As filed with the Securities and Exchange Commission on January 12, 2022

Registration No. 333-261771

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

AMENDMENT NO. 1

to

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

GREENWAVE TECHNOLOGY SOLUTIONS, INC. (f/k/a MassRoots, Inc.)

(Exact name of registrant as specified in its charter)

 

Delaware		7370		46-2612944
(State or other jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer
incorporation or organization)		Classification Code		Identification Number)

 

277 Suburban Drive, Suffolk, VA 23434 

(757) 966-1432

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Danny Meeks

Chief Executive Officer

277 Suburban Drive

Suffolk, VA 23434

(757) 966-1432

 

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

M. Ali Panjwani

Pryor Cashman LLP

7 Times Square

New York, NY 10036

212-326-0820

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒ 

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ☐ 

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ☐ 

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ☐ 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

 

 

CALCULATION OF REGISTRATION FEE

 

						Proposed				Proposed
						Maximum				Maximum
		Amount				Offering				Aggregate				Amount of
Title of Each Class of Securities to be Registered (1)		to be Registered				Price Per Share (2)				Offering Price (2)				Registration Fee (4)
Common Stock, par value $0.001 per share (3)			4,525,795,918			$	0.05			$	226,289,795.90			$	20,977.06
Total			4,525,795,923			$	0.05			$	226,289,795.90			$	20,977.06

 

(1)

The shares of our common stock being registered hereunder are being registered for sale by the selling security holders named in the prospectus. Under Rule 416 of the Securities Act of 1933, as amended, the shares being registered include such indeterminate number of shares of common stock as may be issuable with respect to the shares being registered in this registration statement as a result of any stock splits, stock dividends or other similar event.

 

(2)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.  Our common stock is not traded on any national exchange. The price of $0.05 is a fixed price at which the selling stockholders may sell their shares until our common stock is listed on a national securities exchange or are quoted on the OTC Bulletin Board or the OTCQX marketplace, at which time the shares may be sold at prevailing market prices or privately negotiated prices.

 

(3)

Represents shares of common stock issuable upon (a) conversion outstanding convertible debt into shares of common stock and (b) shares of common stock issuable upon exercise of outstanding warrants to purchase shares of common stock, in each case, offered by the selling stockholders.

 

(4)	All of which has been previously paid.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS - SUBJECT TO COMPLETION

 

Dated January 12, 2022

 

 

4,525,795,918 Shares of Common Stock

 

This prospectus relates to the sale or other disposition from time to time by the selling stockholders of Greenwave Technology Solutions, Inc., a Delaware corporation (f/k/a MassRoots, Inc.) (the “Company”) identified in this prospectus of up to 4,525,795,918 shares of our common stock, par value par value $0.001 per share (“Common Stock”), including 754,299,325 shares of Common Stock issuable upon conversion of outstanding convertible debt and 754,299,323 shares of Common Stock issuable upon exercise of outstanding warrants (collectively, the “Resale Shares”). All of the Resale Shares were initially purchased from the Company in private placement transactions and are being offered for resale by the selling stockholders. For a description of the transactions pursuant to which this resale registration statement relates, please see “Recent Unregistered Financings.”

 

The Resale Shares may be sold by the selling stockholders to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information regarding the methods of sale you should refer to the section entitled “Plan of Distribution” in this Prospectus.

 

The Resale Shares may be sold by the selling stockholder at $0.05 per share until the shares are listed on a national securities exchange or quoted on the OTC Bulletin Board, the OTCQX marketplace or the OTCQB marketplace. Thereafter, the prices at which the selling stockholders may sell the Resale Shares will be determined by the prevailing market price for shares of the Company’s Common Stock or in negotiated transactions. We will not receive any proceeds from the sale of the Resale Shares by the selling stockholders; however, we will receive the proceeds from any cash exercise of warrants.

 

We will bear all costs relating to the registration of the Resale Shares, other than any selling stockholders legal or accounting costs or commissions. We will not be paying any underwriting discounts or commissions in this offering.

 

Our Common Stock is presently quoted on the OTC Pink tier of the OTC Markets Group, Inc. (“OTC Pink”) under the symbol “MSRT.” The closing price of our Common Stock on December 16, as reported by OTC Markets Group, Inc., was $0.05 per share.

 

Investing in our Common Stock involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 5 of this prospectus and elsewhere in this prospectus for a discussion of information that should be considered in connection with an investment in our Common Stock.

 

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

 

We have not registered the sale of the Resale Shares under the securities laws of any state. Brokers or dealers effecting transactions in the Resale Shares should confirm that the shares have been registered under the securities laws of the state or states in which sales of the shares occur as of the time of such sales, or that there is an available exemption from the registration requirements of the securities laws of such states.

 

We have not authorized anyone, including any salesperson or broker, to give oral or written information about this offering, Greenwave Technology Solutions, Inc., or the Resale Shares that is different from the information included in this prospectus. You should not assume that the information in this prospectus, or any supplement to this prospectus, is accurate at any date other than the date indicated on the cover page of this prospectus or any supplement to it.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is January ___, 2022.

 

 

TABLE OF CONTENTS

 

	Page
Cautionary Note Regarding Forward-Looking Statements	ii
Prospectus Summary	1
Risk Factors	5
Use of Proceeds	15
Dividend Policy	15
Issuance of Securities to Selling Stockholders	15
Selling Stockholders	16
Description of Securities	20
Plan of Distribution	21
Description of Business	23
Market for Common Equity and Related Stockholder Matters	25
Management’s Discussion and Analysis of Financial Condition and Results of Operation	27
Quantitative and Qualitative Disclosures About Market Risk	37
Directors, Executive Officers, Promoters and Control Persons	37
Corporate Governance	38
Executive Compensation	40
Security Ownership Of Certain Beneficial Owners And Management	44
Certain Relationships And Related Party Transactions And Director Independence	45
Legal Matters	46
Experts	46
Where You Can Find More Information	46
Financial Statements	F-1

 

You should rely only on the information contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available to you. We have not authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may only be used where it is legal to offer and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer to sell these securities and are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

 

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements in this prospectus are “forward-looking statements” within the meaning of the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our current beliefs, goals and expectations about matters such as our expected financial position and operating results, our business strategy and our financing plans. The forward-looking statements in this prospectus are not based on historical facts, but rather reflect the current expectations of our management concerning future results and events. The forward-looking statements generally can be identified by the use of terms such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “guidance,” “estimate,” “potential,” “outlook,” “target,” “forecast,” “likely” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. We cannot guarantee that our forward-looking statements will turn out to be correct or that our beliefs and goals will not change. Our actual results could be very different from and worse than our expectations for various reasons. You should review carefully all information, including the discussion under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus or under similar headings in any accompanying prospectus supplement. Any forward-looking statements in this prospectus are made only as of the date hereof and, except as may be required by law, we do not have any obligation to publicly update any forward-looking statements contained in this prospectus to reflect subsequent events or circumstances.

 

 

RISK FACTORS

 

An investment in our common stock involves a high degree of risk. The risks described below include all material risks to our company or to investors in this offering that are known to our company. You should carefully consider such risks before participating in this offering. If any of the following risks actually occur, our business, financial condition and results of operations could be materially harmed. As a result, the trading price of our common stock could decline, and you might lose all or part of your investment. When determining whether to buy our common stock, you should also refer to the other information in this prospectus, including our financial statements and the related notes included elsewhere in this prospectus.

 

Risks Relating to Our Business and Industry

 

The coronavirus disease 2019 (COVID-19) pandemic has had, and may continue to have, an adverse effect on our business, results of operations, financial condition and cash flows. Future epidemics or other public health emergencies could have similar effects.

 

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the COVID-19 pandemic which spread from China to many other countries including the United States. In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The outbreak resulted in governments around the world implementing stringent measures to help control the spread of the virus, followed by phased regulations and guidelines for reopening communities and economies. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

 

We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with federal guidelines and with state and local orders to date, we have continued to operate across our footprint. Notwithstanding our continued operations, COVID-19 has negatively impacted and may have further negative impacts on our financial performance, operations, supply chain and flows of raw materials, transportation and logistics networks and customers. Due in large part to the impacts of and response to the spread of COVID-19, global economic conditions declined sharply during the second quarter of fiscal 2020, resulting in historic unemployment levels, rapid changes in supply and demand in certain industry sectors, businesses switching to remote work or ceasing operations, and consumers eliminating, restricting or redirecting spending. The economic downturn adversely affected demand for our products and contributed to weaker supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials. During fiscal 2020, in particular the second quarter, our operations, margins and results were adversely impacted by lower sales volumes of recycled metals driven by severely constrained supplies of scrap metal including end-of-life vehicles, leading to lower processed volumes at our recycling facilities. We also experienced significant decreases in selling prices for our recycled metal products, softer demand, supply chain disruptions, reduced availability of shipping containers, and other logistics constraints.

 

The COVID-19 pandemic could further negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, disrupting scrap metal inflows to our recycling facilities, limiting our ability to process scrap metal through our shredder, inhibiting the manufacture of steel products at our steel mill, and delaying or preventing deliveries to our customers, among others. In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of prevention and control measures, which may significantly hamper our production throughout the supply chain and constrict sales channels.

 

Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, continually changing and difficult to predict, the pandemic’s impacts on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategies and initiatives, are also uncertain and difficult to predict. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transportation and workforce pressures); the impact of the pandemic and actions taken in response on global and regional economies and on levels of economic activity; the availability of federal, state or local funding programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides. While we expect the COVID-19 pandemic to continue to negatively impact our results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time.

 

We operate in industries that are cyclical and sensitive to general economic conditions, which could have a material adverse effect on our operating results, financial condition and cash flows

 

Demand for most of our products is cyclical in nature and sensitive to general economic conditions. The timing and magnitude of the cycles in the industries in which our products are used, including global steel manufacturing and nonresidential and infrastructure construction in the U.S., are difficult to predict. The cyclical nature of our operations tends to reflect and be amplified by changes in economic conditions, both domestically and internationally, and foreign currency exchange fluctuations. Economic downturns or a prolonged period of slow growth in the U.S. and foreign markets or any of the industries in which we operate could have a material adverse effect on our results of operations, financial condition and cash flows.

 

 

Changing conditions in global markets including the impact of sanctions and tariffs, quotas and other trade actions and import restrictions may adversely affect our operating results, financial condition and cash flows

 

A significant portion of the metal we process is sold to end customers located outside the U.S., including countries in Asia, the Mediterranean region and North, Central and South America. Our ability to sell our products profitably, or at all, is subject to a number of risks including adverse impacts of political, economic, military, terrorist or major pandemic events; labor and social issues; legal and regulatory requirements or limitations imposed by foreign governments including quotas, tariffs or other protectionist trade barriers, sanctions, adverse tax law changes, nationalization, currency restrictions, or import restrictions for certain types of products we export; and disruptions or delays in shipments caused by customs compliance or other actions of government agencies. The occurrence of such events and conditions may adversely affect our operating results, financial condition and cash flows.

 

For example, in fiscal 2017, regulators in China began implementing the National Sword initiative involving inspections of Chinese industrial enterprises, including recyclers, in order to identify rules violations with respect to discharge of pollutants or illegally transferred scrap imports. Restrictions resulting from the National Sword initiative include a ban on certain imported recycled products, lower contamination limits for permitted recycled materials, and more comprehensive pre- and post-shipment inspection requirements. Disruptions in pre-inspection certifications and stringent inspection procedures at certain Chinese destination ports have limited access to these destinations and resulted in the renegotiation or cancellation of certain nonferrous customer contracts in connection with the redirection of such shipments to alternate destinations. Commencing July 1, 2019, China imposed further restrictions in the form of import license requirements and quotas on certain scrap products, including certain nonferrous products we sell. Chinese import licenses and quotas are issued to Chinese scrap consumers on a quarterly basis for the importation of scrap products. Since the implementation of this program, the size of import quotas has been steadily reduced on a quarter-over-quarter basis. We have continued to sell our recycled metal products into China; however, additional or modified license requirements and quotas, as well as additional product quality requirements, may be issued in the future. We believe that the potential impact on our recycling operations of the Chinese regulatory actions described above could include requirements that would necessitate additional processing and packaging of certain nonferrous recycled scrap metal products, increased inspection and certification activities with respect to exports to China, or a change in the use of our sales channels in the event of delays in the issuance of licenses, restrictive quotas or an outright ban on certain or all of our recycled metals products by China. As regulatory developments progress, we may need to make further investments in nonferrous processing equipment beyond existing planned investments where economically justified, incur additional costs in order to comply with new inspection requirements, or seek alternative markets for the impacted products, which may result in lower sales prices or higher costs and may adversely impact our business or results of operations.

 

In March 2018, the U.S. imposed a 25 percent tariff on certain imported steel products and a 10 percent tariff on certain imported aluminium products under Section 232 of the Trade Expansion Act of 1962. These new tariffs, along with other U.S. trade actions, have triggered retaliatory actions by certain affected countries, and other foreign governments have initiated or are considering imposing trade measures on other U.S. goods. For example, China has imposed a series of retaliatory tariffs on certain U.S. products, including a 25 percent tariff on all grades of U.S. scrap and an additional 25 percent tariff on U.S. aluminium scrap. These tariffs and other trade actions could result in a decrease in international steel demand beyond that already experienced and further negatively impact demand for our products, which would adversely impact our business. Given the uncertainty regarding the scope and duration of these trade actions by the U.S. or other countries, the impact of the trade actions on our operations or results remains uncertain, but this impact could be material.

 

Changes in the availability or price of inputs such as raw materials and end-of-life vehicles could reduce our sales

 

Our businesses require certain materials that are sourced from third party suppliers. Industry supply conditions generally involve risks, including the possibility of shortages of raw materials, increases in raw material and other input costs, and reduced control over delivery schedules. We procure our scrap inventory from numerous sources. These suppliers generally are not bound by long-term contracts and have no obligation to sell scrap metal to us. In periods of declining or lower scrap metal prices suppliers may elect to hold scrap metal to wait for higher prices or intentionally slow their metal collection activities, tightening supply. If a substantial number of suppliers cease selling scrap metal to us, we will be unable to recycle metal at desired levels, and our results of operations and financial condition could be materially adversely affected. For instance, in the second quarter of fiscal 2020 a lower price environment for recycled metals in combination with economic and other restrictions on suppliers relating to COVID-19 severely constricted the supply of scrap metal including end-of-life vehicles, which resulted in significantly reduced processed volumes. A slowdown of industrial production in the U.S. may also reduce the supply of industrial grades of metal to the metals recycling industry, resulting in less recyclable metal available to process and market. Increased competition for domestic scrap metal, including as a result of overcapacity in the scrap recycling industry in the U.S. and Canada, may also reduce the supply of scrap metal available to us. Failure to obtain a steady supply of scrap material could both adversely impact our ability to meet sales commitments and reduce our operating margins. Failure to obtain an adequate supply of end-of-life vehicles could adversely impact our ability to attract customers and charge admission fees and reduce our parts sales. Failure to obtain raw materials and other inputs to steel production such as graphite electrodes, alloys and other required consumables, could adversely impact our ability to make steel to the specifications of our customers.

 

 

Significant decreases in scrap metal prices may adversely impact our operating results

 

The timing and magnitude of the cycles in the industries in which we operate are difficult to predict and are influenced by different economic conditions in the domestic market, where we typically acquire our raw materials, and foreign markets, where we typically sell the majority of our products. Purchase prices for scrap metal including end-of-life vehicles and selling prices for recycled scrap metal are subject to market forces beyond our control. While we attempt to respond to changing recycled scrap metal selling prices through adjustments to our metal purchase prices, our ability to do so is limited by competitive and other market factors. As a result, we may not be able to reduce our metal purchase prices to fully offset a sharp reduction in recycled scrap metal sales prices, which may adversely impact our operating income and cash flows. In addition, a rapid decrease in selling prices may compress our operating margins due to the impact of average inventory cost accounting, which causes cost of goods sold recognized in the Consolidated Statements of Operations to decrease at a slower rate than metal purchase prices.

 

For instance, in fiscal 2020, weaker market conditions for recycled metals, including as a result of the sharp decline in global economic conditions during the third quarter of fiscal 2020 in large part due to the impacts of the COVID-19 pandemic, and structural changes to the market for certain recycled nonferrous products primarily from Chinese import restrictions and tariffs, resulted in periods of sharply declining commodity prices and lower average net selling prices for our ferrous and nonferrous recycled metal products compared to fiscal 2019. As a result, operating margins in fiscal 2020 compressed as the decline in average net selling prices for our recycled metal products outpaced the reduction in purchase costs for raw materials.

