Our Corporate History and Background
EVmo was initially formed on June 21, 2016 as a Delaware limited liability
company under the name "YayYo, LLC." The Company was subsequently converted into
a Delaware corporation pursuant to Section 265 of the Delaware General
Corporation Law (the "DGCL"). The Company now operates as a "C" corporation
formed under the laws of the State of Delaware.
We became a reporting company when, on March 17, 2017, an offering circular on
Form 1-A relating to a best-efforts offering of our Common Stock pursuant to
"Regulation A+" of the Securities Act of 1933, as amended (the "Securities
Act"), was qualified by the Securities and Exchange Commission (the "SEC").
Then, on November 15, 2019, we completed an initial public offering of 2,625,000
shares of Common Stock, at $4.00 per share, for gross proceeds, before
underwriting discounts and expenses, of $10.5 million and our Common Stock was
listed on the Nasdaq Capital Market ("Nasdaq") under the ticker symbol "YAYO."
On February 10, 2020, after being advised by Nasdaq that it believed we no
longer met the conditions for continued listing, the Company announced its
intent to voluntarily delist its Common Stock. Since delisting from Nasdaq, our
Common Stock has been quoted and traded on the Pink Open Market, which is
operated by OTC Markets Group, under the same ticker symbol. The delisting was
effective on March 1, 2020.
In September 2020, we changed our name from YayYo, Inc. to Rideshare Rental,
Inc., in order for our corporate brand to better reflect our principal
businesses, ridesharing and vehicle rentals. In February 2021, we again changed
our name to EVmo, Inc., to underscore our commitment to making a full transition
to electric vehicles by the end of 2024. In January 2022, we completed a
follow-on offering of 27,400,000 shares of our Common Stock, at $0.50 per share,
for gross proceeds, before underwriting discounts and expenses, of $13,700,000.
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We are a holding company operating principally through two wholly-owned
subsidiaries: Rideshare and Distinct Cars. The Rideshare Platform provides TNC
drivers with an online booking platform, while Distinct Cars maintains a fleet
of passenger vehicles and transit vans for use in the last-mile logistical space
for rent to our TNC driver customers, enabling such drivers to meet the vehicle
suitability and other requirements of rideshare and delivery gig companies such
as Uber, Lyft, DoorDash and Grubhub. Through Rideshare and Distinct Cars, we
seek to become a leading provider of rental vehicles to drivers in the
ridesharing and delivery gig spaces, and an industry leader in supplying transit
vans for last-mile logistics.
Impact of COVID-19 on our business
On January 30, 2020, the World Health Organization declared the outbreak of the
coronavirus disease (COVID-19) a "Public Health Emergency of International
Concern," and on March 11, 2020, it characterized the outbreak as a "pandemic."
In response, numerous states and cities ordered their residents to cease
traveling to non-essential jobs and to curtail all unnecessary travel, and
similar restrictions were recommended by the federal government. Beginning in
the first quarter of 2020, which saw the initial rapid spread of COVID-19,
rideshare companies were severely and negatively impacted, as demand plummeted.
Consequently, the Company experienced a decline in revenue during the first half
of 2020, which had a negative impact on our cash flows, but we then saw a
positive upward movement in revenue during the second half of 2020, which
continued through fiscal 2021. Currently, through fiscal 2022, the demand for
Rideshare remains high with little impact remaining from the COVID-19 pandemic.
Given the current prevalence of FDA-approved eligible vaccines across most age
groups, the marked decrease in the number of COVID-19 infections,
hospitalizations and deaths in 2022, and the resulting easement of pandemic
restrictions in our active markets, we are optimistic that COVID-19 will not
have a material impact on our operations in the current fiscal year. However,
certain factors- including, for example, a new, more aggressive and deadly
variant that is resistant to the vaccines could alter our prediction.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Distinct Cars and RideShare. (As of
the date of this Report, our other wholly-owned subsidiary, EV Vehicles, has no
material assets and generates no revenue,) All significant intercompany
transactions and balances have been eliminated.
