UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, ~~2019~~2020

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

For the Transition Period From ____________ to ____________

Commission File Number: 000-54258

TERRA TECH CORP.

(Exact Name of Registrant as Specified in its Charter)

NEVADA

26-3062661

(State or Other Jurisdiction

of Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2040 Main Street, Suite 225

Irvine, California

92614

(Address of Principal Executive Offices)

(Zip Code)

~~(855) 447-6967~~

(855) 447-6967

(Registrant’s Telephone Number, Including Area Code)

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

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

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	x
Emerging growth company	¨

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

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

As of ~~April 30, 2019,~~June 12, 2020, there were ~~103,168,106~~203,910,204 shares of common stock issued and 201,601,796 shares outstanding, 128 shares of Series A Preferred Stock, convertible at any time into 128 shares of common stock, 0 shares of Series B Preferred Stock, ~~1,052,615~~1,313,460 shares of common stock issuable upon the exercise of all of our outstanding warrants and ~~2,560,555~~3,320,582 shares of common stock issuable upon the exercise of all vested options.

TERRA TECH CORP.

INDEX TO FORM 10-Q FOR THE

QUARTERLY PERIOD ENDED MARCH 31, ~~2019~~2020

PART I — FINANCIAL INFORMATION
		Page
~~PART I — FINANCIAL INFORMATION~~
Item 1.
~~Item 1.~~	Financial Statements
	Consolidated Balance Sheets as of March 31, ~~2019~~2020 (Unaudited) and December 31, ~~2018~~2019	3
	Consolidated Statements of Operations for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	5
	Consolidated Statements of Stockholders Equity for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	~~6-7~~6
	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3033
	Company Overview	3033
	Results of Operations	3334
	Disclosure About Off-Balance Sheet Arrangements	3436
	Critical Accounting Policies and Estimates	3436
	Liquidity and Capital Resources	3437

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3538

Item 4.	Controls and Procedures	3638

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	3739

Item 1A.	Risk Factors	3739

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3739

Item 3.	Defaults Upon Senior Securities	3739

Item 4.	Mine Safety Disclosures	39


Item 5.	Other Information	3739

Item 6.	Exhibits	3840

~~Signatures~~
40Signatures		42

EXPLANATORY NOTE

On April 17, 2020, Terra Tech Corp. (the “Company”) filed a Current Report on Form 8-K, and is filing this Quarterly Report on Form 10-Q, in reliance on the Order of the Securities and Exchange Commission dated March 4, 2020, as modified March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934 granting exemptions from specified provisions of the Exchange Act and certain rules thereunder (Release No. 34-22465).

Due to the disruptions caused by the COVID-19 outbreak and related work and travel restrictions, certain Company officers and management as well as professional staff and consultants were delayed in conducting the work required to prepare our financial report for the quarter ended March 31, 2020. The Company is based in California and operates in both California and Nevada. On March 18, 2020, Governor Gavin Newsom of California issued a “Stay at Home” order due to the novel coronavirus. On April 1, 2020, Governor Steve Sisolak issued a “Stay at Home” order due to the novel coronavirus. These orders hampered the Company’s ability to conduct necessary work to finalize its financial statements, and otherwise finalize its Quarterly Report for the quarter ended March 31, 2020, in a timely manner.

Table of Contents

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for Shares)

March 31,

December 31,

2019

2018

(Unaudited)

ASSETS

Current Assets:

Cash

$ 5,807

$ 7,193

Accounts Receivable

1,862

1,247

Inventory

4,505

2,280

Assets Held for Sale

7,509

7,501

Prepaid Expenses and Other Current Assets

923

741

Total Current Assets

20,606

18,963

Property, Equipment and Leasehold Improvements, Net

46,432

34,139

Intangible Assets, Net

25,708

18,466

Goodwill

35,973

35,173

Other Assets

11,115

897

Other Investments

5,300

12,451

TOTAL ASSETS

$ 145,133

$ 120,088

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:

Current Liabilities:

Accounts Payable and Accrued Expenses

$ 9,222

$ 6,901

Total Current Liabilities

9,222

6,901

Long-Term Liabilities:

Long-Term Debt, Net of Discounts

13,031

18,313

Long-Term Lease Liabilities

7,786

-

Total Long-Term Liabilities

20,817

18,313

Total Liabilities

30,039

25,214

STOCKHOLDERS’ EQUITY:

Preferred Stock, Convertible Series A, Par Value 0.001: 100 Shares Authorized as of March 31, 2019 and December 31, 2018; 12 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018

-

-

Preferred Stock, Convertible Series B, Par Value 0.001: 41,000,000 Shares Authorized as of March 31, 2019 and December 31, 2018; 0 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018

-

-

Common Stock, Par Value 0.001: 990,000,000 Shares Authorized as of March 31, 2019 and December 31, 2018; 100,648,444 and 81,759,415 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018, respectively (1)

101

82

Additional Paid-In Capital (1)

253,066

236,543

Accumulated Deficit

(147,442 )

(142,754 )

Total Terra Tech Corp. Stockholders’ Equity

105,725

93,870

Non-Controlling Interest

9,369

1,003

Total Stockholders’ Equity

115,094

94,874

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 145,133

$ 120,088

~~(1)~~ ~~Adjusted to reflect the one-for-15 reverse stock split. See~~ ~~"Note 1 – Description of Business.”~~

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except Shares)

	March 31,			December 31,
	2020			2019
	(Unaudited)
ASSETS

Current Assets:
Cash	$	946		$	1,226
Accounts receivable, net		1,561			693
Inventory		5,012			4,334
Prepaid expenses and other assets		942			675
Current assets of discontinued operations		206			2,440

Total current assets		8,667			9,368

Property, equipment and leasehold improvements, net		35,021			35,469
Intangible assets, net		16,865			14,871
Goodwill		24,034			21,471
Other assets		11,842			7,631
Investments		5,330			5,000
Assets of discontinued operations		13,227			25,440

TOTAL ASSETS	$	114,986		$	119,250

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Current liabilities:
Accounts payable and accrued expenses	$	13,025		$	9,504
Deferred Revenue		300			-
Short-term debt		16,514			11,008
Current liabilities of discontinued operations		4,436			7,070

Total current liabilities		34,275			27,582

Long-term liabilities:
Long-term debt, net of discounts		2,159			6,570
Long-term lease liabilities		8,422			8,902
Long-term liabilities of discontinued operations		-			869
Total long-term liabilities		10,581			16,341

Total liabilities		44,856			43,923

STOCKHOLDERS’ EQUITY:
Preferred stock, convertible series A, par value 0.001:		-			-
100 shares authorized as of March 31, 2020 and December 31, 2019; 12 shares issued and 8 shares outstanding as of March 31, 2020 and December 31, 2019
Preferred stock, convertible series B, par value 0.001:		-			-
41,000,000 Shares Authorized as of March 31, 2020 and December 31, 2019; 0 Shares Issued and Outstanding as of March 31, 2020 and December 31, 2019
Common stock, par value 0.001:		193			120
990,000,000 Shares authorized as of March 31, 2020 and December 31, 2019; 193,239,261 issued and 190,930,853 outstanding as of March 31, 2020 and 120,313,386 shares issued and 118,004,978 shares outstanding as of December 31, 2019
Additional paid-in capital		272,455			260,516
Treasury Stock (2,308,408 shares of common stock, 4 shares of Preferred Stock Convertible Series A)		(808	)		(808	)
Accumulated deficit		(207,015	)		(189,685	)

Total Terra Tech Corp. stockholders’ equity		64,825			70,143
Non-controlling interest		5,305			5,184

Total stockholders’ equity		70,130			75,327

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	114,986		$	119,250

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3
Table of Contents

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except for Shares & Per-Share info)

Three Months Ended
March 31,

2019

2018

Total Revenues

$ 7,358

$ 8,615

Cost of Goods Sold

3,354

5,494

Gross Profit

4,004

3,122

Selling, General and Administrative Expenses

11,515

10,292

Loss from Operations

(7,511 )

(7,171 )

Other Income (Expense):

Interest Expense, Net

(2,928 )

(4,926 )
Other Income/Loss

48

-

Share of Gain / (Loss) in Joint Venture

5,599

-

Total Other Income (Expense)

2,719

(4,926 )

Net Loss

(4,792 )

(12,097 )
Net Income (Loss) Attributable to Non-Controlling Interest

277

79

NET LOSS ATTRIBUTABLE TO TERRA TECH CORP.

$ (5,069 )

$ (12,175 )

Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders – Basic and Diluted (1)

$ (0.05 )

$ (0.19 )

Weighted-Average Number of Common Shares Outstanding – Basic and Diluted (1)

93,710,004

64,711,660

~~(1)~~ ~~Adjusted to reflect the one-for-15 reverse stock split. See~~ ~~"Note 1 – Description of Business."~~

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except for shares and per-share information)

	Three Months Ended
	March 31,
	2020			2019

Total revenues	$	4,313		$	2,045
Cost of goods sold		1,975			445

Gross profit		2,338			1,600

Selling, general and administrative expenses		9,037			8,591
Impairment of assets		5,120			-
(Gain) / Loss on sale of assets		(35	)		-
Loss on interest in joint venture		-			1,067

Loss from operations		(11,784	)		(8,058	)

Other income (expense):
Interest expense, net		(902	)		(2,928	)
Other income/loss		65			11

Total other income (expense)		(837	)		(2,917	)

Income (Loss) from continuing operations		(12,621	)		(10,975	)
Income (Loss) from discontinued operations, net of tax		(4,752	)		(484	)

NET INCOME (LOSS)		(17,373	)		(11,459	)

Less: Income (Loss) attributable to non-controlling interest from continuing operations		(44	)		77
Less: Income (Loss) attributable to non-controlling interest from discontinued operations		-			200

NET LOSS ATTRIBUTABLE TO TERRA TECH CORP.	$	(17,329	)	$	(11,736	)

Income / ( Loss) from continuing operations per common share attributable to Terra Tech Corp. common stockholders – basic and diluted	$	(0.08	)	$	(0.12	)
Net Loss per common share attributable to Terra Tech Corp. common stockholders – basic and diluted	$	(0.11	)	$	(0.13	)

Weighted-average number of common shares outstanding – basic and diluted		150,906,135			93,710,004

The accompanying notes are an integral part of the unaudited consolidated financial statements.

4
Table of Contents

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

Three Months Ended

March 31,

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss

$ (4,792 )

$ (12,097 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Cancellation of shares issued

(58 )

(118 )
Interest Expense

2,928

4,926

Interest Income Accreted

-

(68 )
Depreciation and Amortization

1,565

1,533

Operating Lease Expense

562

-

Stock Issued for Compensation

315

288

Stock Issued for Services

23

17

Stock Option Expense

1,282

474

Gain on Revaluation of Equity Interests

(5,597 )

-

Other Noncash Gains

-

(175 )
Changes in Operating Assets and Liabilities:

-

-

Accounts Receivable

(615 )

237

Inventory

(1,251 )

988

Prepaid Expenses and Other Current Assets

(102 )

(865 )
Other Assets

(221 )

(203 )
Accounts Payable and Accrued Expenses

742

(604 )
Payments on Operating Lease Liabilities

(497 )

-

NET CASH USED IN OPERATING ACTIVITIES

(5,715 )

(5,667 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Issuance of Note Receivable

-

(886 )
Purchase of Property, Equipment and Leasehold Improvements

(2,547 )

(4,682 )
Purchase of Equity investment

(402 )

-

Cash from Acquisition of Joint Venture Entities

127

-

NET CASH USED IN INVESTING ACTIVITIES

(2,822 )

(5,568 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Issuance of Notes Payable

6,000

10,000

Payments of Debt Principal

(1,000 )

-

Cash Paid for Debt Discount

(150 )

(495 )
Proceeds from Issuance of Common Stock

2,300

750

Proceeds from Exercise of Warrants

-

51

Cash (Distribution) Contribution from Non-Controlling Interest

-

(6 )

NET CASH PROVIDED BY FINANCING ACTIVITIES

7,150

10,300

NET CHANGE IN CASH

(1,387 )

(935 )
NET CHANGE IN CASH CLASSIFIED WITHIN CURRENT ASSETS HELD FOR SALE

-

-

Cash at Beginning of Period

7,193

5,446

CASH AT END OF PERIOD

$ 5,807

$ 4,511

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:

Cash Paid for Interest

$ 50

$ 312

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:

Financing Fees in Accounts Payable

$ 25

$ -

Purchase of Land and Building with a Mortgage

$ -

$ 6,500

Claw Back of Escrow Shares

$ -

$ 351

Warrants Issued in Conjunction with Debt

$ 163

$ 466

Stock Issued for Assets

$ -

$ 100

Conversion of Dominion Debt

$ 7,750

$ 9,400

Deposits Applied to the Purchase of Property

$ -

$ 3,500

Beneficial Conversion Feature Recorded as Debt Discount

$ 4,662

$ 3,811

Consolidation of Joint Venture Net Assets

$ 11,957

$ -

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2020
(UNAUDITED)
(in thousands)

	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(17,373	)	$	(11,459	)
Less: net loss from discontinued operations		4,752			484
Net loss from continuing operations		(12,621	)		(10,975	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		296			-
Cancellation of shares issued		-			(58	)
Gain on sale of assets		(35	)		-
Amortization of debt discount		339			2,928
Depreciation and amortization		1,804			1,306
Non-cash operating lease expense		225			168
Stock based compensation		959			1,620
Loss on revaluation of equity interests		-			1,064
Impairment loss		5,120			-
Change in operating assets and liabilities:
Accounts receivable		(212	)		(47	)
Inventory		(597	)		(731	)
Prepaid expenses and other current assets		(26	)		(60	)
Other assets		(249	)		(672	)
Accounts payable and accrued expenses		2,320			865
Operating lease liabilities		(221	)		(475	)
Net cash provided by / (used in) operating activities - continuing operations		(2,898	)		(5,066	)
Net cash provided by / (used in) operating activities - discontinued operations		(1,281	)		(806	)
NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES		(4,179	)		(5,872	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements		(263	)		(2,408	)
Purchase of equity investment		-			(402	)
Cash from acquisitions		57			127
Proceeds from sales of assets		35			-
Net cash provided by / (used in) investing activities - continuing operations		(171	)		(2,683	)
Net cash provided by / (used in) investing activities - discontinued operations		2,263			18
NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES		2,092			(2,665	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		1,392			6,000
Payments of debt principal		-			(1,000	)
Cash paid for debt discount		-			(150	)
Proceeds from issuance of common stock		250			2,300
Cash contribution (distribution) from non-controlling interest		165			-
Net cash provided by / (used in) financing activities - continuing operations		1,807			7,150
Net cash provided by / (used in) financing activities - discontinued operations		-			-
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES		1,807			7,150

NET CHANGE IN CASH		(280	)		(1,387	)

Cash at beginning of period		1,226			7,193

CASH AT END OF PERIOD	$	946		$	5,806

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	360		$	50

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt principal and accrued interest converted into common stock	$	1,028		$	7,750
Stock Issued for the acquisition of OneQor	$	9,305		$	-
Fixed assets in accounts payable	$	167		$	-
Consolidation of Joint Venture Net Assets	$	-		$	11,957
Financing Fees in Accounts Payable	$	-		$	25
Warrants issued for debt discount	$	-		$	163
Beneficial Conversion Feature	$	-		$	4,662

The accompanying notes are an integral part of the unaudited consolidated financial statements.

5
Table of Contents

~~TERRA TECH CORP. AND SUBSIDIARIES~~
~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~
~~FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018~~ ⁽¹⁾
~~(in thousands, except for Shares)~~

Preferred Stock

Convertible
Series A

Convertible
Series B

Common
Stock

Additional
Paid-In

Accumulated

Non-
Controlling

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interest

Total

Balance at December 31, 2017

8

$ -

-

$ -

61,818,560

$ 62

$ 181,358

$ (105,549 )

$ 931

$ 76,802

Opening Balance Sheet Adjustment - ASU 2017-11

-

-

-

-

-

-

5,238

2,548

-

7,786

Beneficial Conversion Feature - Convertible Notes

-

-

-

-

-

-

3,811

-

-

3,811

Issuance of Common Stock for Compensation

4

-

-

-

81,506

0

288

-

-

288

Issuance of Common Stock for Services

-

-

-

-

6,410

0

17

-

-

17

Stock Cancellation

-

-

-

-

(24,510 )

(0 )

(118 )

-

-

(118 )
Reverse Stock Split round up shares

-

-

-

-

46,688

0

(0 )

-

-

-

TCD Acquisition Clawback

-

-

-

-

(101,083 )

(0 )

(351 )

-

-

(351 )
Warrant Exercise

-

-

-

-

197,125

0

51

-

-

51

Debt Conversion - Common Stock

-

-

-

-

3,133,025

3

9,485

-

-

9,488

Stock issued for Cash

-

-

-

-

160,430

0

750

-

-

750

Stock issued for Assets

-

-

-

-

26,666

0

100

-

-

100

Stock Option Expense

-

-

-

-

-

-

474

-

-

474

Issuance of warrants

-

-

-

-

-

-

466

-

-

466

Net Income Attributable to Non-Controlling Interest

-

-

-

-

-

-

-

-

79

79

Net Loss Attributable to Terra Tech Corp.

-

-

-

-

-

-

-

(12,175 )

-

(12,175 )
Balance at March 31, 2018

12

$ -

-

$ -

65,344,816

$ 65

$ 201,570

$ (115,176 )

$ 1,010

$ 87,469

⁽¹⁾ ~~Adjusted to reflect the 1 for 15 reverse stock split. See Note 15.~~

~~The accompanying notes are an integral part of the unaudited consolidated financial statements.~~

6
~~Table of Contents~~

~~TERRA TECH CORP. AND SUBSIDIARIES~~
~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~
~~FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018~~ ⁽¹⁾
~~(in thousands, except for Shares)~~

Preferred Stock

Convertible
Series A

Convertible
Series B

Common
Stock

Additional
Paid-In

Accumulated

Non-
Controlling

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interest

Total

Balance at December 31, 2018

12

$ -

-

$ -

81,759,415

$ 82

$ 236,543

$ (142,754 )

$ 1,003

$ 94,874

Opening Balance Sheet Adjustment - ASC 842

381

381

Stock Compensation - Employees

-

-

-

-

385,536

0

315

-

-

315

Stock Compensation - Services Expense

-

-

-

-

26,376

0

23

-

-

23

Stock Cancellation

-

-

-

-

(60,000 )

(0 )

(58 )

-

-

(58 )
Debt Conversion - Common Stock

-

-

-

-

15,038,949

15

7,839

-

-

7,854

Stock issued for Cash

-

-

-

-

3,498,168

3

2,297

-

-

2,300

Stock Option Expense

-

-

-

-

-

-

1,282

-

-

1,282

Issue of warrants to Aegis

-

-

-

-

-

-

4,825

-

-

4,825

Consolidation of NuLeaf Joint Venture

-

-

-

-

-

-

-

-

8,089

8,117

Net Income Attributable to Non-Controlling Interest

-

-

-

-

-

-

-

-

277

277

Net Loss Attributable to Terra Tech Corp.