 

Imbalances in supply and demand conditions in the global steel industry may reduce demand for our products

 

Economic expansions and contractions in global economies can result in supply and demand imbalances in the global steel industry that can significantly affect the price of commodities used and sold by our business, as well as the price of and demand for finished steel products. In a number of foreign countries, such as China, steel producers are generally government-owned and may therefore make production decisions based on political or other factors that do not reflect free market conditions. In the past, overcapacity and excess steel production in these foreign countries resulted in the export of aggressively priced semi-finished and finished steel products. This led to disruptions in steel-making operations within other countries, negatively impacting demand for our recycled scrap metal. Existing or new trade laws and regulations may cause or be inadequate to prevent disadvantageous trade practices, which could have a material adverse effect on our financial condition and results of operations. Although trade regulations restrict or impose duties on the importation of certain products, if foreign steel production significantly exceeds consumption in those countries, global demand for our recycled scrap metal products could decline and imports of steel products into the U.S. could increase, resulting in lower volumes and selling prices for our recycled metal products and finished steel products.

 

Impairment of long-lived assets and equity investments may adversely affect our operating results

 

Our long-lived asset groups are subject to an impairment assessment when certain triggering events or circumstances indicate that their carrying value may be impaired. If the carrying value exceeds our estimate of future undiscounted cash flows of the operations related to the asset group, an impairment is recorded for the difference between the carrying amount and the fair value of the asset group. The results of these tests for potential impairment may be adversely affected by unfavourable market conditions, our financial performance trends, or an increase in interest rates, among other factors. If, as a result of the impairment test, we determine that the fair value of any of our long-lived asset groups is less than its carrying amount, we may incur an impairment charge that could have a material adverse effect on our financial condition and results of operations. 

 

We may be unable to renew facility leases, thus restricting our ability to operate

 

We lease a significant portion of our facilities. The cost to renew such leases may increase significantly, and we may not be able to renew such leases on commercially reasonable terms or at all. Failure to renew these leases or find suitable alternative locations for our facilities may impact our ability to continue operations within certain geographic areas, which could have a material adverse effect on our financial condition, results of operations and cash flows.

 

 

Increases in the value of the U.S. dollar relative to other currencies may reduce the demand for our products

 

A significant portion of our recycled scrap metal revenues is generated from sales to foreign customers, which are denominated in U.S. dollars, including customers located in Asia, the Mediterranean region and North, Central and South America. A strengthening U.S. dollar, as experienced during recent years including fiscal 2020, makes our products more expensive for non-U.S. customers, which may negatively impact export sales. A strengthening U.S. dollar also makes imported metal products less expensive, which may result in an increase in imports of steel products into the U.S. As a result, our finished steel products, which are made in the U.S., may become more expensive for our U.S. customers relative to imported steel products thereby reducing demand for our products.

 

Equipment upgrades, equipment failures and facility damage may lead to production curtailments or shutdowns

 

Our business operations and recycling and manufacturing processes depend on critical pieces of equipment, including information technology equipment, shredders, nonferrous sorting technology, furnaces and a rolling mill, which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures. Our facilities are subject to equipment failures and the risk of catastrophic loss due to unanticipated events such as fires, earthquakes, accidents or violent weather conditions. Interruptions in our processing and production capabilities and shutdowns resulting from unanticipated events could have a material adverse effect on our financial condition, results of operations and cash flows.

 

We are subject to legal proceedings and legal compliance risks that may adversely impact our financial condition, results of operations and liquidity

 

We spend substantial resources ensuring that we comply with domestic and foreign regulations, contractual obligations and other legal standards. Notwithstanding this, we are subject to a variety of legal proceedings and compliance risks in respect of various matters, including regulatory, safety, environmental, employment, transportation, intellectual property, contractual, import/export, international trade and governmental matters that arise in the course of our business and in our industry. An outcome in an unusual or significant legal proceeding or compliance investigation in excess of insurance recoveries could adversely affect our financial condition and results of operations. For information regarding our current significant legal proceedings and contingencies, see “Legal Proceedings” in Part I, Item 3 and “Contingencies – Other” within Note 9 - Commitments and Contingencies in Part II, Item 8 of this report.

 

Climate change may adversely impact our facilities and our ongoing operations

 

The potential physical impacts of climate change on our operations are highly uncertain and depend upon the unique geographic and environmental factors present, for example rising sea levels at deep water port facilities, changing storm patterns and intensities, and changing temperature levels. As many of our recycling facilities are located near deep water ports, rising sea levels may disrupt our ability to receive scrap metal, process the scrap metal through our shredders and ship products to our customers. Extreme weather events and conditions, such as hurricanes, thunderstorms, tornadoes, wildfires and snow or ice storms, may increase our costs or cause damage to our facilities, and any damage resulting from extreme weather may not be fully insured. Increased frequency and duration of adverse weather events and conditions may also inhibit construction activity utilizing our products, scrap metal inflows to our recycling facilities, and retail admissions and parts sales at our auto parts stores. Potential adverse impacts from climate change, including rising temperatures and extreme weather events and conditions, may create health and safety issues for employees operating at our facilities and may lead to an inability to maintain standard operating hours.

 

We may not realize our deferred tax assets in the future

 

The assessment of recoverability of our deferred tax assets is based on an evaluation of existing positive and negative evidence as to whether it is more-likely-than-not that they will be realized. If negative evidence outweighs positive evidence, a valuation allowance is required. Impairment of deferred tax assets may result from significant negative industry or economic trends, a decrease in earnings performance and projections of future taxable income, adverse changes in laws or regulations, and a variety of other factors. Impairment of deferred tax assets could have a material adverse impact on our results of operations and financial condition and could result in not realizing the deferred tax assets. Deferred tax assets may require further valuation allowances if it is not more-likely-than-not that the deferred tax assets will be realized.

 

 

Tax increases and changes in tax rules may adversely affect our financial results

 

As a company conducting business on a global basis with physical operations throughout North America, we are exposed, both directly and indirectly, to the effects of changes in U.S., state, local and foreign tax rules. Taxes for financial reporting purposes and cash tax liabilities in the future may be adversely affected by changes in such tax rules. In many cases, such changes put us at a competitive disadvantage compared to some of our major competitors, to the extent we are unable to pass the tax costs through to our customers.

 

One or more cybersecurity incidents may adversely impact our financial condition, results of operations and reputation

 

Our operations involve the use of multiple systems, some of which are outsourced to certain third party service and hosting providers, that process, store and transmit sensitive information about our customers, suppliers, employees, financial position, operating results and strategies. We face global cybersecurity risks and threats on a continual and ongoing basis, which include, but are not limited to, attempts to access systems and information, computer viruses, or denial-of-service attacks. These risks and threats range from uncoordinated individual attempts to sophisticated and targeted measures. Increased numbers of employees working remotely increases our exposure to cyber-threats. While we are not aware of any material cyber-attacks or breaches of our systems to date, we have and continue to implement measures to safeguard our systems and information and mitigate potential risks, including employee training around phishing, malware and other cyber risks, but there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches that manipulate or improperly use our systems, compromise sensitive information, destroy or corrupt data, or otherwise disrupt our operations. The occurrence of such events, including breaches of our security measures or those of our third party service providers, could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business due to disruption of operations and/or reputational damage, potential liability and increased remediation and protection costs, any of which could have a material adverse effect on our financial condition and results of operations. Additionally, as cybersecurity risks become more sophisticated, we may need to increase our investments in security measures which could have a material adverse effect on our financial condition and results of operations.

 

Environmental compliance costs and potential environmental liabilities may have a material adverse effect on our financial condition and results of operations

 

Compliance with environmental laws and regulations is a significant factor in our business. We are subject to local, state and federal environmental laws and regulations in the U.S. and other countries relating to, among other matters:

 

●

Waste disposal;

 

●

Air emissions;

 

●

Waste water and storm water management, treatment and discharge;

 

●

The use and treatment of groundwater;

 

●

Soil and groundwater contamination and remediation;

 

●

Climate change;

 

●

Generation, discharge, storage, handling and disposal of hazardous materials and secondary materials; and

 

●

Employee health and safety.

 

We are also required to obtain environmental permits from governmental authorities for certain operations. Violation of or failure to obtain permits or comply with these laws or regulations could result in our business being fined or otherwise sanctioned by regulators or becoming subject to litigation by private parties. Future environmental compliance costs, including capital expenditures for environmental projects, may increase because of new laws and regulations, changing interpretations and stricter enforcement of current laws and regulations by regulatory authorities, expanding emissions, groundwater and other testing requirements and new information on emission or contaminant levels, uncertainty regarding adequate pollution control levels, the future costs of pollution control technology and issues related to climate change. We have seen an increased focus by federal, state and local regulators on metals recycling and auto dismantling facilities and new or expanding regulatory requirements.

 

 

Our operations use, handle and generate hazardous substances. In addition, previous operations by others at facilities that we currently or formerly owned, operated or otherwise used may have caused contamination from hazardous substances. As a result, we are exposed to possible claims, including government fines and penalties, costs for investigation and clean-up activities, claims for natural resources damages and claims by third parties for personal injury and property damage, under environmental laws and regulations, especially for the remediation of waterways and soil or groundwater contamination. These laws can impose liability for the cleanup of hazardous substances even if the owner or operator was neither aware of nor responsible for the release of the hazardous substances. We have, in the past, been found not to be in compliance with certain of these laws and regulations, and have incurred liabilities, expenditures, fines and penalties associated with such violations. Environmental compliance costs and potential environmental liabilities could have a material adverse effect on our financial condition, results of operations and cash flows. See “Contingencies – Environmental” in Note 9 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

 

Governmental agencies may refuse to grant or renew our licenses and permits, thus restricting our ability to operate

 

We conduct certain of our operations subject to licenses, permits and approvals from state and local governments. Governmental agencies often resist the establishment of certain types of facilities in their communities, including auto parts facilities. Changes in zoning and increased residential and mixed-use development near our facilities are reducing the buffer zones and creating land use conflicts with heavy industrial uses such as ours. This could result in increased complaints, increased inspections and enforcement including fines and penalties, operating restrictions, the need for additional capital expenditures and increased opposition to maintaining or renewing required approvals, licenses and permits. In addition, from time to time, both the U.S. and foreign governments impose regulations and restrictions on trade in the markets in which we operate. In some countries, governments require us to apply for certificates or registration before allowing shipment of recycled metal to customers in those countries. There can be no assurance that future approvals, licenses and permits will be granted or that we will be able to maintain and renew the approvals, licenses and permits we currently hold. Failure to obtain these approvals could cause us to limit or discontinue operations in these locations or prevent us from developing or acquiring new facilities, which could have a material adverse effect on our financial condition and results of operations.

 

Compliance with existing and future climate change and greenhouse gas emission laws and regulations may adversely impact our operating results

 

Future legislation or increased regulation regarding climate change and GHG emissions could impose significant costs on our business and our customers and suppliers, including increased energy, capital equipment, emissions controls, environmental monitoring and reporting and other costs in order to comply with laws and regulations concerning and limitations imposed on climate change and GHG emissions. The potential costs of allowances, taxes, fees, offsets or credits that may be part of “cap and trade” programs or similar future legislative or regulatory measures are still uncertain and the future of these programs or measures is unknown. Future climate change and GHG laws or regulations could negatively impact our ability (and that of our customers and suppliers) to compete with companies situated in areas not subject to such requirements. Until the timing, scope and extent of any future laws or regulations becomes known, we cannot predict the effect on our financial condition, operating performance or ability to compete. Furthermore, even without such laws or regulations, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the metals recycling and steel manufacturing industries could harm our reputation and reduce customer demand for our products. See “Business - Environmental Matters” in Part I, Item 1 of this report for further detail.

 

We Have Substantial Customer Concentration, with a Limited Number of Customers Accounting for a Substantial Portion of our 2019 and 2020 Revenues.

 

We currently derive a significant portion of our revenues from two customers, Sims Metal Management (“Sims”) and Techemet LP (“Techemet”), each of which accounted for more than 10% of our revenues in each of 2019 and 2020. Combined, these two customers accounted for approximately 98% of our revenues for each of the years ended December 31, 2019 and 2020. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our services that will be generated by these customers or the future demand for the products and services of these customers in the end-user marketplace. In addition, revenues from these larger customers, especially our two largest customers, Sims and Techemet, may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. Further, some of our contracts with these larger customers permit them to terminate our relationship at any time (subject to notice and certain other provisions).  If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services which could have an adverse effect on our margins and financial position, and could negatively affect our revenues and results of operations and/or trading price of our common stock.  If either of our two largest customers, Sims or Techemet, terminates our services, such termination would negatively affect our revenues and results of operations and/or trading price of our common stock.

 

 

We have a limited history upon which an evaluation of our prospects and future performance can be made and have no history of profitable operations.

 

We were incorporated in April 2013 and have a limited operating history and our business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with development and expansion of a new business enterprise. We may sustain losses in the future as we implement our business plan. There can be no assurance that we will operate profitably.

 

Since we have a limited operating history, it is difficult for potential investors to evaluate our business.

 

Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. As an early stage company, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive and evolving environment. Our business is dependent upon the implementation of our business plan. We may not be successful in implementing such plan and cannot guarantee that, if implemented, we will ultimately be able to attain profitability.

    

We are highly dependent on the services of key executives, the loss of whom could materially harm our business and our strategic direction. If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.

 

We are highly dependent on our management team, specifically our Chief Executive Officer, Danny Meeks. While we have an employment agreement with Danny Meeks, such employment agreement permits Mr. Meeks to terminate such agreement upon notice. If we lose key employees, our business may suffer. Furthermore, our future success will also depend in part on the continued service of our key management personnel and our ability to identify, hire, and retain additional personnel. We carry “key-man” life insurance on the life of our executive officer. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition, our compensation costs may increase significantly.

 

We will need to obtain additional financing to fund our operations.

 

We will need additional capital in the future to continue to execute our business plan. Therefore, we will be dependent upon additional capital in the form of either debt or equity to continue our operations. At the present time, we do not have arrangements to raise all of the needed additional capital, and we will need to identify potential investors and negotiate appropriate arrangements with them. We may not be able to arrange enough investment within the time the investment is required or that if it is arranged, that it will be on favorable terms. If we cannot obtain the needed capital, we may not be able to become profitable and may have to curtail or cease our operations. Additional equity financing, if available, may be dilutive to the holders of our capital stock. Debt financing may involve significant cash payment obligations, covenants and financial ratios that may restrict our ability to operate and grow our business.

 

The failure to enforce and maintain our intellectual property rights could enable others to use trademarks used by our business which could adversely affect the value of the Company.

 

The success of our business depends on our continued ability to use our existing tradename in order to increase our brand awareness. As of the date hereof, MASSROOTS is a federally registered trademark owned by us. The unauthorized use or other misappropriation of any of the foregoing trademarks could diminish the value of our business which would have a material adverse effect on our financial condition and results of operation.

 

 

Our independent registered accounting firm has expressed concerns about our ability to continue as a going concern.

 

The report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on the absence of significant revenues, our significant losses from operations and our need for additional financing to fund all of our operations. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unknown. If we cannot continue as a viable entity, we may be unable to continue our operations and you may lose some or all of your investment in our securities.

 

In the past we have experienced material weaknesses in our internal control over financial reporting, which if continued, could impair our financial condition.

 

As reported in our Annual Report on Form 10-K, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020 and 2019 due to material weaknesses regarding our controls and procedures. The Company did not have sufficient segregation of duties to support its internal control over financial reporting. Due to our small size and limited resources, segregation of all conflicting duties has not always been possible and may not be economically feasible in the near term; however, we do expect to hire additional accounting personnel in the near future. We have and do endeavor to take appropriate and reasonable steps to make improvements to remediate these deficiencies. If we have continued material weaknesses in our internal financial reporting, our financial condition could be impaired or we may have to restate our financials, which could cause us to expend additional funds that would have a material impact on our ability to generate profits and on the success of our business.

 

Risks Relating to our Common Stock

 

There can be no assurance that our common stock will ever be approved for listing on a national securities exchange.

 

Currently, shares of our common stock are quoted on the OTC Pink Market and are not traded or listed on any securities exchange. While we remain determined to work towards getting our securities listed on a national exchange, there can be no assurance that this will occur. As a result we may never develop an active trading market for our securities which may limit our investors’ ability to liquidate their investments.

  

The market price of our common stock may be volatile and adversely affected by several factors.

 

The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to: our ability to execute our business plan; operating results below expectations; our issuance of additional securities, including debt or equity or a combination thereof, necessary to fund our operating expenses; announcements of technological innovations or new products by us or our competitors; and period-to-period fluctuations in our financial results.

 

In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

 

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

 

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

We are a “smaller reporting company” within the meaning of the Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to investors.

 

We qualify as a “smaller reporting company,” which allows us to take advantage of exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock or warrants less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

 

We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment.

 

Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of common stock. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

 

You could lose all of your investment.

 

An investment in our securities is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in the Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying value. You could lose your entire investment.

 

Our management controls a large block of our common stock that will allow them to control us.

 

As of the date of this prospectus, members of our management team beneficially own approximately 49.97% of our outstanding common stock.

