Item
1.01 Entry into a Material Definitive Agreement.
On
February 11, 2019, MassRoots, Inc. (“MassRoots,” the “Company” or “we”) entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with MassRoots Supply Chain, Inc., a wholly-owned subsidiary of the Company
(“Merger Subsidiary”), Cowa Science Corporation, a Delaware corporation (“Cowa”), and Christopher Alameddin,
an individual acting solely in his capacity as a stockholder representative (“Stockholder Representative”). Pursuant
to the Merger Agreement, Merger Subsidiary will be merged with and into Cowa, whereby the separate corporate existence of Merger
Subsidiary will cease and Cowa will be the surviving entity (the “Surviving Entity”) and will be a wholly-owned subsidiary
of the Company (the “Merger”).
Upon
effectiveness of the Merger (such time, the “Effective Date”), MassRoots will issue 50,000,000 shares of its common
stock, par value $0.001 per share (“Common Stock”) to the stockholders of Cowa, allocated
pro-rata
based
on each stockholder’s respective holdings of Cowa immediately prior to the Effective Date; and each share of the common
stock of Merger Subsidiary will be converted into one newly issued, fully paid and non-assessable share of common stock of the
Surviving Entity. If (i) within three (3) years after the Effective Date, Cowa has generated an aggregate of $2.5 million in revenue,
the Company shall issue an aggregate of 25 million shares of Common Stock to the Cowa stockholders; and (ii) within three (3)
years after the Effective Date, Cowa has generated an aggregate of $7.5 million in revenue (inclusive of the $2.5 million in revenue
generated in clause (i)), the Company shall issue an aggregate of 25 million additional shares of Common Stock to the Cowa stockholders.
The
closing of the Merger is subject to various conditions, including, but not limited to, (a) the adoption of the Merger and the
Merger Agreement by the Cowa stockholders, (b) the delivery of certain audited financial statements by Cowa, (c) the Company or
the Surviving Enity’s employment of previous Cowa employees Christopher Alameddin, Joseph Boudreau, Nickolas Brait, and
Lauren Harris, and (d) receipt of a signed lock-up/leak-out agreement, pursuant to which each Cowa stockholder will agree to not
sell shares of Common Stock received in the Merger until the earlier of (a) December 17, 2019 or (b) the repayment of a certain
promissory note as described in the Merger Agreement (the “Initial Term”). During the three (3) year period following
the Initial Term, provided that certain liquidity thresholds have been met, the Cowa stockholders will be permitted to sell a
portion of the shares of Common Stock received in the Merger, with the portion of shares eligible to be sold to be determined
based upon the stock price of the Common Stock.
In
the event the Merger has not closed by May 15, 2019, the Company may terminate the Merger Agreement upon providing written
notice to Cowa. The Board of Directors of MassRoots have approved the Merger Agreement, the Merger and the other transactions
contemplated thereby.
The
foregoing is only a brief description of the material terms of the Merger Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated herein by reference, and is qualified in its entirety by reference to such exhibit.
Cautionary
Note Regarding Forward-Looking Statements
This Current Report on Form 8-K includes information that may
constitute forward-looking statements. These forward-looking statements are based on the Company’s current beliefs, assumptions
and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature,
forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual
events and results, as well as the Company’s expectations, to differ materially from those expressed in or contemplated by
the forward-looking statements. Risk factors affecting the Company are discussed in detail in the Company’s filings with
the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.