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| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨ TRANSITION REPORT PURSUANT TO SECTION 13 2021
For the Transition Period from ____________ to ____________
Commission File Number 000-54258
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
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$65,823,407.
TERRA TECH CORP.
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basis. Effective July 7, 2021 the Company changed its corporate name from “Terra Tech Corp.” to “Unrivaled Brands, Inc.” in connection with the Company’s acquisition of UMBRLA, Inc (“UMBRLA”). https://www.sec.gov. our company. treatment. 1 . Alaska 12 . Maine 23 . New York 2 . Arizona 13 . Maryland 24 . North Dakota 3 . Arkansas 14 . Massachusetts 25 . Ohio 4 . California 15 . Michigan 26 . Oklahoma 5 . Colorado 16 . Minnesota 27 . Oregon 6 . Connecticut 17 . Missouri 28 . Pennsylvania 7 . Delaware 18 . Montana 29 . Rhode Island 8 . Florida 19 . Nevada 30 . Utah 9 . Hawaii 20 . New Hampshire 31 . Vermont 10 . Illinois 21 . New Jersey 32 . Washington 11 . Louisiana 22 . New Mexico 33 . West Virginia Gallery/Blü Portland, Oregon. (in thousands) Total Revenue % of Total Revenue Year Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Real Estate % % Corporate and Other Total non-store front delivery Distribution- flow lines. strategy. operations. businesses. contaminated. dispensaries. In August 2020, California prohibited the sale of most flavored tobacco products, including menthol cigarettes. Purpose Location Own or Lease Base Monthly Rent Lease Begin Date Lease End Date Corporate Headquarters Irvine, CA Lease 05/01/2019 04/30/2024 Office (Edible Garden) Jesery City, NJ Lease 12/01/2017 12/31/2020 Land for Greenhouse (Edible Garden) Belvidere, NJ Lease 01/01/2015 12/31/2029 Cultivation Facility (Gary) Las Vegas, NV Lease 05/01/2014 04/30/2024 Cultivation Facility (1) Oakland, CA Lease 01/01/2017 12/31/2024 Cultivation Facility (1) Spanish Springs, NV Own Dispensary (Blüm Oakland)/Cultivation Facility Oakland, CA Lease 05/01/2016 03/31/2022 Dispensary (Blüm Desert Inn) Las Vegas, NV Lease 04/15/2014 05/31/2019 Dispensary (Blüm Decatur) Las Vegas, NV Lease 05/01/2014 04/30/2019 Dispensary (Blüm San Leandro) San Leandro, CA Lease 01/01/2017 12/31/2024 Dispensary (Blüm Reno) Reno, NV Lease 08/01/2019 07/31/2020 Dispensary (MediFarm So Cal) Santa Ana, CA Lease 10/01/2017 M to M Building (Carnegie) Santa Ana, CA Own Building (Dyer) Santa Ana, CA Own Building (4th Street) Las Vegas, NV Own $0.177. On February 14, 2020, the Board approved an amendment (the “Plan Amendment”) to the Company’s Amended and Restated 2018 Equity Incentive Plan (the “Plan”) to increase the number of shares available for issuance thereunder by 28.98 million shares of Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Range of Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity Compensation Plans Approved By Security Holders 0.576-5.035 Equity Compensation Plans Not Approved By Security Holders 2.02-3.75 Total 0.576-5.035 2020 civil unrest. 2020. The year over year margin decrease was due to the inclusion of the lower margin distribution operation into the portfolio in 2021. In 2020, the operation was exclusively retail. over the year ended December 31, 2020. Hydrofarm Holdings, a $29.04 million unrealized gain. 2021 saw an additional gain of $5.34 million when we sold the Hydrofarm Holdings investment, however that was offset by $5.98 million of extinguishment of debt costs. operating more stores, more distribution centers, and more cultivation sites in 2021 compared to 2020. Silverstreak acquisitions. common stock than 2020. 2021. Name Director or Officer Since Age Positions Derek Peterson 2012 46 Chairman of the Board and Chief Strategy Officer Matthew Morgan 2020 34 Chief Executive Officer and Director Alan Gladstone 2017 72 Director Michael James 2012 61 Chief Financial Officer Michael A. Nahass 2012 54 President, Chief Operating Officer, Secretary, Treasurer, and Director Steven J. Ross 2012 62 Director emerging ventures, across a spectrum of industries including life sciences, legal cannabis, education, travel, technology, and real estate. In his concurrent roles as Managing Director of Acquis Consulting Group since 2003 and Managing Director / Co-Founder of its affiliate company, Solidea Capital since 2006, he leverages his extensive management and operational consulting expertise to guide companies in areas such as corporate strategy, market positioning, growth and scale strategies, trajectory management, M&A, partnering frameworks, risk evaluation, and more. He serves in several advisory and Board of Director roles for public and private companies such as Kushco Holdings, Starton Therapeutics, Big Rentz,Tenant Tracker, B Great, and Trip Kicks, supporting the full lifecycle of needs from initial business building through expansion and growth strategies. our directors or executive officers. Agreement. or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. ir.unrivaledbrands.com/corporate-governance/governance-documents. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of the Code of Ethics by posting such information on our website. Information contained on our website is not part of this report. Non-Equity Stock Incentive Nonqualified All Other Name and Principal Awards Option Deferred Compensation Position Year Salary Bonus Awards Compensation Compensation Total Derek Peterson (1) Chief Executive Officer and 2019 $ Chairman of the Board 2018 $ $ $ Michael Nahass (2) 2019 $ Secretary,Treasurer and Director 2018 $ $ $ Michael James (4) 2019 $ 706,906 Chief Financial Officer 2018 $ $ $ $500 per month car allowance. next eleven quarters. Fees Earned Paid in Cash Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation All Other Compensation Total Name (1) ($) ($) (4) ($) ($) ($) ($) ($) Steven Ross (2) Alan Gladstone (3) 2021: Mr. Imbimbo Director Agreement. The Ross Separation Agreement contains mutual releases and other customary terms and conditions as more fully set forth therein. other customary terms and conditions as more fully set forth therein. AND RELATED STOCKHOLDER MATTERS On February 14, 2020, the Name and Address of Beneficial Owner Title of Class Amount and Nature of Beneficial Ownership Percent of Common Stock (1) Derek Peterson Common Stock (2) Matthew Morgan Common Stock (3) Michael A. Nahass Common Stock (4) Michael James Common Stock (5) * Steven Ross Common Stock (6) * Alan Gladstone Common Stock (7) * All Directors and Executive Officers as a Group (6 persons) Name of Beneficial Owner Title of Class Amount and Nature of Beneficial Ownership Percent of Series A Preferred Stock Derek Peterson Series A Preferred Stock Matthew Morgan Series A Preferred Stock Michael A. Nahass Series A Preferred Stock Michael James Series A Preferred Stock Steven Ross Series A Preferred Stock Alan Gladstone Series A Preferred Stock All Directors and Executive Officers as a Group (6 persons) which Mr. Baum is a member (“Acquis Fund”), (iv) 961,612 shares underlying exercisable warrants held by Mr. Baum’s spouse, and (v) 268,481 shares underlying exercisable warrants held by Acquis Fund. Mr. Baum disclaims beneficial ownership with respect to the shares held by Acquis Fund except to the extent of his pecuniary interest therein.. Mr. Imbimbo was a director of the Company. As such, the Acquisition is a related party transaction. On December 18, 2020, Terra Tech Corp entered into an Executive Employment Agreement with Mr. Knuettel, appointing Mr. Knuettel as the Company’s Interim Chief Executive Officer and President. Therefore Mr. Knuettel was no longer considered an independent director. Agreement. the Director Agreement. Year Ended December 31, 2019 2018 Audit Fees(1) 2020: 2021. LLP LLP December 31, December 31, 2019 2018 ASSETS Current assets: Cash Accounts receivable, net Inventory Prepaid expenses and other current assets Current assets of discontinued operations Total current assets Property, equipment and leasehold improvements, net Intangible assets, net Goodwill Other assets Other investments Assets of discontinued operations TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES: Current liabilities: Accounts payable and other accrued expenses Short-term debt Current liabilities of discontinued operations Total current liabilities Long-term liabilities: Long-term debt, net of discounts Long-term lease liabilities Total long-term liabilities Total liabilities STOCKHOLDERS’ EQUITY: Preferred stock, convertible series A, par value $0.001: 100 Shares authorized as of December 31, 2019 and 2018; 8 and 12 Shares issued and outstanding as of December 31, 2019 and 2018, respectively Preferred stock, convertible series B, par value $0.001: 41,000,000 Shares authorized as of December 31, 2019 and 2018; 0 and 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively Common stock, par value $0.001: 990,000,000 Shares authorized as of December 31, 2019 and 2018; 120,313,386 shares issued and 118,004,978 shares outstanding as of December 31, 2019; and 81,759,415 shares issued and outstanding as of December 31, 2018. 120 82 Additional paid-in capital Treasury stock Accumulated deficit Total Terra Tech Corp. stockholders’ equity Non-controlling interest Total stockholders’ equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY Year Ended December 31, 2019 2018 Total revenues Cost of goods sold Gross profit Selling, general and administrative expenses Impairment of assets (Gain) / Loss on sale of assets (Gain) / Loss on interest in joint venture Loss from operations Other income / (expense) Interest expense, net Other income / (loss) Total other income / (expense) Income / (loss) from continuing operations Income / (loss) from discontinued operations, net of tax NET INCOME / (LOSS) Less: Income / (Loss) attributable to non-controlling interest from continuing operations Less: Income / (Loss) attributable to non-controlling interest from discontinued operations NET LOSS ATTRIBUTABLE TO TERRA TECH CORP. Income / ( Loss) from continuing operations per common share attributable to Terra Tech Corp. common stockholders – basic and diluted Net Income / ( Loss) per common share attributable to Terra Tech Corp. common stockholders – basic and diluted Weighted-Average Number of Common Shares Outstanding – Basic and Diluted (1) 2020 Preferred Stock Convertible Additional Non- Series A Common Stock Paid-In Treasury Stock Accumulated Controlling Shares Amount Shares Amount Capital Shares Amount Deficit Interest Total Balance at December 31, 2017 Opening balance sheet adjustment - ASU 2017-11 Beneficial conversion feature - convertible notes Stock compensation - employees Stock compensation - directors Stock compensation - services expense Stock cancellation Reverse stock split TCD acquisition clawback Warrant exercise Debt conversion - common stock Stock issued for cash Stock issued for assets Stock option expense Issuance of warrants Issuance of stock for non-controlling interest Net income attributable to non-controlling interest Net loss attributable to Terra Tech Corp. Balance at December 31, 2018 Stock compensation - employees Stock compensation - directors Stock compensation - services expense Stock cancellation Debt conversion - common stock Stock issued for cash Stock option expense Issuance of warrants to Aegis Series A Common stock repurchase Consolidation of NuLeaf joint venture Contribution (distribution) from non-controlling interest Contribution (distribution) to non-controlling interest Net loss attributable to non-controlling interest Net loss attributable to Terra Tech Corp. Balance at December 31, 2019 Year Ended December 31, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) Less: Income from discontinued operations Net loss from continuing operations Adjustments to reconcile net loss to net cash used in operating activities: Bad debt expense Cancellation of shares issued Gain on sale of assets Non-cash interest expense Depreciation and amortization Non-cash operating lease expense Stock based compensation Loss on revaluation of equity interests Impairment loss Other Change in operating assets and liabilities: Accounts receivable Inventory Prepaid expenses and other current assets Other assets Accounts payable and accrued expenses Operating lease liabilities Net cash provided by / (used in) operating activities - continuing operations Net cash provided by / (used in) operating activities - discontinued operations NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Issuance of note receivable Purchase of property, equipment and leasehold improvements Purchase of equity investment Purchase of intangible assets Cash acquired from NuLeaf acquisition Proceeds from sales of assets Net cash provided by / (used in) investing activities - continuing operations Net cash provided by / (used in) investing activities - discontinued operations NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable Payments of debt principal Cash paid for debt discount Proceeds from issuance of common stock Proceeds from exercise of warrants Cash paid for acquisition of non-controlling interest Cash contribution (distribution) from non-controlling interest Purchase of treasury stock Net cash provided by / (used in) financing activities - continuing operations Net cash provided by / (used in) financing activities - discontinued operations NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES NET CHANGE IN CASH Cash at beginning of period CASH AT END OF PERIOD SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: Cash paid for interest SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES: Consolidation of NuLeaf net assets Financing fees in accounts payable Purchase of land and building with a mortgage Claw back of escrow shares Stock issued for assets Warrants issued for debt discount Deposits applied to the purchase of property Non-cash contribution from non-controlling interest Beneficial conversion feature recorded for Dominion debt Debt principal converted to common stock for additional information. 2020, respectively. operations. 3 to 5 Years Trademarks 2 to 8 Years Dispensary Licenses 14 non-collectability. The Company Year Ended December 31, 2019 2018 Common stock warrants Common stock options results. Non-Financial Instruments and Derivative Assets 2020. Therefore, the basic and diluted weighted-average shares of common stock outstanding were the same for all years presented. 2020. method. (in thousands) February 28, December 31, 2019 2019 Current assets: Cash Accounts receivable, net Inventory Prepaid expenses and other current assets Total current assets Property, equipment and leasehold improvements, net Other assets TOTAL ASSETS Liabilities: Total current liabilities Total long-term liabilities TOTAL LIABILITIES 2020. retail and distribution. (in thousands) December 31, December 31, 2019 Raw materials Work-in-progress Finished goods Inventory reserve Total inventory (in thousands) December 31, December 31, 2019 2018 Land and building Furniture and equipment Computer hardware Leasehold improvements Construction in progress Subtotal Less accumulated depreciation Property, equipment and leasehold improvements, net Total Consideration Inventory Prepaid Expenses Property & Equipment Total Asset Book Value Transaction Costs Gain on Sale respectively. Goodwill Balance at December 31,2017 Measurement Period Adjustment Balance at December 31, 2018 Impairment Balance of December 31, 2019 Gallery's operations, as well as declines in our forecasted revenue and earnings. (in Thousands) December 31, 2019 December 31, 2018 Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Amortization Accumulated Net Carrying Value Amortizing Intangible Assets: Customer Relationships 3 to 5 Trademarks and Patent 2 to 8 Dispensary Licenses 14 ) Management Service Agreement 15 Total Amortizing Intangible Assets Non-Amortizing Intangible Assets: Trade Name Indefinite Total Non-Amortizing Intangible Assets Total Intangible Assets, Net recognized. (in thousands) Year Ending December 31, 2021 2022 2023 2024and thereafter Total Amortization expense (in thousands) December 31, 2019 December 31, 2018 Accounts Payable Sales & Local Tax Payable Accrued Payroll Accrued Expenses Total Accounts Payable and Accrued Expenses December 31, December 31, 2019 Promissory note dated November 22, 2017, issued for the purchase of real property. Matures December 1, 2020, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5%. In the event of default, the note is convertible at the holder's option. Promissory note dated January 18, 2018, issued for the purchase of real property. The promissory note is collateralized by the land and building purchased and matures February 1, 2021, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.0%. The full principle balance and accrued interest are due at maturity. In the event of default, the note is convertible at the holder's option. Senior convertible promissory note dated July 25, 2018, issued to accredited investors under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement, which matures January 25, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment. Senior convertible promissory note dated September 6, 2018, issued to accredited investors under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement, which matures March 7, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment. 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. Securities Purchase Agreement dated December 3, 2018, issued to accredited investors, which matures June 3, 2020 and bears interest at a rate of 3.0% per annum. The conversion price is 5.0% discount to the average of the three (3) lowest VWAPs in the five (5) trading days prior to the conversion date. Securities Purchase Agreement dated June 11, 2019, issued to accredited investors, which matures December 11, 2020 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date. Securities Purchase Agreement dated October 21, 2019, issued to accredited investors, which matures April 21, 2021 and bears interest at a rate of 7.5% per annum. The conversion price is $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date. Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matures December 30, 2020, and bears interest at a rate of 10% per annum. The note is secured by the Company's HydroFarm investment. Notes payable - promissory notes Vehicle loans Less: Short term debt Less: Debt discount Net Long Term Debt (in thousands) Year Ending December 31, 2021 2022 2023 2024 and thereafter Total Total Debt were paid upon sale of the real estate during 2021. 2021. (in thousands) Twelve Months Ended December 31, 2019 Operating lease ROU assets Operating lease liabilities 2021: (in thousands) Operating Leases 2020 2021 2022 2023 2024 Thereafter Total lease payments Less: discount Total operating lease liabilities 2021: Weighted average remaining lease term (years) Weighted average discount rate Year Ended December 31, 2019 2018 Deferred income tax assets: Options expense Depreciation Allowance for Doubtful Accounts Net operating Losses Deferred income tax liabilities: Depreciation Total Valuation allowance Net deferred tax assets (liabilities) Year Ended December 31, 2019 2018 Expected Income Tax Benefit at Stautory Tax Rate, Net Amortization IRC 280E Adjustment Impairment of Assets Impairment of Intangibles Derivatives Expense Other Non-Deductible Items Change In Valuation Allowance Reported income tax expense (benefit) limitations. increased. and eliminates the Company’s Series B Preferred Stock from the Company’s Articles of Incorporation. Awards Reserved for Issuance Awards Issued Awards Available for Grant 2016 Equity Incentive Plan 2018 Equity Incentive Plan 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, 2018 Options Granted Options Exercised Options Forfeited Options Expired Options Outstanding as of December 31, 2018 Options Granted Options Exercised Options Forfeited Options Expired Options Outstanding as of December 31, 2019 8.9 years Options Exercisable as of December 31, 2019 8.6 years 2020: Year Ended December 31, 2019 2018 6 Years 6 Years 115.3-117.5 % 113.2-128.0 % 1.85-2.5 % 2.5-2.9 % (in thousands, except for number of shares or options) For the Year Ended December 31, 2019 December 31, 2018 Type of Award Number of Shares or Options Granted Stock-Based Compensation Expense Number of Shares or Options Granted Stock-Based Compensation Expense Stock Options Stock Grants: Employees (Common Stock) Directors (Common Stock) Non–Employee Consultants (Common Stock) Total Stock–Based Compensation Expense Shares Weighted-Average Exercise Price Warrants Exercised Warrants Granted Warrants Expired Warrants Exercised Warrants Granted Warrants Expired 2020: For the Year Ended December 31, 2019 December 31, 2018 Weighted-Average Exercise Price Weighted-Average Fair Value Weighted-Average Exercise Price Weighted-Average Fair Value Warrants Granted Whose Exercise Price Exceeded Fair Value at the Date of Grant Warrants Granted Whose Exercise Price Was Equal or Lower Than Fair Value at the Date of Grant Year Ended December 31, 2019 2018 Stock Price on Date of Grant Exercise Price Volatility Term 5 -Years 5 -Years Risk-Free Interest Rate Expected Dividend Rate gain in income from discontinued operations. The transaction closed upon receiving all required government approvals during the year ended December 31, 2021. The Company recognized a gain of $2.37 million upon sale of the assets, equal to the difference between the consideration paid and the book value of the assets as of the disposition date, less direct costs to sell, and reflected such gain in income from discontinued operations. Operating results for the discontinued operations were comprised of the following: (in thousands) Year endedDecember 31, 2019 2018 Total revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income (Loss) from operations Other income (expense) Income (Loss) from discontinued operations Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted (in thousands) December 31, 2019 December 31, 2018 Accounts receivable, net Inventory Prepaid expenses and other assets Property, equipment and leasehold improvements, net Other assets Assets of discontinued operations Accounts payable and accrued expenses Deferred gain on sale of assets Liabilities of discontinued operations (in thousands) Total Revenue % of Total Revenue Year Ended Decemeber 31, Year Ended December 31, 2019 2018 2019 2018 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Real Estate Corporate and Other Total Retail (in thousands) For the Year Ended December 31, 2019 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Real Estate Eliminations and Other Total Total revenues Cost of goods sold Gross profit Depreciation & amortization Stock-based compensation Selling, general and administrative expenses (all other) Loss from operations Other income / (expense): Interest income/(expense) Other income / (loss) Total Other Income (Expense) Loss Before Provision for Income Taxes Total Assets at December 31, 2019 For the Year Ended December 31, 2018 Herbs and Produce Cannabis Dispensary, Cultivation and Production Real Estate Eliminations and Other Total Total Revenues Cost of Goods Sold Gross Profit Depreciation & amortization Stock-based compensation Selling, General and Administrative Expenses Loss from Operations Other income / (expense): Interest income/(expense) Other income / (loss) Total Other Income (Expense) Loss Before Provision for Income Taxes Total Assets at December 31, 2018 CEO of Greenlane Holdings, Inc. Ms. Davis (the “Davis Consulting Agreement”) pursuant to which she will provide certain services to the Company through a future agreed upon date. The Company intends to disclose the material terms of the Davis Consulting Agreement, as required by yet to be agreed upon exercise price. Date: By: /s/ Chief Executive Officer and Director By: /s/ Chairman of the Board Date: By: /s/ Tiffany Davis Date: By: /s/ Date: By: /s/ Chief Financial OfficerUnless the context indicatessuggests otherwise, references“our” are intended to “we,” “our,” “us,” the “Company,” or “Terra Tech” refer to Terra Tech Corp.mean Unrivaled Brands, Inc., a Nevada corporation, individually, or as the context requires, collectively with its subsidiaries on a consolidated subsidiaries.Terra Tech·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”);·Edible Garden Corp., a Nevada corporation (“Edible Garden”);·EG Transportation, LLC, a Nevada limited liability company (“EG Transportation”);·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 I Real Estate, LLC, a Nevada limited liability company (“MediFarm I RE”);·MediFarm II, LLC, a Nevada limited liability company (“MediFarm II”); and·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")2040 Main3242 S. Halladay Street, Suite 225, Irvine,202, Santa Ana, California 9261492705 and our telephone number is (855) 447-6967.(888) 909-5564. Our website addresses are as follows: www.terratechcorp.com,www.unrivaledbrands.com, www.letsblum.com, www.ivxx.com, and www.ediblegarden.com.www.thespotforyou.com. No information available on or through our websites shall be deemed to be incorporated into this Annual Report on Form 10-K. Our common stock, par value $0.001 (the “Common Stock”), is quoted on the OTC Markets Group, Inc.’s OTCQX tier under the symbol “TRTC."UNRV.”4Table of ContentsRecent DevelopmentsOn March 12, 2018, we implemented a 1-for-15 reverse stock split of our common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in the stock market upon commencement of trading Our Annual Reports on March 13, 2018. As a resultForm 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Reverse Stock Split, every fifteen sharesSecurities Exchange Act of our Pre-Reverse Stock Split common stock were combined and reclassified into one share of our common stock. No fractional shares were issued in connection with1934, as amended (the “Exchange Act”) may be accessed through the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of our common stock were not affected by the Reverse Stock Split.Currently, we are exploring strategic alternatives for certain operational and non-operational assets in both Nevada and California. We are confident we can get a better return on our invested capital by redeploying assets. We’re working with financial advisors to identify locations or permits that can generate non-dilutive capital that can be reinvested in strategic locations to produce greater returns. We have identified multiple opportunities that appear to be a more accretive use of capital. There are numerous risks and uncertainties associated with our exploration of strategic alternatives and there can be no assurance that these efforts will be successful. See Note 17 – “Discontinued Operations”for information regarding recent and pending asset sales which are expected to generate capital.On May 8, 2019, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. entered into an asset purchase agreement with Picksy, LLC 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 locatedSEC’s Interactive Data Electronic Applications system at 1130 East Desert Inn Road, Las Vegas, NV 89109. The transaction is pending.On August 19, 2019, MediFarm I LLC, a wholly-owned subsidiary of Terra Tech Corp. entered into an asset purchase agreement with Picksy Reno, LLC 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 transaction is pending.These two transactions are pending, due to the fact that they are subject to approval by the Nevada Department of Taxation and are expected to close promptly following receipt of such approval. The transactions’ approvals are currently being delayed as the State of Nevada reviews its regulatory and enforcement measures.surroundingregarding the timingfuture of the close of these two transactions, our limited capital resources, and the weak industry conditions impacting our business raisedue to the impact of COVID-19 and regulatory uncertainty, combined with our historical lack of profitability, have raised substantial doubt as to our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate our continuationassuming that we will continue as a going concern. For additional information, see Note 21 – “Going Concern”of the Notes to Consolidated Financial Statements included in Part II and Item 1A – “Risk Factors”in Part I of this Annual Report on Form 10-K.We arecompany,operations, with an emphasis on providing the highest quality of medical and adult use cannabis products. We grow organic antioxidant rich Superleaf lettuceFrom the acquisition of UMBRLA, the Company has established multiple cannabis-lifestyle brands. The Company is home to Korova, a brand of high potency products across multiple product categories, currently available in California, Oregon, Arizona, and living herbs using classic Dutch hydroponic farming methods. We have licensed an exclusive patent on the Superleaf lettuce.5Table of ContentsWe haveOklahoma. Other Company brands include Cabana, a presence in three states (California, Nevadaboutique cannabis flower brand, and New Jersey) and currently haveSticks, a concentratedmainstream value-driven cannabis interestbrand, available in California and Nevada. AllOregon. With the acquisition of our cannabis dispensaries operate underPeople’s First Choice and the name Blüm. Oursubsequent opening of People's Downtown LA store, the Company operates five cannabis dispensaries in California operate as MediFarm SoCalCalifornia. In addition to People's First Choice, and People's Downtown LA, the Company also operates The Spot in Santa Ana, Black Oak GalleryBlüm in Oakland and Blum San LeandroSilverstreak in San LeandroLeandro. The company operates two cultivation facilities in California. The Company also operates a non-storefront delivery service in Sacramento under the Silverstreak name. In addition, the Company has licensed distribution facilities in Portland, Oregon, Los Angeles, California, and offerSonoma County, California.broad selectionsubstantial public health and economic challenge around the world and is affecting employers, employees, communities and business operations, as well as the world’s economy and financialadult-use cannabis productsfinancial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including flowers, concentratesnew information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and edibles.In Nevada,the economic impact on local, regional, national and international markets.three dispensaries, two under MediFarmbeen able to continue our operations and do not anticipate any material interruptions in Las Vegasthe foreseeable future. However, we are continuing to assess the potential impact of the COVID-19 pandemic and one under MediFarm I in Reno, which sell quality medicalits impact on our industry and adult use cannabis products.Founded on the importance of providing consumers with healthy and natural products, Edible Garden is a wholesale seller of organic and locally grown hydroponic produce and herb products. EG Transportation supports the distribution of Edible Garden products to major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, and others throughout New Jersey, New York, Delaware, Maine, Maryland, Connecticut, Pennsylvania and the Midwest.2019,2021, there are a total of 3339 states, plus the District of Columbia, withthat have passed legislation passed as it relates to medicinal cannabis. Of these states, 1119 (including the District of Columbia) have decriminalized adult use cannabis legislation.use. These state laws are in direct conflict with the United States Federal Controlled Substances Act (21 U.S.C. § 811) (“CSA”), which places controlled substances, including. The CSA classifies cannabis in a schedule. Cannabis is classified as a Schedule I drug,controlled substance, which is viewed as having a high potential for abuse and has no currently-accepted use for medical treatment in the U.S., and lacks acceptable safety for use under medical supervision.3339 states, and the District of Columbia, have adopted laws that exemptallow certain patients who use medicinal cannabis and/or cannabis-derived products under a physician’s supervision from state criminal penalties. These are collectively referred to as the states that have de-criminalized medicinal cannabis, although there is a subtle difference between de-criminalization and legalization, and each state’s laws are different.The states that have legalized medicinal cannabis