RIDENOW GROUP, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2017
OR
For the transition period from ___________ to
_____________
Commission file number 000-55182
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RumbleON, Inc.
(Exact name of registrant as specified in its charter)
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Nevada
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46-3951329
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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4521 Sharon Road, Suite 370
Charlotte, North Carolina
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28211
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(Address of principal executive offices)
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(Zip Code)
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(704) 448-5240
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(Registrant’s telephone number, including area
code)
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(Former name, former address and former fiscal year, if changed
since last report)
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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 and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒
No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated
filer
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☐
(Do not check if a smaller reporting company)
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Smaller reporting company
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Emerging
growth company
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☒
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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 is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
The number of shares of Class B Common Stock, $0.001 par value,
outstanding on May 12, 2017 was 8,981,041 shares. In addition,
1,000,000 shares of Class A Common Stock, $0.001 par value, were
outstanding on May 12, 2017.
RUMBLEON, INC.
QUARTERLY
PERIOD ENDED MARCH 31, 2017
Table
of Contents to Report on Form 10-Q
Page
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PART I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements.
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1
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
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17
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Item 3.
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Quantitative and Qualitative Disclosure About Market
Risk.
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22
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Item 4.
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Controls and Procedures.
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22
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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23
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Item 1A.
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Risk Factors.
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23
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Item 2.
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Unregistered Sales of Equity Securities and Use of
Proceeds.
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23
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Item 3.
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Defaults Upon Senior Securities.
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23
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Item 4.
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Mine Safety Disclosures.
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23
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Item 5.
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Other Information.
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23
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Item 6.
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Exhibits.
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23
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SIGNATURES
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24
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Item 1.
Financial Statements.
RumbleON, Inc.
(formerly
Smart Server, Inc.)
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Unaudited
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Balance at
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March 31,
2017
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December 31,
2016
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ASSETS
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Current assets:
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Cash
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$
4,024,315
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$
1,350,580
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Accounts
receivable
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16,187
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-
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Prepaid
expenses
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40,119
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1,667
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Total
current assets
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4,080,621
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1,352,247
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Property
and Equipment, net
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1,521,298
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-
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Goodwill
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3,240,000
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-
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Intangible
assets, net
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144,265
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45,515
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Total
assets
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$
8,986,184
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$
1,397,762
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts
payable
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$
738,574
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$
219,101
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Other
current liabilities
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12,110
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-
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Total
current liabilities
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750,684
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219,101
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Long term liabilities:
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Notes
payable
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1,333,334
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1,282
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Accrued
interest payable - related party
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-
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5,508
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Deferred
tax liability
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260,130
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78,430
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Total
long term liabilities
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1,593,464
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85,220
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Total
liabilities
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2,344,148
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304,321
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Commitments and Contingencies
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Stockholders’ equity:
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Preferred
stock, $0.001 par value, 10,000,000 shares
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authorized,
0 shares issued and outstanding
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as
of March 31, 2017 and December 31, 2016
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-
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-
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Class
A Common stock, $0.001 par value, 1,000,000 and 0
shares
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authorized,
1,000,000 and 0 shares issued and outstanding
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as
of March 31, 2017 and December 31, 2016
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1,000
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-
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Class
B Common stock, $0.001 par value, 99,000,000 and 100,000,000
shares
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authorized,
8,981,041 and 6,400,000 shares issued and
outstanding
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as
of March 31, 2017 and December 31, 2016
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8,981
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6,400
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Additional
Paid in Capital
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8,051,924
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1,534,015
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Subscriptions
receivable
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(51,000
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(1,000
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Accumulated
deficit
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(1,368,869
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(445,974
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Total
stockholders’ equity
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6,642,036
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1,093,441
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Total
liabilities and stockholders’ equity
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$
8,986,184
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$
1,397,762
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See
Notes to the Condensed Consolidated Financial
Statements
1
RumbleON, Inc.
(formerly
Smart Server, Inc.)
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Unaudited
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Three
Months Ended March 31,
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2017
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2016
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Revenue
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$
38,889
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$
-
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Costs
and Expenses:
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Cost
of Sales
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34,688
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-
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General
and administrative
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230,942
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3,831
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Technology
development
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78,009
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-
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Professional
fees
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346,257
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6,773
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Depreciation and amortization
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60,085
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475
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Total
costs and operating expenses
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749,981
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11,079
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Other
expense:
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Interest
expense
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211,803
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2,209
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Total
other expense
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211,803
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2,209
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Net
loss before provision for income taxes
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(922,895
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(13,288
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Benefit
for income taxes
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-
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Net
loss
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$
(922,895
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$
(13,288
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Weighted-average
common shares used in the computation of loss per
share
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Basic
and diluted
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7,263,492
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5,500,000
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Net
loss per share - basic and diluted
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$
(0.13
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$
(0.00
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See Notes to the Condensed Consolidated Financial
Statements
2
RumbleON, Inc.
(formerly
Smart Server, Inc.)
Condensed
Consolidated Statement of Stockholders’
Equity
For the Three-Months Ended March 31, 2017
(unaudited)
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Preferred Shares
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Class A Common Shares
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Class B Common Shares
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Additional Paid In
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Subscription
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Accumulated
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Total Stockholders’ Equity
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Capital
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Receivable
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Deficit
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(Deficit)
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Balance, December 31,
2016
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-
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$
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6,400,000
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$
6,400
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1,534,015
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$
(1,000
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$
(445,974
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$
1,093,441
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Exchange of common
stock
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-
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-
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1,000,000
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1,000
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(1,000,000
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(1,000
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-
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-
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Issuance of common
stock in connection with acquisition
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1,523,809
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1,524
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2,665,142
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-
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-
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2,666,666
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Issuance of common
stock in private placements
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-
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620,000
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620
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2,479,380
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(50,000
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-
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2,430,000
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Issuance of common
stock in connection with loan agreement
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-
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-
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-
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1,161,920
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1,162
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1,088,748
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-
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-
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1,089,910
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Issuance of common
stock in connection with conversion of Note Payable-related
party
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-
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-
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-
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-
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275,312
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275
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284,639
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-
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-
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284,914
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Net
loss
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-
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(922,895
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(922,895
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Balance, March 31,
2017
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-
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-
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1,000,000
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$
1,000
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8,981,041
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$
8,981
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8,051,924
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$
(51,000
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$
(1,368,869
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$
6,642,036
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See Notes to the Condensed Consolidated Financial
Statements
3
RumbleON, Inc.
(formerly
Smart Server, Inc.)
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Unaudited
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Three Months Ended March 31,
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2017
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2016
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$
(922,895
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$
(13,288
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Adjustments
to reconcile net income
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to
net cash used in operating activities:
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Depreciation
and amortization
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60,085
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475
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Interest
expense on conversion of debt
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196,076
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-
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Changes in operating assets and liabilities:
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(Increase)
in prepaid expenses
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(38,452
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(9,167
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(Increase)
in accounts receivable
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(16,187
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-
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Increase
in accounts payable and accrued liabilities
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535,201
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3,209
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Cash used in operating activities
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(186,172
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(18,771
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CASH FLOWS FROM INVESTING ACTIVITIES
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Acquisition
of assets
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(750,000
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-
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Technology
development
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(127,358
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-
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Purchase
of property and equipment
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(42,775
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-
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Cash used in investing activities
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(920,133
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-
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds
from note payable
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667,000
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-
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Borrowings
for note payable - related party
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-
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15,000
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Proceeds
from sale of common stock
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3,113,040
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5,000
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-
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Cash provided from financing activities
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3,780,040
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20,000
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NET CHANGE IN CASH
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2,673,735
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1,229
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CASH AT BEGINNING OF PERIOD
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1,350,580
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3,713
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CASH AT END OF PERIOD
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$
4,024,315
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$
4,942
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See Notes to the Condensed Consolidated Financial
Statements
4
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
Organization
RumbleON,
Inc. (along with its consolidated subsidiaries, the
“Company”) was incorporated in October 2013 under the
laws of the State of Nevada, as Smart Server, Inc. (“Smart
Server”). On February 13, 2017, the Company changed its name
from Smart Server, Inc. to RumbleON, Inc.
Nature of Operations
Smart
Server was originally formed to engage in the business of designing
and developing mobile application payment software for smart phones
and tablet computers. After Smart Server ceased its software
development activities in 2014, it had no operations and nominal
assets, meeting the definition of a “shell company”
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and regulations
thereunder.
In
July 2016, Berrard Holdings Limited Partnership (“Berrard
Holdings”) acquired 99.5% of the common stock of the Company
from the principal stockholder. Shortly after the Berrard Holdings
common stock purchase, the Company began exploring the development
of a capital light e-commerce platform facilitating the ability of
both consumers and dealers to Buy-Sell-Trade-Finance pre-owned
recreation vehicles in one online location. The Company’s
goal is for the platform to be widely recognized as the leading
online solution for the sale, acquisition, and distribution of
recreation vehicles by providing users with the most efficient,
timely and transparent experience. The Company’s initial
focus is the market for 650cc and larger on road motorcycles,
particularly those concentrated in the
“Harley-Davidson” brand. The Company will look to
extend to other brands and additional vehicle types and products as
the platform matures.
