MassRoots Slash Jobs After Running Up Huge Debt
MassRoots Inc., the cannabis tech company has laid off over 40% of its workforce. Now, they just need to figure out what to do about all their debt.
MassRoots Inc. has had a tough year. Nasdaq quashed their dreams to uplift their stock this spring, and now they find themselves with a whole lot of debt without the funds to pay it. The company has reported large net losses in 2014 and 2015 respectively, so how do they plan to get out of 2016’s pickle? Here’s the scoop on why this weed tech company slashed jobs during a major debt default.
Big losses, lots of layoffs
MassRoots Inc., the popular marijuana tech company has come out about debt defaults and mass layoffs. In a filing made with the Securities and Exchange commission on September 21st, the company has defaulted on a principal balance of $966,000.
In an effort to climb out of the hole, MassRoots came forward about cutting 14 of 33 full-time positions. They also made some key technology changes. Both of these actions are estimated to save the company $146,000 per month. This free capital will hopefully help fuel more reliable growth projects.
How did MassRoots rack up so much debt?
But, why does MassRoots even have nearly $1 million in debt in the first place? Back in March of this year, the company took out $1.42 million worth of convertible secured promissory notes from a variety of different institutions. MassRoots is a publicly traded company, so their 6-month term was secured against their public stock.
Unfortunately, MassRoots has had a difficult year. Their plans to uplift stock to the Nasdaq was denied. This isn’t entirely surprising, as cannabis is still a federally illegal substance.
Though mega corporations like Microsoft have recently expressed interested in the industry, most mainstream, public giants have failed to take the bait. Without clear federal action, cannabis is still considered risky investment by many.
Though mega corporations like Microsoft have recently expressed interested in the industry, most mainstream, public giants have failed to take the bait. Without clear federal action, cannabis is a risky investment.
MassRoots stock currently trades over the counter (OCT), which gives the company a little more wiggle room than the larger exchanges. Yet, the Nasdaq denial cost MassRoots to lose nearly half its value. Needless to say, many shareholders weren’t all that confident about MassRoots’ potential after that.
When news came out about the defaults, Chairman and CEO Isaac Dietrich admitted:
This is kind of the worst-case scenario, in many regards.
Some good news amongst the bad?
MassRoots laid off over 40% of its staff, but some more positive reform is underway. The company has funneled energy into development, adding handy product reviews, dispensary finders, and menu pricing. Upcoming state elections also show positive signs for growth in the cannabis industry overall.
Recreational cannabis reform looks promising in California and Arizona, which could open up a whole new audience for online cannabis culture and information hubs. This possibility of expanding markets has given Dietrich an optimistic outlook on what is to come.
Overall, he is confident that MassRoots will be able to effectively address the debt situation. Thus far, no actions have been taken against MassRoots for their default. Some holders have traded debt for shares. Unfortunately, some holders still seem to be weighing their options.