Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 08, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Terra Tech Corp. | ||
Entity Central Index Key | 1,451,512 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 116,891,921 | ||
Entity Common Stock, Shares Outstanding | 65,319,183 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 5,445,582 | $ 9,749,572 |
Accounts Receivable | 959,698 | 747,792 |
Notes Receivable | 5,010,143 | |
Inventory | 5,760,019 | 1,909,330 |
Prepaid Expenses and Other Current Assets | 1,067,689 | 704,721 |
Total Current Assets | 18,243,131 | 13,111,415 |
Property, Equipment and Leasehold Improvements, Net | 19,191,616 | 10,464,764 |
Intangible Assets, Net | 27,773,110 | 23,627,098 |
Goodwill | 28,921,260 | 28,921,260 |
Other Assets | 4,058,682 | 54,193 |
TOTAL ASSETS | 98,187,799 | 76,178,730 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 5,444,710 | 2,417,400 |
Derivative Liabilities | 9,331,400 | 6,987,000 |
Short-Term Debt | 564,324 | |
Income Taxes Payable | 615,830 | |
Contingent Consideration | 12,085,859 | |
Total Current Liabilities | 14,776,110 | 22,670,413 |
Long-Term Liabilities: | ||
Long-Term Debt | 6,609,398 | 1,354,352 |
Total Long-Term Liabilities | 6,609,398 | 1,354,352 |
Total Liabilities | 21,385,508 | 24,024,765 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock, Par Value $0.001:990,000,000 Shares Authorized as of December 31, 2017 and 2016; 61,818,560 and 36,924,254 Shares Issued and Outstanding as of December 31, 2017 and 2016, respectively | 61,819 | 36,924 |
Additional Paid-In Capital | 181,357,715 | 125,466,493 |
Accumulated Deficit | (105,548,602) | (72,870,999) |
Total Terra Tech Corp. Stockholders' Equity | 75,870,932 | 52,634,873 |
Non-Controlling Interest | 931,359 | (480,908) |
Total Stockholders' Equity | 76,802,291 | 52,153,965 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 98,187,799 | 76,178,730 |
Convertible Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value | ||
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value | $ 2,455 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, Authorized | 50,000,000 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 990,000,000 | 990,000,000 |
Common stock, Issued | 61,818,560 | 36,924,254 |
Common stock, Outstanding | 61,818,560 | 36,924,254 |
Convertible Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 100 | 100 |
Preferred stock, Issued | 8 | 8 |
Preferred stock, Outstanding | 8 | 8 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 49,999,900 | 49,999,900 |
Preferred stock, Issued | 0 | 2,455,064 |
Preferred stock, Outstanding | 0 | 2,455,064 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements Of Operations | |||
Total Revenues | $ 35,800,844 | $ 25,327,763 | $ 9,975,346 |
Cost of Goods Sold | 30,323,771 | 22,755,080 | 8,958,475 |
Gross Profit | 5,477,073 | 2,572,683 | 1,016,871 |
Selling, General and Administrative Expenses | 25,357,091 | 20,720,534 | 9,833,646 |
Loss from Operations | (19,880,018) | (18,147,851) | (8,816,775) |
Other Income (Expense): | |||
Amortization of Debt Discount | (2,138,762) | (1,414,202) | (696,180) |
Impairment of Property | (138,037) | ||
Impairment of Intangible Assets | (757,467) | ||
Loss on Extinguishment of Debt | (7,144,288) | (5,382,813) | (619,444) |
Loss from Derivatives Issued with Debt Greater than Debt Carrying Value | (1,487,500) | (561,000) | |
Gain (Loss) on Fair Market Valuation of Derivatives | (3,494,550) | (1,844,500) | 1,800,100 |
Interest Expense, Net | (542,664) | (377,349) | (469,576) |
Gain on Settlement of Contingent Consideration | 4,991,571 | ||
Gain (Loss) on Fair Market Valuation of Contingent Consideration | (4,426,047) | 668,694 | |
Total Other Income (Expense) | (13,650,244) | (9,837,670) | (546,100) |
Loss Before Provision for Income Taxes | (33,530,262) | (27,985,521) | (9,362,875) |
Provision for Income Tax Benefit (Expense) | 347,455 | (44,000) | |
Net Loss | (33,182,807) | (27,985,521) | (9,406,875) |
Net Loss Attributable to Non-Controlling Interest | 505,204 | 1,066,631 | 181,295 |
NET LOSS ATTRIBUTABLE TO TERRA TECH CORP. | $ (32,677,603) | $ (26,918,890) | $ (9,225,580) |
Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders' Basic and Diluted | $ (0.71) | $ (1.04) | $ (0.58) |
Weighted-Average Number of Common Shares Outstanding - Basic and Diluted | 46,072,846 | 25,957,307 | 16,012,987 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Convertible Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Convertible Series Q Preferred Stock [Member] | Series Z Preferred Stock [Member] | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning balance, Shares at Dec. 31, 2014 | 8 | 1,033,334 | 13,168,859 | ||||||
Beginning balance, Amount at Dec. 31, 2014 | $ 1,033 | $ 13,169 | $ 38,280,615 | $ (36,726,529) | $ (291,330) | $ 1,276,958 | |||
Sale of Common Stock, Shares | 2,286,786 | ||||||||
Sale of Common Stock, Amount | $ 2,287 | 3,973,601 | 3,975,888 | ||||||
Issuance of warrants | 1,148,069 | 1,148,069 | |||||||
Issuance of Common Stock for services, Shares | 722,902 | ||||||||
Issuance of Common Stock for services, Amount | $ 723 | 1,009,389 | 1,010,112 | ||||||
Issuance of Common Stock for debt and interest expense, Shares | 3,776,369 | ||||||||
Issuance of Common Stock for debt and interest expense, Amount | $ 3,776 | 7,049,102 | 7,052,878 | ||||||
Issuance of Common Stock for compensation, Shares | 246,667 | ||||||||
Issuance of Common Stock for compensation, Amount | $ 247 | 314,253 | 314,500 | ||||||
Issuance of Preferred Stock for compensation, Shares | 53,333 | ||||||||
Issuance of Preferred Stock for compensation, Amount | $ 53 | 366,078 | 366,131 | ||||||
Stock Option Compensation | |||||||||
Net Loss Attributable to Non-Controlling Interest | (181,295) | (181,295) | |||||||
Cash Contribution from Non-Controlling Interest | 603,156 | 603,156 | |||||||
Net Loss Attributable to Terra Tech Corp. | (9,225,580) | (9,225,580) | |||||||
Ending balance, Shares at Dec. 31, 2015 | 8 | 1,086,667 | 20,201,583 | ||||||
Ending balance, Amount at Dec. 31, 2015 | $ 1,086 | $ 20,202 | 52,141,107 | (45,952,109) | 130,531 | 6,340,817 | |||
Sale of Common Stock, Shares | 1,927,948 | ||||||||
Sale of Common Stock, Amount | $ 1,928 | 4,056,206 | 4,058,134 | ||||||
Issuance of warrants | 467,066 | 467,066 | |||||||
Issuance of Common Stock for services, Shares | 494,352 | ||||||||
Issuance of Common Stock for services, Amount | $ 494 | 2,739,991 | 2,740,485 | ||||||
Issuance of Common Stock for debt and interest expense, Shares | 3,778,581 | ||||||||
Issuance of Common Stock for debt and interest expense, Amount | $ 3,779 | 20,720,887 | 20,724,666 | ||||||
Issuance of Common Stock for compensation, Shares | 430,113 | ||||||||
Issuance of Common Stock for compensation, Amount | $ 430 | 2,462,190 | 2,462,620 | ||||||
Issuance of Preferred Stock for compensation, Shares | 26,667 | ||||||||
Issuance of Preferred Stock for compensation, Amount | $ 27 | 715,012 | 715,039 | ||||||
Stock Option Compensation | 190,355 | 190,355 | |||||||
Issuance of Common Stock for the exercise of cashless warrants, Shares | 487,169 | ||||||||
Issuance of Common Stock for the exercise of cashless warrants, Amount | $ 487 | (487) | |||||||
Exercise of Warrants, Shares | 1,136,364 | ||||||||
Exercise of Warrants, Amount | $ 1,136 | 3,148,864 | 3,150,000 | ||||||
Issuance of Common Stock for Intangibles, Shares | 11,494 | ||||||||
Issuance of Common Stock for Intangibles, Amount | $ 11 | 99,989 | 100,000 | ||||||
Purchase of Black Oak Gallery, Shares | 577,913 | 1,425 | 544 | ||||||
Purchase of Black Oak Gallery, Amount | $ 578 | $ 1 | $ 1 | 38,612,507 | 38,613,087 | ||||
Preferred Stock Series Q Converted into Common Stock, Shares | (1,425) | 7,126,000 | |||||||
Preferred Stock Series Q Converted into Common Stock, Amount | $ (1) | $ 7,126 | 99,744 | 106,869 | |||||
Preferred Stock Series Z Converted into Preferred Stock Series B, Shares | 1,010,951 | (544) | |||||||
Preferred Stock Series Z Converted into Preferred Stock Series B, Amount | $ 1,011 | $ (1) | 14,146 | 15,156 | |||||
Preferred Stock Series B Converted into Common Stock, Shares | (173,801) | 935,799 | |||||||
Preferred Stock Series B Converted into Common Stock, Amount | $ (174) | $ 936 | (762) | ||||||
Preferred Stock Series B Converted into Common Stock one, Shares | (73,333) | 394,851 | |||||||
Preferred Stock Series B Converted into Common Stock one, Amount | $ (73) | $ 395 | (322) | ||||||
Net Loss Attributable to Non-Controlling Interest | (1,066,631) | (1,066,631) | |||||||
Cash Contribution from Non-Controlling Interest | 455,192 | 455,192 | |||||||
Net Loss Attributable to Terra Tech Corp. | (26,918,890) | (26,918,890) | |||||||
Ending balance, Shares at Dec. 31, 2016 | 8 | 2,455,064 | 36,924,254 | ||||||
Ending balance, Amount at Dec. 31, 2016 | $ 2,455 | $ 36,924 | 125,466,493 | (72,870,999) | (480,908) | 52,153,965 | |||
Issuance of warrants | 689,542 | 689,542 | |||||||
Issuance of Common Stock for services, Shares | 389,374 | ||||||||
Issuance of Common Stock for services, Amount | $ 389 | 1,284,173 | 1,284,562 | ||||||
Issuance of Common Stock for debt and interest expense, Shares | 8,284,283 | ||||||||
Issuance of Common Stock for debt and interest expense, Amount | $ 8,284 | 29,776,987 | 29,785,271 | ||||||
Issuance of Common Stock for compensation, Shares | 158,867 | ||||||||
Issuance of Common Stock for compensation, Amount | $ 160 | 490,720 | 490,880 | ||||||
Issuance of Preferred Stock for compensation, Shares | 40,000 | ||||||||
Issuance of Preferred Stock for compensation, Amount | $ 40 | 1,035,366 | 1,035,406 | ||||||
Stock Option Compensation | 692,971 | 692,971 | |||||||
Preferred Stock Series B Converted into Common Stock, Shares | (2,209,741) | 11,897,965 | |||||||
Preferred Stock Series B Converted into Common Stock, Amount | $ (2,210) | $ 11,898 | (9,688) | ||||||
Issuance of Common Stock for Director Fees, Shares | 81,061 | ||||||||
Issuance of Common Stock for Director Fees, Amount | $ 81 | 221,892 | 221,973 | ||||||
Sale of Common Stock for Cash, Shares | 2,983,137 | ||||||||
Sale of Common Stock for Cash, Amount | $ 2,983 | 9,447,017 | 9,450,000 | ||||||
Issuance of Common Stock for Prepaid Inventory, Shares | 892,964 | ||||||||
Issuance of Common Stock for Prepaid Inventory, Amount | $ 893 | 1,934,607 | 1,935,500 | ||||||
Purchase of Assets from Tech Center Drive, Shares | 826,105 | ||||||||
Purchase of Assets from Tech Center Drive, Amount | $ 826 | 2,725,320 | 2,726,146 | ||||||
Settlement of Contingent Consideration, Shares | (285,323) | (619,450) | |||||||
Settlement of Contingent Consideration, Amount | $ (285) | $ (619) | 4,740,542 | 4,739,638 | |||||
Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital | 4,692,697 | 4,692,697 | |||||||
Reclass of Non-Controlling Interest to Additional Paid-In Capital for the Acquisition Additional Interest in Subsidiary | (1,830,924) | 1,830,924 | |||||||
Net Loss Attributable to Non-Controlling Interest | (505,204) | (505,204) | |||||||
Cash Contribution from Non-Controlling Interest | 86,547 | 86,548 | |||||||
Net Loss Attributable to Terra Tech Corp. | (32,677,603) | (32,677,603) | |||||||
Ending balance, Shares at Dec. 31, 2017 | 8 | 61,818,560 | |||||||
Ending balance, Amount at Dec. 31, 2017 | $ 61,819 | $ 181,357,715 | $ (105,548,602) | $ 931,359 | $ 76,802,291 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Loss | $ (33,182,807) | $ (27,985,521) | $ (9,406,875) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | |||
(Gain) Loss on Fair Market Valuation of Derivatives | 3,494,550 | 1,844,500 | (1,800,100) |
(Gain) Loss on Fair Market Valuation of Contingent Consideration | 4,426,047 | (668,694) | |
Gain on Settlement of Contingent Consideration | (4,991,571) | ||
Impairment of Property | 138,037 | ||
Impairment of Intangibles | 757,467 | ||
Loss on Extinguishment of Debt | 7,144,288 | 5,382,813 | 619,444 |
Amortization of Debt Discount | 2,138,762 | 1,414,202 | 696,180 |
Interest income capitalized to notes receivable | (49,911) | ||
Deferred Tax Expense (Benefit) | (145,900) | 44,000 | |
Depreciation and Amortization | 3,647,216 | 2,536,413 | 645,294 |
Warrants Issued with Common Stock and Debt | 211,534 | 467,066 | 1,148,069 |
Stock Issued for Compensation | 1,526,286 | 3,177,659 | 680,630 |
Stock Issued for Director Fees | 221,973 | 334,424 | |
Stock Issued for Services | 1,284,562 | 2,406,061 | 1,010,112 |
Stock Option Compensation | 692,971 | 190,355 | |
Equity Instruments Issued with Debt Greater than Debt Carrying Value | 1,487,500 | 561,000 | |
Change in Allowance for Doubtful Accounts | (168,619) | 153,660 | |
Changes in Operating Assets and Liabilities: | |||
Accounts Receivable | (211,906) | 162,671 | (478,041) |
Inventory | (3,736,910) | (797,596) | (279,268) |
Prepaid Expenses and Other Current Assets | 1,572,532 | (32,274) | (65,030) |
Other Assets | (3,999,489) | (133) | 50 |
Accounts Payable and Accrued Expenses | 3,662,710 | 65,530 | 1,164,308 |
Income Taxes Payable | (615,830) | (254,100) | |
NET CASH USED IN OPERATING ACTIVITIES | (15,869,489) | (10,583,643) | (5,306,567) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Cash Assumed in Black Oak Acquisition | 163,566 | ||
Cash Paid for Acquisition, Net of Cash Acquired | (4,113,779) | ||
Issuance of Note Receivable | (4,960,232) | ||
Purchase of Property, Equipment and Leasehold Improvements | (6,194,438) | (4,316,094) | (1,851,045) |
Purchase of Intangible Assets Trade Names | (75,000) | ||
NET CASH USED IN INVESTING ACTIVITIES | (15,268,449) | (4,227,528) | (1,851,045) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from Issuance of Notes Payable | 20,000,000 | 17,479,335 | 2,150,000 |
Payments on Notes Payable | (1,000,000) | ||
Cash Paid for Debt Discount | (614,600) | ||
Proceeds from Issuance of Common Stock, Warrants and Common Stock Subscribed | 9,450,000 | 4,058,134 | 3,975,888 |
Proceeds from Exercise of Warrants | 3,150,000 | ||
Payment of Contingent Consideration | (2,088,000) | ||
Cash Contribution from Non-Controlling Interest | 86,548 | 455,192 | 603,156 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 26,833,948 | 24,142,661 | 6,729,044 |
NET CHANGE IN CASH | (4,303,990) | 9,331,490 | (428,568) |
Cash at Beginning of Period | 9,749,572 | 418,082 | 846,650 |
CASH AT END OF PERIOD | 5,445,582 | 9,749,572 | 418,082 |
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: | |||
Cash Paid for Interest | 13,500 | 4,500 | |
Cash Paid for Income Taxes | 268,375 | 400,000 | |
Warrant Expense | 467,066 | 1,148,069 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||
Settlement of Contingent Consideration | 4,739,638 | ||
Purchase of land and building with a mortgage | 4,500,000 | ||
Gain on Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital | 4,692,697 | ||
Fair Value of Debt Discount Recorded | 13,073,400 | ||
Issuance of Common Stock for Debt and Interest Expense | 29,785,271 | 13,558,388 | 5,773,320 |
Fair Value of Shares Issued for Tech Center Drive Asset Acquisition | 2,726,146 | ||
Issuance of Common Stock for Prepaid Inventory | 1,935,500 | ||
Warrants Issued for Debt Discount | 478,008 | ||
Conversion of Series B Preferred Stock to Common Stock | 33,146 | ||
Reclass of Non-Controlling Interest to Additional Paid-In Capital for the Acquisition of Additional Interest in Subsidiary | $ 1,830,925 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 1. DESCRIPTION OF BUSINESS | Organization References in this document to the Company, Terra Tech, we, us, or our are intended to mean Terra Tech Corp., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis. Terra Tech is a holding company with the following subsidiaries: · 620 Dyer LLC, a California corporation (Dyer); · 1815 Carnegie LLC, a California limited liability company (Carnegie); · Black Oak Gallery, a California corporation (Black Oak); · Blüm San Leandro, a California corporation (Blüm San Leandro); · Edible Garden Corp., a Nevada corporation (Edible Garden); · EG Transportation, LLC, a Nevada limited liability company (EG Transportation); · GrowOp Technology Ltd., a Nevada corporation (GrowOp Technology); · IVXX, Inc., a California corporation (IVXX Inc.; together with IVXX LLC, IVXX); · IVXX, LLC, a Nevada limited liability company (IVXX LLC); · MediFarm, LLC, a Nevada limited liability company (MediFarm); · MediFarm I, LLC, a Nevada limited liability company (MediFarm I); · MediFarm I Real Estate, LLC, a Nevada limited liability company (MediFarm I RE); · MediFarm II, LLC, a Nevada limited liability company (MediFarm II); and · MediFarm So Cal, Inc., a California mutual benefit corporation (MediFarm SoCal) The Company is a vertically integrated retail, production and cultivation company, with an emphasis on providing the highest quality of medical and adult use cannabis products. The Company also holds an exclusive patent on an organic antioxidant rich Superleaf rich lettuce and living herbs that are grown using classic Dutch hydroponic farming methods. The Company has a presence in three states (California, Nevada and New Jersey), and currently has a concentrated cannabis interest in California and Nevada. All of the Companys cannabis dispensaries operate under the name Blüm. The Companys cannabis dispensaries in California operate as MediFarm SoCal in Santa Ana and Black Oak Gallery in Oakland and offer a broad selection of medical cannabis products including flowers, concentrates and edibles. The Company is currently in various stages of construction in both states as the Company is rapidly expanding its commercial footprint focusing on building additional retail, cultivation and production locations for medical and adult use cannabis. The Hegenberger cultivation facility in Oakland under Black Oak is expected to be complete mid-2018, with additional medical and adult use locations under Dyer and Carnegie in which the Company owns the real property. The Company has received provisional permits to operate a dispensary and production facility in the city of San Leandro, California under Blüm San Leandro; and upon project completion and inspection, to receive final operating permits. In Nevada, the Company has four dispensaries, three under MediFarm in Las Vegas and one under MediFarm I in Reno, which sell quality medical and adult use cannabis products. The Company owns real property in Reno under MediFarm I RE, on which MediFarm I operates its dispensary. Under MediFarm II, the Company is constructing a state of the art cultivation and production facility, which will produce the Companys IVXX proprietary brand of cannabis flowers and cannabis extracted products available throughout Nevada. The Company has access to wide consumer markets for cannabis in both Nevada and California for which the Companys focus is on building a brand portfolio of a line of quality IVXX cannabis products. Within the Companys highly advanced and custom designed extraction labs, the Company produces the purest concentrates and cannabis extracted products including cartridges and vape pens. The Companys IVXX cannabis flowers are grown under meticulous standards ensuring exceptional quality and consistency. Founded on the importance of providing consumers with healthy and natural products, Edible Garden is a wholesale seller of organic and locally grown hydroponic produce and herb products. EG Transportation supports the distribution of Edible Garden products to major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, and others throughout New Jersey, New York, Delaware, Maine, Maryland, Connecticut, Pennsylvania and the Midwest. On April 1, 2016, the Company acquired Black Oak. Black Oak operates a medical marijuana dispensary and cultivation in Oakland, California under the name Blüm, pursuant to that certain Agreement and Plan of Merger, dated December 23, 2015 (the Merger Agreement), with Generic Merger Sub, Inc., a California corporation and our wholly-owned subsidiary (the Merger Sub), and Black Oak. The Merger Agreement was amended by a First Amendment to the Agreement and Plan of Merger, dated February 29, 2016. Pursuant to the Merger Agreement, the Merger Sub merged with and into Black Oak, with Black Oak as the surviving corporation, and became our wholly-owned subsidiary (the Merger). The Merger was intended to qualify for Federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, the outstanding shares of common stock of Black Oak were converted into the right to receive shares of the Companys Series Z preferred stock, shares of our Series B preferred stock and shares of our Series Q preferred stock. Subsequent to the Merger, the Series Q Preferred Stock, were all converted to common stock, and all the series Z preferred stock were all converted to Series B Preferred Stock. The Series B Preferred Stock were ultimately converted to common stock during 2017. Since the Merger was completed on April 1, 2016, Black Oaks financial results are included in our consolidated financial statements subsequent to that date , Note 5 Acquisitions Note 12 Contingent Consideration Due to changes in planned operations of the MediFarm dispensaries, the Company acquired an additional 38% ownership for no additional consideration during August 2017. Previously, the Company owned 60%. As of September 30, 2017, the Company has 98% ownership of MediFarm. In connection with the ownership change the Company recorded a $1,830,925 adjustment to additional paid in capital representing the change in non-controlling interest. On August 17, 2017, the Company formed a wholly owned legal entity, MediFarm SoCal, to acquire all assets of Tech Center Drive Management, LLC (Tech Center Drive) and 55 OC Collective, Inc. (55 OC). 55 OC owns and holds a cannabis dispensary license in the city of Santa Ana, California. Tech Center Drive manages and operates a dispensary under the license of 55 OC. On September 13, 2017, MediFarm SoCal acquired all of the assets of Tech Center Drive and 55 OC. The acquisition was accounted for in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805-10, Business Combinations; Note 5 Acquisition On March 12, 2018, the Company implemented 1-for-15 reverse stock split of the Companys common stock (the Reverse Stock Split). The Reverse Stock Split became effective in the stock market upon commencement of trading on March 13, 2018. As a result of the Reverse Stock Split, every fifteen shares of the Companys Pre-Reverse Stock Split common stock were combined and reclassified into one share of the Companys common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout consolidated financial statements have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of the Companys common stock were not affected by the Reverse Stock Split. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions to Securities Exchange Commission (SEC) Form 10-K and Regulation S-X, and reflect the accounts and operations of the Company and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of FASB or ASC 810, Consolidation Non-Controlling Interest Non-controlling interest is shown as a component of stockholders equity on the consolidated balance sheets and the share of income (loss) attributable to non-controlling interest is shown as a component of income (loss) in the consolidated statements of operations. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of total net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns, inventory valuation, stock-based compensation expense, goodwill and purchased intangible asset valuations, derivative liabilities, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, and litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Companys future results of operations will be affected. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not affect net loss and stockholders equity. Revisions Certain immaterial revisions were made to the notes to the December 31, 2016 consolidated financial statements related to the treatment of certain deferred tax items. As presented in Note 14 - Tax Expense Accounts Receivable The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. There was no allowance at December 31, 2017 and 2016. Notes Receivable The Company reviews all outstanding notes receivable for collectability as information becomes available pertaining to the Companys inability to collect. An allowance for notes receivable is recorded for the likelihood of non-collectability. The Company accrues interest on notes receivable based net realizable value. There was no allowance at December 31, 2017 and 2016. Inventory Inventory is stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method of accounting. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items and reserves. The reserve estimate for excess and obsolete inventory is based on expected future use. The reserve estimates have historically been consistent with actual experience as evidenced by actual sale or disposal of the goods. Prepaid Expenses and Other Current Assets Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include advertising, insurance, and service or other contracts requiring up-front payments. Property, Equipment and Leasehold Improvements, Net Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The approximate useful lives for depreciation of our property, equipment and leasehold improvements are as follows: thirty-two years for buildings; three to eight years for furniture and equipment; three to five years for computer and software; five years for vehicles and the shorter of the estimated useful life or the underlying lease term for leasehold improvements. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred. Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, Property, Plant, and Equipment. Note 8 Property, Equipment and Leasehold Improvements, Net Goodwill Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired and liabilities assumed in a business acquisition. In accordance with ASC 350, IntangiblesGoodwill and Other, The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of August 1 and whenever events or changes in circumstances indicate its carrying amount may not be recoverable. When assessing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company performs a two-step impairment test. If the Company concludes otherwise, then no further action is taken. The Company also has the option to bypass the qualitative assessment and only perform a quantitative assessment, which is the first step of the two-step impairment test. In the two-step impairment test, the Company measures the recoverability of goodwill by comparing a reporting units carrying amount, including goodwill, to the estimated fair value of the reporting unit. There were no events or changes in circumstances that indicated potential impairment of intangible assets during 2017, as such the Company determined that no adjustment to the carrying value of goodwill was required. In assessing the qualitative factors, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting units fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact. The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where the Company has had an acquisition that benefited more than one reporting unit, The Company has assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit. The estimated fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, tax deductions, and proceeds from disposition. