Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 10, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | TERRA TECH CORP. | |
Entity Central Index Key | 0001451512 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 233,881,740 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 1,243 | $ 888 |
Accounts receivable, net | 1,300 | 835 |
Short Term investments | 40,256 | 34,045 |
Inventory | 2,354 | 1,602 |
Prepaid expenses and other assets | 628 | 234 |
Current assets of discontinued operations | 1 | 2 |
Total current assets | 45,782 | 37,606 |
Property, equipment and leasehold improvements, net | 31,641 | 32,480 |
Intangible assets, net | 7,522 | 7,714 |
Goodwill | 6,171 | 6,171 |
Other assets | 12,844 | 13,040 |
Investments | 330 | 330 |
Assets of discontinued operations | 2,927 | 2,953 |
TOTAL ASSETS | 107,217 | 100,294 |
Current liabilities: | ||
Accounts payable and accrued expenses | 9,869 | 8,621 |
Short-term debt | 12,746 | 8,033 |
Current liabilities of discontinued operations | 9,782 | 9,768 |
Total current liabilities | 32,397 | 26,422 |
Long-term liabilities: | ||
Long-term debt, net of discounts | 3,532 | 6,632 |
Long-term lease liabilities | 7,592 | 8,082 |
Long-term liabilities of discontinued operations | 0 | 28 |
Total long-term liabilities | 11,124 | 14,742 |
Total liabilities | 43,521 | 41,164 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value 0.001: 990,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 235,491,198 shares issued and 233,182,790 shares outstanding as of March 31, 2021; 196,512,867 shares issued and 194,204,459 shares outstanding as of December 31, 2020. | 256 | 218 |
Additional paid-in capital | 290,225 | 275,060 |
Treasury Stock (2,308,408 shares of common stock, 12 shares of Preferred Stock Convertible Series A) | (808) | (808) |
Accumulated deficit | (230,822) | (219,803) |
Total Terra Tech Corp. stockholders' equity | 58,851 | 54,667 |
Non-controlling interest | 4,845 | 4,463 |
Total stockholders' equity | 63,696 | 59,130 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 107,217 | 100,294 |
Preferred Stock Convertible Series A [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock Value | 0 | 0 |
Preferred Stock Convertible Series B [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock Value | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
STOCKHOLDERS' EQUITY | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 990,000,000 | 990,000,000 |
Common stock, shares issued | 235,491,198 | 196,512,867 |
Common stock, shares outstanding | 233,182,790 | 194,204,459 |
Preferred Stock Convertible Series A | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 0 | 100 |
Preferred stock, shares issued | 0 | 8 |
Preferred stock, shares outstanding | 0 | 8 |
Preferred Stock Convertible Series B [Member] | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 0 | 41,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||
Total revenues | $ 5,112 | $ 4,047 |
Cost of goods sold | 2,680 | 1,723 |
Gross profit | 2,432 | 2,324 |
Selling, general and administrative expenses | 14,138 | 8,541 |
Impairment of assets | 0 | 5,120 |
(Gain) / Loss on sale of assets | 0 | (35) |
Loss from operations | (11,706) | (11,302) |
Other income (expense): | ||
Loss on Extinguishment of Debt | (6,161) | 0 |
Interest expense, net | (400) | (902) |
Other income/loss | 345 | 65 |
Unrealized Gain (Loss) on Investments | 6,212 | 0 |
Total other income (expense) | (4) | (837) |
Income (Loss) from continuing operations | (11,710) | (12,139) |
Income (Loss) from discontinued operations, net of tax | 14 | (5,235) |
NET INCOME (LOSS) | (11,696) | (17,374) |
Less: Income (Loss) attributable to non-controlling interest from continuing operations | 382 | (44) |
NET LOSS ATTRIBUTABLE TO TERRA TECH CORP. | $ (12,078) | $ (17,330) |
Income / ( Loss) from continuing operations per common share attributable to Terra Tech Corp. common stockholders - basic and diluted | $ (0.05) | $ (0.08) |
Net Loss per common share attributable to Terra Tech Corp. common stockholders - basic and diluted | $ (0.05) | $ (0.11) |
Weighted-average number of common shares outstanding - basic and diluted | 237,752,273 | 150,906,135 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (11,696) | $ (17,374) |
Less: net loss from discontinued operations | (14) | 5,235 |
Net loss from continuing operations | (11,710) | (12,139) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 0 | 295 |
Gain from debt forgiveness | (86) | 0 |
Unrealized gain on investments | (6,212) | 0 |
Loss (gain) on extinguishment of debt | 6,161 | 0 |
Non-cash portion of severance expense | 7,990 | 0 |
Non-cash interest expense | 27 | 339 |
Gain on sale of assets | 0 | (35) |
Depreciation and amortization | 1,141 | 1,718 |
Amortization of operating lease right of use asset | 195 | 225 |
Stock based compensation | 398 | 960 |
Impairment loss | 0 | 5,120 |
Change in operating assets and liabilities: | ||
Accounts receivable | (465) | (161) |
Inventory | (753) | (516) |
Prepaid expenses and other current assets | (394) | 215 |
Other assets | 9 | 11 |
Accounts payable and accrued expenses | 991 | 974 |
Operating lease liabilities | (161) | (221) |
Net cash provided by / (used in) operating activities - continuing operations | (2,869) | (3,215) |
Net cash provided by / (used in) operating activities - discontinued operations | 18 | (966) |
NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES | (2,851) | (4,181) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property, equipment and leasehold improvements | (110) | (182) |
Cash from acquisitions | 0 | 57 |
Proceeds from sales of assets | 0 | 35 |
Net cash provided by / (used in) investing activities - continuing operations | (110) | (90) |
Net cash provided by / (used in) investing activities - discontinued operations | 0 | 2,182 |
NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES | (110) | 2,092 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of notes payable | 3,500 | 1,392 |
Payments of debt principal | (6) | 0 |
Cash paid for debt issuance costs | (178) | 0 |
Proceeds from issuance of common stock | 0 | 250 |
Cash contribution (distribution) from non-controlling interest | 0 | 165 |
Net cash provided by / (used in) financing activities - continuing operations | 3,316 | 1,807 |
Net cash provided by / (used in) financing activities - discontinued operations | 0 | 0 |
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES | 3,316 | 1,807 |
NET CHANGE IN CASH | 355 | (282) |
Cash at beginning of period | 888 | 1,226 |
CASH AT END OF PERIOD | 1,243 | 944 |
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: | ||
Cash paid for interest | 182 | 360 |
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Debt principal and accrued interest converted into common stock | 3,596 | 1,028 |
Promissory note issued for severance | 2,100 | 0 |
Stock Issued for the acquisition of OneQor | 0 | 9,305 |
Fixed assets in accounts payable | 0 | 167 |
Stock options exercised on a net share basis | $ 1 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Preferred Stock Convertible A Series | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest |
Balance, shares at Dec. 31, 2019 | 118,004,978 | 2,308,412 | 8 | ||||
Balance, amount at Dec. 31, 2019 | $ 75,326 | $ 120 | $ (808) | $ 0 | $ 260,516 | $ (189,686) | $ 5,184 |
Debt conversion - common stock, shares | 9,123,560 | ||||||
Debt conversion - common stock, amount | 1,027 | $ 9 | $ 0 | 0 | 1,018 | 0 | 0 |
Stock compensation - employees, shares | 2,353,115 | ||||||
Stock compensation - employees, amount | 376 | $ 2 | $ 0 | 0 | 374 | 0 | 0 |
Stock compensation - services expense, shares | 825,000 | ||||||
Stock compensation - services expense, amount | 109 | $ 1 | $ 0 | 0 | 108 | 0 | 0 |
Stock issued for cash, shares | 2,470,173 | ||||||
Stock issued for cash, amount | 250 | $ 2 | $ 0 | 0 | 248 | 0 | 0 |
Stock issued for OneQor acquisition, shares | 58,154,027 | ||||||
Stock issued for OneQor acquisition, amount | 9,304 | $ 58 | $ 0 | 0 | 9,246 | 0 | 0 |
Stock option expense | 944 | 0 | 0 | 0 | 944 | 0 | 0 |
Contribution from non-controlling interest | 165 | 0 | 0 | 0 | 0 | 0 | 165 |
Net income attributable to non-controlling interest | (44) | 0 | 0 | 0 | 0 | 0 | (44) |
Net loss attributable to Terra Tech Corp. | (17,330) | $ 0 | $ 0 | $ 0 | 0 | (17,330) | 0 |
Balance, shares at Mar. 31, 2020 | 190,930,853 | 2,308,412 | 8 | ||||
Balance, amount at Mar. 31, 2020 | 70,127 | $ 192 | $ (808) | $ 0 | 272,454 | (207,016) | 5,305 |
Balance, shares at Dec. 31, 2020 | 194,204,459 | 2,308,412 | 8 | ||||
Balance, amount at Dec. 31, 2020 | 59,130 | $ 218 | $ (808) | $ 0 | 275,060 | (219,803) | 4,463 |
Debt conversion - common stock, shares | 20,391,774 | ||||||
Debt conversion - common stock, amount | 4,009 | $ 20 | $ 0 | 3,989 | 0 | 0 | |
Stock compensation - services expense, shares | 322,947 | ||||||
Stock compensation - services expense, amount | 32 | $ 0 | $ 0 | 32 | 0 | 0 | |
Stock option expense | 244 | 0 | 0 | 0 | 244 | 0 | 0 |
Net income attributable to non-controlling interest | 382 | 0 | 0 | 0 | 0 | 0 | 382 |
Net loss attributable to Terra Tech Corp. | (12,078) | 0 | 0 | 0 | 0 | (12,078) | 0 |
Adoption of ASU 2020-06 | (12) | 0 | 0 | (1,071) | 1,059 | ||
Warrants issued to Dominion | 5,978 | $ 0 | $ 0 | 0 | 5,978 | 0 | 0 |
Stock compensation - directors, shares | 541,666 | ||||||
Stock compensation - directors, amount | 122 | $ 1 | $ 0 | 0 | 121 | 0 | 0 |
Stock Option Exercises, shares | 1,226,230 | ||||||
Stock Option Exercises, amount | 0 | $ 1 | $ 0 | $ 0 | (1) | 0 | 0 |
Acquisition of A shares, shares | 16,485,714 | 8 | (8) | ||||
Acquisition of A shares, amount | 5,889 | $ 16 | $ 0 | $ 0 | 5,873 | 0 | 0 |
Balance, shares at Mar. 31, 2021 | 233,172,790 | 2,308,420 | |||||
Balance, amount at Mar. 31, 2021 | $ 63,696 | $ 256 | $ (808) | $ 0 | $ 290,225 | $ (230,822) | $ 4,845 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2021 | |
DESCRIPTION OF BUSINESS | |
