MassRoots Archives - Green Market Report

Debra BorchardtDebra BorchardtMay 5, 2020
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5min4890

While numerous small businesses across the country struggle during an unforeseen lockdown, MassRoots (OTC:MSRT) the poorly run cannabis tech company managed to snag $50,000 in the Payroll Protection Program. This despite one of the company’s main shareholders being sued for stock fraud by the SEC.

“I’m pleased to report MassRoots has raised significant capital to fund our operations and, later this month, launch our rewards program – MassRoots Rewards – aimed at driving cannabis demand from our community to client dispensaries,” stated Isaac Dietrich, MassRoots’ Chief Executive Officer. “We’ve slashed our monthly expenses to less than $75,000 per month, negotiated far better rates and terms with our vendors, and built a rewards model we believe can gain widespread adoption while generating positive cash-flows. We’ve learned many important lessons in the five years since MassRoots became a public company – and we’re now positioned to combine that knowledge with an unparalleled work-ethic to deliver results for all our shareholders.”

The PPP loan matures in May 2022 and bears an interest rate of 1.0% per annum. Payments of principal and interest of any unforgiven balance commence in December 2020.

$300,000 Bridge Financing

This loan supplements the $300,000 in bridge financing recently closed by MassRoots. Although there is no press release detailing the terms of this loan, the SEC filing noted that on April 17, 2020, the company issued and sold convertible notes in the aggregate principal amount of $330,000 (including an aggregate of $30,000 original issuance discount) to accredited investors. The April Notes mature on October 17, 2020.

The April Notes accrue interest at a rate of 12% per annum and are convertible into shares of the Company’s common stock at $0.01 per share, subject to adjustment; provided, however, upon the occurrence of an Event of Default, the conversion price shall be 60% of the average of the three lowest closing bid prices of the Company’s common stock during the twenty days prior to the date of conversion; provided, further, however, upon the occurrence of an Event of Default, the conversion price shall not be less than $0.001 per share.

MassRoots stock sells at less than one penny.

Once called the “Facebook” of cannabis, MassRoots burned through millions of dollars raised with little to show for it. When the advertising dollars for the social media platform never came through, MassRoots then pivoted to becoming a seed-to-sale tech platform. However, the competition was already well-entrenched and this endeavor never seemed to get off the ground. The company is now pursuing a review, mapping, and news website style entity not unlike Weedmaps or Leafly.

Stock Fraud

The SEC posted a filing that it is going after the lead investor group in Massroots for stock price manipulation and organizing coordinated buying and selling movements. Dietrich is not a part of the lawsuit. Instead, the defendant is mainly Douglas Leighton.

Leighton is specifically called out for promoting the stock, causing a rise in the share prices so that he could sell at a profit. A scheme often referred to as “pump and dump.” Leighton and his trading group, which was comprised of the above-listed individuals and companies owned roughly 90% of MassRoots shares prior to the company going public. He assisted in bringing the company public in 2015.

The SEC lawsuit alleges, “Leighton directed the trading group members how to slow the sales of their privately-purchased MassRoots stock, imposing a limit on how many shares he wanted them to sell at a time. He criticized trading group members who did not follow his “rule” about selling their MassRoots stock.” The intent of this manipulation was to keep MassRoots stock prices high so that Leighton and the trading group members could sell at a large profit.

Leighton is currently listed as an advisor to BudTrader.com, which is also planning to go public through a reverse takeover.

 


Debra BorchardtDebra BorchardtApril 30, 2020
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6min229812

The cannabis e-commerce online vendor BudTrader is going public in a reverse takeover with Lake Victoria Mining, Inc. (OTCPINK:LVCA). The privately held Encinitas, CA-based P5 Systems Inc. has owned and operated the BudTrader.com since 2016. The website boasts two million-plus registered users safely and legally post classifieds–style advertisements for cannabis products, services, jobs, information, and equipment.

LVCA is a control affiliate of Grapefruit (OTCPINK: GPFT), which holds California permits and licenses to both manufacture and distribute cannabis products. Grapefruit’s extraction laboratory and distribution facilities are located in the industry recognized Coachillin’ Industrial Cultivation and Ancillary Canna-Business Park in Desert Hot Springs. Grapefruit reported net revenues of $451,196 for all of 2019. The company was previously known as Imaging 3 and traded under the symbol IGNG, which changed in January 2020.

