Company is basing accounting on the 4-5-4 calendar structure. Additionally, the Company is now breaking out performance in the MD&A by retail, cultivation and manufacturing, corporate SG&A and pre-opening expenses.
For the second quarter of fiscal 2019, systemwide revenue was $29.9 million. This represents a 39.1% quarter-over-quarter increase over the first quarter of fiscal 2019 ended September 30, 2018. Systemwide revenue, pro forma to include pending acquisitions that have not yet closed, would have been $49.5 million for the quarter.
Retail: Systemwide retail revenue for the quarter is based on 16 retail stores that were operational at the end of the quarter. This includes the MedMen Paradise location near McCarran International Airport in Las Vegas, which opened in October, and the MedMen Scottsdale location in Arizona, which began to be included in MedMen’s results in December following the closing of the Monarch acquisition.
Strong systemwide retail revenue for the quarter is primarily attributable to MedMen’s stores in Southern California’s recreational market. In California, the Company’s eight retail locations reported a combined $23.7 million in revenue, which represents a 28% quarter-over-quarter increase.
Cultivation and Manufacturing: For the second quarter of fiscal 2019, the Company reported a $4.9 million EBITDA loss for cultivation and manufacturing, of which approximately $4 million is related to costs associated with the Company’s first full-scale factory, Project Mustang in Nevada, which has already begun producing [statemade] products.
Corporate SG&A: During the second quarter, the Company continued to make significant investments in building the corporate infrastructure and team required to execute its strategy for long-term growth. Corporate SG&A includes corporate infrastructure and growth initiatives such as corporate payroll, sales and marketing, technology, among other things. Of the total $40.9 million corporate SG&A expenses, $14.4 million was corporate payroll, which included the buildout of several teams within the Company including finance and accounting, digital, business intelligence and marketing. SG&A expenses also included $8.6 million in marketing and branding as compared to $4.8 million in the first quarter of 2019.
Pre-Opening Expenses: The Company incurred $3.0 million of pre-opening expenses in the second fiscal quarter of 2019, primarily driven by rent expenses of retail stores, cultivation/manufacturing sites and facilities that are not yet operational.
Gross profit for the second quarter, before biological asset adjustment, was $13.3 million, as compared to $0.5 million in the second fiscal quarter of last year. For the second quarter, gross profit margin after biological asset adjustment was 53%, compared to 45% in the previous quarter.
For the second quarter 2019, the Company reported a total net loss of $64.6 million compared to a net loss of $66.5 million for the first quarter. Net loss per share attributable to the Company in the second quarter was $0.25 versus a net loss of $0.27 for the first quarter.
ADDITIONAL INFORMATION
Additional information relating to the Company’s second quarter 2019 results is available in the Company’s Interim Financial Statements and related Management Discussion & Analysis (“MD&A”) filed on SEDAR at www.sedar.com.
MedMen refers to certain non-IFRS financial measures such as annualized sales per square foot, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Four Wall EBITDA, and adjusted EBITDA (earnings defined as earnings before interest, taxes, depreciation, amortization, less certain non-cash equity compensation expense, including one-time transaction fees and all other non-cash items). These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.
Please see the supplemental information (unaudited) regarding non-IFRS financial measures at the end of this press release and the MD&A for more detailed information regarding non-IFRS financial measures.
CONFERENCE CALL AND WEBCAST:
MedMen Enterprises will host a conference call and audio webcast with Chief Executive Officer and Co-Founder Adam Bierman and Chief Financial Officer Michael Kramer today at 5:00 pm Eastern to discuss the financial results in further detail.
Webcast Information:
A live audio webcast of the call will be available on the Events and Presentations section of MedMen’s website at: https://investors.medmen.com/events-and-presentations/default.aspx.
Calling Information:
Toll Free Dial-In Number: (844) 559-7829
International Dial-In
Number: (647) 689-5387
Conference ID: 9283806
ABOUT MEDMEN:
MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission is to provide an unparalleled experience that invites the world to discover the remarkable benefits of cannabis because a world where cannabis is legal and regulated is a safer, healthier and happier world.
Learn more at www.medmen.com
California Market Share by Revenue
For the 13 weeks ended December 29, 2018, the State of California collected $50.8 million in excise taxes at a rate of 15%, which equates to approximately $338.7 million in retail sales according to the California Department of Tax and Fee Administration (see http://cdtfa.ca.gov/news/19-02.htm). The Company’s California stores reported $23.7 million in revenue over the same period, which equates to an approximate 7% market share.
Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only MedMen’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of MedMen’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to, information concerning the proposed acquisition of PharmaCann LLC (the “PharmaCann Acquisition”), expectations regarding whether the PharmaCann Acquisition will be consummated, including whether conditions to the consummation of the PharmaCann Acquisition will be satisfied and whether the PharmaCann Acquisition will be completed on the current terms, the timing for completing the PharmaCann Acquisition, expectations for the effects of the PharmaCann Acquisition (including on the Company’s footprint and asset base) on the ability of the Company to successfully achieve business objectives, expectations regarding the number and location of additional stores to be opened by the Company in the next 90 days and during calendar 2019 and expectations for other economic, business, and/or competitive factors.
By identifying such information and statements in this manner, MedMen is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of MedMen to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, MedMen has made certain assumptions. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: the inability to consummate the PharmaCann Acquisition; the failure to obtain requisite regulatory approvals and third party consents and the failure to satisfy other conditions to the consummation of the PharmaCann Acquisition, which could impact closing or closing on the proposed terms and schedule; the potential impact of the announcement or consummation of the PharmaCann Acquisition on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; compliance with extensive government regulation; and the diversion of management time on the PharmaCann Acquisition. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
Although MedMen believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and MedMen does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to MedMen or persons acting on its behalf is expressly qualified in its entirety by this notice.
| MEDMEN ENTERPRISES INC. | |||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||||
| AS OF DECEMBER 29, 2018 AND JUNE 30, 2018 | |||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | |||||||||
|
December 29, |
June 30,
2018 |
||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and Cash Equivalents | $ | 78,219,490 | $ | 79,159,970 | |||||
| Restricted Cash | 3,164,980 | 6,163,599 | |||||||
| Accounts Receivable | 534,283 | 318,159 | |||||||
| Current Portion of Prepaid Rent - Related Party | 1,922,038 | 1,898,863 | |||||||
| Prepaid Expenses | 16,044,104 | 9,387,047 | |||||||
| Biological Assets | 2,672,981 | 1,952,580 | |||||||
| Inventory | 13,133,638 | 6,248,754 | |||||||
| Other Current Assets | 22,357,390 | 2,790,772 | |||||||
| Due from Related Party | 5,999,146 | 3,509,035 | |||||||
| Total Current Assets | 144,048,050 | 111,428,779 | |||||||
| Prepaid Rent - Related Party, Net of Current Portion | 1,681,474 | 2,652,149 | |||||||
| Property and Equipment, Net | 131,004,726 | 88,748,447 | |||||||
| Intangible Assets, Net | 96,339,102 | 48,792,757 | |||||||
| Goodwill | 84,818,127 | 18,165,161 | |||||||
| Other Assets | 8,561,933 | 12,403,049 | |||||||
| TOTAL ASSETS | $ | 466,453,412 | $ | 282,190,342 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Current Liabilities: | |||||||||
| Accounts Payable and Accrued Liabilities | $ | 26,204,120 | $ | 18,001,505 | |||||
| Other Current Liabilities | 14,856,540 | 1,186,148 | |||||||
| Derivative Liabilities | 7,089,100 | - | |||||||
| Current Portion of Finance Lease Liability | 307,181 | - | |||||||
| Current Portion of Notes Payable | 33,487,387 | 52,353,625 | |||||||
| Due to Related Party | 5,798,301 | 9,858,445 | |||||||
| Total Current Liabilities | 87,742,629 | 81,399,723 | |||||||
