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MassRoots—Technology Platform for Cannabis Consumers and Businesses

Overview

MassRoots, Inc. (OTCQB:MSRT) is one of the cannabis industry’s largest and fastest growing technology platforms and its consumer-facing mobile app is available in every regulated medical and recreational cannabis market in the United States. The platform reached 1 million registered users in early 2017. The company is focused on further increasing its user acquisition through an enhanced website design targeting both cannabis consumers and businesses.

MassRoots has recruited a team of talented engineers from some of the world’s leading technology companies. The MassRoots’ development team is led by Lance Galey, former Chief Software Architect of Cloud Services for Autodesk and Vice President and Principal Architect at Salesforce, where he led the architecture and development of numerous core infrastructure and platform services.

“With a world-class team now in place, we believe MassRoots is progressing at a higher velocity than anyone else in the space,” said MassRoots CEO Isaac Dietrich.

Investment Highlights

  • Leading technology platform for cannabis industry with over 1,000,000 registered users.
  • Targeting the regulated cannabis market which is projected to grow from $6.7 billion in 2016 to $22.6 billion by 2021 according to ArcView Market Research.
  • Anticipated growth in platform user base and revenue over 2017-2018 as medical or adult-use cannabis laws take effect in California, Florida, Nevada, Massachusetts, and several other states.
  • Offers businesses strategic advertising opportunities with access to a growing consumer base.
  • 22,000+ shareholders (including growers, dispensary owners and industry professionals); over $15 million raised to date through offerings.
  • Strong cash position and no debt.
  • Planning to apply to list on a major US stock exchange.
  • Affiliated with thought leaders in the cannabis industry, including the National Cannabis Industry Association and ArcView Group, the largest accredited investor network focused on the cannabis industry.

Positioned for Profit in North America’s Booming Legal Cannabis Markets

Cannabis for medical use is now legal in 28 states in the United States, while eight states have legalized recreational cannabis.

In 2016, legal cannabis sales totaled $6.9 billion in North America. That same year, Americans in the states of California, Massachusetts, Maine and Nevada voted to legalize the recreational use of marijuana, while voters in Florida, North Dakota, Arkansas and Montana passed medical marijuana measures.

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These new markets will underpin significant growth in legal cannabis sales, projected to reach a total of $21.6 billion by 2021, representing a compound annual growth rate of 26 percent.

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“MassRoots is well-positioned to profit from this growing trend in cannabis regulation because unlike cannabis producers, we don’t need to navigate the lengthy licensing process and build grow facilities to begin generating revenue,” said CEO Isaac Dietrich. “Our scalability process into new markets is extremely rapid and cost-efficient. In addition, our revenue model is not tied to the success of a particular location, brand or ballot initiative.”

MassRoots is also exploring possibilities in the Canadian cannabis market. In Canada, Prime Minister Justin Trudeau’s liberal government is working to legalize recreational cannabis use by July 1, 2018. Deloitte’s recent report, titled “Recreational Marijuana: Insights and Opportunities”, estimates Canadian recreational cannabis could reach retail sales of $6 billion by 2021.

MassRoots Mobile Community: Connecting Markets and Consumers

MassRoots users can search the best cannabis strains and products with the help of a community of over 1 million cannabis enthusiasts.

The MassRoots mobile application enables consumers to make educated purchasing decisions about cannabis products and strains based on community members’ reviews, and then find local dispensaries with those products in stock. The platform has an extensive repository of strains with information about type, THC and CBD levels, aroma, flavor, effects and more. Product reviews cover flower strains, concentrates, edibles, beverages, tinctures and topicals.

The platform is accessible as a free mobile application through the iOS App Store and the Google Play marketplace and as a Website at massroots.com.

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In March 2017, MassRoots revamped its website to offer consumers and businesses new features intended to expand advertising inventory, enhance search engine optimization, and produce more community-driven product and strain reviews.

“MassRoots’ new website enables us to broaden our audience and more effectively monetize our users and web-traffic,” said Dietrich. “We are already seeing hundreds of thousands of unique page-views per month and are confident that the significant functionality and SEO improvements in MassRoots’ new website will enable us to accelerate our user and web-visitor growth. At the same time, we have greatly expanded the inventory and targeting options available to MassRoots’ advertisers, which will have an immediate and direct impact on our revenue.”