NOTE 1. DESCRIPTION OF BUSINESS | References in this document to “the Company”, “Terra Tech”, “we”, “us”, or “our” are intended to mean Terra Tech Corp., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis. Terra Tech 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”) · GrowOp Technology Ltd., a Nevada corporation (“GrowOp Technology”) · IVXX, Inc., a California corporation (“IVXX Inc.”; together with IVXX LLC, “IVXX”) · IVXX, LLC, a Nevada limited liability company (“IVXX LLC”) · MediFarm, LLC, a Nevada limited liability company (“MediFarm”) · MediFarm I, LLC, a Nevada limited liability company (“MediFarm I”) · MediFarm II, LLC, a Nevada limited liability company (“MediFarm II”) · MediFarm So Cal, Inc., a California corporation (“MediFarm SoCal”) · 121 North Fourth Street, LLC, a Nevada limited liability company ("121 North Fourth") · OneQor Technologies, Inc., a Delaware corporation ("OneQor") 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. All of the Company’s cannabis dispensaries operate under the name Blüm. 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Securities Exchange Commission (“SEC”) Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933 and reflect the accounts and operations of the Company and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of FASB or ASC 810, “Consolidation,” All intercompany transactions and 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 March 31, 2021 and 2020, and the consolidated results of operations and cash flows for the quarters ended March 31, 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, 2020. The December 31, 2020 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 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. Going Concern The accompanying financial statements have been prepared assuming that we will continue as a going concern. The risks and uncertainties on the future of our business due to COVID-19 and regulatory uncertainty, combined with the fact that we have historically lost money, have in the past, raised substantial doubt as to our ability to continue as a going concern. However, management believes that proceeds due from its 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. 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” Trade and Other Receivables The Company extends noninterest bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the consolidated balance sheets, net of an allowance for doubtful accounts. The Company analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends, in determining the allowance for doubtful accounts. The Company does not accrue interest receivable on past due accounts receivable. The allowance for doubtful accounts was zero as of March 31, 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. 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. 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.” “Property, Equipment and Leasehold Improvements, Net” Intangible Assets Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, “Property, Plant, and Equipment,” 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 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. Goodwill Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. In accordance with ASC 350, “Intangibles—Goodwill and Other,” 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 or its fair value, the Company recognizes an impairment charge equal to the amount in excess. Notes Receivable The Company reviews all outstanding notes receivable for collectability as information becomes available pertaining to the Company’s inability to collect. An allowance for notes receivable is recorded for the likelihood of non-collectability. The Company accrues interest on notes receivable based on net realizable value. The allowance for uncollectible notes was zero as of March 31, 2021 and December 31, 2020. 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 in accordance with ASC 360 , “Property, Plant, and Equipment,” “Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity” Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. 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 March 31, 2021: Investments: Amount Level 1 Level 2 Level 3 Warrants to acquire shares of HydroFarm $ 10,452 $ - $ 10,452 $ - Shares in HydroFarm 29,804 - 29,804 - Option to acquire Edible Garden Inc 330 - - 330 Total $ 40,586 $ - $ 40,256 $ 330 Business Combinations The Company accounts for its business acquisitions in accordance with ASC 805-10, “Business Combinations.” 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. Disaggregation of Revenue The table below shows the revenue break between California operations and Nevada operations for the three months ended March 31, 2021 and 2020. (in thousands) 2021 2020 California $ 2,057 $ 2,442 Nevada 3,055 1,605 Total $ 5,112 $ 4,047 Contract Balances Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606. Contract Estimates and Judgments The Company’s revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Cost of Goods Sold Cannabis Dispensary, Cultivation and Production Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and delivery costs. It also includes the labor and overhead costs incurred in cultivating and producing cannabis flower and cannabis-derived products. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. Cannabinoid Products Cost of goods sold includes the fees charged by suppliers to manufacture CBD products as well as packaging and shipping costs for finished goods. Advertising Expenses The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.” Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”, 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 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”, Potentially dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive are as follows (in common equivalent shares): Three Months Ended March 31, 2021 2020 Common stock warrants 16,076,556 1,313,459 Common stock options 11,937,987 5,715,294 28,014,543 7,028,753 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 March 31, 2021, the Company issued 24,945,055 such warrants that are included in the calculation of net loss per share. Recently Adopted Accounting Standards FASB ASU No. 2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” Derivatives and Hedging As Reported 2020 Cumulative Effect Adjustment As Reported 2021 Additional Paid-In Capital $ 275,060 $ 1,071 $ 276,131 Accumulated Deficit 219,803 (1,059 ) 218,744 Debt Discount 50 (12 ) 38 |
CONCENTRATIONS OF BUSINESS AND
CONCENTRATIONS OF BUSINESS AND CREDIT RISK | 3 Months Ended |
Mar. 31, 2021 | |
CONCENTRATIONS OF BUSINESS AND CREDIT RISK | |
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 remained at $0.06 million for March 31, 2021, the same as December 31, 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 three months ended March 31, 2021 and 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 three months ended March 31, 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. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2021 | |
VARIABLE INTEREST ENTITIES | |
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.” Revenue and net income attributed to NuLeaf was $3.06 million and $0.76 million, respectively, for the three months ended March 31, 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) March 31, 2021 December 31, 2020 Current assets: Cash $ 670 $ 671 Accounts receivable, net 800 483 Inventory 1,888 3,118 Prepaid expenses and other current assets 80 21 Total current assets 3,438 4,293 Property, equipment and leasehold improvements, net 6,890 7,442 Other assets 371 395 TOTAL ASSETS $ 10,699 $ 12,130 Liabilities: Total current liabilities $ 505 $ 396 Total long-term liabilities 278 307 TOTAL LIABILITIES $ 783 $ 703 |
INVESTMENTS IN UNCONSOLIDATED A
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3 Months Ended |
Mar. 31, 2021 | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | |
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”, each Unit consisting of one share of common stock and one warrant to purchase one-half of a share of common stock for an initial exercise price of $5.00 per share, for $2.50 per Unit for an aggregate purchase price of $5.00 million. The investment in Hydrofarm was recorded at cost and was included in other assets on the consolidated balance sheet as of December 31, 2019. 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 no longer qualifies to be stated at cost, as the equity security has a readily determinable value and therefore should be recorded at fair value. In the fourth quarter of 2020, the Company recorded its investment in Hydrofarm of 593,261 common shares at fair value, and 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 Hydrofarm to market as of March 31, 2021 and recorded the change in fair value in current period earnings. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2021 | |
INVENTORY | |
NOTE 6. INVENTORY | Raw materials consist of material for NuLeaf and IVXX’s line of cannabis pure concentrates. Work-in-progress consists of cultivation materials and live plants grown at NuLeaf and Black Oak Gallery. Finished goods consists of cannabis products sold in retail. Inventory as of March 31, 2021 and December 31, 2020 consisted of the following: (in thousands) March 31, December 31, 2021 2020 Raw materials $ 881 $ 39 Work-in-progress 1,175 1,196 Finished goods 298 367 Total inventory $ 2,354 $ 1,602 |
PROPERTY EQUIPMENT AND LEASEHOL
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET | |
NOTE 7. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | Property, equipment, and leasehold improvements, net consists of the following: (in thousands) March 31, December 31, 2021 2020 Land and building $ 11,649 $ 11,206 Furniture and equipment 2,537 2,913 Computer hardware 219 215 Leasehold improvements 16,483 16,459 Construction in progress 9,922 9,922 Subtotal 40,810 40,715 Less accumulated depreciation (9,169 ) (8,235 ) Property, equipment and leasehold improvements, net $ 31,641 $ 32,480 Depreciation expense related to property, equipment and leasehold improvements for the three months ended March 31, 2021 and 2020 was $0.95 million and $0.96 million, respectively. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS AND GOODWILL | |