| Non-Current Liabilities: | |||||||||
| Finance Lease Liability, Net of Current Portion | 6,539,888 | - | |||||||
| Other Non-Current Liabilities, Net of Current Portion | 17,547,652 | - | |||||||
| Notes Payable, Net of Current Portion | 62,920,336 | 3,593,334 | |||||||
| Total Non-Current Liabilities | 87,007,876 | 3,593,334 | |||||||
| TOTAL LIABILITIES | 174,750,505 | 84,993,057 | |||||||
| SHAREHOLDERS’ EQUITY: | |||||||||
| Share Capital | 288,042,748 | 129,145,994 | |||||||
| Additional Paid-In Capital | 80,071,402 | 47,091,271 | |||||||
| Accumulated Deficit | (97,810,015 | ) | (66,647,221 | ) | |||||
| Total Equity Attributable to Shareholders of MedMen | 270,304,135 | 109,590,044 | |||||||
| Non-Controlling Interest | 21,398,772 | 87,607,241 | |||||||
| TOTAL SHAREHOLDERS’ EQUITY | 291,702,907 | 197,197,285 | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 466,453,412 | $ | 282,190,342 | |||||
| MEDMEN ENTERPRISES INC. | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| 13 AND 26 WEEKS ENDED DECEMBER 29, 2018 AND THREE AND SIX MONTHS ENDED DECEMBER 31, 2017 | ||||||||||||||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | ||||||||||||||||||||
| 13 Weeks Ended | Three Months Ended | 26 Weeks Ended | Six Months Ended | |||||||||||||||||
| December 29, | December 31, | December 29, | December 31, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Revenue | $ | 29,930,358 | $ | 3,075,187 | $ | 51,390,553 | $ | 4,881,742 | ||||||||||||
| Cost of Goods Sold | 16,629,783 | 2,564,202 | 26,439,116 | 3,768,988 | ||||||||||||||||
| Gross Profit Before Fair Value Adjustments | 13,300,575 | 510,985 | 24,951,437 | 1,112,754 | ||||||||||||||||
| Changes in Fair Value of Inventory Sold | (244,343 | ) | - | (2,196,924 | ) | - | ||||||||||||||
|
Unrealized Gain on Changes in Fair Value of
Biological Assets |
2,878,271 | - | 2,882,915 | - | ||||||||||||||||
| Gross Profit | 15,934,503 | 510,985 | 25,637,428 | 1,112,754 | ||||||||||||||||
| Expenses: | ||||||||||||||||||||
| General and Administrative | 65,696,688 | 9,531,722 | 131,436,138 | 14,668,415 | ||||||||||||||||
| Sales and Marketing | 8,602,293 | 357,299 | 13,402,526 | 528,081 | ||||||||||||||||
| Depreciation and Amortization | 3,423,677 | 708,783 | 5,873,997 | 1,387,001 | ||||||||||||||||
| Total Expenses | 77,722,658 | 10,597,804 | 150,712,661 | 16,583,497 | ||||||||||||||||
| Loss from Operations | (61,788,155 | ) | (10,086,819 | ) | (125,075,233 | ) | (15,470,743 | ) | ||||||||||||
| Other Expense (Income): | ||||||||||||||||||||
| Interest Expense | 2,886,674 | 669,130 | 5,296,706 | 1,017,717 | ||||||||||||||||
| Interest Income | (284,889 | ) | - | (284,889 | ) | - | ||||||||||||||
| Amortization of Debt Discount | 1,384,186 | - | 1,442,944 | - | ||||||||||||||||
| Change in Fair Value of Derivative Liabilities | (5,389,178 | ) | - | (6,163,107 | ) | - | ||||||||||||||
|
Unrealized Gain on Changes in Fair Value
of Investments |
(1,194,000 | ) | - | (1,194,000 | ) | - | ||||||||||||||
| Other Expense | 3,152,422 | - | 3,258,049 | - | ||||||||||||||||
| Total Other Expense (Income) | 555,215 | 669,130 | 2,355,703 | 1,017,717 | ||||||||||||||||
| Loss Before Provision for Income Taxes | (62,343,370 | ) | (10,755,949 | ) | (127,430,936 | ) | (16,488,460 | ) | ||||||||||||
| Provision for Income Taxes | 2,226,849 | 275,878 | 3,635,507 | 275,878 | ||||||||||||||||
| Net Loss and Comprehensive Loss | (64,570,219 | ) | (11,031,827 | ) | (131,066,443 | ) | (16,764,338 | ) | ||||||||||||
|
Net Loss and Comprehensive Loss
Attributable to Non-Controlling Interest |
45,885,355 | - | 99,903,648 | 423,804 | ||||||||||||||||
|
Net Loss and Comprehensive Loss
Attributable to MedMen Enterprises Inc. |
$ | (18,684,864 | ) | $ | (11,031,827 | ) | $ | (31,162,795 | ) | $ | (16,340,534 | ) | ||||||||
| Loss Per Share - Basic and Diluted | ||||||||||||||||||||
|
Attributable to MedMen Enterprises
