UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] ☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 20202021
or
[ ] ☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____ to _______
Commission File Number: 001-39132
YAYYO, EVMO,INC.
(exact name of registrant as specified in its charter)
RIDESHARE RENTAL, INC.
(former name of registrant as specified in its charter)
Delaware | 95-3261426 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
433 N. Camden Drive, Suite 600 Beverly Hills, California | 90210 | |
(Address of principal executive offices) | (Zip Code) | |
(310)926-2643
(310) 926-2643
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
None | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]☐ Accelerated filer [ ] ☐ Non-accelerated filer [X] ☒ Smaller reporting company [X]☒ Emerging growth company [X]☒
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 pursuant to Section 13(a) of the Exchange Act. [ ]☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] ☐ No [X] ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock,Common Stock, as of the latest practicable date.
31,981,374 shares of common stock,Common Stock, $0.000001 par value, as of August 5, 202013, 2021
TABLE OF CONTENTS
ii |
PART I – FINANCIAL INFORMATION
YAYYO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETSEVmo, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 20202021 and December 31, 20192020
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 162,727 | $ | 72,890 | ||||
Accounts receivable | 428,623 | 119,239 | ||||||
Prepaid expenses | 171,405 | 23,861 | ||||||
Deferred offering costs | 251,918 | - | ||||||
Total current assets | 1,014,673 | 215,990 | ||||||
Property and equipment, net | 46,471 | 1,908 | ||||||
Rental vehicles, net | 8,010,050 | 6,196,433 | ||||||
Right of use asset | 210,763 | - | ||||||
Other assets | 200,000 | 200,000 | ||||||
TOTAL ASSETS | $ | 9,481,957 | $ | 6,614,331 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable (including $546,746 and $590,176 to related party) | $ | 2,274,029 | $ | 1,157,299 | ||||
Accrued expenses | 103,067 | 961,704 | ||||||
Convertible note payable, (net of discount of $1,103,849 and $0) | 1,146,151 | - | ||||||
Notes payables, current (net of discount of $0 and $1,973) | 611,880 | 666,132 | ||||||
Customer deposit - related party | - | 150,000 | ||||||
Advance from related parties | - | 100,000 | ||||||
Finance lease obligations, current | 1,532,320 | 1,426,425 | ||||||
Operating lease obligations, current | 133,559 | - | ||||||
Total current liabilities | 5,801,006 | 4,461,560 | ||||||
Note payable, net of current portion | 148,863 | 149,414 | ||||||
Finance lease obligations, net of current portion | 1,554,858 | 926,453 | ||||||
Operating lease obligations, net of current portion | 87,615 | - | ||||||
TOTAL LIABILITIES | 7,592,342 | 5,537,427 | ||||||
Commitments and contingencies | - | - | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $ | par value; shares authorized; shares issued and outstanding- | - | ||||||
Common stock, $ | par value; shares authorized; and shares issued and outstanding35 | 32 | ||||||
Additional paid-in capital | 36,817,909 | 29,750,864 | ||||||
Accumulated deficit | (34,928,329 | ) | (28,673,992 | ) | ||||
Total stockholders’ equity | 1,889,615 | 1,076,904 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 9,481,957 | $ | 6,614,331 |
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 103,240 | $ | 1,256,429 | ||||
Accounts receivable | 43,562 | 59,331 | ||||||
Prepaid expenses | 549,404 | 782,900 | ||||||
Total current assets | 696,206 | 2,098,660 | ||||||
Equipment, net | 2,651 | 3,395 | ||||||
Rental vehicles, net | 6,362,989 | 4,737,047 | ||||||
Deposit on vehicles | - | 164,080 | ||||||
Other assets | 200,000 | 200,000 | ||||||
TOTAL ASSETS | $ | 7,261,846 | $ | 7,203,182 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable (including $526,076 and $394,183 to related party) | $ | 1,334,521 | $ | 545,254 | ||||
Accrued expenses (including $0 and $171,665 to related party) | 365,793 | 405,977 | ||||||
Notes payables, current (net of discount of $12,383 and $32,289) | 500,059 | 287,378 | ||||||
Finance lease obligations, current | 1,640,899 | 1,416,446 | ||||||
Total current liabilities | 3,841,272 | 2,655,055 | ||||||
Note payable, net of current portion | 149,900 | - | ||||||
Finance lease obligations, net of current portion | 1,458,486 | 984,119 | ||||||
TOTAL LIABILITIES | 5,449,658 | 3,639,174 | ||||||
Commitments and contingencies | - | - | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $0.000001 par value; 10,000,000 shares authorized; nil shares issued and outstanding | - | - | ||||||
Common stock, $0.000001 par value; 90,000,000 shares authorized; 31,981,374 and 29,427,803 shares issued and outstanding | 32 | 29 | ||||||
Additional paid-in capital | 29,468,133 | 28,735,894 | ||||||
Accumulated deficit | (27,655,977 | ) | (25,171,915 | ) | ||||
Total stockholders’ deficit | 1,812,188 | 3,564,008 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 7,261,846 | $ | 7,203,182 |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
YAYYO, INC.
1 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSEVmo, Inc.
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2021 and 2020 and 2019 (unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Revenue | $ | 1,580,555 | $ | 1,696,917 | $ | 3,328,197 | $ | 3,475,518 | $ | 2,652,083 | $ | 1,580,555 | $ | 4,946,615 | $ | 3,328,197 | ||||||||||||||||
Cost of revenue | 1,295,059 | 962,071 | 2,696,350 | 2,044,241 | 1,915,294 | 1,295,059 | 3,696,197 | 2,696,350 | ||||||||||||||||||||||||
Gross profit | 285,496 | 734,846 | 631,847 | 1,431,277 | 736,789 | 285,496 | 1,250,418 | 631,847 | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Selling and marketing expenses | 79,133 | 20,868 | 210,642 | 102,606 | 64,816 | 79,133 | 230,564 | 210,642 | ||||||||||||||||||||||||
Product development | 50,766 | - | 60,266 | - | ||||||||||||||||||||||||||||
General and administrative expenses | 861,410 | 675,628 | 2,757,616 | 1,460,811 | 1,493,494 | 861,410 | 2,932,595 | 2,757,616 | ||||||||||||||||||||||||
Loss on the settlement of debt | - | 12,900 | - | 252,900 | ||||||||||||||||||||||||||||
Total operating expenses | 940,543 | 709,396 | 2,968,258 | 1,816,317 | 1,609,076 | 940,543 | 3,223,425 | 2,968,258 | ||||||||||||||||||||||||
Loss from operations | (655,047 | ) | 25,450 | (2,336,411 | ) | (385,040 | ) | (872,287 | ) | (655,047 | ) | (1,973,007 | ) | (2,336,411 | ) | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||
Interest and financing costs | (67,795 | ) | (442,902 | ) | (147,651 | ) | (611,875 | ) | (964,387 | ) | (67,795 | ) | (4,289,330 | ) | (147,651 | ) | ||||||||||||||||
Gain on forgiveness of debt | - | - | 8,000 | - | ||||||||||||||||||||||||||||
Total other income (expense) | (67,795 | ) | (442,902 | ) | (147,651 | ) | (611,875 | ) | (964,387 | ) | (67,795 | ) | (4,281,330 | ) | (147,651 | ) | ||||||||||||||||
Net loss | $ | (722,842 | ) | $ | (417,452 | ) | $ | (2,484,062 | ) | $ | (996,915 | ) | $ | (1,836,674 | ) | $ | (722,842 | ) | $ | (6,254,337 | ) | $ | (2,484,062 | ) | ||||||||
Weighted average shares outstanding : | ||||||||||||||||||||||||||||||||
Basic | 31,064,184 | 26,798,865 | 30,245,994 | 26,760,318 | 35,333,924 | 31,064,184 | 34,364,066 | 30,245,994 | ||||||||||||||||||||||||
Diluted | 31,064,184 | 26,798,865 | 30,245,994 | 26,760,318 | 35,333,924 | 31,064,184 | 34,364,066 | 30,245,994 | ||||||||||||||||||||||||
Loss per share | ||||||||||||||||||||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | $ | (0.04 | ) | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | (0.08 | ) | ||||||||
Diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | $ | (0.04 | ) | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | (0.08 | ) |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
YAYYO, INC.
2 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)EVmo, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended June 30, 2021 and 2020 and 2019 (unaudited)
Additional | Total | |||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders’ | Additional | Total | |||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 31,981,374 | $ | 32 | $ | 29,750,864 | $ | (28,673,992 | ) | $ | 1,076,904 | ||||||||||||||||||||||||||||||
Issuance of common stock for cash | 100,000 | - | 50,000 | - | 50,000 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for exercise of stock options | 35,000 | - | 15,400 | - | 15,400 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for cashless exercise of stock options | 960,550 | 1 | (1 | ) | - | - | ||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of litigation | 225,000 | - | 1,103,750 | - | 1,103,750 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for conversion of convertible debt | 1,000,000 | 1 | 499,999 | - | 500,000 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement agreement | 825,000 | 1 | 3,240,599 | - | 3,240,600 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for financing cost | 600 | - | 1,440 | - | 1,440 | |||||||||||||||||||||||||||||||||||
Beneficial conversion feature associated with convertible debt | - | - | 30,000 | - | 30,000 | |||||||||||||||||||||||||||||||||||
Value of warrants issued with convertible debt | ||||||||||||||||||||||||||||||||||||||||
Fair value of warrants issued for financing costs | ||||||||||||||||||||||||||||||||||||||||
Stock option expense | - | - | 193,587 | - | 193,587 | |||||||||||||||||||||||||||||||||||
Net loss | - | - | - | (4,417,663 | ) | (4,417,663 | ) | |||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 35,127,524 | 35 | 34,885,638 | (33,091,655 | ) | 1,794,018 | ||||||||||||||||||||||||||||||||||
Issuance of common stock for exercise of stock options | 260,000 | - | 71,700 | - | 71,700 | |||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of litigation | - | - | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock for conversion of convertible debt | - | - | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement agreement | - | - | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock for financing cost | - | - | ||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature associated with convertible debt | - | - | 810,634 | - | 810,634 | |||||||||||||||||||||||||||||||||||
Value of warrants issued with convertible debt | - | - | 488,133 | - | 488,133 | |||||||||||||||||||||||||||||||||||
Fair value of warrants issued for financing costs | - | - | 457,417 | - | 457,417 | |||||||||||||||||||||||||||||||||||
Stock option expense | - | - | 104,387 | - | 104,387 | |||||||||||||||||||||||||||||||||||
Net loss | - | - | - | (1,836,674 | ) | (1,836,674 | ) | |||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 35,387,524 | $ | 35 | $ | 36,817,909 | $ | (34,928,329 | ) | $ | 1,889,615 | ||||||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 29,427,803 | $ | 29 | $ | 28,735,894 | $ | (25,171,915 | ) | $ | 3,564,008 | 29,427,803 | $ | 29 | $ | 28,735,894 | $ | (25,171,915 | ) | $ | 3,564,008 | ||||||||||||||||||||
Stock option expense | 457,242 | 457,242 | - | - | 457,242 | - | 457,242 | |||||||||||||||||||||||||||||||||
Net loss | (1,761,220 | ) | (1,761,220 | ) | - | - | - | (1,761,220 | ) | (1,761,220 | ) | |||||||||||||||||||||||||||||
Balance, March 31, 2020 | 29,427,803 | 29 | 29,193,136 | (26,933,135 | ) | 2,260,030 | 29,427,803 | 29 | 29,193,136 | (26,933,135 | ) | 2,260,030 | ||||||||||||||||||||||||||||
Issuance of common stock for cash | 2,553,571 | 3 | 274,997 | 275,000 | 2,553,571 | 3 | 274,997 | 275,000 | ||||||||||||||||||||||||||||||||
Net loss | (722,842 | ) | (722,842 | ) | - | - | - | (722,842 | ) | (722,842 | ) | |||||||||||||||||||||||||||||
Balance, June 30, 2020 | 31,981,374 | $ | 32 | $ | 29,468,133 | $ | (27,655,977 | ) | $ | 1,812,188 | 31,981,374 | $ | 32 | $ | 29,468,133 | $ | (27,655,977 | ) | $ | 1,812,188 | ||||||||||||||||||||
Balance, December 31, 2018 | 26,718,676 | $ | 27 | $ | 19,193,151 | $ | (21,241,694 | ) | $ | (2,048,516 | ) | |||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of debt | 80,000 | 640,000 | 640,000 | |||||||||||||||||||||||||||||||||||||
Net loss | (579,463 | ) | (579,463 | ) | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2019 | 26,798,676 | 27 | 19,833,151 | (21,821,157 | ) | (1,987,979 | ) | |||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of debt | 4,300 | 34,400 | 34,400 | |||||||||||||||||||||||||||||||||||||
Net loss | (417,452 | ) | (417,452 | ) | ||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 | 26,802,976 | $ | 27 | $ | 19,867,551 | $ | (22,238,609 | ) | $ | (2,371,031 | ) |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
YAYYO, INC.