NOTE 8 - INTANGIBLE ASSETS AND GOODWILL | Intangible Assets, Net Intangible assets, net consisted of the following as of March 31, 2021 and December 31, 2020: (in Thousands) March 31, 2021 December 31, 2020 Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizing Intangible Assets: Customer Relationships 3 to 5 $ 7,400 $ (7,400 ) $ - $ 7,400 $ (7,400 ) $ - Trademarks and Patent 2 to 8 195 (195 ) - 196 (187 ) 9 Dispensary Licenses 14 10,270 (3,668 ) 6,602 10,270 (3,485 ) 6,785 Total Amortizing Intangible Assets 17,865 (11,263 ) 6,602 17,866 (11,072 ) 6,794 Non-Amortizing Intangible Assets: Trade Name Indefinite 920 - 920 920 - 920 Total Non-Amortizing Intangible Assets 920 - 920 920 - 920 Total Intangible Assets, Net $ 18,785 $ (11,263 ) $ 7,522 $ 18,786 $ (11,072 ) $ 7,714 Amortization expense for the three months ended March 31, 2021 and 2020 was $0.19 million and $0.85 million, respectively. 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. 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 Company conducts its annual goodwill impairment assessment as of the last day of the 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 or indefinite-lived intangible assets is necessary or a quantitative assessment (“step one”) where the 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 March 31, 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. Management did not identify any impairment triggers during the first quarter of 2021 and therefore no impairment of goodwill was recognized. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2021 | |
NOTES PAYABLE | |
NOTE 9. NOTES PAYABLE | Notes payable consist of the following as of March 31, 2021 and December 31, 2020: (in thousands) March 31, 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 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 31, 2021 and bears interest at a rate of 7.5% per annum. The conversion price is 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. - 2,800 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 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. - 725 Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matures January 30, 2021, and bears interest at a rate of 10% per annum. - 500 Secured promissory note dated January 10, 2020, issued to an unaffilitated third party. The note matures on July 10, 2021 and incurs 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 principle 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 incurs an interest rate of 8% per annum and matures on April 29, 2021. 1,000 1,000 Unsecured promissory note dated January 22, 2021, issued to Michael Nahass (a related party), which matures July 25, 2021, and bears interest at a rate of 3% per annum. 1,050 - 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 - 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 $ 16,262 $ 14,687 Vehicle loans 23 29 Less: Short term debt (12,746 ) (8,033 ) Less: Debt discount (7 ) (51 ) Net Long Term Debt $ 3,532 $ 6,632 During the three months ended March 31, 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 (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. In connection with the extension, 620 Dyer is required to pay Elizon an extension fee equal to 1% of the outstanding principal balance of the Loan Agreement by the earlier of (1) the maturity date of the Loan Agreement, (2) July 18, 2021 or (3) the closing of the sale of any real property or securities of Hydrofarm Holdings Group Inc. by the Company or 620 Dyer. On January 8, 2021, the Company entered into an amendment to the Secured Promissory Note issued by Terra Tech Corp. (the “Borrower”) to Arthur Chan (the “Lender”) on January 10, 2020. The Loan Agreement Amendment, among other things, amends the maturity date of the Loan Agreement from January 10, 2021 to July 10, 2021. Series A Preferred Stock Purchase Agreement On January 22, 2021, the Company entered into a Series A Preferred Stock Purchase Agreement with Michael A. Nahass, pursuant to which 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 $3.10 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 and Securities Purchase Agreement On January 25, 2021, the Company entered into several agreements with the 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 the June 2019 Note from January 26, 2021 to December 31, 2021 and (2) extended the maturity date of the October 2019 Note from April 21, 2021 to December 31, 2021. In connection with the Note Amendments, the Company issued to the Lender warrants to purchase 5,000,000 shares of the Company’s common stock (the “ Old Note Warrants In conjunction with the above amendments, the Company entered into a Securities Purchase Agreement with certain accredited investors (the “ Purchasers Notes Warrants The Notes, which are convertible into common stock at any time at the discretion of the 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 product of (i) the sum of the then-outstanding principal amount of the Notes and all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the prepayment date is within 90 days of the original issue date, (y) 115%, if the prepayment date is between 91 days and 180 days following the original issue date or (z) 125%, if the prepayment date is after the 180th day following the original issue date. The Company can demand that the Purchasers convert the Notes at any time, on five calendar days’ notice, that (i) the daily dollar volume-weighted average price for the Company’s common stock for the prior five consecutive trading days is $0.30 or more and (ii) (1) the shares underlying the Notes have been registered with the U.S. Securities and Exchange Commission (the “ SEC 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 or any of its subsidiaries is a 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 18% per annum) and other amounts owing in respect thereof through the date of acceleration shall become, at the Purchaser’s election, immediately due and payable in cash. Management performed an analysis to determine the appropriate accounting treatment of the above transactions and concluded (1) a 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 the difference between the carrying value of the old debt and the reacquisition price was recognized in current period earnings. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2021 | |
FAIR VALUE MEASUREMENTS | |
NOTE 10. FAIR VALUE MEASUREMENTS | As of March 31, 2021, the Company owned 593,261 common shares of Hydrofarm, a public company trading on the Nasdaq Global Select Market under the ticker symbol “HYFM.” The Company’s investment in Hydrofarm is stated at fair value and is presented in the “Short term investments” line within the consolidated balance sheet. As the Hydrofarm shares held by the Company are restricted from sale for a period of 180 days from the date of Hydrofarm’s initial public offering, the fair value of the Company’s investment is estimated utilizing the market price of the common shares at the end of each reporting period (a level one input), less a discount for lack of marketability (a level two input). The discount for marketability was estimated upon consideration of volatility and the length of the lock-up period. On March 31, 2021, the HYFM stock price was $60.32, and the investment value was $29.81 million. Changes in the fair value of the Company’s investment are reported in current period earnings. As of March 31, 2021, the Company held 296,630 warrants to purchase one share of Hydrofarm’s common stock, with an exercise price of $16.86 per share. As the underlying shares are restricted from sale for a period of 180 days from the date of Hydrofarm’s initial public offering, the fair value of the warrants are estimated using the Black-Scholes option pricing model that uses several inputs, including market price of Hydrofarm’s common shares at the end of each reporting period (a level one input), less a discount for lack of marketability (a level two input). The discount for lack of marketability was estimated upon consideration of volatility and the length of the lock-up period. The warrants are valued at $10.45 million as of March 31, 2021. Changes in the fair value of the Company’s investments in the warrants are reported in current period earnings. 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 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 March 31, 2021. The options are included in the “Investments” line within the consolidated balance sheet. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2021 | |
LEASES | |
NOTE 11. 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”) are included in other assets while lease liabilities are a line-item on the Company’s Consolidated Balance Sheets. 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 terms used to calculate the ROU assets for certain properties include the renewal options that the Company 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 for the three months ended March 31, 2021 and March 31, 2020 were $0.20 million and $0.23 million, respectively. Short-term lease costs during the 2021 and 2020 fiscal quarters ended March 31 were not material. As of March 31, 2021 and December 31, 2020, short term lease liabilities of $1.14 million and $0.81 million are included in “Accounts Payable and Accrued Expenses” on the consolidated balance sheets, respectively. The table below presents total operating lease ROU assets and lease liabilities as of March 31, 2021: (in thousands) Three Months Ended March 31, 2021 Operating lease ROU assets $ 7,942 Operating lease liabilities 8,833 The table below presents the maturities of operating lease liabilities as of March 31, 2021: (in thousands) Operating Leases 2021 (remaining) $ 1,255 2022 2,506 2023 1,801 2024 1,562 2025 1,470 Thereafter 5,015 Total lease payments 13,609 Less: discount (4,776 ) Total operating lease liabilities $ 8,833 The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets: Three Months Ended March 31, 2021 Weighted average remaining lease term (years) 8.2 Weighted average discount rate 11.6 % |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2021 | |
EQUITY | |
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 though 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. 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 990.00 million shares of common stock with $0.001 par value per share. As of March 31, 2021 and December 31, 2020, 233.18 million and 194.20 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. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2021 | |
