MassRoots (OTCQB: MSRT), Board of Directors voted to remove the company’s Chairman and CEO, Isaac Dietrich. With this decision, they have placed Vice President Scott Kveton as the new CEO.
The History of Massroots
Isaac Dietrich and Tyler Knight founded Massroots in April 2013. The idea evolved because “they didn’t want their grandmothers to see pictures of them taking bong rips on Facebook.” By July 2013, they launched Massroots in the App store, as a social network for cannabis lovers worldwide. Very quickly Massroots gained traction, reaching several thousand users through Instagram, Reddit, and word-of-mouth.
Following their rapid growth, they were invited to pitch that September at an Arcview Event. Arcview is one of the largest cannabis investment groups in the country, founded by Steve DeAngelo and Troy Dayton. Isaac met Douglas Leighton, Co-Founder of Dutchess Capital while attending the event which led to Douglas investing the first $50,000 to their $150,000 seed round.
Those funds allowed Isaac and his team to increase users to 100,000 and to launch a beta version for Android application. By March 2014, Massroots was adding over 20,000 to 30,000 users each month organically. Even with all this traction, VC’s still felt Massroots was too much of a risk, as it was a cannabis-related company. With no private financing available, Isaac decided to go public as a Registration Statement on Form S-1 which went into effect by operation of Law in September 2014.
Banned on Apple
By the end of 2014, Massroots made it into the top 200 fastest growing social networks in the IOS App store, which brought attention to Apple and in turn was permanently banned from the store. However, Massroots gained community support and united the cannabis industry against this ban, bringing together cannabis business leaders who authored a policy letter to Apple’s policies along with over 10,000+ users who sent personal emails to Apple. By February 2015, Apple removed the ban and reversed their policy.
In April 2015, Massroots stock began trading under the ticker MSRT, and on 4/20/2015, Massroots stock traded over $7 million in volume, making it the most active stocks on the entire OTC market. By summer of 2015, Massroots hit over a half million users and finally moved to monetizing their platform making approximately $60,000 in the first few weeks, through advertising.
Even with this continuous growth, Isaac’s vision to go on the Nasdaq was quickly shut down, when Nasdaq determined that “listing the company could have been seen as aiding distribution of an illegal substance,” Massroots stated. This didn’t slow down their user growth which reached over 900,000 users in 2016.
When concern turns to doubt
However, their debt also grew. By the second quarter, MassRoots reported a loss of $1.8 million, up from the same quarter the previous year, when it reported a net loss of $1.4 million. Following the months from July to September, Massroots laid off 40% of their company and defaulted on its debt, according to filings with the Securities and Exchange Commission. The on-going concern began building doubt throughout the year, and many cannabis companies, investors, and analysts started to lose favor on MSRT.
At the end of 2016, Massroots acquired Whaxy. Massroots looked at this acquisition as an opportunity to expand their offerings, specifically for cannabis businesses. They also recruited Robert Pullar as the Chief Financial Officer to help provide guidance and insight into Massroots’ Financial model to attain profitability.
Things start to heat up
This past year, Massroots acquired Odava, a cannabis POS software for $1.75 Million in an essentially all-stock transaction. The vision was to integrate their cannabis user review site marketing opportunities with Odava’s real-time pricing and availability capability, to create an end-to-end marketing offering.
And a month later, Massroots announced that they would be acquiring Cannaregs, Inc, in a deal valued at $12 million. This is where things started to turn.
Some members of the company’s board (and supposedly including Kveton) had been unhappy with Dietrich’s decision to acquire CannaRegs, reported Green Market Report. Shortly after this announcement, the stock fell 5% within a week and was trading at .41 cents, down from a 52-week high of $1.18. Over the past few month’s Massroots also had come under question for stock promotion activities, which Isaac denied any knowledge of this action by the company.
The Boards Decision
This past weekend, Isaac began reaching out to shareholders gaining not only their support to keep Isaac as CEO, but to also move towards removing the board, however, it appears the board of directors beat him to it and called a meeting this morning to let him go. After today’s news, the stock has plummeted 22% to .33 cents.
The company has yet to make any public statements about the news.
UPDATE: On Wednesday, October 18th, 2017, it has been reported that Cannaregs has pulled out of the deal with Massroots. This decision was after Isaac was abruptly fired by the company’s board. Amanda told Business Insider, “she needed to do what was best for CannaRegs and not be on a roller-coaster ride.”
Wondering who is on the Board of Directors?
- Vincent Keber III of Medical Marijuana Inc.
- Ean Seeb of Denver Relief Consulting LLC.
- Terrence Finch of Massroots, Inc.
- Isaac Dietrich of Massroots, Inc.
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