 

 

As a result, management may have the ability to control substantially all matters submitted to our stockholders for approval including:

 

●

Election and removal of our directors;

 

●

amendment of our Certificate of Incorporation or Bylaws; and

 

●

adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

 

In addition, management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. Any additional investors will own a minority percentage of our common stock and will have minority voting rights.

 

Because we can issue additional shares of Common Stock, purchasers of our Common Stock may incur immediate dilution and experience further dilution.

 

We are authorized to issue up to 1,200,000,000 shares of Common Stock, of which 994,871,337 shares of Common Stock are issued and outstanding as of January 11, 2022. Our Board of Directors has the authority to cause us to issue additional shares of Common Stock without consent of any of stockholders. Consequently, our stockholders may experience further dilution in their ownership of our stock in the future, which could have an adverse effect on the trading market for our Common Stock.

 

Our Second Amended and Restated Certificate of Incorporation contains an exclusive forum provision with respect to all Internal Corporate Claims, which may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable and discourage lawsuits against us or our current or former directors or officers and/or stockholders in such capacity.

 

Our Second Amended and Restated Certificate of Incorporation provides that all Internal Corporate Claims must be brought solely and exclusively in the Court of Chancery of the State of Delaware (or, if such court does not have jurisdiction, the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware). The exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes based upon Internal Corporate Claims, which may discourage lawsuits against us or our current or former directors or officers and/or stockholders in such capacity. In addition, if a court were to find this exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur costs associated with resolving the dispute in other jurisdictions, which could have a material adverse effect on our business and operations.

 

If equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the market price of our common stock will likely decline.

 

The trading market for our common stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish about us and our business.  We may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the market price for our common stock could decline. In the event we obtain securities or industry analyst coverage, the market price of our common stock could decline if one or more equity analysts downgrade our common stock or if those analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about us or our business.

 

The reverse stock split could decrease the liquidity of our common stock.

 

The reverse stock split could adversely affect the liquidity of our common stock given the reduced number of shares that will be outstanding after the reverse stock split. In addition, the reverse stock split could increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

 

Even after the reverse stock split, the trading price of our common stock may not be high enough to attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.

 

Even after the reverse stock split, there can be no assurance that the reverse stock split would result in a share price that will attract new investors, including institutional investors, or that the share price will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve, our share price may decline and you may lose all or part of your investment.

 

 

USE OF PROCEEDS

 

The selling stockholders will receive all of the proceeds from the sale of the Resale Shares offered by them pursuant to this prospectus. We will not receive any proceeds from the sale of the Resale Shares by the selling stockholders covered by this prospectus. If the warrants issued pursuant to the November 2021 are exercised for cash, such proceeds will be used by the Company for working capital.

 

DIVIDEND POLICY

 

We have not paid any cash dividends on our Common Stock and have no present intention of paying any dividends on the shares of our Common Stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our Board of Directors.

 

ISSUANCE OF SECURITIES TO SELLING STOCKHOLDERS

 

On November 29, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors as purchasers (the “Investors”). Pursuant to the Securities Purchase Agreement, we sold, and the Investors purchased, approximately $37,700,000, which consisted of approximately $30.0 million in cash. $1.9 million in an original issuance discount, and $5.8 million of existing debt of the Company which was exchanged for the notes and warrants issued in the 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 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, we have 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 our common stock on a national exchange and certain other conditions being met, the Senior Notes will automatically convert into common stock at the conversion price set forth in the Senior Notes.

 

We may extend the maturity date of the Senior Notes prior to the initial maturity date to November 30, 2022 if no Equity Conditions Failure (as defined in the Senior Notes) is occurring. The maturity date of the Senior Notes also may be extended by the holders under other circumstances specified therein. If we are unable to extend the Senior Notes or elect not to do so, we 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 754,299,323 shares of common stock at an exercise price of $0.065, subject to adjustment under certain circumstances described in the Warrants.

 

We utilized the proceeds of the offering of the Senior Notes and Warrants to redeem all of our outstanding shares of Series X and Series Y Preferred Stock, retire debt outstanding prior to such offering, and to expand operations aimed at accelerating growth. 

 

 

This prospectus relates to the resale by the selling stockholders named herein of the shares of common stock issuable upon conversion of the Senior Notes and exercise of the Warrants. 

 

A holder will not have the right to exercise any portion of a Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days following notice from the holder to us.

  

SELLING STOCKHOLDERS

 

The common stock being offered by the selling stockholders are those issuable to the selling stockholders upon exercise of the Senior Notes and the Warrants. For additional information regarding the issuances of those shares of common stock underlying the Senior Notes and Warrants, see “Issuance of Securities to Selling Stockholders” above. We are registering the shares of common stock underlying the Senior Notes and Warrants in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the Senior Notes and the Warrants, the selling stockholders have not had any material relationship with us within the past three years.

 

The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders. The second column lists the number of shares of common stock directly owned by each selling stockholder. The third and fourth columns list the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership of the Senior Notes and Warrants, respectively, as of January 11, 2022, assuming conversion of the Senior Notes and exercise of the Warrants held by the selling stockholders on that date, without regard to any limitations on conversions or exercises.

 

The fifth column lists the shares of common stock being offered by this prospectus by the selling stockholders.

 

In accordance with the terms of a registration rights agreement with the selling stockholders, this prospectus generally covers the resale of 300% of the sum of (i) the maximum number of shares of common stock issuable upon conversion of the Senior Notes, determined as if the outstanding notes were converted in full and (ii) the maximum number of shares of common stock issuable upon exercise of the related Warrants, determined as if the outstanding Warrants were exercised in full, in each case, as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any limitations on the conversion of the Senior Notes or the exercise of the Warrants. The fifth and sixth columns assume the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.

 

Under the terms of the Senior Notes and the Warrants, a selling stockholder may not convert the Senior Notes or exercise the Warrants to the extent such exercise would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% or 9.99%, as applicable, of our then outstanding common stock following such conversion or exercise, as applicable, excluding for purposes of such determination shares of common stock issuable upon conversion of such notes or exercise of such warrants which have not been converted or exercised. The number of shares in the third and fourth columns do not reflect this limitation. The selling stockholder may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

 

 

Name of Selling Stockholder		Number of Shares of Common Stock Owned Prior to Offering				Number of Shares of Common Stock Underlying Convertible Debt (1)				Number of Shares of Common Stock Underlying Warrants (1)				Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus				Number of Shares of Common Stock Owned After Offering (2)				Percentage of Common Stock Owned After Offering
Anson Investments Master Fund LP (3)			-				42,553,191				42,553,191				255,319,149				-				-
155 University Avenue, Suite 207, Toronto, Ontario, M5H 3B7
Iroquois Master Fund Ltd. (4)			-				21,276,596				21,276,596				127,659,574				-				-
125 Park Ave., 25th Fl., New York, NY 10017
Iroquois Capital Investment Group LLC (5)			-				10,638,298				10,638,298				63,829,787				-				-
125 Park Ave., 25th Fl., New York, NY 10017
Hudson Bay Master Fund Ltd. (6)			-				63,829,787				63,829,787				382,978,723				-				-
C/o Hudson Bay Capital Management LP 28 Havermeyer Place, 2nd Floor Greenwich, CT 06830
L1 Capital Global Opportunities Master Fund (7)			-				31,914,894				31,914,894				191,489,362				-				-
1688 Meridian Ave., Level 6, Miami Beach, FL 33139
Intracoastal Capital, LLC (8)			-				2,127,660				2,127,660				12,765,957				-				-
245 Palm Trail, Delray Beach, FL 33483
Arena Special Opportunities Fund, LP (9)			-				11,289,852				11,289,852				67,739,111				-				-
405 Lexington Ave., 59th Fl., New York, NY 10174
Arena Special Opportunities Partners I, LP (10)			-				24,662,185				24,662,185				147,973,108				-				-
405 Lexington Ave., 59th Fl., New York, NY 10174
Arena Special Opportunities Partners II, LP (11)			-				70,430,942				70,430,942				422,585,653				-				-
405 Lexington Ave., 59th Fl., New York, NY 10174
Sabby Volatility Warrant Master Fund, Ltd. (12)			-				63,829,787				63,829,787				382,978,723				-				-
c/o Sabby Mgt. LLC, 10 Mountainview Rd., Suite 205, Upper Saddle River, NJ 07458
Kingsbrook Opportunities Master Fund LP (13)			-				5,319,149				5,319,149				31,914,894				-				-
c/o Kingsbrook Partners LP, 689 Fifth Avenue, 12th Floor, New York, NY 10022
3i, LP (14)			-				31,914,894				31,914,894				191,489,362				-				-
140 Broadway - 38th Floor, New York, NY 10005
Empery Tax Efficient, LP (15)			-				20,706,341				20,706,340				124,238,046				-				-
c/o Empery Asset Management LP 1 Rockefeller Plaza, Suite 1205, New York, NY 10020
Empery Debt Opportunity Fund, LP (16)			-				47,872,341				47,872,340				287,234,045				-				-
c/o Empery Asset Management LP 1 Rockefeller Plaza, Suite 1205, New York, NY 10020
Empery Asset Master, LTD (17)			-				37,804,298				37,804,298				226,825,787				-				-
c/o Empery Asset Management LP 1 Rockefeller Plaza, Suite 1205, New York, NY 10020
Sixth Borough Capital Fund LP (18)			-				5,319,149				5,319,149				31,914,894				-				-
1515 N. Federal Highway Suite 300, Boca Raton, FL 33431
Brio Capital Master Fund, Ltd. (19)			-				21,276,596				21,276,596				127,659,574				-				-
100 Merrick Road Suite 401W, Rockville Centre, NY 11570
Richard Molinsky			-				3,191,489				3,191,489				19,148,936				-				-
52 Lord’s Hwy East, Weston, CT 06883
32 Entertainment LLC (20)			-				12,765,957				12,765,957				76,595,745				-				-
9 Westerleigh Road, Purchase, NY 10577
Gregory Castaldo			-				21,276,596				21,276,596				127,659,574				-				-
3776 Steven James Drive, Garnet Valley, PA 19060
Rampart Capital Group, LLC (21)			-				21,276,596				21,276,596				127,659,574				-				-
6111 W 74th Street, Westchester, CA 90045
Leonard R. Warner Jr.			-				2,127,660				2,127,660				12,765,957				-				-
220 Victory Drive, Massapequa Park, NY 11762
William Cobb			-				2,127,660				2,127,660				12,765,957				-				-
38 Oakwood Road, Allendale, NJ 07401
SRAX Inc. (22)			-				5,319,149				5,319,149				31,914,894				-				-
2629 Towngate Road, Westlake Village, CA 91361
Jaime Taicher			-				1,595,745				1,595,745				9,574,468				-				-
475 2nd Street N, Unit 204, Saint Petersburg, FL 33701
David Jenkins			-				1,063,830				1,063,830				6,382,979				-				-
9611 North US Hwy 1 Box 390, Sebastian, FL 32958
Ryan Warner			-				531,915				531,915				3,191,489				-				-
220 Victory Drive, Massapequa Park, NY 11762
James Patrick McIlree			-				1,063,830				1,063,830				6,382,979				-				-
4 Bishop’s Gate Road, Darien, CT, 06820
Seafield Brothers Holdings, LLC (23)			-				1,063,830				1,063,830				6,382,979				-				-
720 N.4th Street, Montpelier, ID 83254
Elizabeth River Recycling LLC (24)			-				6,382,979				6,382,979				38,297,872				-				-
2649 South Military Highway, Chesapeake, VA 23324
Living Full Blast Inc. (25)			-				2,127,660				2,127,660				12,765,957				-				-
15030 Ventura Blvd, Ste 395, Sherman Oaks, CA 91403
Leonite Fund I, LP (26)			-				10,638,298				10,638,298				63,829,787				-				-
1 Hillcrest Center Drive, Ste 232, Spring Valley, NY 10977
LGH Investments, LLC (27)			-				8,510,638				8,510,638				51,063,830				-				-
6170 Tiki Ct, San Diego, CA 92130
Joseph Reda			-				21,276,596				21,276,596				127,659,574				-				-
1324 Manor Circle, Pelham, NY 10803
The Special Equities Opportunity Fund, LLC (28)			-				21,276,596				21,276,596				127,659,574				-				-
135 Sycamore Drive, Roslyn, NY 11576
Timothy Tyler Berry			-				2,127,660				2,127,660				12,765,957				-				-
4 Millers Way, Old Lyme, CT 06371
Michael Scrobe			-				531,915				531,915				3,191,489				-				-
46 Bartlett Drive, Manhasset, NY 11030
Danny Meeks			507,495,258				95,256,766				95,256,766				571,540,598				507,495,258				19.8	%
c/o Greenwave Technology Solutions, Inc., 277 Suburban Drive, Suffolk, VA 23434

 

*	Less than 1%.

 

(1)

This table is based upon information supplied by the selling stockholders. Unless otherwise indicated in the footnotes to this table and subject to community property laws, where applicable, we believe each stockholder named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

 

 

(2)

Because the selling shareholders identified in this table may sell some, all or none of the shares owned by them that are registered under this registration statement, and because, to our knowledge, there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares registered hereunder, no estimate can be given as to the number of shares available for resale hereby that will be held by the selling shareholders at the time of this registration statement. Therefore, unless otherwise noted, we have assumed for purposes of this table that the selling shareholders will sell all of the shares beneficially owned by them as of January 11, 2022.

 

(3)	Anson Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund LP (“Anson”), hold voting and dispositive power over the Common Shares held by Anson. Bruce Winson is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these Common Shares except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands
(4)	Iroquois Capital Management L.L.C. is the investment manager of Iroquois Master Fund, Ltd. Iroquois Capital Management, LLC  has voting control and investment discretion over securities held by Iroquois Master Fund. As Managing Members of Iroquois Capital Management, LLC , Richard Abbe and Kimberly Page make voting and investment decisions on behalf  of Iroquois Capital Management, LLC  in its capacity as investment manager to Iroquois Master Fund Ltd. As a result of the foregoing, Mr. Abbe and Mrs. Page may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of the securities held by Iroquois Capital Management and Iroquois Master Fund.
(5)	Richard Abbe is the managing member of Iroquois Capital Investment Group LLC.   Mr. Abbe has voting control and investment discretion over securities held by Iroquois Capital Investment Group LLC. As such, Mr. Abbe may be deemed to be the beneficial owner (as determined under Section 13(d) of the Exchange Act) of the securities held by Iroquois Capital Investment Group LLC.
(6)	Hudson Bay Capital Management LP, the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.
(7)	David Feldman, the Portfolio Manager of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(8)	Mitchell P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of the securities reported herein that are held by Intracoastal.
(9)	Lawrence Cutler, the Authorized Signatory of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.

 

(10)	Lawrence Cutler, the Authorized Signatory of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(11)	Lawrence Cutler, the Authorized Signatory of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(12)	Sabby Management, LLC serves as the investment manager of Sabby Volatility Warrant Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby Volatility Warrant Master Fund, Ltd., except to the extent of their respective pecuniary interest therein.
(13)	Kingsbrook Partners LP (“Kingsbrook Partners”) is the investment manager of Kingsbrook Opportunities Master Fund LP (“Kingsbrook Opportunities”) and consequently has voting control and investment discretion over securities held by Kingsbrook Opportunities. Kingsbrook Opportunities GP LLC (“Opportunities GP”) is the general partner of Kingsbrook Opportunities and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Opportunities. KB GP LLC (“GP LLC”) is the general partner of Kingsbrook Partners and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Partners. Ari J. Storch, Adam J. Chill and Scott M. Wallace are the sole managing members of Opportunities GP and GP LLC and as a result may be considered beneficial owners of any securities deemed beneficially owned by Opportunities GP and GP LLC. Each of Kingsbrook Partners, Opportunities GP, GP LLC and Messrs. Storch, Chill and Wallace disclaim beneficial ownership of these securities.

 

 

(14)	The business address of 3i, LP is 140 Broadway, 38th Floor, New York, NY 10005. 3i, LP’s principal business is that of a private investor. Maier Joshua Tarlow is the manager of 3i Management, LLC, the general partner of 3i, LP, and has sole voting control and investment discretion over securities beneficially owned directly or indirectly by 3i Management, LLC and 3i, LP.  Mr. Tarlow disclaims any beneficial ownership of the securities beneficially owned directly by 3i, LP and indirectly by 3i Management, LLC.
(15)	Empery Asset Management LP, the authorized agent of Empery Tax Efficient, LP (“ETE”), has discretionary authority to vote and dispose of the shares held by ETE and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by ETE. ETE, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares.
(16)	Empery Asset Management LP, the authorized agent of Empery Debt Opportunity Fund, LP (“EDOF”), has discretionary authority to vote and dispose of the shares held by EDOF and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by EDOF. EDOF, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares.
(17)	Empery Asset Management LP, the authorized agent of Empery Asset Master Ltd (“EAM”), has discretionary authority to vote and dispose of the shares held by EAM and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by EAM. EAM, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares.
(18)	Robert D. Keyser, Jr., the CEO of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(19)	Shaye Hirsch, the Director of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(20)	Robert Wolf, the Founder of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(21)	Peter Abskharon, the Partner of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(22)	Michael Malone, the CFO of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(23)	Robert Haag, the Managing Member of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(24)	Owen Walsh, a Member of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(25)	Marc Savas, the CEO of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(26)	Avi Geller, the CIO of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(27)	Lucas Hoppel, the Managing Member of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.
(28)	Jonathan Schechter, a Member of this Selling Stockholder, holds voting and dispositive power over the shares of common stock held by this Selling Stockholder.