3 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSEVmo, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2021 and 2020 and 2019 (unaudited)
2019 | 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (2,484,062 | ) | $ | (996,915 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 669,367 | 514,402 | ||||||
Stock option expense | 457,242 | - | ||||||
Common stock issued for services | - | - | ||||||
Amortization of debt discounts | 19,906 | 19,797 | ||||||
Loss on the settlement of debt | - | 252,900 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 15,769 | (65,115 | ) | |||||
Prepaid expenses | 233,496 | (36,697 | ) | |||||
Accounts payable | 789,267 | (214,585 | ) | |||||
Accrued expenses | (40,184 | ) | 465,843 | |||||
Net cash used in operating activities | (339,199 | ) | (60,370 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from notes payable | 342,675 | 1,051,300 | ||||||
Proceeds from sale of common stock | 275,000 | - | ||||||
Proceeds from advance from related party | 150,000 | - | ||||||
Repayment of advance from related party | (150,000 | ) | - | |||||
Repayment of notes payable | - | (508,394 | ) | |||||
Repayment of finance lease obligations | (1,431,665 | ) | (725,599 | ) | ||||
Net cash provided by (used in) financing activities | (813,990 | ) | (182,693 | ) | ||||
NET INCREASE (DECREASE) IN CASH | (1,153,189 | ) | (243,063 | ) | ||||
CASH, BEGINNING OF PERIOD | 1,256,429 | 277,444 | ||||||
CASH, END OF PERIOD | $ | 103,240 | $ | 34,381 | ||||
CASH PAID FOR: | ||||||||
Interest | $ | 127,745 | $ | 564,961 | ||||
Income taxes | $ | - | $ | - | ||||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Payment of accounts payable/accrued expenses with common stock | $ | - | $ | 421,500 | ||||
Value of equity recorded as debt discounts | $ | - | $ | - | ||||
Finance lease obligations | $ | 2,246,285 | $ | 510,136 |
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (6,254,337 | ) | $ | (2,484,062 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 995,123 | 669,367 | ||||||
Stock option expense | 297,974 | 457,242 | ||||||
Amortization of debt discounts | 476,891 | 19,906 | ||||||
Common stock issued for financing costs | 1,440 | - | ||||||
Common stock issued for settlement agreement | 3,240,600 | - | ||||||
Gain on forgiveness of debt | (8,000 | ) | - | |||||
Fair value of warrants issued for financing costs | 457,417 | - | ||||||
Operating lease expense | 47,458 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (309,384 | ) | 15,769 | |||||
Prepaid expenses | (147,544 | ) | 233,496 | |||||
Accounts payable | 1,308,562 | 789,267 | ||||||
Accrued expenses | (163,637 | ) | (40,184 | ) | ||||
Customer deposit - related party | (150,000 | ) | - | |||||
Operating lease liability | (37,047 | ) | - | |||||
Net cash used in operating activities | (244,484 | ) | (339,199 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (47,051 | ) | - | |||||
Net cash used in investing activities | (47,051 | ) | - | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from sale of common stock | 50,000 | 275,000 | ||||||
Proceeds from exercise of stock options | 87,100 | - | ||||||
Proceeds from advance from related parties | 503,766 | 150,000 | ||||||
Repayment of advance from related parties | (603,766 | ) | (150,000 | ) | ||||
Proceeds from convertible note payable | 2,500,000 | - | ||||||
Proceeds from notes payable | - | 342,675 | ||||||
Repayment of notes payable | (48,776 | ) | - | |||||
Repayment of finance lease obligations | (2,071,952 | ) | (1,431,665 | ) | ||||
Payment of deferred offering costs | (35,000 | ) | - | |||||
Net cash provided by (used in) financing activities | 381,372 | (813,990 | ) | |||||
NET INCREASE (DECREASE) IN CASH | 89,837 | (1,153,189 | ) | |||||
CASH, BEGINNING OF PERIOD | 72,890 | 1,256,429 | ||||||
CASH, END OF PERIOD | $ | 162,727 | $ | 103,240 | ||||
CASH PAID FOR: | ||||||||
Interest | $ | 102,446 | $ | 127,745 | ||||
Income taxes | $ | - | $ | - | ||||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Payment of accounts payable/accrued expenses with common stock | $ | 1,103,750 | $ | - | ||||
Finance lease obligations | $ | 3,705,417 | $ | 2,246,285 |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
4 |
YAYYO, INC.EVmo, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 and 2019 (unaudited)
Note 1 - Organization and Basis of Presentation
Organization and Line of Business
YayYo,EVmo, Inc. (“YayYo” or the(the “Company”) was incorporatedorganized on June 21, 2016under the laws of the state of Delaware originally as a limited liability company andcompany. It subsequently changedconverted to a C corporation. The accompanying financial statements are retroactively restated to presentcorporation, also incorporated in Delaware, named YayYo, Inc. On September 11, 2020, the Company as a C corporation from June 21, 2016.changed its name to Rideshare Rental, Inc. and on March 1, 2021, the Company again changed its name, this time to EVmo, Inc. The Company rents carsCompany’s principal business is to rent vehicles to drivers who work for ridesharing Transportation Network Companies (“TNCs”) such as Uber and Lyft, drivers.as well as to drivers in the delivery gig-economy that work for companies such as DoorDash and GrubHub.
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP)(“GAAP”).
Risk and Uncertainties
In December 2019, a novel strain of coronavirus surfaced in China, which has and is continuing to spread throughout the world, including the United States.
On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organizationit characterized the outbreak as a “pandemic”. The governors of New York, California“pandemic.” In response, numerous states and several other states, as well as mayors on many cities have ordered their residents to cease traveling to non-essential jobs and to curtail all unnecessary travel, and to stay in their homes as much as possible in the coming weeks, as the nation confronts the escalating coronavirus outbreak, and similar restrictions have beenwere recommended by the federal authorities and authoritiesgovernment. Beginning in many other states and cities. Since the beginningfirst quarter of 2020, andwhich saw the initial rapid spread of COVID-19, rideshare companies have increasingly beenwere severely and negatively impacted. As Americans practice social distancing and self-isolation, Uber, Lyft, and other rideshare companies have seen a steep decline in ridership and revenue,impacted, as a result. Given that rideshare drivers are both at risk themselves and of risk todemand plummeted. Consequently, the public, and in addition to decreased demand overall, less people are even still driving. The Company has seenexperienced a decline in revenue during the first half of 2020, which is havinghad a negative impact on theour cash flows, of the business, but we then saw a positive upward movement in revenue during the latter partsecond half of 2020, which has continued into the first half of 2021. As of the second quarterdate of this quarterly report, several vaccinations for COVID-19 have received emergency-use authorization from the Food and Drug Administration and many of the lockdown restrictions imposed by state and local governments have abated. Still, the pandemic has not yet ended, June 30, 2020. The Company has seen increased demand from drivers wanting to rent cars for ridesharing purposes and new drivers renting cars forthere have been multiple waves where infections, hospitalizations, and deaths have sharply increased. Most recently, variants of the original virus have been identified, and many Americans have resisted obtaining one of the vaccinations, both rideshare and delivery gig economy. With the recent increaseof which have resulted in increases in the aggregate number of positive COVID-19 cases, the Company is not able toinfections. We therefore cannot predict the ultimate impact that COVID -19 willCOVID-19 may have on its business. If another lockdown were to occur,our business over the Company could be forced to significantly scale back its business operations and its growth plans, and could ultimately have a significant negative impact on the Company. The Company cannot at this time estimate the long term effectentirety of this unprecedented situation on the rideshare market or delivery gig economy in general or the Company in particular.year, and possibly beyond.
Interim financial statements
The unaudited interimcondensed consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have beenare prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”(the “SEC”). CertainThe information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosure are adequate to make the information presented not misleading.
These statements reflectfurnished herein reflects all adjustment,adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for fair presentation of the periods presented. Certain information contained therein. It is suggested that these interimand footnote disclosures normally present in annual financial statements be readprepared in conjunctionaccordance with accounting principles generally accepted in the financial statementsUnited States of the CompanyAmerica were omitted pursuant to such rules and regulations. The results of operations for the six months ended June 30, 2019 and notes thereto. The Company follows2021 are not necessarily indicative of the same accounting policies in the preparation of interim report. Results of operationsresults expected for the interim period are not indicative of annual results.year ending December 31, 2021.
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned operating subsidiaries, Distinct Cars, LLC and RideShare Car Rentals, LLC, RideYayYo, LLC and Savy, LLC. All significant intercompany transactions and balances have been eliminated.
YAYYO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2020 and 2019 (unaudited)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principlesGAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved.
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EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.
Property and Equipment and Rental Vehicles
EquipmentProperty and Rental Vehiclesequipment and rental vehicles are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment and rental vehicles is provided using the straight-line method for substantially all assets with estimated lives as follows:
Schedule of Estimated Lives of Equipment
Computer equipment | 5 years | |
Officer furniture | 7 years | |
Leasehold improvements | 15 years or term of lease whichever is less | |
Vehicles | 5 years |
Long-Lived Assets
The Company applies the provisions of ASCthe Financial Standards Accounting Board (“FASB”)’s Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at June 30, 2020,2021, the Company determined that no 0impairment charge was necessary.
Revenue Recognition
The Company recognizes all of its material revenue from renting its fleet of cars to Uber and LyftTNC drivers. Revenue is recognized based on the rental agreements, which are generally entered into on a weekly basis. The Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue From Contracts with Customers. Generally, this enables us to both recognize revenue when we have satisfied our obligations under our rental agreement, i.e. when we have provided the vehicle to our renter, and to recognize the entire amount we expect to receive pursuant to the agreement, including estimates.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Stock-Based Compensation
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EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Stock-Based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees, and non-employees.as well as non-employees, which is permitted under ASC 718. There were 1,631,250 warrants and options outstanding as of June 30, 2021 and warrants and options outstanding as of June 30, 2020.
YAYYO, INC.
For the Six Months Ended June 30, 2020 and 2019 (unaudited)
Basic and Diluted Earnings Per Share
Earnings per share (“EPS”) is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”)EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase shares of the Company’s common stock, par value $(the “Common Stock”) at the average market price during the period. Due to the net loss incurred, potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. There were and potentially dilutive securitiesoptions and warrants outstanding at June 30, 2020.2021 and 2020, respectively, and shares potentially issuable upon the conversion of an outstanding convertible note at June 30, 2021.
Advertising Costs
The Company expenses the cost of advertising as incurred. Advertising costs for the six months ended June 30, 2021 and 2020 were $230,564and 2019 were $210,642 and $102,606,$210,642, respectively.
Fair Value Measurements
The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
● | Level 1 inputs to the valuation methodology are quoted, unadjusted prices for identical assets or liabilities in active markets. | |
● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, as well as other than quoted prices for identical assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
At June 30, 20202021 and December 31, 2019,2020, the Company did not identify any liabilities that are required to be presented on the balance sheet at fair value.
Recent Accounting Pronouncements
In June 2018,December 2019, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have an impact on its financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on January 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.
