UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended ~~September~~June 30, ~~2020~~2021

☐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.~~UNRIVALED BRANDS, INC.

(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,~~3242 S. Halladay St., Suite ~~225 Irvine, CA~~202

Santa Ana, California

~~92614~~92705

(Address of Principal Executive Offices)

(Zip Code)

~~(855) 447-6967~~(888) 909-5564

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

None

UNRV

OTCQX

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 ☒ 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 ☒ 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	☒☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised 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 ☒

As of ~~November 2, 2020,~~August 10, 2021, there were ~~194,704,163~~242,411,734 shares of common stock issued and ~~192,395,755~~240,103,326 shares outstanding, ~~8 shares of Series A Preferred Stock, convertible at any time into 8 shares of common stock, 0 shares of Series B Preferred Stock, 1,088,460~~41,026,610 shares of common stock issuable upon the exercise of all of our outstanding warrants and ~~5,593,814~~8,225,610 shares of common stock issuable upon the exercise of all vested options.

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC.

INDEX TO FORM 10-Q FOR THE

QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements
~~PART I - FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements~~
	Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	3
	Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 (Unaudited) and ~~2019 (Unaudited)~~2020	4
	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 (Unaudited) and ~~2019 (Unaudited)~~2020	5
	Consolidated Statements of Stockholders Equity for the Three and Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	~~6-7~~
	~~Consolidated Statements of Stockholders Equity for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)~~	~~8-9~~6
	Notes to Unaudited Consolidated Financial Statements	108

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3429
	Company Overview	3429
	Results of Operations	3730
	Disclosure About Off-Balance Sheet Arrangements	3932
	Critical Accounting Policies and Estimates	3932
	Liquidity and Capital Resources	4033

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4135

Item 4.	Controls and Procedures	4135

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4236

Item 1A.	Risk Factors	4236

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4236

Item 3.	Defaults Upon Senior Securities	4236

Item 4.	Mine Safety Disclosures	4236

Item 5.	Other Information	4236

Item 6.	Exhibits	4337

Signatures		4540

Table of Contents

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except Shares)

		September 30,			December 31,				June 30,			December 31,
		2020			2019				2021			2020
		(Unaudited)							(Unaudited)
ASSETS	ASSETS							ASSETS

Current Assets:
Cash		$	2,338		$	1,226			$	40,283		$	888
Accounts receivable, net			351			693				2,202			835
Short term investments										0			34,045
Inventory			4,851			4,334				2,590			1,602
Prepaid expenses and other assets			457			675				1,038			234
Current assets of discontinued operations			183			2,440				0			2

Total current assets			8,180			9,368				46,113			37,606

Property, equipment and leasehold improvements, net			33,345			35,469				31,214			32,480
Intangible assets, net			8,028			14,871				7,339			7,714
Goodwill			6,171			21,471				6,171			6,171
Other assets			13,327			10,272				12,733			13,040
Investments			5,330			5,000				330			330
Assets of discontinued operations			2,981			22,799				2,901			2,953

TOTAL ASSETS		$	77,362		$	119,250			$	106,801		$	100,294

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Current liabilities:
Accounts payable and accrued expenses		$	10,752		$	9,526			$	10,550		$	8,621
Short-term debt			12,855			11,021				11,775			8,033
Current liabilities of discontinued operations			8,219			7,035				14,356			9,768

Total current liabilities			31,826			27,582				36,681			26,422

Long-term liabilities:
Long-term debt, net of discounts			1,877			6,570				3,500			6,632
Long-term lease liabilities			8,448			8,902				7,094			8,082
Long-term liabilities of discontinued operations			55			869				0			28
Total long-term liabilities			10,380			16,341				10,594			14,742

Total liabilities			42,206			43,923				47,275			41,164

STOCKHOLDERS’ EQUITY:
Preferred stock, convertible series A, par value 0.001: 100 shares authorized as of September 30, 2020 and December 31, 2019; 12 shares issued and 8 shares outstanding as of September 30, 2020 and December 31, 2019			0			0
Preferred stock, convertible series B, par value 0.001: 41,000,000 Shares Authorized as of September 30, 2020 and December 31, 2019; 0 Shares Issued and Outstanding as of September 30, 2020 and December 31, 2019			0			0
Common stock, par value 0.001: 990,000,000 Shares authorized as of September 30, 2020 and December 31, 2019; 211,571,970 issued and 209,263,562 outstanding as of September 30, 2020 and 120,313,386 shares issued and 118,004,978 shares outstanding as of December 31, 2019			214			120
Common stock, par value 0.001:										258			218
990,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 236,555,408 shares issued and 234,247,000 shares outstanding as of June 30, 2021; 196,512,867 shares issued and 194,204,459 shares outstanding as of December 31, 2020.
Additional paid-in capital			274,370			260,516				291,026			275,060
Treasury Stock (2,308,408 shares of common stock, 4 shares of Preferred Stock Convertible Series A)			(808	)		(808	)
Treasury stock (2,308,408 shares of common stock, 12 shares of Preferred Stock Convertible Series A)										(808	)		(808	)
Accumulated deficit			(243,358	)		(189,685	)			(234,927	)		(219,803	)

Total Terra Tech Corp. stockholders’ equity			30,418			70,143
Total Unrivaled Brands Inc. stockholders’ equity										55,549			54,667
Non-controlling interest			4,738			5,184				3,977			4,463

Total stockholders’ equity			35,156			75,327				59,526			59,130

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	77,362		$	119,250			$	106,801		$	100,294

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

Table of Contents

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except for shares and per-share information)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020

Total revenues	$	3,053		$	5,477		$	9,806		$	12,000		$	6,262		$	2,706		$	11,375		$	6,753
Cost of goods sold		1,615			2,295			4,796			4,917			3,924			1,458			6,604			3,181

Gross profit		1,438			3,182			5,010			7,083			2,338			1,248			4,771			3,572

Selling, general and administrative expenses		5,588			9,318			20,409			26,521			6,188			6,279			20,325			14,820
Impairment of assets		9,792			171			19,909			681			0			4,998			0			10,118
(Gain) / Loss on sale of assets		0			(893	)		(35	)		(893	)
Loss on interest in joint venture		0			0			0			1,067
Loss (gain) on sale of assets														6			0			6			(35	)

Loss from operations		(13,943	)		(5,414	)		(35,273	)		(20,294	)		(3,856	)		(10,029	)		(15,560	)		(21,331	)

Other income (expense):
Loss on extinguishment of debt														0			0			(6,161	)		0
Interest expense, net		(529	)		(1,714	)		(1,885	)		(8,262	)		(204	)		(454	)		(604	)		(1,356	)
Other income/loss		372			(984	)		349			13			17			(89	)		362			(23	)
Gain (loss) on sale of investment														(874	)		0			5,337			0

Total other income (expense)		(157	)		(2,698	)		(1,536	)		(8,249	)		(1,061	)		(543	)		(1,066	)		(1,379	)

Income (Loss) from continuing operations		(14,100	)		(8,112	)		(36,809	)		(28,543	)
Income (Loss) from discontinued operations, net of tax		(4,199	)		(811	)		(17,342	)		(2,135	)
Loss from continuing operations														(4,917	)		(10,572	)		(16,626	)		(22,710	)
Loss from discontinued operations, net of tax														(56	)		(7,908	)		(43	)		(13,143	)

NET INCOME (LOSS)		(18,299	)		(8,923	)		(54,151	)		(30,678	)
NET LOSS														(4,973	)		(18,480	)		(16,669	)		(35,853	)

Less: Income (Loss) attributable to non-controlling interest from continuing operations		(138	)		(143	)		(479	)		(57	)
Less: Income (loss) attributable to non-controlling interest from continuing operations														(868	)		(298	)		(486	)		(341	)

NET LOSS ATTRIBUTABLE TO TERRA TECH CORP.	$	(18,161	)	$	(8,780	)	$	(53,672	)	$	(30,621	)
NET LOSS ATTRIBUTABLE TO UNRIVALED BRANDS, INC.													$	(4,105	)	$	(18,182	)	$	(16,183	)	$	(35,512	)

Income / ( Loss) from continuing operations per common share attributable to Terra Tech Corp. common stockholders – basic and diluted	$	(0.07	)	$	(0.07	)	$	(0.20	)	$	(0.28	)
Net Loss per common share attributable to Terra Tech Corp. common stockholders – basic and diluted	$	(0.09	)	$	(0.08	)	$	(0.29	)	$	(0.30	)
Loss from continuing operations per common share attributable to Unrivaled Brands, Inc. common stockholders – basic and diluted													$	(0.02	)	$	(0.06	)	$	(0.07	)	$	(0.13	)
Net Loss per common share attributable to Unrivaled Brands Inc. common stockholders – basic and diluted													$	(0.02	)	$	(0.10	)	$	(0.07	)	$	(0.20	)

Weighted-average number of common shares outstanding – basic and diluted		206,828,614			110,797,214			186,295,127			102,907,538			258,897,777			186,068,175			248,066,926			174,781,579

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

Table of Contents

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020~~

(UNAUDITED)

(in thousands)

	Nine Months Ended
	September 30,						Six Months Ended June 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(54,151	)	$	(30,678	)
Net loss							$	(16,669	)	$	(35,853	)
Less: net loss from discontinued operations		17,342			2,135			42			13,143
Net loss from continuing operations		(36,809	)		(28,543	)		(16,627	)		(22,710	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		650			319			0			300
Cancellation of shares issued		0			(58	)
Gain on sale of assets		(35	)		(893	)
Amortization of debt discount		845			7,211
Gain from debt forgiveness								(86	)		0
Gain on sale of investment								(5,337	)		0
Loss on extinguishment of debt								6,161			0
Non-cash portion of severance expense								7,990			0
Non-cash interest expense								30			627
Gain (loss) on sale of assets								6			(35	)
Depreciation and amortization		5,062			4,684			2,252			3,413
Operating lease expense		680			578
Amortization of operating lease right of use asset								385			446
Stock based compensation		1,672			3,904			1,198			1,244
Impairment loss		19,910			681			0			16,434
Loss on revaluation of equity interests		0			1,067
Other		0			(178	)
Change in operating assets and liabilities:								-
Accounts receivable		292			(550	)		(1,367	)		411
Inventory		(518	)		(2,934	)		(988	)		(272	)
Prepaid expenses and other current assets		218			174			(804	)		46
Other assets		(1,024	)		1,354			(69	)		(1,285	)
Accounts payable and accrued expenses		1,567			4,787			1,314			2,593
Deferred income								0			(300	)
Operating lease liabilities		(380	)		(2,137	)		(302	)		(655	)
Net cash provided by / (used in) operating activities - continuing operations		(7,870	)		(10,532	)		(6,244	)		257
Net cash provided by / (used in) operating activities - discontinued operations		(5,020	)		(910	)		(187	)		(8,421	)
NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES		(12,890	)		(11,443	)		(6,431	)		(8,164	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements		(46	)		(1,208	)		(688	)		(584	)
Purchase of equity investment		243			(409	)
Cash outflow for loans		(250	)		(450	)		0			(250	)
Purchase of intangible assets								0			0
Cash from acquisitions		57			127			0			57
Proceeds from sales of investment								39,382			0
Proceeds from sales of assets		35			1,240			72			35
Net cash provided by / (used in) investing activities - continuing operations		39			(700	)		38,766			(742	)
Net cash provided by / (used in) investing activities - discontinued operations		11,189			516			4,750			6,176
NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES		11,228			(184	)		43,516			5,434

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		2,954			11,000			3,500			1,953
Payments of debt principal		(430	)		(2,000	)		(1,012	)		(35	)
Cash paid for debt discount		(8	)		(150	)
Cash paid for debt issuance costs								(178	)		0
Proceeds from issuance of common stock		250			4,500			0			250
Cash contribution from non-controlling interest		152			0
Cash paid for acquisition of non-controlling interest		0			(6,250	)
Cash distribution to non-controlling interest		(145	)		0
Purchase of treasury stock		0			(808	)
Cash contribution (distribution) from non-controlling interest								0			80
Net cash provided by / (used in) financing activities - continuing operations		2,773			6,292			2,310			2,248
Net cash provided by / (used in) financing activities - discontinued operations		0			0			0			0
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES		2,773			6,292			2,310			2,248

NET CHANGE IN CASH		1,112			(5,335	)		39,395			(482	)

Cash at beginning of period		1,226			7,193			888			1,226

CASH AT END OF PERIOD	$	2,338		$	1,858		$	40,283		$	744

SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	$	892		$	1,352		$	430		$	625

SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt principal and accrued interest converted into common stock	$	2,252		$	12,450		$	3,596		$	1,829
Promissory note issued for severance							$	2,100		$	0
Stock Issued for the acquisition of OneQor	$	9,304		$	0		$	0		$	9,305
Fixed assets in accounts payable	$	792		$	0		$	0		$	35
Non-cash contribution from non-controlling interest	$	25		$	702
Consolidation of Joint Venture Net Assets	$	0		$	11,957
Financing Fees in Accounts Payable	$	0		$	145
Warrants issued for debt discount	$	0		$	228
Beneficial Conversion Feature	$	0		$	5,633
Stock options exercised on a net share basis							$	2		$	0

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

Table of Contents

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS EQUITY

FOR THE THREE AND SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, 2021 AND 2020

(UNAUDITED)

(in ~~thousands, except for Shares)~~thousands)

	Preferred Stock
	Convertible Series A				Common Stock				Additional Paid-In			Treasury Stock					Accumulated			Non- Controlling
	Shares		Amount		Shares		Amount		Capital			Shares		Amount			Deficit			Interest			Total
Balance at March 31, 2021		-	$	0		233,182,790	$	256	$	290,225			2,308,420	$	(808	)	$	(230,822	)	$	4,845		$	63,696
Stock compensation - employees		-		0		250,000		0		68			-		0			0			0			68
Stock compensation - directors		-		0		343,493		1		93			-		0			0			0			94
Stock Option Exercises		-		0		470,717		1		(1	)		-		0			0			0			0
Stock option expense		-		0		-		0		641			-		0			0			0			641
Net income attributable to non-controlling interest		-		0		-		0		0			-		0			0			(868	)		(868	)
Net loss attributable to Unrivaled Brands Inc.		-		0		-		0		0			-		0			(4,105	)		0			(4,105	)
Balance at June 30, 2021		-	$	0		234,247,000	$	258	$	291,026			2,308,420	$	(808	)	$	(234,927	)	$	3,977		$	59,526

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


	Preferred Stock
	Convertible Series A				Common Stock					Additional Paid-In			Treasury Stock					Accumulated			Non- Controlling
	Shares		Amount		Shares			Amount		Capital			Shares		Amount			Deficit			Interest			Total
Balance at March 31, 2020		8	$	0		190,930,853		$	192	$	272,454			2,308,412	$	(808	)	$	(207,016	)	$	5,305		$	70,127
Debt conversion - common stock		-		0		12,943,496			13		788			-		0			0			0			801
Stock compensation - employees		-		0		826,429			1		57			-		0			0			0			58
Stock compensation - directors		-		0		(173,610	)		0		(100	)		-		0			0			0			(100	)
Stock compensation - services expense		-		0		250,000			1		32			-		0			0			0			33
Stock option expense		-		0		-			0		295			-		0			0			0			295
Contribution from non-controlling interest		-		0		-			0		0			-		0			0			(84	)		(84	)
Net income attributable to non-controlling interest		-		0		-			0		0			-		0			0			(298	)		(298	)
Net loss attributable to Unrivaled Brands Inc.		-		0		-			0		0			-		0			(18,182	)		0			(18,182	)
Balance at June 30, 2020		8	$	0		204,777,168		$	207	$	273,526			2,308,412	$	(808	)	$	(225,198	)	$	4,923		$	52,650

~~Table of Contents~~

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS EQUITY

FOR THE THREE AND SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2021 AND 2020

(UNAUDITED)

(in ~~thousands, except for Shares)~~thousands)

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 June 30, 2019

12

$ -

109,105,288

$ 109

$ 255,112

-

$ -

$ (164,594 )

$ 6,741

$ 97,368

Stock compensation - employees

-

-

91,465

0

37

-

-

-

-

37

Stock compensation - directors

-

-

173,610

0

102

-

0

0

0

102

Stock cancellation

-

0

-

0

0

-

0

0

0

0

Debt conversion - common stock

-

0

4,071,410

4

1,284

-

0

0

0

1,288

Stock issued for cash

-

0

1,775,382

2

648

-

0

0

0

650

Stock option expense

-

0

-

0

1,078

-

0

0

0

1,078

Series A

(4 )

0

-

-

0

4

0

0

0

0

Common Stock

-

0

-

0

0

2,308,408

(808 )

0

0

(808 )
Consolidation of NuLeaf joint venture

-

-

-

-

-

-

-

-

-

0

Contribution (distribution) from non-controlling interest

-

-

-

-

0

-

0

0

(182 )

(182 )
Net income attributable to non-controlling interest

-

0

-

0

0

-

0

0

(143 )

(143 )
Net loss attributable to Terra Tech Corp.

