MedMen Enterprises, Inc. [MMNFF] Filings

10-Q 1 mmen-20230325.htm 10-Q mmen-20230325

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 25, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 000-56199

MEDMEN ENTERPRISES INC.

(Exact name of registrant as specified in its charter)


British Columbia						98-1431779
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)

8740 S Sepulveda Blvd, Suite 105, Los Angeles, California						90045
(Address of principal executive offices)						(Zip code)

(424) 330-2082

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None.

Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financing accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of June 30, 2023, the registrant had 1,391,916,839 Class B Subordinate Voting Shares outstanding.

EXPLANATORY NOTE

The interim financial statements of MedMen Enterprises Inc. (the “Company”) included in this Quarterly Report on Form 10-Q for the three and nine month periods ended March 25, 2023 and March 26, 2022 and the year-end balance sheet dated June 25, 2022, have not been reviewed nor audited, as applicable, by the Company’s independent registered public accounting firm. As previously disclosed in its Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 22, 2023, the Company concluded that a restatement of previously issued financial statements would be required to correct certain errors. Upon completing the restated financial statements, the Company will file an amendment to this Form 10-Q with reviewed and audited, as applicable, financial statements. For further information, see Item 1.A. of Part II of this report.

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MEDMEN ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q

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		Page
FINANCIAL INFORMATION
Part I
ITEM 1:	Condensed Consolidated Balance Sheets as of March 25, 2023 (u naudited and not reviewed) and June 25, 2022	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and not reviewed )	4
	Condensed Consolidated Statements of Changes in Shareholders’ Deficit for the Three and Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and no t reviewed )	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and not reviewed )	8
	Notes to Condensed Consolidated Financial Statements (unaudited and not reviewed )	11
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations (unaudited and not reviewed )	37
ITEM 3:	Quantitative and Qualitative Disclosure About Market Risk	51
ITEM 4:	Controls and Procedures	51

OTHER INFORMATION
Part II
ITEM 1:	Legal Proceedings	53
ITEM 1A:	Risk Factors	53
ITEM 2:	Unregistered Sales of Equity Securities	54
ITEM 3:	Defaults Upon Senior Securities	54
ITEM 4:	Mine Safety Disclosure	54
ITEM 5:	Other Information	54
ITEM 6:	Exhibits	55
Signatures		56

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Use of Names

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” “Corporation” or “MedMen” refer to MedMen Enterprises Inc. together with its wholly-owned subsidiaries.

Disclosure Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that we believe are, or may be considered to be, “forward-looking statements”. All statements other than statements of historical fact included in this document regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plan,” “forecast,” “continue” or “could” or the negative of these terms or variations of them or similar terms. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (the “SEC”), press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These known and unknown risks include, without limitation: marijuana remains illegal under U.S. federal law, and enforcement of cannabis laws could change; the Company may face limitations on ownership of cannabis licenses; the Company may become subject to U.S. Food and Drug Administration or the U.S. Bureau of Alcohol, Tobacco and Firearms; the Company may face difficulties acquiring additional financing; the Company operates in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business; the Company is subject to general economic risks; the Company may be negatively impacted by challenging global economic condition; the Company is subject to risks arising from epidemic diseases, such as the recent outbreak of COVID-19; the Company may face difficulties in enforcing its contracts; the Company is subject to taxation in Canada and the United States; cannabis businesses are subject to unfavorable tax treatment; cannabis businesses may be subject to civil asset forfeiture; the Company is subject to proceeds of crime statutes; the Company faces security risks; competition for the acquisition and leasing of properties suitable for the cultivation, production and sale of medical and adult use cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could adversely affect our operating results and financial condition; the Company faces risks related to its products; the Company is dependent on the popularity of consumer acceptance of the Company’s brand portfolio; the Company faces risks related to its insurance coverage and uninsurable risks; the Company is dependent on key inputs, suppliers and skilled labor; the Company must attract and maintain key personnel; the Company’s business is subject to the risks inherent in agricultural operations; the Company’s sales are difficult to forecast; the Company’s products may be subject to product recalls; the Company may face unfavorable publicity or consumer perception; the Company faces intense competition; and additional issuances of Subordinate Voting Shares may result in dilution. Further information on these and other potential factors that could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the SEC on September 9, 2022, and elsewhere in the Company’s filings with the SEC, which are available on the SEC’s website or on the Company’s website at https://investors.medmen.com/. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this document, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

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PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

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MEDMEN ENTERPRISES INC. Condensed Consolidated Balance Sheets (June 25, 2022 financial information is unaudited; March 25, 2023 financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars, Except for Share Data)


	March 25, 2023		June 25, 2022
	(Unaudited and not reviewed)		(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	7,625,642	$	11,459,990
Restricted Cash	729,571		—
Accounts Receivable and Prepaid Expenses	3,862,148		8,515,742
Inventory	14,668,577		10,010,731
Assets Held for Sale	41,052,393		121,463,527
Receivable for Assets Held for Sale	11,500,000		—
Other Assets	11,638,765		8,873,492
Total Current Assets	91,077,096		160,323,482

