NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Note
1 - Organization and Basis of Presentation
Organization
and Line of Business
Rideshare
Rental, Inc. (the “Company”) was incorporated on June 21, 2016 under the laws of the state of Delaware originally
as a limited liability company and subsequently changed to a C corporation. On September 11, 2020, the Company changed its name
from YayYo, Inc. to Rideshare Rental, Inc. The accompanying financial statements are retroactively restated to present the Company
as a C corporation from June 21, 2016. The Company’s operations at present consist entirely of the rental of cars
to Uber and Lyft drivers.
Basis
of Presentation
The
accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America
(GAAP).
Risk
and Uncertainties
We have identified the impact of the COVID-19
pandemic as a risk and uncertainty that has had a material impact on our operating results throughout the nine months ended September
30, 2020, and that we expect to have a potentially material effect on our future. For further information on how COVID-19 has
affected our operating results and the ongoing risk it presents, we refer you to both Management’s Discussion and Analysis of
Financial Condition and Results of Operations included in Item 2 of this Part I of this quarterly report on Form 10-Q, and to
the risk factor included in Item 1A of Part II.
Interim
financial statements
The
unaudited condensed consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the
Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments, consisting only
of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial
position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures
normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United
States of America were omitted pursuant to such rules and regulations. The results of operations for the nine months ended September
30, 2020 are not necessarily indicative of the results expected for the year ending December 31, 2020.
Note
2 – Summary of Significant Accounting Policies
Principles
of Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned operating subsidiaries, Distinct Cars, LLC and RideShare
Car Rentals, LLC along with two other wholly-owned subsidiaries that have not had operations to date. All significant intercompany
transactions and balances have been eliminated.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material
to the Company due to the levels of subjectivity and judgment involved.
Cash
Equivalents
For
the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid
debt instruments with original maturities of three months or less.
Equipment
and Rental Vehicles
Equipment
and Rental Vehicles are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions,
renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment
and rental vehicles is provided using the straight-line method for substantially all assets with estimated lives as follows:
Computer
equipment
|
5
years
|
Vehicles
|
5
years
|
Long-Lived
Assets
The
Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which
the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined
in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at September 30, 2020,
the Company determined that no impairment charge was necessary.
Revenue
Recognition
The
Company recognizes revenue from fees generated through renting its fleet of cars to Uber and Lyft drivers. Revenue is recognized
based on the terms of our rental agreements, which are generally entered into on a weekly basis. The Company
recognizes revenue in accordance with FASB ASC 606, Revenue From Contracts with Customers.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the
asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount
of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more
likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial
statements.
Stock-Based
Compensation
The
Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation.
FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the
grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement
of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.
There were 1,631,250 warrants and 3,221,000 options outstanding as of September 30, 2020.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Basic
and Diluted Earnings Per Share
Earnings
per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”)
is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive
securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants
are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby
were used to purchase common stock at the average market price during the period. There were 4,852,250 potentially dilutive securities
outstanding at September 30, 2020. Basic and diluted earnings per share is the same for all periods presented since the potentially
dilutive securities are anti-dilutive due to the net losses incurred.
Advertising
Costs
The
Company expenses the cost of advertising as incurred. Advertising costs for the nine months ended September 30, 2020 and 2019
were $324,546 and $182,645, respectively.
Fair
Value Measurements
The
Company applies the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines
fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
|
|
|
|
|
●
|
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.
|
|
|
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
For
certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including
convertible notes payable, each qualify as financial instruments and are a reasonable estimate of their fair values because of
the short period of time between the origination of such instruments and their expected realization and their current market rate
of interest.
At
September 30, 2020 and December 31, 2019, the Company did not identify any liabilities that are required to be presented on the
balance sheet at fair value.
Recent
Accounting Pronouncements
In
June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies
the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such
payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January
1, 2019. Early adoption is permitted. The adoption of this ASU did not have an impact on its financial statements.
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue
recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace
it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue
based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure
about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective
for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods
beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either
retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on January
1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the
Company’s financial statements and disclosures.
In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income
Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general
principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for
fiscal years beginning after December 15, 2021. The guidance in this update has various elements, some of which are applied on
a prospective basis and others on a retrospective basis with earlier application permitted. The Company is currently evaluating
the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Note
3 – Equipment
At
September 30, 2020 and December 31, 2019 equipment consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Computer equipment
|
|
$
|
6,046
|
|
|
$
|
6,046
|
|
|
|
|
6,046
|
|
|
|
6,046
|
|
Less accumulated depreciation
|
|
|
(3,766
|
)
|
|
|
(2,651
|
)
|
Equipment, net
|
|
$
|
2,280
|
|
|
$
|
3,395
|
|
Depreciation
expense for equipment for the nine months ended September 30, 2020 and 2019 was $1,115 and $211, respectively.
