MassRoots, Inc.

From January 7 to March 23, 2021, the Company issued 4.82388 shares of Series Y Preferred Stock, having a stated value of $96,478, in exchange for convertible notes payable of $38,500, accrued interest of $77,205, and 131,249,975 warrants. The exchanges resulted in a reduction of derivative liabilities related to the convertible notes and accrued interest of $2,502,223, a reduction of derivative liabilities related to the warrants of $1,396,283, and a net gain on settlement of $3,917,734. Upon each issuance of Series Y shares, the conversion price was less than the Company’s stock price. Accordingly, during the three months ended March 31, 2021, the Company recognized an aggregate beneficial conversion feature of $557,037 upon issuance of the Series Y preferred shares with a $557,037 increase in Discount on preferred stock and a corresponding increase in Additional paid in capital. The preferred stock discount is being amortized over 120 days commencing December 23, 2020 (the date of the initial issuance of the Series Y preferred shares), which is the maximum amount of time the Company has to conduct a stockholder vote to increase the Company’s authorized shares. Amortization of the preferred stock discount of $17,878,589 was recognized as a deemed dividend for the three months ended March 31, 2021. As of March 31, 2021, unamortized debt discount on Series Y Preferred Stock was $3,244,472.

On April 30, 2021, MassRoots entered into a settlement agreement with PowerUp Lending Group, Ltd. by accepting an offer communicated to the Company via electronic mail. In accordance with the terms of the Settlement, PowerUp, the judgment creditor of a judgment against the Company and Isaac Dietrich, the Company’s Chief Executive Officer and director, in the total amount of $350,551.10 entered in the Office of the Clerk of the County of Nassau on February 23, 2021, agreed to a settlement and filing of a satisfaction of judgment in consideration of receipt of the sum of $150,000.00 on April 30, 2021. The Company accepted the aforementioned offer by remitting the Settlement Amount timely and in full. On April 30, 2021, the Company satisfied and discharged its obligations with respect to the Judgment. Accordingly, a satisfaction of Judgment was filed by PowerUp with the Office of the Clerk of the County of Nassau on May 3, 2020.

As previously reported by the Company in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2021, on or about January 25, 2021, Travis Trawick filed a complaint against the Company and Isaac Dietrich, the Company’s Chief Executive Officer and director, in the Circuit Court for the City of Virginia Beach, Virginia asserting the Company’s failure to remit payments under the certain promissory note, as subsequently amended and modified, and ancillary documents thereto and Mr. Dietrich’s failure to fulfill its obligations, as the guarantor, under the Note. On May 4, 2021, Trawick requested that the Clerk of the Court files for entry an order to dismiss Trawick’s Lawsuit with prejudice. On June 2, 2021, MassRoots and a debtholder entered into an agreement to cancel their outstanding principal and accrued interest of a non-convertible promissory note.

On May 24, 2021, MassRoots, Inc., a Delaware corporation filed with the Secretary of State of the State of Delaware amendments to its Certificate of Designations, Preferences, and Rights of the Series X Convertible Preferred Stock filed with the Secretary of State on May 24, 2021 (“Series X Certificate of Designations”) and Certificate of Designations, Preferences, and Rights of the Series Y Convertible Preferred Stock filed with the Secretary of State on December 30, 2020 (“Series Y Certificate of Designations”) respectively. The amendments, which were effective upon filing, changed the conversion rights of the holders of shares of convertible preferred stock to allow the Company to extend the time period before conversion of Series X and Y Convertible Preferred Stock up until November 30, 2022, subject to certain conditions including the increase of the Company’s authorized shares of common stock to 1,200,000,000 and closing of a definitive agreement with Empire Services, Inc. (“Empire”) to acquire the entirety of issued and outstanding equity of Empire. Further, under the terms of Series X Certificate and Series Y Certificate, as amended, the Company is required to exercise its redemption option and use 10% of aggregate proceeds from capital raises amounting to $10 million to redeem its outstanding preferred shares (10% for Series X Preferred Stock and 10% for Series Y Preferred Stock) and 15% (15% for Series X Preferred Stock and 15% for Series Y Preferred Stock) of the portion of such aggregate capital raises that exceeds $10 million in the event Qualified Equity Financing (as defined in Series X Amendment and Series Y Amendment) occurs. Should the Company list its common stock to a senior exchange, the Company will be required to redeem 40% of its outstanding shares of the holders of Series X Preferred Stock and Series Y Preferred Stock on a pro rata basis.

Our primary business objective is to seek various sources of revenue generation. Currently, we are considering various strategies to achieve such objective including acquisitions, dispositions, mergers, or other business combinations with one or more unaffiliated targets. The management of the Company believes that such approach may be especially relevant in the current state of the marketplace and continues to explore strategic opportunities that would further the business of the Company. A recently executed letter of intent with Empire Services, Inc. (“Empire”) to acquire the entirety of issued and outstanding equity of Empire is the primary focus of the management of the Company at the moment. The Company has elected not to proceed with the earlier announced Herbfluence, Inc. letter of intent. Further, the Company is currently taking affirmative steps to effect the non-binding provisions of the letter of intent with Empire in the absence of definitive agreement, which is considered the best course of action by the management of the Company.