The power of community

MassRoots’ online community of 1 million strong is comprised of medical cannabis users, cannabis enthusiasts, dispensary budtenders and even includes a growing population of healthcare professionals.

This community came to the company’s defense in 2014 when Apple banned the MassRoots App from its App Store over cannabis-related concerns. More than 10,000 of the then 180,000 users bombarded Apple with emails in support of MassRoots. The leading cannabis trade and investor organization penned a policy letter, signed by numerous cannabis industry leaders, to Apple CEO Tim Cook. Soon after, MassRoots was once again available in the App Store.

Diverse Revenue Model

MassRoots is committed to rapidly growing its market share of cannabis consumers and effectively monetizing that base to maximize shareholder value.

In 2016, MassRoots increased its revenue by 227 percent with the majority of revenue from dispensaries and cannabis-brands in Colorado and California. Management expects that trend to continue into the next few years as further markets open up in 2017 and 2018, including in California, Florida, Massachusetts and Nevada.

MassRoots’ business model is currently based on two revenue streams, dispensary advertising, and brand advertising, with plans to expand the model to order-based transaction fees and data sales.

The United States is home to approximately 5,000 cannabis dispensaries and that number is expected to grow to 10,000 by 2020. As of April 2017, the company has captured about 15 percent of the current market share and charges member dispensaries a monthly listing fee ranging from $100 to $2,000 month for exposure to the MassRoots community.

MassRoots offers cannabis-related business and big name brands (Uber and Fision in 2016) the ability to place targeted ads based on users’ preferences in newsfeeds on a cost-per-impression or cost-per-click basis. The company is currently building out a self-service advertising portal.

Aggressive growth strategy

MassRoots is well-positioned to capitalize on the new medical and recreational cannabis markets opening up through legislation in the key states such as Florida. The company is planning aggressive marketing campaigns in these states with a goal of doubling its current 15-percent market share. By capturing at least 30 percent of the market share, MassRoots will have the ability to implement a top-placement-advertising bidding system for dispensaries and brands similar to that employed by its peers in the industry.

MassRoots two closest comparable peers, Weedmaps and Leafly, are expected to generate more than $25 million and $15 million, respectively, in digital advertising revenue during 2017. MassRoots’ user base is already comparable to both of Weedmaps and Leafly, and management projects the company’s annual revenue run rate could grow to match its peers as in 4 to 6 consecutive fiscal quarters.

Whaxy, online ordering platform

In January 2017, MassRoots completed its acquisition of Whaxy, an online ordering platform for licensed cannabis businesses which prior to the transaction had already processed more than $5 million across 40,000 unique transactions. The Whaxy platform is expected to seamlessly integrate with most major point-of-sale systems used by dispensaries to connect them to the growing MassRoots’ network.

Using the MassRoots’ platform, consumers will be able to find specific cannabis products and then place an order for pick with their chosen dispensary. MassRoots’ will charge transaction fees for each order placed. Once state regulations allow, the company plans to expand its operations to include delivery services.

“With Whaxy, MassRoots can expand its offerings to include a full suite of dispensary software solutions – online ordering, marketing, and real-time inventory management— for cannabis businesses,” said MassRoots CEO Isaac Dietrich.

The company plans to leverage the vast amount of market data its accumulating (e.g. product trends by geographical region) through the MassRoots platform. For a monthly fee, cannabis-related businesses will be able to access this data through interactive dashboards in late 2017.

Management

Isaac Dietrich—Founder, CEO and Chairman of the Board

Isaac Dietrich is the founder, CEO, largest shareholder, and Chairman of the Board of MassRoots, each since our inception. He is responsible for executing our strategic business development. Mr. Dietrich was the co-founder and majority shareholder of RoboCent.com from June 2012 until his buyout in December 2016, scaling the business to millions in revenue. He also founded Tidewater Campaign Solutions, LLC, a Virginia Beach-based political strategy firm that was retained by 30 political campaigns and political action committees from January 2010 to December 2012. From February to December 2010, Mr. Dietrich served as Field Director for former Congressman E. Scott Rigell’s campaign.

Lance Galey—Chief Technology Officer

For nearly 20 years, Lance Galey has been a technology leader in some of the best known web and cloud service businesses in the world including Salesforce, The Walt Disney Company, and Microsoft.

Bob Pullar—Chief Financial Officer

Prior to MassRoots, Bob Pullar served as Managing Director of Axis Private Equity Group, LLC, an investment firm focused on making equity investments in well-managed, profitable companies.

