MassRoots Archives - Green Market Report

Video StaffVideo StaffApril 20, 2018

5min14400

Happy 4/20 everyone. It’s the day the cannabis industry likes to celebrate as their special holiday. It’s become a huge business deal for the industry.

A recent study done by LeafLink predicts that this 4/20 will be the first ever to have retail sales top $1B, even reaching as high as $1.2B, based on their wholesale marketplace figures. According to Flowhub, in 2017, total sales of cannabis by consumers on 4/20 represented a 44 percent increase from an average Thursday and 30 percent more than an average Friday.

The big news this week had to do with biotech company GW Pharmaceuticals. The company received very positive comments from the FDA. That left many market watchers with the feeling that the FDA will ultimately approve GW’s drug epidiolex for pharmaceutical sales in the U.S. While some believe this means that marijuana would immediately be removed from the controlled substances list. Think again. That still has to be done by Congress. However, it’s hard to argue that marijuana has no medicinal purposes, which is part of the schedule 1 designation if you can get a legal prescription for it.

Green Bits, headquartered in San Jose, announced it has raised a $17 million Series A funding round, led by Tiger Global, the New York-based investment firm, along with participation by Snoop Dogg’s Casa Verde Capital.

Medicine Man Technologies (MDCL) announced today the preliminary financial results for the quarter The company reported approximately $1.2 million in revenue for the quarter, a 122% increase over the same quarter last year and representing the fifth consecutive quarter of revenue growth.

Ontario-based Aphria Inc. (APHQF) reported that its revenues for the third quarter ending February 28 were C$10.2 million versus last year’ C$5.1 million for the same time period, an increase of 100%. Revenue increased 20% sequentially from C$8.5 million.

MassRoots filed its annual report on Tuesday but didn’t get around to the company’s financials in the filing until page 24. Gross revenue for the year fell 54% to $319,242, while the net losses ballooned 146% to $44 million. In all of this mess, CEO Isaac Dietrich awarded himself a bonus of $190,659 on top of his salary of $96,971. While Mr. Dietrich’s monthly salary was decreased from 2016, his total compensation jumped from $107,917 in 2016 to $287,630 in 2017.

Lots of acquisitions to report…..

MPX Bioceutical Corporation  (MPXEF)  signed a letter of intent to acquire all the issued and outstanding shares of private company Canveda Inc., a Licensed Producer under Health Canada’s Access to Cannabis.

CannaRoyalty  is buying FloraCal Farms (“FloraCal”), a licensed ultra-premium craft cannabis producer located in Sonoma County, California for US$1 million and 3,million + CannaRoyalty shares

Livewell Foods Canada announced that it entered into a C$10 million private placement deal.

Civilized Worldwide Inc. announced that it executed a strategic investment and collaboration agreement with Canopy Rivers Corporation where they will invest C$5 million in Civilized via a convertible debenture and the companies will work together on various online, media and event mandates relating to the cannabis industry.


Debra BorchardtDebra BorchardtApril 19, 2018
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5min9952

Cannabis social media, blockchain, seed-to-sale company MassRoots (MSRT) had an unarguably tumultuous year in 2017. The founder Issac Dietrich lost control of the company he created, only to wrestle it back and replace the board with friendlier members. Dietrich immediately embarked on a strategy to get the company righted and in doing so awarded himself a hefty bonus even as the company reported extreme losses.

MassRoots filed its annual report on Tuesday but didn’t get around to the company’s financials in the filing until page 24. Gross revenue for the year fell 54% to $319,242, while the net losses ballooned 146% to $44 million. The net loss per share for 2017 was 46 cents. The company said in its filing that the “Decline is primarily related to prior management’s decision to make MassRoots’ dispensary finder, its main source of revenue, free for dispensaries to use with the goal of getting them to upgrade to premium features, which did not materialize.”

Payroll and related expenses increased $991,528 to $3,104,407 during fiscal year 2017 from $2,112,879 during fiscal year 2016. MassRoots said that the increase was mainly a result of added personnel in 2017. However, the company actually slashed personnel and currently only has five full-time employees, two part-time and one full-time independent contractor. MassRoots also hasn’t paid its taxes. The company has payroll tax liabilities of approximately $1,599,489. However, the company did settle with its previous landlord following an eviction. That settlement was $145,000 and the company is now using a WeWork space.