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the particular investment. Cash flow projections are based on managements estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the businesss ability to execute on the projected cash flows. If the carrying amount of a reporting unit is in excess of its fair value, an impairment may exist, and the Company must perform the second step of the impairment analysis to measure the amount of the impairment loss, by allocating the reporting units fair value to its assets and liabilities other than goodwill, comparing the carrying amount of the goodwill to the resulting implied fair value of the goodwill, and recording an impairment charge for any excess. Intangibles Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, Property, Plant, and Equipment, Customer Relationships 5 to 12 Years Trademarks 2 to 8 Years Dispensary Licenses 14 Years Patent 2 Years Management Service Agreement 15 Years The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified. The Company calculates fair value of our intangible assets as the present value of estimated future cash flows the Company expects to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, The Company uses estimates and assumptions about future revenue contributions, cost structures and remaining useful lives of the asset (asset group). Intangible assets that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value. Long-Lived Assets Other long-lived assets are subject to amortization, and any impairment is determined in accordance with ASC 360, Property, Plant, and Equipment. Note 8 Property, Equipment and Leasehold Improvements, Net The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in our overall strategy with respect to the manner of use of the acquired assets or changes in our overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in our stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. The impairment charges, if any, are included in operating expenses in the accompanying consolidated statements of operations. Based on the test results, no impairments have occurred. Other Assets Other assets are comprised primarily of deposits for the purchase of real property in California and security deposits for leased properties in California, Nevada and New Jersey. The deposits for the purchase of real property in California will be allocated once the purchase is final and the deposit for leased properties will be returned at the end of the lease term. Business Combinations The Company accounts for its business acquisitions in accordance with ASC 805-10, Business Combinations. Revenue Recognition The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. Cannabis Dispensary, Cultivation and Production The Company recognizes revenue from manufacturing and distribution product sales, upon transfer of title and risk to the customer, which occurs either at shipping (F.O.B. terms), or upon sell through, depending on the arrangement. Revenue from our retail dispensaries is recognized net of discounts, rebates, promotional adjustments, price adjustments and returns, and net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue is recorded upon transfer of title and risk to the customer, which occurs at the time customers take delivery of our products at our retail dispensaries. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase. Revenue related to the sale of consignment inventory is not recognized until the product is pulled from inventory and sold directly to end-customers. The Company recognizes revenue from the sale of consignment inventory on a gross basis, as the Company has determined that: 1) the Company is the primary obligor to the customer; 2) the Company has latitude in establishing the sales prices and profit margins of its products; 3) the Company has discretion in selecting its suppliers; 4) the Company is responsible for loss or damage to consigned inventory; and 5) the Companys customer validation process performs an important part of the process of providing such products to authorized customers. The Company believes that these factors outweigh the fact that the Company does not have title to the consigned inventory prior to its sale. During the years ended December 31, 2017 and 2016, sales returns were not significant and, as such, no sales return allowance has been recorded as of December 31, 2017 and 2016. Herbs and Produce Products The Company recognizes revenue from products grown in its greenhouses and sold net of discounts, rebates, promotional adjustments, price adjustments, and estimated returns and upon transfer of title and risk to the customer, which occurs at delivery (F.O.B. terms). Upon delivery, the Company has no further performance obligations, selling price is fixed, and collection is reasonably assured. For sales for which the Company uses an outside grower, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Depending on the terms of the arrangements, the Company determines some or all of the following: product specifications, cultivation, and packaging, while disclosing trade and operational secrets, greenhouse technologies, and nutrients used to grow. The Company is the primary obligor in the transaction because it is our brand that is sold into the retail channel. The Company is subject to inventory risk until the product is accepted by the retailer. The Company bears credit risk for the amount billed to the retailer and, thus, must pay the grower in the event the selling price is not collected. This revenue is recorded at the gross sale price once the retailer has accepted delivery, selling price is fixed, and collection is reasonably assured. For the years ended December 31, 2016, and 2015, the Company had one significant outside grower which had such sales of $7,649,125 and $6,166,927, respectively. There were no sales with this outside grower during the year ended December 31, 2017. Cost of Goods Sold Cannabis Dispensary, Cultivation and Production Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and other supplies, fees for services and processing, other expenses for services, and allocated overhead. It also includes the cost incurred in producing the oils, waxes, shatters, and clears sold by IVXX. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. Herbs and Produce Products Cost of goods sold include cultivation costs, packaging, other supplies and purchased plants that are sold into the retail marketplace by Edible Garden. Other expenses included in cost of goods sold include freight, allocations of rent, repairs and maintenance, and utilities. Advertising Expenses The Company expenses advertising costs as incurred in accordance with ASC 720-35, Other Expenses Advertising Cost. Loyalty Rewards Program The Company offers a customer loyalty rewards program that allows members to earn discounts on future purchases. Unused discounts earned by loyalty rewards program members are included in accrued liabilities and recorded as a reduction of revenue at the time a qualifying purchase is made. Revenue is recognized when points are redeemed by the loyalty rewards program member. The loyalty rewards program was part of the acquisition of Black Oak, who began offering customers the loyalty rewards program in April 2015. The value of points accrued as of December 31, 2017 and 2016 was $22,783 and $21,627, respectively. Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, Compensation Stock Compensation, The Black-Scholes option-pricing model requires the input of certain assumptions that require the Companys judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent managements best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from managements estimates, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. Derivative Financial Instruments. ASC 815-40, Contracts in Entitys Own Equity ASC 815, Derivatives and Hedging Income Taxes The provision for income taxes is determined in accordance with ASC 740, Income Taxes The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations. In December 2017, the Tax Cuts and Jobs Act (TJCA or the Act) was enacted, which significantly changes U.S. tax law. In accordance with ASC 740, Income Taxes Loss Per Common Share In accordance with the provisions of ASC 260, Earnings Per Share, Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. Recently Issued Accounting Standards FASB ASU 2017-12 (Topic 815), Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities FASB ASU 2017-04 (Topic 350), Intangibles - Goodwill and Others FASB ASU 2017-01 (Topic 805), Business Combinations: Clarifying the Definition of a Business FASB ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Statement of Cash Flows. FASB ASU No. 2016-02 (Topic 842), Leases FASB ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers Revenue from Contracts with Customers. · Under the new standard, revenue will be recognized when the Company satisfies its performance obligation by transferring promised products or services to its customer. The standard allows for application of the guidance to a portfolio of contracts or performance obligations with similar characteristics. The Company has identified three portfolios of contracts or obligations which consists of cannabis dispensary, cannabis cultivation and production and herbs and produce. Since the Companys individual sales transactions in each portfolio are very similar in nature, the Company anticipates applying the guidance to all transactions in each portfolio. The Company expects that the effects of applying this guidance to the portfolios would not differ materially from applying the guidance to individual performance obligations within each portfolio. · The Companys revenue recognition will be achieved upon delivery of products for the cannabis dispensary and herbs and produce portfolio as there are no other promised services as part of the Companys contracts with customers. For the Companys cannabis cultivation and production portfolio the Companys revenue recognition will be achieved upon definitive ability to collect on the sale, which usually occurs upon ultimate sale to the end-customer. Because shipping and handling activities are performed before the customer obtains control of the goods, the Company does not consider these activities to be a promised service to the customer. Rather, shipping and handling are activities to fulfill our promise to transfer the goods. · To determine the amount of consideration which the Company expects to be entitled in exchange for transferring promised goods, the Company has considered if variable consideration exists. The Company has reviewed its standard terms and conditions and its customary business practices to determine the transaction price. The Company has reviewed its pricing policies and strategies including marketing, loyalty and incentive programs for determining whether the Company has any variable or non-cash consideration. No material items were noted. In addition, the Company reviewed its current accounting policies related to returns, price concessions and volume discounts and concluded such items not to be significant. The Company will continue its accounting policy election to exclude from revenue all amounts we collect and remit to governmental authorities. · The Companys sales transactions do not require any additional performance obligation after delivery with respect to the cannabis dispensary portfolio and herbs and produce portfolio, therefore the Company does not have multiple performance obligations for which the Company will have to allocate the transaction price. With respect to the cannabis cultivation and production transactions, the additional performance obligation after delivery requires the Company retain risk of loss until the ultimate sale of the product, therefore the Company waits to allocate the transaction price upon the ultimate sale of the product to the end-customer. · The Company expects to recognize revenue upon delivery to the customer as its performance obligation will be satisfied at that point in time with regards to the cannabis dispensary and herbs and produce portfolio. With respect to the cannabis cultivation and production, the Company expects to recognize revenue upon the ultimate sale of the product to the end customer and when collectability is assured. The Company expects to apply the guidance using the modified retrospective transition method. Based on the Companys analysis performed to date, the Company does not expect the adoption of ASU 2014-09 will have a material impact on its financial position or results of operations but will result in additional disclosures regarding its revenue recognition policies. The Company also does not expect the adoption will require material or significant changes to its internal controls over financial reporting. The Company has expanded its revenue recognition inquiries to additional departments and updated its questionnaires primarily to identify matters that would signal variable consideration implications and performance obligations under the new guidance. |
CONCENTRATIONS OF BUSINESS AND
CONCENTRATIONS OF BUSINESS AND CREDIT RISK | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK | The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit Insurance Corporation up to certain federal limitations. At times, the Companys cash balance exceeds these federal limitations and it maintains significant cash on hand at certain of its locations. The Company has not historically experienced any material loss from carrying cash on hand. The amount in excess of insured limitations was $2,968,403 and $9,022,253 as of December 31, 2017 and 2016, respectively. The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. One customer comprised 29% and 74% of the Companys revenues for the years ended December 31, 2016 and 2015, respectively. The relationship with this customer terminated on December 31, 2016. There were no customers that comprised more than 10% of the Companys revenue for the year ended December 31, 2017. The loss of this customer did not have a material adverse effect on the Companys business, financial condition, or results of operation. The Company sources cannabis products for retail, cultivation and production from various vendors. However, as a result of the new regulations in the State of California, the Companys California retail, cultivation and production operations must use vendors licensed by the State effective January 1, 2018. As a result, we will be dependent upon the licensed vendors in California to supply products as of that date. If the Company is unable to enter into a relationship with sufficient members of properly licensed vendors, the Company's sales may be impacted. During the year ended December 31, 2017, 2016 and 2015, we did not have any concentration of vendors for inventory purchases. However, this may change depending on the number of vendors who receive appropriate licenses to operate in the State of California. |
VARIABLE INTEREST ENTITY ARRANG
VARIABLE INTEREST ENTITY ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 4. VARIABLE INTEREST ENTITY ARRANGEMENTS | The Company has shared interest in the two entities, MediFarm I and MediFarm I RE, with another investor for the operation of a cultivation and dispensary in Nevada. The entities are considered to be VIEs and the Company is considered to be the primary beneficiary by reference to the power and benefits criterion under ASC 810, Consolidation. As the primary beneficiary of MediFarm I and MediFarm I RE, the financial statements of the entities are consolidated. All intercompany transactions are eliminated in the consolidated financial statements. The aggregate carrying values of the VIEs assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows (in thousands): December 31, December 31, 2017 2016 Current Assets: Cash $ 409,029 $ 30,057 Inventory 232,231 - Prepaid Expenses and Other Current Assets 302,186 17,492 Total Current Assets 943,446 47,549 Property, Equipment and Leasehold Improvements, Net 1,965,103 1,798,784 TOTAL ASSETS $ 2,908,549 $ 1,846,333 Current Liabilities: Accounts Payable and Accrued Expenses 319,853 5,337 TOTAL LIABILITIES $ 319,853 $ 5,337 |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 5. ACQUISITION | Therapeutics Medical On March 10, 2016, we acquired finished goods inventory, trademarks, a patent, and a customer list along with vendor numbers from Therapeutics Medical, a company which had previously been engaged in the research, development, and marketing of nutraceutical supplements. The assets were acquired at auction and were selected from among a group of assets held for sale by Therapeutics Medical. The total consideration transferred in connection with the acquisition was $1,250,000. The Company acquired the finished goods inventory, which was valued at replacement cost in the amount of $58,622. The trademarks of certain brands were valued at $300,000 based on an estimated royalty approach. The patent was valued at $3,078. The customer list with vendor numbers was valued at $888,300 based on an estimate of the cost to enter into such relationships. The Company complied with ASC 350, IntangiblesGoodwill and Other, The Company determined that the trademarks, patent, and customer list with vendor numbers have a definite useful life because of legal, regulatory, or contractual provisions that limit the useful life of the assets and therefore, the assets will be amortized over the estimated useful life as follows: · Customer Relationships · Trademarks of the Brands · Patent The following table summarizes the allocation of the purchase price of $1,250,000: Finished Goods Inventory $ 58,622 Trademarks 300,000 Patent 3,078 Customer Relationships 888,300 Total Assets Acquired $ 1,250,000 Refer to Note 12 Contingent Consideration (Therapeutics Medical) Black Oak Gallery On April 1, 2016, we acquired all of the assets of Black Oak. The acquisition of Black Oak was accounted for in accordance with ASC 805-10, Business Combinations. The preliminary allocation of the purchase price was based upon a preliminary valuation, and the Companys estimates and assumptions of the assets acquired and liabilities assumed were subject to change within the measurement period pending the finalization of a third-party valuation, which was obtained in December 2016. The table below represents the allocation of the preliminary purchase price to the assets acquired and liabilities assumed that were recognized at the closing date, the adjustments made as a result of purchase price adjustments during the second and third quarters of 2016, and the final purchase price amounts based on the final third-party valuations: Preliminary Final as of as of April 1, 2016 Adjustments December 31, 2016 Current Assets (Inclusive of Cash of $163,566) $ 792,447 $ $ 792,447 Property, Plant and Equipment 681,896 681,896 Customer Relationships 7,480,800 379,200 7,860,000 * Trade Name 4,280,000 1,040,000 5,320,000 * Dispensary License 8,214,700 2,055,300 10,270,000 * Liabilities (2,355,938 ) (2,355,938 ) Total Identifiable Net Assets 19,093,905 3,474,500 22,568,405 Goodwill 32,395,760 (3,474,500 ) 28,921,260 Net Assets $ 51,489,665 $ $ 51,489,665 ___________________ * The Company received an independent third-party expert appraiser valuation report in valuing certain assets which included Customer Relationships, Trade Name and Dispensary License. Management is fully responsible for the valuation of the assets. The estimated purchase price of Black Oak (for accounting purposes) was $51,489,665. The purchase price was determined based on the value of the shares of our common stock issuable upon conversion of the various series of preferred stock issued in connection with the acquisition, or $3.93 per share of common stock, which was the closing sales price of our common stock on April 1, 2016, as quoted on the OTC Market Group Inc.s OTCQX tier. The purchase price represents the sum of: (i) the issuance of approximately 78 shares of our Series Z Preferred Stock (or, upon conversion, 783,949 shares of our common stock), approximately 83,220 shares of our Series B Preferred Stock (or, upon conversion, 448,084 shares of our common stock), and approximately 246 shares of our Series Q Preferred Stock (or, upon conversion, 1,232,033 shares of our common stock), which collectively, were converted into 2,464,066 shares of our common stock (the Closing Consideration); and (ii) the issuance of approximately 281 shares of our Series Z Preferred Stock (or, upon conversion, 2,806,553 shares of our common stock), approximately 297,925 shares of our Series B Preferred Stock (or, upon conversion, 1,604,124 shares of our common stock), and approximately 596 shares of our Series Q Preferred Stock (or, upon conversion, 2,981,520 shares of our common stock), which collectively, were converted into approximately 7,392,197 shares of our common stock (the Lockup Consideration); and (iii) the issuance of approximately 185 shares of our Series Z Preferred Stock (or, upon conversion, 1,853,607 shares of our common stock), approximately 196,769 shares of our Series B Preferred Stock (or, upon conversion, 1,059,466 shares of our common stock), and approximately 583 shares of our Series Q Preferred Stock (or, upon conversion, 2,913,073 shares of our common stock), which collectively, were converted into approximately 5,826,147 shares of our common stock (the Holdback Consideration); and (iv) the contingent cash consideration of up to $2,088,000 pursuant to certain earn-out provisions set forth in the Merger Agreement, payable to the Group B Shareholders (the Performance-Based Cash Consideration). Closing Consideration Lockup Consideration Holdback Consideration Performance-Based Cash Consideration The below chart outlines a summary of the purchase price: Purchase Price Detail Series B Preferred Stock Series Q Preferred Stock Series Z Preferred Stock Preferred Stock Converted into Common Stock Total Consideration Closing Consideration 83,220 246 78 2,464,066 $ 9,683,779 Lockup Consideration 297,925 596 281 7,392,197 29,051,334 Holdback Consideration 196,769 583 185 5,826,147 11,324,969 Performance-Based Cash Consideration 1,429,583 Totals 577,914 1,425 544 15,682,410 $ 51,489,665 The Series Q Preferred Stock was converted into 7,126,000 shares of common stock in September 2016. The Series Z Preferred Stock was converted into 1,010,951 shares of Series B Preferred Stock in September 2016. Refer to Note 12 Contingent Consideration (Black Oak Gallery) Tech Center Drive On September 13, 2017, the Company acquired all assets of Tech Center Drive and majority control of 55 OC. The acquisition of Tech Center Drive and 55 OC was accounted for in accordance with ASC 805-10, Business Combinations. The purchase price allocation for the acquisition, as set forth in the table below, reflects various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets, the valuation of intangible assets acquired, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Companys consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could also be affected. The Company acquired inventory, property, equipment and leasehold improvements, a security deposit and a management service agreement which allows for Tech Center Drive to purchase the medical marijuana dispensary license of 55 OC. As consideration for entering into the Asset Purchase Agreement, the Company paid $4,120,791 in cash, issued 633,348 shares of the Companys common stock with a value of $2,090,046 on the closing date and issued 192,758 shares of the Companys common stock with a value of $636,100 into an escrow account. The shares held in escrow are to be paid six months after the acquisition date subject to any amounts to be withheld related to working capital type adjustments. The Company is also due $316,363 from the sellers of Tech Center Drive for amounts paid in excess of the agreement, which will be settled six months after the closing date. The value of the shares issued were based on the closing value of the Company's common stock on September 13, 2017, which was $3.30 per share. The following table summarizes the acquisition with a purchase price of $6,839,925: Assets Acquired Inventory $ 113,779 Property, Equipment and Leasehold Improvements: Furniture and Equipment 52,829 Leasehold Improvements 46,737 Security Deposits 5,000 Management Service Agreement 6,621,580 Total Assets Acquired $ 6,839,925 The supplemental pro forma information, as if the acquisition had occurred on January 1, 2016, is as follows: Pro Forma Results of Operations For the Year Ended December 31, (Unaudited) 2017 2016 Revenues $ 38,208,172 $ 28,207,138 Net Loss Attributable to Terra Tech Corp. $ (33,472,729 ) $ (27,863,773 ) Net Loss per Common Share Attributable to Terra Tech Corp. Common Stockholders - Basic and Diluted $ (0.73 ) $ (1.07 ) The supplemental pro forma information above is based on estimates and assumptions that we believe are reasonable. The pro forma information presented is not necessarily indicative of the consolidated results of operations in future periods or the results that would have been realized had the acquisition occurred on January 1, 2016. The supplemental pro forma results above exclude any benefits that may result from the acquisition due to synergies that are expected to be derived from the elimination of any duplicative costs. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 6. NOTES RECEIVABLE | On October 26, 2017, the Company entered into agreements with NuLeaf Sparks Cultivation, LLC and NuLeaf Reno Production, LLC (NuLeaf) to build and operate cultivation and production facilities for our IVXX brand of cannabis products in Nevada. The agreements are subject to approval by the State of Nevada. As part of the agreements the Company made convertible loans at the time of the agreement of $4.5 million in aggregate to the NuLeaf entities bearing an interest rate of 6% per annum. If the agreements are not approved by May 2018, the notes receivable are due in equal quarterly payments beginning August 2018. Additional fundings subsequent to the initial loans are added to the principle balance due. The convertible loans will automatically convert into a 50% ownership in the NuLeaf entities upon approval by the State of Nevada which is expected to be in the second quarter of 2018. The notes receivable, including accrued interest, due to the Company as of December 31, 2017 is $5,010,143. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 7. INVENTORY | Raw materials consist of Edible Gardens herb product lines and material for IVXXs line of cannabis pure concentrates. Work-in-progress consists of live plants grown for Edible Gardens herb product lines and deferred cultivation costs at Black Oak. Finished goods consists of IVXXs line of cannabis packaged products to be sold into dispensaries and Black Oak cannabis products sold in retail, and Edible Gardens products to be sold via food, drug, and mass channels. Inventory consists of the following: December 31, 2017 2016 Raw Materials $ 1,450,273 $ 486,119 Work-in-Progress 1,016,596 570,145 Finished Goods 3,293,150 853,066 Total Inventory $ 5,760,019 $ 1,909,330 |
PROPERTY, EQUIPMENT AND LEASEHO