 

 

DESCRIPTION OF SECURITIES

 

Common Stock

 

The following description of our Common Stock is intended as a summary only and is qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”) and Bylaws, as amended (“Bylaws”), which are filed as exhibits to the registration statement of which this prospectus forms a part.

 

Our authorized Common Stock consists of 1,200,000,000 shares, par value $0.001 per share, of which 994,871,337 shares were issued and outstanding as of January 11, 2022.

 

Each share of our Common Stock is entitled to one vote on all matters submitted to a vote of the stockholders. Our stockholders have no cumulative voting. Holders of our Common Stock are entitled to receive ratably such dividends, if any, as may be declared by our Board out of legally available funds. However, the current policy of our Board is to retain earnings, if any, for the operation and expansion of our Company. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities, subject to rights, if any, of the holders of any of our other securities. The holders of our Common Stock have no preemptive, subscription, redemption or conversion rights.

 

Preferred Stock

 

As of the date of this prospectus, 500 shares of our Series Z Preferred Stock are outstanding. Pursuant to our Certificate of Incorporation, our Board has the authority, without further action by the stockholders, to issue from time to time up to 10,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges, and relative participating, optional, or special rights as well as the qualifications, limitations, or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than the rights of the Common Stock. Our Board, without stockholder approval, can issue convertible preferred stock with voting, conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change of control or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock, and may adversely affect the voting and other rights of the holders of common stock.

 

Warrants

 

In August 2017, we issued five-year warrants to purchase up to 2,090,000 shares of Common Stock at an exercise price of $0.50 per share. Our December 2017 private placement and November 2018 warrant repricing triggered the price protection provisions of the warrants issued in the August 2017 private placement, and as a result of such adjustment, as of January 11, 2022, warrants to purchase up to 1,925,000 shares were outstanding.

 

In December 2017, we issued five-year warrants to purchase up to 4,850,000 shares of Common Stock at an exercise price of $0.20 per share. Our November 2018 warrant repricing lowered the exercise price of the warrants to $0.075 per share. As of January 11, 2022, warrants to purchase up to 4,550,000 shares were outstanding.

 

In December 2017, we issued five-year warrants to purchase up to 10,250,000 shares of Common Stock at an exercise price of $0.40 per share. As January 11, 2022, warrants to purchase up to 125,000 shares were outstanding.

 

In January 2018, we issued five-year warrants to purchase up to 250,000 shares of Common Stock at an exercise price of $0.20 per share. As of January 11, 2022, warrants to purchase up to 250,000 shares were outstanding.

 

In November 2021, we issued five-year warrants to purchase up to 814,299,319 shares of Common Stock at an exercise price of $0.065 per share. As of January 11, 2022, warrants to purchase up to 814,299,319 shares were outstanding.

 

 

PLAN OF DISTRIBUTION

 

Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. The Selling Stockholders may sell some or all of their securities at a fixed price of $0.05 per share until our shares are listed on a national securities exchange or quoted on the OTC Bulletin Board, the OTCQX marketplace or the OTCQB marketplace and thereafter at prevailing market prices or privately negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

 

●

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

●

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

●

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

●

an exchange distribution in accordance with the rules of the applicable exchange;

 

●

in the over-the-counter market;

 

●

in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

●

privately negotiated transactions;

 

●

settlement of short sales;

 

●

in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

 

●

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

●

a combination of any such methods of sale; or

 

●

any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

 

 

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

 

DESCRIPTION OF BUSINESS

 

Overview

 

Greenwave was formed in April 2013 as a technology company. In September 2021, we closed our acquisition of Empire Services, Inc., which operates 11 metal recycling facilities in Virginia and North Carolina.

 

Background

 

We were incorporated in the state of Delaware on April 26, 2013 as a technology platform. Our principal executive office is located at 277 Suburban Drive, Suffolk, VA 23434, and our telephone number is (757) 966-1432.

 

On January 25, 2017, we consummated a reverse triangular merger (the “Whaxy Merger”) pursuant to which we acquired all of the outstanding common stock of DDDigtal Inc. (“DDDigtal”), a Colorado corporation. Upon closing of the Whaxy Merger, each share of DDDigtal’s common stock was exchanged for such number of shares of our common stock (or a fraction thereof) based on an exchange ratio equal to approximately 5.273-for-1, such that 1 share of our common stock was issued for every 5.273 shares of DDDigtal’s common stock. At the closing of the Whaxy Merger, all shares of common stock of our newly-formed merger subsidiary formed for the sole purpose of effectuating the Whaxy Merger, were converted into and exchanged for one share of common stock of DDDigtal, and all shares of DDDigtal’s common stock that were outstanding immediately prior to the closing of the Whaxy Merger were automatically cancelled and retired. Upon the closing of the Whaxy Merger, DDDigtal continued as our surviving wholly-owned subsidiary, and the merger subsidiary ceased to exist.

 

On July 13, 2017, we consummated a reverse triangular merger (the “Odava Merger”) pursuant to which we acquired all of the outstanding common stock of Odava Inc. (“Odava”), a Delaware corporation. Upon closing of the Odava Merger, each share of Odava’s common stock was exchanged for such number of shares of our common stock (or a fraction thereof), based on an exchange ratio equal to approximately 4.069-for-1, such that 1 share of our common stock was issued for every 4.069 shares of Odava’s common stock. At the closing of the Odava Merger, all shares of common stock of our newly-formed merger subsidiary formed for the sole purpose of effectuating the Odava Merger, were converted into and exchanged for one share of common stock of Odava, and all shares of Odava’s common stock that were outstanding immediately prior to the closing of the Odava Merger automatically cancelled and retired. Upon the closing of the Odava Merger, Odava continued as our surviving wholly-owned subsidiary, and the merger subsidiary ceased to exist.

 

On September 30, 2021, we consummated a reverse triangular merger (the “Empire Merger”) pursuant to which we acquired all of the outstanding common stock of Empire Services, Inc. (“Empire”), a Virginia corporation. Upon closing of the Empire Merger, each share of Empire’s common stock was exchanged 495,000,000 shares of our common stock. At the closing of the Empire Merger, all shares of common stock of our newly-formed merger subsidiary formed for the sole purpose of effectuating the Empire Merger, were converted into and exchanged for one share of common stock of Empire, and all shares of Empire’s common stock that were outstanding immediately prior to the closing of the Empire Merger automatically cancelled and retired. Upon the closing of the Empire Merger, Empire continued as our surviving wholly-owned subsidiary, and the merger subsidiary ceased to exist.

 

Our Products and Services

 

Empire operates 11 metal recycling facilities in Virginia and North Carolina. At these facilities, Empire collects, classifies and processes raw scrap metal (ferrous and nonferrous) for recycling. Steel is one of the world’s most recycled products with the ability to be re-melted and re-cast into numerous times while offering significant economic and environmental benefits when compared with virgin materials. Empire recycles metals such as iron, steel, aluminum, copper, lead, stainless steel and zinc.

 

 

Empire purchases scrap metal from retail customers, municipal governments, and large corporations and sells both processed and unprocessed scrap metal to Sims Metal and steel mills across the country. There continues to be robust demand for recycled metals which is attributable to the continual development of processing technology and the significant environmental benefits of recycling.

 

The Company competes with other scrap metal recyclers and is focused utilizing technology to create operating efficiencies and competitive advantages over its peers. Empire is headquartered in Suffolk, Virginia and employs approximately 65 people as of October 2021.

 

Intellectual Property

 

MASSROOTS is a federally registered trademark of Greenwave.

 

Employees and Consultants

 

Greenwave has 73 full-time employees as of January 11, 2022.

  

Legal Proceedings

 

On December 1, 2020, Sheppard, Mullin, Richter& Hampton LLP (“Sheppard Mullin”), the Company’s former securities counsel, filed a demand for arbitration at JAMS in New York, New York against the Company, alleging the Company’s breach of an engagement agreement dated January 4, 2018, and a failure of the Company to pay $487,390.73 of outstanding legal fees to Sheppard Mullin. Sheppard Mullin was awarded $459,250.88 in unpaid legal fees, disbursements and interest on June 25, 2021. A judgement confirming the arbitration award was entered on September 8, 2021 in the Federal District Court located in Denver, Colorado.

 

On September 23, 2021, the Company entered into a Resolution Agreement and Release (the “Resolution Agreement”) with Sheppard Mullin concerning the $459,250.88 judgement entered against the Company. Under the terms of the Resolution Agreement, the Company was required to make a $25,000 initial payment by September 30, 2021 and is required to make $15,000 monthly payments from October 2021 to January 2023 with a final $10,000 payment due in February 2023. The Company has made the September, October, November and December 2021 payments.

 

Properties

 

We lease our scrap yard located at 22097 Brewers Neck Blvd., Carrollton, VA 23314, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $14,959 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 1576 Millpond Rd., Elizabeth City, NC 27909, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 130 Courtland Rd., Emporia, VA 23847, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 623 Highway 903 N., Greenville, NC 27834, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 8952 Richmond Rd., Toano, VA 23168, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 945 NC 11N, Kelford, NC 27805, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $37,132 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 1100 E Princess Anne Rd, Norfolk, VA 23504, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $15,914 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 4091 Portsmouth Blvd., Portsmouth, VA 23701, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

 

We lease our scrap yard located at 277 Suburban Drive, Suffolk, VA 23434, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $14,959 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 9922 Hwy 17 S., Vanceboro, NC 28586, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $8,487 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 1040 Oceana Blvd, Virginia Beach, VA 23454, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $15,000 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease office space at 505 Crawford Street, Portsmouth, VA 23704 for $1,150 per month. The lease expires on March 31, 2024.

 

We do not own any properties or land.

 

We believe that our facilities are adequate for our current needs and that, if required, we will be able to expand our current space or locate suitable new office space and obtain a suitable replacement for our executive and administrative headquarters.

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

From April 9, 2015 to October 16, 2019, our common stock was quoted on the OTCQB under the symbol “MSRT.” Since October 17, 2019, our common stock has been quoted on the OTC Pink Tier of the OTC Markets under the symbol “MSRT.”

 

The following table presents, for the periods indicated, the high and low sales prices of Common Stock, and is based upon information provided by the OTC Marketplace. These quotations below reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.

 

		2021
		High				Low
First Quarter		$	0.0570			$	0.0061
Second Quarter		$	0.0879			$	0.0175
Third Quarter		$	0.0583			$	0.0280

 

		2020
		High				Low
First Quarter		$	0.0085			$	0.0015
Second Quarter		$	0.0069			$	0.0010
Third Quarter		$	0.0052			$	0.0015
Fourth Quarter		$	0.0084			$	0.0016

 

		2019
		High				Low
First Quarter		$	0.0990			$	0.0500
Second Quarter		$	0.0980			$	0.0130
Third Quarter		$	0.0249			$	0.0031
Fourth Quarter		$	0.0060			$	0.0028

 

 

The last reported sale price of Common Stock as of January 11, 2022 on OTC Pink was $0.043 per share.

 

As of January 11, 2022, there were 138 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of Common Stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. The transfer agent of our Common Stock is Equity Stock Transfer, located at 237 W. 37^th St. #602, New York, NY 10018.

 

As of January 11, 2022, there were 994,871,337 shares of our Common Stock issued and outstanding.

 

As of January 11, 2022, 27,621,765 shares of Common Stock were issuable upon the exercise of options granted under Plans to certain employees and directors with a weighted average exercise price of $0.51 per share, as set forth below:

 

Exercise Price		Number of Options				Remaining Life In Years				Number of Options Exercisable
$0.01 – 0.25			13,306,786				6.51				13,306,786
0.26 – 0.50			1,939,631				5.51				1,939,631
0.51 – 0.75			1,820,112				4.87				1,820,112
0.76 – 1.00			9,926,072				4.96				9,926,072
1.01 – 2.00			629,164				4.86				629,164
			27,621,765				5.74				27,621,765

 

In addition, 825,874,319 shares of Common Stock were issuable upon the exercise of warrants outstanding as of January 11, 2022, with a weighted average exercise price of $0.0659, as set forth below:

 

Exercise Price		Warrants Outstanding				Weighted Avg. Remaining Life				Warrants Exercisable
$0.0001 – 0.25			825,749,319				4.92				825,749,319
0.26 – 0.50			125,000				1.05				125,000
			825,874,319				4.92				825,874,319

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

You should read the following discussion of our financial condition and results of operations in conjunction with financial statements and notes thereto, as well as the “Risk Factors” and “Description of Business” sections included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors”.

 

Overview

 

Greenwave was formed in April 2013 as a technology platform developer. On September 30, 2021, we closed our acquisition of Empire Services, Inc., which operates 11 metal recycling facilities in Virginia and North Carolina.

 

At these facilities, Empire collects, classifies and processes raw scrap metal (ferrous and nonferrous) for recycling. Steel is one of the world’s most recycled products with the ability to be re-melted and re-cast into numerous times while offering significant economic and environmental benefits when compared with virgin materials. Empire recycles metals such as iron, steel, aluminum, copper, lead, stainless steel and zinc.

 

Empire purchases scrap metal from retail customers, municipal governments, and large corporations and sells both processed and unprocessed scrap metal to Sims Metal and steel mills across the country. There continues to be robust demand for recycled metals which is attributable to the continual development of processing technology and the significant environmental benefits of recycling.

 

Empire is headquartered in Suffolk, Virginia and employs approximately 73 people as of January 11, 2022.

 

Competitors

 

We compete with other metal recycling facility operators, such as Schnitzer Steel Industries, and are focused on utilizing technology to create operating efficiencies and competitive advantages over our peers.

 

Recent Developments and Other Sources of Funding

 

Financings

 

On January 7, 2020, we issued and sold a convertible note in the principal amount of $55,000 (including a $5,000 original issuance discount) to an accredited investor which note matures on July 7, 2020.

 

On March 5, 2020, we issued and sold a convertible note in the aggregate principal amount of $72,600 (including a $6,600 original issuance discount) to an accredited investor which note matures on September 5, 2020.

 

On March 17, 2020, we issued and sold a convertible note in the aggregate principal amount of $17,600 (including a $1,600 original issuance discount) to an accredited investor which note matures on September 17, 2020.

 

On April 17, 2020, we issued and sold convertible notes in the aggregate principal amount of $330,000 (including an aggregate of $30,000 original issuance discount) to accredited investors which notes mature on October 17, 2020.

 

On May 4, 2020, we received a loan in the principal amount of $50,000 pursuant to the PPP of the CARES Act. The PPP loan matures in May 2022 and bears an interest rate of 1% per annum. The Company has applied for forgiveness of the principal and accrued interest due under the loan.

 

 

On June 26, 2020, we issued and sold a secured promissory note in the principal amount of $60,000 with 10% annual interest. On the two-year anniversary of the issuance of this note, June 26, 2022, all principal and interest becomes due and payable.

 

On July 8, 2020, we issued and sold a promissory note in the principal amount of $22,911 with 10% annual interest maturing on December 31, 2020.

 

On July 13, 2020, we issued and sold convertible notes in the aggregate principal amount of $110,000 (including an aggregate of $10,000 original issuance discount) to accredited investors which notes mature on January 13, 2021.

 

On August 31, 2020, we issued and sold convertible notes in the aggregate principal amount of $66,000 (including an aggregate of $6,000 original issuance discount) to accredited investors which notes mature on March 1, 2021.

 

On September 1, 2020, we issued and sold convertible notes in the aggregate principal amount of $49,500 (including an aggregate of $4,500 original issuance discount) to accredited investors which notes mature on March 1, 2021.

 

On November 25, 2020, the Company entered into a securities purchase agreement with an accredited investor for the sale of 3.3 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $66,000. The purchase and issuance of such shares of Series X Preferred Stock closed on December 1, 2020.

 

On December 21, 2020, the Company entered into a securities purchase agreement with an accredited investor for the sale 7.5 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $150,000. The purchase and issuance of such shares of Series X Preferred Stock closed on December 23, 2020.

 

On December 22, 2020, the Company entered into a securities purchase agreement with an accredited investor for the sale 5.25 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $105,000. The purchase and issuance of such shares of Series X Preferred Stock closed on December 29, 2020.