-

0

-

0

0

-

0

(8,780 )

0

(8,780 )
Balance at September 30, 2019

8

$ 0

115,217,155

$ 115

$ 258,262

2,308,412

$ (808 )

$ (173,375 )

$ 6,416

$ 90,610

	Preferred Stock
	Convertible Series A					Common Stock				Additional Paid-In			Treasury Stock					Accumulated			Non- Controlling
	Shares			Amount		Shares		Amount		Capital			Shares		Amount			Deficit			Interest			Total
Balance at December 31, 2020		8		$	0		194,204,459	$	218	$	275,060			2,308,412	$	(808	)	$	(219,803	)	$	4,463		$	59,130
Adoption of ASU 2020-06		-			0		-		0		(1,071	)		-		0			1,059			0			(12	)
Debt conversion - common stock		-			0		20,391,774		20		3,990			-		0			0			0			4,010
Warrants issued to Dominion		-			0		-		0		5,978			-		0			0			0			5,978
Stock compensation - employees		-			0		250,000		0		67					0			0			0			67
Stock compensation - directors		-			0		885,159		1		213			-		0			0			0			214
Stock compensation - services expense		-			0		332,947		0		32					0			0			0			32
Stock option exercises		-			0		1,696,947		2		(2	)		-		0			0			0			0
Acquisition of A shares		(8	)		0		16,485,714		17		5,874			8		0			0			0			5,891
Stock option expense		-			0		-		0		885			-		0			0			0			885
Net income attributable to non-controlling interest		-			0		-		0		0			-		0			0			(486	)		(486	)
Net loss attributable to Unrivaled Brands Inc.		-			0		-		0		0			-		0			(16,183	)		0			(16,183	)
Balance at June 30, 2021		-		$	0		234,247,000	$	258	$	291,026			2,308,420	$	(808	)	$	(234,927	)	$	3,977		$	59,526

	Preferred Stock
	Convertible Series A				Common Stock					Additional Paid-In			Treasury Stock					Accumulated			Non- Controlling
	Shares		Amount		Shares			Amount		Capital			Shares		Amount			Deficit			Interest			Total
Balance at December 31, 2019		8	$	0		118,004,978		$	120	$	260,516			2,308,412	$	(808	)	$	(189,686	)	$	5,184		$	75,326
Beneficial conversion feature - convertible notes		-		0		22,067,056			22		1,807			-		0			0			0			1,829
Stock compensation - employees		-		0		3,179,544			3		431			-		0			0			0			434
Stock compensation - directors		-		0		(173,610	)		0		(100	)		-		0			0			0			(100	)
Stock compensation - services expense		-		0		1,075,000			1		140			-		0			0			0			141
Stock issued for cash		-		0		2,470,173			3		248			-		0			0			0			251
Stock issued for assets		-		0		58,154,027			58		9,246			-		0			0			0			9,304
Stock option expense		-		0		-			0		1,238			-		0			0			0			1,238
Contribution from non-controlling interest		-		0		-			0		0			-		0			0			80			80
Net income attributable to non-controlling interest		-		0		-			0		0			-		0			0			(341	)		(341	)
Net loss attributable to Unrivaled Brands Inc.		-		0		-			0		0			-		0			(35,512	)		0			(35,512	)
Balance at June 30, 2020		8	$	-		204,777,168		$	207	$	273,526			2,308,412	$	(808	)	$	(225,198	)	$	4,923		$	52,650

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

Table of Contents

~~TERRA TECH CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 )

$ (189,686 )

$ 5,184

$ 75,327

Debt conversion - common stock

-

-

27,694,543

28

2,224

2,252

Stock compensation - employees

-

-

3,179,544

3

431

434

Stock compensation - directors

-

-

909,090

1

18

19

Stock compensation - services expense

-

-

1,159,615

1

151

152

Stock issued for cash

-

-

2,470,173

2

248

250

Stock issued for OneQor acquisition

-

-

58,154,027

58

9,246

9,304

Stock option expense

-

-

1,536

1,536

Net contribution from non-controlling interest

-

-

-

0

0

-

0

0

33

33

Net income attributable to non-controlling interest

-

0

0

0

0

(479 )

(479 )
Net loss attributable to Terra Tech Corp.

-

0

0

0

(53,672 )

0

(53,672 )
Balance at September 30, 2020

8

$ -

211,571,970

$ 214

$ 274,370

2,308,412

$ (808 )

$ (243,358 )

$ 4,738

$ 35,156

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

~~Table of Contents~~

~~TERRA TECH CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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

Opening balance sheet adjustment - ASC 842

-

-

-

-

-

-

-

-

-

Stock compensation - employees

-

-

564,799

1

428

-

-

-

428

Stock compensation - directors

-

-

173,610

0

102

-

-

-

-

102

Stock compensation - services expense

-

0

66,376

0

59

0

0

0

59

Stock cancellation

-

0

(60,000 )

0

(58 )

-

0

0

0

(58 )
Debt conversion - common stock

-

0

25,251,122

25

12,656

-

0

0

0

12,681

Stock issued for cash

-

0

7,461,833

7

4,493

-

0

0

0

4,500

Stock option expense

-

0

-

0

3,314

-

0

0

0

3,314

Beneficial conversion feature - convertible notes

-

0

-

0

5,862

0

0

0

5,862

Series A

(4 )

0

-

0

4

0

0

0

0

Common Stock

-

0

2,308,408

(808 )

0

0

(808 )
Consolidation of NuLeaf joint venture

-

0

-

0

0

-

0

0

5,402

5,402

Acquisition of non-controlling interest

-

0

-

0

(5,136 )

0

0

(633 )

(5,770 )
Contribution (distribution) from non-controlling interest

-

0

-

0

0

-

0

0

702

702

Net income attributable to non-controlling interest

-

0

-

0

0

-

0

0

(57 )

(57 )
Net loss attributable to Terra Tech Corp.

-

0

-

0

0

-

0

(30,621 )

0

(30,621 )
Balance at September 30, 2019

8

$ 0

115,217,155

$ 115

$ 258,262

2,308,412

$ (808 )

$ (173,375 )

$ 6,416

$ 90,610

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

~~Table of Contents~~

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -– DESCRIPTION OF BUSINESS

References in this document to “the Company”, ~~“Terra Tech”~~“Unrivaled”, “we”, “us”, or “our” are intended to mean ~~Terra Tech Corp.~~Unrivaled Brands, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis. Effective July 7, 2021 the Company changed its corporate name from “Terra Tech Corp.” to “Unrivaled Brands, Inc.” in connection with the Company’s acquisition of UMBRLA, Inc (“UMBRLA”).

~~We are~~Unrivaled is a holding company with the following subsidiaries:

·	620 Dyer LLC, a California corporation (“Dyer”)
·	1815 Carnegie LLC, a California limited liability company (“Carnegie”)
·	Black Oak Gallery, a California corporation (“Black Oak”)
·	Blüm San Leandro, a California corporation (“Blüm San Leandro”)
·	MediFarm, LLC, a Nevada limited liability company (“MediFarm”)
·	MediFarm I, LLC, a Nevada limited liability company (“MediFarm I”)
·	121 North Fourth Street, LLC, a Nevada limited liability company ("121 North Fourth")
·	OneQor Technologies, Inc., a Delaware corporation ("OneQor")
·	UMBRLA, Inc., a Nevada corporation ("UMBRLA")

The Company is a retail, production, and cultivation company, with an emphasis on providing the highest quality of medical and adult use cannabis products. We currently have a concentrated cannabis interest in ~~California and Nevada.~~California. All of ~~our~~the Company’s cannabis dispensaries operate under the name Blüm. ~~Our~~The Company’s cannabis dispensaries in California operate as 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.

~~On February 14, 2020,~~From the acquisition of UMBRLA, the Company ~~acquired OneQor Technologies, Inc. (“OneQor”).~~has become a cannabis multi-state operator and the parent company of multiple cannabis lifestyle brands. The Company is home to Korova, a brand of high potency products across multiple product categories, currently available in California, Oregon, Arizona, and Oklahoma. Other Company brands include Cabana, a boutique cannabis flower brand, and Sticks, a mainstream value-driven cannabis brand, active in California and Oregon. The Company also added a dispensary in California which operates as The Spot in Santa Ana and licensed distribution facilities in Portland, Los Angeles, Orange, and Sonoma County. See Note 19 – Subsequent Events for further discussion on 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. Refer to Note 13, “~~Business Combinations”~~ for additional information regarding the transaction. On July 31, 2020, due to a lack of growth in customer acquisition and revenue during the COVID-19 pandemic, the Company made the decision to suspend OneQor operations and layoff the OneQor staff.UMBRLA.

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 U.S. Securities and 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~~of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of ~~the Financial Accounting Standards Board (“FASB”)~~FASB or ~~Accounting Standards Codification (“ASC”)~~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.

~~Table of Contents~~

All intercompany ~~accounts~~transactions and ~~transactions~~balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of June 30, 2021 and December 31, 2020, and the consolidated results of operations and cash flows for the quarters ended June 30, 2021 and 2020 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, ~~2019.~~2020. The December 31, ~~2019~~2020 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, ~~2019.~~2020. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

~~Revision of Previously Issued Financial Statements~~

Table of Contents

On October 26, 2017, the Company entered into joint venture agreements with NuLeaf Sparks Cultivation, LLC and NuLeaf Reno Production, LLC (collectively “NuLeaf”) to build and operate cultivation and production facilities of cannabis products in Nevada. 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 began consolidating the accounts and operations of these entities as of March 1, 2019. All intercompany transactions are eliminated in the consolidated financial statements. On March 1, 2019, we 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.UNRIVALED BRANDS, INC. AND SUBSIDIARIES

~~During the year ended December 31, 2019, management finalized the accounting for the transaction, and recorded a measurement period adjustment that increased net loss by $6.63 million (see Note 4, “~~~~Variable Interest Entities”~~ for a description of the transaction). The Company has revised the condensed unaudited consolidated statement of operations and condensed unaudited consolidated statements of stockholders’ equity for the nine months ended September 30, 2019 to restate the 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 nine months ended September 30, 2019 of $1.07 million.NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 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. The risks and uncertainties ~~surrounding~~on the ~~timing of the close~~future of our ~~pending asset sales~~business due to COVID-19 and regulatory uncertainty, combined with the fact that we have historically lost money, have in ~~Nevada, our limited capital resources, and~~ the ~~weak industry conditions stemming from the COVID-19 pandemic that are impacting our business raise~~past, raised substantial doubt as to our ability to continue as a going concern. However, management believes that the acquisition of UMBRLA, proceeds from sales of Hydrofarm investment, proceeds from the Nevada asset sales, management’s past and on-going efforts to trim costs and management’s recent efforts to boost sales will lead to cash sustainability. Therefore, management believes that there is no material uncertainty as to the Company’s ability to continue as a going concern. See Note 19~~, “Going Concern”~~ of5 – Investments in Unconsolidated Affiliates for more details about the ~~Notes to Consolidated Financial Statements.~~Hydrofarm investment.

~~Table of Contents~~

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”~~Operations for further discussion regarding discontinued operations.

Trade and Other Receivables

The Company extends ~~non-interest~~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 zero as of June 30, 2021 and December 31, 2020.

Investments

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 outstanding voting stock, under the equity method of accounting. These investments are recorded at the amount of the Company’s investment and adjusted each period for the Company’s share of the 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 fair value.

Publicly held equity securities are recorded at fair value with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains or losses on equity securities in our consolidated statements of operations.

Table of Contents

UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

~~Table of Contents~~

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 7, “Property, Equipment and Leasehold Improvements, Net” for further information.

~~Investments~~Intangible Assets

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 outstanding voting stock, under the equity method of accounting. These investments are recorded at the amount of the Company’s investmentIntangible assets continue to be subject to amortization, and adjusted each period for the Company’s share of the 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 fair value.

~~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 records assets held for sale~~impairment is determined in accordance with ASC 360,~~, “Property,~~“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 can be reliably determined. The approximate useful lives for amortization of our intangible assets are as follows:

Customer relationships		3 to 5 Years
Trademarks and Patent		2 to 8 Years
Dispensary licenses		14 Years

The Company 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 recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the ~~lower~~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 orof 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 fair value ~~less costs~~in the period identified.

Intangible assets that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to ~~sell. Fair value is based on~~ the ~~estimated proceeds from~~extent that the ~~sale~~carrying amount of the ~~facility utilizing recent purchase offers, market comparables and/or data. Our estimate as to~~asset group exceeds its 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.~~value.

Table of Contents

UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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~~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 the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit.

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 orof its fair value, the Company recognizes an impairment charge equal to the amount in excess.

~~Table of Contents~~

~~Intangible~~ Assets Held for Sale and Discontinued Operations

~~Intangible~~Assets held for sale represent furniture, equipment, and leasehold improvements less accumulated depreciation as well as any other assets ~~continue to be subject to amortization, and any impairment is determined~~that are held for sale in conjunction with the sale of a business. The Company records assets held for sale in accordance with ASC 360~~“Property,~~, “Property, Plant, and Equipment,”~~intangible~~ 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 ~~stated at historical cost~~available for immediate sale and ~~amortized over their estimated useful lives.~~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 ~~uses~~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 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~~		~~3 to 5 Years~~
~~Trademarks~~		~~2 to 8 Years~~
~~Dispensary licenses~~		~~14 Years~~
~~Patent~~		~~2 Years~~

The Company 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 changestrategic shift 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 recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assetsCompany’s operations 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 fair value in the period identified.

Intangible assets that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value.financial results.

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 ~~held one investment at~~has not elected the fair value ~~as of September 30, 2020. Refer to Note 10, “~~~~Fair Value Measurements”~~ option for ~~details.~~any eligible financial instruments.

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UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of June 30, 2021 and December 31, 2020:

	June 30, 2021
Investments:	Amount		Level 1		Level 2		Level 3
Warrants to acquire shares of HydroFarm	$	0	$	0	$	0	$	0
Shares in HydroFarm		-		-		-		-
Option to acquire Edible Garden Inc		330		0		0		330

Total	$	330	$	0	$	0	$	330

	December 31, 2020
Investments:	Amount		Level 1		Level 2		Level 3
Warrants to acquire shares of HydroFarm	$	10,195	$	0	$	10,195	$	0
Shares in HydroFarm		23,850		-		23,850		-
Option to acquire Edible Garden Inc		330		0		0		330

Total	$	34,375	$	0	$	34,045	$	330

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

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.

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.

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UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Revenue

~~See Note 17,~~ ~~“ Segment Information”~~The table below shows the revenue break between California operations and Nevada operations 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~~six months ended June 30, 2021 and ~~uncertainty of our revenue and cash flows are affected by economic factors.~~2020:

	(in thousands)
	2021		2020

California	$	4,929	$	4,932
Nevada		6,446		1,821
Total	$	11,375	$	6,753

Contract Balances

Due to the nature of the Company’s revenue from contracts with customers, ~~our cannabis dispensary, cultivation and production operations do~~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~~is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration.

~~Table of Contents~~

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.

Advertising Expenses

The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses -– Advertising Cost.” Advertising expenses recognized totaled ~~$0.21~~$0.11 million and ~~$1.32~~$0.17 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, 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 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 statements of operations.

The Black-Scholes option-pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the 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 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 amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. At ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, such net operating losses were offset entirely by a valuation allowance.

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UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 is greater than 50.0% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations.

Loss Per Common Share

In accordance with the provisions of ASC 260, “Earnings Per Share”, 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 the diluted loss per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the ~~nine~~three and six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. Therefore, the basic and diluted weighted-average shares of common stock outstanding were the same for ~~all~~both years.

~~Table of Contents~~

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):

	Six Months Ended June 30,
	2021		2020

Common stock warrants		16,076,556		1,205,126
Common stock options		16,721,567		15,350,580

		32,798,123		16,555,706

Nine Months Ended
September 30,

2020

2019

Common stock warrants

1,088,278

1,170,540

Common stock options

16,259,670

12,365,295

17,347,948

13,535,835

Warrants issued that are exercisable for little to no cost are included in the denominator of basic earnings per share. During the three months ended June 30, 2021, the Company issued no warrants.