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | Property, equipment, and leasehold improvements, net consists of the following: December 31, 2017 2016 Land and Building $ 9,047,201 $ 1,454,124 Furniture and Equipment 3,553,587 3,141,244 Computer Hardware and Software 486,176 396,479 Leasehold Improvements 9,316,665 7,568,465 Construction in Progress 1,204,547 459,327 Subtotal 23,608,176 13,019,639 Less Accumulated Depreciation (4,416,560 ) (2,554,875 ) Property, Equipment and Leasehold Improvements, Net $ 19,191,616 $ 10,464,764 Depreciation expense related to property, equipment and leasehold improvements for the years ended December 31, 2017, 2016 and 2015 was $1,929,115, $969,185 and $602,814, respectively. During the third quarter of 2017, the Company recorded an impairment charge for land held in Nevada. In accordance with the guidance for the impairment of long-lived assets, the Company evaluated the property for recovery and recorded an impairment charge of $138,037 to adjust the carrying value of the property to our estimate of fair value. The impairment charge was recorded in other expense in our consolidated statement of operations and we allocated that charge to our eliminations and other segment, see Note 20 Segment Information |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 9. INTANGIBLE ASSETS, NET | Intangible assets, net consist of the following: December 31, 2017 December 31, 2016 Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizing Intangible Assets: Customer Relationships 5 to 12 $ 8,072,400 $ (1,345,191 ) $ 6,727,209 $ 8,960,700 $ (780,960 ) $ 8,179,740 Trademarks and Patent 2 to 8 195,520 (77,448 ) 118,072 498,598 (91,061 ) 407,537 Dispensary Licenses 14 10,270,000 (1,283,751 ) 8,986,249 10,270,000 (550,179 ) 9,719,821 Management Service Agreement 15 6,621,580 - 6,621,580 - - - Total Amortizing Intangible Assets 25,159,500 (2,706,390 ) 22,453,110 19,729,298 (1,422,200 ) 18,307,098 Non-Amortizing Intangible Assets: Trade Name Indefinite 5,320,000 - 5,320,000 5,320,000 - 5,320,000 Total Non-Amortizing Intangible Assets 5,320,000 - 5,320,000 5,320,000 - 5,320,000 Total Intangible Assets, Net $ 30,479,500 $ (2,706,390 ) $ 27,773,110 $ 25,049,298 $ (1,422,200 ) $ 23,627,098 During the fourth quarter of 2017, the Company recorded an impairment charge for intangible assets related to customer relationships and trademarks and patents held by Edible Garden Corp. In accordance with the guidance for the impairment of long-lived assets, the Company evaluated the assets for recovery and concluded an impairment of certain intangibles was more likely than not. Accordingly, the Company removed $888,300 and $310,905 of the gross carrying amount and accumulated amortization, respectively, of the customer relationships intangibles. The Company also removed $303,078 and $123,006 of gross carrying amount and accumulated amortization, respectively, of the trade name and patents. The Company recorded a net impairment charge of $757,467. The impairment charge was recorded in other expense in our consolidated statement of operations. The Company recorded amortization expense of $1,718,101, $1,308,212 and $42,480 for the years ended December 31, 2017, 2016 and 2015, respectively. Based solely on the amortizable intangible assets recorded at December 31, 2017, the Company estimates amortization expense for the next five years to be as follows: Year Ending December 31, 2018 2019 2020 2021 2022 and thereafter Total Amortization expense $ 1,882,563 $ 1,869,111 $ 1,869,111 $ 1,830,767 $ 15,001,558 $ 22,453,110 Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses consist of the following: December 31, 2017 2016 Accounts Payable $ 2,308,844 $ 1,986,907 Sales Tax Payable 545,398 122,470 Accrued Interest Payable 21,742 96,633 Accrued Expenses 2,568,726 211,390 Total Accounts Payable and Accrued Expenses $ 5,444,710 $ 2,417,400 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 11. NOTES PAYABLE | Notes payable consists of the following: December 31, 2017 December 31, 2016 Unsecured promissory demand notes issued to an accredited investor, which bear interest at a rate of 4% per annum. Holder may elect to convert into common stock at $11.25 per share. The balance of the note and accrued interest was converted into common stock in April 2017. $ - $ 64,324 Convertible promissory note dated December 14, 2015, issued to accredited investors, which matured December 13, 2016 and bears interest at a rate of 12% per annum. The holder of the note extended the maturity to December 13, 2017. The conversion price is $1.82, subject to adjustment. The balance of the note and accrued interest was converted into common stock in July 2017. - 500,000 Senior convertible promissory note dated October 28, 2016, issued to accredited investors, which matures April 28, 2018 and bears interest at a rate of 1% per annum. The conversion price is 90% of the average of the lowest three (3) VWAPs for the five (5) consecutive trading days prior to the conversion date. The balance of the note and accrued interest was converted into common stock in January 2017. - 102,582 Senior convertible promissory note dated November 1, 2016, issued to accredited investors, which matures May 1, 2018 and bears interest at a rate of 12% per annum. The conversion price is $5.25, subject to adjustment. The balance of the note and accrued interest was converted into common stock in July 2017. - 31,615 Senior convertible promissory note dated December 16, 2016, issued to accredited investors, which matures June 16, 2018 and bears interest at a rate of 12% per annum. The conversion price is $4.05, subject to adjustment. The balance of the note and accrued interest was converted into common stock in May 2017. - 1,220,155 Senior convertible promissory note dated August 21, 2017, issued to accredited investors, which matures February 21, 2019 and bears interest at a rate of 12% per annum. The conversion price is $4.50, subject to adjustment. 640,010 - Senior convertible promissory note dated December 26, 2017, issued to accredited investors, which matures June 26, 2019 and bears interest at a rate of 12% per annum. The conversion price is $4.50, subject to adjustment. 1,469,388 - Promissory note dated November 22, 2017, issued for the purchase of real property. Matures December 1, 2020, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5% 4,500,000 - Total Debt 6,609,398 1,918,676 Less Short-Term Portion - 564,324 Long-Term Portion $ 6,609,398 $ 1,354,352 Total debt as of December 31, 2017 and 2016 was $6,609,398 and $1,918,676, respectively, which included unamortized debt discount of $4,790,601 and $4,295,648, respectively. All debt outstanding as of December 31, 2016 were converted into shares of the Companys common stock during 2017. The senior secured promissory notes are secured by shares of common stock. There was accrued interest payable of $21,767 and $96,633 as of December 31, 2017 and 2016, respectively. See Note 23 Subsequent Events Scheduled Maturities of Long-Term Debt Scheduled maturities of long-term debt, including the amortization of debt discounts of approximately $4,790,601, are as follows: Year Ended December 31, 2018 2019 2020 Thereafter Total Total Debt $ - $ 2,109,398 $ 4,500,000 $ - $ 6,609,398 Promissory Note On November 22, 2017, the Company entered into a $4,500,000 promissory note for the purchase of land and a building in California with a third-party creditor. The promissory note is collateralized by the land and building purchased and matures in December 1, 2020. The interest rate for the first year is 12.0% and increases 0.5% per year through 2020. Payments of interest only are due monthly. The full principle balance and accrued interest are due at maturity. Master Securities Purchase Agreement and Convertible Promissory Notes The Company has a Securities Purchase Agreement with an accredited investor pursuant to which the Company sells to the accredited investor Senior Convertible Promissory Notes. During the year ended December 31, 2017, the Company issued five 12% convertible notes for an aggregate value of $20,000,000 due at various dates through June 2019. Of the $20,000,000 convertible notes issued during 2017, the Company converted $13,100,000 of the convertible notes into shares of the Companys common stock during the year ended December 31, 2017. As of December 31, 2017, $6,900,000 gross of the unamortized debt discount of $4,790,602 remains due. There were no fees or expenses deducted from the net proceeds received by the Company in the offerings. The Company paid $614,600 in cash and issued approximately $478,000 of warrants in connection with the notes. The cash fee and warrants issued were recorded as a debt discount. For each note issued under the Master Securities Purchase Agreement, the principal and interest due and owed under the note is convertible into shares of Common Stock at any time at the election of the holder at a conversion price per share equal to the lower of (i) the original conversion price as defined in each note issuance or (ii) 85% of the lowest daily volume weighted average price of the Common Stock in the fifteen (15) trading days prior to the conversion date (Conversion Price), which Conversion Price is subject to adjustment for (i) stock splits, stock dividends, combinations, or similar events and (ii) full ratchet anti-dilution protection. Upon certain events of default, the conversion price will automatically become 70% of the average of the three (3) lowest volume weighted average prices of the Common Stock in the twenty (20) consecutive trading days prior to the conversion date for so long as such event of default remains in effect. In addition, at any time that (i) the daily volume weighted average price of the Common Stock for the prior ten (10) consecutive trading days is $10.50 or more and (ii) the average daily trading value of the Common Stock is greater than $2,500,000 for the prior ten (10) consecutive trading days, then the Company may demand, upon one (1) days notice, that the holder convert the notes at the Conversion Price. The Company may prepay in cash any portion of the outstanding principal amount of the notes and any accrued and unpaid interest by, upon ten (10) days written notice to the holder, paying an amount equal to (i) 110% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is within 90 days of the issuance date of the notes; (ii) 115% of the sum of the then-outstanding principal amount of Note A plus accrued but unpaid interest, if the prepayment date is between 91 days and 180 days of the issuance date of the notes; or (iii) 125% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is after 180 days of the issuance date of the notes. Conversion of Notes Payable and Related Loss on Extinguishment of Debt During the years ended December 31, 2017, 2016 and 2015, the Company converted debt and accrued interest into 8,284,283, 3,778,581 and 3,776,369, respectively, of the Companys common stock. The value of the common stock issued in conversion of debt are detailed below. The table below details the conversion of the notes payable into equity and the loss on extinguishment of debt for the years ended December 31, 2017, 2016, and 2015: Year Ended December 31, 2017 2016 2015 Fair market value of common stock issued upon conversion $ 29,785,271 $ 18,887,399 $ 1,493,659 Principal amount of debt converted (19,314,324 ) (13,324,973 ) (900,000 ) Accrued interest converted (635,401 ) (233,415 ) (108,000 ) Fair value of derivative at conversion date (14,223,550 ) (10,361,100 ) (374,600 ) Debt discount value at conversion date 11,532,292 10,414,902 508,385 Loss on extinguishment of debt $ 7,144,288 $ 5,382,813 $ 619,444 |
CONTINGENT CONSIDERATION
CONTINGENT CONSIDERATION | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 12. CONTINGENT CONSIDERATION | The Company accounts for contingent consideration according to FASB ASC 805, Business Combinations Fair Value Measurements Therapeutics Medical In the acquisition of assets from Therapeutics Medical, the Company may be required to issue an additional Convertible Promissory Note to the seller based on the following calculation (the Therapeutics Contingent Consideration): (i) if the total revenue (Total Revenue) generated by the assets for the period beginning on April 1, 2016 and ending on March 31, 2017 (the Applicable Period) is greater than $1.6 million but less than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to 50% of the Total Revenue in excess of $1.6 million; or (ii) if the Total Revenue generated by the assets for the Applicable Period is greater than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to the sum of: (a) $800,000 (which equals 50% of the Total Revenue in excess of $1.6 million up to $3.2 million), plus (b) 25% of the Total Revenue for the Applicable Period in excess of $3.2 million. The Company valued the Therapeutics Contingent Consideration based on an analysis using a cash flow model to determine the expected contingent consideration payment. The model determined that the aggregate expected contingent consideration liability was an immaterial amount ($4,000) with an associated immaterial present value of the contingent consideration liability of $3,200. At the time of purchase, Therapeutics Medical had gone out of business, and the assets acquired were selected from a lot at auction. As such, the Company did not recognize a contingent consideration liability associated with the Therapeutics Contingent Consideration because managements best estimates resulted in an extremely low, in fact near zero likelihood, of the revenue targets being achieved. In determining the likelihood of payouts related to the Therapeutics Contingent Consideration, the probabilities for various scenarios ( e g The Company calculated the Therapeutics Contingent Consideration based upon the following formula: One-Year Anniversary Date Revenue Probability Revenue-Based Payment Probability-Weighted Amounts $ 3,200,000 0.00 % $ 800,000 $ $ 2,000,000 0.50 % $ 200,000 1,000 $ 1,599,999 99.50 % $ Fair Value of Expected Earn-out Payment 1,000 Discount Rate 25 % Payments $ 0 Present Value Factor at 20% Discount Rate for 12 Months 0.9457 Present Value of Contingent Consideration $ 946 As of December 31, 2016, based on revenues achieved throughout the year, the probability of a contingent payment is near zero and as such, no amount was due. As of March 31, 2017, the end of the Applicable Period, the Company was not required to make the contingent payment. Black Oak Gallery In the acquisition of Black Oak, the Company valued the Holdback Consideration and the Performance-Based Cash Consideration (collectively, the Black Oak Contingent Consideration), based on an analysis using a cash flow model to determine the expected contingent consideration payment, which model determined that the aggregate expected contingent consideration liability was $15,305,463 and the present value of the contingent consideration liability was $12,754,553. Accordingly, the Company recognized at April 1, 2016, the closing date of the Black Oak merger, a $12,754,553 contingent consideration liability associated with the Black Oak Contingent Consideration paid pursuant to the Merger Agreement. In determining the likelihood of payouts related to the Black Oak Contingent Consideration, the probabilities for various scenarios ( e g Holdback Consideration The Holdback Consideration is comprised of (i) the market-based clawback amount (the Market-Based Clawback Amount) and (ii) the performance-based clawback amount (the Performance-Based Clawback Amount). The Holdback Consideration, which is comprised of shares of our preferred stock, was issued on April 1, 2016, the closing date of the Black Oak merger. The Market-Based Clawback Amount is determined as follows: a) If the Terra Tech Common Stock 30-day VWAP on the one-year anniversary date of the Merger Agreement exceeds the Terra Tech Closing Price, the Market-Based Clawback Amount shall mean the number of shares of Terra Tech Common Stock equal to (i) (A) $4,912,000 divided by (B) the Terra Tech Closing Price, less (ii) (A) $4,912,000 divided by (B) the Terra Tech Common Stock 30-day VWAP on such date. b) If the Terra Tech Common Stock 30-day VWAP on the one-year anniversary date of the Merger Agreement is less than or equal to the Terra Tech Closing Price, the Market-Based Clawback Amount shall be zero shares. In no event will the Market-Based Clawback Amount exceed 50% of the Holdback Consideration. The Performance-Based Clawback Amount is determined as follows: a) The Lower Threshold means an amount equal to $11,979,351, and the Upper Threshold means an amount equal to $16,667,000. b) If Black Oaks operating revenues for the 12-month period following the closing date of the Black Oak merger (the Year 1 Revenue) is less than the Lower Threshold, then the Performance-Based Clawback Amount will be the number of shares obtained from a quotient, (A) the numerator of which is equal to the sum of (1) $4,912,000, plus (2) the product of 1.5 multiplied by the difference between the Lower Threshold and the Year 1 Revenue, and (B) the denominator of which is the Terra Tech common stock 30-day VWAP as of the one-year anniversary date of the closing of the Black Oak merger. c) If the Year 1 Revenue is greater than or equal to the Lower Threshold but is less than the Upper Threshold, then the Performance-Based Clawback Amount will be the number of shares obtained from a quotient, (A) the numerator of which is equal to the product of 1.053 multiplied by the difference between the Upper Threshold and the Year 1 Revenue, and (B) the denominator of which is the Terra Tech common stock 30-day VWAP as of the one-year anniversary date of the closing of the Black Oak merger. d) If the Year 1 Revenue is greater than or equal to the Upper Threshold, then the Performance-Based Clawback Amount will be zero shares. Performance-Based Cash Consideration Pursuant to the Merger Agreement, the Group B Shareholders may receive cash consideration of up to approximately $2,088,000 to be paid on approximately the one-year anniversary date of the closing of the Black Oak merger, to be determined as follows: a) $0 if Year 1 Revenue is less than or equal to $12,000,000; and b) the product obtained by multiplying 0.447 times Year 1 Revenue if Year 1 Revenue is greater than $12,000,000; provided, that in no event will the Performance-Based Cash Consideration amount exceed $2,088,000. For example, pursuant to the above formula, if the revenue in Year 1 equals $16,666,666, then the Performance-Based Cash Consideration would be $2,088,000 calculated as follows: Year 1 Revenue $ 16,666,666 Less: 12,000,000 $ 4,666,666 0.44742864 Performance-Based Cash Payment $ 2,088,000 As of December 31, 2016, the Black Oak Contingent Consideration was based upon the following formula: One-Year Anniversary Value of Probability-Weighted Date of the Common Performance- Amounts Year 1 Merger 30- Stock to Based Cash Earn-Out Performance- Revenue Day VWAP Issue Payment Probability Shares Based Cash Total 20 % $ 15,788,827 $ 2,088,000 4 % $ 631,553 $ 83,520 $ 715,073 $ 0.2108 Upside 20 % 70 % $ 13,824,526 $ 2,088,000 14 % $ 1,935,434 $ 292,320 $ 2,227,754 $ 16,667,000 $ 0.3108 10 % $ 12,816,555 $ 2,088,000 2 % $ 256,331 $ 41,760 $ 298,091 $ 0.4108 20 % $ 11,867,575 $ 747,500 15 % $ 1,780,136 $ 112,125 $ 1,892,261 $ 0.2108 Base 75 % 70 % $ 11,164,938 $ 747,500 52.5 % $ 5,861,592 $ 392,438 $ 6,254,030 $ 13,670,835 $ 0.3108 10 % $ 10,804,383 $ 747,500 7.5 % $ 810,329 $ 56,063 $ 866,391 $ 0.4108 20 % $ 7,251,428 $ 1 % $ 72,514 $ $ 72,514 $ 0.2108 Downside 5 % 70 % $ 8,034,038 $ 3.5 % $ 281,191 $ $ 281,191 $ 10,674,670 $ 0.3108 10 % $ 8,435,630 $ 0.5 % $ 42,178 $ $ 42,178 $ 0.4108 Fair Value of Expected Earn-Out Payment $ 11,671,259 $ 978,225 $ 12,649,484 Price Per Common Share $ 3.93 $ 3.93 Discount Rate 20 % 20 % Periods (nper) 0.250 0.250 Payments $ $ Present Value Factor at 20% Discount Rate for 12 Months 0.9554 0.9554 Present Value of Contingent Consideration $ 11,151,221 $ 934,638 Present Value of Contingent Consideration $ 12,085,859 The below table summarizes adjustments made to the Black Oak Contingent Consideration during the year ended December 31, 2016. Preliminary April 1, 2016 Adjustments June 30, 2016 June 30, 2016 Adjustments September 30, 2016 September 30, 2016 Adjustments December 31, 2016 Final as of December 31, 2016 Holdback Consideration Stock $ 11,324,969 $ (514,339 ) $ 10,810,630 $ 217,895 $ 11,028,525 $ 122,695 $ 11,151,220 Performance-Based Cash 1,429,583 66,669 1,496,252 130,963 1,627,215 (692,577 ) 934,638 Adjustment to Goodwill 447,670 (1) (348,858 ) (1) (98,812 ) (2) Change in Fair Value of Contingent Consideration 98,812 Total Contingent Consideration $ 12,754,553 $ $ 12,306,882 $ $ 12,655,740 $ (569,882 ) $ 12,085,858 ________________ ( 1) Changes in fair value of the Black Oak Contingent Consideration during the second and third quarter of 2016 (during measurement period) were taken to goodwill. Total adjustment was $98,812 which was recorded to the income statement at December 31, 2016. (2) $98,812 is the combined adjustments to goodwill ($447,670 less $348,858) recorded to Change in Fair Value of Contingent Considerat at December 31, 2016. Changes in the fair market valuation of the contingent consideration are recognized in the consolidated statements of operations. During the year ended December 31, 2017, the loss on fair market valuation of contingent consideration was $4,426,047. During the year ended December 31, 2016, the gain on market valuation of contingent consideration was $668,694. On April 1, 2017, the anniversary date of the acquisition and the settlement date of the contingent consideration, the final contingent consideration was approximately $16.5 million. A summary of the changes in the contingent consideration as well as the detail is below: Amount Contingent Consideration Summary : Balance at December 31, 2016 $ 12,085,859 Change in Fair Market Valuation of Contingent Consideration 4,348,761 Balance at March 31, 2017 and April 1, 2017 $ 16,434,620 Contingent Consideration Detail : Performance-Based Cash Contingent Consideration $ 2,088,000 Market-Based Stock Contingent Consideration 14,346,620 Balance at March 31, 2017 and April 1, 2017 $ 16,434,620 During April 2017, in final settlement of the contingent consideration, the Company issued approximately $4.7 million in shares of its common stock, or common stock equivalent of approximately 1.21 million shares of its common stock and made a cash payment of approximately $2.1 million. A summary is as follows: Contingent Consideration Balance at March 31, 2017 $ 16,434,620 Change in Fair Market Valuation of Contingent Consideration 77,286 Payment of Contingent Consideration in Cash (2,088,000 ) Settlement of Contingent Consideration (4,739,638 ) Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital (4,692,697 ) Gain on Settlement of Contingent Consideration (4,991,571 ) Contingent Consideration December 31, 2017 $ - Pursuant to the terms of the contingent consideration as outlined in the Merger Agreement, the Company was required to release from escrow shares worth approximately $14.4 million. Of those shares, 1.21 million shares, with a value of $4,789,638, were issued in final settlement of the Market-Based Contingent Consideration, and approximately 2.28 million shares were additionally clawed-back. The Market-Based Clawback associated with common stock equivalent of approximately 2.34 million shares were clawed-back pursuant to the appreciation of the quoted price of the Companys stock underlying the market-based component of the contingent consideration. An additional common stock equivalent of approximately 2.28 million shares, with a value of $9,684,268, were clawed-back pursuant to disputes between the sellers of Black Oak and the Company with respect to certain operational and performance goals that would have impacted the appreciation of the quoted price of the Companys common stock underlying the market-based component of the contingent consideration and, in effect, increasing the number of clawback shares. The Company applied the guidance of ASC 470-50-40-2, related to the additional $9,684,268 worth of shares that were clawed back. For the years ended December 31, 2017 and 2016, the Company recognized a gain on settlement of contingent consideration of $4,991,571 and $0, respectively. The balance attributable to related parties was recorded in additional paid in capital. See Note 13 Fair Value Measurements |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 13. FAIR VALUE MEASUREMENTS | Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated: Fair Value at December 31, Fair Value Measurement Using Description 2017 Level 1 Level 2 Level 3 Derivative Liabilities Conversion Feature $ 9,331,400 $ - $ - $ 9,331,400 $ 9,331,400 $ - $ - $ 9,331,400 Fair Value at December 31, Fair Value Measurement Using Description 2016 Level 1 Level 2 Level 3 Derivative Liabilities Conversion Feature $ 6,987,000 $ - $ - $ 6,987,000 Liability Contingent Consideration 12,085,859 - - 12,085,859 $ 19,072,859 $ - $ - $ 19,072,859 The following table presents a reconciliation of the derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Balance at December 31, 2015 $ 743,400 Change in Fair Market Value of Conversion Feature 501,700 Issuance of Equity Instruments with Debt Greater Than Debt Carrying Amount 1,487,500 Derivative Debt Converted into Equity (14,232,100 ) Issuance of Debt Instruments with Derivatives 18,486,500 Balance at December 31, 2016 $ 6,987,000 Change in Fair Market Value of Conversion Feature 3,494,550 Derivative Debt Converted into Equity (14,223,550 ) Issuance of Debt Instruments with Derivatives 13,073,400 Balance at December 31, 2017 $ 9,331,400 The following table presents a reconciliation of the Black Oak Contingent Consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Balance at December 31, 2015 $ - Purchase of Black Oak Gallery 12,754,553 Change in Fair Market Valuation of Black Oak Contingent Consideration (668,694 ) Balance at December 31, 2016 $ 12,085,859 Change in Fair Market Valuation of Contingent Consideration 4,426,047 Payment of Contingent Consideration in Cash (2,088,000 ) Settlement of Contingent Consideration (4,739,638 ) Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital (4,692,697 ) Gain on Settlement of Contingent Consideration (4,991,571 ) Balance at December 31, 2017 $ - The Company estimates the fair value of the derivative liabilities using the Black-Scholes-Merton option pricing model using the following assumptions: December 31, 2017 2016 2015 Stock Price $2.25 - $5.85 $4.35 - $7.35 $1.35 - $3.30 Conversion and Exercise Price $1.80 - $6.60 $3.30 - $7.50 $1.05 - $2.40 Annual Dividend Yield - - - Expected Life (Years) 0.46 - 3.42 1.5 - 4.0 1.0 - 4.0 Risk-Free Interest Rate 1.04% - 2.50% 2.50% 2.50% Expected Volatility 43.80% - 123.56% 120.30% - 144.03% 98.35% - 148.71% Volatility is based on historical volatility of our common stock. Historical volatility was computed using weekly pricing observations for our common stock that correspond to the expected term. This method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants and conversion features. No financial assets were measured on a recurring basis as of December 31, 2017 and 2016. Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Non-financial assets, such as property, equipment and leasehold improvements, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized. The Company recorded an impairment charge related to property during the third quarter 2017, see Note 8 - Property, Equipment and Leasehold Improvements, Net . Note 9 Intangible Assets, Net |
TAX EXPENSE