Operating Lease Right-of-Use Assets	26,024,281		42,869,004
Property and Equipment, Net	52,432,284		61,010,455
Intangible Assets, Net	32,562,022		40,992,189
Goodwill	9,810,049		9,810,049
Other Non-Current Assets	3,681,382		5,665,061
TOTAL ASSETS	$	215,587,114	$	320,670,241
LIABILITIES AND SHAREHOLDERS’ DEFICIT
LIABILITIES:
Current Liabilities:
Accounts Payable and Accrued Liabilities	$	43,892,879	$	33,086,099
Income Taxes Payable	71,374,606		58,646,291
Other Liabilities	18,162,727		16,702,520
Derivative Liabilities	4,185,817		6,749,563
Current Portion of Operating Lease Liabilities	13,156,450		10,543,088
Current Portion of Finance Lease Liabilities	4,466,230		4,061,273
Current Portion of Notes Payable	140,041,414		97,003,922
Current Portion of Senior Secured Convertible Credit Facility	154,105,740		—
Liabilities Held for Sale	24,895,126		86,781,694
Total Current Liabilities	474,280,989		313,574,449
Operating Lease Liabilities	39,903,938		50,950,445
Finance Lease Liabilities	27,509,899		26,553,287
Other Non-Current Liabilities	2,657,306		3,082,277
Deferred Tax Liability	28,623,413		35,213,671
Senior Secured Convertible Credit Facility	—		132,005,663
Notes Payable	—		74,372,898
TOTAL LIABILITIES	572,975,545		635,752,690
SHAREHOLDERS’ DEFICIT:
Preferred Shares (no par value, unlimited shares authorized and no shares issued and outstanding)	—		—
Subordinate Voting Shares (no par value, unlimited shares authorized, 1,383,202,500 and 1,301,423,950 shares issued and outstanding as of March 25, 2023 and June 25, 2022, respectively)	—		—
Additional Paid-In Capital	1,063,499,686		1,057,228,873
Accumulated Deficit	(941,143,491)		(897,299,299)
Total Equity Attributable to Shareholders of MedMen Enterprises Inc.	122,356,195		159,929,574
Non-Controlling Interest	(479,744,626)		(475,012,023)
TOTAL SHAREHOLDERS’ DEFICIT	(357,388,431)		(315,082,449)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	215,587,114	$	320,670,241

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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Condensed Consolidated Statements of Operations (March 25, 2023 and March 26, 2022 financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars, Except for Share Data)


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Revenue	$	27,224,670	$	35,249,258	$	86,812,823	$	107,502,399
Cost of Goods Sold	14,077,038		18,040,863		47,386,411		55,027,929
Gross Profit	13,147,632		17,208,395		39,426,412		52,474,470

Operating Expenses:
General and Administrative	16,747,282		25,703,080		53,650,787		89,645,070
Sales and Marketing	577,596		1,022,828		1,572,493		2,623,308
Depreciation and Amortization	3,200,902		5,526,094		10,624,508		17,729,576
Realized and Unrealized Changes in Fair Value of Contingent Consideration	(63,748)		—		(927,604)		(301,459)
Impairment Expense	13,896,507		8,174,346		16,377,804		8,609,587
Other Operating Expense (Income)	2,718,611		(3,128,263)		(4,825,452)		(298,264)
Total Operating Expenses	37,077,150		37,298,085		76,472,536		118,007,818
Loss from Operations	(23,929,518)		(20,089,690)		(37,046,124)		(65,533,348)

Non-Operating Expenses (Income):
Interest Expense	10,064,888		7,846,523		29,804,508		26,988,126
Interest Income	(36,692)		(22,894)		(64,716)		(68,809)
Accretion of Debt Discount and Loan Origination Fees	1,575,088		1,292,063		4,461,000		11,454,971
Change in Fair Value of Derivatives	543,040		(9,737,076)		(2,563,746)		(25,948,861)
Loss (Gain) on Extinguishment of Debt	499,895		—		499,895		(10,233,604)
Total Non-Operating Expenses (Income)	12,646,219		(621,384)		32,136,941		2,191,823

Loss from Continuing Operations Before Provision for Income Taxes	(36,575,737)		(19,468,306)		(69,183,065)		(67,725,171)
Benefit (Provision) for Income Tax Expense	5,367,411		(1,471)		(1,385,475)		(11,555,481)
Net Loss from Continuing Operations	(31,208,326)		(19,469,777)		(70,568,540)		(79,280,652)
Net (Loss) Income from Discontinued Operations, Net of Taxes	(3,879,044)		(10,571,454)		22,126,481		(31,728,589)
Net Loss	(35,087,370)		(30,041,231)		(48,442,059)		(111,009,241)

Net Loss Attributable to Non-Controlling Interest	(3,600,395)		(294,429)		(4,732,603)		(6,905,606)
Net Loss Attributable to Shareholders of MedMen Enterprises Inc.	$	(31,486,975)	$	(29,746,802)	$	(43,709,457)	$	(104,103,635)

Earnings (Loss) Per Share - Basic and Diluted:
From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc.	$	(0.02)	$	(0.02)	$	(0.05)	$	(0.07)
From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc.	$	(0.00)	$	(0.01)	$	0.01	$	(0.03)
Weighted-Average Shares Outstanding - Basic	1,340,935,140		1,202,452,775		1,314,823,152		1,114,554,702
Weighted-Average Shares Outstanding - Diluted	1,340,935,140		1,202,452,775		2,894,966,858		1,114,554,702

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Condensed Consolidated Statements of Changes in Shareholders’ Deficit (June 25, 2022 financial information is unaudited; all fiscal year 2023 interim financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars, Except for Share Data)



	For the Nine Months Ended March 25, 2023 (Unaudited and not reviewed)