The
Company’s business plan is currently driven by a technology
platform that it acquired on February 8, 2017 from NextGen Dealer
Solutions, LLC (“NextGen”), which the Company owns and
operates through its wholly-owned subsidiary NextGen Pro, LLC
(“NextGen Pro”). The NextGen's platform provides
appraisal, inventory management, customer relationship management
(“CRM”), lead management, equity mining, and other key
services necessary to drive the online marketplace. For additional
information, see Note 4 -
“Acquisitions.”
With
its new online platform, the Company intends to both (1) offer
consumers or dealers cash for the purchase of their vehicles and
(2) provide the flexibility for consumers or dealers to trade,
list, consign, or auction their vehicle through the Company and its
dealer partners. In addition, the Company will offer a large
inventory of vehicles for sale on its website as well as financing
and associated products. The Company will earn fees and transaction
income, while its dealer partners earn incremental revenue and
enhance profitability through increased sales leads as well as
income from inspection, reconditioning and distribution
programs.
On March 31, 2017, the Company completed the
sale of 620,000 shares of Class B Common Stock, par value $0.001,
at a price of $4.00 per share for aggregate proceeds of $2,480,000
in the private placement (the “2017 Private
Placement”). Officers and directors of the Company acquired
175,000 shares of Class B common stock in the 2017 Private
Placement. Proceeds from the 2017 Private Placement will be used to
complete the launch of the Company’s website,
www.rumbleON.com
,
acquire vehicle inventory, continue development of the
Company’s platform, and for working capital purposes. The
Company intends to file a Registration Statement on Form S-1 with
the Securities and Exchange Commission (the “SEC”)
covering the resale of such shares during the second quarter of
2017.
5
Basis of Presentation
The
accompanying Condensed Consolidated Financial Statements have been
prepared in accordance with United States generally accepted
accounting principles (“GAAP”) for interim financial
information and in accordance with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X promulgated by the SEC and
therefore do not contain all of the information and footnotes
required by GAAP and the SEC for annual financial statements. The
Company’s Condensed Consolidated Financial Statements reflect
all adjustments (consisting only of normal recurring adjustments)
that management believes are necessary for the fair presentation of
their financial condition, results of operations, and cash flows
for the periods presented. The information at December 31,
2016 in the Company’s Condensed Consolidated Balance Sheets
included in this quarterly report was derived from the audited
Consolidated Balance Sheets included in the Company’s 2016
Annual Report on Form 10-K filed with the SEC on February 14, 2017.
The Company’s 2016 Annual Report on Form 10-K, together with
the information incorporated by reference into such report, is
referred to in this quarterly report as the “2016 Annual
Report.” This quarterly report should be read in conjunction
with the 2016 Annual Report.
Year-end
In
October 2016, the Company changed its fiscal year-end from November
30 to December 31.
Use of Estimates
The
preparation of financial statements in conformity with GAAP
requires estimates and assumptions that affect the reported amounts
of assets and liabilities, revenue and expenses, and related
disclosures of contingent assets and liabilities in the financial
statements and accompanying notes. Estimates are used for, but not
limited to, inventory valuation, depreciable lives, carrying value
of intangible assets, sales returns, receivables valuation,
restructuring-related liabilities, taxes, and contingencies. Actual
results could differ materially from those estimates.
Earnings (Loss) Per Share
The Company follows the Financial Accounting
Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 260,
Earnings per
share
. Basic earnings per
common share (“EPS”) calculations are determined by
dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the year. Diluted earnings
(loss) per common share calculations are determined by dividing net
income (loss) by the weighted average number of common shares and
dilutive common share equivalents outstanding. During periods when
common stock equivalents, if any, are anti-dilutive they are not
considered in the computation.
Revenue Recognition
The
Company recognizes revenue when all of the following conditions are
satisfied: (1) there is persuasive evidence of an arrangement;
(2) the product or service has been provided to the customer;
(3) the amount to be paid by the customer is fixed or
determinable; and (4) the collection of the Company’s
payment is probable.
Purchase Accounting for Business Combinations
The
Company accounts for acquisitions by allocating the fair value of
the consideration transferred to the fair value of the assets
acquired and liabilities assumed on the date of the acquisition and
any remaining difference is recorded as goodwill. Adjustments may
be made to the preliminary purchase price allocation when facts and
circumstances that existed on the date of the acquisition surface
during the allocation period subsequent to the preliminary purchase
price allocation, not to exceed one year from the date of
acquisition. Contingent consideration is recorded at fair value
based on the facts and circumstances on the date of the acquisition
and any subsequent changes in the fair value are recorded through
earnings each reporting period.
Goodwill
Goodwill
is not amortized but rather tested for impairment at least
annually. The Company tests goodwill for impairment annually during
the fourth quarter of each year. Goodwill will also be tested for
impairment between annual tests if an event occurs or circumstances
change that would more likely than not reduce the fair value of the
reporting unit below its carrying amount. Impairment testing for
goodwill is done at the reporting unit level. A reporting unit is
an operating segment or one level below an operating segment (also
known as a component). A component of an operating segment is a
reporting unit if the component constitutes a business for which
discrete financial information is available, and segment management
regularly reviews the operating results of that component. The
Company has concluded that currently it has one reporting
unit.
6
Determining
fair value includes the use of significant estimates and
assumptions. Management utilizes an income approach, specifically
the discounted cash flow technique as a means for estimating fair
value. This discounted cash flow analysis requires various
assumptions including those about future cash flows, transactional
and customer growth rates and discount rates. Expected cash flows
are based on historical customer growth and the growth in
transactions, including attrition, future strategic initiatives and
continued long-term growth of the business. The discount rates used
for the analysis reflect a weighted average cost of capital based
on industry and capital structure adjusted for equity risk and size
risk premiums. These estimates can be affected by factors such as
customer and transaction growth, pricing, and economic conditions
that can be difficult to predict.
Intangible Assets
Included
in “Intangible Assets” on the Company’s Condensed
Consolidated Balance Sheet are identifiable intangible assets
including customer relationships, non-compete agreements,
trademarks, trade names and internet domain names. The estimated
fair value of these intangible assets at the time of acquisition
are based upon various valuation techniques including replacement
cost and discounted future cash flow projections. Trademarks,
trade names and internet domain names are not amortized. Customer
relationships are amortized on a straight-line basis over the
expected average life of the acquired accounts, which are based
upon several factors, including historical longevity of customers
and contracts acquired and historical retention rates. Non-compete
agreements are amortized on a straight-line basis over the term of
the agreement, which will generally not exceed three years. The
Company reviews the recoverability of these assets if events or
circumstances indicate that the assets may be impaired and
periodically reevaluates the estimated remaining lives of these
assets.
Trademarks,
trade names and internet domain names are considered to be
indefinite lived intangible assets unless specific evidence exists
that a shorter life is more appropriate. Indefinite lived
intangible assets are tested for impairment, at a minimum, on an
annual basis using an income approach or sooner whenever events or
changes in circumstances indicate that an asset may be
impaired.
Long-Lived Assets
Property
and Equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount of an asset or
asset group may not be recoverable. Recoverability of assets to be
held and used are measured by a comparison of the carrying amount
of an asset to the future net cash flows expected to be generated
by the asset. If such assets or asset groups are considered to be
impaired, the impairment to be recognized will be measured by the
amount by which the carrying amount of the assets or asset groups
exceeds the related fair values. The Company also performs a
periodic assessment of the useful lives assigned to the long-lived
assets.
Technology Development Costs
Technology development costs are accounted for
pursuant to ASC 350,
Intangibles
— Goodwill
and Other.
Technology
development costs include internally developed software and website
applications that are used by the Company for its own internal use
and to provide services to its customers, which include consumers,
dealer partners and ancillary service providers. Under the terms of
these customer arrangements the Company retains the revenue
generating technology and hosts the applications on its
servers
and mobile applications. The customer does not
have a contractual right to take possession of the software during
the hosting period and is not permitted to run the software itself
or contract with another party unrelated to the entity to host the
software. Technology development costs consist principally of (i)
development activities including payroll and related expenses
billed by a third-party contractor involved in application,
content, production, maintenance, operation, and platform
development for new and existing products and services, (ii)
technology infrastructure expenses, and (iii) costs of Company
employees devoted to the development and maintenance of software
products. Technology and content costs for design,
maintenance and post-implementation stages of
internal-use software and general website development are expensed
as incurred. For costs incurred to develop new website
functionality as well as new software products and significant
upgrades to existing internally used platforms or
modules, capitalization begins during the application
development stage and ends when the software is available for
general use. Capitalized technology development is amortized
on a straight-line basis over periods ranging from 3 to 7 years.
The Company will perform periodic assessment of the useful lives
assigned to capitalized software applications. Additionally,
the Company from time-to-time may abandon additional development
activities relating to specific software projects or applications
and charge accumulated costs to technology development expense in
the period such determination is made.