TAX EXPENSE | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 14. TAX EXPENSE | The (benefit) expense for income taxes consists of the following: Year Ended December 31, 2017 2016 2015 Current: $ - $ - $ - Federal (343,943 ) - - State (3,512 ) - - (347,455 ) - - Deferred: Federal - - 44,000 State - - - - - 44,000 Total (Benefit) Expense for Income Taxes $ (347,455 ) $ - $ 44,000 The reconciliation between the Companys effective tax rate and the statutory tax rate is as follows: Year Ended December 31, 2017 2016 (As Revised, See Note 2) 2015 Expected Income Tax Benefit at Statutory Tax Rate, Net $ (13,456,000 ) $ (9,469,000 ) $ (3,694,000 ) Non-Deductible Items - 1,263,000 368,000 Warrants Expense 871,000 4,186,000 1,196,000 Derivatives Expense 4,104,000 4,067,000 (545,000 ) Net Operating Losses - - 2,667,000 Impairment of Property and Intangibles 365,000 - - Other 1,033,545 - - Change in Valuation Allowance 6,735,000 (47,000 ) 52,000 Reported Income (Benefit) Tax Expense $ (347,455 ) $ - $ 44,000 The components of deferred income tax assets and (liabilities) are as follows: Year Ended December 31, 2017 2016 (As Revised, See Note 2) Deferred Income Tax Assets: Net Operating Losses $ 8,023,000 $ 15,242,000 8,023,000 15,242,000 Deferred Income Tax Liabilities: Depreciation (850,000 ) (1,334,000 ) Total 7,173,000 13,908,000 Valuation Allowance (7,173,000 ) (13,908,000 ) Net Deferred Tax $ - $ - The U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code that affects revaluation of deferred tax assets and liabilities to reflect the federal tax rate reduction from 35.0% to 21.0%. For the years ended December 31, 2017 and 2016, the Company had subsidiaries that produced and sold cannabis or cannabis pure concentrates, subjecting the Company to the limits of Internal Revenue Code (IRC) Section 280E. Pursuant to IRC Section 280E, the Company is allowed only to deduct expenses directly related to sales of product. The State of California does not conform to IRC Section 280E and, accordingly the Company is allowed to deduct all operating expenses on its California income tax returns. As the Company files consolidated federal income tax returns, the taxable income generated from its subsidiaries subject to IRC Section 280E has been offset by losses generated by operations not subject to IRC Section 280E. During 2017, Company amended income tax returns of Black Oak for the periods prior to acquisition, which resulted in a net tax refund in 2017. Permanent tax differences include ordinary and necessary business expenses deemed by the Company as non-allowable deductions under IRC Section 280E; non-deductible expenses for interest, derivatives and warrant expense related to debt financings and non-deductible losses related to various acquisitions. As of December 31, 2017, and 2016, the Company had net operating loss carryforwards of approximately $26,333,000 and $34,940,000, respectively, which, if unused, will expire beginning in the year 2034. These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under IRC Section 382, which will limit their utilization. The Company has assessed the effect of these limitations and does not believe these losses to be substantially limited. The Company also has deferred tax liabilities from the excess carrying amounts of the basis of depreciable assets for financial reporting purposes. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred through the period ended December 31, 2017. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2017, a valuation allowance of has been recorded against all net deferred tax assets as these assets are more likely than not to be unrealized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. All tax years from 2013 to 2016 are subject to examination. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 15. EQUITY | Preferred Stock Amendment to Certificate of Designation of Series B Preferred Stock; Designation of New Series of Preferred Stock The Company filed an Amended and Restated Certificate of Designation of Series B Preferred Stock (the Amended Series B Certificate) with the Secretary of State of the State of Nevada, effective March 29, 2016. The Amended Series B Certificate decreased the number of authorized shares of Series B Preferred Stock, specified a liquidation preference, clarified the provisions related to adjustments to the conversion rate upon certain events, and made such other amendments as the Companys Board of Directors deemed necessary. Effective March 29, 2016, the Company also designated two additional series of preferred stock: (i) Series Z Preferred Stock and (ii) Series Q Preferred Stock, by filing a Certificate of Designations with the Secretary of State of the State of Nevada. The Certificate of Designation of Series Z Preferred Stock (the Series Z Certificate) designates 8,300 shares as Series Z Preferred Stock and is intended to mirror the rights of the holders of the Series B Preferred Stock. Each share of Series Z Preferred Stock is convertible into 1,857 shares of Series B Preferred Stock immediately upon the Company filing with the Secretary of State of the State of Nevada an Amendment to its Articles of Incorporation to increase its authorized capital for, among other reasons, satisfaction of the terms of the potential acquisition of Black Oak, as discussed in more detail below. The holders of the Series Z Preferred Stock are entitled to a liquidation preference equal to $10.00 per share (subject to appropriate adjustment in the event of any stock dividend, forward stock split, or other similar recapitalization). Such liquidation preference is in preference (but equal with the holders of the Companys Series B Preferred Stock) to the holders of the common stock, but subordinate in preference to any sum to which the holders of the Companys Series A Preferred Stock are entitled. During the year ended December 31, 2016, all Series Z Preferred Stock were converted to Series B Preferred Stock. The Certificate of Designation of Series Q Preferred Stock (the Series Q Certificate) designates 21,600 shares as Series Q Preferred Stock. Each share of Series Q Preferred Stock is convertible into 5,000 shares of the Companys common stock immediately upon the Company filing with the Secretary of State of the State of Nevada an Amendment to its Articles of Incorporation to increase its authorized capital for, among other reasons, satisfaction of the terms of the potential acquisition of Black Oak, as discussed in more detail below. The holders of the Series Q Preferred Stock are entitled to a liquidation preference equal to $0.001 per share (subject to appropriate adjustment in the event of any stock dividend, forward stock split, or other similar recapitalization). Such liquidation preference is in preference to the holders of the common stock, but subordinate in preference to any sum to which the holders of any shares of any other series of the Corporations preferred stock are entitled. During the year ended December 31, 2016, all Series Q Preferred Stock were converted to common stock. On July 26, 2017, the Company filed a Certificate of Amendment to the Certificate of Designation of the Companys Series B Preferred Stock (the Amendment) with the Secretary of State of the State of Nevada to provide for an adjustment of the Conversion Rate of the Companys Series B Preferred Stock in the event of a reverse stock split or combination in the same ratio as the Companys common stock. A copy of the Amendment was filed as Exhibit 3.14 to the Companys Current Report on Form 8-K dated July 26, 2017. The Company authorized 50,000,000 shares of preferred stock with $0.001 par value per share. The Company designated 100 shares of preferred stock as Series A Preferred Stock, of which there were 8 shares of Series A Preferred Stock outstanding as of December 31, 2017 and 2016. Series A Preferred Stock is convertible on a one-for-one basis into common stock and has all of the voting rights of the Companys common stock. The Company designated 49,990,900 shares of preferred stock as Series B Preferred Stock, of which there were 0 and 2,455,064 shares of Series B Preferred Stock outstanding as of December 31, 2017 and 2016, respectively. Each share of Series B Preferred Stock: (i) is entitled to 100 votes for each share of common stock into which a share of Series B Preferred Stock is convertible and (ii) is convertible, at the option of the holder, on a 1-for-5.384325537 basis, into shares of the Companys common stock. During the year ended December 31, 2017, all Series B Preferred Stock were converted to common stock. Common Stock The Company authorized 990,000,000 shares of common stock with $0.001 par value per share. As of December 31, 2017 and 2016, 61,818,560 and 36,924,254 shares of common stock were issued and outstanding, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 16. STOCK-BASED COMPENSATION | 2016 Equity Incentive Plan In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. The following table contains information about the 2016 Equity Incentive Plan as of December 31, 2017: Awards Reserved for Issuance Awards Issued Awards Available for Grant 2016 Equity Incentive Plan 30,000,000 1,177,732 28,822,268 Stock Options The following table summarizes the Companys stock option activity and related information for the year ended December 31, 2017: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value of In-the-Money Options Options Outstanding as of January 1, 2016 - $ - Options Granted 446,667 $ 1.35 Options Exercised - $ - Options Forfeited - $ - Options Expired - $ - Options Outstanding as of December 31, 2016 446,667 $ 1.35 Options Granted 731,065 $ 2.68 Options Exercised - $ - Options Forfeited - $ - Options Expired - $ - Options Outstanding as of December 31, 2017 1,177,732 $ 2.17 8.9 Years $ 4,330,481 Options Exercisable as of December 31, 2017 491,035 $ 1.90 8.6 Years $ 1,940,491 The aggregate intrinsic value is calculated as the difference between the Companys closing stock price of $5.85 on December 31, 2017 and the exercise price of options, multiplied by the number of options. As of December 31, 2017, there was $1,547,443 total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 2.2 years. The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following weighted-average assumptions were used to calculate stock-based compensation: Year Ended December 31, 2017 2016 Expected term (years) 5 Years 5 Years Volatility 117.3-120.9 % 121.62 % Risk-Free Interest Rate 2.0-2.4 % 2.5 % Dividend Yield 0 % 0 % The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the simplified method described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants. The expected stock price volatility assumption was determined by examining the historical volatilities for the Companys common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Companys common stock becomes available. The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Companys stock options. The expected dividend assumption is based on the Companys history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company stock-based compensation. The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on managements expectation through industry knowledge and historical data. Stock-Based Compensation Expense The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling general and administrative expenses: For the Year Ended December 31, 2017 December 31, 2016 Type of Award Number of Shares or Options Granted Stock-Based Compensation Expense Number of Shares or Options Granted Stock-Based Compensation Expense Stock Options 731,065 $ 692,971 446,667 $ 190,355 Stock Grants: Employees (Common Stock) 158,867 490,880 - - Employees (Series B Preferred Stock) 40,000 1,035,406 430,113 2,451,220 Directors (Common Stock) 81,061 221,973 71,381 334,424 NonEmployee Consultants (Common Stock) 389,374 1,284,562 422,971 2,406,061 Total StockBased Compensation Expense $ 3,725,792 $ 5,382,060 |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 17. WARRANTS | The Company has the following shares of common stock reserved for exercise of the warrants outstanding as of December 31, 2017: Shares Weighted-Average Exercise Price Warrants Outstanding as of January 1, 2016 2,161,734 $ 2.70 Warrants Exercised (1,873,206 ) $ 2.55 Warrants Granted 802,122 $ 3.45 Warrants Expired (34,889 ) $ 6.75 Warrants Outstanding as of December 31, 2016 1,055,761 $ 2.85 Warrants Exercised - $ - Warrants Granted 214,915 $ 2.79 Warrants Expired (79,309 ) $ 3.34 Warrants Outstanding as of December 31, 2017 1,191,367 $ 0.19 The weighted-average exercise price and weighted-average fair value of the warrants granted by the Company are as follows: For the Year Ended December 31, 2017 December 31, 2016 Weighted-Average Exercise Price Weighted-Average Fair Value Weighted-Average Exercise Price Weighted-Average Fair Value Warrants Granted Whose Exercise Price Exceeded Fair Value at the Date of Grant $ - $ - $ 4.50 $ 3.75 Warrants Granted Whose Exercise Price Was Equal or Lower Than Fair Value at the Date of Grant $ 2.79 $ 3.20 $ 4.35 $ 4.80 The following table summarizes information about fixed-price warrants outstanding as of December 31, 2017: Range of Number Outstanding Average Remaining Weighted-Average Exercise Prices at December 31, 2017 Contractual Life Exercise Price $ 0.90 304,467 9 Months $ 0.90 $ 0.99 16,629 36 Months $ 0.99 $ 1.82 61,932 16 Months $ 1.82 $ 1.95 57,559 15 Months $ 1.95 $ 2.04 44,053 55 Months $ 2.04 $ 2.06 105,263 6 Months $ 2.06 $ 2.40 111,759 37 Months $ 2.40 $ 2.91 56,760 60 Months $ 2.91 $ 3.09 26,711 6 Months $ 3.09 $ 3.12 52,834 56 Months $ 3.12 $ 3.74 24,048 50 Months $ 3.74 $ 4.05 37,037 48 Months $ 4.05 $ 5.25 170,190 40 Months $ 5.25 $ 5.55 11,905 33 Months $ 5.55 $ 6.15 29,268 47 Months $ 6.15 $ 6.60 80,952 32 Months $ 6.60 1,191,367 For the warrants issued in 2017 and 2016 the Company valued the warrants utilizing the Black-Scholes option-pricing model with the following weighted-average inputs: Year Ended December 31, 2017 2016 Stock Price on Date of Grant $ 4.15 $ 4.80 Exercise Price $ 2.79 $ 4.50 Volatility 126.14 % 138.00 % Term 5-Years 5-Years Risk-Free Interest Rate 1.87 % 1.24 % Expected Dividend Rate 0 % 0 % Based on the Black-Scholes calculations, warrant expense of $211,534, $467,066, and $1,148,069 was recorded during the years ended December 31, 2017, 2016, and 2015, respectively. For the year ended December 31, 2017, $478,008 of warrants were issued in connection with debt and recorded as a debt discount. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 18. COMMITMENTS AND CONTINGENCIES | The Company leases certain business facilities under operating lease agreements that specify minimum rentals. Many of these have renewal provisions. The Companys net rent expense for the years ended December 31, 2017, 2016 and 2015 was $1,383,033, $515,413 and $501,449, respectively. Future minimum lease payments under non-cancelable operating leases having an initial or remaining term of more than one year are as follows: Scheduled Year Ending December 31 Payments 2018 $ 1,580,306 2019 1,476,267 2020 1,412,252 2021 1,394,609 2022 1,065,985 2023 and Thereafter 2,894,828 Total Future Minimum Lease Payments $ 9,824,247 Production Operating Agreement On May 23, 2017, the Company entered into a one-year operating agreement with Panther Gap Farms pursuant to which Panther Gap Farms will grow up to approximately one metric ton of the Companys IVXX cannabis annually. The operating agreement is renewable, upon mutual agreement between Panther Gap Farms and the Company, for up to three additional terms of one year each. The agreement requires the Company to issue common stock, with a value of $1,150,000, upon execution of the agreement, which the Company issued in August 2017 and held in escrow. In addition to the common stock, the Company is required to issue common stock, with a value of $785,500, for the profit share of the cannabis ultimately sold by the Company upon execution of the agreement. Panther Gap Farms has the right to receive up to $100,000 in cash in lieu of receiving the common stock related to the net profit share. If Panther Gap Farms requests such cash payment, the amount of common stock to be delivered will be reduced by an amount equal to the amount of such cash divided by the lower of the closing price or the 30 day VWAP of common stock on the date of the agreement. The shares to be received by Panther Gap Farms under the profit share agreement are dependent on the ultimate profit recognized by the Company when the cannabis product is sold. The Company and Panther Gap Farms also entered into a lease agreement pursuant to which the Company leases the property on which the cannabis is grown. The lease agreement requires monthly payments of $30,000 for eight months and is also renewable for up to three additional terms of one year each. California Operating Licenses Effective January 1, 2018 the State of California allowed for adult use cannabis sales. Californias cannabis licensing system is being implemented in two phases. First, beginning on January 1, 2018, the state began issuing temporary licenses that will expire on May 1, 2018 for retail and distribution permits and May 20, 2018 for cultivation permits. The Companys prior license obtained from the local jurisdictions it operated in have been continued by such jurisdictions and are necessary to obtain State licensing. The Company has received a temporary license for each local jurisdiction which it had active operations. The temporary permits may be extended for an additional period of time. The Company intends to submit its applications for the annual permits in April 2018. Although the Company believes it will receive the necessary licenses from the state to conduct its business in a timely fashion, there is no guarantee the Company will be able to do so and any failure to do so may have a negative effect on its business and results of operations. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 19. SELECTED QUARTERLY FINANCIAL DATA (Unaudited) | Selected financial data for 2017 and 2016 is summarized as follows and highlights certain items that impacted our quarterly results (unaudited): Year Ended December 31, 2017 (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenues $ 6,824,456 $ 7,842,873 $ 10,121,375 $ 11,012,140 Gross Profit $ 359,063 $ 1,506,373 $ 2,334,938 $ 1,276,699 Loss from Operations $ (6,027,237 ) $ (4,522,914 ) $ (3,903,172 ) $ (5,426,695 ) Amortization of Debt Discount $ (610,616 ) $ (515,654 ) $ (490,068 ) $ (522,424 ) Impairment of Property $ - $ - $ (138,037 ) $ - Impairment of Intangible Assets $ - $ - $ - $ (757,467 ) Loss on Extinguishment of Debt $ (1,039,458 ) $ (1,639,137 ) $ (1,373,538 ) $ (3,092,155 ) (Loss) Gain on Fair Market Valuation of Derivatives $ 1,610,750 $ 987,200 $ (1,475,900 ) $ (4,616,600 ) Interest Expense $ (157,833 ) $ (130,510 ) $ (119,650 ) $ (134,671 ) Gain on Settlement of Contingent Consideration $ - $ 4,991,571 $ - $ - Loss on Fair Market Valuation of Contingent Consideration $ (4,348,761 ) $ (77,286 ) $ - $ - Net Loss Attributable to Terra Tech Corp. $ (10,111,988 ) $ (453,769 ) $ (7,792,933 ) $ (14,318,913 ) Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders Basic and Diluted $ (0.27 ) $ (0.01 ) $ (0.16 ) $ (0.24 ) Stock Price Per Share: High $ 5.10 $ 4.35 $ 4.35 $ 5.85 Low $ 3.75 $ 2.10 $ 3.00 $ 2.70 Year Ended December 31, 2016 (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenues $ 1,548,167 $ 9,699,909 $ 6,950,365 $ 7,129,322 Gross Profit $ 133,974 $ 1,649,944 $ 1,319,386 $ (530,621 ) Loss from Operations $ (1,912,374 ) $ (3,817,377 ) $ (4,686,560 ) $ (7,731,540 ) Amortization of Debt Discount $ (94,406 ) $ (218,126 ) $ (610,089 ) $ (491,581 ) Loss on Extinguishment of Debt $ (920,797 ) $ - $ - $ (4,462,016 ) Loss from Derivatives Issued with Debt Greater Than Debt Carrying Value $ - $ (488,000 ) $ (867,000 ) $ (132,500 ) (Loss) Gain on Fair Market Valuation of Derivatives $ (1,160,700 ) $ (206,000 ) $ 771,000 $ (1,248,800 ) Interest Expense $ (55,995 ) $ (60,565 ) $ (159,633 ) $ (101,156 ) Gain on Fair Market Valuation of Contingent Consideration $ - $ - $ - $ 668,694 Provision (Benefit) for Income Taxes $ - $ 381,000 $ 410,300 $ (791,300 ) Net Loss Attributable to Terra Tech Corp. $ (4,126,064 ) $ (4,934,238 ) $ (5,587,759 ) $ (12,270,829 ) Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders Basic and Diluted $ (0.19 ) $ (0.21 ) $ (0.24 ) $ (0.35 ) Stock Price Per Share: High $ 6.30 $ 11.25 $ 7.65 $ 8.40 Low $ 1.35 $ 3.30 $ 4.05 $ 3.30 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 20. SEGMENT INFORMATION | The Companys operating and reportable segments are currently organized around the following products that it offers as part of its core business strategy: · Herbs and Produce Products · Cannabis Dispensary, Cultivation and Production The Company experienced significant growth over the last few years in most of our product areas. As the Company has grown organically, and as the Company previously added to its capabilities through acquisitions, its products have increased in scale and become more strategically important and distinctly organized and managed under these two groupings. In addition, Derek Peterson, the Companys Chief Operating Decision Maker (CODM), reviews results, manages and allocates resources between these two strategic business groupings, and budgets using these business segments. The Companys CODM reviews revenues including intersegment revenues, gross profit and operating income (loss) before income taxes when evaluating segment performance and allocating resources to each segment. Accordingly, intersegment revenue is included in the segment revenues presented in the tables below and is eliminated from revenues and cost of goods sold in the Eliminations and Other column. The Eliminations and Other column also includes various income and expense items that the Company does not allocate to its operating segments. These income and expense amounts include interest income, interest expense, corporate overhead, and corporate-wide expense items such as legal and professional fees as well as expense items for which the Company has not identified a reasonable basis for allocation. The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies Herbs and Produce Products Either independently or in conjunction with third parties, the Company is a wholesale seller of locally grown hydroponic herbs, produce, and floral products, which are distributed through major grocery stores throughout the East and Midwest regions of the U.S. Cannabis Dispensary, Cultivation and Production Either independently or in conjunction with third parties, the Company operates medical and adult use marijuana retail dispensaries, medical and adult use marijuana cultivation and production facilities in California and Nevada. The Company owns real property in Nevada on which the Company plans to build a medical marijuana grow facility. All of our retail dispensaries in California offer a broad selection of medical cannabis products including flowers, concentrates and edibles while our dispensaries in Nevada offer a broad selection of medical and adult use cannabis products including flowers, concentrates and edibles. The Company also produces and sells a line of medical cannabis flowers, as well as a line of medical cannabis-extracted products, which include concentrates, cartridges, vape pens and wax products. Summarized financial information concerning the Companys reportable segments is shown in the following tables. Total asset amounts at December 31, 2017, 2016 and 2015 exclude intercompany receivable balances eliminated in consolidation. For the Year Ended December 31, 2017 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 5,701,233 $ 30,031,046 $ 68,565 $ 35,800,844 Cost of Goods Sold 5,211,658 25,112,113 - 30,323,771 Gross Profit 489,575 4,918,933 68,565 5,477,073 Selling, General and Administrative Expenses 3,123,037 10,843,210 11,390,844 25,357,091 Loss from Operations (2,633,462 ) (5,924,277 ) (11,322,279 ) (19,880,018 ) Other Income (Expense): Amortization of Debt Discount - - (2,138,762 ) (2,138,762 ) Impairment of Property - - (138,037 ) (138,037 ) Impairment of Intangibles (757,467 ) - - (757,467 ) (Loss) Gain on Extinguishment of Debt (18 ) 187 (7,144,457 ) (7,144,288 ) Loss on Fair Market Valuation of Derivatives - - (3,494,550 ) (3,494,550 ) Interest (Expense) Income - 110 (542,774 ) (542,664 ) Gain on Settlement of Contingent Consideration - 4,991,571 - 4,991,571 Loss on Fair Market Valuation of Contingent Consideration - (4,426,047 ) - (4,426,047 ) Total Other Income (Expense) (757,485 ) 565,821 (13,458,580 ) (13,650,244 ) Loss Before Provision for Income Taxes $ (3,390,947 ) $ (5,358,456 ) $ (24,780,859 ) $ (33,530,262 ) Total Assets at December 31, 2017 $ 5,847,286 $ 69,844,546 $ 22,495,967 $ 98,187,799 For the Year Ended December 31, 2016 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 12,000,423 $ 13,207,327 $ 120,013 $ 25,327,763 Cost of Goods Sold 11,021,449 11,664,737 68,894 22,755,080 Gross Profit 978,974 1,542,590 51,119 2,572,683 Selling, General and Administrative Expenses 2,520,061 5,729,884 12,470,589 20,720,534 . Loss from Operations (1,541,087 ) (4,187,294 ) (12,419,470 ) (18,147,851 ) Other Income (Expense): Amortization of Debt Discount - - (1,414,202 ) (1,414,202 ) Loss on Extinguishment of Debt - - (5,382,813 ) (5,382,813 ) Loss from Derivatives Issued with Debt Greater than Debt Carrying Value - - (1,487,500 ) (1,487,500 ) Loss on Fair Market Valuation of Derivatives - - (1,844,500 ) (1,844,500 ) Interest Expense - - (377,349 ) (377,349 ) Gain on Fair Market Valuation of Contingent Consideration - - 668,694 668,694 Total Other Income (Expense) - - (9,837,670 ) (9,837,670 ) Loss Before Provision for Income Taxes $ (1,541,087 ) $ (4,187,294 ) $ (22,257,140 ) $ (27,985,521 ) Total Assets at December 31, 2016 $ 7,064,697 $ 12,516,441 $ 56,597,592 $ 76,178,730 For the Year Ended December 31, 2015 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 8,633,538 $ 1,207,424 $ 134,384 $ 9,975,346 Cost of Goods Sold 7,771,039 1,078,852 108,584 8,958,475 Gross Profit 862,499 128,572 25,800 1,016,871 Selling, General and Administrative Expenses 1,910,375 763,728 7,159,543 9,833,646 . Loss from Operations (1,047,876 ) (635,156 ) (7,133,743 ) (8,816,775 ) Other Income (Expense): Amortization of Debt Discount - - (696,180 ) (696,180 ) Loss on Extinguishment of Debt - - (619,444 ) (619,444 ) Loss from Derivatives Issued with Debt Greater than Debt Carrying Value - - (561,000 ) (561,000 ) Gain on Fair Market Valuation of Derivatives - - 1,800,100 1,800,100 Interest Expense - - (469,576 ) (469,576 ) Total Other Income (Expense) - - (546,100 ) (546,100 ) Loss Before Provision for Income Taxes $ (1,047,876 ) $ (635,156 ) $ (7,679,843 ) $ (9,362,875 ) Total Assets at December 31, 2015 $ 5,383,659 $ 1,671,966 $ 2,109,414 $ 9,165,039 |
LITIGATION AND CLAIMS
LITIGATION AND CLAIMS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 21. LITIGATION AND CLAIMS | The Company is the subject of lawsuits and claims arising in the ordinary course of business from time to time. The Company reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Companys financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company determined that there were no matters that required an accrual as of December 31, 2017 nor were there any asserted or unasserted material claims for which material losses are reasonably possible. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 22. RELATED PARTY TRANSACTIONS | Except as described below, during the past fiscal year, there have been no transactions, whether directly or indirectly, between the Company and any of its respective officers, directors, beneficial owners of more than 5% of our outstanding Common Stock or their family members, that exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end for the last completed fiscal year. During the three months ended March 31, 2016, the Companys subsidiary, IVXX, purchased raw materials totaling $16,076 from Black Oak, an entity in which the Companys Chief Executive Officer then-held an ownership interest of 12% prior to the acquisition. On April 1, 2016, we acquired Black Oak and it became a wholly-owned subsidiary of the Company. There was no accounts receivable balance from Black Oak as of March 31, 2016. During the year ended December 31, 2017, all transactions between IVXX and Black Oak were eliminated in consolidation. Prior to the acquisition of Black Oak, IVXX had historically not been charged any rent for use of the space where its extraction lab is located. The Company leases the land in Belvidere, New Jersey, on which Edible Gardens greenhouse structure is situated. The land is being leased from Whitetown Realty, LLC, an entity in which David Vande Vrede and Greda Vande Vrede own interests. David Vande Vrede and Greda Vande Vrede are the parents of one our directors, Kenneth Vande Vrede. The lease commenced on January 1, 2015 and expires December 31, 2029. The current monthly lease amount is $14,640 and increases 1.5% each calendar year. Pursuant to an Independent Director Agreement dated June 9, 2016 by and between the Company and Steven J. Ross, the Company agreed to pay Mr. Ross $8,333 per month for a period of one year. The Company also issued to Mr. Ross an aggregate of 48,048 restricted shares of Common Stock, of which all of the shares vested on the date of appointment. Pursuant to an Independent Director Agreement dated June 1, 2017 by and between the Company and Steven J. Ross, the Company agreed to pay Mr. Ross $10,000 per month for a period of one year. The Company also issued to Mr. Ross an aggregate of 72,727 restricted shares of Common Stock, of which all of the shares vested on the date of appointment. Pursuant to an Independent Director Agreement dated November 15, 2017 by and between the Company and Alan Gladstone, the Company agreed to pay Mr. Gladstone $6,250 per month for a period of one year. The Company also issued to Mr. Gladstone an aggregate of 29,167 shares of the Companys stock options, to be fully vested on the date of appointment. On December 12, 2017 management entered into a lock-up agreement with Derek Peterson, the Companys Chief Executive Officer and Chairman of the Board, subject to certain exceptions, not to sell any shares of the Companys common stock for a period of one year from date of the lock-up agreement. On May 7, 2013, Edible Garden entered into a letter agreement with Gro-Rite related to Edible Gardens right to purchase and distribute a majority of Gro-Rites plant products. During the year ended December 31, 2017, the agreement is still in effect on a month to month basis. Gro-Rite is affiliated with one of our directors, Kenneth Vande Vrede. Edible Garden received a valuable strategic partnership through this letter agreement. The revenue under the agreement was not significant for the years ended December 31, 2017, 2016 and 2015. On May 7, 2013, Edible Garden entered into a letter agreement with NB Plants related to Edible Gardens right to purchase and distribute a majority of NB Plants plant products. NB Plants is affiliated with three of our directors, Kenneth Vande Vrede, Michael Vande Vrede, and Steven Vande Vrede, and another member of their family. Edible Garden receives a valuable strategic partnership through this letter agreement. This agreement was terminated as of December 31, 2016. For the years ended December 31, 2016 and 2015, the sales under this agreement of $7,649,125 and $6,166,927, respectively. There were no sales during the year ended December 31, 2017 as the agreement was terminated as of December 31, 2016. Pursuant to the Krueger Independent Director Agreement dated November 2, 2015, the Company agreed to issue to Mr. Krueger an aggregate of 23,333 restricted shares of its Common Stock, to be fully vested on the date of appointment. The value of the 23,333 shares of Common Stock was equal to approximately $60,550. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 23. SUBSEQUENT EVENTS | Equity Financing Facility Subsequent to December 31, 2017, the Company issued 160,450 shares of common stock for cash in the amount of $750,000 pursuant to an equity financing with an accredited investor. Subsequent to December 31, 2017, the Company issued a $5,000,000 convertible note to an accredited investor. The convertible note matures in July 2019 and accrues interest at a rate of 12.0% per year. Subsequent to December 31, 2017, the Company obtained a $40,000,000 Security Purchase Agreement with an accredited investor. As of March 16, 2018, the Company issued one $5,000,000 convertible note to the accredited investor under this Security Purchase Agreement. The convertible note matures in September 2019 and accrues interest at 7.5% per year. Debt and Interest Converted into Equity Subsequent to December 31, 2017, senior convertible promissory notes and accrued interest in the amount of $9,400,000 and $84,613, respectively, were converted into 3,141,005 shares of common stock. Option Issuances Subsequent to December 31, 2017, the Company issued 800,000 options which vest quarterly over 3 years to various directors and executives. Other Events Throughout January 2018, various directors and executive management entered into lock-up agreements, subject to certain exceptions, not to sell any shares of the Company's common stock for a period of one year from their respective date of lock-up agreement. On March 12, 2018, the Company notified the other party to the Tech Center Drive acquisition, See Note 4 Acquisitions the amount to be adjusted from the shares held in escrow. The other party has thirty days from the date of notice to respond. On March 12, 2018, the Company implemented 1-for-15 reverse stock split of the Companys common stock (the Reverse Stock Split). The Reverse Stock Split became effective in the stock market upon commencement of trading on March 13, 2018. As a result of the Reverse Stock Split, every fifteen shares of the Companys Pre-Reverse Stock Split common stock were combined and reclassified into one share of the Companys common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares were rounded up to the nearest whole share. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of fifteen as of March 13, 2018. All historical share and per share amounts reflected throughout consolidated financial statements have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of the Companys common stock were not affected by the Reverse Stock Split. On December 6, 2017, the Company through Dyer, entered into an agreement to purchase real property for a purchase price of $11,000,000. On January 18, 2018, the Company closed on the acquisition of the real property. In connection with the acquisition of the real property, on January 18, 2018 the Company entered into a loan agreement with an unrelated third party to lend the Company $6,500,000 for the purchase of the real property. The loan is collateralized by the real property. The Loan matures on the three-year anniversary of the closing date (January 18, 2018); provided that the Company may extend the maturity date by 12 months by delivering a notice to the lender at least 30 days before the stated maturity date. The Loan bears interest at the rate of 12% during the first 12 months, 12.5% during the second 12 months, 13% during the third 12 months, and 13.5% during any extension. The Company prepaid the first three (3) months of interest on the Loan and additional interest payments are due on the first day of each month starting on the fourth month after the Closing Date. The Company may prepay the loan, in whole or in part, at any time after the end of the third full month immediately following the closing date, without penalty or premium. At any time after an event of default, as defined in the loan agreement, the Company may elect to convert the then outstanding principal balance and interest due on the Loan into shares of common stock of the Company at a price based on commercially reasonable determinations, plus a default penalty of 130% of the principal balance and interest. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions to Securities Exchange Commission (SEC) Form 10-K and Regulation S-X, and reflect the accounts and operations of the Company and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of FASB or ASC 810, Consolidation |
