Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 13, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HyreCar Inc. | |
Entity Central Index Key | 1,713,832 | |
Trading Symbol | HYRE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,708,041 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 11,867,519 | $ 213,944 |
Accounts receivable | 60,800 | 41,000 |
Deferred offering costs | 135,608 | |
Deferred expenses | 11,585 | 35,153 |
Other current assets | 82,560 | 118,020 |
Total current assets | 12,022,464 | 543,725 |
Property and equipment, net | 3,802 | |
Other assets | 90,000 | 90,000 |
Total assets | 12,116,266 | 633,725 |
Current liabilities: | ||
Accounts payable | 1,780,724 | 1,355,064 |
Accrued liabilities | 428,502 | 119,226 |
Deferred revenue | 24,960 | 47,718 |
Related party advances | 9,629 | 9,629 |
Note payable, net of discount | 46,368 | |
Notes payable - related party, net of discount | 300,000 | 278,607 |
Settlement payable | 24,444 | |
Total current liabilities | 2,543,815 | 1,881,056 |
Total liabilities | 2,543,815 | 1,881,056 |
Commitments and contingencies (Note 3) | ||
Stockholders' equity (deficit): | ||
Preferred stock 15,000,000 shares authorized, par value $0.00001, 0 and 2,429,638 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 1,591,886 | |
Common stock, 50,000,000 shares authorized, par value $0.00001, 11,708,041 and 5,252,953 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 117 | 52 |
Additional paid-in capital | 21,641,896 | 2,553,672 |
Subscription receivable - related party | (7,392) | (140,087) |
Accumulated deficit | (12,062,170) | (5,252,854) |
Total stockholders' equity (deficit) | 9,572,451 | (1,247,331) |
Total liabilities and stockholders' equity (deficit) | $ 12,116,266 | $ 633,725 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares issued | 0 | 2,429,638 |
Preferred stock, shares outstanding | 0 | 2,429,638 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 11,708,041 | 5,252,953 |
Common stock, shares outstanding | 11,708,041 | 5,252,953 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 2,273,499 | $ 631,245 | $ 3,987,682 | $ 1,136,569 |
Cost of revenues | 1,196,547 | 559,026 | 2,487,419 | 1,027,478 |
Gross profit | 1,076,952 | 72,219 | 1,500,263 | 109,091 |
Operating Expenses: | ||||
General and administrative | 3,156,479 | 362,218 | 4,045,733 | 678,102 |
Sales and marketing | 793,196 | 351,259 | 1,676,223 | 670,936 |
Research and development | 296,958 | 115,599 | 522,045 | 197,067 |
Total operating expenses | 4,246,633 | 829,076 | 6,244,001 | 1,546,105 |
Operating loss | (3,169,681) | (756,857) | (4,743,738) | (1,437,014) |
Other (income) expense: | ||||
Interest expense | 1,874,685 | 14,299 | 2,036,458 | 154,364 |
Other (income) expense | (2,081) | (2,281) | 29,120 | 728 |
Total other (income) expense | 1,872,604 | 12,018 | 2,065,578 | 155,092 |
Net loss | $ (5,042,285) | $ (768,875) | $ (6,809,316) | $ (1,592,106) |
Weighted average shares outstanding - basic and diluted | 5,456,685 | 3,978,606 | 5,355,337 | 4,015,007 |
Weighted average net loss per share - basic and diluted | $ (0.92) | $ (0.19) | $ (1.27) | $ (0.40) |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (6,809,316) | $ (1,592,106) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 392 | |
Forgiveness of related party advance | 7,500 | |
Amortization of debt discount | 1,515,191 | 14,208 |
Interest expense on beneficial conversion feature | 368,757 | 134,108 |
Stock-based compensation | 2,065,721 | 195,808 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (19,800) | |
Deferred expense | 23,568 | (5,978) |
Accounts payable | 561,268 | 161,940 |
Accrued liabilities | 400,003 | (117,490) |
Deferred revenues | (22,758) | 8,023 |
Settlement payable | (24,444) | (36,667) |
Net cash used in operating activities | (1,941,418) | (1,230,654) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (4,194) | |
Related party advances | (500) | |
Deposits and other | 35,460 | (97,695) |
Net cash provided by (used in) investing activities | 31,266 | (98,195) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from common stock issued for cash in public offering | 12,600,000 | |
Offering costs associated with underwriters in public offering | (1,260,000) | |
Proceeds from note payable | 50,000 | |
Proceeds from notes payable - related parties | 300,000 | |
Repayment of note payable | (50,000) | |
Proceeds from convertible debt | 2,778,579 | |
Offering costs | (637,547) | (129,684) |
Proceeds from subscription receivable | 132,695 | |
Proceeds from sale of preferred stock | 300,000 | |
Proceeds from sale of common stock | 892,688 | |
Net cash provided by financing activities | 13,563,727 | 1,413,004 |
Increase in cash and cash equivalents | 11,653,575 | 84,155 |
Cash and cash equivalents, beginning of period | 213,944 | 516,163 |
Cash and cash equivalents, end of period | 11,867,519 | 600,318 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 61,380 | |
Cash paid for income taxes | 2,600 | 800 |
Non cash investing and financing activities: | ||
Interest on subscription receivable | 347 | 694 |
Discount on debt with warrants | 1,107,982 | 84,031 |
Discount from beneficial conversion feature | 368,757 | 134,108 |
Preferred stock converted to common stock | 1,591,886 | |
Conversion of convertible debt and interest | 3,137,008 | |
Debt and accrued interest converted to preferred stock | $ 536,434 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NOTE 1 – NATURE OF OPERATIONS HyreCar Inc. (which may be referred to as “HyreCar,” the “Company,” “we,” “us” or “our”) was incorporated on November 24, 2014 (“Inception”) in the State of Delaware. The Company’s headquarters is located in Los Angeles, California. The Company is a web-based marketplace that allows car and fleet owners to rent their idle cars to Uber and Lyft drivers safely, securely and reliably. The financial statements of HyreCar Inc. are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Initial public offering On June 29, 2018, the Company closed its initial public offering (“IPO”), in which the Company issued and sold 2,520,000 shares of common stock at $5.00 per share for gross proceeds of $12,600,000, net of underwriters’ discounts and commissions totaling $1,260,000. Accordingly, net proceeds from the IPO totaled $11,340,000, before deducting offering costs of $569,665. In connection with the closing of the Company’s IPO, all outstanding shares of convertible preferred stock were converted into 2,429,638 shares of common stock. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation – Unaudited Interim Financial Information The accompanying balance sheet as of June 30, 2018, the statements of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The unaudited interim 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 financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2018 and results of operations and cash flows for the three and six months ended June 30, 2018 and 2017. The financial data and the other information disclosed in these notes to the interim financial statements related to the three and six month periods are unaudited. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto that are included in the prospectus, dated June 26, 2018, that formed a part of the registration statement on Form S-1 (File No. 333-225157), which was declared effective by the SEC on June 26, 2018. 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 increased revenue from operations and the funds raised through the IPO. Based on our current capital and ability to reduce cash burn if needed, as well as the increasing revenues through normal course of business, we believe that substantial doubt about the Company’s ability to continue as a going concern has been alleviated. Use of Estimates The preparation of 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, calculating the reserves for insurance, the measurement of the Company’s stock-based compensation, including the estimation of the underlying deemed fair value of common stock in periods prior to the date of the Company’s IPO, the estimation of the fair value of market-based awards, the valuation of warrants, allowance for doubtful accounts, and the fair value of financial instruments 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 June 30, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, accrued liabilities, notes payable, convertible debt and settlement payable. 