To say Terra Tech Corp (OTCMKTS:TRTC) has been a disappointment is perhaps the understatement of the century. The company, like Medical Marijuana Inc (OTCMKTS:MJNA), Hemp Inc (OTCMKTS:HEMP), and Growlife In (OTCMKTS:PHOT) was one of the original pot stocks to start trading. Investors that were around for the 2014 Cannabis Green Rush saw big profits. However, since that time, Terra Tech has come to significant shareholder dilution and bad management. The stock has been on a steady downtrend and every rally has been an opportunity to sell. Long-term investors are asking what’s next and how to play TRTC. Is there any hope for Terra Tech Corp?
First up, a little background info for those that are not familiar with Terra Tech. Terra Tech Corp. (OTCQX: TRTC) operates through multiple subsidiary businesses including Blüm, IVXX Inc., Edible Garden, and MediFarm LLC.
Blüm’s retail and medical cannabis facilities provide the highest quality medical cannabis to patients who are looking for alternative treatments for their chronic medical conditions as well as premium cannabis to the adult-use market in Nevada and California. Blüm offers a broad selection of cannabis products including; flowers, concentrates, and edibles through its Oakland, CA and multiple Nevada locations.
IVXX, Inc. is a wholly-owned subsidiary of Terra Tech that produces cannabis-extracted products for regulated medical cannabis dispensaries throughout California and medical and adult-use dispensaries in Nevada.
The Company’s wholly-owned subsidiary, Edible Garden, cultivates a premier brand of local and sustainably grown hydroponic produce, sold through major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, Stop & Shop and others nationwide.
Terra Tech’s MediFarm LLC subsidiaries are focused on medical and adult-use cannabis cultivation and permitting businesses throughout Nevada.
String of negative news
Casting a negative spell over the company has been a string of bad news lately. While other cannabis companies like Canopy Growth Corp (NYSE:CGC) have been able to rally in 2019, TRTC has been held back. The first negative item was a lawsuit filed last December against the company by Heidi Loeb Hegerich related to MediFarm I, LLC, which owns the Blüm dispensary in Reno, NV.
According to Heidi Loeb Hegerich, the company has a history of inaccurate bookkeeping practices and filling of deceptive financial results. In the lawsuit, Hegerich alleges that Terra Tech has continued to loot from the Blum Dispensary one of the joint ventures she co-owns with the company. She goes on to claim that the company didn’t properly audit the joint venture and also tried to remove her as a manager of Blum.
The second item was that Golden Leaf Holdings Ltd (OTCMKTS:GLDFF) called off its merger with TRTC. The deal was announced on November 5th and a month and a half later, the deal was canceled.
Third, the company posted disappointing earnings results. The posting of a wider than expected net loss of -$13.7 million compared to -$7.8 million reported a year earlier did not go well with investors. The fact that the company also reported a slowdown in revenue growth all but spooked the markets triggering a sell-off of the stock.
The cannabis-focused company says it generated revenues of $7.1 million in the recent quarter down from $10.1 million reported a year earlier.
So what’s the solution? Well, there are quite a few positives with Terra Tech. For one, the company owns an impressive collection of assets. Stockholders’ equity for the quarter ended September 30, 2018 amounted to approximately $93.1 million, an increase of approximately $16.3 million compared to approximately $76.8 million as of December 31, 2017. Consider the current market cap of the entire company is only $61 million.
In reality, the problem with Terra Tech starts at the top and lies with CEO Derek Peterson. The fact is the investment community has lost confidence in his abilities. This destruction of wealth has come under his watch. He needs to go. There needs to be new life at the top of Terra Tech for the company to grow. Until that happens, TRTC will continue to underperform other names in the cannabis sector.
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Disclosure: We have no position in TRTC and have not been compensated for this article.
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