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.


				Page
FINANCIAL INFORMATION
Part I
ITEM 1:	Condensed Consolidated Balance Sheets ~~(Unaudited)~~as of March 25, 2023 (u naudited and not reviewed) and June 25, 2022	2		1
	Condensed Consolidated Statements of Operations ~~(Unaudited)~~for the Three and Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and not reviewed )	4		2
	Condensed Consolidated Statements of Changes in Shareholders’ ~~Equity (Unaudited)~~Deficit for the Three and Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and no t reviewed )	5		3
	Condensed Consolidated Statements of Cash Flows ~~(Unaudited)~~for the Nine Months Ended March 25, 2023 and March 26, 2022 (unaudited and not reviewed )	8		4
	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~(unaudited and not reviewed )	11		6
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	(unaudited and not reviewed )	3837
ITEM 3:	Quantitative and Qualitative Disclosure About Market Risk	51		47
ITEM 4:	Controls and Procedures	51		47

OTHER INFORMATION
Part II
ITEM 1:	Legal Proceedings	53		49
ITEM 1A:	Risk Factors	53		49
ITEM 2:	Unregistered Sales of Equity Securities	54		49
ITEM 3:	Defaults Upon Senior Securities	54		49
ITEM 4:	Mine Safety Disclosure	54		49
ITEM 5:	Other Information	54		50
ITEM 6:	Exhibits	55		51
Signatures		5256

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.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Table of Contents


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

Table of Contents

~~MEDMEN ENTERPRISES INC.~~

The accompanying notes are an integral part of these Condensed Consolidated ~~Balance Sheets (Unaudited)~~

Financial Statements (Unaudited and not reviewed).

AsTable of ~~September 24,~~Contents


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 ~~June 25, 2022~~

~~(Amounts Expressed in United States Dollars, Except for Share Data)~~

not reviewed).

Table of Contents

September 24, June 25,
2022 2022
(unaudited) (audited)
ASSETS

Current Assets:
Cash and Cash Equivalents $ 21,097,057 $ 10,795,999
Accounts Receivable and Prepaid Expenses 5,376,069 7,539,767
Inventory 9,117,809 10,010,731
Assets Held for Sale 44,185,218 123,158,751
Receivable for Assets Held for Sale 11,500,000 -
Other Assets 7,403,829 9,990,992

Total Current Assets 98,679,982 161,496,240

Operating Lease Right-of-Use Assets 44,461,062 47,649,270
Property and Equipment, Net 59,965,935 64,107,792
Intangible Assets, Net 34,057,051 35,746,114
Goodwill 9,810,049 9,810,049
Other Non-Current Assets 4,157,513 4,414,219

TOTAL ASSETS $ 251,131,592 $ 323,223,684

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 35,355,136 $ 38,905,818
Income Taxes Payable 64,710,033 58,646,291
Other Liabilities 17,121,093 16,704,283
Derivative Liabilities 7,555,153 6,749,563
Current Portion of Operating Lease Liabilities 12,199,351 10,925,128
Current Portion of Finance Lease Liabilities 4,150,484 4,061,273
Current Portion of Notes Payable 66,294,249 97,003,922
Liabilities Held for Sale 26,195,800 86,595,102

Total Current Liabilities 233,581,299 319,591,380

Operating Lease Liabilities 47,280,217 50,917,244
Finance Lease Liabilities 26,905,824 26,553,287
Other Non-Current Liabilities 2,987,812 3,082,277
Deferred Tax Liability 40,295,319 35,213,671
Senior Secured Convertible Credit Facility 138,746,070 132,005,663
Notes Payable 74,898,640 74,372,898

TOTAL LIABILITIES 564,695,181 641,736,420

SHAREHOLDERS’ EQUITY:
Preferred Shares (no par value, unlimited shares authorized and no shares issued and outstanding) - -
Subordinate Voting Shares (no par value, unlimited shares authorized, 1,301,683,764 and 1,301,423,950 shares issued and outstanding as of September 24, 2022 and June 26, 2022, respectively) - -
Additional Paid-In Capital 1,058,145,437 1,057,228,873
Accumulated Deficit (897,613,980 ) (901,758,875 )

Total Equity Attributable to Shareholders of MedMen Enterprises Inc. 160,531,457 155,469,998
Non-Controlling Interest (474,095,046 ) (473,982,734 )

TOTAL SHAREHOLDERS’ EQUITY (313,563,589 ) (318,512,736 )

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 251,131,592 $ 323,223,684


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).

Table of Contents


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		—

Table of Contents


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).

Table of Contents


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

Table of Contents


	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)~~(Unaudited and not reviewed).

~~MEDMEN ENTERPRISES INC.~~

~~Condensed Consolidated Statements~~Table of ~~Operations (Unaudited)~~Contents

~~Three Months Ended September 24, 2022 and September 25, 2021~~

~~(Amounts Expressed in United States Dollars, Except for Share Data)~~

Three Months Ended
September 24, September 25,
2022 2021
Revenue $ 30,044,048 $ 36,735,904
Cost of Goods Sold 15,187,672 19,349,990

Gross Profit 14,856,376 17,385,914

Operating Expenses:
General and Administrative 17,846,117 32,649,234
Sales and Marketing 443,790 593,224
Depreciation and Amortization 3,946,523 5,823,617
Realized and Unrealized Changes in Fair Value of Contingent Consideration (863,856 ) -
Impairment Expense 1,663,911 435,241
Other Operating (Income) Expense (2,555,118 ) 2,199,028

Total Operating Expenses 20,481,367 41,700,344

Loss from Operations (5,624,991 ) (24,314,430 )

Non-Operating (Income) Expenses:
Interest Expense 10,052,691 8,171,764
Interest Income (33 ) (23,008 )
Accretion of Debt Discount and Loan Origination Fees 1,581,967 6,347,471
Change in Fair Value of Derivatives 805,590 (2,105,415 )
Gain on Extinguishment of Debt - (10,233,610 )

Total Non-Operating Expenses 12,440,215 2,157,202

Loss from Continuing Operations Before Provision for Income Taxes (18,065,206 ) (26,471,632 )
Provision for Income Tax Expense (2,193,542 ) (19,691,908 )

Net Loss from Continuing Operations (20,258,748 ) (46,163,540 )
Net Income (Loss) from Discontinued Operations, Net of Taxes 24,306,649 (14,446,491 )

Net Income (Loss) 4,047,901 (60,610,031 )

Net Loss Attributable to Non-Controlling Interest (112,312 ) (5,280,003 )

Net Income (Loss) Attributable to Shareholders of MedMen Enterprises Inc. $ 4,160,213 $ (55,330,028 )

Earnings (Loss) Per Share - Basic and Diluted:
From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc. $ (0.02 ) $ (0.04 )

From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc. $ 0.02 $ (0.02 )

Weighted-Average Shares Outstanding - Basic and Diluted 1,301,659,701 942,696,052


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)~~(Unaudited and not reviewed).

~~MEDMEN ENTERPRISES INC.~~

~~Condensed Consolidated Statements~~Table of ~~Changes in Shareholders’ Equity (Unaudited)~~Contents

~~Three Months Ended September 24, 2022 and September 25, 2021~~

~~(Amounts Expressed in United States Dollars, Except for Share Data)~~

Units $ Amount
TOTAL EQUITY
ATTRIBUTABLE

Subordinate
Voting
Shares
Subordinate
Voting
Shares Additional
Paid-In
Capital Accumulated
Deficit TO
SHAREHOLDERS
OF MEDMEN
Non-
Controlling
Interest
TOTAL
SHAREHOLDERS’
DEFICIENCY
BALANCE AS OF JUNE 26, 2022 1,301,423,950 $ - $ 1,057,228,873 $ (901,758,875 ) $ 155,469,998 $ (473,982,734 ) $ (318,512,736 )

Net Income (Loss) - - - 4,160,213 4,160,213 (112,312 ) 4,047,901

Controlling Interest Equity Transactions
Partner Contributions - - 37,561 - 37,561 - 37,561
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 $ - $ 1,058,145,437 $ (897,613,980 ) $ 160,531,457 $ (474,095,046 ) $ (313,563,589 )

Units $ Amount TOTAL EQUITY ATTRIBUTABLE

Subordinate
Voting
Shares
Subordinate
Voting
Shares Additional
Paid-In
Capital Accumulated
Deficit TO
SHAREHOLDERS
OF MEDMEN
Non-
Controlling
Interest
TOTAL
SHAREHOLDERS’
DEFICIENCY
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 - - 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 )

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).~~

~~MEDMEN ENTERPRISES INC.~~

~~Condensed Consolidated Statements of Cash Flows (Unaudited)~~

~~Three Months Ended September 24, 2022 and September 25, 2021~~

~~(Amounts Expressed in United States Dollars)~~

Three Months Ended
September 24, September 25,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss from Continuing Operations $ (20,258,748 ) $ (46,163,540 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Deferred Tax Expense - (4,497,141 )
Depreciation and Amortization 3,971,473 6,256,917
Non-Cash Operating Lease Costs 3,453,863 4,442,077
Accretion of Debt Discount and Loan Origination Fees 1,581,970 6,347,471
Loss on Disposals of Assets 205,595 -
Gain on Lease Terminations (1,587,670 ) -
Accretion of Deferred Gain on Sale of Property (141,657 ) (141,657 )
Impairment of Assets 1,663,911 435,241
Realized and Unrealized Changes in Fair Value of Contingent Consideration 863,856 -
Change in Fair Value of Derivative Liabilities 805,590 (2,105,415 )
Gain on Extinguishment of Debt - (10,233,610 )
Share-Based Compensation 863,685 3,104,077
Interest Capitalized to Senior Secured Convertible Debt and Notes Payable 6,416,426 7,837,693
Interest Capitalized to Finance Lease Liabilities 444,232 377,885
Changes in Operating Assets and Liabilities:
Accounts Receivable and Prepaid Expenses 2,163,698 617,325
Inventory 892,922 (1,710,735 )
Other Current Assets 2,587,163 282,230
Other Assets 256,706 -
Accounts Payable and Accrued Liabilities (1,746,175 ) 4,827,997
Interest Payments on Finance Leases (1,804,507 ) (1,784,541 )
Cash Payments - Operating Lease Liabilities (1,026,792 ) (3,478,891 )
Income Taxes Payable 11,145,390 21,707,961
Other Current Liabilities (447,046 ) (2,413,113 )
Other Non-Current Liabilities 47,192 -

NET CASH PROVIDED BY (USED IN) CONTINUED OPERATING ACTIVITIES 10,351,077 (16,291,769 )

Net Cash Used in Discontinued Operating Activities (19,961,041 ) (6,684,431 )

NET CASH USED IN OPERATING ACTIVITIES (9,609,964 ) (22,976,200 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property and Equipment - (391,730 )
Additions to Intangible Assets (24,056 ) (461,456 )
Proceeds from the Sale of Assets Held for Sale 51,500,000 -
Restricted Cash - 730

NET CASH PROVIDED BY (USED IN) CONTINUED INVESTING ACTIVITIES 51,475,944 (852,456 )

Net Cash Used in Discontinued Investing Activities - (2,764,417 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 51,475,944 (3,616,873 )

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 (31,599,999 ) (75,605 )
Principal Repayments of Finance Lease Liability (2,484 ) (959 )
Distributions - Non-Controlling Interest 37,561 -

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (31,564,922 ) 93,235,646

NET INCREASE IN CASH AND CASH EQUIVALENTS 10,301,058 66,642,573
Cash Included in Assets Held for Sale - (275,178 )
Cash and Cash Equivalents, Beginning of Period 10,795,999 11,575,138

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,097,057 $ 77,942,533

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).~~

~~MEDMEN ENTERPRISES INC.~~

~~Condensed Consolidated Statements of Cash Flows (Unaudited)~~

~~Three Months Ended September 24, 2022 and September 25, 2021~~

~~(Amounts Expressed in United States Dollars)~~

Three Months Ended
September 24, September 25,
2022 2021
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION
Cash Paid for Interest $ 1,260,562 $ 2,336,120

Non-Cash Investing and Financing Activities:
Net Assets Transferred to Held for Sale $ - $ 4,476,993
Redemption of MedMen Corp Redeemable Shares $ - $ 1,496,142
Derivative Liability Incurred on Convertible Facility and Equity Financing $ - $ 30,500,000
Conversion of Convertible Debentures $ - $ 2,371,100
Shares Issued to Settle Debt and Lender Fees $ - $ 4,030,000
Shares Issued to Settle Accounts Payable and Liabilities $ - $ 700,000
Equity Component of Debt - New and Amended $ - $ 41,388,047
Deferred Tax Impact on Conversion Feature $ - $ 13,057,730

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).~~

~~MEDMEN ENTERPRISES INC.~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~Three Months Ended September 24, 2022 and September 25, 2021~~

~~(Amounts Expressed in United States Dollars, Except for Share and Per Share Data)~~


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 ~~September 24, 2022,~~March 25, 2023, the Company ~~owns~~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 ~~are~~were classified as discontinued operations until the day of sale, oron August 22, 2022. ~~As of September 24,~~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. The financial data presented herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended June 25, 2022, as filed with the Securities and Exchange Commission on September 9, 2022 (the “2022 Form 10-K”).

Going Concern

As of ~~September 24, 2022,~~March 25, 2023, the Company had cash and cash equivalents of $~~21.1~~ $7.6 million and working capital deficit of $~~134.9~~ $383.2 million. The Company has incurred net losses from continuing operations of $~~20.3~~ $31.2 million and $~~46.2~~ $70.6 million for the three and nine months ended ~~September 24,~~March 25, 2023 respectively.

Table of Contents

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 ~~September 25, 2021, respectively.~~ 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.

The Company plans to continue to fund its operations through the implementation of its cost savings plan, and various strategic actions, including the successful negotiations of lower costs of occupancy with its master lease landlord and other landlords, divesture of non-core assets including but not limited to the current asset group held for sale, New York, as well continuing its on-going revenue strategy of market expansion and retail revenue growth. The Company also needs to obtain an extension or a refinancing of its debt-in-default with the secured senior lender. The annual operating plan for fiscal year 2023 estimates the Company will be able to manage ongoing operations. However, its cash needs are significant and not achievable with the current cash flow from operations. If the above strategic actions, for any reason, are inaccessible, it will have a significantly negative effect on the Company’s financial condition. Additionally, management expects to continue to manage the Company’s operating expenses and reduce its projected cash requirements through reduction of its 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. Furthermore, COVID-19 and the impact the global pandemic on the broader retail environment could also have a significant impact on the Company’s financial position, results of operations, equity and or its access to capital and future financing.

~~COVID-19~~

In response to the COVID-19 pandemic, governmental authorities have enacted and implemented various recommendations and safety measures in an attempt to limit the spread and magnitude of the pandemic. During the current reporting period, aspects of the Company’s business continue to be affected by impacts of the COVID-19 pandemic, as the Company’s retail stores strive to operate within the local rules and regulations of the states and localities in which the Company operates. While the Company saw continued recovery from the impacts of the COVID 19-pandemic during the first quarter of 2023, the Company continues to closely monitor the potential impact that a resurgence of the COVID-19 virus, including as a result of the emergence of new variants and strains, could have on the Company’s operations. In the event that the Company were to experience widespread transmission of the virus at one or more of the Company’s store or other facilities, the Company could suffer reputational harm or other potential liabilities. Further, the Company’s business operations may be materially and adversely affected if a significant number of the Company’s employees are impacted by the virus.

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. With the exception of MME Florida, LLC, which the Company disposed on August 22, 2022, the list of the Company’s subsidiaries included in the Company’s 2022 Form 10-K remain complete as of September 24, 2022.

Significant Accounting Policies

The ~~significant accounting policies~~Company's Unaudited and ~~critical estimates applied by the Company in these~~Not Reviewed Condensed Consolidated Financial Statements ~~are~~presented herein reflect estimates and assumptions made by management that affect the ~~same as those applied~~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 ~~the Company’s audited Consolidated Financial Statements and accompanying notes included in the Company’s 2022 Form 10-K, unless otherwise disclosed in these accompanying notes~~response to the ~~Condensed Consolidated~~ 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 ~~Statements for~~instruments that potentially subject the ~~interim period ended September 24, 2022.~~

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.

Table of Contents

Restatement

~~Reclassifications~~

~~Certain amounts reported~~During the nine months ended March 25, 2023, the Company identified errors that resulted in ~~the Notes to the Condensed Consolidated Financial Statements~~misstatements of certain assets and liabilities as of June 25, 2022 ~~have non-material~~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.

1In 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 ~~non-material corrections and~~ reclassifications ~~impacted leasehold improvements and furniture and fixtures~~did not impact Total Assets, Total Liabilities or Total Shareholders' Deficit as of June 25, 2022.

Table of Contents

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 ~~amount~~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)

Table of ~~approximately $~~Contents

~~940,000~~

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 ~~categories. Customer relationships~~shareholders of MedMen Enterprises Inc. and ~~accumulated amortization~~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.

Table of ~~customer relationships~~Contents

The effect of the adjustments on the financial statement line items within the Company's consolidated statement of changes in shareholders' deficit for the ~~amount~~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

~~1,440,000~~(1) The tax effect of the adjustments are immaterial.

(2) The allocation of the cumulative net adjustment between the ~~categories were reclassed between~~shareholders of MedMen Enterprises Inc. and the ~~two categories. Fully amortized management agreements and its related accumulated amortization in~~Company's non-controlling interest is an estimate based upon the ~~amount of $964,000~~ ~~were also reclassed. Non-controlling interest and accumulated deficit in the amount of approximately $3,662,000~~ ~~have been reclassed between the two categories. In addition,~~allocation percentage calculated by the Company ~~reclassified short-term~~for its quarterly report on Form 10-Q for the three and ~~long-term operating lease liabilities between~~six months ended December 24, 2022, as filed with the ~~two categories~~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 ~~amount of approximately $6,825,000. There was no change to total current assets, total assets, total liabilities, total shareholders’ equity or cash flows~~six months ended December 24, 2022 is as ~~a result of these reclassifications and non-material corrections.~~

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 ~~May 2021,~~March 2020, the FASB issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~2021-04, “~~~~Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)~~” (“ASU 2021-04”), which amends existing guidance for earnings per share (“EPS”) in accordance with Topic 260. ASU 2021-04 is effective prospectively for fiscal years beginning after December 15, 2021. The Company adopted ASU 2021-04 on June 26, 2022. The adoption of the standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

~~Recently Issued Accounting Standards~~

~~In March 2020, the FASB issued 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 ~~due~~ to ~~reference rate reform~~which the standard would apply during the ~~nine~~subsequent three months ended ~~September 30, 2022. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.~~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 ~~consists~~as of ~~the following:~~

Schedule of inventories
September 24, June 25,
2022 2022
Raw Materials $ 612,901 $ 521,777
Work-in-Process 1,142,397 671,541
Finished Goods 7,362,511 8,817,413

Total Inventory $ 9,117,809 $ 10,010,731

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 ~~three~~nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022, ~~and September 25, 2021,~~ the Company recognized impairment of nil and $~~864,314~~,$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:

Schedule of asset held for sale
Discontinued
Operations ⁽¹⁾ Other
Assets TOTAL
Balance as of June 25, 2022 $ 123,128,406 $ 30,345 $ 123,158,751
Ongoing Activities (47,881,618 ) 248,324 (47,633,294 )
Proceeds from Sale (67,000,000 ) - (67,000,000 )
Gain on Sale of Assets Held for Sale 35,659,761 - 35,659,761

Balance as of September 24, 2022 $ 43,906,549 $ 278,669 $ 44,185,218

~~(1)~~Discontinued Operations & Other Assets

Balance as of June 25, 2022

~~See “Note 22 – Discontinued Operations” for further information.~~121,463,527

5.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 ~~September 24, 2022~~March 25, 2023 and June 25, 2022, property and equipment, net consists of the following:

Schedule of property and equipment
September 24, June 25,
2022 2022
Land and Buildings $ 29,933,999 $ 29,933,999
Capital Leases 5,318,516 5,315,625
Furniture and Fixtures 8,325,228 8,776,994
Leasehold Improvements 33,625,893 33,069,524
Equipment and Software 16,316,334 16,897,649
Construction in Progress 4,528,762 6,828,923

Total Property and Equipment 98,048,732 100,822,714

Less Accumulated Depreciation (38,082,797 ) (36,714,922 )

Property and Equipment, Net $ 59,965,935 $ 64,107,792


	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 ~~of $2,258,354~~ ~~and $3,031,080~~ ~~was recorded~~ for the three months ended ~~September 24,~~March 25, 2023 and March 26, 2022 was $2.0 million and ~~September~~$2.8 million, respectively. Depreciation expense related to continuing operations for the nine months ended March 25, ~~2021, respectively, of which $24,950~~ 2023 and $March 26, 2022 was $6.4 million and $9.0 million, respectively.

~~433,300, respectively, is included in cost of goods sold.~~ The amount of depreciation recognized for ~~the~~ capital leases during the three months ended ~~September 24,~~March 25, 2023 and March 26, 2022 was nil and ~~September~~$0.3 million, respectively. The amount of depreciation recognized for capital leases during the nine months ended March 25, ~~2021~~2023 and March 26, 2022 was $~~347,406~~ $0.5 million and $0.8 million, respectively. See ~~and $283,406, 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 ~~not~~ capitalized ~~as there were no active construction projects in progress~~ during the three and nine months ended ~~September 24, 2022.~~March 25, 2023 using an average capitalization rate of 24.68%. During the three and nine months ended ~~September 25, 2021,~~March 26, 2022, borrowing costs totaling $~~375,241~~ $0.4 million and $1.2 million, respectively, were capitalized using an average capitalization rate of ~~11.95~~%.

