Note 5 - Stockholders' Equity (Deficit)

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company is authorized to issue 15,000,000 shares of preferred stock, $0.00001 par value per share. No preferred shares are issued and outstanding as of December 31, 2021.

Common Stock

The Company is authorized to issue 50,000,000 shares of common stock, $0.00001 par value per share.

Public Offering

On February 4, 2021, the Company closed a public offering of a total of 2,530,000 shares of Company common stock. The net proceeds to the Company from the 2021 offering was approximately $27.6 million, after deducting the underwriting discounts and commissions and offering expenses payable by the Company.

Stock Options

In 2016, the Board of Directors adopted the HyreCar Inc. 2016 Incentive Plan (the “2016 Plan”). The 2016 Plan provides for the grant of equity awards to highly qualified personnel, including stock options, restricted stock, stock appreciation rights, and restricted stock units to purchase shares of common stock. Up to 2,227,777 shares of common stock may be issued pursuant to awards granted under the 2016 Plan. The 2016 Plan is administered by the Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

In 2018, the Board of Directors adopted the HyreCar Inc. 2018 Incentive Plan (the “2018 Plan”). The 2018 Plan provides for the grant of equity awards in various forms, including stock options, restricted stock, stock appreciation rights and restricted stock units. Up to 3,000,000 shares of common stock may be issued pursuant to awards granted under the 2018 Plan, with the share reserve number subject to increase in future periods. No increase was made during the year ended December 31, 2021. The 2018 Plan is administered by the Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

In the second quarter of 2021, the Board of Directors adopted the HyreCar Inc. 2021 Incentive Plan (the "2021 Plan"). The 2021 Plan provides for the grant of equity awards in various forms, including stock options, restricted stock, stock appreciation rights and restricted stock units. Three million shares of common stock were initially reserved for issuance under the 2021 Plan, with the share reserve number subject to increases that occur starting in 2024. The 2021 Plan is administered by the Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board. As of December 31, 2021, the Company has not utilized the 2021 Plan for any equity award grants. 

A summary of our stock option activity for the years ended  December 31, 2021 and 2020, is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate Intrinsic value
Outstanding as of December 31, 2019		2,253,206		$	2.60		8.19
Granted		—			—		—
Exercised		(85,939	)		1.28		—
Forfeited or expired		(1,514,627	)		3.38		—
Outstanding as of December 31, 2020		652,640		$	0.91		6.38
Granted		—			—		—
Exercised		(148,872	)		1.20		—
Forfeited or expired		—			—		—
Outstanding as of December 31, 2021		503,768		$	0.83		5.33	$	1,954,882
Vested and expected to vest at December 31, 2021		503,768		$	0.83		5.33	$	1,954,882
Exercisable as of December 31, 2021		503,768		$	0.83		5.33	$	1,954,882

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $4.71 of common stock on December 31, 2021.

There were no stock options granted during the year ended December 31, 2021. The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $2,382,955 and $210,055 respectively. When options are exercised, the Company's policy is to issue previously unissued shares of common stock to satisfy share option exercises. The total fair value of options vested for the years ended December 31, 2021 and 2020 was $19,325 and $83,774, respectively.

The Company estimates the fair value of stock options that contain service and/or performance conditions using the Black-Scholes option pricing model. There were no options granted during  year ended December 31, 2021 and 2020.

The Company recognizes stock option forfeitures as they occur. The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s stock options.

The expected term of stock options is calculated using the simplified method which takes into consideration the contractual life and vesting terms of the options. The simplified method was used by the Company due to insufficient historical data.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public company’s common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s common stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

Stock-based compensation expense for stock options for the years ended December 31, 2021 and 2020 was $11,402 and $1,742,705, respectively. Included in stock-based compensation expense for the year ended December 31, 2020 was additional expense of $1,434,132 pertaining to a modification. On April 29, 2020, the Compensation Committee of the Board of Directors approved an exchange (the “Exchange”) of grants under the 2018 Plan previously made to executive officers and directors of the Company (the “Grantees”). Pursuant to the Exchange, the Grantees agreed to the cancellation of options to purchase an aggregate of 1,487,500 shares of the Company’s common stock under the 2018 Plan in exchange for the issuance of an aggregate of 822,500 shares of fully vested restricted stock under the 2018 Plan.