Recently ~~Issued~~Adopted Accounting Standards

FASB ~~Accounting Standards Update (“ASU”)~~ASU No. 2020-06 ~~“Accounting~~“Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” – Issued~~- Issued~~ in August 2020, ASU 2020-06simplifiesthe accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversionfeatures are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted foras paid-incapital. By removing the separation model, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost andthe interest rate on convertible debt instruments will typically be closer to the coupon interest rate when applying the guidance in Topic 835,Interest. ASU 2020-06is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlierthan fiscal years beginning after December 15, 2020, including interim periods within those years. The Company adopted ASU 2020-06 as of January 1, 2021, utilizing the modified retrospective method of adoption. As a result of adoption of the new standard, previously recognized beneficial conversion features for convertible debt instruments outstanding as of January 1, 2021 were removed from additional paid-in capital and the debt discount. A cumulative impact adjustment was recorded to account for a reduction in interest expense due to a decrease in the discount, which is ~~currently evaluating~~recognized as interest expense upon conversion of the ~~adoption date and impact adoption will have on its~~convertible notes. The January 1, 2021 cumulative effect adjustment to the Company’s financial position ~~and results of operations.~~was as follows:

As Reported
December 31,
2020

Cumulative Effect Adjustment

As Reported
January 1,
2021

Additional Paid-In Capital

$ 275,060

$ 1,071

$ 276,131

Accumulated Deficit

219,803

(1,059 )

218,744

Debt Discount

50

(12 )

38

~~Recently Adopted Accounting Standards~~
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~~FASB Accounting Standards Update (“ASU”) No. 2016-13 “Measurement of Credit Losses on Financial Instruments”~~ ~~Issued in June 2016,~~ UNRIVALED BRANDS, INC. AND SUBSIDIARIES
ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. Effective January 1, 2020, the Company adopted the standard.   It has had no material impact.NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 ~~$0.65~~at $39.95 million as ~~September~~of June 30, ~~2020~~2021 and was ~~$0.18~~approximately $0.06 million as of December 31, ~~2019.~~2020.

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 ~~nine~~three and six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

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 sales may be impacted. During the ~~nine~~three and six months ended ~~September~~June 30, ~~2020,~~2021, 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.

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NOTE 4 -– VARIABLE INTEREST ENTITIES

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, 2019.

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~~granted 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 began consolidating the accounts and operations of these entities ~~as of~~on March 1, 2019. All intercompany transactions are eliminated in the unaudited consolidated financial statements. OnEffective March 1, 2019, we remeasured our equity method investment in NuLeaf to fair value and consolidated the results of NuLeaf inwithin our consolidated financial ~~statements and report its results in our cannabis segment.~~statements.
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UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~Year to date revenue~~Revenue and net loss attributed to NuLeaf ~~is $4.96~~was $6.45 million and ~~$1.26~~$0.97 million, ~~respectively.~~respectively, for the six months ended June 30, 2021 and was $3.39 million and $1.73 million, respectively, for the three months ended June 30, 2021. 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)

(in thousands)

September 30,

December 31,

June 30,

December 31,

2020

2019

2021

2020

Current assets:

Cash

$ 489

$ 243

$
769

$ 671

Accounts receivable, net

74

16

1,038

483

Inventory

3,699

2,910

1,961

3,118

Prepaid expenses and other current assets

72

35

89

21

Total current assets

4,334

3,204

3,857

4,293

Property, equipment and leasehold improvements, net

7,807

9,543

6,248

7,442

Other assets

554

598

347

395

TOTAL ASSETS

$ 12,695

$ 13,344

$ 10,452

$ 12,130

Liabilities:

Total current liabilities

$ 391

$ 213

$ 676

$ 396

Total long-term liabilities

335

415

245

307

TOTAL LIABILITIES

$ 726

$ 628

$ 921

$ 703

NOTE 5 -– 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,~~“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~~Unit for an aggregate purchase price of $5.00 million. ~~The $5.00 million~~
On November 24, 2020, Hydrofarm’s board of directors and stockholders approved an amendment to their amended and restated certificate of incorporation effecting a 1-for-3.3712 reverse stock split of their issued and outstanding shares of common stock. Subsequent to the reverse split, the Company owned 593,261 shares of common stock in Hydrofarm, with an acquisition price of $8.43 per share, and 296,630 warrants to purchase one share of common stock, with an exercise price of $16.86 per share.
On December 14, 2020, Hydrofarm announced the closing of its initial public offering; shares of Hydrofarm began trading on the Nasdaq Global Select Market under the ticker symbol “HYFM.” Hydrofarm’s common shares outstanding on the closing date were 31,720,727; the Company’s ownership percentage in Hydrofarm was approximately 1.9%.
Upon closing of Hydrofarm’s initial public offering, the Company determined that the investment in Hydrofarm ~~was~~no longer qualified to be stated at cost, as the equity security had a readily determinable value and therefore should be recorded at ~~cost~~fair value. In the fourth quarter of 2020, the Company recorded its investment in Hydrofarm of 593,261 common shares at fair value, and ~~is included~~the warrants to acquire an additional 296,630 shares of Hydrofarm common stock at an exercise price of $16.86, at their respective fair values. The Company marked the investment in ~~Investments on the unaudited consolidated balance sheet~~Hydrofarm to market as of ~~September 30, 2020.~~December 31, 2020 and March 31, 2021 and recorded the change in fair value in those period’s earnings.
On June 16, 2021, the Company completed disposition of 593,261 shares of Hydrofarm common stock and warrants to purchase 296,630 shares of Hydrofarm common stock at a current exercise price of $16.86 per share, for aggregate gross proceeds of $40.76 million in cash pursuant to a Securities Purchase Agreement (the “SPA”) between the Company and two accredited investors. There is no material relationship between the Company or its affiliates and either of the investors other than in respect of the transactions contemplated by the SPA.

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~~Edible Garden~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES
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 September 30, 2020. Refer to Note 10, ~~“Fair Value Measurements”~~ ~~for additional details on management’s approach to estimating the fair value of options.~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 -– INVENTORY

Raw materials consist of material for NuLeaf and IVXX’s line of cannabis pure concentrates. Work-in-progress consists of ~~raw~~cultivation materials ~~labor~~ and ~~overhead expenses associated with the cultivation and production operations~~live plants grown at NuLeaf and Black Oak Gallery. Finished goods consists of cannabis products sold in retail.

Inventory as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consisted of the following:

(in thousands)

September 30,

December 31,

2020

2019

Raw materials

$ 1,389

$ 2,400

Work-in-progress

3,056

3,142

Finished goods

406

275

Inventory reserve

0

(1,483 )

Total inventory

$ 4,851

$ 4,334

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~~Table of Contents~~

(in thousands)

June 30,

December 31,

2021

2020

Raw materials

$ 1,122

$ 39

Work-in-progress

1,145

1,196

Finished goods

323

367

Total inventory

$ 2,590

$ 1,602

NOTE 7 -– PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

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

(in thousands)

June 30,

December 31,

2021

2020

Land and building

$ 11,206

$ 11,206

Furniture and equipment

2,894

2,913

Computer hardware

228

215

Leasehold improvements

16,765

16,459

Construction in progress

10,167

9,922

Subtotal

41,260
��

40,715

Less accumulated depreciation

(10,046 )

(8,235 )
Property, equipment and leasehold improvements, net

$ 31,214

$ 32,480

(in thousands)

September 30,

December 31,

2020

2019

Land and building

$ 11,206

$ 11,206

Furniture and equipment

2,700

2,787

Computer hardware

210

299

Leasehold improvements

16,386

16,545

Construction in progress

10,153

9,676

Subtotal

40,655

40,513

Less accumulated depreciation

(7,310 )

(5,044 )

Property, equipment and leasehold improvements, net

$ 33,345

$ 35,469

Depreciation expense related to property, equipment and leasehold improvements for the ~~nine~~three months ended ~~September~~June 30, 2021 and June 30, 2020 ~~and 2019~~ was ~~$2.83~~$0.93 million and ~~$2.86~~$0.96 million, respectively, and for the six months ended June 30, 2021 and June 30, 2020 was $1.88 million and $1.92 million, respectively.
~~Assets Divested~~
~~Blum Santa Ana~~
On 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 $1.45 million during the 3rd Quarter of 2020 in exchange for these assets.MediFarm So Cal Inc. (“MediFarm So Cal”), a wholly-owned subsidiary of the Company, terminated the existing management services agreement with 55 OC Community Collective Inc. (“55 OC”). 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 managed the dispensary known as “Blum Santa Ana” under the license of 55 OC. Control of 55 OC was transferred to Mr. Vivero and Tetra House Co. via a new management services agreement and the appointment of Mr. Vivero to the Board of Directors of 55 OC, which was pending final regulatory approval as of the date of our report.
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 as of the disposition date, less direct costs to sell, and reflected such loss in discontinued operations.
~~The following table summarizes the transaction:~~

(in thousands)

Total consideration

$ 3,800

Net book value of assets divested and liabilities 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 )

2017
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~~Edible Garden~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
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 as of the disposition date and reflected such loss in discontinued operations. The following table summarizes the transaction:

(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 )
21
~~Table of Contents~~

NOTE 8 -– INTANGIBLE ASSETS AND GOODWILL

Intangible Assets, Net

Intangible assets, net consisted of the ~~following:~~following as of June 30, 2021 and December 31, 2020:

(in thousands)

September 30,

December 31,

2020

2019

Amortizing Intangible Assets:

Customer relationships

$ 7,400

$ 7,860

Dispensary licenses

10,270

10,270

Trade name

196

196

Gross carrying amount

17,865

18,326

Accumulated Amortization

(10,757 )

(8,525 )

Total intangible assets, net

7,108

9,801

Indefinite-lived intangible assets:

Trade Name

920

5,070

Total Indefinite-Lived Intangible Assets

920

5,070

Total Intangible Assets, Net

$ 8,028

$ 14,871

(in Thousands)

June 30, 2021

December 31, 2020

Estimated

Gross

Net

Gross

Net

Useful Life
in Years

Carrying Amount

Accumulated Amortization

Carrying
Value

Carrying Amount

Accumulated Amortization

Carrying
Value

Amortizing Intangible Assets:

Customer Relationships

3 to 5

$ 7,400

$ (7,400 )

$ 0

$ 7,400

$ (7,400 )

$ 0

Trademarks and Patent

2 to 8

196

(196 )

0

196

(187 )

9

Dispensary Licenses

14

10,270

(3,851 )

6,419

10,270

(3,485 )

6,785

Total Amortizing Intangible Assets

17,866

(11,447 )

6,419

17,866

(11,072 )

6,794

Non-Amortizing Intangible Assets:

Trade Name

Indefinite

920

0

920

920

0

920

Total Non-Amortizing Intangible Assets

920

0

920

920

0

920

Total Intangible Assets, Net

$ 18,786

$ (11,447 )

$ 7,339

$ 18,786

$ (11,072 )

$ 7,714

Amortization expense for the ~~nine~~three months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$2.23~~$0.18 million and ~~$2.26~~$0.74 million, respectively and for the six months ended June 30, 2021 and 2020 was $0.38 million and $1.78 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.
During the first three quarters 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 September 30, 2020. As a result, the Company recognized an impairment charge of $0.08 million in the third quarter of 2020 and an impairment of $0.46 million for the nine months ended September 30, 2020.
Management completed the annual test of impairment of the Black Oak Gallery trade name using level 3 inputs and an income approach. The recoverability test indicated that the book value of the trade name exceeded the fair value as of September 30, 2020. As a result, the Company recognized an impairment charge of $1.67 million in the third quarter of 2020. For the nine months ended September 30, 2020 the impairment charge totaled $4.15 million.
22
~~Table of Contents~~

Goodwill

Goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities.
Goodwill is reviewed annually for impairment or more frequently if impairment indicators arise. The ~~table below summarizes~~Company conducts its annual goodwill impairment assessment as of the ~~changes in~~last day of the ~~carrying amount~~third quarter, or more frequently under certain circumstances. For the purpose of the goodwill impairment assessment, the Company has the option to perform a qualitative assessment (commonly referred to as “step zero”) to determine whether further quantitative analysis for impairment of goodwill ~~during~~or indefinite-lived intangible assets is necessary or a quantitative assessment (“step one”) where the ~~nine months ended September~~Company estimates the fair value of each reporting unit using a discounted cash flow method (income approach). Goodwill is assigned to the reporting unit, which is the operating segment level or one level below the operating segment. The balance of goodwill at June 30, ~~2020:~~

(in thousands)

Balance at December 31, 2019

$ 21,471

Impairment

(15,300 )
Balance at September 30, 2020

$ 6,171

~~Impairment of Goodwill~~2021 and December 31, 2020 was unchanged and was $6.17 million.

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 thanManagement did 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 anidentify any 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.
~~During~~triggers during the second quarter of ~~2020, COVID-19~~2021 and ~~civil unrest in Oakland, California continued to have a material negative impact on the financial results~~therefore no impairment of ~~the Black Oak Gallery reporting unit. As a result, management determined that a triggering event had occurred as it~~goodwill was more likely than not the carrying value Black Oak Gallery’s goodwill exceeded its fair value. Accordingly, the Company performed a quantitative assessment of the fair value of Black Oak Gallery’s goodwill as of June 30, 2020 using an income approach. The analysis resulted in an impairment charge of $2.75 million recorded in the second 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.
During the third quarter of 2020, COVID-19 and the aftermath of civil unrest in Oakland, California continued to have a material negative impact on the financial results of the Black Oak Gallery reporting unit. The Company completed its annual testing for impairment as of September 30, 2020 using the Guideline Public Company method. The results of the step one assessment indicated the carrying value of the reporting unit exceeded the fair value by $8.35 million as of September 30, 2020. As a result, the Company recognized an impairment charge of $8.35 million during the third quarter of 2020.recognized.

2318
Table of Contents

UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -– NOTES PAYABLE

Notes payable consist of the ~~following:~~following as of June 30, 2021 and December 31, 2020:

(in thousands)

September 30,

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.

$ 0

$ 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.

2,900

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.

775

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

0

Promissory note dated May 4, 2020, issued to Harvest Small Business Finance, LLC, an unaffiliated third party.   Loan is part of the Paycheck Protection Program ("PPP Loan") offered by the U.S. Small Business Administration.   The interest rate on the note is 1%.   The note requires interest and principle payments seven months from April 2020.   The note matures in two years.

562

0

Promissory note dated July 29, 2020, issued to an unaffilitated third party. The note incurs an interest rate of 8% per annum and matures on April 28, 2021.

1,000

0

Secured promissory note dated September 30, 2020 issued to an unaffiliated third party. The loan accrues interest at a rate of 10% per annum and matures on December 31, 2020.

73

0

Notes payable - promissory notes & mortgages

$ 14,910

$ 18,600

Vehicle loans & other loan agreements

32

46

Less: Short term debt, net of discounts

(12,855 )

(11,021 )
Less: Debt discount

(210 )

(1,055 )
Net Long Term Debt

$ 1,877

$ 6,570

(in thousands)

June 30,

December 31,

2021

2020

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 January 18, 2022. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter. The full principal 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 31, 2021 and incurred interest at a rate of 7.5% per annum. The conversion price was the lower of $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date.

0

2,800

Promissory note dated October 21, 2019, issued to accredited investors, which matured April 21, 2021 and incurred interest at a rate of 7.5% per annum. The conversion price was the lower of $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date.

0

725

Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matured January 30, 2021, and incurred interest at a rate of 10% per annum.

0

500

Secured promissory note dated January 10, 2020, issued to an unaffilitated third party.   The note matured on July 10, 2021 and incurred an interest rate of 15.0% per annum.

1,000

1,000

Promissory note dated May 4, 2020, issued to Harvest Small Business Finance, LLC, an unaffiliated third party.   Loan is part of the Paycheck Protection Program ("PPP Loan") offered by the U.S. Small Business Administration.   The interest rate on the note is 1%.   The note requires interest and principal payments seven months from July 2020.   The note matures in two years.

562

562

Promissory note dated July 29, 2020, issued to an unaffilitated third party. The note incurred an interest rate of 8% per annum and matured on April 29, 2021.

0

1,000

Unsecured promissory note dated January 22, 2021, issued to Michael Nahass (a related party), which matured July 25, 2021, and incurred interest at a rate of 3% per annum.

1,050

0

Unsecured promissory note dated January 22, 2021, issued to Michael Nahass (a related party), which matures January 25, 2022, and bears interest at a rate of 3% per annum.

1,050

0

Convertible promissory note dated January 25, 2021, issued to accredited investors, which matures July 22, 2022 and bears interest at a rate of 3% per annum. The conversion price is $0.175 per share.