Non-Controlling Interest | Non-controlling interest is shown as a component of stockholders equity on the consolidated balance sheets and the share of income (loss) attributable to non-controlling interest is shown as a component of income (loss) in the consolidated statements of operations. |
Use of Estimates | The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of total net revenue and expenses in the reporting periods. The Company regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, sales returns, inventory valuation, stock-based compensation expense, goodwill and purchased intangible asset valuations, derivative liabilities, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, and litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Companys future results of operations will be affected. |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not affect net loss and stockholders equity. |
Revisions | Certain immaterial revisions were made to the notes to the December 31, 2016 consolidated financial statements related to the treatment of certain deferred tax items. As presented in Note 14 - Tax Expense |
Accounts Receivable | The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. There was no allowance at December 31, 2017 and 2016. |
Notes Receivable | The Company reviews all outstanding notes receivable for collectability as information becomes available pertaining to the Companys inability to collect. An allowance for notes receivable is recorded for the likelihood of non-collectability. The Company accrues interest on notes receivable based net realizable value. There was no allowance at December 31, 2017 and 2016. |
Inventory | Inventory is stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method of accounting. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items and reserves. The reserve estimate for excess and obsolete inventory is based on expected future use. The reserve estimates have historically been consistent with actual experience as evidenced by actual sale or disposal of the goods. |
Prepaid Expenses and Other Current Assets | Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include advertising, insurance, and service or other contracts requiring up-front payments. |
Property, Equipment and Leasehold Improvements, Net | Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The approximate useful lives for depreciation of our property, equipment and leasehold improvements are as follows: thirty-two years for buildings; three to eight years for furniture and equipment; three to five years for computer and software; five years for vehicles and the shorter of the estimated useful life or the underlying lease term for leasehold improvements. Repairs and maintenance expenditures that do not extend the useful lives of related assets are expensed as incurred. Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property, equipment and leasehold improvements may not be recoverable in accordance with the provisions of ASC 360, Property, Plant, and Equipment. Note 8 Property, Equipment and Leasehold Improvements, Net |
Goodwill | Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired and liabilities assumed in a business acquisition. In accordance with ASC 350, IntangiblesGoodwill and Other, The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of August 1 and whenever events or changes in circumstances indicate its carrying amount may not be recoverable. When assessing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company performs a two-step impairment test. If the Company concludes otherwise, then no further action is taken. The Company also has the option to bypass the qualitative assessment and only perform a quantitative assessment, which is the first step of the two-step impairment test. In the two-step impairment test, the Company measures the recoverability of goodwill by comparing a reporting units carrying amount, including goodwill, to the estimated fair value of the reporting unit. There were no events or changes in circumstances that indicated potential impairment of intangible assets during 2017, as such the Company determined that no adjustment to the carrying value of goodwill was required. In assessing the qualitative factors, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting units fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact. The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where the Company has had an acquisition that benefited more than one reporting unit, The Company has assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit. The estimated fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, tax deductions, and proceeds from disposition. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the particular investment. Cash flow projections are based on managements estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the businesss ability to execute on the projected cash flows. If the carrying amount of a reporting unit is in excess of its fair value, an impairment may exist, and the Company must perform the second step of the impairment analysis to measure the amount of the impairment loss, by allocating the reporting units fair value to its assets and liabilities other than goodwill, comparing the carrying amount of the goodwill to the resulting implied fair value of the goodwill, and recording an impairment charge for any excess. |
Intangibles | Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, Property, Plant, and Equipment, Customer Relationships 5 to 12 Years Trademarks 2 to 8 Years Dispensary Licenses 14 Years Patent 2 Years Management Service Agreement 15 Years The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified. The Company calculates fair value of our intangible assets as the present value of estimated future cash flows the Company expects to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, The Company uses estimates and assumptions about future revenue contributions, cost structures and remaining useful lives of the asset (asset group). Intangible assets that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value. |
Long-Lived Assets | Other long-lived assets are subject to amortization, and any impairment is determined in accordance with ASC 360, Property, Plant, and Equipment. Note 8 Property, Equipment and Leasehold Improvements, Net The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in our overall strategy with respect to the manner of use of the acquired assets or changes in our overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in our stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. The impairment charges, if any, are included in operating expenses in the accompanying consolidated statements of operations. Based on the test results, no impairments have occurred. |
Other Assets | Other assets are comprised primarily of deposits for the purchase of real property in California and security deposits for leased properties in California, Nevada and New Jersey. The deposits for the purchase of real property in California will be allocated once the purchase is final and the deposit for leased properties will be returned at the end of the lease term. |
Business Combinations | The Company accounts for its business acquisitions in accordance with ASC 805-10, Business Combinations. |
Revenue Recognition | The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. Cannabis Dispensary, Cultivation and Production The Company recognizes revenue from manufacturing and distribution product sales, upon transfer of title and risk to the customer, which occurs either at shipping (F.O.B. terms), or upon sell through, depending on the arrangement. Revenue from our retail dispensaries is recognized net of discounts, rebates, promotional adjustments, price adjustments and returns, and net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue is recorded upon transfer of title and risk to the customer, which occurs at the time customers take delivery of our products at our retail dispensaries. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase. Revenue related to the sale of consignment inventory is not recognized until the product is pulled from inventory and sold directly to end-customers. The Company recognizes revenue from the sale of consignment inventory on a gross basis, as the Company has determined that: 1) the Company is the primary obligor to the customer; 2) the Company has latitude in establishing the sales prices and profit margins of its products; 3) the Company has discretion in selecting its suppliers; 4) the Company is responsible for loss or damage to consigned inventory; and 5) the Companys customer validation process performs an important part of the process of providing such products to authorized customers. The Company believes that these factors outweigh the fact that the Company does not have title to the consigned inventory prior to its sale. During the years ended December 31, 2017 and 2016, sales returns were not significant and, as such, no sales return allowance has been recorded as of December 31, 2017 and 2016. Herbs and Produce Products The Company recognizes revenue from products grown in its greenhouses and sold net of discounts, rebates, promotional adjustments, price adjustments, and estimated returns and upon transfer of title and risk to the customer, which occurs at delivery (F.O.B. terms). Upon delivery, the Company has no further performance obligations, selling price is fixed, and collection is reasonably assured. For sales for which the Company uses an outside grower, the Company evaluates whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Depending on the terms of the arrangements, the Company determines some or all of the following: product specifications, cultivation, and packaging, while disclosing trade and operational secrets, greenhouse technologies, and nutrients used to grow. The Company is the primary obligor in the transaction because it is our brand that is sold into the retail channel. The Company is subject to inventory risk until the product is accepted by the retailer. The Company bears credit risk for the amount billed to the retailer and, thus, must pay the grower in the event the selling price is not collected. This revenue is recorded at the gross sale price once the retailer has accepted delivery, selling price is fixed, and collection is reasonably assured. For the years ended December 31, 2016, and 2015, the Company had one significant outside grower which had such sales of $7,649,125 and $6,166,927, respectively. There were no sales with this outside grower during the year ended December 31, 2017. |
Cost of Goods Sold | Cannabis Dispensary, Cultivation and Production Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles, and concentrates, as well as packaging and other supplies, fees for services and processing, other expenses for services, and allocated overhead. It also includes the cost incurred in producing the oils, waxes, shatters, and clears sold by IVXX. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. Herbs and Produce Products Cost of goods sold include cultivation costs, packaging, other supplies and purchased plants that are sold into the retail marketplace by Edible Garden. Other expenses included in cost of goods sold include freight, allocations of rent, repairs and maintenance, and utilities. |
Advertising Expenses | The Company expenses advertising costs as incurred in accordance with ASC 720-35, Other Expenses Advertising Cost. |
Loyalty Rewards Program | The Company offers a customer loyalty rewards program that allows members to earn discounts on future purchases. Unused discounts earned by loyalty rewards program members are included in accrued liabilities and recorded as a reduction of revenue at the time a qualifying purchase is made. Revenue is recognized when points are redeemed by the loyalty rewards program member. The loyalty rewards program was part of the acquisition of Black Oak, who began offering customers the loyalty rewards program in April 2015. The value of points accrued as of December 31, 2017 and 2016 was $22,783 and $21,627, respectively. |
Stock-Based Compensation | The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, Compensation Stock Compensation, The Black-Scholes option-pricing model requires the input of certain assumptions that require the Companys judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent managements best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from managements estimates, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. |
Derivative Financial Instruments | ASC 815-40, Contracts in Entitys Own Equity ASC 815, Derivatives and Hedging |
Income Taxes | The provision for income taxes is determined in accordance with ASC 740, Income Taxes The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax related interest and penalties as interest expense and selling, general and administrative expense, respectively, on the consolidated statements of operations. In December 2017, the Tax Cuts and Jobs Act (TJCA or the Act) was enacted, which significantly changes U.S. tax law. In accordance with ASC 740, Income Taxes |
Loss Per Common Share | In accordance with the provisions of ASC 260, Earnings Per Share, |
Fair Value of Financial Instruments | The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. |
Recently Issued Accounting Standards | FASB ASU 2017-12 (Topic 815), Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities FASB ASU 2017-04 (Topic 350), Intangibles - Goodwill and Others FASB ASU 2017-01 (Topic 805), Business Combinations: Clarifying the Definition of a Business FASB ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Statement of Cash Flows. FASB ASU No. 2016-02 (Topic 842), Leases FASB ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers Revenue from Contracts with Customers. · Under the new standard, revenue will be recognized when the Company satisfies its performance obligation by transferring promised products or services to its customer. The standard allows for application of the guidance to a portfolio of contracts or performance obligations with similar characteristics. The Company has identified three portfolios of contracts or obligations which consists of cannabis dispensary, cannabis cultivation and production and herbs and produce. Since the Companys individual sales transactions in each portfolio are very similar in nature, the Company anticipates applying the guidance to all transactions in each portfolio. The Company expects that the effects of applying this guidance to the portfolios would not differ materially from applying the guidance to individual performance obligations within each portfolio. · The Companys revenue recognition will be achieved upon delivery of products for the cannabis dispensary and herbs and produce portfolio as there are no other promised services as part of the Companys contracts with customers. For the Companys cannabis cultivation and production portfolio the Companys revenue recognition will be achieved upon definitive ability to collect on the sale, which usually occurs upon ultimate sale to the end-customer. Because shipping and handling activities are performed before the customer obtains control of the goods, the Company does not consider these activities to be a promised service to the customer. Rather, shipping and handling are activities to fulfill our promise to transfer the goods. · To determine the amount of consideration which the Company expects to be entitled in exchange for transferring promised goods, the Company has considered if variable consideration exists. The Company has reviewed its standard terms and conditions and its customary business practices to determine the transaction price. The Company has reviewed its pricing policies and strategies including marketing, loyalty and incentive programs for determining whether the Company has any variable or non-cash consideration. No material items were noted. In addition, the Company reviewed its current accounting policies related to returns, price concessions and volume discounts and concluded such items not to be significant. The Company will continue its accounting policy election to exclude from revenue all amounts we collect and remit to governmental authorities. · The Companys sales transactions do not require any additional performance obligation after delivery with respect to the cannabis dispensary portfolio and herbs and produce portfolio, therefore the Company does not have multiple performance obligations for which the Company will have to allocate the transaction price. With respect to the cannabis cultivation and production transactions, the additional performance obligation after delivery requires the Company retain risk of loss until the ultimate sale of the product, therefore the Company waits to allocate the transaction price upon the ultimate sale of the product to the end-customer. · The Company expects to recognize revenue upon delivery to the customer as its performance obligation will be satisfied at that point in time with regards to the cannabis dispensary and herbs and produce portfolio. With respect to the cannabis cultivation and production, the Company expects to recognize revenue upon the ultimate sale of the product to the end customer and when collectability is assured. The Company expects to apply the guidance using the modified retrospective transition method. Based on the Companys analysis performed to date, the Company does not expect the adoption of ASU 2014-09 will have a material impact on its financial position or results of operations but will result in additional disclosures regarding its revenue recognition policies. The Company also does not expect the adoption will require material or significant changes to its internal controls over financial reporting. The Company has expanded its revenue recognition inquiries to additional departments and updated its questionnaires primarily to identify matters that would signal variable consideration implications and performance obligations under the new guidance. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Useful Lives for amortization of our Intangible assets | The approximate useful lives for amortization of our intangible assets are as follows: Customer Relationships 5 to 12 Years Trademarks 2 to 8 Years Dispensary Licenses 14 Years Patent 2 Years Management Service Agreement 15 Years |
VARIABLE INTEREST ENTITY ARRA32
VARIABLE INTEREST ENTITY ARRANGEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Variable Interest Entity Arrangements Tables | |
VARIABLE INTEREST ENTITY ARRANGEMENTS | December 31, December 31, 2017 2016 Current Assets: Cash $ 409,029 $ 30,057 Inventory 232,231 - Prepaid Expenses and Other Current Assets 302,186 17,492 Total Current Assets 943,446 47,549 Property, Equipment and Leasehold Improvements, Net 1,965,103 1,798,784 TOTAL ASSETS $ 2,908,549 $ 1,846,333 Current Liabilities: Accounts Payable and Accrued Expenses 319,853 5,337 TOTAL LIABILITIES $ 319,853 $ 5,337 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions Tables | |
Schedule of allocation of the purchase price | Finished Goods Inventory $ 58,622 Trademarks 300,000 Patent 3,078 Customer Relationships 888,300 Total Assets Acquired $ 1,250,000 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | Preliminary Final as of as of April 1, 2016 Adjustments December 31, 2016 Current Assets (Inclusive of Cash of $163,566) $ 792,447 $ $ 792,447 Property, Plant and Equipment 681,896 681,896 Customer Relationships 7,480,800 379,200 7,860,000 * Trade Name 4,280,000 1,040,000 5,320,000 * Dispensary License 8,214,700 2,055,300 10,270,000 * Liabilities (2,355,938 ) (2,355,938 ) Total Identifiable Net Assets 19,093,905 3,474,500 22,568,405 Goodwill 32,395,760 (3,474,500 ) 28,921,260 Net Assets $ 51,489,665 $ $ 51,489,665 ___________________ * The Company received an independent third-party expert appraiser valuation report in valuing certain assets which included Customer Relationships, Trade Name and Dispensary License. Management is fully responsible for the valuation of the assets. |
Summary of the purchase price | Purchase Price Detail Series B Preferred Stock Series Q Preferred Stock Series Z Preferred Stock Preferred Stock Converted into Common Stock Total Consideration Closing Consideration 83,220 246 78 2,464,066 $ 9,683,779 Lockup Consideration 297,925 596 281 7,392,197 29,051,334 Holdback Consideration 196,769 583 185 5,826,147 11,324,969 Performance-Based Cash Consideration 1,429,583 Totals 577,914 1,425 544 15,682,410 $ 51,489,665 |
Acquisition with a purchase price | Assets Acquired Inventory $ 113,779 Property, Equipment and Leasehold Improvements: Furniture and Equipment 52,829 Leasehold Improvements 46,737 Security Deposits 5,000 Management Service Agreement 6,621,580 Total Assets Acquired $ 6,839,925 |
Pro Forma Results of Operations | Pro Forma Results of Operations For the Year Ended December 31, (Unaudited) 2017 2016 Revenues $ 38,208,172 $ 28,207,138 Net Loss Attributable to Terra Tech Corp. $ (33,472,729 ) $ (27,863,773 ) Net Loss per Common Share Attributable to Terra Tech Corp. Common Stockholders - Basic and Diluted $ (0.73 ) $ (1.07 ) |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Tables | |
Inventory | December 31, 2017 2016 Raw Materials $ 1,450,273 $ 486,119 Work-in-Progress 1,016,596 570,145 Finished Goods 3,293,150 853,066 Total Inventory $ 5,760,019 $ 1,909,330 |
PROPERTY, EQUIPMENT AND LEASE35
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property Equipment And Leasehold Improvements Net Tables | |
Property, equipment, and leasehold improvements | December 31, 2017 2016 Land and Building $ 9,047,201 $ 1,454,124 Furniture and Equipment 3,553,587 3,141,244 Computer Hardware and Software 486,176 396,479 Leasehold Improvements 9,316,665 7,568,465 Construction in Progress 1,204,547 459,327 Subtotal 23,608,176 13,019,639 Less Accumulated Depreciation (4,416,560 ) (2,554,875 ) Property, Equipment and Leasehold Improvements, Net $ 19,191,616 $ 10,464,764 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets Net Tables | |
Intangible assets | December 31, 2017 December 31, 2016 Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizing Intangible Assets: Customer Relationships 5 to 12 $ 8,072,400 $ (1,345,191 ) $ 6,727,209 $ 8,960,700 $ (780,960 ) $ 8,179,740 Trademarks and Patent 2 to 8 195,520 (77,448 ) 118,072 498,598 (91,061 ) 407,537 Dispensary Licenses 14 10,270,000 (1,283,751 ) 8,986,249 10,270,000 (550,179 ) 9,719,821 Management Service Agreement 15 6,621,580 - 6,621,580 - - - Total Amortizing Intangible Assets 25,159,500 (2,706,390 ) 22,453,110 19,729,298 (1,422,200 ) 18,307,098 Non-Amortizing Intangible Assets: Trade Name Indefinite 5,320,000 - 5,320,000 5,320,000 - 5,320,000 Total Non-Amortizing Intangible Assets 5,320,000 - 5,320,000 5,320,000 - 5,320,000 Total Intangible Assets, Net $ 30,479,500 $ (2,706,390 ) $ 27,773,110 $ 25,049,298 $ (1,422,200 ) $ 23,627,098 |
Estimated amortization expense of intangible assets | Year Ending December 31, 2018 2019 2020 2021 2022 and thereafter Total Amortization expense $ 1,882,563 $ 1,869,111 $ 1,869,111 $ 1,830,767 $ 15,001,558 $ 22,453,110 |
ACCOUNTS PAYABLE AND ACCRUED 37
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable And Accrued Expenses Tables | |
Accounts payable and accrued expenses | December 31, 2017 2016 Accounts Payable $ 2,308,844 $ 1,986,907 Sales Tax Payable 545,398 122,470 Accrued Interest Payable 21,742 96,633 Accrued Expenses 2,568,726 211,390 Total Accounts Payable and Accrued Expenses $ 5,444,710 $ 2,417,400 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable Tables | |
Notes payable | December 31, 2017 December 31, 2016 Unsecured promissory demand notes issued to an accredited investor, which bear interest at a rate of 4% per annum. Holder may elect to convert into common stock at $11.25 per share. The balance of the note and accrued interest was converted into common stock in April 2017. $ - $ 64,324 Convertible promissory note dated December 14, 2015, issued to accredited investors, which matured December 13, 2016 and bears interest at a rate of 12% per annum. The holder of the note extended the maturity to December 13, 2017. The conversion price is $1.82, subject to adjustment. The balance of the note and accrued interest was converted into common stock in July 2017. - 500,000 Senior convertible promissory note dated October 28, 2016, issued to accredited investors, which matures April 28, 2018 and bears interest at a rate of 1% per annum. The conversion price is 90% of the average of the lowest three (3) VWAPs for the five (5) consecutive trading days prior to the conversion date. The balance of the note and accrued interest was converted into common stock in January 2017. - 102,582 Senior convertible promissory note dated November 1, 2016, issued to accredited investors, which matures May 1, 2018 and bears interest at a rate of 12% per annum. The conversion price is $5.25, subject to adjustment. The balance of the note and accrued interest was converted into common stock in July 2017. - 31,615 Senior convertible promissory note dated December 16, 2016, issued to accredited investors, which matures June 16, 2018 and bears interest at a rate of 12% per annum. The conversion price is $4.05, subject to adjustment. The balance of the note and accrued interest was converted into common stock in May 2017. - 1,220,155 Senior convertible promissory note dated August 21, 2017, issued to accredited investors, which matures February 21, 2019 and bears interest at a rate of 12% per annum. The conversion price is $4.50, subject to adjustment. 640,010 - Senior convertible promissory note dated December 26, 2017, issued to accredited investors, which matures June 26, 2019 and bears interest at a rate of 12% per annum. The conversion price is $4.50, subject to adjustment. 1,469,388 - Promissory note dated November 22, 2017, issued for the purchase of real property. Matures December 1, 2020, with an option to extend the maturity date 1 year. The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5% 4,500,000 - Total Debt 6,609,398 1,918,676 Less Short-Term Portion - 564,324 Long-Term Portion $ 6,609,398 $ 1,354,352 |