Note
4 – Rental Vehicles
At
September 30, 2020 and December 31, 2019, all of the Company’s rental vehicles consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Rental vehicles
|
|
$
|
9,622,805
|
|
|
$
|
6,284,211
|
|
|
|
|
9,622,805
|
|
|
|
6,284,211
|
|
Less accumulated depreciation
|
|
|
(2,482,516
|
)
|
|
|
(1,547,164
|
)
|
Rental vehicles, net
|
|
$
|
7,140,289
|
|
|
$
|
4,737,047
|
|
The
Company’s leased assets, consisting of vehicles, are depreciated over their estimated useful life of five years. Depreciation
expense for leased assets for the nine months ended September 30, 2020 and 2019 was $1,045,960 and $730,399, respectively. The
lease terms are generally for 30 to 36 months and the Company has the right to purchase the leased assets at the end of the lease
terms for generally a nominal amount.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Note
5 – Notes Payable
Notes
payable at September 30, 2020 and December 31, 2019 consisted of the following:
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
Notes
payable to individual investors; accrue interest at 8% per annum; principal payments equal to 1/12 of original balance plus
interest due quarterly; due from dates ranging from August 9, 2020 to March 26, 2021; unsecured (A)
|
|
$
|
309,667
|
|
|
|
319,667
|
|
Note
payable to the Small Business Administration. The note bears interest at 3.75% per annum, requires monthly payments of $731
after 12 months from funding and is due 30 years from the date of issuance.
|
|
|
149,900
|
|
|
|
-
|
|
Note
payable issued under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”)
Act. The loan has terms of 24 months and accrues interest at 1% per annum. The Company expects some or all of this loan to
be forgiven as provided for in the CARES Act.
|
|
|
192,775
|
|
|
|
-
|
|
Total
notes payable
|
|
|
652,342
|
|
|
|
319,667
|
|
Unamortized
debt discount
|
|
|
(4,570
|
)
|
|
|
(32,289
|
)
|
Notes
payable, net discount
|
|
|
647,772
|
|
|
|
287,378
|
|
Less
current portion
|
|
|
(497,872
|
)
|
|
|
(287,378
|
)
|
Long-term
portion
|
|
$
|
149,900
|
|
|
$
|
0
|
|
(A)
In connection with the issuance of these notes payable in 2018 and 2017, the Company also issued an aggregate of 24,050 shares
of its common stock to these note holders as additional incentive to make the loans. The aggregate relative fair value of these
shares of common stock was $119,875 and was recorded as a discount on the note payable and as additional paid in capital. The
discount of $119,875 is being amortized over the term of the notes payable. During the nine months ended September 30, 2020 and
2019, $27,719 and $29,860, respectively, was charged to interest expense as amortization of the discounts, with an unamortized
balance of $4,570 at September 30, 2020.
A
rollforward of notes payable from December 31, 2019 to September 30, 2020 is below:
Notes
payable, December 31, 2019
|
|
$
|
287,378
|
|
Issued
for cash
|
|
|
342,675
|
|
Repayments
|
|
|
(10,000
|
)
|
Amortization
of debt discounts
|
|
|
27,719
|
|
Notes
payable, September 30, 2020
|
|
$
|
647,772
|
|
Note
6 – Lease Obligations
Lease
obligations at September 30, 2020 and December 31, 2019 consisted of the following:
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Lease
obligations
|
|
$
|
3,667,772
|
|
|
$
|
2,400,565
|
|
Less
current portion
|
|
|
(1,689,534
|
)
|
|
|
(1,416,446
|
)
|
Long-term
portion
|
|
$
|
1,978,238
|
|
|
$
|
984,119
|
|
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
A
rollforward of lease obligations from December 31, 2019 to September 30, 2020 is below:
Lease
obligations, December 31, 2019
|
|
$
|
2,400,565
|
|
New
lease obligations
|
|
|
3,705,417
|
|
Disposal
of leased vehicles
|
|
|
(420,295
|
)
|
Payments
on lease obligations
|
|
|
(2,017,915
|
)
|
Lease
obligations, September 30, 2020
|
|
$
|
3,667,772
|
|
Future
payments under lease obligations are as follows:
Twelve
months ending September 30,
|
|
|
|
2021
|
|
$
|
1,844,204
|
|
2022
|
|
|
1,126,489
|
|
2023
|
|
|
472,290
|
|
2024
|
|
|
488,362
|
|
Total
payments
|
|
|
3,931,345
|
|
Amount
representing interest
|
|
|
(263,573
|
)
|
Lease
obligation, net
|
|
$
|
3,667,772
|
|
Note
7 – Stockholders’ Equity
The
Company authorized 100,000,000 shares of capital stock with consists of 90,000,000 shares of common stock, $0.000001 par value
per share and 10,000,000 shares of preferred stock, $0.000001 par value per share.
