HyreCar Annual Report 2020

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FY2020 Annual Report · HyreCar

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark one)
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2020

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 001-38561

HyreCar Inc.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

355 South Grand Avenue, Suite 1650
Los Angeles, CA
(Address of principal executive offices)

47-2480487
(I.R.S. Employer
Identification No.)

90071
(Zip Code)

Registrant’s telephone number, including area code: (888) 688-6769

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, par value $0.00001 per share

Trading Symbol(s)
HYRE

Name of Each Exchange on Which Registered
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $44,347,276 as of June 30, 2020, the last
business day of the registrants most recently completed second quarter based on the closing price of the common stock on the Nasdaq Capital Market.
Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of the registrant as of such date have been excluded
because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive
determination for any other purposes.

20,330,352 shares of common stock were issued and outstanding as of March 30, 2021.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2021 annual meeting of stockholders (the “2021 Proxy Statement”) are
incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2021 Proxy Statement will be filed with the Securities and
Exchange Commission (the “SEC”) within 120 days after the end of the fiscal year to which this report relates.

TABLE OF CONTENTS

Page Number

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

PART IV
Item 15.
Item 16.

Forward Looking Statements

Business
Risk Factors
Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Exhibits, Consolidated Financial Statements Schedules
Form 10-K Summary
Signatures

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These statements may be identified by such forward-looking terminology as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements
are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and
involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements.
Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and
our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our
statements regarding:

●

the impacts of COVID-19, or other future pandemics on our business, results of operations, financial position and cash flows;

our ability to effectively manage our growth and maintain and improve our corporate culture;

the potential benefits of and our ability to maintain our relationships with ridesharing companies, and establish or maintain future collaborations
or strategic relationships or obtain additional funding;

our marketing capabilities and strategy;

our ability to maintain a cost-effective insurance program;

our industry is in early stages of growth

our anticipated investments in new products and offerings, and the effect of these investments on our results of operations;

our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

our competitive position, and developments and projections relating to our competitors and our industry;

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and

our ability to comply with existing, modified, or new laws and regulations applying to our business.

All of our forward-looking statements are as of the date of this Annual Report on Form 10-K only. In each case, actual results may
differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be
correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Annual Report on
Form 10-K or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could
materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan
to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other
circumstances affecting such forward-looking statements occurring after the date of this Annual Report on Form 10-K, even if such results, changes or
circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Annual
Report on Form 10-K that modify or impact any of the forward-looking statements contained in this Annual Report on Form 10-K will be deemed to
modify or supersede such statements in this Annual Report on Form 10-K.

This Annual Report on Form 10-K may include market data and certain industry data and forecasts, which we may obtain from internal company
surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and
surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from
sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and
publications are reliable, we have not independently verified market and industry data from third-party sources.

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Throughout this Annual Report on Form 10-K, the “Company,” “HyreCar,” “we,” “us,” and “our” refers to HyreCar Inc. and “our board of

directors” or our “Board” refers to the board of directors of HyreCar Inc.

PART I

Item 1. Business

Overview

HyreCar Inc. was formed as a corporation in the State of Delaware on November 24, 2014. Our founders identified the need for a car-sharing
platform for individuals who wanted to drive for ride-sharing companies such as Uber Technologies Inc. (“Uber”) and Lyft, Inc. (“Lyft”), but whose
automobiles could not meet the standards imposed by the ride-sharing companies. For example, Uber maintains strict guidelines regarding the types of cars
a driver can use. Although guidelines relating to cars can differ by state, in general the use of two door coupes, motorcycles and cars that are 12 years or
older are excluded. Our founders, before deciding to purchase qualifying sedans that met Uber’s strict guidelines, first inquired as to whether there were
any rental options available from Uber that would allow them to drive for the ride-sharing platform. To their surprise, there were no rental options
available, other than a shadow industry of individuals renting cars to one another.

HyreCar is a car-sharing marketplace that allows car owners (collectively, “Owners”) to rent their idle cars to ride-sharing service drivers
(collectively, “Drivers”). By sourcing vehicles from individual Owners, part-time Drivers may more easily enter and exit the market and our business
model allows us to satisfy fluctuating transportation demand in cities around the United States by matching Owners and Drivers. In 2019 we began to
diversify our vehicle supply to include commercial owners of vehicles including car dealerships and fleet owners to help increase activity levels.

Our business is based on a proprietary car-sharing marketplace developed to (i) onboard Owners and Drivers, (ii) facilitate the matching of
Owners and Drivers and (iii) log rental activity for Owners and Drivers. All transactions related to the rental (including, but not limited to, background
checks, rentals, deposits and insurance costs) are run securely through the HyreCar platform. Drivers and Owners access their rental or car dashboards
through a unique login. Drivers can initiate, terminate or extend a rental through the platform while Owners can manage their car or fleet of cars through
the platform.

We believe we have a competitive advantage with our commercial automobile insurance policy that covers both Owners and Drivers. 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 subordinates to the state
mandated insurance provided by the third party ride-sharing business. To our knowledge, we are the only provider of this car-matching service utilizing this
unique insurance product.

To date, the majority of our growth has been from the dealer sales efforts to build sustainable vehicle supply focused on key markets through the
United States. Our car supply has changed from mostly individuals which is where we initially sourced, but now with more of our car supply and rental
days coming from the commercial side of the business – consisting primarily of dealers and large fleet owners. We have seen a particular emphasis on
states in the southern portion of the United States in late 2019, and now the majority of our daily rental days come from certain states including Georgia,
California, New York, Pennsylvania, and Texas. We have also increased driver leads matched in those same key markets, which has been achieved through
organic search traffic and paid search advertising. Going forward we will direct advertising dollars strategically because we believe that online channels
and offline brand awareness will provide substantial opportunities for growth.

Impact of COVID-19 to our Business

In March 2020, COVID-19 began spreading rapidly throughout the world, prompting governments and businesses to take unprecedented measures
in response. Such measures included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place
orders. The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and
will depend on many factors outside the Company’s control, including, without limitation, the extent, trajectory and duration of the pandemic, the
availability of effective treatments and vaccines, and the imposition of further protective public safety measures nationlly or in the markets in which we
operate. Refer to Part I, Item 1A of the of this Form 10-K under the heading “Risk Factors,” for more information.

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Industry and Market Opportunities

Our company was founded to capitalize on a combination of two growth markets: ridesharing (an industry led by Uber and Lyft) and car-sharing
(an industry led by companies such as Turo, Inc. and ZipCar, Inc.). Our customers are the Drivers that use our car-sharing platform to rent a car and then
use that car to make money driving for either Uber or Lyft. Finding enough cars and drivers to meet demand has been a problem for ride-sharing
companies. Recently we have expanded our target marketing to drivers who provide delivery services with companies like Instacart and Postmates.

The transportation industry represents a massive market. In the United States alone, consumer expenditures on transportation were approximately
$1.1 trillion and $1.3 trillion in 2020 and 2019, respectively. Transportation was the second largest household expenditure after housing and was almost
twice as large as healthcare and three times as large as entertainment. We believe we are still in the relatively early phases of potentially capturing part of
the opportunity in the industry. In 2019, ridesharing accounted for just seven percent of total vehicle miles travelled in the United States and in a 2016
survey, 57% of U.S. respondents who used sharing services said that well-priced and convenient offerings could cause them to give up ownership
altogether.

We have added over 38,000 Drivers, matching them with Owner vehicles that have been used on the Uber and Lyft platforms over the past several
years. During the years ended December 31, 2020 and 2019, we added approximately 14,000 and 11,000 new Drivers, respectively, into cars so that they
could drive for Uber and Lyft. These numbers represent an equivalent 127.3% growth rate in new drivers onto the HyreCar platform year over year.

Ride-sharing Industry (Uber and Lyft)

The growth in ridesharing over the past few years has kicked off a transportation revolution. Smart phones are now used as ride hailing apps,
transactions are processed through online platforms and transportation as a service is becoming more and more personalized. The industry has experienced
tremendous traction. According to a July 2016 post on TechCrunch, it took Uber six years, to December 2015, to complete a billion rides and by the end of
2020, Uber announced that it had completed its two-billionth ride.

Transportation Network Companies (“TNCs”) like Uber and Lyft have reported high demand from Drivers but many of these Drivers do not own
a car that qualifies for their platforms. Uber reported that it had 3.9 million drivers and Lyft reported that it had 1.9 million drivers in North America at the
end of 2018. In 2016, a spokesperson for Uber estimated that approximately 10% to 15% of their potential drivers/partners do not own a qualifying car.
Further, Lyft estimates that there are approximately 60,000 people in the city of Chicago alone that want to drive for their platform, but do not currently
own a qualifying car, and General Motors also estimates that there are approximately 160,000 potential drivers in the DC Metro area, Baltimore, Chicago
and Boston who do not own a qualifying car.

Accordingly, TNCs are actively taking steps to satisfy their driver demand by setting up programs designed to get eligible drivers into qualified cars,
including such programs as the Enterprise/Uber partnership, the Lyft Express Driver partnership with Hertz and Pep Boys and the General Motor’s Maven
program. These programs serve as a validation that there is a healthy market to pair eligible drivers with qualified cars.

Food and Package Industry (Instacart and Grubhub)

With the growth in food, package and grocery delivery services such as Instacart, Postmates, Uber Eats and Grubhub, Hyrecar expects driver
demand for services like HyreCar to continue into 2021. With expected revenues for all food delivery companies to top $123B in 2020 and expectations to
increase to $164B by 2024. Drivers participating into the Gig economy are diversifying their sources of income across many different TNCs and delivery
services. Over 61% of all HyreCar drivers are active drivers for both rideshare and delivery service companies. The package and food delivery companies
have seen tremendous demand in the first quarter of 2020, and expect continued growth into 2021 as more and more households move away from
traditional in store purchase to online and mobile purchases for the same goods.

Car-sharing Industry

Shared mobility market began to rapidly develop around 2010-2011 when the total number of its users exceeded one million. In 2017, there were
already around 10 million people using this type of service, and according to a study by Frost & Sullivan, by 2025 their numbers will reach 36 million,
maintaining the annual growth rate of 16.4%. Global Market Insights forecasts the value of the global car sharing market in 2024 at $11 billion. At present,
the leading shared mobility markets are the U.S. and Western Europe, while experts predict that Asia will experience the fastest growth in this field.
HyreCar is attempting to capitalize on this opportunity as demand from traditional taxi and public transportation options is transferred to shared
transportation. Further, growth is expected from this opportunity as the accelerating trend of the mass ease-of-use and availability of shared transportation
permanently shifts some driving habits away from personal vehicle ownership. Evidence of this decline, while not yet a national trend, can be seen in large
cities as vehicle ownership is beginning to decline. Longer term, we envision a potential impact on the auto industry as a whole from a subset of people
permanently changing their driving habits and selling their cars entirely in favor of using shared transportation.

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Competition

We believe the key differentiator between HyreCar and our competitors is our asset light model, which allows us to connect excess car inventory
to drivers without actually owning or managing the vehicles. This allows our prices to be competitive with other vehicle solutions because we do not have
the monthly vehicle overhead or infrastructure costs that our competitors may have. Other advantages include the following:

1. Pay-As-You-Go: Drivers using our platform are not locked into lengthy lease agreements, monthly contracts or subscription fees. Our
payment model is upfront and transparent. While our competitors engage in auto-debiting payment for the rented vehicle from the Drivers’
accounts, regardless of their current account balance, under our platform Drivers pay for the term of rental up-front, extend if they are
financially able, and return the rented vehicle whenever they need with no “strings” attached. We are the only company providing this type of
fluid and frictionless car transaction for Uber and Lyft drivers.

2. Convenience: In some cases, drivers are renting a car from a local supplier or even their neighbor. They walk down the street, take the keys

and go. With Hertz, FlexDrive, Fair or Avis, only one or two retail outlets participate in the Uber and Lyft programs.

3. Flexibility: The ability to use the same car for both rideshare companies plus food delivery is an important reason why many drivers choose our
platform. Coupled with a comprehensive protection program that includes insurance, drivers are attracted to this unique service not offered by our
competition.

Among vehicle solutions for ride-sharing rentals, are Avis, FlexDrive, Getaround and HyreCar. These car rental companies are similar in one way:

they operate in the U.S. and provide cars drivers to rent and drive on the Uber or Lyft platform. However, their business models vary widely.

Hertz (OTC:HTZGQ) and Fair.com (“Fair”) were competitors with vehicle supply partnerships with Uber, but both floundered in 2020. Hertz
declared bankruptcy mid-year and following Uber’s spring 2019 initial public offering, Fair was offering promotional weekly rates to Uber drivers, which
presented a competitive threat in certain marketing, particularly in California. The partnership ended in February 2020 when Uber announced it was ending
this “Fair Go” partnership, and as a result Fair has exited the weekly rental business .

A comparative analysis of markets, pricing limitations and age requirements are as follows:

Markets

Nationwide

30+ Cities

26+ Cities

9+ Cities

Rental Length
and Age
Requirement

Service
Limitation

2-Day Minimum / 21+

24-Hour Minimum / 25+

7-Day Minimum / 25+

1-Hour Minimum / 21+

No Limits

Uber Only

Lyft Only

Uber Only

Deposit

$99 in some states
based on driver risk

Average Weekly
Rates**

Owners set pricing on
the platform, around
$200 per week with
incentives

None

$250

$150

$209 per week plus $0.10 -
$0.30 per mile (depends on
location, taxes and fees)

$209 per week
(disqualified from Express
Pay and driver bonuses)

$5 per hour + 3% Booking
fee of trip price + $0.5 per
mile daily trip mileage
overages

All-In Cost*

$311

$340

$390

$498

* Includes insurance, weekly cost assumes 1,000 miles driven per week, assumes maximum 12-hour rental per day, assumes $0.10 per mile plus 15% taxes
and fees applied to advertised competitor pricing.
** Assumes $150 per week in driver bonuses.

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Our Strengths

Using our website platform or mobile applications (iOS and Android), vehicle Owners can post their cars to our marketplace and Drivers can
browse car 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, a copy of applicable state issued driver’s license, Uber or Lyft credentials and social security number) and submits a credit card for
payment. We then perform 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 and 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 attraction and vetting of qualified gig economy drivers is a
primary reason why commercial automobile businesses around the country are increasingly working with the Company.

Why Drivers Use Our Service

● Attractive Economics: Drivers’ ability to earn income by driving for multiple ride-sharing or delivery services simultaneously.

● Pay-As-You-Go: Drivers are not locked into long-term lease agreements or monthly payments or even subscription fees.

● Convenience: Drivers can quickly pick up the car from a location close by. Typically getting behind the wheel in under 48 hours.

● Transparency and Trust: No hidden fees and only Car Owners who have been properly vetted are permitted to use the platform.

● Customer Experience: Application of game-design elements (i.e. gamification) of the platform keeps Drivers engaged.

Why Owners Use Our Service

Data from a national survey of driving behavior indicates that private vehicles are in use 5% or less during any given day, or about one hour per
day. Given the excess capacity of vehicle hours, higher vehicle utilization rates, and lower vehicle ownership rates, we expect a consumer shift towards
acceptance of car-sharing. Based on the results of the survey, we believe our platform is advantageous for the following reasons:

● Passive Income: We often match Owners with long term Drivers, which provides the Owners with a steady source of passive income resulting

from our re-booking process.

● Insurance: Physical damage and liability policies fill the gaps left by personal and ride-sharing policies.

● Review of Drivers: Drivers must pass our extensive background checks which even exceed the Uber and Lyft background checks.

Insurance Coverage

A key component to our business is our commercial auto insurance coverage. The two-sided nature of our platform means that we need to insure
both the Driver and the Owner. Prior to any rental the Driver and Owner are provided an insurance ID card that lists the driver’s name and the vehicle
identification number. Insurance is typically generated for the rental until the Owner confirms drop-off of the rented vehicle by the Driver. The vehicle
pick-up and drop-off is all managed through our platform. An Owner takes pictures of his or her vehicle prior to pressing the “Confirm Pick-up” button on
the HyreCar mobile app. After the rental is completed, the Owner presses the “Confirm Drop-off” button on the HyreCar mobile app and the rental ends.