The takeover expands the alliance between the two southern California firms which was first made public on April 1, 2020, when the firms announced a license agreement between the two companies. Since that time, the firms have worked closely implementing the logistics of the license, and in the course of that work the concept of the acquisition developed into a general plan for the Acquisition culminating in the execution of the LOI. At the conclusion of the acquisition, Grapefruit’s founders and management team will own approximately 20% of post-acquisition LVCA/BudTrader.

“We have been intrigued by the idea of an alliance with BudTrader since our first meeting with them in March 2020 in Palm Springs California,” said  Grapefruit CEO Bradley Yourist. “BudTrader’s multimillion cannabis-centric user social media base and its custom-designed analytics not only allow Grapefruit to target market its products to BudTrader’s specific set of consumers but also receive constant real-time feedback on our products from BudTrader’s users on the social media platform. We can rapidly fine-tune a potentially disruptive product such as our Patchless-Patch on the BudTrader platform in real-time. BudTrader will receive marketing fees in consideration for its online marketing efforts in connection with sales of Grapefruit and its partner’s products and our unique Grapefruit offerings will draw new users to the BudTrader site. As our product sales and revenues grow, BudTrader’s user base and revenues will grow as a result of our cross-marketing efforts.”

BudTrader’s founder Brad McLaughlin added, “We have been working with Grapefruit studying advanced data analytics from the legal cannabis marketplace and immediately recognized the synergy between Grapefruit and BudTrader at both the corporate culture and management team level. It’s a natural fit.”

Bud Trader

BudTrader was originally conceived to be solely a cannabis commerce platform but as it has increased in the number of users and user time spent on the site. BudTrader’s founder Brad McLoughlin and its directors and LVCA’s current management Bradley and Daniel Yourist, also the control persons of Grapefruit USA, Inc., all believe this cannabis-centric social media platform has the potential for explosive growth. NBA champion John Salley joined the company’s board in February 2019.

In May 2019, the company offered pre-IPO shares to the public calling itself the “Craigslist of Cannabis.” The shares were offered at EquiFund CFP. The company was raising $1 million and pricing its shares at $1.25. This gave the company a valuation of $16 million.

According to the offering in 2019, BudTrader’s revenues for the most recent fiscal year-end were $781,758.00, while the long term debt was listed at $149.200. The net income for the same time period was $83,767.00. The revenue fell from the prior fiscal year-end of $1,289,879.

MassRoots Connection

Douglas Leighton was listed as an advisor to BudTrader on its pitch deck for the pre-IPO shares. Leighton was recently charged by the SEC for a scheme in which he allegedly acquired discounted shares in a microcap company, knowingly failed to disclose his holdings and sales, and manipulated the public market for those shares. Leighton, two entities he controlled, and six investors he directed agreed to settlements ordering them to pay nearly $1.5 million in civil penalties, disgorgement, and prejudgment interest.MassRoots Connection

The company, though said Leighton resigned as a board member and advisor in March.

Dana Rohrabacher

Former Congressman Dan Rohrabacher, who has been a staunch cannabis advocate is also listed as an investor/advisor to BudTrader. Rohrbacher has come back into the news after it surfaced that he allegedly tried to broker a pardon for Julian Assange at the request of President Trump. Trump now says he hardly knows Rohrabacher. The former congressman is mostly working as a lobbyist.

LVCA Trading Activity

LVCA short interest popped in October 2019 to 131,368 from September’s 100 shares. The stock went from one cent a share in October to seven cents a share on no news. By November it had dropped back to three cents a share. For most of 2020, the shares have traded below two cents.


Debra BorchardtDebra BorchardtApril 8, 2020
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MassRoots (OTC:MSRT) was once the darling of the cannabis industry. CEO Isaac Dietrich was able to raise millions of dollars as he built the “Facebook” of cannabis. The premise was that cannabis consumers would want a friendly social media site to connect with each other and then the ad dollars would be tremendous. That never happened.