11.47% and 11.93%, respectively.

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6.			INTANGIBLE ASSETS, NET

As of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, intangible assets, net consist of the following:

Schedule of Intangible assets
September 24, June 25,
2022 2022
Dispensary Licenses $ 49,253,452 $ 49,253,452
Customer Relationships 16,409,600 16,409,600
Capitalized Software 7,413,470 7,413,470
Intellectual Property 4,016,597 4,016,597

Total Intangible Assets 77,093,119 77,093,119

Dispensary Licenses (17,477,268 ) (16,876,912 )
Customer Relationships (16,589,651 ) (15,870,284 )
Capitalized Software (4,681,748 ) (4,413,974 )
Intellectual Property (4,287,401 ) (4,185,835 )

Less Accumulated Amortization (43,036,068 ) (41,347,005 )

Intangible Assets, Net $ 34,057,051 $ 35,746,114


	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 ~~of $1,713,119~~ ~~and $3,225,837~~ for the ~~three~~nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022 of $1,202,842 and ~~September~~$2,774,346, respectively and amortization expense related to continuing operations for the nine months ended March 25, ~~2021,~~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.


7.			ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

As of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, accounts payable and accrued liabilities consist of the following:

Schedule of accounts payable and accrued liabilities
September 24, June 25,
2022 2022
Accounts Payable $ 19,078,177 $ 14,627,746
Accrued Liabilities 7,784,119 10,031,194
Accrued Inventory 3,129,868 5,868,831
Accrued Payroll 2,081,284 1,682,517
Local & State Taxes Payable 3,281,687 6,695,532

Total Accounts Payable and Accrued Liabilities $ 35,355,136 $ 38,905,818


	March 25, 2023		June 25, 2022
Accounts Payable	$	19,384,084	$	14,627,746

Accrued Liabilities	9,451,378		3,826,771
Accrued Inventory	4,562,830		5,868,831
Accrued Payroll	1,685,095		1,500,592
Local & State Taxes Payable	8,242,865		6,695,532
Deferred Gain on Sale of Assets	566,627		566,627
Total Accounts Payable and Accrued Liabilities	$	43,892,879	$	33,086,099


8.			DERIVATIVE LIABILITIES

A reconciliation of the beginning and ending balance of derivative liabilities and change in fair value of derivative liabilities for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 is as follows:


	TOTAL
Balance as of June 25, 2022	$	6,749,563

Change in Fair Value of Derivative Liabilities	(2,563,746)
Balance as of March 25, 2023	$	4,185,817

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Schedule of reconciliation of the beginning and ending balance of derivative liabilities and change in fair value of derivative liabilities
September 24,
2022
Balance at Beginning of Period $ 6,749,563

Change in Fair Value of Derivative Liabilities 805,590

Balance at End of Period $ 7,555,153

On August 17, 2021, in connection with the amended and restated senior secured convertible credit facility (the Sixth Amendment”), the Company provided the note holders top-up and preemptive rights which were bifurcated from the related notes and classified as a derivative due to the variability of the number and price of shares issuable under these rights. See “Note 11 – Senior Secured Convertible Credit Facility” for further information.

The fair value of the top-up provision in connection with Sixth Amendment of the Convertible Facility was determined using the ~~Black Scholes~~Black-Scholes simulation model based on Level 3 inputs on the fair value hierarchy. The following assumptions were used at ~~September 24, 2022:~~

Schedule of assumptions to measure fair value
Top-Up
Provision
Average Stock Price $ 0.04
Weighted-Average Probability 50.00 %
Term (in Years) 5.00
Expected Stock Price Volatility 96.68 %

March 25, 2023:


	Top-Up Provision
Average Stock Price	$	0.02
Weighted-Average Probability	50.00		%
Term (in Years)	5
Expected Stock Price Volatility	142.84		%

The following are the warrants issued related to the equity financing transactions that were accounted for as derivative liabilities:

Number of
Warrants

Exercise
Price (C$)

Expiration
Date

March 2021 Private Placement (1)

50,000,000

$0.50

March 27, 2024

50,000,000

~~Schedule of warrant issued~~
	Number of Warrants		Exercise Price	Expiration Date
~~March 2021 Private Placement~~ ⁽¹⁾		~~50,000,000~~	C$~~0.50~~	~~March 27, 2024~~

		~~50,000,000~~

(1)See “Note 12 – Shareholders’ Equity” for further information.

~~(1)~~

~~See “Note 12 – Shareholders’ Equity” for further information.~~

The fair value of the March 2021 private placement warrants was measured based on Level 3 inputs on the fair value hierarchy using the Black-Scholes Option pricing model using the following variables:

Schedule of assumptions to measure fair value
Expected Stock Price Volatility 106.25 %
Risk-Free Annual Interest Rate 2.51 %
Expected Life (in Years) 0.50
Share Price $ 0.04
Exercise Price $ 0.37


9.Expected Stock Price Volatility			~~LEASES~~161.95%
Risk-Free Annual Interest Rate			2.35%
Expected Life (in Years)			0.25
Share Price			$0.02
Exercise Price			$0.37

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9.			LEASES

The Company has various operating and finance leases for land, buildings, equipment and other assets that are used for corporate purposes as well as for the production and sale of cannabis products. These leases are subject to covenants and restrictions standard to the industry in which the Company operates.

The below are the details of the lease cost and other disclosures regarding the Company’s leases for the three and nine months ended ~~September 24, 2022~~March 25, 2023 and ~~September 25, 2021:~~

March 26, 2022:


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Finance Lease Cost:
Amortization of Finance Lease Right-of-Use Assets	$	1,101	$	355,872	$	535,725	$	801,940
Interest on Lease Liabilities	1,824,333		1,710,566		5,463,907		5,220,859
Operating Lease Cost	1,609,581		3,913,118		7,810,084		12,719,529
Total Lease Expenses	$	3,435,015	$	5,979,556	$	13,809,716	$	18,742,328

Sublease Income (1)	$	(507,217)	$	(3,473,165)	$	(3,550,519)	$	(3,238,270)

Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Financing Cash Flows from Finance Leases	$	665	$	(484,802)	$	—	$	(1,162,955)
Operating Cash Flows from Operating Leases	$	(7,217,910)	$	(3,685,151)	$	(8,719,504)	$	(11,804,405)

Schedule of lease cost
Three Months Ended
September 24, September 25,
2022 2021
Finance Lease Cost:
Amortization of Finance Lease Right-of-Use Assets $ 347,406 $ 283,406
Interest on Lease Liabilities 1,804,507 1,784,541
Operating Lease Cost 3,453,863 6,595,652
Sublease Income ⁽¹⁾ (1,521,693 ) -

Total Lease Expenses $ 5,605,776 $ 8,663,599

Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Financing Cash Flows from Finance Leases $ 2,484 $ 959
Operating Cash Flows from Operating Leases $ 1,026,792 $ 3,478,891

(1)See “Note 16 – Other Operating Income” for further information.

~~(1)~~

~~See “Note 16 – Other Operating Income” for further information.~~

The weighted-average remaining lease term and discount rate related to the Company’s finance and operating lease liabilities as of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, is as follows:

September 24, June 25,
2022 2022
Weighted-Average Remaining Lease Term (Years) - Finance Leases 47 46
Weighted-Average Remaining Lease Term (Years) - Operating Leases 7 8
Weighted-Average Discount Rate - Finance Leases 24.78 % 24.33 %
Weighted-Average Discount Rate - Operating Leases 15.96 % 18.70 %


	March 25, 2023		June 25, 2022
Weighted-Average Remaining Lease Term (Years) - Finance Leases	45		46
Weighted-Average Remaining Lease Term (Years) - Operating Leases	6		8
Weighted-Average Discount Rate - Finance Leases	24.85	%	24.33	%
Weighted-Average Discount Rate - Operating Leases	17.28	%	18.70	%

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Future lease payments under non-cancellable operating leases and finance leases as of ~~September 24, 2022~~March 25, 2023 are as follows:

Schedule of future leases payments
Fiscal Year Ending Operating
Leases Finance
Leases
July 1, 2023 (remaining) $ 9,155,365 $ 4,387,279
June 29, 2024 16,183,010 10,961,495
June 28, 2025 25,224,922 14,020,131
June 27, 2026 12,675,441 7,300,368
June 26, 2027 12,716,234 7,519,379
Thereafter 20,832,425 1,054,354,990

Total Lease Payments 96,787,396 1,098,543,643
Less Interest (37,307,828 ) (1,067,487,335 )

Lease Liability Recognized $ 59,479,568 $ 31,056,308


Fiscal Year Ending	Operating Leases		Finance Leases
July 1, 2023 (remaining)	$	2,311,520	$	1,473,896
June 29, 2024	12,844,650		10,961,495
June 28, 2025	9,311,213		7,087,736
June 27, 2026	9,495,658		7,300,368
June 26, 2027	9,466,730		7,519,379
Thereafter	26,252,624		1,061,283,374

Total Lease Payments	69,682,395		1,095,626,248
Less Interest	(16,622,007)		(1,063,650,119)

Lease Liability Recognized	$	53,060,388	$	31,976,129

The Company entered into a management agreement (the “Management Agreement”) with a third party to operate its cultivation facilities in California and Nevada (the “Cultivation Facilities”). On September 30, 2021, the landlord approved the third party to operate the leased facilities which effectuated the Management Agreement. The Management Agreement provides the third party an option to acquire all the assets used in the Cultivation Facilities, including the cannabis licenses and equipment, for $1 (the “Purchase Option”). The fee for the services under the Management Agreement is 100% and 30% of the California and Nevada Cultivation Facilities net revenue, respectively. The term of the Management Agreement remains in effect until the earlier of (a) the closing of any sale pursuant to the Purchase Option and (b) the expiration of the term, as applicable, of the master lease, at which time this Management Agreement shall automatically terminate without any further action of the Parties. As of ~~September 24, 2022,~~March 25, 2023, the Management Agreement remains in effect as neither termination condition has occurred. During the ~~three~~nine months ended ~~September 24,~~March 25, 2023 and the three and nine months ended March 26, 2022, the Company recorded ~~sublease~~rent income under the Management Agreement. Due to the financial condition of the third party to the Management Agreement, the Company did not record the rent income for the last two months of the three months ended March 25, 2023. See “Note 16 – Other Operating Income” 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.


10.			NOTES PAYABLE

Refer to the 2022 Form 10-K for complete disclosure of current terms of notes payable included in the footnotes of the annual financial statements as of June 25, 2022. There were no amendments during the ~~three~~nine months ended ~~September 24, 2022.~~March 25, 2023.

Table of Contents

As of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, notes payable consist of the following:

Schedule of notes payable
September 24, June 25,
2022 2022
Financing liability incurred on various dates between January 2019 through September 2019 with implied interest rates ranging from 0.7% to 17.0% per annum. $ 72,300,000 $ 72,300,000

Non-revolving, senior secured term notes dated between October 1, 2018 and October 30, 2020, issued to accredited investors, which mature on August 1, 2022 and July 31, 2022, and bear interest at a rate of 15.5% and 18.0% per annum. 66,819,991 97,162,001

Promissory notes dated November 7, 2018, issued to Lessor for tenant improvements as part of sales and leaseback transactions, which mature on November 7, 2028, bear interest at a rate of 10.0% per annum and require minimum monthly payments of $15,660 and $18,471. 2,057,207 2,057,207

Other 15,691 15,691

Total Notes Payable 141,192,889 171,534,899
Less Unamortized Debt Issuance Costs and Loan Origination Fees - (158,079 )

Net Amount $ 141,192,889 $ 171,376,820
Less Current Portion of Notes Payable (66,294,249 ) (97,003,922 )

Notes Payable, Net of Current Portion $ 74,898,640 $ 74,372,898


	March 25, 2023		June 25, 2022
Financing liability incurred on various dates between January 2019 through July 2020 with implied interest rates ranging from 0.7% to 17.0% per annum.	$	72,300,000	$	72,300,000
Non-revolving, senior secured term notes dated between October 1, 2018 and February 2, 2022, issued to accredited investors, which mature on August 1, 2022 and July 31, 2022, and bear interest at a rate of 15.5% and 18.0% per annum.	65,894,250		97,162,001




Promissory notes dated November 7, 2018, issued to Lessor for tenant improvements as part of sales and leaseback transactions, which mature on November 7, 2028, bear interest at a rate of 10% per annum and require minimum monthly payments of $15,660 and $18,471.	1,968,951		2,057,207
Other	15,692		15,691
Total Notes Payable	140,178,893		171,534,899
Less Unamortized Debt Issuance Costs and Loan Origination Fees	(137,479)		(158,079)
Net Amount	140,041,414		171,376,820
Less Current Portion of Notes Payable	(140,041,414)		(97,003,922)
Notes Payable, Net of Current Portion	$	—	$	74,372,898

A reconciliation of the beginning and ending balances of notes payable for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 is as follows:


	March 25, 2023
Balance at Beginning of Period	$	171,376,820
Paid-In-Kind Interest Capitalized	1,257,988
Cash Payments	(32,751,472)
Accretion of Debt Discount	(239,954)
Accretion of Debt Discount Included in Discontinued Operations	398,032
Balance at End of Period	140,041,414
Less Current Portion of Notes Payable	(140,041,414)
Notes Payable, Net of Current Portion	$	—

Schedule of Reconciliation of Notes payable
September 24,
2022
Balance at Beginning of Period $ 171,376,820

Paid-In-Kind Interest Capitalized 1,257,988
Cash Payments (31,599,999 )
Accretion of Debt Discount Included in Discontinued Operations 158,079

Balance at End of Period 141,192,889

Less Current Portion of Notes Payable (66,294,249 )

Notes Payable, Net of Current Portion $ 74,898,640

Non-Revolving Senior Secured Term Loan Facility

In February 2022, the Company executed the Sixth Modification extending the maturity date of the senior secured term loan facility (the “Facility”) with Hankey Capital and Stable Road Capital (the “Lenders”) to July 31, 2022 with respect to the Facility, and August 1, 2022 with respect to the incremental term loans (collectively, the “Term Loans”). The Sixth Modification required that the Company make a mandatory prepayment of at least $~~37,500,000~~ $37.5 million in the event of the sale of certain ~~assets and imposed covenants in regards to strategic actions the Company would have to implement if unable to pay the Term Loans by the extended stated maturity date.~~

assets.

During the ~~three~~nine months ended ~~September 24, 2022,~~March 25, 2023, in connection with the sale of the Company’s Florida-based operations, the Company made a principal repayment of $~~31,599,999~~$31.6 million to Hankey Capital with proceeds from the sale. ~~An additional $8,500,000~~In April 2023, the Company entered into a third amendment to the Asset Purchase Agreement with Green Sentry Holdings, LLC ("Green Sentry"), the buyer of the Company's Florida-based operations, wherein the due date of Green Sentry's payment of $11.5 million, the Second Installment of the sale proceeds, was extended, and the Company directed Green Sentry to pay $9.8 million of the Second Installment directly to Hankey Capital as a principal repayment ~~will be made in 2023 upon receipt~~ of the ~~final installment payment from~~Facility. Subsequent to the ~~sale~~end of the ~~Company’s Florida-based operations.~~quarter ended March 25, 2023, an additional $1.1 million of the Second Installment was paid directly to Hankey Capital as a further principal repayment to the Facility. The Facility and Term Loans remain in default as of ~~September 24, 2022~~March 25, 2023 as the principal balance matured on July 31, 2022 and August 1, 2022, respectively. Beginning in December 2022, the interest assessed on the Facility and Term Loans include a default interest rate of 5%. In February 2023, the Company paid a lower agreed-upon interest to the Lenders, and beginning in March 2023, the Company's monthly accrued interest is paid-in-kind. As of ~~September 24, 2022,~~March 25, 2023, the Company is in ongoing discussions with the ~~Lenders.~~

Lenders regarding a new modification to the Facility and a final written amendment of the Facility has not yet been completed. As such, the Company has classified the total outstanding balance of the Facility to current liabilities.

Table of Contents


11.			SENIOR SECURED CONVERTIBLE CREDIT FACILITY

Refer to the 2022 Form 10-K for complete disclosure of current terms of the senior secured convertible facility included in the footnotes of the annual financial statements as of June 25, 2022. There were no amendments during the three months ended ~~September 24, 2022.~~

March 25, 2023. As of ~~September 24, 2022~~March 25, 2023, the Company did not satisfy the minimum liquidity financial covenant required by the senior secured convertible facility. As such, the Company has classified the total outstanding balance of the Facility to current liabilities. The Company is in ongoing discussions with the Lenders to cure the default.

As of March 25, 2023 and June 25, 2022, senior secured convertible credit facility consists of the following:

Schedule of senior secured convertible credit facility
September 24, June 25,
Tranche 2022 2022
Senior secured convertible notes dated August 17, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. 1A $ 23,376,684 $ 22,880,556

Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. 1B 100,679,152 98,542,422

Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. 2 32,738,817 32,043,996

Senior secured convertible notes dated November 27, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. 3 12,677,140 12,408,091

Senior secured convertible notes dated March 27, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. 4 14,911,453 14,594,985

Amendment fee converted to senior secured convertible notes dated October 29, 2019, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. - 23,932,224 23,424,438

Senior secured convertible notes dated April 24, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. IA-1 3,346,889 3,275,857

Senior secured convertible notes dated September 14, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. IA-2 6,472,344 6,334,980

Restatement fee issued in senior secured convertible notes dated March 27, 2020, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. - 10,103,343 9,888,919

Second restatement fee issued in senior secured convertible notes dated July 2, 2020, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. - 2,237,875 2,190,380

Third restatement fee issued in senior secured convertible notes dated January 11, 2021, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum. - 12,587,295 12,320,154

Total Drawn on Senior Secured Convertible Credit Facility 243,063,216 237,904,778

Less Unamortized Debt Discount (104,317,146 ) (105,899,115 )

Senior Secured Convertible Credit Facility, Net $ 138,746,070 $ 132,005,663


	Tranche	March 25, 2023		June 25, 2022
Senior secured convertible notes dated August 17, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	1A	$	24,554,037	$	22,880,556

Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	1B	105,745,909		98,542,422

Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	2	34,388,437		32,043,996

Senior secured convertible notes dated November 27, 2019, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	3	13,315,539		12,408,091

Senior secured convertible notes dated March 27, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	4	15,662,990		14,594,985

Amendment fee converted to senior secured convertible notes dated October 29, 2019, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	—	25,138,245		23,424,438

Senior secured convertible notes dated April 24, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	IA-1	3,515,572		3,275,857

Senior secured convertible notes dated September 14, 2020, issued to accredited investors, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	IA-2	6,798,550		6,334,980

Restatement fee issued in senior secured convertible notes dated March 27, 2020, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	—	10,612,417		9,888,919

Second restatement fee issued in senior secured convertible notes dated July 2, 2020, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	—	2,350,632		2,190,380

Third restatement fee issued in senior secured convertible notes dated January 11, 2021, which mature on August 17, 2028 and bear interest at LIBOR plus 6.0% per annum.	—	13,221,572		12,320,154

Total Drawn on Senior Secured Convertible Credit Facility		255,303,900		237,904,778

Less Unamortized Debt Discount		(101,198,160)		(105,899,115)

Senior Secured Convertible Credit Facility, Net		$	154,105,740	$	132,005,663

Table of Contents

A reconciliation of the beginning and ending balances of senior secured convertible credit facility for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 is as follows:

Schedule of reconciliation senior secured convertible credit facility
Tranche 1 Tranche 2 Tranche 3 Tranche 4 Incremental Advance - 1 Incremental Advance - 2 3rd Advance Amendment
Fee Notes Restatement Fee Notes 2nd Restatement Fee Notes TOTAL
Balance as of June 25, 2022 $ 80,178,586 $ 21,218,356 $ 8,217,079 $ 1,051,827 $ 224,585 $ 433,598 $ 842,981 $ 15,512,409 $ 2,211,711 $ 2,114,531 $ 132,005,663

Paid-In-Kind Interest Capitalized 2,632,858 694,821 269,049 316,468 71,032 137,364 267,141 507,786 214,424 47,495 5,158,438
Accretion of Debt Discount 988,849 260,580 100,902 - - - - 190,486 37,165 3,987 1,581,969

Balance as of September 24, 2022 $ 83,800,293 $ 22,173,757 $ 8,587,030 $ 1,368,295 $ 295,617 $ 570,962 $ 1,110,122 $ 16,210,681 $ 2,463,300 $ 2,166,013 $ 138,746,070


	Tranche 1				Tranche 2				Tranche 3				Tranche 4				Incremental Advance - 1				Incremental Advance - 2				3rd Advance				Amendment Fee Notes		Restatement Fee Notes				2nd Restatement Fee Notes				TOTAL
Balance as of June 25, 2022	$	80,178,586	$	—	$	21,218,356	$	—	$	8,217,079	$	—	$	1,051,827	$	—	$	224,585	$	—	$	433,598	$	—	$	842,981	$	—	$	15,512,409	$	2,211,711			$	2,114,531	$	—	$	132,005,663
Paid-In-Kind Interest Capitalized	8,876,969				2,344,441				907,447				1,068,005				239,715				463,570				901,419				1,713,807		723,499				160,252				17,399,123
Accretion of Debt Discount	2,952,575				767,990				294,594				—				—				—				—				561,502		113,653				10,640				4,700,954
Balance as of March 25, 2023	$	92,008,130			$	24,330,787			$	9,419,120			$	2,119,832			$	464,300			$	897,168			$	1,744,400			$	17,787,718	$	3,048,863	$	—	$	2,285,423			$	154,105,740


12.			SHAREHOLDERS’ EQUITY

Issued and Outstanding

A reconciliation of the beginning and ending issued and outstanding shares is as follows:

Schedule of Shares issued and outstanding
Subordinate
Voting Shares MM CAN USA
Class B
Redeemable Units MM Enterprises USA
Common Units
Balance as of June 25, 2022 1,301,423,950 65,066,106 725,016
Redemption of MedMen Corp Redeemable Shares 259,814 (259,814 ) -

Balance as of September 24, 2022 1,301,683,764 64,806,292 725,016

Subordinate
Voting Shares MM CAN USA
Class B
Redeemable Units MM Enterprises USA
Common Units
Balance as of June 25, 2022 1,301,423,950 65,066,106 725,016
Redemption of MedMen Corp Redeemable Shares 259,814 (259,814) —
Balance as of September 24, 2022 1,301,683,764 64,806,292 725,016
Redemption of MedMen Corp Redeemable Shares 445,320 (445,320) —
Balance as of December 24, 2022 1,302,129,084 64,360,972 725,016
Shares Issued to Settle Accounts Payable and Liabilities 74,158,530 — —
Redemption of MedMen Corp Redeemable Shares 6,605,038 (6,605,038) —
Stock Grants for Compensation 309,848 — —
Balance as of March 25, 2023 1,383,202,500 57,755,934 725,016

Non-Controlling Interests

Non-controlling interest represents the net assets of the subsidiaries that the holders of the Subordinate Voting Shares do not directly own. The net assets of the non-controlling interest are represented by the holders of MM CAN USA Redeemable Shares and the holders of MM Enterprises USA Common Units. Non-controlling interest also represents the net assets of the entities the Company does not directly own but controls through a management agreement. As of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, the holders of the MM CAN USA Redeemable Shares represent approximately ~~4.74~~%4.71% and ~~4.76~~%4.76%, respectively, of the Company and holders of the MM Enterprises USA Common Units represent approximately ~~0.05~~%0.05% of the Company.