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AON is our insurance broker utilizing their Digital Economy Practice for consulting and insurance placement activities. AON is the leading global
professional services firm providing advice and solutions in risk, retirement and health. We moved our annual automobile insurance policy to Apollo for
the policy year June 2020 to June 2021 under improved terms and conditions.

For insurance purposes a vehicle rental is broken into four distinct driving periods. Period 0 is when the Driver has picked a vehicle up from the
Owner and is driving with the Uber or Lyft app turned-off. Period 1 is when the Driver has the Uber or Lyft app turned-on but has not yet accepted a fare.
Period 2 is when the Driver has accepted a fare and is on the way to pick-up a passenger. Period 3 is when a passenger is in the vehicle. The HyreCar policy
is specifically written to cover periods in which the Drivers are operating HyreCar vehicles OFF the Uber or Lyft platform (period 0). During the periods
when Drivers are operating ON the Uber or Lyft platform (periods 1, 2 and 3), the HyreCar liability insurance subordinates to state mandated insurance
provided by Uber and Lyft. This enables us to keep insurance costs and liability low by leveraging state mandated insurance policies provided by the
TNCs.

Business Structure and Strategy

We operate out of our corporate office in Los Angeles, California. Our technology platform allows for a relatively small staff compared to the size
and reach of our business. For example, our platform matches drivers and owners in certain states and key markets with no physical presence in those
states, with the exception of California. Our business structure is divided into three distinct departments: General and Administrative, Sales and Marketing
and Research and Development.

Sales and Marketing are vital to our future profitability and growth. Most of our customers need to be sold into a car because they are initially
reluctant to pay upfront fees. Early interactions with our customers indicated that if customers were walked through the process once by a member of our
sales and marketing team, the customers were more inclined to use and continue to use our services for a longer period of time. As we have streamlined
our technology stack, user experience, and strengthened our brand in the industry, consuming rental vehicles through our applications has become a much
more seamless process. We have found that a segment of our user base can seamlessly flow through our reservation journey with very few touch points.
Due to this we have transitioned the majority of our sales staff into drivers success agents who facilitate the rental process, provide guidance on best places
rideshare drivers are making the most income, and generally more of a customer support role.

The Driver Success Team is currently 28 employees, including 2 managers, which are divided into different specialties based on points in the
reservation flow. For example, to onboard drivers to the platform we have an outsource group that has a sole focus to get drivers into and through our
driver vetting process or background check. After that there is a team of driver success agents who facilitate the driver to rent the vehicle, troubleshoot any
issues with the vehicle supplier, generate insurance and inspection documents and make sure that the driver can upload the rental vehicle to their rideshare
platform. The Owner team is comprised of agents who are very familiar with the nuances of operating a fleet of vehicles on the HyreCar platform. The
Owner sales team’s primary objective is to get Owners to list their cars on the platform. To compliment and tie together the Owner and driver teams, we
have built a utilization team with the core focus to facilitate both the driver and owners sides of the marketplace to optimize vehicle utilization for all
HyreCar Owners. To underpin the supply side of the marketplace, there is also a specialized group of dealerships and mini fleet sales representatives who
present the Platform solution to B2B Owners. As the driver success team has become more efficient as we have scaled, we do not expect the need to add
headcount as rapidly through 2021 in order for us to continue to achieve forecasted revenue growth rates.

Leveraging headcount more efficiently is a key assumption that we believe drives profitability. The ability to grow topline revenue without
significant increases to operating expense is achieved through a combination of marketing, sales, support and technology. Attribution of organic bookings
is directly related
technology
development. HyreCar has invested in a partnership with a leading SEO firm to continue maximizing organic rankings on Google search pages.
Additionally, new market automation tools have allowed HyreCar to communicate directly with its drivers with specially curated messaging to increase
awareness of available vehicles and incentive programs for each target DMA and market segment. The company’s expectation is that both aspects
contribute to low operating expense growth in relation to revenue, which in-turn, the company believes, will lead to higher gross profit in 2021.

interface/experience enhancements (UI/UX) per

leads generated and user

the quality of marketing

We currently operate with one technology development team in the United States, including multiple full-time developers based out of our home
office in Los Angeles. These teams are tasked with maintaining the current codebase and website, and incrementally adding enhancement to the Owner and
Driver application and website to support our expansion into institutional car supply nationally.

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Support and operations underpin the company. New Dealer onboarding, insurance claims management, owner payment resolutions, Driver
payment resolutions, collections, chat support, email support, phone support, late rentals, car recovery, Driver verifications, insurance generation and
insurance verification all work together to create what we believe is a “best in class” customer service experience. Currently, we have 12 in-house customer
support staff in our Los Angeles office as well as 20 independent contractors located in the Central Time Zone through our outsourced partner who we
added in mid-2019. Our plan is to focus our domestic customer support team on being client-facing for larger commercial accounts and scale by
outsourcing as we continue to grow. We believe that customer service is critical to our goal of bringing new Drivers/Owners onto the platform and retaining
those customers who have already utilized our services.

Revenue Model

We generate revenue by taking a fee out of each rental processed on our platform. Each rental transaction represents a Driver renting a car from
an Owner. Drivers pay a daily rental rate set by the Car Owner, plus a 10% HyreCar Driver Fee and direct daily insurance costs. Owners receive their daily
rental rate minus a 15-25% HyreCar Owner Fee. For example, as of December 31, 2020, the average daily rental rate of a HyreCar vehicle nationally is
approximately $36.00 (“Daily Rental Rate”), plus a 10% HyreCar Driver fee ($3.60) and daily direct insurance fee of $13.00, totaling $52.60 in total daily
gross billings is paid by the Driver via a credit card transaction. On average approximately 80% of the daily rental or $28.80 is transferred to the Owner via
our merchant processing partner. HyreCar earns revenues from the two revenue share fees and the insurance totaling approximately $24.16 per day.
Accordingly, the GAAP reportable revenue recognized by HyreCar is $24.16 in this example transaction, as detailed in the following table:

Daily Gross Revenue Example

Daily Net (GAAP) Revenue Example

National Average Daily Rental Rate

Driver Fee

Daily Insurance Fee

Daily Gross Billing Paid by Driver

36.00 HyreCar Owner Fee (~21% Average)

3.60 HyreCar Driver Fee (10% rate)

13.00 Insurance Fee (100% of fee)

52.60 Daily Average Net Revenue

7.56

3.60

13.00

24.16

Gross billings is an important measure by which we evaluate and manage our business. We define gross billings as the amount billed to Drivers,
without any adjustments for amounts paid to Owners or refunds. It is important to note that gross billings is a non-GAAP measure and as such, is not
recorded in our consolidated financial statements as revenue. However, we use gross billings to asses our business growth, scale of operations and our
ability to generate gross billings is strongly correlated to our ability to generate revenues. Gross billings may also be used to calculate net revenue margin,
defined as the company’s GAAP reportable revenue over gross billings. Using the definition of net revenue margin and the example above, HyreCar’s net
revenue margin is equal to approximately 45.2% ($25,231,741 HyreCar’s GAAP revenue over $55,761,917 Total Gross Billings). A breakout of revenue
components is provided in the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and the footnotes to our audited consolidated financial statements.

Marketing Plan

Our marketing team periodically reviews keyword searches using Google Analytics. Thirty keywords and phrases were chosen and analyzed,
allowing the team to determine in which cities the persons searching for the keywords and phrases were located. For example, approximately 400,000
people in Los Angeles googled key words like, “rent a car for Uber,” “Uber,” and “Uber Leasing.” Overlaying our customer demographics with the Google
search results created a Driver/Owner affinity population of approximately 25 million potential customers, with the bulk of the 25 million concentrated in
16 core geographic locations. Our key geographies currently consist of ten key metropolitan statistical areas (MSA) based on the driver demand for
ridesharing and delivery activity as part of the gig economy with large population bases. As we built out the institutional car supply through year ended
December 31, 2020, our historical car supply constraints were largely addressed. Further, we have started focusing more locally on approximately ten key
metropolitan markets in certain states. Currently more than 75% of our car supply comes from commercial versus individual sources and for the fourth
quarter of 2020 more than 75% of our rental days come from a few key states including California, Florida, Georgia, New York, Pennsylvania, Texas and
Maryland.

-6-

Insurance Opportunity

A large percentage of our cost of revenues is direct insurance and claims expense, which we pay to the insurance company. The premiums are
broken into two categories, liability insurance and physical damage. The unique nature of our insurance enables us to keep insurance costs and liability low
by leveraging state mandated insurance policies provided by the Transportation Network Companies.

In addition to self-insurance, the company is also working with AON to develop new and innovative insurance products. The company is
reviewing alternative insurance opportunities including a new type of owner “lay-up” insurance and higher insurance level for fleet vehicle owners on the
HyreCar platform. Lay-up insurance replaces the need for an owner’s personal auto insurance policy and would represent significant cost savings when
compared to other insurance options available in the market today. Offering this type of insurance product benefits the company in multiple verticals,
including reduced insurance claim expense, greater customer retention and stickiness to the HyreCar platform.

Regulation

The California Public Utilities Commission (“CPUC”) was the first state regulatory body to impose rules and guidelines for ridesharing in the
United States. The CPUC designated Uber and Lyft as “transportation network companies” or TNCs. The CPUC guidelines became the standard for all
states across the U.S. Most states have adopted some form of the guidelines. California is one of the strictest states when it comes to regulating the TNCs.
Our insurance works within the California guidelines which make it easily adoptable by future state mandates outside of California.

Changes in government regulation of our business have the potential to materially alter our business practices or our operational results.
Depending on the jurisdiction, those changes may come about through the issuance of new laws and regulations or changes in the interpretation of existing
laws and regulations by a court, regulatory body or governmental official. Sometimes those changes may have not just prospective but also retroactive
effect; this is particularly true when a change is made through reinterpretation of laws or regulations that have been in effect for some time. Moreover,
changes in regulation that may seem neutral on their face may have either more or less impact on us than on ride-sharing businesses, depending on the
circumstances. Potential changes in law or regulation that may affect us relate to insurance intermediaries, customer privacy, data security and rate
regulation.

In addition, our operations also could be affected by any limitation in the fuel supply or by any imposition of mandatory allocation or rationing
regulations. We are not aware of any current proposal to impose such a regime in the U.S. or internationally. Such a regime could, however, be quickly
imposed if there was a serious disruption in the fuel supply for any reason, including an act of war, terrorist incident or other problem, such as the
devastation caused by hurricane Harvey, affecting the petroleum supply, refining, distribution or pricing.

Employees

As of December 31, 2020, we employ 86 full-time personnel primarily in our headquarters location in downtown Los Angeles, California,

although our team has largely been remote since March 2020 due to COVID-19 limitations.

Our Corporate Information

We were incorporated as a Delaware corporation on November 24, 2014. Our principal executive offices are located at 355 South Grand Avenue,

Suite 1650, Los Angeles, California 90071, and our telephone number is (888) 688-6769.

Available Information

Our website address is www.hyrecar.com. The contents of, or information accessible through, our website are not part of this Annual Report on
Form 10-K, and our website address is included in this document as an inactive textual reference only. We make our filings with the SEC, including our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, available free of
charge on our website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the SEC. The public may read and copy
the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that
contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. The information contained in
the SEC’s website is not intended to be a part of this filing.

-7-

Item 1A. Risk Factors

You should carefully consider the risks described below, as well as general economic and business risks and the other information in this Annual
Report on Form 10-K. The occurrence of any of the events or circumstances described below or other adverse events could have a material adverse effect
on our business, results of operations and financial condition and could cause the trading price of our common stock to decline. Additional risks or
uncertainties not presently known to us or that we currently deem immaterial may also harm our business.

Risks Related to Our Business and Our Industry
Our limited operating history makes it difficult to evaluate our current business and prospects and may increase the risks associated with your
investment.

We were founded in 2014. Our limited operating history makes it difficult to evaluate our current business and prospects and plan for and model
our future growth. We have encountered and will continue to encounter risks and uncertainties frequently encountered by rapidly growing companies in
developing markets. If our assumptions regarding these risks and uncertainties are incorrect or change in response to changes in the ridesharing or car-
sharing market, our results of operations and financial results could differ materially from our plans and forecasts. Although we have experienced periods
of rapid growth since our inception, there is no assurance that such growth will continue. Any success we may experience in the future will depend in large
part on our ability to, among other things:

● maintain and expand our customer base and the ways in which customers use our platform;

● expand revenue from existing customers through increased or broader use of our platform;

● improve the performance and capabilities of our platform through research and development;

● effectively expand our business domestically and internationally, which will require that we rapidly expand our sales force and fill key

management positions; and

● successfully compete with other companies that currently provide, or may in the future provide, solutions like ours.

If we are unable to achieve our key objectives, including the objectives listed above, our business and results of operations will be adversely

affected, and the value of our securities could decline.

The COVID-19 pandemic has disrupted and harmed, and is expected to continue to disrupt and harm, our business, financial condition and results of
operations. We are unable to predict the extent to which the pandemic and related impacts will continue to adversely impact our business, financial
condition and results of operations and the achievement of our strategic objectives.

Our business, operations and financial performance have been negatively impacted by the COVID-19 pandemic and related public health
responses, such as travel bans, travel restrictions and shelter-in-place orders. The pandemic and these related responses have caused, and are expected to
continue to cause, decreased demand for our platform relative to pre-COVID-19 demand, the global slowdown of economic activity (including a decrease
in demand for a broad variety of goods and services), disruptions in global supply chains, and significant volatility and disruption of financial markets.

The COVID-19 pandemic has subjected our operations, financial performance and financial condition to a number of risks, including, but not

limited to those discussed below:

● Declines in travel as a result COVID-19, including commuting, local travel, and business and leisure travel, has resulted in decreased
demand for our platform which has decreased our anticipated revenue growth trajectory. During certain periods in the past, these factors
have led to a decrease in earning opportunities for drivers on our platform. Changes in travel trends and behavior arising from COVID-19
may continue to develop or persist over time and further contribute to this adverse effect.

● Changes in driver behavior arising from COVID-19 have led to reduced levels of driver availability on our platform. To the extent that driver
availability is limited, our service levels may be negatively impacted, which may adversely affect our business, financial condition and results
of operation.

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●

The responsive measures to the COVID-19 pandemic have caused us to modify our business practices by having employees work remotely
or holding virtual meetings. We may in the future be required to or choose voluntarily to take actions for the health and safety of our
workforce, whether in response to government orders or based on our own determinations of what is in the best interests of our employees
or users of our platform. The effects of the pandemic, including remote working arrangements for employees, may also impact our financial
reporting systems and internal control over financial reporting, including our ability to ensure information required to be disclosed in our
reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. To the
extent these measures result in decreased productivity, harm our company culture, adversely affect our ability to maintain internal controls,
or otherwise negatively affect our business, our financial condition and results of operations could be adversely affected.

Our results of operations vary and are unpredictable from period-to-period, which could cause the trading price of our common stock to decline.

Our results of operations have historically varied from period-to-period and we expect that our results of operations will continue to do so for a
variety of reasons, many of which are outside of our control and difficult to predict. Because our results of operations may vary significantly from quarter-
to-quarter and year-to-year, the results of any one period should not be relied upon as an indication of future performance. We have presented many of the
factors that may cause our results of operations to fluctuate in this “Risk Factors” section. Fluctuations in our results of operations may cause such results
to fall below our financial guidance or other projections, or the expectations of analysts or investors, which could cause the trading price of our common
stock to decline.

The ridesharing market and the market for our service offerings are still in relatively early stages of growth and if such markets do not continue to
grow, grow more slowly than we expect or fail to grow as large as we expect, our business, financial condition and results of operations could be
adversely affected.