MassRoots is dependent on the sale of stock to fund its operations and the company said in its filing that it has does not have sufficient capital to become cash-flow positive from operations. “We expect to need to raise additional funds to continue to fund operations.”

The Bonus

In all of this mess, CEO Isaac Dietrich awarded himself a bonus of $190,659 on top of his salary of $96,971. While Mr. Dietrich’s monthly salary was decreased from 2016, his total compensation jumped from $107,917 in 2016 to $287,630 in 2017. Of course, every CEO is entitled to compensation for their hard work and numerous hours. The optics of a hefty bonus as the company’s revenues plunge don’t look good.

In addition to that, the company said it has been on a travel whirlwind attending over 50 conferences during 2017 and racking up expenses of $718,693 over 2016’s travel expenses of $188,723. That’s $14,373 per conference. That is outrageous. While there are certainly numerous cannabis and blockchain conferences to attend; 50 conferences in one year is almost one per week. Granted some of this travel could be related to meeting new investors, however, the filing states that it was conference attendance. Yes, conference booths can be expensive to set up and run, along with flights and hotels. Still, in light of the board struggles that occurred during the year how was MassRoots still managing to attend 50 conferences a year?

Stronger Competition

All of this spending is occurring as the company tries to figure out what it is. It is part social media, part dispensary finder, and part blockchain. MassRoots believes users will come to it for dispensary information versus WeedMaps or Leafly because of its social component. However, with consumers becoming more concerned about privacy issues that could be a disadvantage. Plus, Leafly and WeedMaps are well-funded established players in the space.

MassRoots also faces competition on its seed-to-sale retail plans from more entrenched companies like MJ Freeway and BioTrack THC. Both have greater resources from a financial and marketing standpoint. The filing didn’t mention Metrc as a competitor, which is probably gaining the most traction of all in this space. MassRoots is also trying to enter the point-of-sale retail space, where it too faces a competitive environment with much stronger players.

Shareholders

The stock was lately trading at 28 cents, down from its 52-week high of $8.25. Many investors have jumped ship, but some still remain and the stock has moved higher from trading at 22 cents in early April.


William SumnerWilliam SumnerApril 4, 2018
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3min7980

The cannabis technology company, MassRoots (MSRT), today reaffirmed its commitment to being compliant with California state law by announcing that it would only list state-licensed cannabis dispensaries on its platform.

Over the next few weeks, the company intends to launch an updated version of its business portal and dispensary finder. In order to become listed on MassRoots, cannabis dispensaries will have to pay the company a minimum of $199 a month.

The announcement comes in the wake of the controversy surrounding MassRoots competitor, Weedmaps. Last month, Weedmaps received a cease-and-desist letter from the California Bureau of Cannabis Control (BCC) demanding that the company stop listing unlicensed dispensaries on its platform.

Defying the bureau’s request, Weedmaps responded by saying that the bureau does not have the authority to regulate it and that the site “interactive computer service” covered under the federal Communications Decency Act, which protects technology companies from prosecution over any illicit activities performed on their platform.

Weedmaps also argued they by not listing unlicensed dispensaries, the state is merely ignoring the underlying regulatory issues as to why those dispensaries are unlicensed in the first place. Nevertheless, other competitors, such as Leafly and now MassRoots, have announced that they would no longer list illegal dispensaries. So far, the state has not taken any action against Weedmaps but that hardly means that the fight is yet over.

“We believe that operating in full compliance with state cannabis regulations is crucial to creating long-term, sustainable shareholder value and building confidence with consumers as well as local, state and federal regulatory organizations,” said MassRoots CEO, Isaac Dietrich, in a statement. “Other services that continue to drive traffic to unlicensed dispensaries are punishing businesses that have invested significant time and resources to gain compliance with state regulations. We view this as an opportunity to build long-term relationships with compliant dispensaries that we believe are the future of the cannabis industry.”


Debra BorchardtDebra BorchardtFebruary 2, 2018
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3min14031

After burning through nearly $20 million, MassRoots (MSRT) has managed to raise another $4.75 million according to CEO Isaac Dietrich in a conference call held on Thursday for investors. and fully repay capital debt. Dietrich also said that he hopes to get the company to become cash flow positive this year. “We have a significant runway,” said Dietrich.