Variable Interest Entities

The below information are entities the Company has concluded to be variable interest entities (“VIEs”) as the Company possesses the power to direct activities through management services agreements (“MSAs”). Through these MSAs, the Company can significantly impact the VIEs and thus holds a controlling financial interest. The following table represents the summarized financial information about the Company’s consolidated VIEs. VIEs include the balances of Venice Caregiver Foundation, Inc., LAX Fund II Group, LLC, and Natures Cure, Inc. This information represents amounts before intercompany eliminations.

Table of Contents

As of and for the ~~three~~nine months ended ~~September 24, 2022,~~March 25, 2023, the balances and activities attributable to the VIEs consist of the following:

Schedule of VIE
Venice Caregivers Foundation, Inc. LAX Fund II Group, LLC Natures Cure, Inc. TOTAL
Current Assets $ 1,180,136 $ - $ 24,602,018 $ 25,782,154
Non-Current Assets 8,763,511 3,233,062 4,891,725 16,888,298

Total Assets $ 9,943,647 $ 3,233,062 $ 29,493,743 $ 42,670,452

Current Liabilities $ 10,477,448 $ 16,016,119 $ 8,510,967 $ 35,004,534
Non-Current Liabilities 7,004,484 2,004,062 1,342,632 10,351,178

Total Liabilities $ 17,481,932 $ 18,020,181 $ 9,853,599 $ 45,355,712

Non-Controlling Interest $ (7,538,285 ) $ (14,787,119 ) $ 19,640,163 $ (2,685,241 )

Revenues $ 1,959,080 $ - $ 3,317,299 $ 5,276,379
Net (Loss) Income Attributable to Non-Controlling Interest $ (494,845 ) $ (810,965 ) $ 885,605 $ (420,205 )


	Venice Caregivers Foundation, Inc.		LAX Fund II Group, LLC		Natures Cure, Inc.		TOTAL
Current Assets	$	1,819,664	$	841,330	$	28,473,664	$	31,134,658
Non-Current Assets	7,812,823		1,779,297		4,865,130		14,457,250
Total Assets	$	9,632,487	$	2,620,627	$	33,338,794	$	45,591,908

Current Liabilities	$	11,596,328	$	18,210,090	$	10,454,044	$	40,260,462
Non-Current Liabilities	6,716,127		1,472,754		1,337,770		9,526,651
Total Liabilities	$	18,312,455	$	19,682,844	$	11,791,814	$	49,787,113

Non-Controlling Interest	$	(8,679,969)	$	(17,062,218)	$	21,546,980	$	(4,195,207)

Revenues	$	5,405,090	$	—	$	9,559,347	$	14,964,437
Net (Loss) Income Attributable to Non-Controlling Interest	$	(1,636,529)	$	(3,086,064)	$	2,792,422	$	(1,930,171)

As of and for the fiscal year ended June 25, 2022, the balances of the VIEs consists of the following:

Venice Caregivers Foundation, Inc. LAX Fund II Group, LLC Natures Cure, Inc. TOTAL
Current Assets $ 1,735,304 $ 1,067,636 $ 23,557,168 $ 26,360,108
Non-Current Assets 10,073,880 3,379,412 4,973,459 18,426,751

Total Assets $ 11,809,184 $ 4,447,048 $ 28,530,627 $ 44,786,859

Current Liabilities $ 9,238,460 $ 16,238,249 $ 8,433,436 $ 33,910,145
Non-Current Liabilities 9,614,164 2,184,953 1,342,633 13,141,750

Total Liabilities $ 18,852,624 $ 18,423,202 $ 9,776,069 $ 47,051,895

Non-Controlling Interest $ (7,043,440 ) $ (13,976,154 ) $ 18,754,558 $ (2,265,036 )

Revenues $ 8,732,449 $ 1,857 $ 16,157,388 $ 24,891,694
Net (Loss) Income Attributable to Non-Controlling Interest $ (1,384,751 ) $ (4,868,632 ) $ 7,190,809 $ 937,426


	Venice Caregivers Foundation, Inc.				LAX Fund II Group, LLC				Natures Cure, Inc.				TOTAL
Current Assets	$	1,735,304			$	1,067,636			$	23,557,168			$	26,360,108
Non-Current Assets	10,073,880				3,379,412				4,973,459				18,426,751
Total Assets	$	11,809,184	$	—	$	4,447,048	$	—	$	28,530,627			$	44,786,859

Current Liabilities	$	9,238,460			$	16,238,249			$	8,433,436			$	33,910,145
Non-Current Liabilities	9,614,164				2,184,953				1,342,633				13,141,750
Total Liabilities	$	18,852,624	$	—	$	18,423,202	$	—	$	9,776,069			$	47,051,895

Non-Controlling Interest	$	(7,043,440)	$	—	$	(13,976,154)	$	—	$	18,754,558	$	—	$	(2,265,036)

Revenues	$	4,815,688			$	—			$	8,816,113			$	13,631,801
Net (Loss) Income Attributable to Non-Controlling Interest	$	(1,052,480)			$	(3,127,023)			$	3,822,700			$	(356,803)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the ~~three~~nine months ended ~~September 24, 2022:~~

March 25, 2023:


	Venice Caregivers Foundation, Inc.		LAX Fund II Group, LLC		Natures Cure, Inc.		Other Non- Controlling Interests		TOTAL
Balance as of June 25, 2022	$	(7,043,440)	$	(13,976,154)	$	18,754,558	$	(472,746,987)	$	(475,012,023)

Net (Loss) Income	$	(1,636,529)	$	(3,086,064)	$	2,792,422	$	(2,802,432)	$	(4,732,603)

Balance as of March 25, 2023	$	(8,679,969)	$	(17,062,218)	$	21,546,980	$	(475,549,419)	$	(479,744,626)

Schedule of other non-controlling interest
Venice Caregivers Foundation, Inc. LAX Fund II Group, LLC Natures Cure, Inc. Other Non- Controlling Interests TOTAL
Balance as of June 25, 2022 $ (7,043,440 ) $ (13,976,154 ) $ 18,754,558 $ (471,717,698 ) $ (473,982,734 )

Net (Loss) Income (494,845 ) (810,965 ) 885,605 307,893 (112,312 )

Balance as of September 24, 2022 $ (7,538,285 ) $ (14,787,119 ) $ 19,640,163 $ (471,409,805 ) $ (474,095,046 )

~~Le Cirque Rouge, LP (the “OP”) is a Delaware limited partnership that holds substantially all~~Table of the real estate assets owned by the Treehouse Real Estate Investment Trust (the “REIT”), conducts the REIT’s operations and is financed by the REIT. Under Accounting Standards Codification (“ASC”) Topic 810, “~~Consolidation~~” (“ASC Topic 810”), the OP was determined to be a variable interest entity in which the Company has an implicit variable interest based on the leasing relationship and arrangement with the REIT. However, the Company is not the primary beneficiary under ASC Topic 810. Accordingly, Le Cirque Rouge, LP is not consolidated as a variable interest entity within the Consolidated Financial Statements. As of and during the three months ended September 24, 2022, the Company continues to have a variable interest in the OP and did not provide any financial or other support to the REIT other than the completion of the sale and leaseback transactions and the REIT being a lessor on various leases as described in “~~Note 9 – Leases~~”.Contents


13.			SHARE-BASED COMPENSATION

The Company has a stock and equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments to any employee, officer, consultant, advisor or director. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, stock grants, and restricted stock units (together, “Awards”). Stock based compensation expenses are recorded as a component of general and administrative expenses. The maximum number of Awards that may be issued under the Incentive Plan shall be determined by the Compensation Committee or the Board of Directors in the absence of a Compensation Committee. Any shares subject to an Award under the Incentive Plan that are forfeited, cancelled, expire unexercised, are settled in cash or are used or withheld to satisfy tax withholding obligations, shall again be available for Awards under the Incentive Plan. Vesting of Awards will be determined by the Compensation Committee or Board of Directors in absence of a Compensation Committee. The exercise price for Awards (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 5 or 10 years.

A summary of share-based compensation expense for the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022 ~~and September 25, 2021~~ is as follows:


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Stock Options	$	862,791	$	410,705	$	3,488,372	$	1,724,898
Stock Grants for Compensation	26,465		—		26,465		540,864
Restricted Stock Grants	150,663		161,362		502,443		2,118,525
Total Share-Based Compensation	$	1,039,919	$	572,067	$	4,017,280	$	4,384,287

Schedule of share-based compensation expense
Three Months Ended
September 24, September 25,
2022 2021
Stock Options $ 863,685 $ 1,216,447
Stock Grants for Compensation - 333,333
Restricted Stock Grants - 1,554,297

Total Share-Based Compensation $ 863,685 $ 3,104,077

Stock Options

A reconciliation of the beginning and ending balance of stock options outstanding is as follows:

Schedule of stock options
Number of
Stock Options Weighted-Average
Exercise Price
Balance as of June 25, 2022 8,649,673 $ 1.35

Forfeited and Expired (205,354 ) $ (3.39 )

Balance as of September 24, 2022 8,444,319 $ 1.39

Stock Options Exercisable as of September 24, 2022 8,037,095 $ 1.27


	Number of Stock Options	Weighted-Average Exercise Price
Outstanding at June 25, 2022	8,649,673	$	1.35
Granted	92,382,965	0.05
Forfeited	(422,766)	(3.71)
Outstanding at March 25, 2023	100,609,872	$	0.15
Stock Options Exercisable as of March 25, 2023	8,037,095	$	1.18

Long-Term Incentive Plan (“LTIP”) Units and LLC Redeemable Units

A reconciliation of the beginning and ending balances of the LTIP Units and LLC Redeemable Units issued for compensation outstanding is as follows:


	LTIP Units	LLC Redeemable Units	Weighted Average Grant Date Fair Value
	Issued and Outstanding
Balance as of June 25, 2022 and March 25, 2023	19,323,878	725,016	$	0.52

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Schedule of LTIP Units and LLC Redeemable Units
Weighted
LTIP Units LLC Average
Issued and Redeemable Grant Date
Outstanding Units Fair Value
Balance as of June 25, 2022 and September 24, 2022 19,323,878 725,016 $ 0.52

Restricted Stock Units

A reconciliation of the beginning and ending balance of restricted stock units outstanding is as follows:


	Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value
Non-Vested at June 25, 2022	10,998,483	$	0.20
Granted	—	—
Vested	1,811,727	0.23
Forfeited	(2,238,016)	(0.22)
Non-Vested at March 25, 2023	10,572,194	$	0.24

Schedule of Restricted Stock Grants
Issued and
Outstanding Vested ⁽¹⁾ Weighted-Average
Fair Value
Balance as of June 25, 2022 10,998,483 4,030,460 $ 0.20

Forfeiture of Restricted Stock ⁽²⁾ (1,405,788 ) - $ (0.22 )
Vesting of Restricted Stock - 1,117,081 $ 0.22

Balance as of September 24, 2022 9,592,695 5,147,541 $ 0.20

(1)Represents restricted stock units forfeited upon resignation of certain employees prior to their vesting.

Warrants

~~(1)~~

Restricted stock units were issued on September 24, 2021 and vests 37.5% on the first anniversary, 12.5% on the second anniversary, 37.5% on the third anniversary, and 12.5% on the fourth anniversary of the grant date.

~~(2)~~

~~Restricted stock units were forfeited upon resignation of certain employees prior to their vesting during the three months ended September 24, 2022.~~

~~Warrants~~

A reconciliation of the beginning and ending balance of warrants outstanding is as follows:

Schedule of Warrants
Number of Warrants Outstanding
Subordinate
Voting Shares MM CAN USA
Redeemable Shares TOTAL Weighted-Average
Exercise Price
Balance as of June 25, 2022 352,704,355 97,430,456 450,134,811 $ 0.25

Expired (2,677,535 ) - (2,677,535 ) $ (3.27 )

Balance as of September 24, 2022 350,026,820 97,430,456 447,457,276 $ 0.23


	Number of Warrants Outstanding
	Subordinate Voting Shares	MM CAN USA Redeemable Shares	TOTAL	Weighted-Average Exercise Price
Balance as of June 25, 2022	352,704,355	97,430,456	450,134,811	$	0.25
Expired	(6,023,696)	—	(6,023,696)	$	2.03
Balance as of March 25, 2023	346,680,659	97,430,456	444,111,115	$	0.22

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14.			LOSS PER SHARE

The following is a reconciliation for the calculation of basic and diluted loss per share for the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022 ~~and September 25, 2021:~~

is as follows:

Schedule of basic and diluted loss per share
Three Months Ended
September 24, September 25,
2022 2021
Net Loss from Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (20,146,436 ) $ (40,883,537 )
Net Income (Loss) from Discontinued Operations 24,306,649 (14,446,491 )

Total Net Income (Loss) $ 4,160,213 $ (55,330,028 )

Weighted-Average Shares Outstanding - Basic and Diluted 1,301,659,701 942,696,052

Earnings (Loss) Per Share - Basic and Diluted:
From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc. $ (0.02 ) $ (0.04 )
From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc. $ 0.02 $ (0.02 )


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Net Loss from Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc.	$	(31,208,326)	$	(19,469,777)	$	(70,568,540)	$	(79,280,652)
Net Income (Loss) from Discontinued Operations	(3,879,044)		(10,571,454)		22,126,481		(31,728,589)
Total Loss	$	(35,087,370)	$	(30,041,231)	$	(48,442,059)	$	(111,009,241)

Denominator:
Weighted-Average Shares Outstanding - Basic	1,340,935,140		1,202,452,775		1,314,823,152		1,114,554,702

Dilutive effect of LTIP and LLC Redeemable Units issued for compensation	19,323,878		19,323,878		19,323,878		19,323,878
Dilutive effect of restricted stock granted under the Equity Plan	10,572,194		—		10,572,194		—
Dilutive effect of warrants and top-up warrants	71,528,708		—		238,513,559		17,016,611
Dilutive effect of convertible debentures	1,311,734,075		1,137,949,289		1,311,734,075		1,137,949,289
Weighted-Average Shares Outstanding - Diluted (1)	2,754,093,996		2,359,725,942		2,894,966,858		2,288,844,480

(1)

~~Diluted~~For all periods presented wherein the Company incurred net losses from continuing operations and/or discontinued operations, the calculation of diluted net loss per share gives no consideration to the potentially anti-dilutive securities shown in the above reconciliation, and as such is the same as basic net loss per ~~share as the issuance of shares on the exercise of convertible debentures, LTIP share units, warrants and share options is anti-dilutive.~~share.


15.			GENERAL AND ADMINISTRATIVE EXPENSES

During the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022 ~~and September 25, 2021,~~ , general and administrative expenses consisted of the following:

Schedule of general and administrative expenses
Three Months Ended
September 24, September 25,
2022 2021
Salaries and Benefits $ 6,858,048 $ 9,911,488
Professional Fees 1,350,848 7,430,659
Rent 3,627,925 4,754,883
Licenses, Fees and Taxes 1,001,669 2,537,788
Share-Based Compensation 863,685 1,642,853
Deal Costs 429,272 1,637,587
Other General and Administrative 3,714,670 4,733,976

Total General and Administrative Expenses $ 17,846,117 $ 32,649,234


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Salaries and Benefits	$	6,490,518	$	8,852,866	$	19,834,550	$	28,468,853
Professional Fees	823,566		2,946,165		4,523,446		18,195,451
Rent	2,347,345		4,234,297		8,996,504		13,712,265
Licenses, Fees and Taxes	2,158,548		2,392,556		5,934,730		8,236,068
Share-Based Compensation	1,039,919		572,067		4,017,280		4,384,287
Deal Costs	1,324,511		2,366,861		1,753,783		5,178,804
Other General and Administrative	2,562,875		4,338,268		8,590,494		11,469,342
Total General and Administrative Expenses	$	16,747,282	$	25,703,080	$	53,650,787	$	89,645,070

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16.			OTHER OPERATING (INCOME) EXPENSE

During the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022, ~~and September 25, 2021,~~ other operating (income) expense consisted of the following:


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Other Operating (Income) Expense:
Loss (Gain) on Disposals of Assets	$	(188,876)	$	4,720,548	$	1,169,944	$	4,594,033
Restructuring and Reorganization Expense	—		60,000		423,793		2,824,327
Gain on Settlement of Accounts Payable	(566,982)		—		(425,960)		(177,989)
(Gain) Loss on Lease Terminations	12,512		(4,429,519)		(3,452,435)		(4,255,754)
Loss on Disposal of Assets Held for Sale	—		—		532,598		—

Loss (Gain) on Legal Settlements (1)	1,371,717		—		(2,119,714)		—
Other (Income) Expense (2)	2,090,240		(3,479,292)		(953,678)		(3,282,881)
Total Other Operating Expense (Income)	$	2,718,611	$	(3,128,263)	$	(4,825,452)	$	(298,264)

(1)

Schedule of other operating expenses
Three Months Ended
September 24, September 25,
2022 2021
Loss on Disposals of Assets $ 205,595 $ 15,146
Restructuring and Reorganization Expense 423,793 2,378,675
Gain on Settlement of Accounts Payable (74,637 ) (177,990 )
Gain on Lease Terminations (1,587,650 ) -
Other Income (1,522,219 ) (16,803 )

Total Other Operating (Income) Expense $ (2,555,118 ) $ 2,199,028

During the three months ended ~~September 24, 2022,~~March 25, 2023, this consisted primarily of a settlement loss of $1.0 million. During the nine months ended March 25, 2023, the Company also recognized an additional settlement loss of $3.1 million, offset by a settlement gain of $6.6 million.

(2) During the three and nine months ended March 25, 2023, the Company recorded $~~1,521,650~~ $0.5 million and $3.6 million, respectively, of ~~sublease~~rent income related to the cultivation facilities in California and Nevada as a component of Other ~~Operating Income~~(Income) Expense in the Unaudited and Not Reviewed Condensed Consolidated Statements of Operations. During the three and nine months ended March 26, 2022, the Company recorded $3.5 million and $3.2 million, respectively, of rent income.


17.			PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES

The following table summarizes the Company’s income tax expense and effective tax rates for the three and nine months ended ~~September 24, 2022~~March 25, 2023 and ~~September 25, 2021:~~

Schedule of income tax expense and effective tax rates
Three Months Ended
September 24, September 25,
2022 2021
Loss from Continuing Operations Before Provision for Income Taxes $ (18,065,206 ) $ (26,471,632 )
Income Tax Expense (2,193,542 ) (19,691,908 )
Effective Tax Rate -12 % -74 %

~~We have~~March 26, 2022.


