Terra Tech Reports Drop In Revenues Amid Rising Losses – Blames California Taxes
Terra Tech Corp. (OTCQX: TRTC) reported that its revenues for the year ending in December dropped to approximately $31.33 million versus last year’s approximately $35.80 million. The company blamed the drop on “the significant level of taxes that the State of California placed on cannabis sales which depressed the overall legal cannabis market.” Terra Tech did not break out its fourth-quarter earnings in the press release.
The company also delivered a 2018 net loss of approximately $39.8 million or $0.56 per share compared to a loss of approximately $32.7 million or $0.71 per share for 2017. Expenses also rose as SG&A for 2018 was approximately $43.30 million versus 2017’s $30.80 million.
“We faced several headwinds in 2018 that slowed our progress and impacted top-line results,” commented Derek Peterson, Chief Executive Officer of Terra Tech. “These challenges included navigating the changing regulations in the State of California, which affected sales from our retail businesses in the state, Blüm Oakland and Blüm Santa Ana. Our capacity to generate wholesale revenues in California was also impacted by the regulations which required us to relocate and upgrade our IVXX cannabis production to a new facility, effectively halting production in some months.”
“While these factors created challenges for us in 2018, they also drove us to make investments in cultivation and manufacturing infrastructure that will enable us to scale production and achieve greater IVXX distribution in California in 2019. The upgraded facility in Oakland, California is nearly complete and will support a ramp in production starting in Q2 2019. Other initiatives to drive revenue growth in the state include the anticipated launch of a branded delivery system in California, and our plans to establish a pop-up retail experience,” continued Mr. Peterson.
“In conjunction with these growth initiatives, we are also implementing strategies to improve fiscal responsibility and improve our bottom line in 2019. This includes streamlining our operations and headcount to mitigate operational burn and completing an assessment of all our assets to explore opportunities to sell certain lower performing assets and redirect resources into accretive opportunities. This strategy will also allow us to avoid accessing the capital markets for funding in the second half of 2019.
The company had $7.19 million in cash as of December 31, 2018, compared with $5.45 million as of December 31, 2017. The company said it had no short-term debt as of December 31, 2018, and that its long term debt was $18.3 million as of December 31, 2018, compared with $6.6 million as of December 31, 2017.
Following the end of the year, Terra Tech agreed to acquire the remainder of the interest in the Blüm Reno dispensary and the building where the facility is located from Forever Green NV and Forever Young Investments, LLC, affiliates of Heidi Loeb Hegerich. The transfer of those interests is subject to the approval of the Nevada Department of Taxation, which the Company expects to receive in approximately 60-90 days. The company also entered into a settlement agreement with Forever Green, Forever Young Investments and Ms. Hegerich to settle the lawsuit between them and the company.
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