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 statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Insurance Liability The Company records a loss reserve for insurance deductible or 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, as it may be amended. This reserve is based on changes to the Company’s insurance policy that occurred during the second quarter of 2018 in relation to the insurance policy in effect for car owners. This reserve represents an estimate for both reported accident 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 June 30, 2018, $162,375 was included in accrued liabilities related to the loss reserve, where the expense is reflected in the general and administrative within the statements of operations. No such liability was recorded as of December 31, 2017 as the Company’s policy was such that it was not responsible for any claims at the time. Offering Costs The Company accounts for offering costs in accordance with Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs were capitalized as deferred offering costs on the balance sheet. The deferred offering costs are netted against the proceeds of the offering in stockholders’ deficit or the related debt, as applicable. Convertible Debt and Warrant Convertible debt is accounted for under the guidelines established by ASC 470-20, Debt with Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion and/or debt issued with warrants, which is treated as a discount to the instruments where derivative accounting does not apply. The discounts are accreted over the term of the debt. The Company calculates the fair value of warrants and conversion features issued with convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except the contractual life of the warrant or conversion feature is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. Preferred Stock ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity. Management is required to determine the presentation for the preferred stock because of the redemption and conversion provisions, among other provisions. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815, Derivatives and Hedging, is not required. Management determined the host contract of the preferred stock is more akin to equity, and accordingly, derivative liability accounting is not required by the Company. The Company has presented preferred stock within stockholders’ equity (deficit) section of the balance sheet. Costs incurred directly for the issuance of the preferred stock were recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. In connection with the closing of the Company’s IPO, all outstanding shares of convertible preferred stock were converted into 2,429,638 shares of common stock. Revenue Recognition The Company recognizes revenue primarily from insurance and transaction fees when a car is rented on the Company’s platform when (a) persuasive evidence an agreement exists which occurs when the rental contract is signed electronically between the two parties involved; (b) the services have been delivered; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured which occurs simultaneously when the booking is accepted and the credit card or account on file is charged. The Company defers revenue where the earnings process is not yet complete. The Company also recognizes revenue from other sources such as referrals, motor vehicle record fees (application fees), late rental fees, and other fees charged to drivers in specific situations. In limited circumstances, the Company provides contingent consideration in the form of a rebate or refund 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. Measurement of the total rebate or refund obligation is based on management estimates using historical data. The following is a breakout of revenue components by subcategory for the three and six months ended June 30, 2018 and 2017: Three Months Three Months Six Months Six Months Insurance and administration fees $ 1,237,443 $ 316,536 $ 2,194,610 $ 566,598 Transaction fees 834,163 281,040 1,529,101 503,061 Other fees 294,165 43,169 444,506 76,410 Incentives and rebates (92,272 ) (9,500 ) (180,535 ) (9,500 ) Net revenue $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 Insurance and transaction fees are charged to a driver in a single transaction. Drivers currently do not have an option to decline insurance at any point during the transaction. Principal Agent Considerations In accordance with ASC 605-45, Revenue Recognition: Principal Agent Considerations, we evaluate 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. Our primary revenue source 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, and motor vehicle records (application fees) 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. Gross billings is an important measure by which we evaluate and manage our business. We define gross billings as the amount billed to drivers and other customers, without any adjustments for amounts paid to owners or refunds. Gross billings include transactions from both our revenues recorded on a net and a gross basis. It is important to note that gross billings is a non-U.S. GAAP measure and as such, is not recorded in our financial statements as revenue. However, we use gross billings to asses our business growth, scale of operations and our ability to generate gross billings is strongly correlated to our ability to generate revenues. Gross billings may also be used to calculate net revenue margin, defined as the Company’s U.S. GAAP reportable revenue over gross billings. The table below sets forth a reconciliation of our U.S. GAAP reported revenues to gross billings as follows: Three Months ended Three Months ended Six Months ended Six Months ended Revenues (U.S. GAAP reported revenues) $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 Add: Refunds, rebates and deferred revenue 146,811 167,518 530,998 303,685 Add: Owner payments (not recorded in financial statements) 2,773,457 1,020,835 5,121,217 1,770,735 Gross billings (non-U.S. GAAP measure not recorded in financial statements) $ 5,193,767 $ 1,819,598 $ 9,639,897 $ 3,210,989 Cost of Revenues Cost of revenues primarily include direct fees paid for driver insurance, merchant processing fees, and motor vehicle record fees incurred for paid driver applications. Stock-Based Compensation The Company accounts for stock options issued to employees under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation cost to employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite vesting period. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model. The Company measures compensation expense for its non-employee stock-based compensation under ASC 505, Equity. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock or equity award on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. Stock-based compensation is included in the statements of operations as follows: Three months ended June 30, 2018 Three Months ended June 30, 2017 Six months ended June 30, 2018 Six Months ended June 30, 2017 General and administrative $ 1,708,917 $ 110,103 $ 1,890,988 $ 110,103 Sales and marketing 105,034 70,858 126,745 70,858 Research and development $ 41,395 $ 14,847 $ 47,988 $ 14,847 Loss per Common Share The Company presents basic loss per share (“EPS”) and diluted EPS on the face of the 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 six months ended June 30, 2018 and 2017, there were 2,526,856 and 984,394 options or warrants excluded, respectively. As of June 30, 2018, and 2017, there were no debts convertible into common stock. As of June 30, 2018, and 2017 there was 0 and 2,429,638 shares of preferred stock convertible into common stock outstanding. As of June 30, 2018, there were 825,000 shares of restricted common stock (Note 5) that were excluded. 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 relies on two insurance agencies to provide all insurance on vehicles in service. The loss of either of these insurance carriers would have a negative effect on our operations. New Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 eliminates the separate accounting model for nonemployee share-based payment awards and generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. The accounting remains different for attribution, which represents how the equity-based payment cost is recognized over the vesting period, and a contractual term election for valuing nonemployee equity share options. ASU 2018-07 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. The Company is in process of assessing the impact of the adoption of ASU 2018-07 on the financial statements. In January 2017, the FASB issued ASU No. 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently reviewing the provisions of the new standard, but it is not expected to have a significant impact on the Company. In February 2016, the FASB issued 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 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, 2018, with early adoption permitted. The Company is currently reviewing the provisions of the new standard. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and has issued subsequent amendments to this guidance. This new standard will replace all current guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for interim and annual periods beginning after December 15, 2017 for public business entities and December 31, 2018 for all other entities. The standard may be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has elected the extended transition period for complying with any new or revised financial accounting standards afforded to emerging growth companies, and is currently reviewing the provisions of the new standard. 