The ridesharing market has grown rapidly since we launched our car-sharing marketplace in 2014, but it is still relatively new, and it is uncertain
to what extent market acceptance will continue to grow, if at all. Our success will depend to a substantial extent on the willingness of people to widely-
adopt car-sharing and ride-sharing generally. We cannot be certain whether the COVID-19 pandemic will negatively impact the willingness of drivers or
passengers to participate in ridesharing. If the public does not perceive ridesharing as beneficial, or chooses not to adopt them as a result of concerns
regarding public health or safety, affordability or for other reasons, whether as a result of incidents on Lyft or Uber or similar platforms, the COVID-19
pandemic, or otherwise, then the market for our offerings may not further develop, may develop more slowly than we expect or may not achieve the growth
potential we expect. Additionally, from time to time we may re-evaluate the markets in which we operate, and we have discontinued and may in the future
discontinue operations in certain markets as a result of such evaluations. Any of the foregoing risks and challenges could adversely affect our business,
financial condition and results of operations.

Our business is subject to a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations
could harm our business, financial condition and results of operations.

We are subject to a wide variety of laws in the United States and other jurisdictions. Laws, regulations and standards governing issues such as
transportation network companies (“TNCs”), ridesharing, food and package delivery, worker classification, labor and employment, anti-discrimination,
payments, gift cards, whistleblowing and worker confidentiality obligations, product liability, defects, maintenance and repairs, personal injury, text
messaging, subscription services, intellectual property, consumer protection, taxation, privacy, data security, competition, unionizing and collective action,
arbitration agreements and action waiver provisions, terms of service, mobile application accessibility, autonomous vehicles, bike and scooter sharing,
insurance, vehicle rentals, money transmittal, non-emergency medical transportation, environmental health and safety, background checks, public health,
anti-corruption, anti-bribery, and delivery of goods including (but not limited to) medical supplies, perishable foods and prescription drugs are often
complex and subject to varying interpretations, in many cases due to their lack of specificity. As a result, their application in practice may change or
develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state
and local administrative agencies.

-9-

Recent financial, political and other events have increased the level of regulatory scrutiny on larger companies, technology companies in general
and companies engaged in dealings with independent contractors, such as ridesharing and delivery companies. Regulatory bodies may enact new laws or
promulgate new regulations that are adverse to our business, or, due to changes in our operations and structure or partner relationships as a result of
changes in the market or otherwise, they may view matters or interpret laws and regulations differently than they have in the past or in a manner adverse to
our business. For example, Assembly Bill 5 (as codified in part at Cal. Labor Code sec. 2750.3) codified and extended an employment classification test in
Dynamex Operations West, Inc. v. Superior Court, which established a new standard for determining employee or independent contractor status. The
passage of this bill led to additional challenges to the independent contractor classification of drivers using the Lyft and Uber platforms. Subsequently,
voters in California voted on Proposition 22, a state ballot initiative that provides a framework for drivers utilizing platforms such as Lyft to maintain their
status as independent contractors under California law. Based on the unofficial results published by the California Secretary of State indicating that
Proposition 22 was approved, Lyft filed a petition for rehearing of our appeal with the California Court of Appeal on November 6, 2020.

The results of Proposition 22 in California may cause us to alter our operations and incur additional costs.

The recent passage of Proposition 22 in California may impact how TNCs provide different earning opportunities to drivers in California. We
expect that this transition will require additional costs as TNCs transition drivers to this new model, including the logistics of providing the additional
earning opportunities, and as a result may result in potential changes to the pricing or method by which customers utilize these services, and in turn the
services we offer. The change in model may also affect our ability to attract and retain drivers and vehicle owners in this market. To the extent similar
classification models are adopted in other jurisdictions, we may face similar costs and challenges.

Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results.

Due to the global nature of the Internet, it is possible that various states might attempt to impose additional or new regulation on our business or
levy additional or new sales, income or other taxes relating to our activities. Tax authorities at the federal, state and local levels are currently reviewing the
appropriate treatment of companies engaged in e-commerce and digital services. New or revised international, federal, state or local tax regulations or court
decisions may subject us or our customers to additional sales, income and other taxes. For example, on June 21, 2018, the U.S. Supreme Court rendered a
5-4 majority decision in South Dakota v. Wayfair Inc., 17-494 where the Court held, among other things, that a state may require an out-of-state seller with
no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers in the state, overturning existing court precedent.
Other new or revised taxes and, in particular, digital taxes, sales taxes, VAT and similar taxes could increase the cost of doing business online and decrease
the attractiveness of selling products services over the Internet. New taxes and rulings could also create significant increases in internal costs necessary to
capture data and collect and remit taxes. Any of these events could have a material adverse effect on our business, financial condition and operating results.

Our revenue growth rate and financial performance in recent periods may not be indicative of future performance and such revenue growth rate or
growth in demand for our offerings may slow over time.

We have grown rapidly over the last several years, and therefore, our recent revenue growth rate and financial performance should not be
considered indicative of our future performance. We have experienced a decline in ur anticipated revenue growth trajectory due to decreased demand in the
second quarter for our car-sharing platform in light of the COVID-19 pandemic, and we expect that our revenue growth rate and financial performance in
future quarters will continue to be harmed while responsive measures to COVID-19, such as travel bans and restrictions and shelter-in-place orders, remain
in place. You should not rely on our revenue for any previous quarterly or annual period as any indication of our revenue or revenue growth in future
periods. As we grow our business, our revenue growth rates will slow in future periods due to a number of reasons, which may include impacts of the
COVID-19 pandemic on our business, slowing demand for our offerings, increasing competition, a decrease in the growth of our overall market or market
saturation, increasing regulatory costs and challenges and resulting changes to our business model and our failure to capitalize on growth opportunities.

-10-

If we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely affected.

Our ability to manage our growth and business operations effectively and to integrate new employees, technologies and acquisitions into our
existing business will require us to continue to expand our operational and financial infrastructure and to continue to retain, attract, train, motivate and
manage employees. Continued growth could strain our ability to develop and improve our operational, financial and management controls, enhance our
reporting systems and procedures, recruit, train and retain highly skilled personnel and maintain user satisfaction. Additionally, if we do not effectively
manage the growth of our business and operations, the quality of our offerings could suffer, which could negatively affect our reputation and brand,
business, financial condition and results of operations.

Any actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely affect our reputation, brand, business,
financial condition and results of operations.

Our business involves the collection, storage, processing and transmission of our users’ personal data and other sensitive data. An increasing
number of organizations, including large online and off-line merchants and businesses, other large Internet companies, financial institutions and
government institutions, have disclosed breaches of their information security systems and other information security incidents, some of which have
involved sophisticated and highly targeted attacks. In addition, users on our platform could have vulnerabilities on their own mobile devices that are
entirely unrelated to our systems and platform, but could mistakenly attribute their own vulnerabilities to us. Further, breaches experienced by other
companies may also be leveraged against us. For example, credential stuffing attacks are becoming increasingly common and sophisticated actors can mask
their attacks, making them increasingly difficult to identify and prevent. Certain efforts may be state-sponsored or supported by significant financial and
technological resources, making them even more difficult to detect.

Changes in laws or regulations relating to privacy, data protection or the protection or transfer of personal data, or any actual or perceived failure by
us to comply with such laws and regulations or any other obligations relating to privacy, data protection or the protection or transfer of personal data,
could adversely affect our business.

We receive, transmit and store a large volume of personally identifiable information and other data relating to the users on our platform. Numerous
local, municipal, state, and federal laws and regulations address privacy, data protection and the collection, storing, sharing, use, disclosure and protection
of certain types of data, including the California Online Privacy Protection Act, the Personal Information Protection and Electronic Documents Act, the
U.S. Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, Section 5(c) of the Federal Trade Commission Act, the California
Consumer Privacy Act, or CCPA, and the California Privacy Rights Act, or CPRA, which becomes operative on January 1, 2023. These laws, rules and
regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation and changes in
enforcement, and may be inconsistent from one jurisdiction to another. For example, the CPRA will require new disclosures to California consumers and
affords such consumers new data rights and abilities to opt-out of certain sharing of personal information. The CPRA provides for fines of up to $7,500 per
violation, which can be applied on a per-consumer basis. Aspects of the CPRA and its interpretation and enforcement remain unclear. The effects of this
legislation potentially are far-reaching, however, and may require us to further modify our data processing practices and policies and incur additional
compliance-related costs and expenses. The CPRA and other changes in laws or regulations relating to privacy, data protection and information security,
particularly any new or modified laws or regulations that require enhanced protection of certain types of data or new obligations with regard to data
retention, transfer or disclosure, could greatly increase the cost of providing our offerings, require significant changes to our operations or even prevent us
from providing certain offerings in jurisdictions in which we currently operate and in which we may operate in the future.

Operating as a public company requires us to incur substantial costs and requires substantial management attention. In addition, certain members of
our management team have limited experience managing a public company.

As a public company, we incur substantial legal, accounting and other expenses that we did not incur as a private company. For example, we are
subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the rules and regulations of the SEC and the listing standards of the Nasdaq Global Select Market. For example, the Exchange
Act requires, among other things, we file annual, quarterly and current reports with respect to our business, financial condition and results of operations.
We are also required to maintain effective disclosure controls and procedures and internal control over financial reporting. Compliance with these rules and
regulations has increased and will continue to increase our legal and financial compliance costs, and increase demand on our systems. In addition, as a
public company, we may be subject to stockholder activism, which can lead to additional substantial costs, distract management and impact the manner in
which we operate our business in ways we cannot currently anticipate. As a result of disclosure of information in filings required of a public company, our
business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors.

-11

We rely on third-party background check providers to screen potential drivers, and if such providers fail to provide accurate information, or if providers
are unable to complete background checks because of court closures or other unforeseen government shutdown, or we do not maintain business
relationships with them, our business, financial condition and results of operations could be adversely affected.

We rely on third-party background check providers such as Checkr to screen the records of potential drivers to help identify those that are not
qualified to utilize our platform pursuant to applicable law or our internal standards. Our business has and may continue to be adversely affected to the
extent we cannot attract or retain qualified drivers as a result of such providers being unable to complete certain background checks because of court
closures or other government shutdown related to the COVID-19 pandemic, or to the extent that they do not meet their contractual obligations, our
expectations or the requirements of applicable law or regulations. If any of our third-party background check providers terminates its relationship with us or
refuses to renew its agreement with us on commercially reasonable terms, we may need to find an alternate provider, and may not be able to secure similar
terms or replace such partners in an acceptable time frame. If we cannot find alternate third-party background check providers on terms acceptable to us,
we may not be able to timely onboard potential drivers, and as a result, our platform may be less attractive to qualified drivers. Further, if the background
checks conducted by our third-party background check providers do not meet our expectations or the requirements under applicable laws and regulations,
unqualified drivers may be permitted to provide rides on our platform, and as a result, our reputation and brand could be adversely affected and we could be
subject to increased regulatory or litigation exposure.

We could be subject to claims from TNC or delivery drivers or third parties that are harmed whether or not our platform is in use, which
could adversely affect our business, brand, financial condition and results of operations.

We are regularly subject to claims, lawsuits, investigations and other legal proceedings relating to injuries to, or deaths of, TNC and delivery
drivers or third-parties, as applicable, that are attributed to us through our offerings. We may also be subject to claims alleging that we are directly or
vicariously liable for the acts of the drivers on our platform or for harm related to the actions of drivers, TNC riders, or third parties, or the management
and safety of our platform and our assets, including in light of the COVID-19 pandemic and related public health measures issued by various jurisdictions,
including travel bans, restrictions, social distancing guidance, and shelter-in-place orders. We may also be subject to personal injury claims whether or not
such injury actually occurred as a result of activity on our platform. For example, third parties have in the past asserted legal claims against us in
connection with personal injuries related to the actions of a driver or rider who may have previously utilized our platform, but was not at the time of such
injury. Regardless of the outcome of any legal proceeding, any injuries to, or deaths of, any TNC riders, drivers or third parties could result in negative
publicity and harm to our brand, reputation, business, financial condition and results of operations.

We may require additional capital, which may not be available on terms acceptable to us or at all.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development
efforts, business plans and operating performance and the condition of the capital markets at the time we seek financing. Additionally, COVID-19 may
impact our access to capital and make additional capital more difficult or available only on terms less favorable to us. We cannot be certain that additional
financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when
we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business,
financial condition and results of operations could be adversely affected.

We have had operating losses each year and quarterly period since our inception and may not achieve or maintain profitability in the future.

We have incurred operating losses each year and every quarterly period since inception. For the years ended December 31, 2020 and 2019, our
operating loss was $15,252,689 and $12,689,558 respectively. We expect our operating expenses to decrease in the future as we curtail expenditures by
scaling back certain sales and marketing and research and development expenses. Our revenue growth may slow or our revenue may decline for a number
of other reasons, including reduced demand for our services, economic weakness, global macroeconomic shocks such as the recent coronavirus outbreak,
increased competition, a decrease in the growth or size of the ride-sharing or car-sharing market or any failure to capitalize on growth opportunities. Any
failure to increase our revenue as we grow our business could prevent us from achieving or maintaining profitability. If we are unable to meet these risks
and challenges as we encounter them, our business, financial condition and results of operations may suffer.

-12-

If we do not respond appropriately, the evolution of the automotive industry towards autonomous vehicles and mobility on demand services could
adversely affect our business.

The automotive industry is increasingly focused on the development of advanced driver assistance technologies, with the goal of developing and
introducing a commercially viable, fully automated driving experience. The high development cost of active safety and autonomous driving technologies
may result in a higher risk of exposure to the success of new or disruptive technologies different than those being developed by us. There has also been an
increase in consumer preferences for mobility on demand services, such as car and ridesharing, as opposed to automobile ownership, which may result in a
long-term reduction in the number of vehicles per capita. These evolving areas have also attracted increased competition from entrants outside the
traditional automotive industry. If we do not continue to innovate to develop or acquire new and compelling products and service offerings that capitalize
upon new technologies in response to consumer preferences, this could have an adverse impact on our results of operations.

If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and
our business will be adversely affected.

We continue to be substantially dependent on our direct sales force to obtain new customers and increase sales with existing customers. There is
significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will
depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth. New hires require
significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as
quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do
business. In addition, because we continue to grow rapidly, a large percentage of our sales force is new to our company. If we are unable to hire and train a
sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our
existing customer base, our business will be adversely affected.

Unfavorable global economic, business, or political conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including
conditions that are outside of our control, including the impact of health and safety concerns, such as those relating to the current COVID-19 coronavirus
(“COVID-19”) pandemic. The recent global financial crisis in connection with the COVID-19 pandemic has caused extreme volatility and disruptions in
the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for
our platform and our ability to raise additional capital when needed on acceptable terms, if at all. Any of the foregoing could harm our business and we
cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.

We have no formal contracts with either Uber or Lyft and our current relationships with either of these companies could change in the future, which
could adversely affect our revenues.

Although we have deployed drivers and cars to the systems of both Uber and Lyft since our operations began in 2015, there is currently no formal
contractual relationship in place with either company. We have an arrangement with Lyft that allows us to activate our Drivers through Lyft’s sign-up
portal; however, this is an oral arrangement that has not been memorialized in a written agreement. Consequently, each of these relationships could be
discontinued at any time. In addition, virtually all of our revenue is generated by cars and drivers operating on both the Uber or Lyft platform and therefore
this concentration represents a high degree of risk to us and to potential investors.

The ride-sharing and delivery models may not continue to grow, which would adversely affect our business.

Our business and future growth is significantly dependent on the continued success of each of Uber, Lyft, Instacart and other software-based

systems that have come into the marketplace to compete with standard taxicab transportation organizations.

While the effect of those companies has been to decrease the cost and therefore increase the utilization of ride-sharing, there can be no assurance
that consumer utilization of these systems will continue to grow, or that competition and the resulting price pressure will not undermine the viability of
these types of systems, thereby adversely affecting our business.

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Our unique peer to peer structure could be duplicated and our inability to accurately predict user behavior could negatively impact our sales business.