STOCK-BASED COMPENSATION | |
NOTE 13. STOCK-BASED COPENSATION | 2016 & 2018 Equity Incentive Plans In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. In the fourth quarter of 2018, the Company adopted the 2018 Equity Incentive Plan. On February 14, 2020, the Company amended the number of shares reserved for issuance under the 2018 Equity Incentive Plan to 43,976,425. The following table contains information about the 2016 and the 2018 Equity Incentive Plans as of March 31, 2021: Awards Reserved for Issuance Awards Outstanding Awards Available for Grant 2016 Equity incentive plan 2,000,000 499,953 1,500,047 2018 Equity incentive plan 43,976,425 11,110,927 32,865,498 Stock Options The following table summarizes the Company’s stock option activity and related information for the three months ended March 31, 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 500,000 $ 0.26 Options exercised (1,483,334 ) $ 0.07 Options forfeited (4,571,510 ) $ 0.19 Options expired - $ - Options outstanding as of March 31, 2021 11,937,986 $ 0.53 8.4 years $ 2,108 Options exercisable as of March 31, 2021 7,346,443 $ 0.75 7.9 years $ 883 As of March 31, 2021, there was $0.69 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 1.94 years. The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The 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: (in thousands except for shares / options) For the Three Months Ended March 31, 2021 March 31, 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 500,000 $ 244 - $ 944 Stock grants: Directors (common stock) 541,666 121 Employees (common stock) - - 2,353,115 (*) - Non–employee consultants (common stock) 332,947 33 825,000 (*) 16 Total stock–based compensation expense $ 398 $ 960 *Expense for grants attributed to 2019 bonuses was recorded in 2019. |
WARRANTS
WARRANTS | 3 Months Ended |
Mar. 31, 2021 | |
WARRANTS | |
NOTE 14. WARRANTS | The following table summarizes warrant activity for the quarter ended March 31, 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 March 31, 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: March 31, 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 March 31, 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | |
NOTE 15. COMMITMENTS AND CONTINGENCIES | California Operating Licenses 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. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2021 | |
DISCONTINUED OPERATIONS | |
NOTE 16. DISCONTINUED OPERATIONS | On May 8, 2019, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy, LLC (the “Purchaser”) pursuant to 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 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. On August 19, 2019, MediFarm I LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy Reno, LLC (the “Purchaser”) pursuant to which the Company agreed to sell and the Purchaser agreed to purchase substantially all of the assets of the Company related to the Company’s dispensary located at 1085 S Virginia St Suite A, Reno, NV 89502 (the “Business”). The aggregate consideration to be paid for the Business is $13.50 million, of which $9.30 million is cash (the “Purchase Price”). A portion of the Purchase Price is payable by the Purchaser pursuant to a 12 month Secured Promissory Note with a principal amount of $4.20 million (the “Note”). The Note is secured by all the assets sold pursuant to the Purchase Agreement. In conjunction with the Note, Purchaser and the Company entered into a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement. The transaction 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. On April 15, 2020, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Natural Medicine, LLC, a 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 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. The 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 reflect such loss in discontinued operations. As of March 31, 2021, Management has classified a real estate asset held Nevada as available-for-sale, as it has met the criteria of ASC 360-10-45-9. The pending sales of our Nevada dispensaries, expected sale of real estate, and assets divested 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 During 2020, Management 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) Three Months Ended 2021 2020 Total revenues $ - $ 2,576 Cost of goods sold - 2,039 Gross profit - 537 Selling, general and administrative expenses - 2,594 Loss on sale of assets - 3,188 Income (Loss) from operations $ - $ (5,245 ) Interest expense Other income (loss) 14 11 Income (Loss) from discontinued operations $ 14 $ (5,235 ) Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted $ 0.00 $ (0.03 ) The carrying amounts of the major classes of assets and liabilities for the discontinued operations are as follows: (in thousands) March 31, December 31, 2020 Prepaid expenses and other assets $ 1 $ 2 Property, equipment and leasehold improvements, net 2,766 2,766 Intangible assets, net - - Goodwill - - Other assets 161 186 Assets of discontinued operations $ 2,928 $ 2,954 Accounts payable and accrued expenses $ 999 $ 985 Deferred gain on sale of assets 8,783 8,783 Long-term lease liabilities - 28 Liabilities of discontinued operations $ 9,782 $ 9,796 |
LITIGATION AND CLAIMS
LITIGATION AND CLAIMS | 3 Months Ended |
Mar. 31, 2021 | |
LITIGATION AND CLAIMS | |
NOTE 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 March 31, 2021. On January 6, 2021, a putative, nationwide class action for violations of the Telephone Consumer Protection Act (the “TCPA”), captioned as Stanley, et al. v Terra Tech Corp., et al., Civil Action No. 8:21-cv00022, was filed against Terra Tech and MediFarm LLC (the “Defendants”) in the United States District Court for the Central District of California (the “TCPA Action”). In the TCPA Action, Plaintiffs alleged that Defendants violated the TCPA by sending text messages to them and other persons using an automated telephone dialing system without consent. Plaintiffs sought on behalf of themselves and other purportedly similarly situated-persons, statutory damages and an unspecified amount of actual damages for each alleged violation, declaratory and injunctive relief, and attorneys’ fees and costs. On March 5, 2021, Defendants filed a motion to dismiss the TCPA Action in its entirety. See Note 19, “ Subsequent Events” |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
NOTE 18 - RELATED PARTY TRANSACTIONS | On January 11, 2021 the Company entered into a separation agreement with Alan Gladstone, formerly a director of the Company. Pursuant to the agreement, the Company issued to Mr. Gladstone 500,000 freely-trading shares of the Company’s common stock. The Independent Director Agreement between the Company and Mr. Gladstone, dated as of July 1, 2019, was terminated. The Company recognized $0.11 million of stock-based compensation expense in the three months ended March 31, 2021 as a result of the separation agreement with Mr. Gladstone. 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 $3.1 million, of which (i) $1.00 million was paid in cash, and $2.10 million was paid in the form of promissory notes. As a result of the separation agreement with Mr. Nahass, the Company recorded $2.10 million of short-term debt and $3.10 million of severance expense as of and during the three months ended March 31, 2021. 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. 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 though 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 recognized $5.90 million of severance expense in the three months ended March 31, 2021 as a result of the separation agreement with Mr. Peterson. On February 1, 2021, Terra Tech Corp. (the “Company”) entered into an Amended and Restated Independent Director Agreement with Nicholas Kovacevich, the Chairman of the Company’s Board of Directors (the “Kovacevich Agreement”). Pursuant to the Kovacevich Agreement, (1) the Company issued to Mr. Kovacevich 500,000 restricted shares of the Company’s common stock (the “Common Stock”), which vest in twelve equal installments on the first day of each month beginning on March 1, 2021 (provided Mr. Kovacevich is a director of the Company on the applicable vesting date) and (2) the Company agreed to pay Mr. Kovacevich cash compensation of five thousand dollars per month, payable on the first day of each month beginning March 1, 2021 for the term of the Kovacevich Agreement. There is no material relationship between the Company or its affiliates and Mr. Kovacevich, other than in respect of the transactions contemplated by the Kovacevich Agreement. On February 1, 2021, the Company entered into an Amended and Restated Independent Director Agreement with Ira Ritter, a member of the Company’s Board of Directors (the “Ritter Agreement”). Pursuant to the Ritter Agreement, (1) the Company issued to Mr. Ritter an option to purchase 500,000 shares of Common Stock at the closing price of the Common Stock on the date of the Ritter Agreement, which vest in twelve equal installments on the first day of each month beginning on March 1, 2021 (provided Mr. Ritter is a director of the Company on the applicable vesting date) and (2) the Company agreed to pay Mr. Ritter cash compensation of five thousand dollars per month, payable on the first day of each month beginning March 1, 2021 for the term of the Ritter Agreement. There is no material relationship between the Company or its affiliates and Mr. Ritter, other than in respect of the transactions contemplated by the Ritter Agreement. On February 3, 2021, the Company entered into an Exchange Agreement with Matthew Lee Morgan, formerly the Chief Executive Officer of the Company. Pursuant to the agreement, the secured promissory note held by Mr. Morgan in the amount of $0.50 million was converted into 1,428,571 shares of common stock, with a fair value of $0.41 million. During the three months ended March 31, 2021, the Company recognized a gain of $0.09 million for debt forgiveness upon conversion of the promissory note. On March 2, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with UMBRLA, Inc., a Nevada corporation (“UMBRLA”), a diversified cannabis company with distribution, manufacturing and dispensary operations, Phoenix Merger Sub Corp., a Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Dallas Imbimbo, as the stockholder representative for the UMBRLA stockholders. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will be merged with and into UMBRLA (the “Merger”), with UMBRLA surviving the Merger as a wholly owned subsidiary of the Company. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. There is ownership in UMBRLA stock by members of the Company’s Board of Directors as well as certain Terra Tech Corp Note Holders who also hold UMBRLA stock and warrants. As such, the Merger may be considered a related party transaction. All related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2021 | |