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 financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 3 – COMMITMENTS AND CONTINGENCIES Settlement and Legal In September 2015, a claim was made by certain former founders against the Company for violations of the founders’ agreement. The claimants and the Company entered into an arbitration agreement on April 25, 2016 to settle the claim. The settlement stated each of the claimants would maintain 190,177 shares of their common stock (post reverse split as described in Note 5) restricted per the founders’ agreement with the remaining being remitted back to the Company. However, the shares while not separate in class, would not have voting rights until such shares were sold to a non-affiliated third party. The claimants would be diluted upon subsequent money raises, stock option offerings and vesting, however, any dilution would remain consistent and proportional to the remaining founders’ dilution ratios and would not be diluted more than the founders’ ratios in any current or subsequent money raise. The claimants also received a total of $110,000 paid out over eighteen (18) months starting November 1, 2016. As of June 30, 2018 and December 31, 2017, $0 and $24,444 of the balance remained outstanding, all of which are considered short term, respectively. In July 2017, an owner of several vehicles that he was renting through the Company’s platform filed arbitration seeking damages for losses associated with renting his vehicles, specifically losses associated with a claimed stolen vehicle, storage fees, damage/repair fees, an insurance deductible, and purported loss of income due to his inability to rent the stolen/damaged vehicles. In December 2017, the owner also filed a lawsuit in Los Angeles Superior Court reasserting the same claims. The Company believes this action is without merit and is vigorously defending itself, while also exploring whether the dispute can be settled in an expeditious manner. The Company has moved to compel the owner to arbitrate his claims and to stay his Superior Court case. That motion was heard on June 19, 2018 and the court granted the motion to compel arbitration. The Company is involved in claims and litigation from time to time in the normal course of business. At June 30, 2018, the Company believes there are no pending matters, except as noted above, that are expected to have a material adverse effect on the business of the Company, its financial condition, results of operations or cash flows. Agreements In November 2017, the Company entered into a 180-day agreement with a third-party broker/dealer to assist in raising funds under a private placement. For their services, they were to receive five percent (5%) of the gross proceeds under the placement as a success fee defined by the agreement, non-callable warrants equal to ten percent (10%) of the aggregate number of shares of common stock, or in the case of non-convertible securities, the aggregate number of shares of common stock issuable as if the non-convertible securities were convertible into common stock at the public stock price on the date of closing if the Company is public or valuation per share on the date of closing if the Company is private (excluding warrants) sold to potential investors in the placement. The warrants were to entitle the holder to purchase securities of the Company at the same terms as issued under the placement, except that the exercise price of the warrants would be 110% of the lesser of (a) the price at which securities (excluding the value of any warrants) are issued or (b) the exercise price of any warrants issued to entities funding the placement. The agreement also called for $20,000 due upon execution of the agreement and non-accountable expense cash fees equal to three percent (3%) of the gross proceeds due and payable immediately upon the closing of the placement. The compensation terms of this agreement were modified on June 22, 2018 prior to the IPO such that 15,445 warrants were issued with a five year term and exercise price of $2.80. The Company valued the warrants similar to stock options in Note 5 which was recorded as a discount on the related debt, Accordingly, the Company recorded $46,600 of interest expense related to the accretion of the discount upon conversion of the 2018 Convertible Notes. See Note 4 for 2018 Convertible Debt related to this agreement. Other In November 2017, the Company entered into a lease in Los Angeles, California commencing April 1, 2018, with the ability to occupy the facility in January 2018. The lease term is 39 months from the commencement date. Annual base rent is as follows: 2018 - $249,381, 2019 - $342,480, 2020 - $356,145, 2021 - $183,489, respectively. The lease required a deposit of $90,000. Per the lease agreement, the monthly rate will range from $27,708 to $31,167 a month. The Company also rents office furniture and incurs ancillary fees for building services and shared expenses. Rent expense for the six months ended June 30, 2018 and 2017 was $165,566 and $81,209, respectively. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 4 – NOTES PAYABLE 2016 Convertible Notes Payable From June 2016 to September 2016, the Company issued convertible promissory notes (the “2016 Convertible Notes”) to related parties and third parties with the same terms and conditions totaling indebtedness of $500,000 (the “2016 Convertible Debt”), $150,000 of which was borrowed from related parties. The 2016 Convertible Notes bore interest at 12%, with a default rate of 15% and were due three years from the issuance date. The 2016 Convertible Notes were automatically convertible upon 1) the consummation of an investment in the Company’s equity securities of over $250,000 through a single or series of transactions involving the same party or parties and 2) the occurrence of a liquidity event as defined by the 2016 Convertible Notes. The holders had the option to convert the entire unpaid and outstanding principal amount and any accrued interest thereon under the 2016 Convertible Notes on the maturity date. The conversion price was the lesser of 1) that price per share that was eighty percent (80%) of the purchase price per share of the same class and series of equity securities sold by the Company in a qualifying transaction or liquidity event or 2) an amount equal to $4,000,000 divided by the total number of outstanding shares of the Company’s common stock immediately prior to the transaction or liquidity event on a fully-diluted, as-converted basis. In February 2017, the outstanding balance of the 2016 Convertible Notes was converted into Series Seed 1 Convertible Preferred Stock based on the conversion terms noted above due to the closing of a qualifying investment in equity securities. Accordingly, the 2016 Convertible Debt and accrued interest thereon totaling $36,434 was converted into 943,908 shares of Series Seed 1 Convertible Preferred Stock. Upon conversion, the contingent beneficial conversion feature was no longer contingent, and resulted in a discount and immediate accretion of such discount in the amount of $134,108, which was charged to interest expense in the accompanying statement of operations during the three and six months ended June 30, 2017. Interest expense for the 2016 Convertible Debt, including the charge for the beneficial conversion feature, for the three and six months ended June 30, 2017 was $0 and $140,065, respectively. There were no such charges in the 2018 periods presented. 2017 Notes Payable In April and May 2017, the Company issued promissory notes to related parties totaling $300,000 and a third party totaling $50,000 with the same terms and conditions (collectively, the “2017 Notes”) and issued five year warrants to purchase up to 200,000 shares of common stock with an exercise price of $2.10 per share. The Company calculated the relative fair value of the warrants using a Black-Scholes option pricing model with similar inputs as disclosed for stock options in Note 5, resulting in a discount of $84,031. During the three and six months ended June 30, 2018 and 2017, the Company accreted $4,017, $14,208, $25,025 and $14,208 of this discount to interest expense, respectively. The outstanding balance of the 2017 Notes has been repaid as of the filing date. 2018 Convertible Notes and Warrants During the first and second quarter of 2018, pursuant to a securities purchase agreement, the Company issued and sold senior secured convertible promissory notes (the “2018 Convertible Notes”) to accredited investors in the aggregate principal amount of $3,046,281. Gross principal amounts were net of $267,702 withheld for net proceeds of $2,778,579. The Company incurred additional offering costs of $67,882 for a total debt discount of $335,584, which was fully amortized by the IPO date. The 2018 Convertible Notes bore interest at the rate of 13% per annum and were due eight months from the original issue date, which ranged from September to December 2018 (the “Maturity Dates”). The 2018 Convertible Notes provided that the principal and all accrued and unpaid interest on the 2018 Convertible Notes were convertible into shares of common stock