Although to date neither Uber nor Lyft have endeavored to develop a peer-to-peer system to match drivers and car owners as we are doing, there
can be no assurance that either one of these companies or other competitors subsequently entering the marketplace will not endeavor to do so, and there can
be no assurance that such competition will not have a negative impact on our business.

Furthermore, although several attempts to match up fleets of cars owned by operators with Uber and Lyft drivers have failed, there can be no
assurance that other entities will not enter the marketplace on this basis with economic and logistical models that solve the problems that caused this
failure.

The market forecasts included in this Annual Report on Form 10-K may prove to be inaccurate, and even if the markets in which we operate achieve
growth, we cannot assure you our business will grow at similar rates, if at all.

Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates, which may not prove to be accurate. Forecasts
relating to the expected growth in the ride-sharing market, including the forecasts or projections referenced in this Annual Report, may prove to be
inaccurate. Even if the ride-sharing market experiences the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is
subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the
forecasts of market growth included in this Annual Report should not be taken as indicative of our future growth.

We rely on third-party insurance policies to insure auto-related risks. If insurance coverage is insufficient for the needs of our business or our
insurance providers are unable to meet their obligations, we may not be able to mitigate the risks facing our business, which could adversely affect our
business, financial condition and results of operations.

We procure third-party insurance policies which provide coverage for both Owners and Drivers on our platform. If the amount of one or more
auto-related claims were to exceed our applicable aggregate coverage limits, we may bear the excess liability. Insurance providers have raised premiums
and deductibles for many businesses and may do so in the future. As a result, our insurance and claims expense could increase. Our business, financial
condition and results of operations could be adversely affected if (i) cost per claim, premiums or the number of claims significantly exceeds our historical
experience and coverage limits, (ii) we experience a claim in excess of coverage limits, (iii) our insurance providers fail to pay insurance claims, or (iv) we
experience a claim for which coverage is not provided.

We rely on third-party background check providers to screen potential drivers, and if such providers fail to provide accurate information, or if
providers are unable to complete background checks because of court closures or other unforeseen government shutdown, or we do not maintain business
relationships with them, our business, financial condition and results of operations could be adversely affected.

We could be subject to claims from TNC or delivery drivers or third parties that are harmed whether or not our platform is in use, which could
adversely affect our business, brand, financial condition and results of operations.

-14-

Our actual losses may exceed our insurance reserves, which could adversely affect our financial condition and results of operations.

We establish insurance reserves for claims incurred but not yet paid and claims incurred but not yet reported and any related estimable expenses,
and we periodically evaluate and, as necessary, adjust our insurance reserves as our experience develops or new information is learned. We employ various
predictive modeling actuarial techniques and make numerous assumptions based on limited historical experience and industry statistics to estimate our
insurance reserves. Estimating the frequency and severity of claims, as well as related judgment or settlement amounts, is inherently difficult, subjective,
and speculative. A number of external factors can affect the actual losses incurred for any given claim, including the length of time the claim remains open,
fluctuations in healthcare costs, legislative and regulatory developments, jurisdiction and judicial developments. Additionally, we may encounter in the
future, instances of insurance fraud, which could increase our actual insurance-related costs. For any of the foregoing reasons, our actual losses for claims
and related expenses may deviate, individually or in the aggregate, from the insurance reserves reflected in our consolidated financial statements. If we
determine that our estimated insurance reserves are inadequate, we may be required to increase such reserves at the time of the determination, which could
result in an increase to our net loss in the period in which the deficiency is determined and negatively impact our financial condition and results of
operations.

Our operations are dependent on our current management. The loss of any member of our management team could adversely affect our operations and
financial results.

We are highly dependent upon the retention of the services of our current executive management team, specifically Joseph Furnari, Mike Furnari,
Henry Park, Scott Brogi and Brian Allan. The loss of any one of these individuals could adversely affect our operations and financial results. Our business
also depends on our ability to attract and retain additional highly qualified management, technical, operating, and sales and marketing personnel. We do not
currently maintain key person life insurance policies on any of our employees. We do not have fixed term employment agreements with any of our
management employees, all of whom could terminate their relationship with us at any time.

We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results
of operations.

The market for ridesharing and car-sharing services is intensely competitive and characterized by rapid changes in technology, customer
requirements, industry standards and frequent new service introductions and improvements. We anticipate continued challenges from current competitors,
as well as by new entrants into the industry. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position
could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.

-15-

The results of Proposition 22 in California may cause us to alter our operations and incur additional costs.

The recent passage of Proposition 22 in California may impact how TNCs provide different earning opportunities to drivers in California. We expect
that this transition will require additional costs as TNCs transition drivers to this new model, including the logistics of providing the additional earning
opportunities, and as a result may result in potential changes to the pricing or method by which customersutilize these services, and in turn the services we
offer. The change in model may also affect our ability to attract and retain drivers and vehicle owners in this market. To the extent similar classification
models are adopted in other jurisdictions, we may face similar costs and challenges.

A security breach or other disruption to our information technology systems or our platform could result in the loss, theft, misuse, or unauthorized
disclosure of user or sensitive company information, could disrupt our operations, or could frustrate or thwart our users’ ability to access our products
and services, which could damage our relationships with users and partners, may cause our users and partners to cut back on or stop using our
products and services altogether, could expose us to litigation or regulatory proceedings, or harm to our reputation, any of which could seriously harm
our business.

Our business involves the storage and transmission of a significant amount of personal and/or confidential information, including the personal
information of our users, the personal information of our drivers and employees, information relating to user preferences, confidential information of our
partners, and our own proprietary financial, operational and strategic information. The protection of our information, as well as information relating to our
users, drivers, partners, and employees, is vitally important to us as the loss, theft, misuse, or unauthorized disclosure of such information could lead to
significant reputational or competitive harm, result in litigation involving us or our business partners, expose us to regulatory proceedings, and cause us to
incur substantial liability or expenses.

As has been well documented in the media, the frequency, intensity, and sophistication of cyber-attacks and data security incidents has
significantly increased in recent years. As with many businesses, we are subject to numerous data privacy and security risks, which may prevent us from
maintaining the privacy of personal, confidential, and sensitive information, result in the disruption of our business, and require us to expend significant
resources attempting to secure and protect such information and respond to incidents, any of which could seriously harm our business. Due to the increased
risk of these types of attacks and incidents, we expend significant resources on information technology and data security tools, measures, and processes
designed to protect personal, confidential or sensitive information and to ensure an effective response to any cyber-attack or data security incident. Whether
or not these measures are ultimately successful, the expenditures could have an adverse impact on our financial condition and results of operations and
divert management’s attention from pursuing our strategic objectives.

-16-

In addition, although we take the security of our information technology systems and platform seriously, our efforts to protect the personal and
confidential information of our users, drivers, partners, employees, and company may be unsuccessful due to the actions of third parties, malicious code,
software bugs, or other technical malfunctions. Despite our security efforts, because the techniques used to obtain unauthorized access to information
technology systems and our platform are constantly evolving and, in some cases, becoming more sophisticated and harder to detect, we may be unable to
anticipate these techniques or implement adequate preventive measures in response, and cyber-attacks or data incidents could remain undetected for some
period, which could potentially result in greater harm to our systems, our platform, and the information stored and transmitted by our systems. In addition,
and despite our security efforts and training, our employees may also inadvertently or intentionally cause security incidents that could result in the
unauthorized disclosure of personal or confidential information, and third parties may attempt to fraudulently induce employees or users to disclose
information to gain access to our data or our users’ data. If any of these events occur, our confidential information or our users’ personal information could
be accessed, acquired, disclosed, or used without authorization, which could harm our relationships with users, put us at a competitive disadvantage, result
in the deterioration of our users’ confidence in us, cause our partners to reconsider their relationship with our company or impose more onerous contractual
provisions, and subject us to potential litigation, liability, fines, and penalties. For example, we could be subject to regulatory or other actions pursuant to
domestic privacy laws, including newer regulations such as the California Consumer Privacy Act. This could result in costly investigations and litigation,
civil or criminal penalties, operational changes, and negative publicity that could adversely affect our reputation.

Further, some of our partners may store personal or confidential information that we share with them. If these third parties fail to implement
adequate data-security practices or fail to comply with our terms and policies, our users’ data may be improperly accessed, acquired, or disclosed. And
even if these third parties take all these steps, their networks and information technology systems may still suffer a security breach, which could
compromise our users’ data or our company data. Any incidents where our users’ information or confidential company information is accessed without
authorization, improperly disclosed, or misused, or incidents that violate our terms of service or policies, could damage our reputation and our brand and
diminish our competitive position. Maintaining the trust of our users is important to sustain our growth, retention, and user engagement. Concerns over our
privacy practices, whether actual or unfounded, could damage our reputation and brand and deter users, advertisers, and partners from using our products
and services. Any of these occurrences could seriously harm our business.

The market price of our common stock may be volatile and adversely affected by several factors

Risks Related to Our Common Stock

● our ability to execute our business plan;
● operating results below expectations
● announcements of technological innovations or new products by us or our competitors;
● other external factors, including the effects of the COVID-19 pandemic;
● our issuance of additional securities, including debt or equity or a combination thereof, necessary;
● period-to-period fluctuations in our financial results; and
● whether an active trading market in our common stock develops in maintained

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating

performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

-17-

We may acquire other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders and otherwise
disrupt our operations and adversely affect our operating results.

We may in the future seek to acquire or invest in businesses, applications and services or technologies that we believe could complement or
expand our services, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the
attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are
consummated.

In addition, we do not have any experience in acquiring other businesses. If we acquire additional businesses, we may not be able to integrate the
acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. We also may not
achieve the anticipated benefits from the acquired business due to a number of factors, including:

● inability to integrate or benefit from acquired technologies or services in a profitable manner;

● unanticipated costs or liabilities associated with the acquisition;

● difficulty integrating the accounting systems, operations and personnel of the acquired business;

● difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

● difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenue,

licensing, support or professional services model of the acquired company;

● diversion of management’s attention from other business concerns;

● adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;

● the potential loss of key employees;

● use of resources that are needed in other parts of our business; and

● use of substantial portions of our available cash to consummate the acquisition.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets,
which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges
to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating

results. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer.

-18-

If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and
trading volume may decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us, our
business, our markets and our competitors. We do not control these analysts. If securities analysts do not cover our common stock, the lack of research
coverage may adversely affect the market price of our common stock. Furthermore, if one or more of the analysts who do cover us downgrade our stock or
if those analysts issue other unfavorable commentary about us or our business, our stock price would likely decline. If one or more of these analysts cease
coverage of us or fails to regularly publish reports on us, we could lose visibility in the market and interest in our stock could decrease, which in turn could
cause our stock price or trading volume to decline and may also impair our ability to expand our business with existing customers and attract new
customers.

Future sales and issuances of our securities could result in additional dilution of the percentage ownership of our shareholders and could cause our
share price to fall.

We expect that significant additional capital will be needed in the future to continue our planned operations, including research and development,
increased marketing, hiring new personnel, commercializing our products and services, and continuing activities as an operating public company. To the
extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution. We may sell common stock, convertible
securities or other equity securities in one or more transactions at prices and in a manner, we determine from time to time. If we sell common stock,
convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also
result in material dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders.

We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate
declaring or paying any cash dividends for the foreseeable future. Any return to shareholders will therefore be limited to the increase, if any, of our share
price.

We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth
companies, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition,
pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we intend to take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can
delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We cannot predict if investors will
find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there
may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions
until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year
in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the
completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the
date on which we are deemed to be a large accelerated filer under the rules of the SEC.

We may be at risk of securities class action litigation.

We may be at risk of securities class action litigation. In the past, technology companies have experienced significant stock price volatility. If we
face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business and results
in a decline in the market price of our common stock.

-19-

Anti-takeover provisions in our charter documents and under the General Corporation Law of the State of Delaware could make an acquisition of us
more difficult and may prevent attempts by our stockholders to replace or remove our management.

Provisions in our amended and restated certificate of incorporation and our bylaws may delay or prevent an acquisition of us or a change in our
management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, and the ability of the
board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the
provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which prohibits stockholders owning in excess of 15% of the
outstanding combined organization voting stock from merging or combining with the combined organization. Although we believe these provisions
collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply
even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our
stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the board of directors,
which is responsible for appointing the members of management.

Anti-takeover provisions in our charter documents could discourage, delay or prevent a change in control of us and may affect the trading price of our
common stock.

Our corporate documents and the DGCL contain provisions that may enable our board of directors to resist a change in control of us even if a

change in control were to be considered favorable by our stockholders. These provisions:

● stagger the terms of our board of directors and require 66 and 2/3% stockholder voting to remove directors, who may only be removed for

cause;

● authorize our board of directors to issue “blank check” preferred stock and to determine the rights and preferences of those shares, which may

be senior to our common stock, without prior stockholder approval;

● establish advance notice requirements for nominating directors and proposing matters

to be voted on by stockholders at

stockholders’ meetings;

● prohibit our stockholders from calling a special meeting and prohibit stockholders from acting by written consent;

● require 66 and 2/3% stockholder voting to effect certain amendments to our certificate of incorporation and bylaws; and

● prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates.

These provisions could discourage, delay or prevent a transaction involving a change in control of us. These provisions could also discourage
proxy contests and make it more difficult for stockholders to elect directors of their choosing and cause us to take other corporate actions our stockholders
desire.

-20-

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of
the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, any action asserting a claim arising
pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or any action asserting a
claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable
parties named as defendants therein and the claim not being one which is vested in the exclusive jurisdiction of a court or forum other than the Court of
Chancery or for which the Court of Chancery does not have subject matter jurisdiction. Any person purchasing or otherwise acquiring any interest in any
shares of our common stock shall be deemed to have notice of and to have consented to this provision of our amended and restated certificate of
incorporation. This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents
even though an action, if successful, might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional
litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery may also reach different
judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to
bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively, if a court were to find this provision of
our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or
proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on our
business, financial condition or results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our corporate headquarters are located in Los Angeles, California and our current lease for this office space extends through June 30, 2021. We
believe that our existing facilities are suitable and adequate to meet our current needs. We intend to add new facilities or expand existing facilities as we
add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our
operations.

Item 3. Legal Proceedings

Except as may be set forth below, we are not a party to any legal proceedings, and we are not aware of any claims or actions pending or threatened
against us. In the future, we might from time to time become involved in litigation relating to claims arising from our ordinary course of business, the
resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows.

On November 13, 2018, two founders of the Company (the “Claimant Founders”), initiated two lawsuits in the Superior Court of California,
County of San Francisco (“SFSC”), entitled Nathaniel Farber v. HyreCar Inc., Case No. CGC-18-571257 and Josiah Larkin v. HyreCar Inc., Case No.
CGC-18-571258. The complaints for the lawsuits, which were largely duplicative, alleged that the Company breached a Settlement Agreement by and
between the Company and the Claimant Founders by not allowing the Claimant Founders to sell stock in the Company’s initial public offering (“IPO”),
failing to buyback Claimant Founders’ stock at the time of the IPO, allowing the issuance of certain stock without proportionately increasing the stock
ownership of Claimant Founders, and not providing certain required information to the Claimant Founders. The Company strongly disagreed with all of the
allegations and vigorously contested both lawsuits. The Company believes that, at all times, its actions were consistent with the terms, conditions, and
context of the Settlement Agreement, as well as applicable law. Pursuant to a motion brought by the Company, the two lawsuits were joined for pretrial and
trial purposes. As the case progressed, the Claimant Founders narrowed their allegations significantly. Mr. Larkin dismissed all of his claims. Mr. Farber
dismissed all of his allegations except for an allegation that the Company failed to buyback the Claimant Founders’ stock at the time of the IPO. The
Company believed that the remaining claim was without merit, but without admitting fault agreed to settle any and all claims between the Claimant
Founders and the Company. As part of the settlement, the Company agreed to issue 78,431 shares of the Company’s common stock to Mr. Farber at an
agreed upon value of $200,000 . In addition, the Company entered into general mutual releases with each Claimant Founder.

Item 4. Mine Safety Disclosures

Not applicable.

