One stock that has slipped off the path of the righteous in the cannabis space in a big way is Terra Tech Corp (OTCMKTS:TRTC). We suspect investors need to see a path to resumed revenue growth (now sitting on y/y topline contraction). One catalyst that may have unfairly fallen through the cracks of perception was the company’s recent announcement that, on November 2, 2018, the company signed a non-binding letter of intent to merge with Golden Leaf Holdings Ltd. (OTCQB: GLDFF), a cannabis company with cultivation, production and retail operations built around recognized brands.
According to the release, “Under the terms of the letter of intent, a wholly owned subsidiary of Terra Tech will amalgamate with Golden Leaf, with the resulting amalgamated corporation being a wholly owned subsidiary of Terra Tech. Consummation of the transaction is subject to a number of conditions, including entering into a mutually agreed definitive arrangement agreement, completion of due diligence, the waiting period for the Hart-Scott-Rodino Act, state and local regulatory approvals, approval by the Ontario courts, Terra Tech board approval, Golden Leaf receiving a positive fairness opinion, Canadian Securities Exchange approval and Golden Leaf shareholder and board approval.”
Terra Tech Corp (OTCMKTS:TRTC) has positioned itself in the cannabis space as a company that engages in the design, marketing, and sale of hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor agriculture in Newport Beach and Irvine, California.
TRTC operates through two segments, Hydroponic Produce and Cannabis Products. The company offers environmental controllers and timers; ballasts; bulbs; reflectors; nutrients; and portable hydroponic trailers and The Big Bud and Little Bud, which are custom fabricated proprietary cultivation systems for horticulture enthusiasts, local urban farmers, and greenhouse growers
Additionally, TRTC operates as a retail seller of hydroponic produce, herbs, and floral products, which are distributed in the Midwest and the Northeast United States; and produces and sells a line of cannabis flowers and cigarettes, as well as a line of cannabis pure concentrates, including oils, waxes, shatters, and clears to dispensaries in California.
The company operates through multiple subsidiary businesses, including Blum, IVXX Inc., Edible Gardens, MediFarm LLC and GrowOp Technology.
Blum’s retail medical cannabis facilities focus on providing the highest quality medical cannabis to patients who are looking for alternative treatments for their chronic medical conditions. Blum offers a broad selection of medical cannabis products including; flowers, concentrates and edibles through its Oakland, CA and multiple Nevada locations.
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As noted above, TRTC just announced that, on November 2, 2018, it signed a non-binding letter of intent to merge with Golden Leaf Holdings Ltd. (OTCQB: GLDFF), a cannabis company with cultivation, production and retail operations built around recognized brands. In all, we’ve witnessed -8% during the past week in terms of shareholder losses in the listing.
Furthermore, the stock has registered increased average transaction volume recently, with the past month seeing 7% beyond its prior sustained average level.
Derek Peterson, CEO of Terra Tech, commented, “As new participants enter the cannabis industry the market is undergoing rapid consolidation. The companies that are vertically integrated with strong brands and multi-jurisdictional operations are best situated to achieve scale and retain market-leading positions. We are planning to merge with Golden Leaf’s operations because its seed-to-sale business model is complementary to ours, encompassing both the Oregon and Canadian market which represent new markets for us, and touching Nevada where we are focused on gaining market share. Its ‘Chalice Farms’ retail dispensaries are well known and have an excellent reputation in Oregon, and the wholesale side of the business offers diverse, high quality cannabis products for all demographics, which are complementary to our existing wholesale product lines. This transaction, if completed, will create a combined company that will control 41 permits across cultivation, manufacturing, distribution and retail spanning Oregon, California and Nevada, in addition to 21 pending permit applications in multiple jurisdictions throughout the U.S.”
Now commanding a market cap of $92.65M, TRTC has a significant war chest ($3.4M) of cash on the books, which is balanced by about $7.7M in total current liabilities. TRTC is pulling in trailing 12-month revenues of $35.4M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -30%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $TRTC stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $TRTC, either long or short, and we have not been compensated for this article.