at a conversion rate equal to the lesser of $2.5480 per share or seventy percent (70%) of the IPO price per share. Upon pricing the IPO, at the option of the holders, all outstanding principal plus accrued interest underlying the 2018 Convertible Notes was converted into 1,231,165 shares of common stock at a conversion rate of $2.5480. Upon conversion, the contingent beneficial conversion feature was no longer contingent, and resulted in a discount and immediate accretion of such discount in the amount of $368,757 which was charged to interest expense in the accompanying statement of operations during the three and six months ended June 30, 2018. In connection with the issuance of the 2018 Convertible Notes, each holder also received contingent five-year warrants to purchase common stock in an amount equal to 50% of the shares of common stock that the holder was entitled to in connection with the conversion of the holder’s 2018 Convertible Note when such note first became convertible, which was at the time the IPO was priced. Prior to the 2018 Convertible Note being convertible, the holder did not have a right to exercise these warrants. At the IPO pricing date, 615,585 warrants to purchase common stock became exercisable upon the conversion of the outstanding balance of the 2018 Convertible Notes, including accrued interest. The warrants have an exercise price of 125% of the conversion price, or $3.185. The Company calculated the fair value of the warrants at $1,741,334 using a Black-Scholes pricing model. The Company valued the warrants at $2.8288 per warrant using a common stock fair value of $5.00, a term of five years, a volatility of 45% and a risk free interest rate of 2.75%. The Company allocated the debt proceeds on a relative fair value basis between the note and warrant, in which the Company recognized a note discount for $1,107,982. This was immediately recognized in interest expense as of the note conversion date. As of June 30, 2018, all of the warrants were outstanding. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 5 – STOCKHOLDERS’ DEFICIT Reverse Stock Split The Company effected a 1 for 1.8404 reverse stock split for each share of common stock outstanding on May 17, 2017. Unless otherwise stated, all share information herein has been retrospectively adjusted to reflect the reverse stock split. Preferred Stock The Company is authorized to issue 15,000,000 shares of preferred stock, $0.00001 par value per share, all of which shares of preferred stock are undesignated. As described in Note 1, on June 29, 2018, at the closing of the IPO, 2,429,638 shares of outstanding Series Seed 1 Convertible Preferred Stock automatically converted into 2,429,638 shares of common stock. Common Stock The Company is authorized to issue 50,000,000 shares of common stock, $0.00001 par value per share. Private Placement Starting in June 2017, the Company undertook a private placement for the sale of common stock for $1.75 per share. During the year ended December 31, 2017, 1,236,588 shares of common stock were sold for gross proceeds of $2,164,029. Relating to this offering, the Company was required to pay the placement agent for the private placement a cash commission equal to 13% of the gross proceeds and issue the placement agent, or its designees, warrant to purchase shares of common stock equal to 10% the amount of monies raised divided by $1.75. Accordingly, as of December 31, 2017, $281,324 in cash commissions have been paid or are payable along with $38,806 in related legal and other fees, both of which were netted against the gross proceeds of the offering. Based on the amounts raised through December 31, 2017, the Company issued the placement agent warrants to purchase 123,659, exercisable at $2.00 per share. The value of these placement agent warrants, for which similar inputs were used compared to stock options below, are both an increase and reduction to additional paid-in capital for a net zero effect on the gross proceeds of the offering. On June 22, 2018, the placement agent warrants that were to be earned per the description in Note 3, were amended to (i) decrease the amount of shares that can be purchased at an exercise price of $2.00 per share to 60,392 shares of common stock and (ii) reduce the remaining 63,267 shares to 28,993 shares at a modified exercise price of $7.50 per share, due to the fact that such placement agent warrants were earned 180 days immediately preceding the filing date of the IPO registration statement. Shares for Services In December 2017, the Company issued 37,755 shares of common stock for payment of $66,070 in accounts payable related to legal services. Collateralized Restricted Stock Purchases In 2016, the Company issued 1,032,387 shares of restricted common stock to related parties that vest as follows: 33% upon a sale of securities for gross proceeds of at least $250,000 in one or more transactions and the remaining 67% vest monthly over three years, becoming fully vested in April 2019. For consideration of these shares, the related parties entered into note agreements totaling $138,700 that call for the principal and interest to be paid back in ten years from the date of the loan. The notes bear interest at 1%. The loans are secured by the related shares of common stock. On May 31, 2018, the board of directors determined that it was in the best interest of the Company, in order to comply with the requirements of Section 402 of the Sarbanes-Oxley Act of 2002 prior to filing the IPO registration statement with the SEC, to (i) issue a bonus to those related parties serving as an officer and/or director of the Company in the amount owed by each party. Each such related party bonus was used to repay and terminate the note agreements. An aggregate of $131,400 in principal was repaid and terminated along with accrued interest thereon. Remaining balance of $7,392 is outstanding to a related party that is not serving as an officer or director of the Company. As of June 30, 2018, 840,248 shares have vested. Stock Options A summary of our stock option activity for the six months ended June 30, 2018, is as follows: Number of shares Weighted average exercise price Weighted average remaining contractual life (years) Outstanding at December 31, 2017 1,021,171 $ 1.04 9.3 Granted 289,000 4.62 – Exercised – – – Forfeited or expired (29,340 ) 1.42 – Outstanding at June 30, 2018 1,280,831 $ 0.79 9.2 Stock-based compensation expense for stock options for the three months ended June 30, 2018 and 2017 was $182,379 and $140,356, respectively, and $231,296 and $140,356 for the six months ended June 30, 2018, and 2017, respectively. As of June 30, 2018, the total estimated remaining stock-based compensation expense for unvested stock options is $1,469,873 which is expected to be recognized over a weighted average period of 2.23 years. The Company estimates the fair value of stock options that contain service and/or performance conditions using the Black-Scholes option pricing model. The range of input assumptions used by the Company were as follows: Three Months Ended Six Months Ended June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Expected volatility 45% 45% 45% 45% Risk-free interest rate 2.67% 2.56% 2.67% 2.56% Expected life in years 5.39 – 6.25 5.25 – 6.00 5.39 – 6.25 5.25 – 6.00 Expected dividend yield 0% 0% 0% 0% The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeitures rates. Management estimated the fair value of common stock prior to the IPO date by looking at a market approach which takes into consideration past sales of our common and preferred stock, as well Company developments to date. Restricted Shares A summary of activity with our restricted shares for the six months ended June 30, 2018, is as follows: Number of shares Weighted average grant date fair value per share Unvested as of December 31, 2017 – – Granted 1,099,285 $ 5.00 Vested (274,285 ) $ 5.00 Forfeited – – Unvested as of June 30, 2018 825,000 $ 5.00 During the six months ended June 30, 2018, the Company granted 264,285 shares of restricted common stock to three consultants for services. All shares of restricted common stock fully vested upon the IPO. Accordingly, stock-based compensation of $1,321,425 was recognized during the six months ended June 30, 2018. During the six months ended June 30, 2018, the Company also granted 10,000 shares of restricted common stock to a consultant for services which fully vested upon the IPO. The Company recognized stock-based compensation expense of $50,000 during the six months ended June 30, 2018 for the vesting of the 10,000 shares of restricted common stock. In addition, the Company also agreed to issue the consultant an aggregate of 825,000 shares of restricted common stock with the issuance of 275,000 shares of restricted common stock upon each of three milestones. Each of the three milestones has a specific target in which the Company must meet or exceed which include i) gross bookings of rentals, ii) average daily active rentals, or iii) market capitalization. As of June 30, 2018, it is not probable the performance metrics will be met and