-21-

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Part II

On June 27, 2018, our common stock began trading on the Nasdaq Capital Market under the symbol “HYRE.” Prior to that time, there was no

public market for our common stock.

Stockholders

As of March 30, 2021, there were 9,059 stockholders of record of our common stock. The actual number of holders of our common stock is
greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or
held by other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

Dividend Policy

We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common
stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any
future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of
operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors
deems relevant.

Recent Sales of Unregistered Securities

During the year ended December 31, 2020, the Company issued 2,612 shares of our common stock upon the exercise of outstanding warrants.

The foregoing offers, sales and issuances were exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D thereunder.

Equity Compensation Plans

The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of

this Annual Report on Form 10-K.

Issuer Purchases of Equity Securities

We did not purchase any of our registered equity securities during the period covered by this Annual Report.

Item 6. Selected Financial Data

As a smaller reporting company, as such term is defined in 17 C.F.R. 229.10, we are not required to provide disclosure for this item.

-22-

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated
financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information
contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our
business, include forward-looking statements that involve risks and uncertainties. You should review “Risk Factors” for a discussion of important factors
that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following
discussion and analysis.

Our Company

We operate in the car sharing marketplace for ride sharing and delivery through our proprietary platform. The Company has established a leading
presence in Transportation as a Service (TaaS) through vehicle owners and institutions, such as franchise car dealerships, independent car dealerships and
rental car companies, who have been disrupted by automotive asset sharing. We are based in Los Angeles, California and car owners and drivers can
currently use the platform nationwide. Our unique revenue opportunity for both owners (“Owners”) and drivers (“Drivers”) are providing a flexible, secure
and reliable marketplace. We categorize our operations into one reportable business segment: Rental, consisting primarily of our vehicle rental operations
in the United States.

Business and Trends

We generate revenue by taking a fee from out of each rental processed on our platform. Each rental transaction represents a Driver renting a car
from an Owner. Drivers pay a daily rental rate set by the Car Owner, plus a 10% HyreCar Driver Fee and direct daily insurance costs. Owners receive their
daily rental rate minus a 15-25% HyreCar Owner Fee. The net revenue is currently approximately $24.16 per rental day to HyreCar. We have expanded the
rental days serviced by our platform at a compound annual growth rate in excess of 63.3% to an annual level of more than 1,000,000 rental days in 2020 as
displayed below:

-23-

Gross billings are an important measure by which we evaluate and manage our business. We define gross billings as the amount billed to Drivers,
without any adjustments for amounts paid to Owners, refunds or rebates. Gross billings include transactions from both our revenues recorded on a net and a
gross basis. It is important to note that gross billings is a non-U.S. GAAP measure and as such, is not recorded in our consolidated financial statements as
revenue. However, we use gross billings to asses our business growth, scale of operations and our ability to generate gross billings is strongly correlated to
our ability to generate revenues. Gross billings may also be used to calculate net revenue margin, defined as the Company’s U.S. GAAP reportable revenue
over gross billings. Using the definition of net revenue margin, HyreCar’s net revenue margin has increased to approximately 45.2% ($25,231,741
HyreCar’s 2020 U.S. GAAP revenue over $55,761,917 Total Gross Billings).

Our operating results are subject to variability due to seasonality, macroeconomic conditions such as the coronavirus outbreak (“COVID-19”) and
other factors. Car rental volumes tend to be associated with travel and driving holidays, where there is an influx of Uber and Lyft demand. In 2020, we
continued to operate in an uncertain and uneven economic environment marked by heightened economic and geopolitical risks due to the COVID-19
situation.

Our objective is to focus on strategically accelerating our growth, strengthening our position as a leading provider of vehicle rental services to
ridesharing (Lyft and Uber) and delivery (Door Dash, Instacart, Postmates) drivers, continuing to enhance our customers’ rental experience, and controlling
costs and driving efficiency throughout the organization. We operate in a high growth industry and we expect to continue to face challenges and risks. We
seek to mitigate our exposure to risks in numerous ways, including delivering upon our core strategic initiatives, continued growth of fleet levels to match
changes in demand for vehicle rentals, and appropriate investments in technology.

Some highlights from 2020 include:

● Net rental days totaled approximately 1,014,000 rental days for the year ended December 31, 2020, an increase of approximately 393,000
rental days or 63.3% over the 621,000 rental days recognized during the year ended December 31, 2019, as the Company continued to expand
its presence in key markets.

● Net revenues totaled $25,231,741 for the year ended December 31, 2020, an increase of $9,376,817 or 59.1% over the $15,854,924

recognized during the year ended December 31, 2019, primarily as a result of the higher net rental days year over year.

● Cost of Sales totaled $16,961,450 for the year ended December 31, 2020, an increase of $7,118,907 or 72.3% over $9,842,543 recognized
during the year ended December 31, 2019. The increase was primarily attributed to increase in net rental days revenues and insurance costs.

● Gross profit totaled $8,270,291 for the year ended December 31, 2020, an increase of $2,257,910 or 37.6% over the $6,012,381 recognized during
the year ended December 31, 2019. The increase in gross profit was primarily attributed to higher rental days and partially offset by insurance
costs.

● Operating expenses, consisting of general and administrative, sales and marketing, and research and development expenses totaled
$23,522,980 for the year ended December 31, 2020, an increase of $4,821,041 or 25.8% over $18,701,939 recognized during the year ended
December 31, 2019. The increase in operating expenses was related to the scaling of our business across all functional areas and non-cash
stock-based compensation expense.

● Net loss totaled $15,220,901 for the year ended December 31, 2020, an increase of $2,702,524 or 21.6% over $12,518,377 recognized during
the year ended December 31, 2019. The increase in net loss was driven by the higher operating costs and non-cash stock-based compensation
expense noted above, partially offset by the higher net revenues recognized during the year ended December 31, 2020.

● Adjusted EBITDA totaled ($11,015,194) or the year ended December 31, 2020, a decrease of $1,369,112 or 14.2% from ($9,646,082) recognized
for the prior year ended December 31, 2019, primarily as a result of increase in operating costs, but on a per share basis this represented an
improvement to ($0.87) per share from ($0.90) per share the prior year.

-24-

Management’s Plan

We have incurred operating losses since Inception and historically relied on debt and equity financing for working capital. Going forward the
Company intends to fund its operations through increased revenue from operations and the funds raised through prior and recent public securities offerings.
On February 9, 2021, the Company completed underwritten public offering of an aggregate of 2,530,000 million shares of its common stock at a public
offering price of $11.75 per share for gross proceeds of approximately $29.7 million, before deducting underwriting discounts and commissions and
estimated offering expenses, which includes the exercise in full of the underwriters’ option to purchase 330,000 additional shares. Our annualized rental
day run rate increased to over 1,100,000 as we set a new all-time high three-month average for the Company with over 90,000 monthly rental days in the
fourth quarter of 2020. Our business model and platform allowed us to leverage new opportunities within this crisis and create a larger market
with ridesharing, food and package delivery. As states continue to reopen, we expect to see steady revenue growth in 2021.

On November 4, 2020, California voters passed Proposition 22 which protects the ability of app-based ridesharing and delivery drivers to continue
working as independent contractors, while adding important new benefits and protections. We believe this establishes an important legal precedent that will
continue to provide significant
opportunities will continue for vehicle rentals from ridesharing and delivery drivers in the state of California and beyond, and for HyreCar, this will be
incremental business as ridesharing and delivery continues to recover.

The company announced new an expanded strategic partnership with AmeriDrive Holdings to create a national network of vehicle supply and fleet

maintenance operations in January 2021, and is in the process of expanding operations starting in the Southeast United States in the first half of 2021.

We completed an equity financing in February of 2021 which provided approximately $29.7 million in gross proceeds to the company, before
underwriting expenses and other costs. This will provide additional capital to support initiatives to drive rental day and Net revenue growth and make our
vehicle platform more automated and scalable.

Finally, on February 10, 2021, TrueCar announced a partnership with HyreCar to provide its car sharing marketplace with a modern digital car
buying and trade-in solution. The TrueCar partnership offers a seamless way to address this significant market in a relevant and effective manner for
dealers and customers. TrueCar helps create awareness that vehicle dealers can benefit from serving the Transportation -as-a-Service ("TaaS") industry via
Company's platform.

Based on generally increasing revenues through the normal course of business and a high relative amount of variable costs as well as capital

currently on hand, we believe the Company’s has sufficient resources to continue to operate its business for at least the next 12 months.

Below is our nationwide footprint with volumes of quarterly rental days and net revenues from the quarters ended December 31, 2018 through

December 31, 2020.

-25-

Components of Our Results of Operations

The following describes the various components that make up our results of operations, discussed below:

Revenue is earned from fees associated with matching Drivers to Owners of cars that meet the strict requirements imposed by ride-sharing
services such as Uber and Lyft with Drivers. A Driver will typically rent a car through one transaction via our on-line marketplace. We recognize GAAP
reportable revenue primarily from a transaction fee and an insurance fee when a car is rented on our platform when the Company 1) identifies the contract
with the customer 2) identifies the performance obligations in the contract 3) determines the transaction price, 4) determines if an allocation of that
transaction price is required to the performance obligations in the contract, and 5) recognizes revenue when or as the companies satisfies a performance
obligation.

Cost of revenues primarily include direct fees paid for driver insurance, insurance claim payments based on the policy in effect at the time of loss,

merchant processing fees, technology and hosting costs, and motor vehicle record fees incurred for paid driver applications.

General and administrative costs include all corporate and administrative functions that support our business. These costs also include payroll for
officers and operational staff, stock-based compensation expense, consulting costs, professional fees, and other costs that are not included in cost of
revenues. Research and development costs are related to activities such as user experience and user interface development, database development and
maintenance, and technology related expenses to research, improve, implement, or maintain technology and systems utilized throughout our enterprise.
Research and development costs are expensed as incurred. Sales and marketing expenses primarily consist of personnel-related compensation costs,
commissions expenses, advertising expenses, and marketing partnerships with third parties. Sales and marketing costs are expensed as incurred.

Other income/expense includes non-operating income and expenses including interest income and expense.

Results of Operations

December 31, 2020 compared to December 31, 2019

Revenues and Gross Profit. Revenues totaled $25,231,741 for the year ended December 31, 2020, an increase of $9,376,817 or 59.1% over the
$15,854,924 recognized during the year ended December 31, 2019. Gross profit totaled $8,270,291 for the year ended December 31, 2020, an increase of
$2,257,910 or 37.6% over the $6,012,381 recognized during the year ended December 31, 2019. The increase in revenues and gross profit were primarily
attributed to the higher rental days partially offset by increase in insurance costs particularly on the insurance premium and claims expenses.

Operating Expenses. Operating expenses, consisting of general and administrative, sales and marketing, and research and development expenses
totaled $23,522,980 for the year ended December 31, 2020, an increase of $4,821,041 or 25.8% over $18,701,939 recognized during the year ended
December 31, 2019. The increase in operating expenses was related to the scaling of our business across all functional areas and stock-based compensation
expense. General and administrative totaled $12,332,147 for the year ended December 31, 2020, an increase of $3,770,392 or 44.0% over $8,561,755
recognized during the year ended December 31, 2019. The increase was primarily attributed to increase in stock-based compensation expense, headcount
and salaries, legal, operations and support functions. Sales and marketing totaled $8,141,675 for the year ended December 31, 2020, an increase of
$497,656 or 6.5% over $7,644,019 recognized during the year ended December 31, 2019. The increase was primarily attributed to increase in commissions
expense and offset by decrease in digital advertising. Research and development totaled $3,049,158 for the year ended December 31, 2020, an increase of
$552,993 or 22.2% over $2,496,165 recognized during the year ended December 31, 2019. The increase was primarily attributed to the growth in the
technology team related to the enhancement and maintenance of our digital marketplace technology platform.

-26-

Loss from Operations. Loss from operations for the year ended December 31, 2020 was $15,252,689 as compared to a loss from operations of
12,689,558 for the year ended December 31, 2019. The increase in loss from operations was driven by the higher operating costs and non-cash stock-based
compensation expense described above, partially offset by the higher net revenues recognized during the year.

Other (Income) Expense. Other (income) expense for the year ended December 31, 2020 totaled $32,588 in net other income, a decrease of
$139,393 or 81.1% over $171,981 of net income for the year ended December 31, 2019. The decrease was primarily due to decrease in interest income and
increase in non-operational expenses and loan interest expense.

Net Loss. Net loss for the year ended December 31, 2020 was $15,220,901 as compared to a net loss for the year ended December 31, 2019of
$12,518,377. The increase in net loss was primarily driven by the higher operating costs and non-cash stock-based compensation expense described above,
partially offset by the higher net revenues recognized during the year ended December 31, 2020.

Non-GAAP Financial Measures

Gross Billings

We believe gross billings is an important measure by which we evaluate and manage our business. We define gross billings as the amount billed to
Drivers, without any adjustments for amounts paid to Owners or refunds. Gross billings include transactions from both our revenues recorded on a net and
a gross basis. It is important to note that gross billings is a non-GAAP measure and as such, is not recorded in our consolidated financial statements as
revenue. However, we use gross billings to asses our business growth, scale of operations and our ability to generate gross billings is strongly correlated to
our ability to generate revenues. Gross billings may also be used to calculate net revenue margin, defined as the company’s GAAP reportable revenue over
gross billings.

The table below sets forth a reconciliation of our GAAP reported revenues to gross billings for the years ended December 31, 2020 and 2019:

Revenues (GAAP reported revenue)

Add: Refunds and rebates
Add: Owner payments (not recorded in consolidated financial statements)

Gross billings (non-GAAP measure not recorded in consolidated financial statements)

Adjusted EBITDA

2020
25,231,741 $
1,967,668
28,562,508
55,761,917 $

2019
15,854,924
1,267,971
18,695,704
35,818,599

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance and the operating leverage in our
business. Because Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these
measures for business planning purposes. We expect Adjusted EBITDA will increase over the long term as we continue to scale our business and achieve
greater efficiencies in our operating expenses.

We calculate Adjusted EBITDA as net loss, adjusted to exclude:
● other income (expense), net;

● provision for income taxes;

● depreciation and amortization;

-27-

● stock-based compensation expense;

● payroll tax expense related to stock-based compensation expense; and

● changes to the liabilities for insurance required by regulatory agencies attributable to historical periods.

For more information regarding the limitations of Adjusted EBITDA and a reconciliation of net loss to Adjusted EBITDA, see the section titled

“Reconciliation of Non-GAAP Financial Measures.”

Reconciliation of Non-GAAP Financial Measures

We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of
our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors
concerning our financial performance. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited.
In addition, other companies may not publish these or similar metrics. Furthermore, these measures have certain limitations in that they do not include the
impact of certain expenses that are reflected in our consolidated statements of operations that are necessary to run our business. Thus, our Adjusted
EBITDA should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

We compensate for these limitations by providing a reconciliation of Adjusted EBITDA to the related GAAP financial measures, revenue and net
loss, respectively. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to
view Adjusted EBITDA in conjunction with their respective related GAAP financial measures.

The following table provides a reconciliation of net loss to Adjusted EBITDA for the years ended December 31, 2020 and 2019:

Net loss
Adjusted to exclude the following:
Other expense (income), net
Provision for income taxes
Depreciation and amortization
Stock-based compensation expense
Payroll tax expense related to stock-based compensation expense
Changes to the liabilities for insurance reserves

Adjusted EBITDA

-28-

Year ended
December 31,
2020
(15,220,901)

Year ended
December 31,
2019
(12,518,377)

(32,588)
800
76,834
3,303,211
77,303
780,147

(171,981)
800
70,400
1,988,626
-
984,450

(11,015,194)

(9,646,082)

Liquidity and Capital Resources

As of December 31, 2020, our principal sources of liquidity were cash and cash equivalents of $4,923,515 compared to $10,657,140 as of

December 31, 2019. Cash and cash equivalents consisted of money market deposit accounts denominated in U.S. dollars.