 

On February 16, 2021, the Company entered into a securities purchase agreement with an accredited investor for the sale 5 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $100,000. The purchase and issuance of such shares of Series X Preferred Stock closed on February 18, 2021.

 

On February 22, 2021, the Company entered into a securities purchase agreement with an accredited investor for the sale 1.25 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $25,000. The purchase and issuance of such shares of Series X Preferred Stock closed on February 24, 2021.

 

On March 10, 2021, the Company entered into a securities purchase agreement with an accredited investor for the sale 3.75 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share, resulting in aggregate proceeds of $75,000. The purchase and issuance of such shares of Series X Preferred Stock closed on March 12, 2021.  

 

During the nine months ended June 30, 2021, the Company received proceeds from the issuance of non-convertible notes and advances of $357,053 from Empire Services, Inc.

 

On November 30, 2021, the Company entered into securities purchase agreements with accredited investors for the placement of secured convertible promissory notes in the principal amount of $37,714,966 together with warrants to purchase 754,299,319 shares of common stock. The Company paid $2,200,000 and a warrant to purchase 60,000,000 shares of common stock as commission for the offering. The Company’s Chief Executive Officer rolled $4,762,838 of debt into the offering. Aggregate proceeds from the offering were $27,775,000.

  

Greenwave Technology Solutions, Inc. Results of Operations For the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

 

		For the Fiscal Year ended
		31-Dec-20				31-Dec-19				$ Change				% Change
Revenues		$	6,964			$	23,703			$	(16,739	)			(70.6	)%
Operating expenses			1,167,175				3,469,139				(2,301,964	)			(66.4	)%
Loss from Operations			(1,160,211	)			(3,445,436	)			2,285,225				(66.3	)%
Other Expense			(13,550,249	)			(30,823,476	)			17,273,227				(56.0	)%
Net Loss		$	(14,710,460	)		$	(34,268,912	)		$	19,558,452				(57.1	)%
Net loss per share - basic and diluted		$	(0.08	)		$	(0.19	)		$	0.11				57.9	%

 

Since inception on April 26, 2013, and during the year ended December 31, 2020, our business operations have been primarily focused developing our mobile applications, web platform and blockchain features for our products, and increasing our User-base.

 

 

Revenues

 

For the year ended December 31, 2020, we generated $6,964 in revenues, as compared to $23,703 for the year ended December 31, 2019, a decrease of $16,739. This decrease is primarily related to service interruptions on our platform and downsizing of our sales and corporate staff.

 

Operating Expenses

 

For the years ended December 31, 2020 and 2019, our operating expenses were $1,167,175 and $3,469,139, respectively, a decrease of $2,301,964. The decrease was mainly attributed to stock-based compensation to our employees and key consultants which, for 2020, was $0 as compared to $222,700 for 2019, a non-cash decrease of $222,700. In addition, impairment expense decreased by $196,315 as impairment expense was $0 in 2020 as compared to $196,315 in 2019, which was mainly attributed to impairment expenses associated with our business portal. There was an decrease in payroll and related expenses of $853,064 as payroll and related expenses were $303,850 for 2020 as compared to $1,156,914 for the same period in 2019, which was the result of a decrease in our labor force. Advertising expense increased by $29,197 to $58,961 for 2020 as compared to $29,764 for 2019 due to a re-focus on the Company’s YouTube channel. For the years ended December 31, 2020 and 2019, we recorded amortization of software costs of $0 and $38,549, respectively.

 

Our other general and administrative expenses decreased to $803,081 for the year ended December 31, 2020 from $1,460,867 for the year ended December 31, 2019, a decrease of $657,786. This decrease was mainly attributed to the following:

 

●

Consulting and accounting expenses decreased during the year ended December 31, 2020 to $355,963 from $452,477 during the year ended December 31, 2019. This decrease was primarily a result of us having fewer consulting projects with firms in fiscal year 2020.

 

●

Independent contractor expenses decreased from $284,328 during the year ended December 31, 2019 to $51,442 during the year ended December 31, 2020 due to us engaging fewer individual consultants.

 

●

Travel and related expenses decreased to $3,372 during the year ended December 31, 2020 from $21,506 during the year ended December 31, 2019. This was a result of our team attending fewer conferences and meetings with potential clients in 2020 as compared to 2019.

 

The decrease of these expenditures resulted in our total operating expenses declining to $1,167,175 during the year ended December 31, 2020 compared to $3,469,139 during the year ended December 31, 2019, a decrease of $2,301,964.

 

Loss from Operations

 

Our loss from operations decreased $2,285,225 to $1,160,211 during the year ended December 31, 2020, from $3,445,436 during the year ended December 31, 2019.

 

Other (Expense)

 

During the year ended December 31, 2020, we incurred other (expense) of $(13,550,249), as compared to $(30,823,476) for the year ended December 31, 2019, a decrease of $17,273,227. This decrease is primarily due to a gain of the forgiveness of debt of $250,000 and a gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable of $162,109,131 for the year ended December 31, 2020. The Company’s derivative liability for authorized shares shortfall expense increased by $(151,398,053) to $(170,319,590) in fiscal year 2020 from ($18,921,537) during fiscal year 2019. Preferred stock issuance costs fell to $0 during the year ended December 31, 2020 from $(5,585,594) during the same period in 2019. The Company realized a $882 gain on the conversion of convertible debentures during fiscal year 2020 as compared to a $(603,529) loss in fiscal year 2020. In addition, interest expense increased by $203,851 to $(5,139,321) during fiscal year 2020 as compared to $(4,935,470) during fiscal year 2019. Lastly, the expense for the loss on change in fair value of derivative liabilities decreased by $234,064, to $(451,351) during fiscal year 2020, as compared to $(685,415) during the prior year.

 

 

Net Loss

 

Our net loss decreased by $19,558,452 to $14,710,460 during the year ended December 31, 2020, from $34,268,912 during the year ended December 31, 2019.

 

Liquidity and Capital Resources 

 

Net cash used in operations for the year ended December 31, 2020 and 2019 was $1,037,843 and $1,797,227, respectively. The decrease in 2020 resulted primarily from the net loss of $14,710,460, partially offset by non-cash items including derivative liability for authorized shares shortfall of $170,319,590, gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable of $162,109,131, interest and amortization of debt discount of $5,139,321, change in fair value of derivative liabilities of $451,351, gain on forgiveness of debt of $250,000 and gain on conversion of convertible notes payable of $882, as well as an increase in accrued payroll and related expenses of $140,005 and an increase in accounts payable and accrued expenses of $77,520. The decrease in 2019 resulted primarily from the net loss of $34,268,912, partially offset by non-cash items including derivative liability for authorized shares shortfall of $18,921,537, preferred stock issuance costs of $5,585,594, interest and amortization of debt discount of $4,716,970, change in fair value of derivative liabilities of $685,415, and loss on conversion of convertible notes payable of $603,529, as well as an increase in accrued payroll and related expenses of $732,027 and an increase in accounts payable and accrued expenses of $557,360.

 

Net cash provided by (used in) investing activities for the year ended December 31, 2020 and 2019 was $0 and $90,981, respectively. Net cash provided by investing activities for the year ended December 31, 2019 was attributed to proceeds from sale of investments of $90,981.

 

Net cash provided by financing activities for the year ended December 31, 2020 and 2019 was $1,038,208 and $1,677,798, respectively. For the year ended December 31, 2020, these funds came mainly from the sale of Series X Preferred Stock amounting to $321,000, proceeds from issuance of convertible debt of $637,000, proceeds from issuance of non-convertible notes payable of $82,911, proceeds from the issuance of a $50,000 PPP loan, offset by repayment of advances in the amount of $3,009, repayment of non-convertible notes in the amount of $39,641, and the repayment of $13,749 in bank overdrafts. Comparatively, for the year ended December 31, 2019, these funds came mainly from the sale of Series B Preferred Stock and warrants amounting to $1,407,500, proceeds from issuance of convertible debt of $549,000 and proceeds from issuance of non-convertible notes payable of $175,000, offset by repayment of advances in the amount of $595,000. 

 

Capital Resources

 

As of December 31, 2020, we had cash on hand of $1,485. We currently have no external sources of liquidity such as arrangements with credit institutions that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

 

We are dependent on the sale of our securities to fund our operations, and will remain so until we generate sufficient revenues to pay for our operating costs; however, no assurance can be given that additional financing will be available on terms favorable to us, or at all.

 

Fundraising

 

During the year ended December 31, 2020, the Company received proceeds of $637,000, $132,911, and $321,000 from the issuance of convertible notes, non-convertible notes, and Series X preferred shares, respectively.

   

Required Capital over the Next Fiscal Year

 

We do not believe that we have sufficient capital to become cash-flow positive from operations. We expect that we will need to raise additional funds to continue to fund operations.

 

We prepared the accompanying consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

 

We depend upon our ability to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management has determined that there is substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements are issued.

 

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

 

Greenwave Technology Solutions, Inc. Results Of Operations For the Nine Months Ended September 30, 2021
Compared to the Nine Months Ended September 30, 2020

 

		For the nine months ended
		Sept 30, 2021				Sept 30, 2020				$ Change				% Change
Revenue		$	1,660			$	2,316			$	(656	)			(28.32	%)
Operating Expenses			1,197,952				696,357				501,595				72.03	%
Loss from Operations			(1,196,292	)			(694,041	)			(502,251	)			72.37	%
Other Income (Expense)			12,060,441				(46,708,918	)			58,769,359				(125.82	%)
Deemed Dividends			(34,798,923	)			(95,002,933	)			60,204,010				(67.37	%)
Net Income (Loss) Available to Common Stockholders		$	(23,934,774	)		$	(142,405,892	)		$	118,471,118				(83.19	%)

 

Revenues

 

For the nine months ended September 30, 2021 and 2020, we generated revenues of $1,660 and $2,316, respectively, a decrease of $656 primarily due to the relaunch of product placements on the Company’s YouTube and social media channels.

 

Operating Expenses

 

For the nine months ended September 30, 2021 and 2020, our operating expenses were $1,197,952 and $696,357, respectively, an increase of $501,595. There was a decrease in advertising expenses from $43,020 for the nine months ended September 30, 2020 to $18,125 for the same period in 2021, a decrease of $24,895. There was a decrease in payroll and related expenses of $14,167 due to reduction in the number of employees, as payroll and related expenses decreased to $225,603 for the nine months ended September 30, 2021 from $ 239,770 for same period in 2020. Other general and administrative expenses increased by $540,510 from $413,417 for the nine months ended September 30, 2020, to $953,927 for the nine months ended September 30, 2021. This increase was attributable to higher travel and legal costs for the nine months ended September 30, 2021 as compared to the same period in 2020. 

 

Loss from Operations

 

During the nine months ended September 30, 2021, we incurred losses of $1,196,292 from operations, as compared to losses of $694,041 during the same period in 2020, a difference of $502,251, for the reasons stated above.

 

Other Income (Expense)

 

For the nine months ended September 30, 2021 and 2020, the Company recorded interest expense of $2,147,364 and $3,607,210, respectively, primarily related to Company’s convertible notes. The Company recorded a $880 loss and $882 gain on the conversion of convertible notes payable for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded a $300,885 and a $303,593 gain, respectively, on the change in fair value of derivative liabilities. For the nine months ended September 30, 2021 and 2020, the Company recorded losses of $159,633,797 and $43,406,183, respectively, of changes in the fair value of the derivative liability for the authorized shares shortfall. The Company recorded a $173,349,076 gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable during the nine months ended September 30, 2021, as compared to $0 during the same period in 2020. There was a $192,521 gain on the forgiveness of debt for the nine months ended September 30, 2021, as compared to $0 during the same period in 2020.

 

Net Income (Loss) Available to Common Stockholders

 

For the nine months ended September 30, 2021, we had net losses available to common stockholders of $23,934,774 as compared to a net loss of $142,405,892 for the same period in 2020, a difference of $118,471,118 for the reasons discussed above.

 

 

Liquidity and Capital Resources

 

Net cash used in operations for the nine months ended September 30, 2021 and 2020 was $390,269 and $717,062, respectively. This $326,793 decrease was primarily caused by an increase in accounts payable and accrued expenses, accrued payroll and related expenses, and deferred revenue. Net cash used in operations for the nine months ended September 30, 2020 was primarily based on the loss for the nine months ended September 30, 2020, partially offset by decreases in accounts payable and accrued payroll. 

 

Net cash provided by financing activities for the nine months ended September 30, 2021 and 2020 was $389,866 and $716,592 respectively. During the nine months ended September 30, 2021, these funds were derived mainly from proceeds related to the issuance of preferred shares and non-convertible notes. During the nine months ended September 30, 2020, net cash provided by financing activities was derived from the issuance of convertible notes, offset by repayment of non-convertible notes.

 

Capital Resources

 

As of September 30, 2021, the Company had cash of $1,082 and working capital deficit (current liabilities in excess of current assets) of $17,539,723. During the nine months ended September 30, 2021, the net loss available to common stockholders was $23,934,774 and net cash used in operating activities was $390,269. These conditions raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the condensed consolidated financial statements. Our primary source of operating funds since inception has been cash proceeds from the public and private placements of our securities, including debt securities, and proceeds from the exercise of warrants and options. We have experienced net losses and negative cash flows from operations since inception and expect these conditions to continue for the foreseeable future. For the foreseeable future, our ability to continue our operations is dependent upon our ability to obtain additional capital through public or private equity offerings, debt financings or other sources; however, financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy and we may be forced to curtail or cease operations.

 

Management’s plans regarding these matters encompass the following actions: 1) obtain funding from new and current investors to alleviate our working capital deficiency; and 2) implement a plan to generate revenues. Our continued existence is dependent upon our ability to translate our audience into revenues. However, the outcome of our plans cannot be determined with any degree of certainty.

 

Accordingly, the accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business for one year from the date the condensed consolidated financial statements are issued. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty such as the final settlement amounts of our notes payable and accrued interest.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2021, we did not have any off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for: (1) convertible debt with a cash conversion feature; and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

 

 

In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes certain disclosure requirements, including the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. ASU 2018-13 also adds disclosure requirements, including changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 became effective for us on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

Empire Services, Inc. Results of Operations For the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

 

		For the Fiscal Year ended
		31-Dec-20				31-Dec-19				$ Change				%  Change
Revenues		$	12,956,728			$	17,121,212			$	(4,164,484	)			(24.3	)%
Gross Profit			6,077,315				8,433,325				(2,356,010	)			(27.9	)%
Operating Expenses			8,540,598				7,667,025				873,573				11.4	%
Profit (Loss) from Operations			(2,463,283	)			766,300				(3,229,583	)			(421.5	)%
Other Expense			(1,286,087	)			(218,616	)			(1,067,471	)			488.3	%
Net Income (Loss)		$	(3,749,370	)		$	547,684			$	(4,297,054	)			(784.6	)%

 

Revenues

 

For the year ended December 31, 2020, we generated $12,956,728 in revenues, as compared to $17,121,212 for the year ended December 31, 2019, a decrease of $4,164,484. This decrease is primarily related to the impacts of the COVID-19 pandemic on our operations and the overall metal market.

 

Operating Expenses

 

For the years ended December 31, 2020 and 2019, our operating expenses were $8,540,598 and $7,667,025, respectively, an increase of $873,573. The increase was partially attributable to rent, utilities and property maintenance which, for 2020, was $2,374,860 as compared to $2,310,421 for 2019, an increase of $64,439. In addition, consulting, accounting, and legal increased by $195,724 as these expenses were $295,364 in 2020 as compared to $99,640 in 2019. There was a decrease in payroll and related expenses of $53,149 as payroll and related expenses were $2,405,871 for 2020 as compared to $2,459,020 for the same period in 2019, which was the result of a decrease in our labor force. Depreciation expense increased by $55,164 to $382,244 for 2020 as compared to $327,080 for 2019 due to an increase in the amount of equipment owned by Empire. Hauling and equipment maintenance costs increased by $88,821 to $2,043,551 for the year ended December 31, 2020 from $1,954,730 for the same period in 2019. For the years ended December 31, 2020 and 2019, we recorded environmental remediation costs of $0 and $140,000, respectively.

 

Our other general and administrative expenses increased to $1,038,708 for the year ended December 31, 2020 from $376,134 for the year ended December 31, 2019, an increase of $662,574.

 

Profit (Loss) from Operations

 

Our loss from operations was $(2,463,283) for the year ended December 31, 2020 as compared to a profit from operations of $766,300 for the year ended December 31, 2019, a change of $(3,229,583).

 

Other (Expense)

 

During the year ended December 31, 2020, we incurred other (expenses) of $(1,286,087), as compared to $(218,616) for the year ended December 31, 2019, a change of $(1,067,471). This change is primarily due to an increase in interest expense from $(651,361) for the year ended December 31, 2019 to $(1,328,527) for the year ended December 31, 2020. There was a gain on the settlement of a legal matter of $285,000 during fiscal year ended December 31, 2019 as compared to $0 during the same period in 2020. There was a $19,440 gain on the settlement of debt for the year ended December 31, 2020 as compared to $127,984 during the same period in 2019. There was other income of $23,000 during the year ended December 31, 2020 as compared to $19,761 during the year ended December 31, 2019.

