MassRoots Inc (OTCMKTS:MSRT) is trading higher once again. It's up over 70% in the last month. This comes about as it has announced a large influx of cash from an equity offering, a partnership with one of Canada's lowest cost producers and suppliers of medical cannabis, and its recruitment of key engineers from some of the largest technology companies.MSRT has one of the largest and fastest growing social media platforms for cannabis, aiming to be the Facebook of the industry. It can be accessed through its website or through an iOS or Android app.In terms of the partnership, MSRT intends to build awareness of the Canadian brand Aphria amongst its user base. Canada's prime minister has vowed to have recreational marijuana legislation in place throughout all the provinces by 2017. MSRT presently has over 900,000 subscribers. Aphria will compensate MSRT with a cash fee for each patient it refers. As a result of the agreement, Aphria purchased 500K shares of MSRT for $250K and will receive warrants to purchase an additional 500K shares at $0.90 over the next 3 years. Aphria CEO Vic Neufeld said:
"This partnership with MassRoots offers a fresh, innovative way to expand Aphria's patient base while helping to grow our digital presence. MassRoots has the potential to be the leading technology platform in the cannabis sector and we look forward to leveraging their distribution channels and data to optimize our operations."
MSRT just took in a significant amount of capital, completing it's $5mm equity offering it started in August. MSRT's founder, CEO and largest shareholder, Isaac Dietrich, led the rounds with participation from former MyPoints.com CEO, Mr. Steve Markowitz, Aphria, The Delavaco Group, and several family offices.
"We believe these funds are sufficient for the Company to reach cash-flow positive and to scale our commercialization efforts to a much wider audience," stated Dietrich. "We are confident that the current political climate coupled with increasing demand in regulated cannabis markets presents a tremendous growth opportunity for MassRoots. We're focused on introducing new monetization channels within our mobile applications while exploring strategic partnerships to expand our platform's capabilities."
This equity offering has brought the Company to a solid cash position as it continues to grow its user base. The regulated cannabis market in the United States is projected to reach more than $7 billion this year, according to a report by New Frontier and ArcView Market Research. On November 8th, nine states with over thirty percent of the U.S. population will be voting on regulating the sale of cannabis for medicinal or recreational use. MSRT expects that the passage of any combination of these initiatives has the potential to significantly accelerate its user and revenue growth. The infusion of this additional capital puts it into a solid position to take advantage of this expected growth.Meanwhile, they have recruited engineers from Autodesk and Salesforce to accelerate the roll-out of several planned features.
“Over the past three months, we’ve recruited some of the most talented engineers from the world’s leading technology companies who are fascinated by the incredible opportunity the cannabis industry presents,” stated MassRoots CTO Lance Galey. “All great technology companies are built by talented engineers. With a world-class team now in place, we believe MassRoots is progressing at a higher velocity than anyone else in the space.”
Prior to the equity offering, the company's balance sheet reflected that the company had $147K in current assets with $50K in cash and $83K in property and equipment. Total assets were $440K, of which $175K is an investment in Flowhub. The company had LT debt of $209K from convertible debentures resulting in total liabilities of $1.9mm.It should be noted that the above figures do not represent the equity offering as aforementioned or that $1mm in secured six-month notes were converted into equity, thus increasing its cash and reducing its total liabilities significantly. Consequently, expect to see some dilution.MSRT has a market cap of a little over $45mm. We’ve seen a lot of interest in MSRT recently with the average daily volume approximately 7 times normal. Couple that with a small float of 19mm shares and a significant short position and you have a number of catalysts for MSRT to trade higher. We will be updating our subscribers as soon as we know more. For the latest updates on MSRT, sign up below!Disclosure: We have no position in MSRT and have not been compensated for this article.
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