MassRoots, Inc. (OTCMKTS:MSRT) Files An 8-K Entry into a Material Definitive Agreement

MassRoots, Inc. (OTCMKTS:MSRT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

On July 5, 2018 (the “Effective Date”), MassRoots, Inc. (the “Company”) entered into separate securities purchase agreements (each a “Securities Purchase Agreement”) with certain accredited investors (the “Investors”) to which it sold an aggregate of $1,650,000 in principal amount of convertible secured promissory notes (each a “Note” and collectively, the “Notes”) (including an original issuance discount of 10%) together with warrants (each a “Warrant” and collectively, the “Warrants”) to purchase up to 3,300,000 shares of the Company’s common stock (the “Offering”).

to the terms of the Securities Purchase Agreement, from a period of twelve months from the Effective Date, the Company and its subsidiaries are prohibited from entering into an agreement to effect any offer or sale of any securities involving a Variable Rate Transaction (as defined in the Securities Purchase Agreement). In addition, from the Effective Date until such time that no principal amount of the Notes remains outstanding, upon any issuance by the Company or any of its subsidiaries of common stock, Common Stock Equivalents (as defined in the Securities Purchase Agreement) or debt for cash consideration, indebtedness or a combination thereof (a “Subsequent Financing”), the Investors shall, collectively, have the right to participate in the Subsequent Financing in an amount equal to up to 50% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing; provided, however, such right shall not apply with respect to an Exempt Issuance (as defined in the Securities Purchase Agreement). Furthermore, to the terms of the Securities Purchase Agreement, if the Company does not repay amounts due to the Notes by the Maturity Date (as defined herein), then the Company shall issue to the Investors up to 250,000 shares of the Company’s common stock on a pro rata basis.

to the Offering, the Company issued the Investors Notes in the aggregate principal amount of $1,650,000 (including an original issuance discount of 10%). The Notes are due and payable on January 5, 2019 (the “Maturity Date”), bear no interest and are convertible into shares of the Company’s common stock at the Conversion Price, subject to adjustment. “Conversion Price” means the lower of (i) $0.25 and (ii) a 15% discount to the price at which the Company next issues common stock or Common Stock Equivalents (as defined in the Securities Purchase Agreement) after the Effective Date; provided, however, in the event that any principal amount of the Note remains outstanding after the Maturity Date, the Conversion Price shall equal 65% of the average of the three lowest daily volume weighted average prices during the 15 days prior to the Maturity Date. The Company is prohibited from effecting a conversion of any Note to the extent that, as a result of any such conversion, the holder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Note, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. In the event the Company issues shares of common stock or Common Stock Equivalents (as defined in the Securities Purchase Agreement), other than Exempted Issuances (as defined in the Securities Purchase Agreement), for a consideration which is less than the Conversion Price then in effect, then thereafter successively upon each such issuance, the Conversion Price shall be reduced to such lower price. If any Event of Default (as defined in the Note) occurs, then the outstanding principal amount of the Note and other amounts owing in respect thereof shall, at the holder’s election, become immediately due and payable in cash at the Mandatory Default Amount (as defined in the Note). In addition, after the occurrence of any Event of Default that results in the acceleration of the Note, the Note shall accrue interest at an interest rate equal to the lesser of (i) 2% per month or (ii) the maximum rate permitted under applicable law. The Notes may be prepaid at any time upon five days prior written notice to the holder in an amount equal to the following: (i) during the first 90 days after the Effective Date, an amount equal to the principal amount of the Note multiplied by 110% and (ii) after the first 90 days after the Effective Date, an amount equal to the principal amount of the Note multiplied by 125% (collectively, the “Prepayment Multiplier”). If the Company participates in any Subsequent Financing, receives cash proceeds from warrant exercises, or sells any of its assets other than in the ordinary course, while any portion of the Notes remains outstanding, any proceeds of such Subsequent Financing, warrant exerciseor asset sale must be applied toward repayment of the Notes, subject to the Prepayment Multiplier.

to the Offering, the Company issued the Investors Warrants to purchase up to 3,300,000 shares of the Company’s common stock. The Warrants are exercisable at any time on or after the initial issuance date at a price of $0.25 per share, subject to adjustment (the “Exercise Price”), and expire five years from the date of issuance. Under certain circumstances, holders of the Warrants may exercise the Warrants on a cashless basis and the Company is prohibited from effecting an exercise of any Warrant to the extent that, as a result of any such exercise, the holder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of such Warrant, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. In the event the Company issues shares of common stock or Common Stock Equivalents (as defined in the Securities Purchase Agreement), other than Exempted Issuances (as defined in the Securities Purchase Agreement), for a consideration which is less than the Exercise Price then in effect, then thereafter successively upon each such issuance, the Exercise Price shall be reduced to such lower price.

to the Offering, the Company entered into a security agreement (the “Security Agreement”) with the Investors to which the Company granted the Investors a security interest in the Company’s Collateral (as defined in the Security Agreement) to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Notes.

The foregoing descriptions of the Securities Purchase Agreement, Note, Warrant and Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Securities Purchase Agreement, Note, Warrant and Security Agreement, which are attached as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

On July 5, 2018, the Company entered into Securities Purchase Agreements with the Investors to which it sold an aggregate of $1,650,000 in principal amount of Notes and Warrants to purchase up to 3,300,000 shares of the Company’s common stock. The details of this transaction are described in Item 1.01, which is incorporated by reference in its entirety into this Item 3.02.

The Notes and Warrants (and the securities issuable upon conversion or exercise thereof) have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and issued in reliance on the exemption from registration under the Securities Act afforded by Rule 506 of Regulation D and Section 4(a)(2) thereof.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits.


MassRoots, Inc. Exhibit
EX-10.1 2 f8k070518ex10-1_massrootsinc.htm FORM OF SECURITIES PURCHASE AGREEMENT Exhibit 10.1   SECURITIES PURCHASE AGREEMENT   This Securities Purchase Agreement (this “Agreement”) is dated as of July 5,…
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About MassRoots, Inc. (OTCMKTS:MSRT)

MassRoots, Inc. (MassRoots) is a United States-based company, which offers technology platforms for the cannabis industry. The Company’s mobile applications enable consumers to provide community-driven reviews of cannabis strains and products, enabling consumers to make cannabis purchasing decisions. Through its mobile applications and Web portal, users utilize MassRoots to share their cannabis content, stay connected with the legalization news and follow their preferred dispensaries. Its mobile application features dispensary finder and menus; product pages and reviews, and Sponsored Posts 2.0. It provides business dashboards featuring MassRoots’ product data in actionable formats. The Company focuses on introducing other features for users and index the network’s public content on Google for software engine optimization (SEO) value. The Company gains insights into consumer trends by aggregating data from various cannabis consumers.

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