Consolidated Results of Operations-Year ended December 31, 2022, Compared to
Year ended December 31, 2021.
Total Revenues
Revenue for the year ended December 31, 2022 was $12,558,427, an increase of
$2,322,797 or 22.69% compared to revenue for the year ended December 31, 2021 of
$10,235,630 The increase is attributed to improved operating results stemming
from, in part, drivers who regularly extend their vehicle rentals through
Rideshare and an increase in the size of Distinct Cars' vehicle fleet.
Cost of Revenues
Cost of revenues for the year ended December 31, 2022 were $10,068,469, an
increase of $1,517,015 or 17.74% compared to cost of revenues for the year ended
December 31, 2021 of $8,551,454. Depreciation expense on the vehicles is
included in cost of revenues. The increase is due to higher depreciation
expenses due to an increase in fleet size and higher repairs and maintenance,
including body shop expenses to redeploy vehicles. For the years ended December
31, 2022 and 2021 our cost of revenue including vehicle depreciation was 19.8%
and 22.0% of our revenue, respectively. The increase in the cost of revenue is
mainly attributed to an increase in body shop-related expenses, depreciation
expense, auto maintenance expenses and registration expenses due to the increase
in fleet size in 2022.
If we exclude vehicle depreciation, gross profit the year ended December 31,
2022 was $5,465,531, an increase of $799,183 or 17.1% compared to gross profit
for the year ended December 31, 2021 of $4,666,348. Excluding vehicle
depreciation, gross margin the year ended December 31, 2022 was 43.5%, as
compared to gross margin for the year ending December 31, 2021 of 45.5%.
Selling and Marketing Expenses
Selling and marketing expenses for the year ended December 31, 2022 were
$348,277 representing an increase of $65,096 or 23.0% over the year ended
December 31, 2021 of $283,181. The increase is attributed to targeted marketing
efforts to rent the additions to our fleet in each of our five operations
locations.
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General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2022 were
$6,451,021, representing a decrease of $1,946,128 or 23.2% below the year ended
December 31, 2021 of $8,397,149. This decrease is attributable to spending
efficiency, reduction of legal fees/settlements, and reduced professional fees.
Total Operating Expenses
Total operating expenses for the year ended December 31, 2022 were $7,042,287,
representing a decrease of $1,837,796 or 20.7% compared to the year ended
December 31, 2021 of $8,880,083. The decrease is due to the aggregate reasons
described in the expense-related disclosure above.
Interest Expense, Net
Interest and financing expenses for the year ended December 31, 2022 were
$2,589,898 compared to $6,296,524 for the year ended December 31, 2021. The
decrease in interest and financing cost for the year ended December 31, 2022 was
due to the completion of our capital raise in January 2022.
Gain on Forgiveness of Debt
Gain on forgiveness of debt for the year ended December 31, 2022 was $0 as
compared to $8,000 for the same period in 2021, as, during the year ended
December 31, 2021, a small balance remaining on an Economic Impact Disaster Loan
granted by the Small Business Administration Loan was forgiven.
Net Loss
The net loss for the year ended December 31, 2022 was $(7,142,227), representing
an improvement of $7,842,651 or 52.3% compared to the net loss for the year
ended December 31, 2021 of $(14,984,878). The increase and improvement is due to
the aggregate reasons described in the expense-related disclosure above.
Liquidity, Capital Resources and Plan of Operations
In November 2019, we completed our initial public offering of Common Stock, and
sold a total of 2,625,000 common shares at a price of $4.00 per share. Total
gross proceeds from the offering were $10,500,000, before deducting underwriting
discounts and other offering expenses.
In January 2021, we received $500,000 from one of our stockholders in exchange
for a convertible note. The note was convertible into shares of Common Stock at
$0.50 per share and was converted into 1,000,000 shares of Common Stock in
February 2021.