	Three Months Ended						Nine Months Ended
	March 25, 2023			March 26, 2022			March 25, 2023			March 26, 2022

Loss from Continuing Operations Before Income Tax Benefit (Expense)	$	(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)
Effective Tax Rate	(15		%)	—		%	2		%	17		%

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate (“AETR”) for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the three and nine months ended ~~September~~March 25, ~~2021, we~~2023, the Company determined weit could no longer reliably estimate income taxes utilizing an AETR. The AETR estimate is highly sensitive to estimates of ordinary income (loss) and permanent differences such that minor fluctuations in these estimates could result in significant fluctuations of the Company’s AETR. Accordingly, wethe Company used ~~our~~its actual year-to-date effective tax rate to calculate income taxes for the three and nine months ended ~~September~~March 25, ~~2022.~~

2023.

As the Company operates in the legal cannabis industry, the Company is subject to the limits of IRC Section 280E for U.S. federal, Illinois state, Massachusetts state and New York state income tax purposes under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. However, the State of California does not

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conform to IRC Section 280E and, accordingly, the Company deducts all operating expenses on its California Franchise Tax Returns.

The Company has approximately gross ~~$12,230,000~~$12.2 million (tax effected ~~$3,240,000)~~$3.2 million) of Canadian non-capital losses and ~~$6,000,000~~$6.0 million (tax effected ~~$1,620,000)~~$1.6 million) of share issuance cost 20(1)(e) balance. The loss tax attribute has been determined to be more likely than not that the tax attribute would not yield any tax benefit. As such, the Company has recorded a full valuation allowance against the benefit. Since IRC Section 280E was not applied in the California Franchise Tax Returns, the Company has approximately ~~$22,000,000~~$22.0 million of gross California net operating losses which begin expiring in 2033 as of June 25, 2022. The Company has evaluated the realization of its California net operating loss tax attribute and has determined ~~under the~~that more likely than not ~~standard that $217,300,000~~$217.3 million will not be realized.

The effective tax rate for the three and nine months ended ~~September 24, 2022~~March 25, 2023 is different from the three and nine months ended ~~September 25, 2021,~~March 26, 2022, respectively, primarily due to the Company’s income and related 280E expenditures. The Company’s non-deductible expenses related to IRC Section 280E limitations have remained relatively consistent.

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and in Canada. The Company is generally subject to audit by taxing authorities in various U.S., state, and in foreign jurisdictions for fiscal years 2014 through the current fiscal year. As of ~~September 24, 2022,~~March 25, 2023, the Company had $~~18,781,424~~ $18.8 million of unrecognized tax benefits, all of which would reduce income tax expense and the effective tax rate if recognized. During the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022, the Company recognized a net discrete tax expense of $~~407,993~~$0.4 million and $0.1 million, respectively, primarily related on interest of past liabilities. During the next twelve months, the Company does not estimate any material reduction in its unrecognized tax benefits.


18.			COMMITMENTS AND CONTINGENCIES

Contingencies

The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of these regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulations as of ~~September 24, 2022~~March 25, 2023 and June 25, 2022, marijuana regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. ~~As of September 24, 2022, there were no~~The Company recognizes legal settlement expense when litigation losses related to pending or threatening lawsuits ~~that~~ could be reasonably assessed to have resulted in a probable loss to the Company in an amount that can be reasonably estimated. ~~As such, no accrual has been made~~The Company recognizes legal settlement gains when a favorable settlement is awarded to the Company and payment is received. Gain and losses related to claims and litigation are recorded as a component of Other Operating (Income) Expense in the Condensed Consolidated Financial ~~Statements relating to claims and litigations.~~Statements. As of ~~September 24, 2022,~~March 25, 2023, there are also no proceedings in which any of the Company’s current directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

In March 2020, litigation was filed against the Company in the Superior Court of Arizona, Maricopa County, related to a purchase agreement for a previous acquisition. The Superior Court of Arizona, Maricopa County granted summary judgement in favor of the Company on all counts in July 2022. The Company is currently in process of recovering certain fees and costs associated with the lawsuit from the ~~plaintiffs.~~plaintiffs, and the plaintiffs have filed an appeal of the summary judgment decision. The Company believes the likelihood of a loss contingency is neither probable nor estimable. As such, no amount has been accrued in these financial statements.

In April 2020, a complaint was filed against the Company in Los Angeles Superior Court related to a contemplated acquisition in which the plaintiffs are seeking damages for alleged breach of contract and breach of implied covenant of good faith and fair dealing seeking declaratory relief and specific performance. The Company ~~has~~ filed counterclaims including for breach of contract, breach of promissory note, unjust enrichment and declaratory relief. ~~The~~During the quarter ending March 25, 2023 the parties reached an agreement resolving the litigation under which the Company will receive $0.5 million plus interest under a twelve month payment plan. A second complaint, filed by separate plaintiffs arising from a separate dispensary acquisition transaction but alleging similar claims, remains pending in Los Angeles Superior Court

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and is currently scheduled for trial in December 2023. With respect to this litigation the parties entered into a partial settlement agreement in August 2021 but claims including relating to a contractual provision providing for the payment of a true-up in Company shares under certain circumstances remain pending. With respect to this matter, the Company believes the likelihood of a loss contingency is ~~remote.~~neither probable nor estimable. As such, no amount has been accrued in ~~the financial statements.~~

In May 2020, litigation was filed against the Company related to a purchase agreement and secured promissory note for a previous acquisition. The Company is currently defending against this lawsuit, which claims for breach of contract, breach of implied covenant of good faith and fair dealing, common law fraud and securities fraud. The plaintiffs are seeking damages for such claims in which the amount is currently not reasonably estimable. In response, the Company filed a counterclaim and is seeking entitlement to proceeds of the sale, net of amounts owed under the secured promissory note. The plaintiffs filed an appeal to the ruling on the entitlement of proceeds in excess of the secured promissory note which was dismissed. The additionally claims and counterclaims are currently in dispute. Any loss recoveries related to the Company’s counterclaim have not been recorded. In addition, net proceeds resulting from the sale was not recognized as a receivable as the amount is not reasonably estimable.

In September 2020 and May 2020, legal disputes were filed against the Company related to the separation of former officers in which the severance issued is currently being disputed. The Company believes the likelihood of loss is remote. As a result, no amount has been set up for potential damages in these financial statements.

In November 2020, entities affiliated with former officers of the Company initiated arbitration against a subsidiary of the Company in Los Angeles, California asserting breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and unjust enrichment. The claimants ~~are~~ generally ~~seeking~~sought damages and compensatory damages according to proof, including lost earnings and other benefits, past and future, interest on lost earnings and benefits, reasonable attorney’s fees, and such other and further relief as the court deems proper. The Company asserted counterclaims, including for breach of the same management agreements. ~~The~~Subsequent to the end of the quarter ended March 25, 2023, the parties settled the arbitration ~~is currently set for hearing~~with the affiliated entities agreeing to transfer all right, title and interest in ~~December 2022. The litigation is~~the entities owning the retail cannabis licenses associated with the dispensaries operated by the Company under management agreements at ~~an early stage~~LAX and Abbot Kinney to the Company and the ~~likelihood of~~Company agreeing to enter into a ~~loss contingency is remote. As a result, no amount has been set up for potential damages~~$6.5 million promissory note and $0.3 million in ~~these financial statements.~~

cash to the affiliated entities.

In October 2021, a suit for premises liability and negligence seeking unspecified damages for pain and suffering, disability, mental and emotional distress, and loss of earnings was filed against was filed against a third party defendant with regard to which the Company allegedly owes a duty of indemnification, in Los Angeles Superior Court. The Company participated in the mediation of this matter during the quarter ending March 25, 2023. After the end of the quarter the third party defendant settled with the plaintiff for the amount of $0.6 million. While the insurance company for the third party defendant may have potential indemnification claims against the Company the overall exposure of the Company with respect to this matter is limited by the settlement amount.

In July 2022, a complaint was filed in Los Angeles Superior Court by Baker & McKenzie LLP, a former law firm to the Company, seeking in excess of $0.6 million in legal fees plus accrued interest. A surety bond has been provided by us in accordance with the court’s mandate. The Company has filed a counterclaim against Baker & McKenzie claiming overbilling on total invoices propounded by the law firm to the Company exceeding $18.5 million. The litigation remains at an early stage and the likelihood of a loss contingency is remote. As such, no amount has been accrued in these financial statements.

In March 2023, the Company received a demand for arbitration from a business broker asserting unpaid fees related to a purchase agreement with respect to the sale of a cannabis asset. The broker seeks damages for breach of contract, unjust enrichment, and quantum meruit. The action remains in the ~~process of being litigated.~~early stages and no amount has been accrued in these financial statements.

In April 2023, an office furniture vendor brought suit against the Company in Indiana, Allen Superior Court, seeking damages for unpaid invoices. The ~~Company believes~~litigation remains at an early stage and the likelihood of loss is remote. As ~~a result,~~such, no amount has been ~~set up for potential damages~~accrued in these financial statements.

The Company is the defendant in several complaints filed by various of its landlords seeking rents and damages under ~~leases. In~~lease arrangements. First, in 2020, a complaint was filed in Cook County Circuit Court, Illinois against the Company by a landlord claiming the Company had failed to meet its obligations to apply effort to obtain a retail cannabis license at a property, ~~and~~for which the landlord is seeking rents and damages. ~~The litigation is currently~~Plaintiff’s motion for summary judgment was granted and resulted in judgment in favor of the landlord in the ~~discovery phase. If~~amount of approximately $7.2 million. After the ~~litigation is not settled or resolved, trial will likely take place During~~end of the ~~fiscal year ended 2023. In~~quarter ending March 25, 2023, the parties reached an agreement to significantly reduce the summary judgment award. Second, in July 2022, a complaint was filed against the Company in the United States District Court for the Southern District of New York by a landlord seeking damages under a lease on real estate located in Illinois. The Company ~~is required to file~~filed an answer to the complaint arguing that the subject matter of the case was not appropriate for determination by ~~September 2022. Prior attempts~~a federal court in New York. The court thereafter permitted the action to ~~resolve~~be dismissed without prejudice, after which the ~~lease dispute with this landlord have failed. In~~plaintiff refiled the case in California against the Company as guarantor of the lease. The matter is in the process of being litigated in the Los Angeles Superior Court. The Company believes the likelihood of loss is remote. As such, no amount has been accrued in these financial statements. Third, in June 2022, a complaint was filed against the Company by the Company’s landlord at its cultivation center in Utica, New York, related to an agreement to purchase land next to the cultivation center, which land was also owned by the landlord. Plaintiff ~~seeks~~sought to enforce a land purchase agreement and ~~seeks~~is seeking damages. InThe Company settled this dispute during the quarter ending March 25, 2023 in the amount of $0.4 million. Fourth, in April 2022, the landlord at the Company’s dispensary location in Tampa, Florida, filed suit seeking damages under a lease, shortly after which the Company announced its plans to sell its Florida ~~business.~~operations. The Company retained this lease and the associated litigation following the sale of ~~the~~its Florida ~~business and the~~operations. This litigation ~~is at an early stage and the likelihood of a loss contingency is remote. As a result, no amount~~ has been ~~set up for potential damages~~resolved via a settlement agreement in ~~these financial statements.~~

the amount of $0.1 million.

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19.			RELATED PARTY TRANSACTIONS

The Company’s Board of Directors each receive quarterly fees of $~~200,000~~ $0.2 million of which one-third is paid in cash and two-thirds is paid in Class B Subordinate Voting Shares.


20.			SEGMENT INFORMATION

The Company currently operates in one segment, the production and sale of cannabis products, which is how the Company’s Chief Operating Decision Maker manages the business and makes operating decisions. The Company’s cultivation operations are not considered significant to the overall operations of the Company. Intercompany sales and transactions are eliminated in consolidation.


21.			REVENUE

While the Company operates in one segment as disclosed in “Note 20 – Segment Information”, the Company is disaggregating its revenue by geographical region in accordance with ~~ASC~~Accounting Standards Codification ("ASC") 606, “Revenue from Contracts with Customers”. Revenue by state for the ~~periods presented~~three and nine months ended March 25, 2023 and March 26, 2022 are as follows:

Schedule of Disaggregation of revenue
Three Months Ended
September 24, September 25,
2022 2021
California $ 19,928,985 $ 24,626,555
Nevada 2,997,469 4,079,151
Illinois 3,542,071 4,328,602
Arizona 2,794,648 3,701,596
Massachusetts 780,875 -

Revenue from Continuing Operations $ 30,044,048 $ 36,735,904

Revenue from Discontinued Operations 3,629,641 7,340,099

Total Revenue $ 33,673,689 $ 44,076,003


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
California	$	17,940,463	$	22,348,125	$	57,434,839	$	70,343,195
Nevada	2,484,701		3,769,868		8,295,072		11,704,390
Illinois	2,714,234		3,953,706		9,338,393		12,387,279
Arizona	3,451,801		4,372,512		9,590,039		12,247,718
Massachusetts	614,668		805,047		2,129,949		819,818
Florida (1)	18,803		—		24,531		—
Revenue from Continuing Operations	27,224,670		35,249,258		86,812,823		107,502,399
Revenue from Discontinued Operations	1,849,145		7,301,401		7,761,072		22,706,765
Total Revenue	$	29,073,815	$	42,550,659	$	94,573,895	$	130,209,164

(1)

Recognized in connection with revenue earned under one of the Company's royalty agreements.

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22.			DISCONTINUED OPERATIONS

The operating results of the discontinued operations for the three and nine months ended March 25, 2023 and March 26, 2022 are summarized as follows:


	Three Months Ended				Nine Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Revenue	$	1,849,145	$	7,301,401	$	7,761,072	$	22,706,765
Cost of Goods Sold	1,148,802		3,470,101		3,778,937		14,369,625
Gross Profit	700,343		3,831,300		3,982,135		8,337,140
Expenses:
General and Administrative	2,393,527		7,211,587		9,237,734		19,158,323
Sales and Marketing	6,000		101,874		64,326		333,520
Depreciation and Amortization	(233,103)		1,516,280		660,899		3,927,370
Impairment Expense	—		—		57,460		—

Total (Income) Expenses	$	2,166,424	$	8,829,741	$	10,020,418	23,419,213
Loss from Discontinued Operations	(1,466,081)		(4,998,441)		(6,038,283)		(15,082,073)
Other (Income) Expense:
Interest Expense	3,456,148		4,183,799		9,001,594		10,663,408
Accretion of Debt Discount and Loan Origination Fees	—		733,587		398,032		5,183,834
Other (Income) Expense	—		83,295		(36,305,166)		(514,296)
Total Other (Income) Expense	$	3,456,148	$	5,000,681	$	(26,905,540)	15,332,946
Income (Loss) from Discontinued Operations Before Provision for Income Taxes	(4,922,229)		(9,999,122)		20,867,257		(30,415,019)
Provision for Income Tax Benefit (Expense)	1,043,185		(572,332)		1,259,224		(1,313,570)
Net Income (Loss) from Discontinued Operations	$	(3,879,044)	$	(10,571,454)	$	22,126,481	$	(31,728,589)

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The carrying amounts of assets and liabilities in the disposal group are summarized as follows:


	March 25, 2023		June 25, 2022
Carrying Amounts of the Assets Included in Discontinued Operations:

Cash and Cash Equivalents	$	566,366	$	1,124,076
Restricted Cash	5,280		5,280
Accounts Receivable and Prepaid Expenses	—		322,973
Inventory	3,841,134		6,866,833

TOTAL CURRENT ASSETS (1)

Property and Equipment, Net	8,080,695		39,590,021
Operating Lease Right-of-Use Assets	18,418,480		31,543,058
Intangible Assets, Net	10,582,559		40,799,146
Other Assets	461,241		1,181,795
TOTAL ASSETS OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE	$	41,955,755	$	121,433,182

Carrying Amounts of the Liabilities Included in Discontinued Operations:

Accounts Payable and Accrued Liabilities	$	1,418,018	$	6,282,277
Income Taxes Payable	586,090		1,671,380
Other Current Liabilities	41,758		237,537
Current Portion of Operating Lease Liabilities	2,576,350		4,261,104
Current Portion of Finance Lease Liabilities	—		174,000

TOTAL CURRENT LIABILITIES (1)

Operating Lease Liabilities, Net of Current Portion	17,714,261		56,410,071
Deferred Tax Liabilities	4,737,983		6,097,597
Notes Payable	—		11,100,000

TOTAL NON-CURRENT LIABILITIES (1)

TOTAL LIABILITIES OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE	$	27,074,460	$	86,233,966

(1) The assets and liabilities of the disposal group classified as held for sale are classified as current on the Unaudited and Not Reviewed Condensed Consolidated Balance Sheets as of March 25, 2023 because it is probable that the sale will occur and proceeds will be collected within one year.

On ~~February 28,~~August 22, 2022, MME Florida LLC and its parent, MM Enterprises USA, LLC, a wholly-owned subsidiary of the Company ~~entered into an~~closed on the Asset Purchase Agreement (the “Agreement”) with Green Sentry Holdings, LLC, (“Buyer”) for the sale ~~of substantially all~~ of the Company’s Florida-based assets, including its license, dispensaries, inventory and cultivation operations, and assumption of certain liabilities.

~~On August 22, 2022, the Company closed the transaction at the~~ The final sales price ~~of $67,000,000~~,was $67.0 million, which was comprised of $~~63,000,000~~$63.0 million in cash and $~~4,000,000~~$4.0 million in liabilities to be assumed by the Buyer. The Buyer made a cash payment of ~~$40,000,000~~$40.0 million at closing and a cash payment of ~~$11,500,000~~$11.5 million on September 15, ~~2022 and is required to make one additional installment payment of $11,500,000 on or before March 15, 2023.During the three months ended September 24, 2022, $31,599,999~~ 2022. The Company used $31.6 million of the cash proceeds ~~was used~~ to repay the Senior Secured Term Loan Facility, and the Company received net cash proceeds of $~~19,558,947. As of September 24, 2022, the final cash payment of $11,500,000~~ ~~remains due and payable. Accordingly, the~~$19.6 million. The Company recognized a gain on sale of assets of $~~31,719,833~~ $31.7 million, which is included in Net Income from Discontinued Operations for the ~~three~~nine months ended ~~September 24, 2022.~~March 25, 2023. All profit or loss relating to the Florida operations were eliminated from the

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Company’s continuing operations and are shown as a single line item in the Unaudited and Not Reviewed Condensed Consolidated ~~Statements~~Statement of ~~Operations.~~

~~The operating results of the discontinued operations are summarized as follows:~~

Schedule of net operating loss of discontinued operation
Three Months Ended
September 24, September 25,
2022 2021
Revenue $ 3,629,641 $ 7,340,099
Cost of Goods Sold 2,103,298 5,227,553

Gross Profit 1,526,343 2,112,546

Expenses:
General and Administrative 4,983,995 5,617,595
Sales and Marketing 43,311 103,803
Depreciation and Amortization 872,895 1,221,759
Impairment Expense (78,433 ) -
Gain on Disposal of Assets and Other Income (35,659,761 ) (597,591 )

Total (Income) Expenses (29,837,993 ) 6,345,566

Income (Loss) from Discontinued Operations 31,364,336 (4,233,020 )

Other Expense:
Interest Expense 3,761,758 4,616,829
Accretion of Debt Discount and Loan Origination Fees 158,079 3,540,908

Total Other Expense 3,919,837 8,157,737

Income (Loss) from Discontinued Operations Before Provision for Income Taxes 27,444,499 (12,390,757 )
Provision for Income Tax Benefit (Expense) (3,137,850 ) (2,055,734 )

Net Income (Loss) from Discontinued Operations $ 24,306,649 $ (14,446,491 )

Operation.

~~The carrying amounts of assets and liabilities in the disposal group are summarized as follows:~~

Schedule of assets included in discontinued operation
September 24, June 25,
2022 2022
Carrying Amounts of the Assets Included in Discontinued Operations:

Cash and Cash Equivalents $ 355,378 $ 1,124,076
Restricted Cash 5,280 5,280
Accounts Receivable and Prepaid Expenses 95,048 334,621
Inventory 2,915,345 6,866,833

TOTAL CURRENT ASSETS ⁽¹⁾

Property and Equipment, Net 9,713,565 41,273,597
Operating Lease Right-of-Use Assets 19,780,991 31,543,058
Intangible Assets, Net 10,582,559 40,799,146
Other Assets 458,383 1,181,795

TOTAL ASSETS OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 43,906,549 $ 123,128,406

Carrying Amounts of the Liabilities Included in Discontinued Operations:

Accounts Payable and Accrued Liabilities $ 2,640,664 $ 6,295,745
Income Taxes Payable (27,904 ) 1,671,380
Other Current Liabilities - 89,069
Current Portion of Operating Lease Liabilities 2,605,317 4,209,512
Current Portion of Finance Lease Liabilities - 174,000

TOTAL CURRENT LIABILITIES ⁽¹⁾

Operating Lease Liabilities, Net of Current Portion 19,067,840 56,410,071
Deferred Tax Liabilities 6,250,511 6,097,597
Notes Payable - 11,100,000

TOTAL NON-CURRENT LIABILITIES ⁽¹⁾

TOTAL LIABILITIES OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 30,536,428 $ 86,047,374


23.			SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these Unaudited and Not Reviewed Condensed Consolidated Financial Statements were available to be issued and has concluded that there no ~~subsequent~~ events have occurred that would require recognition or disclosure in the Unaudited and Not Reviewed Condensed Consolidated Financial Statements except for the following:

Sale of Florida-based Assets - Amended Purchase Agreement

In March 2023, Green Sentry delivered an indemnity claim to the Company in connection with its purchase of the Company's Florida-based assets in August 2022. In April 2023, the Company entered into a third amendment to the Agreement with Green Sentry, wherein the due date of Green Sentry's payment of $11.5 million, the Second Installment of the sale proceeds, was extended, and the Company directed Green Sentry to pay $9.8 million of the Second Installment directly to Hankey Capital as a principal repayment of the Facility. The remaining $1.8 million was put into escrow to be used as the sole source of recovery for any monetary relief or monetary damages with respect or pursuant to the indemnity claim. Subsequent to the end of the quarter ended March 25, 2023, the Company and Green Sentry agreed to a settlement of the indemnity claim with $1.1 million of the $1.8 million held in escrow being paid directly to Hankey Capital as a further principal repayment to the Facility.