On the call, Dietrich added that the company has reduced its employee count to five and its burn rate to $200,000 a month. The company has moved its offices to a WeWork space after it was reported that it had been evicted from its Denver offices.

Dietrich did address the 800-pound gorilla in the room and discussed his ouster and the change in board members. He noted the new board is supportive of the move to blockchain technology.

Mostly he discussed the blockchain technology that MassRoots is now focused on. He wants to use this technology for seed-to-sale processing and identity management The company hopes to introduce a business portal blockchain product in the few weeks that will track analytics. The company has not announced plans for a cryptocurrency.

MassRoots currently has several hundred dispensaries that pay a couple hundred of dollars a month for services. He hopes to grow that to $500. The goal is to increase dispensaries to 1,000. He noted that he has a large market share of cannabis consumers on the internet through the social media site and has strong SEO traffic.

CannaRegs is the main focus for the California market. Dietrich said MassRoots has invested $300,000 in the company and that it has been the best investment. He said they have a strong relationship with the team. “We’re excited to continue to see their growth,” he said. Dietrich also noted that the company is an investor in High Times and that he is excited to continue to work with them.

MassRoots is exploring the possibility of a Canadian stock offering. Dietrich said that Aphria (APHQF) had invested in MassRoots over the past 18 months. He said the company was interested in learning how consumers were reacting to products and adding MassRoots clients to its patient database.

 


Debra BorchardtDebra BorchardtDecember 29, 2017
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4min96965

MassRoots, Inc. (MSRT) has formed MassRoots Blockchain Technologies, Inc., a wholly-owned subsidiary of MassRoots, Inc. dedicated to developing blockchain-based solutions for the cannabis industry. 

We believe blockchain has the potential to enable the cannabis industry to operate more efficiently and with a greater degree of accountability and transparency,” stated MassRoots Chief Executive Officer Isaac Dietrich. “MassRoots looks forward to being a pioneer in exploring blockchain-based solutions for the multi-billion dollar cannabis industry.”

It’s a big move from Dietrich, who just recently regained control of the company he founded following a messy boardroom coup. Dietrich has been on a mission to keep MassRoots alive amid a failed acquisition of CannaRegs that triggered his ouster. He was able to gain shareholder support to get his old job back as CEO and may even resurrect the CannaRegs deal. Part of his strategy to save the company was to pivot from the original goal of becoming a social media giant like Facebook (FB) to becoming a software, tech brand for the cannabis industry.

The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value,” according to Dan and Alex Tapscott in the Blockchain Revolution (2016). MassRoots stated in its press release that the most well-known application of blockchain technology has been cryptocurrencies, which have grown to a market valued at more than $600 billion, according to CoinMarketCap.com.

MassRoots has made cryptocurrency transactions over the past year and has turned a profit on the investment. Entering the blockchain space is another way for the company to shift more towards becoming a cannabis software brand.

Plans For Blockchain In The Cannabis Industry

The company believes that blockchain will be useful in improving seed-to-sale traceability and will explore that with its new point-of-sale system called MassRoots Retail. This system was formerly known as Odava, a company acquired from the CEO Scott Kveton who orchestrated the boardroom coup.

MassRoots will also look into using blockchain to improve supply chain contracts. The idea is that with these smart contracts, dispensaries would be able to automatically order more product when the inventory is low for that product.

It could also eliminate third parties in various transactions and create a peer-to-peer system. MassRoots also believes that blockchain has the potential to streamline social network data while eliminating the security risk. The company said in its statement, “This would enable advertisers to better target consumers, reduce the risk of security breaches, and enable the development of solutions that better serve the MassRoots community.”

MassRoots Blockchain is also “exploring how distributed-ledger technology can be applied to proxy voting and giving MassRoots’ shareholders a greater degree of transparency and communication.” Clearly, Dietrich is inspired as a result of his experience in rallying shareholders to his side in his CEO battle. 

More information is available at www.MassRootsBlockchain.com.


Debra BorchardtDebra BorchardtDecember 13, 2017
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4min26460

MassRoots (MSRT) founder Isaac Dietrich has regained control of the company he founded. Dietrich spoke to Green Market Report minutes ago to confirm that the company filed an 8K with the Securities and Exchange Commission.

The filing states that the current Chief Executive Officer Scott Kveton has resigned, along with the board members that only recently forced Dietrich to resign. Dietrich has installed his choices as new board members.