	Units	$ Amount		Additional Paid-In Capital			Accumulated Deficit			TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MEDMEN		Non- Controlling Interest		TOTAL SHAREHOLDERS’ DEFICIT
	Subordinate Voting Shares	Subordinate Voting Shares
Balance as of June 25, 2022	1,301,423,950	$	—	$	1,057,228,873		$	(897,299,299)		$	159,929,574	$	(475,012,023)	$	(315,082,449)
Net Income (Loss)	—	—		—			4,564,045			4,564,045		(27,380)		4,536,665
Controlling Interest Equity Transactions:
Partner Contributions	—	—		—			—			—		—		—
Redemption of MedMen Corp Redeemable Shares	259,814	—		15,318			(15,318)			—		—		—
Share-Based Compensation	—	—		863,685			—			863,685		—		863,685
Balance as of September 24, 2022	1,301,683,764	—		$	1,058,107,876		$	(892,750,572)		$	165,357,304	$	(475,039,403)	$	(309,682,099)
Net Loss	—	—		—			(16,786,526)			(16,786,526)		(1,104,828)		(17,891,354)
Controlling Interest Equity :
Redemption of MedMen Corp Redeemable Shares	445,320	—		15,079			(15,079)			—		—		—
Share-Based Compensation	—	—		2,113,676			—			2,113,676		—		2,113,676
Balance as of December 24, 2022	1,302,129,084	$	—	$	1,060,236,631		$	(909,552,177)		$	150,684,454	$	(476,144,231)	$	(325,459,777)
Net Loss	—	—		—		(21,919,104)	(31,486,975)		(2,191,629)	(31,486,975)		(3,600,395)		(35,087,370)
Controlling Interest Equity Transactions:
Shares Issued to Settle Accounts Payable and Liabilities	74,158,530			2,118,797						2,118,797		—		2,118,797
Redemption of MedMen Corp Redeemable Shares	6,605,038	—		104,339			(104,339)			—		—		—
Stock Grants for Compensation	309,848			26,465						26,465		—		26,465
Share-Based Compensation	—	—		1,013,454			—			1,013,454		—		1,013,454
Balance as of March 25, 2023	1,383,202,500	$	—	$	1,063,499,686		$	(941,143,491)		$	122,356,195	$	(479,744,626)	$	(357,388,431)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Condensed Consolidated Statements of Changes in Shareholders’ Deficit (June 27, 2021 financial information is unaudited; all fiscal year 2022 interim financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars, Except for Share Data)


	For the Nine Months Ended March 26, 2022 (Unaudited)
	Units	$ Amount		Additional Paid-In Capital		Accumulated Deficit		TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MEDMEN		Non- Controlling Interest		TOTAL SHAREHOLDERS’ DEFICIT
	Subordinate Voting Shares	Subordinate Voting Shares
Balance as of June 27, 2021	726,866,374	$	—	$	908,992,686	$	(717,232,706)	$	191,759,980	$	(445,393,599)	$	(253,633,619)
Net Loss	—	—		—		(55,330,028)		(55,330,028)		(5,280,003)		(60,610,031)
Controlling Interest Equity Transactions:
Shares Issued for Cash, Net of Fees	406,249,973	—		73,393,745		—		73,393,745		—		73,393,745
Shares Issued to Settle Debt and Accrued Interest	20,833,333	—		4,030,000		—		4,030,000		—		4,030,000
Shares Issued to Settle Accounts Payable and Liabilities	4,182,730	—		700,000		—		700,000		—		700,000
Equity Component of Debt - New and Amended	0	—		41,388,048		—		41,388,048		—		41,388,048
Redemption of MedMen Corp Redeemable Shares	4,054,278	—		1,121,441		374,701		1,496,142		(1,496,142)		—
Shares Issued for Vested Restricted Stock Units and Cashless Exercise of Options	8,473,868	—		—		—		—		—		—
Shares Issued for Exercise of Warrants	8,807,605	—		1,273,679		—		1,273,679		—		1,273,679
Shares Issued for Conversion of Debt	16,014,665	—		2,371,100		—		2,371,100		—		2,371,100
Stock Grants for Compensation	1,455,415	—		1,421,400		—		1,421,400		—		1,421,400
Deferred Tax Impact On Conversion Feature	—	—		(13,057,730)		—		(13,057,730)		—		(13,057,730)
Share-Based Compensation	—	—		1,682,677		—		1,682,677		—		1,682,677
Balance as of September 25, 2021	1,196,938,241	$	—	$	1,023,317,046	$	(772,188,033)	$	251,129,013	$	(452,169,744)	$	(201,040,731)
Net Loss	—	—		—		(19,026,802)		(19,026,802)		(1,331,174)		(20,357,976)
Controlling Interest Equity Transactions:


Shares Issued to Settle Accounts Payable and Liabilities	98,118	—		15,000		—		15,000		—		15,000

Redemption of MedMen Corp Redeemable Shares	84,605	—		18,627		6,835		25,462		(25,462)		—
Shares Issued for Vested Restricted Stock Units and Cashless Exercise of Options	2,283,972	—		—		—		—		—		—


Stock Grants for Compensation	714,356	—		207,494		—		207,494		—		207,494
Deferred Tax Impact On Conversion Feature	—	—		1,345,580		—		1,345,580		—		1,345,580
Share-Based Compensation	—	—		500,612		—		500,612		—		500,612
Balance as of December 25, 2021	1,200,119,292	$	—	$	1,025,404,359	$	(791,208,000)	$	234,196,359	$	(453,526,380)	$	(219,330,021)
Net Loss	—	—		—		(29,746,802)		(29,746,802)		(294,429)		(30,041,231)
Controlling Interest Equity Transactions:
Shares Issued to Settle Accounts Payable and Liabilities	72,685	—		37,796		—		37,796		—		37,796
Equity Component of Debt - New and Amended	8,021,593	—		1,618,609		—		1,618,609		—		1,618,609
Redemption of MedMen Corp Redeemable Shares	98,533	—		10,378		(13,316)		(2,935)		2,935		—

