HyreCar is looking for investors to provide quite a financial lift to the car-sharing start-up via a $10.5 million initial public offering.
In explaining the need via its filing submission to the Securities and Exchange Commission, HyreCar acknowledged two dozen risk factors to its business that’s based on a peer-to-peer vehicle sharing platform that can allow anyone to rent their idle vehicles to on-demand drivers active on major ridesharing services such as Uber and Lyft.
HyreCar plans to offer 2.1 million shares of its common stock at a public offering price between $5 to $6 per share. Hyrecar intends to list its common stock on the Nasdaq Capital Market under the ticker symbol HYRE.
Network 1 Financial Securities is the managing underwriter for this offering.
According to the SEC filing, HyreCar closed 2017 by generating revenues of $3,223,874 but incurring a net loss of $4,271,732. A year earlier, the company earned revenues of $515,437 and incurred a net loss of $866,676.
The company acknowledged those financial challenges are making the funds generated through an IPO so crucial.
“We intend to rely on debt and equity financing for working capital until positive cash flows from operations can be achieved, which may never occur,” HyreCar said in its SEC paperwork. “We have incurred operating losses since inception. These matters raise substantial doubt about our ability to continue as a going concern.
“Throughout the next 12 months, we expect to fund our operations from additional debt and/or equity offerings, and increased revenue from our operations,” the company continued. “If we cannot raise additional short-term capital, we may consume all of our cash reserved for operations. There are no assurances that we will be able to raise capital on terms acceptable to us.
“If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results,” the company went on to say.
Before making those points in the filing, HyreCar recognized 24 different risk factors, such as:
— Limited operating history makes it difficult to evaluate current business and prospects and may increase the risks associated with an investment.
— If the company does not effectively expand and train it sales team, HyreCar may be unable to add new customers or increase listings or rentals on its platform, and its business will be adversely affected.
— Fluctuating economic conditions make it difficult to predict revenue for a particular period, and a shortfall in revenue may harm its operating results.
— HyreCar does not have written contracts with either Uber or Lyft and its current relationships with either of these companies could change in the future, which could adversely affect its revenues.
So why would an investor take on this much risk and buy HyreCar stock? According to an infographic produced and distributed by the company before the SEC filing, there are 50,000 drivers signing up each month to participate in services such as Uber and Lyft.
HyreCar projects that the ride-sharing industry to be worth $600 billion by 2024.
Using its platform, HyreCar explained in the SEC filing that vehicle owners can post their cars to its marketplace and drivers can browse inventory prior to rental. Once a driver finds a car, he or she creates a profile, enters his or her personal information and credentials (including, address, city, state, copy of applicable state issued driver’s license, Uber or Lyft credentials and Social Security Number) and submits a credit card or debit card for payment.
HyreCar then performs a criminal background check, DMV driving record check, Homeland Security Watch-list and Sex Offender database check.
“HyreCar’s screening criteria is stricter than Uber and Lyft’s background check. We are focused on maintaining a safe user experience and ensuring that all transactions between owners and drivers are processed through a secure web platform,” the company said in the SEC paperwork.
“We believe we have a competitive advantage with our commercial automobile policy that covers both owners and drivers,” HyreCar also said in its federal filing. “The policy is specifically designed to cover the period of time in which a driver is operating an owner’s vehicle while not actively operating a vehicle on a ride-sharing platform, such as Uber or Lyft.
“During the periods when drivers are actively operating on a ride-sharing platform, the insurance defaults to the state mandated insurance provided by the applicable ride-sharing company. To our knowledge, we are the only provider of this car-matching service which is made possible by this unique insurance product,” the company went on to say.