Assets Held for Sale and Asset Impairment

The Company has been in active ongoing discussions with interested parties for the potential dispositions of its retail stores in Emeryville, California; Fenway, Massachusetts and Nevada as well as its retail stores and cultivation facility in Arizona.

The Company applied the criteria in ASC 360-10-45-9, "Property, Plant and Equipment - Long-Lived Assets Classified as Held for Sale," to determine whether any of the aforementioned long-lived asset groups should be classified as held for sale as of March 25, 2023 and concluded that none of the material long-lived asset groups met all the requisite criteria as of March 25, 2023, primarily as a result of management not having the unilateral authority to commit to a plan to sell these long-lived asset groups.

However, the Company also determined that management's current expectation that more likely than not, one or more of these long-lived asset groups will be sold or otherwise disposed of before the end of the useful life of the asset group(s) is an impairment triggering event. The Company performed impairment testing on each aforementioned asset group pursuant to ASC 360 and concluded that the full carrying amount of its asset group in Massachusetts, which consisted of an operating lease right-of-use asset and property and equipment, was not recoverable. As such, the Company recognized an impairment loss of $9.7 million for the three and nine months ended March 25, 2023 within Impairment Expense in its Unaudited and Not Reviewed Condensed Consolidated Statements of Operations and fully reduced the carrying value of its asset group in Massachusetts within Operating Lease Right-of-Use Assets and Property and Equipment, Net by $7.3 million and $2.4 million, respectively, in its Unaudited and Not Reviewed Condensed Consolidated Balance Sheet as of March 25, 2023.

Litigation Settlements

Subsequent to March 25, 2023, the Company entered into a settlement agreement in connection with an employment dispute and another settlement agreement in connection with a dispute with one of its landlords. As the condition that gave rise to each settlement occurred prior to the balance sheet date, the Company recognized a combined settlement loss of $1.3 million for the three and nine months ended March 25, 2023 within Other Operating (Income) Expense in the Condensed Consolidated ~~Financial~~ Statements ~~or disclosure in~~of Operations and increased the ~~Notes to~~carrying value of its current liabilities within Accounts Payable and Accrued Liabilities on the Condensed Consolidated Balance Sheet as of March 25, 2023.

Appointment of new CEO and CFO

On July 5, 2023, the Company appointed Ellen Deutsch as Chief Executive Officer, effective immediately, and Amit Pandey as Chief Financial ~~Statements.~~

Officer, effective July 24th. Ms. Deutsch succeeds Interim CEO Edward Record, who will continue as a non-executive member of MedMen’s Board of Directors. Ms. Deutsch has also been appointed to the Company’s Board of Directors, increasing the size of the Board of Directors to six.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

(All financial information disclosed in this section is unaudited and not reviewed)

This management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of MedMen Enterprises Inc. (“MedMen Enterprises”, “MedMen”, the “Company”, “we” or “our”) is for the three and nine months ended ~~September 24, 2022.~~March 25, 2023 and March 26, 2022. The following discussion should be read in conjunction with, and is qualified in its entirety by, the Condensed Consolidated Financial Statements and the accompanying notes presented in Item 1 of this Form 10-Q and those discussed in Item 8 of the Company’s Annual Report on Form 10-K (the “Form 10-K”) filed with the SEC on September 9, 2022. Except for historical information, the discussion in this section contains forward-looking statements that involve risks and uncertainties. Future results could differ materially from those discussed below for many reasons, including the risks described in “Disclosure Regarding Forward-Looking Statements,” Item 1A. “Risk Factors” and elsewhere in this Form 10-Q.

We are a smaller reporting and emerging growth company, as defined in Rule 12b-2 of the Exchange Act. Accordingly, we have omitted certain information called for by this Item as permitted by applicable scaled disclosure rules.

All references to “$” and “dollars” refer to U.S. dollars. References to C$ refer to Canadian dollars. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Our fiscal year is a 52/53-week year ending on the last Saturday in June or first Saturday in July. For the current interim period, the three and nine months ended ~~September 24,~~March 25, 2023 and March 26, 2022 ~~and September 25, 2021~~ refer to the 13 weeks ended therein.

Restatement

~~Overview~~During the nine months ended March 25, 2023, we 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 our 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"). We 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. The preliminary net impact of these estimated adjustments on our consolidated financial statements as of and for the fiscal year ended June 25, 2022 was also separately furnished in our Current Report on Form 8-K filed on May 22, 2023. The restatement of our audited consolidated financial statements as of and for the year ended June 25, 2022 would also result in a restatement of our 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.

In addition, the unaudited interim condensed consolidated financial statements and accompanying notes for the three and nine months ended March 25, 2023 and March 26, 2022 are subject to the completion of our restatement analysis and financial close and reporting process; have not been audited, reviewed, or compiled by our independent registered public accounting firm; and are subject to change. The unaudited interim condensed consolidated financial statements have been prepared internally by us and are still the subject of review by our independent registered public accounting firm. While we believe that the unaudited interim condensed consolidated financial statements for the three and nine months ended March 25, 2023 on which this MD&A is based fairly represents the expected impact of the restatement on our results of operations, additional material weaknesses may be identified, further adjustments may arise, including with respect to changes on our balance sheet, and the restated financial statements as of and for the fiscal year ended June 25, 2022 to be included in amendments to the prior annual and quarterly reports, as applicable, will reflect any such additional adjustments. The information and expected impact to our historical financial results are preliminary, do not present all information necessary for an understanding of our restated financial condition and are subject to change, potentially materially, as we complete the restatement of our financial statements and our independent registered public accounting

--------------------------------------
1 In our 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 our 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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firm completes the audit and review thereof. There can be no assurance that our actual financial results for the three and nine month periods ended March 25, 2023 will not differ from the financial information presented herein and such changes could be material. Therefore, undue reliance should not be placed upon these preliminary financial results.

The effect of the adjustments on the financial statement line items within our 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 Current 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 our 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 our 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 our non-controlling interest is an estimate based on the allocation percentage we calculated for our Q1 2023 Form 10-Q.

The effect of the adjustments on the financial statement line items within our 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)

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The effect of the adjustments on the financial statement line items within our 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 our non-controlling interest is an estimate based upon the allocation percentage we calculated for our 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.

The effect of the adjustments on the financial statement line items within our 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)

Overview

MedMen is a cannabis retailer based in the U.S. offering a robust selection of high-quality products, including MedMen-owned brands, LuxLyte, and MedMen Red through its premium retail stores, proprietary delivery service, as well as curbside and in-store pick up. As of ~~September 24, 2022,~~March 25, 2023 the Company operates 23store locations across California (13), ~~New York (4)~~ Nevada (3), Illinois (1), Arizona (1), Massachusetts (1), and New York (4).

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The Company continues to market its New York-based assets, which are presented as discontinued operations in our Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.

On March 17, 2023, the Company announced it has changed its auditor from MNP LLP to Marcum LLP for the fiscal year ending July 1, 2023.

On February 17, 2023, the Company announced it had retained ATB Capital Markets Inc. (“ATB”) to assist in the strategic review and potential sale of one or more of the Company’s non-core assets in Arizona, ~~(1).~~

Illinois, and Nevada. ATB has assisted MedMen in evaluating opportunities to divest certain retail and cultivation assets. Management’s decision to evaluate a potential sale of one of more the Company’s non-core states is an effort to bolster liquidity. As a result of this announcement, management conducted an assessment of the recoverability of the carrying basis of its long-lived assets across the retail portfolio. For further information see "Note 5 - Property and Equipment, Net" and "Note 23 - Subsequent

Events" of our unaudited interim condensed consolidated financial statements and accompanying notes for the three and

nine months ended March 25, 2023 and March 26, 2022.

On August 22, 2022, the Company completed the sale of its operations in the state of Florida, including its license, dispensaries, inventory and cultivation operations, to Green Sentry Holdings, LLC (“~~Buyer~~”) at the final sales price of ~~$67,000,000~~$67.0 million which comprised of ~~$63,000,000~~$63.0 million in cash and ~~$4,000,000~~$4.0 million in liabilities assumed by the Buyer. The Buyer made a cash payment of ~~$40,000,000~~$40.0 million at closing, a cash payment of ~~$11,500,000~~$11.5 million on September 15, 2022, and is required to make one additional installment payments of ~~$11,500,000~~$11.5 million on or before March 15, 2023. As of ~~September 24, 2022,~~March 25, 2023, net proceeds to the Company were ~~$19,500,000~~$19.5 million after ~~$31,599,999~~$31.6 million of the cash proceeds was used to repay the Senior Secured Term Loans with Hankey Capital. Proceeds of the transaction to the Company ~~will be~~are used to fund operations and pay interest to Hankey Capital while the Senior Secured Term Loans remain outstanding and in default. In addition, the Company licensed the tradename “MedMen” to the Buyer for use in Florida for a period of two years, subject to termination rights, for a quarterly revenue-based fee. Proceeds from the licensure of the trade name have been minimal. All purchased assets and assumed liabilities related to Florida are excluded from our Condensed Consolidated Balance ~~Sheets~~Sheet as of ~~September 24, 2022~~March 25, 2023 and all profits or losses from our Florida operations subsequent to August 22, 2022 are included in the Condensed Consolidated Statements of Operations. Refer to “Note 22 – Discontinued Operations” of the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for further information.

Other developments during third quarter of fiscal 2023 include:

•We are nearing completion of the construction and build-out of our second store in Illinois expecting to be complete in the next several weeks. The store is located 15 miles northwest of Chicago and in similar proximity to our existing store in Oak Park, IL, in a dense suburban area near restaurants, coffee shops and parks.

•We began the implementation of a new point-of-sale system that replaces the existing system internally developed by us and recognized an impairment loss of $2.4 million.

Subsequent to the end of our fiscal quarter, we executed the following transactions:

•Sale of Florida-based Assets - Amended Purchase Agreement

In March 2023, the Buyer delivered an indemnity claim to us. In April 2023, we entered into a third amendment to the Agreement with the Buyer, wherein the due date of the Buyer's payment of $11.5 million, the Second Installment of the sale proceeds, was extended, and we directed the Buyer to pay $9.8 million of the Second Installment directly to Hankey Capital as a principal repayment of the Facility. The remaining $1.8 million was put into escrow to be used as the sole source of recovery for any monetary relief or monetary damages with

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respect or pursuant to the indemnity claim. See “Note 23 – Subsequent Events” of the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for further information.
•Assets Held for Sale and Asset Impairment
We have been in active ongoing discussions with interested parties for the potential dispositions of its retail stores in Emeryville, California; Fenway, Massachusetts and Nevada as well as its retail stores and cultivation facility in Arizona.
We applied all the criteria in ASC 360-10-45-9, "Property, Plant and Equipment - Long-Lived Assets Classified as Held for Sale," to determine whether any of the aforementioned long-lived asset groups should be classified as held for sale as of March 25, 2023 and concluded that none of the material long-lived asset groups met all the requisite criteria as of March 25, 2023, primarily as a result of management not having the unilateral authority to commit to a plan to sell these long-lived asset groups.
However, we also determined that our current expectation that more likely than not, one or more of these long-lived asset groups will be sold or otherwise disposed of before the end of the useful life of the asset group(s) is an impairment triggering event. Our impairment testing resulted in an impairment loss of $9.7 million for the three and nine months ended March 25, 2023 to fully reduce the carrying value of our asset group in Massachusetts, which consisted of an operating lease right-of-use asset and property and equipment.
•Litigation Settlements
Subsequent to March 25, 2023, we entered into a settlement agreement in connection with an employment dispute and another settlement agreement in connection with a dispute with one of our landlords. As the condition that gave rise to each settlement occurred prior to the balance sheet date, we recognized a combined settlement loss of $1.3 million for the three and nine months ended March 25, 2023.

COVID-19 Pandemic

We continuously address the effects of the COVID-19 pandemic, a discussion of which is available in Item 1A “Risk Factors” of the 2022 Form 10-K. Our business and operating results for the three and nine months ended ~~September 24, 2022,~~March 25, 2023, continue to be impacted by the COVID-19 pandemic. The overall impact on our business continues to depend on the length of time that the pandemic continues, the non-reverted impact on consumer purchasing behavior, macro-economic factors such as inflation, and the extent to which it affects our ability to raise capital, and the effect of governmental regulations imposed in response to the pandemic, which all remain uncertain at this time. We continue to implement and evaluate actions to strengthen our financial position and support the continuity of our business and operations.

Erratic Climate

During the three months ended March 25, 2023, which coincided with the recent winter months, we were forced to alter our hours of operations at various of our stores in California and New York due to erratic weather conditions including major rainstorms, severe snowstorms and snow accumulation, power outages and / or inability of employees to commute into work. We experienced loss of revenue and continue to monitor impact to consumer purchasing behavior that may be longer lasting.

Financial Condition and Going Concern

As of March 25, 2023, we had cash and cash equivalents of $7.6 million and working capital deficit of $383.2 million. We incurred net losses from continuing operations of $31.2 million and $70.6 million compared to $19.5 million and $79.3 million for the three and nine months ended March 25, 2023 and March 26, 2022, respectively.

We plan to continue to fund our operations and service our debt and other obligations through the implementation and expansion of our cost savings plan, and various strategic actions, including the potential divesture of one or more of our 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. We have made progress in our

negotiations of lower costs of occupancy with the master lease

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landlord and other landlords. We also plan for on-going revenue and vendor strategy of market expansion and retail revenue and gross margin growth. We will need to obtain an extension or a refinancing of its debt-in-default with the secured senior lender. Our annual operating plan estimates we will be able to manage our ongoing operations; however, such will require extending our payment terms with vendors and other service providers. We are party to several litigation matters as described in Note 18 and firstly disclosed in our 2022 Form 10-K that may require use of cash to defend and in some case pay settlements.In total, our 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 our financial condition. Additionally, we expect to continue to manage our operating expenses and reduce our 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 our ability to meet our obligations for at least one year from the issuance of these Condensed Consolidated Financial Statements, and therefore, to continue as a going concern.
The following table summarizes certain aspects of the Company’s financial condition as of March 25, 2023 and June 25, 2022 (Unaudited and not reviewed):
($ in Millions) March 25,
2023 June 25,
2022 $ Change % Change
Cash and Cash Equivalents $ 7.6 $ 11.5 $ (3.8) (33 %)
Total Current Assets $ 91.1 $ 160.3 $ (69.2) (43 %)
Total Assets $ 215.6 $ 320.7 $ (105.1) (33 %)
Total Current Liabilities $ 474.3 $ 313.6 $ 160.7 51 %
Notes Payable, Net of Current Portion $ — $ 74.4 $ (74.4) (100 %)
Total Liabilities $ 573.0 $ 635.8 $ (62.8) (10 %)
Total Shareholders’ Equity $ (357.4) $ (315.1) $ (42.3) 13 %
Working Capital Deficit $ (383.2) $ (153.3) $ (230.0) 150 %
In August 2022, the Company completed the sale of its operations in the state of Florida at the final sales price of $67,000,000 which comprised of $63,000,000 in cash and $4,000,000 in liabilities to be assumed by the Buyer. The Buyer made a cash payment of $40,000,000 at closing, $11,500,000 on September 15, 2022, and is required to make an additional installment payment of $11,500,000 on or before March 15, 2023. During the fiscal third quarter of 2022, net proceeds to the Company were $19,558,947 after a principal repayment of $31,599,999 on the Senior Secured Term Loans with Hankey Capital. The final cash payment of $11,500,000 remains due and receivable as of March 25, 2023. The Senior Secured Term Loans remains outstanding and in default as of March 25, 2023.
The $(230.0) million improvement in working capital deficit was primarily related to the $31.6 million principal repayment on the Senior Secured Term Loans that matured on July 31, 2022 and August 1, 2022. The Company’s working capital will be significantly impacted by continued operations and growth in retail operations and the continued stewardship of the Company’s financial resources. The ability to fund working capital needs will also be dependent on the Company’s ability to raise additional debt and equity financing and execute cost savings plans.
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Results of Operations

Our consolidated results, in millions, except for per share and percentage data, for the three and nine months ended ~~September 24, 2022,~~March 25, 2023, compared to the three and nine months ended ~~September 25, 2021,~~March 26, 2022, are as follows:

Three Months Ended
September 24, September 25,
($ in Millions) 2022 2021 $ Change % Change
(unaudited) (unaudited)
Revenue $ 30.0 $ 36.7 $ (6.7 ) (18 %)
Cost of Goods Sold 15.2 19.3 (4.1 ) (21 %)

Gross Profit 14.9 17.4 (2.5 ) (14 %)

Operating Expenses:
General and Administrative 17.8 32.6 (14.8 ) (45 %)
Sales and Marketing 0.4 0.6 (0.2 ) (33 %)
Depreciation and Amortization 3.9 5.8 (1.9 ) (33 %)
Unrealized Changes in Fair Value of Contingent Consideration (0.9 ) - (0.9 ) -
Impairment Expense 1.7 0.4 1.3 325 %
Other Operating (Income) Expense (2.6 ) 2.2 (4.8 ) (218 %)

Total Operating Expenses 20.5 41.7 (21.3 ) (51 %)

Loss from Operations (5.6 ) (24.3 ) 18.7 (77 %)

Non-Operating Expense (Income):
Interest Expense 10.1 8.2 1.9 23 %
Accretion of Debt Discount and Loan Origination Fees 1.6 6.3 (4.7 ) (75 %)
Change in Fair Value of Derivatives 0.8 (2.1 ) 2.9 (138 %)
Gain on Extinguishment of Debt - (10.2 ) 10.2 (100 %)

Total Non-Operating Expense 12.4 2.2 10.2 464 %

Loss from Continuing Operations Before Provision for Income Taxes (18.1 ) (26.5 ) 8.4 (32 %)
Provision for Income Tax Expense (2.2 ) (19.7 ) 17.5 (89 %)

Net Loss from Continuing Operations (20.3 ) (46.2 ) 25.9 (56 %)
Net Income (Loss) from Discontinued Operations, Net of Taxes 24.3 (14.4 ) 38.7 (269 %)

Net Income (Loss) 4.0 (60.6 ) 64.6 (107 %)

Net Loss Attributable to Non-Controlling Interest (0.1 ) (5.3 ) 5.2 (98 %)

Net Income (Loss) Attributable to Shareholders of MedMen Enterprises Inc. $ 4.2 $ (55.3 ) $ 59.5 (108 %)

EBITDA from Continuing Operations (Non-GAAP) $ (2.5 ) $ (5.7 ) $ 3.2 (56 %)
Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (2.0 ) $ (12.2 ) $ 10.2 (84 %)


	Three Months Ended								Nine Months Ended
($ in Millions)	March 25, 2023		March 26, 2022		$ Change		% Change		March 25, 2023		March 26, 2022		$ Change		% Change
	(unaudited and not reviewed )		(unaudited and not reviewed )						(unaudited and not reviewed )		(unaudited and not reviewed )
Revenue	$	27.2	$	35.2	$	(8.0)	(23	%)	$	86.8	$	107.5	$	(20.7)	(19	%)
Cost of Goods Sold	14.1		18.0		(3.9)		(22	%)	47.4		55.0		(7.6)		(14	%)

Gross Profit	13.1		17.2		(4.1)		(24	%)	39.4		52.5		(13.1)		(25	%)

Operating Expenses:
General and Administrative	16.7		25.7		(9.0)		(35	%)	53.7		89.6		(35.9)		(40	%)
Sales and Marketing	0.6		1.0		(0.4)		(40	%)	1.6		2.6		(1.0)		(38	%)
Depreciation and Amortization	3.2		5.5		(2.3)		(42	%)	10.6		17.7		(7.1)		(40	%)
Realized and Unrealized Changes in Fair Value of Contingent Consideration	(0.1)		—		(0.1)		—	%	(0.9)		(0.3)		(0.6)		200	%
Impairment Expense	13.9		8.2		5.7		70	%	16.4		8.6		7.8		91	%
Other Operating (Income) Expense	2.7		(3.1)		5.8		(187	%)	(4.8)		(0.3)		(4.5)		1500	%

Total Operating Expenses	37.1		37.3		(0.2)		(1	%)	76.6		117.9		(41.3)		(35	%)

Loss from Operations	(24.0)		(20.1)		(3.9)		19	%	(37.2)		(65.4)		28.2		(43	%)

Non-Operating (Income) Expenses:


Interest Expense, net of Interest Income	10.0		7.8		2.2		28	%	29.7		26.9		2.8		10	%
Accretion of Debt Discount and Loan Origination Fees	1.6		1.3		0.3		23	%	4.5		11.5		(7.0)		(61	%)
Change in Fair Value of Derivatives	0.5		(9.7)		10.2		(105	%)	(2.6)		(25.9)		23.3		(90	%)

Gain on Extinguishment of Debt	0.5		—		0.5		—	%	0.5		(10.2)		10.7		(105	%)

Total Non-Operating Expense	12.6		(0.6)		13.2		(2200	%)	32.1		2.3		29.8		1296	%

Loss from Continuing Operations Before Provision for Income Taxes	(36.6)		(19.5)		(17.1)		88	%	(69)		(67.7)		(1.3)		2	%
Provision for Income Tax Expense	5.4		—		5.4		—	%	(1.4)		(11.6)		10.2		(88	%)

Net Loss from Continuing Operations	(31.2)		(19.5)		(11.7)		60	%	(70.6)		(79.3)		8.7		(11	%)
Net Income (Loss) from Discontinued Operations, Net of Taxes	(3.9)		(10.6)		6.7		(63	%)	22.1		(31.7)		53.8		(170	%)

Net Income (Loss)	(35.1)		(30.1)		(5.0)		17	%	(48.5)		(111.0)		62.5		(56	%)

Net Loss Attributable to Non-Controlling Interest	(3.6)		(0.3)		(3.3)		1121	%	(4.7)		(6.9)		2.2		(32	%)

Net Loss Attributable to Shareholders of MedMen Enterprises Inc.	$	(31.5)	$	(29.7)	$	(1.8)	6	%	$	(43.7)	$	(104.1)	$	60.4	(58	%)

EBITDA from Continuing Operations (Non-GAAP)	$	(21.7)	$	(4.8)	$	(16.9)	352	%	$	(24.2)	$	(11.1)	$	(13.1)	118	%
Adjusted EBITDA from Continuing Operations (Non-GAAP)	$	(2.1)	$	(3.0)	$	0.9	(30	%)	$	(6.1)	$	(25.5)	$	19.4	(76	%)

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Revenue

~~Revenue~~

Revenue from continuing operations for the three months ended ~~September 24, 2022~~March 25, 2023 was ~~$30.0~~$27.2 million, a decrease of ~~$(6.7)~~$8.0 million, or ~~(18%)~~23%, compared to revenue of ~~$36.7~~$35.2 million for the three months ended ~~September~~March 26, 2022. Revenue from continuing operations for the nine months ended March 25, ~~2021.~~2023

was $86.8 million, a decrease of $20.7 million, or 19%, compared to revenue of $107.5 million for the nine months ended March 26, 2022. On a consecutive quarter basis, revenue from continuing operations for the three months ended March 25, 2023 decreased $2.3 million or 8% as compared to the three months December 24, 2022. March 2023 marked the anniversary

of when promotions and point-of-sales discounts were introduced in our retail locations.