therefore no compensation expense has been recognized as no shares of restricted common stock have been issued. Warrants Relating to the 2017 Notes as described in Note 4, the Company issued warrants to purchase up to 200,000 shares of common stock with a fixed exercise price of $2.10 per share. Relating to the private placement described above, the Company agreed to issue warrants to the placement agent, equal to 10% the amount of monies raised divided by $1.75. The Company received $2,164,029 in gross funds from the private placement which has earned the placement agent warrants to purchase up to 123,659 shares of common stock with an exercise price of $2.00 per share. On June 22, 2018, such placement agent warrants were amended to (i) decrease the amount of shares that can be purchased at an exercise price of $2.00 per share to 60,392 shares of common stock and (ii) reduce the remaining 63,267 shares to 28,993 shares at a modified exercise price of $7.50 per share, due to the fact that such placement agent warrants were earned 180 days immediately preceding the filing date of the IPO registration statement. Relating to the 2018 Convertible Notes, warrants to purchase up to 615,585 shares of our common stock at a price of $3.185 per share were issued to the holders of such notes, and 15,455 were issued to the broker/dealer. Relating to the IPO, the Company agreed to issue warrants to purchase up to 75,600 shares of common stock to the underwriters in connection with this primary offering. The value of the warrants nets against the equity related funds raised but also is added back to equity for a net zero effect on equity. In June 2018, the Company entered into agreements with two service providers firms pursuant to which the Company agreed to pay cash compensation and issue warrants to purchase up to an aggregate amount of 250,000 shares of common stock. The warrants are fully vested and non-forfeitable. The warrants range from three (3) or five (5) years and are exercisable for $5.00. Accordingly, stock-based compensation of $463,000 was recognized in general and administrative expenses in the accompanying statements of operations. The Company used the Black-Scholes pricing model to value the above warrants, which had similar inputs to stock options included in the stock option section above except for the expected life of the warrants, which was set to match the related term of the warrant. As of June 30, 2018 and December 31, 2017, all warrants were vested. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS Related Party Advances From time to time during the years ended December 31, 2017 and 2016, the Company received advances from related parties for short-term working capital. Such advances are considered short-term and non-interest bearing and due on demand. As of June 30, 2018 and December 31, 2017 $9,629, remained outstanding. During the six months ended June 30, 2017, advances of $7,500 to former officers were forgiven. Insurance The president of the Company’s primary insurance broker, providing gap coverage for vehicles on the platform, when existing policy coverage is not applicable, is also a minority stockholder and holder of 2017 Notes with related warrants. As of June 30, 2018 and December 31, 2017, the Company had outstanding balances to the insurer totaling $0 and $337,882, included in accounts payable, respectively. During the three and six months ended June 30, 2018 and 2017, the Company paid the insurer $960,053, $2,370,946, $699,820 and $931,744, respectively. |
Summary of Significant Accoun12
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation - Unaudited Interim Financial Information | Basis of Presentation – Unaudited Interim Financial Information The accompanying balance sheet as of June 30, 2018, the statements of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The unaudited interim 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 financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2018 and results of operations and cash flows for the three and six months ended June 30, 2018 and 2017. The financial data and the other information disclosed in these notes to the interim financial statements related to the three and six month periods are unaudited. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto that are included in the prospectus, dated June 26, 2018, that formed a part of the registration statement on Form S-1 (File No. 333-225157), which was declared effective by the SEC on June 26, 2018. |
Management Plans | 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 increased revenue from operations and the funds raised through the IPO. Based on our current capital and ability to reduce cash burn if needed, as well as the increasing revenues through normal course of business, we believe that substantial doubt about the Company’s ability to continue as a going concern has been alleviated. |
Use of Estimates | Use of Estimates The preparation of 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, calculating the reserves for insurance, the measurement of the Company’s stock-based compensation, including the estimation of the underlying deemed fair value of common stock in periods prior to the date of the Company’s IPO, the estimation of the fair value of market-based awards, the valuation of warrants, allowance for doubtful accounts, and the fair value of financial instruments |
Fair Value of Financial Instruments | 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 June 30, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, accrued liabilities, notes payable, convertible debt and settlement payable. 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 | Cash and Cash Equivalents For purpose of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. |
Insurance Liability | Insurance Liability The Company records a loss reserve for insurance deductible or 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, as it may be amended. This reserve is based on changes to the Company’s insurance policy that occurred during the second quarter of 2018 in relation to the insurance policy in effect for car owners. This reserve represents an estimate for both reported accident 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 June 30, 2018, $162,375 was included in accrued liabilities related to the loss reserve, where the expense is reflected in the general and administrative within the statements of operations. No such liability was recorded as of December 31, 2017 as the Company’s policy was such that it was not responsible for any claims at the time. |
Offering Costs | Offering Costs The Company accounts for offering costs in accordance with Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs were capitalized as deferred offering costs on the balance sheet. The deferred offering costs are netted against the proceeds of the offering in stockholders’ deficit or the related debt, as applicable. |
Convertible Debt and Warrant | Convertible Debt and Warrant Convertible debt is accounted for under the guidelines established by ASC 470-20, Debt with Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion and/or debt issued with warrants, which is treated as a discount to the instruments where derivative accounting does not apply. The discounts are accreted over the term of the debt. The Company calculates the fair value of warrants and conversion features issued with convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except the contractual life of the warrant or conversion feature is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. |
Preferred Stock | Preferred Stock ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity. Management is required to determine the presentation for the preferred stock because of the redemption and conversion provisions, among other provisions. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815, Derivatives and Hedging, is not required. Management determined the host contract of the preferred stock is more akin to equity, and accordingly, derivative liability accounting is not required by the Company. The Company has presented preferred stock within stockholders’ equity (deficit) section of the balance sheet. Costs incurred directly for the issuance of the preferred stock were recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. In connection with the closing of the Company’s IPO, all outstanding shares of convertible preferred stock were converted into 2,429,638 shares of common stock. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue primarily from insurance and transaction fees when a car is rented on the Company’s platform when (a) persuasive evidence an agreement exists which occurs when the rental contract is signed electronically between the two parties involved; (b) the services have been delivered; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured which occurs simultaneously when the booking is accepted and the credit card or account on file is charged. The Company defers revenue where the earnings process is not yet complete. The Company also recognizes revenue from other sources such as referrals, motor vehicle record fees (application fees), late rental fees, and other fees charged to drivers in specific situations. In limited circumstances, the Company provides contingent consideration in the form of a rebate or refund 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. Measurement of the total rebate or refund obligation is based on management estimates using historical data. The following is a breakout of revenue components by subcategory for the three and six months ended June 30, 2018 and 2017: Three Months Three Months Six Months Six Months Insurance and administration fees $ 1,237,443 $ 316,536 $ 2,194,610 $ 566,598 Transaction fees 834,163 281,040 1,529,101 503,061 Other fees 294,165 43,169 444,506 76,410 Incentives and rebates (92,272 ) (9,500 ) (180,535 ) (9,500 ) Net revenue $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 Insurance and transaction fees are charged to a driver in a single transaction. Drivers currently do not have an option to decline insurance at any point during the transaction. |
