YayYo files Updated Reg A+ Offering

Remember YayYo? Back in May of 2017, YayYo announced a Reg A+ crowdfunding offering for a business that was ostensibly designed to provide price comparisons to ride sharing applications like UBER and Lyft. YayYo wanted to help save consumers money while possibly missing the fact that service already existed in Apple’s map application that exists on all iPhones. Initially, the Reg A+ offer took some heat due to the promotions that ran on networks such as CNBC that may have pushed things a bit too far. Sam Guzik, a securities attorney and CI Contributor, stated at that time;

“In simple terms, the pitch sells the sizzle – lots of it – without any mention of the risks involved. And it creates a false sense of urgency, by suggesting that available shares are limited – akin to a “hot” IPO.  And when you are directed to Yayyo’s IPO website you will have to hunt to locate the link to the SEC mandated Offering Circular – if you even know enough to look for it.  And then you have to hunt some more to find it on Yayyo’s SEC page.”

According to an earlier filing, During the six months ended from June 30, 2017, the Company sold 274,261 shares of common stock to investors for gross cash proceeds of $2,013,172 of which 229,034 shares and $1,832,272 of cash proceeds were related to the Company’s Regulation A offering. The Company incurred $809,580 of offering cost related to the sale of common stock which consisted principally of legal fees and costs associated with soliciting the sale of common stock directly to the Regulation A investors.

In August of 2017, YayYo announced a pivot of sorts by migrating to a vehicle rental business with a focus on developing (i) an online peer-to-peer bookings platform to service the ride sharing economy through the Company’s wholly-owned subsidiary Rideshare, and (ii) the maintenance of a fleet of standard passenger vehicles to be made commercially available for rent through the Company’s wholly-owned subsidiary Distinct Cars.

The most recent filing is a “Post-Qualification Offering Circular“. The new filing may be due to a securities purchase agreement that was established earlier this month and announced in a press release. According to YayYo;

“[a] Lender purchased (i) a senior secured promissory note in the principal face amount of $6,000,000 due March 8, 2023, subject to extension (the “Second Note”) and (ii) warrants to acquire up to an aggregate of 1,500,000 shares, with an exercise price of $4.00 per share (the “Warrant Shares”) of Common Stock (defined below) of the Company (the “Warrants”) and 150,000 commitment shares of common stock, par value $0.000001 per share, (“Common Stock”) of the Company (the “Commitment Shares”) for an aggregate purchase price of $6,000,000 (the “Second Note Offering”) to be directed and deposited by the Lender in the Company’s Master Restricted Account (defined below). The principal balance of $6,000,000 on the Second Note bears interest at a rate per annum equal to LIBOR plus 100 basis points, subject to adjustment in accordance with the terms of the Second Note. The Warrants expire five years from the date of issuance. Further, the Company paid $178,228 of issuance costs associated with the Second Note.”

There are a lot of moving parts in this offering.

For the fiscal year ended December 31, 2017, YayYo generated a loss of approximately ($4,100,310). YayYo expects to list its shares on the NASDAQ following the completion of this Reg A+ that, according to its website, closed on March 16th. In order to meet one of the requirements for listing of shares on the NASDAQ, YayYo must have a positive stockholders’ equity on not less than $4,000,000. As of December 31, 2017, YayYo reported stockholders’ equity was $673,241. As of March 7, 2018, YayYo reported stockholders’ equity was $4,778,663.

YayYo CEO Ramy Y. El Batrawi has a bit of a checkered past. In April of 2006, he was named as a defendant in an SEC enforcement action that saw him barred from acting as an officer or director of a public company for a period of five years. It will be interesting to see what this offer closes at and if it successfully lists on NASDAQ.