SUBSEQUENT EVENTS | |
NOTE 19. SUBSEQUENT EVENTS | On April 6, 2021, the Company entered into an Independent Director Agreement (the “Director Agreement”), a Director Indemnification Agreement (the “Indemnification Agreement”) and a Stock Option Agreement (the “Option Agreement”) with Tiffany Davis in connection with her appointment to the Board of Directors of the Company. Pursuant to the Director Agreement, among other things, (1) the Company agreed to enter into a Stock Option Agreement to issue to Ms. Davis an option to purchase 409,716 shares of the Company’s Common Stock at the closing price of the Common Stock on the date of the Director Agreement and (2) the Company agreed to pay Ms. Davis cash compensation of five thousand dollars per month, pro-rated for any partial months, payable on the first day of each month beginning on the date of the Director Agreement. Pursuant to the Indemnification Agreement, among other things, the Company agreed to hold harmless and indemnify Ms. Davis to the fullest extent permitted by law, including indemnification of expenses such as attorneys’ fees, judgments, penalties, fines and settlement amounts incurred by Ms. Davis in any proceeding arising out of her services as a director. Pursuant to the Option Agreement, among other things, the Company issued to Ms. Davis an option to purchase 409,716 shares of the Company’s Common Stock at the closing price of the Common Stock on the date of the Option Agreement. The stock options vest in ten installments, with the first installment of 34,722 shares vesting on date of the Option Agreement, and the remaining installments vesting equally on the first day of each month thereafter (provided Ms. Davis is a director of the Company on the applicable vesting date). There is no material relationship between the Company or its affiliates and Ms. Davis, other than in respect of the transactions contemplated by the Director Agreement, the Indemnification Agreement and the Option Agreement. On April 13, 2021, in connection with the resignation of Steven Ross as a director of the Company, the Company and Mr. Ross agreed to terminate the Director Agreement and enter into a Separation Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement, among other things, the Company agreed to 1) make cash payments to Mr. Ross of $0.09 million on April 30, 2021, $0.08 million on August 16, 2021, and $0.08 million on December 31, 2021, and 2) issue to Mr. Ross $0.05 million of freely-trading shares of the Common Stock on each of April 30, 2021, August 16, 2021, and December 31, 2021. The number of shares of common stock issued on each issuance date will be calculated based on the closing price of the Common Stock on the trading day immediately prior to such issuance date. In addition, all vested options to acquire Common Stock held by Mr. Ross remain exercisable pursuant to their terms and all unvested options to acquire Common Stock held by Mr. Ross’ will accelerate and become vested. The Separation Agreement contains mutual releases and other customary terms and conditions as more fully set forth therein. There is no material relationship between the Company or its affiliates and Mr. Ross other than in respect of the transactions contemplated by the Separation Agreement. On April 29, 2021, the Company and the Plaintiffs of the TCPA Action filed a joint notice advising the court that they had reached a settlement of the Plaintiffs’ individual claims and expect to (1) finalize the settlement and (2) file a joint stipulation of dismissal of the TCPA Action with prejudice by May 29, 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Securities Exchange Commission (“SEC”) Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933 and reflect the accounts and operations of the Company and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of FASB or ASC 810, “Consolidation,” All intercompany transactions and 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 March 31, 2021 and 2020, and the consolidated results of operations and cash flows for the quarters ended March 31, 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, 2020. The December 31, 2020 balances reported herein are derived from the audited consolidated financial statements for the year ended December 31, 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. |
Going Concern | The accompanying financial statements have been prepared assuming that we will continue as a going concern. The risks and uncertainties on the future of our business due to COVID-19 and regulatory uncertainty, combined with the fact that we have historically lost money, have in the past, raised substantial doubt as to our ability to continue as a going concern. However, management believes that proceeds due from its 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. |
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” |
Trade and other Receivables | The Company extends noninterest bearing trade credit to its customers in the ordinary course of business which is not collateralized. Accounts receivable are shown on the face of the consolidated balance sheets, net of an allowance for doubtful accounts. The Company analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends, in determining the allowance for doubtful accounts. The Company does not accrue interest receivable on past due accounts receivable. The allowance for doubtful accounts was zero as of March 31, 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. |
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. 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.” “Property, Equipment and Leasehold Improvements, Net” |
Intangible Assets | Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, “Property, Plant, and Equipment,” 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 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. |
Goodwill | Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. In accordance with ASC 350, “Intangibles—Goodwill and Other,” 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 or its fair value, the Company recognizes an impairment charge equal to the amount in excess. |
Notes Receivable | The Company reviews all outstanding notes receivable for collectability as information becomes available pertaining to the Company’s inability to collect. An allowance for notes receivable is recorded for the likelihood of non-collectability. The Company accrues interest on notes receivable based on net realizable value. The allowance for uncollectible notes was zero as of March 31, 2021 and December 31, 2020. |
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 in accordance with ASC 360 , “Property, Plant, and Equipment,” “Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity” |
Fair Value of Financial Instruments, Non-Financial Instruments and Derivative Assets | The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. 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 March 31, 2021: Investments: Amount Level 1 Level 2 Level 3 Warrants to acquire shares of HydroFarm $ 10,452 $ - $ 10,452 $ - Shares in HydroFarm 29,804 - 29,804 - Option to acquire Edible Garden Inc 330 - - 330 Total $ 40,586 $ - $ 40,256 $ 330 |
Business Combinations | The Company accounts for its business acquisitions in accordance with ASC 805-10, “Business Combinations.” |
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. Disaggregation of Revenue The table below shows the revenue break between California operations and Nevada operations for the three months ended March 31, 2021 and 2020. (in thousands) 2021 2020 California $ 2,057 $ 2,442 Nevada 3,055 1,605 Total $ 5,112 $ 4,047 Contract Balances Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606. Contract Estimates and Judgments The Company’s revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. |
Cost of Goods Sold | Cannabis Dispensary, Cultivation and Production Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and delivery costs. It also includes the labor and overhead costs incurred in cultivating and producing cannabis flower and cannabis-derived products. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. Cannabinoid Products Cost of goods sold includes the fees charged by suppliers to manufacture CBD products as well as packaging and shipping costs for finished goods. |
Advertising Expenses | The Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.” |
Stock-Based Compensation | The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”, 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 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”, Potentially dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive are as follows (in common equivalent shares): Three Months Ended March 31, 2021 2020 Common stock warrants 16,076,556 1,313,459 Common stock options 11,937,987 5,715,294 28,014,543 7,028,753 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 March 31, 2021, the Company issued 24,945,055 such warrants that are included in the calculation of net loss per share. |
Recently Adopted Accounting Standards | FASB ASU No. 2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” Derivatives and Hedging As Reported 2020 Cumulative Effect Adjustment As Reported 2021 Additional Paid-In Capital $ 275,060 $ 1,071 $ 276,131 Accumulated Deficit 219,803 (1,059 ) 218,744 Debt Discount 50 (12 ) 38 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of intangible assets | Customer relationships 3 to 5 Years Trademarks and Patent 2 to 8 Years Dispensary licenses 14 Years |