In April 2021, as part of a securities purchase agreement, we issued and sold to
an investor a 12.5% original issue discount convertible promissory note and a
Common Stock purchase warrant. The note had an original principal amount of
$2,250,000, with an original issue discount of $250,000. It bore interest at a
fixed rate of ten percent (10%), was convertible into shares of Common Stock at
a price of $3.00 per share (subject to adjustment), and was to mature on January
12, 2022. The warrant granted the investor the right to purchase 187,500 shares
of Common Stock at an exercise price of $3.00, subject to adjustment; it is
exercisable at any time within five (5) years of the date of issuance and
additional warrants, each for 93,750 shares of Common Stock with an exercise
price of $3.00 per share, were to be issued by the Company to the investor each
month that the note remains outstanding.
In July 2021, we entered into a term loan, guarantee and security agreement we
entered into with EICF Agent LLC, as agent for the lenders, and Energy Impact
Credit Fund I, LP, as lender, providing for a secured term loan facility in an
aggregate principal amount of up to $15.0 million, consisting of a $7.5 million
closing date term loan facility and up to $7.5 million of borrowings under a
delayed draw term loan facility. The initial loan was fully drawn on the closing
date. The term loan agreement will mature on July 9, 2026.
In connection with the term loan, we entered into an exchange agreement with the
investor who we entered into the securities purchase agreement in April 2021. As
part of the exchange agreement, the investor agreed to exchange the note we
issued to it in April 2021 for 230,375 shares of Series B Preferred Stock, and a
warrant. The warrant granted the investor the right to purchase 93,750 shares of
Common Stock at an exercise price of $3.00, subject to adjustment. This warrant
is exercisable in full at any time within five (5) years of the date of
issuance. Additional warrants on substantially identical terms were issued by
the Company to the investor monthly until such time as the Preferred Stock was
redeemed or converted in full, after which a final warrant was issued. All of
the shares of Series B Preferred Stock were converted by their holder into
shares of Common Stock, or redeemed by us, in the first quarter of 2022.
In January 2022, we completed a follow-on offering of 27,400,000 shares of
Common Stock at a price of $0.50 per share, for total gross proceeds of
$13,700,000.
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Current Assets, Liabilities and Working Capital
At December 31, 2022, the Company's current assets totaled $2,625,891, current
liabilities totaled $7,583,679, and working capital was a deficit of $4,957,788.
At December 31, 2021, the Company's current assets totaled $4,077,934, current
liabilities totaled $7,051,073, and working capital was a deficit of $2,973,139.
Regarding current liabilities, the amounts categorized as accounts payable and
accrued expenses totaled $2,051,926 and $4,940,580 as of December 31, 2022 and
2021, respectively, a decrease of $2,888,654 or 58.5%.
Since inception, our principal sources of operating funds have been: (i)
proceeds from equity financings, including two public offerings of our Common
Stock and the private sales of our Common Stock to certain investors in
transactions exempt from registration under the Securities Act; (ii) the term
loan for $7.5 million described above; and (iii) revenues generated from our
operations. As of December 31, 2022, the Company had $1,702,942 in cash and cash
equivalents. As of the date of this Report, we do not believe that we have
sufficient capital to finance our operating expenses for the remainder of this
fiscal year and the Company is actively seeking new sources of capital.
Capital Expenditures
During the year ended December 31, 2022, the Company had capital expenditures of
$16,807,593 in leased vehicles. Most of the Company's vehicles are financed with
leases. At December 31, 2022 the Company had $27,702,758 of rental vehicles, net
of accumulated depreciation in the amount of $7,001,331, totaling $20,701,427 in
net rental vehicles. At December 31, 2021 the Company had $13,514,619 of rental
vehicles, net of accumulated depreciation in the amount of $4,627,300, totaling
$8,887,319 in net rental vehicles. Additionally, the Company purchased $132,000
in kiosks for the launch of the Trek World project in Illinois. A contract is in
place with Trek World to guarantee the costs of the kiosks through rental of the
vehicles and a revenue share potential on the point-of-sale device merchant
fees. Should Trek World terminate the rental agreements. Payment in full for the
$132,000 is to be reimbursed at termination of the rentals from Trek World. The
Company's rental vehicles and kiosks are depreciated over their estimated useful
life of five years. The lease terms for those rental vehicles that are leased
are generally for one to three years and the Company has the right to purchase
the leased vehicle at the end of the lease terms.