Principal Agent Considerations | Principal Agent Considerations In accordance with ASC 605-45, Revenue Recognition: Principal Agent Considerations, we evaluate 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. Our primary revenue source 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, and motor vehicle records (application fees) 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. Gross billings is an important measure by which we evaluate and manage our business. We define gross billings as the amount billed to drivers and other customers, without any adjustments for amounts paid to owners or refunds. Gross billings include transactions from both our revenues recorded on a net and a gross basis. It is important to note that gross billings is a non-U.S. GAAP measure and as such, is not recorded in our financial statements as revenue. However, we use gross billings to asses our business growth, scale of operations and our ability to generate gross billings is strongly correlated to our ability to generate revenues. Gross billings may also be used to calculate net revenue margin, defined as the Company’s U.S. GAAP reportable revenue over gross billings. The table below sets forth a reconciliation of our U.S. GAAP reported revenues to gross billings as follows: Three Months ended Three Months ended Six Months ended Six Months ended Revenues (U.S. GAAP reported revenues) $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 Add: Refunds, rebates and deferred revenue 146,811 167,518 530,998 303,685 Add: Owner payments (not recorded in financial statements) 2,773,457 1,020,835 5,121,217 1,770,735 Gross billings (non-U.S. GAAP measure not recorded in financial statements) $ 5,193,767 $ 1,819,598 $ 9,639,897 $ 3,210,989 |
Cost of Revenues | Cost of Revenues Cost of revenues primarily include direct fees paid for driver insurance, merchant processing fees, and motor vehicle record fees incurred for paid driver applications. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock options issued to employees under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation cost to employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite vesting period. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model. The Company measures compensation expense for its non-employee stock-based compensation under ASC 505, Equity. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock or equity award on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. Stock-based compensation is included in the statements of operations as follows: Three months ended June 30, 2018 Three Months ended June 30, 2017 Six months ended June 30, 2018 Six Months ended June 30, 2017 General and administrative $ 1,708,917 $ 110,103 $ 1,890,988 $ 110,103 Sales and marketing 105,034 70,858 126,745 70,858 Research and development $ 41,395 $ 14,847 $ 47,988 $ 14,847 |
Loss per Common Share | Loss per Common Share The Company presents basic loss per share (“EPS”) and diluted EPS on the face of the 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 six months ended June 30, 2018 and 2017, there were 2,526,856 and 984,394 options or warrants excluded, respectively. As of June 30, 2018, and 2017, there were no debts convertible into common stock. As of June 30, 2018, and 2017 there was 0 and 2,429,638 shares of preferred stock convertible into common stock outstanding. As of June 30, 2018, there were 825,000 shares of restricted common stock (Note 5) that were excluded. |
Concentration of Credit Risk | 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 | Other Concentrations The Company relies on two insurance agencies to provide all insurance on vehicles in service. The loss of either of these insurance carriers would have a negative effect on our operations. |
New Accounting Standards | New Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 eliminates the separate accounting model for nonemployee share-based payment awards and generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. The accounting remains different for attribution, which represents how the equity-based payment cost is recognized over the vesting period, and a contractual term election for valuing nonemployee equity share options. ASU 2018-07 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. The Company is in process of assessing the impact of the adoption of ASU 2018-07 on the financial statements. In January 2017, the FASB issued ASU No. 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently reviewing the provisions of the new standard, but it is not expected to have a significant impact on the Company. In February 2016, the FASB issued 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 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, 2018, with early adoption permitted. The Company is currently reviewing the provisions of the new standard. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and has issued subsequent amendments to this guidance. This new standard will replace all current guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for interim and annual periods beginning after December 15, 2017 for public business entities and December 31, 2018 for all other entities. The standard may be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has elected the extended transition period for complying with any new or revised financial accounting standards afforded to emerging growth companies, and is currently reviewing the provisions of the new standard. 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 financial statements. |
Summary of Significant Accoun13
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of revenue by subcategory | Three Months Three Months Six Months Six Months Insurance and administration fees $ 1,237,443 $ 316,536 $ 2,194,610 $ 566,598 Transaction fees 834,163 281,040 1,529,101 503,061 Other fees 294,165 43,169 444,506 76,410 Incentives and rebates (92,272 ) (9,500 ) (180,535 ) (9,500 ) Net revenue $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 |
Schedule of reconciliation of revenues to gross billings | Three Months ended Three Months ended Six Months ended Six Months ended Revenues (U.S. GAAP reported revenues) $ 2,273,499 $ 631,245 $ 3,987,682 $ 1,136,569 Add: Refunds, rebates and deferred revenue 146,811 167,518 530,998 303,685 Add: Owner payments (not recorded in financial statements) 2,773,457 1,020,835 5,121,217 1,770,735 Gross billings (non-U.S. GAAP measure not recorded in financial statements) $ 5,193,767 $ 1,819,598 $ 9,639,897 $ 3,210,989 |
Schedule of stock based compensation | Three months ended June 30, 2018 Three Months ended June 30, 2017 Six months ended June 30, 2018 Six Months ended June 30, 2017 General and administrative $ 1,708,917 $ 110,103 $ 1,890,988 $ 110,103 Sales and marketing 105,034 70,858 126,745 70,858 Research and development $ 41,395 $ 14,847 $ 47,988 $ 14,847 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of the stock options activity | Number of shares Weighted average exercise price Weighted average remaining contractual life (years) Outstanding at December 31, 2017 1,021,171 $ 1.04 9.3 Granted 289,000 4.62 – Exercised – – – Forfeited or expired (29,340 ) 1.42 – Outstanding at June 30, 2018 1,280,831 $ 0.79 9.2 |
Schedule of Black Scholes pricing model with range of inputs | Three Months Ended Six Months Ended June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Expected volatility 45% 45% 45% 45% Risk-free interest rate 2.67% 2.56% 2.67% 2.56% Expected life in years 5.39 – 6.25 5.25 – 6.00 5.39 – 6.25 5.25 – 6.00 Expected dividend yield 0% 0% 0% 0% |
Schedule of unvested restricted shares | Number of shares Weighted average grant date fair value per share Unvested as of December 31, 2017 – – Granted 1,099,285 $ 5.00 Vested (274,285 ) $ 5.00 Forfeited – – Unvested as of June 30, 2018 825,000 $ 5.00 |
Nature of Operations (Details)
Nature of Operations (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Jun. 29, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Nature of Operations (Textual) | |||