are as follows (in alphabetical order):6Table of ContentsMedical cannabisThe dichotomy between federal and state laws has limited the access to banking and other financial services by marijuana businesses. The U.S. Department of Justice and the U.S. Department of Treasury have issued guidance for banks considering conducting business with marijuana dispensaries in states where those businesses are legal, pursuant to which banks must file a Marijuana Limited Suspicious Activity Report that states the marijuana business is following the government’s guidelines with regard to revenue that is generated exclusively from legal sales. However, as banks can still face prosecution if they provide financial services to marijuana businesses, there is widespread refusal of the banking industry to offer banking services to marijuana businesses operating within state and local laws.In November 2016, California and Nevada voters both approved marijuana use for adults over the age of 21 without a physician’s prescription or recommendation, and permitted the cultivation and sale of marijuana, in each case subject to certain limitations. We have obtained the necessary permits and licenses to expand our existing business to cultivate and distribute marijuana in compliance with the laws in the State of Nevada and California. Despite the changes in state laws, marijuana remains illegal under federal law.In November 2016, California voters approved Proposition 64, which is also known as the Adult Use of Marijuana Act (“the AUMA”), in a ballot initiative. Among other things, the AUMA makes it legal for adults over the age of 21 to use marijuana and to possess up to 28.5 grams of marijuana flowers and 8 grams of marijuana concentrates. Individuals are also permitted to grow up to six marijuana plants for personal use. In addition, the AUMA establishes a licensing system for businesses to, among other things, cultivate, process and distribute marijuana products under certain conditions. On January 1, 2018, the California Bureau of Marijuana Control enacted regulations to implement the AUMA.Nevada voters approved Question 2 in a ballot initiative in November 2016. Among other things, Question 2 makes it legal for adults over the age of 21 to use marijuana and to possess up to one ounce of marijuana flowers and one-eighth of an ounce of marijuana concentrates. Individuals are also permitted to grow up to six marijuana plants for personal use. In addition, Question 2 authorizes businesses to cultivate, process and distribute marijuana products under certain conditions. On June 30, 2017, the State of Nevada Department of Taxation approved our Dual-Use Marijuana business licenses. This approval allowed all of our Blüm cannabis dispensaries in Nevada to commence sales of cannabis for adult-use beginning on July 1, 2017.The U.S. Department of Justice (the “DOJ”) has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for use on private property but has relied on state and local law enforcement to address marijuana activity. In the event the DOJ reverses its stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to our business and our revenue and profits.We are monitoring the Trump administration’s, the DOJ’s and Congress’ positions on federal marijuana law and policy. Since the start of the new Congress in January 2019, there have been positive discussions about the Federal Government’s approach to cannabis. The DOJ has not signaled any change in their enforcement efforts. Based on public statements and reports, we understand that certain aspects of those laws and policies are currently under review, but no official changes have been announced. It is possible that certain changes to existing laws or policies could have a negative effect on our business and results of operations.NevadaCalifornia, Oregon and California laws and regulations. Any changes in federal, state or local law enforcement regarding marijuana may affect our ability to operate our business. Strict enforcement of federal law regarding marijuana would likely result in the inability to proceed with our business plans, could expose us to potential criminal liability and could subject our properties to civil forfeiture. Any changes in banking, insurance or other business services may also affect our ability to operate our business.7Table of Contents1. Alabama 14. Louisiana 27. New York 2. Alaska 15. Maine 28. North Dakota 3. Arizona 16. Maryland 29. Ohio 4. Arkansas 17. Massachusetts 30. Oklahoma 5. California 18. Michigan 31. Oregon 6. Colorado 19. Minnesota 32. Pennsylvania 7. Connecticut 20. Mississippi 33. Rhode Island 8. Delaware 21. Missouri 34. South Dakota 9. Florida 22. Montana 35. Utah 10. Georgia 23. Nevada 36. Vermont 11. Hawaii 24. New Hampshire 37. Virginia 12. Illinois 25. New Jersey 38. Washington 13 Iowa 26 New Mexico 39. West Virginia Medical Marijuana Dispensaries, Cultivation and ManufacturingGallery“edibles”,edibles, which include cannabis-infused baked goods, chocolates, and candies; cannabis-infused topical products, such as lotions, massage oils and balms; clones of marijuana plants; and numerous kinds of cannabis concentrates, such as hash, shatter and wax.Black Oak’s target markets are those individuals located in the areas surrounding its dispensary. Black Oak services approximately 500 consumers per day. Collectively known as the Blüm Campus, Black Oak’s location consists of a retail dispensary storefront, indoor cultivation area, a distribution area and a 20-car capacity parking lot.During January 2017, we executed a lease for 13,000 square feet of industrial space on over 30,000 square feet of land in Oakland’s industrial corridor with the intention of building a cultivation facility. The Hegenberger facility is expected to be completed in the 2nd Quarter of 2020 and we will begin cultivating marijuana once all required operating permits are approved.Blüm2016.2016, which operates a medical and adult use marijuana dispensary and delivery service in San Leandro, California under the name Silverstreak. Blüm San Leandro has received the necessary governmental approvals and permitting to operate a medical and adult use marijuana dispensary and productionas well as a distribution facility in San Leandro, California. The San Leandro dispensary opened on January 11, 2019. The production facility is expected to be completedlate 2020.MediFarm SoCalWe incorporated MediFarm SoCal on August 17, 2017 to acquire all the assets of Tech Center Drive Management LLC. As a result of the acquisition, MediFarm SoCal now operates a medical and adult use marijuana dispensary under the name Blüm. MediFarm SoCal has the necessary governmental approvals and permitting toOakland’s industrial corridor where we operate a medical and adult use marijuanacannabis cultivation facility.California.MediFarm, MediFarm I,California and MediFarm IIWe formed three subsidiaries forowns the purposes of cultivation or production of medicalKorova, Cabana and adult use marijuana and/or operation ofSticks brands.facilities in various locations in Nevada. MediFarm, MediFarm I,Santa Ana, California. The Company also operates the People's Downtown Los Angeles dispensary, and MediFarm II received four final dispensary licenses, two provisional cultivation licenses and two provisional production licenses from the State of Nevada, and we have received approval from local authorities with respect to all eight of such licenses. The provisional cultivation and production licenses related to MediFarm were finalized August 31, 2018. The provisional cultivation and production licenses associated with MediFarm II were relinquished in June 2018. The receipt of both the provisional licenses from the State of Nevada and approval from local authorities were necessary to commence the final permitting process for the cultivation and production licenses. The receipt of final permits and licenses was necessary to commence the cultivation and production businesses of MediFarm, MediFarm I, and MediFarm II. Effectuation of the businesses of each of (i) MediFarm, (ii) MediFarm I, and (iii) MediFarm II is also dependent upon the continued legislative authorization of medical and adult use marijuana at the state level.8Table of ContentsWe formed MediFarm on March 19, 2014. Prior to August 2017, we owned 60.0% of the membership interests in MediFarm. The remaining membership interests were owned by Camden Goorjian (20.0%) and by Richard Vonfeldt (20.0%), two otherwise unaffiliated individuals. In August 2017, we acquired an additional 38% ownership in MediFarm for no additional consideration due to changes in the planned level of involvement of the two individuals in the operations of MediFarm. In December 2018, we issued 200,000 shares of common stock with a fair value of $0.20 millionhas entered into agreements to acquire and operate additional People's dispensaries in Riverside and Costa Mesa, California.remaining 2.0% interestCompany acquired Silverstreak Solutions Inc., a cannabis delivery service based in MediFarm. MediFarm has received the necessary governmental approvals and permitting to operate medical marijuana and adult use cultivation, production, and/or dispensary facilities in Clark County, Nevada andSacramento, California.medical and adult use marijuana dispensarydistribution facility in the City of Las Vegas. As of December 31, 2019, MediFarm has two fully operational retail medical and adult use marijuana dispensaries in the greater Las Vegas region.We formed MediFarm I on July 18, 2014. We owned 50.0% of the membership interests in MediFarm I. The remaining membership interests were owned by Forever Green NV, LLC (50.0%), an otherwise unaffiliated entity that also owns certain membership interests in MediFarm II. MediFarm I has the necessary governmental approvals and permitting to operate a medical and adult use marijuana dispensary in Reno, Nevada. As of December 31, 2019, MediFarm I has one fully operational retail medical and adult use marijuana dispensary in Reno, Nevada. On February 26, 2019, we purchased Forever Green’s 50% membership interest in MediFarm I as part of a larger deal that involved ownership interest in MediFarm I, MediFarm II, and Medifarm I Real Estate for an aggregate consideration of $6.25 million.We formed MediFarm II on July 30, 2014. We owned 55.0% of the membership interests in MediFarm II. The remaining membership interests were owned by Nevada MF, LLC (30.0%) [JB1] and by Forever Green NV, LLC (15.0%), two otherwise unaffiliated entities. Forever Green NV, LLC also owned certain membership interests in MediFarm I. On February 26, 2019, we purchased Forever Green’s 15% membership interest in MediFarm II as part of a larger deal that involved ownership interest in MediFarm I, MediFarm II, and Medifarm I Real Estate. See Note 19 – “ Litigation and Claims”.MediFarm, MediFarm I, and MediFarm II may face substantial competition in the operation of cultivation, production, and dispensary facilities in Nevada. Numerous other companies were also granted licenses, and, therefore, we anticipate that we will face competition with these other companies if such companies operate cultivation, production, and dispensary facilities in and around the locations at which we operate our facilities. Our management has extensive experience in successfully developing, implementing, and operating all facets of equivalent businesses in other markets. We believe this experience will provide MediFarm, MediFarm I, and MediFarm II with a competitive advantage over these other companies.MediFarm, MediFarm I, and MediFarm II rely on a combination of trademark laws, trade secrets, confidentiality provisions, and other contractual provisions to protect their proprietary rights. MediFarm, MediFarm I, and MediFarm II do not own any patents.IVXX and IVXX Branded ProductsOn September 16, 2014, Terra Tech formed IVXX for the purposes of producing a line of IVXX branded cannabis flowers as well as a complete line of IVXX branded pure cannabis concentrates including: oils, waxes, shatters, and clears.The science of cannabis concentrate extraction functions on the solubility of the cannabinoids and other active ingredients in the cannabis plant. Cannabinoids are not water soluble, so to extract them properly, the cannabinoids must be dissolved in a solvent. IVXX utilizes multiple proprietary extraction methods to produce its concentrates. The Company’s extractors process raw cannabis plants and separate the chemical cannabinoids from the cannabis plant material, producing a concentrate. IVXX also sells clothing, apparel, and other various branded products.IVXX produces, markets and sells their line of IVXX branded cannabis products both to adult use and recreational cannabis markets in California and Nevada pursuant to Proposition 64 and Question 2, respectively, which made marijuana consumption legal (January 1, 2018 for California and July 1, 2017 for Nevada), with certain restrictions and rules, for adults over the age of 21. 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 6.0% per annum. The Company received all required permits and licenses from the State of Nevada and local authorities in 2018. As a result, the notes receivable balance was converted into a 50.0% ownership interest in Nuleaf. See Note 4— “Variable Interest Entity Arrangements”.9Table of ContentsMediFarm I REOn October 14, 2015, we formed MediFarm I RE. We owned 50.0% of the membership interests in MediFarm I RE. The remaining membership interests were owned by Forever Young Investments, LLC (50.0%), an otherwise unaffiliated entity. On February 26, 2019, we purchased Forever Young’s 50% membership interest in MediFarm I as part of a larger deal that involved ownership interest in MediFarm I, MediFarm II, and MediFarm I RE. MediFarm I RE is a real estate holding company that owns the real property and a building that is situated on such real property, at which our MediFarm I marijuana dispensary facility is located and operates. See Note 19 – “ Litigation and Claims”.CarnegieOn October 31, 2017, we formed Carnegie, a wholly owned subsidiary. Carnegie is a real estate holding company that owns the real property and a building located in Santa Ana, California. The Carnegie real estate was listed for sale in the fourth quarter of 2018. See Note 17 – “Discontinued Operations”.DyerOn October 31, 2017, we formed Dyer, a wholly owned subsidiary. Dyer is a real estate holding company for the purpose of acquiring real property and a building located in Santa Ana, California, where the Company plans to open an additional cannabis operation in Santa Ana, California.Herbs and Produce ProductsEdible GardenEdible Garden was incorporated on April 9, 2013. Edible Garden is a retail seller of locally grown hydroponic produce and herb products that are distributed throughout the Northeast, Midwest and Western United States. Currently, Edible Garden’s products are sold at approximately 1,800 retailers throughout these markets. Most of the produce and herbs grown by Edible Garden are certified organic. Our target customers are those individuals seeking organic and fresh produce locally grown using environmentally sustainable methods.There are numerous growers that are available to us, and therefore, we are not limited in the number of growers available nor are we dependent on any one grower. We completed construction of a greenhouse structure in 2014, which can be used to grow plants to satisfy selling demands; however, we may incur additional freight costs to distribute these plants until growers are replaced.Edible Garden’s main competitors are Shenandoah Growers and Sun Aqua Farms. To a lesser extent, Edible Garden competes with Green Giant, Del Monte, Rock Hedge Herbs, and Infinite Herbs. Edible Garden is an up and coming brand that has increased its retailers to approximately 1,800 retail sellers since we acquired Edible Garden in April 2013. Edible Garden believes the following three factors set it apart from its competitors: (1) its branding and marketing displays, which are predominately placed in high traffic areas on its proprietary racks; (2) it uses proprietary strands and seeds for its produce and its methodology for growing such produce; and (3) all of its produce is hydroponically grown and sold “alive” ( i.e., the produce is sold “rooted”).Edible Garden relies on a combination of trademark laws, trade secrets, confidentiality provisions, and other contractual provisions to protect its proprietary rights, which are primarily its brand names, marks, and proprietary pods and seeds. Edible Garden owns trademarks but does not own any patents. Edible Garden signed an exclusive license agreement with Nutrasorb LLC, a spin-off from Rutgers University, to grow and commercialize nutritionally-enhanced lettuce varieties. Under the terms of the agreement, Edible Garden has the right to grow and sell Green and Red Superleaf Lettuce across the North American and European continents as well as Australia. With five times more antioxidants than ordinary lettuce, the produce is high in vitamins A and C, magnesium, iron and potassium contents. It also has high levels of fiber and chlorogenic acid for superior digestion. These nutritionally-enhanced, proprietary Green and Red Superleaf Lettuces were developed by scientists at Rutgers University following years of intensive research. Edible Garden pays a license fee to Nutrasorb, LLC for each unit sold.Edible Garden’s produce is Global Food Safety Initiative certified. Edible Garden also obtained certain organic certifications for its products. No other governmental regulations or approvals are needed or affect its business.10Table of Contentsthreetwo reportable segments:·Herbs and Produce Products– Includes herbs and leafy greens that are grown using classic Dutch hydroponic farming methods;·Cannabis Dispensary, Cultivation and Production– Includes cannabis-focused retail, cultivation and production operations; and·Real Estate– Includes building ownership and construction operations where cannabis dispensary and/or cultivation operations are currently in developmentOur segment net revenuecontributions to consolidated net revenue for each of the last two fiscal years were as follows:$ 5,284 $ 4,476 18.8 % 15.9 % 22,416 14,872 79.9 % 83.9 % - - - - 350 817 1.2 % 0.2 % $ 28,050 $ 20,165 100.0 % 100.0 % See Note 2 – “Summary of Significant Accounting Policies”to our consolidated financial statements for financial information about our segments. See also “Item 1A. Risk Factors”below for a discussion of certain risks associated with our operations.Herbs and Produce ProductsEither independently or in conjunction with third parties, we are a retail seller of locally grown hydroponic herbs and produce, which are distributed through major grocery stores throughout the East, West and Midwest regions of the U.S. Dispensary, Cultivation and Production Allretail dispensaries in CaliforniaCompany. In a rapidly evolving industry, it is imperative that we attract, develop and Nevada offer a broad selection of medicalretain top talent on an ongoing basis. To do this, we seek to make Unrivaled Brands an inclusive, diverse and adult use cannabis products including flowers, concentratessafe workplace, with meaningful compensation and edibles. We also produce and sell a line of medical and adult use cannabis flowers, as well as a line of medical and adult use cannabis-extracted products, which include concentrates, cartridges, vape pens and wax products.Real Estate and Construction OperationsWe own real property in Nevada. Additionally, we own properties in California that are in various stages of constructionopportunities for medical marijuana and adult use cultivation and production facilities and dispensaries.EmployeesAs of the date of this Annual Report on Form 10-K, we have 248 employees.
career growth.11Table of Contentsa limited operating history,had significant changes to our operations, which may make it difficult for investors to predict future performance based on current operations.limited operating historymaterial adverse effect on our financial condition, our ability to pay our debts as they become due and on our cash flow.havemay not proven that we canbe able to sell produce and herb products, or cannabis products in a manner that enables us to be profitable and meet customer requirements, enhance our produce and herb products, obtain the necessary permits and/or achieve certain milestones to develop our dispensary businesses, enhance our line of cannabis products, including IVXX, develop and maintain relationships with key manufacturers and strategic partners to extract value from our intellectual property, raise sufficient capital in the public and/or private markets, or respond effectively to competitive pressures. As a result, there can be no assurance that we will be able to develop or maintain consistent revenue sources, or that our operations will be profitable and/or generate positive cash flow.yourour stockholder's investment could be significantly reduced or completely lost.flow.2019,2021, we incurred a net loss of $46.93$31.47 million and, as of that date, we had an accumulated deficit of $189.69$250.02 million. For the year ended December 31, 2018,2020, we incurred a net loss of $39.75$30.12 million and, as of that date, we had an accumulated deficit of $142.75$219.80 million. Any losses in the future could cause the quoted price of our Common Stock to decline or have a material adverse effect on our financial condition, our ability to pay our debts as they become due, and on our cash flow.12Table of Contentscommence operations at additional cultivation and production facilities, expandfund our product lines, develop our intellectual property base, and establish our targeted levels of commercial production.future operations. We may not be able to obtain additional financing on terms acceptable to us, or at all. In particular, because marijuana is illegal under federal law, we may have difficulty attracting investors.assure youprovide assurance that we will be able to obtain capital in the future to meet our needs.give youprovide any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. If we are unable to raise capital when needed, our business, financial condition, and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.13Table of Contentswithout infringingthat do not infringe on our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue.upon the patents or violate the proprietaryintellectual property rights of others, it is possible such infringement or violation has occurred or may occur, which could have a material adverse effect on our business.there can be no assurance that we wouldmay not be able to do somodify our products or secure a license in a timely manner, upon acceptable terms and conditions, or at all, and the failure to do any of the foregoing could have a material adverse effect upon our business.There can be no assurance that we will could be independently discovered by competitors, in which case we would not be able to prevent the use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive, and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.14Table of Contents·The need for continued development of our financial and information management systems;·The need to manage strategic relationships and agreements with manufacturers, customers, and partners; and·Difficulties in hiring and retaining skilled management, technical, and other personnel necessary to support and manage our business.We cannot provide assurances that ourwillmay not be able to manage this growth effectively. Our failure to successfully manage growth could result in our sales not increasing commensurately with capital investments or otherwise materially adversely affecting our business, financial condition, or results of operations.15Table of Contentsare dependentdepend on the popularity of consumer acceptance of our product lines, including IVXX.lines, including IVXX.lines. Acceptance of our products will depend on several factors, including availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability. If customers do not accept our products, or if we fail to meet customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.medical marijuana products to decline, which would have a negative impact on our business. there are 33 states plus the District of Columbia that have laws and/or regulations that recognize, in one form or another, legitimate medical and adult uses for cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under the CSA prohibits the policiesmanufacture, distribution, dispensation, and regulationspossession of the federal government and its agencies are that cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited.cannabis. Unless and until Congress amends the CSA with respect to medical marijuana, as toalter the timing or scopeSchedule I status of any such potential amendmentscannabis, for which there can be no assurance, there is a risk that federal authorities may enforce current federal law, and we may be deemed to be producing, cultivating, or dispensing marijuana in violation of federal law. Active enforcement of the current federal regulatory position on cannabis may thustherefore indirectly and adversely affect our revenues and profits. The risk of strict enforcement of the CSA in light of Congressional activity, judicial holdings, and stated federal policy remains uncertain.In February 2017, the Trump administration announced that there may be “greater enforcement” of federal laws regarding marijuana. Any such enforcement actions could have a negative effect on our business and results of operations.Since the start of the new congress, there have been “positive” discussions about the Federal Government’s approach to cannabis. The DOJ has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for use on private property but has relied on state and local law enforcement to address marijuana activity. With the change of the Attorney General, the DOJ has not signaled any change in their enforcement efforts. In the event the DOJ reverses its stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to our business and our revenue and profits. Furthermore, H.R. 83, enacted by Congress on December 16, 2014, provides that none of the funds made available to the DOJ pursuant to the 2015 Consolidated and Further Continuing Appropriations Act may be used to prevent certain states, including Nevada and California, from implementing their own laws that authorized the use, distribution, possession, or cultivation of medical marijuana. there are 33 states plus the District of Columbia that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under the CSA prohibits the policiesmanufacture, distribution, dispensation, and regulationspossession of the federal government and its agencies are that cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited.cannabis. Unless and until Congress amends the CSA with respect to medical marijuana, as toalter the timing or scopeSchedule I status of any such amendmentscannabis, for which there can be no assurance there is a risk that federal authorities may enforce current federal law.law, including the CSA in appropriate circumstances. The risk of strict enforcement of the CSA in light of Congressional activity, judicial holdings, and stated federal policy remains uncertain. Because we cultivate, produce, sell and distribute medical marijuana, we havethere is a risk that we will be deemed to facilitate the selling or distribution of medical marijuana in violation of federal law. Finally, we could be found in violationActive enforcement of the CSA in connection with the sale of IVXX’s products. This wouldon cannabis may, hence cause a direct and adverse effect on our subsidiaries’ businesses, or intended businesses, and on our revenue and prospective profits.16Table of Contents2019, eleven2021, 18 states and the District of Columbia have legalized the recreational use of cannabis. Variations exist among states that have legalized, decriminalized, or created medical marijuana exemptions. For example, certain states have limits on the number of marijuana plants that can be homegrown. In most states, the cultivation of marijuana for personal use continues to be prohibited except for those states that allow small-scale cultivation by the individual in possession of medical marijuana needing care or that person’s caregiver. Active enforcement of state laws that prohibit personal cultivation of marijuana may indirectly and adversely affect our business and our revenue and profits.In November 2016, California voters approved Proposition 64, also known as the Adult Use of Marijuana Act (“AUMA”), in a ballot initiative. Among other things, the AUMA makes it legal for adults over the age of 21 to use marijuana and to possess up to 28.5 grams of marijuana flowers and 8 grams of marijuana concentrates. Individuals are also permitted to grow up to six marijuana plants for personal use. In addition, the AUMA establishes a licensing system for businesses to, among other things, cultivate, process and distribute marijuana products under certain conditions. On January 1, 2018 the California Bureau of Cannabis Control enacted regulations to implement the AUMA.Also, in November 2016, Nevada voters approved Question 2 in a ballot initiative. Among other things, Question 2 makes it legal for adults over the age of 21 to use marijuana and to possess up to one ounce of marijuana flowers and one-eighth of an ounce of marijuana concentrates. Individuals are also permitted to grow up to six marijuana plants for personal use. In addition, Question 2 authorizes businesses to cultivate, process and distribute marijuana products under certain conditions. The Nevada Department of Taxation enacted regulations to implement Question 2 in the summer of 2017.Schedule-ISchedule I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law. Since federal law criminalizing the use of marijuana preempts state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in our inability to proceed with our business plan, especially in respect of our marijuana cultivation, production and dispensaries. In addition, our assets, including real property, cash, equipment and other goods, could be subject to asset forfeiture because marijuana is still federally illegal.17Table of Contents currently comprised of a majority of independent directors. We may in the future desire to list our common stock on The New York Stock Exchange (“NYSE”) or The NASDAQ Stock Market (“NASDAQ”), both of which require that a majority of our board be comprised of independent directors. We may have difficulty attracting and retaining independent directors because, among other things, we operate in the marijuana industry, and as a result we may be delayed or prevented from listing our common stock on the NYSE or NASDAQ.strategyoperations, and the business of IVXX.products through IVXX.products. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.theour medical and adult use marijuana business.18Table of Contents IVXX is presently engaged in the distribution of marijuana; however, we have not been, and are not currently, subject to any material litigation, complaint or enforcement action regarding marijuana (or otherwise) brought by any federal, state, or local governmental authority with respect to IVXX’s business.We are dependent on the popularity of consumer acceptance of produce and herbs.Our ability to generate revenue and be successful in the continued implementation of Edible Garden’s business plan is dependent on consumer acceptance and demand of produce and herbs, and in particular for organic products. Acceptance of Edible Garden’s products will depend on several factors, including availability, cost, and convenience. If these customers do not accept Edible Garden’s products, or if we fail to meet Edible Garden’s customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.A drop in the retail price of commercially grown produce may negatively impact our business.The demand for Edible Garden’s produce depends in part on the price of commercially grown produce. Fluctuations in economic and market conditions that impact the prices of commercially grown produce, such as increases in the supply of such produce and the decrease in the price of commercially grown produce, could cause the demand for produce to decline, which would have a negative impact on our business.be inadequate tonot cover all significant risk exposures.may have had difficulty obtaining insurance because we operate in the marijuana industry. The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, and results of operations. We do not have any business interruption insurance. Any business disruption or natural disaster could result in substantial costs and diversion of resources.19Table of ContentsIfcontaminated, we may have litigation and products liability exposure. suffers an injury from our products, they may sue us in addition to the supplier,20Table of ContentsStateStates of California, imposes a 15.0% excise taxOregon and state of Nevada imposes a 10%impose excise tax on products sold at licensed cannabis dispensaries. Local jurisdictions typically impose additional taxes on cannabis products. In addition, we incur significant costs complying with state and local laws and regulations. As a result, products sold at our dispensaries will likely cost more than similar products sold by unlicensed vendors and we may lose market share to those vendors.AtAs of December 31, 2019,2021, the Company has completed its accounting for the tax effects of the 2017 Tax Act. However, additional guidance may be issued by the Internal Revenue Service, or IRS, the Department of the Treasury, or other governing body that may significantly differ from our interpretation of the law, which may result in a material adverse effect on our business, cash flow, results of operations or financial conditions.Department of Justice (DOJ)DOJ and other government agencies could hinder their ability to perform normal business functions on which the operation of our business may rely, which could negatively impact our business. On January 4, 2018, Attorney General Jeff Sessions revoked the Ogden Memo and the Cole Memos.21Table of Contentsdispensary Trump Administration announced a plan to ban the sale of most flavored e-cigarettes nationwide. At the state level, over 25 states have implemented statewide regulations that prohibit vaping in public places. In January 2015, the California Department of Health declared electronic cigarettes and certain other vaporizer products a health threat that should be strictly regulated like tobacco products, and in September 2019, California’s governor issued an executive order on vaping, focused on enforcement and disclosure. Many states, provinces, and some cities have passed laws restricting the sale of electronic cigarettes and certain other tobacco vaporizer products. Some cities have also implemented more and do not ourselves manufacture any products, several lawsuits have been brought against other manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. We may be subject to similar claims in the future relating to vaporizer products that we sell. We may also be named as a defendant in product liability litigation against one of our suppliers by association, including in class action lawsuits. In addition, we may see increasing litigation over our vaporizer products or the regulation of our products as the regulatory regimes surrounding these products develop. If such lawsuits are filed against us in the future, we could incur substantial costs, including costs to defend the cases and possible damages awards.22Table of Contents·decreased demand for our products;·injury to our reputation;·costs to defend the related litigation;·a diversion of management’s time and our resources;·substantial monetary awards to users of our products;·product recalls or withdrawals;·loss of revenue; and·a decline in our stock price.yourour stockholders' ability to sell yourtheir shares of Common Stock or, if youthey are able to sell yourtheir shares, to sell yourtheir shares at a price that youthey determine to be fair or favorable.ismay be categorized as “penny stock,” which may make it more difficult for investors to sell their shares of Common Stock due to suitability requirements.ismay be categorized as “penny stock.” The Securities and Exchange CommissionSEC has adopted Rule 15g-9, which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our Common Stock is significantly less than $5.00 per share and ismay therefore be considered a “penny stock.” This designation imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer buying our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities given the increased risks generally inherent in penny stocks. These rules may restrict the ability and/or willingness of brokers or dealers to buy or sell our Common Stock, either directly or on behalf of their clients, may discourage potential stockholders from purchasing our Common Stock, or may adversely affect the ability of stockholders to sell their shares.23Table of Contentsyourinvestors' ability to buy and sell our shares of Common Stock, have an adverse effect on the market for our shares of Common Stock, and thereby depress our price per share of Common Stock.9, 2019,31, 2021, we had 183,535,449527,729,921 shares of Common Stock, 8 shares of Series A Preferred Stock and zero shares of Series B Preferred Stock outstanding; however, we may issue additional shares of Common Stock or preferred stock in the future in connection with a financing or an acquisition. Such issuances may not require the approval of our stockholders. In addition, certain of our outstanding rights to purchase additional shares of Common Stock or securities convertible into our Common Stock are subject to full-ratchet anti-dilution protection, which could result in the right to purchase significantly more shares of Common Stock being issued or a reduction in the purchase price for any such shares or both. Any issuance of additional shares of our Common Stock, or equity securities convertible into our Common Stock, including but not limited to, preferred stock, warrants, and options, will dilute the percentage ownership interest of all stockholders, may dilute the book value per share of our Common Stock, and may negatively impact the market price of our Common Stock.24Table of Contents2019,2021, we havehad goodwill of $27.72$48.13 million and other intangible assets of $15.27$129.64 million, which represents 36.2%represented 65.9% of our total assets. As of December 31, 2018,2020, we hadhave goodwill of $35.17$6.17 million and other intangible assets of $18.47$7.71 million, which represented 44.7%represents 13.8% of our total assets. WeWe evaluate goodwill for impairment on an annual basis or more frequently if impairment indicators are present based upon the fair value of each reporting unit. We assess the impairment of other intangible assets on an annual basis, or more frequently if impairment indicators are present, based upon the expected future cash flows of the respective assets. These valuations include management’s estimates of sales, profitability, cash flow generation, capital structure, cost of debt, interest rates, capital expenditures, and other assumptions. Significant negative industry or economic trends, disruptions to our business, inability to achieve sales projections or cost savings, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations. If the estimated fair value of our reporting units changes in future periods, we may be required to record an impairment charge related to goodwill or other intangible assets, which would reduce earnings in such period.$ 19,255 $ 4,967 $ 14,640 $ 5,624 $ 25,462 – – – $ 30,596 $ 9,422 $ 5,245 $ 25,462 $ 7,500 $ 15,000 – – – – – – – – – __________ Purpose Location Own or
LeaseBase
Monthly
RentLease
Begin
DateLease
End
DateNon-storefront Delivery Sacramento, CA Lease $ 11,000 5/1/2019 4/30/2024 Oakland, CA Lease $ 26,225 1/1/2017 12/31/2024 Dispensary (Peoples OC) Santa Ana, CA Lease $ 52,086 4/1/2018 3/31/2025 Dispensary (Blüm Oakland)/Cultivation Facility Oakland, CA Lease $ 31,486 5/1/2016 3/31/2022 Dispensary (Silverstreak San Leandro) San Leandro, CA Lease $ 26,225 1/1/2017 12/31/2024 Dispensary (Peoples DTLA) Los Angeles, CA Lease $ 58,880 11/01/2019 10/31/2026 Dispensary (Peoples Riverside) Riverside, CA Lease $ 79,200 9/1/2020 8/31/2027 Dispensary (Peoples Costa Mesa) Costa Mesa, CA Lease $ 50,000 7/6/2021 7/5/2036 Distribution and Manufacturing Facility Portland, OR Lease $ 10,000 7/1/2021 8/31/2026 Distribution Facility Santa Rosa, CA Lease $ 6,750 8/15/2020 7/31/2023 Distribution and Manufacturing Facility Chatsworth, CA Lease $ 28,800 4/1/2020 5/31/2022 Corporate Headquarters and Dispensary (The Spot) Santa Ana, CA Own Spanish Springs, NV Own Santa Ana, CA Own Not open yet. Subsequent event — Put up for sale in December 2021, sold in January 202219 21 – “Litigation and Claims”of the Notes to Consolidated Financial Statements in Part II of this Annual Report on Form 10-K, which is incorporated herein by reference.25Table of Contents“TRTC.“UNRV.” On March 9, 2020,21, 2022, the closing bid price on the OTC Markets Group, Inc.’s OTCQX tier for our Common Stock was $0.089.9, 2020,31, 2022, there were 185,843,857504,438,333 shares of Common Stock issued and 183,535,449527,729,921 shares of Common Stock outstanding (excluding shares of Common Stock issuable upon conversion or conversion into shares of Common Stock of all of our currently outstanding Series A Preferred Stock and Series B Preferred Stock and exercise of our warrants and options) held by approximately 196263 stockholders of record. We believe that we have more than 296,500 beneficial holders of our Common Stock. As of March 9, 2020, there were no shares issued and outstanding of our Series B Preferred Stock, Series G Preferred Stock, Series N Preferred Stock and Series Z Preferred Stock.·we would not be able to pay our debts as they become due in the usual course of business; or·our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation.20182016, 2017, and 2017,2018, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 0.800.13 million, 0.21 million, and 0.730.20 million shares of Common Stock, respectively. The options have exercise prices of $2.54 - $4.68$5.04 per share, and generally vest quarterly over a three-year period.During the years ended December 31, 2019 and 2018, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 5.70 million and 4.14 million shares of Common Stock, respectively. The options have exercise prices of $0.58 - $1.00 per share, and generally vest quarterly over a three-year period.26Table of ContentsDuring the year ended December 31, 2018, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 1.06 million shares of Common Stock that were not subject to the 2016 Equity Plan or the 2018 Equity Plan. The options have exercise prices ranging from $2.02 to $3.75 per share, and generally vest quarterly over a three-year period.Terra Tech common stockCommon Stock for a total of 43.98 million shares of Terra Tech common stock,Common Stock, plus the number of shares, not to exceed 2.00 million shares, that may become available under the Company’s 2016 Equity Incentive Plan after termination of awards thereunder, subject to adjustment in accordance with the terms of the Plan.Equity Compensation Plan Information 5,164,063 $ 40,812,362 784,565 - 5,948,628 $ 40,812,362 Equity Compensation Plan Information Plan Category Number of
Securities to be
Issued Upon
Exercise of Outstanding
Options,
Warrants and
RightsRange of
Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and RightsNumber of
Securities
Remaining
Available for
Future
Issuance
Under
Equity
Compensation
Plans
Excluding
Securities
Reflected in
Column (a))(a) (b) (c) Equity Compensation Plans Approved By Security Holders 87,930,786 $ 0.072-5.035 42,195,639 Equity Compensation Plans Not Approved By Security Holders 320,594 2.02 — Total 88,251,380 $ 0.072-5.035 42,195,639 when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1.00 million (excluding primary residence), or annual incomes exceeding $0.20 million individually, or $0.30 million, together with their spouse).27Table of ContentsNovember 28, 2016, Terra Tech Corp. entered into an Investment Agreement (the “Investment Agreement”) with an accredited investor (the “Purchaser”) pursuant to which, upon the terms and subject to the conditions set forth therein, the Investor is committed to purchase up to $20.00 million of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) over the 30-month term of the Investment Agreement. From time to time over the term of the Investment Agreement, at the Company’s sole discretion,September 17, 2021, the Company may present the Purchaser with a put notice to purchase Common Stock. The maximum amount of any put shall be equal to the lesser of (i) $1.50 million and (ii) 200.0% of the average of the daily trading volume of the Common Stock in the ten (10) trading days prior to the delivery of a put notice. The Company may not deliver more than one put notice during any five (5) trading day period. The purchase price of the Common Stock shall be 95.0% of the average of the three (3) lowest daily volume weighted average prices of the Common Stock in the five (5) trading days prior to the delivery of a put notice (the “Purchase Price”). In the event the average of the three (3) lowest daily volume weighted average prices of the Common Stock in the five (5) trading days following the delivery of a put notice is less than the Purchase Price, the Company shall deliver to the Purchaser additional shares of Common Stock such that the effective price per share of Common Stock paid by the Purchaser is equal to the Purchase Price. Upon execution of the Investment Agreement, the Company issued the Purchaser 13,333 shares of Common Stock as a commitment fee (the “Commitment Shares”).Pursuant to the Investment Agreement, the Company agreed to sell the Common Stock, including the Commitment Shares, pursuant to an effective shelf registration statement on Form S-3 (Registration No. 333-210673), declared effective by the Securities and Exchange Commission on August 12, 2016, and a related prospectus supplement thereto.On September 7, 2018, Company filed for a shelf registration statementrenewal on Form S-3 with the United States Securities and Exchange Commission. TheSEC. Our existing registration statement was extended six months as the SEC reviewed our request. On February 12, 2022 the shelf registration was declared effective by the SEC, on October 11, 2018.SEC. The registration statement will allow the Company to issue, from time to time at prices and on declared terms to be determined at or prior to the time of the offering, shares of our common stock,Common Stock, par value $0.001 per share, (our “Common Stock”), shares of our preferred stock, par value $0.001 per share (our “Preferred Stock”), debt securities, warrants, rights, or purchase contracts, either individually or in units, with a total value of up to $100.00 million.20192021 Compared to the Year Ended December 31, 20182019,2021, we generated revenues from continuing operations of approximately $28.05$47.67 million, compared to approximately $20.16$6.16 million for the year ended December 31, 2018,2020, an increase of approximately $7.89$41.51 million. The year-over-year increase was primarily due ramping up of our production operations, a $3.32 million impact, and increaseddriven by increase in existing dispensary revenue which accounted for $3.71 million. We also sawof $3.15 million, acquired dispensary revenue of $15.99 million and acquired distribution revenue of $23.05 million offset by the reclassification of Nuleaf revenues to discontinued operations. The existing dispensary revenue achieved a 20%36.8% increase in revenue generated by Edible Gardenover 2020 as we rebound from the salesinitial impact of its produceCOVID-19 and herb products. At this stage in our development, revenues are not yet sufficient to cover ongoing operating expenses.Cost of Goods Sold– For the year ended December 31, 2019, cost of goods sold from continuing operations was approximately $13.40 million, compared to approximately $13.16 million for the year ended December 31, 2018, an increase of only $0.24 million, on a revenue increase of $7.89 million. We saw operational improvements on the Cannabis segment via improved purchasing, marketing, and enhanced vertical integration that nearly offset the additional cost of sales attached to the incremental revenue.28Table of Contents20192021 was approximately $14.65$11.97 million, compared to a gross profit of approximately, $7.01$2.64 million for the year ended December 31, 2018,2020, an increase of approximately $7.64$9.32 million. Our gross margin for the year ended December 31, 20192021 was approximately 52.23%,25.1% compared to approximately 34.77%with the gross margin of 42.9% for the year ended December 31, 2018.20192021 were approximately $45.32$48.26 million, compared to approximately $37.91$19.32 million for the year ended December 31, 2018,2020, an increase of approximately $7.41$28.94 million. TheIn general the increase was primarily due to: to costs associated with the acquisitions brought on-board in 2021 that resulted in a significantly larger company.We ended 2021 with six retail operations compared with two in 2020; as well as three distribution centers compared to none in 2020; and we ended 2021 with 334 employees compared to 52 employees at the end of 2020.As a result of operating a larger organization, we saw increases in the following areas:(i) an increase of 2.29 million for depreciation expense; (ii) an increase of $1.81 million in employee stock option expense; (iii) an increase of $0.83 million in amortization expense; (iv) an increase of $0.62 million in legal expense; (v) an increase of $0.57 million for marketing expense; (vi) a $0.40$4.38 million increase in bank service fees; (vii) ansalaries / payroll taxes (excluding severance), (ii) a $3.13 million increase of $0.38in amortization and depreciation expenses, (iii) a $2.45 million increase in allowance for doubtful accounts; (viii)accounts, (iv) a $0.31$1.93 million increase in business and city taxes,(v) a $1.90 million increase in stock compensation expense, (vi) a $1.71 million increase in consulting and professional fees, (vii) a $1.39 million increase in insurance expense, (viii) a $1.10 million increase in advertising and promotion expense, (ix) a $1.09 million increase in security expense, and (x) a $0.87 million increase in rent expense. Another significant driver of expense increase in 2021 was a $9.10 million severance expense for the departure of the company's founders.This was an increase of $0.24$9.05 million increase in licenses, fees, and taxes.20192021 were approximately $8.62$3.04 million, compared to an Other Operating Gainexpenses of $19.91 million in the year ended December 31, 2020, a decrease of $16.87 million. The 2021 activity had $6.18 million of goodwill impairment charges compared to $19.91 million of like charges in 2020. In 2021 we also had $3.13 million gain on sale of assets.$4.49$2.85 million compared to Other income of $28.58 million for the year ended December 31, 2018,2020, an increase of approximately $13.11$31.43 million. The increaseyear-over-year decrease was primarily due to 2020 income driven by the combination of (i) a goodwill impairment charge of $8.35 million in 2019 (ii) a $5.23 million gain recorded for the salemark-to-market of the assets at our dispensary located at 1921 Western Ave., Las Vegas,company’s investment in 2018 which reduced Other Expense.2019,2021, we incurred a net loss of $46.93$31.27 million and, as of that date, we had an accumulated deficit of $189.69$250.02 million. For the year ended December 31, 2018,2020, we incurred a net loss of $39.75$30.12 million and, as of that date, we had an accumulated deficit of $142.75$219.80 million. We expect to experience further significant net losses in 2020 and the foreseeable future. At December 31, 2019,2021, we had a cash balance of approximately $1.23$6.89 million, compared to a cash balance of approximately $7.19approximately $0.89 million at December 31, 2018.2020. We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. Since our inception, we have raised capital through private sales of common stock, and debt securities. Our future success is dependent upon our ability to achieve profitable operations and generate cash from operating activities. ThereManagement feels that our past and current efforts to trim cost and our recent marketing and promotional efforts to boost sales will lead to cash sustainability, however there is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations.will be requiredanticipate receiving approximately $15 million over the next three months as compensation for asset sales. We anticipate these cash in-flows and acquisitions of complementary businesses to raise additional funds through public or private financing, additional collaborative relationships or other arrangements until we are ableallow for our operations to raise revenuesgrow to a pointcash sustainability.positive cash flow. We are evaluating various optionsour business due to further reduce our cash requirements to operate at a reduced rate,COVID-19 and regulatory uncertainty, as well as options to raise additional funds, including obtaining loans and selling common stock. Thereour historical lack of profitability, there is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations, or if we are able to raise capital, that it will be available to us on acceptable terms, on an acceptable schedule, or at all.The issuance of additional securities may result in a significant dilution in the equity interests of our current stockholders. Obtaining loans, assuming these loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available for use when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.29Table of ContentsThe risks and uncertainties surrounding the timing of the close of our pending asset sales in Nevada, our limited capital resources, and the weak industry conditions impacting our business raise substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. For additional information, see Note 21– “Going Concern”of the Notes to Consolidated Financial Statements included in Part II, and Item 1A – 20192021 was approximately $14.74$17.75 million, compared to approximately $19.88$14.84 million for the year ended December 31, 2018. 2020. The $5.14$2.91 million decreaseincrease in cash used in operating activities was due a number of influences, however there was one significant factor. In light of our asset transfers being frozen by state of Nevada, management made efforts to conserve cash until the consummation of the asset sales.byin investing activities for the year ended December 31, 20192021 was approximately $0.63$20.79 million, compared to cash used$11.80 million provided in investing activities of approximately $16.53 million for the prior year. The 2018 activityyear ended 2020, an increase of $8.99 million. This increase was comprised of expenditures related to: (i)driven by the construction$39.38 million in proceeds from sales of the San LeandroHydrofarm investment partially offset by $24.40 million paid for the People's and Oakland facilities; (ii) capital expenditures at Edible Garden in Belvidere, N.J.; (iii) payment for acquisition of real estate in Santa Ana, California and (iv) $5.00 million equity investment in Hydrofarm Holdings Group, Inc. and approximately $2.00 million advances to NuLeaf (see Note 4 – “Variable Interest Entities”).During 2019, cash provided was primarily driven by asset sales proceeds. Management delayed certain construction projects until the State of Nevada approves our pending asset sales.20192021 was approximately $8.14$4.50 million, compared to $38.16$2.70 million for the prior year. This is an increase of $1.80 million year-over-year. The cash provided by financing activities in fiscal 2019 was primarily due to $13.00 million proceeds from the2021 had less cash provided by issuance of notes payable and $4.50 million from the sale of Common Stock and warrants. The Company also had a cash outflow related to the purchase of $6.25 million related to the purchase of an unaffiliated third parties interest in MediFarm I, MediFarm II, and MediFarm I RE. See Note 19 – “Litigation and Claims”. Themore cash provided by financing activities in fiscal 2018 was primarily due to: (i) $33.65 million proceeds from the issuance of notes payable and (ii) $5.60 million from the sale of Common Stock and warrants.The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if: (1) it requires assumptions to be made that are uncertain at the time the estimate is made; and (2) changes in the estimate, or different estimates that could have been selected, could have a material effect on our results of operations or financial condition.30Table of ContentsWhile we believe that our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations. We believe that the following critical policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.Policies,”Policies” to our Financial Statements for further information on accounting policies that we believe to be critical, including our policies on:20192021 and other new accounting standards that were issued but not effective as of December 31, 2019.2021.31Table of Contents2019.2021. Based on this evaluation, our management concluded that as of December 31, 20192021 these disclosure controls and procedures were not effective at the reasonable assurance level. As discussed below, our internal control over financial reporting is an integral part of our disclosure controls and procedures.1.Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;2.Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and3.Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.32Table of Contents2019.20192021 based on such criteria.Our independent registered public accounting firm, Marcum LLP, has audited our consolidatedcriteria due to material weaknesses in internal control over financial statementsreporting described below:has issued an attestation report onquarterly user access review) to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate Company personnel were not operating effectively. Automated process-level controls and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency.asin an effort to remediate the material weaknesses described above. We are committed to ensuring that our internal control over financial reporting is designed and operating effectively. Our remediation process will include:20192021 fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.2019,2021, that have materially affected, or are likely to materially affect, our internal control over financial reporting.The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person, and the year such director or officer commenced serving in such capacity:Derek PetersonName Director or Officer Since Age Positions Eric Baum 2020 45 Chairman of the Board Tiffany Davis 2021 43 Interim Chief Executive Officer and Director Nicholas Kovacevich 2020 36 Director Jeffrey Batliner 2020 56 Chief Financial Officer Chief Strategy OfficerPeterson has servedBaum founded and leads a rapidly growing real estate investment firm operating in several U.S. markets. He is also actively involved in the venture capital arena as our Presidenta participant in several investment-focused groups, such as the Charlotte Angel Fund. His exposure to companies across all stages of development and breadth of knowledge in the venture space position him well to provide a unique perspective and challenge the status quo when needed. Eric holds a Bachelor of Business Administration from Emory University, where he graduated Valedictorian. He was awarded the Goizueta Business School Organizational Management Highest Award for Excellence and was inducted into Beta Gamma Sigma, the highest national business honor society. Mr. Baum’s extensive background in advising corporate leaders and finance experience led to his appointment as a Director.Chairman of the Board, since February 9, 2012. Mr. Peterson served as President until November 6, 2017. Mr. Peterson began his career in finance with Crowell, Weedon & Co. (now, D.A. Davidson & Co.), the then-largest independent broker-dealer on the West Coast. In his 6 years there, Mr. Peterson became a partner and Branch supervisor where he was responsible for sales of over $10 million. Mr. Peterson was offered an opportunity to build a southern Orange County presence for Wachovia Securities, where he became the first Vice President and Branch Manager for their Mission Viejo location. He was instrumental in growing that office from the ground up into the $15 million office it is today. After his term at Wachovia Securities (now, Wells Fargo Advisors), Mr. Peterson accepted an opportunity for a Senior Vice President position with Morgan Stanley Smith Barney, where he and his team oversaw combined assets of close to $100 million. In addition, heDirectoralso been involved in several public and private equity financings, where he has personally funded several projects from angel to mezzanine levels. Mr. Peterson is a CFP Professional and holds his Series 7 (General Securities Representative), Series 9 and 10 (General Securities Sales Supervisor), Series 3 (National Commodity Futures), Series 65 (Investment Advisor Representative), and California Insurance License. Mr. Peterson holds a Bachelor’s degree in Business Management from Pepperdine University. Mr. Peterson also owned a 12% interest in Black Oak until we acquired Black Oak on April 1, 2016. As a co-owner of Black Oak, Mr. Peterson worked with governmental agencies and tax authorities in Oakland, including working with the city to establish medical cannabis ordinances, competed for a permit to operate, and responded to a city request for proposal. Mr. Peterson’s experiences gained through these matters will assist us in launching and operating the medical marijuana and adult use cultivation, production and dispensary businesses of MediFarm, MediFarm I, and MediFarm II, as well as IVXX’s launch of its line of cannabis flowers, cigarettes, and pure concentrates. Mr. Peterson’s background in investment banking led to our conclusion that he should serve as a director in light of our business and structure.34Table of ContentsMatthew MorganChief Executive Officer and DirectorMr. Morgan served as the Chief Executive Officer, of OneQor Technologies, Inc. from December 2018 through the closing of the merger with Oneqor. From March 2014 through November 2017, Mr. Morgan served as co-Founder and Chief Executive Officer of Tryke Companies, LLC, a vertically integrated seed-to-sale cannabis company that includes the Reef Dispensary. In 2018, Mr. Morgan was named one of the most influential people in cannabis by High Times magazine. Mr. Morgan co-founded several businesses including Bloom Dispensaries, Reef Dispensaries, and Ignite Cannabis Co.Alan GladstoneDirectorMr. Gladstone has served as a Director since November 15, 2017. Mr. Gladstone was Founder, Chairman, President and CEO of Anna’s Linens, a specialty retailer of home textiles and home decoration items, from 1987 - 2014. During his tenure at Anna’s Linens, he grew the business to 305 stores in 23 states with over $400 million in annual revenues. He managed a team of 12 executives and over 3,500 employees and oversaw the company’s M&A strategy. Anna’s Linens was ranked the 13th largest seller of home textiles nationally in 2013. On June 14, 2015, Anna’s Linens filed a petition in the United States Bankruptcy Court for the Central District of California seeking relief under Chapter II of the United States Bankruptcy Code. Prior to his time at Anna’s Linens, he was a self-employed retail business consultant where he counted Vons, TG&Y and Cook United in his client base. He was also President of Home Front, a division of U.S. Shoe, from 1983 - 1986 where he led a team of 800 employees. In this role, he led the profitable growth of the business from 21 stores to 105 stores and grew sales from $40 million to $400 million. Mr. Gladstone has a BS in Economics from the University of California, Irvine. Mr. Gladstone’s entrepreneurial experience and success in retail led to our conclusion that he should serve as a Director and Chairman of the Compensation Committee in light of our business and structure.Michael JamesChief Financial OfficerMr. James has served as our Chief Financial Officer since February 9, 2012. In addition to this role, Mr. James has served as the Chief Executive Officer and Chief Financial Officer of Inergetics, Inc. from June 11, 2012 until January 2016. Previously, Mr. James served as Chief Executive Officer