-

-

-

-

-

-

-

(5,069 )

-

(5,069 )
Balance at March 31, 2019

12

$ -

-

$ -

100,648,444

$ 101

$ 253,066

$ (147,442 )

$ 9,369

$ 115,094

⁽¹⁾ ~~Adjusted to reflect the 1 for 15 reverse stock split. See Note 15.~~

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2020
(UNAUDITED)
(in thousands, except for Shares)

	Preferred Stock
	Convertible								Additional										Non-
	Series A				Common Stock				Paid-In		Treasury Stock					Accumulated			Controlling
	Shares		Amount		Shares		Amount		Capital		Shares		Amount			Deficit			Interest			Total
Balance at December 31, 2019		8	$	-		118,004,978	$	120	$	260,516		2,308,412	$	(808	)	$	(189,685	)	$	5,184		$	75,327
Debt conversion - common stock		-		-		9,123,560		9		1,018		-		-			-			-			1,028
Stock compensation - employees		-		-		2,353,115		2		373		-		-			-			-			375
Stock compensation - services expense		-		-		825,000		1		108		-		-			-			-			109
Stock issued for cash		-		-		2,470,173		2		248		-		-			-			-			250
Stock issued for OneQor acquisition		-		-		58,154,027		58		9,246		-		-			-			-			9,305
Stock option expense		-		-		-		-		944		-		-			-			-			944
Contribution from non-controlling interest		-		-		-		-		-		-		-			-			165			165
Net income attributable to non-controlling interest		-		-		-		-		-		-		-			-			(44	)		(44	)
Net loss attributable to Terra Tech Corp.		-		-		-		-		-		-		-			(17,329	)		-			(17,329	)
Balance at March 31, 2020		8	$	-		190,930,853	$	193	$	272,455		2,308,412	$	(808	)	$	(207,015	)	$	5,305		$	70,130

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2019
(UNAUDITED)
(in thousands, except for Shares)

	Preferred Stock
	Convertible									Additional										Non-
	Series A				Common Stock					Paid-In			Treasury Stock				Accumulated			Controlling
	Shares		Amount		Shares			Amount		Capital			Shares		Amount		Deficit			Interest		Total
Balance at December 31, 2018		12	$	-		81,759,415		$	82	$	236,543			-	$	-	$	(142,754	)	$	1,003	$	94,874
Stock compensation - employees		-		-		385,536			-		315			-		-		-			-		315
Stock compensation - services expense		-		-		26,376			-		23			-		-		-			-		23
Stock cancellation		-		-		(60,000	)		-		(58	)		-		-		-			-		(58	)
Debt conversion - common stock		-		-		15,038,949			15		7,839			-		-		-			-		7,854
Stock issued for cash		-		-		3,498,168			3		2,297			-		-		-			-		2,300
Stock option expense		-		-		-			-		1,282			-		-		-			-		1,282
Issuance of warrants		-		-		-			-		4,825					-		-			-		4,825
Consolidation of NuLeaf joint venture		-		-		-			-		-			-		-		-			5,402		5,402
Net income attributable to non-controlling interest		-		-		-			-		-			-		-		-			277		277
Net loss attributable to Terra Tech Corp.		-		-		-			-		-			-		-		(11,736	)		-		(11,736	)
Balance at March 31, 2019		12	$	-		100,648,444		$	100	$	253,066			-	$	-	$	(154,490	)	$	6,682	$	105,358

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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TERRA TECH CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

References in this document to “the Company”, “Terra Tech”, “we”, “us”, or “our” are intended to mean Terra Tech Corp., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.

We are a retail, production and cultivation company, with an emphasis on providing the highest quality of medical and adult use cannabis products. We ~~grow organic antioxidant rich Superleaf lettuce and living herbs using classic Dutch hydroponic farming methods. We have licensed an exclusive patent on the Superleaf lettuce.~~

~~We have a presence in three states (California, Nevada and New Jersey) and~~ currently have a concentrated cannabis interest in California and Nevada. All of our cannabis dispensaries operate under the name Blüm. Our cannabis dispensaries in California operate as ~~MediFarm SoCal in Santa Ana,~~ Black Oak Gallery in Oakland and Blum San Leandro in San Leandro and offer a broad selection of medical and adult-use cannabis products including flowers, concentrates and edibles.

In Nevada, we have ~~three dispensaries, two~~one dispensary operating under MediFarm in Las Vegas ~~and one under MediFarm I in Reno,~~ which ~~sell~~sells quality medical and adult use cannabis products. ~~We jointly own real property~~The cannabis dispensary in ~~Reno under MediFarm I RE, on which MediFarm I operates its dispensary.~~

~~Founded on~~Nevada has been categorized as a discontinued operation as we have entered into an agreement to sell the importance of providing consumers with healthy and natural products, Edible Garden is a wholesale seller of organic and locally grown hydroponic produce and herb products. EG Transportation supports the distribution of Edible Garden productsrelated assets to ~~major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, and others throughout New Jersey, New York, Delaware, Maine, Maryland, Connecticut, Pennsylvania and the Midwest.~~an unaffiliated third party.

On ~~March 12, 2018,~~February 14, 2020, the Company ~~implemented a 1-for-15 reverse stock split of the Company’s common stock (the “Reverse Stock Split”~~acquired OneQor Technologies, Inc. (“OneQor”). The ~~Reverse Stock Split became effective~~acquisition of OneQor was accounted for in accordance with ASC 805-10, “Business Combinations.” OneQor is a cannabinoid-focused company, concentrating on the ~~stock market upon commencement~~development, manufacturing, and delivery of ~~trading on March~~patented, proprietary over-the-counter CBD products to established suppliers and consumer brands. Refer to Note 13, ~~2018. As a result, every fifteen shares of~~“Business Combinations” for additional information regarding the Company’s Pre-Reverse Stock Split common stock were combined and reclassified into one share of the Company’s common stock. The number of common stock shares subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout unaudited consolidated financial statements have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of the Company’s common stock were not affected by the Reverse Stock Split.transaction.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Securities Exchange Commission (“SEC”) Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933 and reflect the accounts and operations of the Company and those entities in which we have a controlling financial interest. In accordance with the provisions of the Financial Accounting Standards Board (“FASB”) or Accounting Standards Codification (“ASC”) 810, “Consolidation”, we consolidate any variable interest entity (“VIE”), of which we are the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidate a VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We have determined that we are the primary beneficiary of certain VIEs. We evaluate our relationships with all the VIEs on an ongoing basis to reassess if we continue to be the primary beneficiary.

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All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These interim unaudited condensed consolidated financial statements do not include all disclosures required by GAAP for complete financial statements and, therefore, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, ~~2018.~~2019. The December 31, ~~2018~~2019 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, ~~2018.~~2019. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

~~Liquidity~~

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AsRevision of Previously Issued Financial Statements

During the year ended December 31, 2019, management finalized the accounting for the NuLeaf transaction and recorded a measurement period adjustment that increased net loss by $6.63 million. The Company has revised the condensed unaudited consolidated statement of operations and condensed unaudited consolidated statements of stockholders’ equity for the three months ended March 31, 2019 to restate the ~~Company’s principal sources~~loss on remeasurement of our equity interests in NuLeaf to equal the loss as reported at the close of the measurement period. The revision resulted in a decrease in accumulated deficit and net loss reported as of and during the three months ended March 31, 2019 of $6.63 million.

Going Concern

The accompanying unaudited condensed financial statements have been prepared assuming that we will continue as a going concern. In an effort to achieve liquidity consisted of approximately $5.81 million of cash, future cash generated from operations, and available financing. The Company believes its current cash balances coupled with anticipated cash flow from operating activities willthat would be sufficient to meet ~~its working~~all of our commitments, we have undertaken a number of actions, including minimizing capital ~~requirements for at least one year from~~expenditures and reducing recurring expenses. However, we believe that even after taking these actions, we may not have sufficient liquidity to satisfy all of our future financial obligations. The risks and uncertainties surrounding the ~~date~~timing of the ~~issuance~~ close of our pending asset sales in Nevada, our limited capital resources, and the weak industry conditions impacting our business raise substantial doubt as to our ability to continue as a going concern. See Note 19, ”Going Concern” of the ~~accompanying financial statements. The Company continues~~Notes to ~~control its cash expenses as a percentage~~Consolidated Financial Statements included in Part II and Item 1A – “Risk Factors “in Part I of ~~expected revenue~~this Quarterly Report on an annual basis and thus may use its cash balances in the short-term to invest in revenue growth. Based on current internal projections, the Company believes it has and/or will generate sufficient cash for its operational needs. The company believes that it has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.Form 10-Q.

Non-Controlling Interest

Non-controlling interest is shown as a component of stockholders’ equity on the consolidated balance sheets and the share of net income (loss) attributable to non-controlling interest is shown as a component of net income (loss) in the consolidated statements of operations.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of total net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns, inventory valuation, stock-based compensation expense, goodwill and purchased intangible asset valuations, derivative liabilities, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not affect net loss, revenues or stockholders’ equity. See Note 16,“Discontinued Operations” for further discussion regarding discontinued operations.

Trade and ~~other~~Other Receivables

The Company extends noninterest bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the consolidated balance sheets, net of an allowance for doubtful accounts. The Company analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends, in determining the allowance for doubtful accounts. The Company does not accrue interest receivable on past due accounts receivable. The allowance for doubtful accounts was $0.35 million as of March 31, 2020.

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Notes Receivable

The company reviews all outstanding notes receivable for collectability as information becomes available pertaining to the Company’s inability to collect. An allowance for notes receivable is recorded for the likelihood of non-collectability. The Company accrues interest on the note receivable based upon contractual terms. There was no allowance at March 31, 2020.

Inventory

Inventory is stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method of accounting. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items and reserves. The reserve estimate for excess and obsolete inventory is based on expected future use. The reserve estimates have historically been consistent with actual experience as evidenced by actual sale or disposal of the goods.

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Prepaid Expenses and Other Current Assets

Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include advertising, insurance, and service or other contracts requiring upfront payments.

Property, Equipment and Leasehold Improvements, Net

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The approximate useful lives for depreciation of our property, equipment and leasehold improvements are as follows: thirty-two years for buildings; three to eight years for furniture and equipment; three to five years for computer and software; five years for vehicles and the shorter of the estimated useful life or the underlying lease term for leasehold improvements. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred.

Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. See “Note ~~9 –~~ 7, “Property, Equipment and Leasehold Improvements, Net” for further information.

Investments ~~in Unconsolidated Affiliates~~

Investments in unconsolidated affiliates are accounted for under the cost or the equity method of accounting, as appropriate. The Company accounts for investments in limited partnerships or limited liability corporations, whereby the Company owns a minimum of 5% of the ~~investee's~~investee’s outstanding voting stock, under the equity method of accounting. These investments are recorded at the amount of the ~~Company's~~Company’s investment and adjusted each period for the ~~Company's~~Company’s share of the ~~investee's~~investee’s income or loss, and dividends paid. As investments accounted for under the cost method do not have readily determinable fair values, the Company only estimates fair value if there are identified events or changes in circumstances that could have a significant adverse effect on the ~~investment's~~investment’s fair value.

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Assets Held for Sale and Discontinued Operations

Assets held for sale represent furniture, equipment, and leasehold improvements less accumulated depreciation as well as any other assets that are held for sale in conjunction with the sale of a business. The Company recorded assets held for sale in accordance with ASC 360, “Property, Plant, and Equipment,” at the lower of carrying value or fair value less costs to sell. Fair value is based on the estimated proceeds from the sale of the facility utilizing recent purchase offers, market comparables and/or data. Our estimate as to fair value is regularly reviewed and subject to changes in the commercial real estate markets and our continuing evaluation as to the facility’s acceptable sale price. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. These conditions are usually met from the date on which a letter of intent or agreement to sell is ready for signing. The Company follows the guidance within ASC 205, “Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity” when assets held for sale represent a strategic shift in the Company’s operations and financial results.

Goodwill

Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. In accordance with ASC 350, “Intangibles—Goodwill and Other,”goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.

The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of September 30 and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In ~~assessing~~ the ~~qualitative factors,~~impairment test, the Company ~~assesses relevant events and circumstances that may impact~~measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value ~~and the carrying amount~~ of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

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The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where the Company has had an acquisition that benefited more than one reporting unit, The Company has assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit.

If the carrying amount of a reporting unit is in excess ofor its fair value, ~~an impairment may exist, and~~ the Company must perform the second step of the impairment analysis to measure the amount of the impairment loss, by allocating the reporting unit’s fair value to its assets and liabilities other than goodwill, comparing the carrying amount of the goodwill to the resulting implied fair value of the goodwill, and recordingrecognizes an impairment charge ~~for any~~equal to the amount in excess.

Intangible Assets

Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, “Property, Plant, and Equipment,” intangible assets are stated at historical cost and amortized over their estimated useful lives. The Company uses a straight-line method of amortization, unless a method that better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up can be reliably determined. The approximate useful lives for amortization of our intangible assets are as follows:

Customer ~~Relationships~~relationships		3 to 5 Years
Trademarks		2 to 8 Years
Dispensary ~~Licenses~~licenses		14 Years
Patent		2 Years
~~Management Service Agreement~~		~~15 Years~~

~~Business Combinations~~

The Company ~~accounts~~reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for ~~its business acquisitions in accordance with ASC 805-10,~~ ~~“Business Combinations.”~~ ~~The Company allocates the total cost~~recoverability. For purposes of the ~~acquisition~~recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the ~~underlying net~~fair value in the period identified.

Intangible assets ~~based on their respective estimated fair values. As part of this allocation process,~~that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the ~~Company identifies and attributes values and estimated lives~~asset might be impaired. An impairment loss is recognized to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, andextent that the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market prices or other transparent market data. These determinations affect thecarrying amount of ~~amortization expense recognized in future periods. The Company bases~~the asset group exceeds its fair ~~value estimates on assumptions it believes to be reasonable but are inherently uncertain.~~value.

~~Revenue Recognition and Performance Obligations~~

~~On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09,~~ ~~“Revenue from Contracts with Customers”~~ and all the related amendments, which are also codified into ASC 606. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows.

~~Under the new standard, the Company recognizes a sale as follows:~~

~~Cannabis Dispensary, Cultivation and Production~~

The Company recognizes revenue from manufacturing and distribution product sales when our customers obtain control of our products. Revenue from our retail dispensaries is recorded at the time customers take possession of the product. Revenue from our retail dispensaries is recognized net of discounts, rebates, promotional adjustments, price adjustments and returns, and net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase.

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Revenue related to distribution customers is recorded when the customer is determined to have taken control of the product. This determination is based on the customer specific terms of the arrangement and gives consideration to factors including, but not limited to, whether the customer has an unconditional obligation to pay, whether a time period or event is specified in the arrangement and whether the Company can mandate the return or transfer of the products. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities with collected taxes recorded as current liabilities until remitted to the relevant government authority.

~~Herbs and Produce Products~~

The Company recognizes revenue from products grown in its greenhouses upon delivery of the product to the customer at which time control passes to the customer. Upon transfer of control, the Company has no further performance obligations.

For sales for which the Company uses an outside grower, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. The evaluation considers whether the Company takes control of the products of the outside grower, whether it has the ability to direct the outside grower to provide the product to the customer on its behalf or whether it combines products from the outside grower with its own goods and services to provide the products to the customer.

In evaluating whether it takes control of the products of the outside grower, the Company considers whether it has primary responsibility for fulfilling the promise to provide the products, whether the Company is subject to inventory risk related to the products and whether it has the ability to set the selling prices for the products.

~~Disaggregation of Revenue~~

~~See~~ ~~“Note 18 – Segment Information”~~ ~~for revenues disaggregated by type as required by ASC Topic 606.~~

~~Contract Balances~~

~~Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606.~~

~~Contract Estimates and Judgments~~

The Company’s revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed at the point of sale and all consideration from contracts are included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration.

Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 –Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company ~~has not elected the~~held one investment at fair value ~~option~~as of March 31, 2020. Refer to ~~measure any eligible financial instruments.~~ Note 10, “Fair Value Measurements” for details.

Business Combinations

The Company accounts for its business acquisitions in accordance with ASC 805-10, “Business Combinations.” The Company allocates the total cost of the acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, the Company identifies and attributes values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, and the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market prices or other transparent market data. These determinations affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes to be reasonable but are inherently uncertain.

Revenue Recognition and Performance Obligations

Cannabis Dispensary, Cultivation and Production

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~~Recently Adopted Accounting Standards~~Cannabinoid Products

~~FASB ASU No. 2018-07 (Topic 718), “Compensation—Stock Compensation: Improvements~~Under ASC 606, revenue from the sale of OneQor’s products is generally recognized at a point in time when control over the goods has been transferred to ~~Nonemployee Share-Based~~the customer. Payment ~~Accounting”~~ – ~~Issued in June 2018, ASU 2018-07 expands~~is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. Revenue is recognized upon the satisfaction of the performance obligation. The Company satisfies its performance obligation and transfers control upon delivery and acceptance by the customer.

Disaggregation of Revenue

See Note 17, “ Segment Information” for revenues disaggregated by type as required by ASC Topic 606. The company believes this level of disaggregation sufficiently depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Contract Balances

Cannabis Dispensary, Cultivation and Production

Due to the nature of the Company’s revenue from contracts with customers, our cannabis dispensary, cultivation and production operations do not have material contract assets or liabilities that fall under the scope of ASC Topic ~~718~~606.

Cannabinoid Products

The Company has established terms with its customers whereby customers generally will pay 50 percent at the time an order is placed and 50 percent at the time of completion to ~~include share-based payment transactions for acquiring~~release the order. These terms are typically mirrored with the Company’s suppliers who are paid 50 percent at the time an order is placed and the balance also due upon manufacturing completion. Deposit payments made to suppliers are recorded as prepaid inventory until fully paid, whereby goods are then shipped to customers. As of March 31, 2020, deposits from customers totaled $0.30 million and ~~services~~prepaid inventory totaled $0.23 million. Deposits from ~~nonemployees.~~ customers are reflected as deferred revenue on the balance sheet until the performance obligation has been fulfilled.

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Contract Estimates and Judgments

The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contractCompany’s revenues accounted for under ASC Topic ~~606.~~ 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed at the point of sale and all consideration from contracts are included in the transaction price. The Company’s contracts do not include multiple performance obligations or variable consideration.

