LOS ANGELES--(BUSINESS WIRE)--MedMen Enterprises Inc. (“MedMen” or the “Company”) (CSE: MMEN) (OTCQX: MMNFF) today released its consolidated financial results for the third quarter of fiscal 2019. All financial information for the 13 week period ended March 30, 2019 is reported in U.S. dollars, unless otherwise indicated.
Management Commentary
“Over the past nine years, MedMen has built the most valuable retail brand in the cannabis industry by taking advantage of the land grab opportunity and scaling with speed to secure as many flagship assets as possible,” said Adam Bierman, MedMen co-founder and chief executive officer. “We continue to march onward towards profitability. The biggest driver for this phase of the business remains revenue, which continues to increase significantly with new store openings and same store sales growth. Where we are impressively ahead of schedule is in leveraging our scale to create greater operational efficiencies across the organization. Execution keeps improving while corporate SG&A is decreasing.”
Since going public one year ago, MedMen has established a track record of success, including achieving a 7% market share in California (inclusive of revenue from pending and pre-closing revenue from recently closed acquisitions), an $11 billion cannabis market. The Company is slated to open 15 new locations across the U.S. during the remainder of calendar 2019. Of the planned locations, 12 will be in Florida, where MedMen is licensed for up to 35 locations.
Third Quarter 2019 Overview
Financial:
- Revenue: Increased to $36.6 million for the quarter, which represents a 22% sequential increase over fiscal 2019 second quarter ended December 29, 2018
- Gross Margin: California retail gross margin increased from 51% to 57%, reflecting increased purchasing power and optimization of merchandising and supply chain management
- Corporate SG&A: Declined 9% from $40.9 million to $37.5 million, with an overall target reduction of 20% from the previous quarter
- Adjusted EBITDA Loss: Decreased 3% from $43.9 million to $42.6 million
Retail Highlights:
- California: Overall retail revenue increased sequentially by 5% during the quarter as the Company continues to hold a 7% market share in the state (inclusive of revenue from pending and pre-closing revenue from recently closed acquisitions). MedMen Beverly Hills reported the highest sequential growth rate among California stores at 13%
- Nevada: Overall retail revenue increased sequentially by 34% during the quarter. MedMen’s Las Vegas location on Paradise, the closest dispensary to the airport, is now the Company’s second best-performing store across the U.S.
- Arizona: Significant sequential growth, mainly attributable to M&A with two new stores in Tempe and Scottsdale
- Florida: The Company expects to open 12 additional locations during the remainder of calendar year 2019
Corporate Development:
- Southern California: Closed on acquisition of non-operational retail license in San Diego, which has subsequently opened as MedMen Sorrento Valley; closed on acquisition of ownership interests in MedMen-branded retail store in Santa Ana, which was previously managed by the Company, but owned by a third party
- Northern California: Closed on acquisitions of two cannabis retailers in Northern California – Buddy’s in San Jose and Sugarleaf in Seaside
- Arizona: Closed on acquisition of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up” providing 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
- Illinois: Closed on acquisition of Seven Point, a licensed medical cannabis dispensary located in the Chicago suburb of Oak Park, Illinois
Brand and Digital Strategy:
- Marketing: Launched the marketing campaign, The New Normal. At the center of the campaign was a short film directed by Academy Award winning Spike Jonze and starring actor Jesse Williams that chronicled the American history of cannabis
- Investor Website: Created a new enhanced investor relations website, which includes detailed information on the Company’s strategy, long-term vision and other infographics on Company operations
- Lifestyle: Introduced the Company’s first athleisure clothing collection available in stores and online ranging from graphic t-shirts, fleece hoodies and varsity jackets all incorporating the signature red MedMen logo
Capital Markets and Financing Activities:
- Credit Facility: Announced a senior secured convertible credit facility of up to US$250,000,000 from funds managed by Gotham Green Partners, an investor in the global cannabis industry
- Property Sales: Entered into sale-leaseback transactions with Treehouse Real Estate Investment Trust for three storefront properties and two cultivation and production factories with gross proceeds of approximately $72.0 million
Subsequent Events
Corporate Development:
- Southern California: Signed definitive agreement to acquire a retail operation in Long Beach, the third largest city in Southern California
Brand and Digital Strategy:
- House Brands: Test launched our value-oriented MedMen RED line in our Las Vegas stores
Corporate SG&A:
- Executive Compensation: As part of broader SG&A and profitability initiatives, Adam Bierman, chief executive officer, and Andrew Modlin, president, have entered into revised employment agreements with annual salaries of $50,000
Capital Markets and Financing Activities:
- Credit Facility: Closed on initial US$100,000,000 tranche of previously announced secured convertible credit facility with Gotham Green Partners
- ATM Program: Entered into an equity distribution agreement with Canaccord Genuity Corp. in respect of an “at-the-market” offering of subordinate voting shares for gross proceeds of up to C$60 million
Corporate Governance:
- Executive Chairman: Ben Rose, previous Chairman of the Board, transitioned to an Executive Chairman role, effectively immediately, where he will be more actively involved in the Company’s day-to-day operations
Third Quarter Fiscal Year 2019 Review
Consolidated:
For the third quarter of fiscal 2019, systemwide revenue was $36.6 million. This represents a 22% quarter-over-quarter increase over the fiscal 2019 second quarter ended December 30, 2018 and an 156% increase over the same quarter last year.