of Nestor, Inc. (“Nestor”), where he successfully completed a financial restructuring of Nestor prior to its sale in September 2009 from the Receiver’s Estate in Superior Court of the State of Rhode Island. He also served on Nestor’s Board of Directors from 2006 to 2009. Mr. James was the Managing Partner of Kuekenhof Capital Management, LLC, a private investment management company, from 1999 to 2015. Mr. James is also the Chairmanmember of the Board of Guided Therapeutics,Directors of Generation Alpha, Inc., where he serves since October 2019. Ms. Davis previously served as Chairman of the Audit CommitteeGeneration Alpha’s Chief Operating Officer between February 2018 and September 2019, and as a member of the Compensation Committee. During his career, Mr. JamesBoard between August 2018 and September 2019. Ms. Davis has servedhad 19 years of experience as a Partner at Moore Capital Management, Inc.,financial professional working in both management consulting and private equity. She has held several key leadership positions in accounting, finance, and operations. She has extensive experience in supply chain functionality, financial and operational due diligence, cash flow forecasting, financial statement analysis,premierenumber of industries including most recently in the cannabis industry. Since June 2019, Ms. Davis has been the founder and manager of Trilogy Wellness Brands LLC and Trilogy Wellness Manufacturing LLC, companies developing and manufacturing premium products from hemp CBD. From 2016 through 2017, Ms. Davismanagement company; and debt instruments for appropriate investment opportunities. From 2009 to 2011, Ms. Davis was a Manager of Corporate Advisory for Grant Thornton, one of the Big 6 worldwide accounting firms, again in accounting and supply chain services during the automotive crisis in the US, specifically on the Chrysler turnaround project. From 2005-2008, Ms. Davis worked for an international technology sector company with $500 million in revenues as a Vice President of Special Projects for an automobile parts sourcing project in India from the company’s headquarters in Chicago, IL. Ms. Davis received her B.S. from DePaul University in 2002 and a MBA from University of Chicago Graduate School of Business in 2009. Ms. Davis’s valuable insight and knowledge of the cannabis industry, coupled with her extensive financial and operational experience, qualifies her to serve on our Board.and Administrative Officer at Buffalo Partners, L.P., a private investment management company; and Treasurer andNational Discount Brokers. Mr. James began his careerUnrivaled Brands, Inc., joined the Company in 1980December of 2018 when he was hired as a staff accountant with Eisner, LLP. Mr. James is a retired CPA.35Table of ContentsMichael A. NahassPresident, Chief Operating Officer, Secretary, Treasurer, and DirectorMr. Nahass has served as a Director since January 26, 2012, and as our Secretary and Treasurer since July 20, 2015, and as our President and Chief Operating Officer since November 6, 2017. Previously, Mr. Nahass served as our President, Secretary and Treasurer from January 26, 2012 until February 9, 2012. Since August 2011, Mr. Nahass has served as Managingthe Director of Arque Capital, Ltd., of Irvine, California. From September 2009 until August 2011,Financial Reporting, where his responsibilities focused on SEC Reporting as well as Financial Planning and Analysis. During Mr. NahassBatliner’s tenure in that role, he was a Partner,instrumental in improving internal and servedexternal reporting processes as Managing Director/Chief Operating Office of NMS Capital Asset Management, Inc. (“NMS Capital”). Additionally, while at NMS Capital,well as implementing more robust budgeting and planning processes. Mr. Nahass servedBatliner was promoted to his current role as Chief Portfolio Manager of the NMS Platinum Funds, LLC. From February 1995 until April 2007, Mr. Nahass was employedFinancial Officer on October 6, 2020. Prior to Terra Tech, he served in various positionsFinancial Planning and Analysis roles spanning multiple industries. From 1996 to 2003, he led the FP&A team for Canon USA’s computer peripheral products division. Mr. Batliner was at Morgan Stanley, where his last position was Senior Vice PresidentSage, a global business software provider, from 2003 to 2014. He built out the finance team supporting Sage’s shared services division and Complex Manager, whereled several FP&A teams supporting multiple business units. From 2015 to 2018, he directly managed over 200 financial advisors with approximately $20 billion in assets under management. With over 20 years of financial services experience,created the FP&A team at Iteris, Inc., a transportation management firm, as the company experienced significant growth. Mr. Nahass has been and is responsible for private client services, business development, regulatory compliance and strategic development. Mr. NahassBatliner holds a B.S.Master’s in Business Administration (1988) from Fairleigh Dickenson University. In addition, he also holds NASD Series 3 (National Commodity Futures), Series 7 (General Securities Representative), Series 8 (Supervisory), Series 31 (Managed Futures) and Series 65 (Investment Advisor Representative) licenses. Mr. Nahass’ background in investment banking led to our conclusion that he should serve as director in light of our business and structure.Steven J. RossDirectorMr. Ross has served as a Director since July 23, 2012, and has over 30 years of senior management experience, ranging from high growth private companies to multi-billion dollar divisions of public enterprises. His experience also includes service on numerous public and private Boards. He is known as a problem solver who has demonstrated leadership and consistent results in challenging business situations across multiple industries. Mr. Ross has been CEO of Ecolane since June 2013. Ecolane is a Helsinki, Finland-based software company providing disruptive, specialized software and support services for transportation scheduling, dispatching and tracking. US operations are headquartered in Wayne, PA, where the company supports statewide contracts in PA, NE, NC and OH and numerous state and local transportation agencies throughout the country. Ecolane was acquired by National Express PLC, a British publicly-traded leading international transportation company in June 2016, generating greater than 500% returns for Ecolane’s investors.Prior to leading Ecolane, Mr. Ross was a Managing Director at MTN Capital Partners, a New York-based Private Equity firm, and Managing Partner of Belcourt Associates. Previously, Mr. Ross was CEO of National Investment Managers from 2006 until its sale to a Private Equity firm in 2011. Under Mr. Ross’ leadership, the company became the largest independent retirement services company in the country with over $11 billion in assets under administration and operations in 17 cities in the United States. Between 2001 and 2006, Mr. Ross served as Chairman and CEO of DynTek. During his tenure he successfully transitioned the company from a $5 million software development company to a leading provider of information technology services with annual revenues of over $100 million. From 1998 to 2001, Mr. Ross was Vice President and General Manager of the Computer Systems Division of Toshiba America with overall responsibility for Toshiba’s $3 billion computer business in the US and South America. Prior to joining Toshiba, from 1996 to 1998, Mr. Ross served as President & General Manager – Computer Reseller Division and President of Corporate Marketing at Inacom, a $7 billion Fortune 500 provider of computer products and services. Prior to his employment at Inacom, Mr. Ross served as Senior Vice President, Sales & Business Development, for Intelligent Electronics. Mr. Ross has also held senior management positions at Dell Computer Corporation and PTXI/Bull HN Information Systems. Mr. Ross has served as Vice-Chairman of the Board of the Computing Technology Industry Association (COMPTIA) and on the board of the US Internet Industry Association (USIIA). He also served on the Board of the national Cristina Foundation, and as a member of the Harvard Club of Orange County and the Harvard Business School Association of Orange County.He is an active alumnus of HarvardPepperdine University and a graduateBachelor’s in Finance from California State Fullerton.the Advanced Management Program at Harvard Business School. Steve has appeared as an industry and corporate spokesperson in numerous business and trade publications and events and was named #14 in Smart Reseller’s annual listing of top 50 computer industry executives.36Table of ContentsJulyDecember 11, 2020 by and between us and Nicholas Kovacevich, we agreed to grant Mr. Kovacevich 150,000 restricted shares of stock, to be fully vested on the date of appointment. On February 1, 2019 with Steven J. Ross and Alan Gladstone2021, the Company agreed to pay each of Mr. Ross and Mr. Gladstone $12,500 per month for a period of three years beginning on July 1, 2019. The cash compensation includes $10,000 per month for serviceKovacevich amended the Independent Director Agreement, as a Director and $2,500 per month for service asamended (the "Kovacevich Agreement"). Per the Chairperson of one or more board committees. TheKovacevich Agreement, (1) the Company also issued to each of Mr. Ross and Mr. Gladstone 86,805Kovacevich 500,000 restricted shares of the Company’s common stock (“Common(the “Common Stock”), allwhich vest in twelve equal installments on the first day of whicheach 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 $5,000 per month, payable on the first day of each month beginning March 1, 2021 for the term of the Kovacevich Agreement.appointment,appointment. On February 1, 2021, the Company and Mr. Ritter amended the Independent Director Agreement, as amended (the "Ritter Agreement"). Pursuant to the Ritter Agreement, (1) the Company issued to Mr. Ritter an option to purchase an additional 86,805500,000 shares of Common Stock with an exerciseat 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 vestingAgreements, which vest over a three-year period. In addition, a stock optionAgreement and stock issuance(2) the Company agreed to pay each of equivalent value are to be issued atMssrs. Imbimbo and Baum cash compensation of $5,000 per month, pro-rated for any partial months, payable on the one year and two-year anniversary datesfirst day of each month beginning on the date of the Director Agreements.We and Mr. Ross also entered into an Indemnification Agreement dated July 23, 2012, whereby we agreed to indemnify Mr. Ross, subject to certain exceptions, for claims against him that may arise in connection with the performance of his duties as one of our directors.· filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;·Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);·Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;·Being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;·Being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or·Being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.On February 22, 2012, Mr. Peterson filed by or against such person or any business of which such person was a petition forgeneral partner or executive officer either at the time of the bankruptcy or within two years prior to that time;United States Bankruptcy Court forSEC or the Central DistrictCommodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;California, Case No. 8:12−bk−13957−ES. The discharge date was November 2, 2012.On May 13, 2009, Mr. Nahass filedor a petition for bankruptcyparty to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in the United States Bankruptcy Court for the Central Districtconnection with any business entity; orCalifornia, Case No. 8:09-bk 14465-TA. The discharge date was August 17, 2011.37Table of ContentsBoardboard approved and adopted a Code of Ethics (the “Code of Ethics”) that applies to all of our directors, officers, and employees, including our principal executive officer and principal financial officer. The Code of Ethics addresses such individuals’ conduct with respect to, among other things, conflicts of interests; compliance with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure by us; competition and fair dealing; corporate opportunities; confidentiality; insider trading; protection and proper use of our assets; fair treatment; and reporting suspected illegal or unethical behavior. The Code of Ethics is available on our website at http:https://ir.terratechcorp.com/governance-docs.Boardboard of directors and hold office until removed by the Board,board, absent an employment agreement.the Boardour board of directors established the Audit Committee, and approved and adopted a charter (the “Audit Committee Charter”) to govern the Audit Committee. Messrs. Ross and Krueger were appointed to serve onwhich is governed by the Audit Committee Charter. Our Audit Committee currently consists of Nicholas Kovacevich and Eric Baum, with Mr. Ross designatedKovacevich serving as chairman. On November 6, 2017 Mr. Krueger resigned as achair since March of 2022. All members of our Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules and regulations. Our board has affirmatively determined that each member of the Board. Subsequently on November 15, 2017, Mr. Gladstone was appointed to serve on the Audit Committee. Each member of theour Audit Committee meets the independence requirements of The NASDAQNasdaq Stock Market, LLC and Rule 10A-3 of the SEC. The Audit Committee met five times during 2019.Exchange Act. In addition, to the enumerated responsibilitiesour board has determined that Mr. Baum qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. A copy of the Audit Committee in the Audit Committee Charter, the primary function of the Audit Committee is to assist the Board in its general oversight of our accounting and financial reporting processes, audits of our financial statements, and internal control and audit functions. The Audit Committee Charter can be found online at http://ir.terratechcorp.com/ir.unrivaledbrands.com/goverance-docs.Compensation CommitteeOn November 4, 2015, the Board established the Compensation Committee and approved and adopted a charter (the “Compensation Committee Charter”). Messrs. Ross and Krueger were appointed to serve on the Compensation Committee, with Mr. Krueger designated as chairman. On November 6, 2017 Mr. Krueger resigned as a member of the Board. Subsequently on November 15, Mr. Gladstone was appointed to serve as the Chairman of the Compensation Committee. Each member of the Compensation Committee meets the independence requirements of The NASDAQ Stock Market, LLC and the SEC, is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and is an outside director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. The Compensation Committee held one meeting during 2019. In addition to the enumerated responsibilities of the Compensation Committee in the Compensation Committee Charter, the primary function of the Compensation Committee is to oversee the compensation of our executives and advise the Board on the adoption of policies that govern our compensation programs. The Compensation Committee Charter may be found online at http://ir.terratechcorp.com/governance-docs.38Table of ContentsGovernance and Nominating CommitteeOn November 4, 2015, the Board established the Nominating Committee and approved and adopted a charter (the “Nominating Committee Charter”). Messrs. Ross and Krueger were appointed to serve on the Nominating Committee, with Mr. Ross designated as chairman. On November 6, 2017, Mr. Krueger resigned as a member of the Board. Subsequently on November 15, 2017, Mr. Gladstone was appointed to serve on the Governance and Nominating Committee. Each member of the Nominating Committee meets the independence requirements of The NASDAQ Stock Market, LLC and the SEC. The Nominating Committee held one meeting during 2019. In addition to the enumerated responsibilities of the Nominating Committee in the Nominating Committee Charter, the primary function of the Nominating Committee is to determine the slate of director nominees for election to the Board, to identify and recommend candidates to fill vacancies occurring between annual stockholder meetings, to review our policies and programs that relate to matters of corporate responsibility, including public issues of significance to us and our stockholders, and any other related matters required by federal securities laws. The charter of the Nominating and Corporate Governance Committee may be found online at http://ir.terratechcorp.com/governance-docs.Compensation Committee Interlocks and Insider ParticipationNo interlocking relationship exists between our Board of Directors and the Board of Directors or Compensation Committee of any other company, nor has any interlocking relationship existed in the past.The following table provides information relating to compensation for the Company’sName and Principal
PositionYear Salary Bonus (4) Stock
Awards
(5)Option
Awards
(6)All Other
Compensation
(7)Total 2021 $ 298,654 $ 40,000 $ 67,500 $ 194,000 $ — $ 600,154 Chief Executive Officer and Director 2020 $ — $ — $ 62,150 $ — $ — $ 62,150 2021 $ 250,000 $ 100,000 $ — $ 137,873 $ 6,000 $ 493,873 Chief Financial Officer 2020 $ 194,073 $ 20,000 $ 50,956 $ 7,440 $ 1,500 $ 273,969 2021 $ 236,235 $ 20,000 $ — $ 170,333 $ — $ 426,568 Chief Operating Officer 2020 $ 180,000 $ 25,350 $ — $ — $ 205,350 individuals servingKenig, this column reflects the cash bonus payable upon the closing of the UMBRLA transaction, per the terms of their employment agreements. For Mr. Batliner this column reflects the cash bonus paid for 2020 bonus achievement.principal executive officer or actingconsolidated financial statements contained in this Annual Report on Form 10-K.similar capacity (collectively, the “Named Executive Officers”) for the fiscal years ended December 31, 2019 and 2018.Plan (5) (6) $ 309,000 $ - $ $ 1,100,882 1,409,882 $ 300,000 $ 100,000 $ 39,911 $ 648,649 8,610 $ 1,097,170 President, Chief Operating Officer, $ 283,250 $ - $ $ 1,100,882 1,384,132 $ 275,000 $ 100,000 $ 21,318 $ 642,967 8,610 $ 1,047,895 $ 257,500 $ 75,000 1,039,406 $ 250,000 $ 90,000 $ 21,318 $ 421,616 6,000 $ 788,934 ____________ (1) Appointed President, Chief Executive Officer, and Chairman of the Board on February 9, 2012. Served as President until November 6, 2017.(2) Appointed director on January 26, 2012. Appointed Secretary and Treasurer on July 20, 2015. Served as President, Secretary, and Treasurer from January 26, 2012 until February 9, 2012. Appointed President and Chief Operating Officer on November 6, 2017.(3) Appointed Chief Operating Officer and director on February 25, 2013. Served as Chief Operating Officer until November 6, 2017 and was appointed Chief Agricultural Officer on November 6, 2017. Terminated on April 13, 2018.(4) Appointed Chief Financial Officer on February 9, 2012.(5) For valuation purposes, the dollar amount shown represents the aggregate award date fair value of awards made in fiscal 2017, 2016 and 2015 computed in accordance with FASB ASC Topic 718, “Stock Compensation”. The fair value is calculated based on the closing price of the Common Stock on the grant dates. The number of shares granted, the grant date, and the market price of such shares for each Named Executive Officer is set forth below.(6) The amounts disclosed represent a car allowance of $500 per month for each officer and health club memberships in the amount of $2,610 for Mr. Peterson and Mr. Nahass.39Table of ContentsJuly 1, 2019,December 18, 2020, Terra Tech Corp. entered into an Executive Employment Agreement (the “Knuettel Employment Agreement”) with Francis Knuettel II, appointing Mr. Knuettel as the Company’s Interim Chief Executive Officer andemployment agreements (“an Amended and Restated Executive Employment Agreements”Agreement (the “A&R Knuettel Employment Agreement”) with each of its’ Executive Officers. The Employment Agreement entered into withMr. Knuettel, appointing Mr. Knuettel as the Company’s Chief Executive Officer Derek Petersonand President. The term of the A&R Knuettel Employment Agreement began on June 7, 2021 and continues until terminated by the Company or Mr. Knuettel pursuant to the terms thereof. Mr. Knuettel’s annual base compensation pursuant to the A&R Knuettel Employment Agreement is Three Hundred Thousand Dollars ($300,000) and he is eligible to receive an annual cash bonus, with the target amount of such annual bonus equal to 50% of his base compensation in the year to which the annual bonus relates; provided that the actual amount of the annual bonus may be greater or less than the target bonus. The annual bonus will be based on performance and achievement by the Company and individual goals and objectives agreed to by the Board or Compensation Committee and Mr. Knuettel.“Peterson“Knuettel Grant Shares”) of Common Stock, which will vest in six equal installments, with the first installment vesting on June 7, 2021, and the remaining installments vesting on every three-month anniversary thereafter; provided he is an employee of the Company on the applicable vesting date. The vesting of the Knuettel Grant Shares is subject to acceleration under certain circumstances as set forth in the A&R Knuettel Employment Agreement., with Uri Kenig, appointing Mr. Kenig as the Company’s Interim Chief Operating Officer. The Kenig Employment Agreement, is for a term of three yearssix months. Mr. Kenig’s compensation pursuant to the Kenig Employment Agreement is Ninety Thousand Dollars ($90,000) and beginninghe is eligible to receive a cash performance bonus at the discretion of the board of directors. Mr. Kenig was granted 150,000 fully-vested shares of the Company’s Common Stock and is entitled to an additional 150,000 fully-vested shares of Common Stock on the thirdsix-month anniversary of signing shall be automatically extended for successive one (1) year periods, unlessthe Kenig Employment Agreement; provided it has not been terminated prior to that date. Mr. Kenig was also granted an option to purchase 300,000 shares of Common Stock with an exercise price equal to the closing price of the Common Stock on the trading day prior to the date of the Kenig Employment Agreement pursuant to the terms of the Company’s 2018 Equity Incentive Plan, which will vest 50% on the three-month anniversary of the Kenig Employment Agreement and 50% on the six-month anniversary of the Kenig Employment Agreement; provided it has not been terminated prior to either such date. In addition, Mr. Kenig is eligible to receive a bonus of 200,000 fully-vested shares of Common Stock and $20,000 upon closing of (A) a merger or consolidation of the Company or a subsidiary of the Company with another entity, or (B) the disposition by the Company of all or substantially all of the Company’s assets or the acquisition by the Company of all or substantially all of the assets of another entity entered into during the term of the Kenig Employment Agreement, in each case with a transaction value of over $20,000,000 and approved by the Board of Directors, whether or not he is then an employee of the Company. The Board of Directors approved the payment of this cash and equity bonus to Mr. Kenig in connection with the closing of the UMBRLA merger on July 1, 2021.Peterson providesKenig pursuant to the other at least ninety (90) days prior written notice beforeterms thereof. Mr. Kenig’s annual base compensation pursuant to the next renewal term,A&R Kenig Employment Agreement is Two Hundred and Fifty Thousand Dollars ($250,000) and he is eligible to receive an annual cash bonus, with the target amount of such annual bonus equal to 50% of his base compensation in the year to which the annual bonus relates; provided that the actual amount of the annual bonus may be greater or less than the target bonus. The annual bonus will be based on performance and achievement of Company and individual goals and objectives agreed to by the Board of Directors or Compensation Committee and Mr. Kenig.shall not be extended.of one year. Mr. Peterson’sBatliner’s base salary shall be ThreeTwo Hundred Nine Thousand Dollars ($309,000)200,000) and he shall also be eligible for a performance bonus equalof up to 100% of his base salary (“Peterson Target Performance Bonus”). The Peterson Target Performance Bonus shallPeterson Target Performance Bonus.The Mr. Batliner may be eligible for severance benefits under certain circumstances as set forth in the Employment Agreement.entered into(the “A&R Batliner Employment Agreement”) with Mr. Batliner, appointing Mr. Batliner as the Company’s President & Chief Operating Officer, Michael Nahass (the “Nahass Agreement”), is for aFinancial Officer. The term of three yearsthe A&R Batliner Employment Agreement began on June 7, 2021 and beginning on the third anniversary of signing shall be automatically extended for successive one (1) year periods, unlesscontinues until terminated by the Company or Mr. Nahass providesBatliner pursuant to the other at least ninety (90) days prior written notice beforeterms thereof. Mr. Batliner’s annual base compensation pursuant to the next renewal term, that the term shall not be extended. Mr. Nahass’ base salary shall beA&R Batliner Employment Agreement is Two Hundred Eighty-Threeand Fifty Thousand Two Hundred Fifty Dollars ($283,250)250,000) and he shall also beis eligible for a performanceto receive an annual cash bonus, with the target amount of such annual bonus equal to 100%50% of his base salary (“Nahass Target Performance Bonus”).compensation in the year to which the annual bonus relates; provided that the actual amount of the annual bonus may be greater or less than the target bonus. The Nahass Target Performance Bonus shallannual bonus will be based on performance and achievement of Company and individual goals and objectives as definedagreed to by the Company’s Board of Directors or Compensation Committee and Mr. Batliner.NahassBatliner Target Performance Bonus.InGrant based on performance and achievement of Company and individual goals and objectives as set forth in the event of terminationA&R Batliner Employment Agreement.withoutother than for cause (as defined in the A&R Batliner Employment Agreement), death or by“permanent and total disability” or (ii) Mr. Peterson or Mr. NahassBatliner resigns for good reason or(as defined in the event of a change of control (“Qualified Termination”)A&R Batliner Employment Agreement), Mr. Peterson and Mr. Nahassthen he shall be eligible for the followingentitled to severance benefits (“Severance Benefits”); (i) the greater of (i) the remaining compensation during the initial term of the James Agreement or (ii)in an amount equal to two (2) times their50% of his then current annual base salary, paid in equal installments over a two (2) month period beginning with the first normal payroll period after the effective date of the Qualified Termination,compensation, less any taxes and withholding as may be necessary pursuant to law; and (ii) a number of shares of the Common Stock (or the common stock of a successor company following a change of control) with an aggregate value of Two Million Dollars ($2,000,000) (the “Stock Severance”) calculated by dividing (a) $2,000,000 by (b) the Fair Market Value (as definedlaw, to be paid in the Company’s 2018 Equity Incentive Plan (the “Plan”)) of a share of the Company’s common stock on the date of termination of employment. Notwithstanding the foregoing, Mr. Peterson and Mr. Nahass shall not be entitled to the Stock Severance if the total market capitalization of the Company (defined as the number of outstanding shares multiplied by the Fair Market Value of a share of common stock) on the date of termination of employment is less than $65 million.The Employment Agreement entered intoaccordance with the Company’s Chief Financial Officer, Michael James (the “James Agreement”), is for a term of three years and beginning on the third anniversary of signing shall be automatically extended for successive one (1) year periods, unless the Company or Mr. James provides the other at least ninety (90) days prior written notice before the next renewal term, that the term shall not be extended. Mr. James’ base salary shall be Two Hundred Fifty-Seven Thousand Five Hundred Dollars ($257,500) and he shall also be eligible for a performance bonus equal to 60% of his base salary (“James Target Performance Bonus”). The James Target Performance Bonus shall be based on performance and achievement of Company goals and objectives as defined by the Board of Directors or Compensation Committee and may be greater ornormal payroll practices, but in no event less frequently than the James Target Performance Bonus.40Table of ContentsIn the event of a Qualified Termination, Mr. James shall be eligible for the following Severance Benefits; (i) the greater of (i) the remaining compensation during the initial term of the James Agreement or (ii) two (2) times Mr. James’ then current annual base salary,monthly, paid in equal installments over a 6-month period.Option awards Stock awards Name Number of securities underlying unexercised options
(#) exercisableNumber of securities underlying unexercised options
(#) unexercisableOption Exercise Price
($)Option expiration date Number of shares or units of stock that have not vested
(#)Market value of shares of units of stock that have not vested
($)Francis Knuettel II 600,000 — $ 0.1770 12/17/2030 500,000 1,000,000 $ 0.2337 6/06/2031 1,000,000 266,400 Jeffrey Batliner 116,667 83,333 $ 0.0721 4/2/2030 416,667 583,333 $ 0.0750 9/25/2030 583,333 1,166,667 $ 0.2337 6/06/2031 Uri Kenig 300,000 — $ 0.1720 12/20/2030 583,333 1,166,667 $ 0.2337 6/06/2031 (2) month period beginninginstallments. The first installment vested three months after grant date. The second installment vested six months after the grant date.normal payroll period after the effective datevesting on 6/7/21 and subsequently every three month anniversary of the Qualified Termination, less any taxesgrant date for the next five quarterswithholding as may be necessary pursuant to law; and (ii) a number of sharessubsequently the first day of the Common Stock (orquarter the common stock of a successor company following a change of control)next eleven quarters.an aggregate value of One Million Two hundred Thousand Dollars ($1,200,000) (the “Stock Severance”) calculated by dividing (a) $1,200,000 by (b) the Fair Market Value (as defined infirst vesting on 10/1/20 and subsequently the Plan) of a sharefirst day of the Company’s common stock onquarter the date of termination of employment. Notwithstanding the foregoing, Mr. James shall not be entitled to the Stock Severance if the total market capitalization of the Company (defined as the number of outstanding shares multiplied by the Fair Market Value of a share of common stock) on the date of termination of employment is less than $65 million.2019:$ 137,500 $ 51,215 $ 220,361 $ - $ - $ 45 $ 409,121 $ 158,333 $ 51,215 $ 403,226 $ - $ - $ 434 $ 613,208 ______________(1)Derek Peterson and Michael Nahass are not included in this table as they were executive officers during fiscal 2018, and thus received no compensation for their service as directors. The compensation of Mr. Peterson and Mr. Nahass as our employees is shown in “Item 11 Executive Compensation – Summary Compensation Table.”(2) Appointed as a director on July 23, 2012.(3)Appointed as a director on November 15, 2017.(4) For valuation purposes, the dollar amount shown represents the aggregate award date fair value of awards made in fiscal 2019 computedin accordance with FASB ASC Topic 718, “Stock Compensation”. The fair value is calculated based on the closing price of the Common Stock on the grant dates.Fees Earned
Paid in
Cash
($)Option
Awards
($)All Other Compensation ($) Total
