Unrivaled Brands : Reports Third Quarter 2021 Financial Results - Form 8-K

Unrivaled Brands Reports Third Quarter 2021 Financial Results

Reports Year Over Year Quarterly Revenue Growth of 668%

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.

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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.
[e-mail]
678-570-6791

For media inquiries:
Nic Johnson
Russo Partners
[e-mail]
303-482-6405

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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

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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

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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			$	-

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		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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