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Shares Issued for Vested Restricted Stock Units and Cashless Exercise of Options	1,136,994	—		—		—		—		—		—
Share-Based Compensation	—	—		(530,115)		—		(530,115)		1,102,219		572,104
Balance as of March 26, 2022	1,209,449,097	$	—	$	1,026,541,027	$	(820,968,118)	$	205,572,909	$	(452,715,656)	$	(247,142,743)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Condensed Consolidated Statements of Cash Flows (March 25, 2023 and March 26, 2022 financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars

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	Nine Months Ended
	March 25, 2023			March 26, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss from Continuing Operations	$	(70,568,540)		$	(79,280,652)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Deferred Tax Expense	—			(6,905,566)
Depreciation and Amortization	10,701,758			18,226,164
Non-Cash Operating Lease Costs	11,392,319			12,720,529
Accretion of Debt Discount and Loan Origination Fees	4,461,000			12,477,359
Loss on Disposals of Assets	1,594,915			—
Gain on Lease Terminations	(3,452,435)			(4,255,754)
Accretion of Deferred Gain on Sale of Property	(424,971)			(424,970)
Impairment of Assets	16,377,804			8,609,587
Realized and Unrealized Gain on Investments and Other Assets	—			(3,644,390)
Realized and Unrealized Changes in Fair Value of Contingent Consideration	927,604			—
Change in Fair Value of Derivative Liabilities	(2,563,746)			(25,948,861)
Loss (Gain) on Extinguishment of Debt	499,895			(10,243,632)
Share-Based Compensation	4,017,280		4,017,280	4,384,287
Interest Capitalized to Senior Secured Convertible Debt and Notes Payable	18,657,111			19,366,648
Interest Capitalized to Finance Lease Liabilities	1,361,569			1,155,142
Changes in Operating Assets and Liabilities:
Accounts Receivable and Prepaid Expenses	4,392,993			(2,115,415)
Inventory	(4,657,846)			2,690,193
Other Current Assets	(3,218,982)			353,766
Other Assets	1,439,800			451,502
Accounts Payable and Accrued Liabilities	17,279,121			(1,207,002)
Interest Payments on Finance Leases	(5,463,907)			(5,110,859)
Cash Payments - Operating Lease Liabilities	(8,719,504)			(6,954,624)
Income Taxes Payable	6,138,057			15,318,263
Other Current Liabilities	114,307			(1,343,994)

NET CASH PROVIDED BY (USED IN) CONTINUED OPERATING ACTIVITIES	285,602		—	(51,682,279)
Net Cash Used in Discontinued Operating Activities	(23,458,243)			(13,672,994)
NET CASH USED IN OPERATING ACTIVITIES	(23,172,642)			(65,355,273)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property and Equipment	(4,136,304)			(2,356,591)
Additions to Intangible Assets	4,788,003			—
Proceeds from the Sale of Assets Held for Sale	51,500,000			—
Restricted Cash	(729,571)			730
NET CASH PROVIDED BY (USED IN) CONTINUED INVESTING ACTIVITIES	51,422,129		—	(2,355,861)
Net Cash Used in Discontinued Investing Activities	—			(2,346,287)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	51,422,129			(4,702,148)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Subordinate Voting Shares for Cash	—			95,000,000
Payment of Stock Issuance Costs Relating to Private Placement	—			(5,352,505)
Exercise of Warrants for Cash	—			1,273,679
Payment of Debt Issuance Costs Relating to Senior Secured Convertible Credit Facility	—			(2,608,964)
Proceeds from Issuance of Notes Payable	—			5,000,000
Principal Repayments of Notes Payable	(32,751,472)			(20,153,000)
Principal Repayments of Finance Lease Liability	—			—
Distributions - Partner	—			—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(32,751,472)			73,159,210
NET DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS	(4,501,985)			3,101,789
Cash Included in Assets Held for Sale	667,635			(265,271)
Cash and Cash Equivalents, Beginning of Period	11,459,990			11,575,139
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	7,625,640		$	14,411,657

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Condensed Consolidated Statements of Cash Flows (March 25, 2023 and March 26, 2022 financial information is unaudited and not reviewed) (Amounts Expressed in United States Dollars)



	March 25, 2023		March 26, 2022
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION
Cash Paid for Interest	$	9,988,063	$	5,943,000

Non-Cash Investing and Financing Activities:
Change in Accrued Capital Expenditures	$	(46,585)	$	—
Net Assets Transferred to Held for Sale	$	—	$	4,472,000
Redemption of MedMen Corp Redeemable Shares	$	705,134	$	1,518,669
Derivative Liability Incurred on Convertible Facility and Equity Financing	$	—	$	29,885,694
Equity Component of Debt Modification - New and Amended	$	—	$	1,000,000
Conversion of Convertible Debentures	$	—	$	2,371,000
Shares Issued to Settle Debt and Lender Fees	$	—	$	4,030,000
Shares Issued to Settle Accounts Payable and Liabilities	$	2,118,797	$	752,796
Equity Component of Debt - New and Amended	$	—	$	41,388,047
Deferred Tax Impact on Conversion Feature	$	—	$	11,712,150

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited and not reviewed).

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MEDMEN ENTERPRISES INC. Notes to Condensed Consolidated Financial Statements (All financial information disclosed is unaudited and not reviewed) Three and Nine Months Ended March 25, 2023 and March 26, 2022 (Amounts Expressed in United States Dollars, Except for Share and Per Share Data)


1.			NATURE OF OPERATIONS

MedMen Enterprises Inc. and its subsidiaries over which the company has control (collectively, “MedMen”, the “Company”, “we” or “us”) is a premier cannabis retailer based in the U.S. with an operational footprint in California, Nevada, Illinois, Arizona, Massachusetts, and New York. MedMen offers a robust selection of high-quality products, including MedMen-owned brands – MedMen Red and LuxLyte – through its premium retail stores, proprietary delivery service, as well as curbside and in-store pick up. MedMen Buds, Medmen's customer loyalty program, provides exclusive access to promotions, product drops and content.