($)$ 50,000 $ 203,332 $ — $ — $ 253,332 $ 50,000 $ — $ 85,792 $ — $ 135,792 $ 45,000 $ — $ 84,375 $ — $ 129,375 $ 25,000 $ — $ 45,646 $ — $ 70,646 $ 25,000 $ 80,940 $ 45,646 $ — $ 151,586 $ 48,507 $ 150,000 $ — $ 237,500 $ 436,007 $ 12,500 $ 105,000 $ — $ — $ 117,500 All travellodging expenses associated with corporate matters are reimbursed by us, if and when incurred.Steven J. RossRoss earned cash fees for his services asKovacevich amended the Independent Director Agreement. Pursuant to the amended agreement, (1) the Company issued to Mr. Kovacevich 500,000 restricted shares of 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 in fiscal 2019 inof the amountCompany on the applicable vesting date) and (2) the Company agreed to pay Mr. Kovacevich cash compensation of $0.14 million.$5,000 per month, payable on the first day of each month beginning March 1, 2021 for the term of the agreement.Ross earned cash fees for his services as a director in fiscal 2018 inRitter amended the amount of $0.10 million.On June 20, 2019, we grantedIndependent Director Agreement. Pursuant to the amended agreement, (1) the Company issued to Mr. Ross a ten-yearRitter an option to acquirepurchase 500,000 shares of Common Stock at $0.585 per share. The option is in considerationthe closing price of the servicesCommon Stock on the date of the 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 be rendered, which shall vest and become exercisable with respect to one-twelfth (1/12)pay Mr. Ritter cash compensation of $5,000 per month, payable on the first day of each quarter untilmonth beginning March 1, 2021 for the option is one hundred percent (100.0%) vested. Asterm of December 31, 2019, the option was one-sixth (1/6) vested.agreement. On July 1, 2019, we granted2021, Mr. Ross a ten-yearRitter’s Independent Director Agreement was terminated in connection with his resignation from the Board.acquire 86,805purchase 409,716 shares of Common Stock at $0.576 per share. The option is in considerationthe closing price of the servicesCommon Stock on the date of the agreement, which vest in ten installments, with the first installment of 34,722 shares vesting on date of the 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) and (2) the Company agreed to be rendered, which shall vestpay Ms. Davis cash compensation of $5,000 per month, payable on the first day of each month, pro rated for any partial month, beginning April 6, 2021 for the term of the agreement.become exercisablea Director Indemnification Agreement with respectEric Baum in connection with his appointment to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. AsBoard of December 31, 2019,Directors of the option was one-sixth (1/6) vested.41Table of ContentsOn December 11, 2018,Company. Pursuant to the Director Agreements, among other things, (1) we grantedagreed to enter into a Stock Option Agreement to issue to Mr. Ross a ten-yearBaum an option to acquire 300,000purchase 500,000 shares of Common Stock at $1.00 per share. The option is in considerationthe closing price of the servicesCommon Stock on the date of the Director Agreement and (2) we agreed to be rendered, which shall vest and become exercisable with respect to one-twelfth (1/12)pay Mr. Baum cash compensation of $5,000 per month, pro-rated for any partial months, payable on the first day of each quarter untilmonth beginning on the option is one hundred percent (100.0%) vested. Asdate of December 31, 2019, the option was five-twelfths (5/12) vested. Baum Director Agreement.30, 2018,1, 2021, we grantedentered into an Independent Director Agreement and a Director Indemnification Agreement with Dallas Imbimbo in connection with his appointment to the Board of Directors of the Company. Pursuant to the Director Agreements, among other things, (1) we agreed to enter into a Stock Option Agreement to issue to Mr. Ross a ten-yearImbimbo an option to acquire 55,000purchase 500,000 shares of Common Stock at $2.02 per share. The option is in considerationthe closing price of the servicesCommon Stock on the date of the Director Agreement and (2) we agreed to be rendered, which vested upon issuance and become exercisable with respect to one-twelfth (1/12)pay Mr. Imbimbo a cash compensation of $5,000 per month, pro-rated for any partial months, payable on the first day of each quarter untilmonth beginning on the option is one hundred percent (100.0%) vested. Asdate of December 31, 2019, the option was one-half (1/2) vested.Alan GladstoneGladstone earned cash fees for his servicesRoss resigned as a director of the Company. On that same date, in fiscal 2019 in the amount of $0.16 million.connection with Mr. Gladstone earned cash fees for his servicesRoss’ resignation as a director in fiscal 2018 inof the amountCompany, the Company and Mr. Ross agreed to terminate the Independent Director Agreement entered into by Mr. Ross and the Company on July 1, 2019 and enter into a Separation Agreement (the “Ross Separation Agreement”).Gladstone a ten-year optionRoss of $87,500 on April 30, 2021, $75,000 on August 16, 2021, and $75,000 on December 31, 2021, and 2) issue to acquire 700,000Mr. Ross $50,000 of freely-trading shares of Common Stock at $0.585 per share. The option is in considerationon each of the services to be rendered, which shall vestApril 30, 2021, August 16, 2021, and become exercisable with respect to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. As of December 31, 2019, the option was one-sixth (1/6) vested. On July 1, 2019, we granted Mr. Gladstone a ten-year option to acquire 86,8052021. The number of shares of Common Stock at $0.576 per share. The option is in considerationissued on each issuance date will be calculated based on the closing price of the servicesCommon Stock on the trading day immediately prior to be rendered, which shall vestsuch 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 exercisable with respect to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. As of December 31, 2019, the option was one-sixth (1/6) vested.DecemberJanuary 11, 2018, we granted2021, Mr. Gladstone resigned as a ten-year option to acquire 600,000 shares at $1.00 per share. The option is in considerationdirector of the servicesCompany. On that same date, the Company entered into a Separation Agreement (the “Gladstone Separation Agreement”) with Mr. Gladstone. Pursuant to be rendered, which shall vest and become exercisable with respectthe Gladstone Separation Agreement, among other things, the Company issued to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. As of December 31, 2019, the option was five-twelfths (5/12) vested. On July 30, 2018, we granted Mr. Gladstone a ten-year option to acquire 100,000500,000 freely-trading shares of Common Stock, at $2.02 per share. The option is in consideration of the servicesand all vested options to be rendered, which vested upon issuance and become exercisable with respect to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. As of December 31, 2019, the option was one-half (1/2) vested. On January 30, 2018, we grantedacquire Common Stock held by Mr. Gladstone a ten-year optionremain exercisable pursuant to acquire 66,667their terms. Mr. Gladstone also agreed not to sell, dispose of or transfer more than 500,000 shares of Common Stock at $4.68 per share.in any calendar month. In addition, the Independent Director Agreement between the Company and Mr. Gladstone, dated as of July 1, 2019, was terminated. The option is in consideration of the services to be rendered, which vested upon issuanceGladstone Separation Agreement also contains mutual releases and become exercisable with respect to one-twelfth (1/12) each quarter until the option is one hundred percent (100.0%) vested. As of December 31, 2019, the option was two-thirds (2/3) vested.January 12, 2016, we adoptedDecember 11, 2018, the 2016board of directors approved the 2018 Equity Incentive Plan (the “Plan”), as amended and restated as of June 20, 2019, and approved by our stockholders approved the Plan at our annual meeting of stockholders that was held on September 26, 2016. Pursuant to the terms of the Plan, the maximum number of23, 2019 (the "2018 Plan"), with 13,000,000 shares of Common Stock available for the grant of awards under the Plan shall not exceed 2.0 million.issuance. During the years ended December 31, 20182021 and 2017,2020, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 0.80 million6,909,716 and 0.71 million3,644,828 shares of Common Stock, respectively. The options have exercise prices of $2.54 - $4.68ranging from $0.07 to $0.26 per share, and generally vest quarterly over a three-year period.On December 11, 2018, the Company’s Board of Directors approved the 2018 Equity Incentive Plan (the “Plan”). On June 20, 2019, the Company adopted the Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”), and our stockholders approved the Plan at our annual meeting of stockholders that was held September 23, 2019. Pursuant to the terms of the 2018 Plan, the maximum number of shares of Common Stock available for the grant of awards under the 2018 Plan shall not exceed 13.00 million. During the years ended December 31, 2019 and 2018, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 5.80 million and 4.14 million shares of Common Stock, respectively. The options have exercise prices of $0.58 - $1.00 per share, and generally vest quarterly over a three-year period.42Table of ContentsDuring the year ended December 31, 2018, the Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 1.06 million shares of Common Stock that were not subject to the 2016 Equity Plan or the 2018 Equity Plan. The options have exercise prices ranging from $2.02 to $3.75 per share, and generally vest quarterly over a three-year period.Boardboard approved an amendment (the “Plan Amendment”) to the Company’s Amended and Restated 2018 Equity Incentive Plan, (the “Plan”) to increaseincreasing the number of shares available for issuance thereunder by 28.98 million28,976,425 shares of Terra Tech common stockCommon Stock for a total of 43.98 million43,976,425 shares of Terra Tech common stock,Common Stock, plus the number of shares, not to exceed 2.00 million shares that may become available under the Company’s 2016 Equity Incentive Plan after termination of awards thereunder, not to exceed 2,000,000 million shares subject to adjustment in accordance with the terms of the 2018 Plan. Our stockholders will vote to approve it at the next annual meeting of stockholders, to be held in September or October of 2020.8, 202021, 2022 with respect to the holdings of: (1) each person known to us to be the beneficial owner of more than 5.0% of our Common Stock; (2) each of our directors, nominees for director and executive officers; and (3) all directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated. Shares of common stock that are currently exercisale or convertible within 60 of March 21, 2022 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage beneficial ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, at the address of 2040 Main Street, Suite 225, Irvine, California 92614.In computingName and Address of Beneficial Owner Title of Class Amount and
Nature of
Beneficial
OwnershipGreater than 5% Beneficial Owners: Dallas Imbimbo Common Stock 87,425,209 (2) 17.31 % Joseph Gerlach Common Stock 41,662,529 (3) 8.30 % Nicholas Kovacevich Common Stock 29,156,060 (4) 5.72 % Executive Officers and Directors: Common Stock 5,627,390 (5) 1.02 % Common Stock 2,184,219 (6) * Common Stock 1,616,667 (7) * Common Stock 2,931,791 (8) * Common Stock 29,156,060 (4) 5.72 % Common Stock 307,287 (9) * Common Stock 87,425,209 (2) * All Directors and Executive Officers as a Group (6 persons) 129,248,623 25.18 % number and percentageoutstanding shares of shares beneficially owned by each person,our Common Stock.include anyhad a total of 504,438,329 shares of Common Stock that could be acquiredissued and 502,129,921 shares outstanding.March 8, 2020the Record Date, and (xi) 15,444,746 shares held by Bonaparte Group LLC, of which Mr. Imbimbo’s spouse is the conversion or exercise of shares of Series A Preferred Stock, Series B Preferred Stock, or option awards. These shares, however, are not counted in computing the percentage ownership of any other person.4,449,811 2.42 % 14,616,118 7.96 % 5,902,415 3.22 % 1,652,054 541,157 1,015,343 28,176,898 15.35 % __________*Representsmanaging member. Mr. Imbimbo disclaims beneficial ownership of less than one percent of the outstanding shares of our Common Stock.(1)As of March 8, 2019, we had a total of 185,843,857 shares of Common Stock issued and 183,535,449 shares outstanding.(2)Includes 3,654,029 shares of Common Stock owned via Equity IQ. Mr. Peterson owns Series A Preferred Stock, which is currently convertible into 4 shares of Common Stock. Mr. Peterson disclaims any beneficial ownership interest in the 989,574 shares of Common Stock held by his spouse, Amy Almsteier.(3)Amount is Mr. Morgan's OneQor stock that was converted into Terra Tech Stock as part of the February 14, 2020 merger of OneQor & Terra Tech Corp.(4)Includes 3,654,029 shares of Common Stock owned via Equity IQ. Mr. Nahass owns Series A Preferred Stock, which is currently convertible into 4 shares of Common Stock.(5)Includes 827,221 shares of Common Stock underlying vested options.(6)Includes 356,875 shares of Common Stock underlying vested options.(7)Includes 267,121 shares of Common Stock underlying vested options.43Table of ContentsThe following table sets forth certain information as of March 8, 2020 with respect to the holdings of: (1) each person knownshares held by Alpha West and Bonaparte Group LLC except to us to be the beneficial ownerextent of more than 5.0%his pecuniary interest therein.our Series A Preferred Stock; (2) each of our directors, nominees for director and executive officers; and (3) all directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein hasJuly 1, 2021. Mr. Gerlach holds sole voting power and dispositive power over such shares. The principal address of Mr. Gerlach is 2811 Pepper Rd., Petaluma, CA 94952.investment power to direct the voting and disposition of, the shares is closed as directly held by the Rutherford Trust, and to beneficially hold, and have the shared power to direct the voting and disposition of, the shares disclosed as directly held by Alpha West. Mr. Kovacevich disclaims beneficial ownership with respect to suchthe shares unless otherwise indicated. Unless otherwise specified,held by Alpha except to the addressextent of eachhis pecuniary interest thereinpersons set forth below is in careRecord Date, and (vii) 384,644 shares underlying exercisable warrants held by the Knuettel Trust.Company, atRecord Date.addressRecord Date.2040 Main Street, Suite 225, Irvine, California 92614.4 50 % – – 4 50 % – – – – – – 8 100 % During the fiscal year endedissued promissory notes totaling $1.80 million to OneQor Technologies, Inc (“OneQor”). Derek Peterson and Mike Nahass, the Chief Executive Officer and Chief Operating Officer, respectively, have minority ownership interests in OneQor.On December 30, 2019, the Company entered into a $0.50 million secured promissory note agreement with the Matthew Lee Morgan Trust, which is affiliated with Matthew Morgan, formerly the Chief Executive Officer of OneQor Technologies, Inc. (“OneQor”). Derek Peterson, Chief Executive Officer of Terra Tech and Michael Nahass, President of Terra Tech are minority interest holders in OneQor. The note maturesmatured on DecemberJanuary 30, 2020,2021, and bears interest at a rate of 10% per annum. The note is secured bywas converted into the Company’s HydroFarm investment.44Table of ContentsWe lease the land in Belvidere, New Jersey, oncommon stock at maturity.Garden’s greenhouse structureGarden sold and the Purchaser purchased substantially all of the assets of Edible Garden (the “Business”). The aggregate consideration paid for the Business was a five-year $3,000,000 secured promissory note bearing interest at 3.5% per annum. Michael James, the Company’s former Chief Financial Officer, is situated.a principal of the Purchaser. There is no material relationship between the Company or its affiliates and the Purchaser other than as set forth in the previous sentence. The land is being leased from Whitetown Realty, LLC, an entity in which David Vande VredePurchase Agreement contains customary conditions, representations, warranties, indemnities and Greda Vande Vrede own interests. David Vande Vredecovenants by, among, and Greda Vande Vrede arefor the parentsbenefit of one our former directors, Kenneth Vande Vrede. The lease commenced on January 1, 2015 and expiresthe parties.2029.2020, the Company issued promissory notes totaling $1.80 million to OneQor. Derek Peterson and Mike Nahass, formerly the Chief Executive Officer and Chief Operating Officer, respectively, had minority ownership interests in OneQor. At the end of the fiscal year, management made the decision to fully-reserve for these loans due to their confidence in the completion of the merger with OneQor, which would result in the cancellation of these loans.current monthly lease amountCompany had an independent third-party perform a valuation of the Property prior to entering into the Purchase Agreement. Mr. Kovacevich is $14,640a director of the Company and increases 1.5% each calendar year.July 31, 2018December 11, 2020 by and between us and Steven J. Ross,Francis Knuettel II, we agreed to paygrant Mr. Ross $8,333 per month for a period of one year. We also issued to Mr. Ross an aggregate of 24,750Knuettel 150,000 restricted shares of Common Stock, of which all of the sharesstock, to be fully vested on the date of appointment.20192021 by and between us and Steven J. Ross,Eric Baum, we agreed to enter into a Stock Option Agreement to issue to Mr. Baum an option to purchase 500,000 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 Mr. Ross $12,500Baum cash compensation of $5,000 per month, pro-rated for a periodany partial months, payable on the first day of three years. We also issued to Mr. Ross an aggregate of 86,805 restricted shares of Common Stock, of which all of the shares vestedeach month beginning on the date of appointment.Pursuant to an Independentthe Director Agreement dated July 31, 2018 by and between us and Alan Gladstone, we agreed to pay Mr. Gladstone $8,333 per month for a period of one year. We also issued to Mr. Gladstone an aggregate of 24,750 restricted shares of Common Stock, of which all of the shares vested on the date of appointment.20192021 by and between us and Alan Gladstone,Dallas Imbimbo, we agreed to enter into a Stock Option Agreement to issue to Mr. Imbimbo an option to purchase 500,000 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 Mr. Gladstone $12,500Imbimbo cash compensation of $5,000 per month, pro-rated for a periodany partial months, payable on the first day of three years. We also issued to Mr. Gladstone an aggregate of 86,805 restricted shares of Common Stock, of which all of the shares vestedeach month beginning on the date of appointment.Post-merger, ourSteven RossNicholas Kovacevich and Alan Gladstone,Eric Baum, each qualifies as an independent director. We evaluated independence in accordance with Rule 5605 of the NASDAQ Stock Market. All three and MGO for the audit of our annual financial statements and fees billed for other services rendered for the years ended December 31, 20192021 and 2018:$ 611,587 $ 1,020,566 __________ (1)Audit Fees consisted of fees billed for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, review of the interim financial statements included in quarterly reports, and review of other documents filed with the SEC within those fiscal years.Year Ended
December 31,2021 2020 Audit Fees (1) $ 215,081 $ 270,030 Board, or the Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is specific to the particular service or category of services and is generally subject to a specific budget. In addition, the Audit Committee has delegated pre-approval authority to its Chairman who, in turn, must report any pre-approval decisions to the Audit Committee at its next scheduled regular meeting. Our independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by our independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. The Board, or the Audit Committee, as applicable, pre-approved all fees for audit and non-audit work performed during fiscal 20192020 and 2018.45Table of Contents(a)The following documents are filed as part of this Annual Report:(1)Financial Statements – See Index on page F-1Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm on Internal Control Over Financial ReportingConsolidated Financial Statements: Consolidated Balance Sheets as of December 31, 20192021 and 20182020 Consolidated Statements of Operations for the Years Ended December 31, 20192021 and 20182020 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 20192021 and 20182020 Consolidated Statements of Cash Flows for the Years Ended December 31, 20192021 and 20182020 Notes to Consolidated Financial Statements 46Table of Contents(b)The following exhibits are filed herewith as a part of this report:ExhibitDescription2.6Form of Agreement of Merger, dated June 30, 2016, by and among Generic Merger Sub, Inc., a California corporation and Black Oak Gallery, a California corporation (3)3.2Amended Bylaws, dated August 2, 2018 (5)3.4Certificate of Change dated July 8, 2011 (6)3.7Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated September 27, 2016 (7)3.8Certificate of Amendment to Articles of Incorporation, Dated September 26, 2016 (8)3.9Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated October 3, 2016 (9)3.10Certificate of Amendment to Certificate of Designation of Series B Preferred Stock, dated July 26, 2017 (10)3.11Amendment of Bylaws, dated June 20, 2018 (11)3.12Certificate of Designation for Series A Preferred Stock (12)3.13Amended and Restated Certificate of Designation for Series B Preferred Stock (3)Amended and Restated Certificate of Designation for Series B Preferred Stock (3)Form of 7.5% Senior Convertible Promissory Note dated September 7, 2018 (38)47Table of Contents48Table of Contents_____________ (1)Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on February 10, 2012.(2)Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on May 6, 2013.(3)Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 29, 2016(4)Incorporated by reference to Registration Statement on Form S-1 (File No. 333-156421), filed with the SEC on December 23, 2008.(5)Incorporated by reference to Registration Statement on Form S-1 (File No. 333-191954), filed with the SEC on October 28, 2013.(6)Incorporated by reference to Current Report on Form 8-K filed with the SEC on September 28, 2016(7)Incorporated by reference to Current Report on Form 8-K filed with the SEC on October 7, 2016(8)Incorporated by reference to Amendment No. 3 to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on April 19, 2012.(9)Incorporated by reference to Current Report on Form 8-K filed with the SEC on March 2, 2015.(10)Incorporated by reference to Quarterly Report on Form 10-Q filed with the SEC on May 12, 2016(11)Incorporated by reference to Current Report on Form 8-K filed with the SEC on June 1, 2016(12)Incorporated by reference to Current Report on Form 8-K (File No. 000-54258), filed with the SEC on May 28, 2013.(13)Incorporated by reference to Current Report on Form 8-K/A filed with the SEC on April 5, 2016(14)Incorporated by reference to Current Report on Form 8-K filed with the SEC on November 28, 2016(15)Incorporated by reference to Current Report on Form 8-K filed with the SEC on August 22, 2017(16)Incorporated by reference to Current Report on Form 8-K filed with the SEC on November 24, 2017(17)Incorporated by reference to Current Report on Form 8-K filed with the SEC on December 26, 2017(18)Incorporated by reference to Current Report on Form 8-K filed with the SEC on July 27, 2017(19)Incorporated by reference to Current Report on Form 8-K filed with the SEC on November 24, 2017(20)Incorporated by reference to Current Report on Form 8-K filed with the SEC on December 26, 2017(21)Incorporated by reference to Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-191954), filed with the SEC on December 5, 2013(22)Incorporated by reference to Annual Report on Form 10-K filed with the SEC on March 16, 2018(23)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 16, 2018(24)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 18, 2018(25)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 19, 2018(26)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 25, 2018(27)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 26, 2018(28)Incorporated by reference to Current Report on Form 8-K filed with the SEC on January 29, 2018(29)Incorporated by reference to Current Report on Form 8-K filed with the SEC on March 13, 2018(30)Incorporated by reference to Current Report on Form 8-K filed with the SEC on April 24, 2018(31)Incorporated by reference to Current Report on Form 8-K filed with the SEC on May 2, 2018(32)Incorporated by reference to Current Report on Form 8-K filed with the SEC on June 8, 2018(33)Incorporated by reference to Current Report on Form 8-K filed with the SEC on June 22, 2018(34)Incorporated by reference to Current Report on Form 8-K filed with the SEC on July 12, 2018(35)Incorporated by reference to Current Report on Form 8-K filed with the SEC on July 26, 2018(36)Incorporated by reference to Current Report on Form 8-K filed with the SEC on July 31, 2018(37)Incorporated by reference to Current Report on Form 8-K filed with the SEC on August 16, 2018(38)Incorporated by reference to Current Report on Form 8-K filed with the SEC on September 7, 2018(39)Incorporated by reference to Current Report on Form 8-K filed with the SEC on October 12, 2018(40)Incorporated by reference to Current Report on Form 8-K filed with the SEC on December 3, 2018(41)Incorporated by reference to Current Report on Form 10-Q filed with the SEC on November 18, 2018(42)Incorporated by reference to Current Report on Form 8-K filed with the SEC on November 5, 2015(43)Incorporated by reference to Current Report on Form 8-K filed with the SEC on November 4, 2019(44)Incorporated by reference to Current Report on Form 8-K filed with the SEC on December 2, 2019(45)Incorporated by reference to Current Report on Form 8-K filed with the SEC on February 18, 2020*filed herewith49Table of ContentsIncorporated by Reference Exhibit Description Form Date Filed Exhibit 2.1 8-K 3/3/2021 2.1 2.2 8-K 7/8/2021 2.2 2.3 8-K 7/8/2021 2.1 2.4 8-K 8/16/2021 2.1 2.5 8-K 11/22/2021 2.1 2.6 8-K 11/29/2021 2.1 2.7 8-K 2/4/2021 3.1 2.8 8-K 2/4/2021 3.2 2.9 8-K 7/8/2021 3.1 2.10 8-K 7/8/2021 3.2 2.11 S-1 12/23/2008 3.1 2.12 S-1 10/28/2013 3.1.2 2.13 S-1 10/28/2013 3.1.3 2.14 8-K 2/10/2012 3.1 2.12 8-K 8/2/2021 3.3 3.1 8-K 1/25/2021 4.2 3.2 8-K 1/13/2021 4.1 3.3 8-K 1/25/2021 4.1 3.4 8-K 1/25/2021 4.3 3.5 8-K 1/25/2021 4.4 3.6 8-K 1/25/2021 4.5 3.7 8-K 1/25/2021 4.6 3.8 8-K 1/25/2021 4.7 3.9 8-K 1/25/2021 4.8 3.10 10-K 3/30/2021 4.12 3.11 8-K 11/29/2021 4.1 3.12 8-K 11/29/2021 4.2 3.13 3.14 3.15 3.16 10-Q 8/16/2021 10.22 3.17 10-Q 8/16/2021 10.23 3.18 10-Q 8/16/2021 10.24 4.1 8-K/A 4/5/2016 10.27 4.2 8-K 6/10/2021 10.6 4.3 8-K 1/13/2021 10.1 4.4 8-K 1/13/2021 10.2 4.5 8-K 1/13/2021 10.3 4.6 8-K 1/25/2021 10.2 4.7 8-K 2/4/2021 10.1 4.8 8-K 2/4/2021 10.2 4.9 10-K 3/30/2021 10.42 4.10 8-K 4/9/2021 10.1 4.11 8-K 4/9/2021 10.2 4.12 8-K 4/9/2021 10.3 10.1 8-K 6/10/2021 10.2 10.2 8-K 6/10/2021 10.3 10.3 8-K 7/8/2021 10.1 10.4 8-K 7/8/2021 10.2 10.5 8-K 7/8/2021 10.3 10.6 8-K 7/8/2021 10.4 10.7 8-K 8/2/2021 10.2 10.8 8-K 8/2/2021 10.5 10.9 8-K 10/5/2021 10.1
__________________10.10 8-K 10/5/2021 10.2 10.11 8-K 10/5/2021 10.3 10.12 8-K 10/5/2021 10.4 10.13 10-Q 11/15/2021 10.12 10.14 8-K 11/29/2021 10.1 10.15 8-K 11/29/2021 10.2 10.16 8-K 11/29/2021 10.3 10.17 8-K 11/29/2021 10.4 10.18 8-K 11/29/2021 10.5 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 14.1 8-K 11/5/2015 14.1 21.1 23.1 24.10 Power of Attorney (set forth on the signature page of this Annual Report on Form 10-K) 31.1 31.2 32.1 32.20 101.INS XBRL Instance Document * 101.SCH XBRL Taxonomy Extension Schema Document * 101.CAL XBRL Taxonomy Extension Calculations Linkbase Document * 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB XBRL Taxonomy Extension Label Linkbase Document * 101.PRE XBRL Taxonomy Presentation Linkbase Document * Report of Independent Registered Public Accounting FirmF-2Page F-3Consolidated Financial Statements:F-4F-5F-6F-7F-8F-1Table of ContentsTerra Tech Corp.Terra Tech Corp.Unrivaled Brands, Inc. (the “Company”) as of December 31, 20192021 and 2018, 2020,the related consolidated statements of operations,stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2019,2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019,2021 and 2020 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019,2021, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 13, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.Explanatory Paragraph – Change in Accounting PrincipleAs discussed in Note 21 to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), as amended, effective January 1, 2019, using the modified retrospective approach.2,23, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’sCompany's ability to continue as a going concern. Management’sManagement's plans in regard to these matters are also described in Note 21.23. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.PCAOBPublic Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.llpllpMarch 13, 2020F-2REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMON INTERNAL CONTROL OVER FINANCIAL REPORTINGTo the Stockholders and Board of Directors ofTerra Tech Corp.Opinion on Internal Control over Financial ReportingWe have audited Terra Tech Corp.’s (the “Company”) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows and the related notes for each of the two years in the period ended December 31, 2019 of the Company, and our report dated March 13, 2020 expressed an unqualified opinion on those financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate./s/ Marcum LLP Marcum llpF-3Table of Contents$ 1,226 $ 7,193 1,457 1,209 5,155 1,359 882 714 648 1,034 9,368 11,509 40,082 31,681 15,270 18,466 27,722 35,172 11,317 895 5,000 12,451 10,490 9,914 $ 119,249 $ 120,088 $ 11,820 $ 6,396 11,022 - 4,740 505 27,582 6,901 6,570 18,313 9,771 - 16,341 18,313 43,923 25,214 - - - - 260,516 236,543 (808 ) - (189,686 ) (142,754 ) 70,142 93,871 5,184 1,003 75,326 94,874 $ 119,249 $ 120,088 December 31,
2021December 31,