Common
Stock
During
the nine months ended September 30, 2020, the Company sold an aggregate of 2,553,571 shares of common stock to three investors
for cash proceeds of $275,000, of which 125,000 shares and $25,000 was to a member of the Company’s board of directors.
Stock
Options
The
following is a summary of stock option activity:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Options
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Outstanding
|
|
|
Price
|
|
|
Life
|
|
|
Value
|
|
Outstanding,
December 31, 2019
|
|
|
300,000
|
|
|
$
|
8.00
|
|
|
|
1.00
|
|
|
$
|
-
|
|
Granted
|
|
|
4,005,000
|
|
|
|
1.63
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,084,000
|
)
|
|
|
4.00
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
September 30, 2020
|
|
|
3,221,000
|
|
|
$
|
1.43
|
|
|
|
4.03
|
|
|
$
|
-
|
|
Exercisable,
September 30, 2020
|
|
|
1,853,458
|
|
|
$
|
2.32
|
|
|
|
3.48
|
|
|
$
|
-
|
|
The
exercise price for options outstanding and exercisable at September 30, 2020:
Outstanding
|
|
|
Exercisable
|
|
Number
of
|
|
|
Exercise
|
|
|
Number
of
|
|
|
Exercise
|
|
Options
|
|
|
Price
|
|
|
Options
|
|
|
Price
|
|
|
2,505,000
|
|
|
$
|
0.22
|
|
|
|
1,137,458
|
|
|
$
|
0.22
|
|
|
416,000
|
|
|
|
4.00
|
|
|
|
416,000
|
|
|
|
4.00
|
|
|
300,000
|
|
|
|
8.00
|
|
|
|
300,000
|
|
|
|
8.00
|
|
|
3,221,000
|
|
|
|
|
|
|
|
1,853,458
|
|
|
|
|
|
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
The
following is a summary of warrant activity:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Warrants
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Outstanding
|
|
|
Price
|
|
|
Life
|
|
|
Value
|
|
Outstanding,
December 31, 2019
|
|
|
1,631,250
|
|
|
$
|
4.08
|
|
|
|
3.38
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
September 30, 2020
|
|
|
1,631,250
|
|
|
$
|
4.08
|
|
|
|
2.63
|
|
|
$
|
-
|
|
Exercisable,
September 30, 2020
|
|
|
1,631,250
|
|
|
$
|
4.08
|
|
|
|
2.63
|
|
|
$
|
-
|
|
The
exercise price for warrants outstanding at September 30, 2020:
Outstanding
and Exerciseable
|
|
Number
of
|
|
|
Exercise
|
|
Warrants
|
|
|
Price
|
|
|
1,500,000
|
|
|
$
|
4.00
|
|
|
131,250
|
|
|
|
5.00
|
|
|
1,631,250
|
|
|
|
|
|
Note
8 – Related Party Transactions
Beginning
on February 1, 2019, the Company entered into a consulting agreement with the individual who currently serves as its
Chief Executive Officer and director, paid him $167,000 pursuant to this consulting agreement, and terminated
it effective September 1, 2019. Also during the nine months ended September 30, 2020, the Company’s CEO and director
advanced the Company $200,000 and the Company repaid $150,000. At September 30, 2020, $50,000 was owed to the Company’s
CEO and director related to this advance.
During
the nine months ended September 30, 2020 and 2019, the Company expensed $32,173 and $138,747, respectively, in advertising expenses
from a company whose CEO was also a former director of the Company. At September 30, 2020 and December 31, 2019, $324,920 and
$394,183, respectively, was owed to this company and is included in accounts payable in the accompanying consolidated balance
sheets.
During
the nine months ended September 30, 2020 and 2019, the Company expensed $1,715,237 and $1,569,919, respectively, in insurance
expense related to insuring the Company fleet of vehicles from an insurance brokerage firm whose owner is also a stockholder of
the Company. At September 30, 2020 and December 31, 2019, $367,466 and $171,665, respectively, was owed to this insurance brokerage
from and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.
Note
9 – Contingencies
Legal
Proceedings
From
time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation
is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. Other
than what is disclosed herein, the Company is currently not aware of any legal proceedings or potential claims against it whose
outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business,
financial condition, operating results, or cash flows.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Social
Reality Inc. v. YayYo, Inc.
This
action was filed on February 11, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff
Social Reality Inc. is a media company that the Company had contracted with to provide certain specified services.