YAYYO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2020 and 2019 (unaudited)
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
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EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
In August 2020, the FASB issued ASU 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under ASC Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and EPS for convertible instruments and contract in an entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, which includes the Company, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements, and whether it intends to early adopt.
Management does not believe that any recently issued, but not yet effective, accounting standardsupdates could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Note 3 – Property and Equipment
At June 30, 20202021 and December 31, 20192020, property and equipment consisted of the following:
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
Computer equipment | $ | 6,046 | $ | 6,046 | ||||
6,046 | 6,046 | |||||||
Less accumulated depreciation | (3,395 | ) | (2,651 | ) | ||||
Equipment, net | $ | 2,651 | $ | 3,395 | ||||
Schedule of Property and Equipment
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Computer equipment | $ | 6,046 | $ | 6,046 | ||||
Office furniture | 17,401 | - | ||||||
Leasehold improvement | 29,650 | - | ||||||
53,097 | 6,046 | |||||||
Less accumulated depreciation | (6,626 | ) | (4,138 | ) | ||||
Equipment, net | $ | 46,471 | $ | 1,908 |
Depreciation expense for equipment for the six months ended June 30, 2021 and 2020 was $2,488and 2019 was $744 and $158,$744, respectively.
Note 4 – Rental Vehicles
At June 30, 20202021 and December 31, 2019,2020, all of the Company’s rental vehicles consisted of the following:
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
Rental vehicles | $ | 8,468,168 | $ | 6,284,211 | ||||
8,468,168 | 6,284,211 | |||||||
Less accumulated depreciation | (2,105,179 | ) | (1,547,164 | ) | ||||
Rental vehicles, net | $ | 6,362,989 | $ | 4,737,047 |
Schedule of Rental Vehicles
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Rental vehicles | $ | 11,874,137 | $ | 9,067,885 | ||||
11,874,137 | 9,067,885 | |||||||
Less accumulated depreciation | (3,864,087 | ) | (2,871,452 | ) | ||||
Rental vehicles, net | $ | 8,010,050 | $ | 6,196,433 |
The Company’s leased assets, consisting of vehicles, are depreciated over their estimated useful life of five years. Depreciation expense for leased assets for the six months ended June 30, 2021 and 2020 was $992,635and 2019 was $668,623 and $514,244,$668,623, respectively. The lease terms are generally for 30 to 36 months and the Company has the right to purchase the leased assets at the end of the lease terms for generally a nominal amount.
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EVmo, Inc.
YAYYO, INC.Notes to Condensed Consolidated Financial Statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2021 and 2020 and 2019 (unaudited)
Note 5 – Notes Payable
Notes payable at June 30, 20202021 and December 31, 20192020 consisted of the following:
Schedule of Notes Payable
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Notes payable to individual investors; accrue interest at 8% per annum; principal payments equal to 1/12 of original balance plus interest due quarterly; due from dates ranging from August 9, 2020 to March 26, 2021; unsecured (A) | $ | 304,667 | $ | 304,667 | ||||
Note payable to the Small Business Administration. The note bears interest at 3.75% per annum, requires monthly payments of $731 after 24 months from funding and is due 30 years from the date of issuance. | 148,863 | 149,414 | ||||||
Note payable issued under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act in the amount of $192,775. The loan has terms of 24 months and accrues interest at 1% per annum. During the year ended December 31, 2020, $184,775 of this loan has been forgiven as provided for in the CARES Act. | - | 8,000 | ||||||
Notes payable to a finance company, default interest at 14% per annum; monthly principal payments ranging from $10,000 to $40,000 with unpaid principal due on December 15, 2021 | 307,213 | 355,438 | ||||||
Total notes payable | 760,743 | 817,519 | ||||||
Unamortized debt discount | 0 | (1,973 | ) | |||||
Notes payable, net discount | 760,743 | 815,546 | ||||||
Less current portion | (611,880 | ) | (666,132 | ) | ||||
Long-term portion | $ | 148,863 | $ | 149,414 |
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
Notes payable to individual investors; accrue interest at 8% per annum; principal payments equal to 1/12 of original balance plus interest due quarterly; due from dates ranging from August 9, 2020 to March 26, 2021; unsecured (A) | $ | 319,667 | 319,667 | |||||
Note payable to the Small Business Administration. The note bears interest at 3.75% per annum, requires monthly payments of $731 after 12 months from funding and is due 30 years from the date of issuance. | 149,900 | - | ||||||
Note payable issued under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The loan has terms of 24 months and accrues interest at 1% per annum. The Company expects some or all of this loan to be forgiven as provided for in the CARES Act. | 192,775 | - | ||||||
Total notes payable | 662,342 | 319,667 | ||||||
Unamortized debt discount | (12,383 | ) | (32,289 | ) | ||||
Notes payable, net discount | 649,959 | 287,378 | ||||||
Less current portion | (649,959 | ) | (287,378 | ) | ||||
Long-term portion | $ | - | $ | - |
(A) | In connection with the issuance of these notes payable in 2018 and 2017, the Company also issued an aggregate of 119,875 is being amortized over the term of the notes payable. During the six months ended June 30, 2021 and 2020, $1,973 and $19,906, respectively, was charged to interest expense as amortization of the discounts, with an unamortized balance of $0 at June 30, 2021. shares of its Common Stock to these note holders as additional incentive to make the loans. The aggregate fair value of these shares of Common Stock was $ and was recorded as a discount on the note payable and as additional paid-in-capital. The discount of $ |
(A) In connection with the issuance of these notes payable in 2018 and 2017, the Company also issued an aggregate of 24,050 shares of its common stock to these note holders as additional incentive to make the loans. The aggregate relative fair value of these shares of common stock was $119,875 and was recorded as a discount on the note payable and as additional paid in capital. The discount of $119,875 is being amortized over the term of the notes payable. During the six months ended June 30, 2020 and 2019, $19,906 and $19,797, respectively, was charged to interest expense as amortization of the discounts, with an unamortized balance of $12,383 at June 30, 2020.
A rollforwardroll-forward of notes payable from December 31, 20192020 to June 30, 20202021 is below:
Schedule of Outstanding Notes Payable
Notes payable, December 31, 2020 | $ | 815,546 | ||
Forgiveness of note payable | (8,000 | ) | ||
Repayments | (48,776 | ) | ||
Amortization of debt discounts | 1,973 | |||
Notes payable, June 30, 2021 | $ | 760,743 |
Notes payable, December 31, 2019 | $ | 287,378 | ||
Issued for cash | 342,675 | |||
Amortization of debt discounts | 19,906 | |||
Notes payable, June 30, 2020 | $ | 649,959 |
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Note 6 – Lease ObligationsEVmo, Inc.
Notes to Condensed Consolidated Financial Statements
Lease obligations at June 30, 2020 and December 31, 2019 consisted of the following:
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
Lease obligations | $ | 3,099,385 | $ | 2,400,565 | ||||
Less current portion | (1,640,899 | ) | (1,416,446 | ) | ||||
Long-term portion | $ | 1,458,486 | $ | 984,119 |
YAYYO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Note 6 – Convertible Notes
On January 8, 2021, the Company, issued a stand-alone $500,000 convertible promissory note to Mr. John Gray, principal of one of the Company’s largest stockholders, the Gray Mars Venus Trust, Arizona 2015, an Arizona asset management limited partnership. The convertible note accrued interest at a fixed rate of 6% and 2019 (unaudited)had a maturity date of January 6, 2022. Any unpaid principal balance on the convertible note could be converted at any time, at the option of Mr. Gray, into shares of Common Stock at a price of $0.50 per share. The Company recorded a beneficial conversion feature associated with this convertible note of $30,000, which was recorded as a debt discount. On February 12, 2021, Mr. Gray converted the full amount of the convertible promissory note into shares of Common Stock.
On April 12, 2021, the Company entered into a securities purchase agreement with a certain investor in connection with the issuance, as of that same date, of a 12.5% original issue discount convertible promissory note and a Common Stock purchase warrant. The note had an original principal amount of $2,250,000, with an original issue discount of $250,000. It bore interest at a fixed rate of 10%, was convertible into shares of Common Stock at a price of $3.00 per share (subject to adjustment as set forth in the note), and was to mature on January 12, 2022. The warrant grants the right to purchase shares of Common Stock at an exercise price of $3.00, subject to adjustment as set forth therein, and is exercisable at any time within five years of the date of issuance. The agreement provides that additional warrants, each for 93,750 shares of Common Stock with an exercise price of $3.00 per share, will be issued by the Company to the investor on the 12th day of each month that the note remained outstanding. Both the note and the warrant include anti-dilution provisions in which the conversion price of the note and the exercise price of the warrant will be reduced to equal the conversion or exercise price, as applicable, of any subsequently-issued derivative security to acquire shares of Common Stock, or their equivalent, should that conversion or exercise price be lower than that of the note or the warrant. To account for the note and warrant, the Company first determined the value of the note and the fair value of the detachable warrants issued in connection with this convertible note. The estimated value of the warrants of $623,373 was determined using the Black-Scholes option pricing model and the following assumptions: a term of five years, a risk-free interest rate of , a dividend yield of and volatility of . The face amount of the convertible note of $2,250,000 was proportionately allocated to the convertible note and the warrant in the amount of $1,761,866 and $488,134, respectively. Since the Company’s stock price exceeded the conversion price on the transaction date, there is an embedded beneficial conversion feature present in the convertible note of $810,633. The combined discount of $1,298,767 plus the original issue discount are recorded as a debt discount to the convertible note and are being amortized over the year life of the note.
Please see Note 13- Subsequent Events for a description of how the note described immediately above has since been cancelled, and Series B convertible preferred stock has been issued to the investor.
A rollforwardroll-forward of convertible notes from December 31, 2020 to June 30, 2021 is below:
Schedule of Convertible Notes
Convertible notes, December 31, 2020 | $ | - | ||
Issued for cash | 2,500,000 | |||
Issued for original issue discount | 250,000 | |||
Debt discount related to convertible notes | (1,578,767 | ) | ||
Conversion to Common Stock | (500,000 | ) | ||
Amortization of debt discounts | 474,918 | |||
Convertible notes, June 30, 2021 | $ | 1,146,151 |
Note 7 – Financing Lease Obligations
Lease obligations at June 30, 2021 and December 31, 2020 consisted of the following:
Schedule of Lease Obligations
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Lease obligations | $ | 3,087,178 | $ | 2,352,878 | ||||
Less current portion | (1,532,320 | ) | (1,426,425 | ) | ||||
Long-term portion | $ | 1,554,858 | $ | 926,453 |
10 |
EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
A roll-forward of lease obligations from December 31, 20192020 to June 30, 20202021 is below:
Lease obligations, December 31, 2019 | $ | 2,400,565 | ||
New lease obligations | 2,246,285 | |||
Disposal of leased vehicles | (115,800 | ) | ||
Payments on lease obligations | (1,431,665 | ) | ||
Lease obligations, June 30, 2020 | $ | 3,099,385 |
Schedule of Outstanding Lease Obligations
Lease obligations, December 31, 2020 | $ | 2,352,878 | ||
New lease obligations | 3,049,261 | |||
Disposal of leased vehicles | (243,009 | ) | ||
Payments on lease obligations | (2,071,952 | ) | ||
Lease obligations, June 30, 2021 | $ | 3,087,178 |
Future payments under lease obligations are as follows:
Schedule of Future Lease Obligations
Twelve Months Ending June 30, | ||||
2022 | $ | 1,663,320 | ||
2023 | 1,099,666 | |||
2024 | 540,146 | |||
Total payments | 3,303,132 | |||
Amount representing interest | (215,954 | ) | ||
Lease obligation, net | $ | 3,087,178 |
Note 8 – Operating Lease Obligations
The Company determines whether a contract is or contains a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
The Company leases its corporate office space under an operating lease that expires in 2023. The Company accounts for this lease under the provisions of ASC Topic 842, Leases.