Cost of Goods Sold

Cannabis Dispensary, Cultivation and Production

Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and delivery costs. It also includes the labor and overhead costs incurred in cultivating and producing cannabis flower and cannabis-derived products. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs.

Cannabinoid Products

Cost of goods sold includes the fees charged by suppliers to manufacture CBD products as well as packaging and shipping costs for finished goods.

Advertising Expenses

The Company ~~adopted ASU 2018-07 on January 1, 2019. Adoption of this guidance did not have a material impact~~expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.” Advertising expenses recognized totaled $0.17 million and $0.57 million the three months ended March 31, 2020 and 2019, respectively.

Stock-Based Compensation

The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”, which requires fair value measurement on the ~~Company’s~~grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors, including restricted stock awards. For stock options, the Company estimates the fair value using a closed option valuation (Black-Scholes) model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value is then expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the performance period and the related amount is recognized in the consolidated ~~financial condition or results~~statements of operations.

~~FASB ASU 2017-04 (Topic 350), “Intangibles - Goodwill~~The Black-Scholes option-pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and ~~Others”~~ ~~– Issued~~the expected stock price volatility of the underlying stock. The assumptions used in ~~January 2017, ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from~~calculating the ~~goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied~~ fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. The Company accounts for forfeitures of stock-based awards as they occur.

Income Taxes

The provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company files a consolidated United States federal income tax return. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting ~~unit’s goodwill with~~purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the ~~carrying~~amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. At March 31, 2020 and 2019, such net operating losses were offset entirely by a valuation allowance.

The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that ~~goodwill. ASU 2017-04~~ is ~~effective for annual periods beginning after December 15, 2019 including interim periods within those periods. As early adoption~~greater than 50.0% likely of being ultimately realized upon settlement. The tax position is ~~permitted, the~~derecognized when it is no longer more likely than not of being sustained. The Company ~~adopted ASU 2017-04 on January 1, 2019. Adoption of this guidance did not have a material impact~~classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the ~~Company’s~~ consolidated ~~financial condition or results~~statements of operations.

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~~FASB ASU No. 2016-02 (Topic 842)~~

Loss Per Common Share

In accordance with the provisions of ASC 260, “Earnings Per Share”, ~~“Leases”~~ ~~– Issued~~net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in ~~February 2016, ASU No. 2016-02 established ASC Topic 842, “~~~~Leases,”~~ ~~as amended by subsequent ASUs on~~ the ~~topic, which sets out~~diluted loss per share calculation since the ~~principles~~effect would be anti-dilutive. The results of operations were a net loss for the ~~recognition, measurement, presentation~~three months ended March 31, 2020 and ~~disclosure~~2019. Therefore, the basic and diluted weighted-average shares of ~~leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on~~common stock outstanding were the ~~principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability~~same for all leases with a term greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under the existing lease standard. We adopted this standard effective January 1, 2019 using the modified retrospective approach. In transitioning to ASC 842, we elected to use the practical expedient package available to us and did not elect to use hindsight. These elections have been applied consistently to all of our leases. On January 1, 2019 we recorded a right-of-use asset of $9.91 million (included in “other assets”) and a lease liability of $9.91 million (included in “other liabilities”) (see “~~Note 16 – Leases”~~).years.

Potentially dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive are as follows (in common equivalent shares):

	Three Months Ended March 31,
	2020		2019

Common stock warrants		1,313,459		1,052,615
Common stock options		5,715,294		8,801,447

		7,028,753		9,854,062

NOTE 3 – CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains cash balances in several financial institutions that are insured by either the Federal Deposit Insurance Corporation or the National Credit Union Association up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations and it maintains significant cash on hand at certain of its locations. The Company has not historically experienced any material loss from carrying cash on hand. The amount in excess of insured limitations was ~~$2.64~~$0.46 million as March 31, 2020 and ~~$4.83~~was $0.18 million as of ~~March 31, 2019 and~~ December 31, ~~2018, respectively.~~2019.

The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. There were no customers that comprised more than 10.0% of the Company’s revenue for the three months ended March 31, ~~2019~~2020 and ~~2018.~~

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2019.

The Company sources cannabis products for retail, cultivation and production from various vendors. However, as a result of regulations in the State of California, the Company’s California retail, cultivation and production operations must use vendors licensed by the State. As a result, the Company is dependent upon the licensed vendors in California to supply products. If the Company is unable to enter into a relationship with sufficient members of properly licensed vendors, the ~~Company's~~Company’s sales may be impacted. During the three months ended March 31, ~~2019,~~2020, we did not have any concentration of vendors for inventory purchases. However, this may change depending on the number of vendors who receive appropriate licenses to operate in the State of California.

NOTE 4 – ~~ASSETS HELD FOR SALE~~VARIABLE INTEREST ENTITIES

As of March 31, 2019, there was one asset group in the Cannabis Dispensary, Cultivation and Production segment that met the criteria to be recorded as held for sale under ASC 360: (1) management, having the authority to approve the action, committed to a plan to sell the asset, (2) the asset group was available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, (3) an active program to locate a buyer and other actions required to complete the plan to sell the asset group have been initiated, (4) the sale of the asset group was probable, and transfer of the asset group was expected to qualify for recognition as a completed sale, within one year, (5) the asset group was being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The assets related to this asset group have been classified as held for sale on the unaudited March 31, 2019 consolidated balance sheet.

~~The components of assets held for sale are as follows:~~

(in thousands)

Components Of Assets Held for Sale:

March 31,
2019

Property, Equipment and Leasehold Improvements, Net

$ 7,503

Other Assets

6

Assets Held for Sale

$ 7,509

~~NOTE 5 – VARIABLE INTEREST ENTITY ARRANGEMENTS~~

~~MediFarm I and MediFarm I RE~~

The Company has a shared interest in two entities, MediFarm I and MediFarm I RE, with another investor for the operation of a dispensary in Nevada. The Company has determined these entities are variable interest entities in which the Company is the primary beneficiary by reference to the power and benefits criterion under ASC 810, ~~“Consolidation.”~~ ~~The provisions within the operating agreements and other factors grant the Company the power to manage and make decisions that affect the operation of these entities.~~

As the primary beneficiary of MediFarm I and MediFarm I RE, the Company consolidates the accounts and operations of these entities. All intercompany transactions are eliminated in the unaudited consolidated financial statements. The aggregate carrying values of MediFarm I and MediFarm I RE assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows:

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(in thousands)

March 31,

December 31,

2019

2018

Current Assets:

Cash

$ 219

$ 894

Accounts Receivable, Net

513

28

Inventory

601

556

Prepaid Expenses and Other Current Assets

5

8

Total Current Assets

1,338

1,487

Property, Equipment and Leasehold Improvements, Net

1,699

1,799

Other Assets

34

-

Intercompany Accounts

(48 )

(927 )

TOTAL ASSETS

$ 3,023

$ 2,359

Current Liabilities:

Accounts Payable and Accrued Expenses

$ 520

$ 342

Long-Term Debt

-

-

TOTAL LIABILITIES

$ 520

$ 342

NuLeaf, Inc.

On October 26, 2017, the Company entered into operating agreements with NuLeaf, Inc. and formed NuLeaf Sparks Cultivation, LLC and NuLeaf Reno Production, LLC (collectively “NuLeaf”) to build and operate cultivation and production facilities for our IVXX brand of cannabis products in Nevada. The agreements were subject to approval by the State of Nevada, the City of Sparks and the City of Reno in Nevada. Under the terms of the agreements, the Company remitted to NuLeaf an upfront investment of $4.50 million in the form of convertible loans bearing an interest rate of 6% per annum. On June 28, 2018, the Company received approval from the State of Nevada. The remaining required approvals from local authorities were received in July 2018. As a result, the notes receivable balance was converted into a 50% ownership interest in NuLeaf. The investment in NuLeaf was recorded at cost and accounted for using the equity method as of December 31, ~~2018.~~2019.

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In February 2019, we amended and restated the NuLeaf agreements and obtained control of the operations of NuLeaf. The Company has determined these entities are variable interest entities in which the Company is the primary beneficiary by reference to the power and benefits criterion under ASC 810, “Consolidation.” The provisions within the amended agreement grant the Company the power to manage and make decisions that affect the operation of these entities. As the primary beneficiary of NuLeaf Sparks Cultivation, LLC and NuLeaf Reno Production, LLC, the Company ~~consolidates~~began consolidating the accounts and operations of these entities ~~beginning~~as of March 1, 2019. All intercompany transactions are eliminated in the unaudited consolidated financial statements. ~~Effective as of~~On March 1, 2019, we ~~consolidate~~remeasured our equity method investment in NuLeaf to fair value and consolidated the results of NuLeaf in our consolidated financial statements and report its results in our cannabis segment. We remeasured our equity method investment in NuLeaf to estimated fair value, which resulted in a non-cash gain of $5.60 million that was recorded in operating income; recognized redeemable noncontrolling interest for NuLeaf, Inc.’s interest in NuLeaf at an estimated fair value of $13.20 million; and recognized $12.08 million of net assets, including cash acquired, at fair value. As part of our purchase price allocation, we recorded $0.80 million of goodwill, primarily related to the value of the existing workforce, and $8.00 million of intangible assets, primarily related to licenses with a weighted-average life of 10 years. The measurement period is expected to be closed in the second quarter of 2019.

~~Pro Forma table was omitted as amounts are not material.~~

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Year to date revenue and net loss attributed to NuLeaf is $1.61 million and $0.45 million, respectively. The aggregate carrying values of Sparks Cultivation, LLC and NuLeaf Reno Production, LLC assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows:

(in thousands)

March 31,

2019

Current Assets:

Cash

$ 212

Accounts Receivable, Net

39

Inventory

1,503

Prepaid Expenses and Other Current Assets

79

Total Current Assets

1,833

Property, Equipment and Leasehold Improvements, Net

11,472

Other Assets

92

Intercompany Accounts

-

TOTAL ASSETS

$ 13,397

Liabilities

Accounts Payable and Accrued Expenses

$ 167

Other Liabilities

533

TOTAL LIABILITIES

$ 699

	(in thousands)
	March 31,		December 31,
	2020		2019
Current assets:
Cash	$	171	$	243
Accounts receivable, net		221		16
Inventory		3,316		2,910
Prepaid expenses and other current assets		132		35
Total current assets		3,840		3,204

Property, equipment and leasehold improvements, net		8,965		9,543
Other assets		569		598

TOTAL ASSETS	$	13,374	$	13,344

Liabilities:
Total current liabilities	$	296	$	213
Total long-term liabilities		397		415

TOTAL LIABILITIES	$	693	$	628

NOTE 65 – INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Hydrofarm

On August 28, 2018, the Company entered into a Subscription Agreement with Hydrofarm Holdings Group, Inc. (“Hydrofarm”), one of the leading independent providers of hydroponic products in North America, pursuant to which the Company agreed to purchase from Hydrofarm and Hydrofarm agreed to sell to the Company 2,000,000 Units, each Unit consisting of one share of common stock and one warrant to purchase one-half of a share of common stock for an initial exercise price of $5.00 per share, for $2.50 per unit for an aggregate purchase price of $5.00 million. The $5.00 million investment in Hydrofarm was recorded at cost and is included in ~~other investments~~Investments on the unaudited consolidated balance sheet as of March 31, ~~2019.~~2020.

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Edible Garden

On March 30, 2020, Edible Garden Corp. (“Edible Garden”), a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Edible Garden Incorporated (the “Purchaser”), pursuant to which Edible Garden sold and the Purchaser purchased substantially all of the assets of Edible Garden. The consideration paid for the assets included two option agreements to purchase up to a 20% interest in the Purchaser for a nominal fee. The first option gives the Company the right to purchase a 10% interest in the Purchaser for one dollar at any time between the one and five-year anniversary of the transaction, or at any time should a change in control event or public offering occur. The second option gives the Company the right to purchase an additional 10% interest in the Purchaser for one dollar at any point prior to the five-year anniversary of the transaction. The options were recorded at fair value and are included in Investments in the unaudited consolidated balance sheet as of March 31, 2020. Refer to Note 7, “Property, Equipment and Leasehold Improvements, Net” for additional details concerning the sale and its impact on our quarterly results. Refer to Note 10, “Fair Value Measurements” for additional details on management’s approach to estimating the fair value of options.

NOTE 6 – INVENTORY

Raw materials consist of material for Nuleaf and IVXX’s line of cannabis pure concentrates. Work-in-progress consists of cultivation materials and live plants grown at NuLeaf and Black Oak Gallery. Finished goods consists of cannabis products sold in retail.

Inventory as of March 31, 2020 and December 31, 2019 consisted of the following:

	(in thousands)
	March 31,			December 31,
	2020			2019

Raw materials	$	2,654		$	2,400
Work-in-progress		2,630			3,142
Finished goods		746			275
Inventory reserve		(1,018	)		(1,483	)

Total inventory	$	5,012		$	4,334

NOTE 7 – ~~ACQUISITIONS~~PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

~~Tech Center Drive~~Property, equipment, and leasehold improvements, net consists of the following:

	(in thousands)
	March 31,			December 31,
	2020			2019

Land and building	$	11,206		$	11,206
Furniture and equipment		2,970			2,787
Computer hardware		299			299
Leasehold improvements		16,545			16,545
Construction in progress		10,007			9,676

Subtotal		41,027			40,513
Less accumulated depreciation		(6,006	)		(5,044	)

Property, equipment and leasehold improvements, net	$	35,021		$	35,469

Depreciation expense related to property, equipment and leasehold improvements for the three months ended March 31, 2020 and 2019 was $0.96 million and $0.55 million, respectively.

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Assets Divested

Blum Santa Ana

On ~~September 13, 2017,~~February 26, 2020, the Company agreed to transfer governance and control of our dispensary operation located at 2911 Tech Center Drive, Santa Ana, CA to Martin Vivero and Tetra House Co. (“Tetra”), who are unaffiliated third parties. The company received $2.00 million at closing and is due future payments of $1.80 million, which are reflected within assets of continuing operations. MediFarm So Cal Inc. (“MediFarm So Cal”), a wholly-owned subsidiary of the Company, ~~acquired all assets of Tech Center Drive LLC (“Tech Center Drive”) and majority control of~~terminated the existing management services agreement with 55 OC Community Collective Inc. (“55 OC”). ~~The acquisition of Tech Center Drive and 55 OC was accounted for in accordance with ASC 805-10, “~~~~Business Combinations.~~” 55 OC is a mutual benefit corporation which holds a cannabis license with the City of Santa Ana in the State of California. Previously, MediFarm So Cal ~~manages~~managed the dispensary known as “Blum Santa Ana” under the license of 55 OC. Control of 55 OC was ~~obtained by~~transferred to Mr. Vivero and Tetra House Co. via a new management services agreement and the ~~Company’s CEO and President holding two~~appointment of Mr. Vivero to the ~~three~~ Board ~~seats~~of Directors of 55 OC, ~~and through~~which was pending final regulatory approval as of the management contract held by MediFarm So Cal. The Company acquired inventory, property, equipment and leasehold improvements and a management service agreement which allows for MediFarm So Cal to purchase the medical marijuana dispensary licensedate of ~~55 OC.~~our report.

~~As consideration for entering into the Asset Purchase Agreement, the~~The Company ~~paid $4.12 million in cash, issued 633,348 shares~~recognized a loss upon sale of the ~~Company’s common stock with a value of $2.10 million on~~assets equal to the ~~closing date~~difference between the consideration paid and ~~issued 192,758 shares of~~ the Company’s common stock with a value of $0.64 million into an escrow account. The shares held in escrow were to be paid six months after the acquisition date subject to any amounts to be withheld related to working capital adjustments. As a result of the working capital adjustments, the Company withheld and cancelled 101,083 shares with an approximate value of $0.35 million in March 2018.

On November 6, 2018, MediFarm So Cal Inc. was converted from a Nonprofit Mutual Benefit Corporation to a General Stock Corporation. During the third quarter of 2018, the Company recorded a $6.30 million adjustment to reflect the fairbook value of the ~~management services agreement. The adjustment resulted~~assets as of the disposition date, less direct costs to sell, and reflected such loss in ~~an increase to goodwill, a decrease in other intangible assets and a $0.43 million decrease in amortization expense.~~discontinued operations.

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~~The measurement period was closed during the third quarter of 2018.~~ The following table summarizes the ~~fair~~transaction:

	(in thousands)

Total consideration	$	3,800

Net book value of assets divested and liabilties transferred
Inventory		23
Prepaid and other current assets		33
Property, plant & equipment		98
Intangible assets and goodwill		6,565
Other long-term assets		54
Lease liability, net of right-of-use asset		(78	)
Net book value of assets divested and liabilities transferred		6,694
Loss on sale	$	(2,894	)

Edible Garden

On March 30, 2020, Edible Garden Corp. (“Edible Garden”), a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Edible Garden Incorporated (the “Purchaser”), pursuant to which Edible Garden sold and the Purchaser purchased substantially all of the assets of Edible Garden (the “Business”). The consideration paid for the Business included a five-year $3.00 million secured promissory note bearing interest at 3.5% per annum, which is reflected within the assets under discontinued operations, and two option agreements to purchase up to a 20% interest in the Purchaser for a nominal fee. The first option gives the Company the right to purchase a 10% interest in the Purchaser for one dollar at any time between the one and five-year anniversary of the transaction, or at any time should a change in control event or public offering occur. The second option gives the Company the right to purchase an additional 10% interest in the Purchaser for one dollar at any point prior to the five-year anniversary of the transaction. The second option is automatically terminated upon payment in full of the $3.00 million secured promissory note.

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Michael James, the Company’s former Chief Financial Officer, is a principal of the Purchaser. There is no material relationship between the Company or its affiliates and the Purchaser other than as set forth in the previous sentence. The Purchase Agreement contains customary conditions, representations, warranties, indemnities and covenants by, among, and for the benefit of the parties.