Plaintiff has sued the Company for breach of contract and related causes of action, arising from claims that the Company has failed
to pay for outstanding invoices for services rendered, which the Company disputes. The plaintiff filed a motion for prejudgment
attachment which was heard on July 28, 2020. The Superior Court denied the writ of attachment on the merits. The parties had a
case management conference in October 2020. The Company believes that it has both valid defenses and counterclaims
to the lawsuit, and will vigorously defend against it.
Anthony
Davis v. YayYo, Inc., and Ramy El-Batrawi
This
action was filed on March 5, 2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff
Anthony Davis acted as the Company’s Chief Executive Officer from approximately December 2016 through
April 2017 Mr. El-Batrawi is the founder of the Company and our current Chief Executive Officer and one of our
directors, and was involved, the complaint alleges, in Plaintiff’s hiring and termination. As part of his severance
compensation, Mr. Davis was granted stock options in the Company. Mr. Davis claims that the Company breached its
agreement to award him certain stock options and includes a claim for wage and hour violations. The lawsuit also seeks
declaratory and injunctive relief. Mr. Davis also included a claim under California Unfair Practices Act. The Company
denies all liability, asserts that it has paid Davis all amounts due to him under his separation agreement with the
Company, and intends to vigorously defend against this lawsuit.
Ivan
Rung v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV27876
This action was filed on July 22,
2020, in the Superior Court of the State of California for the County of Los Angeles. Plaintiff Ivan Rung claimed to have
purchased the Company’s stock and purported to bring a securities class action on behalf of all purchasers of the
Company’s stock, pursuant to the Registration Statement and Prospectus filed with the SEC in connection with the
Company’s November 13, 2019 initial public stock offering (“IPO”). The complaint alleged misrepresentations
and material omissions in its IPO-related disclosure. In its answer, the Company denied liability and asserted that it
accurately and completely disclosed all material facts and occurrences, including adverse ones, in its Registration
Statement, related public filings and other public statements, and further asserted that the Complaint’s alleged
violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), are baseless.
Plaintiff’s counsel voluntarily dismissed this action on August 31, 2020, after admitting that Mr. Rung was not a
suitable class representative. Instead plaintiff’s counsel are pursuing the highly similar case brought by Michael
Vanbecelaere, as described below.
Michael
Vanbecelaere v. YayYo, Inc., Ramy El-Batrawi, et al., 20STCV28066
This action was filed on July 23, 2020,
in the Superior Court of the State of California for the County of Los Angeles, also as a purported class action. Plaintiff Michael
Vanbecelaere claims to have purchased the Company’s stock “traceable to the IPO” and brings a securities class
action pursuant to Sections 11 and 15 of the Securities Act on behalf of all purchasers of the Company’s stock. The complaint
alleges that there were materially false statements and material omissions in the Registration Statement and Prospectus filed
with the SEC and provided to prospective investors in connection with the Company’s IPO on November 13, 2019. The Company
denies liability and asserts that it accurately and completely disclosed all material facts and occurrences, including adverse
ones, in its IPO-related registration statement and related public filings, and that the Complaint’s alleged violations
of Sections 11 and 15 of the Securities Act are baseless. The Company intends to vigorously defend the lawsuit.
RIDESHARE
RENTAL, INC. (FORMERLY YAYYO, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Nine Months Ended September 30, 2020 and 2019 (unaudited)
Jason
Hamlin v. YayYo, Inc., Ramy El-Batrawi, et al., 20-cv-8235 (SVW) and William Koch v. YayYo, Inc., Ramy El-Batrawi, et al, 20-cv-8591
(SVW)
These
two actions were filed on September 9, 2020 and September18, 2020, respectively, in the United States District Court for the Central
District of California, both cases as purported class actions. Plaintiffs Jason Hamlin and William Koch each claim to have purchased
the Company’s stock “traceable to the IPO” and likein the pending state court action described immediately above,
bring this securities class action pursuant to Sections 11 and 15 of the Securities Act on behalf of all purchasers of the Company’s
stock. The complaint alleges that there were materially false statements and material omissions in the registration statement
and prospectus filed with the SEC and provided to prospective investors in connection with the Company’s IPO on November
13, 2019 The defendants include directors of the company and the underwriters of the IPO, Westpark Capital and Aegis Capital Corp.
The federal court has now consolidated the two matters for all purposes, and an initial status conference has been scheduled and
held. As with the state court case described above, the Company denies liability and asserts that it accurately and completely
disclosed all materially adverse facts, events and occurrences in its IPO-related registration statement and related public filings,
and that the complaint’s alleged violations of Sections 11 and 15 of the Securities Act of 1933 are baseless. The Company
intends to vigorously defend these lawsuits in federal court.
Note
10 – Subsequent Events
Subsequent
to September 30, 2020, the Company has received an advance from a related party, its current Chief Executive Officer,
for $25,000.