2020ASSETS Current assets: Cash $ 6,891 $ 217 Accounts receivable, net 4,677 352 Short term investments — 34,045 Inventory, net 7,179 759 Prepaid expenses and other current assets 1,272 214 Notes receivable 750 — Current assets of discontinued operations 4,495 2,020 Total current assets 25,264 37,607 Property, equipment and leasehold improvements, net 23,728 12,630 Intangible assets, net 129,637 7,714 Goodwill 48,132 6,171 Other assets 26,915 12,644 Investments 163 330 Assets of discontinued operations 17,984 23,198 TOTAL ASSETS $ 271,824 $ 100,294 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES: Current liabilities: Accounts payable and other accrued expenses $ 31,904 $ 8,225 Short-term debt 45,749 8,033 Income taxes payable 7,969 — Current liabilities of discontinued operations 2,087 10,164 Total current liabilities 87,708 26,422 Long-term liabilities: Long-term debt, net of discounts 10,006 6,632 Deferred tax liabilities 6,123 — Long-term lease liabilities 21,316 7,775 Long-term liabilities of discontinued operations 184 335 Total long-term liabilities 37,629 14,742 Total liabilities 125,337 41,164 COMMITMENTS AND CONTINGENCIES (Note 18) 0 0 STOCKHOLDERS’ EQUITY: Common stock, par value $0.001: 990,000,000 Shares authorized as of December 31, 2021 and 2020; 498,546,295 shares issued and 496,237,883 shares outstanding as of December 31, 2021; 196,512,867 shares issued and 194,204,459 shares outstanding as of December 31, 2020. 521 218 Additional paid-in capital 392,930 275,060 Treasury stock (808) (808) Accumulated deficit (250,015) (219,803) Total Unrivaled Brands, Inc. stockholders’ equity 142,628 54,667 Non-controlling interest 3,859 4,463 Total stockholders’ equity 146,487 59,130 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 271,824 $ 100,294 F-4Table of Contents$ 28,050 $ 20,164 13,396 13,159 14,654 7,005 45,322 37,911 8,347 - (794 ) (5,152 ) 1,067 662 (39,288 ) (26,416 ) (9,297 ) (10,970 ) 144 (1,599 ) (9,153 ) (12,569 ) (48,441 ) (38,984 ) 588 (490 ) (47,853 ) (39,474 ) (921 ) (41 ) - 320 $ (46,932 ) $ (39,753 ) $ (0.45 ) $ (0.55 ) $ (0.44 ) $ (0.56 ) 106,037,631 71,028,851 ________________(1) Adjusted to reflect the 1 for 15 reverse stock split that occurred on March 12, 2018.Year Ended December 31, 2021 2020 Total revenues $ 47,673 $ 6,161 Cost of goods sold 35,706 3,518 Gross profit 11,967 2,643 Selling, general and administrative expenses 48,257 19,319 Impairment of assets 6,171 19,910 Gain on sale of assets (3,133) — Loss from operations (39,328) (36,586) Other income / (expense) Loss on extinguishment of debt (5,976) — Interest expense, net (1,776) (1,394) Unrealized gain on investments — 29,045 Gain on investments 5,337 — Other income / (loss) (433) 929 Total other income / (expense) (2,848) 28,580 Loss from continuing operations, before provision for income taxes (42,176) (8,006) Provision for income taxes (885) — Net loss from continuing operations (43,061) (8,006) Income / (loss) from discontinued operations 12,103 (22,865) Provision for income taxes for discontinued operations (917) — Net loss from discontinued operations 11,186 (22,865) NET LOSS (31,875) (30,871) Less: Income / (Loss) attributable to non-controlling interest from discontinued operations (604) (754) NET LOSS ATTRIBUTABLE TO UNRIVALED BRANDS, INC. $ (31,271) $ (30,117) Loss from continuing operations per common share attributable to Unrivaled Brands, Inc. common stockholders – basic and diluted $ (0.11) $ (0.04) Net loss per common share attributable to Unrivaled Brands, Inc. common stockholders – basic and diluted $ (0.08) $ (0.16) Weighted-Average Number of Common Shares Outstanding – Basic and Diluted 376,625,320 191,978,187 F-5Table of Contents20192021 AND 201812 $ - 61,818,560 $ 62 $ 181,358 - - $ (105,549 ) $ 931 $ 76,802 - - - - 5,238 - - 2,548 - 7,786 - - - - 9,015 - - - - 9,015 - - 201,296 0 603 - - - - 603 - - 49,500 0 100 - - - - 100 - - 132,971 0 225 - - - - 225 - - (24,210 ) (0 ) (118 ) - - - - (118 ) - - 46,688 - (0 ) - - - - (0 ) - - (101,384 ) (0 ) (351 ) - - - - (351 ) - - 252,703 - 101 - - - - 101 - - 16,652,002 17 30,957 - - - - 30,974 - - 2,477,957 2 5,598 - - - - 5,600 - - 53,332 - 200 - - - - 200 - - - - 2,528 - - - - 2,528 - - - - 889 - - - - 889 - - 200,000 0 200 - - - (207 ) (7 ) - - - - - - - - 280 280 - - - - - - - (39,753 ) - (39,753 ) 12 $ - 81,759,415 $ 82 $ 236,543 - $ - $ (142,754 ) $ 1,003 $ 94,874 - - 740,580 1 473 - - - - 473 - - 173,610 0 102 - - - - 102 - - 715,065 1 369 - - - - 369 - - (60,000 ) (0 ) (58 ) - - - - (58 ) - - 29,380,222 29 13,411 - - - - 13,440 - - 7,604,494 8 4,492 - - - - 4,500 - - - - 4,342 - - - - 4,342 - - - - 5,978 - - - - 5,978 (4 ) - - - - 4 - - - - - - (2,308,408 ) - - 2,308,408 (808 ) - - (808 ) - - - - - - - - 5,402 5,402 - - - - - - - - 703 703 - - - - (5,136 ) - - - (1,003 ) (6,139 ) - - - - - - - - (921 ) (921 ) - - - - - - - (46,931 ) - (46,931 ) 8 $ - 118,004,978 120 $ 260,516 2,308,412 $ (808 ) $ (189,686 ) $ 5,184 $ 75,326 Preferred Stock Common Stock Additional
Paid-In
CapitalTreasury Stock Accumulated
DeficitNon-
Controlling
InterestTotal Convertible
Series AShares Amount Shares Amount Shares Amount Balance at December 31, 2019 8 $ — 118,004,978 $ 120 $ 260,516 2,308,412 $ (808) $ (189,686) $ 5,184 $ 75,326 Stock compensation - employees — — 3,894,544 4 515 — — — — 519 Stock compensation - directors — — 1,359,090 1 103 — — — — 104 Stock compensation - services expense — — 1,159,615 1 151 — — — — 152 Stock cancellation — — (21,924,177) — — — — — — — Debt conversion - common stock — — 31,086,209 31 2,413 — — — — 2,444 Stock issued for cash — — 2,470,173 2 248 — — — — 250 Stock option expense — — 58,154,027 58 9,246 — — — — 9,304 Issuance of warrants to Aegis — — — — 1,868 — — — — 1,868 Series A — — — — — — — — — — Contribution (distribution) to non-controlling interest — — — — — — — — 33 33 Net loss attributable to non-controlling interest — — — — — — — — (754) (754) Net loss attributable to Unrivaled Brands, Inc. — — — — — — — (30,117) — (30,117) Balance at December 31, 2020 8 $ — 194,204,459 218 $ 275,060 2,308,412 $ (808) $ (219,803) $ 4,463 $ 59,130 Adoption of ASU 2020-06 — — — — (1,071) — — 1,059 — (12) Stock compensation - employees — — 250,000 — 67 — — — — 67 Stock compensation - directors — — 1,917,837 2 493 — — — — 495 Stock compensation - services expense — — 4,556,603 5 1,074 — — — — 1,079 Warrants Issued to Dominion — — — — 5,978 — — — — 5,978 Debt conversion - common stock — — 24,939,780 25 5,031 — — — — 5,056 Stock issued for cash — — 9,677,419 10 3,746 — — — — 3,756 Stock option exercises — — 3,381,878 3 2 — — — — 5 Stock option expense — — — — 2,415 — — — — 2,415 Acquisition of A Shares — — 16,485,714 17 5,874 8 — — — 5,891 Stock issued for Umbrla Acquisition — — 191,772,781 192 79,630 — — — — 79,822 Stock issued for People's Acquisition — — 40,000,000 40 12,140 — — — — 12,180 Stock issued for Silverstreak Acquisition — — 9,051,412 9 2,491 — — — — 2,500 Net contribution from non-controlling interest — — — — — — — — — — Net income attributable to non-controlling interest — — — — — — — — (604) (604) Net loss attributable to Unrivaled Brands, Inc. — — — — — — — (31,271) — (31,271) Balance at December 31, 2021 8 $ — 496,237,883 521 $ 392,930 2,308,420 $ (808) $ (250,015) $ 3,859 $ 146,487 F-6Table of Contents$ (47,852 ) $ (39,474 ) (588 ) 490 (48,440 ) (38,984 ) 2,221 - (58 ) (118 ) (860 ) (5,644 ) 7,880 11,926 7,213 4,706 1,218 - 5,286 3,457 1,067 - 8,347 - (28 ) 662 (2,668 ) (249 ) (2,821 ) 3,849 (93 ) (438 ) 1 (319 ) 7,790 1,422 (1,894 ) - (15,839 ) (19,730 ) 1,099 (147 ) (14,740 ) (19,877 ) (1,800 ) - (4,482 ) (11,407 ) (400 ) (7,766 ) (100 ) - 127 - 1,249 5,644 (5,406 ) (13,529 ) 6,035 (3,002 ) 629 (16,531 ) 13,000 33,650 (2,150 ) - (150 ) (1,195 ) 4,500 5,600 - 101 (6,250 ) - 1 - (808 ) - 8,143 38,156 - - 8,143 38,156 (5,968 ) 1,748 7,193 5,445 $ 1,226 $ 7,193 $ 1,594 $ - $ 11,957 $ - $ 165 $ - $ - $ 6,500 $ - $ 351 $ - $ 200 $ 183 $ 818 $ - $ 3,500 $ 703 $ - $ 5,795 $ 9,015 $ 13,200 $ 36,267 Year Ended December 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ (31,875) $ (30,871) Less: Income from discontinued operations 11,186 (22,865) Net loss from continuing operations (43,061) (8,006) Adjustments to reconcile net loss to net cash used in operating activities: Deferred tax expense 835 — Bad debt expense (3,097) 650 Depreciation and amortization 6,198 3,920 Impairment loss 6,171 19,910 Gain on sale of assets (3,133) — Discount on issuance of common stock 756 — Gain on debt forgiveness (86) — Gain on sale of investments (5,337) — Amortization of operating lease right of use asset 3,193 857 Loss (gain) on extinguishment of debt 5,976 — Non-cash interest expense 1,977 1,004 Non-cash portion of severance expense 7,990 — Stock-based compensation 4,056 2,175 Unrealized gain on investments — (29,045) Other — 841 Change in operating assets and liabilities: Accounts receivable 3,029 227 Inventory 1,832 3,575 Prepaid expenses and other current assets 579 461 Other assets 684 (524) Accounts payable and accrued expenses (2,636) (566) Operating lease liabilities (1,083) (1,093) Net cash provided by / (used in) operating activities - continuing operations (15,160) (5,614) Net cash provided by / (used in) operating activities - discontinued operations (2,586) (9,223) NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES (17,745) (14,837) CASH FLOWS FROM INVESTING ACTIVITIES: Sale of property, equipment and leasehold improvements 15,264 20,772 Insurance proceeds for damaged assets — 452 Issuance of note receivable — (250) Cash from acquisitions 2,309 57 Cash paid for acquisitions (24,397) — Proceeds from sales of investments 39,382 — Proceeds from sales of assets — — Net cash provided by / (used in) investing activities - continuing operations 32,558 21,031 Net cash provided by / (used in) investing activities - discontinued operations (11,768) (9,228) NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES 20,790 11,803 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable 8,500 2,954 Payments of debt principal (6,774) (507) Proceeds from issuance of common stock 3,005 250 Purchase of treasury stock (228) — Cash contribution from non-controlling interest — 152 Cash distribution to non-controlling interest — (145) Other — (8) Net cash provided by / (used in) financing activities - continuing operations 4,502 2,696 Net cash provided by / (used in) financing activities - discontinued operations — — NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES 4,502 2,696 NET CHANGE IN CASH 7,547 (338) Cash at beginning of period 217 1,226 Cash reclassified to discontinued operations $ (873) $ (671) CASH AT END OF PERIOD $ 6,891 $ 217 SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: Cash paid for interest $ 633 $ 1,177 SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES: Non-cash Capex $ 2,986 $ — Stock issued for the acquisition of OneQor $ — $ 9,305 Promissory note issued for severance $ 2,100 $ — Stock issued for prior year bonuses $ — $ 469 Stock options exercised on a net share basis $ 3 $ — Fixed assets in accounts payable $ 100 $ 484 Non-cash consideration for acquisition of Umbrla Inc $ 79,032 $ — Non-cash consideration for acquisition of People's, including acquisition liabilities outstanding $ 58,749 $ — Non-cash consideration for acquisition of Silverstreak, including acquisition liabilities outstanding $ 8,500 $ — Debt principal and interest converted to common stock $ 5,056 $ 2,444 F-7Table of Contents“Terra Tech”“Unrivaled”, “we”, “us”, or “our” are intended to mean Terra Tech Corp.Unrivaled Brands, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.Terra Effective July 7, 2021 the Company changed its corporate name from “Terra Tech Corp.” to “Unrivaled Brands, Inc.” in connection with the Company’s acquisition of UMBRLA, Inc (“UMBRLA”).·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”);·Edible Garden Corp., a Nevada corporation (“Edible Garden”);·EG Transportation, LLC, a Nevada limited liability company (“EG Transportation”);·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 I Real Estate, LLC, a Nevada limited liability company (“MediFarm I RE”);·MediFarm II, LLC, a Nevada limited liability company (“MediFarm II”); and·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")F-8Table of Contentscompany,operations, with an emphasis on providing the highest quality of medical and adult use cannabis products. From the acquisition of UMBRLA, the Company has multiple cannabis lifestyle brands. The Company grows organic antioxidant rich Superleaf rich lettuceis home to Korova, a brand of high potency products across multiple product categories, currently available in California, Oregon, Arizona, and living herbs using classic Dutch hydroponic farming methods. We have licensed an exclusive patent on the Superleaf lettuce.TheOklahoma. Other Company hasbrands include Cabana, a presence in three states (California, Nevadaboutique cannabis flower brand, and New Jersey), and currently hasSticks, a concentratedmainstream value-driven cannabis interestbrand, active in California and Nevada. AllOregon. With the acquisition of People’s First Choice, the Company’sCompany operates the premier cannabis dispensaries operate under the name Blüm.dispensary in Orange County California. The Company’s cannabisCompany also owns dispensaries in California which operate as MediFarm SoCalThe Spot in Santa Ana, Black Oak GalleryBlum in Oakland and Blum San LeandroSilverstreak in San Leandro and offer a broad selection of medical and adult-use cannabis products including flowers, concentrates and edibles.In Nevada, theLeandro. The Company also has three dispensaries, two under MediFarm in Las Vegas and one under MediFarm I in Reno, which sell quality medical and adult use cannabis products.Founded on the importance of providing consumers with healthy and natural products, Edible Garden is a wholesale seller of organic and locally grown hydroponic produce and herb products. EG Transportation supports thelicensed distribution of Edible Garden products to major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, and others throughout New Jersey, New York, Delaware, Maine, Maryland, Connecticut, Pennsylvania and the Midwest.On April 1, 2016, the Company acquired Black Oak. Black Oak operates a medical marijuana dispensary and cultivation in Oakland, California under the name Blüm, pursuant to that certain Agreement and Plan of Merger, dated December 23, 2015 (the “Merger Agreement”), with Generic Merger Sub, Inc., a California corporation and our wholly-owned subsidiary (the “Merger Sub”), and Black Oak. The Merger Agreement was amended by a First Amendment to the Agreement and Plan of Merger, dated February 29, 2016. Pursuant to the Merger Agreement, the Merger Sub merged with and into Black Oak, with Black Oak as the surviving corporation, and became our wholly-owned subsidiary (the “Merger”). The Merger was intended to qualify for Federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.Due to changes in planned operations of the MediFarm dispensaries, the Company acquired an additional 38.0% ownership for no additional consideration during August 2017. Previously, the Company owned 60.0%. In December 2018, we issued 200,000 shares of common stock with a fair value of $0.20 million to acquire the remaining 2.0% interest in MediFarm. MediFarm has received the necessary governmental approvals and permitting to operate medical marijuana and adult use dispensary facilities in Clark County, NevadaPortland, Los Angeles, and a medical and adult use marijuana dispensary facility in the City of Las Vegas. On February 26, 2019, the Company acquired the remaining interest in MediFarm I and II.On September 13, 2017, MediFarm So Cal Inc. (“MediFarm So Cal”), a wholly-owned subsidiary of the Company acquired all assets of Tech Center Drive LLC (“Tech Center Drive”) and majority control of 55 OC Community Collective Inc. (“55 OC”). The acquisition of Tech Center Drive and 55 OC was accounted for in accordance with ASC 805-10, “ Business Combinations.” 55 OC is a mutual benefit corporation which holds a cannabis license with the City of Santa Ana in the State of California. MediFarm So Cal manages the dispensary under the license of 55 OC. Control of 55 OC was obtained by the Company’s CEO and Treasurer holding two of the three Board seats of 55 OC and through the management contract held by MediFarm So Cal. The Company acquired inventory, property, equipment and leasehold improvements and a management service agreement which allows for Tech Center Drive to purchase the medical marijuana dispensary license of 55 OC. The acquisition was accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805-10, “Business Combinations”. MediFarm SoCal’s sole purpose is to operate a medical marijuana retail dispensary. On November 6, 2018, MediFarm So Cal Inc. was converted from a Nonprofit Mutual Benefit Corporation to a General Stock Corporation.On March 12, 2018, the Company implemented 1-for-15 reverse stock split of the Company’s common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in the stock market upon commencement of trading on March 13, 2018. As a result of the Reverse Stock Split, every fifteen shares of the Company’s Pre-Reverse Stock Split common stock were combined and reclassified into one share of the Company’s common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout consolidated financial statements have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of the Company’s common stock were not affected by the Reverse Stock Split.
Sonoma County.F-9Table of Contentshave determined that we are the primary beneficiary of a number of VIEs. We evaluate our relationships with all the VIEs on an ongoing basis to reassess if we continue to be the primary beneficiary. 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 December 31, 20192021 and 2018,2020, and the consolidated results of operations and cash flows for the years ended December 31, 20192021 and 20182020 have been included.the timing of the close of our pending asset sales in Nevada,ability to raise capital, our limited capital resources, and the weak industry conditions impacting our business raise substantial doubt as to our ability to continue as a going concern. See Note 21 23 – ”Going Concern””Going Concern” of the Notes to Consolidated Financial Statements included in Part II and Item 1A – “Risk Factors”in Part I of this Annual Report on Form 10-K.revenue recognition, allowances for doubtful accounts, sales returns, inventory valuation, stock-based compensation expense, goodwill and purchased intangible asset valuations, derivative liabilities,investments, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, and 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.F-10Table of Contents1719, “Discontinued Operations” for further discussion regarding discontinued operations.$0.44$3.68 million and $0.33 millionnil as of December 31, 20192021 and 2018, respectivelyNotes Receivablereviews allaccounts for investments in limited partnerships or limited liability corporations, whereby the Company owns a minimum of 5% of the investee's outstanding notes receivable for collectability as information becomes available pertaining tovoting stock, under the equity method of accounting. These investments are recorded at the amount of the Company’s inability to collect. An allowance for notes receivable is recordedinvestment and adjusted each period for the likelihoodCompany’s share of non-collectability. Thethe 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 accrues interestonly estimates fair value if there are identified events or changes in circumstances that could have a significant adverse effect on notes receivable based net realizablethe investment’s fair value. The allowance for uncollectible notes was $1.83 million and $0December 31, 2019 and 2018, respectively.“Note 7 –, “Property, Equipment and Leasehold Improvements, Net”for further information.F-11Table of ContentsGoodwillGoodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. In accordance with ASC 350, “Intangibles—Goodwill and Other,”goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of September 30 and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In 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.F-12Table of ContentsCustomer Relationships YearsPatent2 YearsManagement Service Agreement15 Yearsyears The Company calculates fair value of our intangible assets as the present value of estimated future cash flows the Company expects to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, The Company uses estimates and assumptions about future revenue contributions, cost structures and remaining useful lives of the asset (asset group).and are tested for impairmentor 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.Other AssetsOthercomprised primarilyno longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.purchaselikelihood of real property and security deposits for leased properties in California, Nevada and New Jersey. The deposits for the purchase of real property are reclassified to Property and Equipment once the purchase is final.Business Combinationsaccountsaccrues interest on notes receivable based net realizable value. The allowance for its business acquisitionsuncollectible notes was nil as of December 31, 2021 and 2020, respectively.805-10, “ Business Combinations.360, “Property, Plant, and Equipment,” The Company allocates at the total costlower of the acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, the Company identifies and attributes values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, and the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market pricescarrying value or other transparent market data. These determinations affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believesless costs to be reasonable but are inherently uncertain.Revenue Recognition and Performance ObligationsCannabis Dispensary, Cultivation and ProductionThe 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, promotional adjustments and returns. We collect taxes on certain revenue transactions to be remitted to governmental authorities, which may include sales, excise and local taxes. These taxes are not included in the transaction price and are, therefore, excluded from revenue. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase.F-13Table of ContentsRevenue related to distribution customers is recorded when the customer is determined to have taken control of the product. This determinationsell. Fair value is based on the customer specific termsestimated proceeds from the sale of the arrangement and gives considerationfacility utilizing recent purchase offers, market comparables and/or data. Our estimate as to factors including, but not limited to, whether the customer has an unconditional obligation to pay, whether a time period or event is specified in the arrangement and whether the Company can mandate the return or transfer of the products. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities with collected taxes recorded as current liabilities until remitted to the relevant government authority.Herbs and Produce ProductsThe Company recognizes revenue from products grown in its greenhouses upon delivery of the product to the customer at which time control passes to the customer. Upon transfer of control, the Company has no further performance obligations. For sales for which the Company uses an outside grower, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. The evaluation considers whether the Company takes control of the products of the outside grower, whether it has the ability to direct the outside grower to provide the product to the customer on its behalf or whether it combines products from the outside grower with its own goods and services to provide the products to the customer.In evaluating whether it takes control of the products of the outside grower, the Company considers whether it has primary responsibility for fulfilling the promise to provide the products, whether the Company is subject to inventory risk related to the products and whether it has the ability to set the selling prices for the products.Disaggregation of RevenueSee Note 18 – “Segment Information”for revenues disaggregated by type as required by ASC Topic 606.Contract BalancesDue 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 JudgmentsThe 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 considerationCost of Goods SoldCannabis Dispensary, Cultivation and ProductionCost 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.Herbs and Produce ProductsCost of goods sold include cultivation costs, packaging, other supplies and purchased plants that are sold into the retail marketplace by Edible Garden. Other expenses included in cost of goods sold include freight, allocations of rent, repairs and maintenance, and utilities.F-14Table of ContentsAdvertising ExpensesThe Company expenses advertising costs as incurred in accordance with ASC 720-35, “Other Expenses – Advertising Cost.”Advertising expenses recognized totaled $1.80 million and $1.23 million the years ended December 31, 2019 and 2018, respectively.Stock-Based CompensationThe Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”,which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors, including restricted stock awards. For stock options, the Company estimates the fair value using a closed option valuation (Black-Scholes) model. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value is then expensed overregularly reviewed and subject to changes in the requisite service periods ofcommercial real estate markets and our continuing evaluation as to the awards, net of estimated forfeitures, which is generallyfacility’s acceptable sale price. The reclassification takes place when the performance periodassets are available for immediate sale and the related amountsale is recognizedhighly probable. These conditions are usually met from the date on which a letter of intent or agreement to sell is ready for signing. The Company follows the guidance within ASC 205, consolidated statements of operations.The Black-Scholes option-pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected termoperations 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. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from management’s estimates, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.Income TaxesThe provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. The Company files a consolidated United States federal income tax return. The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expense are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. At December 31, 2019 and 2018, such net operating losses were offset entirely by a valuation allowance.The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that 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 ShareIn accordance with the provisions of ASC 260, “Earnings Per Share”,net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in the diluted loss per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the years ended December 31, 2019 and 2018. Therefore, the basic and diluted weighted-average shares of common stock outstanding were the same for all years.Potentially dilutive securities that are not included in the calculation of diluted net loss per share because there effect is anti-dilutive are as follows (in common equivalent shares):1,313,459 1,053,252 12,365,295 8,400,629 13,678,755 9,453,881 F-15Table of Contents–Quoted–Quoted prices in active markets for identical assets or liabilities.InvestmentsInvestmentsunconsolidated affiliates are accounted for under the costEdible Garden AG, Inc. at fair value. On March 30, 2020, Edible Garden Corp., a wholly-owned subsidiary of Terra Tech Corp. (the "Company"), entered into and closed an Asset Purchase Agreement (the "Purchase Agreement") with Edible Garden AG Incorporated ("Edible Garden", or the equity method"Purchaser"), pursuant to which Edible Garden sold and the Purchaser purchased substantially all of accounting,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 gave 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 gave 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. During the year ended December 31, 2021, the Company exercised its options and acquired 5,000,000 shares of Edible Garden AG, Inc.'s common stock for 2 dollars. During 2021, the Company concluded that the investment in Edible Garden was impaired and recorded an impairment charge of $0.33 million, which is included in "Net Income from Discontinued Operations" for the year ended December 31, 2021.appropriate. of December 31, 2020:Investments as of December 30, 2020: Amount Level 1 Level 2 Level 3 Warrants to acquire shares of HydroFarm $ 10,195 $ — $ 10,195 $ — Shares of HydroFarm 23,850 — 23,850 — Option to acquire common shares of Edible Garden: 330 — — 330 Total $ 34,375 $ — $ 34,045 $ 330 investments in limited partnerships or limited liability corporations, whereby the Company owns a minimum of 5.0% 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.Assets Held for Sale and Discontinued OperationsAssets 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 saleits business acquisitions in accordance with ASC 360, “Property, Plant,805-10, “Equipment,”attributes values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, and the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market prices or other transparent market data. These determinations affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes to be reasonable but are inherently uncertain.lowertime customers take possession of carrying value or fair value less coststhe product. Revenue from our retail dispensaries is recognized net of discounts, promotional adjustments and returns. We collect taxes on certain revenue transactions to sell. Fair valuebe remitted to governmental authorities, which may include sales, excise and local taxes. These taxes are not included in the transaction price and are, therefore, excluded from revenue. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase. estimated proceeds from the salecustomer specific terms of the facility utilizing recent purchase offers,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.(in thousands) 2021 2020 California $ 42,120 $ 6,161 Oregon 5,553 — Total $ 47,673 $ 6,161 comparables and other market data. Our estimate as toprice of the common shares on the date of grant. The fair value is regularly reviewedthen expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the performance period and subject to changesthe related amount is recognized in the commercial real estate marketsconsolidated statements of operations.continuing evaluation asincome tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reportingfacility’s acceptable sale price. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. These conditions are usually met from the date on which a letter of intent or agreementamount expected to sell is ready for signing.be realized. The Company followshas incurred net operating losses for financial-reporting and tax-reporting purposes. At December 31, 2020, such net operating losses were offset entirely by a valuation allowance. At December 31, 2021, we have released the guidance withinvaluation allowance due to our net deferred tax liability position.205, “Reporting Discontinued Operations260, “Earnings Per Share,” net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and Disclosure of Disposals of Components of an Entity” when assets held for sale represent a strategic shiftconvertible debt are not considered in the Company’sdiluted loss per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the years ended December 31, 2021 and financial results.Year Ended December 31, 2021 2020 Common stock warrants 30,677,637 1,076,555 Common stock options 88,251,380 17,492,830 118,929,017 18,569,385 2018-07 (Topic 718), “Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting”2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” – Issued in June 2018,August 2020, ASU 2018-07 expands2020-06 simplifies the scope ofaccounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 718 to include share-based payment transactions815, Derivatives and Hedging, or that do not result in substantial premiums accounted for acquiring goodsas paid-in capital. By removing the separation model, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and services from nonemployees. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financingthe interest rate on convertible debt instruments will typically be closer to the issuer or (2) awards grantedcoupon interest rate when applying the guidance in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606. The Company adopted835, Interest. ASU 2018-07 on January 1, 2019. Adoption of this guidance did not have a material impact on the Company’s consolidated financial condition or results of operations.F-16Table of ContentsFASB ASU 2017-04 (Topic 350), “Intangibles - Goodwill and Others” – Issued in January 2017, ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-042020-06 is effective for annual periodsfiscal years beginning after December 15, 20192021, including interim periods within those periods. As earlyfiscal years. Early adoption is permitted, thebut no earlier than fiscal years beginning after December 15, 2020, including interim periods within those years. The Company adopted ASU 2017-04 on2020-06 as of January 1, 2019. Adoption of this guidance did not have a material impact on the Company’s consolidated financial condition or results of operations.FASB ASU No. 2016-02 (Topic 842), “Leases”– Issued in February 2016, ASU No. 2016-02 established ASC Topic 842, “Leases,” as amended by subsequent ASUs on the topic, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under the existing lease standard. We adopted this standard effective January 1, 2019 using2021, utilizing the modified retrospective approach. In transitioning to ASC 842, we elected to usemethod of adoption. As a result of adoption of the practical expedient package available to us and did not elect to use hindsight. These elections have been applied consistently to allnew standard, previously recognized beneficial conversion features for convertible debt instruments outstanding as of our leases. On January 1, 2019 we2021 were removed from additional paid-in capital and the debt discount. A cumulative impact adjustment was recorded to account for a right-of-use assetreduction in interest expense due to a decrease in the discount, which is recognized as interest expense upon conversion of $9.91 million (included in “other assets”) and a lease liabilitythe convertible notes. The January 1, 2021 cumulative effect adjustment to the Company’s financial position was as follows (in thousands):As Reported Cumulative Effect Adjustment As Reported December 31, 2020 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 – - Issued in December 2019,2020, ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluatingadopted the adoption date andstandard January 1, 2021. Adoption had no material impact if any, adoption will have on itsthe Company’s financial position andor results of operations..$0.18$5.42 million and $4.83$0.06 million as of December 31, 20192021 and 2018,2020, respectively.customers located throughout the U.S.its customers. 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’sCompany's revenue for the yearyears ended December 31, 20192021 and 2018.yearyears ended December 31, 20192021 and 2018,2020, we did not have any concentration of vendors for inventory purchases. However, this may change depending on the number of vendors who receive appropriate licenses to operate in the State of California.F-17Table of Contents 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 initially recorded at cost and accounted for using the equity method as of December 31, 2018.grantgranted the Company the power to manage and make decisions that affect the operation of these entities. As the primary beneficiary of NuLeaf Sparks Cultivation, LLC and NuLeaf Reno Production, LLC, the Company began consolidating the accounts and operations of these entities as ofon March 1, 2019. All intercompany transactions are eliminated in the consolidated financial statements. OnEffective March 1, 2019, we remeasured our equity method investment in NuLeaf to fair value and consolidated the results of NuLeaf inwithin our consolidated financial statementsstatements.report its resultsaffiliated companies with an expected closing in our cannabis segment.The Company finalized the accounting2022. Nuleaf operations are considered held for sale as of December 31, 2021 and are therefore included in Discontinued Operations as of and for the years ended December 31, 2021 and 2020.transaction inwas $12.90 million and $0.69 million, respectively. During the fourth quarter of 2019year ended December 31, 2020, revenue and now considers the measurement periodnet loss attributed to be closed.NuLeaf was $8.13 million and $4.08 million, respectively. The aggregate carrying values of Sparks Cultivation, LLC and NuLeaf Reno Production, LLC assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows:$ 127 $ 243 - 16 974 2,910 88 35 1,189 3,204 10,839 9,543 92 598 $ 12,120 $ 13,345 $ 37 $ 213 - 415 $ 37 $ 628 For fiscal year 2019, revenue and net loss attributed to NuLeaf was $4.08 million and $3.04 million, respectively. Additional pro forma information was omitted as amounts are not material.F-18Table of ContentsBlum Desert InnOn November 1, 2019, we entered into an agreement with Picksy, LLC (“Picksy”) to transfer all management responsibilities over the operations of our Blum Desert Inn retail dispensary. In consideration of the services to be performed by Picksy, the Company has conveyed the rights to 85% of all future net profits generated from the aforementioned store. In the event of a loss, Picksy has assumed responsibility to cover all future working capital shortfalls. The agreement will terminate upon the closing of the related asset purchase agreement, whereby the Company has agreed to sell all of the assets associated with the Blum Desert Inn location to Picksy. The Company’s 15% share of net profits are to be applied to the purchase price payable to the Company upon the closing of the asset purchase agreement. See Note 17 – “Discontinued Operations.”As the agreement transferred the benefits and risks arising from the operations of the Desert Inn store, as well as complete managerial authority over the operations, management concluded that Picksy became the primary beneficiary of Blum Desert Inn upon execution of the agreement. As a result, the Company deconsolidated Desert Inn’s assets as of November 1, 2019.(in thousands) December 31,