3,500

-

Notes payable - promissory notes

$ 15,262

$ 14,687

Vehicle loans

21

29

Less: Short term debt

(11,779 )

(8,033 )
Less: Debt discount

(4 )

(51 )
Net Long Term Debt

$ 3,500

$ 6,632

2419
Table of Contents

~~2018 Master Securities Purchase and Convertible Promissory Notes Agreement~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~In March 2018,~~During the six months ended June 30, 2021, the Company converted debt and accrued interest into 20,391,774 shares of the Company’s common stock.
Promissory Note Extensions
On January 7, 2021, 620 Dyer LLC (“620 Dyer”), a subsidiary of the Company, entered into Amendment No. 1 (the “Loan Agreement Amendment”) to the Loan Agreement between 620 Dyer and Elizon DB Transfer Agent LLC (“Elizon”), dated as of January 18, 2018 ~~Master Securities~~(the “Loan Agreement”). The Loan Agreement Amendment, among other things, amends the maturity date of the Loan Agreement from January 18, 2021 to January 18, 2022. 620 Dyer paid a 1% fee to extend the maturity date.
On January 8, 2021, the Company entered an amendment to the Secured Promissory Note issued by the Company (the “Borrower”) to Arthur Chan (the “Lender”) on January 10, 2020. The Loan Agreement Amendment, among other things, amended the maturity date of the Loan Agreement from January 10, 2021 to July 10, 2021. See Note 19 – Subsequent Events for further discussion on Arthur Chan note.
Series A Preferred Stock Purchase Agreement
On January 22, 2021, the Company entered into a Series A Preferred Stock Purchase Agreement with ~~an accredited investor~~Michael A. Nahass, pursuant to which the Company ~~sells~~agreed to purchase from Mr. Nahass the ~~accredited investor 7.5%~~four shares of the Company’s Series A Preferred Stock held by Mr. Nahass for an aggregate purchase price of $3.10 million, of which (i) $1.00 million was paid in cash, (ii) $1.05 million was paid in the form of an unsecured promissory note bearing interest at the rate of 3% and maturing on or about July 25, 2021 and (iii) $1.05 million was paid in the form of an unsecured promissory note bearing interest at the rate of 3% and maturing on or about January 25, 2022.
Amendment of Existing Senior Convertible Promissory Notes ~~in eight tranches~~and Securities Purchase Agreement
On January 25, 2021, the Company entered into several agreements with an accredited investor (the “Lender”) that holds the promissory notes under the 2018 Securities Purchase Agreement. The amendments, among other things, (1) extended the maturity date of ~~$5.00 million, for a total~~the June 2019 Note from January 26, 2021 to December 31, 2021 and (2) extended the maturity date of ~~$40.00 million. The~~the October 2019 Note from April 21, 2021 to December 31, 2021. In connection with the Note Amendments, the Company ~~converted $1.83 million of convertible notes into~~issued to the Lender warrants to purchase 5,000,000 shares of the Company’s common stock ~~during~~(the “Old Note Warrants”) at an exercise price of $0.01 per share. The Old Note Warrants are exercisable at any time before the ~~nine months ended September 30, 2020. As~~close of ~~September 30, 2020, $3.68 million of principle remains outstanding.~~business on June 25, 2026. The Old Note Warrants contain cashless exercise provisions and, to the extent not previously exercised, will be automatically exercised via cashless exercise on June 25, 2026.

~~For each note issued under~~In conjunction with the ~~2018 Master~~above amendments, the Company entered into a Securities Purchase Agreement with certain accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers $3,500,000 in aggregate principal amount of the Company’s senior convertible promissory notes (the “Notes”) and ~~interest due~~warrants to purchase shares of the Company’s common stock (the “Warrants”), exercisable at any time before the close of business on June 25, 2026. The Warrants are comprised of 15,000,000 “A Warrants” with an exercise price of $0.01 per share and ~~owed under the note is~~15,000,000 “B Warrants” with an exercise price of $0.2284 per share.
The Notes, which are convertible into ~~shares of Common Stock~~common stock at any time at the ~~election~~discretion of the ~~holder~~respective Purchasers at a conversion price of $0.175 per share of common stock, will bear an interest rate of 3%. The Notes mature on or about July 24, 2022 unless accelerated due to an event of default. The Company has the right to prepay the Notes at any time upon 10 days’ prior notice to the Purchasers. If the Company elects to prepay the Notes, the Company must pay the respective Purchasers an amount in cash equal to the ~~lower~~product 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) days’ 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~~Notes and all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the prepayment date is within 90 days of the ~~issuance~~original issue date, ~~of the notes; (ii)~~(y) 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 offollowing the ~~issuance~~original issue date ~~of the notes;~~ or ~~(iii)~~(z) 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~~180th day following the ~~notes.~~original issue date.
~~During~~
The Company can demand that the ~~nine months ended September 30, 2020,~~Purchasers convert the ~~Company converted debt and accrued interest into 27,694,593 shares of~~Notes at any time, on five calendar days’ notice, that (i) the daily dollar volume-weighted average price for the Company’s common ~~stock.~~
~~Additional Financing Arrangements~~
~~On December 30, 2019,~~stock for the ~~Company issued~~prior five consecutive trading days is $0.30 or more and (ii) (1) the shares underlying the Notes have been registered with the SEC or (2) there is a ~~promissory note to Matthew Lee Morgan Trust (a related party), which matures on December 30, 2020.The note accrues interest at a rate of 10% per annum. The note is secured~~fundamental transaction that has been announced by the ~~Company’s HydroFarm investment.~~
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 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.Company.

2520
Table of Contents

~~On July 29, 2020,~~
UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Notes contain standard and customary terms concerning events of default. Events of default include, among other things, any failure to make payments when due, failure to observe or perform material covenants or agreements contained in the Notes, a material default under the Securities Purchase Agreement or related transaction documents or any other material contract to which the Company ~~issued~~or any of its subsidiaries is a ~~promissory note to an unaffiliated third~~ party, the breach of any representation or warranty in the Notes or the Securities Purchase Agreement, the bankruptcy or insolvency of the Company or any of its subsidiaries, the Company’s common stock not being eligible for listing or quotation on a trading market and not eligible to resume listing or quotation for trading within 5 trading days, the Company’s failure to meet the current public information requirements under Rule 144 under the Securities Act of 1933, as amended, the Company’s failure to file required reports with the SEC, and the Company’s failure to maintain sufficient reserved shares for issuance upon conversion of the Notes and exercise of the Warrants. If any event of default occurs, subject to any cure period, the full principal amount, together with interest (including default interest of ~~$1.00 million. The note incurs interest~~18% per annum) and other amounts owing in respect thereof through the date of acceleration shall become, at ~~a rate of 8.00% per annum~~the Purchaser’s election, immediately due and ~~matures on April 28, 2021.~~payable in cash.

~~On September 30, 2020,~~Management performed an analysis to determine the ~~Company issued~~appropriate accounting treatment of the above transactions and concluded (1) a ~~promissory note~~troubled debt restructuring had not occurred, and (2) as the total change in cash flows was greater than 10% of the carrying value of the debt, the transactions should be treated as a debt extinguishment for accounting purposes. A loss on extinguishment equal to ~~an unaffiliated third party,~~the difference between the carrying value of the old debt and the reacquisition price was recognized in ~~the amount of $0.07 million. The note accrues interest at a rate of 10.00% per annum and matures on December 31, 2020.~~current period earnings.

NOTE 10 -– FAIR VALUE MEASUREMENTS

On March 30, 2020, Edible Garden Corp. (“Edible Garden”), a wholly-owned subsidiary of ~~Terra Tech Corp. (the “Company”),~~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 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.

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 ~~September~~June 30, 2021 and December 31, 2020. The options are included in ~~Investments in~~ the ~~unaudited~~“Investments” line within the consolidated balance sheet.

NOTE 11 ~~- EQUITY~~
~~Common Stock~~
~~During the nine months ended September 30, 2020, senior secured convertible promissory notes and accrued interest in the amount of $2.25 million were converted into 27,694,543 shares of common stock.~~
~~During the nine months ended September 30, 2020, the Company issued 5,248,249 shares of common stock for compensation in the amount of $0.61 million.~~
~~NOTE 12 - 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 September 30, 2020:

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

15,055,708

28,920,717

26
~~Table of Contents~~
~~Stock Options~~
~~The following table summarizes the Company’s stock option activity and related information for the nine months ended September 30, 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

$ 0.46

Options granted

10,559,090

$ 0.07

Options exercised

-

$ 0

Options forfeited

(6,566,667 )

$ 1.29

Options expired

(248,048 )

$ 1.33

Options outstanding as of September 30, 2020

16,109,670

$ 0.46

9.0 years

$ 0

Options exercisable as of September 30, 2020

5,593,814

$ 0.91

8.4 years

$ 0

As of September 30, 2020, there was $1.54 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 2.58 years. The weighted average fair value of options exercisable as of September 30, 2020 was $0.80.
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 weighted-average assumptions were used to calculate stock-based compensation for issuances during the three months ended September 30, 2020:

September 30,

September 30,

2020

2019

Expected term (years)

6 Years

6 Years

Volatility

104.2 %

115.7 %
Risk-free interest rate

0.5 %

1.9 %
Dividend yield

0 %

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.
~~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.
27
~~Table of Contents~~
~~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, within continuing operations:

(in thousands except for shares / options)

For the Three Months Ended

September 30, 2020

September 30, 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

909,090

$ 298

143,848

$ 1,078

Stock grants:

Employees (common stock)

0

-

91,465

38

Directors (common stock)

1,082,700

119

173,610

102

Non–employee consultants (common stock)

84,615

11

0

0

Total stock–based compensation expense

$ 428

$ 1,218

For the Nine Months Ended

September 30, 2020

September 30, 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

10,559,090

$ 1,536

4,144,666

$ 3,314

Stock grants:

Employees (common stock)

3,179,544

58 (a)

564,799

428

Directors (common stock)

909,090

19 (b)

173,610

102

Non–employee consultants (common stock)

1,159,615

59

66,376

59

Total stock–based compensation expense

$ 1,672

$ 3,904

~~(a) Expense for Q1 grants attributed to 2019 bonuses was recorded in 2019.~~
~~(b) Clawback of shares granted in 2019.~~
28
~~Table of Contents~~
~~NOTE 13 - BUSINESS COMBINATIONS~~
~~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:

(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 nine months ended September 30, 2020, the Company recognized $1.07 million of revenue and a net loss of $12.07 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 unaudited pro-forma supplemental information is based on estimates and assumptions 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 project the future financial position or operating results of the Company as a result of the OneQor acquisition. Please note that in the 3^rd ~~Quarter of 2020 OneQor was moved to Discontinued Operations, however for the tables below it’s being added to Continuing Operations.~~

(in thousands)

For the
Nine Months
Ended

September 30,
2020

Pro-forma revenues

$ 11,182

Pro-forma net loss from continuing operations

$ (52,330 )

(in thousands)

For the
Three Months
Ended

For the
Nine Months
Ended

September 30,
2019

September 30,
2019

Pro-forma revenues
��
$ 5,607

$ 12,391

Pro-forma net loss from continuing operations

$ (9,411 )

$ (32,440 )
~~NOTE 14 -~~– 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~~while lease liabilities are a line-item on the Company’s ~~Condensed~~ Consolidated Balance Sheets.

29
~~Table of Contents~~
ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the 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~~terms used to calculate the ROU ~~asset includes any~~assets for certain properties include the renewal options ~~or lease termination~~ that the Company ~~expects~~is reasonably certain to exercise.

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 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. Total operating lease costs ~~were $0.68 million in~~for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021 and June 30, 2020 were $0.39 million and $0.45 million, respectively. Short-term lease costs during the ~~nine months~~2021 and 2020 fiscal quarters ended ~~September~~June 30 ~~2020~~ were not material.

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Table of Contents
~~Cash paid for amounts included in operating lease liabilities was $1.17 million for the nine months ended September 30, 2020.~~
UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
As of ~~September~~June 30, 2021 and December 31, 2020, short term lease liabilities of ~~$0.85~~$1.50 million and $0.81 million are included in “Accounts Payable and Accrued Expenses” on the ~~unaudited~~ consolidated balance ~~sheet.~~sheets, respectively. The table below presents total operating lease ROU assets and lease liabilities as of ~~September~~June 30, 2021 and December 31, 2020:

(in thousands)

(in thousands)

Nine Months
Ended
September 30,

June 30,

December 31,

2020

2021

2020

Operating lease ROU assets

$ 8,553

$ 7,752

$ 8,137

Operating lease liabilities

9,301

8,593

8,895

The table below presents the maturities of operating lease liabilities as of ~~September~~June 30, ~~2020:~~2021:

(in thousands)

(in thousands)

Operating

Operating

Leases

Leases

2020

$ 1,680

2021

1,745

2021 (remaining)

$ 837

2022

2,587

2,506

2023

1,885

1,801

2024

1,590

1,562

2025

1,470

Thereafter

6,486

5,015

Total lease payments

15,973

13,191

Less: payments made to date 2020

(1,201 )
Less: discount

(5,471 )

(4,598 )
Total operating lease liabilities

$ 9,301

$ 8,593


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:

~~Nine~~Six Months
Ended
~~September~~June 30,

~~2020~~2021

Weighted average remaining lease term (years)

~~8.3~~79.0

Weighted average discount rate

~~11.5~~11.6 %
NOTE 12 – EQUITY
Preferred Stock
On January 22, 2021, the Company entered into a Resignation and Release Agreement and a Series A Preferred Stock Purchase Agreement with Michael A. Nahass. Mr. Nahass agreed to resign from his positions as a director, executive officer and employee of the Company, and the Company agreed to purchase from Mr. Nahass the four shares of the Company’s Series A Preferred Stock held by Mr. Nahass for an aggregate purchase price of $3,100,000, of which (i) $1,000,000 was paid in cash, and $2.1 million was paid in the form of promissory notes. The Company recorded severance expense equal to the fair value of consideration paid to Mr. Nahass in current period earnings.
On January 22, 2021, the Company entered into a Resignation and Release Agreement with Derek Peterson, pursuant to which Mr. Peterson agreed to resign from his positions as a director, executive officer and employee of the Company effective immediately upon the Company’s closing of a private placement in the amount of not less than $3,500,000, which occurred on January 25, 2021. In addition, the Company extended the time within which vested common stock options held by Mr. Peterson may be exercised to 150 days after the date of resignation.
Mr. Peterson agreed to the cancellation of his Series A Preferred Stock through conversion into 16,485,714 shares of common stock and, in consideration of the conversion, was issued 4,945,055 warrants to purchase common stock, expiring in June 2026, with an exercise price of $0.01 per share, which are subject to a one-year lockup with registration rights. The Company recorded severance expense equal to the fair value of consideration paid to Mr. Peterson in current period earnings.