Schedule of fair value | Investments: Amount Level 1 Level 2 Level 3 Warrants to acquire shares of HydroFarm $ 10,452 $ - $ 10,452 $ - Shares in HydroFarm 29,804 - 29,804 - Option to acquire Edible Garden Inc 330 - - 330 Total $ 40,586 $ - $ 40,256 $ 330 |
Schedule Of Revenue | (in thousands) 2021 2020 California $ 2,057 $ 2,442 Nevada 3,055 1,605 Total $ 5,112 $ 4,047 |
Schedule of loss per common share | Three Months Ended March 31, 2021 2020 Common stock warrants 16,076,556 1,313,459 Common stock options 11,937,987 5,715,294 28,014,543 7,028,753 |
Schedule of Recently Adopted Accounting Standards | 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 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
VARIABLE INTEREST ENTITIES | |
Schedule of intercompany transactions and balances | (in thousands) March 31, 2021 December 31, 2020 Current assets: Cash $ 670 $ 671 Accounts receivable, net 800 483 Inventory 1,888 3,118 Prepaid expenses and other current assets 80 21 Total current assets 3,438 4,293 Property, equipment and leasehold improvements, net 6,890 7,442 Other assets 371 395 TOTAL ASSETS $ 10,699 $ 12,130 Liabilities: Total current liabilities $ 505 $ 396 Total long-term liabilities 278 307 TOTAL LIABILITIES $ 783 $ 703 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
INVENTORY | |
Schedule of inventory | (in thousands) March 31, December 31, 2021 2020 Raw materials $ 881 $ 39 Work-in-progress 1,175 1,196 Finished goods 298 367 Total inventory $ 2,354 $ 1,602 |
PROPERTY EQUIPMENT AND LEASEH_2
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET | |
Schedule Property, equipment, and leasehold improvements | (in thousands) March 31, December 31, 2021 2020 Land and building $ 11,649 $ 11,206 Furniture and equipment 2,537 2,913 Computer hardware 219 215 Leasehold improvements 16,483 16,459 Construction in progress 9,922 9,922 Subtotal 40,810 40,715 Less accumulated depreciation (9,169 ) (8,235 ) Property, equipment and leasehold improvements, net $ 31,641 $ 32,480 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS AND GOODWILL (Tables) | |
Schedule of Intangible Assets, Net | (in Thousands) March 31, 2021 December 31, 2020 Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizing Intangible Assets: Customer Relationships 3 to 5 $ 7,400 $ (7,400 ) $ - $ 7,400 $ (7,400 ) $ - Trademarks and Patent 2 to 8 195 (195 ) - 196 (187 ) 9 Dispensary Licenses 14 10,270 (3,668 ) 6,602 10,270 (3,485 ) 6,785 Total Amortizing Intangible Assets 17,865 (11,263 ) 6,602 17,866 (11,072 ) 6,794 Non-Amortizing Intangible Assets: Trade Name Indefinite 920 - 920 920 - 920 Total Non-Amortizing Intangible Assets 920 - 920 920 - 920 Total Intangible Assets, Net $ 18,785 $ (11,263 ) $ 7,522 $ 18,786 $ (11,072 ) $ 7,714 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
NOTES PAYABLE | |
Schedule Notes payable | (in thousands) March 31, 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 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 31, 2021 and bears interest at a rate of 7.5% per annum. The conversion price is 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. - 2,800 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 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. - 725 Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matures January 30, 2021, and bears interest at a rate of 10% per annum. - 500 Secured promissory note dated January 10, 2020, issued to an unaffilitated third party. The note matures on July 10, 2021 and incurs 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 principle 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 incurs an interest rate of 8% per annum and matures on April 29, 2021. 1,000 1,000 Unsecured promissory note dated January 22, 2021, issued to Michael Nahass (a related party), which matures July 25, 2021, and bears interest at a rate of 3% per annum. 1,050 - 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 - 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 $ 16,262 $ 14,687 Vehicle loans 23 29 Less: Short term debt (12,746 ) (8,033 ) Less: Debt discount (7 ) (51 ) Net Long Term Debt $ 3,532 $ 6,632 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
LEASES (Tables) | |
Schedule of operating lease ROU assets and lease liabilities | (in thousands) Three Months Ended March 31, 2021 Operating lease ROU assets $ 7,942 Operating lease liabilities 8,833 |
Schedule of maturities of operating lease liabilities | (in thousands) Operating Leases 2021 (remaining) $ 1,255 2022 2,506 2023 1,801 2024 1,562 2025 1,470 Thereafter 5,015 Total lease payments 13,609 Less: discount (4,776 ) Total operating lease liabilities $ 8,833 |
Schedule of operating lease right-of-use assets | Three Months Ended March 31, 2021 Weighted average remaining lease term (years) 8.2 Weighted average discount rate 11.6 % |
STOCKBASED COMPENSATION (Tables
STOCKBASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
STOCK-BASED COMPENSATION | |
Schedule of Equity incentive plan | Awards Reserved for Issuance Awards Outstanding Awards Available for Grant 2016 Equity incentive plan 2,000,000 499,953 1,500,047 2018 Equity incentive plan 43,976,425 11,110,927 32,865,498 |
Schedule of Stock option activity | 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 500,000 $ 0.26 Options exercised (1,483,334 ) $ 0.07 Options forfeited (4,571,510 ) $ 0.19 Options expired - $ - Options outstanding as of March 31, 2021 11,937,986 $ 0.53 8.4 years $ 2,108 Options exercisable as of March 31, 2021 7,346,443 $ 0.75 7.9 years $ 883 |
Schedule of Stock based compensation assumptions | (in thousands except for shares / options) For the Three Months Ended March 31, 2021 March 31, 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 500,000 $ 244 - $ 944 Stock grants: Directors (common stock) 541,666 121 Employees (common stock) - - 2,353,115 (*) - Non–employee consultants (common stock) 332,947 33 825,000 (*) 16 Total stock–based compensation expense $ 398 $ 960 |
WARRANTS (Tables)
WARRANTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
WARRANTS | |
Schedule of Warrants outstanding | 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 March 31, 2021 41,021,610 $ 0.14 |
Schedule of Weighted-average fair value of the warrants granted | March 31, 2021 Expected term (years) 2.5 Years Volatility 115.20 % Risk-free interest rate 0.09 % Dividend yield 0 % |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
DISCONTINUED OPERATIONS | |
Schedule of discontinued operations | (in thousands) Three Months Ended March 31, 2021 2020 Total revenues $ - $ 2,576 Cost of goods sold - 2,039 Gross profit - 537 Selling, general and administrative expenses - 2,594 Loss on sale of assets - 3,188 Income (Loss) from operations $ - $ (5,245 ) Interest expense Other income (loss) 14 11 Income (Loss) from discontinued operations $ 14 $ (5,235 ) Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted $ 0.00 $ (0.03 ) |
Schedule of assets and liabilities for discontinued operations | (in thousands) March 31, 2021 December 31, 2020 Prepaid expenses and other assets $ 1 $ 2 Property, equipment and leasehold improvements, net 2,766 2,766 Intangible assets, net - - Goodwill - - Other assets 161 186 Assets of discontinued operations $ 2,928 $ 2,954 Accounts payable and accrued expenses $ 999 $ 985 Deferred gain on sale of assets 8,783 8,783 Long-term lease liabilities - 28 Liabilities of discontinued operations $ 9,782 $ 9,796 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Trademarks [Member] | Minimum [Member] | |
Useful Life (in Years) | 2 years |
Trademarks [Member] | Maximum [Member] | |
Useful Life (in Years) | 8 years |
Customer Relationship [Member] | Amortized Intangible Assets [Member] | Minimum [Member] | |
Useful Life (in Years) | 3 years |
Customer Relationship [Member] | Amortized Intangible Assets [Member] | Maximum [Member] | |
Useful Life (in Years) | 5 years |
Dispensary Licenses [Member] | |
Useful Life (in Years) | 14 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 3 Months Ended |
Mar. 31, 2021USD ($)shares | |
Warrants to acquire shares of HydroFarm | $ 10,452 |
Shares in HydroFarm | shares | 29,804 |
Option to acquire Edible Garden Inc | $ 330 |
Total fair value | 40,586 |
Level 1 [Member] | |
Warrants to acquire shares of HydroFarm | $ 0 |
Shares in HydroFarm | shares | |
Option to acquire Edible Garden Inc | $ 0 |
Total fair value | 0 |
Level 2 Member | |
Warrants to acquire shares of HydroFarm | $ 10,452 |
Shares in HydroFarm | shares | 29,804 |
Option to acquire Edible Garden Inc | $ 0 |
Total fair value | 40,256 |
Level 3 [Member] | |
Warrants to acquire shares of HydroFarm | $ 0 |
Shares in HydroFarm | shares | |
Option to acquire Edible Garden Inc | $ 330 |
Total fair value | $ 330 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | $ 5,112 | $ 4,047 |
California [Member] | ||
Revenue | 2,057 | 2,442 |
Nevada [Member] | ||
Revenue | $ 3,055 | $ 1,605 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Loss Per share, potentially dilutive securities | 28,014,543 | 7,028,753 |
Common stock warrants [Member] | ||
Loss Per share, potentially dilutive securities | 16,076,556 | 1,313,459 |
Common stock options [Member] | ||
Loss Per share, potentially dilutive securities | 11,937,987 | 5,715,294 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | Mar. 31, 2021 | Jan. 01, 2021 | Dec. 31, 2020 |
Additional Paid-In Capital | $ 290,225,000 | $ 275,060,000 | |
Accumulated Deficit | (230,822,000) | (219,803,000) | |
As Reported [Member] | |||
Additional Paid-In Capital | $ 276,131 | 275,060 | |
Accumulated Deficit | 218,744 | 219,803 | |
Debt Discount | $ 38 | $ 50 | |
Cumulative Effect Adjustment [Member] | |||
Additional Paid-In Capital | 1,071 | ||
Accumulated Deficit | (1,059) | ||
Debt Discount | $ (12) |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Warrants issued | 24,945,055 | ||
Income tax statutory rate | 50.00% | ||
Allowance for uncollectible notes | $ 0 | $ 0 | |
Advertising expenses | 30,000 | $ 110,000 | |
Description for useful lives of assets | 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. | ||
