Annual report pursuant to Section 13 and 15(d)

CONTINGENT CONSIDERATION LIABILITY (Details Narrative)

v3.8.0.1
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., a greater than 98% probability that the minimum amount of Therapeutics Contingent Consideration will not be payable), as well as the discount rate used in the Company’s calculations, were based on internal projections, all of which were vetted by the Company’s senior management

      
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., a 75% probability that the maximum amount of Black Oak Contingent Consideration will be payable), as well as the discount rate used in the Company’s calculations were based on internal projections, all of which were vetted by the Company’s senior management

      
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 Oak’s 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.