7
Inventories
Inventories are accounted for pursuant to ASC
330,
Inventory
. During May 2017, the Company began to buy and
sell used vehicles. The vehicle inventory consists of used
vehicles, primarily acquired from consumers, dealers or auctions.
Direct and indirect vehicle reconditioning costs including parts
and labor and other incremental costs are capitalized as a
component of inventory. Transportation costs will be expensed as
incurred. Inventory will be stated at the lower of cost or net
realizable value. Vehicle inventory cost will be determined by
specific identification. Net realizable value is the estimated
selling price less costs to complete, dispose and transport the
vehicles. Selling prices are derived from historical data and
trends, such as sales price and inventory turn times of similar
vehicles, as well as independent, market resources. Each reporting
period, the Company recognizes any necessary adjustments to reflect
vehicle inventory at the lower of cost or net realizable value
through cost of sales in the accompanying Condensed Consolidated
Statements of Operations.
Valuation Allowance for Accounts Receivable
The
Company estimates the allowance for doubtful accounts for accounts
receivable by considering a number of factors, including overall
credit quality, age of outstanding balances, historical write-off
experience and specific account analysis that projects the ultimate
collectability of the outstanding balances. Ultimately, actual
results could differ from these assumptions.
Cash and Cash Equivalents
For
the statements of cash flows, all highly liquid investments with an
original maturity of three-months or less are considered to be cash
equivalents. The carrying value of these investments approximates
fair value.
Marketing and Advertising Costs
Marketing and advertising costs are expensed as
incurred and are included in General and administrative expenses on
the accompanying Condensed Consolidated Statements of Operations.
Marketing and advertising expense was $26,130 for the three-months
ended March 31, 2017.
There was no marketing and advertising costs
incurred for the three-month period ended March 31,
2016.
Property and Equipment, Net
Property and
equipment is stated at cost less accumulated depreciation and
consists of capitalized technology development costs, furniture and
equipment. Depreciation and amortization is recorded on a
straight-line basis over the estimated useful life of the assets.
Costs of significant additions, renewals and betterments, are
capitalized and depreciated. Maintenance and repairs are charged to
expense when incurred.
Fair Value of Financial Instruments
Fair
value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
March 31, 2017. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair
values. These financial instruments include cash, prepaid expenses
and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term
in nature and their carrying amounts approximate fair values or
they are payable on demand.
ASC Topic 820,
Fair Value Measurement,
establishes a fair value hierarchy for
inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by
requiring the most observable inputs be used when available.
Observable inputs are from sources independent of the Company,
whereas unobservable inputs reflect the Company’s assumptions
about the inputs market participants would use in pricing the asset
or liability developed on the best information available in the
circumstances. The fair value hierarchy is categorized into three
levels based on the inputs as follows:
Level
1: The preferred inputs to valuation efforts are “quoted
prices in active markets for identical assets or
liabilities,” with the caveat that the reporting entity must
have access to that market. Information at this level is based on
direct observations of transactions involving the same assets and
liabilities, not assumptions, and thus offers superior reliability.
However, relatively few items, especially physical assets, actually
trade in active markets.
8
Level
2: FASB acknowledged that active markets for identical assets and
liabilities are relatively uncommon and, even when they do exist,
they may be too thin to provide reliable information. Inputs other
than quoted market prices included in Level 1, that are observable
for the asset or liability, either directly or indirectly, are
Level 2 inputs.
Level
3: If inputs from Levels 1 and 2 are not available, FASB
acknowledges that fair value measures of many assets and
liabilities are less precise. The board describes Level 3 inputs as
“unobservable,” and limits their use by saying they
“shall be used to measure fair value to the extent that
observable inputs are not available.” This category allows
“for situations in which there is little, if any, market
activity for the asset or liability at the measurement date”.
Earlier in the standard, FASB explains that “observable
inputs” are gathered from sources other than the reporting
company and that they are expected to reflect assumptions made by
market participants.
Beneficial Conversion Feature
From time to time, the Company may issue
convertible notes that may have conversion prices that create an
embedded beneficial conversion feature pursuant to the guidelines
established by the ASC Topic 470-20,
Debt with Conversion and Other
Options
. The Beneficial
Conversion Feature (“BCF”) of a convertible security is
normally characterized as the convertible portion or feature of
certain securities that provide a rate of conversion that is below
market value or in-the-money when issued. The Company records a BCF
related to the issuance of a convertible security when issued and
also records the estimated fair value of any conversion feature
issued with those securities. Beneficial conversion features that
are contingent upon the occurrence of a future event are recorded
when the contingency is resolved.
The BCF of a convertible note is measured by
allocating a portion of the note’s proceeds to the conversion
feature, if applicable, and as a reduction of the carrying amount
of the convertible note equal to the intrinsic value of the
conversion feature, both of which are credited to additional paid
in capital.
The debt discount
is amortized to interest expense over the life of the note using
the effective interest method. The Company calculates the fair
value of the conversion feature embedded in any convertible
security using either a) the Black Scholes valuation model or b) a
discount cash flow analysis tested for sensitivity to key Level 3
inputs using Monte Carlo simulation.
Stock-Based Compensation
On
January 9, 2017, the Company’s Board of Directors approved
the RumbleON, Inc. 2017 Stock Incentive Plan (the
“Plan”) under which restricted stock units
(“RSUs”) and other equity awards may be granted to
employees and non-employee members of the Board of Directors. The
Company estimates the fair value of such awards on the date of
grant. The fair value of an RSU is based on the average of the high
and low market prices of the Company’s common stock on the
date of grant and is recognized as an expense over its vesting
period; to date, the Company has only issued RSUs that vest over a
three-year period utilizing the following vesting schedule: (i) 20%
on the first anniversary of the grant date; (ii) 30% on the second
anniversary of the grant date; and (iii) 50% on the third
anniversary of the grant date. There was no compensation expense
associated with RSU grants for the three-month periods ended March
31, 2017 or 2016. The Plan is subject to stockholder approval at
the next annual meeting of stockholders. The Company records
share-based compensation expense in general and administrative
expenses in the Condensed Consolidated Statements of
Operations.
Income Taxes
The Company follows ASC Topic 740,
Income
Taxes,
for recording the
provision for income taxes. Deferred tax assets and liabilities are
computed based upon the difference between the financial statement
and income tax basis of assets and liabilities using the enacted
marginal tax rate applicable when the related asset or liability is
expected to be realized or settled. Deferred income tax expenses or
benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than
not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred
tax assets to the amount that is more likely than not to be
realized. Future changes in such valuation allowance are included
in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for financial
accounting and tax purposes in different
periods.
The
Company applies a more-likely-than-not recognition threshold for
all tax uncertainties. ASC Topic 740 only allows the recognition of
those tax benefits that have a greater than fifty percent
likelihood of being sustained upon examination by the taxing
authorities. As of March 31, 2017, the Company reviewed its tax
positions and determined there were no outstanding, or retroactive
tax positions with less than a 50% likelihood of being sustained
upon examination by the taxing authorities, therefore this standard
has not had a material effect on the Company.
9
The
Company classifies tax-related penalties and net interest as income
tax expense. As of March 31, 2017, no income tax expense has been
incurred.
Recent Pronouncements
The Company will adopt Accounting Standards Update
2015-11 Inventory (Topic 330),
Simplifying the Measurement of
Inventory,
which requires
inventory to be stated at the lower of cost or net realizable
value. Vehicle inventory cost is determined by specific
identification. Net realizable value is the estimated selling price
less costs to complete, dispose and transport the vehicles. Selling
prices are derived from historical data and trends, such as sales
price and inventory turn times of similar vehicles, as well as
independent, market resources. Each reporting period the Company
recognizes any necessary adjustments to reflect vehicle inventory
at the lower of cost or net realizable value through cost of sales
in the accompanying Condensed Consolidated Statements of
Operations.
The accompanying Condensed Consolidated Financial
Statements have been prepared assuming the Company will continue as
a going concern, which contemplates the recoverability of assets
and the satisfaction of liabilities in the normal course of
business. The Company has not yet generated significant revenue
from operations. Since its inception, the Company has been engaged
substantially in financing activities and developing its business
plans and incurring start-up costs and expenses, resulting in
accumulated net losses from October 24, 2013 (inception)
through the period ended March 31, 2017 of $1,368,869. As of
March 31, 2017, the Company had a total of
$4,024,315
in available cash. Since inception, the Company
has financed its cash flow requirements through debt and equity
financing. As the Company expands its activities, it will continue
to experience net negative cash flow from operations, until the
Company generates sustainable cash flow from the implementation of
its business strategy and utilization of its e-commerce
platform.
The
ability of the Company to continue as a going concern is dependent
upon its continued ability to raise additional capital from the
sale of common stock and debt financing, and ultimately, the
achievement of significant operating revenue and positive cash
flow. If the Company were to not raise additional funds, it may be
unable to continue in business for the next 12 months with its
currently available capital. These Condensed Consolidated Financial
Statements do not include any material adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from
this uncertainty.