Shareholders |
$ | (0.25 | ) | $ | (0.57 | ) | ||||||||||||||
|
Weighted-Average Shares Outstanding -
Basic and Diluted |
74,243,033 | 54,950,660 | ||||||||||||||||||
| MEDMEN ENTERPRISES INC. | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| FOR THE 26 WEEKS ENDED DECEMBER 29, 2018 AND SIX MONTHS ENDED DECEMBER 31, 2017 | |||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | |||||||||
|
26 Weeks
Ended |
Six Months Ended | ||||||||
| December 29, | December 31, | ||||||||
| 2018 | 2017 | ||||||||
|
|
|
||||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | |||||||||
| Net Loss | $ | (131,066,443 | ) | $ | (16,764,338 | ) | |||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | |||||||||
| Unrealized Gain on Changes in Fair Value of Biological Assets | (2,882,915 | ) | - | ||||||
| Changes in Fair Value of Inventory Sold | 2,196,924 | - | |||||||
| Depreciation and Amortization | 6,324,661 | 1,500,431 | |||||||
| Amortization of Debt Discount and Loan Origination Fees | 2,001,820 | - | |||||||
| Loss on Sale of Property | 2,626,216 | - | |||||||
| Accretion of Deferred Gain on Sale of Property | (84,995 | ) | - | ||||||
| Unrealized Gain on Change in Fair Value of Investments | (1,194,000 | ) | - | ||||||
| Loss on Extinguishment of Debt | 715,979 | - | |||||||
| Share-Based Compensation | 22,653,899 | 539,916 | |||||||
| Shares Issued for Acquisition Costs | 747,562 | - | |||||||
| Change in Fair Value of Derivative Liabilities | (6,163,107 | ) | - | ||||||
| Changes in Operating Assets and Liabilities: | |||||||||
| Accounts Receivable | (183,324 | ) | (323,290 | ) | |||||
| Prepaid Rent - Related Party | 947,500 | 1,100,000 | |||||||
| Prepaid Expenses | (6,657,057 | ) | (2,150,754 | ) | |||||
| Other Current Assets | (7,777,816 | ) | - | ||||||
| Biological Assets | (34,410 | ) | - | ||||||
| Inventory | (5,247,388 | ) | (8,224,108 | ) | |||||
| Due from Related Party | (2,490,111 | ) | (5,618,504 | ) | |||||
| Other Assets | 3,841,116 | (455,502 | ) | ||||||
| Accounts Payable and Accrued Liabilities | 6,988,188 | 15,187,349 | |||||||
| Other Current Liabilities | (6,204,608 | ) | (1,464,568 | ) | |||||
| Due to Related Party | (4,060,144 | ) | (2,098,270 | ) | |||||
| NET CASH USED IN OPERATING ACTIVITIES | (125,002,453 | ) | (18,771,638 | ) | |||||
| - | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchases of Property and Equipment | (55,261,730 | ) | (13,263,308 | ) | |||||
| Investments | (8,304,833 | ) | - | ||||||
| Proceeds from Sale of Property | 24,073,319 | - | |||||||
| Purchase of Intangible Assets | - | (1,260 | ) | ||||||
| Purchase of Management Agreement | - | (2,000,000 | ) | ||||||
| Acquisition of Businesses, Net of Cash Acquired | (30,686,541 | ) | - | ||||||
| Restricted Cash | 2,998,619 | (472,136 | ) | ||||||
| - | |||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (67,181,166 | ) | (15,736,704 | ) | |||||
| - | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Issuance of MedMen Corp Redeemable Shares for Cash | 115,289,679 | - | |||||||
| Exercise of Warrants for MedMen Corp Redeemable Shares | 8,521,268 | - | |||||||
| Contributions from Members | - | 21,904,035 | |||||||
| Proceeds from Issuance of Notes Payable | 93,943,539 | - | |||||||
| Principal Repayments of Notes Payable | (24,739,101 | ) | (3,959,965 | ) | |||||
| Principal Repayments of Capital Lease Liability | (42,775 | ) | - | ||||||
| Debt Issuance Costs | (2,019,472 | ) | - | ||||||
| Cash Received from Issuance of Class D Units | - | 9,850,000 | |||||||
| Contributions - Non-Controlling Interest | 290,000 | 4,231,214 | |||||||
| - | |||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 191,243,139 | 32,025,284 | |||||||
| - | |||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (940,480 | ) | (2,483,058 | ) | |||||
| Cash and Cash Equivalents, Beginning of Period | 79,159,970 | 5,720,026 | |||||||
| - | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 78,219,490 | $ | 3,236,968 | |||||
| - | - | ||||||||
| CASH PAID DURING PERIOD FOR: | |||||||||
| Interest | $ | 3,732,632 | $ | 762,657 | |||||
| - | - | ||||||||
| OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||
| Net Assets Acquired through Management Agreement | $ | - | $ | 4,690,505 | |||||
| Derivative Liability Incurred on Issuance of Equity | $ | 13,252,207 | $ | - | |||||
| Issuance of Subordinate Voting Shares for Other Assets | $ | 1,946,290 | $ | - | |||||
| Issuance of MedMen Corp Redeemable Shares for Other Assets | $ | 343,678 | $ | - | |||||
| Redemption of MedMen Corp Redeemable Shares | $ | 17,994,369 | $ | - | |||||
| Debt Discount Recognized Upon Issuance of Warrants | $ | 18,694,985 | $ | - | |||||
| Debt Discount Recognized Upon Issuance of Subordinate Voting Shares | $ | 185,511 | $ | - | |||||
| Conversion of Convertible Notes into Equity | $ | 3,802,381 | $ | - | |||||
| Issuance of MedMen Corp Redeemable Shares for Repayment of Notes Payable | $ | 6,759,125 | $ | - | |||||
| Asset Acquired Under Sales-Leaseback (Finance Lease) | $ | 6,889,844 | $ | - | |||||
| Issuance of Note Payable Related to Purchase of Management Agreement | $ | - | $ | 2,000,000 | |||||
| Deferred Gain on Sales/Leaseback | $ | 5,666,274 | $ | - | |||||
| Issuance of Note Payable Related to Purchase of Property and Equipment | $ | - | $ | 2,025,000 | |||||
| MEDMEN ENTERPRISES INC. | ||||||||||||||||||||
| NON-IFRS RECONCILIATION | ||||||||||||||||||||
| 13 AND 26 WEEKS ENDED DECEMBER 29, 2018 AND THREE AND SIX MONTHS ENDED DECEMBER 31, 2017 | ||||||||||||||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | ||||||||||||||||||||
| 13 Weeks Ended | Three Months Ended | 26 Weeks Ended | Six Months Ended | |||||||||||||||||
| December 29, | December 31, | December 29, | December 31, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Net Loss (IFRS) | $ | (64,570,219 | ) | $ | (11,031,827 | ) | $ | (131,066,443 | ) | $ | (16,764,338 | ) | ||||||||
| Add (Deduct) Impact of: | ||||||||||||||||||||
| Transaction Costs | 5,381,648 | 2,211,536 | $ | 6,804,999 | 2,144,611 | |||||||||||||||
| Share-Based Compensation | 11,470,363 | 288,494 | 22,653,899 | 539,916 | ||||||||||||||||
| Other Non-Cash Operating Costs | (6,064,684 | ) | - | (4,785,050 | ) | - | ||||||||||||||
| Total Adjustments | 10,787,327 | 2,500,030 | 24,673,848 | 2,684,527 | ||||||||||||||||
| Adjusted Net Loss (Non-IFRS) | $ | (53,782,892 | ) | $ | (8,531,797 | ) | $ | (106,392,595 | ) | $ | (14,079,811 | ) | ||||||||
| Net Loss (IFRS) | $ | (64,570,219 | ) | $ | (11,031,827 | ) | $ | (131,066,443 | ) | $ | (16,764,338 | ) | ||||||||
| Add (Deduct) Impact of: | ||||||||||||||||||||
| Net Interest and Other Financing Costs | 2,601,785 | 669,130 | 5,011,817 | 1,017,717 | ||||||||||||||||
| Provision for Income Taxes | 2,226,849 | 275,878 | 3,635,507 | 275,878 | ||||||||||||||||
| Amortization and Depreciation | 5,046,897 | 708,783 | 7,767,605 | 1,577,283 | ||||||||||||||||
| Total Adjustments | 9,875,531 | 1,653,791 | 16,414,929 | 2,870,878 | ||||||||||||||||
| EBITDA (Non-IFRS) | $ | (54,694,688 | ) | $ | (9,378,036 | ) | $ | (114,651,514 | ) | $ | (13,893,460 | ) | ||||||||
| EBITDA (Non-IFRS) | $ | (54,694,688 | ) | $ | (9,378,036 | ) | $ | (114,651,514 | ) | $ | (13,893,460 | ) | ||||||||
| Add (Deduct) Impact of: | ||||||||||||||||||||
| Transaction Costs | 5,381,648 | 2,211,536 | 6,804,999 | 2,144,611 | ||||||||||||||||
| Share-Based Compensation | 11,470,365 | 288,494 | 22,653,899 | 539,916 | ||||||||||||||||
| Other Non-Cash Operating Costs | (6,064,684 | ) | - | (4,785,050 | ) | - | ||||||||||||||
| Total Adjustments | 10,787,329 | 2,500,030 | 24,673,848 | 2,684,527 | ||||||||||||||||
| Adjusted EBITDA (Non-IFRS) | $ | (43,907,359 | ) | $ | (6,878,006 | ) | $ | (89,977,666 | ) | $ | (11,208,933 | ) | ||||||||
SOURCE: MedMen Enterprises
