Terra Tech Corp (OTCMKTS:TRTC): Here's Where Things Stand

Terra Tech Corp (OTCMKTS:TRTC) is a company that we have looked at on the few occasions in the past here at Insider Financial and on each of these occasions we've highlighted the company's potential for growth in its industry. Over time, however, and in particular across the last three months, the company has declined in value pretty substantially. At last close, Terra Tech went for $0.15 a share, a more than 50% decline on its 2017 open price.Management just put out the company's most recent financials and, against a backdrop of the above-described decline in market capitalization, it is time to update our thesis.So, here goes.For those new to the company, this one is a cannabis stock that essentially has irons in all the different cannabis fires. Primarily, these break down into five core subsidiaries: Blüm, IVXX Inc., Edible Garden, MediFarm LLC and GrowOp Technology. Blüm is a medical cannabis retail operation; IVXX produces medical cannabis for dispensaries; Edible Garden, as its name insinuates, creates and distributes hydroponic edibles; MediFarm is a medical cannabis cultivation operation in Nevada; and GrowOp works as what the company refers to as a specialist in controlled environment agricultural technologies (basically, cannabis grow tech).Anybody with a finger on the pulse of the cannabis space right now will know that the industry is growing dramatically across numerous US states and that companies operating in the sector have the potential to latch onto, and benefit from, this growth. Terra Tech is one of these companies, and as we have pointed out in previous coverage, it looks as though it is taking advantage of this positioning – at least from a topline perspective.The latest numbers support this statement.Revenues generated during the first quarter of this year increased 340% to approximately $6.8 million, compared to $1.5 million in the same period in 2016. Gross profit came in at $359,000, an increase of $225,000 on the comparable quarter last year. The gains came (primarily) from an increase in activity in two of the above-noted subs – Blüm and IVXX, as we might have expected given industry trends.Guidance for the full year 2017 comes in at $38 - $40 million revenues. For some perspective, this company currently trades for a market cap of just $90 million, or a little over 2X expected annual sales. For a play in a space that's expected to grow as fast as this one is, that seems incredibly cheap.Unfortunately, however, that's not the entire picture.Terra Tech is plagued with dilution issues. Last year, the company converted $13.5 million of convertible promissory notes and accrued interest into 56.6 million shares of common. In the first quarter of this year alone, a similar transaction saw 15.1 million shares added. Again during the first quarter of 2017, the company raised $1.3 million through a 4.6 million share issue. A February 22 filing details a Securities Purchase Agreement that saw $3 million raised by way of a 12% senior convertible promissory, due August next year. It's convertible at any time to common stock at a discount to market and – and here's the key point – it's protected against splits and dilution.Now, it's important to recognize that it is not unusual for a company of this size, and in an industry that is growing this fast, to dilute in order to raise capital. Shareholders taking a position in this sort of company generally recognize this and are prepared to accept a certain degree of dilution. What's also important, however, is for management to allocate the capital raised towards operational efforts that can drive topline, and in turn, market capitalization, growth.And that's the key to this one working out as a trade for an early shareholder.If the company can grow at a pace that outstrips the value lost through dilution (proportionately for each holding) then there's real potential for long-term return. If not, shareholders are going to end up with dwindling positions as dilution eats away at proportionate value.We think that the growth seen over the last twelve months is a good start and, to a degree, indicative that there's competence steering the ship. Whether it can maintain this level of growth remains to be seen.We will be updating our subscribers as soon as we know more. For the latest updates on TRTC, sign up below!Disclosure: We have no position in TRTC and have not been compensated for this article.