On
February 8, 2017, the Company acquired substantially all of the
assets of NextGen in exchange for $750,000 in cash, plus 1,523,809
unregistered shares of Class B common stock of the Company, which
were issued at a negotiated fair value of $1.75 per share and a
subordinated secured promissory note issued by the Company in favor
of NextGen in the amount of $1,333,334 (the “NextGen
Note”). The NextGen Note matures on the third anniversary of
the closing date (the “Maturity Date”). Interest
accrues and will be paid semi-annually (i) at a rate of 6.5%
annually from the closing date through the second anniversary of
such date and (ii) at a rate of 8.5% annually from the second
anniversary of the closing date through the Maturity Date. For
additional information, see Note 7 - “Notes
Payable.” In connection with the closing of the acquisition,
certain investors of the Company accelerated their commitment to
fund the second tranche of their investment totaling $1,350,000
(the “2016 Private Placement”). The investors in the
2016 Private Placement were issued 1,161,920 shares of Class B
common stock and promissory notes in the amount of $667,000. The
second tranche financing was completed on March 31, 2017. For
additional information, see Note 7 - “Notes
Payable” and Note 8 - “Stockholders’
Equity.”
The
following table presents the purchase price consideration as of
March 31, 2017:
|
Issuance
of shares
|
$
2,666,666
|
|
Debt
|
1,333,334
|
|
Cash
paid
|
750,000
|
|
|
$
4,750,000
|
10
The
preliminary allocation of the purchase price is based on the best
information available to management. This allocation is
provisional, as the Company is required to recognize additional
assets or liabilities if new information is obtained about facts
and circumstances that existed as of March 31, 2017 that, if
known, would have resulted in the recognition of those assets or
liabilities as of that date. The Company may adjust the preliminary
purchase price allocation after obtaining additional information
regarding asset valuation, liabilities assumed and revisions of
previous estimates. The following table summarizes the preliminary
allocation of the purchase price based on the estimated fair value
of the acquired assets and assumed liabilities of NextGen as of
March 31, 2017 as follows:
|
Net
tangible assets acquired:
|
|
|
Technology
development
|
$
1,400,000
|
|
Customer
contracts
|
10,000
|
|
Non-compete
agreements
|
100,000
|
|
Tangible
assets acquired
|
1,510,000
|
|
Goodwill
|
3,240,000
|
|
Total
purchase price
|
4,750,000
|
|
Less:
Issuance of shares
|
2,666,666
|
|
Less:
Debt issued
|
1,333,334
|
|
|
|
|
Cash
paid
|
$
750,000
|
Supplemental pro forma information
The
results of operations of NextGen since the acquisition date are
included in the accompanying Condensed Consolidated Financial
Statements.
The
following supplemental pro forma information presents the financial
results as if the acquisition of NextGen was made as of
January 1, 2017 for the three-months ended March 31, 2017 and
on January 1, 2016 for the three-months ended March 31,
2016.
Pro
forma adjustments for the three-months ended March 31, 2017
and 2016 primarily include adjustments to reflect additional
depreciation and amortization of $29,866 and $24,394, respectively,
related to technology development and identifiable intangible
assets recorded as part of the acquisition, and interest expense
related to the NextGen Note of $27,353 and $21,443,
respectively.
|
|
Three-Months
Ended March 31,
|
|
|
|
2017
|
2016
|
|
Pro
forma revenue
|
$
45,415
|
$
30,951
|
|
Pro
forma net loss
|
$
(1,028,084
)
|
$
(459,834
)
|
The
following table summarizes property and equipment, net as of March
31, 2017 and December 31, 2016:
|
|
March 31,
2017
|
December 31,
2016
|
|
Furniture
and equipment
|
$
42,775
|
$
-
|
|
Technology
development
|
1,527,358
|
|
|
Total
property and equipment
|
1,570,133
|
-
|
|
Less:
accumulated depreciation and amortization
|
48,835
|
-
|
|
Property
and equipment, net
|
$
1,521,298
|
$
-
|
At March 31, 2017, capitalized technology
development costs were $1,527,358, which includes $1,400,000 of
software acquired in the NextGen transaction. For additional
information, see Note 4 - “Acquisitions”. Total
technology development costs incurred for the three-months ended
March 31, 2017 were $205,367, of which $127,358 was
capitalized and $
78,009 was
charged to expense in the accompanying Condensed Consolidated
Statements of Operations. The amortization of capitalized
technology development costs for the three-months ended March 31,
2017 was $48,248. There were no technology development costs
incurred and no amortization of capitalized development costs for
the three-months ended March 31, 2016. Depreciation on furniture
and equipment was $587 for the three-months ended March 31, 2017.
There was no depreciation expense on furniture and fixtures for the
three-months ended March 31, 2016.
11
Intangible
assets, net consist of the following at March 31, 2017 and December
31, 2016:
|
|
March 31,
2017
|
|
Amortized Identifiable Intangible Assets:
|
|
|
Customer agreements
|
|
|
Balance
at December 31, 2016
|
$
-
|
|
Customers
acquired
|
10,000
|
|
Amortization
|
(1,250
)
|
|
Balance
at March 31, 2017
|
$
8,750
|
|
|
|
|
Non-compete agreements
|
|
|
Balance
at December 31, 2016
|
-
|
|
Agreements
|
100,000
|
|
Amortization
|
(10,000
)
|
|
Balance
at March 31, 2017
|
$
90,000
|
|
|
|
|
Unamortized Identifiable Intangible Assets:
|
|
|
Domain names
|
|
|
Balance
at December 31, 2016
|
45,515
|
|
Domain
names acquired
|
-
|
|
Impairment
or write down
|
-
|
|
Balance
at March 31, 2017
|
$
45,515
|
|
|
|
|
Intangible assets, net at March 31, 2017
|
$
144,265
|
Total amortization expense related to intangible assets was $11,250
for the three-months ended March 31, 2017. As of March 31, 2017,
estimated future amortization expenses related to identifiable
intangible assets were as follows:
|
Remainder through December 31,
2017
|
$
33,750
|
|
2018
|
45,000
|
|
2019
|
20,000
|
|
|
$
98,750
|
12
Notes
payable consisted of the following as of March 31, 2017 and
December 31, 2016:
|
|
March 31,
2017
|
December 31,
2016
|
|
Notes
payable-NextGen dated February 8, 2017. Interest is payable
semi-annually at 6.5% through February 9, 2019 and 8.5% through
maturity which is February 8, 2020.
|
$
1,333,334
|
$
-
|
|
Notes
payable-private placement dated March 31, 2017. Interest is payable
at maturity and accrues at 6.5% through March 31, 2019 and 8.5%
through maturity which is March 31, 2020.
|
667,000
|
-
|
|
Convertible note payable-related party dated July
13, 2016. Interest rate of 6.0% which is accrued and paid at
maturity. Note matures on July 26, 2026.
Note
is convertible into common stock, in whole at any time before
maturity at the option of the holder
at
$.75 per share.
|
-
|
197,358
|
|
Less:
Debt discount
|
(667,000
)
|
(196,076
)
|
|
Current
portion
|
-
|
-
|
|
|
|
|
|
Long-term
portion
|
$
1,333,334
|
$
1,282
|
Convertible Note Payable-Related Party
On July 13, 2016, the Company entered into an
unsecured convertible note (the “BHLP Note”) with
Berrard Holdings, an entity owned and controlled by a current
officer and director, Mr. Berrard, pursuant to which the Company
was required to repay $191,858 on or before July 13, 2026 plus
interest at 6% per annum. The BHLP Note was also convertible into
common stock, in whole, at any time before maturity at the option
of the holder at the greater of $0.06 per share or 50% of the price
per share of the next qualified financing which is defined as
$500,000 or greater. Effective August 31, 2016, the principal
amount of the BHLP Note was amended to include an additional $5,000
loaned to the Company, on the same terms. On November 28, 2016, the
Company completed its qualified financing at $1.50 per share which
established the conversion price per share for the BHLP Note of
$0.75 per share, resulting in the principal amount of the BHLP Note
being convertible into 263,144 shares of common stock. As such,
November 28, 2016 became the “commitment date” for
determining the value of the BHLP Note conversion feature. Because
there had been no trading in the Company’s common stock since
July 2014, other than the purchase by Berrard Holdings of 99.5% of
the outstanding shares in a single transaction, the Company used
the Monte Carlo simulation to determine the intrinsic value of the
conversion feature of the BHLP Note,
which resulted in a value in excess of the
principal amount of the BHLP Note. Thus, the
Company recorded a note discount of $197,358 with
the corresponding amount as an addition to paid in capital. This
note discount will be amortized to interest expense until the
scheduled maturity of the BHLP Note in July 2026 or until it is
converted using the effective interest method. The effective
interest rate at March 31, 2017 was 7.4%. Interest expense on the
BHLP Note for the three-months ended March 31, 2017 was $2,920 and
the amortization of the beneficial conversion feature was $3,558.
