-
Increased revenue sequentially by 22% to $36.6 million across the
Company’s operations in California, Nevada, New York, Arizona and
Illinois
-
Including revenue from pending acquisitions and pre-closing revenue
from recently closed acquisitions, pro forma quarterly revenue was
approximately $57 million based on third quarter results
-
Decreased corporate SG&A by 9% quarter-over-quarter with a plan to
achieve an overall 20% reduction from previous quarter
-
Continued to perform favorably in California with $24.9 million in
retail revenue and retail gross margins increasing from 51% to 57%
-
Announced $250 million financing commitment from Gotham Green
Partners
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
Ended
|
|
Nine Months
Ended
|
|
|
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
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190529005899/en/
OFFICER:
Adam Bierman
Chief Executive Officer
Email:
info@medmen.com
(855) 292-8399
MEDIA CONTACT:
Allison McLarty
Vice President,
Corporate Communications
Email: communications@medmen.com
(646)
270-6797
INVESTOR RELATIONS CONTACT:
Stéphanie Van Hassel
Vice
President, Investor Relations
Email: investors@medmen.com
(323)
705-3025
Source: MedMen Enterprises