As of March 25, 2023, the Company operates 23 store locations across California (13), Nevada (3), Illinois (1), Arizona (1), Massachusetts (1), and New York (4). The Company continues to market its assets in New York and thus classifies all assets and liabilities and profit or loss allocable to its operations in the state of New York as discontinued operations. In August 2022, the Company completed the sale of its operations in the state of Florida of which all assets and liabilities and profit or loss allocable to Florida were classified as discontinued operations until the day of sale, on August 22, 2022. Subsequent to August 22, 2022, the remaining post-acquisition assets and liabilities, which is primarily comprised of a current receivable for the portion of the sales proceeds due to the Company, and profit or loss allocable to Florida have been reclassified as continuing operations. See “Note 23 – Subsequent Events” for further discussion on post-sale developments.


2.			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying Unaudited and Not Reviewed Condensed Consolidated Financial Statements have been prepared on a going concern basis in accordance with generally accepted accounting principles in the United States of America (“GAAP”), which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. The Unaudited and Not Reviewed Condensed Consolidated Financial Statements include the accounts of MedMen Enterprises, its subsidiaries and variable interest entities (“VIEs”) where the Company is considered the primary beneficiary, if any, after elimination of intercompany accounts and transactions. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method.

In the opinion of management, all adjustments considered necessary for a fair presentation of the preliminary condensed consolidated financial position of the Company as of and for the interim periods presented have been included. The accompanying Unaudited and Not Reviewed Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

The accompanying Unaudited and Not Reviewed Condensed Consolidated Financial Statements do not include all of the information required for full annual financial statements. Accordingly, certain information, footnotes and disclosures normally included in the annual financial statements have been condensed or omitted in accordance with SEC rules for interim financial information.

Going Concern

As of March 25, 2023, the Company had cash and cash equivalents of $7.6 million and working capital deficit of $383.2 million. The Company has incurred net losses from continuing operations of $31.2 million and $70.6 million for the three and nine months ended March 25, 2023 respectively.

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The Company plans to continue to fund its operations and service its debt and other obligations through the implementation and expansion of its cost savings plan, and various strategic actions, including the potential divesture of one or more of its non-core states, Arizona, Nevada, Massachusetts or Illinois announced in February 2023, and the sale of New York based assets currently held for sale. The sale of any of these assets will likely take several weeks or months due to customary regulatory requirements. The Company has made progress in its negotiations of lower costs of occupancy with the master lease landlord and other landlords. The Company also plans for on-going revenue and vendor strategy of market expansion and retail revenue and gross margin growth. The Company will need to obtain an extension or a refinancing of its debt-in-default with the secured senior lender. The Company's annual operating plan estimates it will be able to manage its ongoing operations; however, such will require the Company to extend its payment terms with vendors and other service providers. The Company is party to several litigation matters as described in Note 18 and firstly disclosed in the Company’s 2022 Form 10-K that may require use of cash to defend and in some case pay settlements. In total, the Company's cash needs remain significant and primarily related or stemming to matters that precede from years past when decisions were made under the assumption of eminent federal legalization of cannabis, and not achievable under the current macro-economic conditions impacting our cash flow from operations.

If the above strategic actions, including a significant liquidity event from the sale of assets or otherwise, for any reason, are inaccessible, it will have a significantly negative effect on the Company’s financial condition. Additionally, the Company expects to continue to manage its operating expenses and reduce its projected cash requirements through reduction of its operating expenses by delaying new store development, permanently or temporarily closing stores that are deemed to be performing below expectations, and/or implementing other restructuring activities.

The conditions described above raise substantial doubt with respect to the Company’s ability to meet its obligations for at least one year from the issuance of these Unaudited and Not Reviewed Condensed Consolidated Financial Statements, and therefore, to continue as a going concern.

Basis of Consolidation

Subsidiaries are entities controlled by the Company. Control exists when the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity. The financial statements of subsidiaries are included in the Unaudited and Not Reviewed Condensed Consolidated Financial Statements from the date that control commences until the date that control ceases.

Significant Accounting Policies

The Company's Unaudited and Not Reviewed Condensed Consolidated Financial Statements presented herein reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. During the current fiscal year, the Company continued to implement its strategy for strengthening its financial position and supporting the continuity of its business and operations in response to the impacts of COVID-19; however, the uncertain nature of the evolution of COVID-19 may impact the Company's business operations for reasons beyond its immediate control. Ultimate results could differ from the Company's estimates.

Cash and Cash Equivalents

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. The Company's cash deposits at each banking institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000 and by the National Credit Union Administration ("NCUA") up to $250,000 per member account.

As of March 25, 2023 and June 25, 2022, the Company had $3.3 million and $2.3 million in excess of the FDIC insured limit and NCUA insured limit, respectively.

Earnings (Loss) per Share

The Company calculates basic loss per share by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting profit or loss attributable to common shareholders and the weighted-average number of common shares outstanding, for the effects of all dilutive potential common shares, which comprise convertible debentures, restricted stock units, warrants and stock options issued.