The Company recognized a loss upon sale of the assets equal to the difference between the consideration paid and the book value of the assets atas of the disposition date ~~of acquisition:~~and reflected such loss in discontinued operations. The following table summarizes the transaction:

(in thousands)

Assets Acquired

Inventory

$ 114

Property, Equipment and Leasehold Improvements:

Furniture and Equipment

53

Leasehold Improvements

47

Security Deposits

5

Management Service Agreement

370

Goodwill

6,258

Total Assets Acquired

$ 6,847

	(in thousands)
Consideration
Fair value of note receivable	$	2,960
Fair value of options		330
Less: cash transferred to purchaser		(30	)
Total consideration	$	3,260

Net book value of assets divested and liabilities transferred
Accounts receivable	$	360
Inventory		520
Other current assets		80
Property, plant and equipment		4,100
Intangible assets		70
Other long-term assets		200
Accounts payable and accrued expenses		(1,700	)
Lease liabilities, net of right of use assets		(70	)
Net book value of assets divested and liabilities transferred		3,560
Loss on sale	$	(300	)

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NOTE 8 – ~~INVENTORY~~INTANGIBLE ASSETS AND GOODWILL

Raw materials consist of Edible Garden’s herb product lines and material for IVXX’s line of cannabis pure concentrates. Work-in-progress consists of live plants grown for Edible Garden’s herb product lines and live plants grown at Black Oak Gallery (“Black Oak”). Finished goods consists of IVXX’s line of cannabis packaged products to be sold into dispensaries and Black Oak cannabis products sold in retail, and Edible Garden’s products to be sold via food, drug, and mass channels.Intangible Assets, Net

~~Inventory consists~~Intangible assets, net consisted of the following:

(in thousands)

March 31,

December 31,

2019

2018

Raw Materials

$ 1,781

$ 1,213

Work-in-Progress

1,611

882

Finished Goods

2,123

1,203

Inventory Reserve

(1,011 )

(1,018 )

Total Inventory

$ 4,505

$ 2,280

	(in thousands)
	March 31,			December 31,
	2020			2019
Amortizing Intangible Assets:
Customer Relationships	$	10,770		$	7,860
Trademarks and Patent		196			196
Dispensary Licenses		10,270			10,270
Trade Name		690			-

Gross carrying amount		21,926			18,326

Accumulated Amortization		(9,370	)		(8,525	)

Total intangible assets, net		12,555			9,801

Indefinite-lived intangible assets:
Trade Name		4,310			5,070

Total Indefinite-Lived Intangible Assets		4,310			5,070

Total Intangible Assets, Net	$	16,865		$	14,871

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~~NOTE 9 – PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET~~

~~Property, equipment, and leasehold improvements, net consists of the following:~~

(in thousands)

March 31,

December 31,

2019

2018

Land and Building

$ 22,401

$ 22,401

Furniture and Equipment

5,156

3,652

Computer Hardware and Software

642

531

Leasehold Improvements

21,253

8,525

Construction in Progress

11,581

12,288

Subtotal

61,032

47,398

Less Accumulated Depreciation

(7,098 )

(5,807 )
Less Assets Held for Sale

(7,503 )

(7,451 )

Property, Equipment and Leasehold Improvements, Net

$ 46,432

$ 34,139

~~Depreciation~~Amortization expense ~~related to property, equipment and leasehold improvements~~ for the three months ended March 31, 2020 and 2019 was $0.85 and ~~2018 was $0.64 million and $0.53~~$0.82 million, respectively.

Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets

Long-lived assets other than goodwill and indefinite-lived intangible assets, held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company evaluates recoverability of assets to be held and used and if the carrying value is not recoverable, the Company fair values the asset and compares to the carrying value. If the asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. The analysis for impairment of long-lived assets other than goodwill and indefinite-lived intangible assets is the first impairment analysis performed and related impairment charges are recognized before the impairment of goodwill analysis.

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During the first quarter of 2020, the impact of COVID-19 on the retail industry had a negative impact on our revenues and management was forced to limit store operating hours due to the pandemic. Management believes the COVID-19 outbreak will continue to have a material negative impact on the Company’s financial results. These factors, including management’s revised forecast for the future performance of our Black Oak Gallery reporting unit, indicated the carrying value of Black Oak Gallery’s customer relationships and trade name may not be recoverable. Management evaluated the recoverability of the customer relationships using level 3 inputs and a probability-weighted approach to assess the potential impact of a long-term decline in our existing customer base due to the COVID-19 pandemic. The recoverability test indicated that the book value of customer relationships exceeded fair value as of March 31, 2020. As a result, the Company recognized an impairment charge of $0.16 million in the three months ended March 31, 2020. Management evaluated the recoverability of the Black Oak Gallery trade name using level 3 inputs and an income approach to assess the potential impact of a long-term decline in cash flows due to the pandemic. The recoverability test indicated that the book value of the trade name exceeded the fair value as of March 31, 2020. As a result, the Company recognized an impairment charge of $0.76 million in the three months ended March 31, 2020.

Goodwill

The table below summarizes the changes in the carrying amount of goodwill during the three months ended March 31, 2020:

	Reportable Segment
	(in thousands)
	Cannabis			Corporate/Other		Total
Balance at December 31, 2019	$	21,471		$	-	$	21,471
Acquisition of OneQor					6,763		6,763
Impairment		(4,200	)		-		(4,200	)
Balance at March 31, 2020	$	17,271		$	6,763	$	24,034

Impairment of Goodwill

The Company tests for impairment annually on September 30, and between annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. During the first quarter of 2020, the impact of COVID-19 on the retail industry as well as uncertainty around when the Company would be able to resume its normal operations contributed to a significant and prolonged decline in the Company’s stock price, resulting in the market capitalization of the Company falling below its carrying value. As a result, management determined that a triggering event had occurred as it was more likely than not that the carrying values of the Black Oak Gallery reporting unit exceeded its fair value. Accordingly, the Company performed a quantitative assessment of the fair value of Black Oak Gallery’s goodwill as of March 31, 2020 using a market capitalization approach. This analysis resulted in an impairment charge of $4.20 million recorded in the first quarter of 2020. The goodwill impairment charge was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value.

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NOTE 109 – NOTES PAYABLE

Notes payable ~~consists~~consist of the following:

(in thousands)

March 31,

December 31,

2019

2018

Promissory note dated November 22, 2017, issued for the purchase of real property. Matures December 1, 2020, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5%. In the event of default, the note is convertible at the holder's option.

$ 4,500

$ 4,500

Promissory note dated January 18, 2018, issued for the purchase of real property. The promissory note is collateralized by the land and building purchased and matures February 1, 2021, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.0%. The full principle balance and accrued interest are due at maturity. In the event of default, the note is convertible at the holder's option.

6,500

6,500

Senior convertible promissory note dated July 25, 2018, issued to accredited investors under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement, which matures January 25, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment.

150

150

Senior convertible promissory note dated September 6, 2018, issued to accredited investors under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement, which matures March 7, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment.

-

1,200

Promissory note dated October 5, 2018 , issued for the purchase of real property. Matures October 5, 2021. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5%. In the event of default, the note is convertible at the holder's option.

1,600

1,600

Securities Purchase Agreement dated December 3, 2018, issued to accredited investors, which matures June 3, 2020 and bears interest at a rate of 3.0% per annum. The conversion price is 5.0% discount to the average of the three (3) lowest VWAPs in the five (5) trading days prior to the conversion date.

450

7,000

Senior convertible promissory note dated March 12, 2019, issued to accredited investors under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement, which matures September 12, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment.

5,000

-

Long-Term Debt

$ 18,200

$ 20,950

Less: Debt Discount

(5,169 )

(2,637 )
Net Long Term Debt

13,031

18,313

	(in thousands)
	March 31,			December 31,
	2020			2019
Promissory note dated November 22, 2017, issued for the purchase of real property. Matures December 1, 2020, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5%. In the event of default, the note is convertible at the holder's option.	$	4,500		$	4,500
Promissory note dated January 18, 2018, issued for the purchase of real property. The promissory note is collateralized by the land and building purchased and matures February 1, 2021, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.0%. The full principle balance and accrued interest are due at maturity. In the event of default, the note is convertible at the holder's option.		6,500			6,500
Promissory note dated October 5, 2018, issued for the purchase of real property. Matures October 5, 2021. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5%. In the event of default, the note is convertible at the holder's option.		1,600			1,600
Promissory note dated June 11, 2019, issued to accredited investors, which matures December 11, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date.		3,500			4,000
Promissory note dated October 21, 2019, issued to accredited investors, which matures April 21, 2021 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date.		1,250			1,500
Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matures December 30, 2020, and bears interest at a rate of 10% per annum. The note is secured by the Company's HydroFarm investment.		500			500
Secured promissory note dated January 10, 2020, issued to an unaffilitated third party. The note matures on January 10, 2021 and incurs an interest rate of 15.0% per annum.		1,000			-
Secured promissory note dated February 13, 2020 issued to an unaffiliated third party. The loan accrues interest at a rate of 5% per annum and matures on August 13, 2020.		105			-
Agreement dated March 11, 2020, issued to Clearfi, LLC, an unaffiliated third party. The loan accrues interest at a rate of 20% per annum and matures on April 20, 2020.		200			-
Agreement dated March 12, 2020, issued to Clearfi, LLC, an unaffiliated third party. The loan accrues interest at a rate of 20% per annum and matures on April 21, 2020.		192			-

Notes payable - promissory notes	$	18,955		$	18,600
Other loan agreements		392			-
Vehicle loans		19			47
Less: Short term debt		(16,514	)		(11,008	)
Less: Debt discount		(692	)		(1,069	)
Net Long Term Debt	$	2,159		$	6,570

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~~Promissory Notes~~

On March 4, 2019, Terra Tech Corp. (the “Company”) issued a Promissory Note (the “Note”) in the principal amount of $1.00 million to an accredited investor (the “Purchaser”). The Note is due on the earlier of (i) April 4, 2019 or (ii) the closing of a financing with gross proceeds equal to or greater than $1.00 million (the “Maturity Date”). The Note accrues interest at a rate of 1.5% per month, payable on the Maturity Date or prepayment of the Note, with 30-days of interest guaranteed. The note was paid in full as of March 31, 2019.

2018 Master Securities Purchase and Convertible Promissory Notes Agreement

In March 2018, the Company entered into the 2018 Master Securities Purchase Agreement with an accredited investor pursuant to which the Company sells to the accredited investor 7.5% Senior Convertible Promissory Notes in eight tranches of $5.00 million, for a total of $40.00 million. The Company converted $0.75 million of convertible notes into shares of the Company’s common stock during the three months ended March 31, 2020. As of March 31, 2020, $4.75 million of principle remains outstanding.

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For each note issued under the 2018 Master Securities Purchase Agreement, the principal and interest due and owed under the note is convertible into shares of Common Stock at any time at the election of the holder at a conversion price per share equal to the lower of (i) the original conversion price as defined in each note issuance or (ii) 87% of the average of the two lowest daily volume weighted average price of the Common Stock in the thirteen (13) trading days prior to the conversion date (“Conversion Price”). The Conversion Price is subject to adjustment for (i) stock splits, stock dividends, combinations, or similar events and (ii) full ratchet anti-dilution protection. Upon certain events of default, the conversion price will automatically become 70% of the average of the three (3) lowest volume weighted average prices of the Common Stock in the twenty (20) consecutive trading days prior to the conversion date for so long as such event of default remains in effect.

In addition, at any time that (i) the daily volume weighted average price of the Common Stock for the prior ten (10) consecutive trading days is $10.50 or more and (ii) the average daily trading value of the Common Stock is greater than $2.50 million for the prior ten (10) consecutive trading days, then the Company may demand, upon one (1) day’s notice, that the holder convert the notes at the Conversion Price.

The Company may prepay in cash any portion of the outstanding principal amount of the notes and any accrued and unpaid interest by, upon ten (10) days’ written notice to the holder, paying an amount equal to (i) 110% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is within 90 days of the issuance date of the notes; (ii) 115% of the sum of the then-outstanding principal amount plus accrued but unpaid interest, if the prepayment date is between 91 days and 180 days of the issuance date of the notes; or (iii) 125% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is after 180 days of the issuance date of the notes.

During the three months ended March 31, 2020, the Company converted debt and accrued interest into 9,123,560 shares of the Company’s common stock.

Additional Financing Arrangements

On January 10, 2020, the Company issued a promissory note to an unaffiliated third party, in the amount of $1.00 million dollars. The note accrues interest at a rate of 15.00% per annum and matures on January 10, 2021. The note is secured by the Company’s real estate located at 620 E. Dyer Rd., Santa Ana, CA.

On February 14, 2020, upon the closing of the acquisition of OneQor Technologies, Inc., the Company assumed a promissory note issued to an unaffiliated third party, in the amount of $0.11 million. The note accrues interest at a rate of 5.00% per annum and matures on August 13, 2020.

In March 2020, the Company entered into two secured borrowing arrangements with Clearfi LLC, an unaffiliated third party. The borrowing agreements are secured by the Company’s future cash receipts from operations.

NOTE 10 – FAIR VALUE MEASUREMENTS

On March ~~12, 2019,~~30, 2020, Edible Garden Corp. (“Edible Garden”), a wholly-owned subsidiary of Terra Tech Corp. (the “Company”) ~~issued~~, entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Edible Garden Incorporated (the “Purchaser”), pursuant to which Edible Garden sold and the Purchaser purchased substantially all of the assets of Edible Garden (the “Business”). The consideration paid for the Business included two option agreements to purchase up to a ~~7.5% Senior Convertible Promissory Note due September 12, 2020 (the “Note”)~~20% interest in the ~~principal amount of $5.00 million to an accredited investor (the “Purchaser”)~~Purchaser for a nominal fee. The first option gives the Company the right to purchase ~~price of $5.00 million (the “Offering”) pursuant to~~ a ~~Securities Purchase Agreement with~~10% interest in the Purchaser ~~dated~~for one dollar at any time between the one and five-year anniversary of the transaction, or at any time should a change in control event or public offering occur. The second option gives the Company the right to purchase an additional 10% interest in the Purchaser for one dollar at any point prior to the five-year anniversary of the transaction. The second option is automatically terminated upon payment in full of the $3.00 million secured promissory note.

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Management estimated the fair value of the options using the Black-Scholes model, utilizing level 3 inputs that included the stock price, annual volatility, and the probability the second option will be terminated due to repayment of the secured promissory note. The estimated fair value of the options was $0.33 million as of March ~~12, 2018 (the “Purchase Agreement”).~~31, 2020. The ~~Note and~~options are included in Investments in the shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), issuable upon conversion of the Note (the “Conversion Shares”) are collectively referred to herein as the “Securities.” The Note is the sixth of eight tranches of 7.5% Senior Convertible Promissory Notes to be issued by the Company to the Purchaser pursuant to the Purchase Agreement.unaudited consolidated balance sheet.

NOTE 11 – EQUITY

Common Stock

During the three months ended March 31, ~~2019, the Company converted debt and accrued interest into 15,038,949 shares of the Company’s common stock.~~

~~2017 Master Securities Purchase and Convertible Promissory Notes Agreement~~

The Company had a Securities Purchase Agreement with an accredited investor pursuant to which the Company sells to the accredited investor Senior Convertible Promissory Notes. During the year ended December 31, 2017, the Company issued five 12.0% convertible notes for an aggregate value of $20.00 million due at various dates through June 2019. Of the $20.00 million convertible notes issued during 2017, the Company converted $13.10 million and $6.90 million of the convertible notes into shares of the Company’s common stock during the years ended December 31, 2017 and 2018, respectively. The Company paid $0.60 million in cash and issued approximately $0.56 million of warrants in connection with the notes. The cash fee and warrants issued were recorded as a debt discount.

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~~NOTE 11 – FAIR VALUE MEASUREMENTS~~

~~As of March 31, 2019 and 2018, the Company did not hold any financial assets or liabilities measured at fair value on a recurring basis.~~

~~Nonfinancial assets, such as property, equipment and leasehold improvements, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized. See~~ ~~“Note 9 Property,~~~~Equipment and Leasehold Improvements, Net”~~ ~~for further information on fixed assets~~.

~~NOTE 12 – TAX EXPENSE~~

~~For the three months ended March 31, 2019 and 2018, the Company had no income tax expense (benefit).~~

~~The components of deferred income tax assets and (liabilities) are as follows:~~

(in thousands)

March 31,

December 31,

2019

2018

Deferred Income Tax Assets:

Options expense

$ 1,400

$ 1,018

Allowance for Doubtful Accounts

33

33

Net Operating Losses

14,350

13,409

15,783

14,460

Deferred Income Tax Liabilities:

Depreciation

(2,112 )

(829 )

Total

13,671

13,631

Valuation Allowance

(13,671 )

(13,631 )

Net Deferred Tax

$ -

$ -

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, making significant changes to taxation of U.S. business entities. The Tax Act reduced the U.S. corporate income tax rate from 35% to 21%, provided for accelerated deductions for capital asset additions, imposed limitations on certain tax deductions (e.g., meals & entertainment, executive compensation, interest, etc.), eliminated the corporate alternative minimum tax, and included numerous other provisions.

In connection with the Tax Act, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) to provide guidance to companies that had not completed their accounting for the income tax effects of the Tax Act. Under SAB 118, companies were permitted to record provisional amounts to the extent reasonable estimates could be made. Additionally, upon obtaining, preparing, or analyzing additional information (including computations), companies were permitted to record additional tax effects and adjustments to previously recorded provisional amounts within one year from the enactment date of the Tax Act.

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As of December 31, 2017, the Company had recorded a provisional income tax benefit of $3.30 million, which was primarily associated with the remeasurement of certain deferred tax liabilities in the U.S. from 35.0% to 21.0%. As of December 31, 2017, a full valuation allowance was recorded against all net deferred tax assets, as these assets are more likely than not to be unrealized. As of December 31, 2018, the Company completed its accounting for the income tax effects of the Tax Act and concluded that no adjustment to the provisional estimate was required.

For the three months ended March 31, 2019 and 2018, the Company had subsidiaries that produced and sold cannabis or cannabis pure concentrates, subjecting the Company to the limits of Internal Revenue Code (“IRC”) Section 280E. Pursuant to IRC Section 280E, the Company is allowed only to deduct expenses directly related to sales of product. The State of California does not conform to IRC Section 280E and, accordingly the Company is allowed to deduct all operating expenses on its California income tax returns. As the Company files consolidated federal income tax returns, the taxable income generated from its subsidiaries subject to IRC Section 280E has been offset by losses generated by operations not subject to IRC Section 280E.

Permanent tax differences include ordinary and necessary business expenses deemed by the Company as nonallowable deductions under IRC Section 280E; nondeductible expenses for interest, derivatives and warrant expense related to debt financings and nondeductible losses related to various acquisitions.

As of March 31, 2019, and December 31, 2018, the Company had net operating loss carryforwards of approximately $49.56 million and $42.78 million, respectively, which, if unused, will expire beginning in the year 2034. These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under IRC Section 382, which will limit their utilization. The Company assessed the effect of these limitations and did not believe the losses through December 31, 2017 to be substantially limited. The Company has not completed a study through March 31, 2019 to assess whether an ownership change under Section 382 of the Code has occurred since December 31, 2017, due to the costs and complexities associated with such a study. The Company may have experienced various ownership changes, as defined by the Code, as a result of financing transactions. Accordingly, the Company's ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, the Company may not be able to take full advantage of these carryforwards for federal or state income tax purposes.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred through the period ended March 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of March 31, 2019, a valuation allowance of has been recorded against all net deferred tax assets as these assets are more likely than not to be unrealized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

~~The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. All tax years from 2014 to 2017 are subject to examination.~~

~~NOTE 13 – EQUITY~~

~~Common Stock~~

~~During the three months ended March 31, 2019,~~2020, senior secured convertible promissory notes and accrued interest in the amount of ~~$5.27~~$1.03 million were converted into ~~15,038,949~~9,123,560 shares of common stock.