Revenue in various states in which we operate is as follows:


	Three Months Ended (unaudited and not reviewed)								Nine Months Ended (unaudited and not reviewed)
($ in Millions)	March 25, 2023		March 26, 2022		$ Change		% Change		March 25, 2023		March 26, 2022		$ Change		% Change
California	$	17.9	$	22.3	$	(4.4)	(20)	%	$	57.4	$	70.3	$	(12.9)	(18)	%
Nevada	2.5		3.8		(1.3)		(34)	%	8.3		11.7		(3.4)		(29)	%
Illinois	2.7		4.0		(1.3)		(33)	%	9.3		12.4		(3.1)		(25)	%
Arizona	3.5		4.4		(0.9)		(20)	%	9.6		12.2		(2.6)		(21)	%
Massachusetts	0.6		0.8		(0.2)		(25)	%	2.1		0.8		1.3		163	%
Revenue from Continuing Operations	$	27.2	$	35.3	$	(8.1)	(23)	%	$	86.7	$	107.4	$	(20.7)	(19)	%
Revenue from Discontinued Operations	$	1.8	$	7.3	$	(5.5)	(75)	%	$	7.8	$	22.7	$	(14.9)	(66)	%
Total Revenue	$	29.0	$	42.6	$	(13.6)	(32)	%	$	94.5	$	130.1	$	(35.6)	(27)	%

Three Months Ended
September 24, September 25,
($ in Millions) 2022 2021 $ Change % Change
California $ 19.9 $ 24.6 $ (4.7 ) (19 %)
Nevada 3.0 4.1 (1.1 ) (27 %)
Illinois 3.5 4.3 (0.8 ) (19 %)
Arizona 2.8 3.7 (0.9 ) (24 %)
Massachusetts 0.8 - 0.8 -

Continuing Operations 30.0 36.7 (6.7 ) (18 %)

Discontinued Operations 3.6 7.3 (3.7 ) (51 %)

Total Revenue $ 33.6 $ 44.0 $ (10.4 ) (24 %)

~~Overall, across all markets,~~In California, revenue for the ~~periods presented, we experienced declines in revenue across all markets.~~

~~In California, we~~three and nine months ended March 25, 2023 experienced a decline of ~~$(4.7)~~$4.4 million or ~~(19%)~~20% and $12.9 million or 18%, respectively, over the same prior year ~~period~~periods. This decrease was primarily driven by increased sales discounts as well as lower ~~basket size, inconsistent~~ traffic to ~~the~~our stores. Beginning in March – April 2022 timeframe, we introduced promotional discounts in our stores in California and other states.During this fiscal quarter we also “stacked” and ran multiple types of promotions during times in which ~~was slightly partially offset by flat conversion rates. We believe we~~our social media outlets and marketing communications were ~~also affected by the status of the cannabis supply in this State. California is currently experiencing~~blocked or unavailable, and our in-store promotions ran without comparable added traffic to our stores. In addition, there are other macro-level factors that continue impacting our revenue results including high levels of cannabis production, which we believe has flooded the legal and illegal ~~market~~markets with quality cannabis flower ~~that illicit operators are offering~~and continue to ~~cannabis consumers at lower selling prices. In addition,~~take market share; the ~~increase in~~increasing number of new dispensaries within key ~~markets, especially West Hollywood,~~markets; and ~~the more aggressive promotional cadence these dispensaries are promoting, has resulted in~~ a saturated market wherein the California cannabis consumer has an increased number of choices for cannabis products at discounted pricing. During ~~this first fiscal~~the quarter, we ~~increased~~continued to increase our focus on product portfolio and ~~product~~ selection, ~~expanding vendor relationships, engaging~~and increased our efforts on allowable-marketing strategies to reach our current loyalty customers and provide higher incentives, as well acquire new consumers that opt to receive communication of promotions only offered in ~~allowable marketing strategies, and continued efforts to develop~~ our ~~private label products.~~loyalty programs.

In Nevada, revenue for the three and nine months ~~declined $(1.1)~~ended March 25, 2023 experienced a decline of $1.3 million or ~~(27%).~~34% and $3.4 million or 29%, respectively, over the same prior year periods. We experienced a decline in basket size as well as traffic and conversion rates. Nevada noted an overall decline in legal cannabis sales primarily related to a maturing industry, lower disposable income and a revenue base heavily reliant on tourism.

In both California and Nevada, we had expected to benefit from increasing sales of our MedMen Red private label products. However, the cultivation and production of MedMen Red labeled products have been plagued with delays at the third-party contractor due to financial and operational issues.

In Illinois, revenue ~~declined $(0.8)~~for the three and nine months ended March 25, 2023 experienced a decline of $1.3 million or ~~(19%).~~33% and $3.1 million or 25%, respectively, over the same prior year periods. We continue to face market pressure from additional licenses issued by surrounding municipalities as part of Illinois’ efforts to promote equality and accessible locations for the consumer. We have made great efforts in testing new promotional messaging that, if marketed properly, can increase foot traffic and revenue. The construction and build-out of our second store in Illinois is nearing completion in final stages of regulatory visits and testing. This new store is located 15 miles northwest of Chicago and within similar proximity to our existing store in Oak Park, in a dense suburban area near restaurants, coffee shops and parks.

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In Arizona, revenue for the ~~period decreased $(0.9)~~three and nine months ended March 25, 2023 experienced a decline of $0.9 million or ~~(24%).~~21% and $2.7 million or 22% respectively over the same prior year periods. This decrease resulted from a decline in medical-use sales because of a maturing recreational cannabis industry. Arizona is also experiencing an increase in new dispensary openings, that ~~similar to~~like California, has resulted in a saturated market. Exacerbating the increase in dispensary openings, is the increase in aggressive promotional cadences by these dispensaries. We continue our efforts to finding the optimal product selection that can meet the demands of both medical and recreational customers ~~as well as planning for additional~~including the launch of our private label products, Moss™, from our own cultivation facility in Mesa.

The first shipments of Moss™ landed in our store in late December.

In Massachusetts, ~~our~~revenue for the three and nine months ended March 25, 2023 experienced a decline of $0.2 million and an increase of $1.3 million, respectively. Our store near Fenway Park opened December 2021 with no comparable sales for ~~this reporting period.~~

the first six months of the year.

During our first fiscal quarter, we completed the sale of our Florida-based assets. We continue to hold for sale our New York-based assets which are presented as discontinued operations.

Cost of Goods Sold and Gross Profit

Cost of goods sold from continuing operations for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$15.2~~$14.1 million and $47.4 million compared to ~~$19.3~~$18.0 million and $55.0 million for the three and nine months ended March 26, 2022, respectively, with a decrease of ~~$(4.1)~~$4.0 million, or ~~(21%)~~22% and $7.6 million or 14%, respectively.

Gross profit from continuing operations for the three and nine months ended ~~September~~March 25, ~~2021. Gross profit~~2023 was $13.1 million and $39.4 million compared to $17.2 million and $52.5 million for the ~~fiscal first quarter~~three and nine months ended March 26, 2022 respectively, with a decrease of $4.1 million, or 24% and $13.0 million or 25%, respectively. Gross margin from continuing operations for the three and nine months ended March 25, 2023 was ~~$14.9 million, representing a~~48% and 45%, respectively, compared to gross margin of ~~50%, as compared to $17.4 million, representing a~~49% for both the three and nine months ended March 26, 2022. The slight decrease in gross margin ~~of 47%,~~from continuing operations for the ~~same prior year period.~~quarter resulted from lower retail selling prices in specific products in markets where competitors seem to want to compete on price. The slight improvement ~~in gross margin~~on year-to-date basis resulted from our continuous efforts to develop vendor programs that reduced our cost of goods ~~sold, as well as our success in lowering costs of production at our cultivation centers.~~

sold.

Operating Expenses

Operating expenses for the three and nine months ended ~~September 24, 2022 were $20.5~~March 25, 2023 was $37.1 million ~~a decrease of $(21.3)~~and $76.5 million ~~or (51%),~~ compared to ~~$41.7~~$37.3 million and $118.0 million for the three and nine months ended ~~September 25, 2021.~~March 26, 2022, respectively, with a decrease of $0.2 million, or 1% and $41.5 million or 35%, respectively. These changes were primarily attributable to our efforts and focus on our cost management strategy as well as the factors discussed below.

General and administrative expenses (“G&A”) for the three and nine months ended ~~September 24, 2022 were $17.8~~March 25, 2023 was $16.7 million and $53.7 million compared to ~~$32.6~~$25.7 million and $89.6 million for the ~~same prior year period. The overall~~three and nine months ended March 26, 2022, respectively, with a decrease ~~in the three months period is primarily due to the Company’s corporate cost saving strategy.~~ of $9.0 million, or 35% and $36.0 million or 40%, respectively.


	Three Months Ended (unaudited and not reviewed)								Nine Months Ended (unaudited and not reviewed)
($ in millions)	March 25, 2023		March 26, 2022		$ Change		% Change		March 25, 2023		March 26, 2022		$ Change		% Change
Salaries and Benefits	$	6.5	$	8.9	$	(2.4)	(27)	%	$	19.8	$	28.5	$	(8.7)	(31)	%
Professional Fees	0.8		2.9		(2.1)		(72)	%	4.5		18.2		(13.7)		(75)	%
Rent	2.3		4.2		(1.9)		(45)	%	9.0		13.7		(4.7)		(34)	%
Licenses, Fees and Taxes	2.2		2.4		(0.2)		(8)	%	5.9		8.2		(2.3)		(28)	%
Share-Based Compensation	1.0		0.6		0.4		67	%	4.0		4.4		(0.4)		(9)	%
Deal Costs	1.3		2.4		(1.1)		(46)	%	1.8		5.2		(3.4)		(65)	%
Other General and Administrative	2.6		4.3		(1.7)		(40)	%	8.6		11.5		(2.9)		(25)	%
Total General and Administrative Expenses	$	16.7	$	25.7	$	(9.0)	(35)	%	$	53.6	$	89.7	$	(36.1)	(40)	%

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Key drivers of the decrease in G&A for the three and nine months ended March 25, 2023 include reductions:

•in rent expense resulting from the termination of leases of vacant properties, negotiated lower rents for certain stores, the closure of our headquarters office and the closure of our distribution center;

•in salaries resulting from reductions in force in both retail and corporate personnel;

•in professional fees ~~($6.1) million, payroll expenses ($3.0) million,~~resulting primarily from lower legal fees incurred on routine corporate matters, and

•in licenses, fees and taxes resulting from lower insurance premiums.

Deal costs primarily include legal fees ~~($1.5) million,~~incurred for defending litigious matters resulting from failed acquisitions and/or unusual transactions. In prior years, deal costs ~~($1.2) million~~also included costs and ~~rental payments ($1.1) million. Management continues~~other legal fees resulting from new acquisitions. The decreases in the three and nine months ended March 25, 2023 resulted from a lack of acquisition activity and a reduction in qualifying litigation matters as compared to the three and nine months ended March 26, 2022.

Our focus on reducing company-wide ~~G&A. We expect~~expenses resulted in a decrease in Other G&A, ~~will continue to decrease in fiscal year~~which consists primarily of expenses incurred for security, software licenses, bank fees, repairs and maintenance and utilities, of $1.7 million, or (40)% and $2.9 million, or (25)% during the three and nine months ended March 25, 2023 ~~as compared to prior year.~~

and March 26, 2022, respectively.

Sales and marketing expenses ~~remained relatively consistent~~ for the three and nine months ended ~~September 24,~~March 25, 2023 was $0.6 million and $1.6 million compared to $1.0 million and $2.6 million for the three and nine months ended March 26, 2022 ~~and September 25, 2021 in the amount~~respectively, with a decrease of $0.4 million, or 44% and ~~$0.6~~$1.1 million or 40% respectively.

The decrease in marketing expenses is primarily the results of lower costs incurred with third party providers in connection with our focus on reducing company-wide expenses.

Depreciation and amortization for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$3.9~~$3.2 million and $10.6 million compared to ~~$5.8~~$5.5 million and $17.7 million for the ~~same prior year period.~~three and nine months ended March 26, 2022 respectively, with a decrease of $2.3 million, or 42% and $7.1 million or 40% respectively. The overall decrease is attributable toa lower carrying basis of our long-lived assets as a result of the impairment ~~of assets~~charge recorded in Q4the fourth quarter of 2022 and a delay in new capital projects. We are currently evaluating the long-term benefits of continuing to pursue the build out of some of our locations that are not yet opened or constructed. We are in negotiations with the landlords of our unfinished locations in California ~~Illinois~~ and Massachusetts in an effort to reach the best outcome for all parties including the communities that live and work near these unfinished locations possibly deterring from market values.

Impairment expense for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$1.7~~$13.9 million and $16.4 million compared to ~~$0.4~~$8.2 million and $8.6 million for the three and nine months ended ~~September 25, 2021. During the current period, the Company wrote off approximately $1.7~~March 26, 2022 respectively, with an increase of $5.7 million ~~of construction in progress.~~

and $7.8 million, or 70% and 90%, respectively.

Other operating (income) expense for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$(2.6)~~other operating expense of $2.7 million and other operating (income) of $(4.8) million compared to ~~$2.2~~other operating (income) of $(3.1) million and $(0.3) million for the three and nine months ended March 26, 2022 respectively, with a decrease in other operating expense of $5.8 million, or 187% and $4.5 million or 1518% respectively. The decrease in other operating expense of $5.8 million for the three months ended ~~September~~March 25, ~~2021. The decrease of $(4.8) million in other operating (income) expense~~2023 was primarily due to a ~~decrease of $(2.0)~~$4.4 million increase in ~~restructuring expenses coupled with a~~ gain on lease ~~termination of $1.6~~terminations, a net $1.4 million gain on legal settlements and ~~sublease income~~recognition of $1.5 million ~~recognized during~~in sublease income, partially offset by a $(4.9) million increase in loss on disposals of assets. The decrease in other operating expense of $4.5 million for the ~~fiscal first quarter~~nine months ended March 25, 2023 was primarily due to the net $1.4 million gain on legal settlements, recognition of ~~2023, versus none~~$3.0 million in ~~the comparative period.~~

sublease income, a $0.8 million increase in gain on lease terminations, partially offset by a $2.4 million decrease in restructuring and reorganization expenses and a $(3.4) million increase in loss on disposals of assets.

Non-Operating Expense

Non-operating expense for the three and nine months ended ~~September 24, 2022,~~March 25, 2023 was ~~$12.4~~$12.6 million and $32.1 million compared to non-operating (income) of $(0.6) million and $2.2 million infor the ~~prior year period.~~three and nine months ended March 26, 2022 respectively, with an increase of $13.3 million, or 2135% and $29.9 million or 1366% respectively. The increase in non-operating expense for thethree months ended March 25, 2023 was primarily due a ~~$10.2~~$10.3 million devaluation in the fair value of our derivatives. The increase in non-operating expense for the nine months ended March 25, 2023 was primarily due to a $23.4 million devaluation in the fair value of our derivatives coupled with a decrease in gain on extinguishment of

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debt ~~recognized~~of $10.7 million and increase in ~~prior fiscal first quarter versus none in the current period. This was~~interest expense of $2.8 million, partially offset by a ~~$(4.7)~~decrease of $7.0 million ~~decrease~~ in the accretion of our debt discount ~~due to the principal repayment of $31.6 million on the Senior Secured Term Loan during the fiscal first quarter of 2023~~ and ~~a $(2.9) million decrease in change in fair value of derivatives.~~

loan origination fees.

Provision for Income Taxes

MedMen is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. As we operate in the legal cannabis industry, we are subject to the limits of Internal Revenue Code (“IRC”) Section 280E under which we are only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E and a higher effective tax rate than most industries. However, California does not conform to IRC Section 280E and, accordingly, we deduct all operating expenses on MedMen’s California Franchise Tax Returns.

The ~~provision~~benefit (provision) for income taxes for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$2.2~~$5.4 million and $(1.4) million compared to ~~the provision for income tax expense of $19.7~~$0.0 million and $(11.6) million for the three and nine months ended ~~September 25, 2021,~~March 26, 2022 respectively, with a decrease of $5.4 million, or 0% and $10.2 million or, 88%, respectively. The change is primarily due to the Company’s forecasted income and related IRC Section 280E expenditures.

Net Loss

Net loss from continuing operations for the three and nine months ended ~~September 24, 2022~~March 25, 2023 was ~~$20.3~~$31.2 million ~~a decrease of $(25.9)~~and $70.6 million compared to ~~$46.2~~$19.5 million and $79.3 million for three and nine months ended March 26, 2022, respectively. For the three and nine months ended ~~September~~March 25, ~~2021. For the fiscal first quarter of~~ 2023, net loss from continuing operations was favorably impacted by the Company’s continued efforts to optimize selling, general and administrative costs and right-size the Company’s corporate ~~infrastructure.~~

infrastructure and negatively impacted by increases in the Company's non-cash operating and other (income) expenses.

Non-GAAP Financial Measures

EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations are financial measures that are not defined under GAAP. We define EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA before: (i) transaction costs and restructuring costs; (ii) non-cash share-based compensation expense; (iii) fair value changes in derivative liabilities and contingent consideration; (iv) (gains) losses on disposal of assets, assets held for sale, extinguishment of debt and lease terminations; and (v) other one-time charges for non-cash operating costs. These financial measures are metrics that have been adjusted from the GAAP net income (loss) measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non-recurring, irregular and one-time items that may otherwise distort the GAAP net income measure. Other companies in our industry may calculate this measure differently, limiting their usefulness as comparative measures.

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Reconciliations of GAAP Measures to Non-GAAP Financial Measures

The table below reconciles Net Loss to EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations for the periods indicated.