Scheduled Maturities of Long-Term Debt | Year Ended December 31, 2018 2019 2020 Thereafter Total Total Debt $ - $ 2,109,398 $ 4,500,000 $ - $ 6,609,398 |
Conversion of the notes payable | Year Ended December 31, 2017 2016 2015 Fair market value of common stock issued upon conversion $ 29,785,271 $ 18,887,399 $ 1,493,659 Principal amount of debt converted (19,314,324 ) (13,324,973 ) (900,000 ) Accrued interest converted (635,401 ) (233,415 ) (108,000 ) Fair value of derivative at conversion date (14,223,550 ) (10,361,100 ) (374,600 ) Debt discount value at conversion date 11,532,292 10,414,902 508,385 Loss on extinguishment of debt $ 7,144,288 $ 5,382,813 $ 619,444 |
CONTINGENT CONSIDERATION LIABIL
CONTINGENT CONSIDERATION LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Contingent Consideration Liability Tables | |
Contingent Consideration | One-Year Anniversary Date Revenue Probability Revenue-Based Payment Probability-Weighted Amounts $ 3,200,000 0.00 % $ 800,000 $ $ 2,000,000 0.50 % $ 200,000 1,000 $ 1,599,999 99.50 % $ Fair Value of Expected Earn-out Payment 1,000 Discount Rate 25 % Payments $ 0 Present Value Factor at 20% Discount Rate for 12 Months 0.9457 Present Value of Contingent Consideration $ 946 |
Performance-Based Cash Consideration | Year 1 Revenue $ 16,666,666 Less: 12,000,000 $ 4,666,666 0.44742864 Performance-Based Cash Payment $ 2,088,000 |
Black Oak Contingent Consideration | As of December 31, 2016, the Black Oak Contingent Consideration was based upon the following formula: One-Year Anniversary Value of Probability-Weighted Date of the Common Performance- Amounts Year 1 Merger 30- Stock to Based Cash Earn-Out Performance- Revenue Day VWAP Issue Payment Probability Shares Based Cash Total 20 % $ 15,788,827 $ 2,088,000 4 % $ 631,553 $ 83,520 $ 715,073 $ 0.2108 Upside 20 % 70 % $ 13,824,526 $ 2,088,000 14 % $ 1,935,434 $ 292,320 $ 2,227,754 $ 16,667,000 $ 0.3108 10 % $ 12,816,555 $ 2,088,000 2 % $ 256,331 $ 41,760 $ 298,091 $ 0.4108 20 % $ 11,867,575 $ 747,500 15 % $ 1,780,136 $ 112,125 $ 1,892,261 $ 0.2108 Base 75 % 70 % $ 11,164,938 $ 747,500 52.5 % $ 5,861,592 $ 392,438 $ 6,254,030 $ 13,670,835 $ 0.3108 10 % $ 10,804,383 $ 747,500 7.5 % $ 810,329 $ 56,063 $ 866,391 $ 0.4108 20 % $ 7,251,428 $ 1 % $ 72,514 $ $ 72,514 $ 0.2108 Downside 5 % 70 % $ 8,034,038 $ 3.5 % $ 281,191 $ $ 281,191 $ 10,674,670 $ 0.3108 10 % $ 8,435,630 $ 0.5 % $ 42,178 $ $ 42,178 $ 0.4108 Fair Value of Expected Earn-Out Payment $ 11,671,259 $ 978,225 $ 12,649,484 Price Per Common Share $ 3.93 $ 3.93 Discount Rate 20 % 20 % Periods (nper) 0.250 0.250 Payments $ $ Present Value Factor at 20% Discount Rate for 12 Months 0.9554 0.9554 Present Value of Contingent Consideration $ 11,151,221 $ 934,638 Present Value of Contingent Consideration $ 12,085,859 The below table summarizes adjustments made to the Black Oak Contingent Consideration during the year ended December 31, 2016. Preliminary April 1, 2016 Adjustments June 30, 2016 June 30, 2016 Adjustments September 30, 2016 September 30, 2016 Adjustments December 31, 2016 Final as of December 31, 2016 Holdback Consideration Stock $ 11,324,969 $ (514,339 ) $ 10,810,630 $ 217,895 $ 11,028,525 $ 122,695 $ 11,151,220 Performance-Based Cash 1,429,583 66,669 1,496,252 130,963 1,627,215 (692,577 ) 934,638 Adjustment to Goodwill 447,670 (1) (348,858 ) (1) (98,812 ) (2) Change in Fair Value of Contingent Consideration 98,812 Total Contingent Consideration $ 12,754,553 $ $ 12,306,882 $ $ 12,655,740 $ (569,882 ) $ 12,085,858 |
The summary of contingent consideration | Amount Contingent Consideration Summary : Balance at December 31, 2016 $ 12,085,859 Change in Fair Market Valuation of Contingent Consideration 4,348,761 Balance at March 31, 2017 and April 1, 2017 $ 16,434,620 Contingent Consideration Detail : Performance-Based Cash Contingent Consideration $ 2,088,000 Market-Based Stock Contingent Consideration 14,346,620 Balance at March 31, 2017 and April 1, 2017 $ 16,434,620 |
The summary of additional market-based contingent consideration clawbacks | Contingent Consideration Balance at March 31, 2017 $ 16,434,620 Change in Fair Market Valuation of Contingent Consideration 77,286 Payment of Contingent Consideration in Cash (2,088,000 ) Settlement of Contingent Consideration (4,739,638 ) Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital (4,692,697 ) Gain on Settlement of Contingent Consideration (4,991,571 ) Contingent Consideration December 31, 2017 $ - |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements Tables | |
Fair value hierarchy financial assets measured | The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated: Fair Value at December 31, Fair Value Measurement Using Description 2017 Level 1 Level 2 Level 3 Derivative Liabilities Conversion Feature $ 9,331,400 $ - $ - $ 9,331,400 $ 9,331,400 $ - $ - $ 9,331,400 Fair Value at December 31, Fair Value Measurement Using Description 2016 Level 1 Level 2 Level 3 Derivative Liabilities Conversion Feature $ 6,987,000 $ - $ - $ 6,987,000 Liability Contingent Consideration 12,085,859 - - 12,085,859 $ 19,072,859 $ - $ - $ 19,072,859 |
Fair value of the derivative liabilities using | December 31, 2017 2016 2015 Stock Price $2.25 - $5.85 $4.35 - $7.35 $1.35 - $3.30 Conversion and Exercise Price $1.80 - $6.60 $3.30 - $7.50 $1.05 - $2.40 Annual Dividend Yield - - - Expected Life (Years) 0.46 - 3.42 1.5 - 4.0 1.0 - 4.0 Risk-Free Interest Rate 1.04% - 2.50% 2.50% 2.50% Expected Volatility 43.80% - 123.56% 120.30% - 144.03% 98.35% - 148.71% |
Reconciliation of the Derivative Liabilities measured | Balance at December 31, 2015 $ 743,400 Change in Fair Market Value of Conversion Feature 501,700 Issuance of Equity Instruments with Debt Greater Than Debt Carrying Amount 1,487,500 Derivative Debt Converted into Equity (14,232,100 ) Issuance of Debt Instruments with Derivatives 18,486,500 Balance at December 31, 2016 $ 6,987,000 Change in Fair Market Value of Conversion Feature 3,494,550 Derivative Debt Converted into Equity (14,223,550 ) Issuance of Debt Instruments with Derivatives 13,073,400 Balance at December 31, 2017 $ 9,331,400 |
Reconciliation of the Contingent Consideration Liability | Balance at December 31, 2015 $ - Purchase of Black Oak Gallery 12,754,553 Change in Fair Market Valuation of Black Oak Contingent Consideration (668,694 ) Balance at December 31, 2016 $ 12,085,859 Change in Fair Market Valuation of Contingent Consideration 4,426,047 Payment of Contingent Consideration in Cash (2,088,000 ) Settlement of Contingent Consideration (4,739,638 ) Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital (4,692,697 ) Gain on Settlement of Contingent Consideration (4,991,571 ) Balance at December 31, 2017 $ - |
TAX EXPENSE (Tables)
TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tax Expense Tables | |
Income taxes expense benefit | Year Ended December 31, 2017 2016 2015 Current: $ - $ - $ - Federal (343,943 ) - - State (3,512 ) - - (347,455 ) - - Deferred: Federal - - 44,000 State - - - - - 44,000 Total (Benefit) Expense for Income Taxes $ (347,455 ) $ - $ 44,000 |
Schedule of Effective Income Tax Rate Reconciliation | Year Ended December 31, 2017 2016 (As Revised, See Note 2) 2015 Expected Income Tax Benefit at Statutory Tax Rate, Net $ (13,456,000 ) $ (9,469,000 ) $ (3,694,000 ) Non-Deductible Items - 1,263,000 368,000 Warrants Expense 871,000 4,186,000 1,196,000 Derivatives Expense 4,104,000 4,067,000 (545,000 ) Net Operating Losses - - 2,667,000 Impairment of Property and Intangibles 365,000 - - Other 1,033,545 - - Change in Valuation Allowance 6,735,000 (47,000 ) 52,000 Reported Income (Benefit) Tax Expense $ (347,455 ) $ - $ 44,000 |
Deferred tax assets and liabilities | Year Ended December 31, 2017 2016 (As Revised, See Note 2) Deferred Income Tax Assets: Net Operating Losses $ 8,023,000 $ 15,242,000 8,023,000 15,242,000 Deferred Income Tax Liabilities: Depreciation (850,000 ) (1,334,000 ) Total 7,173,000 13,908,000 Valuation Allowance (7,173,000 ) (13,908,000 ) Net Deferred Tax $ - $ - |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-based Compensation Tables | |
Equity Incentive Plan | Awards Reserved for Issuance Awards Issued Awards Available for Grant 2016 Equity Incentive Plan 30,000,000 1,177,732 28,822,268 |
Stock option activity | Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value of In-the-Money Options Options Outstanding as of January 1, 2016 - $ - Options Granted 446,667 $ 1.35 Options Exercised - $ - Options Forfeited - $ - Options Expired - $ - Options Outstanding as of December 31, 2016 446,667 $ 1.35 Options Granted 731,065 $ 2.68 Options Exercised - $ - Options Forfeited - $ - Options Expired - $ - Options Outstanding as of December 31, 2017 1,177,732 $ 2.17 8.9 Years $ 4,330,481 Options Exercisable as of December 31, 2017 491,035 $ 1.90 8.6 Years $ 1,940,491 |
Weighted-average assumptions stock-based compensation | Year Ended December 31, 2017 2016 Expected term (years) 5 Years 5 Years Volatility 117.3-120.9 % 121.62 % Risk-Free Interest Rate 2.0-2.4 % 2.5 % Dividend Yield 0 % 0 % |
Stock-Based Compensation Expense | For the Year Ended December 31, 2017 December 31, 2016 Type of Award Number of Shares or Options Granted Stock-Based Compensation Expense Number of Shares or Options Granted Stock-Based Compensation Expense Stock Options 731,065 $ 692,971 446,667 $ 190,355 Stock Grants: Employees (Common Stock) 158,867 490,880 - - Employees (Series B Preferred Stock) 40,000 1,035,406 430,113 2,451,220 Directors (Common Stock) 81,061 221,973 71,381 334,424 NonEmployee Consultants (Common Stock) 389,374 1,284,562 422,971 2,406,061 Total StockBased Compensation Expense $ 3,725,792 $ 5,382,060 |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants Tables | |
Warrants outstanding | Shares Weighted-Average Exercise Price Warrants Outstanding as of January 1, 2016 2,161,734 $ 2.70 Warrants Exercised (1,873,206 ) $ 2.55 Warrants Granted 802,122 $ 3.45 Warrants Expired (34,889 ) $ 6.75 Warrants Outstanding as of December 31, 2016 1,055,761 $ 2.85 Warrants Exercised - $ - Warrants Granted 214,915 $ 2.79 Warrants Expired (79,309 ) $ 3.34 Warrants Outstanding as of December 31, 2017 1,191,367 $ 0.19 |
Weighted-average fair value of the warrants granted | For the Year Ended December 31, 2017 December 31, 2016 Weighted-Average Exercise Price Weighted-Average Fair Value Weighted-Average Exercise Price Weighted-Average Fair Value Warrants Granted Whose Exercise Price Exceeded Fair Value at the Date of Grant $ - $ - $ 4.50 $ 3.75 Warrants Granted Whose Exercise Price Was Equal or Lower Than Fair Value at the Date of Grant $ 2.79 $ 3.20 $ 4.35 $ 4.80 |
Summarizes information about fixed-price warrants outstanding | The following table summarizes information about fixed-price warrants outstanding as of December 31, 2017: Range of Number Outstanding Average Remaining Weighted-Average Exercise Prices at December 31, 2017 Contractual Life Exercise Price $ 0.90 304,467 9 Months $ 0.90 $ 0.99 16,629 36 Months $ 0.99 $ 1.82 61,932 16 Months $ 1.82 $ 1.95 57,559 15 Months $ 1.95 $ 2.04 44,053 55 Months $ 2.04 $ 2.06 105,263 6 Months $ 2.06 $ 2.40 111,759 37 Months $ 2.40 $ 2.91 56,760 60 Months $ 2.91 $ 3.09 26,711 6 Months $ 3.09 $ 3.12 52,834 56 Months $ 3.12 $ 3.74 24,048 50 Months $ 3.74 $ 4.05 37,037 48 Months $ 4.05 $ 5.25 170,190 40 Months $ 5.25 $ 5.55 11,905 33 Months $ 5.55 $ 6.15 29,268 47 Months $ 6.15 $ 6.60 80,952 32 Months $ 6.60 1,191,367 |
Warrants utilizing weighted-average inputs | Year Ended December 31, 2017 2016 Stock Price on Date of Grant $ 4.15 $ 4.80 Exercise Price $ 2.79 $ 4.50 Volatility 126.14 % 138.00 % Term 5-Years 5-Years Risk-Free Interest Rate 1.87 % 1.24 % Expected Dividend Rate 0 % 0 % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Tables | |
Future minimum lease payments | Scheduled Year Ending December 31 Payments 2018 $ 1,580,306 2019 1,476,267 2020 1,412,252 2021 1,394,609 2022 1,065,985 2023 and Thereafter 2,894,828 Total Future Minimum Lease Payments $ 9,824,247 |
SELECTED QUARTERLY FINANCIAL 45
SELECTED QUARTERLY FINANCIAL DATA (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Data Tables | |
Quarterly Financial Information | Year Ended December 31, 2017 (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenues $ 6,824,456 $ 7,842,873 $ 10,121,375 $ 11,012,140 Gross Profit $ 359,063 $ 1,506,373 $ 2,334,938 $ 1,276,699 Loss from Operations $ (6,027,237 ) $ (4,522,914 ) $ (3,903,172 ) $ (5,426,695 ) Amortization of Debt Discount $ (610,616 ) $ (515,654 ) $ (490,068 ) $ (522,424 ) Impairment of Property $ - $ - $ (138,037 ) $ - Impairment of Intangible Assets $ - $ - $ - $ (757,467 ) Loss on Extinguishment of Debt $ (1,039,458 ) $ (1,639,137 ) $ (1,373,538 ) $ (3,092,155 ) (Loss) Gain on Fair Market Valuation of Derivatives $ 1,610,750 $ 987,200 $ (1,475,900 ) $ (4,616,600 ) Interest Expense $ (157,833 ) $ (130,510 ) $ (119,650 ) $ (134,671 ) Gain on Settlement of Contingent Consideration $ - $ 4,991,571 $ - $ - Loss on Fair Market Valuation of Contingent Consideration $ (4,348,761 ) $ (77,286 ) $ - $ - Net Loss Attributable to Terra Tech Corp. $ (10,111,988 ) $ (453,769 ) $ (7,792,933 ) $ (14,318,913 ) Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders Basic and Diluted $ (0.27 ) $ (0.01 ) $ (0.16 ) $ (0.24 ) Stock Price Per Share: High $ 5.10 $ 4.35 $ 4.35 $ 5.85 Low $ 3.75 $ 2.10 $ 3.00 $ 2.70 Year Ended December 31, 2016 (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenues $ 1,548,167 $ 9,699,909 $ 6,950,365 $ 7,129,322 Gross Profit $ 133,974 $ 1,649,944 $ 1,319,386 $ (530,621 ) Loss from Operations $ (1,912,374 ) $ (3,817,377 ) $ (4,686,560 ) $ (7,731,540 ) Amortization of Debt Discount $ (94,406 ) $ (218,126 ) $ (610,089 ) $ (491,581 ) Loss on Extinguishment of Debt $ (920,797 ) $ - $ - $ (4,462,016 ) Loss from Derivatives Issued with Debt Greater Than Debt Carrying Value $ - $ (488,000 ) $ (867,000 ) $ (132,500 ) (Loss) Gain on Fair Market Valuation of Derivatives $ (1,160,700 ) $ (206,000 ) $ 771,000 $ (1,248,800 ) Interest Expense $ (55,995 ) $ (60,565 ) $ (159,633 ) $ (101,156 ) Gain on Fair Market Valuation of Contingent Consideration $ - $ - $ - $ 668,694 Provision (Benefit) for Income Taxes $ - $ 381,000 $ 410,300 $ (791,300 ) Net Loss Attributable to Terra Tech Corp. $ (4,126,064 ) $ (4,934,238 ) $ (5,587,759 ) $ (12,270,829 ) Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders Basic and Diluted $ (0.19 ) $ (0.21 ) $ (0.24 ) $ (0.35 ) Stock Price Per Share: High $ 6.30 $ 11.25 $ 7.65 $ 8.40 Low $ 1.35 $ 3.30 $ 4.05 $ 3.30 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information Tables | |
Summarized financial information | For the Year Ended December 31, 2017 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 5,701,233 $ 30,031,046 $ 68,565 $ 35,800,844 Cost of Goods Sold 5,211,658 25,112,113 - 30,323,771 Gross Profit 489,575 4,918,933 68,565 5,477,073 Selling, General and Administrative Expenses 3,123,037 10,843,210 11,390,844 25,357,091 Loss from Operations (2,633,462 ) (5,924,277 ) (11,322,279 ) (19,880,018 ) Other Income (Expense): Amortization of Debt Discount - - (2,138,762 ) (2,138,762 ) Impairment of Property - - (138,037 ) (138,037 ) Impairment of Intangibles (757,467 ) - - (757,467 ) (Loss) Gain on Extinguishment of Debt (18 ) 187 (7,144,457 ) (7,144,288 ) Loss on Fair Market Valuation of Derivatives - - (3,494,550 ) (3,494,550 ) Interest (Expense) Income - 110 (542,774 ) (542,664 ) Gain on Settlement of Contingent Consideration - 4,991,571 - 4,991,571 Loss on Fair Market Valuation of Contingent Consideration - (4,426,047 ) - (4,426,047 ) Total Other Income (Expense) (757,485 ) 565,821 (13,458,580 ) (13,650,244 ) Loss Before Provision for Income Taxes $ (3,390,947 ) $ (5,358,456 ) $ (24,780,859 ) $ (33,530,262 ) Total Assets at December 31, 2017 $ 5,847,286 $ 69,844,546 $ 22,495,967 $ 98,187,799 For the Year Ended December 31, 2016 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 12,000,423 $ 13,207,327 $ 120,013 $ 25,327,763 Cost of Goods Sold 11,021,449 11,664,737 68,894 22,755,080 Gross Profit 978,974 1,542,590 51,119 2,572,683 Selling, General and Administrative Expenses 2,520,061 5,729,884 12,470,589 20,720,534 . Loss from Operations (1,541,087 ) (4,187,294 ) (12,419,470 ) (18,147,851 ) Other Income (Expense): Amortization of Debt Discount - - (1,414,202 ) (1,414,202 ) Loss on Extinguishment of Debt - - (5,382,813 ) (5,382,813 ) Loss from Derivatives Issued with Debt Greater than Debt Carrying Value - - (1,487,500 ) (1,487,500 ) Loss on Fair Market Valuation of Derivatives - - (1,844,500 ) (1,844,500 ) Interest Expense - - (377,349 ) (377,349 ) Gain on Fair Market Valuation of Contingent Consideration - - 668,694 668,694 Total Other Income (Expense) - - (9,837,670 ) (9,837,670 ) Loss Before Provision for Income Taxes $ (1,541,087 ) $ (4,187,294 ) $ (22,257,140 ) $ (27,985,521 ) Total Assets at December 31, 2016 $ 7,064,697 $ 12,516,441 $ 56,597,592 $ 76,178,730 For the Year Ended December 31, 2015 Herbs and Produce Products Cannabis Dispensary, Cultivation and Production Eliminations and Other Total Total Revenues $ 8,633,538 $ 1,207,424 $ 134,384 $ 9,975,346 Cost of Goods Sold 7,771,039 1,078,852 108,584 8,958,475 Gross Profit 862,499 128,572 25,800 1,016,871 Selling, General and Administrative Expenses 1,910,375 763,728 7,159,543 9,833,646 . Loss from Operations (1,047,876 ) (635,156 ) (7,133,743 ) (8,816,775 ) Other Income (Expense): Amortization of Debt Discount - - (696,180 ) (696,180 ) Loss on Extinguishment of Debt - - (619,444 ) (619,444 ) Loss from Derivatives Issued with Debt Greater than Debt Carrying Value - - (561,000 ) (561,000 ) Gain on Fair Market Valuation of Derivatives - - 1,800,100 1,800,100 Interest Expense - - (469,576 ) (469,576 ) Total Other Income (Expense) - - (546,100 ) (546,100 ) Loss Before Provision for Income Taxes $ (1,047,876 ) $ (635,156 ) $ (7,679,843 ) $ (9,362,875 ) Total Assets at December 31, 2015 $ 5,383,659 $ 1,671,966 $ 2,109,414 $ 9,165,039 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) | Mar. 12, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Aug. 31, 2017 |
State of Incorporation | Nevada | |||||
Reclass of Non-Controlling Interest to Additional Paid-In Capital for the Acquisition of Additional Interest in Subsidiary | $ 1,830,925 | |||||
Subsequent Event [Member] | ||||||
Reverse Stock Split | 1-for-15 | |||||
MediFarm [Member] | ||||||
Ownership percentage | 98.00% | 60.00% | ||||
Additional ownership percentage acquired | 38.00% |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum [Member] | Trademarks [Member] | |
Useful Life (in Years) | 2 years |
Maximum [Member] | Trademarks [Member] | |
Useful Life (in Years) | 8 years |
Customer Relationships [Member] | Minimum [Member] | |
Useful Life (in Years) | 5 years |
Customer Relationships [Member] | Maximum [Member] | |
Useful Life (in Years) | 12 years |
Dispensary Licenses [Member] | |
Useful Life (in Years) | 14 years |
Patent [Member] | |
Useful Life (in Years) | 2 years |
Management Service Agreement [Member] | |
Useful Life (in Years) | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Advertising expenses | $ 1,207,480 | $ 518,858 | $ 304,787 |
Permanent differences tax expense | 8,300,000 | ||
Net sales | 7,649,125 | $ 6,166,927 | |
Accrued customer loyalty program liability | $ 22,783 | $ 21,627 | |
Buildings [Member] | |||
Estimated useful life | 32 years | ||
Furniture and Equipment [Member] | Minimum [Member] | |||
Estimated useful life | 3 years | ||
Furniture and Equipment [Member] | Maximum [Member] | |||
Estimated useful life | 8 years | ||
Computer Hardware and Software [Member] | Minimum [Member] | |||
Estimated useful life | 3 years | ||
Computer Hardware and Software [Member] | Maximum [Member] | |||
Estimated useful life | 5 years | ||
Vehicles [Member] | |||
Estimated useful life | 5 years | ||
Leasehold Improvements [Member] | |||
Estimated useful life | 5 years |
CONCENTRATIONS OF BUSINESS AN50
CONCENTRATIONS OF BUSINESS AND CREDIT RISK (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Federal Deposit Insurance Corporation | $ 9,022,253 | $ 2,968,403 | |
One Customer [Member] | |||
Revenues percentage | 29.00% | 74.00% | |
Revenues description | There were no customers that comprised more than 10% of the Company's revenue for the year ended December 31, 2017. |
VARIABLE INTEREST ENTITY ARRA51
VARIABLE INTEREST ENTITY ARRANGEMENTS (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 5,445,582 | $ 9,749,572 |
Inventory | 5,760,019 | 1,909,330 |
Prepaid Expenses and Other Current Assets | 1,067,689 | 704,721 |
Total Current Assets | 18,243,131 | 13,111,415 |
Property, Equipment and Leasehold Improvements, Net | 19,191,616 | 10,464,764 |
TOTAL ASSETS | 98,187,799 | 76,178,730 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 5,444,710 | 2,417,400 |
Total Liabilities | 21,385,508 | 24,024,765 |
Variable Interest Entity [Member] | ||
Current Assets: | ||
Cash | 409,029 | 30,057 |
Inventory | 232,231 | |
Prepaid Expenses and Other Current Assets | 302,186 | 17,492 |
Total Current Assets | 943,446 | 47,549 |
Property, Equipment and Leasehold Improvements, Net | 1,965,103 | 1,798,784 |
TOTAL ASSETS | 2,908,549 | 1,846,333 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 319,853 | 5,337 |
Total Liabilities | $ 319,853 | $ 5,337 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Total Assets Acquired | $ 1,250,000 |
Trademarks [Member] | |
Total Assets Acquired | 300,000 |
Finished Goods Inventory [Member] | |
Total Assets Acquired | 58,622 |
Patents [Member] | |
Total Assets Acquired | 3,078 |
Customer Relationships [Member] | |
Total Assets Acquired | $ 888,300 |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) | Dec. 31, 2016USD ($) | |
Current Assets (Inclusive of Cash of $163,566) | $ 792,447 | |
Property, Plant and Equipment | 681,896 | |
Customer Relationships | 7,860,000 | [1] |
Trade Name | 5,320,000 | [1] |
Dispensary License | 10,270,000 | [1] |
Liabilities | (2,355,938) | |
Total Identifiable Net Assets | 22,568,405 | |
Goodwill | 28,921,260 | |
Net assets | 51,489,665 | |
Preliminary [Member] | ||
Current Assets (Inclusive of Cash of $163,566) | 792,447 | |
Property, Plant and Equipment | 681,896 | |
Customer Relationships | 7,480,800 | |
Trade Name | 4,280,000 | |
Dispensary License | 8,214,700 | |
Liabilities | (2,355,938) | |
Total Identifiable Net Assets | 19,093,905 | |
Goodwill | 32,395,760 | |
Net assets | 51,489,665 | |
Adjustments [Member] | ||
Current Assets (Inclusive of Cash of $163,566) | ||
Property, Plant and Equipment | ||
Customer Relationships | 379,200 | |
Trade Name | 1,040,000 | |
Dispensary License | 2,055,300 | |
Liabilities | ||
Total Identifiable Net Assets | 3,474,500 | |
Goodwill | (3,474,500) | |
Net assets | ||
[1] | The Company received an independent third-party expert appraiser valuation report in valuing certain assets which included Customer Relationships, Trade Name and Dispensary License. Management is fully responsible for the valuation of the assets. |
ACQUISITIONS (Details 2)
ACQUISITIONS (Details 2) | Dec. 31, 2017shares |
Series B Preferred Stock [Member] | |
Closing Consideration | 83,220 |
Lockup Consideration | 297,925 |
Holdback Consideration | 196,769 |
Performance-Based Cash Consideration | |
Totals | 577,914 |
Series Q Preferred Stock [Member] | |
Closing Consideration | 246 |
Lockup Consideration | 596 |
Holdback Consideration | 583 |
Performance-Based Cash Consideration | |
Totals | 1,425 |
Series Z Preferred Stock [Member] | |
Closing Consideration | 78 |
Lockup Consideration | 281 |
Holdback Consideration | 185 |
Performance-Based Cash Consideration | |
Totals | 544 |
Preferred Stock Converted Into Common Stock [Member] | |
Closing Consideration | 2,464,066 |
Lockup Consideration | 7,392,197 |
Holdback Consideration | 5,826,147 |
Performance-Based Cash Consideration | |
Totals | 15,682,410 |
Total Consideration [Member] | |
Closing Consideration | 9,683,779 |
Lockup Consideration | 29,051,334 |
Holdback Consideration | 11,324,969 |
Performance-Based Cash Consideration | 1,429,583 |
Totals | 51,489,665 |
ACQUISITIONS (Details 3)
ACQUISITIONS (Details 3) | Dec. 31, 2017USD ($) |
Assets Acquired | |
Inventory | $ 113,779 |
Property, Equipment and Leasehold Improvements: | |
Furniture and Equipment | 52,829 |
Leasehold Improvements | 46,737 |
Security Deposits | 5,000 |
Management Service Agreement | 6,621,580 |
Total Assets Acquired | $ 6,839,925 |
ACQUISITIONS (Details 4)
ACQUISITIONS (Details 4) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | $ 11,012,140 | $ 10,121,375 | $ 7,842,873 | $ 6,824,456 | $ 7,129,322 | $ 6,950,365 | $ 9,699,909 | $ 1,548,167 | $ 35,800,844 | $ 25,327,763 | $ 9,975,346 |
Net Loss Attributable to Terra Tech Corp. | $ (14,318,913) | $ (7,792,933) | $ (453,769) | $ (10,111,988) | $ (12,270,829) | $ (5,587,759) | $ (4,934,238) | $ (4,126,064) | $ (32,677,603) | $ (26,918,890) | $ (9,225,580) |
Net Loss per Common Share Attributable to Terra Tech Corp. Common Stockholders - Basic and Diluted | $ (0.24) | $ (0.16) | $ (0.01) | $ (0.27) | $ (0.35) | $ (0.24) | $ (0.21) | $ (0.19) | $ (0.71) | $ (1.04) | $ (0.58) |
Pro Forma | |||||||||||
Revenues | $ 38,208,172 | $ 28,207,138 | |||||||||
Net Loss Attributable to Terra Tech Corp. | $ (33,472,729) | $ (27,863,773) | |||||||||
Net Loss per Common Share Attributable to Terra Tech Corp. Common Stockholders - Basic and Diluted | $ (0.73) | $ (1.07) |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Oct. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Sep. 13, 2017 | Dec. 31, 2016 | Apr. 02, 2016 | |
Consideration for assets acquired | $ 6,839,925 | |||||
Common stock, shares issued | 9,500,206 | |||||
Replacement cost of finished goods | $ 3,293,150 | $ 853,066 | ||||
Purchase price of assets acquired | 1,250,000 | |||||
Closing price of common stock | $ 3.30 | |||||
Trademarks [Member] | ||||||
Purchase price of assets acquired | $ 300,000 | |||||
Trademarks [Member] | Minimum [Member] | ||||||
Finite lived intangible asset, useful life | 2 years | |||||
Trademarks [Member] | Maximum [Member] | ||||||
Finite lived intangible asset, useful life | 8 years | |||||
Convertible Series Q Preferred Stock [Member] | ||||||
Debt conversion, converted instrument, shares issued | 7,126,000 | |||||
Series Z Preferred Stock [Member] | ||||||
Debt conversion, converted instrument, shares issued | 1,010,951 | |||||
Asset purchase agreement [Member] | ||||||
Cash paid as consideration | $ 4,120,791 | |||||
Common stock, shares issued | 633,348 | |||||
Common stock shares issued, value | $ 2,090,046 | |||||
Black Oak acquisition [Member] | ||||||
Purchase price of assets acquired | $ 51,489,665 | |||||
Closing price of common stock | $ 3.93 | |||||
Black Oak acquisition [Member] | Purchase price one [Member] | ||||||
Business acquisition purchase price, description | the issuance of approximately 78 shares of our Series Z Preferred Stock (or, upon conversion, 783,949 shares of our common stock), approximately 83,220 shares of our Series B Preferred Stock (or, upon conversion, 448,084 shares of our common stock), and approximately 246 shares of our Series Q Preferred Stock (or, upon conversion, 1,232,033 shares of our common stock), which collectively, were converted into 2,464,066 shares of our common stock (the Closing Consideration) | |||||
Black Oak acquisition [Member] | Purchase price two [Member] | ||||||
Business acquisition purchase price, description | the issuance of approximately 281 shares of our Series Z Preferred Stock (or, upon conversion, 2,806,553 shares of our common stock), approximately 297,925 shares of our Series B Preferred Stock (or, upon conversion, 1,604,124 shares of our common stock), and approximately 596 shares of our Series Q Preferred Stock (or, upon conversion, 2,981,520 shares of our common stock), which collectively, were converted into approximately 7,392,197 shares of our common stock (the Lockup Consideration) | |||||