Proceeds from the IPO | $ (1,260,000) | ||
Initial Public Offering [Member] | |||
Nature of Operations (Textual) | |||
Issued of shares of common stock | 2,520,000 | ||
Sale of stock price | $ 5 | ||
Offering costs | $ 569,665 | ||
Convertible preferred stock | 2,429,638 | ||
Proceeds from the IPO | $ 11,340,000 | ||
Aggregate proceeds of underwriters | 12,600,000 | ||
Underwriters' discounts and commissions | $ 1,260,000 |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Insurance and administration fees | $ 1,237,443 | $ 316,536 | $ 2,194,610 | $ 566,598 |
Transaction fees | 834,163 | 281,040 | 1,529,101 | 503,061 |
Other fees | 294,165 | 43,169 | 444,506 | 76,410 |
Incentives and rebates | (92,272) | (9,500) | (180,535) | (9,500) |
Net revenue | $ 2,273,499 | $ 631,245 | $ 3,987,682 | $ 1,136,569 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Revenues (U.S. GAAP reported revenues) | $ 2,273,499 | $ 631,245 | $ 3,987,682 | $ 1,136,569 |
Add: Refunds, rebates and deferred revenue | 146,811 | 167,518 | 530,998 | 303,685 |
Add: Owner payments (not recorded in financial statements) | 2,773,457 | 1,020,835 | 5,121,217 | 1,770,735 |
Gross billings (non-U.S. GAAP measure not recorded in financial statements) | $ 5,193,767 | $ 1,819,598 | $ 9,639,897 | $ 3,210,989 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
General and administrative [Member] | ||||
Share based compensation expensed | $ 1,708,917 | $ 110,103 | $ 1,890,988 | $ 110,103 |
Sales and marketing [Member] | ||||
Share based compensation expensed | 105,034 | 70,858 | 126,745 | 70,858 |
Research and development [Member] | ||||
Share based compensation expensed | $ 41,395 | $ 14,847 | $ 47,988 | $ 14,847 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Summary of Significant Accounting Policies (Textual) | ||
Antidiluted securities | 2,526,856 | 984,394 |
Convertible preferred stock | 0 | 2,429,638 |
Cash insured by the FDIC | $ 250,000 | |
Accrued liabilities related to self-insurance reserves | $ 162,375 | |
Restricted common stock, shares | 825,000 | |
Initial Public Offering [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Convertible preferred stock | 2,429,638 | |
Convertible Debt [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Convertible preferred stock |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Apr. 25, 2016 | Nov. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Nov. 01, 2016 |
Commitments and Contingencies (Textual) | ||||||
Loss contingency, settlement shares | 190,177 | |||||
Loss contingency receivable | $ 0 | $ 24,444 | $ 110,000 | |||
Private placement, description | The Company entered into a 180-day agreement with a third-party broker/dealer to assist in raising funds under a private placement. For their services, they were to receive five percent (5%) of the gross proceeds under the placement as a success fee defined by the agreement, non-callable warrants equal to ten percent (10%) of the aggregate number of shares of common stock, or in the case of non-convertible securities, the aggregate number of shares of common stock issuable as if the non-convertible securities were convertible into common stock at the public stock price on the date of closing if the Company is public or valuation per share on the date of closing if the Company is private (excluding warrants) sold to potential investors in the placement. The warrants were to entitle the holder to purchase securities of the Company at the same terms as issued under the placement, except that the exercise price of the warrants would be 110% of the lesser of (a) the price at which securities (excluding the value of any warrants) are issued or (b) the exercise price of any warrants issued to entities funding the placement. The agreement also called for $20,000 due upon execution of the agreement and non-accountable expense cash fees equal to three percent (3%) of the gross proceeds due and payable immediately upon the closing of the placement. The compensation terms of this agreement were modified on June 22, 2018 prior to the IPO such that 15,445 warrants were issued with a five year term and exercise price of $2.80. The Company valued the warrants similar to stock options in Note 5 which was recorded as a discount on the related debt, Accordingly, the Company recorded $46,600 of interest expense related to the accretion of the discount upon conversion of the 2018 Convertible Notes. See Note 4 for 2018 Convertible Debt related to this agreement. | |||||
Rent expenses | $ 165,566 | $ 81,209 | ||||
Lease term | 39 months | |||||
Annual base rent 2018 | $ 249,381 | |||||
Annual base rent 2019 | 342,480 | |||||
Annual base rent 2020 | 356,145 | |||||
Annual base rent 2021 | 183,489 | |||||
Lease deposit | 90,000 | |||||
Minimum [Member] | ||||||
Commitments and Contingencies (Textual) | ||||||
Monthly rate rent | 27,708 | |||||
Maximum [Member] | ||||||
Commitments and Contingencies (Textual) | ||||||
Monthly rate rent | $ 31,167 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||||
Feb. 28, 2017 | May 31, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Notes Payable (Textual) | |||||||||
Borrowed from related parties | $ 300,000 | ||||||||
Interest expenses | $ 134,108 | 134,108 | |||||||
Warrants exercise price | $ 5 | $ 5 | |||||||
Accreted discount to interest expense | $ 1,515,191 | 14,208 | |||||||
Net proceeds | 2,778,579 | ||||||||
Additional offering costs | $ 135,608 | ||||||||
2016 Convertible Notes Payable [Member] | |||||||||
Notes Payable (Textual) | |||||||||
Convertible Debt | $ 500,000 | ||||||||
Borrowed from related parties | $ 150,000 | ||||||||
Percentage of convertible debt bore interest rate | 12.00% | ||||||||
Percentage of default interest rate | 15.00% | ||||||||
Description of debt convertible | The 2016 Convertible Notes were automatically convertible upon 1) the consummation of an investment in the Company’s equity securities of over $250,000 through a single or series of transactions involving the same party or parties and 2) the occurrence of a liquidity event as defined by the 2016 Convertible Notes. The holders had the option to convert the entire unpaid and outstanding principal amount and any accrued interest thereon under the 2016 Convertible Notes on the maturity date. The conversion price was the lesser of 1) that price per share that was eighty percent (80%) of the purchase price per share of the same class and series of equity securities sold by the Company in a qualifying transaction or liquidity event or 2) an amount equal to $4,000,000 divided by the total number of outstanding shares of the Company’s common stock immediately prior to the transaction or liquidity event on a fully-diluted, as-converted basis. | ||||||||
Due in date of issuance | 3 years | ||||||||
Convertible notes converted amount | $ 36,434 | ||||||||
Accrued interest totaling | $ 36,434 | ||||||||
Converted into shares | 943,908 | ||||||||
Interest expenses | 0 | 140,065 | |||||||
2017 Notes Payable [Member] | |||||||||
Notes Payable (Textual) | |||||||||
Convertible Debt | $ 50,000 | ||||||||
Borrowed from related parties | $ 300,000 | ||||||||
Interest expenses | $ 4,017 | $ 14,208 | $ 25,025 | $ 14,208 | |||||
Warrants to purchase of common stock | 200,000 | ||||||||
Warrants exercise price | $ 2.10 | ||||||||
Warrant term | 5 years | ||||||||
Debt instrument accreted amount | $ 84,031 | ||||||||
2018 Convertible Notes and Warrants [Member] | |||||||||
Notes Payable (Textual) | |||||||||
Percentage of convertible debt bore interest rate | 13.00% | 13.00% | 13.00% | ||||||
Debt instrument accreted amount | $ 335,584 | $ 335,584 | $ 335,584 | ||||||
Aggregate principal amount | 3,046,281 | 3,046,281 | |||||||
Net proceeds | 2,778,579 | 2,778,579 | |||||||
Gross principal amount | 267,702 | 267,702 | |||||||
Additional offering costs | $ 67,882 | $ 67,882 | $ 67,882 | ||||||
Conversion of bridge notes, description | The 2018 Convertible Notes provided that the principal and all accrued and unpaid interest on the 2018 Convertible Notes were convertible into shares of common stock at a conversion rate equal to the lesser of $2.5480 per share or seventy percent (70%) of the IPO price per share. Upon pricing the IPO, at the option of the holders, all outstanding principal plus accrued interest underlying the 2018 Convertible Notes was converted into 1,231,165 shares of common stock at a conversion rate of $2.5480. Upon conversion, the contingent beneficial conversion feature was no longer contingent, and resulted in a discount and immediate accretion of such discount in the amount of $368,757 which was charged to interest expense in the accompanying statement of operations during the three and six months ended June 30, 2018. In connection with the issuance of the 2018 Convertible Notes, each holder also received contingent five-year warrants to purchase common stock in an amount equal to 50% of the shares of common stock that the holder was entitled to in connection with the conversion of the holder’s 2018 Convertible Note when such note first became convertible, which was at the time the IPO was priced. Prior to the 2018 Convertible Note being convertible, the holder did not have a right to exercise these warrants. At the IPO pricing date, 615,585 warrants to purchase common stock became exercisable upon the conversion of the outstanding balance of the 2018 Convertible Notes, including accrued interest. The warrants have an exercise price of 125% of the conversion price, or $3.185. The Company calculated the fair value of the warrants at $1,741,334 using a Black-Scholes pricing model. The Company valued the warrants at $2.8288 per warrant using a common stock fair value of $5.00, a term of five years, a volatility of 45% and a risk free interest rate of 2.75%. The Company allocated the debt proceeds on a relative fair value basis between the note and warrant, in which the Company recognized a note discount for $1,107,982. This was immediately recognized in interest expense as of the note conversion date. As of June 30, 2018, all of the warrants were outstanding. |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Number of Shares | ||
