Item 1.01 Entry into a Material Definitive Agreement.
Private Placement
On November 29, 2021, MassRoots, Inc. (the “Company”)
entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors as
purchasers (the “Investors”). Pursuant to the Securities Purchase Agreement, the Company sold, and the Investors purchased,
approximately $37,700,000, which consisted of approximately $33.0 million in cash and $4.7 million of existing debt of the Company which
was exchanged for the notes and warrants issued in this offering (collectively, the “Purchase Price”) in principal amount
of senior secured convertible notes (the “Senior Notes”) and warrants (the “Warrants”). The transaction closed
on November 30, 2021.
The Senior Notes were issued with an original
issue discount of 6%, bear interest at the rate of 6% per annum, and mature after 6 months, on May 30, 2022. The Senior Notes are convertible
into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a conversion price per share
of $0.05, subject to adjustment under certain circumstances described in the Senior Notes. To secure its obligations thereunder and under
the Securities Purchase Agreement, the Company has granted a security interest over substantially all of its assets to the collateral
agent for the benefit of the Investors, pursuant to a pledge and security agreement. Upon the listing of the Common Stock on a national
exchange and certain other conditions being met, the Senior Notes issued in this offering will automatically convert into Common Stock
at the conversion price set forth in the Senior Notes.
The maturity date of the Senior Notes may be extended
by the Company prior to the initial maturity date to November 30, 2022 if no Equity Conditions Failure is occurring. The maturity date
of the Senior Notes also may be extended by the holders under other circumstances specified therein. If the Company is unable to extend
the Senior Notes or elects not to do so, the Company will be required to repay the Senior Notes through equity issuances, additional borrowings,
cash flows from operations and/or other sources of liquidity.
The Warrants are exercisable for five (5) years
to purchase an aggregate of 754,299,320 shares of Common Stock at an exercise price of $0.065, subject to adjustment under certain circumstances
described in the Warrants.
In addition, each of the directors and officers
of the Company entered into lock-up agreements, which prohibit sales of the Common Stock for six months, subject to certain exceptions.
The Company is utilizing the proceeds of this
offering to redeem all of its outstanding Series X and Series Y preferred shares, retire debt outstanding prior to the offering, and to
expand operations aimed at accelerating growth.
The issuance of the Senior Notes and Warrants
is being made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act.
The Company has agreed to file a registration statement registering the resale by the Investors of up to 300% of the shares issuable upon
conversion of the Senior Notes and exercise of the Warrants. The Company has agreed to file such registration statement with the Securities
and Exchange Commission, or SEC, by December 10, 2021, and seek effectiveness within 60 days following the date of the Securities Purchase
Agreement, or 90 days in the event of a full review of the registration statement by the SEC.
The Securities Purchase Agreement and certain
other transaction documents have been attached as exhibits to this report to provide security holders with information regarding their
terms. They are not intended to provide any other factual information about the parties to the transaction documents or any of their respective
affiliates. The representations, warranties and covenants contained in the transaction documents were made only for the purposes of such
transaction documents and as of specified dates, were solely for the benefit of the parties to such transaction documents and may be subject
to limitations agreed upon by the contracting parties. The representations and warranties may have been made for the purposes of allocating
contractual risk between the parties to the transaction documents instead of establishing these matters as facts and may be subject to
standards of materiality applicable to the contracting parties that differ from those applicable to security holders. Security holders
are not third-party beneficiaries under the transaction documents. Accordingly, they should not rely on the representations, warranties
and covenants contained in the transaction documents or any descriptions thereof as characterizations of the actual state of facts or
condition of any of the parties or any of their respective affiliates.