The table below presents the lease-related assets and liabilities recorded on the Company’s consolidated balance sheet as of June 30, 2021:
Schedule of Operating Lease Obligations
June 30, | ||||||
Classification on Balance Sheet | 2021 | |||||
Assets | ||||||
Operating lease assets | Operating lease right of use assets | $ | 210,763 | |||
Total lease assets | $ | 210,763 | ||||
Liabilities | ||||||
Current liabilities | ||||||
Operating lease liability | Current operating lease liability | $ | 133,559 | |||
Noncurrent liabilities | ||||||
Operating lease liability | Long-term operating lease liability | 87,615 | ||||
Total lease liability | $ | 221,174 |
Lease obligations at June 30, 2021 consisted of the following:
Schedule of Lease Obligation Maturity
Twelve Months Ending June 30, | ||||
2022 | $ | 157,800 | ||
2023 | 92,050 | |||
Total payments | 249,850 | |||
Less: imputed interest | (28,676 | ) | ||
Total obligation | 221,174 | |||
Less: current portion | (133,559 | ) | ||
Non-current capital leases obligations | $ | 87,615 |
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EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Twelve months ending June 30, | ||||
2021 | $ | 1,807,191 | ||
2022 | 860,581 | |||
2023 | 693,016 | |||
Total payments | 3,360,788 | |||
Amount representing interest | (261,403 | ) | ||
Lease obligation, net | $ | 3,099,385 |
The lease expense for the six months ended June 30, 2021 was $63,010. The cash paid under operating leases for the six months ended June 30, 2021 was $52,600. At June 30, 2021, the weighted-average remaining lease term was 1.51 years and the weighted-average discount rate was 15%.
Note 79 – Stockholders’ Equity
The Company authorized 100,000,000 shares of capital stock with consists of shares of common stock, $0.000001Common Stock, $ par value per share and shares of preferred stock, $0.000001$ par value per share.
Common Stock
During the six months ended June 30, 2021, the Company:
● | issued 50,000; shares of Common Stock to a member of the Company’s Board of Directors, in a negotiated transaction for $ per share, or aggregate cash consideration of $ | |
● | issued 87,100; shares of Common Stock for the exercise of stock options for cash consideration of $ | |
● | issued 1,000,000 stock options; shares of Common Stock for the cashless exercise of | |
● | issued shares of Common Stock to an investor in connection with a prior note payable agreement; | |
● | issued 500,000; shares of Common Stock in connection with the conversion of a convertible note payable for $ | |
● | issued an aggregate of 1,103,750 which was based on the market price of the Common Stock on the grant date; and shares of Common Stock in connection with legal settlements. The shares were valued at $ | |
● | issued shares to Acuitas Group Holdings, LLC, (“Acuitas”) which is now the Company’s largest shareholder, in connection with a settlement agreement between Acuitas and X, LLC, a limited liability company controlled by the Company’s former chief executive officer. The value of the shares was $3,240,600, which was based on the market price of the Common Stock at the date of the settlement agreement. The $3,240,600 was expensed as financing costs, as the dispute underlying the settlement agreement related to the anti-dilution of a prior investment in the Company by Acuitas. |
Stock Options and Warrants
Summary of Stock Option Activity
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Options | Exercise | Contractual | Intrinsic | |||||||||||||
Outstanding | Price | Life | Value | |||||||||||||
Outstanding, December 31, 2020 | 2,540,000 | $ | 0.22 | 4.52 | $ | 1,074,245 | ||||||||||
Granted | 270,000 | 0.51 | ||||||||||||||
Forfeited | - | 0.00 | ||||||||||||||
Exercised | (1,295,000 | ) | 0.230 | |||||||||||||
Outstanding, June 30, 2021 | 1,515,000 | $ | 0.29 | 4.09 | $ | 2,769,275 | ||||||||||
Exercisable, June 30, 2021 | 772,500 | $ | 0.34 | 4.11 | $ | 1,390,384 |
12 |
EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Options | Exercise | Contractual | Intrinsic | |||||||||||||
Outstanding | Price | Life | Value | |||||||||||||
Outstanding, December 31, 2019 | 300,000 | $ | 8.00 | 1.00 | $ | - | ||||||||||
Granted | 1,500,000 | 4.00 | ||||||||||||||
Forfeited | (1,084,000 | ) | 4.00 | |||||||||||||
Exercised | - | |||||||||||||||
Outstanding, June 30, 2020 | 716,000 | $ | 5.68 | 1.68 | $ | - | ||||||||||
Exercisable, June 30, 2020 | 716,000 | $ | 5.68 | 1.68 | $ | - |
The exercise price for options outstanding and exercisable at June 30, 2020:2021:
Outstanding | Exercisable | |||||||||||||
Number of | Exercise | Number of | Exercise | |||||||||||
Options | Price | Options | Price | |||||||||||
416,000 | $ | 4.00 | 416,000 | $ | 4.00 | |||||||||
300,000 | 8.00 | 300,000 | 8.00 | |||||||||||
716,000 | 716,000 |
YAYYO, INC.Schedule of Options Outstanding by Exercise Price Range
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Outstanding | Exercisable | |||||||||||||
Number of | Exercise | Number of | Exercise | |||||||||||
Options | Price | Options | Price | |||||||||||
20,000 | $ | 0.210 | 15,000 | $ | 0.210 | |||||||||
1,305,000 | 0.215 | 648,125 | 0.215 | |||||||||||
15,000 | 0.220 | 0 | 0.220 | |||||||||||
155,000 | 0.530 | 89,375 | 0.530 | |||||||||||
20,000 | 3.800 | 20,000 | 3.800 | |||||||||||
1,515,000 | 772,500 |
For the Six Months Ended June 30, 2020 and 2019 (unaudited)
The following is a summary of warrant activity:
Summary of Warrant Activity
Weighted | Weighted | |||||||||||||||||||||||||||||||
Weighted | Average | Weighted | Average | |||||||||||||||||||||||||||||
Average | Remaining | Aggregate | Average | Remaining | Aggregate | |||||||||||||||||||||||||||
Warrants | Exercise | Contractual | Intrinsic | Warrants | Exercise | Contractual | Intrinsic | |||||||||||||||||||||||||
Outstanding | Price | Life | Value | Outstanding | Price | Life | Value | |||||||||||||||||||||||||
Outstanding, December 31, 2019 | 1,631,250 | $ | 4.08 | 3.38 | $ | - | ||||||||||||||||||||||||||
Outstanding, December 31, 2020 | 1,631,250 | $ | 4.08 | 2.38 | $ | - | ||||||||||||||||||||||||||
Granted | - | 375,000 | 3.00 | |||||||||||||||||||||||||||||
Forfeited | - | - | ||||||||||||||||||||||||||||||
Exercised | - | - | ||||||||||||||||||||||||||||||
Outstanding, June 30, 2020 | 1,631,250 | $ | 4.08 | 2.88 | $ | - | ||||||||||||||||||||||||||
Exercisable, June 30, 2020 | 1,631,250 | $ | 4.08 | 2.88 | $ | - | ||||||||||||||||||||||||||
Outstanding, June 30, 2021 | 2,006,250 | $ | 3.88 | 2.44 | $ | - | ||||||||||||||||||||||||||
Exercisable, June 30, 2021 | 2,006,250 | $ | 3.88 | 2.44 | $ | - |
The exercise price for warrants outstanding at June 30, 2020:2021:
Schedule of Warrants Outstanding by Exercise Price Range
Outstanding and Exercisable | ||||||
Number of | Exercise | |||||
Warrants | Price | |||||
$ | ||||||
1,500,000 | 4.00 | |||||
131,250 | 5.00 | |||||
2,006,250 |
In connection with a convertible note discussed in Note 6, the Company has issued an aggregate of 451,415, using a Black-Scholes model, and has been recorded as financing costs in the accompanying statements of operations for the six months ended June 30, 2021. The Company used the following assumptions in determining the fair value: warrants since the convertible note remained outstanding as of June 30, 2021. The fair value of the warrants was determined to be $
Risk-free interest rate | – % | |||
Expected life of the options | years | |||
Expected volatility | 190 | % | ||
Expected dividend yield | 0 | % |
Outstanding and Exerciseable | |||||
Number of | Exercise | ||||
Warrants | Price | ||||
1,500,000 | $ | 4.00 | |||
131,250 | 5.00 | ||||
1,631,250 |
13 |
EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Note 810 – Related Party Transactions
During the six months ended June 30, 20202021 and 2019, the Company paid management fees of $0 and $120,000, respectively, to a company that is owned by the Company’s Chief Executive Officer and director. Beginning on February 1, 2019, the Company entered into a consulting agreement with this individual and paid $167,000 under the consulting agreement. The consulting agreement was terminated effective September 1, 2019. Also during the six months ended June 30, 2020, the Company’s CEO and director advanced the Company $150,000 and the Company repaid the amount in full. At June 30, 2020, $0 was owed to the Company’s CEO and director related to this advance.
During the six months ended June 30, 2020 and 2019, the Company expensed $32,173 $1,618,441 and $53,507, respectively, in advertising expenses from a company whose CEO was also a former director of the Company. At June 30, 2020 and December 31, 2019, $324,920 and $394,183, respectively, was owed to this company and is included in accounts payable in the accompanying consolidated balance sheets.
During the six months ended June 30, 2020 and 2019, the Company expensed $1,103,460 and $1,024,907,$1,103,460, respectively, in insurance expense related to insuring the Company fleet of vehicles from an insurance brokerage firm whose owner is also a principal stockholder of the Company. At June 30, 20202021 and December 31, 2019, $201,156 2020, $546,746 and $171,665,$265,257, respectively, was owed to this insurance brokerage from and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.
The Company’s Executive Chairman, Terren S. Peizer, and its former chief executive officer (“CEO”), Ramy El-Batrawi, each made financial advances to the Company that were outstanding during the first six months of fiscal 2021. At December 31, 2020, the Company owed its former CEO $100,000. During the six months ended June 30, 2021, Mr. Peizer loaned the Company $503,767 and was repaid $503,767 and Mr. El-Batrawi was repaid the $100,000 outstanding from fiscal 2020. At June 30, 2021, the Company owed its Executive Chairman and its former CEO $0 and $0, respectively.
Note 9 - 11 – Contingencies
Legal Proceedings
From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. The Company is currently not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.flows, other than those described below.
YAYYO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2020 and 2019 (unaudited)
Social Reality Inc. v. YayYo, Inc.
This action was filed on February 11, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff Social Reality Inc. is a media company that claims to have provided media services to the Company. Plaintiff has sued the Company for breach of contract and related causes of action, arising from its claims that the Company has failed to pay for past outstanding invoices for services rendered. The plaintiff has also filed a motion for prejudgment attachment which was heard on July 28, 2020. The Superior Court denied the writ of attachment on the merits. The parties have a case management conference scheduled for August 18, 2020. The Company believes that it has valid defenses to the lawsuit, and expects to file counterclaims that will offset or negate any monies owed to plaintiff; it will vigorously defend the lawsuit.
Anthony Davis v. YayYo, Inc., and Ramy El-Batrawi
This actionA complaint was filed on March 5, 2020, in the Los Angeles Superior Court of the State of California for the County of Los Angeles. Plaintiffby plaintiff Anthony Davis, who was hired by the Company as its Chief Executive Officer inCEO and as a director on or about December 2016, although he worked there for only a matter of months.2016. Mr. El-Batrawi is the founder ofDavis’s employment with the Company and our current Chief Executive Officer and director, and was involved, the complaint alleges, in Plaintiff’s hiring.ended after several months. As part of his compensation, Mr. Davis claimsalleges that he expected to receive stock options in the Company. He has allegedIn his pleadings, Mr. Davis admits that “after several months of unsuccessfully attempting to persuade the Company’s founder to implement certain protocols and procedures” Davishe resigned from his executive officer and director positions, and entered into a written settlement agreement withbut asserts that he did not receive certain compensation in the Company as a consultant. Mr. Davis claims that the Company breached its agreement to award him certainform of stock options and includes(he has also included a claim for wage and hour violations. The lawsuit also includes a request for declaratory and injunctive relief. Davis also included a claim under California Unfair Practices Act.violations). The Company denies liability and assertshas asserted that it has paid Mr. Davis all amounts due to him under the contract, andhis employment agreement, while also asserting that Mr. Davis failed to exercise his stock options before they expired on December 31, 2018. ItThe Company has filed a demurrer to the first amended complaint, which is expected to be heard on September 8, 2021 in Superior Court. The Company’s position is that the lawsuit entirely lacks merit, and intends to vigorously defend the lawsuit, and has agreed to pursue mediation pursuant to the contract with plaintiff.it vigorously.