Gross profit for the third quarter of fiscal 2019, before biological asset adjustment, was $15.5 million, as compared to $13.3 million in the previous quarter. For the third quarter, gross profit margin after biological asset adjustment was 53.7%, compared to 53.2% in the previous quarter.
For the quarter, the Company reported an Adjusted EBITDA loss of $42.6 million, which decreased by 3% from the previous quarter. The Company reported a net loss attributable to the Company of $63.1 million, or loss of $0.20 per basic and diluted share attributable to MedMen Enterprises shareholders, for the third quarter of fiscal 2019, compared to a net loss of $64.6 million, or loss of $0.25 per share, for the second quarter of fiscal 2019.
Retail:
Systemwide retail revenue for the quarter increased by 16% to $34.6 million. This is based on 21 retail stores that were operational at the end of the quarter. The increase is primarily attributable to the Company’s operations in Nevada and Arizona. Despite the typical slowdown in retail sales post-holiday season, the Company recorded positive same-store sales growth.
The Company recorded 53% retail gross margins for the quarter, which is in line with the last quarter. However, retail gross retail margins for California were up from 51% to 57%, reflecting increased purchasing power and supply chain optimization. Retail EBITDA margins decreased from 16.6% to 12.5% for the quarter, reflecting lower margins in medical markets such as Arizona and Illinois and increase in payroll costs. The Company expects margins to increase in the next quarter.
Cultivation and Manufacturing:
For the quarter, the Company reported $4.7 million adjusted EBITDA loss for cultivation and manufacturing, of which approximately $4.3 million was related to costs associated with the Company’s Project Mustang facility in Nevada. These costs were expected during the ramp up period, and the Company expects to break-even by the end of the calendar year.
Corporate SG&A:
For the quarter, the Company recorded a 9% sequential reduction in corporate SG&A, contributing $37.5 million to adjusted EBITDA loss. The key drivers of the decrease were across marketing, legal and HR. The Company is targeting an overall 20% reduction in SG&A from the second quarter and expects the majority of cost savings to come from a decrease in corporate-level payroll.
Pre-Opening Expenses:
The Company incurred $4.6 million of pre-opening expenses in Q3, primarily driven by rent expenses of retail stores, cultivation/manufacturing sites and facilities that are not yet operational. This is up from $3.0 million in the previous quarter.
ADDITIONAL INFORMATION
Additional information relating to the Company’s third quarter 2019 results is available on SEDAR at www.sedar.com in the Company’s Interim Financial Statements and Management Discussion & Analysis (“MD&A”) for the quarter.
