Cannabis tech company MassRoots has cured its previously disclosed debt default, and its executives have taken pay cuts to better the Denver firm’s financial position to close out the year, according to a regulatory filing made Friday.
MassRoots officials put out an announcement saying the company had fully repaid the debt that resulted from raising $1.42 million in March from convertible secured promissory notes and was left with a $1.52 million principal.
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“As a technology company, MassRoots can scale and generate revenue in every state with a medical or adult-use cannabis law,” MassRoots officials said in the announcement. “The 2016 election cycle has the potential to significantly expand MassRoots’ userbase and revenues.”
Late last month, MassRoots, which runs a cannabis social network and app with features such as a dispensary finder and product reviews, received notices of a default event from creditors after not being able to pay the $966,000 outstanding principal that came due.
CEO Isaac Dietrich said unexpected business woes — its sponsored 420 Rally was snowed out April 20, its bid to land on the Nasdaq was a dud — contributed to the company’s less-than-ideal financial situation. MassRoots shed 40 percent of its 33-person workforce and implemented new technology to free up an additional $146,000 a month.
MassRoots took its cost cutting a step further this week by reducing the annual salaries of its chief executive officer, chief operating officer and chief technology officer, according to documents filed Friday morning with the U.S. Securities and Exchange Commission. Dietrich’s annual pay was decreased to $95,000 from $130,000; COO Dan Hunt’s annual pay reduced to $90,000 from $130,000; and CTO Lance Galey’s annual pay was decreased to $60,000 from $150,000, according to the documents.
Galey, a former Salesforce vice president who joined MassRoots in June, also agreed to waive nearly $52,000 in salary that was earned but deferred, according to the documents.
“MassRoots’ executive team took pay cuts to get the company to cash-flow positive before the end of the year and more efficiently allocate shareholder resources,” Dietrich wrote when reached via e-mail Friday.
Some creditors chose to convert the debt into shares of MassRoots stock. Since March, MassRoots paid its noteholders $1.47 million in cash; and roughly 2.38 million shares were converted at a price of 32.8 cents per share.
MassRoots has $209,100 in debt, which has a maturity date in March 2017, Dietrich wrote via e-mail.