Black Oak acquisition [Member] | Purchase price three [Member] | ||||||
Business acquisition purchase price, description | the issuance of approximately 185 shares of our Series Z Preferred Stock (or, upon conversion, 1,853,607 shares of our common stock), approximately 196,769 shares of our Series B Preferred Stock (or, upon conversion, 1,059,466 shares of our common stock), and approximately 583 shares of our Series Q Preferred Stock (or, upon conversion, 2,913,073 shares of our common stock), which collectively, were converted into approximately 5,826,147 shares of our common stock (the Holdback Consideration) | |||||
Black Oak acquisition [Member] | Purchase price four [Member] | ||||||
Business acquisition purchase price, description | the contingent cash consideration of up to $2,088,000 pursuant to certain earn-out provisions set forth in the Merger Agreement, payable to the Group B Shareholders (the Performance-Based Cash Consideration). | |||||
Therapeutics Medical [Member] | ||||||
Consideration for assets acquired | $ 1,250,000 | |||||
Replacement cost of finished goods | 58,622 | |||||
Issuance of convertible promissory note as purchase consideration | $ 1,250,000 | |||||
Convertible promissory note maturity date | Sep. 10, 2017 | |||||
Debt conversion description | Companys common stock at a conversion price equal to 90% of the average of the lowest three volume-weighted average prices of one share of common stock for the five consecutive trading days prior to the conversion date. | |||||
Debt conversion, converted instrument, shares issued | 189,193 | |||||
Weighted-average price per share | $ 6.60 | |||||
Therapeutics Medical [Member] | Trademarks [Member] | ||||||
Acquired of intangible assets | $ 300,000 | |||||
Therapeutics Medical [Member] | Trademarks [Member] | Minimum [Member] | ||||||
Finite lived intangible asset, useful life | 8 years | |||||
Therapeutics Medical [Member] | Trademarks [Member] | Maximum [Member] | ||||||
Finite lived intangible asset, useful life | 12 years | |||||
Therapeutics Medical [Member] | Customer Relationship [Member] | ||||||
Finite lived intangible asset, useful life | 5 years | |||||
Therapeutics Medical [Member] | Customer list [Member] | ||||||
Acquired of intangible assets | $ 888,300 | |||||
Therapeutics Medical [Member] | Patents [Member] | ||||||
Acquired of intangible assets | $ 3,078 | |||||
Escrow [Member] | ||||||
Common stock, shares issued | 192,758 | |||||
Common stock shares issued, value | $ 636,100 | |||||
Tech Center Drive [Member] | ||||||
Due from related parties | $ 316,363 |
NOTES RECEIVABLE (Details Narra
NOTES RECEIVABLE (Details Narrative) - USD ($) | Dec. 31, 2017 | Oct. 26, 2017 |
Notes receivable | $ 5,010,143 | |
NuLeaf [Member] | ||
Convertible loans | $ 4,500,000 | |
Interest rate per annum | 6.00% | |
Ownership percentage | 50.00% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Details | ||
Raw Materials | $ 1,450,273 | $ 486,119 |
Work-In-Progress | 1,016,596 | 570,145 |
Finished Goods | 3,293,150 | 853,066 |
Total Inventory | $ 5,760,019 | $ 1,909,330 |
PROPERTY, EQUIPMENT AND LEASE60
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET(Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Equipment and Leasehold Improvements, Gross | $ 23,608,176 | $ 13,019,639 |
Less Accumulated Depreciation | 4,416,560 | (2,554,875) |
Property, Equipment and Leasehold Improvements, Net | 19,191,616 | 10,464,764 |
Land and Building [Member] | ||
Property, Equipment and Leasehold Improvements, Gross | 9,047,201 | 1,454,124 |
Furniture and Equipment [Member] | ||
Property, Equipment and Leasehold Improvements, Gross | 3,553,587 | 3,141,244 |
Computer Hardware and Software [Member] | ||
Property, Equipment and Leasehold Improvements, Gross | 486,176 | 396,479 |
Leasehold Improvements [Member] | ||
Property, Equipment and Leasehold Improvements, Gross | 9,316,665 | 7,568,465 |
Construction in Progress [Member] | ||
Property, Equipment and Leasehold Improvements, Gross | $ 1,204,547 | $ 459,327 |
PROPERTY, EQUIPMENT AND LEASE61
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property Equipment And Leasehold Improvements Net Details Narrative | |||||||
Depreciation expense | $ 1,929,115 | $ 969,185 | $ 602,814 | ||||
Impairment of Property | $ 138,037 | $ (138,037) |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Gross Carrying Amount | $ 30,479,500 | $ 25,049,298 |
Accumulated Amortization | (2,706,390) | (1,422,200) |
Net carrying value | $ 22,453,110 | 23,627,098 |
Customer Relationships [Member] | Minimum [Member] | ||
Useful Life (in Years) | 5 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Useful Life (in Years) | 12 years | |
Management Service Agreement [Member] | ||
Useful Life (in Years) | 15 years | |
Amortized Intangible Assets [Member] | ||
Gross Carrying Amount | $ 25,159,500 | 19,729,298 |
Accumulated Amortization | (2,706,390) | (1,422,200) |
Net carrying value | 22,453,110 | 18,307,098 |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | ||
Gross Carrying Amount | 8,072,400 | 8,960,700 |
Accumulated Amortization | (1,345,191) | (780,960) |
Net carrying value | $ 6,727,209 | 8,179,740 |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | Minimum [Member] | ||
Useful Life (in Years) | 5 years | |
Amortized Intangible Assets [Member] | Customer Relationships [Member] | Maximum [Member] | ||
Useful Life (in Years) | 12 years | |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | ||
Gross Carrying Amount | $ 195,520 | 498,598 |
Accumulated Amortization | (77,448) | (91,061) |
Net carrying value | $ 118,072 | 407,537 |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | Minimum [Member] | ||
Useful Life (in Years) | 2 years | |
Amortized Intangible Assets [Member] | Trademarks and Patent [Member] | Maximum [Member] | ||
Useful Life (in Years) | 8 years | |
Amortized Intangible Assets [Member] | Dispensary License [Member] | ||
Gross Carrying Amount | $ 10,270,000 | 10,270,000 |
Accumulated Amortization | (1,283,751) | (550,179) |
Net carrying value | $ 8,986,249 | 9,719,821 |
Useful Life (in Years) | 14 years | |
Amortized Intangible Assets [Member] | Management Service Agreement [Member] | ||
Gross Carrying Amount | $ 6,621,580 | |
Accumulated Amortization | ||
Net carrying value | $ 6,621,580 | |
Useful Life (in Years) | 15 years | |
Non- Amortized Intangible Assets [Member] | ||
Gross Carrying Amount | $ 5,320,000 | 5,320,000 |
Accumulated Amortization | ||
Net carrying value | 5,320,000 | 5,320,000 |
Non- Amortized Intangible Assets [Member] | Trade Name [Member] | ||
Gross Carrying Amount | 5,320,000 | |
Accumulated Amortization | ||
Net carrying value | $ 5,320,000 | |
Estimated useful lives | Indefinite | |
Non- Amortized Intangible Assets [Member] | Trade Name [Member] | ||
Gross Carrying Amount | 5,320,000 | |
Accumulated Amortization | ||
Net carrying value | $ 5,320,000 |
INTANGIBLE ASSETS, NET (Detai63
INTANGIBLE ASSETS, NET (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Amortization expense | ||
2,018 | $ 1,882,563 | |
2,019 | 1,869,111 | |
2,020 | 1,869,111 | |
2,021 | 1,830,767 | |
2022 and thereafter | 15,001,558 | |
Estimate amortization expense, Net | $ 22,453,110 | $ 23,627,098 |
INTANGIBLE ASSETS, NET (Detai64
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amortization expense | $ 1,718,101 | $ 1,308,212 | $ 42,480 | |
Impairment charge | $ 757,467 | |||
Customer Relationships [Member] | ||||
Gross carrying amount removed | $ 888,300 | |||
Accumulated amortization removed | 310,905 | |||
Trademarks [Member] | ||||
Gross carrying amount removed | 303,078 | |||
Accumulated amortization removed | $ 123,006 |
ACCOUNTS PAYABLE AND ACCRUED 65
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable And Accrued Expenses Details | ||
Accounts payable | $ 2,308,844 | $ 1,986,907 |
Sales tax payable | 545,398 | 122,470 |
Accrued Interest Payable | 21,742 | 96,633 |
Accrued expenses | 2,568,726 | 211,390 |
Total Accounts Payable and Accrued Expenses | $ 5,444,710 | $ 2,417,400 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total Debt | $ 6,609,398 | $ 1,918,676 |
Less short-term portion | 564,324 | |
Long-term portion | 6,609,398 | 1,354,352 |
Unsecured Promissory Demand Note [Member] | ||
Total Debt | 64,324 | |
Convertible promissory note [Member] | ||
Total Debt | 500,000 | |
Convertible promissory note one [Member] | ||
Total Debt | 102,582 | |
Convertible promissory note Two [Member] | ||
Total Debt | 31,615 | |
Convertible promissory note Three [Member] | ||
Total Debt | 1,220,155 | |
Convertible promissory note four [Member] | ||
Total Debt | 640,010 | |
Convertible promissory note Five [Member] | ||
Total Debt | 1,469,388 | |
Ppromissory note Six [Member] | ||
Total Debt | $ 4,500,000 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total Debt | $ 6,609,398 | $ 1,354,352 |
2018 [Member] | ||
Total Debt | ||
2019 [Member] | ||
Total Debt | 2,109,398 | |
2020 [Member] | ||
Total Debt | 4,500,000 | |
Thereafter [Member] | ||
Total Debt |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes Payable Details 2 | |||
Fair market value of common stock issued upon conversion | $ 29,785,271 | $ 18,887,399 | $ 1,493,659 |
Principal amount of debt converted | (19,314,324) | (13,324,973) | (900,000) |
Accrued interest converted | (635,401) | (233,415) | (108,000) |
Fair value of derivative at conversion date | (14,223,550) | (10,361,100) | (374,600) |
Debt discount value at conversion date | 11,532,292 | 10,414,902 | 508,385 |
Loss on Extinguishment of Debt | $ 7,144,288 | $ 5,382,813 | $ 619,444 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Nov. 22, 2017 | Oct. 28, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 26, 2017 | Aug. 21, 2017 | Dec. 16, 2016 | Nov. 01, 2016 | Dec. 14, 2015 | |
Total debt | $ 6,609,398 | $ 1,918,676 | ||||||||
Unamortized debt discount | 4,790,601 | 4,295,648 | ||||||||
Accrued interest | 21,767 | 96,633 | ||||||||
Debt conversion, converted instrument, amount | (19,314,324) | (13,324,973) | $ (900,000) | |||||||
Cash paid for debt discount | $ (614,600) | |||||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||||
Common stock issued in conversion of debt | 8,284,283 | 3,778,581 | 3,776,369 | |||||||
Convertible promissory note [Member] | Securities Purchase Agreement [Member] | ||||||||||
Interest rate | 12.00% | |||||||||
Issuance of promissory note | 20,000,000 | |||||||||
Debt conversion, converted instrument, amount | $ 13,100,000 | |||||||||
Unamortized debt due discount amount | 6,900,000 | $ 4,790,602 | ||||||||
Cash paid for debt discount | $ (614,600) | |||||||||
Issuance of warrants | 478,000 | |||||||||
Description of conversion price | For each note issued under the Master Securities Purchase Agreement, the principal and interest due and owed under the note is convertible into shares of Common Stock at any time at the election of the holder at a conversion price per share equal to the lower of (i) the original conversion price as defined in each note issuance or (ii) 85% of the lowest daily volume weighted average price of the Common Stock in the fifteen (15) trading days prior to the conversion date (Conversion Price), which Conversion Price is subject to adjustment for (i) stock splits, stock dividends, combinations, or similar events and (ii) full ratchet anti-dilution protection. Upon certain events of default, the conversion price will automatically become 70% of the average of the three (3) lowest volume weighted average prices of the Common Stock in the twenty (20) consecutive trading days prior to the conversion date for so long as such event of default remains in effect. In addition, at any time that (i) the daily volume weighted average price of the Common Stock for the prior ten (10) consecutive trading days is $10.50 or more and (ii) the average daily trading value of the Common Stock is greater than $2,500,000 for the prior ten (10) consecutive trading days, then the Company may demand, upon one (1) days notice, that the holder convert the notes at the Conversion Price. The Company may prepay in cash any portion of the outstanding principal amount of the notes and any accrued and unpaid interest by, upon ten (10) days written notice to the holder, paying an amount equal to (i) 110% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is within 90 days of the issuance date of the notes; (ii) 115% of the sum of the then-outstanding principal amount of Note A plus accrued but unpaid interest, if the prepayment date is between 91 days and 180 days of the issuance date of the notes; or (iii) 125% of the sum of the then-outstanding principal amount of the notes plus accrued but unpaid interest, if the prepayment date is after 180 days of the issuance date of the notes. | |||||||||
Promissory Note [Member] | ||||||||||
Issuance of promissory note | 4,500,000 | |||||||||
Interest rate escalation description | The interest rate for the first year is 12.0% and increases 0.5% per year through 2020. | |||||||||
Debt instrument maturity date | Dec. 1, 2020 | |||||||||
Convertible promissory note Three [Member] | ||||||||||
Total debt | 1,220,155 | |||||||||
Interest rate | 12.00% | |||||||||
Conversion price | $ 4.05 | |||||||||
Convertible promissory note Two [Member] | ||||||||||
Total debt | 31,615 | |||||||||
Interest rate | 12.00% | |||||||||
Conversion price | $ 5.25 | |||||||||
Convertible promissory note [Member] | ||||||||||
Total debt | 500,000 | |||||||||
Interest rate | 1.00% | 12.00% | ||||||||
Conversion price | $ 1.82 | |||||||||
Conversion price description | The conversion price is 90% of the average of the lowest three (3) VWAPs for the five (5) consecutive trading days prior to the conversion date. | |||||||||
Unsecured Promissory Demand Note [Member] | ||||||||||
Total debt | 64,324 | |||||||||
Interest rate | 4.00% | |||||||||
Common stock, par value | $ 11.25 | |||||||||
Convertible promissory note four [Member] | ||||||||||
Total debt | $ 640,010 | |||||||||
Interest rate | 12.00% | |||||||||
Conversion price | $ 4.50 | |||||||||
Convertible promissory note Five [Member] | ||||||||||
Total debt | 1,469,388 | |||||||||
Interest rate | 12.00% | |||||||||
Conversion price | $ 4.50 | |||||||||
Ppromissory note Six [Member] | ||||||||||
Total debt | $ 4,500,000 | |||||||||
Interest rate escalation description | The promissory note bears interest at 12.0% for year one and escalates 0.5% per year thereafter up to 13.5% | |||||||||
Ppromissory note Six [Member] | Minimum [Member] | ||||||||||
Interest rate | 12.00% | |||||||||
Ppromissory note Six [Member] | Maximum [Member] | ||||||||||
Interest rate | 13.50% |
CONTINGENT CONSIDERATION LIAB70
CONTINGENT CONSIDERATION LIABILITY (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Therapeutics Medical Acquisition[Member] | |
Formula to calculate contingent consideration, description | One-Year Anniversary Date Revenue Probability Revenue-Based Payment Probability-Weighted Amounts $ 3,200,000 0.00 % $ 800,000 $ $ 2,000,000 0.50 % $ 200,000 1,000 $ 1,599,999 99.50 % $ Fair Value of Expected Earn-out Payment 1,000 Discount Rate 25 % Payments $ 0 Present Value Factor at 20% Discount Rate for 12 Months 0.9457 Present Value of Contingent Consideration S 946 |
CONTINGENT CONSIDERATION LIAB71
CONTINGENT CONSIDERATION LIABILITY (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Contingent Consideration Liability Details 1 | |
Formula to calculate performance based cash consideration, description | Year 1 Revenue $ 16,666,666 Less: 12,000,000 $ 4,666,666 0.44742864 Performance-Based Cash Payment $ 2,088,000 |
CONTINGENT CONSIDERATION LIAB72
CONTINGENT CONSIDERATION LIABILITY (Details 2) | 12 Months Ended |
Dec. 31, 2017 | |
Black Oak [Member] | |
Formula to calculate contingent consideration, description | One-Year Anniversary Value of Probability-Weighted Date of the Common Performance- Amounts Year 1 Merger 30- Stock to Based Cash Earn-Out Performance- Revenue Day VWAP Issue Payment Probability Shares Based Cash Total 20 % $ 15,788,827 $ 2,088,000 4 % $ 631,553 $ 83,520 $ 715,073 $ 0.2108 Upside 20 % 70 % $ 13,824,526 $ 2,088,000 14 % $ 1,935,434 $ 292,320 $ 2,227,754 $ 16,667,000 $ 0.3108 10 % $ 12,816,555 $ 2,088,000 2 % $ 256,331 $ 41,760 $ 298,091 $ 0.4108 20 % $ 11,867,575 $ 747,500 15 % $ 1,780,136 $ 112,125 $ 1,892,261 $ 0.2108 Base 75 % 70 % $ 11,164,938 $ 747,500 52.5 % $ 5,861,592 $ 392,438 $ 6,254,030 $ 13,670,835 $ 0.3108 10 % $ 10,804,383 $ 747,500 7.5 % $ 810,329 $ 56,063 $ 866,391 $ 0.4108 20 % $ 7,251,428 $ 1 % $ 72,514 $ $ 72,514 $ 0.2108 Downside 5 % 70 % $ 8,034,038 $ 3.5 % $ 281,191 $ $ 281,191 $ 10,674,670 $ 0.3108 10 % $ 8,435,630 $ 0.5 % $ 42,178 $ $ 42,178 $ 0.4108 Fair Value of Expected Earn-Out Payment $ 11,671,259 $ 978,225 $ 12,649,484 Price Per Common Share $ 3.93 $ 3.93 Discount Rate 20 % 20 % Periods (nper) 0.250 0.250 Payments $ $ Present Value Factor at 20% Discount Rate for 12 Months 0.9554 0.9554 Present Value of Contingent Consideration $ 11,151,221 $ 934,638 Present Value of Contingent Consideration $ 12,085,859 |
CONTINGENT CONSIDERATION LIAB73
CONTINGENT CONSIDERATION LIABILITY (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Change in Fair Value of Contingent Consideration | $ 4,991,571 | $ (4,991,571) | $ (4,991,571) | |||||||||||
Total Contingent Consideration, beginning | 12,085,859 | 12,085,859 | ||||||||||||
Total Contingent Consideration, ending | $ 12,085,859 | 12,085,859 | ||||||||||||
Black Oak [Member] | ||||||||||||||
Holdback Consideration Stock, beginning | 11,151,220 | 11,028,525 | $ 10,810,630 | $ 11,324,969 | 11,151,220 | |||||||||
Adjustments | 122,695 | 217,895 | (514,339) | |||||||||||
Holdback Consideration Stock, ending | 11,151,220 | 11,028,525 | 10,810,630 | 11,151,220 | ||||||||||
Performance-Based Cash, beginning | 934,638 | 1,627,215 | 1,496,252 | 1,429,583 | 934,638 | |||||||||
Adjustments | (692,577) | 130,963 | 66,669 | |||||||||||
Performance-Based Cash, ending | 934,638 | 1,627,215 | 1,496,252 | 934,638 | ||||||||||
Adjustment to Goodwill | (98,812) | [1] | (348,858) | [2] | 447,670 | [2] | ||||||||
Change in Fair Value of Contingent Consideration | 98,812 | |||||||||||||
Total Contingent Consideration, beginning | $ 12,085,858 | 12,655,740 | 12,306,882 | 12,754,553 | $ 12,085,858 | |||||||||
Adjustments | (569,882) | |||||||||||||
Total Contingent Consideration, ending | $ 12,085,858 | $ 12,655,740 | $ 12,306,882 | $ 12,085,858 | ||||||||||
[1] | (2) $98,812 is the combined adjustments to goodwill ($447,670 less $348,858) recorded to Change in Fair Value of Contingent Consideration at December 31, 2016. | |||||||||||||
[2] | (1) Changes in fair value of the Black Oak Contingent Consideration during the second and third quarter of 2016 (during measurement period) were taken to goodwill. Total adjustment was $98,812 which was recorded to the income statement at December 31, 2016. |
CONTINGENT CONSIDERATION LIAB74
CONTINGENT CONSIDERATION LIABILITY (Details 4) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Contingent Consideration Liability Details 1 | ||||
Contingent Consideration, beginning balance | $ 12,085,859 | $ 16,434,620 | $ 12,085,859 | |
Change in Fair Market Valuation of Contingent Consideration | 4,348,761 | 77,286 | ||
Contingent Consideration, ending balance | 16,434,620 | $ 12,085,859 | ||
Contingent Consideration Detail | ||||
Performance-Based Cash Contingent Consideration | 2,088,000 | |||
Market-Based Stock Contingent Consideration | 14,346,620 | |||
Total | $ 16,434,620 |
CONTINGENT CONSIDERATION LIAB75
CONTINGENT CONSIDERATION LIABILITY (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Contingent Consideration Liability Details 5 | ||||||||
Contingent Consideration, beginning balance | $ 12,085,859 | $ 16,434,620 | $ 12,085,859 | |||||
Change in Fair Market Valuation of Contingent Consideration | 4,348,761 | 77,286 | ||||||
Payment of Contingent Consideration in Cash | (2,088,000) | |||||||
Settlement of Contingent Consideration | (4,739,638) | (4,739,638) | ||||||
Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital | (4,692,697) | (4,692,697) | ||||||
Gain on Settlement of Contingent Consideration | $ 4,991,571 | (4,991,571) | (4,991,571) | |||||
Contingent Consideration, ending balance | $ 16,434,620 | $ 12,085,859 |
CONTINGENT CONSIDERATION LIAB76
CONTINGENT CONSIDERATION LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | ||||
Contingent Consideration liability | $ 12,085,859 | $ 12,085,859 | |||||||||||||
Gain on Settlement of Contingent Consideration Liability | $ 4,991,571 | $ (4,991,571) | (4,991,571) | ||||||||||||
Loss on Fair Market Valuation of Contingent Consideration | 4,426,047 | (668,694) | |||||||||||||
Contingent consideration, shares issued value | $ 4,789,638 | ||||||||||||||
Additional shares clawed-back, shares | 2,280,000 | 2,280,000 | 2,280,000 | ||||||||||||
Additional shares clawed-back, value | $ 9,684,268 | $ 9,684,268 | $ 9,684,268 | ||||||||||||
Market-Based Claw back associated with common stock | 2,340,000 | 2,340,000 | 2,340,000 | ||||||||||||
Additional shares clawed-back pursuant to disputes between the sellers | 34,200,000 | 34,200,000 | 34,200,000 | ||||||||||||
Black Oak [Member] | |||||||||||||||
Contingent Consideration liability | 12,085,858 | $ 12,655,740 | $ 12,306,882 | $ 12,085,858 | $ 12,754,553 | ||||||||||
Adjustment to Goodwill | (98,812) | [1] | (348,858) | [2] | 447,670 | [2] | |||||||||
Gain on Settlement of Contingent Consideration Liability | $ 98,812 | ||||||||||||||
April 1, 2016 (Acquisition Date) [Member] | |||||||||||||||
Contingent Consideration liability | $ 12,754,553 | $ 12,754,553 | $ 12,754,553 | ||||||||||||
April 1, 2017 (Acquisition Date) [Member] | |||||||||||||||
Final contingent consideration | $ 16,500,000 | ||||||||||||||
Contingent consideration, shares issued | 1,210,000 | ||||||||||||||
Contingent consideration, shares issued value | $ 4,700,000 | ||||||||||||||
Contingent consideration, cash payment | 2,100,000 | ||||||||||||||
Shares released from escrow, value | $ 14,400,000 | ||||||||||||||
Therapeutics Medical Acquisition[Member] | |||||||||||||||
Description of contingent consideration arrangements | In the acquisition of assets from Therapeutics Medical, the Company may be required to issue an additional Convertible Promissory Note to the seller based on the following calculation (the Therapeutics Contingent Consideration): (i) if the total revenue (Total Revenue) generated by the assets for the period beginning on April 1, 2016 and ending on March 31, 2017 (the Applicable Period) is greater than $1.6 million but less than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to 50% of the Total Revenue in excess of $1.6 million; or (ii) if the Total Revenue generated by the assets for the Applicable Period is greater than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to the sum of: (a) $800,000 (which equals 50% of the Total Revenue in excess of $1.6 million up to $3.2 million), plus (b) 25% of the Total Revenue for the Applicable Period in excess of $3.2 million. | ||||||||||||||
Contingent Consideration liability | 4,000 | 4,000 | $ 4,000 | ||||||||||||
Present value of contingent consideration liability | 3,200 | 3,200 | $ 3,200 | ||||||||||||
Description for likelihood of payouts related to contingent consideration | In determining the likelihood of payouts related to the Therapeutics Contingent Consideration, the probabilities for various scenarios ( e g | ||||||||||||||
Black Oak acquisition [Member] | |||||||||||||||
Contingent Consideration liability | 12,754,553 | 12,754,553 | $ 12,754,553 | ||||||||||||
Description for likelihood of payouts related to contingent consideration | In determining the likelihood of payouts related to the Black Oak Contingent Consideration, the probabilities for various scenarios ( e g | ||||||||||||||
Expected contingent consideration liability | 15,305,463 | 15,305,463 | $ 15,305,463 | ||||||||||||
Black Oak acquisition [Member] | Holdback Consideration [Member] | |||||||||||||||
Description for determination of market-based claw back amount | The Market-Based Clawback Amount is determined as follows: a) If the Terra Tech Common Stock 30-day VWAP on the one-year anniversary date of the Merger Agreement exceeds the Terra Tech Closing Price, the Market-Based Clawback Amount shall mean the number of shares of Terra Tech Common Stock equal to (i) (A) $4,912,000 divided by (B) the Terra Tech Closing Price, less (ii) (A) $4,912,000 divided by (B) the Terra Tech Common Stock 30-day VWAP on such date. b) If the Terra Tech Common Stock 30-day VWAP on the one-year anniversary date of the Merger Agreement is less than or equal to the Terra Tech Closing Price, the Market-Based Clawback Amount shall be zero shares. In no event will the Market-Based Clawback Amount exceed 50% of the Holdback Consideration. | ||||||||||||||
Description for determination of performance-based claw back amount | The Performance-Based Clawback Amount is determined as follows: a) The Lower Threshold means an amount equal to $11,979,351, and the Upper Threshold means an amount equal to $16,667,000. b) If Black Oaks operating revenues for the 12-month period following the closing date of the Black Oak merger (the Year 1 Revenue) is less than the Lower Threshold, then the Performance-Based Clawback Amount will be the number of shares obtained from a quotient, (A) the numerator of which is equal to the sum of (1) $4,912,000, plus (2) the product of 1.5 multiplied by the difference between the Lower Threshold and the Year 1 Revenue, and (B) the denominator of which is the Terra Tech common stock 30-day VWAP as of the one-year anniversary date of the closing of the Black Oak merger. c) If the Year 1 Revenue is greater than or equal to the Lower Threshold but is less than the Upper Threshold, then the Performance-Based Clawback Amount will be the number of shares obtained from a quotient, (A) the numerator of which is equal to the product of 1.053 multiplied by the difference between the Upper Threshold and the Year 1 Revenue, and (B) the denominator of which is the Terra Tech common stock 30-day VWAP as of the one-year anniversary date of the closing of the Black Oak merger. d) If the Year 1 Revenue is greater than or equal to the Upper Threshold, then the Performance-Based Clawback Amount will be zero shares. | ||||||||||||||
Black Oak acquisition [Member] | Performance-Based Cash Consideration [Member] | |||||||||||||||
Due date description | To be paid on approximately the one-year anniversary date of the closing of the Black Oak merger | ||||||||||||||
Description for determination of performance-based cash consideration | Pursuant to the Merger Agreement, the Group B Shareholders may receive cash consideration of up to approximately $2,088,000 to be paid on approximately the one-year anniversary date of the closing of the Black Oak merger, to be determined as follows: a) $0 if Year 1 Revenue is less than or equal to $12,000,000; and b) the product obtained by multiplying 0.447 times Year 1 Revenue if Year 1 Revenue is greater than $12,000,000; provided, that in no event will the Performance-Based Cash Consideration amount exceed $2,088,000. For example, pursuant to the above formula, if the revenue in Year 1 equals $16,666,666, then the Performance-Based Cash Consideration would be $2,088,000. | ||||||||||||||
Black Oak acquisition [Member] | Performance-Based Cash Consideration [Member] | Maximum [Member] | |||||||||||||||
Cash consideration payable | $ 2,088,000 | $ 2,088,000 | $ 2,088,000 | ||||||||||||
[1] | (2) $98,812 is the combined adjustments to goodwill ($447,670 less $348,858) recorded to Change in Fair Value of Contingent Consideration at December 31, 2016. | ||||||||||||||
[2] | (1) Changes in fair value of the Black Oak Contingent Consideration during the second and third quarter of 2016 (during measurement period) were taken to goodwill. Total adjustment was $98,812 which was recorded to the income statement at December 31, 2016. |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Derivative liability - Conversion Feature | $ 9,331,400 | $ 6,987,000 |
Liability Contingent Consideration | 12,085,859 | |
Fair value of financial liabilities | 9,331,400 | 19,072,859 |
Fair Value Measurement Using, Level 1 [Member] | ||
Derivative liability - Conversion Feature | ||
Liability Contingent Consideration | ||
Fair value of financial liabilities | ||
Fair Value Measurement Using, Level 2 [Member] | ||
Derivative liability - Conversion Feature | ||
Liability Contingent Consideration | ||
Fair value of financial liabilities | ||