The Exchange was a cancellation of stock options with a concurrent replacement award and was accounted for as a modification. As there was no future service or performance conditions associated with the replacement award, compensation cost was fully recognized during the year ended  December 31, 2020.

As of December 31, 2021, there is no remaining stock-based compensation expense as all options are fully vested. 

Restricted Stock Units and Shares Issued for Services and Other

A summary of activity with our restricted stock units ("RSUs") for the year ended December 31, 2021, is as follows:

	Number of shares			Weighted average grant date fair value per share
Outstanding as of December 31, 2019		303,150		$	3.58
Granted		606,500			5.94
Exercised		(284,648	)		3.64
Forfeited or expired		(109,650	)		3.05
Unvested as of December 31, 2020		515,352		$	6.12
Granted		1,119,323			11.68
Vested		(756,846	)		9.71
Forfeited		(108,343	)		8.03
Unvested as of December 31, 2021		769,486		$	10.46

The weighted-average grant date fair value of RSUs granted for the years ended December 31, 2021 and 2020 was $11.68 and $5.94, respectively. The total fair market value of RSUs that vested for the years ended  December 31, 2021 and 2020 was $7,345,734 and $1,036,070, respectively.

During the year ended December 31, 2021, the Company granted 466,266 and 415,000 RSUs to employees and executives, respectively, of which a large portion vested upon issuance while the remaining generally vest over four years. Additionally, for the year ended December 31, 2021, the Company granted 206,068 RSUs to Board members, of which 50% vested on grant date and the remaining 50% vest over the next four quarters following the date of grant. The total fair market value of these shares as of grant date was $2,524,333 based on the closing price of the Company's stock as of grant date.

During the year ended December 31, 2021, the Company granted 31,989 RSUs to consultants in exchange for legal and research and development services, which vested on the grant date and had a total fair value of $381,564 based on the closing price of the Company’s stock on grant date. 

Stock-based compensation related to restricted stock units for the years ended December 31, 2021 and 2020 was $8,165,539 and $1,070,936, respectively. As of December 31, 2021, unrecognized compensation expense related to the unvested restricted stock units is $7,133,264 and is expected to be recognized over approximately 2.6 years.

During the year ended December 31, 2020, the Company granted 314,535 shares of common stock in exchange for legal and consulting services and the Company recognized stock-based compensation of $255,717 based on the closing price of the Company’s common stock on the date of grant. During the year ended December 31, 2021, the Company also issued 78,431 shares of common stock as legal settlement to Nathaniel Farber, a founder of the Company pursuant to Case No. CGC-18-571257 pertaining to the buyback of the Claimant Founders’ stock at the time of the IPO. Stock-based compensation of $213,332 was recognized during the year ended  December 31, 2020, based on the closing price of the Company’s common stock on the date of issue.

Warrants

A summary of activity with our warrants for the years ended December 31, 2021 and 2020, is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding as of December 31, 2019		500,739		$	3.71		2.68
Granted		—			—		—
Exercised		(15,000	)		—		—
Forfeited or expired		—			—		—
Outstanding as of December 31, 2020		485,739		$	3.63		1.65
Granted		—			—		—
Exercised		(309,252	)		—		—
Forfeited or expired		—			—		—
Outstanding as of December 31, 2021		176,487		$	2.13		0.35

During the year ended December 31, 2021 a warrant holder exercised 309,252 warrants in a cashless exercises, which resulted in the issuance of 121,111 shares of common stock.

As of December 31, 2021 and 2020, all warrants granted as of such dates were vested.