Ivan Rung v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV27876 and Michael Vanbecelaere v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV28066 (Vanbecelaere)(hereafter the “State Cases”)
This action was filed onOn July 22 and July 23, 2020, respectively, two actions were filed in the Los Angeles Superior Court ofCourt. The complaints underlying the State of California for the County of Los Angeles. PlaintiffCases differ only by a few words and some random punctuation marks, and are therefore virtually identical. Plaintiffs Ivan Rung claimsand Michael Vanbecelaere each claimed to have purchased the Common Stock as part of the Company’s stock and purportsinitial public offering (the “IPO”); they purport to bring a securities class action on behalf of all purchasers of YayYo’s stockthe Common Stock pursuant to the Registration Statementregistration statement and Prospectus issuedprospectus filed with the SEC and distributed in connection with YayYo’sthe Company’s IPO, which was launched on November 14, 2019 initial public stock offering (IPO”). Mr. El-Batrawi is the founder and current CEO of the Company but at the time of the IPO was only a shareholder of the Company having stepped down as CEO, Director and a controlling shareholder of the Company.2019. The complaint is vague about alleged misrepresentationState Case complaints allege misrepresentations and material omissions detailing instead a supposed chronologyin the SEC filings in violation of events leadingSections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”). The Company has and continues to vigorously deny any and all liability and asserts that the State Cases are baseless. It is the Company’s voluntary decision to delist its stock from NASDAQ, a decision the Company announced in an 8K filed on February10, 2020. The Company denies liability and assertsfirm position that it accurately and completely disclosed all materially adversematerial facts and occurrencescircumstances in its Registration Statement, related publicSEC filings relating to the IPO, and other public statements,subsequently in its periodic SEC reports, including those that were potentially adverse to the Company’s operations and business prospects. The State Cases litigation is presently stayed pending the Complaint’s alleged violations of Sections 11 & 15outcome of the Securities Act of 1933 are baseless. It intendsfederal securities case discussed below (Hamlin v. YayYo, Inc.)
14 |
EVmo, Inc.
Notes to vigorously defendCondensed Consolidated Financial Statements
For the lawsuit.Six Months Ended June 30, 2021 and 2020 (unaudited)
Michael VanbecelaereJason Hamlin v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV2806620-cv-8235 (SVW) and William Koch v. YayYo, Inc., Ramy El-Batrawi, et al., 20-cv-8591 (SVW)(now consolidated as “In re YayYo Securities Litigation”)
This action wasThese two actions were filed on July 23,September 9, 2020 and September 18, 2020, respectively, in the SuperiorUnited States District Court of the State of California for the CountyCentral District of Los Angeles, also as a purported class action. Plaintiff Michael Vanbecelaere claimsCalifornia. Plaintiffs Jason Hamlin and William Koch each claim to have purchased the Company’s stock “traceable toCommon Stock as part of the IPO”IPO and, like Rung, bringsthe plaintiffs in the State Cases, purport to bring a securities class action pursuant to Sections 11 &and 15 of the Securities Act, as well as and Section 17(a) and 10(b)(5) of 1933the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on behalf of all purchasers of YayYo’s stock.the Common Stock in the IPO. The first amended complaint, like the preceding action, Ivan Rung v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV27876 (“Rung”)State Cases, alleges false statements and material omission pursuant to the Registration Statement and Prospectus issuedomissions of material fact in connection with YayYo’s November 14, 201 9 initial public stock offering (IPO).the SEC filings distributed in connection with the IPO. The defendants are identical toinclude directors of the defendants inCompany and the action filedunderwriters of the day before, on July 22, 2020.IPO, WestPark Capital, Inc. (“WestPark”) and Aegis Capital Corp. The federal court has consolidated the two complaints are virtual cookie cutter versions of each other including a false allegation of fact about YayYo that appears in an identical paragraph 13: “On or about June 21, 2016, defendant EI-Batrawi incorporated YayYo in Delaware. The Company then rented cars to Uber and Lyft drivers.” (The business model of YayYo was different on June 21, 2016.)matters for all practical purposes. As with the Rung case,State Cases, the Company denies liability and asserts that it accurately and completely disclosed all materially adversematerial facts events and occurrencescircumstances in its Registration Statement and related publicSEC filings, and that the Complaint’scomplaint’s alleged violations of Sections 11 & 15 of the Securities Act of 1933securities laws are baseless. The actions will be “low numbered” toCompany’s motion for judgment on the same Superior Court judgepleadings was recently denied, and consolidated.the plaintiff’s motion for class action certification is presently pending. The Company intends to vigorously defend the lawsuit.lawsuit in federal court. The Court has set a trial date of October 5, 2021.
Konop v. El-Batrawi, et al., 1:20-cv-1379- MN (Filed in Del. District Court)
On October 12, 2020 a complaint was filed in Delaware District Court, which has since been transferred to the U.S. District Court for the Central District of California, and assigned as a related case to the judge in the pending federal securities action described immediately above. This case is a purported shareholder derivative action, which alleges that the Company’s executive officers and directors at the time of its IPO made false and misleading statements relating the Company’s business, operations, and future prospects and that the directors breached their fiduciary duties in doing so. The Company believes that the allegations of the complaint are spurious and will vigorously defend the case at trial.
15 |
EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
Note 12 – Settlements
FirstFire Settlement
On February 11, 2021, the Company, entered into a settlement agreement and mutual release (the “Settlement Agreement”) with FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company (“FirstFire”), relating to a pending action in the U.S. District Court in the Southern District of New York, FirstFire Global Opportunities Fund, LLC v. WestPark Capital, Inc. et. al., No. 1:20-cv-03327-LLS. The other parties to the Settlement Agreement were the Company’s co-defendants in the litigation, WestPark, Mr. Richard A. Rappaport and Mr. Ramy El-Batrawi, former chief executive officer of the Company.
This litigation was commenced by FirstFire in April 2020 and subsequently amended in December 2020. FirstFire was a subscriber to the Company’s IPO. It alleged in the litigation that the Company and the other named defendants had, in connection with the IPO and the registration statement on Form S-1 filed thereto, committed violations of Sections 11, 12(a) and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated under the Exchange Act. Each of the Company, WestPark, Mr. Rappaport and Mr. El-Batrawi vigorously denied and disputed these allegations.
In consideration of the releases, covenants, terms and conditions set forth in the Settlement Agreement, FirstFire agreed to dismiss the litigation with prejudice, to not file any further litigation relating to the IPO, and to waive and relinquish any and all claims on shares of Common Stock other than as specified in the Settlement Agreement. The Company agreed to sell to FirstFire one hundred fifty thousand (10,000. Any resale of the Settlement Shares by FirstFire shall be subject to the conditions of Rule 144 of the Act. None of WestPark, Mr. Rappaport or Mr. El-Batrawi contributed to the Settlement Shares or any other consideration under the Settlement Agreement. ) shares of Common Stock (the “Settlement Shares”), with such shares issued pursuant to the exemption from registration under Rule 506(b) of the Act. The purchase price of the Settlement Shares was $ per share, or an aggregate of $
Social Reality Settlement
On February 19, 2021, the Company entered into a confidential settlement agreement and mutual release with SRAX, Inc., a Delaware corporation formerly known as Social Reality, Inc. (“SRAX”), relating to an action brought by SRAX against the Company in Los Angeles Superior Court on or around February 11, 2020. A description of this litigation has been included by the Company in its prior filings.
16 |
EVmo, Inc.
Notes to Condensed Consolidated Financial Statements
For the Six Months Ended June 30, 2021 and 2020 (unaudited)
The Company and SRAX mutually agreed to keep the material terms of this settlement confidential, subject to disclosure as required by applicable law or regulation.
Note 1013 – Subsequent Events
In July 2020, theThe Company issued a total of 2,505,000 stock options to officers, directors and employees. Includedhas evaluated subsequent events through August 13, 2021. The Company has determined there were no subsequent events that require recognition or disclosure in the total optionsfinancial statements, except as discussed below.
During the two months subsequent to June 30, 2021, the Company has issued were: 1,000,000an aggregate of 187,500 warrants pursuant to the CEO; 750,000 toterms of the COO; 250,000 to the CFO and 5,000 each to four independent directors.convertible note agreement discussed in Note 6.
InOn July 2020,9, 2021 (the “Closing Date”), the Company entered into a new employment agreementTerm Loan, Guarantee and Security Agreement (the “Term Loan Agreement”) with Laurie DiGiovanni,EICF Agent LLC (“EICF”), as agent for the lenders, and Energy Impact Credit Fund I, LP, as lender (the “Lender”), providing for a secured term loan facility in an aggregate principal amount of up to $15.0 million (collectively, the “Term Loans”), consisting of a $7.5 million closing date term loan facility (the “Closing Date Term Loan”) and up to $7.5 million of borrowings under a delayed draw term loan facility (the “Delayed Draw Term Loan Facility”). The Closing Date Term Loan was fully drawn on the Closing Date, while the Delayed Draw Term Loan Facility is available upon the satisfaction of certain conditions precedent specified in the Term Loan Agreement. The Term Loan Agreement matures on July 9, 2026. Borrowings under the Term Loan Agreement bear interest at the London Interbank Offered Rate (“LIBOR”), plus a margin of 10.0%. As a condition precedent to the Agent and the Lender entering into the Term Loan Agreement, the Company issued to the Lender a common stock purchase warrant, dated as of the Closing Date (the “Warrant”), which grants the Lender the right to purchase up to 1.5 million shares of the common stock of the Company, par value $ (the “Common Stock”), at an exercise price of $2.10, subject to adjustment as set forth in the Warrant. The Warrant is subject to vesting, with shares of Common Stock exercisable as of the Closing Date and the remainder exercisable only in the event that the Company borrows under the Delayed Draw Term Loan Facility or fails to consummate a qualifying equity transaction on or before October 7, 2021. The Warrant has no expiration date.
In connection with the Company’s COOentry into the Term Loan Agreement, the Company entered into an exchange agreement, dated as of July 8, 2021 (the “Exchange Agreement”), with the holder (the “Holder”) of the Company’s 12.5% OID convertible promissory notes (see Note 6) due January 12, 2022issued on April 12, 2021 (the “Prior Notes”).
Pursuant to the Exchange Agreement, the Holder agreed to exchange the Prior Notes for annual salaryexercise price of $200,000 plus 750,000 stock options$3.00, subject to adjustment as set forth therein. The Exchange Warrant is exercisable in full at any time within five (5) years of the date of issuance. Additional warrants on substantially identical terms as the Exchange Warrant will be issued by the Company to the Holder monthly until such time as the Preferred Stock is redeemed in full, upon which a final warrant will be issued. shares of Series B convertible preferred stock, par value $ per share (the “Preferred Stock”), and a warrant (the “Exchange Warrant”). The Exchange Warrant grants the Holder the right to purchase shares of Common Stock at an
The Preferred Stock is convertible at any time at the option of the holder thereof into if not previously converted into shares of Common Stock at an initial conversion price of $ per share, subject to adjustment as set forth in the Certificate of Designation (as defined below).
The Preferred Stock is subject to mandatory redemption in full at a redemption price initially equal to $10 million. At any time after January 12, 2022, provided that become fully vested over three years.the Company has paid in full all obligations outstanding under the Term Loan Agreement, the holders of a majority of the outstanding shares of Preferred Stock shall be entitled to require the Company to redeem the Preferred Stock at the then applicable redemption price, and any such redemption of Preferred Stock shall be prior and superior to the redemption of any and all other equity securities of the Company duly tendered for redemption. per share, within 15 business days after the date on which the Company has completed an equity financing resulting in total proceeds of at least $
If at any time while the Preferred Stock is outstanding, the Company completes any single public offering or private placement of its equity, equity-linked or debt securities (each, a “Future Transaction”), the holders of the Preferred Stock may, in their sole discretion, elect to apply all, or any portion, of the then outstanding Preferred Stock and any accrued but unpaid dividends, as purchase consideration for such Future Transaction. The conversion price applicable to such conversion shall equal seventy percent (70%) of the cash purchase price paid per share, unit or other security denomination for the securities of the Company issued to other investors in the Future Transaction.