During the three months ended March 31, ~~2019,~~2020, the Company ~~cancelled 60,000 shares of common stock valued at $0.01 million and~~ issued ~~373,631~~3,178,115 shares of common stock for compensation in the amount of ~~$0.30~~$0.49 million.

During the three months ended March 31, ~~2019,~~2020, the Company sold ~~1,314,345~~2,470,173 shares of common stock for the net amount of ~~$0.80~~$0.25 million pursuant to an equity financing facility with an accredited ~~investor and sold 2,183,823~~investor.

On February 14, 2020, the Company issued 58,154,027 shares of common stock as consideration for the ~~net amount of $1.50 million to other accredited investors.~~OneQor merger agreement.

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NOTE 12 – STOCK-BASED COMPENSATION

~~NOTE 14 – STOCK-BASED COMPENSATION~~

2016 & 2018 Equity Incentive Plans

In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. In the fourth quarter of 2018, the Company adopted the 2018 Equity Incentive Plan. On February 14, 2020, the Company amended the number of shares reserved for issuance under the 2018 Equity Incentive Plan to 43,976,425. The following table contains information about the 2016 and the 2018 Equity Incentive Plans as of March 31, ~~2019:~~2020:

Awards Reserved
for Issuance

Awards
Issued

Awards Available
for Grant

2016 Equity Incentive Plan

2,000,000

1,541,064

458,936

2018 Equity Incentive Plan

6,600,000

5,100,000

1,500,000

	Awards Reserved for Issuance		Awards Outstanding		Awards Available for Grant

2016 Equity incentive plan		2,000,000		544,397		1,455,603
2018 Equity incentive plan		43,976,425		4,661,332		39,315,093

Stock Options

The following table summarizes the Company’s stock option activity and related information for the three months ended March 31, ~~2019:~~2020:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value of In-the-Money Options

Options outstanding as of January 1, 2020		12,365,295		$	1.24

Options granted		-		$	-
Options exercised		-		$	-
Options forfeited		(6,416,667	)	$	1.29
Options expired		(233,334	)	$	1.36
Options outstanding as of March 31, 2020		5,715,294		$	1.18	8.7 years	$	-
Options exercisable as of March 31, 2020		3,320,582		$	1.31	8.5 years	$	-

Number of
Shares

Weighted-Average Exercise Price Per Share

Weighted-Average Remaining Contractual Life

(in thousands)
Aggregate Intrinsic Value of In-the-Money Options

Options Outstanding as of January 1, 2019

8,400,629

$ 1.56

Options Granted

442,292

$ 0.84

Options Exercised

-

$ -

Options Forfeited

(80,000 )

$ 2.09

Options Expired

-

$ -

Options Outstanding as of March 31, 2019

8,762,921

$ 1.52

9.4 years

$ 35.4

Options Exercisable as of March 31, 2019

2,623,889

$ 1.77

9.0 years

$ 35.4

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The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.92 on March 31, 2019, and the exercise price of options, multiplied by the number of options. As of March 31, ~~2019,~~2020, there was ~~$7.63~~$1.80 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately ~~2.36~~1.89 years.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. ~~The following assumptions were used to calculate stock-based compensation for issuances during the three months ended March 31, 2019:~~

	~~March 31,~~
	~~2019~~
~~Expected term (years)~~	~~5 Years~~
~~Volatility~~		~~111.8~~	%
~~Risk-Free Interest Rate~~		~~2.4~~	%
~~Dividend Yield~~		0	%

The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants.

The expected stock price volatility assumption was determined by examining the historical volatilities for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.

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The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Company’s stock options.

The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company stock-based compensation.

~~The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data.~~

Stock-Based Compensation Expense

The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling, general and administrative ~~expenses:~~expenses, within continuing operations:

(in thousands except for shares / options)

For the Three Months Ended

March 31, 2019

March 31, 2018

Type of Award

Number of
Shares or
Options Granted

Stock-Based Compensation Expense

Number of Shares or Options Granted

Stock-Based Compensation Expense

Stock Options

442,292

$ 1,282

800,000

$ 474

Stock Grants:

Employees (Common Stock)

385,536

315

81,506

288

Non–Employee Consultants (Common Stock)

26,376

23 *

6,410

17

Total Stock–Based Compensation Expense

$ 1,620

$ 779

	(in thousands except for shares / options) For the Three Months Ended
	March 31, 2020					March 31, 2019
Type of Award	Number of Shares or Options Granted		Stock-Based Compensation Expense			Number of Shares or Options Granted		Stock-Based Compensation Expense



Stock options		-	$	944			442,292	$	1,282

Stock grants:
Employees (common stock)		2,353,115		-	(*)		385,536		315
Non–employee consultants (common stock)		825,000		16	(*)		26,376		23

Total stock–based compensation expense			$	960				$	1,621

~~______~~

* Expense for grants attributed to 2019 bonuses was recorded in 2019.

* Excludes adjustments for shares cancelled.NOTE 13 – BUSINESS COMBINATIONS

~~NOTE 15 – WARRANTS~~On February 14, 2020, the Company acquired all of the assets of OneQor Technologies, Inc. (“OneQor”). The acquisition of OneQor was accounted for in accordance with ASC 805-10, “Business Combinations.” The total consideration transferred included 58,154,027 shares of the Company’s common stock, with a fair value of $9.31 million. The preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company’s estimates and assumptions of the assets acquired and liabilities assumed were subject to change within the measurement period pending the finalization of a third-party valuation. The multi-period excess earnings method, an income approach, was utilized to estimate the fair value of OneQor’s customer relationships. The relief-from-royalty method, an income approach, was utilized to estimate the fair value of OneQor’s trade name. The following table summarizes the preliminary allocation of the purchase price:

~~The Company has the following shares of common stock reserved for exercise of the warrants outstanding as of March 31, 2019:~~

Shares

Weighted-Average Exercise Price

Warrants Outstanding as of January 1, 2019

1,053,252

$ 4.28

Warrants Exercised

-

-

Warrants Granted

131,460

1.14

Warrants Expired

(132,097 )

1.35

Warrants Outstanding as of March 31, 2019

1,052,615

$ 3.28

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	(in thousands)
Assets acquired
Accounts receivable	$	51
Inventory		81
Prepaid expenses		241
Property, plant and equipment		80
Customer relationships		3,070
Trade name		690
Goodwill		6,763
Other long-term assets		260
Total Assets acquired	$	11,237

Liabilities assumed
Accounts payable and accrued expenses	$	1,481
Deferred income		300
Short-term debt		100
Long-term lease liabilities		108
Total liabilities assumed	$	1,990

During the three months ended March 31, 2020, the Company recognized $0.27 million of revenue and a net loss of $0.50 million from OneQor. In the view of management, goodwill reflects the future cash flow expectations for OneQor’s market position in the growing CBD industry, synergies and the assembled workforce. Goodwill recorded for the OneQor transaction is non-deductible for tax purposes.

Supplemental Pro-Forma Information

Supplemental information on an unaudited pro-forma basis is reflected as if each of the OneQor acquisition had occurred at the beginning of 2019, after giving effect to certain pro forma adjustments primarily related to interest expense, amortization of acquired intangible assets and the elimination of expense associated with convertible debt securities that were accounted for as derivative instruments.

The ~~following weighted-average~~unaudited pro-forma supplemental information is based on estimates and assumptions ~~were used~~that the Company believes are reasonable. The supplemental unaudited pro-forma financial information is presented for comparative purposes only and is not necessarily indicative of what the Company’s financial position or results of operations actually would have been had the Company completed the acquisitions at the dates indicated, nor is it intended to ~~calculate~~project the ~~fair value~~future financial position or operating results of ~~warrants issued during~~ the ~~period ended March 31, 2019 and 2018 using~~Company as a result of the ~~Black-Scholes option pricing model:~~OneQor acquisition.

March 31,

March 31,

2019

2018

Stock Price on Date of Grant

$
1.32

$
3.75

Exercise Price

$
1.41

$
4.05

Volatility

111.80
%

120.71
%
Term

5.00
Yrs

5.00
Yrs
Risk-Free Interest Rate

2.40
%

2.49
%
Expected Dividend Rate

0
%

0
%

(in thousands)
For the Three Months Ended
March 31, 2019
Pro-forma revenues	$	2,419
Pro-forma net loss from continuing operations	$	(10,399	)

~~There were no warrants recognized as an expense for the three month periods ended March 31, 2019 and 2018, respectively.~~

NOTE 1614 – LEASES

A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Operating lease right-of-use assets (“ROU assets”) and lease liabilities are included in other assets and other liabilities on the ~~Company's~~Company’s Condensed Consolidated Balance Sheets.

ROU assets represent the ~~Company's~~Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the ~~Company's~~Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The lease term used to calculate the ROU asset includes any renewal options or lease termination that the Company expects to exercise.

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The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The ~~Company's~~Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.

The Company occupies office facilities under lease agreements that expire at various dates. In addition, office, production and transportation equipment is leased under agreements that expire at various dates. The Company does not have any significant finance leases.

~~The components of total~~ Total operating lease ~~cost~~costs were ~~as follows:~~

(in thousands)

Three Months
Ended
March 31,
2019

Short-term lease cost (a)

$ 33

Operating lease cost

562

Total lease cost

$ 595

~~_________~~

~~(a) Includes leases with terms of one year or less.~~

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$0.22 million in the three months ended March 31, 2020. Short-term lease costs during the three months ended March 31, 2020 were not material.

Cash paid for amounts included in operating lease liabilities was ~~$0.50~~$0.22 million for the three months ended March 31, ~~2019.~~2020. As of March 31, 2020, short term lease liabilities of $1.57 million are included in “Accounts Payable and Accrued Expenses” on the unaudited consolidated balance sheet. The table below presents total operating lease ROU assets and lease liabilities as of March 31, ~~2019:~~2020:

(in thousands)

Three Months
Ended
March 31,
2019

Operating lease ROU assets

$ 9,603

Operating lease liabilities

9,673

	(in thousands)
	Three Months Ended March 31,
	2020
Operating lease ROU assets		6,783
Operating lease liabilities		10,011

The table below presents the maturities of operating lease liabilities as of March 31, ~~2019:~~ 2020:

	(in thousands)		(in thousands)
	Operating		Operating
	Leases		Leases
2019 (Excluding the three months ended March 31, 2019)	$	1,488
2020		1,857	$	2,396
2021		1,812		2,155
2022		1,794		1,857
2023		1,819		1,885
2024				1,338
Thereafter		6,540		5,044
Total lease payments		15,309		14,675
Less: Discount		5,636
Less: payments made to date 2020				(221	)
Less: discount				(4,443	)
Total operating lease liabilities	$	9,673	$	10,011

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:

	Three Months Ended March 31,
	~~2019~~2020
Weighted average remaining lease term (years)		~~7.42~~8.7
Weighted average discount rate		~~11.2~~11.5	%

~~The table below presents the expected future minimum lease payments to be made under non-cancelable operating leases as of December 31, 2018:~~

Scheduled

Year Ending December 31

Payments

2019

$ 1,851

2020

1,717

2021

1,667

2022

1,645

2023

1,666

Thereafter

6,496

Total Future Minimum Lease Payments

$ 15,042

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NOTE 1715 – COMMITMENTS AND CONTINGENCIES

California Operating Licenses

~~Effective January 1, 2018 the State~~Terra Tech entities have operated compliantly and have been eligible for applicable licenses and renewals of ~~California allowed for adult use cannabis sales.~~those licenses. Currently, we have received annual as well as provisional licenses from California’s cannabis licensing ~~system is being implemented~~agencies. We are actively working with the State to provide all required information and have confidence that the provisional licenses that we have received will become annual licenses in ~~two phases. First, beginning January 1, 2018, temporary permits were~~the future.

NOTE 16 – DISCONTINUED OPERATIONS

On May 8, 2019, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy, LLC (the “Purchaser”) pursuant to ~~be issued~~which the Company agreed to sell and the ~~state anticipated issuing annual licenses by May of 2018. Licensees were eligible for several 90 days extensions~~Purchaser agreed to ~~their temporary licenses. Throughout 2018 Terra Tech subsidiaries operated compliantly and were eligible for~~purchase substantially all of the ~~extensions.~~assets of the Company related to the Company’s dispensary located at 1130 East Desert Inn Road, Las Vegas, NV 89109 (the “Business”). The aggregate consideration to be paid for the Business is $10.00 million, of which $7.20 million is cash (the “Purchase Price”). A portion of the Purchase Price is payable by the Purchaser pursuant to a 12 month Secured Promissory Note with a principal amount of $2.80 million (the “Note”). The Note is secured by all the assets sold pursuant to the Purchase Agreement. In conjunction with the Note, Purchaser and the Company entered into a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement. The transaction is subject to approval by the Nevada Department of Taxation and is expected to close promptly following receipt of such approval. As of June 18, 2020, we are still awaiting regulatory approval.

On August 19, 2019, MediFarm I LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy Reno, LLC (the “Purchaser”) pursuant to which the Company agreed to sell and the Purchaser agreed to purchase substantially all of the assets of the Company related to the Company’s dispensary located at 1085 S Virginia St Suite A, Reno, NV 89502 (the “Business”). The aggregate consideration to be paid for the Business is $13.50 million, of which $9.30 million is cash (the “Purchase Price”). A portion of the Purchase Price is payable by the Purchaser pursuant to a 12 month Secured Promissory Note with a principal amount of $4.20 million (the “Note”). The Note is secured by all the assets sold pursuant to the Purchase Agreement. In conjunction with the Note, Purchaser and the Company entered into a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement. The transaction is subject to approval by the Nevada Department of Taxation and is expected to close promptly following receipt of such approval. As of June 18, 2020, we are still awaiting regulatory approval.

As of ~~April 2019,~~March 31, 2020, Management classified a real estate asset held in California and a real estate asset held in Nevada as available-for-sale, as they met the ~~State~~criteria of ~~California has issued provisional licenses~~ASC 360-10-45-9. Assets divested, as disclosed in Note 7, “Property, Equipment and Leasehold Improvements,” are included in discontinued operations.

The pending sales of our Nevada dispensaries, expected sales of real estate assets, and assets divested in the first quarter of 2020 represent a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, Management determined the results of these components qualified for ~~Blum San Leandro, Blum Oakland, Blum Santa Ana,~~discontinued operations presentation in accordance with ASC 205, “Reporting Discontinued Operations and ~~Black Oak Distribution. Provisional licenses are an intermediate step before the issuance~~Disclosure of Disposals of Components of an annual license. Like annual licenses Provisional’s require the licensee to be Metrc compliant and are valid for 1 year, or until an annual license is issued. Provisional Licenses are typically issued if the licensee has submitted all appropriate documentation and documentation is in order but some aspect remains to be reviewed, most commonly CEQA approval at the local jurisdictional level. The Company now expects to receive an annual license at some later point this year once the remaining review process is completed by the state. Black Oak Cultivation remains a temporary licensee although he California Department of Food and Agriculture has advised the Company that the application has reached final review process. The company expects either a provisional or annual license will be issued in the third quarter.Entity.”

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Operating results for the discontinued operations were comprised of the following:

	(in thousands)
	Three Months ended March 31,
	2020			2019
Total revenues	$	2,310		$	5,313
Cost of goods sold		1,787			2,909

Gross profit		523			2,404

Selling, general and administrative expenses		2,089			2,924
(Gain) / Loss on sale of assets		3,197			-

Income (Loss) from operations	$	(4,763	)	$	(520	)

Other income (expense)		11			36

Income (Loss) from discontinued operations	$	(4,752	)	$	(484	)

Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted	$	(0.03	)	$	(0.01	)

	(in thousands)
	March 31, 2020		December 31, 2019
Accounts receivable, net	$	980		1,096
Inventory		89		1,073
Prepaid expenses and other assets		37		271
Property, equipment and leasehold improvements, net		10,545		15,069
Intangible assets, net		-		399
Goodwill		-		6,251
Other assets		6,541		3,720
Investments		330		-
Assets of discontinued operations	$	18,522	$	27,879

Accounts payable and accrued expenses	$	538	$	3,320
Deferred gain on sale of assets		3,898		3,750
Liabilities of discontinued operations	$	4,436	$	7,070

NOTE 1817 – SEGMENT INFORMATION

During 2018, the Company acquired additional real property and determined that a previously insignificant operating segment “Real Estate and Construction” ~~is now~~ was significant and iswas a reportable segment requiring disclosure in accordance with ASC 280. As of March 31, 2020, the majority of our real property is included in discontinued operations. As of March 31, 2020, the “Real Estate and Construction” has been merged with our “Corporate & Other” reportable segment.

During the three months ended March 31, 2020, the “Herbs and Produce Products” segment was discontinued as was included in discontinued operations. Prior period information below has been revised to conform to current period presentation.

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We are now organized into ~~three~~two reportable segments:

	·	~~Herbs~~*Cannabis Dispensary, Cultivation and ~~Produce Products~~Production*** – Includes ~~herbs~~cannabis-focused retail, cultivation and ~~leafy greens that are grown using classic Dutch hydroponic farming methods.~~production operations; and

	·	*~~Cannabis Dispensary, Cultivation and Production~~Other / Corporate*** – Includes ~~cannabis-focused retail, cultivation~~CBD formulation and ~~production.~~

	·	*~~Real Estate and Construction~~* ~~– Includes~~production, building ownership ~~where cannabis dispensary and/or cultivation operations are currently in development.~~and corporate support operations.

