This morning, MassRoots (OTC:MSRT) shareholders learned that the SEC has allowed it to sell up to 6.2mm units consisting of shares of stock and warrants to buy additional stock. The company, which announced its intention to move from the OTC to the NASDAQ on August 31st,  had originally filed an S-1 on September 3rd as part of the process.  In order to qualify, one of the conditions MassRoots must meet is to have minimum equity of $4mm, and selling additional shares would help them meet this criterion. It can reverse-split, if necessary, to meet the $4 minimum, and the company has indicated that it can quickly move to meet additional corporate governance requirements. NASDAQ lists the entire set here .

MassRoots amended the S-1 filing several times, the last of which was on October 29th. The SEC has had a policy of not allowing companies in the cannabis industry to accelerate the effectiveness of these statements, though this policy appears to apply to companies that directly cultivate, process or sell cannabis as opposed to companies like MassRoots that provide ancillary services, though the agency hasn’t made public comment.  Without the statement of effectiveness, the company would have been required to wait 20 days following an S-1 submission that doesn’t generate comments from the SEC, so this action saves the company over two weeks.  The SEC had recently allowed acceleration of an S-1 by Denver-based Medicine Man Technologies, which hasn’t yet begun to trade publicly, so this is not unprecedented.

This morning, the Notice of Effectiveness was filed by MassRoots:

The company can now proceed with selling up to 6.2mm units.  If all of the units are sold, the fully-diluted number of shares, including all options, convertible debentures and warrants, would rise to 72mm shares. As the S-1 indicates, the company has three months to sell securities, though it may extend the period by up to three additional months. MassRoots stock has rallied sharply since the announcement in late August, but it has pulled back from its recent peak:

MassRoots is expected to file its 10-Q with the SEC within the next two weeks. For more information on the company, visit http://corporate.massroots.com/

Breaking News by Alan Brochstein, CFA

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email