“Scott will have no role in MassRoots going forward,” said Dietrich. “I’m excited to get back to work for the shareholders.”

How Dietrich Lost The Company

The drama began a few months back when Dietrich announced he was acquiring the legal company CannaRegs for $12 million. He named CannaRegs CEO Amanda Ostrowitz as the new MassRoots President amid rumors swirling that she would eventually take over the role of CEO. Instead, the board grumbled about the price being paid for CannaRegs, even though the deal was immediately accretive and began taking steps for a boardroom coup.

In October, Kveton approached Dietrich with unsavory details of the leader’s behavior and suggested he resign or the allegations would be made public. Dietrich did so and the CannaRegs deal was called off.

Dietrich Fights Back 

Dietrich though wasn’t ready to walk away. He began making waves publicly and this triggered Kveton to file a lawsuit alleging illegal drug use and improper sexual behavior in the workplace. Rather than back down, Dietrich rallied shareholders to his side.

Over the past week, Dietrich approached the board and demonstrated that he had 70% of the shareholders willing to vote in his favor and remove the current board.  Once the negotiations were settled and the dust cleared, Dietrich got the company back. He also noted that the lawsuit against Dietrich has been withdrawn.

What This Means For CannaRegs

Dietrich said Ostrowitz has a great business in CannaRegs. “She has been crushing it on her own,” he said. “If she’s interested we’d love to have her company. MassRoots investment in CannaRegs was one of the best we’ve ever made. It would pay off immediately.”

It’s certainly been a rollercoaster year for Ostrowitz. She had to defend the price being offered for her company after the deal was announced. Rather than bask in the joy of the acquisition, she was immediately forced to defend the deal. After weeks of defending the price being offered for CannaRegs, she learned of the board coup while on vacation in Italy. That’s when she pulled out and continued to sign more and more new clients to her company.

 

 

MassRoots Shareholders

MassRoots shareholders have suffered tremendously this year. The stock plunged from a 52-week high of $8.25 to a low of 12 cents. It was lately trading at 31 cents. The loss of the charismatic Dietrich and the immediately accretive CannaRegs acquisition soured investors on the company’s prospects. The drama of the battling CEO’s also spooked shareholders that were wanting stability at the company.

Now, the onus is on Dietrich to bring value back to the shareholders and convince them that they weren’t wrong to reinstate him as CEO.


Debra BorchardtDebra BorchardtNovember 21, 2017
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6min14051

Another day, another chapter in the saga of MassRoots (MSRT). Yesterday the Company filed a lawsuit against the former Chief Executive Officer Isaac Dietrich and Dietrich promptly retaliated. One can only feel sorry for these beleaguered shareholders – granted there aren’t that many left.

MJ Biz Daily posted a copy of the lawsuit filed by MassRoots against Dietrich that claimed he had used illegal drugs at the office and engaged in improper sexual activities at the workplace. If that wasn’t enough, the company also claimed that Dietrich misappropriated company funds to the tune of $250,000.

Dietrich was not about to be outdone. He’s a company founder who still owns 17 million shares of the company, has filed with the Securities and Exchange Commission a formal request for a shareholder vote. He wants to remove three shareholders and replace them with his board picks. The board members he’d like to toss include Vincent “Tripp” Keber, the CEO and Co-founder of Dixie Brands, Terri Fitch, the CEO and Co-founder of Drink Teck and Ean Seeb, the co-founder of Denver Relief Consulting.

Instead, he’d like to bring in people he was introduced to by another shareholder that don’t have any cannabis industry experience. Former QS Energy executives Nathan Shelton and Charles Blum and Rightscorp. CEO Cecil Kyte. Dietrich feels that the company is best run by its founder and that he should be reinstalled as CEO.

The Back Story

So, how did the “Facebook of Cannabis” turn into MySpace? This past summer, things were looking up for MassRoots. Even though revenues were slipping, Dietrich was making acquisitions to right the ship. One of those acquisitions. Odava (check) brought him the man, Scott Kveton who would eventually throw him out. The last acquisition of CannaRegs would have been immediately accretive and would have quickly delivered that much needed revenue. However, some of the board members felt that the agreed upon price of $12 million was too rich.