On March 31, 2017, the Company issued 275,312 shares of Class B
common stock upon full conversion of the BHLP Note, having an
aggregate principal amount, including accrued interest, of $206,484
and a conversion price of $0.75 per share. In connection with the
conversion of the BHLP Note, the remaining debt discount of
$196,076 was charged to interest expense in the Condensed
Consolidated Statements of Operations and the related deferred tax
liability was credited to additional paid in capital in the
Condensed Consolidated Balance Sheets.
Note Payable-NextGen
On
February 8, 2017, in connection with the acquisition of NextGen,
the Company issued a subordinated secured promissory note in favor
of NextGen in the amount of $1,333,334. The NextGen Note matures on
the third anniversary of the Maturity Date. Interest accrues and
will be paid semi-annually (i) at a rate of 6.5% annually from the
closing date through the second anniversary of such date and (ii)
at a rate of 8.5% annually from the second anniversary of the
closing date through the Maturity Date. Upon the occurrence of any
event of default, the outstanding balance under the NextGen Note
shall become immediately due and payable upon election of the
holder. The Company’s obligations under the NextGen Note are
secured by substantially all the assets of NextGen Pro, pursuant to
an Unconditional Guaranty Agreement (the “Guaranty
Agreement”), by and among NextGen and NextGen Pro, and a
related Security Agreement between the parties, each dated as of
February 8, 2017. Under the terms of the Guaranty Agreement,
NextGen Pro has agreed to guarantee the performance of all of the
Company’s obligations under the NextGen Note.
13
Notes Payable-Private Placement
On March 31, 2017, the Company completed funding
of the second tranche of the 2016 Private Placement. The investors
were issued 1,161,920 shares of Class B common stock of the Company
and promissory notes (the “Private Placement Notes”) in
the amount of $667,000, in consideration of cancellation of loan
agreements having an aggregate principal amount committed by the
purchasers of $1,350,000. Under the terms of the Private Placement
Notes, interest shall accrue on the outstanding and unpaid
principal amounts until paid in full. The Private Placement Notes
mature on March 31, 2020. Interest accrues at a rate of 6.5%
annually from the closing date through the second anniversary of
such date and at a rate of 8.5% annually from the second
anniversary of the closing date through the maturity date. Upon the
occurrence of any event of default, the outstanding balance under
the Private Placement Notes shall become immediately due and
payable upon election of the holders.
Based on the
relative fair values attributed to the
Class B
common stock and promissory notes issued in the 2016
Private Placement the Company
recorded
a debt discount on the promissory notes of $667,000 with the
corresponding amounts as addition to paid in capital, net of
deferred taxes
.
The debt
discount will be amortized to interest expense over the life of the
promissory notes using the effective interest
method.
On
January 9, 2017, the Company’s board of directors approved
the adoption of the Plan. The purposes of the Plan are to attract,
retain, reward and motivate talented, motivated and loyal employees
and other service providers (“Eligible Individuals”) by
providing them with an opportunity to acquire or increase a
proprietary interest in the Company and to incentivize them to
expend maximum effort for the growth and success of the Company, so
as to strengthen the mutuality of the interests between such
persons and the stockholders of the Company. The Plan will allow
the Company to grant a variety of stock-based and cash-based awards
to Eligible Individuals. Twelve percent (12%) of the
Company’s issued and outstanding shares of common stock from
time to time are reserved for issuance under the Plan. As of the
date of this report, 9,981,041 shares are issued and outstanding,
resulting in up to 1,197,725 shares available for issuance under
the Plan. On March 31, 2017, the Company granted 475,000 RSUs under
the Plan to certain officers and employees of the Company. The
aggregate fair value of the RSUs was $1,662,500. The RSUs vest over
a three-year period as follows: (i) 20% on the first anniversary of
the grant date; (ii) 30% on the second anniversary of the grant
date; and (iii) 50% on the third anniversary of the grant date. The
fair value of the grant is amortized over the period from the grant
date through the vesting dates. There was no compensation expense
recognized for these grants as of March 31, 2017. The Company has
approximately $1,662,500 in unrecognized stock based compensation,
with an average remaining vesting period of three
years.
On
January 9, 2017, the Company’s board of directors and
stockholders holding 6,375,000 of the Company’s issued and
outstanding shares of common stock approved an amendment to the
Company’s Articles of Incorporation (the “Certificate
of Amendment”), to change the name of the Company to
RumbleON, Inc. and to create an additional class of common stock of
the Company, which was effective on February 13, 2017 (the
“Effective Date”).
Immediately
before approving the Certificate of Amendment, the Company had
authorized 100,000,000 shares of common stock, $0.001 par value
(the “Authorized Common Stock”), including 6,400,000
issued and outstanding shares of common stock (the
“Outstanding Common Stock, and together with the Authorized
Common Stock, the “Common Stock”). Pursuant to the
Certificate of Amendment, the Company designated 1,000,000 shares
of Authorized Common Stock as Class A Common Stock (the
“Class A Common Stock”), which Class A Common Stock
ranks pari passu with all of the rights and privileges of the
Common Stock, except that holders of the Class A Common Stock are
entitled to ten votes per share of Class A Common Stock issued and
outstanding, and (ii) all other shares of Common Stock, including
all shares of Outstanding Common Stock shall be deemed Class B
Common Stock (the “Class B Common Stock”), which Class
B Common Stock is identical to the Class A Common Stock in all
respects, except that holders of the Class B Common Stock are
entitled to one vote per share of Class B Common Stock issued and
outstanding.
Also
on January 9, 2017, the Company’s board of directors and
stockholders holding 6,375,000 of the Company’s issued and
outstanding shares of common stock approved the issuance to (i)
Marshall Chesrown of 875,000 shares of Class A Common Stock in
exchange for an equal number of shares of Class B Common Stock held
by Mr. Chesrown, and (ii) Steven R. Berrard of 125,000 shares of
Class A Common Stock in exchange for an equal number of shares of
Class B Common Stock held by Mr. Berrard, effective at the time the
Certificate of Amendment was filed with the Secretary of State of
Nevada.
On
the Effective Date, the Company filed the Certificate of Amendment
with the Secretary of State of the State of Nevada changing the
Company’s name to RumbleON, Inc. and creating the Class A and
Class B Common Stock. Also on the Effective Date, the Company
issued an aggregate of 1,000,000 shares of Class A Common Stock to
Messrs. Chesrown and Berrard in exchange for an aggregate of
1,000,000 shares of Class B Common Stock held by them. Also on the
Effective Date, the Company amended its bylaws to reflect the name
change to RumbleON, Inc. and to reflect the Company’s primary
place of business as Charlotte, North Carolina.
On March 31, 2017, the Company completed the
2017 Private Placement and the second tranche of the 2016 Private
Placement.
For additional
information,
see Note 1 -
“Business Description,” Note 4 -
“Acquisitions,” and Note 7 - “Notes
Payable.”
14
The following table includes supplemental cash flow information,
including noncash investing and financing activity for the
three-months ended March 31, 2017 and 2016.
|
|
March 31,
2017
|
March 31,
2016
|
|
Cash
paid for interest
|
$
-
|
-
|
|
|
|
|
|
Note
payable issued on acquisition
|
$
1,333,334
|
-
|
|
|
|
|
|
Conversion
of notes payable-related party
|
$
206,209
|
-
|
|
|
|
|
|
Issuance
of shares for acquisition
|
$
2,666,666
|
-
|
In
projecting the Company’s income tax expense for the year
ended December 31, 2107 management has concluded it is not likely
to recognize the benefit of its deferred tax asset and as a result
a full valuation allowance will be required. As such, no income tax
benefit has been recorded for the three-months ended March 31, 2017
or 2016.
As of December 31, 2016, the Company had the BHLP
Note payable of $197,358 and accrued interest totaling $5,508 due
to an entity that is owned and controlled by a current officer and
director of the Company. On March 31, 2017, the Company issued
275,312 shares of Class B Common Stock upon full conversion of the
BHLP Note. For additional information,
see Note 7 - “Notes
Payable.”
As
of December 31, 2015, the Company had loans of $141,000 and accrued
interest of $13,002 due to an entity that is owned and controlled
by a family member of an officer and director of the Company. For
the three-months ended March 31, 2016, the interest expense was
$2,209. In March 2015, there was a new officer and director
appointed and the lender was then considered a related party. All
convertible notes and related party notes outstanding as of July
13, 2016 were paid in full in July 2016.
On
March 31, 2017, the Company completed the sale of 620,000 shares of
Class B Common Stock in the 2017 Private Placement. Officers and
directors of the Company acquired 175,000 shares of Class B Common
Stock in the 2017 Private Placement. Since March 31, 2017 the
Company has completed the sale of an additional 37,500 shares of
Class B Common Stock in the 2017 Private Placement. For additional
information, see Note 1 - “Business
Description.”