	Three Months Ended (unaudited and not reviewed)				Nine Months Ended (unaudited and not reviewed)
($ in Millions)	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Net Loss	$	(35.09)	$	(30.04)	$	(48.44)	$	(111.01)
Less: Net (Income) Loss from Discontinued Operations, Net	3.88		10.57		(22.13)		31.73
Add (Deduct) Impact of:
Net Interest and Other Financing Costs (1)	11.64		9.14		34.27		38.44
Provision for Income taxes	(5.37)		—		1.39		11.56
Amortization and Depreciation	3.23		5.54		10.70		18.20
EBITDA from Continuing Operations	$	(21.71)	$	(4.79)	$	(24.21)	$	(11.08)

Other Operating (Income) Expense:
Share-based Compensation	1.04		0.57		4.02		4.38
Change in Fair Value of Derivative Liabilities	0.54		(9.74)		(2.56)		(25.95)
Change in Fair Value of Contingent Consideration	(0.06)		—		(0.93)		(0.30)
Impairment Expense	13.90		8.17		16.38		8.61
(Gain) Loss on Disposals of Assets	(0.19)		4.72		1.17		4.59
Restructuring and Reorganization Expense	1.34		2.47		2.25		8.05
Gain on Lease Terminations	0.01		(4.43)		(3.45)		(4.26)
(Gain) Loss on Disposal of Assets Held for Sale	—		—		0.53		—

Legal Settlements	1.37		0.01		(2.12)		0.23
Non-Cash Rent Expense	(0.45)		—		1.20		—
Other Non-Cash Operating Costs	2.06		0.04		1.67		(9.75)
Total Adjustments	19.56		1.81		18.16		(14.40)

Adjusted EBITDA from Continuing Operations	$	(2.15)	$	(2.98)	$	(6.05)	$	(25.48)

Three Months Ended
September 24, September 25,
($ in Millions) 2022 2021
Net Income (Loss) $ 4.0 $ (60.6 )

Less: Net (Income) Loss from Discontinued Operations, Net of Taxes (24.3 ) 14.4
Add (Deduct) Impact of:
Net Interest and Other Financing Costs ⁽¹⁾ 11.6 14.5
Provision for Income Taxes 2.2 19.7
Amortization and Depreciation 4.0 6.3

Total Adjustments 17.8 40.5

EBITDA from Continuing Operations $ (2.5 ) $ (5.7 )

Add (Deduct) Impact of:
Transaction Costs & Restructuring Costs $ 0.9 $ 4.0
Share-Based Compensation 0.9 1.6
Change in Fair Value of Derivative Liabilities 0.8 (2.1 )
Change in Fair Value of Contingent Consideration (0.9 ) -
(Gain) Loss on Lease Termination (1.6 ) -
(Gain) Loss on Extinguishment of Debt - (10.2 )
(Gain) Loss from Disposal of Assets 0.2 -
Sublease Income (1.5 ) -
Impairment Expense 1.7 0.4
Other Non-Cash Operating Costs - (0.2 )

Total Adjustments $ 0.5 $ (6.5 )

Adjusted EBITDA from Continuing Operations $ (2.0 ) $ (12.2 )

~~(1)~~

For the current period, net interest and other financing costs now include accretion of debt discount and loan origination fees of $1.6 million for the three months ended September 24, 2022. The prior year amount of $6.3 million for the three months ended September 25, 2021(1)For the current period, net interest and other financing costs now include accretion of debt discount and loan origination fees of $1.6 million for the three months ended March 25, 2023 and $4.5 million for the nine months ended March 25, 2023. The prior year amount of $1.3 million for the three months ended March 26, 2022 and $11.5 million for the nine months ended March 26, 2022 have been reclassified for consistency with the current year presentation. Accretion of debt discount was previously excluded from the reconciliation of Net Loss to EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations.

EBITDA from Continuing Operations represents ~~the Company’s~~our current operating profitability and ability to generate cash flow and includes significant non-cash operating costs. Considering these adjustments, ~~the Company~~we had EBITDA from Continuing Operations for the three and nine months ended March 25, 2023 of ~~$(2.5)~~$(21.7) million and $(24.2) million compared to $(4.8) million and $(11.1) million for the three and nine months ended ~~September 24, 2022 compared to $(5.7)~~March 25, 2023 respectively, with an increase of $(16.9) million, ~~for the comparative prior period.~~or 353% and $(13.1) million or, 118% respectively. The ~~change~~improvement in EBITDA from Continuing Operations was primarily due to ~~the Company’s~~our continued focus on cost-saving strategies and ~~lower operating costs at~~ the ~~cultivation facilities~~reduction of ~~California~~company-wide general and ~~Nevada as a result of the licensing and management agreement which includes lower rents.~~administrative expenses.

~~For the three months ended September 24, 2022,~~

Adjusted EBITDA from Continuing Operations for the three and nine months ended March 25, 2023 was ~~$(2.0)~~$(2.2) million and $(6.1) million compared to ~~$(12.2)~~$(3.0) million and $(25.5) million for the three and nine months ended ~~September~~March 25, ~~2021.~~2023, respectively. The improvement in Adjusted EBITDA from Continuing Operations is ~~primarily~~similarly due to our continued focus on cost-saving strategies and the ~~decrease in~~reduction of company-wide general and administrative expenses. The financial performance of the Company is expected to further improve as the Company works towards profitability and coupled with significant deleveraging of its balance sheet, will reposition the Company for growth.

Refer to Item 2 “Liquidity and Capital Resources” for further discussion of management’s future outlook.

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Cash Flows

The following table summarizes the Company’s consolidated cash flows for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 and ~~September 25, 2021:~~March 26, 2022:

Three Months Ended
September 24, September 25,
($ in Millions) 2022 2021 $ Change % Change
Net Cash Used in Operating Activities $ (9.6 ) $ (23.0 ) $ 13.4 (58 %)
Net Cash Provided by (Used in) Investing Activities 51.5 (3.6 ) 55.1 (1,531 %)
Net Cash (Used in) Provided by Financing Activities (31.6 ) 93.2 (124.8 ) (134 %)

Net Increase in Cash and Cash Equivalents 10.3 66.6 (56.3 ) (85 %)
Cash Included in Assets Held for Sale - (0.3 ) 0.3 100 %
Cash and Cash Equivalents, Beginning of Period 10.8 11.6 (0.8 ) (7 %)

Cash and Cash Equivalents, End of Period $ 21.1 $ 77.9 $ (56.8 ) (73 %)

Nine Months Ended (unaudited and not reviewed)
($ in Millions) March 25, 2023 March 26, 2022 $ Change % Change
Net Cash Used in Operating Activities $ (23.2) $ (65.4) $ 42.2 (65 %)
Net Cash Provided by (Used in) Investing Activities 51.4 (4.7) 56.1 (1194) %
Net Cash (Used in) Provided by Financing Activities (32.8) 73.2 (105.9) (145 %)
Net Increase in Cash and Cash Equivalents (4.5) 3.1 (7.6) (245 %)
Cash Included in Assets Held for Sale 0.7 (0.3) 1.0 (333) %
Cash and Cash Equivalents, Beginning of Period 11.5 11.6 (0.1) (1 %)
Cash and Cash Equivalents, End of Period $ 7.7 $ 14.4 $ (6.7) (47 %)

Cash Flow from Operating Activities

Net cash used in operating activities ~~was $9.6 million~~ for the ~~three~~nine months ended ~~September 24, 2022, a decrease of $13.4~~March 25, 2023 was $23.2 million compared to ~~$23.0~~$65.4 million net cash used for operating activities for the ~~three~~nine months ended ~~September 25, 2021.~~March 26, 2022. The decrease was primarily driven by the ~~decrease in general and administrative~~impact of our cost management strategy on our G&A expenses, which we reduced by $36.1 million as described in “Results of Operations” above. The extension of payment terms with our vendors during the

nine months ended March 25, 2023 resulted in an additional $18.5 million reduction in our operating cash flows.

Cash Flow from Investing Activities

Net cash provided by investing activities ~~was $51.5 million~~ for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 was $51.4 million compared to ~~the $3.6~~$4.7 million of net cash used in investing activities ~~in the prior year.~~nine months ended March 26, 2022. This was primarily due to the $51.5 million in cash proceeds from the sale of the Company’s operations in the state of Florida during the current period.

Cash Flow from Financing Activities

Net cash used in financing activities ~~was $31.6 million~~ for the ~~three~~nine months ended ~~September 24, 2022~~March 25, 2023 was $32.8 million compared to ~~$93.2~~$73.2 million net cash provided by financing activities for the ~~three~~nine months ended ~~September 25, 2021.~~March 26, 2022. During the current period, ~~the Company used~~we made principal payments of $32.8 million on our Senior Secured Term Loan Facility, of which $31.6 million ofcame from the cash proceeds from the sale of ~~its~~our Florida-based ~~operations to make principal repayments on the Senior Secured Term Loan.~~operations. Whereas during the comparative prior period, the Company completed a private placement with Serruya Private Equity Inc. (“SPE”) resulting in an equity investment of $100.0 million.

~~Financial Condition and Going Concern~~

As of September 24, 2022, the Company had cash and cash equivalents of $21.1 million and working capital deficit of $134.9 million. The Company has incurred net losses from continuing operations of $20.3 million and $46.2 million for the three months ended September 24, 2022 and September 25, 2021, respectively. 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 Condensed Consolidated Financial Statements, and therefore, to continue as a going concern.

The Company plans to continue to fund its operations through the implementation of its cost savings plan, and various strategic actions, including the successful negotiations of lower costs of occupancy with our master lease landlord and other landlords, divesture of non-core assets including but not limited to the current asset group held for sale, New York, as well continuing its on-going revenue strategy of market expansion and retail revenue growth. We also need to obtain an extension or a refinancing of our debt-in-default with the secured senior lender. Our annual operating plan for fiscal year 2023 estimates we will be able to manage our ongoing operations. However, our cash needs are significant and not achievable with the current cash flow from operations. If the above strategic actions, for any reason, are inaccessible, it will have a significantly negative effect on the Company’s financial condition. Additionally, we expect to continue to manage the Company’s operating expenses and reduce its projected cash requirements through reduction of its 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. Furthermore, COVID-19 and the impact the global pandemic on the broader retail environment could also have a significant impact on the Company’s financial position, results of operations, equity and or its access to capital and future financing.

As of September 24, 2022, the accompanying Consolidated Financial Statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying 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 following table summarizes certain aspects of the Company’s financial condition as of September 24, 2022 and June 25, 2022:~~

September 24, June 25,
($ in Millions) 2022 2022 $ Change % Change
Cash and Cash Equivalents $ 21.1 $ 10.8 $ 10.3 95 %
Total Current Assets $ 98.7 $ 161.5 $ (62.8 ) (39 %)
Total Assets $ 251.1 $ 323.2 $ (72.1 ) (22 %)
Total Current Liabilities $ 233.6 $ 319.6 $ (86.0 ) (27 %)
Notes Payable, Net of Current Portion $ 74.9 $ 206.4 $ (131.5 ) (64 %)
Total Liabilities $ 564.7 $ 641.7 $ (77.0 ) (12 %)
Total Shareholders’ Equity $ (313.6 ) $ (318.5 ) $ 4.9 (2 %)
Working Capital Deficit $ (134.9 ) $ (158.1 ) $ 23.2 (15 %)

In August 2022, the Company completed the sale of its operations in the state of Florida at the final sales price of $67,000,000 which comprised of $63,000,000 in cash and $4,000,000 in liabilities to be assumed by the Buyer. The Buyer made a cash payment of $40,000,000 at closing, $11,500,000 on September 15, 2023, and is required to make an additional installment payment of $11,500,000 on or before March 15, 2023. During the fiscal third quarter of 2022, net proceeds to the Company were $19,558,947 after a principal repayment of $31,599,999 on the Senior Secured Term Loans with Hankey Capital. The final cash payment of $11,500,000 remains due and receivable as of September 24, 2022. The Senior Secured Term Loans remains outstanding and in default as of September 24, 2022.

The $23.2 million improvement in working capital deficit was primarily related to the $31.6 million principal repayment on the Senior Secured Term Loans that matured on July 31, 2022 and August 1, 2022. The Company’s working capital will be significantly impacted by continued operations and growth in retail operations and the continued stewardship of the Company’s financial resources. The ability to fund working capital needs will also be dependent on the Company’s ability to raise additional debt and equity financing and execute cost savings plans.

Liquidity and Capital Resources

The primary need for liquidity is to fund working capital requirements of the business, including ~~operationalizing existing licenses, capital expenditures,~~paying vendors, paying legal expenses, debt service and ~~acquisitions.~~future growth. The primary source of liquidity has primarily been private and/or public financing and to a lesser extent by cash generated from sales. The ability to fund operations, ~~to make planned capital expenditures, to execute on the growth/acquisition strategy,~~ to make scheduled debt and rent payments and to repay or refinance indebtedness depends on the Company’s future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond its control. Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure.

Off-Balance Sheet Arrangements

The Company has no material undisclosed off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that are material to investors.

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Critical Accounting Policies, Significant Judgments and Estimates and Recent Accounting Pronouncements

There have been no changes in critical accounting policies, estimates and assumptions from the information provided in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in the Form 1010-K for the fiscal year ended June 25, 2022 that have a significant effect on the amounts recognized in the Condensed Consolidated Financial Statements as of and for the fiscal quarter ended ~~September 24, 2022.~~March 25, 2023. See “Note 2 – Summary of Significant Accounting Policies” in the Condensed Consolidated Financial Statements in Item 1 for recently adopted accounting standards. For more information on the Company’s critical accounting estimates, refer to the “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report on Form 10-K for the fiscal year ended June 25, 2022. In addition, a detailed description of our critical accounting policies and recent accounting pronouncements are detailed in Part I, “Item 8. Financial Statements and Supplementary Data” of the Annual Report on Form 10-K for the fiscal year ended June 25, 2022.

Transactions with Related Parties

As of ~~September 24, 2022~~March 25, 2023 and June 25, 2022 there were no amounts due from or due to related parties that were recorded in the Condensed Consolidated Balance Sheets. Refer to “Note 19 – Related Party Transactions” of the Condensed Consolidated Financial Statements ~~for the three months ended September 24, 2022~~under Part I, “Item 1. Notes to Condensed Consolidated Financial Statements”, which is incorporated in ~~Item 1.~~this item by reference.

The Company’s Board of Directors each receive quarterly fees of $200,000 of which one-third is paid in cash and two-thirds is paid in Class B Subordinate Voting Shares.

Senior Secured Convertible Credit Facility

As of ~~September 24, 2022,~~March 25, 2023, the Company has drawn down a total of $165.0 million on the Convertible Facility, has accrued paid-in-kind interest of ~~$45.2~~$51.1 million with an aggregate weighted average conversion price of approximately $0.24 per share, and an aggregate of ~~196,327,593~~192,981,432 warrants with a weighted average exercise price of ~~$0.17~~$0.15 per share.

Emerging Growth Company Status

The Company is an “emerging growth company” as defined in the Section 2(a) of the Exchange Act, as modified by the Jumpstart Our Business Start-ups Act of 2012, or the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards applicable to public companies. The Company has elected to take advantage of this extended transition period and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information not required to be filed by smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(b) and 15-d-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of ~~September 24, 2022,~~March 25, 2023, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.

The term “disclosure controls and procedures”, as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including

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its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation and the identification of the material weakness described herein, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, at the reasonable assurance level, as of the end of our last fiscal year end, June 25, 2022, and continues as such as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

For fiscal year 2022, management identified a material weakness determining that the Company’s financial recordkeeping process was deficient and that it does not have effective controls over the period-end reconciliation process. The reconciliation process was not being performed in a manner that will detect and correct errors on a timely basis, including:

•

general ledgers are not being reviewed regularly for assets that may not be recoverable or viable,

	●	~~general ledgers are not being reviewed regularly for assets that may not be recoverable or viable,~~

	●	~~review procedures for balance sheet account reconciliations and manual journal entries were not performed, and~~

	●	~~some accounts and balances are not being reconciled regularly, and/or account reconciliations that are being completed do not properly address or adjust reconciling items.~~

•

review procedures for balance sheet account reconciliations and manual journal entries were not performed, and

•some accounts and balances are not being reconciled regularly, and/or account reconciliations that are being completed do not properly address or adjust reconciling items.

Management plans to implement measures designed to improve its internal control over financial reporting to remediate material weaknesses described above by standardizing the monthly reconciliation process for material accounts and balances with formalized procedures. Material non-standard journal entries recorded in the accounting system will be reviewed for the various applicable accounting assertions including recoverability and validity. While the Company is actively engaged in the implementation of its remediation efforts to address this internal control weakness, the actions we have taken are subject to continued review, supported by confirmation and testing by management. Accordingly, the material weakness will not be considered fully remediated until the new control procedures are implemented for a sufficient period of time and management has concluded that these controls are operating effectively which we anticipate will occur in the ensuing months.

Except as noted above, there were no changes in our internal control over financial reporting during the three months ended ~~September 24, 2022~~March 25, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The preliminary evaluation provided above is subject to the completion of the Company’s restatement analysis and financial close and reporting process. While the Company believes that the foregoing description fairly represents the expected impact of the restatement on the Company’s results of operations for the Prior Periods, additional material weaknesses may be identified, further adjustments may arise, including with respect to changes on the Company’s balance sheet, and the restated financial statements for the prior periods will reflect any such additional adjustments.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements attributable to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Assessments of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements as a result of error or fraud may occur and not be detected.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~Other than noted below, there have been no material developments during the fiscal quarter covered by this Report for~~For a description of our legal proceedings, ~~that were~~please see the description set forth in the “Claims and Litigation” section in "Note 18 - Commitments and Contingencies" under Part I, “Item 1. Notes to Condensed Consolidated Financial Statements” of this Form 10-Q, which is incorporated in this item by reference.

ITEM 1A. RISK FACTORS.

Although risk factors are not required for smaller reporting companies, we note the following risks:

The Financial Statements included in this Quarterly Report have not been reviewed nor audited, reflect preliminary financial results and are subject to change.

The interim financial statements included in this Quarterly Report on Form 10-Q for the period ended March 25, 2023 (the “Interim Financial Statements”) have not been reviewed nor audited, as applicable, by the Company’s independent registered public accounting firm. As previously disclosed in ~~our~~its Current Report on Form 8-K, filed with the SEC on May 22, 2023, the Company concluded that a restatement of its previously issued (i) audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 25, 2022, filed with the SEC on September 9, ~~2022.~~

~~On October 6,~~ 2022 (the “2022 Form 10-K”), and (ii) unaudited and not reviewed interim consolidated financial statements included in the Company’s (a) Quarterly Report on Form 10-Q for the period ended September 24, 2022, filed with the SEC on November 3, 2022 (the “Q1 2023 Form 10-Q”), and (b) Quarterly Report on Form 10-Q for the period ended December 24, 2022, filed with the SEC on February 2, 2023 (the "Q2 2023 Form 10-Q" and together with the 2022 Form 10-K and the Q1 2023 Form 10-Q, the "Prior Reports" and the fiscal periods covered thereby the "Prior Periods"), would be required to correct errors related to impairment expenses, general and administrative expenses, cost of goods sold and depreciation and amortization expense that should have been disclosed in the footnotes of the financial statements, together with the corresponding adjustments to the related consolidated balance sheets for each of the Prior Periods. The Company intends to reflect the restatement of the Prior Periods in amendments to its Prior Reports and the Q3 2023 Form 10-Q, which the Company ~~entered into a Settlement~~intends to file as soon as reasonably practicable.

The Company's Interim Financial Statements included in this Quarterly Report are subject to the completion of the Company’s restatement analysis and ~~Mutual Release Agreement with Charles Coburn, Daryll DeSantis, Unisys Technical Solutions, LLC~~financial close and ~~Delsantro Investments LLC in connection with a complaint filed~~reporting process; have not been audited, reviewed, or compiled by ~~these parties on May 26, 2020~~our independent registered public accounting firm; and ~~counterclaim~~are subject to change. The Interim Financial Statements have been prepared internally by management and are still the subject of review by the Company's independent registered public accounting firm. While the Company ~~(the “Unisys Litigation”). The agreement resolved~~believes that the ~~Unisys Litigation~~Interim Financial Statements for the three and ~~preserved~~nine months ended March 25, 2023 included with this Quarterly Report fairly represent the expected impact of the restatement on the Company’s ~~right to a pro rata distribution from plaintiff and cross defendant Charles Coburn’s bankruptcy estate as~~results of operations, additional material weaknesses may be ~~ordered by~~identified, further adjustments may arise, including with respect to changes on the ~~bankruptcy court.~~

~~On July 11, 2022 Thor 952 Fulton Street, LLC,~~Company’s balance sheet, and the restated financial statements for the Prior Periods and included in amendments to the Prior Reports will reflect any such additional adjustments. The information and expected impact to the Company’s historical financial results are preliminary, do not present all information necessary for an ~~affiliate~~understanding of ~~Thor Equities Group, filed a complaint~~the Company’s restated financial condition as of and for the Prior Periods and are subject to change, potentially materially, as management completes the restatement of its financial statements and its independent registered public accounting firm completes the audit and review thereof. There can be no assurance that the Company’s actual financial results for set the three and nine month periods ended March 25, 2023 will not differ from the financial information presented herein and such changes could be material. Therefore, you should not place undue reliance upon these preliminary financial results.

If we fail to comply with the continued eligibility standards, we could be removed from the OTCQB, which would limit the ability of broker-dealers to sell our securities in the ~~United States District Court for~~secondary market.