 

 

Net Income (Loss)

 

We had a net loss of $(3,749,370) during the year ended December 31, 2020 as compared to net income of $547,684 during the year ended December 31, 2019, a change of $(4,297,054).

 

Liquidity and Capital Resources 

 

Net cash provided by (used in) operations for the year ended December 31, 2020 and 2019 was $(289,471) and $3,334,659, respectively. The decrease in 2020 resulted primarily from the net loss of $(3,749,370), partially offset by non-cash items including a contribution of lease payment of $1,718,463, non-cash interest expense of $1,092,173, depreciation and amortization of $382,244, gain on settlement of debt of $(19,440), as well as an increase in accounts payable and accrued expenses of $175,241, a change in lease liability of $58,263 and deferred revenue of $52,955. Cash flows provided by operations for the year ended December 31, 2019 resulted primarily from net income of $547,684, partially offset by non-cash items including a contribution of lease payment of $1,692,201, non-cash interest expense of $233,394, depreciation and amortization of $327,080, gain on settlement of debt of $(127,984), gain on settlement of a legal matter of $(285,000), as well as an increase in accounts payable and accrued expenses of $703,697 and a change in lease liability of $91,478.

 

Net cash (used in) investing activities for the year ended December 31, 2020 and 2019 was $(243,652) and $(159,407), respectively, for the purchase of equipment.

 

Net cash provided by (used in) financing activities for the year ended December 31, 2020 and 2019 was $779,340 and $(3,120,457), respectively. For the year ended December 31, 2020, these funds came mainly from the proceeds from the issuance of a $543,000 PPP note, proceeds from the issuance of a $500,000 Economic Injury Disaster loan, proceeds of $197,000 from the issuance of notes payable, proceeds of $3,309,500 from the issuance of advances, and cash contributions of $1,529,080, offset by repayment of advances in the amount of $(2,545,704) and the repayment of non-convertible notes in the amount of $(2,753,536). Comparatively, for the year ended December 31, 2019, the cash used in financing activities was due to proceeds of advances of $1,109,601 and proceeds of notes payable of $1,240,000, offset by repayments of notes payable in the amount of $(1,288,115), repayments of advances in the amount of $(32,060), and cash distributions of $(4,149,883).

 

Capital Resources

 

As of December 31, 2020, we had cash on hand of $301,012. We currently minimal sources of liquidity such as arrangements with credit institutions that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

 

Fundraising

 

During the year ended December 31, 2020, the Company received proceeds of $3,309,500, $543,000, $500,000 and $197,000 from the issuance of advances, a paycheck protection program loan, an emergency injury disaster loan and non-convertible notes, respectively. During fiscal year 2020, the Company used $243,652 to purchase equipment. The Company may not have sufficient cash to fund operations for the next fiscal year. During the year ended December 31, 2019, the Company received proceeds of $1,109,601 and $1,240,000 from the issuance of advances and non-convertible notes, respectively. During fiscal year 2019, the Company used $159,407 to purchase equipment.

   

Required Capital over the Next Fiscal Year

 

We do not believe that we have sufficient capital to become cash-flow positive from operations. We expect that we will need to raise additional funds to continue to fund operations.

 

We prepared the accompanying consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

 

We depend upon our ability to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management has determined that there is substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements are issued.

 

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

 

 

Empire Services, Inc. Results Of Operations For the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

 

		For the nine months ended
		Sept 30, 2021				Sept 30, 2020				$  Change				%  Change
Revenue		$	19,657,726			$	9,163,115			$	10,494,611				114.5	%
Gross Profit			9,001,098				4,366,800				4,634,298				106.1	%
Operating Expenses			5,968,766				5,704,456				264,310				4.6	%
Income (Loss) from Operations			3,032,332				(1,337,655	)			4,369,987				(326.7	)%
Other (Expense)			(574,392	)			(947,988	)			372,996				(39.3	)%
Net Income (Loss) Available to Common Stockholders		$	2,457,940			$	(2,285,643	)		$	4,743,583				(207.5	)%

 

Revenues

 

For the nine months ended September 30, 2021 and 2020, we generated revenues of $19,657,726 and $9,163,115, respectively, an increase of $10,494,611 primarily due to a strong market for metals during the first nine months of 2021.

 

Operating Expenses

 

For the nine months ended September 30, 2021 and 2020, our operating expenses were $5,968,766 and $5,704,456, respectively, an increase of $264,310. There was a decrease in rent, utilities and property maintenance expenses from $1,763,076 for the nine months ended September 30, 2020 to $1,689,544 for the same period in 2021, a decrease of $73,532. There was an increase in payroll and related expenses of $556,927 due to an increase in the number of employees, as payroll and related expenses increased to $2,242,961 for the nine months ended September 30, 2021 from $1,686,034 for same period in 2020. Consulting, accounting and legal expenses decreased from $193,688 during the nine months ended September 30, 2020 to $165,792 during the same period in 2021, a decrease of $27,896. Due to an increase in the amount of equipment, depreciation expenses increased by $20,022, from $327,532 during the nine months ended September 30, 2020 to $347,554 during the same period in 2021. Hauling and equipment maintenance expenses decreased from $1,020,354 during the nine months ended September 30, 2020 to $952,163 during the nine months ended September 30, 2021, a decrease of $68,191. Other general and administrative expenses decreased by $149,870 from $713,772 for the nine months ended September 30, 2020, to $563,902 for the nine months ended September 30, 2021.

 

Income (Loss) from Operations

 

During the nine months ended September 30, 2021, we generated income of $3,032,332 from operations, as compared to sustaining losses of $(1,337,655) during the same period in 2020, a difference of $4,369,987, for the reasons stated above.

 

Other Income (Expense)

 

For the nine months ended September 30, 2021 and 2020, the Company recorded interest expense of $(1,122,610) and $(990,428), respectively, primarily related to Company’s advances. The Company recorded an $548,218 gain on forgiveness of debt related to the Company’s PPP loan during the nine months ended September 30, 2021, as compared to $0 during the same period in 2020. The Company recorded a gain on debt settlement of $19,440 during the nine months ended September 30, 2020, as compared to $0 during the same period in 2021. The Company recorded other income of $23,000 during the nine months ended September 30, 2020, as compared to $0 during the same period in 2021.

 

Net Income (Loss) Available to Common Stockholders

 

For the nine months ended September 30, 2021, we had net income available to common stockholders of $2,457,940 as compared to a net loss of $(2,285,643) for the same period in 2020, a difference of $4,743,583 for the reasons discussed above.

 

Liquidity and Capital Resources

 

Net cash provided by operations for the nine months ended September 30, 2021 and 2020 was $1,838,065 and $201,155, respectively. This $1,636,910 increase was primarily caused by the Company generating net income during the nine months ended September 30, 2021, amortization of debt discount, and change in lease liability, offset by decreases in accounts payable and accrued expenses, gain on forgiveness of debt, and change in notes receivable. Net cash used in operations for the nine months ended September 30, 2020 was primarily based on the loss for the nine months ended September 30, 2020, offset by lease liabilities contributed and non-cash interest expense. 

 

Net cash provided by (used in) financing activities for the nine months ended September 30, 2021 and 2020 was $(1,718,741) and $227,879 respectively. During the nine months ended September 30, 2021, these funds were derived mainly from proceeds related to the issuance of advances and non-convertible notes, offset by repayments of advances and non-convertible notes as well as cash distributions. During the nine months ended September 30, 2020, net cash provided by financing activities was derived from the issuance of advances, non-convertible notes, a PPP note payable, an EIDL note payable, and cash contributions, offset by repayments of advances and non-convertible notes.

 

 

Capital Resources

 

As of September 30, 2021, the Company had cash of $141,027 and a working capital deficit (current liabilities in excess of current assets) of $8,623,838. During the nine months ended September 30, 2021, although the net profit was $2,457,940 and net cash generated by operating activities was $1,838,065, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the audited consolidated financial statements.

 

During the nine months ended September 30, 2021, the Company received proceeds of $2,692,500, $543,275, and $179,500 from the issuance of advances, a paycheck protection program loan, and non-convertible notes, respectively. The Company may not have sufficient cash to fund operations for the next fiscal year.

 

The Company’s primary source of operating funds since inception has been cash proceeds from operating activities. The Company has occasionally experienced net losses and negative cash flows from operations. The Company’s ability to continue its operations is dependent upon its ability to obtain additional capital through public or private equity offerings, debt financings or other sources; however, financing may not be available to the Company on acceptable terms, or at all. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategy, and the Company may be forced to curtail or cease operations.

  

Management’s plans regarding these matters encompass the following actions: 1) obtain funding from new and current investors to alleviate the Company’s working capital deficiency; and 2) implement a plan to increase revenues. The Company’s continued existence is dependent upon its ability to raise additional capital.  However, the outcome of management’s plans cannot be determined with any degree of certainty. Accordingly, the accompanying condensed unaudited  consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for one year from the date the consolidated financial statements are issued. The carrying amounts of assets and liabilities presented in the audited consolidated financial statements do not necessarily purport to represent realizable or settlement values. The audited consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2021, we did not have any off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), which, among other things, requires lessees to recognize substantially all leases on their balance sheets and disclose key information about leasing arrangements. The new standard establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The new standard became effective for the Company on January 1, 2019.

 

We adopted Topic 842 utilizing the modified retrospective adoption method with an effective date of January 1, 2019. We made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less) for all classes of underlying assets. Instead, we recognize lease payments in profit or loss on a straight-line basis over the lease term. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset. We elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components. The adoption of Topic 842 resulted in the recognition of operating lease liabilities of $4,678,108 and $5,863,648 and operating ROU assets of $4,533,747 and $5,777,550 as of December 31, 2020 and 2019, respectively, primarily related to leases for the company’s metal recycling facilities. There was no cumulative effect adjustment to beginning Stockholders’ Deficit on the consolidated balance sheet. The accounting for our finance leases remained substantially unchanged, as finance lease liabilities and their corresponding ROU assets were already recorded on the consolidated balance sheets under the previous guidance. The adoption of Topic 842 did not have a significant effect on our results from operations or cash flows. See “Note 9—Leases” for additional disclosures required by Topic 842.

 

In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for: (1) convertible debt with a cash conversion feature; and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

 

 

In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes certain disclosure requirements, including the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. ASU 2018-13 also adds disclosure requirements, including changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 became effective for us on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

There are other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

There are other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

JOBS Act Transition Period

 

As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay our adoption of such new or revised accounting standards. As a result of this election, our financial statements may not be comparable to the financial statements of other public companies.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by Item 304 of Regulation S-K.

 

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

 

Directors and Executive Officers

 

The name and age of our Director and Executive Officer is set forth below. All Directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified. The officers are elected by our Board.

 

Name		Age		Executive Position
Danny Meeks		47		Chief Executive Officer, Chairman and Director

 

Danny Meeks, Chief Executive Officer and Chairman – Danny Meeks is the Chief Executive Officer of the Company, a position he has held since September 30 2021. He has served as a director and Chairman of the Board of Directors since June 2021. He has served as interim Chief Financial Officer since November 30, 2021. He was the sole owner and President of Empire Services, Inc., a metal recycling company he founded in 2002, until its acquisition by the Company in September 2021. Additionally, Mr. Meeks has been serving as the President of DWM Properties, LLC, his real estate holding company, since 2002 and as the President of Select Recycling and Waste Services, Inc., a waste disposal and recycling company, from October 2016 to present. Mr. Meeks graduated from Manor High School in 1993. Mr. Meeks is well-suited to serve on our Board due to his significant business and management experience and deep knowledge of growth and commercialization strategies. Mr. Meeks joined the Company’s Board to foster revenue-generating capabilities of the Company.

 

 

Family Relationships

 

There are no family relationships among our directors and executive officers.

 

Involvement in Legal Proceedings

 

We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses) or being subject to any of the items set forth under Item 401(f) of Regulation S-K.

 

CORPORATE GOVERNANCE

 

Governance of Our Company

 

We seek to maintain high standards of business conduct and corporate governance, which we believe are fundamental to the overall success of our business, serving our Stockholders well and maintaining our integrity in the marketplace. Our corporate governance guidelines and Code of Conduct and Ethics, together with our Certificate of Incorporation, Bylaws and the charters for each of our Board committees, form the basis for our corporate governance framework. We also are subject to certain provisions of the Sarbanes-Oxley Act and the rules and regulations of the SEC. The full text of the Code of Conduct and Ethics is available on our website at https://www.greenwavetechnologysolutions.com/code-of-conduct and is also filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the SEC on April 1, 2015.

 

There are currently no members of the Board serving on our Audit Committee, Compensation Committee, or Nominating and Corporate Governance Committee, and our Board will act in place of such committees until such time that members are appointed to such committees.

 

Our Board of Directors

 

Our Board currently consists of two members. The number of directors on our Board can be evaluated and amended by action of our Board.

 

Our Board has decided that it would judge the independence of its directors by the heightened standards established by the Nasdaq Stock Market, despite the Company not being subject to these standards at this time. Our Board considers a director to be independent when the director is not an officer or employee of the Company or its subsidiaries, does not have any relationship which would, or could reasonably appear to, materially interfere with the independent judgment of such director, and the director otherwise meets the independence requirements under the listing standards of the Nasdaq Stock Market and the rules and regulations of the SEC. Based on the foregoing, the Board has determined that none of our directors currently meet the independence standards established by the Nasdaq Stock Market and the applicable independence rules and regulations of the SEC, including the rules relating to the independence of the members of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

 

Stockholder Communications. Although we do not have a formal policy regarding communications with the Board, Stockholders may communicate with the Board by writing to us at 277 Suburban Drive, Suffolk, VA 23434, Attention: Chairman. Stockholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate. Please note that the foregoing communication procedure does not apply to (i) Stockholder proposals pursuant to Exchange Act Rule 14a-8 and communications made in connection with such proposals or (ii) service of process or any other notice in a legal proceeding.

 

Board and Committee Meetings

 

During the fiscal year ended December 31, 2020, our Board held no meetings and operated solely by unanimous written consent. For the fiscal year ended December 31, 2020, our Board was composed of a sole member who attended every meeting of our Board. Our Audit Committee, Compensation Committee, Nominating and Corporate Governance committee did not have any members and did not meet during the fiscal year ended December 31, 2020. The Company did not have an annual meeting of Stockholders during the prior year.

 

 

Board Committees

 

On December 9, 2015, our Board designated the following three committees of the Board: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The Company’s designated committees currently do not have any members and the Board acts in place of such committees.

 

Audit Committee. The Audit Committee is responsible for, among other things, overseeing the financial reporting and audit process and evaluating our internal controls over financial reporting. The Audit Committee currently does not have any members nor does it have an audit committee financial expert and the Board acts in place of such committee. Our Board has determined that given its relatively small size, the function of the Audit Committee could be performed by our Board as a whole without unduly burdening the duties and responsibilities of our Board member. A copy of the Audit Committee Charter is available on our website at https://www.greenwavetechnologysolutions.com/audit-committee-charter.

 

Compensation Committee. The Compensation Committee is responsible for, among other things, establishing and overseeing the Company’s executive and equity compensation programs, establishing performance goals and objectives, and evaluating performance against such goals and objectives. The Compensation Committee currently does not have any members and the Board acts in place of such committee. Our Board has determined that given its relatively small size, the function of the Compensation Committee could be performed by our Board as a whole without unduly burdening the duties and responsibilities of our Board member. A copy of the Compensation Committee Charter is available on our website at https://www.greenwavetechnologysolutions.com/compensation-committee-charter.

 

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for, among other things, identifying and recommending candidates to fill vacancies occurring between annual Stockholder meetings and reviewing the Company’s policies and programs relating to matters of corporate citizenship, including public issues of significance to the Company and its Stockholders. The Nominating and Corporate Governance Committee currently does not have any members and the sole member of the Board acts in place of such committee. Our Board has determined that given its relatively small size, the function of the Nominating and Corporate Governance Committee could be performed by our Board as a whole without unduly burdening the duties and responsibilities of our Board member. A copy of the Nominating and Corporate Governance Committee Charter is available on our website at https://www.greenwavetechnologysolutions.com/ncg-charter.

 

Risk Oversight

 

The Board is primarily responsible for overseeing our risk management processes. The Board receives and reviews periodic reports from management, auditors, legal counsel and others, as appropriate, regarding the Company’s assessment of risks. The Board focuses on the most significant risks facing the Company and our general risk management strategy, and also ensures that the risks we undertake are consistent with the Board’s risk parameters. While the Board oversees the risk management process, our management is responsible for day-to-day risk management and, if management identifies new or additional significant risks, it brings such risks to the attention of the Board.