A
key component of the Company’s business model is to use
dealer partners in the acquisition of motorcycles as well as
utilize these dealer partners to provide inspection, reconditioning
and distribution services. Correspondingly, the Company will earn
fees and transaction income, and the dealer partner will earn
incremental revenue and enhance profitability through increased
sales, leads, and fees from inspection, reconditioning and
distribution programs. These dealer partners will be designated by
the Company as Select Dealers. In connection with the development
of the Select Dealer program the Company has already been testing
various aspects of the program by utilizing a dealership (the
“Test Dealer”) to which a current officer and director
of the Company has provided financing in the form of a $400,000
convertible promissory note. The note matures on May 1, 2019,
interest is payable monthly at 5% per annum and can be converted
into a 25% ownership interest in the Test Dealer at any time. The
Test Dealer is expected to be named a Select Dealer by an agreement
with the same material terms as the Company’s other Select
Dealer agreements.
In
addition, the Company presently intends to sublease warehouse space
from the Test Dealer that is separate and distinct from the
location of the Test Dealer, on the same terms as paid by the Test
Dealer. This subleased facility would then serve as the
northwestern regional distribution center for the
Company.
15
In connection with the NextGen acquisition the
Company entered into a Consulting Agreement (the “Consulting
Agreement”) with Kartik Kakarala, who formerly served as the
Chief Executive Officer of NextGen and now serves as a director of
the Company.
Pursuant to the
Consulting Agreement, Mr. Kakarala will serve as a consultant to
the Company. The Consulting Agreement may be cancelled by either
party, effective upon delivery of a written notice to the other
party. Mr. Kakarala’s compensation pursuant to the Consulting
Agreement will be $5,000 per month. For additional information, see
Note 4 -“Acquisitions.”
In
connection with the NextGen acquisition, the Company entered into a
Services Agreement (the “Services Agreement”) with
Halcyon Consulting, LLC (“Halcyon”), to provide
development and support services to the Company. Mr. Kakarala
currently serves as the Chief Executive Officer of Halcyon.
Pursuant to the Services Agreement, the Company will pay Halcyon
hourly fees for specific services, set forth in the Services
Agreement, and such fees may increase on an annual basis, provided
that the rates may not be higher than 110% of the immediately
preceding year’s rates. The Company will reimburse Halcyon
for any reasonable travel and pre-approved out-of-pocket expenses
in connection with its services to the Company. During the first
quarter of 2017, the Company paid a total of $184,470 under the
Services Agreement.
The
Company is subject to legal proceedings and claims which arise in
the ordinary course of its business. Although occasional adverse
decisions (or settlements) may occur, the Company believes that the
final disposition of such matters will not have a material adverse
effect on the Company’s financial position, results of
operations or cash flows.
In
April and May 2017 the Company granted 40,000 RSUs under the Plan
to certain officers and employees of the Company. The aggregate
fair value of the RSUs was $136,000. The RSUs vest over a
three-year period as follows: (i) 20% on the first anniversary of
the grant date; (ii) 30% on the second anniversary of the grant
date; and (iii) 50% on the third anniversary of the grant date. The
fair value of the grant is amortized over the period from the grant
date through the vesting dates.
In
May 2017, the Company completed the sale of an additional 37,500
shares of Class B Common Stock in the 2017 Private
Placement.
16
Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
This
Quarterly Report on Form 10-Q contains forward-looking statements.
Any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. The
words “believes,” “anticipates,”
“plans,” “expects,” “intends”
and similar expressions identify some of the forward-looking
statements. Forward-looking statements are not guarantees of
performance or future results and involve risks, uncertainties and
assumptions. The factors discussed elsewhere in this Form 10-Q and
in subsequent Quarterly Reports on Form 10-Q, Annual Reports on
Form 10-K, and Current Reports on Form 8-K could also cause actual
results to differ materially from those indicated by the
Company’s forward-looking statements. The Company undertakes
no obligation to publicly update or revise any forward-looking
statements, except as required by law.
Overview
RumbleON,
Inc. was originally incorporated in the State of Nevada in October
2013 as Smart Server, Inc., which was engaged in the business of
designing and developing mobile payment application software. After
Smart Server ceased its software development activities in 2014
with no ongoing operations and nominal assets, it met the
definition of a “shell company” under the Exchange Act,
and regulations thereunder.
In
July 2016, Berrard Holdings acquired 99.5% of the common stock of
Smart Server from the principal stockholder. Shortly after the
Berrard Holdings common stock purchase, the Company began exploring
the development of a capital light disruptive e-commerce platform
facilitating the ability of both consumers and dealers to
Buy-Sell-Trade-Finance pre-owned recreation vehicles in one online
location. The Company’s goal is for its platform to be widely
recognized as the leading solution for the sale, acquisition, and
distribution of recreation vehicles by providing users with the
most efficient, timely and transparent experience. Our initial
focus is the market for 650cc and larger on road motorcycles,
particularly those concentrated in the
“Harley-Davidson” brand. We will look to extend to
other brands and additional vehicle types and products as the
platform matures. In February 2017, the Company’s name was
changed to RumbleON, Inc.
Serving
both consumers and dealers, the Company will make cash offers for
the purchase of their vehicles and provide them the flexibility to
trade, list, consign, or auction their vehicle through the website
and mobile application of the Company and our dealer partners. In
addition, the Company will offer a large inventory of vehicles for
sale along with financing and associated products. The
Company’s operations are designed to be scalable by working
through an infrastructure and capital light model that is
achievable by virtue of a synergistic relationship with dealers.
The Company will utilize dealer partners in the acquisition of
motorcycles as well as to provide inspection, reconditioning and
distribution services. Correspondingly, the Company will earn fees
and transaction income, and dealer partners will earn incremental
revenue and enhance profitability through increased sales, leads,
and fees from inspection, reconditioning and distribution
programs.
The
Company’s business model is driven by a technology platform
that the Company acquired on February 8, 2017 through its
acquisition of NextGen and the Company anticipates it will begin
transacting through the system during the second quarter of 2017.
The system provides integrated appraisal, inventory management,
CRM, lead management, equity mining, and other key services
necessary to drive the online marketplace. Over the past 16 years,
the developers of the software have designed and built, for large
multi-national clients, a number of successful dealer and high
quality online software applications solutions including
applications for vehicle appraisal and inventory management, credit
reporting and compliance, CRM and lead management, and a vehicle
purchase platform. The NextGen product suite currently has modules
supporting the motorcycle, RV, marine, and auto segments and is
believed to be expandable to encompass additional products in the
future.
Critical Accounting Policies
The
accompanying unaudited Condensed Consolidated Financial Statements
are prepared in conformity with accounting principles generally
accepted in the United States. As such, we are required to make
certain estimates, judgments and assumptions that we believe are
reasonable based upon the information available. These estimates
and assumptions affect the reported amounts of assets and
liabilities as of the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. We routinely evaluate our estimates based on historical
experience and on various other assumptions that management
believes are reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or
conditions. During the three-months ended March 31, 2017, we did
not experience any significant changes in estimates or judgments
inherent in the preparation of our financial statements. A summary
of our significant accounting policies is contained in Note 1 to
our financial statements included in our 2016 Annual
Report.
17
RESULTS OF OPERATIONS
Results of Operations for the Three-months Ended March 31,
2017 and March 31, 2016
The
following table provides our results of operations for the
three-months ended March 31, 2017 and for the three-months ended
March 31, 2016. This financial information should be read in
conjunction with our unaudited Condensed Consolidated Financial
Statements and notes included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.
|
|
March 31,
2017
|
March 31,
2016
|
|
Revenue
|
$
38,889
|
$
-
|
|
Cost
and Operating Expenses:
|
|
|
|
Cost
of Sales
|
34,688
|
-
|
|
General
and administrative
|
230,942
|
3,831
|
|
Technology
development cost
|
78,009
|
-
|
|
Professional
fees
|
346,257
|
6,773
|
|
Depreciation
and amortization
|
60,085
|
475
|
|
Total
costs and operating expenses
|
749,981
|
11,079
|
|
Other
expense:
|
|
|
|
Interest
expense
|
211,803
|
2,209
|
|
Total
other expense
|
211,803
|
2,209
|
|
Net
loss before provision for income taxes
|
$
(922,895
)
|
$
(13,288
)
|
Revenue
Revenue
for the three-months ended March 31, 2017 was $38,889 and consisted
of amounts generated from the dealer network acquired in connection
with the NextGen acquisition. Revenue consisted of: (i) monthly
subscription fees of $31,692 paid by dealers for access to some (a
la carte basis) or all modules that the Company offered; and (ii)
$7,197 of implementation and training fees.
Costs and Expenses
Cost
and operating expenses increased $738,902 to $749,981 for the
three-months ended March 31, 2017 as compared to the three-months
ended March 31, 2016. The primary components of this change were
increases in general and administrative expenses, technology
development and professional fees.
Cost of sales for the three-months ended March 31,
2017 was $34,688 and consisted of: (i) various data feeds from
third parties; (ii) hosting of the customer facing website; (iii)
commissions for new sales; and (iv) implementation and training of
new and existing customers. These costs and expenses are charged to
cost of goods sold as incurred. For the three-months ended March
31, 2017, training costs and hosting costs represented
approximately 37% and 26%, respectively, of cost of sales, with the
cost of data feeds from information providers or integrated
software vendors representing the balance of the costs.
