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, 2020.

Common Stock

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

Follow-On Offering

On July 23, 2019 and July 29, 2019, the Company closed a follow-on public offering, in which the Company issued and sold 4,025,000 shares of common stock at a price of $3.00 per share for gross proceeds of $12,075,000, before deducting underwriters’ discounts and commissions totaling $603,750 and reimbursable expenses of $150,000. Accordingly, net proceeds from the offering totaled $11,321,250. In connection with the offering, we paid additional offering costs of $263,873.

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 to purchase shares of common stock. Up to 3,000,000 shares of common stock may be issued pursuant to awards granted under the 2018 Plan, subject to increases that occur starting in 2021. The 2018 Plan is administered by the Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

A summary of our stock option activity for the years ended December 31, 2020 and 2019, is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate Intrinsic value
Outstanding at 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 at December 31, 2020		652,640		$	0.91		6.38	$	4,063,176
Vested and expected to vest at December 31, 2020		652,640		$	0.91		6.38	$	4,063,176
Exercisable at December 31, 2020		640,478		$	0.90		6.4	$	3,999,742

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $7.14 of common stock on December 31, 2020

There were no stock options granted during the year ended December 31, 2020. The weighted average grant-date fair value per share of options for the year ended December 31, 2019 was $1.85 and the 2019 options granted had vest terms from two to four years. The total intrinsic value of options exercised during the years ended December 31, 2020 and 2019 was $210,055 and $106,407 respectively. The total fair value of options vested for the years ended December 31, 2020 and 2019 was $83,774 and $468,236, respectively.

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 for the options grants for the year ended December 31, 2019 as there was no options granted during the year ended December 31, 2020:

	December 31, 2019
Expected volatility		45	%
Risk-free interest rate		1.73 – 2.39	%
Expected life in years		5.56
Expected dividend yield		0	%

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. 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, 2020 and 2019 was $1,742,705 and $1,047,686, 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 HyreCar Inc. 2018 Equity Incentive Plan (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, 2020, the total estimated remaining stock-based compensation expense for unvested stock options is $11,402 which is expected to be recognized over a weighted average period of 0.4 years.

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, 2020, is as follows:

	Number of shares			Weighted average grant date fair value per share
Unvested as of December 31, 2019		303,150			3.58
Granted		606,500		$	5.94
Vested		(284,648	)		3.64
Forfeited		(109,650	)		3.08
Unvested as of December 31, 2020		515,352		$	6.12

The weighted-average grant date fair value of RSUs granted for the years ended December 31, 2020 and 2019 was $5.94 and $4.44, respectively. The total fair market value of RSUs that vested for the years ended December 31, 2020 and 2019 was $1,036,070 and $160,180, respectively.

Stock-based compensation related to restricted stock units for the years ended December 31, 2020 and 2019 was $1,070,936 and $330,390, respectively. As of December 31, 2020, unrecognized compensation expense related to the unvested restricted stock units is $3,120,329 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, 2020, 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, see Note 3 - Commitment and Contingencies. 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.

During the year ended December 31, 2019, the Company granted 135,000 common shares in exchange for legal, consulting, and media services provided during the year. The grants had a total fair value of $607,550 based on the closing price of the Company’s common stock on the grant date.

Warrants

A summary of activity with our warrants for the years ended December 31, 2020 and 2019, is as follows:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding at December 31, 2018		1,246,025		$	3.60		3.60
Granted		—			—		—
Exercised		(745,286	)		—		—
Forfeited or expired		—			—		—
Outstanding at December 31, 2019		500,739		$	3.71		2.68
Granted		—			—		—
Exercised		(15,000	)		—		—
Forfeited or expired		—			—		—
Outstanding at December 31, 2020		485,739		$	3.63		1.65

During the year ended December 31, 2020 a warrant holder exercised 15,000 warrants in a cashless exercises, which resulted in the issuance of 2,612 shares of common stock.

As of December 31, 2020 and 2019, all warrants granted as of such dates were vested.