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Restatement

During the nine months ended March 25, 2023, the Company identified errors that resulted in misstatements of certain assets and liabilities as of June 25, 2022 as well as misstatements of certain income and expenses for the year ended June 25, 2022 included in the Company's Annual Report on Form 10-K for the fiscal year ended June 25, 2022, as filed with the SEC on September 9, 2022 (the "2022 Form 10-K"). Management assessed the materiality of these misstatements in accordance with Accounting Standards Codification ("ASC") 250, "Accounting Changes and Error Corrections," Staff Accounting Bulletin ("SAB") No. 99, "Materiality" and SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" and determined that these corrections were material to the previously issued financial statements, and as such, required restatement of our audited consolidated financial statements as of and for the year ended June 25, 2022 as originally filed in the 2022 Form 10-K.1 The preliminary net impact of these estimated adjustments on the Company's consolidated financial statements as of and for the fiscal year ended June 25, 2022 was also separately furnished in the Company's Current Report on Form 8-K filed on May 22, 2023. The restatement of the Company's audited consolidated financial statements as of and for the year ended June 25, 2022 would also result in a restatement of the Company's reviewed condensed consolidated financial statements as of and for the three months ended September 24, 2022 and the three and six months ended December 24, 2022.

1 In the Company's quarterly report on Form 10-Q for the three months ended September 24, 2022, as filed with the SEC on November 3, 2022 (the "Q1 2023 Form 10-Q"), certain prior period amounts were reclassified between financial statement captions on the audited consolidated balance sheet as of June 25, 2022, as originally reported in the Company's 2022 Form 10-K, in order to conform to the current reporting period presentation. These reclassifications did not impact Total Assets, Total Liabilities or Total Shareholders' Deficit as of June 25, 2022.

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The effect of the adjustments on the financial statement line items within the Company's consolidated balance sheet as of June 25, 2022 is as follows:


	As Adjusted		As Originally Reported(2)		Adjustment

Cash and Cash Equivalents	$	11,459,990	$	10,795,999	$	(663,991)
Accounts Receivable and Prepaid Expenses	$	8,515,742	$	7,539,767	$	(975,975)
Assets Held for Sale	$	121,463,527	$	123,158,751	$	1,695,224
Other Assets	$	8,873,492	$	9,990,992	$	1,117,500
Total Current Assets	$	160,323,482	$	161,496,240	$	1,172,758
Operating Lease Right-of-Use Assets	$	42,869,004	$	47,649,270	$	4,780,266
Property and Equipment, Net	$	61,010,455	$	64,107,792	$	3,097,337
Intangible Assets, Net	$	40,992,189	$	35,746,114	$	(5,246,075)
Other Non-Current Assets	$	5,665,061	$	4,414,219	$	(1,250,842)
Total Assets	$	320,670,241	$	323,223,684	$	2,553,443
Accounts Payable and Accrued Liabilities	$	33,086,099	$	38,905,818	$	5,819,719
Other Current Liabilities	$	16,702,520	$	16,704,283	$	1,763
Current Portion of Operating Lease Liabilities(2)	$	10,543,088	$	10,925,128	$	382,040
Liabilities Held for Sale	$	86,781,694	$	86,595,102	$	(186,592)
Total Current Liabilities	$	313,574,449	$	319,591,380	$	6,016,931
Operating Lease Liabilities(2)	$	50,950,445	$	50,917,244	$	(33,201)
Total Liabilities	$	635,752,690	$	641,736,420	$	5,983,730
Accumulated Deficit(1)(2)	$	(897,299,299)	$	(901,758,875)	$	(4,459,576)
Total Equity Attributable to Shareholders of MedMen Enterprises Inc.(1)(2)	$	159,929,574	$	155,469,998	$	(4,459,576)
Non-Controlling Interest(1)(2)	$	(475,012,023)	$	(473,982,734)	$	1,029,289
Total Shareholders' Deficit(1)	$	(315,082,449)	$	(318,512,736)	$	(3,430,287)
Total Liabilities and Shareholders' Deficit(1)	$	320,670,241	$	323,223,684	$	2,553,443

(1) The tax effect of the adjustments are immaterial.

(2) In the Q1 2023 Form 10-Q, certain prior period amounts were reclassified between financial statement captions on the audited consolidated balance sheet as of June 25, 2022, as originally reported in the 2022 Form 10-K, in order to conform to the current reporting period presentation as follows:


	As Originally Reported		As Adjusted		Adjustment

Current Portion of Operating Lease Liabilities	$	17,750,863	$	10,925,128	$	(6,825,735)
Operating Lease Liabilities	$	44,091,509	$	50,917,244	$	6,825,735
Accumulated Deficit	$	(905,420,836)	$	(901,758,875)	$	3,661,961
Total Equity Attributable to Shareholders of MedMen Enterprises Inc.	$	151,808,037	$	155,469,998	$	3,661,961
Non-Controlling Interest	$	(470,320,773)	$	(473,982,734)	$	(3,661,961)

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The effect of the adjustments on the financial statement line items within the Company's consolidated statement of changes in shareholders' deficit for the fiscal year ended June 25, 2022 is as follows:


	As Adjusted		Prior to Adjustment		Adjustment

Accumulated Deficit	$	(897,299,299)	$	(901,758,875)	$	(4,459,576)
Total Equity Attributable to Shareholders of MedMen	$	159,929,574	$	155,469,998	$	(4,459,576)
Non-Controlling Interest	$	(475,012,023)	$	(473,982,734)	$	1,029,289
Total Shareholders' Deficit	$	(315,082,449)	$	(318,512,736)	$	(3,430,287)

The effect of the adjustments on the financial statement line items within the Company's unaudited and not reviewed condensed consolidated statement of operations and unaudited and not reviewed condensed consolidated balance sheet for the three months ended and as of September 24, 2022, respectively, is as follows:


	As Adjusted		As Originally Reported		Adjustment

Impairment Expense	$	1,039,254	$	1,663,911	$	624,657
Total Operating Expenses	$	19,856,710	$	20,481,367	$	624,657
Loss from Operations	$	(5,000,334)	$	(5,624,991)	$	(624,657)
Loss from Continuing Operations before Income Tax Benefit (Expense)	$	(17,440,549)	$	(18,065,206)	$	(624,657)
Net loss from Continuing Operations(1)	$	(19,634,091)	$	(20,258,748)	$	(624,657)
Net Income from Discontinued Operations, Net of Taxes(1)	$	24,170,756	$	24,306,649	$	135,893
Net Income(1)	$	4,536,665	$	4,047,901	$	(488,764)
Net Loss Attributable to Non-Controlling Interest(1)(2)	$	(27,380)	$	(112,312)	$	(84,932)
Net Loss Attributable to Shareholders of MedMen Enterprises Inc.(1)(2)	$	4,564,045	$	4,160,213	$	(403,832)
Accumulated Deficit(1)(2)	$	(892,750,572)	$	(897,613,980)	$	(4,863,408)
Total Equity Attributable to Shareholders of MedMen Enterprises Inc.(1)(2)	$	165,357,304	$	160,531,457	$	(4,825,847)
Non-Controlling Interest(1)(2)	$	(475,039,403)	$	(474,095,046)	$	944,357
Total Shareholders' Deficit(1)	$	(309,682,099)	$	(313,563,589)	$	(3,881,490)
Total Liabilities and Shareholders' Deficit(1)	$	251,620,356	$	251,131,592	$	(488,764)

(1) The tax effect of the adjustments are immaterial.

(2) The allocation of the cumulative net adjustment between the shareholders of MedMen Enterprises Inc. and the Company's non-controlling interest is an estimate based on the allocation percentage calculated by the Company for its Q1 2023 Form 10-Q.

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The effect of the adjustments on the financial statement line items within the Company's consolidated statement of changes in shareholders' deficit for the three months ended September 24, 2022 is as follows:


	As Adjusted		Prior to Adjustment		Adjustment

Accumulated Deficit	$	(892,750,572)	$	(897,613,980)	$	(4,863,408)
Total Equity Attributable to Shareholders of MedMen	$	165,357,304	$	160,531,457	$	(4,825,847)
Non-Controlling Interest	$	(475,039,403)	$	(474,095,046)	$	944,357
Total Shareholders' Deficit	$	(309,682,099)	$	(313,563,589)	$	(3,881,490)

The effect of the adjustments on the financial statement line items within the Company's unaudited and not reviewed condensed consolidated statement of operations and unaudited and not reviewed condensed consolidated balance sheet for the six months ended and as of December 24, 2022, respectively, is as follows:


	As Adjusted		As Originally Reported		Adjustment

Revenue	$	59,588,153	$	59,598,153	$	10,000
Cost of Goods Sold	$	33,309,373	$	29,601,351	$	(3,708,022)
Gross Profit	$	26,278,780	$	29,996,802	$	3,718,022
General and Administrative	$	36,903,506	$	36,452,557	$	(450,949)
Impairment Expense	$	2,481,297	$	6,716,906	$	4,235,609
Total Operating Expenses	$	39,395,387	$	43,180,047	$	3,784,660
Loss from Operations	$	(13,116,607)	$	(13,183,245)	$	(66,638)
Loss from Continuing Operations before Income Tax Benefit (Expense)	$	(32,607,329)	$	(32,673,967)	$	(66,638)
Net loss from Continuing Operations(1)	$	(39,360,215)	$	(39,426,853)	$	(66,638)
Net Income from Discontinued Operations, Net of Taxes(1)	$	26,005,524	$	26,132,489	$	126,965
Net Loss(1)(2)	$	(13,354,691)	$	(13,294,364)	$	60,327
Net Loss Attributable to Non-Controlling Interest(1)(2)	$	(1,132,208)	$	(1,247,161)	$	(114,953)
Net Loss Attributable to Shareholders of MedMen Enterprises Inc.(1)(2)	$	(12,222,481)	$	(12,047,203)	$	175,278
Accumulated Deficit(1)(2)	$	(909,552,177)	$	(913,798,904)	$	(4,246,727)
Total Equity Attributable to Shareholders of MedMen Enterprises Inc.(1)(2)	$	150,684,454	$	146,437,727	$	(4,246,727)
Non-Controlling Interest(1)(2)	$	(476,144,231)	$	(475,229,895)	$	914,336
Total Shareholders' Deficit(1)(2)	$	(325,459,777)	$	(328,792,168)	$	(3,332,391)
Total Liabilities and Shareholders' Deficit(1)	$	238,414,684	$	238,475,011	$	60,327

(1) The tax effect of the adjustments are immaterial.

(2) The allocation of the cumulative net adjustment between the shareholders of MedMen Enterprises Inc. and the Company's non-controlling interest is an estimate based upon the allocation percentage calculated by the Company for its quarterly report on Form 10-Q for the three and six months ended December 24, 2022, as filed with the SEC on February 2, 2023.

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The effect of the adjustments on the financial statement line items within the Company's consolidated statement of changes in shareholders' deficit for the six months ended December 24, 2022 is as follows:


	As Adjusted		Prior to Adjustment		Adjustment

Accumulated Deficit	$	(909,552,177)	$	(913,798,904)	$	(4,246,727)
Total Equity Attributable to Shareholders of MedMen	$	150,684,454	$	146,437,727	$	(4,246,727)
Non-Controlling Interest	$	(476,144,231)	$	(475,229,895)	$	914,336
Total Shareholders' Deficit	$	(325,459,777)	$	(328,792,168)	$	(3,332,391)

Recently Adopted Accounting Standards

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), provides optional expedients and exceptions for applying GAAP to debt instruments, derivatives, and other contracts that reference London Interbank Offered Rate (“LIBOR”) or other reference rates expected to be discontinued as a result of reference rate reform. This guidance is optional and may be elected through December 31, 2022 using a prospective application on all eligible contract modifications. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to instruments affected by reference rate reform if certain criteria are met. The Company elected to adopt ASU 2020-04 as of December 31, 2022. However, the Company did not enter or modify any material contracts to which the standard would apply during the subsequent three months ended March 25, 2023.

