SEC Filing Summary
Filing identity: The request metadata names Greenwave Technology Solutions, Inc., but the supplied Form 10-Q is for MassRoots, Inc. Investors should verify the filing and issuer before relying on this summary.
Business context and reporting period
MassRoots reported unaudited results for the three months ended March 31, 2019, with comparable results for the three months ended March 31, 2018. The company describes itself as a cannabis-industry technology and advertising platform, including its MassRoots Business Portal and WeedPass rewards program. It reported more than one million registered users and said its focus was developing advertising and sales channels.
Key financial metrics
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | $4,383 | $1,492; up $2,891 (193.8%) |
| Cost of revenue | $3,530 | $0 reported |
| Gross profit / margin | $853 / approximately 19.5% | Not clearly stated |
| Operating expenses | $968,498 | $5,134,544; down 81.1% |
| Operating loss | $(964,115) | $(5,133,052) |
| Interest expense and conversion loss | $(238,787) interest; $(293,597) conversion loss | $(350,196) interest; no conversion loss reported |
| Net loss | $(1,496,499) | $(5,483,248) |
| Basic and diluted loss per share | $(0.01) | $(0.04) |
| Operating cash flow | $(286,583) | $(3,535,373) |
| Investing cash flow | $(32,500) | $0 |
| Financing cash flow | $290,000 | $3,008,562 |
| Cash at period end | $485 | $674,776 at March 31, 2018 |
At March 31, 2019, total assets were $562,282 and current liabilities were $7,957,766, producing a working capital deficit of $7,906,960. Total liabilities were $7,957,766; stockholders’ deficit was $7,395,484. Current liabilities included $2,302,380 of convertible notes, net of discount, $146,150 of notes payable, $942,500 of advances, and substantial accrued payables and payroll.
Material changes and unusual items
- Net loss narrowed by $3,986,749 year over year, primarily alongside sharply lower operating expenses. Management attributed reductions to lower payroll, stock-based compensation, software amortization, and general and administrative costs.
- Revenue increased from a very small base; management attributed the increase to the online advertising portal and rewards sales program.
- The company recorded a $293,597 loss on conversion of convertible notes. It converted $345,000 of July 2018 note principal into 8,906,275 shares during the quarter; the remaining $47,580 was converted in April 2019.
- Common shares outstanding increased to 181,990,849 at March 31, 2019 from 168,706,472 at December 31, 2018. The filing also disclosed 72,160,002 warrants and 27,621,765 options outstanding, as well as potentially issuable shares upon conversion of debt.
- Subsequent to quarter-end through May 17, 2019, the company reported warrant exercises producing $226,950, additional share issuances, and settlement of the remaining July 2018 notes.
Liquidity, outlook, risks, and controls
Management stated that cash was insufficient to fund operations for the next fiscal year and that substantial doubt existed about the company’s ability to continue as a going concern for one year from issuance of the financial statements. The company said it depended on raising additional capital through equity, debt, or other sources; financing might not be available on acceptable terms or at all, and failure to raise funds could force it to curtail or cease operations. Management’s plans were to seek investor funding and generate sales, but it said the outcome could not be assured.
The filing provides no quantified revenue or earnings guidance. Forward-looking statements are subject to risks and uncertainties. The company reported ineffective disclosure controls and procedures, citing inadequate segregation of duties and review of financial reporting; management identified a material weakness and said additional accounting personnel were needed. No legal proceedings or off-balance-sheet arrangements were reported in the supplied text.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is for MassRoots, Inc., not Greenwave Technology Solutions, Inc.
- Assess near-term funding needs, financing availability, debt maturities, secured-note terms, and potential default or redemption provisions.
- Review dilution from conversions, warrants, options, and subsequent-quarter share issuances.
- Evaluate whether portal and rewards activity can produce material, recurring revenue relative to the company’s expenses.
- Track remediation of the disclosed material weakness and whether future filings continue to report ineffective controls.