In July 2019, we received net proceeds of $11,321,250 upon the completion of our secondary public offering. Further, in February 9, 2021, we
received net proceeds of $27.6 million upon the completion an underwritten public offering of an aggregate of 2,530,000 million shares of common stock at
a public offering price of $11.75 per share, after deducting underwriting discounts and commissions and estimated offering expenses.

We have primarily financed our operations through our IPO and recent public offerings, and proceeds of the PPP Loan, in addition to payments
received through our platform. In February 2021, we completed an equity offering which provided approximately $29.7 million in gross proceeds to the
Company to support continued growth of the business in 2021 and beyond. As a result we believe our existing cash and cash equivalent and proceeds from
revenue generating activities will be sufficient to meet our working capital and capital expenditures needs over at least the next 12 months more fully
described in Management's Plan above.

Our future capital requirements will depend on many factors, including, but not limited to our growth, our ability to attract and retain drivers and
car owners on our platform, the continuing market acceptance of our offerings, the timing and extent of spending to support our efforts to improve our
customer experience, actual insurance payments for which we have made reserves, the timing and extent of investment we are making in policy,
government relations, and the expansion of sales and marketing activities. Further, we may in the future enter into arrangements to acquire or invest in
businesses, products, services and technologies. We may decide to, or be required to, seek additional equity or debt financing for any of these reasons, or
others that may arise. If we are unable to raise capital in the future, we may need to curtail expenditures by scaling back certain sales and marketing
expenses.

Cash Flows

Net cash used in operating activities was $7,804,704 for the year ended December 31, 2020. This consisted primarily of a net loss of $15,220,901
offset by non-cash stock-based compensation expense of $3,303,211 largely driven by the recognition of costs related to stock options, RSUs, and shares
issued for services. Additionally, there was an increase in accrued liabilities of $3,548,162, and insurance reserves of $780,147, offset by insurance deposits
of $749,454. The increase in accrued liabilities was primarily driven by increases in insurance premiums accrual due to increased revenue activity and a
revised contract that allowed deferral of payment for approximately six months.

Net cash used in operating activities was for the year ended December 31, 2019 resulted in cash outflows of $8,113,762. This consisted primarily
of a net loss of $12,518,377 offset by non-cash stock-based compensation expense of $1,988,626 and non-cash amortization of debt discount of
$1,515,191. Additionally, there were an increase in accrued liabilities of $128,055 and insurance reserve of $984,450.

Net cash used in investing activities was $2,247 from purchase of property and equipment for the year ended December 31, 2020.

Net cash used in investing activities was $6,207 for the year ended December 31, 2019, which primarily consists of deposits.

Net cash provided by financing activities was $2,073,326 for the year ended December 31, 2020, which primarily consists of net proceeds

received from the PPP loan and proceeds from the exercise of options.

Net cash provided by financing activities was $12,012,239 for the year ended December 31, 2019, which primarily consists of gross proceeds of
sale of common stock in our July 2019 secondary public offering of $12,075,000, exercise of warrants of $873,403, partially offset by offering costs of
$1,017,623.

-29-

Capital Management

We aim to manage capital so that we will maintain optimal returns to shareholders and benefits for other stakeholders. We also aim to maintain a
capital structure that ensures the lowest cost of capital available to the Company. We regularly review the Company’s capital structure and seek to take
advantage of available opportunities to improve outcomes for the Company and its shareholders.

For the years ended December 31, 2020 and 2019, there were no dividends paid and we have no plans to commence the payment of dividends. We
have no current plans to issue further shares on the market but will continue to assess market conditions and the company’s cash flow requirements to
ensure the Company is appropriately funded.

There is no significant external borrowing at the reporting date. Neither the Company nor any of the subsidiaries are subject to externally imposed

capital requirement.

Critical Accounting Policies, Judgments and Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses during the reporting period. Actual
results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

The Company’s most significant estimates and judgments involve recognition of revenue and estimates for future contingent customer incentive

obligations, calculating insurance reserves, and the measurement of the Company’s stock-based compensation.

Stock Based Compensation

The Company accounts for stock awards issued under ASC 718, Compensation – Stock Compensation. Under ASC 718, share-based
compensation cost is measured at the grant date, based on the estimated fair value of the award. Stock-based compensation is recognized as expense over
the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The fair value of each stock option or warrant
award is estimated on the date of grant using the Black-Scholes option valuation model. Restricted shares are measured based on the fair market value of
the underlying stock on the grant date.

Revenue Recognition

The Company generates the majority of its revenue from its ridesharing marketplace that connects vehicle owners and drivers and the related
insurance issued for each rental. Vehicle owners and drivers enter into terms of service with the Company in order to use the HyreCar platform and enter
into a rental contract that governs each rental. In entering into a rental agreement, the driver is charged in a single transaction: the base rental fee as agreed
upon between the driver and vehicle owner, a 10% HyreCar fee on the base rental fee, and a daily insurance charge (“Insurance and administrative fees”),
all based on the number of days the vehicle is to be rented within the contract. HyreCar retains 15-25% of the base rental fee and remits the remaining
portion to the vehicle owner. The 10% fee collected from the driver and 15-25% retained from the owner are considered “Transaction Fees” and the
recorded on a net basis as described below. The Company recognizes revenue daily during the rental periods as the Company is required to maintain
insurance underlying the transaction and as a customary business practice, a driver can return a vehicle early for a refund of the unused rental period.
Insurance and transaction fees are charged to a driver in a single transaction. Drivers currently do not have an option to decline insurance at any point
during the transaction.

The Company also recognizes revenue from other sources such as referrals, motor vehicle record fees (application fees), late rental fees, and other

fees charged to drivers in specific situations.

In applying the guidance of ASC 606, the Company 1) identifies the contract with the customer 2) identifies the performance obligations in the
contract 3) determines the transaction price, 4) determines if an allocation of that transaction price is required to the performance obligations in the
contract, and 5) recognizes revenue when or as the companies satisfies a performance obligation.

-30-

Refunds may occur when the driver returns the owner vehicle early based on the terms of the original contract or cancels the rental prior to
completing the exchange. In limited circumstances, the Company provides contingent consideration in the form of a rebate that is redeemable only if the
customer completes a specific level of transaction over a specific time period. In such cases, the rebate or refund obligation is recognized as a reduction of
revenues. The Company defers revenue in all instances when the earnings process is not yet complete.

The following is a breakout of revenue components by subcategory for the years ended December 31, 2020 and 2019.

Insurance and administration fees
Transaction fees
Other fees
Incentives and rebates
Net revenue

Principal Agent Considerations

Year ended
December 31,
2020
12,819,157 $
11,391,090
1,441,012
(419,518)
25,231,741 $

Year ended
December 31,
2019
7,845,803
6,623,894
1,953,498
(568,271)
15,854,924

The Company evaluates our service offerings to determine if we are acting as the principal or as an agent, which we consider in determining if
revenue should be reported gross or net. One of our primary revenue sources is a transaction fee made from a confirmed booking of a vehicle on our
platform. Key indicators that we evaluate to reach this determination include:

● the terms and conditions of our contracts;

● whether we are paid a fixed percentage of the arrangement’s consideration or a fixed fee for each transaction;

● the party which sets the pricing with the end-user, has the credit risk and provides customer support; and

● the party responsible for delivery/fulfillment of the product or service to the end consumer.

We have determined that we act as the agent in the transaction for vehicle bookings, as we are not the primarily obligor of the arrangement and

receive a fixed percentage of the transaction. Therefore, revenue is recognized on a net basis.

For other fees such as insurance, referrals, motor vehicle records (application fees), and dealer subscription we have determined revenue should be
recorded on a gross basis. In such arrangements, the Company sets pricing, has risk of economic loss, has certain credit risk, provides support services
related to these transactions, and has decision making ability about service providers used .

Income Taxes

The company applies ASC 740 “Income Taxes” (“ASC 740”). Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their consolidated financial statements reported amounts at each period end, based on enacted
tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense
for the period, if any, and the change during the period in deferred tax assets and liabilities. At December 31, 2020 and 2019, the company has established a
full allowance against all deferred tax assets.

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an
uncertain position is recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based
on its technical merit.

-31-

Internal Use Software

Insurance Reserve

The Company records a loss reserve for physical damage and other liability coverage caused to owner vehicles up to the Company's insurance
deductibles. This reserve represents an estimate for both reported accidents claims not yet paid, and claims incurred but not yet reported and are recorded
on a non-discounted basis. The lag time in reported claims is minimal and as such represents a low risk of unreported claims being excluded from the loss
reserve assessment. The adequacy of the reserve is monitored quarterly and is subject to adjustment in the future based upon changes in claims experience,
including the number of incidents for which the Company is ultimately responsible and changes in the cost per claim, or changes to the Company’s policy
as to what amounts of the deductible or claim will be paid by the Company.

While certain liability insurance claims may take several years to completely settle, the Company's liability exposure limit is generally met in the
near term. Due to our limited operational history, the Company makes certain assumptions based on both currently available information to estimate the
insurance reserves as well as third party claims adjuster data provided on existing claims. A number of factors can affect the actual cost of a claim,
including the length of time the claim remains open, economic and healthcare cost trends and the results of related litigation. Furthermore, claims may
emerge in future periods for events that occurred in a prior period that differs from expectations. Accordingly, actual losses may vary significantly from the
estimated amounts reported in the consolidated financial statements. Reserves are reviewed quarterly and adjusted as necessary as experience develops or
new information becomes known. However, ultimate results may differ from the Company’s estimates, which could result in losses over the Company’s
reserved amounts. Such adjustments are recorded in costs of revenues.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements (as defined in the rules and regulations of the SEC) that have or are reasonably likely to have a current
or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material investors.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, as such term is defined in 17 C.F.R. 229.10, we are not required to provide disclosure for this item.

-32-

Item 8. Consolidated Financial Statements and Supplementary Data

The consolidated financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report. An index of those

consolidated financial statements is found in Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal
financial officer, respectively), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended, or the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K. Based on
the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer have concluded
that, as of such date, our disclosure controls and procedures are effective at a reasonable assurance level.

Management’s Annual Report on Internal Controls Over Financial Reporting

We are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the

effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act as long as we are an emerging growth company.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(f) and 15d-
15(f) of the Exchange Act during the quarter ended December 31, 2020 that materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

Item 9B. Other Information

Not applicable.

-33-

Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information required by this Item is incorporated herein by reference to the information that will be contained in our 2021 proxy statement
related to the 2021 Annual Meeting of Stockholders which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General
Instruction G(3) of Form 10-K.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the information that will be contained in our 2021 Proxy Statements,

which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the information that will be contained in our 2021 Proxy Statement,

which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to the information that will be contained in our 2021 Proxy Statement,

which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to the information that will be contained in our 2021 Proxy Statement

which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

-34-

PART IV

Item 15. Exhibits, Consolidated Financial Statements Schedules

(a) The following documents are filed as part of this report:

(1) Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Stockholder's Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

(2) Consolidated Financial Statement Schedules:

F-1
F-2
F-3
F-4
F-5
F-6

All consolidated financial statement schedules have been omitted because they are not applicable, not required or the information required is

shown in the financial statements or the notes thereto.

(3) Exhibits.

Exhibit No.
3.1

Description
Amended and Restated Certificate of Incorporation (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A

(File No. 333-225157)

3.2
4.1
4.2

Amended and Restated Bylaws (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-225157)
Description of Securities Registered Under Section 12 of the Exchange Act
Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to the Registrant’s Registration Statement on

Form S-1/A (File No. 333-225157)

10.1+

Employment Agreement between the Company and Joseph Furnari (incorporated by reference to the Registrant’s Registration Statement on

Form S-1/A (File No. 333-225157)

10.2+

Employment Agreement between the Company and Michael Furnari (incorporated by reference to the Registrant’s Registration Statement

on Form S-1/A (File No. 333-225157)

10.3+

Oral Employment Arrangement between the Company and Abhishek Arora (incorporated by reference to the Registrant’s Registration

Statement on Form S-1/A (File No. 333-225157)

10.4+

Employment Agreement between the Company and Scott Brogi (incorporated by reference to the Registrant’s Current Report on Form 8-K,

dated October 2, 2018)

10.5+

Employment Agreement between the Company and Henry Park (incorporated by reference to the Registrant’s Current Report on Form 8-K,

dated October 30, 2018)

10.6

2016 Equity Incentive Plan and forms of award agreements thereunder (incorporated by reference to the Registrant’s Registration Statement

on Form S-1/A (File No. 333-225157)

10.7

2018 Equity Incentive Plan and forms of award agreements thereunder (incorporated by reference to the Registrant’s Registration Statement

on Form S-8 (File No. 333-229222)

23.1
31.1

Consent of dbbmckennon, independent registered public accounting firm
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as

Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as

Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002

XBRL Instance Document

101.INS
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Indicates a management contract or any compensatory plan, contract or arrangement

Item 16. Form 10-K Summary

Not applicable.

-35-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of HyreCar Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of HyreCar Inc. and subsidiary (the “Company”) as of December 31, 2020 and 2019, the
related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.

/s/ dbbmckennon

We have served as the Company’s auditor since 2016.
Newport Beach, California
March 30, 2021

F-1

HYRECAR INC.
CONSOLIDATED BALANCE SHEETS

Assets

Current assets:

Cash and cash equivalent
Accounts receivable
Deferred offering costs
Insurance deposits
Other current assets

Total current assets

Property and equipment, net
Intangible assets, net
Other assets

Total assets

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:

Accounts payable
Accrued liabilities
Insurance reserve
Note payable, current portion
Deferred revenue
Related party advances

Total current liabilities

Note payable, net of current portion

Total liabilities

Commitments and contingencies (Note 3)

Stockholders’ equity (deficit):

Preferred stock, 15,000,000 shares authorized, par value $0.00001, 0 shares issued and outstanding as of December

31, 2020 and 2019, respectively

Common stock, 50,000,000 shares authorized, par value $0.00001, 17,741,713 and 16,393,171 shares issued and

outstanding as of December 31, 2020 and 2019, respectively

Additional paid-in capital
Subscription receivable - related party
Accumulated deficit

Total stockholders’ equity (deficit)
Total liabilities and stockholders’ equity (deficit)

See accompanying notes to consolidated financial statements

F-2

December 31,
2020

December 31,
2019

4,923,515 $
109,366
33,164
749,454
313,812
6,129,311

8,425
80,031
95,000
6,312,767 $

10,657,140
84,680
—
—
379,425
11,121,245

9,138
153,905
95,000
11,379,288

2,275,559 $
4,359,348
2,113,039
1,554,548

76,059
—
10,378,553

2,232,629
903,912
1,332,892
—
64,808
9,629
4,543,870

444,627
10,823,180

-
4,543,870

—

177
39,725,445
—
(44,236,035)
(4,510,413)
6,312,767 $

164
35,857,835
(7,447)
(29,015,134)
6,835,418
11,379,288

HYRECAR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

Revenues

Cost of revenues

Gross profit

Operating Expenses:

General and administrative
Sales and marketing
Research and development
Total operating expenses

Operating loss

Other (income) expense

Interest expense
Other (income) expense
Total other (income) expense

Loss before provision for income taxes

Provision for income taxes

Net loss

Weighted average shares outstanding - basic and diluted

Weighted average net loss per share - basic and diluted

See accompanying notes to consolidated financial statements

F-3

Year ended
December 31,
2020

Year ended
December 31,
2019

25,231,741 $

15,854,924

16,961,450

9,842,543

8,270,291

6,012,381

12,332,147
8,141,675
3,049,158
23,522,980

8,561,755
7,644,019
2,496,165
18,701,939

(15,252,689)

(12,689,558)

24,299
(56,887)
(32,588)

2,500
(174,481)
(171,981)

(15,220,101)

(12,517,577)

800

(15,220,901) $

(12,518,377)

17,557,868
(0.87) $

13,956,793
(0.90)