General and administrative expenses
include expenses for: (i) marketing and advertising; (ii)
compensation and related costs associated with technology, product
development, accounting, finance, and other support function
personnel; and (iii) other corporate overhead expenses, including
expenses associated with developing and maintaining management and
operational controls which include our reporting systems and
procedures.
General and
administrative expenses increased $227,111 to $230,942 for the
three-months ended March 31, 2017, as compared to the three-months
ended March 31, 2016. The increase is a result of the continued
expansion and progress made on our business plan, including the
integration of the NextGen acquisition, which drove an increase in
advertising and marketing of $26,130; an increase in headcount
resulting in a $121,930 increase in compensation and related costs,
and an increase in other administrative expenses of $79,051, which
represent costs and expenses associated with establishing and
expanding business operations.
General and administrative expenses will increase
substantially
as we continue to
execute and aggressively expand our business through increased
marketing spending and the addition of management and support
personnel to ensure we adequately develop and maintain operational,
financial and management controls as well as our reporting systems
and procedures.
18
Technology development costs are accounted
for pursuant to ASC 350,
Intangibles - Goodwill and
Other.
Technology development
cost, including internally developed software and website
applications that are used by the Company for its own internal use
and to provide services to its customers, which include consumers,
dealer partners and ancillary service providers. Under the terms of
these customer arrangements the Company retains the revenue
generating technology and hosts the applications on its
servers
and mobile applications. The customer does not
have a contractual right to take possession of the software during
the hosting period and is not permitted to run the software itself
or contract with another party unrelated to the entity to host the
software. Technology development costs consist principally of
(i) development activities including payroll and related
expenses billed by a third-party contractor involved in
application, content, production, maintenance, operation, and
platform development for new and existing products and services,
(ii) technology infrastructure expenses, and (iii) costs
of Company employees devoted to the development and maintenance of
software products. Technology and content costs for design,
maintenance and post-implementation stages of
internal-use software and general website development are expensed
as incurred. For costs incurred to develop new website
functionality as well as new software products for resale and
significant upgrades to existing internally used platforms or
modules, capitalization begins during the application
development stage and ends when the software is available for
general use. Capitalized technology development is amortized
on a straight-line basis over periods ranging from 3 to 7 years.
Total technology development costs incurred for the three-months
ended March 31, 2017 was $205,367, of which $127,358 was
capitalized and $78,009 was charged to expense. For the
three-months ended March 31, 2017, a third-party contractor billed
$184,470 of the $205,367 in total technology development costs. The
amortization of capitalized technology development costs for the
three-months ended March 31, 2017 was $48,248. There were no
technology development costs incurred and no amortization of
capitalized development costs for the three-months ended March 31,
2016.
The Company will
perform periodic assessment of the useful lives assigned to
capitalized software applications. Additionally, the Company
from time-to-time may abandon additional development activities
relating to specific software projects or applications and charge
accumulated costs to technology development expense in the period
such determination is made. We expect our technology development
expenses to increase as we continue to upgrade and enhance our
technology infrastructure, invest in our products, expand the
functionality of our platform and provide new product offerings. We
also expect technology development expenses to continue to be
affected by variations in the amount of capitalized internally
developed technology.
Professional fees consist primarily of legal and
accounting fees and costs associated with: (i) financing
activities; (ii) general corporate matters; (iii) the NextGen
acquisition; (iv) the preparation of quarterly and annual financial
statements; and (v) the filing of regulatory reports required of
the Company for public reporting purposes.
Professional fees increased $339,484 to $346,257
for the three-months ended March 31, 2017, as compared to the
three-months ended March 31, 2016. This increase was primarily a
result of legal, accounting and other professional fees and
expenses incurred in connection with the: (i) NextGen acquisition;
(ii) 2017 Private Placement; (iii) second tranche of 2016 Private
Placement; and (iv) various corporate matters resulting from the
discontinuation of the Smart Server business strategy and the
adoption of the RumbleON business plan. For additional information,
see “Overview,” and Note 1 - “Business
Description” in the accompanying Notes to the Condensed
Consolidated Financial Statements. Professional fees including
legal, accounting and other fees and expenses related to being a
public company will increase as we continue to expand our
business.
Depreciation
and amortization is comprised of the: (i) amortization of
capitalized technology development; (ii) amortization of
identifiable intangible assets; and (iii) furniture and equipment.
Depreciation and amortization expenses increased $59,610 to $60,085
for the three-months ended March 31, 2017, as compared to the
three-months ended March 31, 2016. The increase is a result of the
continued expansion and progress made on our business plan.
Amortization of capitalized technology development and identifiable
intangible assets was $59,498 of the total increase in depreciation
and amortization for the three-months ended March 31,
2017.
Interest expense consists of interest on the: (i)
BHLP Note; (ii) NextGen Note; and (iii) Private Placement Notes.
Interest expense increased $209,594 to $211,803 primarily from a
higher level of debt outstanding for the three-months ended March
31, 2017 as compared to the same period in 2016 and the conversion
of the BHLP Note, which resulted in a $196,076 charge to interest
expense for the remaining balance of the beneficial conversion
feature, net of deferred taxes. Included in interest expense for
the three-months ended March 31, 2017 is $3,558 of interest related
to the beneficial conversion feature on the BHLP Note. There was no
interest expense accrued for the Private Placement Notes for the
three-months ended March 31, 2017 since the Private Placement Notes
became effective on April 1, 2017. For additional information, see
Note 7 - “Notes Payable”
in the accompanying Notes to the Condensed
Consolidated Financial Statements.
19
Liquidity and Capital Resources
The
following table sets forth a summary of our cash flows for the
three-months ended March 31, 2017 and for the three-months ended
March 31, 2016:
|
|
Three-months
Ended
March 31, 2017
|
Three-months
Ended
March 31, 2016
|
|
Net
cash used in operating activities
|
$
(186,172
)
|
$
(18,771
)
|
|
Net
cash used in investing activities
|
(920,133
)
|
-
|
|
Net
cash provided by financing activities
|
3,780,040
|
20,000
|
|
Net
increase in cash
|
$
2,673,735
|
$
1,229
|
Operating Activities
Net
cash used in operating activities increased $167,401 to $186,172
for the three-months ended March 31, 2017, as compared to the
three-months ended March 31, 2016. The increase in net cash used is
primarily due to a $909,607 increase in our net loss offset by an
increase in operating assets and liabilities of $480,562. The
increase in the net loss for the three-months ended March 31, 2017
was a result of the continued expansion and progress made on our
business plan, including the integration of the NextGen
acquisition.
Investing Activities
Net
cash used in investing activities increased $920,133 for the
three-months ended March 31, 2017, as compared to the three-months
ended March 31, 2016. The cash used in investment activities was
primarily for the purchase of NextGen and technology
development.
On February 8, 2017, the Company acquired
substantially all of the assets of NextGen in exchange for $750,000
in cash, plus 1,523,809 unregistered shares of Class B common stock
of the Company and a subordinated secured promissory note issued by
the Company in favor of Next
Gen
in the amount of $1,333,334. The NextGen Note matures on the third
anniversary of the closing date. Interest accrues and will be paid
semi-annually (i) at a rate of 6.5% annually from the closing date
through the second anniversary of such date and (ii) at a rate of
8.5% annually from the second anniversary of the closing date
through the Maturity Date. In connection with the closing of the
acquisition, certain investors of the Company accelerated the
funding of the second tranche of their investment totaling
$1,350,000. The investors were issued 1,161,920 shares of Class B
common stock and promissory notes in the amount of $667,000. For
additional information, see “Financing Activities” in
Management’s Discussion and Analysis and Note 7 -
“Notes Payable” in the accompanying
Notes to the Condensed Consolidated Financial
Statements.
Financing Activities
Net cash provided by financing activities
increased $3,760,040 to $3,780,040 for the three-months ended March
31, 2017, compared with net cash provided by financing activities
of $20,000 during the three-months ended March 31, 2016. This
increase is primarily a result of the: (i) 2017 Private Placement
of $2,480,000 in Class B common stock; and (ii) second tranche of
the 2016 Private Placement of $683,040 in Class B common stock and
$667,000 in promissory notes. For additional information, see Note
1 - “Business Description,” Note 4 -
“Acquisitions,” and Note 7 - “Notes
Payable” in the accompanying Notes to the Condensed
Consolidated Financial Statements. On March 31, 2017, the
Company completed the 2017 Private Placement of 620,000 shares of
Class B common stock, par value $0.001, at a price of $4.00 per
share for aggregate proceeds of $2,480,000. Officers and directors
of the Company acquired 175,000 shares of Class B Common Stock in
the 2017 Private Placement. Proceeds from the 2017 Private
Placement will be used to complete the launch of the
Company’s website,
www.rumbleON.com
,
acquire vehicle inventory, continue development of the
Company’s platform, and for working capital purposes. The
Company intends to file a Registration Statement on Form S-1
covering the resale of such shares with the SEC during the second
quarter of 2017. For additional information, see Note 8 -
“Stockholders’ Equity”
in the accompanying Notes to the Condensed
Consolidated Financial Statements.
