On Sept. 26, 2016, Massroots (OTCQB:MSRT) issued a letter from Isaac Dietrich, Chairman and Chief Executive Officer, on the company’s outlook for Fall 2016, including updates on the product pipeline, user growth and expense reductions, among others; however, the letter failed to address the company’s recent default on debt.
According to Form 8-K filed by Massroots with the U.S. Securities and Exchange Commission on Sept. 21, “On March 14, 2016, the Company sold $1,514,667 in principal face amount of six month convertible secured promissory notes (the “Notes”) to certain accredited investors.” When Sept. 14 rolled around, Massroots still owed $966,384.27 on the notes, i.e., it defaulted on the debt owed to the accredited investors.
“Under terms of the default, MassRoots issued 319,008 shares of common stock to its creditors Sept. 20 as a result of failing to repay the promissory notes within six months. As of Aug. 17. the company had issued 51 million shares of common stock,” as reported by BusinessDen.
While a default on debt is a material event, prompting the 8-K filing, Dietrich did not mention it in his letter to shareholders, but painted a positive picture of the company’s future instead.
“MassRoots recently reported in our second quarter financial results that we generated more revenue in a single quarter than all previous quarters combined,” Dietrich said. “Partnered with sizeable reductions in operating expenditures made this summer, we expect that MassRoots will be cash-flow positive on a monthly basis by the end of 2016.”
In regards to the reduction in operating expenditures, from July to September 2016, the company cut 14 full-time employees and ended relationships with some of its vendors to lower its monthly expenses.
“It’s not an ideal situation, by any stretch of the imagination,” Dietrich told The Denver Post.