MedMen refers to certain non-IFRS financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), adjusted EBITDA (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) and four wall retail gross margins. 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: 1895524
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
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 proposed acquisitions, expectations regarding whether such proposed acquisitions will be consummated, including whether conditions to the consummation of the proposed acquisitions will be satisfied and whether the proposed acquisitions will be completed on the current terms, the timing for completing the proposed acquisitions, expectations for the effects of the proposed acquisitions (including on the Company’s footprint, revenues and asset base) on the ability of the Company to successfully achieve business objectives, statements regarding annualized revenues, expectations for gross margins in the next quarter and expectations for the timing of cultivation and manufacturing operations to break even, 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, including that future revenues for the Company and for pending and recently closed acquisitions will at least be as high as current revenues (for purposes of annualizing revenue), that costs at cultivation and manufacturing facilities will be lower after the ramp-up period and that the Company’s targeted reductions in general and administrative costs will be successfully achieved. 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 proposed acquisitions; the failure to obtain requisite regulatory approvals and third party consents and the failure to satisfy other conditions to the consummation of the proposed acquisitions, which could impact closing or closing on the proposed terms and schedule; the potential impact of the announcement or consummation of the proposed acquisitions 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; reduced demand for cannabis products; difficulties or delays in achieving cost reductions. 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 MARCH 30, 2019 AND JUNE 30, 2018 | |||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | |||||||||
|
March 30,
2019 |
June 30,
2018 |
||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and Cash Equivalents | $ | 21,896,764 | $ | 79,159,970 | |||||
| Restricted Cash | 1,844,252 | 6,163,599 | |||||||
| Accounts Receivable | 1,224,440 | 318,159 | |||||||
| Current Portion of Prepaid Rent - Related Party | 1,929,763 | 1,898,863 | |||||||
| Prepaid Expenses | 19,046,412 | 9,387,047 | |||||||
| Biological Assets | 6,044,002 | 1,952,580 | |||||||
| Inventory | 21,799,713 | 6,248,754 | |||||||
| Other Current Assets | 24,741,338 | 2,790,772 | |||||||
| Due from Related Party | 6,347,194 | 3,509,035 | |||||||
| Total Current Assets | 104,873,878 | 111,428,779 | |||||||
| Non-Current Assets: | |||||||||
| Prepaid Rent - Related Party, Net of Current Portion | 1,357,916 | 2,652,149 | |||||||
| Property and Equipment, Net | 195,410,952 | 88,748,447 | |||||||
| Intangible Assets, Net | 130,662,874 | 48,792,757 | |||||||
| Goodwill | 108,231,990 | 18,165,161 | |||||||
| Other Assets | 11,532,467 | 12,403,049 | |||||||
| Total Non-Current Assets | 447,196,199 | 170,761,563 | |||||||
| TOTAL ASSETS | $ | 552,070,077 | $ | 282,190,342 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Current Liabilities: | |||||||||
| Accounts Payable and Accrued Liabilities | $ | 36,881,382 | $ | 18,001,505 | |||||
| Other Current Liabilities | 16,695,595 | 1,186,148 | |||||||
| Derivative Liabilities | 10,950,390 | - | |||||||
| Current Portion of Finance Lease Liability | 2,969,480 | - | |||||||
| Current Portion of Notes Payable | 11,244,259 | 52,353,625 | |||||||
| Due to Related Party | 5,640,821 | 9,858,445 | |||||||
| Total Current Liabilities | 84,381,927 | 81,399,723 | |||||||