Statement of Cash Flows
Cash Flows from Operating Activities
Net cash expended by operating activities for the year ended December 31, 2022
totaled $(7,453,435), which was a increase of $5,999,241 from the net cash
generated from operating activities of $(1,454,194) for the same period in 2021.
The decrease is primarily due to the acquisition of leased vehicles increasing
the fleet size.
Cash Flows from Financing Activities
Net cash generated from financing activities for the year ended December 31,
2022 totaled $7,434,449, which was an increase of $2,465,882 from the net cash
expended in financing activities of $4,968,567 for the same period in 2021. The
change is principally due to the capital raise completed in January 2022.
Current Plan of Operations
Our plan of operations is currently focused on the growth and ongoing
development of our operating businesses: (i) the Rideshare Platform, offered
through Rideshare, (ii) our vehicle fleet, which is commercially available
through Distinct Cars, and (iii) our fleet management initiatives. We expect to
incur substantial expenditures in the foreseeable future for the continuing
operations of our businesses. We embarked on our EV strategy in 2021, in which
we set a goal to replace our entire fleet of vehicles with all electric vehicles
by 2026. At this time, we cannot reliably estimate the timing or aggregate
amount of all of the costs associated with these efforts and, as of the date of
this Report, we cannot continue to execute our EV strategy until such time as we
have secured new sources of capital.
We continually reevaluate our plan of operations to determine how we can most
effectively utilize our resources. The completion of any aspect of our plan of
operations is highly dependent upon the availability of cash to implement that
aspect of the plan and other factors, several of which are beyond our control.
There can be no assurance that our current capital resources will be adequate to
continue to fund our ongoing operations, nor can there be any assurance that,
should we require additional capital, we will successfully obtain it on
favorable terms, or at all. The potential inadequacy of our existing capital or
the inability to secure additional capital could have a material adverse effect
on us, including the possibility that we would have to sell or forego a portion
or all of our assets or cease operations. If we discontinue our operations, we
may not have sufficient funds to pay any amounts to our stockholders.
If our operating businesses fail to achieve anticipated financial results, our
existing capital will likely be depleted more quickly than we anticipate and our
ability to raise additional capital in the future to fund our operations would
likely be seriously impaired. If in the future we are not able to demonstrate
favorable financial results or projections from our operating businesses, we may
not be able to raise the capital we need to continue operations.
Our working capital requirements depend upon numerous factors and there can be
no assurance that our current cash resources will be sufficient to fund our
short-term operations. We have determined that our long-term operations will
require new sources of capital, which we are actively working to obtain at this
time.
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Contractual Obligations, Commitments and Contingencies
The Company periodically enters into a series of monthly vehicle leasing
agreements with ACME Auto Leasing, Utica Leasing Company, NFS Financial
Services, Liberty Financial and Spring Free EV each with an approximate lease
term of 12 to 60 months. As of December 31, 2022 and December 31, 2021, the
Company had total principal lease obligations before residuals and interest
expense in the amount of $13,675,268 and $3,989,210, respectively. The Company
owes monthly payments under each lease agreement ranging from approximately $285
per month to $1,150 per month. At the end of the term of most lease agreements,
we have the right to purchase ownership and title of the subject vehicle for a
nominal payment. In addition, the lease agreements are subject to and secured by
a grant of a purchase money security interest on each leased vehicle. We expect
the useful life of each vehicle to be approximately five years but also expect
to cycle vehicles at three years.
We lease and maintain our principal offices at 2301 N. Sepulveda Blvd. Manhattan
Beach, CA 90266 where the majority of our operational staff conducts its
activities on a day-to-day basis. We do not currently own any real estate.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
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