17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
CertainThis quarterly report on Form 10-Q may contain “forward-looking statements, made herein, as well as in other filings we make with” within the SEC and other written and oral information we release, regarding our future performance constitute “forward-looking statements” as defined inmeaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.1995. Forward-looking statements can be identified by words such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” and similar references to future periods. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. TheAny forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involveour business, which involves judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe our assumptions underlying theany forward-looking statements are reasonable, any of the assumptionsthey could prove to be inaccurate and therefore, there can be no assurance thethat forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements, included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Our actual results may differ materially from those anticipated in theseany forward-looking statements as a result of various factors, including those described in Part II, Item 1A, “Risk Factors” and elsewhere in this report and as also may be described from time to time in future reports we file with the SEC. You should read such information in conjunction with our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report.factors. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations.
Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.
Our Corporate History and Background
The Company was formedorganized in Delaware on June 21, 2016 as a limited liability company under the name “YayYo, LLC,LLC.” which wasIt subsequently converted into a Delaware corporation pursuant to the unanimous written consent of our former manager and members in a transaction intended to be tax-free under the Internal Revenue Code (the “Conversion”). Allall of YayYo, LLC’s liabilities and assets including its intellectual property, were automatically transferred toassumed by the Company. On September 11, 2020, the Company changed its name to Rideshare Rental, Inc. and on March 1, 2021, the Company has assumed ownership of such assets and liabilities. The Company now operates as a “C” corporation formed under the laws of the State of Delaware.again changed its name, this time to EVmo, Inc.
The Company is a holding company operating through its principal wholly-owned subsidiaries, including Distinct Cars, LLC a Delaware limited liability company (“Distinct Cars”) and Rideshare Car Rentals, LLC a Delaware limited liability company (“Rideshare”Rideshare Car Rentals”).
On August 12, 2017, we announced that we were shifting our primary corporate focus in the transportation/ridesharing industry away from the development of the Metasearch App.
The Company’s operating business divisions include (i)Rideshare Car Rentals is an online rideshare vehicle booking platform designed to service the ridesharing economy, throughi.e. the Company’s wholly-owned subsidiary Rideshare (the “Rideshare Platform”),Platform, particularly ridesharing companies such as Uber and (ii) the maintenance ofLyft and delivery-gig companies like DoorDash and GrubHub. Distinct Cars maintains a fleet of standard and, increasingly, electric passenger vehicles to be made commercially available for rent throughto drivers in both the Company’s wholly-owned subsidiary Distinct Cars (“Fleet Management”). Throughridesharing and delivery-gig industries. The Company seeks to turn over its entire vehicle fleet to electric vehicles over the Company’s wholly-owned subsidiaries Rideshare and Distinct Cars, the Company seeksnext several years in order to become the leading provider of a standardelectric rental vehicles to drivers in the ridesharing economy.and delivery-gig economies.
On March 16, 2018, we closed our Regulation A+completed an offering under Regulation AA+ of the Securities Act, which was qualified by the SEC on March 15, 2017. We2017, and sold a total of 365,306 shares of our common stock.Common Stock. We received cash proceeds of $1.8 million, net of commissions and other costs associated with the gross offering proceeds or payable by us.
On November 15, 2019, the Company closedeffected its initial public offeringIPO, selling 2,625,000 shares of 2,625,000 common sharesCommon Stock at $4.00 per share, for gross proceeds, before underwriting discounts and commissions and expenses, of $10.5 million.million, and the shares becameour Common Stock was then listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “YAYO”.“YAYO.”
On February 10, 2020, the Company notified Nasdaq of its intent to voluntarily delist its Common Stock from Nasdaq. In connection therewith, the Company notified Nasdaq of the Company’s intention to filefiled a Form 25 with the SEC on or about February 20, 2020. The Company elected to effect the voluntary delisting of its common stockCommon Stock after discussions with Nasdaq’s staff, and based on the determination of the Company’s board of directors that voluntarily delisting the Common Stock from Nasdaq was in the best interests at that time of the Company and its stockholders. Following delisting from Nasdaq, the Company’s Common Stock now tradeshas traded on the OTC Pink Open Market, still under the trading symbol, “YAYO.”
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Impact of COVID-19 on our business
In December 2019, a novel strain of coronavirus surfaced in China, which has and is continuing to spread throughout the world, including the United States.
On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organizationit characterized the outbreak as a “pandemic.” The governors of New York, CaliforniaIn response, numerous states and several other states, as well as mayors on many cities have ordered their residents to cease traveling to non-essential jobs and to curtail all unnecessary travel, and to stay in their homes as much as possible in the coming weeks, as the nation confronts the escalating coronavirus outbreak, and similar restrictions have beenwere recommended by the federal authorities and authoritiesgovernment. Beginning in many other states and cities. Since the beginningfirst quarter of 2020, andwhich saw the initial rapid spread of COVID-19, rideshare companies have increasingly beenwere severely and negatively impacted. According to its recent investor update call, Uber’s gross bookings in Seattle are down by 60-70%, and Uber assumes similar declines in other big cities hit by COVID-19. As Americans practice social distancing and self-isolation, Uber, Lyft, and other rideshare companies have seen a steep decline in ridership and revenue,impacted, as a result. Given that rideshare drivers are both at risk themselves and of risk todemand plummeted. Consequently, the public, and in addition to decreased demand overall, less people are even still driving. The Company has seenexperienced a decline in revenue during the first half of 2020, which is havinghad a negative impact on theour cash flows, of the business, but we then saw a positive upward movement in revenue during the latter partsecond half of 2020, which has continued into the first half of 2021. As of the second quarterdate of this quarterly report, several vaccinations for COVID-19 have received emergency-use authorization from the Food and Drug Administration and many of the lockdown restrictions imposed by state and local governments have abated. Still, the pandemic has not yet ended, June 30, 2020. The Company has seen increased demand from drivers wanting to rent cars for ridesharing purposes and new drivers renting cars forthere have been multiple waves where infections, hospitalizations, and deaths have sharply increased. Most recently, variants of the original virus have been identified, and many Americans have resisted obtaining one of the vaccinations, both rideshare and delivery gig economy. With the recent increaseof which have resulted in increases in the aggregate number of positive COVID-19 cases, the Company is not able toinfections. We therefore cannot predict the ultimate impact that COVID -19 willCOVID-19 may have on its business. If another lockdown were to occur,our business over the Company could be forced to significantly scale back its business operations and its growth plans, and could ultimately have a significant negative impact on the Company. The Company cannot at this time estimate the long term effectentirety of this unprecedented situation on the rideshare market or delivery gig economy in general or the Company in particular.year, and possibly beyond.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly ownedprincipal wholly-owned subsidiaries, Distinct Cars LLC, a Delaware limited liability company (“Distinct Cars”), Savy LLC, a Delaware limited liability company (“Savy”), Rideyayyo LLC, a Delaware limited liability company (“Rideyayyo”) and RideshareRideShare Car Rentals LLC, a Delaware limited liability company (“Rideshare”). SavyRentals. All significant intercompany transactions and Rideyayyobalances have not had operations to date.been eliminated.
Consolidated Results of Operations—Three Months Ended June 30, 2020,2021, Compared to Three Months Ended June 30, 2019.2020
Total Revenues.
Revenue for the three months ended June 30, 20202021 was $1,580,555, a decrease$2,652,083, an increase of $116,362$1,071,528 or 6.9%67.8% compared to revenue for the three months ended June 30, 20192020 of $1,696,917.$1,580,555. The decreaseincrease is principally due to us not being able to maintainan increase in rentals of our average weekly rental income levels due to the COVID-19 outbreak.vehicle fleet. During the three months ended June 30, 2020,2021, the average weekly rental income per vehicle placed in service was $292$413 compared to $331$292 for the same period in 2019.2020. Our revenues declined in March and AprilMarch-April of 2020 due to COVID -19the impact of COVID-19 and began to recover in May and JuneMay-June 2020. Our revenue since June 2020 has now exceeded pre-COVID-19 levels, but there is no assurance that this trend will continue.
Cost of Revenues.
The principal components of costs of revenue are depreciation of our fleet vehicles, vehicle insurance, and vehicle maintenance.
Cost of revenues for the monththree months ended June 30, 2021 was $1,915,294, an increase of $620,235 or 49.9% compared to cost of revenues for the three months ended June 30, 2020 of $1,295,059. The increase is due to higher depreciation expense and insurance expense due to an increase in fleet size. For the three months ended June 30, 2021 and 2020 our cost of revenue was back72.2% and 81.9% of our revenue, respectively. The decrease in the cost of revenue as a percentage of revenue is due to higher weekly rental rates.
Selling and Marketing Expenses.
Selling and marketing expenses for the three months ended June 30, 2021 were $64,816, representing a decrease of $14,317 or 18.1% over the three months ended June 30, 2020 of $79,133. The decrease is due to a decrease in advertising to gig-economy drivers as we have maintained a high utilization rate for our vehicles.
General and Administrative Expenses.
General and administrative expenses for the three months ended June 30, 2021 were $1,493,494, representing an increase of $632,084 or 73.4% over the three months ended June 30, 2020 of $861,410. The increase is principally due to higher professional fees, salaries and stock option expense during the three months ended June 30, 2021.
Total Operating Expenses
Total operating expenses for the three months ended June 30, 2021 were $1,609,076, representing an increase of $668,533 or 71.1% compared to the three months ended June 30, 2020 of $940,543. The increase is due to the reasons described immediately above.
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Interest expense and financing cost
Interest and financing expenses for the three months ended June 30, 2021 were $964,387 compared to $67,795 for the three months ended June 30, 2020. The increase in interest and financing cost for the three months ended June 30, 2021 was due to amortization of debt discounts and issuance of additional warrants associated with the $2.250 million convertible note.
Net Loss
The net loss for the three months ended June 30, 2021 was $1,836,674, representing an increase of $1,113,832 or 154.1% compared to the three months ended June 30, 2020 of $722,842. The increase is due to the higher total operating expenses described above.
Consolidated Results of Operations—Six Months Ended June 30, 2021, Compared to Six Months Ended June 30, 2020
Total Revenues.
Revenue for the six months ended June 30, 2021 was $4,946,615, an increase of $1,618,418 or 48.6% compared to revenue for the six months ended June 30, 2020 of $3,328,197. The increase is principally due to an increase in rentals of our vehicle fleet. During the six months ended June 30, 2021, the average weekly rental income per vehicle placed in service was $409 compared to $309 for the same period in 2020.
Our revenues declined in March- April of 2020 due to the impact of COVID-19 and began to recover in May-June 2020. Our revenue since June 2020 has now exceeded pre-COVID-19 levels, but there is no assurance that this trend will continue.
Cost of Revenues.
The principal components of costs of revenue are depreciation of the vehicles, vehicle insurance, and vehicle maintenance.
Cost of revenues for the threesix months ended June 30, 2020 were $1,295,059,2021 was $3,696,197, an increase of $332,988$999,847 or 34.6%37.1% compared to cost of revenues for the threesix months ended June 30, 20192020 of $962,071.$2,696,350. The increase is due to higher depreciation expense and insurance expense due to an increase in fleet size and higher repairs and maintenance due to the age of the fleet.size. For the threesix months ended June 30, 20202021 and 20192020 our cost of revenuerevenues was 81.9%74.7% and 56.7%81.0% of our revenue, respectively. The increasedecrease in the cost of revenue as a percentage of revenue is due to the decrease in averagehigher weekly rental income due to the COVID – 19 outbreak.rates.
Selling and Marketing Expenses.
Selling and marketing expenses for the threesix months ended June 30, 2021 were $230,564, representing an increase of $19,922 or 9.5% over the six months ended June 30, 2020 were $79,153, representing an increase of $58,265 or 279.2% over the three months ended June 30, 2019 of $20,868.$210,642. The increase is due to an increase in advertising our rentals to Uber and Lyftgig-economy drivers.
