MassRoots Archives - Page 2 of 2 - Green Market Report

Debra 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.


Debra BorchardtOctober 16, 2017
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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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