Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

v3.19.3
DISCONTINUED OPERATIONS
9 Months Ended
Sep. 30, 2019
DISCONTINUED OPERATIONS  
NOTE 15. DISCONTINUED OPERATIONS

On May 8, 2019, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy, LLC (the “Purchaser”) pursuant to which the Company agreed to sell and the Purchaser agreed to purchase substantially all of the assets of the Company related to the Company’s dispensary located at 1130 East Desert Inn Road, Las Vegas, NV 89109 (the “Business”). The aggregate consideration to be paid for the Business is $10.00 million, of which $7.20 million is cash (the “Purchase Price”). A portion of the Purchase Price is payable by the Purchaser pursuant to a 12 month Secured Promissory Note with a principal amount of $2.80 million (the “Note”). The Note is secured by all the assets sold pursuant to the Purchase Agreement. In conjunction with the Note, Purchaser and the Company entered in to a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement. The transaction is subject to approval by the Nevada Department of Taxation and is expected to close promptly following receipt of such approval.

 

On May 13, 2019, MediFarm LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with a non-affiliated third party (the “Purchaser”) pursuant to which the Company agreed to sell and the Purchaser agreed to purchase substantially all of the assets of the Company related to the Company’s dispensary located at 3650 S. Decatur Blvd., Las Vegas, NV 89103 (the “Business”). The aggregate consideration to be paid for the Business is $11.00 million, of which $7.00 million is cash and $4.00 million is shares convertible into the Purchaser’s publicly-traded securities. The transaction is subject to approval by the Nevada Department of Taxation, and other customary closing conditions, and is expected to close promptly following receipt of such approval and satisfaction of all conditions to close.

 

On August 19, 2019, MediFarm I LLC, a wholly-owned subsidiary of Terra Tech Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Picksy Reno, LLC (the “Purchaser”) pursuant to which the Company agreed to sell and the Purchaser agreed to purchase substantially all of the assets of the Company related to the Company’s dispensary located at 1085 S Virginia St Suite A, Reno, NV 89502 (the “Business”). The aggregate consideration to be paid for the Business is $13.50 million, of which $9.30 million is cash (the “Purchase Price”). A portion of the Purchase Price is payable by the Purchaser pursuant to a 12 month Secured Promissory Note with a principal amount of $4.20 million (the “Note”). The Note is secured by all the assets sold pursuant to the Purchase Agreement. In conjunction with the Note, Purchaser and the Company entered into a Security Agreement granting the Company a security interest in all the assets sold pursuant to the Purchase Agreement.

 

As of September 30, 2019, Management classified a real estate asset held in California as available-for-sale, as it met the criteria of ASC 360-10-45-9.

 

During the third quarter of fiscal year 2019, Management concluded that the pending sales of our Nevada dispensaries and expected sale of real estate in California represented a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, Management determined the results of these components qualified for discontinued operations presentation in accordance with ASC 205, “Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity.”

 

Operating results for the discontinued operations were comprised of the following:

 

 

(in thousands)

 

(in thousands)

 

Three Months ended September 30,

 

Nine Months ended September 30,

 

2019

 

2018

 

2019

 

2018

 

Total revenues

 

$

4,154

 

$

3,790

 

$

11,701

 

$

10,936

 

Cost of goods sold

 

1,996

 

1,910

 

5,663

 

5,728

 

Gross profit

 

2,158

 

1,880

 

6,038

 

5,208

 

Selling, general and administrative expenses

 

1,394

 

1,737

 

4,312

 

5,400

 

Income (Loss) from operations

 

$

764

 

$

143

 

$

1,726

 

$

(192

)

 

Other income (expense)

 

(130

)

 

(137

)

 

(444

)

 

(387

)

 

Income (Loss) from discontinued operations

 

$

634

 

$

6

 

$

1,282

 

$

(579

)

 

Income (Loss) from discontinued operations per common share attributable to Terra Tech Corp common stockholders - basic and diluted

 

$

0.01

 

$

0.00

 

$

0.02

 

$

(0.00

)

 

The carrying amounts of the major classes of assets and liabilities for the discontinued operations are as follows:

 

 

(in thousands)

 

September 30,

2019

 

December 31,

2018

 

Accounts receivable, net

 

$

186

 

48

 

Inventory

 

844

 

1,235

 

Prepaid expenses and other assets

 

58

 

83

 

Property, equipment and leasehold improvements, net

 

8,406

 

10,396

 

Other assets

 

621

 

4

 

Assets of discontinued operations

 

$

10,115

 

$

11,766

 

Accounts payable and accrued expenses

 

$

3,248

 

$

690

 

Other long term liabilities

 

-

 

-

 

Liabilities of discontinued operations

 

$

3,248

 

$

690