The chaotic corporate tale of marijuana tech firm MassRoots has entered a new chapter with the Denver-based company making its second executive change in as many months.
Company founder Isaac Dietrich, who was ousted and subsequently sued by MassRoots’ board of directors, reclaimed his post as the firm’s CEO, according to a filing made early Thursday morning with the U.S. Securities and Exchange Commission.
The reappointment of 25-year-old founder Dietrich coincided with the resignations of interim CEO Scott Kveton and of three MassRoots directors in addition to the appointments of three new board members whom Dietrich floated as replacements in a preliminary proxy filing made Nov. 20.
“The board’s resigned; my slate of candidates have been appointed,” Dietrich told The Cannabist Wednesday morning. “It didn’t require going to an actual vote … everyone realized that I was going to win.”
Dietrich said he plans to evaluate the partnerships developed or expanded under his predecessor’s tenure, including a data licensing agreement with New Frontier Data, a Washington, D.C.-based analytics firm.
Kveton, in his brief tenure, had trumpeted MassRoots’ potential to be a leading provider of consumer- and business-focused technologies including a dispensary locator, social network, point-of-sale and ordering systems. MassRoots was one of the first cannabis companies to trade on the public markets.
Shares of MassRoots (OTC: MSRT) were trading down more than 13 percent in morning trading to 27 cents per share.
“I think you’re going to see quite a bit of movement over the next few weeks, especially on our cryptocurrency (efforts),” Dietrich said, alluding to previously disclosed plans for an initial coin offering.
Dietrich also claimed that his reappointment also will result in the dismissal of a lawsuit filed against him Nov. 14 in Denver District Court.
The complaint alleged Dietrich violated the terms of his separation agreement by enriching himself with more than $250,000 of the company’s funds and for publicly disparaging the firm after he was fired. The complaint also claimed that “serious misconduct,” including “illegal drug use at the workplace, improper sexual activities involving the workplace, and misappropriation and misuse of company funds,” resulted in Dietrich’s firing in mid-October.
Kveton, in an email to The Cannabist, was brief in his response.
“I have resigned from the company and Isaac is now the CEO,” he wrote. “I wish him and the new board the best of luck moving forward.”
As of Wednesday, MassRoots’ board consists of Charles R. Blum, 79, a former CEO of QS Energy, a Texas oil and gas technology firm; Cecil Kyte, 46, a former executive with Rightscorp, an L.A.-area copyright enforcement firm; and Nathan Shelton, 68, a former director of QS Energy.
Departing the board are: Terence Fitch, a former beverage industry executive who logged two decades at Coca-Cola; Vincent “Tripp” Keber, the chief executive of cannabis infused products company Dixie Elixirs; and Ean Seeb, co-founder of consulting firm Denver Relief LLC.
As part of their separation agreements, Fitch, Keber and Seeb received compensation and warrants to purchase additional shares of MassRoots, according to Thursday’s filing with the SEC. The amounts of the compensation and shares were not immediately disclosed, although the terms of the agreement include the cancellation of restricted stock awards made July 24 to the trio.
Fitch, Keber and Seeb could not be reached for comment on Wednesday.
Dietrich’s new employment agreement includes an annual salary of $145,000 and the potential to receive an annual bonus and equity awards.
Dietrich’s previous salary totaled $95,000, SEC filings show. In October 2016, Dietrich’s annual pay was reduced from $130,000 as part of a board-approved reduction in executive salaries, according to SEC documentation.
Through the first nine months of 2017, MassRoots recorded a net loss of $26.2 million, or 28 cents per share, and revenue of $289,130, according to financial statements filed with the SEC.
Dietrich’s reappointment was reported on marijuana-centric site Leafly, which referenced an SEC filing posted Wednesday. Dietrich provided drafts of a proposed SEC filing Wednesday to outlets such as The Cannabist and Marijuana Business Daily; however MassRoots’ 8-K filing was not posted to the SEC until 4 a.m. MT Thursday.