~~Summarized financial information concerning the Company’s reportable segments is shown in the following tables.~~

	For the Three Months Ended March 31, 2020 (Unaudited) (in thousands)
	Cannabis			Other / Corporate			Total

Total Revenues	$	3,746		$	567		$	4,313
Cost of Goods Sold		1,422			553			1,975

Gross Profit		2,324			14			2,338

Selling, General and Administrative Expenses		3,878			5,159			9,037
Impairment of Assets		5,120			-			5,120
(Gain) / Loss on Sale of Assets		(35	)		-			(35	)
(Gain) / Loss on Interest in Joint Venture		-			-			-

Loss from operations		(6,639	)		(5,145	)		(11,784	)

Other Income (Expense):
Interest Income (Expense)		(245	)		(657	)		(902	)
Other Income / (Loss)		38			27			65

Total Other Income (Expense)		(207	)		(630	)		(837	)

Income (loss) from subsidiaries		-			-			-

Net Income (Loss) from continuing operations	$	(6,846	)	$	(5,775	)	$	(12,621	)

Total assets at March 31, 2020	$	49,915		$	65,071		$	114,986

~~Total asset amounts at March 31, 2019 and 2018 exclude intercompany receivable balances eliminated in consolidation.~~

For the Three Months Ended March 31, 2019
(Unaudited)
(in thousands)

Herbs and Produce Products

Cannabis Dispensary, Cultivation and Production

Real Estate

Eliminations
and Other

Total

Total Revenues

$ 1,304

$ 6,813

$ 207

$ (966 )

$ 7,358

Cost of Goods Sold

903

3,151

92

(792 )

3,354

Gross Profit

401

3,662

114

(174 )

4,004

Selling, General and Administrative Expenses

1,081

4,236

592

5,539

11,449

Loss from Operations

(680 )

(574 )

(478 )

(5,713 )

(7,445 )

Other Income (Expense):

Amortization of Debt Discount

-

-

-

-

-

Loss on Extinguishment of Debt

-

-

-

-

-

Gain/(Loss) on Fair Market Valuation of Derivatives

-

-

-

-

-

Interest Income (Expense)

-

(141 )

(278 )

(2,508 )

(2,928 )
Other Income / (Loss)

-

36

-

11

48

Gain on Interest in Joint Venture

-

-

-

5,599

5,599

Total Other Income (Expense)

-

(105 )

(278 )

3,102

2,719

Net Loss

$ (680 )

$ (679 )

$ (756 )

$ (2,611 )

$ (4,725 )

Total Assets at March 31, 2019

$ 5,954

$ 99,344

$ 18,120

$ 16,116

$ 139,534

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	For the Three Months Ended March 31, 2019 (Unaudited) (in thousands)
	Cannabis			Other / Corporate			Total

Total Revenues	$	2,045		$	-		$	2,045
Cost of Goods Sold		445			-			445

Gross Profit		1,600			-			1,600

Selling, General and Administrative Expenses		3,052			5,539			8,591
Impairment of Assets		-			-			-
(Gain) / Loss on Sale of Assets		-			-			-
(Gain) / Loss on Interest in Joint Venture		1,067			-			1,067

Loss from operations		(2,519	)		(5,539	)		(8,058	)

Other Income (Expense):
Interest Income (Expense)		(227	)		(2,701	)		(2,928	)
Other Income / (Loss)		-			11			11

Total Other Income (Expense)		(227	)		(2,690	)		(2,917	)

Income (loss) from subsidiaries		-			-			-

Net Income (Loss) from continuing operations	$	(2,746	)	$	(8,229	)	$	(10,975	)

Total assets at March 31, 2019	$	41,862		$	77,388		$	119,250

For the Three Months Ended March 31, 2018
(Unaudited)
(in thousands)

Herbs and Produce Products

Cannabis Dispensary, Cultivation and Production

Real Estate

Eliminations and Other

Total

Total Revenues

$ 1,284

$ 7,315

$ -

$ 17

$ 8,615

Cost of Goods Sold

1,263

4,231

-

-

5,494

Gross Profit

21

3,084

-

17

3,122

Selling, General and Administrative Expenses

942

5,478

-

3,476

9,897

.

Loss from Operations

(922 )

(2,394 )

-

(3,460 )

(6,775 )

Other Income (Expense):

Amortization of Debt Discount

-

-

-

(468 )

(468 )
Loss on Extinguishment of Debt

-

-

-

(4,731 )

(4,731 )
Gain/(Loss) on Fair Market Valuation of Derivatives

-

-

-

2,281

2,281

Interest Income (Expense)

-

(0 )

-

(259 )

(260 )
Other Income / (Loss)

-

-

-

-

-

Total Other Income (Expense)

-

(0 )

-

(3,178 )

(3,178 )

Net Loss

$ (922 )

$ (2,394 )

$ -

$ (6,637 )

$ (9,953 )

Total Assets at March 31, 2018

$ 6,086

$ 72,403

$ -

$ 29,355

$ 107,844

NOTE 1918 – LITIGATION AND CLAIMS

The Company is the subject of lawsuits and claims arising in the ordinary course of business from time to time. The Company reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for the Company’s financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company determined that there were no matters that required an accrual as of March 31, ~~2019.~~2020.

~~On April 11, 2018,~~NOTE 19 – GOING CONCERN

We have incurred significant losses in prior periods. For this reporting period ended March 31, 2020, we incurred a net loss of $17.33 million and cash outflows from operations were $4.18 million. For the ~~Company filed~~year ended December 31, 2019, we incurred a ~~lawsuit~~net loss of $46.93 million, cash outflows from operations of $14.74 million, and, as of that date, we had an accumulated deficit of $189.69 million. We expect to experience further significant net losses in 2020 and the foreseeable future.

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In an effort to achieve liquidity that would be sufficient to meet all of our commitments, we have undertaken a number of actions, including minimizing capital expenditures and reducing recurring expenses. However, we believe that even after taking these actions, we may not have sufficient liquidity to satisfy all of our future financial obligations and execute our business plan.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ~~District Court, Central District~~ of California against Kenneth Vande Vrede, Michael Vande Vrede, Steven Vande Vrede, Daniel Vande Vrede, Greda Vande Vrede, Beverly Willekes, Brian Vande Vrede, GroRite, Inc. (“GroRite”) and Naturally Beautiful Plant Products, LLC (“Naturally Beautiful”) alleging breach of contract, breach of fiduciary duties, conversion, fraud, breach of covenant of good faith and fair dealing, misappropriation of trade secrets, and conspiracy related to, among other things, the Share Exchange Agreement, datedAmerica, which contemplate our continuation as ~~of April 24, 2013 among~~a going concern. If the Company is unable to obtain the ~~Company’s wholly-owned subsidiary, Edible Garden Corp. (“Edible Garden”),~~funds due upon the close of our pending asset sales or obtain additional financing, future operations would need to be scaled back or discontinued. The risks and uncertainties surrounding the timing of the close of our pending asset sales in Nevada, our limited capital resources, and the ~~individual defendants (the “Share Exchange Agreement”). The Company is seeking monetary damages, including attorneys’ fees and expenses, return~~weak industry conditions impacting our business raise substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of shares of the Company’s common stock issued to the individual defendants under the Share Exchange Agreement, return of stock options issued to the individual defendants, and return of the Company’s intellectual property. As of February 25, 2019, the Court has dismissed all defendants except for Kenneth Vande Vrede based on the other defendants’ lack of contacts with the State of California. The Company intends to appeal this decision and still seeks monetary damages, including attorneys’ fees and expenses, return of shares of the Company’s common stock issued to the individual defendants under the Share Exchange Agreement, return of stock options issued to the individual defendants, and return of the Company’s intellectual property in this case and in other cases discussed herein.these financial statements.

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On April 10, 2018, GroRite, Naturally Beautiful and Whitetown Realty (“Whitetown Realty” and collectively, the “Whitetown Realty Plai.jpgs”) filed a lawsuit in the Superior Court of New Jersey Law Division, Morris County against the Company and Edible Garden alleging, among other things, that Edible Garden owes certain amounts to GroRite under a Marketing and Distribution Agreement between Edible Garden and GroRite, dated May 7, 2013, and Naturally Beautiful under a Marketing and Distribution Agreement between Edible Garden and Naturally Beautiful, dated May 13, 2013 (collectively, the “Marketing and Distribution Agreements”), and that Edible Garden owes certain amounts to Whitetown Realty under the Lease between Whitetown Realty and Edible Garden, dated January 1, 2015 (the “Lease”). The Whitetown Realty Plai.jpgs are seeking, among other things, compensatory damages for the amounts claimed are owed and attorneys’ fees and costs. The Company disputes that Edible Garden owes any payments under the Marketing and Distribution Agreements or the Lease and intends to vigorously defend itself. Accordingly, on May 18, 2018, the company and Edible Garden filed an answer denying the allegations of the plai.jpgs. In that same pleading, Edible Garden filed a counterclaim against Naturally Beautiful and GroRite asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, trademark infringement/unfair competition, and tortious interference with contractual relations. Edible Garden also filed a third-party complaint against previously unidentified defendants John Doe Entities 1-10 and John Doe Individuals 1-10 arising from the wrongful misappropriation and pirating of electricity from the Edible Garden facility located at 283 Route 519, Belvidere, New Jersey. The third-party complaint alleges claims for unjust enrichment, tortious interference with contractual relations and conversion. On June 8, 2018, Edible Garden filed an amended counterclaim adding a count for conversion against Naturally Beautiful and GroRite. On June 12, 2018, Edible Garden Corp. filed an amended third-party complaint adding Gerda Vande Vrede as a named third-party defendant. On June 13, 2018, GroRite and Naturally Beautiful filed an answer to Edible Garden’s amended counterclaim and Gerda Vande Vrede filed an answer to Edible Garden’s amended third-party complaint denying the allegations asserted against them. No counterclaims, crossclaims or fourth party complaints were filed on behalf of Gerda Vande Vrede, Naturally Beautiful or GroRite.NOTE 20 – SUBSEQUENT EVENTS

On April 13, ~~2018, Edible Garden Corp. filed~~2020, 1815 Carnegie LLC, a lawsuit in the Superior Court of New Jersey Chancery Division, Warren County against Whitetown Realty in response to a letter from a law firm representing Whitetown Realty alleging Edible Garden was in default of the Lease. Edible Garden is seeking declaratory and equitable relief to prevent Whitetown Realty from terminating the Lease and for attorneys’ fees and costs. The Company believes that Edible Garden has made all payments due to Whitetown Realty under the Lease and maintains Edible Garden is not in default of the Lease. On April 23, 2018, by order of the assignment judge of Warren County, the lawsuit was transferred to Morris County and consolidated with the April 10, 2018 lawsuit previously filed by GroRite, Naturally Beautiful and Whitetown Realty in the Superior Court of New Jersey, Law Division, Morris County. On June 13, 2018, Whitetown Realty filed its answer to the Edible Garden Complaint. In that answer, Whitetown Realty denies that Edible Garden is entitled to the declaratory and equitable relief that Edible Garden requested. No counterclaim was filed by Whitetown Realty.

On April 11, 2018, Kenneth Vande Vrede, Michael Vande Vrede and Steven Vande Vrede (collectively, the “Vande Vrede Brothers”) filed a lawsuit in the Superior Court of New Jersey Law Division, Warren County against the Company and Edible Garden alleging, among other things, that the Company and Edible Garden improperly suspended the Vande Vrede Brothers from their positions with the Company and Edible Garden. The Vande Vrede Brothers were seeking, among other things, a declaratory judgment that they did not violate their fiduciary duties owed to the Company or Edible Garden and reinstating the Vande Vrede Brothers to their status with the Company and Edible Garden prior to their suspensions and attorneys’ fees and costs. The original complaint in this matter was never served, and on June 12, 2018, the Vande Vrede Brothers, and now David Vande Vrede, Daniel Vande Vrede, Beverly Willekes, and Whitetown Realty filed an amended complaint against Terra Tech, Edible Garden, Derek Peterson, Michael James, and Michael Nahass. The Company filed a pre-answer motion to dismiss the amended complaint, arguing that any of the plai.jpgs’ claims that relate to the Share Exchange Agreement, belong in the already existing lawsuit in California, and any of the plai.jpgs’ claims that relate to the lease, belong in the already existing lawsuits in New Jersey. The Company disputes the Vande Vredes’ allegations in the lawsuit and intends to vigorously defend itself. On September 19, 2018, the Superior Court of New Jersey, Warren County denied the Company’s pre-answer motion to dismiss without prejudice and transferred the matter to Morris County to be consolidated with the other two matters already pending in Morris County, and the Company renewed its pre-answer motion to dismiss in Morris County. On December 17, 2018, the Superior Court of New Jersey, Morris County denied the Company’s motion to dismiss. On January 22, 2019, the Company filed its answer and asserted counterclaims for breach of contract, breach of fiduciary duty, conversion, fraud, misappropriation of trade secrets, and conspiracy in Superior Court of New Jersey, Morris County against the Vande Vredes. On February 28, 2019, the court held a case management conference for all the three consolidated matters in Morris County and set a discovery end date of October 15, 2019.

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On April 15, 2019, the Vande Vrede Brothers, David VandeVrede, Daniel Vande Vrede, Beverly Willekes, and Whitetown Realty filed a motion to dismiss certain aspects of the Company’s counterclaims. The Company filed its opposition to this motion on May 2, 2019. The motion to dismiss is returnable on May 10, 2019.

~~On September 15, 2017, through our~~ wholly-owned subsidiary ~~IVXX, Inc., we filed a lawsuit against Callow Distribution, LLC, a California limited liability company controlled by David Weidenbach, in the Superior Court~~ of the State of California, County of Orange. In the Complaint for Breach of Contract, Conversion, and Injunctive Relief, we requested that the Court award to us, among other things, damages according to proof, attorneys’ fees, and costs of suit. On December 3, 2018, we appeared for trial and provided sufficient evidence to the Court to prove our case in full to its satisfaction. The judge ruled from the bench in our favor. We then prepared the form of Judgment, which the Court entered on December 10, 2018, and made publicly available on December 13, 2018.

The judgment in our favor and against Callow Distribution, LLC is in the amount of $0.95 million. We intend to pursue our post-judgment collection rights vigorously, although there is no assurance as to the timing of collection and the amount that we will collect.

On November 21, 2018, Heidi Loeb Hegerich, Forever Green NV, and Forever Young Investments, L.L.C. filed a lawsuit against the Company, certain of its subsidiaries and affiliates, and certain unrelated parties in the Second Judicial District of the County of Washoe, State of Nevada, alleging, among other things, breach of fiduciary duty, breach of contract, and fraud, and seeking monetary damages and equitable relief. On February 26, 2019, the Company, MediFarm I, MediFarm II, MediFarm I RE and other parties (collectively, the “Terra Tech Parties”) entered into a Settlement Agreement and Release (the “Settlement Agreement”) with Heidi Loeb Hegerich, Forever Green and Forever Young (collectively, the “Loeb Parties”) pursuant to which the Terra Tech Parties and the Loeb Parties agreed to settle and dismiss with prejudice the lawsuit filed by the Loeb Parties against the Terra Tech Parties in the Second Judicial District of the County of Washoe, State of Nevada, Case Number CV1802322 on November 21, 2018 (the “Lawsuit”). Entering into the Settlement Agreement is not an admission or acknowledgement of liability or responsibility on the part of the Company in connection with the Lawsuit. The only material relationship between the Company and Ms. Hegerich, Forever Green and Forever Young, other than in respect of the SPA and the Settlement Agreement, was their membership in MediFarm I, MediFarm II and MediFarm I RE.

~~In conjunction with the settlement,~~ the Company, entered into a ~~Securities~~Standard Offer, Agreement and Escrow Instructions for Purchase ~~Agreement~~of Real Estate (the ~~“SPA”~~“PSA”) with ~~Forever Green NV (“Forever Green”) and Forever Young Investments, L.L.C. (“Forever Young”~~Dyer 18 LLC (the “Buyer”) pursuant to which the Company agreed to sell and the Buyer agreed to purchase Forever Green’s 50% membership interest in MediFarm I LLC (“MediFarm I”), Forever Green’s 15% membership interest in MediFarm II, LLC (“MediFarm II”), and Forever Young’s 50% membership interest in MediFarm I Real Estate, LLC (“MediFarm I RE”the real property located at 1815 E. Carnegie, Santa Ana, CA (the “Property”) for ~~aggregate consideration of $6.30 million. MediFarm I owns~~$9.20 million in cash. There is no material relationship between the ~~Company’s Blüm dispensary located at 1085 S. Virginia St. Suite A, Reno, NV 89502,~~Company or its affiliates and ~~MediFarm I RE owns~~ the ~~building which houses the dispensary. Closing~~Buyer other than in respect of the ~~SPA~~transactions contemplated by the PSA. The closing of the sale of the Property is subject to certain conditions set forth in the ~~approval~~PSA. The PSA contains customary conditions, representations, warranties, indemnities and covenants by, among, and for the benefit of the ~~Nevada Department~~parties.

On April 15, 2020, MediFarm LLC, a wholly-owned subsidiary of ~~Taxation,~~Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with a non-affiliated third party (the “Purchaser”) pursuant to which the Company ~~expects~~agreed to ~~receive in approximately 60-90 days. Following closing,~~sell and the ~~Company will own 100%~~Purchaser agreed to purchase substantially all of ~~MediFarm I, 100% of MediFarm RE and 70% of MediFarm II.~~

~~NOTE 20 – SUBSEQUENT EVENTS~~

~~Debt and Interest Converted into Equity~~

Subsequent to March 31, 2019, senior convertible promissory notes and accrued interest in the amount of $1.20 million and $0.05 million, respectively, were converted into 1,809,611 shares of common stock.

~~Other~~

~~On May 8, 2019, the Company and Picksy LLC agreed upon an asset purchase agreement where the Company would sell~~ the assets of the Company related to ~~its~~the Company’s dispensary located at ~~1130 Desert Inn Road,~~3650 S. Decatur Blvd., Las Vegas, NV ~~89109~~89103 (the “Business”). The aggregate consideration to be paid for ~~$10.00 million.~~the Business is $5.25 million, of which $2.50 million is cash and $2.75 million is payable by the Purchaser pursuant to a 12-month Secured Promissory Note bearing 8% interest per annum, which is secured by all of the assets sold pursuant to the Purchase Agreement. The transaction is subject to approval by the Nevada Department of Taxation, and other customary closing conditions, and is expected to close promptly following receipt of such approval and satisfaction of all conditions to close.

On May 4, 2020, OneQor Technologies, Inc entered into a Promissory Note dated May 4, 2020 (the “PPP Note”) with Harvest Small Business Finance, LLC (the “Lender”), pursuant to which the Lender agreed to make a loan to the Company under the Paycheck Protection Program (the “PPP Loan”) offered by the U.S. Small Business Administration (the “SBA”) in a principal amount of $0.56 million pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leaves; rent; utilities; and interest on certain other outstanding debt. The amount that will be forgiven will be calculated in part with reference to OneQor’s full time headcount during the eight week period following the funding of the PPP loan. The interest rate on the PPP Note is a fixed rate of 1% per annum. To the extent that the amounts owed under the PPP Loan, or a portion of them, are not forgiven, OneQor will be required to make principal and interest payments in monthly installments beginning seven months from April 2020. The PPP Note matures in two years. The PPP Note includes events of default. Upon the occurrence of an event of default, the lender will have the right to exercise remedies against OneQor, including the right to require immediate payment of all amounts due under the PPP Note.

Subsequent to March 31, 2020, $0.73 million of debt principal and accrued interest of $0.08 million were converted into 12,943,496 shares of the Company’s common stock.

