MassRoots, Inc. (MSRT) Releases Shareholder Update and Plans for Continued Growth

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.