In order to maintain price quotation privileges on the ~~Southern District of New York against Future Transactions Holdings, LLC, an affiliate~~OTCQB, companies must be reporting issuers under Section 12 of the ~~Company, MM Enterprises USA, LLC,~~Securities Exchange Act of 1934, as amended, and meet other requirements, such as being current in reports under Section 13 and maintain a minimum closing bid price of $0.01 per share on at least one of the prior 30 consecutive calendar days. Further, pursuant to the OTCQB Standards, in the event that a company’s closing bid price falls below $0.001 at any time for five consecutive trading days, such company will be immediately removed from OTCQB. On June 25, 2023, the Company ~~seeking approximately $950,960 in damages relating~~was notified by OTCQB that it had not filed financial information under Rule 15c2-11 of the Exchange Act. If we are removed from the OTCQB, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to ~~a lease~~sell our securities and an investor may find it more difficult to sell our securities or obtain

Table of ~~commercial property located in Illinois, which lease specified use~~Contents

accurate quotations as ~~a cannabis dispensary, claiming diversity jurisdiction. On September 16, 2022~~to the ~~Company moved~~market value of our securities. In addition, we may be unable to ~~dismiss the case~~get relisted on the ~~basis that~~OTCQB, which may have an adverse material effect on the subject matter of the contract was illegal under federal law, and plaintiffs thereafter moved for a voluntary dismissal. On October 17, 2022 the United States District court granted plaintiff’s motion for voluntary dismissal of the complaint without prejudice. On October 19, 2022 Future Transactions Holdings, LLC, MM Enterprises USA, LLC, and the Company filed a complaint under the federal Declaratory Judgment Act against Thor 942 Fulton Street, LLC.

~~ITEM 1A. RISK FACTORS.~~

~~Smaller reporting companies are not required to provide the information required by this Item.~~

Company.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~

During the three months ended March 25, 2023, the Company issued as aggregate of 74,158,530 shares in connection with the settlement of accounts payable and liabilities. Such securities were issued and sold in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. Each of the investors has represented to the Company, among other things, that it is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act). The offer and sale of such securities and the Shares issuable upon exercise thereof, as applicable, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

See discussion of Senior Secured Term Loan in “Note 10 – Notes Payable” under Part I, “Item 1. Notes to Condensed Consolidated Financial Statements”, of this Form 10-Q, which is incorporated in this item by reference.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~By resolution dated as~~Table of September 21, 2022, as consideration for Mr. Record’s service to the Company since April 24, 2022, when he was appointed as Chief Executive Officer, including successfully guiding the Company through the sale of its Florida assets, the Board effectively approved a cash bonus of $171,429. This payment represents the amount already due to Mr. Record pursuant to the terms of his employment entered at the time of his appointment; except that he shall now receive cash in lieu of RSUs for the period beginning on the date of his appointment through and until the date of the Board resolution. The Board also approved the grant to Mr. Record under the Company’s 2018 Stock and Incentive Plan of $3,000,000 worth of options with a term of five years to purchase Subordinate Voting Shares at an exercise price per share of $0.051968 and with one-third vesting on the date of grant and one-third vesting on each of April 24, 2023 and April 24, 2024. The resolution directs the Company to determine the number of options to be issued through the application of the Black Scholes option pricing model. The options will vest automatically upon a change of control or Mr. Record’s termination as CEO, unless the Board determines that Mr. Record is terminated based on his conduct or performance. A change of control generally includes the acquisition of 50% of the voting securities of the Company, a merger, or sale of all or substantially all of the Company’s assets. Pursuant to his employment terms, Mr. Record will continue to receive an annual salary of $416,000 and is eligible to receive up to an additional $8,000 per week during his service as CEO (the “Bonus”), one half of which will be paid in cash and one half will be paid in RSUs. The Bonus will be paid quarterly at the approval of the Board and not contingent on any specific requirements unless the Board determines reasonably that Mr. Record’s performance did not meet minimal acceptable standards or Mr. Record is terminated based on conduct or performance. The number of RSUs granted will be based on the trailing 10-day volume weighted average price of the Subordinate Voting Shares trading on the Canadian Securities Exchange or any National Securities Exchange prior to the date of grant.

Contents

On October 18, 2022, the Company’s Board of Directors approved a change to director compensation with regards to calculating the number of Subordinate Voting Shares issued to non-employee directors. The Company’s non-employee directors will continue to receive an annual fee of $250,000, of which one-third is paid in cash on a quarterly basis and two-thirds is paid in Subordinate Voting Shares. Each director will now receive on an annual basis 3,453,802 Subordinate Voting Shares, of which 864,200 Subordinate Voting Shares will vest quarterly, with retroactive effect to April 21, 2022.

In February 2022, the Company executed the Sixth Modification extending the maturity date of senior secured term loan facility (the “Facility”) with Hankey Capital and Stable Road Capital (the “Lenders”) to July 31, 2022 with respect to the Facility, and August 1, 2022 with respect to the incremental term loans (collectively, the “Term Loans”). The Sixth Modification makes no modification to the current interest rate. The Sixth Modification provides that the definitive documentation with respect to the conditional purchase of the Term Loans by Superhero Acquisition, L.P., an existing lender under the Company’s Senior Secured Convertible Purchase Agreement dated August 7, 2021, must be entered within 45 days or the stated maturity date of the Term Loans become due. The Sixth Modification requires that the Company make a mandatory prepayment of at least $37,500,000 in the event the sale of certain assets and imposes covenants in regards strategic actions the Company must implement if it is unable to pay the Term Loans by the extended stated maturity date. During the three months ended September 24, 2022, in connection with the sale of the Company’s Florida-based operations, the Company made a principal repayment of $31,599,999 with proceeds from the sale. The Facility remains in default as of September 24, 2022 and the Company is in ongoing discussions with the Lenders.

ITEM 6. EXHIBITS

Incorporated by Reference
Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed/
Furnished
Herewith
10.1 First Amendment to Asset Purchase Agreement dated July 31, 2022 among MME Florida, LLC, MM Enterprises USA, LLC, and Green Sentry Holdings, LLC. 8-K 000-56199 10.1 8/26/22
10.2 Second Amendment to Asset Purchase Agreement dated August 22, 2022 among MME Florida, LLC, MM Enterprises USA, LLC, and Green Sentry Holdings, LLC. 8-K 000-56199 10.2 8/26/22
10.3 Compensation Terms for CEO (Ed Record) approved by Board on September 22, 2022 ✓
31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. ✓
31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. ✓
32.1* Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ✓
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document. ✓
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. ✓
101.DEF XBRL Taxonomy Extension Definition Linkbase Document. ✓
101.LAB XBRL Taxonomy Extension Label Linkbase Document. ✓
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. ✓
104 Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.) ✓

*Incorporated by Reference

Exhibit No.

~~This exhibit shall not be deemed “filed” for purposes~~Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed/
Furnished
Herewith

31.1

Certification of ~~Section 18~~the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of ~~1934~~1934.

✓

31.2

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or ~~otherwise subject to the liabilities~~15d-14(a) of ~~that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or~~ the Securities Exchange Act of ~~1934, whether made before or after~~1934.

✓

32.1*

Certification of the ~~date hereof~~Chief Executive Officer and ~~irrespective~~Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of ~~any general incorporation language~~the Sarbanes-Oxley Act of 2002.

✓

101.INS

XBRL Instance Document - the instance document does not appear in ~~any filings.~~the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document.

✓

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

✓

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

✓

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

✓

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

✓

104

Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

✓

*This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: ~~November 3, 2022~~July 7, 2023	MEDMEN ENTERPRISES INC

	/s/ Ed Record		~~/s/~~ ~~Ana Bowman~~
	By:	~~Ana Bowman~~Ed Record
	Its:	~~Chief~~Principal Financial Officer


British ColumbiaA1	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)


	September 24,			June 25,
	2022			2022
	(unaudited)			(audited)
ASSETS

Current Assets:
Cash and Cash Equivalents	$	21,097,057		$	10,795,999
Accounts Receivable and Prepaid Expenses		5,376,069			7,539,767
Inventory		9,117,809			10,010,731
Assets Held for Sale		44,185,218			123,158,751
Receivable for Assets Held for Sale		11,500,000			-
Other Assets		7,403,829			9,990,992

Total Current Assets		98,679,982			161,496,240

Operating Lease Right-of-Use Assets		44,461,062			47,649,270
Property and Equipment, Net		59,965,935			64,107,792
Intangible Assets, Net		34,057,051			35,746,114
Goodwill		9,810,049			9,810,049
Other Non-Current Assets		4,157,513			4,414,219

TOTAL ASSETS	$	251,131,592		$	323,223,684

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
Current Liabilities:
Accounts Payable and Accrued Liabilities	$	35,355,136		$	38,905,818
Income Taxes Payable		64,710,033			58,646,291
Other Liabilities		17,121,093			16,704,283
Derivative Liabilities		7,555,153			6,749,563
Current Portion of Operating Lease Liabilities		12,199,351			10,925,128
Current Portion of Finance Lease Liabilities		4,150,484			4,061,273
Current Portion of Notes Payable		66,294,249			97,003,922
Liabilities Held for Sale		26,195,800			86,595,102

Total Current Liabilities		233,581,299			319,591,380

Operating Lease Liabilities		47,280,217			50,917,244
Finance Lease Liabilities		26,905,824			26,553,287
Other Non-Current Liabilities		2,987,812			3,082,277
Deferred Tax Liability		40,295,319			35,213,671
Senior Secured Convertible Credit Facility		138,746,070			132,005,663
Notes Payable		74,898,640			74,372,898

TOTAL LIABILITIES		564,695,181			641,736,420

SHAREHOLDERS’ EQUITY:
Preferred Shares (no par value, unlimited shares authorized and no shares issued and outstanding)		-			-
Subordinate Voting Shares (no par value, unlimited shares authorized, 1,301,683,764 and 1,301,423,950 shares issued and outstanding as of September 24, 2022 and June 26, 2022, respectively)		-			-
Additional Paid-In Capital		1,058,145,437			1,057,228,873
Accumulated Deficit		(897,613,980	)		(901,758,875	)

Total Equity Attributable to Shareholders of MedMen Enterprises Inc.		160,531,457			155,469,998
Non-Controlling Interest		(474,095,046	)		(473,982,734	)

TOTAL SHAREHOLDERS’ EQUITY		(313,563,589	)		(318,512,736	)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	251,131,592		$	323,223,684


	Three Months Ended
	September 24,			September 25,
	2022			2021
Revenue	$	30,044,048		$	36,735,904
Cost of Goods Sold		15,187,672			19,349,990

Gross Profit		14,856,376			17,385,914

Operating Expenses:
General and Administrative		17,846,117			32,649,234
Sales and Marketing		443,790			593,224
Depreciation and Amortization		3,946,523			5,823,617
Realized and Unrealized Changes in Fair Value of Contingent Consideration		(863,856	)		-
Impairment Expense		1,663,911			435,241
Other Operating (Income) Expense		(2,555,118	)		2,199,028

Total Operating Expenses		20,481,367			41,700,344

Loss from Operations		(5,624,991	)		(24,314,430	)

Non-Operating (Income) Expenses:
Interest Expense		10,052,691			8,171,764
Interest Income		(33	)		(23,008	)
Accretion of Debt Discount and Loan Origination Fees		1,581,967			6,347,471
Change in Fair Value of Derivatives		805,590			(2,105,415	)
Gain on Extinguishment of Debt		-			(10,233,610	)

Total Non-Operating Expenses		12,440,215			2,157,202

Loss from Continuing Operations Before Provision for Income Taxes		(18,065,206	)		(26,471,632	)
Provision for Income Tax Expense		(2,193,542	)		(19,691,908	)

Net Loss from Continuing Operations		(20,258,748	)		(46,163,540	)
Net Income (Loss) from Discontinued Operations, Net of Taxes		24,306,649			(14,446,491	)

Net Income (Loss)		4,047,901			(60,610,031	)

Net Loss Attributable to Non-Controlling Interest		(112,312	)		(5,280,003	)

Net Income (Loss) Attributable to Shareholders of MedMen Enterprises Inc.	$	4,160,213		$	(55,330,028	)

Earnings (Loss) Per Share - Basic and Diluted:
From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc.	$	(0.02	)	$	(0.04	)

From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc.	$	0.02		$	(0.02	)

Weighted-Average Shares Outstanding - Basic and Diluted		1,301,659,701			942,696,052


	Units		$ Amount							TOTAL EQUITY ATTRIBUTABLE
	Subordinate Voting Shares		Subordinate Voting Shares		Additional Paid-In Capital		Accumulated Deficit			TO SHAREHOLDERS OF MEDMEN		Non- Controlling Interest			TOTAL SHAREHOLDERS’ DEFICIENCY
BALANCE AS OF JUNE 26, 2022		1,301,423,950	$	-	$	1,057,228,873	$	(901,758,875	)	$	155,469,998	$	(473,982,734	)	$	(318,512,736	)

Net Income (Loss)		-		-		-		4,160,213			4,160,213		(112,312	)		4,047,901

Controlling Interest Equity Transactions
Partner Contributions		-		-		37,561		-			37,561		-			37,561
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	$	-	$	1,058,145,437	$	(897,613,980	)	$	160,531,457	$	(474,095,046	)	$	(313,563,589	)

	Units		$ Amount								TOTAL EQUITY ATTRIBUTABLE
	Subordinate Voting Shares		Subordinate Voting Shares		Additional Paid-In Capital			Accumulated Deficit			TO SHAREHOLDERS OF MEDMEN			Non- Controlling Interest			TOTAL SHAREHOLDERS’ DEFICIENCY
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		-		-		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	)

Schedule of inventories
	September 24,		June 25,
	2022		2022
Raw Materials	$	612,901	$	521,777
Work-in-Process		1,142,397		671,541
Finished Goods		7,362,511		8,817,413

Total Inventory	$	9,117,809	$	10,010,731

Schedule of asset held for sale
	Discontinued Operations ⁽¹⁾			Other Assets		TOTAL
Balance as of June 25, 2022	$	123,128,406		$	30,345	$	123,158,751
Ongoing Activities		(47,881,618	)		248,324		(47,633,294	)
Proceeds from Sale		(67,000,000	)		-		(67,000,000	)
Gain on Sale of Assets Held for Sale		35,659,761			-		35,659,761

Balance as of September 24, 2022	$	43,906,549		$	278,669	$	44,185,218

Schedule of property and equipment
	September 24,			June 25,
	2022			2022
Land and Buildings	$	29,933,999		$	29,933,999
Capital Leases		5,318,516			5,315,625
Furniture and Fixtures		8,325,228			8,776,994
Leasehold Improvements		33,625,893			33,069,524
Equipment and Software		16,316,334			16,897,649
Construction in Progress		4,528,762			6,828,923

Total Property and Equipment		98,048,732			100,822,714

Less Accumulated Depreciation		(38,082,797	)		(36,714,922	)

Property and Equipment, Net	$	59,965,935		$	64,107,792

Schedule of Intangible assets
	September 24,			June 25,
	2022			2022
Dispensary Licenses	$	49,253,452		$	49,253,452
Customer Relationships		16,409,600			16,409,600
Capitalized Software		7,413,470			7,413,470
Intellectual Property		4,016,597			4,016,597

Total Intangible Assets		77,093,119			77,093,119

Dispensary Licenses		(17,477,268	)		(16,876,912	)
Customer Relationships		(16,589,651	)		(15,870,284	)
Capitalized Software		(4,681,748	)		(4,413,974	)
Intellectual Property		(4,287,401	)		(4,185,835	)

Less Accumulated Amortization		(43,036,068	)		(41,347,005	)

Intangible Assets, Net	$	34,057,051		$	35,746,114

Schedule of assumptions to measure fair value
Expected Stock Price Volatility		106.25	%
Risk-Free Annual Interest Rate		2.51	%
Expected Life (in Years)		0.50
Share Price	$	0.04
Exercise Price	$	0.37

Schedule of lease cost
	Three Months Ended
	September 24,			September 25,
	2022			2021
Finance Lease Cost:
Amortization of Finance Lease Right-of-Use Assets	$	347,406		$	283,406
Interest on Lease Liabilities		1,804,507			1,784,541
Operating Lease Cost		3,453,863			6,595,652
Sublease Income ⁽¹⁾		(1,521,693	)		-

Total Lease Expenses	$	5,605,776		$	8,663,599

Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Financing Cash Flows from Finance Leases	$	2,484		$	959
Operating Cash Flows from Operating Leases	$	1,026,792		$	3,478,891

Schedule of future leases payments
Fiscal Year Ending	Operating Leases			Finance Leases
July 1, 2023 (remaining)	$	9,155,365		$	4,387,279
June 29, 2024		16,183,010			10,961,495
June 28, 2025		25,224,922			14,020,131
June 27, 2026		12,675,441			7,300,368
June 26, 2027		12,716,234			7,519,379
Thereafter		20,832,425			1,054,354,990

Total Lease Payments		96,787,396			1,098,543,643
Less Interest		(37,307,828	)		(1,067,487,335	)

Lease Liability Recognized	$	59,479,568		$	31,056,308

Schedule of notes payable
	September 24,			June 25,
	2022			2022
Financing liability incurred on various dates between January 2019 through September 2019 with implied interest rates ranging from 0.7% to 17.0% per annum.	$	72,300,000		$	72,300,000

Non-revolving, senior secured term notes dated between October 1, 2018 and October 30, 2020, issued to accredited investors, which mature on August 1, 2022 and July 31, 2022, and bear interest at a rate of 15.5% and 18.0% per annum.		66,819,991			97,162,001

Promissory notes dated November 7, 2018, issued to Lessor for tenant improvements as part of sales and leaseback transactions, which mature on November 7, 2028, bear interest at a rate of 10.0% per annum and require minimum monthly payments of $15,660 and $18,471.		2,057,207			2,057,207

Other		15,691			15,691

Total Notes Payable		141,192,889			171,534,899
Less Unamortized Debt Issuance Costs and Loan Origination Fees		-			(158,079	)

Net Amount	$	141,192,889		$	171,376,820
Less Current Portion of Notes Payable		(66,294,249	)		(97,003,922	)

Notes Payable, Net of Current Portion	$	74,898,640		$	74,372,898

Schedule of Shares issued and outstanding
	Subordinate Voting Shares		MM CAN USA Class B Redeemable Units			MM Enterprises USA Common Units
Balance as of June 25, 2022		1,301,423,950		65,066,106			725,016
Redemption of MedMen Corp Redeemable Shares		259,814		(259,814	)		-

Balance as of September 24, 2022		1,301,683,764		64,806,292			725,016

Schedule of VIE
	Venice Caregivers Foundation, Inc.			LAX Fund II Group, LLC			Natures Cure, Inc.		TOTAL
Current Assets	$	1,180,136		$	-		$	24,602,018	$	25,782,154
Non-Current Assets		8,763,511			3,233,062			4,891,725		16,888,298

Total Assets	$	9,943,647		$	3,233,062		$	29,493,743	$	42,670,452

Current Liabilities	$	10,477,448		$	16,016,119		$	8,510,967	$	35,004,534
Non-Current Liabilities		7,004,484			2,004,062			1,342,632		10,351,178

Total Liabilities	$	17,481,932		$	18,020,181		$	9,853,599	$	45,355,712

Non-Controlling Interest	$	(7,538,285	)	$	(14,787,119	)	$	19,640,163	$	(2,685,241	)

Revenues	$	1,959,080		$	-		$	3,317,299	$	5,276,379
Net (Loss) Income Attributable to Non-Controlling Interest	$	(494,845	)	$	(810,965	)	$	885,605	$	(420,205	)

Schedule of stock options
	Number of Stock Options			Weighted-Average Exercise Price
Balance as of June 25, 2022		8,649,673		$	1.35

Forfeited and Expired		(205,354	)	$	(3.39	)

Balance as of September 24, 2022		8,444,319		$	1.39

Stock Options Exercisable as of September 24, 2022		8,037,095		$	1.27

Schedule of Restricted Stock Grants
	Issued and Outstanding			Vested ⁽¹⁾		Weighted-Average Fair Value
Balance as of June 25, 2022		10,998,483			4,030,460	$	0.20

Forfeiture of Restricted Stock ⁽²⁾		(1,405,788	)		-	$	(0.22	)
Vesting of Restricted Stock		-			1,117,081	$	0.22

Balance as of September 24, 2022		9,592,695			5,147,541	$	0.20

Schedule of Warrants
	Number of Warrants Outstanding
	Subordinate Voting Shares			MM CAN USA Redeemable Shares		TOTAL			Weighted-Average Exercise Price
Balance as of June 25, 2022		352,704,355			97,430,456		450,134,811		$	0.25

Expired		(2,677,535	)		-		(2,677,535	)	$	(3.27	)

Balance as of September 24, 2022		350,026,820			97,430,456		447,457,276		$	0.23

Schedule of other operating expenses
	Three Months Ended
	September 24,			September 25,
	2022			2021
Loss on Disposals of Assets	$	205,595		$	15,146
Restructuring and Reorganization Expense		423,793			2,378,675
Gain on Settlement of Accounts Payable		(74,637	)		(177,990	)
Gain on Lease Terminations		(1,587,650	)		-
Other Income		(1,522,219	)		(16,803	)

Total Other Operating (Income) Expense	$	(2,555,118	)	$	2,199,028

Schedule of Disaggregation of revenue
	Three Months Ended
	September 24,		September 25,
	2022		2021
California	$	19,928,985	$	24,626,555
Nevada		2,997,469		4,079,151
Illinois		3,542,071		4,328,602
Arizona		2,794,648		3,701,596
Massachusetts		780,875		-

Revenue from Continuing Operations	$	30,044,048	$	36,735,904

Revenue from Discontinued Operations		3,629,641		7,340,099

Total Revenue	$	33,673,689	$	44,076,003