2021December 31,
2020Current assets: Cash $ 1,544 $ 671 Accounts receivable, net 1,553 483 Inventory 1,359 3,118 Prepaid expenses and other current assets 39 21 Total current assets 4,495 4,293 Property, equipment and leasehold improvements, net 5,099 7,442 Other assets 295 395 TOTAL ASSETS $ 9,889 $ 12,130 Liabilities: Total current liabilities $ 350 $ 396 Total long-term liabilities 184 307 TOTAL LIABILITIES $ 534 $ 703 Units,“Units”, each Unit consisting of one1 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 iswas included in other assets on the consolidated balance sheet as of December 31, 2019.consistsconsist of materialmaterials and packaging for NuLeaf and IVXX’s linesmanufacturing of cannabis pure concentrates, as well as Edible Garden’s herb product lines.products owned by Unrivaled Brands. Work-in-progress consists of cultivation materials and live plants grown at NuLeaf and Black Oak Gallery and plants grown for Edible Garden’s herb product lines.Hegenberger. Finished goods consists of cannabis products sold in retail.20192021 and 2018 consists2020 consisted of the following:2018 $ 2,650 $ 1,208 3,425 311 573 858 (1,493 ) (1,018 ) $ 5,155 $ 1,359 F-19Table of Contents(in thousands) December 31,
2021December 31,
2020Raw materials $ 2,258 $ — Work-in-progress 1,077 392 Finished goods 3,844 367 Total inventory $ 7,179 $ 759 $ 11,206 $ 13,945 5,147 3,268 464 333 20,976 6,681 10,975 12,180 48,768 36,407 (8,686 ) (4,726 ) $ 40,082 $ 31,681 (in thousands) December 31,
2021December 31,
2020Land and building $ 7,788 $ 206 Furniture and equipment 3,873 1,135 Computer hardware 348 152 Leasehold improvements 14,409 5,850 Vehicles 1,142 123 Construction in progress 1,832 8,500 Subtotal 29,392 15,966 Less accumulated depreciation (5,663) (3,336) Property, equipment and leasehold improvements, net $ 23,729 $ 12,630 20192021 and 20182020 was $7.21$2.06 million and $4.71$1.37 million, respectively.Assets DivestedOn July 6, 2018, MediFarm LLC, a wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Exhale Brands Nevada III, 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 1921 Western Ave., Las Vegas, NV 89102 (“Western”). The total consideration was $6.25 million in cash plus the value of the inventory on the closing date. The transaction closed on October 22, 2018 upon receiving approval from the Nevada Department of Taxation.Management has concluded that the Western asset purchase agreement does not meet the definition of the sale of a business. Therefore, the relevant guidance is ASC 610-20 “Other Income.”The Company recognized a gain upon sale of the assets equal to the difference between the consideration paid and the book value of the assets as of the disposition date, less direct costs to sell.The following table summarizes the transaction:$ 6,408 159 10 597 766 413 $ 5,229 On July 31, 2019, MediFarm I Real Estate LLC entered into a purchase agreement to sell real property in Reno, NV to Green Wagon Reno LLC, an unaffiliated third party, for total cash consideration of $1.50 million.F-20Table of Contents20192021 and 20182020 was $27.72$48.13 million and $35.17$6.17 million, respectively and was attributed to the Cannabis reportable segment.$ 28,921 6,251 35,172 (7,450 ) $ 27,722 Balance at December 31, 2019 $ 21,471 Impairment (15,300) Balance at December 31, 2020 6,171 Goodwill arising from acquisitions 48,132 Impairment (6,171) Balance at December 31, 2021 $ 48,132 completed a preliminary step one assessment as oftests for impairment annually on September 30, 2019 and concluded no adjustment tobetween annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. During the first quarter of goodwill2020, the impact of COVID-19 on the retail industry as well as uncertainty around when the Company would be able to resume its normal operations contributed to a significant and prolonged decline in the Company’s stock price, resulting inrequired, howevermore likely than not that the fair valuecarrying values of the Black Oak Gallery reporting unit exceeded its fair value. Accordingly, the carryingCompany performed a quantitative assessment of the fair value by less than 5%.During the fourth quarter of 2019, Company’sBlack Oak Gallery’s goodwill as of March 31, 2020 using a market capitalization declined more than 50%. The decline coincided with an overall weakening of the legal cannabis industry, primarily due to high taxation and increasing competition from the illicit cannabis market in California. On November 21, 2019 the California Department of Tax and Fee Administration (CDTFA) announced cannabis mark-up and cultivation tax rate changes that will become effective as of Jan. 1, 2020. Management considered the decline in market capitalization and pending increase in taxes to be impairment indicators and performed an interim impairmentapproach. This analysis of the Black Oak Gallery and Blum Santa Ana reporting units as of December 31, 2019, using a “step one” quantitative assessment for each reporting unit.The Company first reviewed long-lived assets, which resulted in an impairment charge of $0.25$4.20 million recorded in the first quarter of 2021. The goodwill impairment charge was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value.2019.2021. The Company then performed a goodwill impairment analysis which resulted in an $7.45 million charge in the fourth quarter of 2019, which approximatesloss represented the excess of the carrying value of our Black Oak Gallery reporting unit over the estimated fair value based on a discounted cash flow analysis. The impairment recognizes the impact of COVID-19 on the financial performance of Black Oak Gallery reporting unit.Company estimated the fair value of the reporting unit using a combination of the Guideline Public Company and Comparable Transactions methods. These non-cashimpairment charges relating to goodwill and other assets were recordedare presented in the Impairment“Impairment of Intangible AssetsAssets” line in the Consolidated Statements of Operations.The results of the Company’s 2019 and 2018 goodwill impairment assessments indicated that no other goodwill impairment existed.F-21Table of Contents20192021 and 2018:$ 8,072 $ (5,834 ) 2,238 $ 8,072 $ (3,630 ) $ 4,443 196 (166 ) 29 196 (117 ) 79 10,270 (2,751 7,519 10,270 (1,985 ) 8,285 470 (57 ) 414 370 (32 ) 338 19,008 (8,808 ) 10,200 18,908 (5,763 ) 13,146 5,070 - 5,070 5,320 - 5,320 5,070 - 5,070 5,320 - 5,320 $ 24,078 $ (8,808 ) 15,270 $ 24,228 $ (5,763 ) $ 18,466 In the fourth quarter2020:(in Thousands) December 31, 2021 December 31, 2020 Estimated Useful Life
in YearsGross
Carrying AmountAccumulated Amortization Net
Carrying AmountGross
Carrying
ValueAccumulated Amortization Net
Carrying
ValueAmortizing Intangible Assets: Customer Relationships 3 to 5 $ 7,400 $ (7,400) $ — $ 7,400 $ (7,400) $ — Trademarks and Patent 2 to 8 4,500 (750) 3,750 196 (187) 9 Operating Licenses 14 100,701 (6,864) 93,837 10,270 (3,485) 6,785 Total Amortizing Intangible Assets 112,601 (15,014) 97,587 17,866 (11,072) 6,794 Non-Amortizing Intangible Assets: Trade Name Indefinite 32,050 — 32,050 920 — 920 Total Non-Amortizing Intangible Assets 32,050 — 32,050 920 — 920 Total Intangible Assets, Net $ 144,651 $ (15,014) $ 129,637 $ 18,786 $ (11,072) $ 7,714 reducedare reviewed for impairment whenever events or changes in circumstances indicate that the estimated useful lifecarrying 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.better reflectassess the expected benefit period.potential impact of a long-term decline in our existing customer base due to the COVID-19 pandemic. The change in estimated useful liferecoverability test indicated that the book value of customer relationships exceeded fair value. As a result, the Company recognized impairment charges of $0.46 million during 2021.accounted for as a change in accounting estimate. The reduction in the useful life increased loss from operations and net loss by approximately $1.58 million for the year ended December 31, 2018.$3.05$3.39 million and $1.72$2.55 million for the years ended December 31, 20192021 and 2018,2020, respectively. Based solely on the amortizable intangible assets recorded atas of December 31, 2019,2021, the Company estimates amortization expense for the next five years to be as follows:2020 $ 3,042 $ 804 $ 766 $ 765 $ 4,873 10,250 (in thousands) Year Ending December 31, 2022 2023 2024 2025 2026 and thereafter Total Amortization expense $ 9,443 $ 8,693 $ 7,193 $ 7,193 $ 65,065 $ 97,587 F-22Table of Contents$ 6,774 $ 2,576 275 568 830 2,553 3,942 1,204 $ 11,820 $ 6,901 (in thousands) December 31,
2021December 31,
2020Accounts Payable $ 16,804 $ 6,027 Tax Liabilities 5,147 337 Accrued Payroll and Benefits 1,409 782 Current Lease Liabilities 3,120 694 Other Accrued Expenses 5,423 385 Total Accounts Payable and Accrued Expenses $ 31,903 $ 8,225 2018 $ 4,500 $ 4,500 6,500 6,500 - 150 - 1,200 1,600 1,600 - 7,000 4,000 - 1,500 - 500 - $ 18,600 $ 20,950 47 - (11,022 ) - (1,055 ) (2,637 ) $ 6,570 $ 18,313 F-23Table of Contents(in thousands) December 31,
2021December 31,
2020Promissory 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. Matured October 5, 2021. The promissory note bore interest at 12.0% for year one and escalated 0.5% per year thereafter up to 13.5%. In the event of default, the note was convertible at the holder's option. — 1,600 Promissory note dated June 11, 2019, issued to accredited investors, which matured December 31, 2021 and bore interest at a rate of 7.5% per annum. The conversion price was the lower of $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date. — 2,800 Promissory note dated October 21, 2019, issued to accredited investors, which matured April 21, 2021 and bore interest at a rate of 7.5% per annum. The conversion price was the lower of $4.50 or 87% of the average of the two (2) lowest VWAPs in the thirteen (13) trading days prior to the conversion date. — 725 Secured promissory note dated December 30, 2019, issued to Matthew Lee Morgan Trust (a related party), which matured January 30, 2021, and bore interest at a rate of 10% per annum. — 500 Secured promissory note dated January 10, 2020, issued to an unaffiliated third party. The note matured on July 10, 2021 and bore interest at a rate of 15.0% per annum. — 1,000 Promissory note dated July 29, 2020, issued to an unaffiliated third party. The note bore interest at a rate of 8% per annum and matured on April 28, 2021. — 1,000 Promissory note dated May 4, 2020, issued to Harvest Small Business Finance, LLC, an unaffiliated third party. The 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 1.0%. The note requires interest and principle payments seven months from July 2020. The note matures on May 4, 2022. 562 562 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 Promissory note dated July 27, 2021, issued to Arthur Chan, which matures July 26, 2024, and bears interest at a rate of 8% per annum. 2,500 Senior Secured Promissory Note dated November 22, 2021 issued to Dominion Capital LLC, which matures on February 22, 2022 and bears interest at a rate of 12% per annum. 2,500 Unsecured promissory note without interest owed to a related party. The loan, which is paid in 20 equal installments, matures on August 1, 2022. 90 Promissory note dated June 1, 2020, issued as part of the Paycheck Protection Program ("PPP Loan") offered by the U.S. Small Business Administration. The interest rate on the note is 1.0%. The note matures on June 1, 2022. 297 Line of credit agreement entered on March 31, 2021, which matures on March 31, 2022 and bears interest of 2.9% per 30 days. 4,500 Promissory note dated October 1, 2021, issued to Sterling Harlan as part of the SilverStreak Solutions acquisition. The interest rate on the note is 3%. The note matures April 1, 2022. 2,000 Promissory note dated October 1, 2021, issued to Sterling Harlan as part of the SilverStreak Solutions acquisition. The interest rate on the note is 3%. The note matures October 1, 2022. 2,500 Secured promissory note dated November 22, 2021 issued to People's California, LLC, which matures on November 22, 2023 and bears interest at a rate of 8% per annum. Payments due include $2.00 million plus accrued interest for the first twelve months followed by payments of $1.00 million plus accrued interest until maturity. 28,569 Promissory note dated May 1, 2019, assumed by the Company on July 1, 2021 in connection with the purchase of real property, from a related party. The note matures on May 15, 2039 and bears interest at a rate of 9.89% per annum. 2,954 Notes payable - promissory notes $ 57,522 $ 14,687 Vehicle loans 204 29 Less: Short term debt (45,749) (8,033) Less: Debt discount (1,971) (51) Net Long Term Debt $ 10,006 $ 6,632 2020 $ 11,022 $ 7,578 $ - $ - $ - $ 18,600 Promissory Notes(in thousands) Year Ending December 31, 2022 2023 2024 2039 Total Total Debt $ 45,749 $ 6,523 $ 2,500 $ 2,954 $ 57,726 2020.2021. Payments of interest only arewere due monthly. The full principleprincipal balance and accrued interest are due at maturity.millionthousand and paid a cash fee of $0.20 million. The warrants and cash fee were recorded as a debt discount. The unamortized balance of such discount as of December 31, 20192021 and 2020 was $0.25 million.$0.04 million and $0.14 million, respectively. The interest rate for the first year iswas 12.0% and increasesincreased 0.5% per year, up to 13.0%, through 2021. Payments of interest only are due monthly. The full principlemonthly, while the principal balance and accrued interest areis due at maturity.monthly.monthly, while the full principal balance is due at maturity. The full principleprincipal balance and accrued interest are due at maturity.2017 Master Securities Purchase Agreement and Convertible Promissory NotesThe Company has a Securities Purchase Agreement with an accredited investor pursuant to which the Company sells to the accredited investor Senior Convertible Promissory Notes. During the year ended December 31, 2017, the Company issued five 12.0% convertible notes for an aggregate value of $20.00 million due at various dates through June 2019. Of the $20.00 convertible notes issued during 2017, the Company converted $6.90 millionwere paid upon sale of the convertible notes into shares of the Company’s common stockreal estate during the year ended December 31, 2018. The Company paid $0.60 million in cash and issued approximately $0.56 million of warrants in connection with the notes. The cash fee and warrants issued were recorded as a debt discount.$18.70$1.98 million of convertible notes into the Company’s common stock during the year ended December 31, 2019.2021. As of December 31, 2019, $8.352021, $3.50 million of principleprincipal remains outstanding. The Company paid $0.67 million in cash and issued warrants with a total fair value of approximately $0.54 million. The cash fee and warrants issued were recorded as a debt discount. 85.0%87% of the average of the 2 lowest daily volume weighted average price of the Common Stock in the fifteen (15)thirteen (13) trading days prior to the conversion date (“Conversion Price”), which. The Conversion Price is subject to adjustment for (i) stock splits, stock dividends, combinations, or similar events and (ii) full ratchet anti-dilution protection. Upon certain events of default, the conversion price will automatically become 70.0%70% of the average of the three3 (3) lowest volume weighted average prices of the Common Stock in the twenty20 (20) consecutive trading days prior to the conversion date for so long as such event of default remains in effect.F-24Table of Contentsten10 (10) consecutive trading days is $10.50 or more and (ii) the average daily trading value of the Common Stock is greater than $2.50 million for the prior ten10 (10) consecutive trading days, then the Company may demand, upon one1 (1) days’ notice, that the holder convert the notes at the Conversion Price.ten10 (10) days’ written notice to the holder, paying an amount equal to (i) 110.0%110% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is within 90 days of the issuance date of the notes; (ii) 115.0%115% of the sum of the then-outstanding principal amount of Note A plus accrued but unpaid interest, if the prepayment date is between 91 days and 180 days of the issuance date of the notes; or (iii) 125.0%125% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is after 180 days of the issuance date of the notes.On March 12, 2019, Terra Tech Corp. (the “Company”) issued a 7.5% Senior Convertible Promissory Note due September 12, 2020 (the “Note”) in the principal amount of $5.00 million to an accredited investor (the “Purchaser”) for a purchase price of $5.00 million (the “Offering”) pursuant to a Securities Purchase Agreement with the Purchaser, dated as of March 12, 2018 (the “Purchase Agreement”). The Note and the shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), issuable upon conversion of the Note (the “Conversion Shares”) are collectively referred to herein as the “Securities.” The Note is the sixth of eight tranches of 7.5% Senior Convertible Promissory Notes to be issued by the Company to the Purchaser pursuant to the Purchase Agreement.On June 11, 2019, Terra Tech Corp. (the “Company”) issued a 7.5% Senior Convertible Promissory Note due December 11, 2020 (the “Note”) in the principal amount of $4.00 million to an accredited investor (the “Purchaser”) for a purchase price of $4.00 million (the “Offering”) pursuant to a Securities Purchase Agreement with the Purchaser, dated as of March 12, 2018 (the “Purchase Agreement”). The Note and the shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), issuable upon conversion of the Note (the “Conversion Shares”) are collectively referred to herein as the “Securities.” The Note is the seventh of eight tranches of 7.5% Senior Convertible Promissory Notes to be issued by the Company to the Purchaser pursuant to the Purchase Agreement.On October 21, 2019, Terra Tech Corp. (the “Company”) issued a Promissory Note (the “Note”) in the principal amount of $1.50 million to an accredited investor (the “Purchaser”). This 7.5% Senior Convertible Promissory Note is one of a series of duly authorized and validly issued convertible promissory notes of Terra Tech Corp. under the 2018 Master Securities Purchase and Convertible Promissory Notes Agreement. It matures April 21, 2021 and bears an interest rate of 7.5% per annum. The conversion price is $4.50, subject to adjustment.Conversion of Notes Payable20192021 and 2018,2020, the Company converted debt and accrued interest into 29,380,22224,939,780 and 16,652,00231,086,209 shares of the Company’s common stock, respectively.(“ROU assets”) and lease liabilities are included in other assets and otherwhile lease liabilities are a line-item on the Company’s Consolidated Balance Sheets.ROUROURight-of-use assets and lease 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 Company has lease extension terms at our Decatur and Edible Garden properties that have either been extended or are likely to be extended. The terms used to calculate the ROUright-of-use assets for these propertiesand lease liabilities include the renewal options that the Company is reasonably certain to exercise.F-25Table of ContentsROURight-of-use assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROUright-of-use 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.$1.92$2.95 million in 2019.and $0.69 million, respectively. Short-term lease costs during the 20192021 and 2020 fiscal yearyears were not material.2019,2021 and December 31, 2020, short term lease liabilities of $1.20$3.12 million and $0.69 million are included in “Accounts“Accounts Payable and Accrued Expenses”Expenses” on the consolidated balance sheet.sheets, respectively. The table below presents total operating lease ROUright-of-use assets and lease liabilities as of December 31, 2019: $ 10,497 10,968 (in thousands) Operating right-of-use assets $ 24,448 Operating lease liabilities 24,436 2019:$ 2,351 2,066 2,085 2,148 1,843 5,294 15,787 (4,819 ) $ 10,968 (in thousands)
Operating
Leases2022 $ 5,370 2023 5,301 2024 5,215 2025 4,324 2026 4,209 Thereafter 14,005 Total lease payments 38,424 Less: discount (13,988) Total operating lease liabilities $ 24,436 Twelve Months EndedDecember 31,2019December 31,
20218.65.71 11.4 11.3% F-26Table of ContentsYear Ended December 31, Current: 2021 2020 Federal 108 — State 860 — Foreign — — Total current tax expense 968 — Year Ended December 31, Deferred: 2021 2020 Federal 1,112 — State (277) — Foreign — 0 Total deferred tax expense 835 — Total Tax Provision 1,803 — $ 2,314 $ 1,018 203 663 $ 33 14,921 13,409 18,101 14,460 - (829 ) 18,101 13,631 (18,101 ) (13,631 ) $ - $ - Year Ended December 31, 2021 2020 Deferred income tax assets: Options expense $ — $ 2,871 Depreciation — 194 Allowance for Doubtful Accounts — 291 Accrued Expenses 58 — Net operating Losses 5,010 19,676 Total 5,068 23,032 Deferred income tax liabilities: Fixed Assets and Intangibles (11,094) — Leases (96) — Unrealized gain on investments — (8,658) Total (11,190) 14,374 Valuation allowance — (14,374) Net deferred tax assets (liabilities) $ (6,122) $ — Company did not incur incomenet deferred tax expense or benefit for the years endedliability as of December 31, 2019 or 2018 from2021 is associated with the Company's continuing or discontinued operations.Company sCompany’s effective tax rate and the statutory tax rate is as follows:$ (9,705 ) $ (6,847 ) 641 642 3,785 1,566 73 - 1,680 - - - 29 405 3,496 4,235 $ - $ - On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, making significant changes to taxation of U.S. business entities. The Tax Act reduced the U.S. corporate income tax rate from 35% to 21%, provided for accelerated deductions for capital asset additions, imposed limitations on certain tax deductions (e.g., meals & entertainment, executive compensation, interest, etc.), eliminated the corporate alternative minimum tax, and included numerous other provisions.In connection with the Tax Act, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) to provide guidance to companies that had not completed their accounting for the income tax effects of the Tax Act. Under SAB 118, companies were permitted to record provisional amounts to the extent reasonable estimates could be made. Additionally, upon obtaining, preparing, or analyzing additional information (including computations), companies were permitted to record additional tax effects and adjustments to previously recorded provisional amounts within one year from the enactment date of the Tax Act.F-27Table of ContentsAs of December 31, 2018, the Company had recorded a provisional income tax benefit of $3.30 million, which was primarily associated with the remeasurement of certain deferred tax liabilities in the U.S. from 35.0% to 21.0%. As of December 31, 2018, a full valuation allowance was recorded against all net deferred tax assets, as these assets are more likely than not to be unrealized. As of December 31, 2019, the Company completed its accounting for the income tax effects of the Tax Act and concluded that no adjustment to the provisional estimate was required.Year Ended December 31, 2021 2020 Expected Income Tax Benefit at Statutory Tax Rate, Net $ (6,385) $ (6,151) Changes in income taxes resulting from: State taxes (net of federal tax benefits) 9,937 (2,045) Decrease in valuation allowance (14,375) (3,727) Foreign tax rate differential — — Gain/loss on distinguishment of debt 1,255 — Non-deductible 280E 5,421 2,683 Goodwill impairment 1,296 5,572 Debt discount 239 — Passthrough and managed 308 713 RTP adjustments and other 4,107 613 Reported income tax expense (benefit) $ 1,803 $ — 20192021 and 2018,2020, the Company had subsidiaries that produced and sold cannabis or cannabis pure concentrates, subjecting the Company to the limits of Internal Revenue Code (“IRC”) Section 280E. Pursuant to IRC Section 280E, the Company is allowed only to deduct expenses directly related to sales of product. The State of California does not conform to IRC Section 280E and, accordingly the Company is allowed to deduct all operating expenses on its California income tax returns. As the Company files consolidated federal income tax returns, the taxable income generated from its subsidiaries subject to IRC Section 280E has been offset by losses generated by operations not subject to IRC Section 280E.2019, and 2018,2021, the Company had federal net operating loss carryforwards of approximately $47.48$16.30 million, and $42.78which do not expire, but are limited in utilization against 80% of taxable income. As of December 31, 2021, the Company had state net operating loss carryforwards of approximately $17.9 million, respectively, which if unused, willbegin to expire beginning in the year 2034.2038. These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under IRC Section 382, which will limit their utilization. The Company assessedManagement completed an analysis of our owner shifts and believe we underwent ownership changes as defined by Section 382 on May 7, 2018 and July 1,2021. Net operating loss carryforwards have been reduced to reflect the effect ofmaximum amount available subject to these limitations and did not believe the losses through December 31, 2019 to be substantially limited.A significant piece of objective negative evidence evaluated was the cumulative losses incurred through the period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, asAs of December 31, 2019,2021, we have determined that a valuation allowance of has been recorded against allis no longer required due to our net deferred tax assets as these assets are more likely than not to be unrealized.liability position. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.Theauthorized 50.00 million shares of preferred stock with $0.001 par value per share. The Company designated 100 shares of preferred stock as “Series A Preferred Stock,” of which there were 8entered into a Resignation and 12 shares ofRelease Agreement and a Series A Preferred Stock outstandingPurchase Agreement with Michael A. Nahass. Mr. Nahass agreed to resign from his positions as a director, executive officer and employee of December 31, 2019the Company, and 2018, respectively.the Company agreed to purchase from Mr. Nahass the four shares of the Company’s Series A Preferred Stock is convertibleheld 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.a one-for-one basisJanuary 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.has allin consideration of the voting rightsconversion, 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.common stock.The Company designated 41.00 million sharesSeries A Preferred Stock with the Secretary of preferred stock as “Series BState of the State of Nevada, which withdraws the Certificate of Designation establishing the Company’s Series A Preferred Stock”. Each share and eliminates the Company’s Series A Preferred Stock from the Company’s Articles of Series B Preferred Stock: (i) is entitled to 100 votes for each shareIncorporation and (2) a Certificate of common stock into which a shareWithdrawal of Certificate of Designation of the Company’s Series B Preferred Stock is convertible and (ii) is convertible, atwith the optionSecretary of State of the holder, on a 1-for-5.38 basis, into sharesState of Nevada, which withdraws the Certificate of Designation establishing the Company’s common stock. During the year ended December 31, 2018, all Series B Preferred Stock were converted to common stock.20192021 and 2018, 118.002020, 496.24 million and 81.76194.20 million shares of common stock were issued and outstanding, respectively.On March 12, 2018, we implemented a 1-for-15 reverse stock split of our common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in the stock market upon commencement of trading on March 13, 2018. As a result of the Reverse Stock Split, every fifteen shares of our Pre-Reverse Stock Split common stock were combined and reclassified into one share of our common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of our common stock were not affected by the Reverse Stock Split.2,308,4082.31 million shares of common stock and 4 shares of Series A Preferred stock as part of a litigation settlement. The shares were recorded at fair market value as of the date the agreement was executed. See Note 19 - “LitigationClaims” for additional information regardingrelease agreements entered into with Mr. Nahass and Mr. Peterson, as described above. The shares were recorded at fair market value as of the settlement.
