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MassRoots, Inc. (“MassRoots” or the “Company”) (MSRT), a technology platform for the regulated cannabis industry, is pleased to release an updated Corporate Overview Deck and the following shareholder update:
Dear MassRoots Shareholders,
The regulated cannabis industry continues to be one of the most exciting and compelling sectors of the market. With a paradigm shift occurring in state legislatures and a seemingly ever-growing line of commercial products, the opportunities in this burgeoning space continue to grow.
Since launching in 2013, MassRoots has struggled to monetize its mobile application and network, with our advertising-centric strategy not generating the revenue we originally expected. The past few months have been especially frustrating for MassRoots shareholders and as Chief Executive Officer, it is my responsibility to clearly lay out our strategy and key upcoming milestones.
In the summer of 2018, we launched a revamped MassRoots Business Portal and a consumer rewards program, WeedPass, accessible through the MassRoots App. After an introductory free trial period, we charge dispensaries a monthly fee for their dispensary listing and access to our consumer rewards program. We believe that our platform could help grow sales at more than 2,500 regulated dispensaries across the country and could generate significant revenues for MassRoots in 2019.
A few weeks ago, MassRoots announced the planned acquisition of COWA Science Corporation, which we expect will be transformative to our corporate strategy and top-line revenue growth.
COWA Science Corporation Acquisition
COWA Science Corporation (“COWA”) provides dispensaries, cannabis cultivators, distributors and ancillary companies with the supply chain products they need to run their businesses. We believe the integration of COWA’s products into our existing sales channels has the potential to significantly grow MassRoots’ top-line revenues and strengthen our client relationships.
During the 2018 fiscal year, COWA generated revenues of approximately $1.5 million (unaudited) from approximately 50 cannabis and hemp-focused clients.
The planned acquisition is a stock-based transaction valued at approximately $5.78 million, and dependent upon COWA achieving revenue milestones of $2.5 and $7.5 million. We believe that these milestones are attainable and have the potential to materially strengthen the overall financial standing of MassRoots. For more information, please see the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 12, 2019.
MassRoots anticipates that the COWA acquisition will enable both business segments to expand their client-bases by offering customers a complete suite of cannabis-centric products and services, including:
- Advertising services, including listings on MassRoots’ dispensary finder and WeedPass Rewards Program;
- Growing supplements and nutrients, including white-labeled growing materials;
- Consumer packaging compliant with industry-specific regulations;
- Process and product development;
- HVAC resources tailored to the unique needs of regulated cannabis businesses; and
- Miscellaneous office and cleaning supplies, lab equipment, and bulk chemicals.
Through this acquisition, our strategy is to offer products and technologies at every step of the cannabis supply chain—from cultivators to dispensaries to consumers.
WeedPass Rewards Program
Since the launch of our WeedPass Rewards Program in August 2018, we have gained adoption by more than 140 dispensary locations, enabling consumers to earn tickets to movies, sporting events, and festivals by shopping at participating dispensaries.
In March 2019, we entered into an agreement with Snipp Interactive, Inc. (“Snipp”) to power our WeedPass Rewards Program. By utilizing Snipp’s receipt processing and loyalty program technology, MassRoots aims to transition WeedPass to a points-based rewards program for dispensaries and cannabis brands.
By partnering with Snipp, we believe MassRoots can rapidly expand the utility and effectiveness of our WeedPass Rewards Program as we continue to grow our client base of dispensaries and cannabis brands. We’re excited by the opportunity to work with an industry-leader in Snipp to develop a cutting-edge rewards program for the multibillion-dollar cannabis industry.
According to a 2017 Forrester Research Report, 72% of U.S. adults belong to at least one loyalty program and of those consumers, people belonged to 9 loyalty programs on average. That report also states loyalty program members spend, on average, $42.33 more than non-loyalty program members at traditional retailers. New Frontier Financial estimates there are 2,500 regulated dispensaries in the United States.
As with any business, we are looking to maximize profitability and increase consumer retention; however, we are also pioneering the path in how our community connects, communicates, and consumes.
MassRoots is preparing the launch of a CBD product-focused review and e-commerce platform. Given our established following, it is a natural step to develop an information portal for millions of consumers interested in CBD products, as well as providing them an e-commerce platform to purchase hemp-derived CBD products.
In January, we signed a retail agreement with New Age Brands subsidiary, We Are Kured, LLC, to serve as a leading online retailer of the Company’s best-selling CBD pen. We Are Kured, LLC’s vaporizer pen is expected to be the first CBD product to be sold directly through our online platform and social media pages.
In December 2018, President Donald Trump signed the Farm Bill into law, legalizing hemp nationwide. We believe that this year, policies to legalize cannabis are poised to further advance significantly at the state, federal and international levels. While the legal CBD marketplace is expected to be valued at more than $20 billion by the year 2022 according to a Bloomberg Article citation, Grand View Research has projected that the global legal marijuana market is expected to reach $146.4 billion by the end of 2025. The growing market in the U.S. and around the world for cannabis, CBD, and hemp positions MassRoots well for continued growth.
We look forward to 2019 being a transformative year for MassRoots as we execute on our growth plans and continue to make accretive acquisitions, deals, and partnerships. By leveraging our community and e-commerce platforms, we aim to transition these developed and growing assets into revenues and cash-flows for MassRoots. The integration of the COWA acquisition is expected to accelerate the growth of the Company and bolster its position in the market. These already announced initiatives are anticipated to have a significant impact on our top-line revenue and as we move forward in 2019, we expect the further development of MassRoots will be represented in our financial filings.
We greatly appreciate your support and look forward to the future.
Chairman & Chief Executive Officer
MassRoots, Inc. is a leading technology platform for the regulated cannabis industry. Powered by more than one million registered users, the Company’s mobile apps empower consumers to make educated cannabis purchasing decisions through community-driven reviews. Its rewards program, WeedPass, enables consumers to earn tickets to movies, sporting events, and festivals by shopping at participating dispensaries. MassRoots has been covered by CNN, CNBC, Fox Business, Fortune, Forbes, and Reuters. For more information, please visit www.MassRoots.com/Investors and review MassRoots’ filings with the U.S. Securities and Exchange Commission.
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results to differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company’s filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
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