HYRECAR INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

Preferred Stock

Common Stock

Amount

— $

— 11,708,041

Amount
$

Additional
Paid-in
Capital

Subscription
Receivable -
Related
Parties

Accumulated
Deficit

117 $ 21,857,017

(7,447) $ (16,496,757) $

Total
Stockholders’
Equity
5,352,930

—

2,188

—

4,025,000
—
—
—
—
—
— 16,393,171

40 12,074,960
(1,017,623)
—
—
—
164 $ 35,857,835

—
—
—

—
—
(12,518,377)
(7,447) $ (29,015,134) $

12,075,000
(1,017,623)
(12,518,377)
6,835,418

—
—

—

—
—

1,047,686
330,390

—

70,703

81,458

—

136,000

610,549

—

274,224

873,400

—

174,502

(2)

—

2,513

—

308,573

—

822,500

1,434,124

—

1,070,936

—

82,894

107,315

—

2,645

—

38,925

—

December 31, 2018
Stock option
compensation
RSU compensation
Stock options
exercised for cash
Shares issued for
services
Warrants exercised
for cash
Warrants exercised
– cashless
Shares issued to
investor from
prior offering
Stock options
exercised -
cashless
Common stock
issued for cash
Offering costs
Net loss
December 31, 2019
Stock option
compensation
Stock option
compensation
modification
Restricted stock
unit compensation
Stock options
exercised for cash
Stock option
exercised -
cashless
Shares issued for
vested restricted
stock units
Shares issued for
legal services and
settlement of
payables and
accrued liabilities
Shares issued for
settlements
Warrants exercised
– cashless
Subscription
receivable relieved
Net loss
December 31, 2020

—

—
—
—
— $

—

—
—
— $

—
—

—

—
—

1,047,686
330,390

—

81,459

—

610,550

—

873,403

—

308,573

—

1,434,132

—

1,070,936

—

107,316

—

567,613

233,853

—

254,535

84,431

567,611

233,852

—

2,612

—

—
—
—
—
— 17,741,713

—
—
—
—
177 $ 39,725,445

—
7,447
—
(15,220,901)
— $ (44,236,035) $

7,447
(15,220,901)
(4,510,413)

See accompanying notes to consolidated financial statements

F-4

HYRECAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization
Relief of related party advance
Write-off of subscription receivable
Stock-based compensation

Changes in operating assets and liabilities:

Accounts receivable
Deferred expense
Insurance deposit
Other current assets
Accounts payable
Accrued liabilities
Insurance reserve
Deferred revenues

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment and intangibles
Deposits and other

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of common stock
Proceeds from exercise of warrants
Proceeds from exercise of stock options
Offering costs associated with underwriters in public offering
Offering costs
Proceeds from note payable
Principal repayment of note payable

Net cash provided by financing activities

Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes

Non cash investing and financing activities:
Related-party advances relieved

Subscription receivable written-off

See accompanying notes to consolidated financial statements

F-5

Year ended
December 31,
2020

Year ended
December 31,
2019

(15,220,901) $

(12,518,377)

76,834
(9,629)
7,447
3,303,211

(24,686)
—

(749,454)

63,613
407,300
3,550,163
780,147
11,251
(7,804,704)

70,400
—
—
1,988,626

76,497
20,927
—
(251,088)
1,375,704
128,055
984,450
11,044
(8,113,762)

(2,247)
—
(2,247)

(1,207)
(5,000)
(6,207)

—
—
107,316
—
(33,165)

2,004,175

(5,000)
2,073,326

12,075,000
873,403
81,459
(753,750)
(263,873)

—
—
12,012,239

(5,733,625)
10,657,140
4,923,515 $

3,892,270
6,764,870
10,657,140

11,329 $
800 $

9,629
7,447 $

—
800

—
—

$
$

NOTE 1 – NATURE OF OPERATIONS

HYRECAR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HyreCar Inc. (which may be referred to as “HyreCar,” the “Company,” “we,” “us” or “our”) was incorporated on November 24, 2014 (“Inception”) in the
State of Delaware. The Company’s headquarters is located in Los Angeles, California. The Company operates a web-based marketplace that allows car
and fleet owners to rent their cars to Uber, Lyft and other gig economy service drivers safely, securely and reliably. The consolidated financial statements of
HyreCar Inc. are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Recent Securities Offering

On February 4, 2021, the Company entered into an underwriting agreement with Lake Street Capital Markets, LLC and Northland Securities, Inc., as
representatives of the several underwriters, in connection with the public offering of 2,200,000 and additional 330,000 of the Company’s shares of common
stock, par value $0.00001 per share. The closing of the offering occurred on February 8, 2021. The net proceeds from the sale is approximately $27.6
million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Plans

We have incurred operating losses since Inception and historically relied on debt and equity financing for working capital. Throughout the next 12 months,
the Company intends to fund its operations through revenue from operations, the remaining capital raised through the recent public securities offerings and
prior follow-on offering described in Note 1 and 5, respectively. The recent public offering, our existing capital and the ability to reduce expense levels
further if necessary depending on the duration of the COVID-19 situation, causes us to continue to believe the Company has sufficient resources to
continue as a going concern.

In March 2020, COVID-19 began spreading rapidly throughout the world, prompting governments and businesses to take unprecedented measures in
response. Such measures included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place
orders. The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and
will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the
development and availability of effective treatments and vaccines, and the imposition of protective public safety measures.

Basis of Presentation and Use of Estimates

The preparation of consolidated financial statements and accompanying notes in conformity with U.S. GAAP requires management to make certain
estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses during the reporting
period. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term. All
significant intercompany accounts and transactions are eliminated upon consolidation.

The Company’s most significant estimates and judgments involve recognition of revenue and estimates for future contingent customer incentive
obligations, insurance reserves, and the measurement of the Company’s stock-based compensation.

F-6

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting
guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in
valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs
that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs
that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value.

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31,
2020 and 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments
include cash and cash equivalents, accounts payable, and accrued liabilities. Fair values for these items were assumed to approximate carrying values
because of their short-term nature or they are payable on demand.

Cash and Cash Equivalents

For purpose of the consolidated statement of cash flows, the Company considers institutional money market funds and all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are reported net of allowance for expected losses. It represents the amount management expects to collect from outstanding balances.
Differences between the amount due and the amount management expects to collect are charged to operations in the year in which those differences are
determined, with an offsetting entry to a valuation allowance. As of December 31, 2020, and 2019, the Company has no reserve allowance.

F-7

Property and Equipment

Property and equipment are stated at cost. The Company’s fixed assets are depreciated using the straight-line method over the estimated useful life ranging
from 3 to 5 years. Leasehold improvements are depreciated over the shorter of the useful life or lease life. Maintenance and repairs are charged to
operations as incurred. Significant renewals and betterments are capitalized. At the time of retirement or other disposition of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations. Property and equipment at
December 31, 2020 was made up of equipment and software. Depreciation expense for the years ended December 31, 2020 and 2019 were $2,960 and
$2,682, respectively.

Offering Costs

The Company accounts for offering costs in accordance with Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs. Prior to
the completion of an offering, offering costs were capitalized as deferred offering costs on the consolidated balance sheets. The deferred offering costs are
netted against the proceeds of the offering in consolidated statements of changes in stockholders’ equity (deficit) or the related debt. As of December 31,
2020, deferred offering costs totaled $33,164.

Internal Use Software

We incur software development costs to develop software programs to be used solely to meet our internal needs and cloud-based applications used to
deliver our services. In accordance with Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software, we capitalize development costs
related to these software applications once a preliminary project stage is complete, funding has been committed, and it is probable that the project will be
completed, and the software will be used to perform the function intended. As of December 31, 2020 and 2019, the Company has capitalized $221,623 of
internal software related costs, which is included in intangible assets in the accompanying consolidated balance sheets and being amortized over 3 years.
Amortization expense for the years ended December 31, 2020 and 2019 was $73,874 and $67,718, respectively. Accumulated amortization for the years
ended December 31, 2020 and 2019 was $141,592 and $67,718, respectively.

Impairment of Long-Lived assets

The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. In the event facts and circumstances indicate that the cost of any long-
lived assets may be impaired, an evaluation of recoverability is performed. There were no impairment losses during the years ended December 31, 2020
and 2019. There can be no assurance, however, that market conditions will not change or demand for the Company’s products and services will continue,
which could result in impairment of long-lived assets in the future.

F-8

Deferred Rent

The Company recognizes rental expense on a straight-line basis from the time of the lease commencement date through the end of the lease. As of 2020
and 2019, the Company recognized deferred rent resulting from future escalating lease payments and abated rent totaling $46,261 and $98,000, which is
included in accrued liabilities in the accompanying consolidated balance sheets.

Insurance Reserves

The Company records a loss reserve for physical damage and other liability coverage caused to owner vehicles up to the Company's insurance deductibles.
This reserve represents an estimate for both reported accidents claims not yet paid, and claims incurred but not yet reported and are recorded on a non-
discounted basis. The lag time in reported claims is minimal and as such represents a low risk of unreported claims being excluded from the loss reserve
assessment. The adequacy of the reserve is monitored quarterly and is subject to adjustment in the future based upon changes in claims experience,
including the number of incidents for which the Company is ultimately responsible and changes in the cost per claim, or changes to the Company’s policy
as to what amounts of the deductible or claim will be paid by the Company.

While certain liability insurance claims may take several years to completely settle, the Company's liability exposure limit is generally met in the near term.
Due to our limited operational history, the Company makes certain assumptions based on both currently available information to estimate the insurance
reserves as well as third party claims adjuster data provided on existing claims. A number of factors can affect the actual cost of a claim, including the
length of time the claim remains open, economic and healthcare cost trends and the results of related litigation. Furthermore, claims may emerge in future
periods for events that occurred in a prior period that differs from expectations. Accordingly, actual losses may vary significantly from the estimated
amounts reported in the consolidated financial statements. Reserves are reviewed quarterly and adjusted as necessary as experience develops or new
information becomes known. However, ultimate results may differ from the Company’s estimates, which could result in losses over the Company’s
reserved amounts. Such adjustments are recorded in costs of revenues.

Preferred Stock

ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity classifies and measures on its consolidated balance sheets
certain financial instruments with characteristics of both liabilities and equity.

Management is required to determine the presentation for the preferred stock because of the redemption and conversion provisions, among other
provisions. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related
to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a
derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative
liability accounting under ASC 815, Derivatives and Hedging, is not required.

F-9

Costs incurred directly for the issuance of the preferred stock are recorded as a reduction of gross proceeds received by the Company, resulting in a
discount to the preferred stock.

Revenue Recognition

The Company generates the majority of its revenue from its ridesharing marketplace that connects vehicle owners and drivers and the related insurance
issued for each rental. Vehicle owners and drivers enter into terms of service with the Company in order to use the HyreCar platform and enter into a rental
contract that governs each rental. In entering into a rental agreement, the driver is charged in a single transaction: the base rental fee as agreed upon
between the driver and vehicle owner, a 10% HyreCar fee on the base rental fee, and a daily insurance charge (“Insurance and administrative fees”), all
based on the number of days the vehicle is to be rented within the contract. HyreCar retains 15-25% of the base rental fee and remits the remaining portion
to the vehicle owner. The 10% fee collected from the driver and 15-25% retained from the owner are considered “Transaction Fees” and the recorded on a
net basis as described below. The Company recognizes revenue daily during the rental periods as the Company is required to maintain insurance
underlying the transaction and as a customary business practice, a driver can return a vehicle early for a refund of the unused rental period. Insurance and
transaction fees are charged to a driver in a single transaction. Drivers currently do not have an option to decline insurance at any point during the
transaction.

The Company also recognizes revenue from other sources such as referrals, motor vehicle record fees (application fees), late rental fees, and other fees
charged to drivers in specific situations.

In applying the guidance of ASC 606, the Company 1) identifies the contract with the customer 2) identifies the performance obligations in the contract 3)
determines the transaction price, 4) determines if an allocation of that transaction price is required to the performance obligations in the contract, and 5)
recognizes revenue when or as the companies satisfies a performance obligation.

Refunds may occur when the driver returns the owner vehicle early based on the terms of the original contract or cancels the rental prior to completing the
exchange. In limited circumstances, the Company provides contingent consideration in the form of a rebate that is redeemable only if the customer
completes a specific level of transaction over a specific time period. In such cases, the rebate or refund obligation is recognized as a reduction of revenues.
The Company defers revenue in all instances when the earnings process is not yet complete.

The following is a breakout of revenue components by subcategory for the years ended December 31, 2020 and 2019.

Insurance and administration fees
Transaction fees
Other fees
Incentives and rebates
Net revenue

Principal Agent Considerations

2020

2019

$ 12,819,157 $ 7,845,803
6,623,894
11,391,090
1,953,498
1,441,012
(568,271)
(419,518)
$ 25,231,741 $ 15,854,924

The Company evaluates our service offerings to determine if we are acting as the principal or as an agent, which we consider in determining if revenue
should be reported gross or net. One of our primary revenue source is a transaction fee made from a confirmed booking of a vehicle on our platform. Key
indicators that we evaluate to reach this determination include:

● the terms and conditions of our contracts;

F-10

● whether we are paid a fixed percentage of the arrangement’s consideration or a fixed fee for each transaction;

● the party which sets the pricing with the end-user, has the credit risk and provides customer support; and

● the party responsible for delivery/fulfilment of the product or service to the end consumer.

We have determined we act as the agent in the transaction for vehicle bookings (Transaction Fees), as we are not the primary obligor of the arrangement
and receive a fixed percentage of the transaction. Therefore, revenue is recognized on a net basis.

For other fees such as insurance, referrals, and motor vehicle records (application fees) we have determined revenue should be recorded on a gross basis. In
such arrangements, the Company sets pricing, has risk of economic loss, has certain credit risk, provides support services related to these transactions, and
has decision making ability about service providers used.

Cost of Revenues

Cost of revenues primarily include direct fees paid for insurance to cover the vehicle driver and owner, insurance claim payments and estimated liabilities
based on the policy in effect at the time of loss, merchant processing fees, technology and hosting costs, and motor vehicle record fees incurred for paid
driver applications. General liability insurance that covers corporate risk from activity on our platform is included in general and administrative costs.

Advertising

The Company expenses the cost of advertising and promotions as incurred. Advertising expense was $2,143,079 and $3,120,151 for the years ended 2020
and 2019, respectively.

Research and Development

We incur research and development costs during the process of researching and developing our technologies and future offerings. Our research and
development costs consist primarily of non-capitalized development and maintenance costs. We expense these costs as incurred unless such costs qualify
for capitalization under applicable guidance.

Stock-Based Compensation

The Company accounts for stock awards issued under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation cost is
measured at the grant date, based on the estimated fair value of the award. Stock-based compensation is recognized as expense over the employee’s
requisite vesting period and over the non employee's period of providing goods or services. The fair value of each stock option or warrant award is
estimated on the date of grant using the Black-Scholes option valuation model. Restricted shares are measured based on the fair market value of the
underlying stock on the grant date.

Stock-based compensation is included in operating expenses in the consolidated statements of operations as follows:

General and administrative
Sales and marketing
Research and development

F-11

Year ended
December 31,
2020
2,532,311 $
383,388
387,512 $

Year ended
December 31,
2019
1,565,602
304,792
118,823

Income Taxes

The Company applies ASC 740, Income Taxes (“ASC 740”). Deferred income taxes are recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their consolidated financial statements reported amounts at each period end, based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if
any, and the change during the period in deferred tax assets and liabilities. At December 31, 2020 and 2019, the Company has established a full allowance
against all deferred tax assets.

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain
position is recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based on its
technical merit.

Loss per Common Share

The Company presents basic loss per share (“EPS”) and diluted EPS on the face of the consolidated statements of operations. Basic loss per share is
computed as net loss divided by the weighted average number of common shares outstanding for the period. For periods in which we incur a net loss, the
effects of potentially dilutive securities would be antidilutive and would be excluded from diluted EPS calculations. For the year ended December 31, 2020
and 2019, there were 1,138,379 and 2,753,945 options or warrants excluded, and 794,325 and 341,000 restricted stock units excluded, respectively. See
Note 5 - Stockholders' Equity (Deficit) for public securities offering in which the Company issued 2,530,000 shares of common stock subsequent to
December 31, 2020.