Recently Issued Accounting Standards

In September 2022, the FASB issued ASU 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50)” (“ASU 2022-04”), which is intended to enhance transparency with supplier finance programs. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption is applied on a retrospective approach. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

In February 2023, the FASB issued ASU 2023-01, “Leases (Topic 842) – Common Control Arrangements” (“ASU 2023-01”), which require that leasehold improvements associated with common control leases be 1) amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset and 2) accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for the Company in fiscal year 2025. The Company is currently evaluating the effect of adopting this ASU.


3.			INVENTORY

The following table provides a summary of total Inventory as of March 25, 2023 and June 25, 2022:


	March 25, 2023		June 25, 2022
Raw Materials	$	915,058	$	521,777
Work-in-Process	651,374		671,541
Finished Goods	13,102,145		8,817,413
Total Inventory	$	14,668,577	$	10,010,731

During the nine months ended March 25, 2023 and March 26, 2022, the Company recognized impairment of nil and $0.9 million respectively, to write down inventory to its net realizable value. The Company did not recognize any impairment of inventory during the three months ended March 25, 2023 and March 26, 2022.

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4.			ASSETS HELD FOR SALE

A reconciliation of our assets held for sale is as follows:


	Discontinued Operations & Other Assets
Balance as of June 25, 2022	$	121,463,527
Ongoing Activities	(13,411,134)
Proceeds from Sale (1)	(67,000,000)


Balance as of March 25, 2023	$	41,052,393

_____________________________________

(1)See “Note 22 – Discontinued Operations” for further information.


5.			PROPERTY AND EQUIPMENT, NET

As of March 25, 2023 and June 25, 2022, property and equipment, net consists of the following:


	March 25, 2023		June 25, 2022
Land and Buildings	$	29,933,999	$	29,933,999
Capital Leases	5,173,435		5,435,947
Furniture and Fixtures	8,664,288		8,776,994
Leasehold Improvements	33,074,158		34,543,019
Equipment and Software	15,931,421		17,026,159
Construction in Progress	1,152,810		1,820,351
Total Property and Equipment	93,930,111		97,536,469
Less Accumulated Depreciation	(41,497,827)		(36,526,014)
Property and Equipment, Net	$	52,432,284	$	61,010,455

Depreciation expense related to continuing operations for the three months ended March 25, 2023 and March 26, 2022 was $2.0 million and $2.8 million, respectively. Depreciation expense related to continuing operations for the nine months ended March 25, 2023 and March 26, 2022 was $6.4 million and $9.0 million, respectively.

The amount of depreciation recognized for capital leases during the three months ended March 25, 2023 and March 26, 2022 was nil and $0.3 million, respectively. The amount of depreciation recognized for capital leases during the nine months ended March 25, 2023 and March 26, 2022 was $0.5 million and $0.8 million, respectively. See “Note 9 – Leases” for further information.

During the three and nine months ended March 25, 2023, the Company recognized an impairment loss for its asset group in Massachusetts, which consisted of an operating lease right-of-use asset and property and equipment . See "Note 23 - Subsequent Events" for further information.

Borrowing costs totaling $0.02 million were capitalized during the three and nine months ended March 25, 2023 using an average capitalization rate of 24.68%. During the three and nine months ended March 26, 2022, borrowing costs totaling $0.4 million and $1.2 million, respectively, were capitalized using an average capitalization rate of 11.47% and 11.93%, respectively.

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6.			INTANGIBLE ASSETS, NET

As of March 25, 2023 and June 25, 2022, intangible assets, net consist of the following:


	March 25, 2023		June 25, 2022
Dispensary Licenses	$	50,331,233	$	54,411,239
Customer Relationships	16,409,600		16,409,600
Capitalized Software	4,406,514		7,332,520
Intellectual Property	—		4,185,835
Total Intangible Assets	$	71,147,347	$	82,339,194

Dispensary Licenses	$	(18,729,391)	$	(16,876,912)
Customer Relationships	(15,756,895)		(15,870,284)
Capitalized Software	(4,099,039)		(4,413,974)
Intellectual Property	—		(4,185,835)
Less Accumulated Amortization	(38,585,325)		(41,347,005)
Intangible Assets, Net	$	32,562,022	$	40,992,189

The Company recorded amortization expense related to continuing operations for the nine months ended March 25, 2023 and March 26, 2022 of $1,202,842 and $2,774,346, respectively and amortization expense related to continuing operations for the nine months ended March 25, 2023 and March 26, 2022 of $4,326,821 and $9,206,271, respectively.

During the three and nine months ended March 25, 2023, the Company began the implementation of a new point-of-sale system to replace its existing internally developed point-of-sale system and recognized an impairment loss of $3.2 million.

MedMen Enterprises, Inc. [MMNFF] Filings
10-Q	[2023-07-10]
10-Q	[2023-02-02]
10-Q	[2022-11-03]
10-K	[2022-09-09]
10-Q	[2022-05-10]
S-1	[2022-03-07]
10-Q	[2022-02-08]
10-Q	[2021-11-09]
S-1	[2021-10-15]
10-K	[2021-09-24]
S-1	[2021-06-09]
10-Q	[2021-05-12]
S-1	[2021-03-08]
10-Q	[2021-02-16]
10-Q	[2020-12-07]