General and Administrative Expenses.
General and administrative expenses for the three months ended June 30, 2020 were $861,410, representing an increase of $185,782 or 27.5% over the three months ended June 30, 2019 of $675,628. The increase is principally due to higher payroll costs as we hired additional personnel for our expanding operations and higher management salaries; and higher occupancy costs.
Loss on the settlement of debt
Loss on the settlement of debt for the three months ended June 30, 2020 was $0 as compared to $12,900 for the same period in 2019. During the months ended June 30, 2019, we settled outstanding debt of $21,500 with 4,300 shares of common stock valued at $34,400.
.
Total Operating Expenses
Total operating expenses for the three months ended June 30, 2020 were $940,543, representing an increase of $231,147 or 32.6% compared to the three months ended June 30, 2019 of $709,396. The increase is due to the reasons described above.
Interest expense, net
Interest and financing expenses for the three months ended June 30, 2020 were $67,795 compared to $442,902 for the three months ended June 30, 2019. The decrease in interest and financing cost for the three months ended June 30, 2020 due to a decrease in high interest rate debt outstanding.
Net Loss
The net loss for the three months ended June 30, 2020 was $722,842, representing an increase of $305,390 or 73.2% compared to the three months ended June 30, 2019 of $417,452. The increase is due to the reasons described above.
Consolidated Results of Operations—Six Months Ended June 30, 2020, Compared to Six Months Ended June 30, 2019.
Total Revenues.
Revenue for the six months ended June 30, 2020 was $3,328,197, a decrease of $147,321 or 4.2% compared to revenue for the six months ended June 30, 2019 of $3,475,518. The decrease is due to us not being able to maintain our average weekly rental income levels due to the COVID-19 outbreak. During the six months ended June 30, 2020, the average weekly rental income per vehicle placed in service was $309 compared to $341 for the same period in 2019. Our revenues declined in March and April due to COVID -19 and began to recover in May and June 2020. Our revenue for the month of June was back to pre-COVID-19 levels, but there is no assurance that this trend will continue.
Cost of Revenues.
Cost of revenues for the six months ended June 30, 2020 were $2,696,350, an increase of $652,109 or 31.9% compared to cost of revenues for the six months ended June 30, 2019 of $2,044,241. The increase is due to higher depreciation expense due to an increase in fleet size and higher repairs and maintenance due to the age of the fleet. For the six months ended June 30, 2020 and 2019 our cost of revenue was 81.0% and 58.8% of our revenue, respectively. The increase in the cost of revenue as a percentage of revenue is due to the decrease in average weekly rental income due to the COVID – 19 outbreak.
Selling and Marketing Expenses.
Selling and marketing expenses for the six months ended June 30, 2020 were $210,642, representing an increase of $108,036 or 105.3% over the six months ended June 30, 2019 of $102,606. The increase is due to an increase in advertising our rentals to Uber and Lyft drivers.
General and Administrative Expenses.
General and administrative expenses for the six months ended June 30, 20202021 were $2,757,616,$2,932,595, representing an increase of $1,296,805$174,979 or 88.8%6.3% over the six months ended June 30, 20192020 of $1,460,811.$2,757,616. The increase is principally due to higher payroll costs (includingprofessional fees and salaries offset by a decrease in stock option expense) as we hired additional personnel for our expanding operations and higher management salaries; and higher occupancy costs.
Loss on the settlement of debt
Loss on the settlement of debt forexpense during the six months ended June 30, 2020 was $0 as compared to $252,900 for the same period in 2019. During the months ended June 30, 2019, we settled outstanding debt of $421,500 with 84,300 shares of common stock valued at $674,400.2021.
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Total Operating Expenses
Total operating expenses for the six months ended June 30, 20202021 were $2,968,258,$3,223,425, representing an increase of $1,151,941$255,167 or 63.4%8.6% compared to the six months ended June 30, 20192020 of $1,816,317.$2,968,258. The increase is due to the reasons described immediately above.
Interest expense netand financing cost
Interest and financing expenses for the six months ended June 30, 20202021 were $147,651$4,289,330 compared to $611,875$147,651 for the six months ended June 30, 2019.2020. The decreaseincrease in interest and financing cost for the six months ended June 30, 20202021 was due to the issuance of 825,000 shares of Common Stock to Acuitas, now the Company’s largest shareholder, in connection with a decreasesettlement agreement between it and X, LLC, a limited liability company controlled by the Company’s former CEO. The value of the shares was $3,240,600, which was based on the market price of the Common Stock at the date of the settlement agreement. The $3,240,600 was expensed as financing costs, as the dispute underlying the settlement agreement related to the anti-dilution of a prior investment in outstanding debt.the Company by Acuitas. Also, the increase is due to amortization of debt discounts and issuance of additional warrants associated with the $2.250 million convertible note.
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Gain on Forgiveness of Debt
Gain on forgiveness of debt for the six months June 30, 2021 was $8,000 as compared to $0 for the same period in 2020, as, during the six months ended June 30, 2021, the remaining amount we received under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security Act was forgiven.
Net Loss
The net loss for the six months ended June 30, 20202021 was $2,484,062,$6,254,337, representing an increase of $1,487,147$3,770,275 or 149.2%151.8% compared to the six months ended June 30, 20192020 of $996,915.$2,484,062. The increase is due to the reasonshigher total operating expenses described above.
Liquidity, Capital Resources and Plan of Operations
Current Assets, Liabilities and Working Capital
Initial Public Offering.On November 15, 2019, we closed our initialIPO of 2,625,000 shares of Common Stock was effected. Our public offering of common stock registered on an S-1 Registration Statement under the Securities Act, whichprice was declared effective on November 13, 2019. We sold a total of 2,625,000 common shares at a price of $4.00 per share. Total gross proceeds from the offering were $10,500,000, before deducting underwriting discounts and commissions and other offering expenses.
During the year ended December 31, 2020, we sold an aggregate of 2,553,571 shares of Common Stock to three investors for cash proceeds of $275,000, of which 125,000 shares was sold to a member of our Board of Directors for cash consideration of $25,000.
On January 8, 2021, we received $500,000 from a convertible note from one of our stockholders. The note was convertible into shares of Common Stock at $0.50 per share and was converted into 1,000,000 shares of Common Stock in February 2021.
On April 12, 2021, we entered into a securities purchase agreement with a certain investor in connection with the issuance of a 12.5% original issue discount convertible promissory note and a common stock purchase warrant. The note had an original principal amount of $2,250,000, with an original issue discount of $250,000. It bore interest at a fixed rate of 10%, was convertible into shares of common stock at a price of $3.00 per share (subject to adjustment as set forth in the note), and was to mature on January 12, 2022.
On July 9, 2021, we entered into a Term Loan Agreement with EICF Agent LLC, as agent for the lenders, and Energy Impact Credit Fund I, LP, as lender, providing for a secured term loan facility in an aggregate principal amount of up to $15.0 million, consisting of a $7.5 million closing date term loan facility and up to $7.5 million of borrowings under a delayed draw term loan facility. The initial term loan has been fully drawn, while the remainder is available upon the satisfaction of certain conditions precedent specified in the agreement. The Term Loan Agreement matures on July 9, 2026. Borrowings under the Term Loan Agreement bear interest at the LIBOR, plus a margin of 10.0%.
During the six months ended June 30, 2021, we sold 100,000 shares of Common Stock to a member of our Board of Directors for cash consideration of $50,000.
Current Assets, Liabilities and Working Capital.
At June 30, 2020,2021, the Company’s current assets totaled $696,206,$1,014,673, current liabilities totaled $3,991,172,$5,801,006, and working capital was a deficit of $3,294,966.$4,786,333. At December 31, 2019,2020, the Company’s current assets totaled $2,098,660,$215,990, current liabilities totaled $2,655,055,$4,461,560, and working capital was a deficit of $556,395.$4,245,570. As of June 30, 2021, the Company had $162,727 in cash. The Company used $244,484 of cash for operating activities for the six months ended June 30, 2021.
Regarding current liabilities, the amounts categorized as accounts payable and accrued expenses totaled $1,700,314$2,377,096 and $951,231$2,119,003 as of June 30, 20202021 and December 31, 2019,2020, respectively, an increasea decrease of $749,083$258,093 or 78.7%.12.2%, due to Common Stock issued for legal settlements that were previously included in accrued expenses.
Since inception, our principal sources of operating funds have been proceeds from debt and equity financingfinancings, including the sale of our common stockCommon Stock to initial investors known to management and principal shareholders of the Company. We do notCompany, our IPO in November 2019, and the Term Loan Agreement entered into in July 2021 described above. As of the date of this quarterly report, we expect that our current cash on hand will be sufficient to fund our existing operations and future business growth. We will need to raise additional capital in order execute our business plan and growth goals for at least the next twelve-month period thereafter. Iftwelve months. In addition to the July 2021 term loan, the Company is unable to raise sufficient additional funds, it will have to execute a slower than planned growth path, reduce overhead and scale back its business plan until sufficient additional capital is raised to support further operational expansion and growth. As of June 30, 2020, the Company had $103,240 in cash. The Company used $339,199 of cash for operating activities for the six months ended June 30, 2020. The Company iscurrently seeking to raise additional capital. If the Company is not successful in raising additional capital it willmay be forced to significantly scale back, perhaps significantly, its business operations and it growth plans. In addition, the COVID-19 virus and the related impact it is having on the U.S. economy is currently having a negative impact on the cash flows of our business. However, we were able to obtain two loans totaling $342,675 related to new legislation passed as a result of COVID-19.
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Capital Expenditures
During the six months ended June 30, 2020,2021, the Company had capital expenditures of $2,246,285$3,049,261 in leased vehicles. At June 30, 2020,2021, most of the Company’s vehicles were financefinanced with leases. At June 30, 20202021 the Company had $8,468,168$11,874,137 of rental vehicles, net of accumulated depreciation in the amount of $2,105,179,$3,864,087, totaling $6,362,989$8,010,050 in net rental vehicles. At December 31, 20192020 the Company had $6,284,211$9,067,885 of rental vehicles, net of accumulated depreciation in the amount of $1,547,164,$2,871,452, totaling $4,737,047$6,196,433 in net rental vehicles. The Company’s rental vehicles are depreciated over their estimated useful life of five years. The lease termsterm for those rental vehicles that are leased arewe lease is generally for three years and the Company has the right to purchase the leased assetsvehicles for $1 each at the end of the lease terms.term.
Statement of Cash Flows
Cash Flows from Operating Activities
Net cash used in operating activities for the six months ended June 30, 20202021 totaled $339,199,$244,484, which was an increasea decrease of $278,829$94,715 or 461.9%27.9% from the net cash used in operating activities of $60,370$339,199 for the same period in 2019.2020. The increasedecrease is principally due to the change in operating assets and liabilities, and non-cash expense items.
Cash Flows from Investing Activities
Net cash used in investing activities for the six months ended June 30, 2021 totaled $47,051, which was an increase of $47,051 from $0 for the same period in net loss.2020. The change is principally due to the purchase of property and equipment.
Cash Flows from Financing Activities
Net cash used inprovided by financing activities for the six months ended June 30, 20202021 totaled $813,990,$381,372, which was a change of $631,297$1,195,362 from the net cash provided byused in financing activities of $182,693$813,990 for the same period in 2019.2020. The change is principally due to cash received from the sale of Common Stock, the exercise of both stock options and a convertible note in 2021, offset by an increase in payments on financing lease obligations in 2020 and proceeds of $1.051.300 from notes payable in 2019 compared to $342,675 in 2020. In addition, we sold $275,000 of common stock in 2020 compared to $0 in 2019.obligations.