20
On
March 31, 2017, the Company completed funding of the second tranche
of the 2016 Private Placement. The investors were issued 1,161,920
shares of Class B common stock of the Company and the Private
Placement Notes in the amount of $667,000, in consideration of
cancellation of loan agreements having an aggregate principal
amount committed by the purchasers of $1,350,000. Under the terms
of the Private Placement Notes, interest shall accrue on the
outstanding and unpaid principal amount until paid in full. The
Private Placement Notes mature on March 31, 2020. Interest accrues
at a rate of 6.5% annually from the closing date through the second
anniversary of such date and (ii) at a rate of 8.5% annually from
the second anniversary of the closing date through the maturity
date. Upon the occurrence of any event of default, the outstanding
balance under the Private Placement Notes shall become immediately
due and payable upon election of the holder. Based on the
relative fair values attributed to the
Class B
common stock and promissory notes issued in the 2016
Private Placement the Company
recorded
a debt discount on the promissory notes of $667,000 with the
corresponding amounts as addition to paid in capital, net of
deferred taxes
.
The debt
discount will be amortized to interest expense over the life of the
notes using the effective interest method.
For additional
information, see Note 7 - “Notes Payable” in the
accompanying Notes to the Condensed Consolidated Financial
Statements.
On July
13, 2016, the Company entered into the BHLP Note with Berrard
Holdings, an entity owned and controlled by a current officer and
director, Mr. Berrard, pursuant to which the Company was required
to repay $191,858 on or before July 13, 2026 plus interest at6% per
annum. The BHLP Note was also convertible into common stock, in
whole, at any time before maturity at the option of the holder at
the greater of $0.06 per share or 50% of the price per share of the
next qualified financing which is defined as $500,000 or greater.
Effective August 31, 2016, the principal amount of the BHLP Note
was amended to include an additional $5,000 loaned to the Company,
on the same terms. On November 28, 2016, the Company completed its
qualified financing at $1.50 per share which established the
conversion price per share for the BHLP Note of $0.75 per share,
resulting in the principal amount of the BHLP Note being
convertible into 263,144 shares of Class B common stock. As such,
November 28, 2016 became the “commitment date” for
determining the value of the BHLP Note conversion feature. Because
there had been no trading in the Company’s common stock since
July 2014, other than the purchase by Berrard Holdings of 99.5% of
the outstanding shares in a single transaction, the Company used
the Monte Carlo simulation to determine the intrinsic value of the
conversion feature of the BHLP Note, which resulted in a value in
excess of the principal amount of the BHLP Note. Thus, the Company
recorded as a note discount of $197,358 with the corresponding
amount as an addition to paid in capital. This note discount will
be amortized to interest expense until the scheduled maturity of
the BHLP Note in July 2026 or it is converted using the effective
interest method. The effective interest rate at March 31, 2017 was
7.4%. Interest expense on the BHLP Note for the three-months ended
March 31, 2017 was $2,920 and the amortization of the beneficial
conversion feature was $3,558. On March 31, 2017, the Company
issued 275,312 shares of Class B common stock upon full conversion
of the BHLP Note, having an aggregate principal amount, including
accrued interest, of $206,484 and a conversion price of $0.75 per
share. In connection with the conversion of the BHLP Note,
the remaining debt discount of
$196,076
was charged to interest expense in the Condensed
Consolidated Statements of Operations and the related deferred tax
liability was credited to additional paid in capital in the
Condensed Consolidated Balance Sheets. For additional information,
see Note 7 - “Notes Payable” in the accompanying Notes
to the Condensed Consolidated Financial Statements.
Investment in Growth
As
of March 31, 2017, the Company had a total of $4,024,315 in
available cash. Our cash requirements for the next twelve months
are significant as we have begun to aggressively invest in the
growth of our business and we expect this investment to continue.
We plan to invest heavily in inventory, marketing, technology and
infrastructure to support the growth of the business. These
investments are expected to increase our negative cash flow from
operations and operating losses at least in the near term, and
there is no guarantee that we will be able to realize the return on
our investments. If we were to not receive any additional funds, we
may not continue in business for the next 12 months with our
currently available capital. Since inception, we have financed our
cash flow requirements through debt and equity financing. However,
additional funds may not be available when we need them, on terms
that are acceptable to us, or at all. Volatility in the credit
markets may also have an adverse effect on our ability to obtain
debt financing. Our limited operating history makes predictions of
future operating results difficult to ascertain. Our prospects must
be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving
markets. Such risks for us include, but are not limited to, an
evolving business model, advancement of technology and the
management of growth. To address these risks, we must, among other
things, continue our development of relevant applications, stay
abreast of changes in the marketplace, as well as implement and
successfully execute our business and marketing strategy. There can
be no assurance that we will be successful in addressing such
risks, and the failure to do so can have a material adverse effect
on our business prospects, financial condition and results of
operations.
Off-Balance Sheet Arrangements
As
of March 31, 2017, we did not have any off-balance sheet
arrangements that have or are reasonably likely to have a current
or future effect on our financial condition, changes in financial
condition, revenue or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to
investors.
21
Emerging Growth Company
We
are an “emerging growth company” under the federal
securities laws and will be subject to reduced public company
reporting requirements. In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can
take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act of 1933, as amended, 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 are choosing not to take advantage
of the extended transition period for complying with new or revised
accounting standards.
Item 3.
Quantitative and Qualitative Disclosure About Market
Risk.
This
item is not applicable as we are currently considered a smaller
reporting company.
Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our
management, with the participation of our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March
31, 2017. We maintain disclosure controls and procedures that are
designed to provide reasonable assurance that information required
to be disclosed in our reports filed or submitted under the
Exchange Act 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. Our management recognizes that any
controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and
procedures.
Based
on the evaluation of disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), the
Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and
procedures were effective as of March 31, 2017.
Changes in Internal Control Over Financial Reporting
Since
the acquisition of NextGen, the Company is evaluating its internal
control over financial reporting; however, there were no changes in
our internal control over financial reporting that occurred during
our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.
Limitations on Effectiveness of Controls and
Procedures
In
designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the
fact that there are resource constraints and that management is
required to apply its judgment in evaluating the benefits of
possible controls and procedures relative to their
costs.
22
Item 1.
Legal Proceedings.
We
are not a party to any material legal proceedings.
Item 1A.
Risk Factors.
Our
business, financial condition, operating results, and cash flows
may be impacted by a number of factors, many of which are beyond
our control, including those set forth in our Annual Report on 10-K
for the year ended December 31, 2016, filed on February 14, 2017,
the occurrence of any one of which could have a material adverse
effect on our actual results.
There
have been no material changes to the Risk Factors previously
disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2016.
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds.
None.
Item 3.
Defaults Upon Senior Securities.
None.
Item 4.
Mine Safety Disclosures.
Not
applicable.
Item 5.
Other Information.
None.
Item 6.
Exhibits.
|
Exhibit No.
|
|
Description
|
|
10.1
|
|
NextGen Promissory Note, dated February 8, 2017*
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Exchange
Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Exchange
Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
|
|
32.1
|
|
Certifications 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
|
|
Certifications 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**
|
|
101.INS
|
|
XBRL Instance Document*
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema*
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase*
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase*
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase*
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase*
|
*
Filed
herewith.
**
Furnished herewith.
23
SIGNATURES
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.
|
|
RumbleON,
INC.
|
|
|
|
|
|
|
|
|
Date: May 15
,
2017
|
By:
|
/s/
Marshall
Chesrown
|
|
|
|
|
Marshall
Chesrown
|
|
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: May 15
,
2017
|
By:
|
/s/
Steven
R. Berrard
|
|
|
|
|
Steven
R. Berrard
|
|
|
|
|
Chief
Financial Officer and Secretary
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
24
Exhibit Index
|
Exhibit No.
|
|
Description
|
|
10.1
|
|
NextGen Promissory Note, dated February 8, 2017*
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Exchange
Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Exchange
Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
|
|
32.1
|
|
Certifications 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
|
|
Certifications 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**
|
|
101.INS
|
|
XBRL Instance Document*
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema*
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase*
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase*
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase*
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase*
|
*
Filed
herewith.
**
Furnished herewith.
25
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsNote 1 Business DescriptionNote 2 Summary Of Significant Accounting PoliciesNote 3 Going ConcernNote 4 AcquisitionsNote 5 Property and Equipment, NetNote 6 Intangible Assets, NetNote 7 Notes PayableNote 8 Stockholders EquityNote 9 Supplemental Cash Flow InformationNote 10 Income TaxesNote 11 Related Party TransactionsNote 12 Commitments and ContingenciesNote 13 Subsequent EventsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosure About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits