| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Management's
Plans We
have incurred operating losses since Inception and historically relied on debt and equity financing for working capital. Throughout
the next 12 months, the Company intends to fund its operations through revenue from operations, the remaining capital raised through
the Follow-On Public Offering and cash received on April 13, 2020 through a Paycheck Protection Plan Loan ("PPP Loan")
for $2,004,175. Based on the revenue and margin impact of the COVID-19 novel coronavirus ("COVID-19") situation, we
have adjusted many of the variable expenses which make up a significant portion of our entire cost structure and continue to adjust
other operating costs appropriate for the situation. The PPP Loan, in addition to our existing capital and the ability to reduce
expense levels further if necessary, depending on the duration of the COVID-19 situation, causes us to continue to believe the
Company has sufficient resources to continue as a going concern. Basis of Presentation
– Unaudited Interim Financial Information The
unaudited interim consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for
interim financial information, within the rules and regulations of the United States Securities and Exchange Commission (the
"SEC"). Certain information and disclosures normally included in the annual consolidated financial statements
prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited
interim consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial
statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments,
necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the
date of the interim consolidated balance sheet. The financial data and the other information disclosed in these notes to the
interim consolidated financial statements related to the three month periods are unaudited. Unaudited interim consolidated
results are not necessarily indicative of the results for the full fiscal year. These unaudited interim consolidated
financial statements should be read in conjunction with the consolidated financial statements of the Company for the year
ended December 31, 2019 and notes thereto that are included in the Company's Annual Report on Form 10-K. Use of Estimates The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses during
the reporting period. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates
will occur in the near term. The
Company's most significant estimates and judgments involve recognition of revenue and estimates for future contingent customer
incentive obligations, calculating insurance reserves, the measurement of the Company's stock-based compensation, and allowance
for doubtful accounts. Fair Value
of Financial Instruments Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as
of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability
and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect
the Company's assumptions about the factors that market participants would use in valuing the asset or liability. There
are three levels of inputs that may be used to measure fair value: Level
1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level
2 - Include other inputs that are directly or indirectly observable in the marketplace. Level
3 - Unobservable inputs which are supported by little or no market activity. The
fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value. Fair-value
estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March
31, 2020 and December 31, 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their
fair values. These financial instruments include cash and cash equivalents, accounts payable, and accrued liabilities. Fair values
for these items were assumed to approximate carrying values because of their short-term nature or they are payable on demand. Cash and Cash
Equivalents For
purpose of the consolidated statement of cash flows, the Company considers institutional money market funds and all highly liquid
debt instruments purchased with an original maturity of three months or less to be cash equivalents. Insurance
Reserve The
Company records a loss reserve for insurance deductible or physical damage that the Company pays to car owners based on the Company's
policy in relation to the insurance policy in effect at the time. This reserve represents an estimate for both reported accidents
claims not yet paid, and claims incurred but not yet reported and are recorded on a non-discounted basis. The lag time in reported
claims is minimal and as such represents a low risk of unreported claims being excluded from the loss reserve assessment. The adequacy
of the reserve is monitored quarterly and is subject to adjustment in the future based upon changes in claims experience, including
the number of incidents for which the Company is ultimately responsible and changes in the cost per claim, or changes to the Company's
policy as to what amounts of the deductible or claim will be paid by the Company. As of March 31, 2020 and December 31, 2019, $1,453,257
and $1,332,892 was included in the accompanying consolidated balance sheets, respectively, related to the loss reserve, where the
expense is included in costs of revenues. Liability
insurance claims may take several years to completely settle, and the Company has limited historical loss experience. Because
of the limited operational history, the Company makes certain assumptions based on currently available information to estimate
the reserves as well as third party claims adjuster data provided on existing claims. A number of factors can affect the actual
cost of a claim, including the length of time the claim remains open, economic and healthcare cost trends and the results of related
litigation. Furthermore, claims may emerge in future periods for events that occurred in a prior period that differs from expectations.
Accordingly, actual losses may vary significantly from the estimated amounts reported in the consolidated financial statements.
Reserves are continually reviewed and adjusted as necessary as experience develops or new information becomes known. However,
ultimate results may differ from the Company's estimates, which could result in losses over the Company's reserved
amounts. Such adjustments are recorded in general and administrative expenses. Revenue Recognition The Company generates
the majority of its revenue from its ridesharing marketplace that connects vehicle owners and drivers and the related insurance
issued for each rental. The
Company also recognizes revenue from other sources such as referrals, motor vehicle record fees (application fees), late rental
fees, dealership subscription fees, and other fees charged to drivers in specific situations. In
applying the guidance of ASC 606, the Company 1) identifies the contract with the customer 2) identifies the performance obligations
in the contract 3) determines the transaction price, 4) determines if an allocation of that transaction price is required to the
performance obligations in the contract, and 5) recognizes revenue when or as the companies satisfies a performance obligation. Refunds
may occur when the driver returns the owner vehicle early based on the terms of the original contract or cancels the rental prior
to completing the exchange. In limited circumstances, the Company provides contingent consideration in the form of a rebate that
is redeemable only if the customer completes a specific level of transaction over a specific time period. In such cases, the rebate
or refund obligation is recognized as a reduction of revenues. The Company defers revenue in all instances when the earnings process
is not yet complete. The
following is a breakout of revenue components by subcategory for the three-months ended March 31, 2020 and 2019.