 

Board Leadership Structure

 

Danny Meeks is the Chairman of our Board of Directors and Chief Executive Officer of the Company. The Chairman of the Board presides at all meetings of the Board, unless such position is vacant, in which case, the Chief Executive Officer of the Company would preside.

   

 

EXECUTIVE COMPENSATION

 

Named Executive Officer

 

Our named executive officers for the year ended December 31, 2020 were Danny Meeks, our Chief Executive Officer, and Isaac Dietrich, our former Chief Executive Officer.

 

Summary Compensation Table

 

The following table presents the compensation awarded to, earned by or paid to our named executive officer for the years ended December 31, 2021 and December 31, 2020.

 

Name and Principal Position		Year		Salary ($)				Bonus ($)				Stock awards ($) (1)				Option awards ($) (1)				Nonequity incentive plan compensation ($)				Nonqualified deferred compensation earnings ($)				All other compensation ($) (1)				Total ($)
Danny Meeks		2021			125,000				250,000				—				—				—				—				—				375,000
Chief Executive Officer		2020			—				—				—				—				—				—				—				—
Isaac Dietrich		2021			132,917				—				—				—				—				—				—				132,917
Former Chief Executive Officer		2020			145,000				38,330				——				—				—				—				—				183,330

 

(1)

These amounts are the aggregate fair value of the equity compensation incurred by the Company for payments to executives during the fiscal year. The aggregate fair value is computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The fair market value was calculated using the Black-Scholes options pricing model.

 

Outstanding Equity Awards at December 31, 2020

 

There were no outstanding equity awards held by our named executive officer as of December 31, 2020.

 

Narrative Disclosure to the Summary Compensation Table

 

Danny Meeks

 

On September 30, 2021, the Company entered into an employment agreement with Danny Meeks pursuant to which Mr. Meeks serves as the Company’s Chief Executive Officer. Pursuant to the terms of the employment agreement, Mr. Meeks shall receive an annual base salary of $500,000. In addition, Mr. Meeks shall be eligible to receive an annual bonus and shall be eligible to receive such awards under the Company’s incentive plans as determined by the Company’s Compensation Committee. Mr. Meeks may be terminated by the Company or may voluntarily resign, at any time, with or without cause. Either the Company or Mr. Meeks may terminate Mr. Meeks’ employment upon two weeks prior written notice.

 

Until October 1, 2026, for every $1 million in annual revenue Empire Services, Inc., a Virginia corporation and wholly-owned subsidiary of the Company, generates over $20 million, Mr. Meeks shall be entitled to receive either 25 million shares of the Company’s common stock or $50,000 in cash, at the discretion of Mr. Meeks.

 

Upon termination except by death (the “Termination Date”), the Company shall pay Mr. Meeks (i) any accrued but unpaid compensation, (ii) a pro-rata portion of his annual bonus calculated as of the Termination Date and (iii) reimbursement of expenses incurred on or prior to the Termination Date. In addition, Mr. Meeks may elect to receive Consolidated Omnibus Budget Reconciliation Act of 1985 benefits for up to twelve months from the Termination Date. Upon termination of Mr. Meeks’ employment for death, the Company shall pay Mr. Meeks (i) any accrued but unpaid compensation and (ii) reimbursement of expenses incurred on or prior to such date. Mr. Meeks is also entitled to participate in any and all benefit plans such as health, dental and life insurance, from time to time, in effect for senior executives, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time. In the fiscal years ended December 31, 2021 and December 31, 2020, Mr. Meeks received $250,000 and $0 in bonuses, respectively. Mr. Meeks did not receive any compensation related to his position as a director.

 

Isaac Dietrich

 

On December 12, 2017, the Company entered into an employment agreement with Isaac Dietrich pursuant to which Mr. Dietrich serves as the Company’s Chief Executive Officer. Pursuant to the terms of the employment agreement, Mr. Dietrich shall receive an annual base salary of $145,000. In addition, Mr. Dietrich shall be eligible to receive an annual bonus and shall be eligible to receive such awards under the Company’s incentive plans as determined by the Company’s Compensation Committee. Mr. Dietrich may be terminated by the Company or may voluntarily resign, at any time, with or without cause. Either the Company or Mr. Dietrich may terminate Mr. Dietrich’s employment upon two weeks prior written notice.

 

Upon termination except by death (the “Termination Date”), the Company shall pay Mr. Dietrich (i) any accrued but unpaid compensation, (ii) a pro-rata portion of his annual bonus calculated as of the Termination Date and (iii) reimbursement of expenses incurred on or prior to the Termination Date. In addition, Mr. Dietrich may elect to receive Consolidated Omnibus Budget Reconciliation Act of 1985 benefits for up to twelve months from the Termination Date. Upon termination of Mr. Dietrich’s employment for death, the Company shall pay Mr. Dietrich (i) any accrued but unpaid compensation and (ii) reimbursement of expenses incurred on or prior to such date. Mr. Dietrich is also entitled to participate in any and all benefit plans such as health, dental and life insurance, from time to time, in effect for senior executives, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time. In the fiscal years ended December 31, 2021 and December 31, 2020, Mr. Dietrich received $0 and $38,330 in bonuses, respectively. Mr. Dietrich resigned as an officer and director of the Company on November 30, 2021.

 

 

At no time during the periods listed in the above tables, with respect to any named executive officers, was there:

 

●

any outstanding option or other equity-based award re-priced or otherwise materially modified (such as by extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined);

 

●

any waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock incentive plan compensation or payouts;

 

●

any non-equity incentive plan award made to a named executive officer;

 

●

any nonqualified deferred compensation plans including nonqualified defined contribution plans; or

 

●

any payment for any item to be included under the “All Other Compensation” column in the Summary Compensation Table.

 

Director Compensation

 

Our directors do not receive any additional compensation for their service as directors.

 

Indemnification of Officers and Directors

 

Our Certificate of Incorporation provides that we shall indemnify our officers and directors to the fullest extent permitted by applicable law against all liability and loss suffered and expenses (including attorneys’ fees) incurred in connection with actions or proceedings brought against them by reason of their serving or having served as officers, directors or in other capacities. We shall be required to indemnify a director or officer in connection with an action or proceeding commenced by such director or officer only if the commencement of such action or proceeding by the director or officer was authorized in advance by the Board of Directors.

 

Our Equity Incentive Plans

 

Our Stockholders approved our 2014 Equity Incentive Plan (“2014 Plan”) in June 2014, our 2015 Equity Incentive Plan (the “2015 Plan”) in December 2015, our 2016 Equity Incentive Plan (“2016 Plan”) in October 2016, our 2017 Equity Incentive Plan (“2017 Plan”) in December 2016, our 2018 Equity Incentive Plan (“2018 Plan”) in June 2018, and our 2021 Equity Incentive Plan (“2021 Plan” and together with the 2014 Plan, 2015 Plan, 2016 Plan, 2017 Plan, and 2018 Plan the “Prior Plans”) in September 2021. The Prior Plans are identical, except for the number of shares of Common Stock reserved for issuance under each.

 

The Prior Plans provide for the grant of incentive stock options, nonstatutory stock options, stock bonus awards, restricted stock awards, performance stock awards and other forms of stock compensation to our employees, including officers, consultants and directors. Our Prior Plans also provide that the grant of performance stock awards may be paid out in cash as determined by the Committee (as defined herein).

 

 

Plan Details

 

The following table and information below sets forth information as of September 30, 2021 with respect to our Plans:

 

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders:
2014 Equity Incentive Plan			1,685,792			$	0.31				—
2015 Equity Incentive Plan			3,059,157			$	0.94				—
2016 Equity Incentive Plan			1,715,104			$	0.51				—
2017 Equity Incentive Plan			7,660,850			$	0.87				—
2018 Equity Incentive Plan			13,700,000			$	0.20				190,000
2021 Equity Incentive Plan			-				-				50,000,000
Equity compensation plans not approved by security holders
Total			27,820,903			$	0.50				50,190,000

 

Summary of the Prior Plans

 

Authorized Shares

 

No shares of our Common Stock are reserved for issuance pursuant to the 2014 Plan, 2015 Plan, the 2016 Plan, the 2017 Plan, the 2018 Plan, or the 2021 Plan. There are currently 190,000 shares of our Common Stock available for issuance pursuant to the 2018 Plan and 50,000,000 shares of our Common Stock available for issuance pursuant to the 2021 Plan. Shares of Common Stock issued under our Prior Plans may be authorized but unissued or reacquired shares of our Common Stock. Shares of Common Stock subject to stock awards granted under our Prior Plans that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares of Common Stock, will not reduce the number of shares of Common Stock available for issuance under our Prior Plans. Additionally, shares of Common Stock issued pursuant to stock awards under our Prior Plans that we repurchase or that are forfeited, as well as shares of Common Stock reacquired by us as consideration for the exercise or purchase price of a stock award, will become available for future grant under our Prior Plans.

 

Administration

 

Our Board, or a duly authorized committee thereof (collectively, the “Committee”), has the authority to administer our Prior Plans. Our Board may also delegate to one or more of our officers the authority to designate employees other than Directors and officers to receive specified stock, which, in respect to those awards, said officer or officers shall then have all authority that the Committee would have.

 

Subject to the terms of our Prior Plans, the Committee has the authority to determine the terms of awards, including recipients, the exercise price or strike price of stock awards, if any, the number of shares of Common Stock subject to each stock award, the fair market value of a share of our Common Stock, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon exercise or settlement of the stock award and the terms and conditions of the award agreements for use under the Prior Plans. The Committee has the power to modify outstanding awards under the Prior Plans, subject to the terms of the Prior Plans and applicable law. Subject to the terms of our Prior Plans, the Committee has the authority to reprice any outstanding option or stock appreciation right, cancel and re-grant any outstanding option or stock appreciation right in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any adversely affected participant.

 

 

Stock Options

 

Stock options may be granted under the Prior Plans. The exercise price of options granted under our Prior Plans must at least be equal to the fair market value of our Common Stock on the date of grant. The term of an ISO may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed 5 years and the exercise price must equal at least 110% of the fair market value on the grant date. The Committee will determine the methods of payment of the exercise price of an option, which may include cash, shares of Common Stock or other property acceptable to the Committee, as well as other types of consideration permitted by applicable law. No single participant may receive more than 25% of the total options awarded in any single year. Subject to the provisions of our Prior Plans, the Committee determines the other terms of options.

 

Performance Shares

 

Performance shares may be granted under our Prior Plans. Performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The Committee will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance shares to be paid out to participants. After the grant of a performance share, the Committee, in its sole discretion, may reduce or waive any performance criteria or other vesting provisions for such performance shares. The Committee, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares of Common Stock or in some combination thereof, per the terms of the agreement approved by the Committee and delivered to the participant. Such agreement will state all terms and condition of the agreement.

 

Restricted Stock

 

The terms and conditions of any restricted stock awards granted to a participant will be set forth in an award agreement and, subject to the provisions in the Prior Plans, will be determined by the Committee. Under a restricted stock award, we issue shares of our Common Stock to the recipient of the award, subject to vesting conditions and transfer restrictions that lapse over time or upon achievement of performance conditions. The Committee will determine the vesting schedule and performance objectives, if any, applicable to each restricted stock award. Unless the Committee determines otherwise, the recipient may vote and receive dividends on shares of restricted stock issued under our Prior Plans.

  

Other Share-Based Awards and Cash Awards

 

The Committee may make other forms of equity-based awards under our Prior Plans, including, for example, deferred shares, stock bonus awards and dividend equivalent awards. In addition, our Prior Plans authorizes us to make annual and other cash incentive awards based on achieving performance goals that are pre-established by our compensation committee.

 

Merger, Consolidation or Asset Sale

 

If the Company is merged or consolidated with another entity or sells or otherwise disposes of substantially all of its assets to another company while awards or options remain outstanding under the Prior Plans, unless provisions are made in connection with such transaction for the continuance of the Prior Plans and/or the assumption or substitution of such awards or options with new options or stock awards covering the stock of the successor company, or parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, then all outstanding options and stock awards which have not been continued, assumed or for which a substituted award has not been granted shall, whether or not vested or then exercisable, unless otherwise specified in the relevant agreements, terminate immediately as of the effective date of any such merger, consolidation or sale.

 

Change in Capitalization

 

If the Company shall effect a subdivision or consolidation of shares of Common Stock or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of Common Stock outstanding, without receiving consideration therefore in money, services or property, then awards amounts, type, limitations, and other relevant consideration shall be appropriately and proportionately adjusted. The Committee shall make such adjustments, and its determinations shall be final, binding and conclusive.

 

 

Prior Plan Amendment or Termination

 

Our Board has the authority to amend, suspend, or terminate our Prior Plans, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Each of the Prior Plans will terminate ten years after the earlier of (i) the date that each such Prior Plan is adopted by the Board, or (ii) the date that each such Prior Plan is approved by the Stockholders, except that awards that are granted under the applicable Prior Plan prior to its termination will continue to be administered under the terms of the that Prior Plan until the awards terminate, expire or are exercised.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding the beneficial ownership of our Common Stock, and Series Z Preferred Stock by (i) each person who, to our knowledge, owns more than 5% of our Common Stock or Series Z Preferred Stock, (ii) our current directors and the named executive officers identified under the heading “Executive Compensation” and (iii) all of our current directors and executive officers as a group. We have determined beneficial ownership in accordance with applicable rules of the SEC, and the information reflected in the table below is not necessarily indicative of beneficial ownership for any other purpose. Under applicable SEC rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and any shares which the person has the right to acquire within 60 days after January 11, 2022 through the exercise of any option, warrant or right or through the conversion of any convertible security. Unless otherwise indicated in the footnotes to the table below and subject to community property laws where applicable, we believe, based on the information furnished to us that each of the persons named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

 

The information set forth in the table below is based on 994,871,337 shares of our Common Stock and 500 shares of Series Z Preferred Stock issued and outstanding on January 11, 2022. In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of Common Stock subject to options, warrants, rights or other convertible securities held by that person that are currently exercisable or will be exercisable within 60 days after January 11, 2022. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the principal address of each of the Stockholders below is in care of Greenwave Technology Solutions, Inc., 277 Suburban Drive, Suffolk, VA 23434.

 

		Number of Shares of Common Stock Beneficially Owned				Percentage of Common Stock Beneficially Owned				Number of Shares of Series Z Preferred Stock Beneficially Owned				Percentage of Series Z Preferred Stock Beneficially Owned				% of Total Voting Power
Directors and Named Executive Officers
Danny Meeks			796,501,053	(1)			80.06	%			250				50	%			80.06	%
All directors and named executive officers as a group (1 person)			796,501,053	(1)			80.06	%			250				50	%			80.06	%
Other 5% Stockholder
None.

 

(1)	Consists of (i) 507,495,258 shares of Common Stock, (ii) 95,256,766 shares of Common Stock underlying convertible debt, (iii) 95,256,766 of Common Stock underlying warrants, and (iv) 98,492,262 shares of Common Stock underlying the shares of Series Z Preferred Stock.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Except for the below, from January 1, 2019 through the date of this prospectus, we have not been a party to any transaction or proposed transaction in which the amount involved in the transaction exceeds the lesser of  $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation which are described elsewhere in this prospectus.

 

Agreements with Jesus Quintero and Affiliates of Jesus Quintero

 

On December 15, 2020, the Company entered into a settlement agreement (the “Settlement Agreement”) with JDE Development, LLC (“JDE”), a Florida limited liability company wholly-owned and managed by Jesus Quintero, the Company’s Chief Financial Officer, in connection with the outstanding sum of $89,143.50 due to JDE for the services of Jesus Quintero as the Chief Financial Officer of the Company pursuant to that certain CFO Services Agreement entered into as of April 1, 2018, by and between the Company and Jesus Quintero. Pursuant to the Settlement Agreement, the Company agreed to pay JDE $25,000 (the “Cash Settlement”) and to enter into a convertible note with JDE in the principal amount of $64,143 (the “Note”). In addition, both parties agreed, on behalf of themselves, their past and present shareholders, members, directors, employees, managers, parents, affiliates, subsidiaries, principals, officers, related entities, assigns and successors, to irrevocably and fully release each other, and their respective past and present shareholders, members, directors, employees, managers, parents, affiliates, subsidiaries, principals, officers, related entities, assigns and successors, from any and all claims and causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever at law or in equity, upon or by reason of any matter, cause or thing of any nature whatsoever, including but not limited to claims related to sums payable by the Company to JDE.

 

In accordance with the Settlement Agreement, (i) on December 23, 2020, the Company paid JDE the Cash Settlement, and (ii) on December 15, 2020 the Company entered into the Note with JDE for a principal amount of $64,143.15. The Note had a maturity date of June 15, 2021 and accrued interest at a rate of twelve percent annually.