Reserve for doubtful accounts | 0 | $ 295,000 | |
Trade and other Receivables [Member] | |||
Reserve for doubtful accounts | $ 0 | $ 0 |
CONCENTRATIONS OF BUSINESS AN_2
CONCENTRATIONS OF BUSINESS AND CREDIT RISK (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Cash in excess of FDIC insured limit | $ 60,000 | $ 60,000 | |
One Customer [Member] | |||
Concentration risk of revenue, description | There were no customers that comprised more than 10.0% of the Company’s revenue | There were no customers that comprised more than 10.0% of the Company’s revenue |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||||
Cash | $ 1,243 | $ 888 | $ 944 | $ 1,226 |
Accounts receivable, net | 1,300 | 835 | ||
Inventory | 2,354 | 1,602 | ||
Prepaid expenses and other current assets | 628 | 234 | ||
Total current assets | 45,782 | 37,606 | ||
Property, equipment and leasehold improvements, net | 31,641 | 32,480 | ||
TOTAL ASSETS | 107,217 | 100,294 | ||
Liabilities: | ||||
Total current liabilities | 32,397 | 26,422 | ||
Total long-term liabilities | 11,124 | 14,742 | ||
TOTAL LIABILITIES | 43,521 | 41,164 | ||
VARIABLE INTEREST ENTITIES ARRANGEMENTS [Member] | ||||
Current assets: | ||||
Cash | 670 | 671 | ||
Accounts receivable, net | 800 | 483 | ||
Inventory | 1,888 | 3,118 | ||
Prepaid expenses and other current assets | 80 | 21 | ||
Total current assets | 3,438 | 4,293 | ||
Property, equipment and leasehold improvements, net | 6,890 | 7,442 | ||
Other assets | 371 | 395 | ||
TOTAL ASSETS | 10,699 | 12,130 | ||
Liabilities: | ||||
Total current liabilities | 505 | 396 | ||
Total long-term liabilities | 278 | 307 | ||
TOTAL LIABILITIES | $ 783 | $ 703 |
VARIABLE INTEREST ENTITIES (D_2
VARIABLE INTEREST ENTITIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Oct. 26, 2017 | |
Net Loss | $ (12,078,000) | $ (17,330,000) | |
Revenue | 5,112,000 | $ 4,047,000 | |
NuLeaf [Member] | |||
Net Loss | (760,000) | ||
Revenue | $ 3,060,000 | ||
NuLeaf [Member] | Operating Agreements [Member] | |||
Convertible loans | $ 4,500,000 | ||
Interest rate per annum | 6.00% | ||
Ownership percentage | 50.00% |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Details Narrative) - $ / shares | Dec. 14, 2020 | Nov. 24, 2020 | Aug. 28, 2018 | Mar. 31, 2021 | Dec. 31, 2020 |
Common stock shares outstanding | 233,182,790 | 194,204,459 | |||
Securities Purchase Agreement [Member] | |||||
Exercise price | $ 16.86 | ||||
Subscription Agreement [Member] | Hydrofarm [Member] | Board Of Directors [Member] | |||||
Exercise price | $ 8.43 | ||||
Common stock purchase description | the Company recorded its investment in Hydrofarm of 593,261 common shares at fair value, and the warrants to acquire an additional 296,630 of Hydrofarm common stock at an exercise price of $16.86, at their respective fair values. The difference in basis was recorded in current period earnings. | Hydrofarm Holdings Group, Inc. (“Hydrofarm”), one of the leading independent providers of hydroponic products in North America, pursuant to which the Company agreed to purchase from Hydrofarm and Hydrofarm agreed to sell to the Company 2,000,000 Units, each Unit consisting of one share of common stock and one warrant to purchase one-half of a share of common stock for an initial exercise price of $5.00 per share, for $2.50 per unit for an aggregate purchase price of $5.00 million. | |||
Owned Shares of common stock | 593,261 | ||||
Purchase of warrants | 296,630 | ||||
Common stock shares outstanding | 31,720,727 | ||||
Ownership percantage | 1.90% | ||||
Initial exercise price | $ 5 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Total inventory | $ 2,354 | $ 1,602 |
Inventory [Member] | ||
Raw materials | 881 | 39 |
Work-in-progress | 1,175 | 1,196 |
Finished goods | 298 | 367 |
Total inventory | $ 2,354 | $ 1,602 |
PROPERTY EQUIPMENT AND LEASEH_3
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Subtotal | $ 40,810 | $ 40,715 |
Less Accumulated Depreciation | (9,169) | (8,235) |
Property, equipment and leasehold improvements, net | 31,641 | 32,480 |
Land and building [Member] | ||
Subtotal | 11,649 | 11,206 |
Furniture and equipment [Member] | ||
Subtotal | 2,537 | 2,913 |
Computer hardware [Member] | ||
Subtotal | 219 | 215 |
Leasehold improvements [Member] | ||
Subtotal | 16,483 | 16,459 |
Construction in progress [Member] | ||
Subtotal | $ 9,922 | $ 9,922 |
PROPERTY EQUIPMENT AND LEASEH_4
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
PROPERTY EQUIPMENT AND LEASEHOLD IMPROVEMENTS NET | ||
Depreciation expense | $ 950,000 | $ 960,000 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL (Details ) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Gross Carrying Amount | $ 18,785 | $ 18,786 |
Accumulated Amortization | (11,263) | (11,072) |
Net carrying value | 7,522 | 7,714 |
Amortized Intangible Assets [Member] | ||
Gross Carrying Amount | 17,865 | 17,866 |
Accumulated Amortization | (11,263) | (11,072) |
Net carrying value | 6,602 | 6,794 |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | ||
Gross Carrying Amount | 7,400 | 7,400 |
Accumulated Amortization | (7,400) | (7,400) |
Net carrying value | $ 0 | 0 |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | Maximum [Member] | ||
Useful Life (in Years) | 5 years | |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | Minimum [Member] | ||
Useful Life (in Years) | 3 years | |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | ||
Gross Carrying Amount | $ 195 | 196 |
Accumulated Amortization | (195) | (187) |
Net carrying value | $ 0 | 9 |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | Maximum [Member] | ||
Useful Life (in Years) | 8 years | |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | Minimum [Member] | ||
Useful Life (in Years) | 2 years | |
Amortized Intangible Assets [Member] | Dispensary License [Member] | ||
Gross Carrying Amount | $ 10,270 | 10,270 |
Accumulated Amortization | (3,668) | (3,485) |
Net carrying value | $ 6,602 | 6,785 |
Useful Life (in Years) | 14 years | |
Non- Amortized Intangible Assets [Member] | ||
Gross Carrying Amount | $ 920 | 920 |
Net carrying value | 920 | 920 |
Non- Amortized Intangible Assets [Member] | Trade Name [Member] | ||
Gross Carrying Amount | 920 | 920 |
Accumulated Amortization | 0 | 0 |
Net carrying value | $ 920 | $ 920 |
Estimated useful lives | Indefinite |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Amortization expense | $ 195,000 | $ 225,000 | |
Goodwill | 6,171,000 | $ 6,171,000 | |
Intangible Assets [Member] | |||
Amortization expense | 190,000 | $ 850,000 | |
Goodwill | $ 6,170,000 | $ 6,170,000 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Notes payable - promissory notes | $ 16,262 | $ 14,687 |
Vehicle loans | 23 | 29 |
Less: Short term debt | (12,746) | (8,033) |
Less: Debt discount | (7) | (51) |
Net Long Term Debt | 3,532 | 6,632 |
Securities Purchase Agreement [Member] | ||
Net Long Term Debt | 0 | 500 |
Promissory note four [Member] | ||
Net Long Term Debt | 562 | 562 |
Convertible promissory note one [Member] | ||
Net Long Term Debt | 3,500 | 0 |
Securities Purchase Agreement Three [Member] | ||
Net Long Term Debt | 1,050 | 0 |
Securities Purchase Agreement Two [Member] | ||
Net Long Term Debt | 1,050 | 0 |
Securities Purchase Agreement One [Member] | ||
Net Long Term Debt | 1,000 | 1,000 |
Promissory Note Five [Member] | ||
Net Long Term Debt | 1,000 | 1,000 |
Promissory Note [Member] | ||
Net Long Term Debt | 6,500 | 6,500 |
Promissory Note One [Member] | ||
Net Long Term Debt | 1,600 | 1,600 |
Promissory Note Two [Member] | ||
Net Long Term Debt | 0 | 2,800 |
Promissory Note Three [Member] | ||
Net Long Term Debt | $ 0 | $ 725 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Jan. 07, 2021 | Jan. 25, 2021 | Jan. 22, 2021 | Mar. 31, 2021 |
Shares issued upon conversion of debt and accrued interest, shares | 20,391,774 | |||
Securities Purchase Agreement [Member] | Accredited investor [Member] | ||||
Issuance of warrants to purchase | 5,000,000 | |||
Exercise price | $ 0.01 | |||
Debt instrument, maturity date description | The amendments, among other things, (1) extended the maturity date of the June 2019 Note from January 26, 2021 to December 31, 2021 and (2) extended the maturity date of the October 2019 Note from April 21, 2021 to December 31, 2021 | |||
Senior convertible promissory notes, principal amount | $ 3,500,000 | |||
Conversion price of note | $ 0.175 | |||
Description of debt conversion | If the Company elects to prepay the Notes, the Company must pay the respective Purchasers an amount in cash equal to the product of (i) the sum of the then-outstanding principal amount of the Notes and all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the prepayment date is within 90 days of the original issue date, (y) 115%, if the prepayment date is between 91 days and 180 days following the original issue date or (z) 125%, if the prepayment date is after the 180th day following the original issue date.The Company can demand that the Purchasers convert the Notes at any time, on five calendar days’ notice, that (i) the daily dollar volume-weighted average price for the Company’s common stock for the prior five consecutive trading days is $0.30 or more. | |||
Default interest rate | 18.00% | |||
Percentage of change in cash flow | 10.00% | |||
Securities Purchase Agreement [Member] | A Warrant [Member] | ||||
Issuance of warrants to purchase | 15,000,000 | |||
Exercise price | $ 0.01 | |||
Securities Purchase Agreement [Member] | B Warrants [Member] | ||||
Issuance of warrants to purchase | 15,000,000 | |||
Exercise price | $ 0.2284 | |||
Loan Agreement [Member] | Elizon [Member] | 620 Dyer [Member] | ||||
Description of extension fee | Extension fee equal to 1% of the outstanding principal balance of the Loan Agreement | |||
Maturity date | Jul. 18, 2021 | |||
Stock Purchase Agreement [Member] | Michael A. Nahass [Member] | Series A Preferred Stock [Member] | ||||
Maturity date | Jul. 25, 2021 | |||
Aggregate purchase price of shares issued, amount | $ 3,100,000 | |||
Unsecured promissory note, other | $ 1,050,000 | |||
Rate of interest on promissory note, other, percentage | 3.00% | |||
Unsecured promissory note, other, maturity date | Jan. 25, 2022 | |||
Cash paid upon shares purchase, amount | $ 1,000,000 | |||