Terence “Terry” Fitch—Director

Terence Fitch has served as a Director of the company since 2015. Fitch is a seasoned corporate executive with 23 years of marketing, sales, finance, manufacturing, supply chain and media experience. Fitch founded Drink Teck, LLC in 2013 and has served as its Chief Executive Officer since that time. Drink Teck LLC is a functional beverage company which uses liposome technology to cost-effectively formulate drinks for the consumer health and wellness sector. Prior to founding Drink Teck LLC, Fitch spent 3 years at Coca Cola Refreshments as Senior Vice President and General Manager. Before that, 18 years at Coca-Cola Enterprises, where from 2004 to 2010, he served as the Senior Vice President and General Manager of the Western Region and was responsible for a team of 13,500 sales, strategy, marketing, operations, manufacturing, supply chain and analytical professionals and accountable for over $4.2 billion in sales. From 1998 to 2002, Fitch acted as Division Vice President and General Manager for Coca-Cola Enterprises and, from 1994-1998, was the Regional Vice President of Sales and Marketing of the Gulf States for Coca-Cola Enterprises. Fitch has a Bachelor of Science in Marketing and Finance from Arizona State University. Fitch brings a strong understanding of financial reporting and corporate governance matters, along with expertise in corporate governance, enterprise risk management and strategic planning, which will strengthen the Board’s collective qualifications, skills, and experience.

Vincent “Tripp” Keber—Director

Tripp Keber has served as a Director of MassRoots since 2014. Keber also is a co-founder, Director and Chief Executive Officer of Dixie Elixirs & Edibles, a Colorado licensed medical marijuana infused products manufacturer. He is a founding director of the National Cannabis Industry Association, and, since 2013, has served as a director of the Marijuana Policy Project. He is also an advisory board member of the Medical Marijuana Industry Group in Colorado. Keber also serves as a board member of American Cannabis Company (2014-current). In his current role as CEO of Dixie, Keber is responsible for the overall strategy, licensing, marketing, branding and expansion efforts related to the Dixie brand, both domestically and internationally. Keber has been featured on CBS’s 60 Minutes and CNBC.

Prior to joining Dixie,. Keber served as Chief Operating Officer for Bella Terra Resort Development Company, and EVP of Business Development for Sagebrush Realty Development. He has a BS in Political Science from Villanova University and currently resides in both Aspen and Denver, CO with his family. He is involved in several charitable organizations located within his community and assists in the research and development of cannabis support for veterans suffering from PTSD. As an experienced leader in the legal cannabis industry, Keber will use his experience and industry knowledge to help guide the company’s leadership team.

Ean Seeb—Director

Ean Seeb has served as a Director of MassRoots since 2014. Seeb is also the co-owner and manager of Denver Relief LLC, a Colorado medical cannabis operation. As a founding partner of Denver Relief Consulting LLC and seasoned cannabis dispensary operator, Seeb has significant experience navigating complex legislation and regulatory demands unique to legal cannabis operations. Seeb also serves as a board member of Manna Molecular Sciences (2015-current). He serves as Chair of the National Cannabis Industry Association and holds leadership positions with charitable organizations focused on a range of social causes, from civil rights to sustainable volunteer farming. Seeb has been actively involved with non-profit groups for over two decades. His years of humanitarian experience lead Seeb to conceptualize and develop a cannabis-centric service organization called the Denver Relief GREEN TEAM in 2009. He holds a B.S. degree in Business Administration with an emphasis in Computer Information Systems from University of Northern Colorado. Seeb will use his experience and industry knowledge to help guide the company’s leadership team.

Steve Markowitz—Advisor

Steven Markowitz is the Founder and former CEO of MyPoints.com, founded in 1996. He was instrumental in scaling the company to $100mm+ in annual revenue and $2.3 billion market capitalization. MyPoints.com was the 9th best performing IPO on Nasdaq in 1999.

Shmuel Tennenhaus—Advisor

Shmuel Tennenhaus was the Vice President of Marketing for BigFish Games when it was acquired by Churchill Downs for $775mm cash. He is currently the President of a cannabis data analytics firm, LemonHaze.

Anthony Nystrom—Advisor

Anthony Nystrom serves as Mashable’s Principal for Artificial Intelligence. Before joining Mashable, Nystrom served as a founder, architect and CTO at a number of enterprise and startup environments.

 

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