 

On December 23, 2020, the Company entered into an exchange agreement with JDE, pursuant to which the Company exchanged the Note, for 3.20716 shares of its Series Y Preferred Stock. On January 11, 2021, the Company issued such shares of Series Y Preferred Stock to JDE. Each share of Series Y Preferred Stock has a stated value of $20,000 and is convertible into 10,000,000 shares of the Company’s Common Stock, subject to certain adjustments. The shares of Series Y Preferred Stock are not convertible to the extent that (i) the Company’s Certificate of Incorporation has not been amended to increase the number of authorized shares of Common Stock of the Company, or (ii) the holder (together with such holder’s affiliates) would beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after giving effect to such conversion (which provision may be increased to a maximum of 9.99% by the holder by written notice from such holder to the Company, which notice shall be effective 61 calendar days after the date of such notice). As of January 11, 2022, no such shares of Series Y Preferred Stock are outstanding. The Series Y shares issued to JDE were redeemed for $49,390 on November 30, 2021 per a redemption agreement dated November 17, 2021.

 

Leases with Danny Meeks

 

We lease our scrap yard located at 22097 Brewers Neck Blvd., Carrollton, VA 23314, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $14,959 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 1576 Millpond Rd., Elizabeth City, NC 27909, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 130 Courtland Rd., Emporia, VA 23847, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 623 Highway 903 N., Greenville, NC 27834, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

 

We lease our scrap yard located at 8952 Richmond Rd., Toano, VA 23168, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 945 NC 11N, Kelford, NC 27805, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $37,132 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 1100 E Princess Anne Rd, Norfolk, VA 23504, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $15,914 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 4091 Portsmouth Blvd., Portsmouth, VA 23701, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $10,874 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 277 Suburban Drive, Suffolk, VA 23434, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $14,959 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

We lease our scrap yard located at 9922 Hwy 17 S., Vanceboro, NC 28586, from DWM Properties, LLC, which is owned by our Chairman and Chief Executive Officer for $8,487 per month. The lease expires on January 1, 2024, with two one year options to extend at the Company’s election.

 

LEGAL MATTERS

 

Unless otherwise indicated, Pryor Cashman LLP, New York, New York, will pass upon the validity of the shares of our Common Stock to be sold in this offering.

 

EXPERTS

 

The financial statements of Greenwave Technology Solutions, Inc. and Empire Services, Inc. for the year ended December 31, 2020 and December 31, 2019 have been included herein in reliance upon the reports of RBSM LLP, an independent registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Resale Shares being offered by this prospectus. This prospectus does not contain all of the information in the registration statement of which this prospectus is a part and the exhibits to such registration statement. For further information with respect to us the Resale Shares by this prospectus, we refer you to the registration statement of which this prospectus is a part and the exhibits to such registration statement. Statements contained in this prospectus as to the contents of any contract or any other document are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document incorporated by reference or filed as an exhibit to the registration statement of which this prospectus is a part. Each of these statements is qualified in all respects by this reference.

 

You may read and copy the registration statement of which this prospectus is a part, as well as our reports, proxy statements and other information, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including Greenwave Technology Solutions, Inc. The SEC’s Internet site can be found at http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing us at 277 Suburban Drive, Suffolk, VA 23434 or telephoning us at (757) 966-1432.

 

We are subject to the information and reporting requirements of the Exchange Act, and, in accordance with this law, file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above. We also maintain a website at www.GreenwaveTechnologySolutions.com. You may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

 

 

GREENWAVE TECHNOLOGY SOLUTIONS, INC.

 

Table of Contents

 

	Page No.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019	F-4
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2020 and 2019	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-6
Notes to Audited Financial Statements	F-7
Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	F-29
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	F-30
Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	F-31
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	F-33
Notes to Condensed Consolidated Financial Statements (unaudited)	F-34
Audited consolidated financial statements of Empire Services, Inc. and Subsidiaries as of and for the years ended December 31, 2020 and 2019 and accompanying Report of RBSM, LLP	F-60
Unaudited condensed consolidated financial statements of Empire Services, Inc. and Subsidiaries as of September 30, 2021 and for the nine months ended September 30, 2021 and 2020	F-80
Unaudited pro forma condensed combined financial statements and explanatory notes for Greenwave Technology Solutions, Inc. as of December 31, 2020, for the nine months ended September 30, 2021 and for the year ended December 31, 2020	F-97

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of

MassRoots, Inc. and Subsidiaries

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of MassRoots, Inc. and subsidiaries (collectively, the “Company”) as of December 31, 2020 and 2019 and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

 

The Company’s Ability to Continue as a Going Concern 

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses, and expects continuing future losses that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ RBSM LLP
We have served as the Company’s auditor since 2017.
Henderson, Nevada
April 15, 2021

 

 

MASSROOTS, INC.

CONSOLIDATED BALANCE SHEETS

 

		December 31,				December 31,
		2020				2019
ASSETS
Current assets:
Cash		$	1,485			$	1,120
Prepaid expenses			97,132				1,975
Total current assets			98,617				3,095
Total assets		$	98,617			$	3,095
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Bank overdrafts		$	-			$	13,749
Accounts payable and accrued expenses			4,948,890				5,455,063
Accrued payroll and related expenses			3,864,055				3,724,050
Advances			88,187				337,500
Non-convertible notes payable, current portion			159,520				115,750
Derivative liabilities			25,475,514				20,236,870
Convertible notes payable, net of debt discount of $0 and $380,431, respectively			3,186,303				6,989,039
Total current liabilities			37,722,469				36,872,021
Non-convertible notes payable			60,000				-
PPP note payable			50,000				-
Total liabilities			37,832,469				36,872,021
Commitments and contingencies (See Note 8)
Stockholders’ deficit:
Preferred stock - 10,000,000 shares authorized, 9,989,900 shares undesignated
Preferred stock - Series X, $0.0001 par value, $20,000 stated value, 100 shares authorized; 16.05 and 0 shares issued and outstanding, respectively			-				-
Preferred stock - Series Y, $0.001 par value, $20,000 stated value, 1,000 shares authorized; 654.781794 and 0 shares issued; 626.995464 and 0 shares outstanding, and 27.786334 and 0 to be issued, respectively			1				-
Preferred stock - Series C, $0.001 par value, 1,000 shares authorized; 1,000 shares issued and outstanding			1				1
Preferred stock - Series A, $0.001 par value, 6,000 shares authorized; 0 shares issued and outstanding			-				-
Preferred stock - Series B, $0.001 par value, 2,000 shares authorized; 0 shares issued and outstanding			-				-
Common stock, $0.001 par value, 500,000,000 shares authorized; 493,726,405 and 384,266,948 shares issued and outstanding, respectively			493,727				384,267
Common stock to be issued, 907,379,814 and 944,659,814 shares, respectively			907,380				944,660
Additional paid in capital			283,024,527				151,364,371
Discount on preferred stock			(20,973,776	)			-
Accumulated deficit			(301,185,712	)			(189,562,225	)
Total stockholders’ deficit			(37,733,852	)			(36,868,926	)
Total liabilities and stockholders’ deficit		$	98,617			$	3,095

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

MASSROOTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		Year Ended December 31,
		2020				2019
Revenues		$	6,964			$	23,703
Operating Expenses:
Cost of revenues			1,283				3,530
Advertising			58,961				29,764
Payroll and related expense			303,850				1,156,914
Stock-based compensation			-				222,700
Amortization of software costs			-				38,549
Impairment of software costs			-				196,315
Allowance for uncollectible advances to COWA Science Corporation (“COWA”)			-				360,500
Other general and administrative expenses			803,081				1,460,867
Total Operating Expenses			1,167,175				3,469,139
Loss From Operations			(1,160,211	)			(3,445,436	)
Other Income (Expense):
Interest expense			(5,139,321	)			(4,935,470	)
Preferred stock issuance costs			-				(5,585,594	)
Change in derivative liability for authorized shares shortfall			(170,319,590	)			(18,921,537	)
Change in fair value of derivative liabilities			(451,351	)			(685,415	)
Impairment on investment			-				(91,931	)
Gain on forgiveness of debt			250,000				-
Gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable			162,109,131				-
Gain (loss) on conversion of convertible notes			882				(603,529	)
Total Other Income (Expense)			(13,550,249	)			(30,823,476	)
Net Loss Before Income Taxes			(14,710,460	)			(34,268,912	)
Provision for Income Taxes (Benefit)			-				-
Net Loss			(14,710,460	)			(34,268,912	)
Deemed dividend from warrant price protection			(95,838,488	)			(28,933,472	)
Deemed dividend resulting from amortization of preferred stock discount			(1,074,539	)			-
Contingent beneficial conversion feature on preferred shares issuance			-				(45,147,093	)
Deemed dividend for issuance of common shares to settle warrant provision			-				(437,400	)
Deemed dividend from exchange of preferred shares for convertible notes			-				(1,476,280	)
Net Loss Available to Common Stockholders		$	(111,623,487	)		$	(110,263,157	)
Net loss per common share:
Basic		$	(0.08	)		$	(0.19	)
Diluted		$	(0.08	)		$	(0.19	)
Weighted average common shares outstanding:
Basic			1,390,934,274				576,802,421
Diluted			1,390,934,274				576,802,421

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

MASSROOTS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

 

		Preferred Stock
		Series X								Series Y								Series B								Series C								Common Stock								Common Stock to be Issued								Additional Paid				Discount on Preferred				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				In Capital				Stock				Deficit				Total
Balance at December 31, 2018			-			$	-				-			$	-				-			$	-				-			$	-				168,706,472			$	168,707				80,000			$	80			$	73,770,195			$	-			$	(80,775,348	)		$	(6,836,366	)
Issuance of common shares previously to be issued			-				-				-				-				-				-				-				-				80,000				80				(80,000	)			(80	)			-				-				-				-
Issuance of Series A preferred shares in exchange for warrants canceled			-				-				-				-				-				-				-				-				-				-				-				-				(296,746	)			-				-				(296,746	)
Sale of Series B Convertible Preferred Stock and warrants			-				-				-				-				1,126				1				-				-				-				-				-				-				1,407,499				-				-				1,407,500
Conversion of Series A Convertible Preferred Stock to common shares			-				-				-				-				-				-				-				-				80,000,000				80,000				903,823,564				903,824				2,153,424				-				-				3,137,248
Common shares issued as origination shares			-				-				-				-				-				-				-				-				1,250,000				1,250				-				-				140,083				-				-				141,333
Common shares issued upon conversion of convertible notes and accrued interest			-				-				-				-				-				-				-				-				111,174,464				111,174				37,160,000				37,160				1,583,984				-				-				1,732,318
Common shares issued upon exercise of warrants for cash			-				-				-				-				-				-				-				-				1,555,160				1,555				1,126,250				1,126				170,268				-				-				172,949
Common shares issued in settlement of a warrant provision			-				-				-				-				-				-				-				-				9,000,000				9,000				-				-				428,400				-				(437,400	)			-
Common shares issued upon cashless exercise of warrants			-				-				-				-				-				-				-				-				3,997,661				3,998				-				-				(3,998	)			-				-				-
Preferred and common shares issued for services			-				-				-				-				-				-				1,000				1				2,950,000				2,950				2,550,000				2,550				203,199				-				-				208,700
Options issued for services			-				-				-				-				-				-				-				-				-				-				-				-				14,000				-				-				14,000
Common shares issued to settle a true-up provision			-				-				-				-				-				-				-				-				5,553,191				5,553				-				-				16,661				-				-				22,214
Contingent beneficial conversion feature on Preferred Shares issuance			-				-				-				-				-				-				-				-				-				-				-				-				45,147,093				-				(45,147,093	)			-
Deemed dividend related to warrant price protection			-				-				-				-				-				-				-				-				-				-				-				-				28,933,472				-				(28,933,472	)			-
Deemed dividend resulting from exchange of preferred Series A and B shares for convertible notes			-				-				-				-				-				-				-				-				-				-				-				-				(1,476,280	)			-				-				(1,476,280	)
Preferred Series B shares exchanged for convertible notes			-				-				-				-				(1,126	)			(1	)			-				-				-				-				-				-				(826,883	)			-				-				(826,884	)
Net loss			-				-				-				-				-				-				-				-				-				-				-				-				-				-				(34,268,912	)			(34,268,912	)
Balance at December 31, 2019			-				-				-				-				-				-				1,000				1				384,266,948				384,267				944,659,814				944,660				151,364,371				-				(189,562,225	)			(36,868,926	)
Issuance of common shares previously to be issued			-				-				-				-				-				-				-				-				37,160,000				37,160				(37,160,000	)			(37,160	)			-				-				-				-
Common shares issued upon conversion of convertible notes and accrued interest			-				-				-				-				-				-				-				-				72,368,457				72,369				-				-				298,386				-				-				370,755
Common shares contributed back to the Company and promptly retired			-				-				-				-				-				-				-				-				(69,000	)			(69	)			-				-				69				-				-				-
Rescission of warrants exercised in prior year			-				-				-				-				-				-				-				-				-				-				(120,000	)			(120	)			(5,880	)			-				-				(6,000	)
Deemed dividend related to warrant price protection			-				-				-				-				-				-				-				-				-				-				-				-				95,838,488				-				(95,838,488	)			-
Convertible note issued to CFO with BCF			-				-				-				-				-				-				-				-				-				-				-				-				64,143				-				-				64,143
Sale of Series X preferred shares			16.05				-				-				-				-				-				-				-				-				-				-				-				321,000				-				-				321,000
BCF recognized upon issuance of Series X preferred shares			-				-				-				-				-				-				-				-				-				-				-				-				454,200				(454,200	)			-				-
Series Y preferred shares issued in exchange for convertible notes, accrued interest and warrants			-				-				654.781794				1				-				-				-				-				-				-				-				-				13,095,635				-				-				13,095,636
BCF recognized upon issuance of Series Y preferred shares			-				-				-				-				-				-				-				-				-				-				-				-				21,594,115				(21,594,115	)			-				-
Deemed dividend resulting from amortization of preferred stock discount			-				-				-				-				-				-				-				-				-				-				-				-				-				1,074,539				(1,074,539	)			-
Net loss			-				-				-				-				-				-				-				-				-				-				-				-				-								(14,710,460	)			(14,710,460	)
Balance at December 31, 2020			16.05			$	-				654.781794			$	1				-			$	-				1,000			$	1				493,726,405			$	493,727				907,379,814			$	907,380			$	283,024,527			$	(20,973,776	)		$	(301,185,712	)		$	(37,733,852	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

MASSROOTS, INC.

CONSOLIDATED STATEMENTS OF CASHFLOWS

 

		Year Ended December 31,
		2020				2019
Cash flows from operating activities:
Net loss		$	(14,710,460	)		$	(34,268,912	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liabilities			451,351				685,415
Change in derivative liability for authorized shares shortfall			170,319,590				18,921,537
Depreciation and amortization			-				45,282
Interest and amortization of debt discount			5,139,321				4,716,970
(Gain) loss on conversion of convertible notes payable			(882	)			603,529
Gain on settlement of convertible notes payable and accrued interest, warrants and accounts payable			(162,109,131	)			-
Gain on forgiveness of debt			(250,000	)			-
Stock-based compensation			-				222,700
Impairment on COWA advances			-				360,500
Impairment of investment			-				65,000
Loss on sale of investment in Canna Regs			-				91,931
Impairment loss on software costs			-				196,315
Preferred stock issuance costs			-				5,585,594
Changes in operating assets and liabilities:
Prepaid expenses			(95,157	)			12,025
Advance to COWA, net			-				(360,500	)
Security deposit			-				36,000
Accounts payable and accrued expenses			77,520				557,360
Accrued payroll and related expenses			140,005				732,027
Net cash used in operating activities			(1,037,843	)			(1,797,227	)
Cash flows from investing activities:
Proceeds from sale of Reg Tech and High Times			-				90,981
Net cash provided by investing activities			-				90,981
Cash flows from financing activities:
Bank overdrafts			(13,749	)			13,749
Proceeds from sale of Series X preferred shares			321,000				-
Proceeds from sale of Series B preferred shares and warrants			-				1,407,500
Proceeds from exercise of warrants			-				172,949
Proceeds from issuance of convertible notes payable			637,000				549,000
Proceeds from issuance of non-convertible notes payable			82,911				175,000
Repayment of non-convertible notes payable			(39,641	)			(45,400	)
Proceeds from advances			3,696				-
Proceeds from PPP note payable			50,000				-
Repayments of advances			(3,009	)			(595,000	)
Net cash provided by financing activities			1,038,208				1,677,798
Net increase (decrease) in cash			365				(28,448	)
Cash, beginning of year			1,120				29,568
Cash, end of year		$	1,485			$	1,120
Supplemental disclosures of cash flow information:
Cash paid during period for interest		$	-			$	218,500
Cash paid during period for taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock previously to be issued		$	37,160			$	80
Issuance of preferred Series A shares in exchange for warrants canceled		$	-