On the weekend of May 29^th - 31^st, 2020 our Oakland and San Leandro stores were damaged during civil unrest and are temporarily closed as we work through damage assessment, insurance claims, and restoration work. While the damage assessment is not complete, we assume it will be significant and will have a negative impact on 2^ndQuarter 2020 results. We anticipate having these stores back open in the 3^rdQuarter of this year.

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

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which provides a “safe harbor” for forward-looking statements made by us. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends, and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates, and projections will occur or can be can achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties, and other important factors, many of which are beyond our control, that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties, and other important factors that could cause actual results to differ include, among others, the risk, uncertainties and factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and in other filings we make from time to time with the U.S. Securities and Exchange Commission (“SEC”).

We caution you that the risks, uncertainties, and other factors set forth in our periodic filings with the SEC may not contain all of the risks, uncertainties, and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that: (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of the report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise.

Company Overview

Our corporate headquarters is located at 2040 Main Street, Suite 225, Irvine, California 92614 and our telephone number is (855) 447-6967. Our website addresses are as follows: www.terratechcorp.com, www.blumoak.com, www.letsblum.com, www.ivxx.com, and ~~www.ediblegarden.com.~~www.oneqor.com. No information available on or through our websites shall be deemed to be incorporated into this Annual Report on Form 10-K. Our common stock, par value $0.001 (the “Common Stock”), is quoted on the OTC Markets Group, Inc.’s OTCQX tier under the symbol “TRTC.”

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On February 14, 2020, the Company acquired OneQor Technologies, Inc. (“OneQor”). The acquisition of OneQor was accounted for in accordance with ASC 805-10, “Business Combinations.” OneQor is a cannabinoid-focused company, concentrating on the development, manufacturing, and delivery of patented, proprietary over-the-counter CBD products to established suppliers and consumer brands.

~~Recent Developments~~

On March 12, 2018, we implemented a 1-for-15 reverse stock split of our common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in the stock market upon commencement of trading on March 13, 2018. As a result of the Reverse Stock Split, every fifteen shares of our Pre-Reverse Stock Split common stock were combined and reclassified into one share of our common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of our common stock were not affected by the Reverse Stock Split.

Our Business

We are a retail, production and cultivation company, with an emphasis on providing the highest quality of medical and adult use cannabis products. ~~The Company grows organic antioxidant rich Superleaf rich lettuce and living herbs using classic Dutch hydroponic farming methods.~~ We ~~have licensed an exclusive patent on the Superleaf lettuce.~~

~~We have a presence in three states (California, Nevada and New Jersey) and currently~~ have cannabis operations in California and Nevada. Our cannabis dispensaries operate under the name Blüm. Our cannabis dispensaries in California operate as ~~MediFarm SoCal in Santa Ana,~~ Black Oak Gallery in Oakland and Blum San Leandro in San Leandro and offer a broad selection of medical and adult-use cannabis products including flowers, concentrates and edibles.

Founded on the importance of providing consumers with premium natural products, Edible Garden is a national grower of organic and locally grown hydroponic produce and herbs. EG Transportation supports the distribution of Edible Garden productsNevada has been categorized as discontinued operations as we have entered into agreements to ~~major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, Hannaford, Stop & Shop, Weis and others throughout the United State.~~sell it to an unaffiliated third party.

~~We have a “rollup” growth strategy, which includes the following components:~~

	·	~~With our brand recognition and experienced management team, maximize productivity, provide economies of scale, and increase profitability through our public market vehicle;~~

	·	~~Acquire unique products and niche players where barriers to entry are high and margins are robust, providing them with a broader outlet for their products; and~~

	·	~~Acquire multiple production facilities to capture the market vertically from manufacturing to production up to retail.~~

Our business also represents our operating segments. See our Part I, Item 1. Business, “Company Overview” and “Note ~~18 – Segment~~17, “Segment Information” to our unaudited consolidated financial statements for further discussion of our operating segments.

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Our Operations

We are organized into ~~three~~two reportable segments:

	·	*~~Herbs and Produce Products~~* ~~– Includes herbs and leafy greens that are grown using classic Dutch hydroponic farming methods;~~

	·	*Cannabis Dispensary, Cultivation and Production* – Includes cannabis-focused retail, cultivation and production operations; and

	·	*~~Real Estate~~Other / Corporate*** – Includes ~~building ownership~~corporate support operations for the entire company, real estate, and ~~construction operations where cannabis dispensary and/or cultivation operations are currently in development~~CBD operations.

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Our segment net revenue and contributions to consolidated net revenue for each of the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 were as follows:

(in thousands)

Total Revenue

Percentage of Total Revenue

Three Months Ended March 31,

Three Months Ended March 31,

2019

2018

2018

2017

Herbs and Produce Products

$ 1,304

$ 1,284

17.7 %

14.9 %
Cannabis Dispensary, Cultivation and Production

6,813

7,315

92.6 %

84.9 %
Real Estate

207

-

2.8 %

-%

Other and Eliminations

(966 )

17

(13.1 )%

0.1 %

Total

$ 7,358

$ 8,615

100.0 %

100.0 %

	(in thousands)
	Total Revenue				Percentage of Total Revenue
	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2020			2019

Cannabis Dispensary, Cultivation and Production	$	3,746	$	2,045		86.9	%		100.0	%
Other / Corporate		567		-		13.1	%		-	%

Total	$	4,313	$	2,045		100.0	%		100.1	%

See “Note 2, – “Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements for financial information about our segments. See also “Item 1A. Risk Factors” below for a discussion of certain risks associated with our operations.

~~Herbs and Produce Products~~

Either independently or in conjunction with third parties, we are a retail seller of locally grown hydroponic herbs and produce, which are distributed through major grocery stores throughout the East, West and Midwest regions of the U.S.

Cannabis Dispensary, Cultivation and Production

Either independently or in conjunction with third parties, we operate medical marijuana retail and adult use dispensaries, cultivation and production facilities in California and Nevada. All of our retail dispensaries in California and Nevada offer a broad selection of medical and adult use cannabis products including flowers, concentrates and edibles. We also produce and sell a line of medical and adult use cannabis flowers, as well as a line of medical and adult use cannabis-extracted products, which include concentrates, cartridges, vape pens and wax products.

~~Real Estate and Construction~~Other / Corporate Operations

The other/corporate segment includes our corporate operations which include accounting, human resources, legal, and executive salaries and costs. We also own real property in Nevada on which we plan to ~~build a medical~~use for future expansion of our operations. The other/corporate segment also includes our CBD operations from the acquisition of OneQor; and adult use marijuana dispensary. Additionally, we own properties in California that are in various stages of construction for medical marijuana and adult use cultivation and production facilities and dispensaries.included our Edible Garden Transportation up to the date it was sold.

Employees

As March 31, 2020, we had 188 employees.

RESULTS OF OPERATIONS

The impact of moving the Nevada Dispensaries into discontinued operations was as follows on revenue and gross profit.

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Revenue & Gross Profit Breakdown

Three Months Ended March 31

Continuing & Discontinued Operations

Variance vs. 2019

(in thousands)

2020

2019

$-Amt

Revenue

Continuing Operations

4,313

2,045

2,268

110.9

Discontinued Operations

2,310

5,313

(3,003

)

-56.5

Total Revenue

6,623

7,358

(735

)

-10.0

Cost of Goods Sold

Continuing Operations

1,975

445

(1,530

)

-343.9

Discontinued Operations

1,787

2,909

1,122

38.6

Total Cost of Goods Sold

3,762

3,354

(408

)

-12.2

Gross Profit $

Continuing Operations

2,338

1,600

738

46.1

Discontinued Operations

523

2,404

(1,881

)

-78.2

Total Gross Profit $

2,861

4,004

(1,143

)

-28.5

Gross Profit %

Continuing Operations

54.2

78.2

17.4%pts

Discontinued Operations

22.6

45.2

2.4%pts

Total Gross Profit %

43.2

54.4

9.1%pts

~~Employees~~

~~As of the date of this Quarterly Report on Form 10-Q, we had approximately 237 employees.~~

~~RESULTS OF OPERATIONS~~

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~2019

Revenues

For the three months ended March 31, ~~2019,~~2020, we generated revenues of ~~$7.36~~$4.31 million, compared to ~~$8.62~~$2.05 million for the three months ended March 31, ~~2018, a decrease~~2019, an increase of ~~$1.26~~$2.26 million or ~~14.6~~110.2 percent. The ~~decrease~~increase was primarily due ~~to: (i) $0.94~~to more mature Cannabis segment operations in 2020 operating more efficiently and productively compared to 2019, when these operations were just ramping up. More specifically we had year-over-year growth of $0.82 million ~~or 12.9 percent, decrease~~at our San Leandro store. It operated as medical only in ~~Cannabis revenues due to the continued impact~~2019 whereas in 2020 it was operating as both medical and recreational. Our NuLeaf production operation which began in Q1 of ~~high California state excise tax rates,~~2019 grew by $0.89 million year-over-year; and our NuLeaf cultivation operation which ~~negatively impact retail demand.~~as began in Q1 of 2019, grew by $0.56 million year-over year.

Gross Profit

Our gross profit for the three months ended March 31, ~~2019~~2020 was ~~$4.00~~$2.34 million, compared to a gross profit of ~~$3.12~~$1.60 million for the three months ended March 31, ~~2018,~~2019, an increase of ~~$0.88~~$0.74 million or ~~28.2~~46.1 percent. ~~Our gross margin percentage for the three months ended March 31, 2019 was 54.4 percent, compared to 36.2 percent for the three months ended March 31, 2018.~~ The increase in gross margin ~~percentage~~ was ~~attributable to: (i) the cannabis segment, which had $3.92 million~~entirely due to our increase in revenue and ~~$3.08 million gross profit, or 55.2 percent and 42.2 percent~~partially offset by lower gross margin for the three months ended March 31, 2019 and 2018, respectively; (ii) the herbs and produce segment, which had $0.40 million and $0.24 million gross profit, or 30.8 percent and 1.6 percent gross margin for the three months ended March 31, 2019 and 2018, respectively. Both the cannabis segment and herbs and produce segment percentage ~~increases were primarily due to operational improvements.~~year-over-year.

Selling, General and Administrative Expenses and Other Operating Expenses

Selling, general and administrative expenses for the three months ended March 31, ~~2019~~2020 were ~~$11.52~~$9.04 million, compared to $10.29 million for the three months ended March 31, 2018, an increase of $1.22 million or 11.9 percent. The increase was primarily due to: (i) a $1.28 million increase in stock options expense related to employee bonuses (ii) a $0.32 million increase in security expense; and (iii) a $0.23 million increase in marketing/advertising expense offset by (iv) a $0.51 million decrease in office supplies expenses.

~~Operating Income (Loss)~~

~~We realized an operating loss of $7.51~~$8.59 million for the three months ended March 31, 2019, an increase of $0.45 million or 5.2 percent. The increase was primarily due to (i) a $0.40 million increase in depreciation expense, (ii) a $0.39 million increase in legal expense related to litigation activity, and (iii) a $0.27 million increase in business / city / property taxes, partially offset by a $0.34 million decrease in option expense and a $0.32 million decrease in employee stock compensation. Other operating expenses increased by $6.15 million due to a $5.12 million goodwill impairment charge slightly offset by a $0.04 gain on sale of assets in 2020 compared to $1.07 million loss on the NuLeaf joint venture in 2019.

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Operating Income (Loss)

We realized an operating loss of ~~$7.17~~$11.78 million for the three months ended March 31, ~~2018,~~2020, compared to an ~~increase in~~operating loss of ~~approximately $0.34~~$8.06 million ~~or 4.8 percent.~~

~~Other Income (Expense)~~

~~Other income~~ for the three months ended March 31, 2019, an increase in loss of approximately $3.72 million or 46.2 percent.

Other Income (Expense)

Other expense for the three months ended March 31, 2020 was ~~$2.72~~$0.84 million. This was down by $2.08 million or 71.2 percent compared to ~~other expense of $4.93~~$2.92 million for the three months ended March 31, ~~2018,~~2019. This was almost entirely attributable to lower interest expense.

Discontinued Operations

We realized an operating loss for discontinued operations of $4.75 million for the three months ended March 31, 2020. This was an increase of ~~$7.65~~$4.27 million ~~or 155.0 percent.~~over the three months ended March 31, 2019 when we had a loss of $0.48 million. This ~~improvement~~increase was primarily ~~attributable~~due to the $3.30 million loss recorded on the sale of assets, Edible Garden experienced a ~~$5.60~~$0.33 million ~~increase~~larger loss in ~~Gain on Interest~~2020 compared to 2019, and additional stores were operating in ~~Joint Venture and a $2.00 million decrease in Interest Expense.~~2019 generating profit of $0.40 million.

Net Loss Attributable to Terra Tech Corp.

We incurred a net loss of ~~$5.07~~$17.33 million, or ~~$0.05~~$0.11 per share, for the three months ended March 31, ~~2019,~~2020, compared to a net loss of ~~$12.18~~$9.60 million, or ~~$0.19~~$0.10 per share, for the three months ended March 31, ~~2018.~~2019.

Management will continue its efforts to lower operating expenses and increase revenue. We will continue to invest in further expanding our operations and a comprehensive marketing campaign with the goal of accelerating the education of potential clients and promoting our name and our products. Given the fact that most of the operating expenses are fixed or have a quasi-fixed character, management expects that, as revenue increases, those expenses, as a percentage of revenue, will significantly decrease. Nevertheless, there can be no assurance that we will be able to increase our revenues in succeeding quarters.

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DISCLOSURE ABOUT OFF-BALANCE SHEET ARRANGEMENTS

We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section discusses our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described in “Note 2, ~~- Summary~~ “Summary of Significant Accounting Policies” of the notes to unaudited condensed consolidated financial statements included in this report.

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LIQUIDITY AND CAPITAL RESOURCES

We have never reported net income. We incurred net losses for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 and have an accumulated deficit of approximately ~~$152.07~~$207.15 million and ~~$142.75~~$154.49 million at March 31, ~~2019~~2020 and ~~December 31, 2018,~~2019, respectively.

As of March 31, ~~2019,~~2020, we had working capital of ~~$11.38~~($25.61) million, including ~~$5.81~~$0.95 million of cash compared to working capital of ~~$12.06~~($18.22) million, including ~~$7.19~~$1.23 million of cash as of ~~December~~March 31, ~~2018.~~2019. Current assets were approximately ~~2.23~~0.25 times current liabilities as of March 31, ~~2019,~~2020, compared to approximately ~~2.75~~0.34 times current liabilities as of ~~December~~March 31, ~~2018.~~2019.

We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. Since our inception, we have raised capital through private sales of preferred stock, common stock, and debt securities. Our future success is dependent upon our ability to achieve profitable operations and generate cash from operating activities. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations.

We anticipate requiring additional capital for the commercial development of our facilities. The Hegenberger facility will require approximately ~~$0.80~~$0.50 million in capital to complete. ~~Construction for the completion of the packaging facility for Edible Garden will require approximately $0.80 million.~~

We will be required to raise additional funds through public or private financing, additional collaborative relationships or other arrangements until we are able to raise revenues to a point of positive cash flow. We believe our existing and available capital resources will be sufficient to satisfy our funding requirements through the ~~fourth~~third quarter of 2020. However, we continue to evaluate various options to further reduce our cash requirements to operate at a reduced rate, as well as options to raise additional funds, including obtaining loans and selling common stock. In March 2018 we entered into a $40.0 million 2018 Master Security Purchase Agreement with an accredited investor. As of March 31, ~~2019,~~2020, the Company has received ~~$31.9~~$37.4 million under this agreement. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations, or if we are able to raise capital, that it will be available to us on acceptable terms, on an acceptable schedule, or at all.

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The issuance of additional securities may result in a significant dilution in the equity interests of our current stockholders. Obtaining loans, assuming these loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available for use when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.

Operating Activities

Cash used in operating activities for the three months ended March 31, ~~2019~~2020 was ~~$5.72~~$4.18 million, compared to ~~$5.67~~$5.87 million for the three months ended March 31, ~~2018, an increase~~2019, a decrease of ~~$0.05~~$1.69 million, or approximately ~~0.9~~28.8 percent. The ~~small increase~~decrease in cash used in operating activities was due to primarily to the ~~change in net loss being offset by the change in gain~~timing on ~~revaluation of equity interests.~~A/R receipts and vendor payments.

Investing Activities

Cash ~~used~~provided in investing activities for the three months ended March 31, ~~2019~~2020 was ~~$2.82~~$2.09 million, compared to cash used in investing activities of ~~$5.57~~$2.67 million for the three months ended March 31, ~~2018,~~2019, a ~~decrease~~increase of ~~$2.75~~$4.76 million, or ~~49.3~~178.3 percent. During the three months ended March 31, 2020, cash provided by investing activities was primarily from the sale of our Santa Ana dispensary whereas the 2019 cash used ~~in investing activities~~ was primarily comprised of expenditures related to the construction of the San Leandro and Oakland facilities.

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Financing Activities

Cash provided by financing activities for the three months ended March 31, ~~2019~~2020 was ~~$7.15~~$1.81 million, compared to ~~$10.30~~$7.15 million for the three months ended March 31, ~~2018,~~2019, a decrease of ~~$3.15~~$5.34 million, or ~~30.6~~74.7 percent. The decrease in cash provided by financing activities for the three months ended March 31, ~~2019~~2020 was primarily due to: ~~$4.00~~$4.61 million less proceeds from the issuance of debt ~~partially offset by a $1.55~~and $2.05 million ~~increase in~~less proceeds from issuance of common stock. This was partially offset by $1.15 million less cash used for payment of debt and interest.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our primary market risks are attributable to fluctuations in commodity prices and interest rates. These fluctuations can affect revenues and cash flow from operating, investing and financing activities.

Commodity Price Risk

Our most significant market risk relates to fluctuations in marijuana prices. Management expects the prices of these commodities to remain volatile and unpredictable. As these prices decline or rise significantly, revenues and cash flow will also decline or rise significantly.

Interest Rate Risk

As of March 31, ~~2019,~~2020, we had no outstanding variable-rate debt and ~~$18.20~~$19.37 million of principal fixed-rate debt.

Credit Risk

Our exposure to non-payment or non-performance by our customers and counterparties presents a credit risk. Generally, non-payment or non-performance results from a customer’s or counterparty’s inability to satisfy obligations. We may also be exposed to credit risk due to the concentration of our customers in the medical marijuana industry, as our customers may be similarly affected by changes in regulatory and legal conditions in the states and municipalities in which we operate.

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ITEM 4. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, our principal executive officer and our principal financial officer are responsible for conducting an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, ~~2019.~~2020. Disclosure controls and procedures means that the material information required to be included in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective as of March 31, ~~2019.~~2020.

