Unrivaled Brands Reports Third Quarter 2021 Financial


SANTA ANA, Calif., Nov. 15, 2021 (GLOBE NEWSWIRE) — Unrivaled Brands, Inc. (OTCQX: UNRV) (“Unrivaled” or the “Company”), a multi-state vertically integrated company focused on the cannabis sector with operations in California, Oregon, and Nevada, today reported its financial results for the quarter ended September 30, 2021.

Frank Knuettel, Chief Executive Officer of Unrivaled Brands stated, “I’m pleased to report the operating results for our first quarter after merging with UMBRLA, which was an important step forward in our effort to become the dominant west coast multi-state operator in the cannabis industry. During the third quarter, we recorded $23.4 million in revenues, up 274% from $6.3 million in revenues during the second quarter of this year and up 668% from $3.1 million in revenues during the third quarter of 2020.

“Moreover, while we have more work to do, the cost reductions we have enacted thus far this year are evident in our operating results. Selling, general and administrative (SG&A) expenses rose considerably less than our revenue increase and represent 58% of revenue for the third quarter of 2021 down from 183% of revenue for the third quarter of 2020.

“With our expanded footprint, including dispensaries that currently are operating and dispensaries in development that are scheduled to open in the coming months, we would like to take this opportunity to affirm our revenue guidance for 2022 in excess of $130 million for the year, notwithstanding any new relationship, partnerships or acquisitions we may make.”

Financial Update

  • Our gross profit for the quarter ended September 30, 2021 was approximately $2.3 million, compared to a gross profit of approximately $1.4 million for the quarter ended September 30, 2020, an increase of $0.9 million. Our gross profit for this quarter was impaired by an approximate $4 million reserve we took against old inventory following the UMBRLA merger. While we made operational changes that we expect will reduce the supply and demand imbalance going forward, we remain cautious of the bulk market and are continuing to review that aspect of our business.
  • Our selling, general and administrative (SG&A) expenses for the third quarter of 2021 were approximately $13.5 million, compared to approximately $5.6 million for the third quarter of 2020, an increase of $7.9 million or 142%. Importantly, as a percentage of revenue, SG&A expenses declined from 183% of revenue to 58% of revenue. As we continue to grow our operations, we will incur increased overhead expenses, but expect the SG&A expenses as a percentage of revenue to meaningfully decline.
  • We reported a net loss from operations of $11.8 million for the third quarter of 2021 compared to a net loss of $14.1 million the third quarter of 2020. Importantly, our non-GAAP loss declined for the same period from $12.7 million to $0.9 million for this most recent quarter, a marked improvement. The non-GAAP details and reconciliation is set forth in the form 10-Q.

The Company will host a conference call at 4:30 p.m. Eastern Time on Monday, November 15, 2021 to discuss its financial results and business highlights.

Interested parties may listen to the call by dialing:

Toll-Free: 1-800 954 0633

Toll / International: 1-212 231 2902

Conference ID: 21999089

The conference call will also be available via a live, listen-only webcast and can be accessed through the Investor Relations section of Unrivaled Brands website at www.unrivaledbrands.com

About Unrivaled Brands

Unrivaled Brands is a multi-state vertically integrated company focused on the cannabis sector with operations in California, Oregon, and Nevada. In California, Unrivaled Brands operates four dispensaries, direct to consumer delivery, a state-wide distribution network, company-owned brands, and two cultivation facilities. In Oregon, we operate a state-wide distribution network, company-owned brands and outdoor and greenhouse cultivation. In Nevada, by way of a joint venture, Unrivaled Brands operates a cultivation and manufacturing facility. Unrivaled Brands is home to Korova, the market leader in high potency products across multiple product categories, currently available in California, Oregon, Arizona, and Oklahoma, as well as Sticks and Cabana.

For more info, please visit: https://unrivaledbrands.com.

Cautionary Language Concerning Forward-Looking Statements

Certain statements contained in this communication regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding management’s intentions, plans, beliefs, expectations, or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors.

New factors emerge from time-to-time and it is not possible for us to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks, as well as other risks associated with the combination, will be more fully discussed in our reports with the SEC. Additional risks and uncertainties are identified and discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. Forward-looking statements included in this release are based on information available to Company as of the date of this release. The Company undertakes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this release.

Contact
Jason Assad
LR Advisors LLC.
jassad@unrivaledbrands.com
678-570-6791

For media inquiries:
Nic Johnson
Russo Partners
Nic.johnson@russopartnersllc.com
303-482-6405

  UNRIVALED BRANDS, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
  (in thousands, except shares)  
      September 30,   December 31,  
      2021   2020  
      (Unaudited)      
  ASSETS
             
  Current Assets:          
  Cash   $ 15,238     $ 888    
  Accounts receivable, net     8,433       835    
  Short term investments           34,045    
  Inventory     15,865       1,602    
  Prepaid expenses and other assets     3,260       234    
  Notes Receivables     750          
  Current assets of discontinued operations           2    
                 
