Derek Peterson ( one of his cover up fake names) may love pot--in addition to his work with TRTC, he co-owns a dispensary called Blum Oakland--but he's not a stoner. He likes to say he "worked on Wall Street," and indeed he spent a decade in the financial industry, though not in New York City. Now about 38 years old, his experience was with several well-known securities firms in the Los Angeles area.
Puzzlingly, FINRA Broker check says he's not currently registered as a broker, though in the "employment history" part of the report it's noted that he's worked for Monarch Bay Securities since November 2012. He doesn't mention Monarch Bay in the biography that appears in TRTC's most recent 10-K, and isn't named as a member of the Monarch Bay "team," so it's not clear whether he's still associated with them or not.
Peterson's employment history, from Broker Check
Peterson's file has only one disclosure event: he was fired by Morgan Stanley Smith Barney in December 2010 because, as he says, "I was managing an outside business in the agricultural industry and did not disclose it to my broker dealer." On 11 June, he complained at length to a Small Cap Voice interviewer about recent criticism of the company and himself.
One question that had been raised was his at least occasional use of the last name "Oppedisano." He pointed out that his surname is Peterson, and always had been, but that before he was born, his father had changed his own name from Oppedisano to Peterson. Derek is, he says, "in the process" of changing his name to Oppedisano, so that his children can have "some sort of understanding of their heritage." How long does it take to change a name? Four years?
Interestingly, he was using Oppedisano back in 2010, when he failed to disclose his "outside business" to Morgan Stanley. As far as can be known, he hasn't used it since. The SCV interviewer didn't press him about any of this; but then they're promoters, and it's their job to agree with the CEOs who pay them.
Peterson's wife Amy Almsteier, a former interior designer, is also involved with Terra Tech. In addition to being a 37 percent owner of the company, she serves as secretary, treasurer and director. TRTC does have a CFO as well, Michael James. Another director, Michael Nahass, is a registered rep. According to Broker Check, he, like Peterson, worked for Morgan Stanley a few years ago; perhaps the two met there. Nahass is currently employed by Arque Capital Ltd., an Arizona company with an office in Irvine, California.
Nahass and Peterson have something else in common: both declared bankruptcy not long ago; Nahass in 2011, evidently as a result of gambling debts, and Peterson in 2012, for other reasons.
Financing efforts
TRTC has so far enjoyed no financial success. Though, as intended, Edible Garden provides some revenues, losses are significant: $6 million, or $0.06 per share, in fiscal 2013. The first quarter of 2014 showed no improvement. Net loss for Q1 alone was $4.9 million, or $0.03 per share. The company's supporters contend that you have to spend money to make money, and that Terra Tech is laying the groundwork for a glorious future.
Certainly it's true that the marijuana industry is new, and that the companies entering the sector must start from scratch, since until recently cultivating, processing, and selling weed for either medicinal or recreational purposes was illegal in most states, and still is in many. Building an infrastructure while dealing with strict state regulations and prohibitions on interstate commerce is costly.
No one knows which of today's infant pot companies will succeed, or are indeed legitimate, though TRTC's many passionate fans are sure their company--and stock--will come through with flying colors. They aren't concerned with earnings, or even revenues, at this point. They approve of Peterson's business plan, and are convinced their seedling will flower into a robust plant. Early this year, Peterson told the Wall Street Journal that he wanted to build a greenhouse for the cultivation of pot "in every major city." He also wants to develop his own branded marijuana strains.
All that will obviously require a great deal of financing. Like nearly every penny stock company, TRTC has a good deal of convertible debt. One creditor is Hanover Holdings, which is part of Joshua Sason's Magna Group. They consider themselves to be venture capitalists; most penny stock observers correctly think of them as toxic financiers.
In April 2013, Terra Tech entered into a stock purchase agreement with Hanover. Hanover committed to purchase $5 million of the company's stock over a 36-month period. The shares would be priced at $0.165, which was approximately what they were trading for in the open market at the time. The deal included registration rights for the stock to be issued. Accordingly, on 9 May 2013, the company filed an S-1 to register the stock to be issued to Hanover from time to time, and to register stock underlying debentures issued to four other investors in a separate transaction.
The SEC was not at all happy with the registration statement. A reviewer from the Division of Corporation Finance sent Peterson a brief letter saying in part: "… You have not included the consent of your auditor, as required by Item 16 of Form S-1 and Regulation S-K Item 601(b)(23). For this reason, we will not perform a detailed examination of the registration statement and we will not issue comments because to do so would delay the review of other disclosure documents that do not appear to contain comparable deficiencies."
Additional problems triggered additional correspondence, and the filing went through seven amendments. It was finally deemed effective on 30 September 2013. By that time, TRTC had reduced the number of shares to be sold to Hanover to 10.1 million, all of which were purchased by year's end.
It seems the reason for the reduction in the number of shares Hanover was willing to buy was a decline in the price of Terra Tech's stock. By October 2013 it was trading between $0.07 and $0.08, and so would have to double for Hanover to break even on its investment. They must have had some faith in Peterson and the company, though, because they agreed to sign up for another round of financing at a stock price more favorable to them. On 28 October, a new S-1 was filed, registering another 19 million shares to be sold to Hanover at $0.07 a share. The intent of the original share purchase agreement had not changed: Hanover was still to buy $5 million worth of TRTC's stock.
By the time the registration statement was deemed effective on 24 January 2014, the stock was trading at $0.38 and on its way to $1.42, courtesy of email and social media promotions. This gave Hanover a shot at a tidy profit.
It is not known how much of that stock Hanover has bought and sold; no mention of it or its purchases appears in the company's 10-Q for the first quarter of 2014. Terra Tech did raise $5.77 million from financing activities in that quarter, however, and notes that it needs to "continue to raise funds to cover working capital requirements until we are able to raise revenues to a point of positive cash flow."
Licenses, critics, and evil short sellers
Part of Peterson's strategy is to try to get into the marijuana business in Nevada on the ground floor. With that in mind, on 19 March 2014 he formed a Nevada company called MediFarm, LLC, which is currently a non-operating subsidiary of TRTC. Nevada legalized medical maryjane in 2013, and in March of this year final regulations for the administration and control of the program were approved by the state legislature.
For the rest of his phone chat with SCV, Peterson tried to clear up some of what he saw as inaccurate information about himself and his company. Among other things, he claimed he did not use promoters to sell TRTC's stock. Never! he said. He was interested in hiring reputable investor relations firms, of course. And TRTC does, according to its OTCMarkets profile page, have an IR firm called Porter, LeVay and Rose. But what, then, is Small Cap Voice? We think of them as a promoter; they take money to say nice things about penny stocks. Can Peterson not see that?
The SCV interviewer self-righteously noted that they have no monetary interest in pumping stocks, because they're paid in restricted shares. He neglected to mention that they're also paid in cash, and that they send email blasts to subscribers and "manage investor awareness campaigns." They've been working for Terra Tech on and off since January 2013."