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UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
On February 3, 2021, the Company filed (1) a Certificate of Withdrawal of Certificate of Designation of the Company’s Series A Preferred Stock with the Secretary of State of the State of Nevada, which withdraws the Certificate of Designation establishing the Company’s Series A Preferred Stock and eliminates the Company’s Series A Preferred Stock from the Company’s Articles of Incorporation and (2) a Certificate of Withdrawal of Certificate of Designation of the Company’s Series B Preferred Stock with the Secretary of State of the State of Nevada, which withdraws the Certificate of Designation establishing the Company’s Series B Preferred Stock and eliminates the Company’s Series B Preferred Stock from the Company’s Articles of Incorporation.
Common Stock
The Company authorized 990.0 million shares of common stock with $0.001 par value per share. As of June 30, 2021 and December 31, 2020, 234.24 million and 194.2 million shares of common stock were outstanding, respectively.
Treasury Stock
During 2021, the Company acquired 8 shares of Series A Preferred stock as part of the resignation and release agreements entered into with Mr. Nahass and Mr. Peterson, as described above. The shares were recorded at fair market value as of the date the agreements were executed.
NOTE 13 – 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 June 30, 2021:

Awards Reserved for Issuance

Awards
Outstanding

2016 Equity incentive plan

2,000,000

499,953

2018 Equity incentive plan

43,976,425

15,894,507

In the third quarter of 2021, the Company adopted UMBRLA’s 2019 Equity Incentive Plan. The maximum number of shares of our common stock that may be issued pursuant to 2019 Equity Incentive Plan is 82,000,000 shares. See Note 19 – Subsequent Events for further discussion on acquisition of UMBRLA.
Stock Options
The following table summarizes the Company’s stock option activity and related information for the three months ended June 30, 2021:

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, 2021

17,492,830

$ 0.41

Options granted

5,909,716

$ 0.22

Options exercised

(2,096,970 )

$ 0.05

Options forfeited

(4,584,010 )

$ 0.19

Options expired

-

$ 0

Options outstanding as of June 30, 2021

16,721,566

$ 0.45

8.7 years

$ 2,943

Options exercisable as of June 30, 2021

8,225,610

$ 0.72

9.0 years

$ 1,119

As of June 30, 2021, there was $1.20 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 1.46 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.
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Table of Contents
UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
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.
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, within continuing operations:

For the Three Months Ended

June 30, 2021

June 30, 2020

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

5,409,716

$ 641

9,650,000

$ 294

Stock grants:

Directors (common stock)

343,493

94

(173,610 )

$ (100 )(a)
Employees (common stock)

250,000

68

826,429

$ 58

Non–employee consultants (common stock)

-

0

250,000

$ 32

Total stock–based compensation expense

$ 803

$ 284

For the Six Months Ended

June 30, 2021

June 30, 2020

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

5,909,716

$ 885

9,650,000

$ 1,238

Stock grants:

Directors (common stock)

885,159

214

(173,610 )

(100 )(a)
Employees (common stock)

250,000

67

3,179,544

58 (b)
Non–employee consultants (common stock)

332,947

32

1,075,000

48

Total stock–based compensation expense

$ 1,198

$ 1,244

(a) clawback of shares granted in 2019.
(b) Expense for Q1 grants attributed to 2019 bonuses was recorded in 2019.
24
Table of Contents
UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 – WARRANTS
The following table summarizes warrant activity for the six months ended June 30, 2021:

Warrants

Weighted-Average Exercise Price

Warrants Outstanding as of January 1, 2021

1,076,555

$ 1.99

Warrants Granted

39,945,055

$ 0.09

Warrants Outstanding as of June 30, 2021

41,021,610

$ 0.14

The Company estimated the fair value of the warrants issued in 2021 utilizing the Black-Scholes option-pricing model with the following weighted-average inputs:
June 30,
2021
Expected term (years)
2.5 Years
Volatility
115.20 %
Risk-free interest rate
0.09 %
Dividend yield
0 %
There was no activity related to warrants during the three months ended June 30, 2021.
NOTE 15 -– COMMITMENTS AND CONTINGENCIES

California Operating Licenses

~~Terra Tech entities~~The Company’s subsidiaries have operated compliantly and have been eligible for applicable licenses and renewals of those licenses. Currently, we have received annual as well as provisional licenses from California’s cannabis licensing 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 the future.

NOTE 16 -– DISCONTINUED OPERATIONS

On May 8, 2019, MediFarm LLC, a wholly-owned subsidiary of ~~Terra Tech Corp. (the “Company”),~~the Company, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy, 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 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~~has been approved by the Nevada Department of Taxation and is awaiting local government approval which is being impacted by COVID-19. It is expected to close promptly following receipt of such ~~approval. As of September 30, 2020, we are still awaiting regulatory~~ approval.

On August 19, 2019, MediFarm I LLC, a wholly-owned subsidiary of ~~Terra Tech Corp. (the “Company”),~~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~~has been approved by the Nevada Department of Taxation and is awaiting local government approval which is being impacted by COVID-19. It is expected to close promptly following receipt of such approval. ~~As of September 30, 2020, we are still awaiting regulatory approval.~~
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Table of Contents
UNRIVALED BRANDS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On April 15, 2020, MediFarm LLC, a wholly-owned subsidiary of ~~Terra Tech Corp. (the “Company”),~~the Company, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Natural Medicine, LLC, a ~~non-affiliated~~nonaffiliated third party (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 3650 S. Decatur Blvd., Las Vegas, NV. The aggregate consideration to be paid for 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~~has been approved by the Nevada Department of Taxation and ~~other customary closing conditions, and~~is awaiting local government approval which is being impacted by COVID-19. It is expected to close promptly following receipt of such ~~approval and satisfaction of all conditions to close.~~approval. The ~~company~~Company will recognize a gain upon completion of the sale of the assets, equal to the difference between the consideration paid and the book value of the assets as of the disposition date, less direct costs to sell, and ~~reflected~~reflect such loss in discontinued operations.

As of ~~September~~June 30, ~~2020,~~2021, Management has classified a real estate asset held ~~in California and a real estate asset held in~~ Nevada as available-for-sale, as ~~they~~it has met the criteria of 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~~sale of real estate, ~~assets,~~ and assets divested ~~in the first half of~~during 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 discontinued operations presentation in accordance with ASC 205, ““Reporting Discontinued Operations and Disclosure of Disposals of Components of an ~~Entity.~~Entity.”

~~Table of Contents~~

~~As of September 30,~~During 2020, Management ~~has~~ suspended the operations of OneQor Technologies due to (i) a lack of proper growth in customer acquisition and revenue for this CBD operation during the COVID-19 pandemic and (ii) the overall financial health of the Company as a result of COVID-19 and social unrest. The Company plans to focus its attention and resources on growing its THC business.

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

(in thousands)

(in thousands)

Three Months
ended September 30,

Nine Months
ended September 30,

2020

2019

2020

2019

Total revenues

$ 203

$ 6,283

$ 3,478

$ 17,491

Cost of goods sold

94

3,458

2,755

9,646

Gross profit

109

2,825

723

7,845

Selling, general and administrative expenses

1,355

3,466

5,224

9,440

Impairment of Assets

4,043

0

10,359

0

(Gain) / Loss on sale of assets

(1,203 )

9

1,994

9

Income (Loss) from operations

$ (4,086 )

$ (650 )

$ (16,854 )

$ (1,604 )

Other income (expense)

(113
)

(161 )

(488
)

(531 )

Income (Loss) from discontinued operations

$ (4,199 )

$ (811 )

$ (17,342 )

$ (2,135 )

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

$ (0.05 )

$ (0.01 )

$ (0.09 )

$ (0.02 )

The carrying amounts of the major classes of assets and liabilities for the discontinued operations are as follows:

(in thousands)

September 30,
2020

December 31,
2019

Accounts receivable, net

$
97

1,096

Inventory

19

1,073

Prepaid expenses and other assets

67

271

Property, equipment and leasehold improvements, net

2,769

15,069

Intangible assets, net

0

399

Goodwill

0

6,251

Other assets

212

1,079

Assets of discontinued operations

$
3,164

$
25,238

Accounts payable and accrued expenses

$
984

$
3,285

Deferred gain on sale of assets

7,236

3,750

Liabilities of discontinued operations

$
8,220

$
7,035

	(in thousands)						(in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Total revenues	$	0		$	699		$	0		$	3,275
Cost of goods sold		0			621			0			2,661

Gross profit		0			78			0			614

Selling, general and administrative expenses		58			1,274			58			3,868
Impairment of assets		0			6,316			0			6,316
Loss on sale of assets		0			9			0			3,197

Income (Loss) from operations	$	(58	)	$	(7,521	)	$	(58	)	$	(12,767	)

Interest expense
Other income (loss)		2			(387	)		15			(376	)

Income (Loss) from discontinued operations	$	(56	)	$	(7,908	)	$	(43	)	$	(13,143	)

Income (Loss) from discontinued operations per common share attributable to Unrivaled Brands, Inc. common stockholders - basic and diluted	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.08	)

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~~NOTE 17 - SEGMENT INFORMATION~~UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~During 2018,~~The carrying amounts of the ~~Company acquired additional real property~~major classes of assets and ~~determined that a previously insignificant operating segment~~ ~~“Real Estate and Construction”~~ ~~was significant and was a reportable segment requiring disclosure in accordance with ASC 280. As of September 30, 2020,~~liabilities for the ~~majority of our real property is included in~~ discontinued ~~operations. The largest entity within the~~ ~~Real Estate and Construction~~ ~~segment is Dyer.Throughout 2020, our Dyer entity has been included in the~~ ~~Cannabis~~ ~~segment for internal reporting~~operations are as ~~it was planned to be an operational Cannabis Dispensary by late 2020.As of September 30, 2020, the “~~~~Real Estate and Construction~~~~” has been merged with our “~~~~Cannabis Dispensary, Cultivation, and Production~~~~” reportable segment. Thus the Company has only one reportable segment.~~follows:

~~During the second Quarter ended June 30, 2020, the “~~~~Herbs and Produce Products”~~ ~~segment was discontinued and is included in discontinued operations. Prior period information below has been revised to conform to current period presentation.~~

	(in thousands)
	June 30, 2021		December 31, 2020
Prepaid expenses and other assets	$	0	$	2
Property, equipment and leasehold improvements, net		2,765		2,766
Intangible assets, net		0		0
Goodwill		0		0
Other assets		136		186
Assets of discontinued operations	$	2,901	$	2,954

Accounts payable and accrued expenses	$	823	$	985
Deferred gain on sale of assets		13,533		8,783
Long-term lease liabilities		0		28
Liabilities of discontinued operations	$	14,356	$	9,796

NOTE ~~18 -~~17 – 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 material matters that required an accrual as of ~~September~~June 30, ~~2020.~~2021.

NOTE ~~19 - GOING CONCERN~~

We have incurred significant losses in prior periods. For the nine months ended September 30, 2020, we incurred a net loss of $53.67 million and cash outflows from operations were $12.58 million. For the year ended December 31, 2019, we incurred a 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.

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 of America, which contemplate our continuation as a going concern. If the Company is unable to obtain the 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 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 these financial statements.

~~NOTE 20 - SUBSEQUENT EVENTS~~18 – RELATED PARTY TRANSACTIONS

On ~~October 12, 2020,~~July 1, 2021, the Company ~~announced the resignation of Matthew Morgan, its Chief Executive Officer. Mr. Morgan forfeited 14,616,118 shares of common stock of Terra Tech issued to him~~entered into a Membership Interest Purchase Agreement with Nicholas Kovacevich and Dallas Imbimbo, pursuant to which the ~~merger between~~Company acquired 100% of the outstanding membership interests in Halladay Holding, LLC from Mr. Kovacevich and Mr. Imbimbo. Halladay Holding, LLC is the owner of real property located at 3242 S. Halladay Street, Santa Ana, CA 92705, where the Company operates a cannabis dispensary and maintains its principal office space. Pursuant to the Purchase Agreement, as consideration for the Acquisition, the Company paid Mr. Kovacevich and Mr. Imbimbo an aggregate purchase price of $4.60 million in cash. The Company had an independent third-party perform a valuation of the Property prior to entering into the Purchase Agreement. Mr. Kovacevich is the Chairman of the Company’s Board of Directors and Mr. Imbimbo is a director of the Company. As such, the Acquisition is a related party transaction.

All related party transactions are monitored quarterly by the Company and ~~OneQor Technologies. The shares will be cancelled and retired on~~approved by the ~~books and records~~Audit Committee of Terra Tech. The Matthew Lee Morgan Trust holds a $0.50 million note that is payable by Terra Tech on December 30, 2020. The Trust grants to Terra Tech an expiring, one-time $0.25 million credit which it may use solely as an offset against the Note.

~~On October 12, 2020,~~ the Board of Directors of the Company appointed Mr. Nahass to the position of Chief Executive Officer, effective October 12, 2020. Mr. Nahass has served as a Director since January 26, 2012, and as the Company’s President and Chief Operating Officer since November 6, 2017. Mr. Nahass forfeited 3,654,030 shares of common stock of Terra Tech issued to him pursuant to the merger between the Company and OneQor Technologies. The shares will be cancelled and retired on the books and records of Terra Tech.

On October 22, 2020, the Company agreed to an amendment to its August 19, 2019 Asset Purchase Agreement with Picksy Reno LLC (Mystic Holdings, Inc) to substitute shares Mystic common stock for the cash portion of the purchase price that was due at closing. The cash portion is $8,332,096. There are safeguards in the amendment that help to assure that Terra Tech will be able to liquidate the Mystic LLC stock for a minimum of $8,332,096.

Subsequent to September 30, 2020, senior convertible promissory notes and accrued interest in the amount of $0.05 million and $0.01 million, respectively, were converted into 1,037,314 shares of common stock.Directors.

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UNRIVALED BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 – SUBSEQUENT EVENTS

On July 1, 2021, the Company completed the acquisition of UMBRLA. Pursuant to Articles of Merger filed by the Company with the Nevada Secretary of State, which became effective upon filing on July 1, 2021. UMBRLA became a wholly owned subsidiary of the Company. Following the acquisition, the Company changed its name from “Terra Tech Corp” to “Unrivaled Brands, Inc.” in connection with the name change, the ticker symbol for the Company’s common stock was officially changed from “TRTC” to “UNRV” effective as of the open of the market on July 8, 2021.

On July 1, 2021, the Company entered into an Independent Director Agreement and a Director Indemnification Agreement with each of Dallas Imbimbo and Eric Baum in connection with their appointment to the Board of Directors of the Company.

On July 13, 2021, the Company entered into a First Amendment to Stock Purchase Agreement with Sterling Harlan and Matthew Guild to amend the Stock Purchase Agreement among the Company and the Sellers, dated as of June 9, 2021 (the “SPA”), pursuant to which the Company will purchase from the Sellers all the issued and outstanding shares of common stock of Silverstreak Solutions, Inc. (“Silverstreak”), a cannabis delivery service based in Sacramento, CA. The Amendment provides that, among other things, 1) in consideration for the Shares, at the closing of the transactions contemplated by the SPA, the Company will pay the Sellers on a pro rata basis a total of $8.50 million (the “Purchase Price”). The Purchase Price is comprised of (i) $1.50 million in cash, (ii) a number of shares of restricted common stock, par value $0.001 per share, of the Company (the “Purchaser Shares”), equal to the quotient obtained by dividing (a) $2.50 million, by (b) the volume-weighted average price of the Purchaser Shares as reported through Bloomberg for the ten (10) consecutive trading days ending on the business day prior to the Closing, (iii) a $2.00 million unsecured promissory note with an interest rate of 3% and due six months after the Closing (the “Six-Month Note”), and (iv) a $2.50 million unsecured promissory note with an interest rate of 3% and due twelve months after the Closing (the “Twelve-Month Note”), and 2) the Company will pay all reasonable and documented out-of-pocket costs and expenses incurred by Silverstreak in connection with the preparation of the audited financial statements of Silverstreak for the fiscal year ended December 31, 2020 (the “Audit Costs”); provided, however, that the Sellers will reimburse the Company for all Audit Costs if the Closing does not occur under certain circumstances.

On July 27, 2021, the Company entered into a Note Termination and Exchange Agreement with Arthur Chan, pursuant to which the Company issued to Mr. Chan 4,548,006 shares of the Company’s common stock at a price of $0.23 per share as payment in full of the principal, interest and fees payable under the Secured Promissory Note issued by the Company to Mr. Chan on January 10, 2020 in the original principal amount of $1.00 million. As a result, the Secured Promissory Note is no longer outstanding. Contemporaneously with the execution of the Exchange Agreement, the Company issued to Mr. Chan a Promissory Note in the amount of $2.50 million. The New Note bears an interest rate of 8% and matures on July 26, 2024.

On August 10, 2021, the Company entered into a Stock Purchase Agreement with two individuals pursuant to which the Company sold all of the share of common stock of its wholly-owned subsidiary, 1815 Carnegie Santa Ana, Corp. (“1815 Carnegie”) to those individuals for aggregate consideration of $1,700,000. 1815 Carnegie holds a permit to operate a cannabis dispensary in the City of Santa Ana, CA. On August 12, 2021, the Company also entered into a Supply agreement with an affiliate of purchasers to obtain a right of first refusal to purchase cannabis bulk and distillate to be integrated into the Company cannabis goods and products, as well as a Retail Space Agreement with 1815 Carnegie, pursuant to which the Company will receive guaranteed placement of 15 SKUs at the cannabis dispensary. Each agreement has a term of three years.

On August 15, 2021, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with People’s California, LLC, a California limited liability company (“People’s California”) and People’s First Choice, LLC, a California limited liability company and wholly owned subsidiary of People’s California (the “Target”), which operates cannabis dispensary operations. Upon the terms and subject to the satisfaction of the conditions described in the Purchase Agreement, the Company will acquire 100% of the outstanding equity of the Target in two separate closings (the “Acquisition”), with 80% of the equity of the Target transferred at the first closing and the remaining 20% of the equity transferred at the second closing.

At the first closing of the Acquisition, People’s California shall receive from the Company: (a) a cash payment of $24,000,000 less certain outstanding indebtedness and transaction expenses related to the Acquisition; (b) a secured note in an aggregate principal amount of $36,000,000 less certain indebtedness; and (c) 40,000,000 shares of Company common stock valued at $0.40 per share, subject to terms and conditions of a stockholder’s agreement by and between the Company and People’s California, which includes a one-year lockup of the shares. The first closing is currently intended to be October 1, 2021. The Purchase Agreement is subject to customary indemnification provisions.