  Total current assets     43,546       37,606    
                 
  Property, equipment and leasehold improvements, net     40,848       32,480    
  Intangible assets, net     135,752       7,714    
  Goodwill     23,575       6,171    
  Other assets     15,054       13,040    
  Investments     437       330    
  Assets of discontinued operations     109       2,953    
                 
  TOTAL ASSETS   $ 259,321     $ 100,294    
                 
  LIABILITIES AND STOCKHOLDERS’ EQUITY
  LIABILITIES:              
  Current liabilities:              
  Accounts payable and accrued expenses   $ 24,428     $ 8,622    
  Deferred Gain on Sale of Assets     139          
  Short-term debt     8,648       8,033    
  Current liabilities of discontinued operations     8,632       9,768    
                 
  Total current liabilities     41,847       26,423    
                 
  Long-term liabilities:              
  Long-term debt, net of discounts     13,545       6,632    
  Long-term lease liabilities     8,065       8,082    
  Long-term liabilities of discontinued operations           28    
  Total long-term liabilities     21,610       14,741    
                 
  Total liabilities     63,457       41,164    
                 
  STOCKHOLDERS’ EQUITY:              
  Common stock, par value 0.001:     460       218    
  990,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 432,886,195 shares issued and 430,557,787 shares outstanding as of September 30, 2021; 196,512,867 shares issued and 194,204,459 shares outstanding as of December 31, 2020.    
  Additional paid-in capital     373,878       275,060    
  Treasury Stock (2,308,408 shares of common stock, 4 shares of Preferred Stock Convertible Series A)     (808 )     (808 )  
  Accumulated deficit     (240,274 )     (219,803 )  
                 
  Total Unrivaled Brands, Inc. Stockholders’ Equity     133,256       54,667    
  Non-controlling interest     62,608       4,463    
                 
  Total stockholders’ equity     195,864       59,130    
                 
  TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 259,321     $ 100,294    
                 
                           
UNRIVALED BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
(in thousands, except for shares and per-share information)  
                           
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
    2021   2020   2021   2020  
                   
Total revenues   $ 23,434     $ 3,053     $ 34,809     $ 9,806    
Cost of goods sold     21,146       1,615       27,750       4,796    
                           
Gross profit     2,288       1,438       7,059       5,010    
                           
Selling, general and administrative expenses     13,516       5,588       33,841       20,409    
Impairment of assets           9,792             19,910    
(Gain) / Loss on sale of assets                 6       (35 )  
                           
Loss from operations     (11,227 )     (13,943 )     (26,788 )     (35,273 )  
                           
Other income (expense):                          
(Gain) / Loss on Extinguishment of Debt     185             (5,976 )        
Interest expense, net     (740 )     (529 )     (1,344 )     (1,885 )  
Other income/loss     5       372       367       349    
Gain (loss) on investments                 5,337          
                           
Total other income (expense)     (550 )     (157 )     (1,616 )     (1,536 )  
                           
Income / (Loss) from Subsidiaries                          
                           
Income (Loss) from continuing operations     (11,777 )     (14,100 )     (28,404 )     (36,809 )  
Income (Loss) from discontinued operations, net of tax     6,312       (4,199 )     6,270       (17,342 )  
                           
NET INCOME (LOSS)     (5,465 )     (18,299 )     (22,134 )     (54,151 )  
                           
Less: Income (Loss) attributable to non-controlling interest from continuing operations     (118 )     (138 )     (604 )     (479 )  
Less: Income (Loss) attributable to non-controlling interest from discontinued operations                          
                           
NET INCOME / (LOSS) ATTRIBUTABLE TO UNRIVALED BRANDS, INC.   $ (5,347 )   $ (18,161 )   $ (21,530 )   $ (53,672 )  
                           
Income / ( Loss) from continuing operations per common share attributable to Unrivaled Brands, Inc. common stockholders – basic and diluted   $ (0.03 )   $ (0.07 )   $ (0.09 )   $ (0.20 )  
Net Loss per common share attributable to Unrivaled Brands, Inc. common stockholders – basic and diluted   $ (0.01 )   $ (0.09 )   $ (0.07 )   $ (0.29 )  
                           
Weighted-average number of common shares outstanding – basic and diluted     457,745,655       206,828,614       317,491,979       186,295,127    
                           
