Today marks a first at TheCannalysts – because we begin our journey into the OTC’s, with a look at Terra Tech Corporation ($TRTC:OTC).

That was literally hard to type…. and I’m almost having second thoughts. I just tried SEDAR 3 times before I remembered this one ain’t even on there. One needs to look up SEC filings directly, or as I’m doing, going through a gate on $TRTC’s website to get them. I’m only looking back one quarter too.

As to information available about $TRTC: it’s an avalanche.

A recent letter was penned by their recently installed interim CEO (Frank), who, replaced the CEO that had been hired last October (Mike, who’s now VP Ops), who had replaced the CEO that was hired in February 2020 (Matt). Notable is that 14MM shares granted to the guy before the current guy were returned to $TRTC ‘at no cost’.

Now, Matt did an undated interview with $TRTC’s CSO/ex-CEO/and long-time $TRTC gadabout Derek Peterson (here’s a fluff piece on him for any masochists out there)…..where they describe $TRTC ‘pivoting’ into an ‘over-the-counter global pharmaceutical company’. The interview would have been made between Feb and Oct of 2020. That ‘pharma’ idea arose from a merger early last year with OneQor Pharmaceutical (Matt was CEO of that), and they state that they are embarking on a journey to become a company that provides over-the-counter products around the world – just like say Advil, or NyQuil (no, I didn’t make that up). In the interview, they seemed to be in love (it didn’t last), and the pair also claim that they are “very close to inking a deal with a global pharmaceutical company’. No clue as to current status.

Sigh. I need an Advil.

I’d had a look at $TRTC back in December 2018. A merger attempt with Golden Leaf Holdings ($GLH) had recently been derailed – some litigation announced at the time could have been a partial reason for the deal’s collapse. I can’t be bothered to look further. There was some more <ahem> material published 6 months prior…that could be characterized as unflattering to $TRTC.

Looking up ‘Derek Peterson lawsuits’ on google, one can find additional material that has arisen from some apparent conflicts around ownership and stock values in the recent past. A union organizer connected with $TRTC was sent to jail for 3 years for soliciting bribes to not organize in certain cannabis dispensaries. Apparently, Derek Peterson helped save the day, and got this crook off the streets. The most lurid material is found in some sort of whistleblower thingy called ‘Fuzzy Panda’, who, drops the whole 9-yards on $TRTC (grab some rubber gloves and eye protection for that one). Although much more exists.

I can’t and won’t opine about the validity (or anything else) about all of this. Except to say – as you are probably thinking – this isn’t normal course for most businesses.

They have dispensaries in California under the ‘BLUM’ banner (3 that I can see, and a 32k sqft grow-op), and have entered Nevada (citing 2 grow-ops, 2 dispensaries, and 2 extraction labs, all under construction). And yes, it’s getting sued as well (I don’t know status), but some sort of restructuring underway has induced $TRTC to sell their Nevada assets (which, had already been litigated over previously…see the $TRTC/$GLH snafu above….and they dumped some cash losing the court battle).

Let’s get this over with. This thing’s a Mexican Soap Opera, and I’ve barely left the first couple of pages of a google search.

To the financials!

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• $2MM in cash, $5MM in inventory. That cash position will change since they’re dumping assets.
• ‘Other Assets’ (in long-term) of $13MM listed on balance sheet. I can’t find out what they are. Largest number in any single line other than PP&E.
• $8MM in current assets, $31MM in current liabilities. They’re underwater by $6MM on discontinued operations.
• $3MM in sales, 45% margin. SG&A of $5.5MM.
• Net impairments of $9.8MM in the quarter, probably related to asset sale.

Ok, I’m out. This thing is a company that even its’ mother wouldn’t love.

Is there anything at all we can take away from this full diaper? Maybe.

Keep your head up around anything California: Companies there had a hard in-rush of capital and deals back in 2015 as collectives and joint ventures and Mom & Pops were sought after. Many of the deals have left stacks of litigation; related and inter-related parties spit-swapping continues to exist and grow; and seem to have embedded perpetual power struggles in some. I think of Harvest Health trying to extricate itself from CA, only to have the deal broken like a mirror. And of Harborside’s history of related party transactions and very material income tax travails. I think it reflects the relative lack of sophistication that existed within the sector at the time. I’ve seen similar issues emerge in other states and companies. A good example being the NICs and what I view as prima facie self-dealing regarding $CURA. I recall seeing litigation in some others, those are top of mind.

Columbia Care ($CCHW) seems to have gone into California smoothly enough, paying $70MM USD for three storefronts and a grow-op. Although they had planned to sell some real-estate that they had acquired in the deal……. to pay for the deal. Yeah. Perhaps the acquisition was cleaned up prior to the buy, or perhaps put together right from the start. Either or, even if CA has been civilized enough (so far), $CCHW is no stranger to being sued, around intellectual property and ownership of licenses and NICs related to Florida.

I am interested in seeing operational metrics out of California if I can get at segmented information.

At a higher level, the largest single legal cannabis market on earth – California – has not seen much activity from those packing bags of capital at the moment. It’s gotta prompt one to reflect on the ‘why’. Too much illegal supply? Anti-corporate west-coast culture? Saturated markets? No margin? Too lax in regulatory? I’ve heard them all at certain points. $PLTH paid for a licence there, but is building from the ground up.

I have to admit, looking at $TRTC has been kinda fun, in the same way watching a movie about a giant shark eating cities and supertankers is. Great entertainment, and one is never really in danger.

$TRTC is effluent.

The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $TRTC.