Now, the SEC has posted a filing that it is going after the lead investor group in Massroots for stock price manipulation and organizing coordinated buying and selling movements. Dietrich is not a part of the lawsuit. Instead, the defendants are DOUGLAS LEIGHTON, BASS POINT CAPITAL, LLC, AZURE CAPITAL CORP., MICHAEL SULLIVAN, DAVID HALL, ZACHARY HARVEY, PAUL DUTRA, JASON HARMAN, and JESSICA GERAN.

Leighton is specifically called out for promoting the stock, causing a rise in the share prices so that he could sell at a profit. A scheme often referred to as “pump and dump.” Leighton and his trading group, which was comprised of the above-listed individuals and companies owned roughly 90% of MassRoots shares prior to the company going public. He assisted in bringing the company public in 2015.

The SEC lawsuit alleges, “Leighton directed the trading group members how to slow the sales of their privately-purchased MassRoots stock, imposing a limit on how many shares he wanted them to sell at a time. He criticized trading group members who did not follow his “rule” about selling their MassRoots stock.” The intent of this manipulation was to keep MassRoots stock prices high so that Leighton and the trading group members could sell at a large profit.

Help From The Inside

The filing references a MassRoots executive, but the executive is not named. “Before and after MassRoots stock began publicly trading in April 2015, Leighton made efforts to publicize the stock by instructing a MassRoots executive about various ways he should promote MassRoots stock. Even before the trading began, between December 2014 and April 2015, Leighton both took steps to help MassRoots promote the stock and promoted it himself.” Leighton also needed help from the inside in order to learn who was buying and selling stock within his trading group in order to keep manipulating the price.

Leighton told a MassRoots executive that he needed the NOBO “Non-Objecting Beneficial Owner,” list in order to monitor the shares sold and owned in the market. The MassRoots executive, more than once, provided Leighton with the list.

Hiding Ownership

Leighton is alleged to have gone to great efforts to hide his ownership percentage in order to avoid reporting his trading activities.  The case says that had the Defendants filed the forms, the public would have seen that (1) there was a single group that owned more than 10% of MassRoots stock, (2) that group was steadily selling the stock. The case states that “Between April 2015 and March 2016, the Defendants made approximately $3.2 million from their scheme. The Defendants continued to profit from their sales of MassRoots stock through 2018.”

Sullivan used multiple accounts at multiple brokerage firms in order to avoid detection of his trading habits that were directed by Leighton. Sullivan’s purchases in May 2015 manipulated the stock’s share price, which rose from $1.21 per share to $1.26.

Leighton is also accused of threatening other MassRoots insiders to not sell or he would pull his entire holdings.

Reported Demise

Cannabis.net had recently reported that MassRoots was likely to go out of business. The site wrote, “It appears now that Massroots has called it a day and closed up shop, which may be a problem since they are a publicly-traded company with stock symbol MSRT.  While their social media channels have remained active the website has now been down for over 3 weeks and Google has begun to remove all listings that lead to an error or non-connected page.”

Dietrich responded to the story by telling MJ Biz Daily, “Our website will be back online shortly. We recently encountered server issues that are in the process of being resolved.” The stock though is essentially worthless and trading at less than one cent.

Dietrich Ousted Then Returned

In 2017, Dietrich was ousted by the board, but he managed to swing shareholders back to his side. At the time interim CEO Scott Kveton led the coup, but once Dietrich rallied shareholders to his side, Kveton resigned along with board members Tripp Keber, Ean Seeb and Terry Fitch. Leighton’s group of shareholders was undoubtedly the group that rescued Dietrich.

On March 30, Dietrich filed an 8-K with the SEC suggesting that COVID 19 was the reason why “The Company has been unable to identify and raise capital necessary for it to, among other things, pay accounting and audit fees as are necessary for the preparation and filing of the Company’s Annual Report. As a result of the foregoing, the Company is unable to complete its 2019 audit to timely file its Annual Report.” Not perhaps because the company had been run into the ground?


Video StaffVideo StaffApril 20, 2018

5min19920

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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5min12612

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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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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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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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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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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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.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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