On August 4, 2021, in connection with the Acquisition, People’s California issued senior secured indebtedness to the Company, pursuant to the terms of a certain Secured Promissory Note (the “Deposit Note”). The Deposit Note provided for a one-time advance of $6,000,000 (the “Loan”) by the Company to People’s California at a flat rate of 3% per annum. The Deposit Note matures on August 4, 2022.

The full principal balance and all outstanding but unpaid interest is due and payable at the maturity date of August 4, 2022; provided that, if the Company consummates the first closing, pursuant to the terms of the Purchase Agreement, then the principal amount of the Deposit Note, but not the accrued interest, shall be deemed repaid, satisfied, or otherwise applied to the cash consideration paid for the equity of the Target and the Deposit Note shall be deemed satisfied.

On August 7, 2021, the Company received a letter from Eaze Technologies, Inc. (“Eaze”), raising an unspecified breach of a certain agreement between the Company and Eaze. Eaze also alleges that a contract it has with People’s Direct, Inc. (“People��s”) will be breached if People’s and the Company proceed with the Acquisition described above. The Company understands that People’s received a substantially similar letter from Eaze on the same date.

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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, ~~2019~~2020 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,~~3242 S. Halladay St, Santa Ana, California ~~92614~~92705 and our telephone number is ~~(855) 447-6967.~~(888) 909-5564. Our website ~~addresses are~~address is as follows: ~~www.terratechcorp.com, www.blumoak.com, www.letsblum.com, www.ivxx.com, and www.oneqor.com.~~www.unrivaledbrands.com. No information available on or through our ~~websites~~website shall be deemed to be incorporated into this ~~Annual~~Quarterly Report on Form ~~10-K.~~10-Q. 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.~~“UNRV.”

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. Due to a lack of growth in customer acquisition and revenue during the COVID-19 pandemic, the Company made the decision to suspend OneQor operations and layoff the OneQor staff during the third quarter of 2020.

~~Table of Contents~~

Our Business

~~We are~~The Company is a retail, production, and cultivation company, with an emphasis on providing the highest quality of medical and adult use cannabis products. We currently have a concentrated cannabis ~~operations~~interest in ~~California and Nevada. Our~~California. All of the Company’s cannabis dispensaries operate under the name Blüm. ~~Our~~The Company’s cannabis dispensaries in California operate as 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.

~~Our business~~From the acquisition of UMBRLA, the Company has become a cannabis multi-state operator and the parent company of multiple cannabis lifestyle brands. The Company is home to Korova, a brand of high potency products across multiple product categories, currently available in California, Oregon, Arizona, and Oklahoma. Other Company brands include Cabana, a boutique cannabis flower brand, and Sticks, a mainstream value-driven cannabis brand, active in California and Oregon. The Company also ~~represents our operating segments.~~added a dispensary in California which operates as The Spot in Santa Ana and licensed distribution facilities in Portland, Los Angeles, Orange, and Sonoma County. See ~~our Part I, Item 1. Business, “Company Overview” and~~ Note 17~~, “Segment Information”~~ ~~to our unaudited consolidated financial statements~~19 – Subsequent Events for further discussion on the acquisition of ~~our operating segments.~~UMBRLA.

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Our Operations

We are organized into one reportable segment: Cannabis Dispensary, Cultivation and Production, which includes cannabis-focused retail, cultivation and production ~~operations~~

~~Our consolidated net revenue for each of the three months and nine months ended September 30, 2020 and 2019 were as follows:~~

(in thousands)

Total Revenue

Percentage of Total Revenue

Three Months Ended September 30,

Three Months Ended September 30,

2020

2019

2020

2019

Total Terra Tech

$ 3,053

$ 5,477

100.0 %

100.0 %

(in thousands)

Total Revenue

Percentage of Total Revenue

Nine Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Total Terra Tech

$ 9,806

$ 12,000

100.0 %

100.0 %
~~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.
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~~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. Our retail dispensaries in California offer a broad selection of medical and adult use cannabis products including flowers, concentrates and edibles. WeIn Nevada, 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.

Employees

As ~~September~~June 30, ~~2020,~~2021, we had 6053 employees.
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~~Table of Contents~~

RESULTS OF OPERATIONS

The below table outlines the impact of ~~moving~~reclassifying the operations of the Nevada Dispensaries, OneQor, and Edible Garden ~~and OneQor into~~to discontinued ~~operations was as follows on revenue and gross profit.~~operations:

Revenue & Gross Profit Breakdown

Continuing & Discontinued Operations

Three Months Ended Septmeber 30

Nine Months Ended September 30

(in thousands)

Variance vs. 2019
Fav / (Unfav)

Variance vs. 2019
Fav / (Unfav)

2020

2019

$-Amt

%

2020

2019

$-Amt

%

Revenue

Continuing Operations

$
3,053

$
5,477

$
(2,424
)

-44.3
%

$
9,806

$
12,000

$
(2,194
)

-18.3
%
Discontinued Operations

203

6,283

(6,080
)

-96.8
%

3,478

17,491

(14,013
)

-80.1
%
Total Revenue

3,256

11,760

(8,504
)

-72.3
%

13,284

29,491

(16,207
)

-55.0
%

Cost of Goods Sold

Continuing Operations

1,615

2,295

680

29.6
%

4,796

4,917

121

2.5
%
Discontinued Operations

94

3,458

3,364

97.3
%

2,755

9,646

6,891

71.4
%
Total Cost of Goods Sold

1,709

5,753

4,044

70.3
%

7,551

14,563

7,012

48.1
%

Gross Profit $

Continuing Operations

$
1,438

$
3,182

$
(1,744
)

-54.8
%

$
5,010

$
7,083

(2,073
)

-29.3
%
Discontinued Operations

109

2,825

(2,716
)

-96.1
%

723

7,845

(7,122
)

-90.8
%
Total Gross Profit $

1,547

6,007

(4,460
)

-74.2
%

5,733

14,928

(9,195
)

-61.6
%

Gross Profit %

Continuing Operations

47.1
%

58.1
%

-11.0
%

pts

51.1
%

59.0
%

-7.9
%

pts

Discontinued Operations

53.7
%

45.0
%

8.7
%

pts

20.8
%

44.9
%

-24.1
%

pts

Total Gross Profit %

47.5
%

51.1
%

-3.6
%

pts

43.2
%

50.6
%

-7.5
%

pts

~~On the weekend of May 29~~^th ~~- 31~~^st, 2020 our Oakland and San Leandro stores were damaged during civil unrest causing both stores to close as damage was assessed and repaired. The San Leandro store was closed for all of June and reopened July 16, 2020. The Oakland store sustained more damage and reopened on October 2, 2020. The company maintains property and business interruption insurance policies which mitigated the total loss incurred.
Revenue & Gross Profit Breakdown

Continuing & Discontinued Operations

Three Months Ended June 30

Six Months Ended June 30

(in thousands)

2021

2020

Change

%

2021

2020

Change

%

Revenue

Continuing Operations

$ 6,262

$ 2,706

$ 3,556

131.4 %

$ 11,375

$ 6,753

$ 4,622

68.4 %
Discontinued Operations

-

699

(699 )

-100.0 %

-

3,275

(3,275 )

-100.0 %
Total Revenue

6,262

3,405

2,857

83.9 %

11,375

10,028

1,347

13.4 %

Cost of Goods Sold

Continuing Operations

3,924

1,458

(2,466 )

-169.1 %

6,604

3,181

(3,423 )

-107.6 %
Discontinued Operations

-

621

621

100.0 %

-

2,661

2,661

100.0 %
Total Cost of Goods Sold

3,924

2,079

(1,845 )

-88.7 %

6,604

5,842

(762 )

-13.0 %

Gross Profit $

Continuing Operations

$ 2,338

$ 1,248

$ 1,090

87.3 %

$ 4,771

$ 3,572

$ 1,199

33.6 %
Discontinued Operations

-

78

(78 )

-100.0 %

-

614

(614 )

-100.0 %
Total Gross Profit $

2,338

1,326

1,012

76.3 %

4,771

4,186

585

14.0 %

Gross Profit %

Continuing Operations

37.3 %

46.1 %

-8.8

%

41.9 %

52.9 %

-11.0
%

Discontinued Operations

--

11.2 %

--

--

18.7 %

--

Total Gross Profit %

37.3 %

38.9 %

-1.6

%

41.9 %

41.7 %

0.2
%

Comparison of the Three Months Ended ~~September~~June 30, 2021 and 2020 ~~Compared to Three Months Ended September 30, 2019~~

Revenues

For the three months ended ~~September~~June 30, ~~2020, we~~2021, the Company generated revenues of ~~$3.05~~$6.26 million, compared to ~~$5.48~~$2.71 million for the three months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of ~~$2.42~~$3.55 million or ~~44.3~~131.4 percent. The ~~decrease~~increase was primarily due to ~~the combined impact of COVID-19~~a $3.02 million increase in revenue from our cultivation and ~~civil unrest. COVID-19 has reduced customer traffic~~production operations and ~~sales volume, while the civil unrest has resulted in damage and closure of one of~~further lifted by a $1.21 million increase from our ~~dispensaries for half of the month of July and the other for the entire quarter.~~retail stores. These revenues were partially offset by a $0.70 million decrease stemming from winding down distribution operations.

Gross Profit

Our gross profit for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$1.44~~$2.34 million, compared to a gross profit of ~~$3.18~~$1.25 million for the three months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of ~~$1.74~~$1.09 million or ~~54.8~~87.3 percent. The decrease in gross margin was mainly due to our revenue decrease, but was also impacted by higher cost of sales. The cost of sales were negatively impacted by lower customer traffic which led to suboptimal purchasing volume which in turn pushed up unit cost.

Selling, General and Administrative Expenses and Other Operating Expenses

Selling, general and administrative expenses for the three months ended ~~September~~June 30, ~~2020~~2021 were ~~$5.59~~$6.19 million, compared to ~~$9.32~~$6.28 million for the three months ended ~~September~~June 30, ~~2019, an~~2020, a decrease of ~~$3.73~~$0.09 million or ~~40.0~~1.4 percent. The decrease was primarily due to (i) a $0.88 million decrease in salaries & wages, (ii) a $0.82 million decrease in legal expenses, (iii) a $0.78 decrease in option expense, (iv) a $0.52 million decrease in professional fees, (v) a $0.30 million decrease in bank service charges, (vi) a $0.22 million decrease in insurance expense, and (vii) a $0.19 million decrease in advertising / promotional expense. In summary, the SG&A expenses for the quarter were down significantly from the same quarter last year as a result of a smaller operations footprint and less corporate spending in support of that smaller operations footprint. Other operating expenses increased by $10.51 million. This was due to impairment of intangibles and goodwill charges stemming from our annual goodwill and intangibles review.

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The decrease was largely due to Management’s ongoing expense reduction efforts contributing a decrease to salaries and wages expense of $0.88 million as well as a $0.33 decrease in professional services including but not limited to legal, accounting and technology. SG&A was also decreased by $0.82 million due to intangibles becoming fully amortized, decreases in depreciation and inventory absorption costs. The overall decrease was offset by (i) a $0.83 million increase in stock option expense and directors or employee stock compensation and (ii) a $0.36 million increase in insurance & licensing and permit fees.

Operating Income (Loss)

We realized an operating loss of ~~$13.94~~$3.86 million for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to an operating loss of ~~$5.41~~$10.03 million for the three months ended ~~September~~June 30, ~~2019,~~2020, an ~~increase~~improvement in loss of approximately ~~$8.84 million.~~$6.17 million or 61.6 percent.

Other Income (Expense)

Other expense for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$0.16 million. This was down by $2.54~~$1.06 million, ~~or 94.2 percent~~ compared to ~~$2.70~~$0.54 million ~~expense for~~recognized in the three months ended ~~September~~June 30, ~~2019. This~~2020.
The increase of approximately $0.52 million, or 95.4 percent, was ~~attributable~~attributed to ~~lower interest expense~~a $0.87 million reduction in ~~2020 and a~~income from unrealized loss on ~~sale of asset~~investments recognized in ~~2019.~~June 30, 2021 offset by a $0.64 million decrease in interest expense.

Discontinued Operations

We realized ~~an operating~~a net loss ~~for discontinued operations~~ of ~~$4.20~~$0.06 million for the three months ended ~~September~~June 30, ~~2020.~~2021. This was an increase ~~in loss~~ of ~~$3.39~~$7.85 million over the three months ended ~~September~~June 30, ~~2019 when we had a loss of $0.81 million. This decrease is~~2020 primarily due to ~~the~~an impairment loss of ~~the OneQor assets.~~goodwill and intangible of $6.32 million of OneQor.

Net Loss Attributable to ~~Terra Tech Corp.~~Unrivaled Brands, Inc.

We incurred a net loss of ~~$18.16~~$4.11 million, or ~~$0.09~~$0.02 per share, for the three months ended ~~September~~June 30, ~~2020,~~2021, an improvement of 77.4 percent compared to a net loss of ~~$8.78~~$18.18 million, or ~~$0.08~~$0.10 per share, for the three months ended ~~September~~June 30, ~~2019.~~2020.
The improvement in net loss from continuing operations was mainly attributable to Management’s continued focus on cost efficiency within the corporate function; including but not limited to strategic reductions in headcount and the elimination of non-core assets. Furthermore, as our cultivation facilities progress in northern and southern California – the Company expects to further improvements through a comprehensive marketing campaign and by expanding the market share of our in-house brands.

Management ~~will~~plans to continue its efforts to lower operating expenses and increase ~~revenue. We will continue~~revenue through strategic investments, improvements to ~~invest in further expanding~~ our ~~operations~~technology stack and ~~a comprehensive marketing campaign with the goal of accelerating~~furthering the education of potential ~~clients and promoting our name and our products. Given~~clients. Due to the ~~fact that most~~quasi-fixed nature of the company’s operating ~~expenses are fixed or have a quasi-fixed character, management~~structure, Management expects that, as revenue increases, those expenses will significantly decrease as a percentage of ~~revenue,~~revenue.
Because the Company is subject to various macro-economic trends and legislative outcomes which can materially impact the condition, financial performance and future performance in succeeding quarters, there can be no assurance that we will ~~significantly decrease.~~be able to increase our revenues to the degree Management expects. Deviations to expectations around these trends could cause actual results to differ materially from any forward-looking information expressed in this MD&A and the Company’s financial statements.

~~Nine~~Comparison of the Six Months Ended ~~September~~June 30, 2021 and 2020 ~~Compared to Nine Months Ended September 30, 2019~~

Revenues

For the ~~nine~~six months ended ~~September~~June 30, ~~2020, we~~2021, the Company generated revenues of ~~$9.81~~$11.38 million, compared to ~~$12.00~~$6.76 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of ~~$2.19~~$4.62 million or ~~18.3~~68.4 percent. The ~~year over year decrease~~increase was primarily due to ~~the combined impact of COVID-19~~a $4.87 million increase in revenue from our cultivation and ~~civil unrest in Q2~~production operations and ~~Q3 overwhelming the positive results in Q1 when~~further lifted by a $0.49 million increase from our ~~maturing cannabis operations outperformed Q1 of prior year .~~retail stores. These revenues were offset by a $0.74 million decrease due to winding down distribution operations.

Gross Profit

Our gross profit for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$5.01~~$4.77 million, compared to a gross profit of ~~$7.08~~$3.57 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of ~~$2.07~~$1.20 million or ~~29.3~~33.6 percent. The decrease in gross margin was due both decreased revenue and higher cost of sales. The cost of sales were negatively impacted by lower customer traffic which led to suboptimal purchasing volume which in turn pushed up unit cost.
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Selling, General and Administrative Expenses and Other Operating Expenses

Selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 were ~~$20.41~~$20.33 million, compared to ~~$26.52~~$14.82 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, an increase of $5.51 million or 37.1 percent. The increase was due to severance expenses paid out in the first quarter of 2021 of $9.0 million.
Excluding this extraordinary event, Management’s ongoing expense reduction initiative contributed to a decrease of ~~$6.11~~$3.49 million ~~or 23.1 percent. The decrease was primarily due to (i) a $1.78 million decrease in option expense and (ii) a $1.51 million decrease in~~predominately from salaries & wages ~~(iii)~~and other efforts. Similarly, there was a ~~$1.12 million decrease in advertising / promotional expense, (iv) a $0.77~~$0.79 million decrease in professional ~~fees~~services including but not limited to legal, accounting and technology and SG&A expenses were further decreased by $1.79 million due to intangibles becoming fully amortized, decreases in depreciation and bolstered inventory controls.
The overall decrease was offset by (i) a $0.19 million increase in stock option expense ~~(v)~~and directors or employee stock compensation, (ii) a ~~$0.68~~$0.35 million ~~decrease~~increase in insurance ~~expense, (vi)~~& licensing and permit fees, (iii) a ~~$0.29~~$0.28 million ~~decrease~~increase in ~~bank service fees, (vii) a $0.29 million decrease in legal expenses,~~operating costs incurred primarily by corporate office including but not limited to; rent, leases and (viii) a $0.21 million decrease in travel expenses. Other operating expenses increased by $19.02 million primarily due to $19.91 million in goodwill and other asset impairment charges for Black Oak Gallery. In comparison, the first nine months of 2019 saw only $0.68 million in impairment charges related to corporate assets.enterprise infrastructure costs.
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Operating Income (Loss)

We realized an operating loss of ~~$35.27~~$15.56 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to an operating loss of ~~$20.29~~$21.33 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, an ~~increase~~improvement in loss of approximately ~~$14.98 million.~~$5.77 million or 27.1 percent.