| Non-Current Liabilities: | |||||||||
| Finance Lease Liability, Net of Current Portion | 96,068,288 | - | |||||||
| Other Non-Current Liabilities, Net of Current Portion | 23,465,189 | - | |||||||
| Notes Payable, Net of Current Portion | 88,748,416 | 3,593,334 | |||||||
| Total Non-Current Liabilities | 208,281,893 | 3,593,334 | |||||||
| TOTAL LIABILITIES | 292,663,820 | 84,993,057 | |||||||
| SHAREHOLDERS’ EQUITY: | |||||||||
| Share Capital | 365,011,343 | 129,145,994 | |||||||
| Additional Paid-In Capital | 81,804,572 | 47,091,271 | |||||||
| Accumulated Deficit | (154,944,124 | ) | (66,647,221 | ) | |||||
| Total Equity Attributable to Shareholders of MedMen Enterprises Inc. | 291,871,791 | 109,590,044 | |||||||
| Non-Controlling Interest | (32,465,534 | ) | 87,607,241 | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 259,406,257 | 197,197,285 | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 552,070,077 | $ | 282,190,342 | |||||
| MEDMEN ENTERPRISES INC. | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| 13 AND 39 WEEKS ENDED MARCH 30, 2019 AND THREE AND NINE MONTHS ENDED MARCH 31, 2018 | |||||||||||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | |||||||||||||||||
| 13 Weeks Ended | Three Months Ended | 39 Weeks Ended | Nine Months Ended | ||||||||||||||
| March 30, | March 31, | March 30, | March 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Revenue | $ | 36,600,559 | $ | 14,345,918 | $ | 87,991,112 | $ | 19,227,660 | |||||||||
| Cost of Goods Sold | 21,069,651 | 8,224,870 | 47,508,767 | 11,993,858 | |||||||||||||
| Gross Profit Before Fair Value Adjustments | 15,530,908 | 6,121,048 | 40,482,345 | 7,233,802 | |||||||||||||
| Changes in Fair Value of Inventory Sold | (5,655,150 | ) | - | (7,852,073 | ) | - | |||||||||||
|
Unrealized Gain on Changes in Fair Value of
Biological Assets |
9,793,860 | - | 12,676,775 | - | |||||||||||||
| Gross Profit | 19,669,618 | 6,121,048 | 45,307,047 | 7,233,802 | |||||||||||||
| Expenses: | |||||||||||||||||
| General and Administrative | 61,284,636 | 17,990,735 | 192,720,774 | 32,659,150 | |||||||||||||
| Sales and Marketing | 6,718,668 | 1,756,115 | 20,121,194 | 2,284,196 | |||||||||||||
| Depreciation and Amortization | 4,975,698 | 1,535,489 | 10,849,695 | 2,922,490 | |||||||||||||
| Total Expenses | 72,979,002 | 21,282,339 | 223,691,663 | 37,865,836 | |||||||||||||
| Loss from Operations | (53,309,384 | ) | (15,161,291 | ) | (178,384,616 | ) | (30,632,034 | ) | |||||||||
| Other Expense (Income): | |||||||||||||||||
| Interest Expense | 2,645,309 | 1,011,421 | 7,942,015 | 2,029,138 | |||||||||||||
| Interest Income | (123,068 | ) | - | (407,957 | ) | - | |||||||||||
| Amortization of Debt Discount | 2,328,353 | - | 3,771,297 | - | |||||||||||||
| Change in Fair Value of Derivative Liabilities | 3,861,290 | - | (2,301,817 | ) | - | ||||||||||||
|
Unrealized Gain on Changes in Fair Value of
Investments |
(1,100,000 | ) | - | (2,294,000 | ) | - | |||||||||||
| Other (Income) Expense | (767,815 | ) | - | 2,490,234 | - | ||||||||||||
| Total Other Expense (Income) | 6,844,069 | 1,011,421 | 9,199,772 | 2,029,138 | |||||||||||||
| Loss Before Provision for Income Taxes | (60,153,453 | ) | (16,172,712 | ) | (187,584,388 | ) | (32,661,172 | ) | |||||||||
| Provision for Income Taxes | 2,919,245 | 588,355 | 6,554,752 | 864,233 | |||||||||||||
| Net Loss and Comprehensive Loss | (63,072,698 | ) | (16,761,067 | ) | (194,139,140 | ) | (33,525,405 | ) | |||||||||
|
Net Loss and Comprehensive Loss Attributable
to Non-Controlling Interest |
39,336,053 | (1,652,887 | ) | 139,239,701 | (1,229,083 | ) | |||||||||||
|
Net Loss and Comprehensive Loss Attributable
to Shareholders of MedMen Enterprises Inc. |
$ | (23,736,645 | ) | $ | (18,413,954 | ) | $ | (54,899,439 | ) | $ | (34,754,488 | ) | |||||
| Loss Per Share - Basic and Diluted: | |||||||||||||||||
