Business Context and Reporting Period
This Form 8-K is filed by MassRoots, Inc. (not Greenwave Technology Solutions, Inc.) on March 31, 2016, reporting events occurring between March 23 and March 29, 2016. The filing details the company's entry into material agreements to promote and present the Denver Annual 420 Rally.
Key Financial Metrics and Agreements
- Investment: MassRoots purchased a Senior Secured Promissory Note from Santino Walter Productions, LLC (SWP) for a principal amount of $156,000 at a purchase price of $130,000.
- Revenue Rights: The company is guaranteed 50% of gross ticket and sponsorship sales and 15% of booth and food truck space sales for the event.
- Repayment Terms: The Note matures 60 days from issuance. Repayment is prioritized from event revenue: the first $130,000 covers talent costs, and the next $156,000 repays the Note principal.
- Collateral: The Note is secured by all assets of SWP.
- Costs: MassRoots is obligated to provide the ticketing system and cover all activation costs related to tickets.
Material Changes and Events
The primary material change is the execution of three agreements on March 23, 2016: a Senior Secured Promissory Note, a 420 Event Agreement, and a License Agreement. Additionally, on March 29, 2016, the company announced that Lil Wayne and Wiz Khalifa would headline the rally scheduled for April 16, 2016.
Outlook, Risks, and Contingencies
- Future Rights: MassRoots retains the right to participate in a materially similar transaction regarding the 420 Rally annually through 2020.
- Operational Risk: The company's ability to recoup its $130,000 investment and earn revenue depends entirely on the success of the event's ticket and sponsorship sales.
- Contingency: If revenue does not exceed $286,000 ($130,000 for talent + $156,000 for note repayment), the company may not recover its principal investment.
Investor Verification Checklist
- Verify the actual ticket and sponsorship sales figures for the April 16, 2016 event to assess repayment likelihood.
- Confirm the total activation costs incurred by MassRoots to determine net profitability.
- Review the full text of Exhibits 10.1, 10.2, and 10.3 for specific default clauses and termination rights.
- Monitor subsequent filings for updates on the Note's repayment status or any extension of terms.