Other Income (Expense)

Other expense for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$2.04 million. This was down by $6.61~~$1.07 million, ~~or 79.3 percent~~ compared to ~~$8.25~~$1.38 million ~~for~~recognized in the ~~nine~~six months ended ~~September~~June 30, ~~2019. This~~2020. The variance was ~~almost entirely~~primarily attributable to ~~lower interest expense.~~the adoption of ASU 2020-06 which was implemented as of January 1, 2021.

Discontinued Operations

We ~~realized an operating~~recognized a loss ~~for~~from discontinued operations of ~~$17.34~~$0.04 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. This was an ~~increase in the loss~~improvement of ~~$15.21~~$13.1 million over the ~~nine~~six months ended ~~September~~June 30, ~~2019 when we had~~2020 where the Company recorded a loss of ~~$2.14~~$13.14 million. ~~This decrease is primarily due to the $10.36 million impairment charges to OneQor’s assets.~~

Net Loss Attributable to ~~Terra Tech Corp.~~Unrivaled Brands, Inc.

We incurred a net loss of ~~$53.67~~$16.18 million, or ~~$0.29~~$0.07 per share, for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, an improvement of 54.4 percent compared to a net loss of ~~$30.62~~$35.51 million, or ~~$0.30~~$0.20 per share, for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.
The improvement in net loss was mainly attributable to Management’s continued focus on cost efficiency within the corporate function; including but not limited to strategic reductions in headcount and the elimination of non-core assets. Furthermore, as our cultivation facilities progress in northern and southern California – the Company expects further improvements through a comprehensive marketing campaign and by expanding the market share of our in-house brands.

Management ~~will~~plans to continue its efforts to lower operating expenses and increase ~~revenue. We will continue~~revenue through strategic investments, improvements to ~~invest in further expanding~~ our ~~operations~~technology stack and ~~a comprehensive marketing campaign with the goal of accelerating~~furthering the education of potential ~~clients and promoting our name and our products. Given~~clients. Due to the ~~fact that most~~quasi-fixed nature of the company’s operating ~~expenses are fixed or have a quasi-fixed character, management~~structure, Management expects that, as revenue increases, those expenses will significantly decrease as a percentage of ~~revenue,~~revenue.
Because the Company is subject to various macro-economic trends and legislative outcomes which can materially impact the condition, financial performance and future performance in succeeding quarters, there can be no assurance that we will ~~significantly decrease.~~be able to increase our revenues to the degree Management expects. Deviations to expectations around these trends could cause actual results to differ materially from any forward-looking information expressed in this MD&A and the Company’s financial statements.

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 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 ~~nine~~three months and six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 and have an accumulated deficit of approximately ~~$243.36~~$234.93 million and ~~$189.69~~$219.80 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

As of ~~September~~June 30, ~~2020,~~2021, we had working capital of ~~($23.65)~~$9.43 million, including ~~$2.34~~$40.28 million of cash compared to working capital of ~~($18.21)~~$11.18 million, including ~~$1.23~~$0.95 million of cash, as of December 31, ~~2019.~~2020. Current assets were approximately ~~0.26~~1.26 times current liabilities as of ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~0.34~~1.42 times current liabilities as of December 31, ~~2019.~~2020.

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 ~~$0.50~~$0.40 million in capital to complete.

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 quarter~~end of ~~2020.~~2021. 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 ~~September~~June 30, ~~2020,~~2021, the Company has received $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.

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 ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$12.89~~$6.43 million, compared to ~~$11.43~~$8.16 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019, an increase~~2020, a decrease of ~~$1.45~~$1.73 million, or approximately ~~12.6~~21.2 percent. The ~~increase~~decrease in cash used in operating activities was due to primarily to ~~an effort to pay down accounts payable and accrued expense balances. This~~a $8.23 million decrease in cash used for discontinued operations. The remaining decrease was ~~partially offset by lower operational volume~~ due to ~~COVID~~normal fluctuations in the timing of operating receipts and ~~civil unrest.~~payments.

Investing Activities

Cash provided by investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$11.23~~$43.52 million, compared to cash ~~used in~~provided by investing activities of ~~$0.20~~$5.43 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, an increase of ~~$11.41 million. During the nine months ended September 30, 2020,~~$38.08 million, or 700.9 percent. The increase in cash provided by investing activities was primarily due to proceeds from the sale of our ~~Santa Ana and Decatur dispensaries whereas~~Hydrofarm investment. The remaining increase was due to receipt of $4.75 million in partial proceeds from pending sales of two Nevada dispensaries.
Financing Activities
Cash provided by financing activities for the ~~2019~~six months ended June 30, 2021 was $2.31 million, compared to $2.25 million for the six months ended June 30, 2020, an increase of $0.06 million, or 2.76 percent. The increase in cash ~~used~~provided by financing activities for the six months ended June 30, 2021 was primarily ~~comprised~~due to $3.50 million of ~~expenditures related to~~additional proceeds from the ~~construction~~issuance of debt, offset by $1.16 million cash outflows for debt principal and financing fees, $0.25 million of lower proceeds from the ~~San Leandro~~issuance of common stock, and ~~Oakland facilities.~~a $0.80 million decrease in cash contributions received from Nuleaf joint owners with a non-controlling interest.

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~~Financing Activities~~Non-GAAP Reconciliations

~~Cash provided~~Non-GAAP earnings is a supplemental measure of our performance that is neither required by, ~~financing~~nor presented in accordance with, U.S. generally accepted accounting principles (“US GAAP”). Non-GAAP earnings is not a measurement of our financial performance under US GAAP and should not be considered as alternative to net income, operating income, or any other performance measures derived in accordance with US GAAP, or as alternative to cash flows from operating activities as a measure of our liquidity. In addition, in evaluating Non-GAAP earnings, you should be aware that in the future we will incur expenses or charges such as those added back to calculate Non-GAAP earnings. Our presentation of Non-GAAP earnings should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
Non-GAAP earnings has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under US GAAP. Some of these limitations are (i) it does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments, (ii) it does not reflect changes in, or cash requirements for, our working capital needs, (iii) it does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP earnings does not reflect any cash requirements for such replacements, (v) it does not adjust for all non-cash income or expense items that are reflected in our statements of cash flows, and (vi) other companies in our industry may calculate this measure differently than we do, limiting its usefulness as comparative measures.
We compensate for these limitations by providing specific information regarding the US GAAP amounts excluded from such non-GAAP financial measures. We further compensate for the ~~nine months ended September 30, 2020 was $2.77 million, compared~~limitations in our use of non-GAAP financial measures by presenting comparable US GAAP measures more prominently.
We believe that non-GAAP earnings facilitates operating performance comparisons from period to ~~$6.29~~period by isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present Non-GAAP earnings because (i) we believe that this measure is frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe that investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use Non-GAAP earnings internally as benchmark to compare our performance to that of our competitors.
In the presentation of the financial results below, the Company reconciles Non-GAAP earnings (loss) with net loss attributable to continuing operations, the most directly comparable GAAP measure, and reports Non-GAAP earnings (loss) per share, which is calculated by dividing Non-GAAP net income (loss) divided by weighted average common shares. Management believes that this presentation may be more meaningful in analyzing our income generation.
On a non-GAAP basis, the Company recorded a non-GAAP loss of $1.12 million for the ~~nine~~three months ended ~~September~~June 30, ~~2019,~~2021, compared to a ~~decrease~~non-GAAP loss in the amount of ~~$3.52~~$11.49 million ~~or 55.9 percent. The decrease in cash provided by financing activities~~ for the ~~nine~~three months ended ~~September~~June 30, ~~2020 was primarily due to: $8.05~~2020. For the six months ended June 30, 2021, the Company recorded a $2.40 million ~~less proceeds from~~loss compared to a $20.16 million loss for the ~~issuance~~six months ended June 30, 2020. The details of ~~debt~~those expenses and ~~$4.25 million less proceeds from issuance~~non-GAAP reconciliation of ~~common stock. This was partially offset by $6.25 million less cash used for acquisition~~these non-cash items are set forth below:

Three Months Ended
June 30
Six Months Ended
June 30

2021

2020

2021

2020

Net loss attributable to Unrivaled Brands Inc. - Continuing Operations

$ (4,105 )

$ (18,182 )

$ (16,183 )

$ (35,512 )
Non-GAAP adjustments

Amortization of intangible assets

184

-

376

761

Depreciation expense

928

956

1,877

1,913

Stock based compensation

800

284

1,198

1,244

Impairment of assets

-

4,998

-

10,118

Interest expense

204

454

604

1,356

Severance expense for Series A share repurchases

-

-

8,990

-

Loss (Gain) on sale of investments

874

-

(5,337 )

-

Gain on sale of assets

-

-

-

(35 )
Gain for debt forgiveness

-

-

(86 )

-

Loss on extinguishment of debt

-

-

6,161

-

Non-GAAP loss

$ (1,115 )

$ (11,490 )

$ (2,400 )

$ (20,155 )
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The following table sets forth the computation of ~~non-controlling interest~~basic and ~~$2.15 million less cash used for payment of debt and interest.~~diluted loss per share on a non-GAAP basis:
Three Months Ended
June 30

Six Months Ended
June 30

2021

2020

2021

2020

Non-GAAP net income (loss)

$ (1,115 )

$ (11,490 )

$ (2,400 )

$ (20,155 )

Denominator

Weighted average common shares - Basic

258,897,777

186,068,175

248,066,926

174,781,579

Weighted average common shares - Diluted

258,897,777

186,068,175

248,066,926

174,781,579

Non-GAAP earnings (loss) per common share:

Non-GAAP earnings (loss) - Basic

$ (0.00 )

$ (0.06 )

$ (0.01 )

$ (0.12 )
Non-GAAP earnings (loss) - Diluted

$ (0.00 )

$ (0.06 )

$ (0.01 )

$ (0.12 )

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 September 30, 2020, we had no outstanding variable-rate debt and $14.91 million of principal fixed-rate debt.~~
~~Credit Risk~~
~~Our exposure to non-payment or non-performance by our customers and counterparties presents~~(not required for 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.smaller reporting company)

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 ~~September~~June 30, ~~2020.~~2021. 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 ~~September~~June 30, ~~2020.~~2021.

We regularly ~~assesses~~assess the adequacy of our internal controls over financial reporting and enhance our controls in response to internal control assessments 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 ~~September~~June 30, ~~2020~~2021 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 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 ~~18,~~17, “Litigation and Claims” for further information about legal 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, ~~2019,~~2020, except for the risk factors noted below. ~~The factors noted below were disclosed in last quarter’s 10-Q filing, but due to the unprecedented nature of current events, we are repeating their disclosure for emphasis.~~ 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.

Our common stock may be categorized as “penny stock,” which may make it more difficult for investors to sell their shares of common stock due to suitability requirements.
Our common stock may be categorized as “penny stock.” The Commission has adopted Rule 15g-9 under the Exchange Act, which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our common stock is significantly less than $5.00 per share and, unless we qualify for an exception, may be considered “penny stock.” This designation imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules, if applicable to us, would require a broker-dealer buying our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities given the increased risks generally inherent in penny stocks. These rules may restrict the ability and/or willingness of brokers or dealers to buy or sell our common stock, either directly or on behalf of their clients, may discourage potential stockholders from purchasing our common stock, or may adversely affect the ability of stockholders to sell their shares.
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.

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ITEM 6. EXHIBITS.

Exhibit

Description

2.1
Agreement and Plan of Merger dated February 9, 2012, by and among ~~Terra Tech Corp.,~~the Company, 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.,~~Company, 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.,~~the Company, 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.,~~the Company, 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)
2.7
Agreement and Plan of Merger, dated March 2, 2021 (15)***
2.8
Membership Interest Purchase Agreement, dated as of July 1, 2021, by and among the Company and Nicholas Kovacevich and Dallas Imbimbo (5)***
2.9
Name Change Agreement and Plan of Merger, dated as of June 30, 2021, by and between the Company and Unrivaled Brands, Inc. (5)

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~~3.3
Certificate of Change dated July 8, 2011 (6)

~~3.5~~3.4
Certificate of Amendment dated January 27, 2012 (1)

~~3.6~~3.5
Form of Amended and Restated Articles of Incorporation of Black Oak Gallery, a California corporation (3)

~~3.7~~3.6
~~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~~3.7
~~Certificate~~Articles of ~~Amendment to Certificate~~Merger, filed with the Nevada Secretary of ~~Designation of Series B Preferred Stock, dated October 3, 2016 (9)~~State on July 1, 2021 (5)

~~3.10~~3.8
~~Certificate~~Name Change Articles of ~~Amendment to Certificate~~Merger, filed with the Nevada Secretary of ~~Designation of Series B Preferred Stock, dated~~State on July ~~26, 2017 (10)~~7, 2021 (5)

~~3.11~~3.9
~~Amendment of Bylaws, dated June 20, 2018 (11)~~

~~3.12~~
~~Certificate of Designation for Series A Preferred Stock (12)~~
~~3.13~~
Second Amended and Restated ~~Certificate of Designation for Series B Preferred Stock (3)~~Bylaws (7)

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~~10.1~~4.1
~~Executive Employment Agreement,~~Form of Amendment No. 2 to 7.5% Senior Convertible Promissory Note, dated asJanuary 11, 2021 (12)
4.2
Form of ~~September 28, 2020~~Amendment No. 3 to 7.5% Senior Convertible Promissory Note (13)

4.3
Form of Amendment No. 1 to 7.5% Senior Convertible Promissory Note (13)
4.4
Form of Common Stock Purchase Warrant (13)
4.5
Form of 3.0% Senior Convertible Promissory Note (13)
4.6
Form of Common Stock Purchase Warrant (“A Warrant”) (13)
4.7
Form of Common Stock Purchase Warrant (“B Warrant”) (13)
4.8
Form of Straight Promissory Note (“6-Month Note”) (13)
4.9
Form of Straight Promissory Note (“12-Month Note”) (13)
4.10
Common Stock Purchase Warrant (16)
10.1
Independent Director Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦
10.2
Director Indemnification Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦
10.3
Stock Option Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦
10.4
Separation Agreement between the Company and Steven J. Ross, dated April 13, 2021 (18)♦
10.5
Stock Purchase Agreement between the Company and Sterling Harlan and Matthew Guild, dated June 9, 2021 (9)
10.6
First Amendment to Stock Purchase Agreement between the Company and Sterling Harlan and Matthew Guild, dated July 13, 2021 (10)
10.7
Form of Six-Month Note (9)
10.8
Form of Twelve-Month Note (9)
10.9
Employment Agreement between the Company and Francis Knuettel II, dated June 7, 2021 (9)♦
10.10
Amendment to Amended and Restated Executive Employment Agreement between the Company and Francis Knuettel II, dated July 27, 2021 (7)♦
10.11
Employment Agreement between the Company and Uri Kenig, dated June 7, 2021 (9)♦
10.12
Employment Agreement between the Company and Jeffrey Batliner, dated June 7, 2021 (9)♦
10.13
Independent Director Agreement, dated as of July 1, 2021, by and between the Company and Dallas Imbimbo (5)♦
10.14
Independent Director Agreement, dated as of July 1, 2021, by and between the Company and Eric Baum (5)♦
10.15
Director Indemnification Agreement, dated as of July 1, 2021, by and between the Company and Dallas Imbimbo (5)♦
10.16
Director Indemnification Agreement, dated as of July 1, 2021, by and between the Company and Eric Baum (5)♦
10.17
Form of Securities Purchase Agreement (11)
10.18
Note Termination and Exchange Agreement between the Company and Arthur Chan, dated July 27, 2021 (7)
10.19
Promissory Note issued by the Company in favor of Arthur Chan, dated July 27, 2021 (7)
10.20
Executive Employment Agreement between the Company and Oren Schauble, dated July 27, 2021 (7)♦
10.21
Indemnification Agreement between the Company and Oren Schauble, dated July 27, 2021 (7)♦
10.22
2019 Equity Incentive Plan of UMBRLA, Inc. *
10.23
Amendment to 2019 Equity Incentive Plan of UMBRLA, Inc., dated March 1, 2020 *
10.24
Amendment to 2019 Equity Incentive Plan of UMBRLA, Inc., dated October 22, 2020 *
38
Table of Contents
31.1
Certification of ~~Michael Nahass,~~Francis Knuettel II, Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2
Certification of Jeffrey Batliner, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1
Certification of ~~Michael Nahass,~~Francis Knuettel II, Chief Executive Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. ***

32.2
Certification of Jeffrey Batliner, Chief Financial Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. ***
~~101.INS~~

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

~~101.SCH~~101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline ~~XBRL Taxonomy Extension Schema Document.~~
~~101.CAL~~
~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~
~~101.DEF~~
~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~
~~101.LAB~~
~~Inline XBRL Taxonomy Extension Labels Linkbase Document.~~
~~101.PRE~~
~~Inline XBRL Taxonomy Extension Presentation Linkbase Document.~~XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Cash Flow, (iv) Consolidated Statements of Stockholders Equity, and (v) Notes to Unaudited Consolidated Financial Statements.*

104

Cover Page Interactive Data File (formatted as ~~inline~~Inline XBRL and contained in Exhibit 101).*
~~__________~~_______________
*
Filed herewith
**
Furnished herewith
***
Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
♦
Indicates a management contract or compensatory plan or arrangement.
(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.~~July 8, 2021.
(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~~August 2, 2021.
(8)
Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 16, ~~2018~~2018.
(9)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on ~~October 7, 2016~~June 10, 2021.
(10)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on July ~~27, 2017~~19, 2021.
(11)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on June ~~22, 2018~~14, 2021.
(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.~~January 13, 2021.
(13)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on ~~September 28, 2020.~~January 25, 2021.
(14)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on February 4, 2021.
(15)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on March 3, 2021.
(16)
Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 30, 2021.
(17)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 9, 2021.
(18)
Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 13, 2021.

4439
Table of Contents

SIGNATURES

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

~~TERRA TECH CORP.~~UNRIVALED BRANDS, INC.

Date: ~~November 6, 2020~~August 16, 2021
By:
/s/ Jeffrey Batliner
Jeffrey Batliner
Chief Financial Officer

4540

	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 June 30, 2020		8	$	0		204,777,168	$	207	$	273,526		2,308,412	$	(808	)	$	(225,198	)	$	4,923		$	52,651
Debt conversion - common stock		-		0		5,627,487		6		417		-		0			0			0			423
Stock compensation - employees		-		0		-		0		0		-		0			0			0			0
Stock compensation - directors		-		0		1,082,700		1		118		-		0			0			0			119
Stock compensation - services expense		-		-		84,615		0		11		-		-			-			-			11
Stock option expense		-		0		-		0		298		-		0			0			0			298
Net contribution from non-controlling interest		-		0		-		0		0		-		0			0			(48	)		(48	)
Net income attributable to non-controlling interest		-		0		-		0		0		-		0			0			(138	)		(138	)
Net loss attributable to Terra Tech Corp.		-		0		-		0		0		-		0			(18,161	)		0			(18,161	)
Balance at September 30, 2020		8	$	0		211,571,970	$	214	$	274,370		2,308,412	$	(808	)	$	(243,358	)	$	4,738		$	35,156

	Nine Months Ended September 30,
	2020		2019

Common stock warrants		1,088,278		1,170,540
Common stock options		16,259,670		12,365,295
		17,347,948		13,535,835

	As Reported December 31, 2020		Cumulative Effect Adjustment			As Reported January 1, 2021
Additional Paid-In Capital	$	275,060	$	1,071		$	276,131
Accumulated Deficit		219,803		(1,059	)		218,744
Debt Discount		50		(12	)		38

	(in thousands)

Total consideration	$	3,800

Net book value of assets divested and liabilities 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	)

	(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	)

	(in thousands)
Balance at December 31, 2019	$	21,471
Impairment		(15,300	)
Balance at September 30, 2020	$	6,171

	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		15,055,708		28,920,717

	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		$	0.46

Options granted		10,559,090		$	0.07
Options exercised		-		$	0
Options forfeited		(6,566,667	)	$	1.29
Options expired		(248,048	)	$	1.33
Options outstanding as of September 30, 2020		16,109,670		$	0.46	9.0 years	$	0
Options exercisable as of September 30, 2020		5,593,814		$	0.91	8.4 years	$	0

	(in thousands except for shares / options)

	For the Three Months Ended
	September 30, 2020				September 30, 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		909,090	$	298		143,848	$	1,078

Stock grants:
Employees (common stock)		0		-		91,465		38
Directors (common stock)		1,082,700		119		173,610		102
Non–employee consultants (common stock)		84,615		11		0		0

Total stock–based compensation expense			$	428			$	1,218

	For the Nine Months Ended
	September 30, 2020					September 30, 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		10,559,090	$	1,536			4,144,666	$	3,314

Stock grants:
Employees (common stock)		3,179,544		58	(a)		564,799		428
Directors (common stock)		909,090		19	(b)		173,610		102
Non–employee consultants (common stock)		1,159,615		59			66,376		59

Total stock–based compensation expense			$	1,672				$	3,904

	(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

	(in thousands)
	For the Nine Months Ended
	September 30, 2020

Pro-forma revenues	$	11,182
Pro-forma net loss from continuing operations	$	(52,330	)

		(in thousands)
		For the Three Months Ended			For the Nine Months Ended
		September 30, 2019			September 30, 2019

Pro-forma revenues	��	$	5,607		$	12,391
Pro-forma net loss from continuing operations		$	(9,411	)	$	(32,440	)

	(in thousands)		(in thousands)
	Nine Months Ended September 30,		June 30,		December 31,
	2020		2021		2020
Operating lease ROU assets	$	8,553	$	7,752	$	8,137
Operating lease liabilities		9,301		8,593		8,895

	(in thousands)			(in thousands)
	Operating			Operating
	Leases			Leases
2020	$	1,680
2021		1,745
2021 (remaining)				$	837
2022		2,587			2,506
2023		1,885			1,801
2024		1,590			1,562
2025					1,470
Thereafter		6,486			5,015
Total lease payments		15,973			13,191
Less: payments made to date 2020		(1,201	)
Less: discount		(5,471	)		(4,598	)
Total operating lease liabilities	$	9,301		$	8,593

	~~Nine~~Six Months Ended ~~September~~June 30,
	~~2020~~2021
Weighted average remaining lease term (years)		~~8.3~~79.0
Weighted average discount rate		~~11.5~~11.6	%

	Awards Reserved for Issuance		Awards Outstanding

2016 Equity incentive plan		2,000,000		499,953
2018 Equity incentive plan		43,976,425		15,894,507

	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, 2021		17,492,830		$	0.41

Options granted		5,909,716		$	0.22
Options exercised		(2,096,970	)	$	0.05
Options forfeited		(4,584,010	)	$	0.19
Options expired		-		$	0
Options outstanding as of June 30, 2021		16,721,566		$	0.45	8.7 years	$	2,943
Options exercisable as of June 30, 2021		8,225,610		$	0.72	9.0 years	$	1,119

	For the Three Months Ended
	June 30, 2021				June 30, 2020
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		5,409,716	$	641		9,650,000		$	294

Stock grants:
Directors (common stock)		343,493		94		(173,610	)	$	(100	)(a)
Employees (common stock)		250,000		68		826,429		$	58
Non–employee consultants (common stock)		-		0		250,000		$	32

Total stock–based compensation expense			$	803				$	284

	For the Six Months Ended
	June 30, 2021				June 30, 2020
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		5,909,716	$	885		9,650,000		$	1,238

Stock grants:
Directors (common stock)		885,159		214		(173,610	)		(100	)(a)
Employees (common stock)		250,000		67		3,179,544			58	(b)
Non–employee consultants (common stock)		332,947		32		1,075,000			48

Total stock–based compensation expense			$	1,198				$	1,244

	Warrants		Weighted-Average Exercise Price

Warrants Outstanding as of January 1, 2021		1,076,555	$	1.99
Warrants Granted		39,945,055	$	0.09
Warrants Outstanding as of June 30, 2021		41,021,610	$	0.14

	June 30,
	2021
Expected term (years)	2.5 Years
Volatility		115.20	%
Risk-free interest rate		0.09	%
Dividend yield		0	%



	(in thousands)						(in thousands)
	Three Months ended September 30,						Nine Months ended September 30,
	2020			2019			2020			2019
Total revenues	$	203		$	6,283		$	3,478		$	17,491
Cost of goods sold		94			3,458			2,755			9,646

Gross profit		109			2,825			723			7,845

Selling, general and administrative expenses		1,355			3,466			5,224			9,440
Impairment of Assets		4,043			0			10,359			0
(Gain) / Loss on sale of assets		(1,203	)		9			1,994			9

Income (Loss) from operations	$	(4,086	)	$	(650	)	$	(16,854	)	$	(1,604	)

Other income (expense)		(113	)		(161	)		(488	)		(531	)

Income (Loss) from discontinued operations	$	(4,199	)	$	(811	)	$	(17,342	)	$	(2,135	)

Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted	$	(0.05	)	$	(0.01	)	$	(0.09	)	$	(0.02	)

	(in thousands)
	Total Revenue				Percentage of Total Revenue
	Three Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020			2019

Total Terra Tech	$	3,053	$	5,477		100.0	%		100.0	%

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020				2021			2020

Net loss attributable to Unrivaled Brands Inc. - Continuing Operations	$	(4,105	)	$	(18,182	)		$	(16,183	)	$	(35,512	)
Non-GAAP adjustments
Amortization of intangible assets		184			-				376			761
Depreciation expense		928			956				1,877			1,913
Stock based compensation		800			284				1,198			1,244
Impairment of assets		-			4,998				-			10,118
Interest expense		204			454				604			1,356
Severance expense for Series A share repurchases		-			-				8,990			-
Loss (Gain) on sale of investments		874			-				(5,337	)		-
Gain on sale of assets		-			-				-			(35	)
Gain for debt forgiveness		-			-				(86	)		-
Loss on extinguishment of debt		-			-				6,161			-

Non-GAAP loss	$	(1,115	)	$	(11,490	)		$	(2,400	)	$	(20,155	)

Exhibit		Description

2.1		Agreement and Plan of Merger dated February 9, 2012, by and among ~~Terra Tech Corp.,~~the Company, 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.,~~Company, 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.,~~the Company, 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.,~~the Company, 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)

2.7		Agreement and Plan of Merger, dated March 2, 2021 (15)***

2.8		Membership Interest Purchase Agreement, dated as of July 1, 2021, by and among the Company and Nicholas Kovacevich and Dallas Imbimbo (5)***

2.9		Name Change Agreement and Plan of Merger, dated as of June 30, 2021, by and between the Company and Unrivaled Brands, Inc. (5)

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~~3.3		Certificate of Change dated July 8, 2011 (6)

~~3.5~~3.4		Certificate of Amendment dated January 27, 2012 (1)

~~3.6~~3.5		Form of Amended and Restated Articles of Incorporation of Black Oak Gallery, a California corporation (3)

~~3.7~~3.6		~~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~~3.7		~~Certificate~~Articles of ~~Amendment to Certificate~~Merger, filed with the Nevada Secretary of ~~Designation of Series B Preferred Stock, dated October 3, 2016 (9)~~State on July 1, 2021 (5)

~~3.10~~3.8		~~Certificate~~Name Change Articles of ~~Amendment to Certificate~~Merger, filed with the Nevada Secretary of ~~Designation of Series B Preferred Stock, dated~~State on July ~~26, 2017 (10)~~7, 2021 (5)

~~3.11~~3.9		~~Amendment of Bylaws, dated June 20, 2018 (11)~~

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

~~3.13~~		Second Amended and Restated ~~Certificate of Designation for Series B Preferred Stock (3)~~Bylaws (7)

~~10.1~~4.1		~~Executive Employment Agreement,~~Form of Amendment No. 2 to 7.5% Senior Convertible Promissory Note, dated asJanuary 11, 2021 (12)

4.2		Form of ~~September 28, 2020~~Amendment No. 3 to 7.5% Senior Convertible Promissory Note (13)

4.3		Form of Amendment No. 1 to 7.5% Senior Convertible Promissory Note (13)

4.4		Form of Common Stock Purchase Warrant (13)

4.5		Form of 3.0% Senior Convertible Promissory Note (13)

4.6		Form of Common Stock Purchase Warrant (“A Warrant”) (13)

4.7		Form of Common Stock Purchase Warrant (“B Warrant”) (13)

4.8		Form of Straight Promissory Note (“6-Month Note”) (13)

4.9		Form of Straight Promissory Note (“12-Month Note”) (13)

4.10		Common Stock Purchase Warrant (16)

10.1		Independent Director Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦

10.2		Director Indemnification Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦

10.3		Stock Option Agreement between the Company and Tiffany Davis, dated April 6, 2021 (17)♦

10.4		Separation Agreement between the Company and Steven J. Ross, dated April 13, 2021 (18)♦

10.5		Stock Purchase Agreement between the Company and Sterling Harlan and Matthew Guild, dated June 9, 2021 (9)

10.6		First Amendment to Stock Purchase Agreement between the Company and Sterling Harlan and Matthew Guild, dated July 13, 2021 (10)

10.7		Form of Six-Month Note (9)

10.8		Form of Twelve-Month Note (9)

10.9		Employment Agreement between the Company and Francis Knuettel II, dated June 7, 2021 (9)♦

10.10		Amendment to Amended and Restated Executive Employment Agreement between the Company and Francis Knuettel II, dated July 27, 2021 (7)♦

10.11		Employment Agreement between the Company and Uri Kenig, dated June 7, 2021 (9)♦

10.12		Employment Agreement between the Company and Jeffrey Batliner, dated June 7, 2021 (9)♦

10.13		Independent Director Agreement, dated as of July 1, 2021, by and between the Company and Dallas Imbimbo (5)♦

10.14		Independent Director Agreement, dated as of July 1, 2021, by and between the Company and Eric Baum (5)♦

10.15		Director Indemnification Agreement, dated as of July 1, 2021, by and between the Company and Dallas Imbimbo (5)♦

10.16		Director Indemnification Agreement, dated as of July 1, 2021, by and between the Company and Eric Baum (5)♦

10.17		Form of Securities Purchase Agreement (11)

10.18		Note Termination and Exchange Agreement between the Company and Arthur Chan, dated July 27, 2021 (7)

10.19		Promissory Note issued by the Company in favor of Arthur Chan, dated July 27, 2021 (7)

10.20		Executive Employment Agreement between the Company and Oren Schauble, dated July 27, 2021 (7)♦

10.21		Indemnification Agreement between the Company and Oren Schauble, dated July 27, 2021 (7)♦

10.22		2019 Equity Incentive Plan of UMBRLA, Inc. *

10.23		Amendment to 2019 Equity Incentive Plan of UMBRLA, Inc., dated March 1, 2020 *

10.24		Amendment to 2019 Equity Incentive Plan of UMBRLA, Inc., dated October 22, 2020 *

31.1		Certification of ~~Michael Nahass,~~Francis Knuettel II, Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification of Jeffrey Batliner, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1		Certification of ~~Michael Nahass,~~Francis Knuettel II, Chief Executive Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. ***

32.2		Certification of Jeffrey Batliner, Chief Financial Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. ***

~~101.INS~~		~~Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).~~

~~101.SCH~~101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline ~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~		~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~

~~101.LAB~~		~~Inline XBRL Taxonomy Extension Labels Linkbase Document.~~

~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document.~~XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Cash Flow, (iv) Consolidated Statements of Stockholders Equity, and (v) Notes to Unaudited Consolidated Financial Statements.*

104		Cover Page Interactive Data File (formatted as ~~inline~~Inline XBRL and contained in Exhibit 101).*

*	Filed herewith
**	Furnished herewith
***	Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
♦	Indicates a management contract or compensatory plan or arrangement.
(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.~~July 8, 2021.
(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~~August 2, 2021.
(8)	Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 16, ~~2018~~2018.
(9)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on ~~October 7, 2016~~June 10, 2021.
(10)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on July ~~27, 2017~~19, 2021.
(11)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on June ~~22, 2018~~14, 2021.
(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.~~January 13, 2021.
(13)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on ~~September 28, 2020.~~January 25, 2021.
(14)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on February 4, 2021.
(15)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on March 3, 2021.
(16)	Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 30, 2021.
(17)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 9, 2021.
(18)	Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 13, 2021.