We regularly assesses the adequacy of ~~its~~our internal ~~control~~controls over financial reporting and ~~enhances its~~enhance our controls in response to internal control assessments ~~and internal~~ and external audit and regulatory recommendations. No changes in internal control over financial reporting have been identified in connection with the evaluation of disclosure controls and procedures during the quarter ended March 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The failure to implement and maintain proper and effective internal controls and disclosure controls could result in material weaknesses in our financial reporting, such as errors in our financial statements and in the accompanying footnote disclosures that could require restatements. Investors may lose confidence in our reported financial information and disclosure, which could negatively impact our stock price.

We do not expect that our internal controls over financial reporting will prevent 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. Further, 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. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

There were no other changes in our internal control over financial reporting during the quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is the subject of lawsuits and claims arising in the ordinary course of business from time to time. See Note ~~19 – Litigation~~18, “Litigation and ~~Claims~~Claims” for further information about legal ~~activity~~activity.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors”, of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019, except for the risk factors noted below. Please refer to that section for disclosures regarding the risk and uncertainties relating to our business.

There is uncertainty regarding the impact of COVID-19 upon our business

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in Wuhan, China. Since then, it has spread broadly and infections have been reported around the world. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the outbreak, governmental authorities in the United States and internationally have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals, including unprecedented business, employment and economic disruptions. The continued spread of COVID-19 in the United States and globally could have an adverse impact on our business, operations and financial results, including through disruptions in our cultivation and processing activities, supply chains and sales channels, and retail sales, as well as a deterioration of general economic conditions including a possible national or global recession. Due to the speed with which the COVID-19 situation is developing and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact on our business, operations or financial results; however, the impact could be material.

The effects of war, acts of terrorism, threat of terrorism, or other types of violence, could adversely affect our business.

Some of our stores are located in areas with a high amount of foot traffic. Any threat of terrorist attacks or actual terrorist events, or other types of violence, such as shootings or riots, could lead to lower consumer traffic and a decline in sales. Decreased sales could have a material adverse effect on our business, financial condition and results of operations.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

3739
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ITEM 6. EXHIBITS.

~~ITEM 6. EXHIBITS.~~Exhibit		Description

~~Exhibit~~		~~Description~~
2.1		Agreement and Plan of Merger dated February 9, 2012, by and among Terra Tech Corp., a Nevada corporation, TT Acquisitions, Inc., a Nevada corporation, and GrowOp Technology Ltd., a Nevada corporation (1)

2.2		Articles of Merger (1)

2.3		Share Exchange Agreement, dated April 24, 2013, by and among the Terra Tech Corp., a Nevada corporation, Edible Garden Corp., a Nevada corporation, and the holders of common stock of Edible Garden Corp. (2)

2.4		Agreement and Plan of Merger, dated December 23, 2015, by and among Terra Tech Corp., a Nevada corporation, Generic Merger Sub, Inc., a California corporation, and Black Oak Gallery, a California corporation (3)

2.5		First Amendment to Agreement and Plan of Merger, dated February 29, 2016, by and among Terra Tech Corp., a Nevada corporation, Generic Merger Sub, Inc., a California corporation, and Black Oak Gallery, a California corporation (3)

2.6		Form of Agreement of Merger, dated March 31, 2016, by and among Generic Merger Sub, Inc., a California corporation and Black Oak Gallery, a California corporation (3)

3.1		Articles of Incorporation dated July 22, 2008 (4)

3.2		Amended Bylaws, dated August 2, 2018 (5)

3.3		Certificate of Amendment dated July 8, 2011 (6)

3.4		Certificate of Change dated July 8, 2011 (6)

3.5		Certificate of Amendment dated January 27, 2012 (1)

3.6		Form of Amended and Restated Articles of Incorporation of Black Oak Gallery, a California corporation (3)

3.7		Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated September 27, 2016 (7)

3.8		Certificate of Amendment to Articles of Incorporation, Dated September 26, 2016 (8)

3.9		Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated October 3, 2016 (9)

3.10		Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated July 26, 2017 (10)

3.11		Amendment of Bylaws, dated June 20, 2018 (11)

3.12		Certificate of Designation for Series A Preferred Stock (12)

3.13		Amended and Restated Certificate of Designation for Series B Preferred Stock (3)


40

Table of Contents

10.1		~~Form~~Amended and Restated Executive Employment Agreement, dated as of ~~Securities Purchase~~October 29, 2019, by and between OneQor and Matthew Morgan, as amended by Amendment to Amended and Restated Executive Employment Agreement, dated as of February 13, 2020, by and between Matthew Morgan and OneQor (13)

10.2		~~Form~~Amendment and Waiver Agreement, dated as of ~~Securities Purchase Agreement (14)~~February 13, 2020, by and between Terra Tech and Derek Peterson (13)

~~31.1~~10.3		Forfeiture Agreement, dated as of February 14, 2020, by and between Terra Tech and Derek Peterson (13)

10.4		Forfeiture Agreement, dated as of February 14, 2020, by and between Terra Tech and Michael Nahass (13)

10.5		Amendment to Terra Tech Corp. Amended and Restated 2018 Equity Incentive Plan dated as of February 14, 2020 (13)

10.6		Forfeiture Agreement, dated as of March 9, 2020, by and between Terra Tech and Derek Peterson (14)

10.7		Forfeiture Agreement, dated as of March 9, 2020, by and between Terra Tech and Michael Nahass (14)

31.1		Certification of ~~Derek Peterson,~~Matthew Morgan, Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification of ~~Michael C. James,~~Megan Jimenez, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1		Certification of ~~Derek Peterson,~~Matthew Morgan, Chief Executive Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. *

32.2		Certification of ~~Michael C. James,~~Megan Jimenez, Chief Financial Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. *

38
~~Table of Contents~~

101.INS		XBRL Instance Document *

101.SCH		XBRL Taxonomy Extension Schema Document *

101.CAL		XBRL Taxonomy Extension Calculations Linkbase Document *

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document *

101.LAB		XBRL Taxonomy Extension Label Linkbase Document *

101.PRE		XBRL Taxonomy Presentation Linkbase Document *

~~_________________~~ _______________

*	Filed herewith

(1)	Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on February 10, 2012

(2)	Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on May 6, 2013.

(3)	Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 29, 2016

(4)	Incorporated by reference to Registration Statement on Form S-1 (File No. 333-156421), filed with the SEC on December 23, 2008.

(5)	Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on August 2, 2018.

(6)	Incorporated by reference to Registration Statement on Form S-1 (File No. 333-191954), filed with the SEC on October 28, 2013.

(7)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on September 28, 2016

(8)	Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 16, 2018

(9)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on October 7, 2016

(10)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on July 27, 2017

(11)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on June 22, 2018

(12)	Incorporated by reference to Amendment No. 3 to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on April 19, 2012.

(13)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on February 18, 2020.
(14)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on March ~~29, 2019~~

~~(14)~~	~~Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 3, 2019~~16, 2020.

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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, thereunto duly authorized.

	TERRA TECH CORP.

Date: ~~May 9, 2019~~June 18, 2020	By:	/s/ ~~Michael C. James~~Megan Jimenez
		~~Michael C. James~~Megan Jimenez
		Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for Shares)

	March 31,			December 31,
	2019			2018
	(Unaudited)
ASSETS

Current Assets:
Cash	$	5,807		$	7,193
Accounts Receivable		1,862			1,247
Inventory		4,505			2,280
Assets Held for Sale		7,509			7,501
Prepaid Expenses and Other Current Assets		923			741

Total Current Assets		20,606			18,963

Property, Equipment and Leasehold Improvements, Net		46,432			34,139
Intangible Assets, Net		25,708			18,466
Goodwill		35,973			35,173
Other Assets		11,115			897
Other Investments		5,300			12,451

TOTAL ASSETS	$	145,133		$	120,088

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Current Liabilities:
Accounts Payable and Accrued Expenses	$	9,222		$	6,901

Total Current Liabilities		9,222			6,901

Long-Term Liabilities:
Long-Term Debt, Net of Discounts		13,031			18,313
Long-Term Lease Liabilities		7,786			-
Total Long-Term Liabilities		20,817			18,313

Total Liabilities		30,039			25,214

STOCKHOLDERS’ EQUITY:
Preferred Stock, Convertible Series A, Par Value 0.001: 100 Shares Authorized as of March 31, 2019 and December 31, 2018; 12 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018		-			-
Preferred Stock, Convertible Series B, Par Value 0.001: 41,000,000 Shares Authorized as of March 31, 2019 and December 31, 2018; 0 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018		-			-
Common Stock, Par Value 0.001: 990,000,000 Shares Authorized as of March 31, 2019 and December 31, 2018; 100,648,444 and 81,759,415 Shares Issued and Outstanding as of March 31, 2019 and December 31, 2018, respectively (1)		101			82
Additional Paid-In Capital (1)		253,066			236,543
Accumulated Deficit		(147,442	)		(142,754	)

Total Terra Tech Corp. Stockholders’ Equity		105,725			93,870
Non-Controlling Interest		9,369			1,003

Total Stockholders’ Equity		115,094			94,874

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	145,133		$	120,088

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except for Shares & Per-Share info)

	Three Months Ended March 31,
		2019			2018

Total Revenues	$	7,358		$	8,615
Cost of Goods Sold		3,354			5,494

Gross Profit		4,004			3,122

Selling, General and Administrative Expenses		11,515			10,292

Loss from Operations		(7,511	)		(7,171	)

Other Income (Expense):
Interest Expense, Net		(2,928	)		(4,926	)
Other Income/Loss		48			-
Share of Gain / (Loss) in Joint Venture		5,599			-

Total Other Income (Expense)		2,719			(4,926	)

Net Loss		(4,792	)		(12,097	)
Net Income (Loss) Attributable to Non-Controlling Interest		277			79

NET LOSS ATTRIBUTABLE TO TERRA TECH CORP.	$	(5,069	)	$	(12,175	)

Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders – Basic and Diluted (1)	$	(0.05	)	$	(0.19	)

Weighted-Average Number of Common Shares Outstanding – Basic and Diluted (1)		93,710,004			64,711,660

TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

	Three Months Ended
	March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(4,792	)	$	(12,097	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Cancellation of shares issued		(58	)		(118	)
Interest Expense		2,928			4,926
Interest Income Accreted		-			(68	)
Depreciation and Amortization		1,565			1,533
Operating Lease Expense		562			-
Stock Issued for Compensation		315			288
Stock Issued for Services		23			17
Stock Option Expense		1,282			474
Gain on Revaluation of Equity Interests		(5,597	)		-
Other Noncash Gains		-			(175	)
Changes in Operating Assets and Liabilities:		-			-
Accounts Receivable		(615	)		237
Inventory		(1,251	)		988
Prepaid Expenses and Other Current Assets		(102	)		(865	)
Other Assets		(221	)		(203	)
Accounts Payable and Accrued Expenses		742			(604	)
Payments on Operating Lease Liabilities		(497	)		-

NET CASH USED IN OPERATING ACTIVITIES		(5,715	)		(5,667	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of Note Receivable		-			(886	)
Purchase of Property, Equipment and Leasehold Improvements		(2,547	)		(4,682	)
Purchase of Equity investment		(402	)		-
Cash from Acquisition of Joint Venture Entities		127			-

NET CASH USED IN INVESTING ACTIVITIES		(2,822	)		(5,568	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Notes Payable		6,000			10,000
Payments of Debt Principal		(1,000	)		-
Cash Paid for Debt Discount		(150	)		(495	)
Proceeds from Issuance of Common Stock		2,300			750
Proceeds from Exercise of Warrants		-			51
Cash (Distribution) Contribution from Non-Controlling Interest		-			(6	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		7,150			10,300

NET CHANGE IN CASH		(1,387	)		(935	)
NET CHANGE IN CASH CLASSIFIED WITHIN CURRENT ASSETS HELD FOR SALE		-			-
Cash at Beginning of Period		7,193			5,446

CASH AT END OF PERIOD	$	5,807		$	4,511

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash Paid for Interest	$	50		$	312

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Financing Fees in Accounts Payable	$	25		$	-
Purchase of Land and Building with a Mortgage	$	-		$	6,500
Claw Back of Escrow Shares	$	-		$	351
Warrants Issued in Conjunction with Debt	$	163		$	466
Stock Issued for Assets	$	-		$	100
Conversion of Dominion Debt	$	7,750		$	9,400
Deposits Applied to the Purchase of Property	$	-		$	3,500
Beneficial Conversion Feature Recorded as Debt Discount	$	4,662		$	3,811
Consolidation of Joint Venture Net Assets	$	11,957		$	-

	Preferred Stock
	Convertible Series A				Convertible Series B				Common Stock						Additional Paid-In			Accumulated			Non- Controlling
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interest		Total
Balance at December 31, 2017		8	$	-		-	$	-		61,818,560		$	62		$	181,358		$	(105,549	)	$	931	$	76,802
Opening Balance Sheet Adjustment - ASU 2017-11		-		-		-		-		-			-			5,238			2,548			-		7,786
Beneficial Conversion Feature - Convertible Notes		-		-		-		-		-			-			3,811			-			-		3,811
Issuance of Common Stock for Compensation		4		-		-		-		81,506			0			288			-			-		288
Issuance of Common Stock for Services		-		-		-		-		6,410			0			17			-			-		17
Stock Cancellation		-		-		-		-		(24,510	)		(0	)		(118	)		-			-		(118	)
Reverse Stock Split round up shares		-		-		-		-		46,688			0			(0	)		-			-		-
TCD Acquisition Clawback		-		-		-		-		(101,083	)		(0	)		(351	)		-			-		(351	)
Warrant Exercise		-		-		-		-		197,125			0			51			-			-		51
Debt Conversion - Common Stock		-		-		-		-		3,133,025			3			9,485			-			-		9,488
Stock issued for Cash		-		-		-		-		160,430			0			750			-			-		750
Stock issued for Assets		-		-		-		-		26,666			0			100			-			-		100
Stock Option Expense		-		-		-		-		-			-			474			-			-		474
Issuance of warrants		-		-		-		-		-			-			466			-			-		466
Net Income Attributable to Non-Controlling Interest		-		-		-		-		-			-			-			-			79		79
Net Loss Attributable to Terra Tech Corp.		-		-		-		-		-			-			-			(12,175	)		-		(12,175	)
Balance at March 31, 2018		12	$	-		-	$	-		65,344,816		$	65		$	201,570		$	(115,176	)	$	1,010	$	87,469

	(in thousands)
Components Of Assets Held for Sale:	March 31, 2019

Property, Equipment and Leasehold Improvements, Net	$	7,503
Other Assets		6

Assets Held for Sale	$	7,509

	(in thousands)
Assets Acquired
Inventory	$	114
Property, Equipment and Leasehold Improvements:
Furniture and Equipment		53
Leasehold Improvements		47
Security Deposits		5
Management Service Agreement		370
Goodwill		6,258
Total Assets Acquired	$	6,847

	Awards Reserved for Issuance		Awards Issued		Awards Available for Grant

2016 Equity Incentive Plan		2,000,000		1,541,064		458,936
2018 Equity Incentive Plan		6,600,000		5,100,000		1,500,000

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life	(in thousands) Aggregate Intrinsic Value of In-the-Money Options


Options Outstanding as of January 1, 2019		8,400,629		$	1.56

Options Granted		442,292		$	0.84
Options Exercised		-		$	-
Options Forfeited		(80,000	)	$	2.09
Options Expired		-		$	-
Options Outstanding as of March 31, 2019		8,762,921		$	1.52	9.4 years	$	35.4
Options Exercisable as of March 31, 2019		2,623,889		$	1.77	9.0 years	$	35.4

	(in thousands except for shares / options)
	For the Three Months Ended
	March 31, 2019					March 31, 2018
Type of Award	Number of Shares or Options Granted		Stock-Based Compensation Expense			Number of Shares or Options Granted		Stock-Based Compensation Expense

Stock Options		442,292	$	1,282			800,000	$	474

Stock Grants:
Employees (Common Stock)		385,536		315			81,506		288
Non–Employee Consultants (Common Stock)		26,376		23	*		6,410		17

Total Stock–Based Compensation Expense			$	1,620				$	779

	Shares			Weighted-Average Exercise Price

Warrants Outstanding as of January 1, 2019		1,053,252		$	4.28
Warrants Exercised		-			-
Warrants Granted		131,460			1.14
Warrants Expired		(132,097	)		1.35
Warrants Outstanding as of March 31, 2019		1,052,615		$	3.28

	(in thousands)
	Three Months Ended March 31, 2019
Short-term lease cost (a)	$	33
Operating lease cost		562
Total lease cost	$	595

	Scheduled
Year Ending December 31	Payments

2019	$	1,851
2020		1,717
2021		1,667
2022		1,645
2023		1,666
Thereafter		6,496
Total Future Minimum Lease Payments	$	15,042

	For the Three Months Ended March 31, 2019 (Unaudited) (in thousands)
	Herbs and Produce Products			Cannabis Dispensary, Cultivation and Production			Real Estate			Eliminations and Other			Total

Total Revenues	$	1,304		$	6,813		$	207		$	(966	)	$	7,358
Cost of Goods Sold		903			3,151			92			(792	)		3,354

Gross Profit		401			3,662			114			(174	)		4,004

Selling, General and Administrative Expenses		1,081			4,236			592			5,539			11,449

Loss from Operations		(680	)		(574	)		(478	)		(5,713	)		(7,445	)

Other Income (Expense):
Amortization of Debt Discount		-			-			-			-			-
Loss on Extinguishment of Debt		-			-			-			-			-
Gain/(Loss) on Fair Market Valuation of Derivatives		-			-			-			-			-
Interest Income (Expense)		-			(141	)		(278	)		(2,508	)		(2,928	)
Other Income / (Loss)		-			36			-			11			48
Gain on Interest in Joint Venture		-			-			-			5,599			5,599

Total Other Income (Expense)		-			(105	)		(278	)		3,102			2,719

Net Loss	$	(680	)	$	(679	)	$	(756	)	$	(2,611	)	$	(4,725	)

Total Assets at March 31, 2019	$	5,954		$	99,344		$	18,120		$	16,116		$	139,534

	(in thousands)
	Total Revenue					Percentage of Total Revenue
	Three Months Ended March 31,					Three Months Ended March 31,
	2019			2018		2018			2017

Herbs and Produce Products	$	1,304		$	1,284		17.7	%		14.9	%
Cannabis Dispensary, Cultivation and Production		6,813			7,315		92.6	%		84.9	%
Real Estate		207			-		2.8	%		-%
Other and Eliminations		(966	)		17		(13.1	)%		0.1	%

Total	$	7,358		$	8,615		100.0	%		100.0	%