| Attributable to Shareholders of MedMen Enterprises Inc. | $ | (0.20 | ) | $ | (0.83 | ) | |||||||||||
|
Weighted-Average Shares Outstanding -
Basic and Diluted |
118,853,840 | 65,930,969 | |||||||||||||||
| MEDMEN ENTERPRISES INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE 39 WEEKS ENDED MARCH 30, 2019 AND NINE MONTHS ENDED MARCH 31, 2018 | ||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | ||||||||
| - | ||||||||
|
39 Weeks |
Nine Months |
|||||||
| March 30, | March 31, | |||||||
| 2019 | 2018 | |||||||
| - | - | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss and Comprehensive Loss | $ | (194,139,140 | ) | $ | (33,525,405 | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Unrealized Gain on Changes in Fair Value of Biological Assets | (12,676,775 | ) | - | |||||
| Changes in Fair Value of Inventory Sold | 7,852,073 | - | ||||||
| Depreciation and Amortization | 11,784,348 | 3,269,682 | ||||||
| Amortization of Debt Discount and Loan Origination Fees | 4,562,915 | - | ||||||
| Loss on Sale of Property | 1,635,598 | - | ||||||
| Accretion of Deferred Gain on Sale of Property | (246,133 | ) | - | |||||
| Unrealized Gain on Change in Fair Value of Investments | (2,294,000 | ) | - | |||||
| Loss on Extinguishment of Debt | 1,174,922 | - | ||||||
| Share-Based Compensation | 28,702,327 | 539,916 | ||||||
| Shares Issued for Acquisition Costs | 1,112,820 | - | ||||||
| Change in Fair Value of Derivative Liabilities | (2,301,817 | ) | - | |||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | (873,481 | ) | - | |||||
| Notes Receivable | - | - | ||||||
| Prepaid Rent - Related Party | 1,263,333 | 1,562,500 | ||||||
| Prepaid Expenses | (9,659,365 | ) | (2,316,841 | ) | ||||
| Other Current Assets | (7,170,184 | ) | - | |||||
| Biological Assets | 733,280 | - | ||||||
| Inventory | (11,302,411 | ) | (12,132,341 | ) | ||||
| Due from Related Party | (2,838,159 | ) | (20,001,298 | ) | ||||
| Other Assets | 873,910 | (3,879,136 | ) | |||||
| Accounts Payable and Accrued Liabilities | 17,191,964 | 10,430,677 | ||||||
| Other Current Liabilities | (13,385,720 | ) | (730,303 | ) | ||||
| Due to Related Party | (4,217,624 | ) | 13,160,844 | |||||
| Other Non-Current Liabilities | 1,705 | - | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (184,215,614 | ) | (43,621,705 | ) | ||||
| - | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (82,198,024 | ) | (36,465,294 | ) | ||||
| Purchase of Investments | (8,919,791 | ) | - | |||||
| Proceeds from Sale of Property | 96,373,319 | - | ||||||
| Purchase of Intangible Assets | - | (1,260 | ) | |||||
| Purchase of Management Agreement | - | (2,000,000 | ) | |||||
| Acquisition of Businesses, Net of Cash Acquired | (49,224,060 | ) | (21,600,000 | ) | ||||
| Restricted Cash | 4,319,347 | (472,136 | ) | |||||
| - | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (39,649,209 | ) | (60,538,690 | ) | ||||
| - | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Issuance of Subordinate Voting Shares for Cash | 115,289,679 | - | ||||||
| Exercise of Warrants for MedMen Corp Redeemable Shares | 8,521,268 | - | ||||||
| Contributions from Members | - | 21,904,035 | ||||||
| MM Enterprises USA, LLC Formation and Rollup | - | 5,561,579 | ||||||
| Proceeds from Issuance of Notes Payable | 93,943,539 | - | ||||||
| Principal Repayments of Notes Payable | (48,863,155 | ) | 35,352,487 | |||||
| Principal Repayments of Finance Lease Liability | (560,242 | ) | 36,011,152 | |||||
| Debt Issuance Costs | (2,019,472 | ) | (5,525,835 | ) | ||||
| Cash Received from Issuance of Class D Units | - | 9,850,000 | ||||||
| Contributions - Non-Controlling Interest | 290,000 | 10,965,004 | ||||||
| - | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 166,601,617 | 114,118,422 | ||||||
| - | ||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (57,263,206 | ) | 9,958,027 | |||||
| Cash and Cash Equivalents, Beginning of Period | 79,159,970 | 5,720,026 | ||||||
| - | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 21,896,764 | $ | 15,678,053 | ||||
| - | - | |||||||
| CASH PAID DURING PERIOD FOR: | ||||||||
| Interest | $ | 5,163,199 | $ | 1,425,032 | ||||
| - | - | |||||||
| 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 | $ | 2,282,314 | $ | - | ||||
| Issuance of MedMen Corp Redeemable Shares for Other Assets | $ | 343,678 | $ | - | ||||
| Redemption of MedMen Corp Redeemable Shares | $ | 13,392,679 | $ | - | ||||
| Redemption of LLC Redeemable Units | $ | 21,584,096 | $ | - | ||||
| Acquisition of Non-Controlling Interests | $ | 361,647 | $ | - | ||||
| Options Issued for Other Assets | $ | 900,599 | $ | - | ||||
| Debt Discount Recognized Upon Issuance of Warrants | $ | 18,694,985 | $ | - | ||||
| Debt Discount Recognized Upon Issuance of Subordinate Voting Shares | $ | 185,511 | $ | - | ||||
| Additional Consideration Upon Payment of Debt | $ | - | $ | - | ||||
| Conversion of Convertible Notes into Equity | $ | 5,863,412 | $ | - | ||||
| Issuance of MedMen Corp Redeemable Shares for Repayment of Notes Payable | $ | 6,759,125 | $ | - | ||||
| Asset Acquired Under Sale and Lease Back Transactions | $ | 99,598,010 | $ | - | ||||
| Issuance of Note Payable Related to Purchase of Management Agreement | $ | - | $ | 2,000,000 | ||||
| Deferred Gain on Sale and Lease Back Transactions | $ | 21,144,427 | $ | - | ||||
| Issuance of Note Payable Related to Purchase of Property and Equipment | $ | - | $ | 15,905,000 | ||||
| MEDMEN ENTERPRISES INC. | ||||||||||||||||
| NON-IFRS RECONCILIATION | ||||||||||||||||
| 13 AND 39 WEEKS ENDED MARCH 30, 2019 AND THREE AND NINE MONTHS ENDED MARCH 31, 2018 | ||||||||||||||||
| (Amounts Expressed in United States Dollars Unless Otherwise Stated) | ||||||||||||||||
| 13 Weeks Ended | Three Months Ended | 39 Weeks Ended | Nine Months Ended | |||||||||||||
| March 30, | March 31, | March 30, | March 31, | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net Loss (IFRS) | $ | (63,072,698 | ) | $ | (16,761,067 | ) | $ | (194,139,140 | ) | $ | (33,525,405 | ) | ||||
| Add (Deduct) Impact of: | ||||||||||||||||
| Transaction Costs | 3,382,251 | 1,209,394 | 10,187,250 | 3,142,470 | ||||||||||||
| Share-Based Compensation | 6,048,428 | - | 28,702,327 | 539,916 | ||||||||||||
| Other Non-Cash Operating Costs | (2,145,236 | ) | - | (6,930,285 | ) | - | ||||||||||
| Total Adjustments | 7,285,443 | 1,209,394 | 31,959,292 | 3,682,386 | ||||||||||||
| Adjusted Net Loss (Non-IFRS) | $ | (55,787,255 | ) | $ | (15,551,673 | ) | $ | (162,179,848 | ) | $ | (29,843,019 | ) | ||||
| Net Loss (IFRS) | $ | (63,072,698 | ) | $ | (16,761,067 | ) | $ | (194,139,140 | ) | $ | (33,525,405 | ) | ||||
| Add (Deduct) Impact of: | ||||||||||||||||
| Net Interest and Other Financing Costs | 2,522,239 | 1,011,421 | 7,534,056 | 2,029,138 | ||||||||||||
| Provision for Income Taxes | 2,919,245 | 588,355 | 6,554,752 | 864,233 | ||||||||||||
| Amortization and Depreciation | 7,788,040 | 1,775,918 | 15,555,645 | 3,353,201 | ||||||||||||
| Total Adjustments | 13,229,524 | 3,375,694 | 29,644,453 | 6,246,572 | ||||||||||||
| EBITDA (Non-IFRS) | $ | (49,843,174 | ) | $ | (13,385,373 | ) | $ | (164,494,687 | ) | $ | (27,278,833 | ) | ||||
| EBITDA (Non-IFRS) | $ | (49,843,174 | ) | $ | (13,385,373 | ) | $ | (164,494,687 | ) | $ | (27,278,833 | ) | ||||
| Add (Deduct) Impact of: | ||||||||||||||||
| Transaction Costs | 3,382,251 | 1,209,394 | 10,187,250 | 3,142,470 | ||||||||||||
| Share-Based Compensation | 6,048,428 | - | 28,702,327 | 539,916 | ||||||||||||
| Other Non-Cash Operating Costs | (2,145,236 | ) | - | (6,930,285 | ) | - | ||||||||||
| Total Adjustments | 7,285,443 | 1,209,394 | 31,959,292 | 3,682,386 | ||||||||||||
| Adjusted EBITDA (Non-IFRS) | $ | (42,557,731 | ) | $ | (12,175,979 | ) | $ | (132,535,395 | ) | $ | (23,596,447 | ) | ||||
SOURCE: MedMen Enterprises