date the agreements were executed.F-28Table of Contents2019:2,000,000 1,461,064 538,936 13,000,000 9,844,666 3,155,334 Awards
Reserved
for IssuanceAwards
ExercisedAwards
OutstandingAwards
Available
for Grant2016 Equity Incentive Plan 2,000,000 — 499,953 1,500,047 2018 Equity Incentive Plan 43,976,425 3,875,921 14,409,604 25,690,900 2019 Equity Incentive Plan 84,150,000 34,884 73,014,717 11,100,399 20192021 and 2018:1,177,732 $ 2.17 7,659,565 $ 1.56 - $ - (436,668 ) $ 2.36 - $ - 8,400,629 $ 1.61 4,174,428 $ 0.62 - $ - (209,762 ) $ 1.39 - $ - 12,365,295 $ 1.24 $ - 5,145,005 $ 1.54 $ - F-29Table of ContentsNumber
of SharesWeighted-
Average
Exercise
Price
Per ShareWeighted-
Average
Remaining Contractual
LifeAggregate
Intrinsic
Value of In-
the-Money
OptionsOptions Outstanding as of December 31, 2019 12,365,295 $ 1.61 Options Granted 12,803,918 $ 0.08 Options Exercised — $ — Options Forfeited (7,203,334) $ 1.19 Options Expired (473,049) $ 1.51 Options Outstanding as of December 31, 2020 17,492,830 $ 0.41 Options Granted 88,627,220 $ 0.23 Options Exercised (3,910,805) $ 0.08 Options Forfeited (13,547,745) $ 0.15 Options Expired (410,120) $ 0.41 Options Outstanding as of December 31, 2021 88,251,380 $ 0.20 8.8 years $ 10,334,294 Options Exercisable as of December 31, 2021 35,661,302 $ 0.27 7.6 years $ 3,591,052 $0.16$0.26 on December 31, 20192021 and the exercise price of options, multiplied by the number of options. As of December 31, 2019,2021, there was $2.76$7.97 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 1.911.58 years. The weighted average fair value of awards granted was $0.53$0.23 and $0.93$0.08 during 20192021 and 2018,2020, respectively.Expected term (years) Volatility Risk-Free Interest Rate Dividend Yield 0 % 0 % Year Ended December 31, 2021 2020 Expected term 5 years 6 years Volatility 106.7 % 104.6 % Risk-Free Interest Rate 0.8 % 0.4 % Dividend Yield 0 % 0 % The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data. 4,174,428 $ 4,342 7,659,565 $ 2,528 740,580 473 201,296 603 173,610 102 49,500 100 715,065 369 132,971 224 $ 5,286 $ 3,457 F-30Table of Contents(in thousands, except for number of shares or options)
For the Year EndedDecember 31, 2021 December 31, 2020 Type of Award Number of
Shares or
Options
GrantedStock-Based
Compensation
ExpenseNumber of
Shares or
Options
GrantedStock-
Based
Compensation
ExpenseStock Options 89,930,019 $ 2,415 4,174,428 $ 1,868 Stock Grants: Employees (Common Stock) 250,000 68 740,580 142 Directors (Common Stock) 1,917,837 494 173,610 105 Non–Employee Consultants (Common Stock) 4,556,603 1,078 715,065 60 Total Stock–Based Compensation Expense $ 4,055 $ 2,175 20192021 and 2018:Warrants Outstanding as of January 1, 2018 1,191,367 $ - (339,275 ) $ 1.96 420,092 $ 2.67 (218,933 ) $ 1.17 Warrants Outstanding as of December 31, 2018 1,053,252 $ 4.28 - $ - 454,237 $ 0.69 (194,029 ) $ 2.08 Warrants Outstanding as of December 31, 2019 1,313,459 $ 2.67 Shares Weighted-
Average
Exercise
PriceWarrants Outstanding as of January 1, 2020 1,313,459 $ 2.67 Warrants Issued — $ — Warrants Expired (236,904) $ 5.73 Warrants Outstanding as of December 31, 2020 1,076,555 $ 1.99 Warrants Issued 85,336,515 $ 0.08 Warrants Exercised (586,198) $ 0.07 Warrants Outstanding as of December 31, 2021 85,826,872 $ 0.22 areduring 2021 were as follows:$ 0.69 $ 0.41 $ 2.37 $ 1.61 $ - $ - $ 3.95 $ 4.53 ForFor the Year Ended December 31, 2021 Weighted-
Average
Exercise
PriceWeighted-
Average Fair
ValueWarrants Granted Whose Exercise Price Exceeded Fair Value at the Date of Grant $ 0.08 $ 0.21 Warrants Granted Whose Exercise Price Was Equal or Lower Than Fair Value at the Date of Grant $ — $ — in 2019 and 2018 the Company valued the warrantsduring 2021 utilizing the Black-Scholes option-pricing model with the following weighted-average inputs:$ 0.69 $ 2.63 $ 0.72 $ 2.67 96.9 % 115.7 % 2.0 % 2.7 % 0 % 0 % Year Ended December 31,
2021Volatility 112.6 % Term 3.8 years Risk-Free Interest Rate 0.2 % Expected Dividend Rate 0.0 % 20192021 and 2018, $0.18 million and $0.73 million of2020, zero warrants were issued in connection with debt and recorded as a debt discount.F-31(in thousands) Assets acquired Table of ContentsAccounts receivable$ 51 Inventory 81 Prepaid expenses 241 Property, plant and equipment 80 Customer relationships 3,070 Trade name 690 Goodwill 6,763 Other long-term assets 260 Total Assets acquired $ 11,237 Liabilities assumed Accounts payable and accrued expenses $ 1,481 Deferred income 300 Short-term debt 100 Long-term lease liabilities 108 Total liabilities assumed $ 1,990 NOTE 16 –COMMITMENTS AND CONTINGENCIESPurchase Price (in thousands): Stock $ 52,929 Liability for holdback shares 6,465 Stock options assumed 9,695 Warrants assumed 10,733 Less: cash transferred (1,290) Total consideration 78,532 (in thousands) Assets acquired Accounts receivable 3,772 Inventory 6,532 Prepaid & other current assets 1,543 Fixed assets 1,450 Notes receivable 750 Other long-term assets 3 Right-of-use asset 460 Trade name 31,130 Licenses 40,760 Goodwill 16,216 Total assets acquired $ 102,617 Liabilities assumed Accounts payable/accrued expenses $ 15,849 Short-term lease liability 118 Long-term lease liability 342 Short-term debt 4,796 Long-term debt 674 Deferred tax liability 499 Uncertain Tax Position 1,806 Total liabilities assumed $ 24,084 Operating LicensesEffective January 1, 2018LLC, a California limited liability company (“People’s California”) and People’s First Choice, LLC, a California limited liability company and wholly owned subsidiary of People’s California (the “Target”), which operates cannabis dispensary operations. Upon the Stateterms and subject to the satisfaction of California allowed for adult use cannabis sales. California’s cannabis licensing system is being implementedthe conditions described in the Purchase Agreement, the Company will acquire 100% of the outstanding equity of the Target in two phases. First, beginning January 1, 2018, temporary permits were to be issuedseparate closings (thestate anticipated issuing annual licensesremaining 20% of the equity transferred at the second closing.Mayand between the Company and People’s California, which includes a one-year lockup of 2018. Licenseesthe shares. The Purchase Agreement is subject to customary indemnification provisions.Purchase Price (in thousands): Cash $ 24,000 Note payable $ 33,749 Common stock $ 16,000 Less: cash transferred $ (994) Total consideration $ 72,755 Assets acquired (in thousands) Inventory 662 Prepaids 74 Fixed Assets 554 Right-of-use asset 2,105 Trade name 4,500 Licenses 49,510 Goodwill 20,995 Total assets acquired $ 78,400 Liabilities assumed Accounts Payable/Accruals $ 2,586 Short-term lease liability 540 Long-term lease liability 1,565 Deferred tax liabilities 4,775 Total liabilities assumed $ 9,466 eligiblesubject to change within the measurement period pending the finalization of a third-party valuation. The cost approach was utilized to estimate the fair value of the Silverstreak license.several 90the ten (10) consecutive trading days extensionsending on the business day prior to their temporary licenses. Throughout 2018 Terra Tech subsidiariesthe Closing, (iii) $2,000,000 in unsecured promissory notes with an interest rate of 3% and due six months after the Closing, and (iv)Purchase Price (in thousands): Cash $ 1,500 Note payable 4,500 Common stock 2,500 Less: cash transferred (24) Total consideration $ 8,476 Assets acquired (in thousands) Inventory 215 Prepaid expenses 6 Fixed assets 257 Licenses 161 Goodwill 10,921 Total assets acquired $ 11,561 Liabilities assumed Accounts payable and accrued expenses $ 1,517 Deferred taxes 14 Taxes payable 1,553 Total liabilities assumed $ 3,084 For the Year Ended 12/31/2021 12/31/2020 Pro-forma revenues $ 95,867 $ 88,078 Pro-forma net loss from continuing operations (36,454) (1,077) werehave been eligible for all of the extensions. As of March 2019, the State of California has yet to issue annual permits. The Company has received a temporary license for each local jurisdiction in which it has active operations and temporary licenses have been issued through the second quarter of 2019. The temporary permits may be extended for an additional period of time. The Company has submitted its applications for the annual permits to the state. Although the Company believes it will receive the necessary licenses from the state to conduct its business in a timely fashion, the state has already exceeded the anticipated time by which it would have issued all annualapplicable licenses and there is no guarantee the State will not continue to extend the temporaries or that the Company will be able to do so and any failure to do so may have a negative effect on its business and resultsrenewals of operations.our licenses.1719 – DISCONTINUED OPERATIONSin tointo a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement. The transaction is subjectclosed upon receiving all required government approvals during the year ended December 31, 2021. The Company recognized a gain of $5.43 million upon sale of the assets, equal to approval by the Nevada Departmentdifference between the consideration paid and the book value of Taxationthe assets as of the disposition date, less direct costs to sell, and is expected to close promptly following receipt ofreflected such approval.2019, Management2020, the Company classified a real estate asset heldproperty in California and a real estate asset held in NevadaLas Vegas, NV as available-for-sale, as theyit met the criteria of ASC 360-10-45-9. On August 9, 2021, the Company sold the property for $2.60 million in cash to 117 Real Estate Holdings LLC. A loss on the sale of the asset of $0.1 million was recorded during the year ended December 31, 2021 and is presented within net income from discontinued operations.F-32(in thousands) Total consideration $ 3,800 TableNet book value of Contentsassets divested and liabilities transferredInventory 23 Prepaid and other current assets 33 Property, plant & equipment 98 Intangible assets and goodwill 6,565 Other long-term assets 54 Lease liability, net of right-of-use asset (78) Net book value of assets divested and liabilities transferred 6,695 Loss on sale $ (2,895) fiscalthe year 2019, Management concluded thatended December 31, 2021, the pendingCompany exercised both options and acquired 5,000,000 common shares of the Purchaser for a nominal fee.(in thousands) Consideration Fair value of note receivable $ 2,960 Fair value of options 330 Less: cash transferred to purchaser (30) Total consideration $ 3,260 Net book value of assets divested and liabilities transferred Accounts receivable $ 360 Inventory 520 Other current assets 80 Property, plant and equipment 4,100 Intangible assets 70 Other long-term assets 200 Accounts payable and accrued expenses (1,700) Lease liabilities, net of right of use assets (70) Net book value of assets divested and liabilities transferred 3,560 Loss on sale $ (300) dispensariesoperations, expected and expected salecompleted sales of real estate in California representedassets, and assets divested during the years ended December 31, 2021 and 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.”$ 10,506 $ 11,169 5,275 5,741 5,231 5,428 3,804 5,393 $ 1,427 $ 35 (839 ) (524 ) $ 588 $ (489 ) $ 0.01 $ 0.00 (in thousands) Year ended December 31, 2021 2020 Total revenues $ 12,900 $ 13,354 Cost of goods sold 7,687 10,905 Gross profit 5,213 2,449 Selling, general and administrative expenses 6,523 10,495 Impairment of assets — 10,359 Loss on sale of assets (6,583) 1,962 Income (Loss) from operations $ 5,273 $ (20,367) Interest expense (976) (565) Other income (loss) 7,806 12 Income (Loss) from discontinued operations $ 12,103 $ (20,920) Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted $ 0.02 $ (0.03) $ 332 38 252 920 64 88 10,457 12,649 33 4 $ 11,138 $ 13,699 $ 990 $ 505 3,750 - $ 4,740 $ 505 F-33Table of Contents(in thousands) December 31,
2021December 31,
2020Cash 1,544 671 Accounts receivable, net 1,553 483 Inventory 1,359 2,152 Prepaid expenses and other assets 39 23 Property, equipment and leasehold improvements, net 17,661 10,207 Other assets 323 582 Assets of discontinued operations $ 22,479 $ 14,118 Accounts payable and accrued expenses $ 1,170 $ 1,380 Short-term Debt — — Deferred gain on sale of assets — 8,783 Long-term lease liabilities 184 335 Liabilities of discontinued operations $ 1,354 $ 10,498 1820 – SEGMENT INFORMATION2018,2021, the Company acquired additional real propertyassets and determinedopened new operations, such that ait has determined previously insignificant operating segment “Real Estate and Construction” issegments are now significant and is aare reportable segmentsegments requiring disclosure in accordance with ASC 280. Prior period information below has been revised to conform to current period presentation. WeOur reportable segments are now organized into three reportable segments:·Herbs and Produce Products– Includes herbs and leafy greens that are grown using classic Dutch hydroponic farming methods.·Cannabis Dispensary, Cultivation and Production– Includes cannabis-focused retail, cultivation and production.·Real Estateand Construction – Includes building ownership where cannabis dispensary and/or cultivation operations are currently in development.Our segment net revenue and contributions to consolidated net revenue for each of the last two fiscal years were as follows:$ 5,284 $ 4,476 18.8 % 15.9 % 22,416 14,872 79.9 % 83.9 % - - -% -% 350 817 1.2 % 0.2 % $ 28,050 20,165 100.0 % 100.0 % See Note 2 – “Summary of Significant Accounting Policies”to our consolidated financial statements for financial information about our segments. See also “Item 1A. Risk Factors”below for a discussion of certain risks associated with our operations.Herbs and Produce ProductsEither independently or in conjunction with third parties, we are a retail seller of locally grown hydroponic herbs and produce, which are distributed through major grocery stores throughout the East, West and Midwest regions of the U.S.(in thousands)
Total Revenue% of Total Revenue Year Ended December 31, Year Ended December 31, Segment 2021 2020 2021 2020 Cannabis Retail $ 24,540 $ 5,400 51.5 % 87.6 % Cannabis Cultivation & Distribution $ 23,131 $ 460 48.5 % 7.5 % Corporate and Other $ 2 $ 301 — % 4.9 % Total $ 47,673 $ 6,161 100.0 % 100.0 % Dispensary, Cultivation and Productionretail and adult use cannabis dispensaries and a medical marijuana and adult use cultivation in Nevada. In addition, we operate retail medical and adult use marijuana dispensary facilities in California, and have medical marijuana and adult use cultivation and production facilities in California. All of our retail dispensaries in California and Nevada offer a broad selection of medical and adult use cannabis products including flowers,flower, concentrates and edibles.also produceoperate distribution centers in California and sell a line ofOregon that distribute our own branded products as well as third party products to our own dispensaries and to other non-affiliated medical andmarijuana and/or adult use cannabis flowers, as well as a linedispensaries.medical and adult use cannabis-extracted products, which include concentrates, cartridges, and wax products.F-34Contents (in thousands) For the Year Ended December 31, 2021 Cannabis Retail Cannabis Cultivation and Distribution Corporate and Other Total Total Revenues $ 24,540 $ 23,131 $ 2 $ 47,673 Cost of goods sold 13,706 22,000 — 35,706 Gross Profit 10,834 1,131 2 11,967 Selling, general and administrative expenses 12,327 7,961 27,969 48,257 Impairment of Assets 6,171 — — 6,171 (Gain) / Loss on sale of assets — 56 (3,189) (3,133) Loss from operations (7,664) (6,886) (24,778) (39,328) Other income / (expense): Extinguishment of debt income / (expense) — 116 (6,092) (5,976) Gain / (loss) on investments — — 5,337 5,337 Interest income / (expense) (85) (186) (1,505) (1,776) Other income / (loss) 110 85 (628) (433) Total other income 25 15 (2,888) (2,848) Loss from continuing operations before provision for income taxes $ (7,639) $ (6,871) $ (27,666) $ (42,176) Total assets at December 31, 2021 $ 67,821 $ 476 $ 203,527 $ 271,824 Real EstateWe own real property in Nevada. Additionally, we own properties in California that are in various stages of construction for medical marijuana and adult use cultivation and production facilities and dispensaries.Summarized financial information concerning the Company’s reportable segments is shown in the following tables. Total asset amounts at December 31, 2019 and 2018 excludes intercompany receivable balances eliminated in consolidation.$ 5,284 $ 22,416 $ - $ 350 $ 28,050 3,955 $ 9,114 $ - $ 327 13,396 1,329 13,302 - 23 14,654 540 $ 6,458 $ - $ 215 7,213 - $ - $ - $ 4,918 4,918 4,783 $ 11,174 $ 334 $ 16,899 33,190 (3,994 ) (4,330 ) (334 ) (22,009 ) (30,667 ) - $ (16 ) $ (1,007 ) $ (8,274 ) (9,297 ) 34 $ (7,794 ) $ - $ (716 ) (8,476 ) 34 (7,810 ) (1,007 ) (8,990 ) (17,773 ) $ (3,960 ) $ (12,140 ) $ (1,341 ) $ (30,999 ) $ (48,440 ) $ (8,201 ) $ 56,777 $ (2,545 ) $ 73,218 $ 119,249 F-35Table of Contents$ 4,476 $ 14,872 $ - $ 817 $ 20,165 4,233 7,241 - 1,684 13,158 243 7,631 - (867 ) 7,007 523 3,951 - 232 4,706 - - - 3,136 3,136 3,682 10,192 973 15,221 30,068 (3,962 ) (6,512 ) (973 ) (19,456 ) (30,903 ) - - (687 ) (10,283 ) (10,970 ) (77 ) - (107 ) 3,075 2,891 (77 ) - (794 ) (7,208 ) (8,079 ) $ (4,039 ) $ (6,512 ) $ (1,767 ) $ (26,664 ) $ (38,982 ) $ (6,871 ) $ 40,734 $ 4,248 $ 81,978 $ 120,088 (in thousands) For the Year Ended December 31, 2020 Cannabis Retail Cannabis Cultivation and Distribution Corporate and Other Total Total Revenues $ 5,400 $ 460 $ 301 $ 6,161 Cost of goods sold 2,253 293 972 3,518 Gross Profit 3,147 167 (671) 2,643 Selling, General and Administrative Expenses 7,145 1,307 10,867 19,319 Impairment of Assets 19,910 — — 19,910 (Gain) / Loss on sale of assets — — — — Loss from operations (23,908) (1,140) (11,538) (36,586) Other income / (expense): Interest income/(expense) — — (1,394) (1,394) Unrealized gain/(loss) on investments — — 29,045 29,045 Other income / (loss) 755 65 109 929 Total other income 755 65 27,760 28,580 Loss before provision for income taxes $ (23,153) $ (1,075) $ 16,222 $ (8,006) Total assets at December 31, 2020 $ 13,342 $ 37,390 $ 49,563 $ 100,294 1921 – LITIGATION AND CLAIMS2019 nor were there any asserted or unasserted material claims for which material losses are reasonably possible.F-36Table of ContentsOn April 10, 2018, GroRite, Naturally Beautiful and Whitetown Realty (“Whitetown Realty” and collectively, the “Whitetown Realty Plaintiffs”) filed2021. lawsuit in the Superior Court of New Jersey Law Division, Morris County against the Company and Edible Garden alleging, among other things, that Edible Garden owes certain amounts to GroRite under a Marketing and Distribution Agreement between Edible Garden and GroRite, dated May 7, 2013, and Naturally Beautiful under a Marketing and Distribution Agreement between Edible Garden and Naturally Beautiful, dated May 13, 2013 (collectively, the “Marketing and Distribution Agreements”), and that Edible Garden owes certain amounts to Whitetown Realty under the Lease between Whitetown Realty and Edible Garden, dated January 1, 2015 (the “Lease”). The Whitetown Realty Plaintiffs were seeking, among other things, compensatory damages for the amounts claimed are owed and attorneys’ fees and costs. The Company disputed that Edible Garden owed any payments under the Marketing and Distribution Agreements or the Lease. Accordingly, on May 18, 2018, the company and Edible Garden filed an answer denying the allegations of the Plaintiffs. In that same pleading, Edible Garden filed a counterclaim against Naturally Beautiful and GroRite asserting claims for breach of contract breachaction brought by former LTRMN, Inc. (“LTRMN”) employee, Kurtis Magee, alleging that he is owed a severance payment pursuant to his separation agreement with LTRMN (signed July 8, 2019). Magee was employed by LTRMN, Inc. for approximately 90 days as the Chief Administrative Officer of the implied covenantcompany. When Magee was released from employment with LTRMN, the company negotiated a separation agreement with him that became payable upon the close of good faiththe acquisition of LTRMN by UMBRLA, Inc. Shortly thereafter a dispute arose whether Magee breached the separation agreement by using proprietary and fair dealing, unjust enrichment, trademark infringement/unfair competition,confidential information of LTRMN to solicit LTRMN clients, and tortious interference with contractual relations. Edible Garden alsoMagee filed suit in August 2020 seeking contract damages in the amount of $835,000, the amount of the severance payment. LTRMN, UMBRLA, and BRND HOUSE, Inc. are named as parties (“Defendants”). Defendants have successfully defended against two motions for a third-party complaint against previously unidentified defendants arising from the wrongful misappropriationwrit of attachment and pirating of electricity from the Edible Garden facility located at 283 Route 519, Belvidere, New Jersey. The third-party complaint alleged claims for unjust enrichment, tortious interference with contractual relations and conversion.a summary judgment motion. On June 8, 2018, Edible Garden filed an amended counterclaim adding a count for conversion against Naturally Beautiful and GroRite. On June 12, 2018, Edible Garden Corp. filed an amended third-party complaint adding Gerda Vande Vrede as a named third-party defendant. On June 13, 2018, GroRite and Naturally Beautiful filed an answer to Edible Garden’s amended counterclaim and Gerda Vande Vrede filed an answer to Edible Garden’s amended third-party complaint denying the allegations asserted against them. No counterclaims, crossclaims or fourth party complaints were filed on behalf of Gerda Vande Vrede, Naturally Beautiful or GroRite.On April 11, 2018, Kenneth Vande Vrede, Michael Vande Vrede and Steven Vande Vrede (collectively, the “Vande Vrede Brothers”) filed a lawsuit against the Company and Edible Garden alleging, among other things, that the Company and Edible Garden improperly suspended the Vande Vrede Brothers from their positions with the Company and Edible Garden. The Vande Vrede Brothers were seeking, among other things, a declaratory judgment that they did not violate their fiduciary duties owedOctober 27, 2021, Defendants’ demurrer to the Company or Edible Garden and reinstating the Vande Vrede Brothers to their status with the Company and Edible Garden prior to their suspensions and attorneys’ fees and costs. The original complaintFirst Amended Complaint (“FAC”) was overruled. Plaintiff's deposition is scheduled for April 6, 2022. Trial in this matter was never served, and on June 12, 2018, the Vande Vrede Brothers, and now David Vande Vrede, Daniel Vande Vrede, Beverly Willekes, and Whitetown Realty filed an amended complaint against Terra Tech, Edible Garden, Derek Peterson, Michael James, and Michael Nahass. On January 22, 2019, the Company filed its answer and asserted counterclaimsis set for breachDecember 5, 2022.contract, breach of fiduciary duty, conversion, fraud, misappropriation of trade secrets, and conspiracy in Superior Court of New Jersey, Morris County against the Vande Vredes.On April 13, 2018, Edible Garden Corp. filed a lawsuit against Whitetown Realty in response to a letter from a law firm representing Whitetown Realty alleging Edible Garden was in default of the Lease. Edible Garden sought declaratory and equitable relief to prevent Whitetown Realty from terminating the Lease and for attorneys’ fees and costs. On April 23, 2018, by order of the assignment judge of Warren County, the lawsuit was transferred to Morris County and consolidated with the April 10, 2018 lawsuit previously filed by GroRite, Naturally Beautiful and Whitetown Realty in the Superior Court of New Jersey, Law Division, Morris County. On June 13, 2018, Whitetown Realty filed its answer to the Edible Garden Complaint. In that answer, Whitetown Realty denied that Edible Garden was entitled to the declaratory and equitable relief that Edible Garden requested.During the third quarter of 2019, the Company settled its lawsuits and all outstanding claims with members of the Vande Vrede family and entities controlled by them. As part of the settlement, Terra Tech purchased all shares of common and preferred stock owned by the Vande Vrede family. See Note 13 – “Equity” for additional information regarding the treasury shares.On November 21, 2018, Heidi Loeb Hegerich, Forever Green NV, and Forever Young Investments, L.L.C. filed alawsuit against the Company, certain of its subsidiaries and affiliates, and certain unrelated parties alleging, among other things, breach of fiduciary duty, breach of contract, and fraud, and seeking monetary damages and equitable relief. On February 26, 2019, the Company, MediFarm I, MediFarm II, MediFarm I RE and other parties (collectively, the “Terra Tech Parties”) entered into a Settlement Agreement and Release (the “Settlement Agreement”) with Heidi Loeb Hegerich, Forever Green and Forever Young (collectively, the “Loeb Parties”) pursuant to which the Terra Tech Parties and the Loeb Parties agreed to settle and dismiss with prejudice the Lawsuit. Entering into the Settlement Agreement was not an admission or acknowledgement of liability or responsibility on the part of the Company in connection with the Lawsuit.In conjunction with the settlement, the Company entered into a Securities Purchase Agreement (the “SPA”) withForever Green NV (“Forever Green”) and Forever Young Investments, L.L.C. (“Forever Young”) pursuant to which the Company agreed to purchase Forever Green’s 50% membership interest in MediFarm I LLC (“MediFarm I”), Forever Green’s 15% membership interest in MediFarm II, LLC (“MediFarm II”), and Forever Young’s 50% membership interest in MediFarm I Real Estate, LLC (“MediFarm I RE”) for aggregate consideration of $6.30 million. Following receipt of approval of the Nevada Department of Taxation, those transactions closed on June 12, 2019. As a result, the Company owned 100% of MediFarm I, 100% of MediFarm RE and 70% of MediFarm II. MediFarm I owns the Company’s Blüm dispensary located at 1085 S. Virginia St. Suite A, Reno, NV 89502, and MediFarm I RE owned the building which housed the dispensary until the closing of an unreleated third party purchased the building on July 31, 2019 (see Note 7 – “ Property, Equipment and Leasehold Improvements, Net”).The only material relationship between the Company and Ms. Hegerich, Forever Green and Forever Young, other than in respect of the SPA and the Settlement Agreement, was their membership in MediFarm I, MediFarm II and MediFarm I RE. On June 26, 2019, the Court dismissed the Lawsuit with prejudice.
ContentsF-37Table of Contents2022 – RELATED PARTY TRANSACTIONS2019,2020, the Company issued promissory notes totaling $1.80 million to OneQor Technologies, Inc (“OneQor”).OneQor. Derek Peterson and Mike Nahass, formerly the Chief Executive Officer and Chief Operating Officer, respectively, havehad minority ownership interests in OneQor. At the end of the fiscal year, management made the decision to fully-reserve for these loans due to their confidence in the completion of the merger with OneQor, which would result in the cancellation of these loans.December 30, 2019,July 1, 2021, the Company entered into a secured promissory note agreementMembership Interest Purchase Agreement with Nicholas Kovacevich and Dallas Imbimbo, pursuant to which the Matthew Lee Morgan Trust, whichCompany acquired 100% of the outstanding membership interests in Halladay Holding, LLC from Mr. Kovacevich and Mr. Imbimbo. Halladay Holding, LLC is affiliated with Matthew Morgan, the Chief Executive Officerowner of OneQor.real property located at 3242 S. Halladay Street, Santa Ana, CA 92705, where the Company operates a cannabis dispensary and maintains its principal office space. Pursuant to the Purchase Agreement, as consideration for the Acquisition, the Company paid Mr. Kovacevich and Mr. Imbimbo an aggregate purchase price of $4.60 million in cash. The note matures onCompany had an independent third-party perform a valuation of the Property prior to entering into the Purchase Agreement. Mr. Kovacevich is a director of the Company and Mr. Imbimbo was a director of the Company. As such, the Acquisition is a related party transaction.30, 2020,31, 2021, the Company contracted for $0.45 million in goods and bears interest atservices of Greenlane Holdings, Inc. Mr. Kovacevich, a ratedirector of 10% per annum. The notethe Company, is secured by the Company’s HydroFarm investment.2123 – GOING CONCERN2019,2021, we incurred a pre-tax net loss from continuing operations of $46.93$42.18 million and, as of that date, we had an accumulated deficit of $189.69 million.$250.02 million . For the year ended December 31, 2018,2020, we incurred a net loss from continuing operations of $39.75$8.01 million and, as of that date, we had an accumulated deficit of $142.75$219.80 million. We expect to experience further significant net losses in 20202022 and the foreseeable future.In an effort At December 31, 2021, we had a consolidated cash balance of approximately liquidityprofitable operations and generate cash from operating activities. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations.sufficientavailable, will increase our liabilities and future cash commitments. There is no assurance that we will be able to meet all ofobtain further funds required for our commitments,continued operations or that additional financing will be available for use when needed or, if available, that it can be obtained on commercially reasonable terms. If we have undertakenare not able to obtain the additional financing on a number of actions, including minimizing capital expenditures and reducing recurring expenses. However, we believe that even after taking these actions,timely basis, we will not have sufficient liquiditybe able to satisfy allmeet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.our future financial obligations, and execute our business plan.The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. If the Company is unable to obtain the funds due upon the close of our pending asset sales or obtain additional financing, future operations would need to be scaled back or discontinued. the timing of the close of our pending asset sales in Nevada,ability to continue to raise capital and our limited capital resources and the weak industry conditions impacting our business raise substantial doubt as to our ability to continue as a going concern for twelve months from the issuance of these financial statements.2224 – SUBSEQUENT EVENTSSubsequent to the balance sheet date,converted $0.60sold its land in Spanish Springs, Nevada for $0.45 million to an unrelated third party.convertible notes and $0.21 million of interest into 6.12 million sharesthe sale of the Company’s common stock.Subsequentnon-operating real property and building located on Dyer Road in Santa Ana, CA (the “Dyer Property”) for $13.40 million. The sale results in the Company retiring $9.00 million of outstanding debt on the property. The Company is continuing to evaluate its options with respect to the balance sheet date,license originally connected to the Dyer property, including consideration of the retail density in the area. If the city of Santa Ana grants approval to relocate licenses elsewhere in the city, the Company issued 1,789,885may consider using the dispensary license to open a dispensary in an underserved part of Santa Ana. Part of the $9.00 million of outstanding debt, that the Company retired in the Dyer property sale, was the $2.50 million promissory note held by Dominion Capital.commonour Common Stock, par value $0.001 per share, shares of our preferred stock, par value $0.001 per share (our “Preferred Stock”), debt securities, warrants, rights, or purchase contracts, either individually or in units, with a total value of up to $100.00 million.$0.20 million in cash in settlementthe company, succeeding Nicholas Kovacevich. Mr. Kovacevich remains on the board of put noticesdirectors.InvestorCompany through a future agreed upon date. The Company intends to disclose the material terms of the Separation Agreements and the Schauble Consulting Agreement, dated November 28, 2016as required by applicable law, at a later date after those agreements have been finalized and executed.an accredited investor.January 1, 2020,March 17, 2022, the Company entered into a Management Services Agreementconsulting agreement with Picksy Reno, LLC (“Picksy”), an unaffiliated third party, to transfer all management responsibilitiesOren Schauble, formerly the Conpany's President. The company shall grant 910,623 restricted shares of the Company’s dispensary located at 1085 S. Virginia Street., Reno, NV (the “Reno Dispensary”). In considerationCompany's Common Stock in four monthly installments. On April 5, 2022, the Company and Mr. Schauble agreed to terms on a separation agreement. The Company agreed to pay Mr. Schauble 50% of the services performed, Picksy will be entitledEmployee's base salary and continue his medical benefits for a period of six months.85%amend a portion of the future net profits of the Reno Dispensary. In the event of a loss, Picksy will be responsible for all future capital shortfalls. The Company’s 15% interest in the future net income of the Reno Dispensary will be applied to the purchase price of the related asset sale, which as of the time of our report was pending regulatory approval.On January 10, 2020, the Company entered into a $1.0 millionNovember 22, 2021 Closing Documents (Primary Membership Interest Purchase Agreement, Secondary Membership Interest Purchase Agreement, Secured Promissory Note, agreement with an unaffiliated third party.and other ancillary agreements) . The company will pay People's California, LLC $3 million upon execution of this amendment and $5 million in June of 2022. The remainder of the promissory note incurs interestheld by People's California, LLC shall be subordinated to a future debt facility. The promissory note becomes convertible to the Company's Common Stock at a rate of 15.0% per annum and matures on January 10, 2021.February 14, 2020,April 12, 2022, the Company merged with OneQor Technologies. Upon close ofand Francis Knuettel, formerly the merger, Terra Tech shareholders owned approximately79% of the combined company and OneQor shareholders owned approximately 21%. Additionally, Derek Peterson resigned asCompany's Chief Executive Officer, agreed to terms on a separation agreement. The company agreed to pay Mr. Knuettel 50% of Terra Tech, but will remain the Chairmanhis annual base salary and continue his medical benefits for a period of the Board of Directors. Matthew Morgan was appointed the Chief Executive Officer of Terra Tech Corp. The Board of Directors changed from four members to five members, assix months. Mr. Morgan joins the four members of the Terra Tech Corp board.Knuettel's unvested shares and options shall vest immediately. As part of this agreement Mr. PetersonKnuettel has resigned as a director of the Company.Mr. Nahass have agreedDallas Imbimbo, an advisor to forfeit their vestedthe company and unvested stock options. The new company also announced plans to change its name to Onyx Group Holdings (“Onyx”).On February 26, 2020,a director of the Company, agreed to transfer governance and control of our dispensary operation located at 2911 Tech Center Drive, Santa Ana, CA to Martin Vivero and Tetra House Co. (“Tetra”), who are unaffiliated third parties.terms on a separation agreement. The company received $2.00 million at closing and is due future paymentsagreed to vest 100% of $1.80 million. MediFarm So Cal Inc. (“MediFarm So Cal”),Mr. Imbimbo's restricted common stock granted pursuant to the Advisor agreement with Mr. Imbimbo. The company agreed to vest 100% of the options to purchase shares of the Company's common stock granted as part Mr. Imbimbo's Independent Director Agreement. The Company will pay Mr. Imbimbo $83,333.30 in cash compensation. As part of this agreement Mr. Imbimbo has resigned as a wholly-owned subsidiarydirector of the Company terminated the existing management services agreement with 55 OC Community Collective Inc. (“55 OC”). 55 OC is a mutual benefit corporation which holds a cannabis license with the City of Santa Ana in the State of California. Previously, MediFarm So Cal managed the dispensary knownand as “Blum Santa Ana” under the license of 55 OC. Control of 55 OC was transferred to Mr. Vivero and Tetra House Co. via a new management services agreement and the appointment of Mr. Viveroan Advisor to the Boardcompany.Directors of 55 OC, which was pending final regulatory approval as of the date of our report. In conjunction with the agreement with Tetra, the Company entered into an agreement with Modernize, Inc. and Wojciech Smolenski (the “Smolenski Parties”) to transfer $0.35 million of the proceeds to the Smolenski parties as consideration for agreeing to sell the real estate that 55 OC operates within to Tetra and for settlement of an existing claim stemming from a lease dispute. F-38Table of ContentsTERRA TECH CORP.Unrivaled Brands, Inc. March 13, 2020Matthew MorganMatthew MorganMatthew MorganTiffany Davis and Michael James,Jeffrey Batliner, and each of them, as his true and lawful attorney-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K of Terra Tech Corp.Unrivaled Brands, Inc. for the fiscal year ended December 31, 2019,2021, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grant unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or his substitutes, may lawfully do or cause to be done by virtue hereof.Date: March 13, 2020April 15, 2022Derek PetersonDerek PetersonMarch 13, 2020Matthew MorganMatthew Morgan
Chief Executive Officer and Director
(Principal Executive Officer)March 13, 2020Michael A. NahassMichael A. NahassPresident, Chief Operating Officer,Secretary, Treasurer, and DirectorMarch 13, 2020Steven J. RossSteven J. RossDirectorDate: March 13, 2020By:/s/ Alan GladstoneAlan GladstoneDirectorDate: March 13, 2020By:/s/ Michael JamesMichael James(Principal Accounting Officerand Principal Financial Officer)50