  UNRIVALED BRANDS, INC. AND SUBSIDIARIES  
  CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (UNAUDITED)  
  (in thousands)  
      Nine Months Ended  
  September 30,  
      2021     2020    
  CASH FLOWS FROM OPERATING ACTIVITIES:          
  Net Loss   $ (22,134 )   $ (54,151 )  
  Less: Net Income (loss) from discontinued operations     6,270       (17,342 )  
  Net loss from continuing operations     (28,404 )     (36,809 )  
  Adjustments to reconcile net loss to net cash used in operating activities:              
  Bad debt expense           650    
  Gain from debt forgiveness     (86 )        
  (Gain) loss on sale of assets     6       (35 )  
  Amortization of debt discount           845    
  Depreciation and amortization     4,480       5,062    
  Operating lease expense     633       680    
  Stock based compensation     2,884       1,672    
  Impairment loss           19,910    
  Gain on sale of investments     (5,337 )        
  Non-cash portion of severance expense     7,990          
  Loss (gain) on extinguishment of debt     5,976          
  Non cash interest expense     30          
  Change in operating assets and liabilities:              
  Accounts receivable     (1,766 )     292    
  Inventory     3,100       (518 )  
  Prepaid expenses and other current assets     (1,392 )     218    
  Other assets     338       (1,024 )  
  Accounts payable and accrued expenses     (3,798 )     1,567    
  Operating lease liabilities     (45 )     (380 )  
  Net cash provided by / (used in) operating activities – continuing operations     (15,391 )     (7,870 )  
  Net cash provided by / (used in) operating activities – discontinued operations     (925 )     (5,020 )  
  NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES     (16,316 )     (12,890 )  
                 
  CASH FLOWS FROM INVESTING ACTIVITIES:              
  Purchase of property, equipment and leasehold improvements     (6,442 )     (46 )  
  Purchase of equity investment           243    
  Proceeds from sale of investments     39,382          
  Cash outflow for loans           (250 )  
  Cash paid for acquisitions     (15,000 )        
  Cash from acquisitions     2,258       57    
  Proceeds from sales of assets     72       35    
  Net cash provided by / (used in) investing activities – continuing operations     20,271       39    
  Net cash provided by / (used in) investing activities – discontinued operations     8,350       11,189    
  NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES     28,621       11,228    
                 
  CASH FLOWS FROM FINANCING ACTIVITIES:              
  Proceeds from issuance of notes payable     6,000       2,954    
  Payments of debt principal     (3,778 )     (430 )  
  Cash paid for debt discount           (8 )  
  Proceeds from issuance of common stock           250    
  Cash contribution from non-controlling interest           152    
  Cash paid for debt issuance cost     (178 )        
  Cash distribution to non-controlling interest           (145 )  
  Purchase of treasury stock              
  Net cash provided by / (used in) financing activities – continuing operations     2,044       2,773    
  Net cash provided by / (used in) financing activities – discontinued operations              
  NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES     2,044       2,773    
                 
  NET CHANGE IN CASH     14,350       1,112    
                 
  Cash at beginning of period     888       1,226    
                 
  CASH AT END OF PERIOD   $ 15,238     $ 2,338    
                 
  SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:              
  Cash paid for interest   $ 705     $ 892    
                 
  SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:              
  Debt principal and accrued interest converted into common stock   $ 2,100     $ 2,252    
   Stock Issued for the acquisition of OneQor   $     $ 9,305    
  Stock options exercised on a net share basis   $ 79,032     $    
  Stock, stock options and warrants issued for the acquisition of UMBRLA   $ 2,986     $    
  Assumption of Halladay mortgage   $ 58,749     $    
  Promissory note issued for severance   $     $    
   Fixed assets in accounts payable   $ 3     $ 792    
  Non-cash contribution from non-controlling interest   $     $ 702    
  Net assets acquired from acquisitions of Umbrla and People’s   $ 153,571     $    
                 
    Non-GAAP Reconciliation (in thousands)  
     
     
    Three Months Ended September 30 Nine Months Ended September 30  
    2021     2020   2021     2020    
                 
Net loss attributable to Unrivaled Brands Inc.   $ (5,347 )   $ (18,161 ) $ (21,530 )   $ (53,672 )  
Non-GAAP adjustments                        
Amortization of intangible assets     1,136           1,512       761    
Depreciation expense     1,091           2,968       1,913    
Stock based compensation     1,685           2,883       1,244    
Impairment of assets           4,998           10,118    
Interest expense     740       454     1,344       1,356    
Severance expense for Series A share repurchases               8,990          
Loss (Gain) on sale of investments               (5,337 )        
Gain on sale of assets               6       (35 )  
Gain for debt forgiveness               (86 )        
Loss on extinguishment of debt     (185 )         5,976          
                         
Non-GAAP gain / (loss)   $ (880 )   $ (12,709 ) $ (3,273 )   $ (38,315 )  
                         
                         
                         
    Non-GAAP Reconciliation (in thousands, except for share amounts)  
 
 
    Three Months Ended September 30 Nine Months Ended September 30  
    2021     2020   2021     2020    
                 
Non-GAAP net income (loss)   $ (880 )   $ (12,709 ) $ (3,273 )   $ (38,315 )  
                         
Denominator                        
Weighted average common shares – Basic     457,745,655       206,828,614     317,491,979       186,295,127    
Weighted average common shares – Diluted     457,745,655       206,828,614     317,491,979       186,295,127    
                         
Non-GAAP earnings (loss) per common share:                        
Non-GAAP earnings (loss) – Basic   $ (0.00 )   $ (0.06 ) $ (0.01 )   $ (0.21 )  
Non-GAAP earnings (loss) – Diluted   $ (0.00 )   $ (0.06 ) $ (0.01 )   $ (0.21 )  

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