2020 2019
Insurance and administration fees $ 2,873,843 $ 1,766,702
Transaction fees 2,558,295 1,259,291
Other fees 507,477 627,292
Incentives and rebates (159,202 ) (142,560 )
Net revenue $ 5,780,413 $ 3,510,725 Principal
Agent Considerations The
Company evaluates our service offerings to determine if we are acting as the principal or as an agent, which we consider in determining
if revenue should be reported gross or net. One of our primary revenue sources is a transaction fee made from a confirmed booking
of a vehicle on our platform. Key indicators that we evaluate to reach this determination include:
● the terms and conditions of our contracts;
● whether we are paid a fixed percentage of the arrangement's
consideration or a fixed fee for each transaction;
● the party which sets the pricing with the end-user, has the
credit risk and provides customer support; and
● the party responsible for delivery/fulfillment of the product
or service to the end consumer. We
have determined we act as the agent in the transaction for vehicle bookings, as we are not the primary obligor of the arrangement
and receive a fixed percentage of the transaction. Therefore, revenue is recognized on a net basis. For
other fees such as insurance, referrals, motor vehicle records (application fees), and dealer subscription we have determined
revenue should be recorded on a gross basis. In such arrangements, the Company sets pricing, has risk of economic loss, has certain
credit risk, provides support services related to these transactions, and has decision making ability about service providers
used. Cost of Revenues Cost of revenues
primarily include direct fees paid for insurance to cover the vehicle driver and owner, insurance claim payments based on the
policy in effect at the time of loss, merchant processing fees, technology and hosting costs, and motor vehicle record fees incurred
for paid driver applications. General liability insurance that covers corporate risk from activity on our platform is included
in general and administrative costs. Advertising The
Company expenses the cost of advertising and promotions as incurred. Advertising expense was $785,228 and $335,396 for the three
months ended March 31, 2020 and 2019, respectively. Research and
Development We
incur research and development costs during the process of researching and developing our technologies and future offerings. Our
research and development costs consist primarily of non-capitalized development and maintenance costs. We expense these costs
as incurred unless such costs qualify for capitalization under applicable guidance. Stock-Based
Compensation The
Company accounts for stock awards issued under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation
cost is measured at the grant date, based on the estimated fair value of the award. Stock-based compensation is recognized as
expense over the employee's requisite vesting period and over the nonemployee's period of providing goods or services.
The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation
model. Restricted shares are measured based on the fair market value of the underlying stock on the grant date. Stock-based compensation
is included in the consolidated statements of operations as follows:
Three months
ended Three months
ended
General and administrative $ 281,953 $ 169,238
Sales and marketing 41,282 99,479
Research and development $ 91,937 $ 12,464 Loss per Common Share The
Company presents basic loss per share ("EPS") and diluted EPS on the face of the consolidated statements of operations.
Basic loss per share is computed as net loss divided by the weighted average number of common shares outstanding for the period.
For periods in which we incur a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded
from diluted EPS calculations. For the three months ended March 31, 2020 and 2019, there were 2,680,093 and 2,888,883 options
or warrants excluded, 403,100 and 138,800 restricted stock units excluded, and 0 and 400,000 forfeitable restricted stock shares
excluded, respectively. Concentration
of Credit Risk The
Company maintains its cash with a major financial institution located in the United States of America which it believes to be
credit worthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times,
the Company maintains balances in excess of the federally insured limits. Other Concentrations The
Company has historically relied on a two primary insurance brokers and underwriters to
provide all automobile insurance on vehicles in service over the last few years. There are multiple brokers and carriers who issue
this type of insurance coverage, and the Company is regularly making reviewing leading insurers in the transportation and mobility
sectors as this is an important part of our operations. The company does not believe the loss of our current broker or underwriter
would have a material effect on our operations. New Accounting
Standards In
February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2016-02, Leases (Topic 842), specifying the accounting for leases, which supersedes the leases requirements in Topic 840,
Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information
to users of consolidated financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. Lessees
are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve
months or less. Lessors' accounting is largely unchanged from the previous accounting standard. In addition, Topic 842 expands
the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach,
which includes several practical expedients. This guidance is effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2020 for emerging growth companies, with early adoption permitted. The Company has reviewed
the provisions of the new standard, but it is not expected to have a significant impact on the Company. In
December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions in existing
guidance and improves consistency in application by clarifying and amending existing guidance. This guidance is effective for
annual periods beginning after December 15, 2020, and interim periods within those annual periods, where the transition method
varies depending upon the specific amendment. Early adoption is permitted, including adoption in any interim period. An entity
that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual
period that includes that interim period, and all amendments must be adopted in the same period. The Company has reviewed the
provisions of the new standard, but it is not expected to have a significant impact on the Company. In
January 2020, the FASB issued ASU No. 2020-01, "Investments-Equity Securities (Topic 321), Investments-Equity Method and
Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323,
and Topic 815", which clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted
for under the equity method of accounting under Topic 323, and the accounting for certain forward contracts and purchased options
accounted for under Topic 815. This guidance is effective for the Company for fiscal years beginning after December 15, 2020,
including interim periods within those fiscal years. Early adoption is permitted. The Company has reviewed the provisions of the
new standard, but it is not expected to have a significant impact on the Company. The
FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that
amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are
technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our consolidated financial
statements. |