From that point on, things took a turn for the worse and the death spiral began. CannaRegs CEO Amanda Ostrowitz was pushed to justify the price that Dietrich agreed to pay for her company. It was implied at that time of the acquisition that she while she was coming in as a President of MassRoots, she was expected to be named CEO of MassRoots in a relatively short amount of time. So, there was an active conversation that Dietrich was going to be replaced by someone with more structure and professionalism. Dietrich was clearly choosing Ostrowitz over Kveton as his successor. That never happened.

The Board Coup

Dietrich got wind of a board coup and set about canvassing shareholders to rally them to his side. Team Dietrich didn’t move fast enough and Kveton outmaneuvered him. According to Dietrich, Kveton asked for his resignation after making serious drug allegations. The deal was that Dietrich would resign and quietly leave his position as CEO. If he didn’t, the alleged drug use would be made public.

Dietrich didn’t go quietly and instead continued to speak to the press. One of these conversations led MassRoots to claim that he was disparaging the company something he had agreed not to do. Kveton followed through with his threat and filed the lawsuit exposing the drug use along with the claim of sex in the workplace and the misuse of company funds.

Company Health

The stock has fallen from a 52-week high of $8.25 to 16 cents. MassRoots doesn’t have sufficient cash to fund operations and stated in its last earnings report on November 14, that it will need additional financing to fund future operations. The company only recorded $11,516 during the last quarter in revenues, while losing $7 million. MassRoots has liabilities of $2.6 million. Rather than focusing on bringing in revenue, MassRoots purchased cryptocurrencies at a discount with the idea it could potentially sell this asset.

There are only six remaining employees and the company said it needs $2.5 million to stay alive. CannaRegs terminated its deal and is no longer associated with MassRoots. CannaRegs has actually hired some of the MassRoots employees that were laid off as Ostrowitz’s company continues to add more clients and has demonstrated it strength.

MassRoots is trying to turn itself into a cannabis software company like MJ Freeway, BioTrack THC or even Flowhub – a company it once owned stock in. Yet, what customer would sign on with a company that is such a mess and so toxic. The two company leaders are employing a scorched earth policy that will only lead to the end of MassRoots. Dietrich has not proven himself to be a reliable company leader and Kveton’s handling of this very messy and public divorce has not done the shareholders any favors.


Debra BorchardtDebra BorchardtOctober 16, 2017
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3min57890

Well-liked cannabis industry leader Issac Dietrich was ousted by the Board of Directors of MassRoots (MSRT) in a vote that was held on Monday. The Chief Executive Officer of MassRoots was voted out as the company continued to burn cash and the stock price was plummeting. Scott Kveton has been named the new Chief Executive Officer.

Some members of the company’s board (and supposedly including Kveton)  had been unhappy with Dietrich’s decision to acquire CannaRegs for $12 million. Several in the cannabis industry complained that the price was too high for the company even though private investors had been willing to pay $10 million for CannaRegs and the company had no debt and was bringing in $500,000 a year in revenues. Amanda Ostrowitz was named President of MassRoots and it had been rumored that she would ultimately be named Chief Executive Officer.

Instead, it seems Kveton orchestrated a board meeting planned for Monday to fire Dietrich, who founded the company and to date had raised over $20 million for MassRoots. Dietrich had been sending emails over the weekend to shareholders asking for their support in the battle. An inside source claims Dietrich not only had the support of the shareholders to remain but also the votes to remove the board. While Dietrich may have had a majority of the shares to keep him in place, there was no formal vote. Ostrowitz is currently out of the country and wasn’t at the board meeting.

Kveton supposedly had been very much against the CannaRegs acquisition and the idea of Ostrowitz potentially becoming CEO. Kveton was Vice President of the company prior to being named CEO and had only recently joined the company in July when his company Odava was acquired by MassRoots. Following the acquisition, Kveton was named Director of Business Development.

MassRoots had come under questioning for stock promotion activities recently in association with a company town hall meeting. At the time, Dietrich denied any knowledge of stock promotion by the company. However, one stock promoter claimed it was true and that they had been paid for stock promotion at that time. As recently as last week, MassRoots paid several thousands of dollars to have the stock promoted on websites like Stock Commander ($10,000) and Small Cap Leader ($13,000). Coincidentally ahead of this weekend’s vote. The stock rose from a low of roughly 30 cents to approximately 44 cents. The stock is now dropping over 16% to 36 cents.

 

 



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