Current Plan of Operations
Our plan of operations is currently focused on the growth and ongoing development of our operating business segments:businesses: (i) ourthe Rideshare Platform, offered through the Company’s wholly-owned subsidiary Rideshare Rentals, and (ii) our Fleet Management business, madevehicle fleet, which is commercially available through the Company’s wholly-owned subsidiary Distinct Cars. We expect to incur substantial expenditures in the foreseeable future for the potentialenhanced operations of our business segmentsbusinesses and related, ongoing, internal research and development. Moreover, we have embarked on “EV strategy” in which we intend to replace our entire fleet of vehicles with all electric vehicles over the next several years. At this time, we cannot reliably estimate the nature, timing or aggregate amount of such costs. Our Rideshare Platform will require extensive technical evaluation, potential regulatory review and approval, significant marketing efforts and substantial investment before it or any successors could provide usall of the costs associated with any revenue. Further, we intend to continue to build our corporate and operational infrastructure and to build interest in our product and service offerings.these efforts.
As noted above, theThe continuation of our currentexpansion plan of operations requiresmay require us to raise significant additional capital immediately. If we are successful in raising capital, we believe that the Company will have sufficient cash resources to fund its planwithin a short period of operations.time. The cash flow from our current vehicle leasing businessRideshare Platform and particularly our Distinct Cars businesses and our existing capital resources are sufficient for us to continue our current operations, but for us to fully executeexecuting our future business plan we willplans may require significant additional capital.capital, which we are currently seeking to raise.
We continually evaluatereevaluate our plan of operations discussed above to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the ready availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that our current capital resources will be sufficient to continue to fund our ongoing operations, nor can there be any assurance that, if we require additional capital, we will successfully obtain the requiredit on favorable terms, or at all. The inadequacy of our existing capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations. The inability to secure additional capital wouldcould have a material adverse effect on us, including the possibility that we would have to sell or forego a portion or all of our assets or cease operations. If we discontinue our operations, we willmay not have sufficient funds to pay any amounts to our stockholders.
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Even if we raise additional capital in the near future, ifIf our operating business segmentsbusinesses fail to achieve anticipated financial results, our existing capital will likely be depleted more quickly than we anticipate and our ability to raise additional capital in the future to fund our operating business segmentsoperations would likely be seriously impaired. If in the future we are not able to demonstrate favorable financial results or projections from our operating business segments,businesses, we willmay not be able to raise the capital we need to continue our then current business operations and business activities, and we will likely not have sufficient liquidity or cash resources to continue operating.operations.
BecauseSimilarly, because our working capital requirements depend upon numerous factors there can be no assurance that our current cash resources will be sufficient to fund our operations. At present, we have no committed external sources of capital, and do not expect any significant product revenues for the foreseeable future. Thus, we will require immediate additional financing to fund future operations. There can be no assurance, however, that we will be able to obtain funds on acceptable terms, if at all.
Contractual Obligations, Commitments and Contingencies
During fiscal years 2017, 2018 and 2019, the Company entered into a series of monthly vehicle leasing agreements with ACME Auto Leasing, LMP Financial Services and United Mile Fleet, each with an approximate lease term of 12 to 36 months. As of June 30, 2020 and December 31, 2019, the Company had total lease obligations in the amount of $3,099,385 and $2,400,565, respectively. The Company owes monthly payments under each Lease Agreement ranging from approximately $342 per month to $621 per month. At the end of the term of the Lease Agreement, lessee has the right to purchase ownership and title of the subject vehicle for a nominal payment. In addition, the Lease Agreements are subject to and secured by a grant of a purchase money security interest on each leased vehicle.
We leased and maintained primary offices at 433 North Camden Drive, Suite 600, Beverly Hills, California 90210 and 6600 Sunset Blvd., Los Angeles, CA 90028, the latter being the location where the majority of our operations and staff conduct activities on a daily basis. We do not currently own any real property.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. In many instances, we could have reasonably used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. This applies in particular to useful lives of non-current assets and valuation allowance for deferred tax assets. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our judgments and estimates.
Property and Equipment and Rental Vehicles
Property and equipment and rental vehicles are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment and rental vehicles is provided using the straight-line method for substantially all assets with estimated lives as follows:
Computer equipment | 5 years |
Officer furniture | 7 years |
Leasehold improvements | 15 years or term of lease whichever is less |
Vehicles | 5 years |
The Company has not changed its estimate for the useful lives of its equipment and rental vehicles, but would expect that a decrease in the estimated useful lives of equipment and rental vehicles of one year would result in an annual increase to depreciation expense of approximately $600,000, and an increase in the estimated useful lives of equipment and rental vehicles of one year would result in an annual decrease to depreciation expense of approximately $400,000.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has not changed it methodology for estimating the valuation allowance. A change in valuation allowance affect earnings in the period the adjustments are made and could be significant due to the large valuation allowance currently established.
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Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Revenue Recognition
The Company recognizes revenue primarily from renting its fleet of cars to Uber and Lyft drivers. Revenue is recognized based on the rental agreements which are generally on a weekly basis.drivers for TNC companies. The Company recognizes revenue in accordance with FASB ASC 606, Revenue From Contracts with Customers. Generally, this enables us to both recognize revenue when we have satisfied our obligations under our rental agreement, i.e. when we have provided the vehicle to our renter, and to recognize the entire amount we expect to receive pursuant to the agreement, including estimates.
We consider a signed contract or other similar documentation reflecting the terms and conditions under which products will be provided to be persuasive evidence of an arrangement. Collectability is assessed based on a number of factors, including payment history and the creditworthiness of a customer. If it is determined that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash.
Stock-Based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required under Regulation S-K for “smaller reporting companies.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC.
In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”)CEO and Chief Financial Officer (“CFO”), to assess the effectiveness of our disclosure controls and procedures as of June 30, 2020.2021. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure due to a material weakness.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
To address this material weakness, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time,For a description of the Company may become involved in lawsuits and otherpending legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. The Company is currently not aware of any legal proceedings or potential claims against it whose outcome wouldcould be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.
Social Reality Inc. v. YayYo, Inc.
This action was filed on February 11, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff Social Reality Inc. is a media company that claims to have provided media services to the Company. Plaintiff has sued the Company, for breach of contract and related causes of action, arising from its claims that the Company has failed to pay for past outstanding invoices for services rendered. The plaintiff has also filed a motion for prejudgment attachment which was heard on July 28, 2020. The Superior Court denied the writ of attachment on the merits. The parties have a case management conference scheduled for August 18, 2020. The Company believes that it has valid defenses to the lawsuit, and expects to file counterclaims that will offset or negate any monies owed to plaintiff; it will vigorously defend the lawsuit.
Anthony Davis v. YayYo, Inc., and Ramy El-Batrawi
This action was filed on March 5, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff Anthony Davis was hired by the Company as its Chief Executive Officer in or about December 2016, although he worked there for only a matter of months. Mr. El-Batrawi is the founder of the Company and our current Chief Executive Officer and director, and was involved, the complaint alleges, in Plaintiff’s hiring. As part of his compensation, Mr. Davis claims that he expected to receive stock options in the Company. He has alleged that “after several months of unsuccessfully attempting to persuade the Company’s founder to implement certain protocols and procedures” Davis resigned from his executive officer and director positions, and entered into a written settlement agreement with the Company as a consultant. Mr. Davis claims that the Company breached its agreement to award him certain stock options and includes a claim for wage and hour violations. The lawsuit also includes a request for declaratory and injunctive relief. Davis also included a claim under California Unfair Practices Act. The Company denies liability and asserts that it has paid Davis all amounts due to him under the contract, and that Davis failed to exercise his stock options before they expired on December 31, 2018. It intends to vigorously defend the lawsuit, and has agreed to pursue mediation pursuant to the contract with plaintiff.
Ivan Rung v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV27876
This action was filed on July 22, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff Ivan Rung claims to have purchased the Company’s stock and purports to bring a securities class action on behalf of all purchasers of YayYo’s stock pursuant to the Registration Statement and Prospectus issued in connection with YayYo’s November 14, 2019 initial public stock offering (IPO”). Mr. El-Batrawi is the founder and current CEO of the Company but at the time of the IPO was only a shareholder of the Company having stepped down as CEO, Director and a controlling shareholder of the Company. The complaint is vague about alleged misrepresentation and material omissions, detailing instead a supposed chronology of events leading to the Company’s voluntary decision to delist its stock from NASDAQ, a decision the Company announced in an 8K filed on February10, 2020. The Company denies liability and asserts that it accurately and completely disclosed all materially adverse facts and occurrences in its Registration Statement, related public filings and other public statements, and the Complaint’s alleged violations of Sections 11 & 15 of the Securities Act of 1933 are baseless. It intends to vigorously defend the lawsuit.
Michael Vanbecelaere v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV28066
This action was filed on July 23, 2020, in the Superior Court of the State of California for the County of Los Angeles, also as a purported class action. Plaintiff Michael Vanbecelaere claims to have purchased the Company’s stock “traceable to the IPO” and like Rung, brings a securities class action pursuant to Sections 11 & 15 of the Securities Act of 1933 on behalf of all purchasers of YayYo’s stock. The complaint like the preceding action, Ivan Rung v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV27876 (“Rung”) alleges false statements and material omission pursuant to the Registration Statement and Prospectus issued in connection with YayYo’s November 14, 201 9 initial public stock offering (IPO). The defendants are identical to the defendants in the action filed the day before, on July 22, 2020. The two complaints are virtual cookie cutter versions of each other including a false allegation of fact about YayYo that appears in an identical paragraph 13: “On or about June 21, 2016, defendant EI-Batrawi incorporated YayYo in Delaware. The Company then rented cars to Uber and Lyft drivers.” (The business model of YayYo was different on June 21, 2016.) As with the Rung case, the Company denies liability and asserts that it accurately and completely disclosed all materially adverse facts, events and occurrences in its Registration Statement and related public filings, and the Complaint’s alleged violations of Sections 11 & 15 of the Securities Act of 1933 are baseless. The actions will be “low numbered” to the same Superior Court judge and consolidated. The Company intends to vigorously defend the lawsuit.please see Note 11- Contingencies.
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COVID-19 has had a negative impact on our business the first half of 2020
In December 2019, a novel strain of coronavirus surfaced in China, which has and is continuing to spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic.” The governors of New York, California and several other states, as well as mayors on many cities, have ordered their residents to cease traveling to non-essential jobs and to curtail all unnecessary travel, and to stay in their homes as much as possible in the coming weeks, as the nation confronts the escalating coronavirus outbreak, and similar restrictions have been recommended by the federal authorities and authorities in many other states and cities. Since the beginning of 2020 and the spread of COVID-19, rideshare companies have increasingly been negatively impacted. According to its recent investor update call, Uber’s gross bookings in Seattle are down by 60-70%, and Uber assumes similar declines in other big cities hit by COVID-19. As Americans practice social distancing and self-isolation, Uber, Lyft, and other rideshare companies have seen a steep decline in ridership and revenue, as a result. Given that rideshare drivers are both at risk themselves and of risk to the public, and in addition to decreased demand overall, less people are even still driving. The Company has seen a decline in revenue during the first half of 2020 which is having a negative impact on the cash flows of the business, but saw a positive upward movement in revenue the latter part of the second quarter ended June 30, 2020. The Company has seen increased demand from drivers wanting to rent carsNot required under Regulation S-K for ridesharing purposes and new drivers renting cars for both rideshare and delivery gig economy. With the recent increase in the number of positive COVID-19 cases, the Company is not able to predict the ultimate impact that COVID -19 will have on its business. If another lockdown were to occur, the Company could be forced to significantly scale back its business operations and its growth plans, and could ultimately have a significant negative impact on the Company. The Company cannot at this time estimate the long term effect of this unprecedented situation on the rideshare market or delivery gig economy in general or the Company in particular.“smaller reporting companies.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended June 30, 2020, the Company sold an aggregate of 2,553,571 shares of common stock to three investors for cash proceeds of $25,000None.
The offer, sale and issuance of the above securities was made to accredited investors and the Company relied upon the exemptions contained in Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated thereunder with regard to the sale. No advertising or general solicitation was employed in offering the securities. The offer and sales were made to accredited investors and transfer of the common stock will be restricted by the Company in accordance with the requirements of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant) | ||
By: | /s/ | |
/s/ Ryan Saathoff | ||
Ryan Saathoff, Chief Financial Officer |
Date: | August 16, 2021 |
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