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America which it believes to be credit worthy. Balances
are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company maintains balances in excess of the federally insured
limits.

Other Concentrations

The Company has historically relied on a single insurance broker and underwriter at any given time to provide all automobile insurance on vehicles rentals
on the HyreCar platform. There are multiple brokers and carriers who issue this type of insurance coverage, and the Company is regularly reviewing
leading insurers in the transportation and mobility sectors as this is an important part of our operations. The company does not believe the loss of our
current broker or underwriter would have a material effect on our operations.

New Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842),
specifying the accounting for leases, which supersedes the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the
principles that lessees and lessors shall apply to report useful information to users of consolidated financial statements about the amount, timing, and
uncertainty of cash flows arising from a lease. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases
with a term of twelve months or less. Lessors’ accounting is largely unchanged from the previous accounting standard. In addition, Topic 842 expands the
disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes several practical
expedients. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021 for emerging
growth companies, with early adoption permitted. The Company has reviewed the provisions of the new standard, but it is not expected to have a
significant impact on the Company.

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions in existing guidance and
improves consistency in application by clarifying and amending existing guidance. This guidance is effective for annual periods beginning after December
15, 2021, and interim periods within those annual periods, where the transition method varies depending upon the specific amendment. Early adoption is
permitted, including adoption in any interim period. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments
as of the beginning of the annual period that includes that interim period, and all amendments must be adopted in the same period. The Company has
reviewed the provisions of the new standard, but it is not expected to have a significant impact on the Company.

F-12

The FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that amend the original
text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to
us or (iv) are not expected to have a significant impact our consolidated financial statements.

NOTE 3 – COMMITMENTS AND CONTINGENCIES

Settlement and Legal

Except as may be set forth below, we are not a party to any legal proceedings, and we are not aware of any claims or actions pending or threatened against
us. In the future, we might from time to time become involved in litigation relating to claims arising from our ordinary course of business, the resolution of
which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows.

On November 13, 2018, two founders of the Company (the “Claimant Founders”), initiated two lawsuits in the Superior Court of California, County of San
Francisco (“SFSC”), entitled Nathaniel Farber v. HyreCar Inc., Case No. CGC-18-571257 and Josiah Larkin v. HyreCar Inc., Case No. CGC-18-571258.
The complaints for the lawsuits, which were largely duplicative, alleged that the Company breached a Settlement Agreement by and between the Company
and the Claimant Founders by not allowing the Claimant Founders to sell stock in the Company’s initial public offering (“IPO”), failing to buyback
Claimant Founders’ stock at the time of the IPO, allowing the issuance of certain stock without proportionately increasing the stock ownership of Claimant
Founders, and not providing certain required information to the Claimant Founders. The Company strongly disagreed with all of the allegations and
vigorously contested both lawsuits. The Company believe that, at all times, its actions were consistent with the terms, conditions, and context of the
Settlement Agreement, as well as applicable law. Pursuant to a motion brought by the Company, the two lawsuits were joined for pretrial and trial purposes.
As the case progressed, the Claimant Founders narrowed their allegations significantly. Mr. Larkin dismissed all of his claims. Mr. Farber dismissed all of
his allegations except for an allegation that the Company failed to buyback the Claimant Founders’ stock at the time of the IPO. The Company believed
that the remaining claim was without merit, but without admitting fault agreed to settle any and all claims between the Claimant Founders and the
Company. As part of the settlement, the Company agreed to issue 78,431 shares of the Company’s common stock to Mr. Farber at an agreed upon value of
$200,000 (the “Settlement Payment”). In addition, the Company entered into general mutual releases with each Claimant Founder.

Other

In November 2017, the Company entered into a lease in Los Angeles, California commencing April 1, 2018, with the ability to occupy the facility in
January 2018. The lease term is 39 months from the commencement date. Annual base rent is as follows: 2020 - $356,145, 2021 - $183,489, respectively.
The lease required a deposit of $90,000. Per the lease agreement, the monthly rate will range from $27,708 to $31,167 a month prior to discounts and
abatements that may apply. The Company also rents office furniture and incurs ancillary fees for building services and shared expenses. Rent expense for
the years ended December 31, 2020 and 2019 was $274,280 and $274,969, respectively.

We connect drivers and vehicle owners in many tax jurisdictions throughout the United States. After the Supreme Court of the United States decision in
South Dakota v. Wayfair Inc. (Wayfair) in June 2018, states commenced enacting laws that would require certain online sellers to collect sales and use tax
despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may adopt, or begin to enforce,
laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. A successful assertion by one or more states requiring us to collect
taxes could result in tax liabilities, including taxes on past sales, as well as penalties and interest. Based on our analysis of certain state regulations on peer-
to-peer activities, we do not believe risk of loss is probable on historical revenue activities. We continuously monitor state regulations as it relates to peer-
to-peer vehicle rental activities and will implement required collection and remittance procedures if and when we believe we would become subject to such
regulations.

F-13

NOTE 4 – DEBT AND LIABILITIES

Accrued Liabilities

A summary of accrued liabilities for the years ended December 31, 2020 and 2019 is as follows:

Accrued payables
Insurance premium
Driver deposits
Deferred rent
Payroll liabilities
Other accrued liabilities
Accrued liabilities

Notes Payable

2020
747,361 $

3,243,509

168,855
46,261
77,303
76,059
$ 4,359,348 $

2019
264,404
130,492
161,601
98,000
161,113
88,302
903,912

On April 13, 2020, the Company entered into a loan with JPMorgan Chase Bank, N.A. as the lender (“Lender”) in an aggregate principal amount of
$2,004,175 pursuant to the Paycheck Protection Program ("PPP") under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP Loan
is evidenced by a promissory note (“Note”). Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent (1%) per annum,
with the first six months of interest deferred, has an initial term of two years, and is unsecured and guaranteed by the Small Business Administration. The
Company may apply to the Lender for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent,
and covered utility payments incurred by the Company during the 24-week period beginning on April 13, 2020, calculated in accordance with the terms of
the CARES Act. The Note provides for customary events of default including, among other things, cross-defaults on any other loan with the Lender. The
PPP Loan may be accelerated upon the occurrence of an event of default.

As of December 31, 2020, the PPP amount payable under the Note is $1,999,175. The PPP Loan proceeds were used for payroll, covered rent and other
covered payments and is expected to be forgiven based on current information available. The Company is in the process of applying to the Lender for
forgiveness of the PPP Loan as of the date of this report and we expect the full PPP Loan amount to be forgiven.

F-14

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, 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.

F-15

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

Outstanding at December 31, 2019

Granted
Exercised

Forfeited or expired

Outstanding at December 31, 2020
Vested and expected to vest at December 31, 2020

Exercisable at December 31, 2020

Weighted
average
exercise
price

2.60
—
1.28
3.38
0.91
0.91
0.90

Aggregate
Intrinsic
value

Weighted
average
remaining
contractual
life (years)
8.19
—
—
—

6.38 $ 4,063,176
6.38 $ 4,063,176
6.4 $ 3,999,742

Number of
shares
2,253,206 $
— $
(85,939)
(1,514,627)
652,640 $
652,640 $
640,478 $

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:

Expected volatility
Risk-free interest rate
Expected life in years
Expected dividend yield

December 31,
2019

45%
1.73 – 2.39%

5.56

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.

F-16

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:

Unvested as of December 31, 2019

Granted
Vested
Forfeited

Unvested as of December 31, 2020

Weighted
average grant
date fair
value
per share

Number of
shares

303,150
606,500 $
(284,648)
(109,650)
515,352 $

3.58
5.94
3.64
3.08
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.

F-17

Warrants

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

Outstanding at December 31, 2018
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2019
Granted
Exercised
Forfeited or expired

Outstanding at December 31, 2020

Weighted
average
exercise
price

3.60
—
—
—
3.71
—
—
—
3.63

Number of
shares
1,246,025 $
—
(745,286)
—
500,739 $
—
(15,000)
—
485,739 $

Weighted
average
remaining
contractual
life (years)
3.60
—
—
—
2.68
—
—
—
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.

NOTE 6 – RELATED PARTY TRANSACTIONS

Related Party Advances

From time to time prior to 2017, the Company received advances from related parties for short-term working capital. Such advances are considered short-
term and non-interest bearing and due on demand. As of December 31, 2020 and 2019 $— and $9,629 remained outstanding, respectively.

F-18

Insurance

The president of the Company’s primary insurance broker through June 2020 is also a minority stockholder and holder of warrants. As of December 31,
2020 and December 31, 2019, the Company had outstanding balances to the insurer totaling $0 and $101,167, included in accounts payable or accrued
liabilities, respectively. During the year ended December 31, 2020 and 2019, the Company paid the insurer approximately $2,514,743 and $5,008,000,
respectively. On June 15, 2020, the Company completed moving its primary and excess automobile insurance liability programs over to a new insurance
provider and is no longer using the related party broker.

NOTE 7 – INCOME TAXES

For the years ended December 31, 2020 and 2019, the Company did not record a current or deferred income tax expense or benefit due to current and
historical losses incurred by the Company. The Company’s losses before income taxes consist solely of losses from domestic operations.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Cares Act includes provisions
relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative
minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified
improvement property. The CARES Act also established a Paycheck Protection Program whereby certain small businesses are eligible for a loan to fund
payroll expenses, rent, and related costs.

The Company considered the provisions under the CARES Act and elected not to take advantage of the provisions of CARES Act as the effect of such
provisions was not expected to have a material impact on the Company’s results of operations, cash flows and financial statements.

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is
as follows:

Statutory US Federal tax rate
Permanent differences:

State income taxes, net of Federal benefit
Stock compensation
Other

Temporary differences
Valuation allowance
Total

2020

2019

21.0%

7.0%
(0.3)%
(0.1)%
(8.0)%
(19.6)%
0.0%

7.0%
(1.4)%
(0.5)%
(5.4)%
(21.8)%
0.0%

The components of our deferred tax assets (liabilities) for federal and state income taxes consisted of the following as of December 31, 2020 and 2019:
2019

2020

Deferred tax asset attributable to:
Net operating loss carryover
Stock-based compensation
Other
Valuation allowance
Net deferred tax asset

1,395,000
501,000

$ 8,990,000 $ 5,956,000
386,000
279,000
(6,621,000)
—

(10,886,000)
— $
$

Management has considered the Company’s history of cumulative net losses and estimated future operating acitivity and has concluded that it is more
likely than not that the Company will not realize the benefits of its U.S. federal and state deferred tax assets. Accordingly, a full valuation allowance has
been established against deferred tax assets as of December 31, 2020 and 2019, respectively. The Company reevaluates the positive and negative evidence
at each reporting period. The Company’s valuation allowance increased during 2020 by approximately $4.3 million primarily due to the generation of net
operating loss carryforwards and stock based compensation.

As of December 31, 2020 and 2019, the Company had U.S. federal net operating loss carryforwards of $32.1 million and $21.3 million, respectively, which
may be available to offset future income tax liabilities. The 2017 Tax Cuts and Jobs Act (“ TCJA”) will generally allow losses incurred after 2017 to be
carried over indefinitely, but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s
taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended). Also, there will be no carryback for losses incurred after 2017.
Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s net operating loss carryover or 100% of a
corporation’s taxable income and be available for twenty years from the period the loss was generated. As of December 31, 2020 and 2019, the Company
also had similar amounts of U.S. state net operating loss carryforwards, which may be available to offset future income tax liabilities and expire at various
dates through 2040.

Utilization of the U.S. federal and state net operating loss carryforwards may be subject to a substantial annual limitation under Section 382 and Section
383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously
or that could occur in the future. These ownership changes may limit the amount of net operating loss and research and development credit carryforwards
that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has not completed a study to assess whether a
change of ownership has occurred, or whether there have been multiple ownership changes since its formation. Any limitation may result in expiration of a
portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

The Company is subject to U.S. federal and state tax examinations by tax authorities for years 2017 through present. As of December 31, 2020 there
currently no pending tax examinations.

F-19

NOTE 8 – SUBSEQUENT EVENTS

On January 28, 2021, the Company announced new and expanded strategic partnerships to AmeriDrive Holdings to create a national network of vehicle
supply and fleet maintenance operations. The Company entered into Collateral Pledge Agreement with Cogent Bank assigning all right, title and interest in
a Company deposit account of $750,000 plus 5% fees to secure that certain revolving line of credit made by the bank to AmeriDrive. Further, on February
10, 2021, TrueCar announced a partnership with HyreCar to provide its car sharing marketplace with a modern digital car buying and trade-in solution. The
TrueCar partnership offers a seamless way to address this significant market in a relevant and effective manner for dealers and customers. Additionally,
TrueCar helps create awareness that vehicle dealers can benefit from serving the Mobility-as-a-Service ("MaaS") industry via Company's platform.

On February 4, 2021, the Company entered into an underwriting agreement with Lake Street Capital Markets, LLC and Northland Securities, Inc., as
representatives of the several underwriters, in connection with the public offering of 2,200,000 and additional 330,000 of the Company’s shares of common
stock, par value $0.00001 per share. The closing of the offering occurred on February 8, 2021. The net proceeds from the sale is approximately
$27.6 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company.

F-20

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized on this 30th day of March 2021.

SIGNATURES

HYRECAR INC.

By:

/s/ Joseph Furnari
Joseph Furnari
Chief Executive Officer

/s/ Scott Brogi
Scott Brogi
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1934, this annual report on Form 10-K has been signed below by the following persons on

behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

/s/ Joseph Furnari
Joseph Furnari

/s/ Scott Brogi
Scott Brogi

/s/ Grace Mellis
Grace Mellis

/s/ Brooke Skinner Ricketts
Brooke Skinner Ricketts

/s/ Michael Root
Michael Root

/s/ Jayaprakash Vijayan
Jayaprakash Vijayan

Chief Executive Officer and Director
(Principal Executive Officer)

Chief Financial Officer
(Principal Financial and Accounting Officer)

Director

-36-

Date

March 30, 2021

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

1) Registration Statement (Form S-8 No. 333-229222) pertaining to HyreCar, Inc. 2018 Equity Incentive Plan,
2) Registration Statement (Form S-8 No. 333-230472) pertaining to HyreCar, Inc. 2016 Equity Incentive Plan;
3) Registration Statement (Form S-3 No. 333-234525) pertaining to HyreCar, Inc.
4) Registration Statement (Form S-3 No. 333-238534) pertaining to HyreCar, Inc.
5) Registration Statement (Form S-3 No. 333-252716) pertaining to HyreCar, Inc.

of our report dated March 30, 2021 with respect to the consolidated financial statements of HyreCar, Inc. which appear in this Annual Report on Form 10-
K.

Exhibit 23.1

/s/ dbbmckennon

Newport Beach, California
March 30, 2021

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 31.1

I, Joseph Furnari, certify that:

I have reviewed this Annual Report on Form 10-K of HyreCar Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.

Dated: March 30, 2021

By:

/s/ Joseph Furnari
Joseph Furnari
Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 31.2

I, Scott Brogi, certify that:

I have reviewed this Annual Report on Form 10-K of HyreCar Inc.;

3. Based on my kno`wledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.

Dated: March 30, 2021

By:

/s/ Scott Brogi
Scott Brogi
Chief Financial Officer
(Principal Financial Officer)

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Furnari, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Annual Report on Form 10-K of HyreCar Inc. for the year ended December 31, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition and results of
operations of HyreCar Inc.

EXHIBIT 32.1

Dated: March 30, 2021

By:

/s/ Joseph Furnari
Joseph Furnari
Chief Executive Officer
(Principal Executive Officer)

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott Brogi, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
Report on Form 10-K of HyreCar Inc. for the year ended December 31, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition and results of
operations of HyreCar Inc.

EXHIBIT 32.2

Dated: March 30, 2021

By:

/s/ Scott Brogi
Scott Brogi
Chief Financial Officer
(Principal Financial Officer)