Unsecured promissory note | $ 1,050,000 | |||
Rate of interest on promissory note, percentage | 3.00% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | |
Investment | $ 330,000 | $ 330,000 | |
Edible Garden Corp [Member] | |||
Estimated fair value of the options | 330,000 | ||
Consideration received under agreement, description | 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 | ||
Payment of secured promissory note | $ 3,000,000 | ||
Hydrofarm [Member] | |||
Payment of secured promissory note | $ 3,000,000 | ||
Warrants, value | $ 10,450,000 | ||
Shares, Outstanding | 593,261 | ||
Investment | $ 29,810,000 | ||
Stock price | $ 60.32 | ||
Warrant purchase | 296,630 | ||
Exercise price | $ 16.86 |
LEASES (Details)
LEASES (Details) $ in Thousands | Mar. 31, 2021USD ($) |
LEASES | |
Operating lease ROU assets | $ 7,942 |
Operating lease liabilities | $ 8,883 |
LEASES (Details 1)
LEASES (Details 1) $ in Thousands | Mar. 31, 2021USD ($) |
LEASES | |
2021 | $ 1,255 |
2022 | 2,506 |
2023 | 1,801 |
2024 | 1,562 |
2025 | 1,470 |
Thereafter | 5,015 |
Total lease payments | 13,609 |
Less: Discount | (4,776) |
Total operating lease liabilities | $ 8,833 |
LEASES (Details 2)
LEASES (Details 2) | 3 Months Ended |
Mar. 31, 2021 | |
LEASES | |
Weighted average remaining lease term (years) | 8 years 2 months 12 days |
Weighted average discount rate | 11.60% |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
LEASES | ||
Short term lease liabilities | $ 1,140,000 | $ 810,000 |
Total operating lease costs | $ 200,000 | $ 230,000 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 1 Months Ended | ||
Jan. 22, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Cancellation of shares | 16,485,714 | ||
Warrants purchase | 4,945,055 | ||
Expiry date | Jun. 30, 2026 | ||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, Authorized | 990,000,000 | 990,000,000 | |
Common stock, shares issued | 235,491,198 | 196,512,867 | |
Common stock, shares outstanding | 233,182,790 | 194,204,459 | |
Resignation and Release Agreement [Member] | Series A Preferred Stock Member [Member] | Mr. Nahass [Member] | |||
Cash | $ 1,000,000 | ||
Promissory note | 2,100,000 | ||
Aggregate purchase price | 3,100,000 | ||
Resignation and Release Agreement [Member] | Derek Peterson [Member] | |||
Private placement, amonut | $ 3,500,000 | ||
Common Stock [Member] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, Authorized | 990,000,000 | 990,000,000 | |
Common stock, shares issued | 194,200,000 | 194,200,000 | |
Common stock, shares outstanding | 194,200,000 | 194,200,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | Mar. 31, 2021shares |
2016 Equity incentive plan [Member] | |
Awards Reserved for Issuance | 2,000,000 |
Awards outstanding | 499,953 |
Awards Available for Grant | 1,500,047 |
2018 Equity incentive plan [Member] | |
Awards Reserved for Issuance | 43,976,425 |
Awards outstanding | 11,110,927 |
Awards Available for Grant | 32,865,498 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) - Stock Options [Member] | 3 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Number of Options | |
Options/Warrants outstanding - beginning balance | shares | 17,492,830 |
Options granted | shares | 500,000 |
Options exercised | shares | (1,483,334) |
Options forfeited | shares | (4,571,510) |
Options expired | shares | |
Options/Warrants outstanding - ending balance | shares | 11,937,986 |
Options exercisable | shares | 7,346,443 |
Weighted average exercise price | |
Weighted-Average Exercise Price Per Share, beginning balance | $ / shares | $ 0.41 |
Weighted-Average Exercise Price Per Share, Options granted | $ / shares | 0.26 |
Weighted-Average Exercise Price Per Share, Options exercised | $ / shares | 0.07 |
Weighted-Average Exercise Price Per Share, Options forfeited | $ / shares | 0.19 |
Weighted-Average Exercise Price Per Share, Options expired | $ / shares | 0 |
Weighted-Average Exercise Price Per Share, ending balance | $ / shares | 0.53 |
Weighted-Average Exercise Price Per Share, Options exercisable | $ / shares | $ 0.75 |
Weighted average remaining contracted term | |
Weighted-Average Remaining Contractual Life, ending balance | 8 years 4 months 24 days |
Weighted-Average Remaining Contractual Life, Exercisable | 7 years 10 months 24 days |
Aggregate intrinsic value | |
Aggregate Intrinsic Value of In-the-Money Options, ending balance | $ | $ 2,108 |
Aggregate Intrinsic Value of In-the-Money Options, Exercisable | $ | $ 883 |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock-Based Compensation Expense | $ 398 | $ 960 |
Stock Options [Member] | ||
Stock-Based Compensation Expense | $ 244 | $ 944 |
Number of Shares or Options Granted | 500,000 | |
Employees (Common Stock) [Member] | ||
Stock-Based Compensation Expense | $ 0 | $ 0 |
Number of Shares or Options Granted | 2,353,115 | |
Directors (Common Stock) [Member] | ||
Stock-Based Compensation Expense | $ 121 | $ 0 |
Number of Shares or Options Granted | 541,666 | |
Non-Employee Consultants (Common Stock) [Member] | ||
Stock-Based Compensation Expense | $ 33 | $ 16 |
Number of Shares or Options Granted | 332,947 | 825,000 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended |
Feb. 14, 2020 | Mar. 31, 2021 | |
STOCK-BASED COMPENSATION | ||
Common shares issued under equity incentive plan | 43,976,425 | |
Unrecognized stock-based compensation | $ 690,000 | |
Weighted-average period | 1 year 11 months 9 days |
WARRANTS (Details)
WARRANTS (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Options/Warrants outstanding - beginning balance | shares | 1,076,555 |
Warrants Granted | shares | 39,945,055 |
Options/Warrants outstanding - ending balance | shares | 41,021,610 |
Weighted-Average Exercise Price, Outstanding, beginning balance | $ / shares | $ 1.99 |
Weighted-Average Exercise Price, Granted | $ / shares | 0.09 |
Weighted-Average Exercise Price, Outstanding, ending balance | $ / shares | $ 0.14 |
WARRANTS (Details 1)
WARRANTS (Details 1) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2021 | |
Expected term (years) | 2 years 6 months |
Volatility | 115.20% |
Risk-free interest rate | 0.09% |
Dividend yield | 0.00% |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | $ 5,112 | $ 4,047 |
Gross profit | 2,432 | 2,324 |
Selling, general and administrative expenses | 14,138 | 8,541 |
Income (Loss) from operations | (11,710) | (12,139) |
Interest expense, net | $ (400) | $ (902) |
Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted | $ (0.05) | $ (0.11) |
Discontinued Operations [Member] | ||
Revenue | $ 0 | $ 2,576 |
Cost of goods sold | 0 | 2,039 |
Gross profit | 0 | 537 |
Selling, general and administrative expenses | 0 | 2,594 |
Loss on sale of assets | 0 | 3,188 |
Income (Loss) from operations | 0 | (5,245) |
Interest expense, net | 0 | 0 |
Other income (loss) | 14 | 11 |
Income (Loss) from discontinued operations | $ 14 | $ (5,235) |
Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted | $ 0 | $ (0.03) |
DISCONTINUED OPERATIONS (Deta_2
DISCONTINUED OPERATIONS (Details 1) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Property, equipment and leasehold improvements, net | $ 31,641 | $ 32,480 |
Goodwill | 6,171 | 6,171 |
Other assets | 12,844 | 13,040 |
Accounts payable and accrued expenses | 9,869 | 8,621 |
Long-term lease liabilities | 7,592 | 8,082 |
Discontinued Operations [Member] | ||
Prepaid expenses and other assets | 1 | 2 |
Property, equipment and leasehold improvements, net | 2,766 | 2,766 |
Intangible assets, net | 0 | 0 |
Goodwill | 0 | 0 |
Other assets | 161 | 186 |
Assets of discontinued operations | 2,928 | 2,954 |
Accounts payable and accrued expenses | 999 | 985 |
Deferred gain on sale of assets | 8,783 | 8,783 |
Long-term lease liabilities | 0 | 28 |
Liabilities of discontinued operations | $ 9,782 | $ 9,796 |
DISCONTINUED OPERATIONS (Deta_3
DISCONTINUED OPERATIONS (Details Narrative) - Asset Purchase Agreement [Member] - MediFarm I LLC [Member] - USD ($) | Apr. 15, 2020 | Aug. 19, 2019 | May 08, 2019 |
Sale of business, consideration receivable from the purchaser | $ 5,250,000 | $ 13,500,000 | $ 10,000,000 |
Sale of business, consideration receivable in cash from the purchaser | 2,500,000 | 9,300,000 | 7,200,000 |
Sale of business, consideration receivable in promissory note from the purchaser | $ 2,750,000 | $ 4,200,000 | $ 2,800,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Feb. 03, 2021 | Feb. 01, 2021 | Jan. 11, 2021 | Jan. 22, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Secured Promissory notes | $ 16,262,000 | $ 14,687,000 | |||||
Debt forgiveness upon conversion | (86,000) | $ 0 | |||||
Mr. Ritter [Member] | |||||||
Warrants issued | 500,000 | ||||||
Mr. Gladstone [Member] | |||||||
Stock-based compensation expense | 110,000 | ||||||
Common shares issued | 500,000 | ||||||
Resignation and Release Agreement [Member] | Mr. Peterson [Member] | |||||||
Exercise price | $ 0.01 | ||||||
Severance expense | 5,900,000 | ||||||
Proceeds from the Private Placement | $ 3,500,000 | ||||||
Conversion of preferred into common stock | 16,485,714 | ||||||
Warrants issued | 4,945,055 | ||||||
Amended and Restated Independent Director Agreement [Member] | Mr. Kovacevich [Member] | |||||||
Restricted shares issued | 500,000 | ||||||
Stock Purchase Agreement [Member] | Mr. Nahass [Member] | |||||||
Severance expense | 3,100,000 | ||||||
Preferred Stock purchase price | $ 3,100,000 | ||||||
Cash paid | 1,000,000 | ||||||
Promissory notes issued | $ 2,100,000 | ||||||
Short-term debt | 2,100,000 | ||||||
Securities Purchase Agreement [Member] | Matthew Lee Morgan [Member] | |||||||
Secured Promissory notes | $ 500,000 | ||||||
Promissory note converted into common stock | 1,428,571 | ||||||
Fair value of common stock | $ 410,000 | ||||||
Debt forgiveness upon conversion | $ 90,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Separation Agreement [Member] - Mr. Ross [Member] - USD ($) | Apr. 06, 2021 | Apr. 30, 2021 | Dec. 31, 2021 | Aug. 16, 2021 |
Amount payable in consideration under agreement | $ 90,000 | $ 80,000 | $ 80,000 | |
Freely-trading shares value of the Common Stock issuable in consideration | 409,716 | 50,000 | ||
Stock option first installement shares | 34,722 |