Fair Value Measurement Using, Level 3 [Member] | ||
Derivative liability - Conversion Feature | 9,331,400 | 6,987,000 |
Liability Contingent Consideration | 12,085,859 | |
Fair value of financial liabilities | $ 9,331,400 | $ 19,072,859 |
FAIR VALUE MEASUREMENTS (Deta78
FAIR VALUE MEASUREMENTS (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Measurements Details 1 | ||||||||||
Liabilities measured at fair value Beginning Balance | $ 6,987,000 | $ 743,400 | $ 6,987,000 | $ 743,400 | ||||||
Change in fair market value of Conversion Feature | $ 4,616,600 | $ 1,475,900 | $ (987,200) | $ (1,610,750) | $ 1,248,800 | $ (771,000) | $ 206,000 | $ 1,160,700 | 3,494,550 | 501,700 |
Issuance of Equity Instruments with Debt Greater Than Debt Carrying Amount | 1,487,500 | |||||||||
Derivative debt converted into equity | (14,223,550) | (14,232,100) | ||||||||
Issuance of equity instruments with derivatives | 13,073,400 | 18,486,500 | ||||||||
Liabilities measured at fair value Ending Balance | $ 9,331,400 | $ 6,987,000 | $ 9,331,400 | $ 6,987,000 |
FAIR VALUE MEASUREMENTS (Deta79
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements Details 2 | ||||||||
Contingent Consideration, beginning balance | $ 12,085,859 | $ 16,434,620 | $ 12,085,859 | |||||
Purchase of Black Oak Gallery | 12,754,553 | |||||||
Change in fair market value of contingent conversion Feature | 4,426,047 | (668,694) | ||||||
Payment of Contingent Consideration in Cash | (2,088,000) | |||||||
Settlement of Contingent Consideration | (4,739,638) | (4,739,638) | ||||||
Settlement of Contingent Consideration Recorded Against Additional Paid-In Capital | (4,692,697) | (4,692,697) | ||||||
Gain on Settlement of Contingent Consideration Liability | $ 4,991,571 | (4,991,571) | (4,991,571) | |||||
Contingent Consideration, ending balance | $ 16,434,620 | $ 12,085,859 |
FAIR VALUE MEASUREMENTS (Deta80
FAIR VALUE MEASUREMENTS (Details 3) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Price | $ 5.85 | ||
Annual Dividend Yield | |||
Expected Life (Years) | 5 years | 5 years | |
Risk-Free Interest Rate | 1.87% | 2.50% | 2.50% |
Expected Volatility | 126.14% | 138.00% | |
Minimum [Member] | |||
Stock Price | $ 2.25 | $ 4.35 | $ 1.35 |
Conversion and Exercise Price | $ 1.80 | $ 3.30 | $ 1.05 |
Expected Life (Years) | 5 months 16 days | 1 year 6 months | 1 year |
Risk-Free Interest Rate | 1.04% | ||
Expected Volatility | 43.80% | 120.30% | 98.35% |
Maximum [Member] | |||
Stock Price | $ 5.85 | $ 7.35 | $ 3.30 |
Conversion and Exercise Price | $ 6.60 | $ 7.50 | $ 2.40 |
Expected Life (Years) | 3 years 5 months 1 day | 4 years | 4 years |
Risk-Free Interest Rate | 2.50% | ||
Expected Volatility | 123.56% | 144.03% | 148.71% |
TAX EXPENSE (Details)
TAX EXPENSE (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||||||
Federal | $ (343,943) | ||||||
State | (3,512) | ||||||
Total | (347,455) | ||||||
Deferred: | |||||||
Federal | 44,000 | ||||||
State | |||||||
Total | 44,000 | ||||||
Total (Benefit) Expense for Income Taxes | $ (791,300) | $ 410,300 | $ 381,000 | $ (347,455) | $ 44,000 |
TAX EXPENSE (Details 1)
TAX EXPENSE (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Tax Expense Details 1 | |||||||
Expected Income Tax Benefit at Statutory Tax Rate, Net | $ (13,456,000) | $ (9,469,000) | $ (3,694,000) | ||||
Non-Deductible Items | 1,263,000 | 368,000 | |||||
Warrants Expense | 871,000 | 4,186,000 | 1,196,000 | ||||
Derivatives Expense | 4,104,000 | 4,067,000 | (545,000) | ||||
Net Operating Losses | 2,667,000 | ||||||
Impairment of Property and Intangibles | 365,000 | ||||||
Other | 1,033,545 | ||||||
Change in Valuation Allowance | 6,735,000 | (47,000) | 52,000 | ||||
Reported Income (Benefit) Tax Expense | $ (791,300) | $ 410,300 | $ 381,000 | $ (347,455) | $ 44,000 |
TAX EXPENSE (Details 3)
TAX EXPENSE (Details 3) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Income Tax Assets: | ||
Net Operating Losses | $ 8,023,000 | $ 15,242,000 |
Deferred Income Tax Assets | 8,023,000 | 15,242,000 |
Deferred Income Tax Liabilities: | ||
Depreciation | (850,000) | (1,334,000) |
Total | 7,173,000 | 13,908,000 |
Valuation Allowance | 7,173,000 | (13,908,000) |
Net Deferred Tax |
TAX EXPENSE (Details Narrative)
TAX EXPENSE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net operating loss carry forwards | $ 26,333,000 | $ 34,940,000 |
Net operating loss carry forwards expiring year | 2,034 | |
Minimum [Member] | ||
Federal tax rate reduction | 21.00% | |
Maximum [Member] | ||
Federal tax rate reduction | 35.00% |
EQUITY (Details Narrative)
EQUITY (Details Narrative) | 1 Months Ended | 12 Months Ended | |
Mar. 29, 2016$ / sharesshares | Dec. 31, 2017Number$ / sharesshares | Dec. 31, 2016$ / sharesshares | |
Preferred stock, Par value | $ / shares | $ 0.001 | ||
Preferred stock, Authorized | 50,000,000 | ||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | |
Common stock, Authorized | 990,000,000 | 990,000,000 | |
Common stock, Issued | 61,818,560 | 36,924,254 | |
Common stock, Outstanding | 61,818,560 | 36,924,254 | |
Common Stock | |||
Conversion of shares | 5,000 | ||
Series B Preferred Stock [Member] | |||
Number of votes | Number | 100 | ||
Common stock conversion basis | 1-for-5.384325537 | ||
Conversion of shares | 1,857 | ||
Preferred stock, Par value | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock, Authorized | 49,999,900 | 49,999,900 | |
Preferred stock, Issued | 0 | 2,455,064 | |
Preferred stock, Outstanding | 0 | 2,455,064 | |
Convertible Series A Preferred Stock [Member] | |||
Preferred stock, Par value | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock, Authorized | 100 | 100 | |
Preferred stock, Issued | 8 | 8 | |
Preferred stock, Outstanding | 8 | 8 | |
Convertible Series Q Preferred Stock [Member] | |||
liquidation preference per share | $ / shares | $ 0.001 | ||
Preferred stock, Authorized | 21,600 | ||
Series Z Preferred Stock [Member] | |||
liquidation preference per share | $ / shares | $ 10 | ||
Preferred stock, Authorized | 8,300 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - 2016 Equity Incentive Plan [Member] | Dec. 31, 2017shares |
Awards Reserved for Issuance | 30,000,000 |
Awards Issued | 1,177,732 |
Awards Available for Grant | 28,822,268 |
STOCK-BASED COMPENSATION (Det87
STOCK-BASED COMPENSATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Options/Warrants outstanding - beginning balance | 446,667 | |
Options granted | 731,065 | 446,667 |
Options forfeited | ||
Options exercised | ||
Options Expired | ||
Options/Warrants outstanding - ending balance | 1,177,732 | 446,667 |
Options exercisable | 491,035 | |
Weighted average exercise price | ||
Options/Warrants outstanding - beginning balance | $ 1.35 | |
Options granted | 2.68 | 1.35 |
Options forfeited | ||
Options exercised | ||
Options Expired | ||
Options/Warrants outstanding - ending balance | 2.17 | $ 1.35 |
Options exercisable | $ 1.90 | |
Weighted average remaining contracted term | ||
Options outstanding - ending balance | 8 years 1 month 2 days | |
Options exercisable | 8 years 22 days | |
Aggregate intrinsic value | ||
Options outstanding - ending balance | $ 4,330,481 | |
Options exercisable | $ 1,940,491 |
STOCK-BASED COMPENSATION (Det88
STOCK-BASED COMPENSATION (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Expected term (years) | 5 years | 5 years |
Volatility | 121.62% | |
Risk-Free Interest Rate | 2.50% | |
Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Volatility | 117.30% | |
Risk-Free Interest Rate | 2.00% | |
Maximum [Member] | ||
Volatility | 120.90% | |
Risk-Free Interest Rate | 2.40% |
STOCK-BASED COMPENSATION (Det89
STOCK-BASED COMPENSATION (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares or Options Granted | 214,915 | 802,122 |
Stock-Based Compensation Expense | $ 3,725,792 | $ 5,382,060 |
Stock Option [Member] | ||
Number of Shares or Options Granted | 731,065 | 446,667 |
Stock-Based Compensation Expense | $ 692,971 | $ 190,355 |
Employees (Common Stock) [Member] | ||
Number of Shares or Options Granted | 158,867 | |
Stock-Based Compensation Expense | $ 490,880 | |
Employees (Series B Preferred Stock) [Member] | ||
Number of Shares or Options Granted | 40,000 | 430,113 |
Stock-Based Compensation Expense | $ 1,035,406 | $ 2,451,220 |
Directors (Common Stock) [Member] | ||
Number of Shares or Options Granted | 81,061 | 71,381 |
Stock-Based Compensation Expense | $ 221,973 | $ 334,424 |
Non-Employee Consultants (Common Stock) [Member] | ||
Number of Shares or Options Granted | 389,374 | 422,971 |
Stock-Based Compensation Expense | $ 1,284,562 | $ 2,406,061 |
STOCK-BASED COMPENSATION (Det90
STOCK-BASED COMPENSATION (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / shares | |
Stock-based Compensation Details Narrative | |
Closing stock price | $ / shares | $ 5.85 |
Unrecognized stock-based compensation | $ | $ 1,547,443 |
Weighted-average period | 2 years 7 days |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares | ||
Options/Warrants outstanding - beginning balance | 446,667 | |
Warrants exercised | ||
Warrants granted | 214,915 | 802,122 |
Options/Warrants outstanding - ending balance | 1,177,732 | 446,667 |
Weighted Average Exercise Price | ||
Options/Warrants outstanding - beginning balance | $ 1.35 | |
Warrants exercised | ||
Warrants granted | 2.68 | 1.35 |
Options/Warrants outstanding - ending balance | $ 2.17 | $ 1.35 |
Warrant [Member] | ||
Shares | ||
Options/Warrants outstanding - beginning balance | 1,055,761 | 2,161,734 |
Warrants exercised | (1,873,206) | |
Warrants granted | 214,915 | 802,122 |
Warrants expired | (79,309) | (34,889) |
Options/Warrants outstanding - ending balance | 1,191,367 | 1,055,761 |
Weighted Average Exercise Price | ||
Options/Warrants outstanding - beginning balance | $ 2.85 | $ 2.7 |
Warrants exercised | 2.55 | |
Warrants granted | 2.79 | 3.45 |
Warrants expired | 3.34 | 6.75 |
Options/Warrants outstanding - ending balance | $ 0.19 | $ 2.85 |
WARRANTS (Details 1)
WARRANTS (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warrant [Member] | ||
Weighted average exercise price of warrants granted | $ 4.50 | |
Weighted average fair value of warrants granted | 3.75 | |
Warrant One [Member] | ||
Weighted average exercise price of warrants granted | 2.79 | 4.35 |
Weighted average fair value of warrants granted | $ 3.20 | $ 4.80 |
WARRANTS (Details 2)
WARRANTS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2015 | |
Number of warrants Outstanding at December 31, 2017 | $ 1,191,367 | |
Exercise Price Range One [Member] | ||
Range of Exercise Prices | $ 0.9 | |
Number of warrants Outstanding at December 31, 2017 | $ 304,467 | |
Average Remaining Contractual Life | 9 months | |
Weighted Average Exercise Price | $ 0.9 | |
Exercise Price Range Two [Member] | ||
Range of Exercise Prices | $ 0.99 | |
Number of warrants Outstanding at December 31, 2017 | $ 16,629 | |
Average Remaining Contractual Life | 36 months | |
Weighted Average Exercise Price | $ 0.99 | |
Exercise Price Range Three [Member] | ||
Range of Exercise Prices | $ 1.82 | |
Number of warrants Outstanding at December 31, 2017 | $ 61,932 | |
Average Remaining Contractual Life | 16 months | |
Weighted Average Exercise Price | $ 1.82 | |
Exercise Price Range Four [Member] | ||
Range of Exercise Prices | $ 1.95 | |
Number of warrants Outstanding at December 31, 2017 | $ 57,559 | |
Average Remaining Contractual Life | 15 months | |
Weighted Average Exercise Price | $ 1.95 | |
Exercise Price Range Five [Member] | ||
Range of Exercise Prices | $ 2.04 | |
Number of warrants Outstanding at December 31, 2017 | $ 44,053 | |
Average Remaining Contractual Life | 55 months | |
Weighted Average Exercise Price | $ 2.04 | |
Exercise Price Range Six [Member] | ||
Range of Exercise Prices | $ 2.06 | |
Number of warrants Outstanding at December 31, 2017 | $ 105,263 | |
Average Remaining Contractual Life | 6 months | |
Weighted Average Exercise Price | $ 2.06 | |
Exercise Price Range Seven [Member] | ||
Range of Exercise Prices | $ 2.4 | |
Number of warrants Outstanding at December 31, 2017 | $ 111,759 | |
Average Remaining Contractual Life | 37 months | |
Weighted Average Exercise Price | $ 2.4 | |
Exercise Price Range Eight [Member] | ||
Range of Exercise Prices | $ 2.91 | |
Number of warrants Outstanding at December 31, 2017 | $ 56,760 | |
Average Remaining Contractual Life | 60 months | |
Weighted Average Exercise Price | $ 2.91 | |
Exercise Price Range Nine [Member] | ||
Range of Exercise Prices | $ 3.09 | |
Number of warrants Outstanding at December 31, 2017 | $ 26,711 | |
Average Remaining Contractual Life | 6 months | |
Weighted Average Exercise Price | $ 3.09 | |
Exercise Price Range Ten [Member] | ||
Range of Exercise Prices | $ 3.12 | |
Number of warrants Outstanding at December 31, 2017 | $ 52,834 | |
Average Remaining Contractual Life | 56 months | |
Weighted Average Exercise Price | $ 3.12 | |
Exercise Price Range Eleven [Member] | ||
Range of Exercise Prices | $ 3.74 | |
Number of warrants Outstanding at December 31, 2017 | $ 24,048 | |
Average Remaining Contractual Life | 50 months | |
Weighted Average Exercise Price | $ 3.74 | |
Exercise Price Range Twelve [Member] | ||
Range of Exercise Prices | $ 4.05 | |
Number of warrants Outstanding at December 31, 2017 | $ 37,037 | |
Average Remaining Contractual Life | 48 months | |
Weighted Average Exercise Price | $ 4.05 | |
Exercise Price Range Thirteen [Member] | ||
Range of Exercise Prices | $ 5.25 | |
Number of warrants Outstanding at December 31, 2017 | $ 170,190 | |
Average Remaining Contractual Life | 40 months | |
Weighted Average Exercise Price | $ 5.25 | |
Exercise Price Range Fourteen [Member] | ||
Range of Exercise Prices | $ 5.55 | |
Number of warrants Outstanding at December 31, 2017 | $ 11,905 | |
Average Remaining Contractual Life | 33 months | |
Weighted Average Exercise Price | $ 5.55 | |
Exercise Price Range Fifteen [Member] | ||
Range of Exercise Prices | $ 6.15 | |
Number of warrants Outstanding at December 31, 2017 | $ 29,268 | |
Average Remaining Contractual Life | 47 months | |
Weighted Average Exercise Price | $ 6.15 | |
Exercise Price Range Sixteen [Member] | ||
Range of Exercise Prices | $ 6.6 | |
Number of warrants Outstanding at December 31, 2017 | $ 80,952 | |
Average Remaining Contractual Life | 32 months | |
Weighted Average Exercise Price | $ 6.6 |
WARRANTS (Details 3)
WARRANTS (Details 3) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Price on Date of Grant | $ 5.85 | ||
Volatility | 126.14% | 138.00% | |
Term | 5 years | 5 years | |
Risk-Free Interest Rate | 1.87% | 2.50% | 2.50% |
Warrant [Member] | |||
Stock Price on Date of Grant | $ 4.15 | $ 4.80 | |
Exercise Price | $ 2.79 | $ 4.50 | |
Volatility | 126.14% | 138.00% | |
Term | 5 years | 5 years | |
Risk-Free Interest Rate | 1.87% | 1.24% | |
Expected Dividend Rate | 0.00% | 0.00% |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants Details | |||
Warrants Issued with Common Stock and Debt | $ 211,534 | $ 467,066 | $ 1,148,069 |
Warrants Issued for Debt Discount | $ 478,008 |
COMMITMENTS AND CONTINGENCIES96
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2017USD ($) |
Year Ending December 31: | |
2,018 | $ 1,580,306 |
2,019 | 1,476,267 |
2,020 | 1,412,252 |
2,021 | 1,394,609 |
2,022 | 1,065,985 |
2023 and Thereafter | 2,894,828 |
Total Future Minimum Lease Payments | $ 9,824,247 |
COMMITMENTS AND CONTINGENCIES97
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2017 | May 23, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net rent expense | $ 1,383,033 | $ 515,413 | $ 501,449 | ||
Operating Leases, Indemnification Agreements, Description | The lease agreement requires monthly payments of $30,000 for eight months and is also renewable for up to three additional terms of one year each. | ||||
Production Operating Agreement [Member] | |||||
Common stock shares issued, value | $ 1,150,000 | ||||
Production Operating Agreement [Member] | Panther Gap Farms [Member] | |||||
Common stock shares issued, value | $ 785,500 | ||||
Cash received due to common stock | $ 100,000 |
SELECTED QUARTERLY FINANCIAL 98
SELECTED QUARTERLY FINANCIAL DATA (Unaudited) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Data Details | ||||||||||||
Total Revenues | $ 11,012,140 | $ 10,121,375 | $ 7,842,873 | $ 6,824,456 | $ 7,129,322 | $ 6,950,365 | $ 9,699,909 | $ 1,548,167 | $ 35,800,844 | $ 25,327,763 | $ 9,975,346 | |
Gross Profit | 1,276,699 | 2,334,938 | 1,506,373 | 359,063 | (530,621) | 1,319,386 | 1,649,944 | 133,974 | 5,477,073 | 2,572,683 | 1,016,871 | |
Loss from operations | (5,426,695) | (3,903,172) | (4,522,914) | (6,027,237) | (7,731,540) | (4,686,560) | (3,817,377) | (1,912,374) | (19,880,018) | (18,147,851) | (8,816,775) | |
Amortization of debt discount | (522,424) | (490,068) | (515,654) | (610,616) | (491,581) | (610,089) | (218,126) | (94,406) | (2,138,762) | (1,414,202) | (696,180) | |
Impairment of Property | (138,037) | 138,037 | ||||||||||
Impairment of Intangibles | (757,467) | |||||||||||
Loss on Extinguishment of Debt | (3,092,155) | (1,373,538) | (1,639,137) | (1,039,458) | (4,462,016) | (920,797) | ||||||
(Loss) Gain on Fair Market Valuation of Derivatives | (4,616,600) | (1,475,900) | 987,200 | 1,610,750 | (1,248,800) | 771,000 | (206,000) | (1,160,700) | (3,494,550) | (501,700) | ||
Interest Expense, Net | (134,671) | (119,650) | (130,510) | (157,833) | (101,156) | (159,633) | (60,565) | (55,995) | (542,664) | (377,349) | (469,576) | |
Gain on Settlement of Contingent Consideration | 4,991,571 | $ (4,991,571) | (4,991,571) | |||||||||
(Loss) Gain on Fair Market Valuation of Contingent Consideration | (77,286) | (4,348,761) | 668,694 | (1,487,500) | (561,000) | |||||||
Provision (Benefit) for Income Taxes | (791,300) | 410,300 | 381,000 | (347,455) | 44,000 | |||||||
Net Loss Attributable to Terra Tech Corp. | $ (14,318,913) | $ (7,792,933) | $ (453,769) | $ (10,111,988) | $ (12,270,829) | $ (5,587,759) | $ (4,934,238) | $ (4,126,064) | $ (32,677,603) | $ (26,918,890) | $ (9,225,580) | |
Net Loss Per Common Share Attributable to Terra Tech Corp. Common Stockholders – Basic and Diluted | $ (0.24) | $ (0.16) | $ (0.01) | $ (0.27) | $ (0.35) | $ (0.24) | $ (0.21) | $ (0.19) | $ (0.71) | $ (1.04) | $ (0.58) | |
High | 5.85 | 4.35 | 4.35 | 5.1 | 8.4 | 7.65 | 11.25 | 6.3 | ||||
Low | $ 2.7 | $ 3 | $ 2.1 | $ 3.75 | $ 3.3 | $ 4.05 | $ 3.3 | $ 1.35 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total Revenues | $ 11,012,140 | $ 10,121,375 | $ 7,842,873 | $ 6,824,456 | $ 7,129,322 | $ 6,950,365 | $ 9,699,909 | $ 1,548,167 | $ 35,800,844 | $ 25,327,763 | $ 9,975,346 | |
Cost of Goods Sold | 30,323,771 | 22,755,080 | 8,958,475 | |||||||||
Gross Profit | 1,276,699 | 2,334,938 | 1,506,373 | 359,063 | (530,621) | 1,319,386 | 1,649,944 | 133,974 | 5,477,073 | 2,572,683 | 1,016,871 | |
Selling, general and administrative expenses | 25,357,091 | 20,720,534 | 9,833,646 | |||||||||
Loss from operations | (5,426,695) | (3,903,172) | (4,522,914) | (6,027,237) | (7,731,540) | (4,686,560) | (3,817,377) | (1,912,374) | (19,880,018) | (18,147,851) | (8,816,775) | |
Other Income Expense: | ||||||||||||
Amortization of debt discount | (522,424) | (490,068) | (515,654) | (610,616) | (491,581) | (610,089) | (218,126) | (94,406) | (2,138,762) | (1,414,202) | (696,180) | |
Impairment of Property | (138,037) | 138,037 | ||||||||||
Impairment of Intangibles | (757,467) | |||||||||||
(Loss) Gain on Extinguishment of Debt | (3,092,155) | (1,373,538) | (1,639,137) | (1,039,458) | (4,462,016) | (920,797) | ||||||
Loss on Fair Market Valuation of Derivatives | (4,616,600) | (1,475,900) | 987,200 | 1,610,750 | (1,248,800) | 771,000 | (206,000) | (1,160,700) | (3,494,550) | (501,700) | ||
Interest (Expense) Income | (134,671) | (119,650) | (130,510) | (157,833) | (101,156) | (159,633) | (60,565) | (55,995) | (542,664) | (377,349) | (469,576) | |
Gain on Settlement of Contingent Consideration | 4,991,571 | $ (4,991,571) | (4,991,571) | |||||||||
(Loss) Gain on Fair Market Valuation of Contingent Consideration | $ (77,286) | $ (4,348,761) | $ 668,694 | (1,487,500) | (561,000) | |||||||
Total Other Income (Expense) | (13,650,244) | (9,837,670) | (546,100) | |||||||||
Loss Before Provision for Income Taxes | (33,530,262) | (27,985,521) | (9,362,875) | |||||||||
Herbs and Produce Products [Member] | ||||||||||||
Total Revenues | 5,701,233 | 12,000,423 | 8,633,538 | |||||||||
Cost of Goods Sold | 5,211,658 | 11,021,449 | 7,771,039 | |||||||||
Gross Profit | 489,575 | 978,974 | 862,499 | |||||||||
Selling, general and administrative expenses | 3,123,037 | 2,520,061 | 1,910,375 | |||||||||
Loss from operations | (2,633,462) | (1,541,087) | (1,047,876) | |||||||||
Other Income Expense: | ||||||||||||
Amortization of debt discount | ||||||||||||
Impairment of Property | ||||||||||||
Impairment of Intangibles | (757,467) | |||||||||||
(Loss) Gain on Extinguishment of Debt | (18) | |||||||||||
Loss on Fair Market Valuation of Derivatives | ||||||||||||
Loss from Derivatives Issued with Debt Greater than Debt Carrying Value | ||||||||||||
Interest (Expense) Income | ||||||||||||
Gain on Settlement of Contingent Consideration | ||||||||||||
Total Other Income (Expense) | (757,485) | |||||||||||
Loss Before Provision for Income Taxes | (3,390,947) | (1,541,087) | (1,047,876) | |||||||||
Total assets | 5,847,286 | 7,064,697 | 5,383,659 | |||||||||
Cannabis Dispensary Cultivation and Production [Member] | ||||||||||||
Total Revenues | 30,031,046 | 13,207,327 | 1,207,424 | |||||||||
Cost of Goods Sold | 25,112,113 | 11,664,737 | 1,078,852 | |||||||||
Gross Profit | 4,918,933 | 1,542,590 | 128,572 | |||||||||
Selling, general and administrative expenses | 10,843,210 | 5,729,884 | 763,728 | |||||||||
Loss from operations | (5,924,277) | (4,187,294) | (635,156) | |||||||||
Other Income Expense: | ||||||||||||
Amortization of debt discount | ||||||||||||
Impairment of Property | ||||||||||||
Impairment of Intangibles | ||||||||||||
(Loss) Gain on Extinguishment of Debt | 187 | |||||||||||
Loss on Fair Market Valuation of Derivatives | ||||||||||||
Loss from Derivatives Issued with Debt Greater than Debt Carrying Value | (4,426,047) | |||||||||||
Interest (Expense) Income | 110 | |||||||||||
Gain on Settlement of Contingent Consideration | 4,991,571 | |||||||||||
Total Other Income (Expense) | 565,821 | |||||||||||
Loss Before Provision for Income Taxes | (5,358,456) | (4,187,294) | (635,156) | |||||||||
Total assets | 69,844,546 | 12,516,441 | 1,671,966 | |||||||||
Eliminations And Other [Member] | ||||||||||||
Total Revenues | 68,565 | 120,013 | 134,384 | |||||||||
Cost of Goods Sold | 68,894 | 108,584 | ||||||||||
Gross Profit | 68,565 | 51,119 | 25,800 | |||||||||
Selling, general and administrative expenses | 11,390,844 | 12,470,589 | 7,159,543 | |||||||||
Loss from operations | (11,322,279) | (12,419,470) | (7,133,743) | |||||||||
Other Income Expense: | ||||||||||||
Amortization of debt discount | (2,138,762) | (1,414,202) | (696,180) | |||||||||
Impairment of Property | (138,037) | |||||||||||
Impairment of Intangibles | ||||||||||||
(Loss) Gain on Extinguishment of Debt | (7,144,457) | (5,382,813) | (619,444) | |||||||||
Loss on Fair Market Valuation of Derivatives | (3,494,550) | (1,844,500) | 1,800,100 | |||||||||
Loss from Derivatives Issued with Debt Greater than Debt Carrying Value | (1,487,500) | (561,000) | ||||||||||
Interest (Expense) Income | (542,774) | (377,349) | (469,576) | |||||||||
Gain on Settlement of Contingent Consideration | ||||||||||||
(Loss) Gain on Fair Market Valuation of Contingent Consideration | 668,694 | |||||||||||
Total Other Income (Expense) | (13,458,580) | (9,837,670) | (546,100) | |||||||||
Loss Before Provision for Income Taxes | (24,780,859) | (22,257,140) | (7,679,843) | |||||||||
Total assets | 22,495,967 | 56,597,592 | 2,109,414 | |||||||||
Segment Information [Member] | ||||||||||||
Total Revenues | 35,800,844 | 25,327,763 | 9,975,346 | |||||||||
Cost of Goods Sold | 30,323,771 | 22,755,080 | 8,958,475 | |||||||||
Gross Profit | 5,477,073 | 2,572,683 | 1,016,871 | |||||||||
Selling, general and administrative expenses | 25,357,091 | 20,720,534 | 9,833,646 | |||||||||
Loss from operations | (19,880,018) | (18,147,851) | (8,816,775) | |||||||||
Other Income Expense: | ||||||||||||
Amortization of debt discount | (2,138,762) | (1,414,202) | (696,180) | |||||||||
Impairment of Property | (138,037) | |||||||||||
Impairment of Intangibles | (757,467) | |||||||||||
(Loss) Gain on Extinguishment of Debt | (7,144,288) | (5,382,813) | (619,444) | |||||||||
Loss on Fair Market Valuation of Derivatives | (3,494,550) | (1,844,500) | 1,800,100 | |||||||||
Loss from Derivatives Issued with Debt Greater than Debt Carrying Value | (4,426,047) | (1,487,500) | (561,000) | |||||||||
Interest (Expense) Income | (542,664) | (377,349) | (469,576) | |||||||||
Gain on Settlement of Contingent Consideration | 4,991,571 | |||||||||||
(Loss) Gain on Fair Market Valuation of Contingent Consideration | 668,694 | |||||||||||
Total Other Income (Expense) | (13,650,244) | (9,837,670) | (546,100) | |||||||||
Loss Before Provision for Income Taxes | (33,530,262) | (27,985,521) | (9,362,875) | |||||||||
Total assets | $ 98,187,799 | $ 76,178,730 | $ 9,165,039 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jun. 01, 2017 | Jun. 09, 2016 | Nov. 02, 2015 | Nov. 15, 2017 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Proceeds from issuance of common stock | $ 9,450,000 | $ 4,058,134 | $ 3,975,888 | |||||
Common Stock outstanding beneficial owners description | Beneficial owners of more than 5% of our outstanding Common Stock or their family members, | |||||||
Average of total assets description | The lesser of $120,000 or 1% of the average of our total assets at year-end for the last completed fiscal year. | |||||||
Net sales | $ 7,649,125 | $ 6,166,927 | ||||||
Black Oak acquisition [Member] | ||||||||
Raw material purchase | $ 16,076 | |||||||
Whitetown Realty, LLC [Member] | ||||||||
Lease commenced period | The lease commenced on January 1, 2015 and expires December 31, 2029. | |||||||
Lease monthly rent amount | $ 14,640 | |||||||
Increases monthly rent percentage | 1.50% | |||||||
Mr. Krueger [Member] | Independent Director Agreement [Member] | ||||||||
Restricted common stock shares issued | 23,333 | |||||||
Proceeds from issuance of common stock | $ 60,550 | |||||||
Alan Gladstone [Member] | Independent Director Agreement [Member] | ||||||||
Restricted common stock shares issued | 29,167 | |||||||
Proceeds from lease amount (per month) | $ 6,250 | |||||||
Steven J. Ross [Member] | Independent Director Agreement [Member] | ||||||||
Restricted common stock shares issued | 72,727 | 48,048 | ||||||
Proceeds from lease amount (per month) | $ 10,000 | $ 8,333 | ||||||
Chief Executive Officer [Member] | Black Oak acquisition [Member] | ||||||||
Ownership interest | 12.00% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Mar. 12, 2018 | Dec. 06, 2017 | Mar. 16, 2018 | Jan. 18, 2018 | Dec. 31, 2017 |
Common stock for cash, shares | 9,500,206 | ||||
Dyer [Member] | |||||
Assets purchase price | $ 11,000,000 | ||||
Subsequent Event [Member] | |||||
Reverse stock split | 1-for-15 | ||||
Subsequent Event [Member] | Accredited Investor [Member] | |||||
Interest rate | 7.50% | 12.00% | |||
Convertible note | $ 5,000,000 | $ 5,000,000 | |||
Convertible note maturity date | Sep. 30, 2019 | Jul. 31, 2019 | |||
Line of credit amount | $ 40,000,000 | ||||
Common stock for cash, amount | $ 750,000 | ||||
Common stock for cash, shares | 160,450 | ||||
Subsequent Event [Member] | Convertible promissory notes [Member] | |||||
Converted common stock, amount | $ 9,400,000 | ||||
Converted common stock, shares | 3,141,005 | ||||
Subsequent Event [Member] | Accrued Interest [Member] | |||||
Converted common stock, amount | $ 84,613 | ||||
Subsequent Event [Member] | DirectorsAndExecutives [Member] | |||||
Options granted shared issued | 800,000 | ||||
Options vested period | 3 years | ||||
Subsequent Event [Member] | Loan Agreement [Member] | |||||
Default penalty percentage | 130.00% | ||||
Loan from related party | $ 6,500,000 | ||||
Term of loan maturity period description | The loan is collateralized by the real property. The Loan matures on the three-year anniversary of the closing date (January 18, 2018); provided that the Company may extend the maturity date by 12 months by delivering a notice to the lender at least 30 days before the stated maturity date. The Loan bears interest at the rate of 12% during the first 12 months, 12.5% during the second 12 months, 13% during the third 12 months, and 13.5% during any extension. The Company prepaid the first three (3) months of interest on the Loan and additional interest payments are due on the first day of each month starting on the fourth month after the Closing Date. |