Number of Shares, Granted | 1,099,285 | |
Stock Options [Member] | ||
Number of Shares | ||
Number of Shares, Outstanding | 1,021,171 | |
Number of Shares, Granted | 289,000 | |
Number of Shares, Exercised | ||
Number of shares, Forfeited or expired | (29,340) | |
Number of Shares, Outstanding | 1,280,831 | 1,021,171 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price, Outstanding | $ 1.04 | |
Weighted Average Exercise Price, Granted | 4.62 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited or expired | 1.42 | |
Weighted Average Exercise Price, Outstanding | $ 0.79 | $ 1.04 |
Weighted average remaining contractual life (years) | 9 years 2 months 12 days | 9 years 3 months 19 days |
Stockholders' Deficit (Details
Stockholders' Deficit (Details 1) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Expected volatility | 45.00% | 45.00% | 45.00% | 45.00% |
Risk-free interest rate | 2.67% | 2.56% | 2.67% | 2.56% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Minimum [Member] | ||||
Expected life in years | 5 years 4 months 20 days | 5 years 2 months 30 days | 5 years 4 months 20 days | 5 years 2 months 30 days |
Maximum [Member] | ||||
Expected life in years | 6 years 2 months 30 days | 6 years | 6 years 2 months 30 days | 6 years |
Stockholders' Deficit (Detail24
Stockholders' Deficit (Details 2) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of shares | |
Number of shares, Unvested as of December 31, 2017 | shares | |
Number of shares, Granted | shares | 1,099,285 |
Number of shares, Vested | shares | (274,285) |
Number of shares, Forfeited | shares | |
Number of shares, Unvested as of June 30, 2018 | shares | 825,000 |
Weighted average grant date fair value per share | |
Weighted average grant date fair value per share, Unvested as of December 31, 2017 | $ / shares | |
Weighted average grant date fair value per share, Granted | $ / shares | 5 |
Weighted average grant date fair value per share, Vested | $ / shares | 5 |
Weighted average grant date fair value per share, Forfeited | $ / shares | |
Weighted average grant date fair value per share, Unvested as of June 30, 2018 | $ / shares | $ 5 |
Stockholders' Deficit (Detail25
Stockholders' Deficit (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 29, 2018 | Jun. 22, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders' Deficit (Textual) | ||||||||
Reverse stock split, description | 1 for 1.8404 reverse stock split for each share of common stock outstanding on May 17, 2017. | |||||||
Preferred stock, par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Preferred stock, authorized | 15,000,000 | 15,000,000 | 15,000,000 | |||||
Common stock authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||||
Common stock par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Non-vested granted forfeitable shares | ||||||||
Shares based compensation | $ 2,065,721 | $ 195,808 | ||||||
Forgave advances due totaling | 500 | |||||||
Description of collateralized restricted stock purchases | The Company issued 1,032,387 shares of restricted common stock to related parties that vest as follows: 33% upon a sale of securities for gross proceeds of at least $250,000 in one or more transactions and the remaining 67% vest monthly over three years, becoming fully vested in April 2019. For consideration of these shares, the related parties entered into note agreements totaling $138,700 that call for the principal and interest to be paid back in ten years from the date of the loan. The notes bear interest at 1%. The loans are secured by the related shares of common stock. On May 31, 2018, the board of directors determined that it was in the best interest of the Company, in order to comply with the requirements of Section 402 of the Sarbanes-Oxley Act of 2002 prior to filing the IPO registration statement with the SEC, to (i) issue a bonus to those related parties serving as an officer and/or director of the Company in the amount owed by each party. Each such related party bonus was used to repay and terminate the note agreements. An aggregate of $131,400 in principal was repaid and terminated along with accrued interest thereon. Remaining balance of $7,392 is outstanding to a related party that is not serving as an officer or director of the Company. As of June 30, 2018, 840,248 shares have vested. | |||||||
Stock option expense | $ 182,379 | $ 140,356 | $ 231,296 | $ 140,356 | ||||
Number of Shares, Granted | 1,099,285 | |||||||
Stock-based compensation | $ 1,321,425 | |||||||
Stock-based compensation expenses, description | The Company also granted 10,000 shares of restricted common stock to a consultant for services which fully vested upon the IPO. The Company recognized stock-based compensation expense of $50,000 during the six months ended June 30, 2018 for the vesting of the 10,000 shares of restricted common stock. In addition, the Company also agreed to issue the consultant an aggregate of 825,000 shares of restricted common stock with the issuance of 275,000 shares of restricted common stock upon each of three milestones. Each of the three milestones has a specific target in which the Company must meet or exceed which include i) gross bookings of rentals, ii) average daily active rentals, or iii) market capitalization. As of June 30, 2018, it is not probable the performance metrics will be met and therefore no compensation expense has been recognized as no shares of restricted common stock have been issued. | |||||||
Warrant exercise price | $ 5 | $ 5 | ||||||
Cash compensation and warrants | 250,000 | |||||||
Stock-based compensation [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Stock-based compensation | $ 463,000 | |||||||
Convertible Debt [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Stock issued services | 15,455 | |||||||
Warrants to purchase common stock | 615,585 | |||||||
Warrant exercise price | $ 3.185 | $ 3.185 | ||||||
Minimum [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Warrants term | 3 years | |||||||
Maximum [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Warrants term | 5 years | |||||||
Consultants [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Stock issued services | 37,755 | |||||||
Legal services value | $ 66,070 | |||||||
Private Placement [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Sale of common stock per shares | $ 1.75 | $ 1.75 | ||||||
Common shares sold | 1,236,588 | |||||||
Gross proceeds of private placement | $ 2,164,029 | |||||||
Commissions amount | 281,324 | |||||||
Legal and other fees | $ 38,806 | |||||||
Placement agent warrants to purchase | 123,659 | |||||||
Warrant exercise price | $ 2 | |||||||
Initial Public Offering [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Designated shares | 2,429,638 | 2,429,638 | ||||||
Sale of common stock per shares | $ 5 | |||||||
Common shares sold | 2,520,000 | |||||||
Warrants to purchase of common stock shares | 75,600 | |||||||
Warrant [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Warrants to purchase common stock | 60,392 | 123,659 | 200,000 | |||||
Warrants, exercisable | $ 2.10 | |||||||
Received gross private placement | $ 2,164,029 | |||||||
Warrant exercise price | $ 2 | $ 2 | $ 2 | |||||
Warrant One [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Warrants to purchase common stock | 28,993 | |||||||
Warrant remaining shares | 63,267 | |||||||
Warrant exercise price | $ 7.50 | |||||||
Stock Options [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Stock-based compensation expense for unvested stock options | 1,469,873 | 1,469,873 | ||||||
Stock-based compensation expense weighted average period term | 2 years 2 months 23 days | |||||||
Number of Shares, Granted | 289,000 | |||||||
2016 Incentive Plan [Member] | ||||||||
Stockholders' Deficit (Textual) | ||||||||
Number of Shares, Granted | 264,285 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||||
Related party outstanding | $ 9,629 | $ 9,629 | ||
Outstanding balances to insurer | 0 | $ 337,882 | ||
Payment to insurer | $ 960,053 | $ 2,370,946 | ||
Advances of former officers | $ 7,500 |