Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 07, 2017 | |
Entity Registrant Name | RumbleON, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Entity Central Index Key | 1,596,961 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 1,000,000 | |
Class B Common Stock | ||
Entity Common Stock, Shares Outstanding | 11,928,541 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 656,220 | $ 1,350,580 |
Accounts Receivable | 320,575 | 0 |
Vehicle Inventory | 1,244,658 | 0 |
Prepaid expenses | 123,513 | 1,667 |
Other | 174,419 | 0 |
Total current assets | 2,519,385 | 1,352,247 |
Property and Equipment - Net of Accumulated Depreciation | 2,166,326 | 0 |
Goodwill | 3,240,000 | 0 |
Intangible assets, net | 121,765 | 45,515 |
Total assets | 8,047,476 | 1,397,762 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,902,543 | 219,101 |
Accrued interest payable | 17,998 | 0 |
Current portion of long term debt | 1,510,274 | 0 |
Other current liabilities | 0 | 0 |
Total current liabilities | 3,430,815 | 219,101 |
Long term liabilities: | ||
Notes payable | 1,414,937 | 1,282 |
Accrued interest payable - related party | 21,736 | 5,508 |
Deferred tax liability | 0 | 78,430 |
Total long term liabilities | 1,436,673 | 85,220 |
Total liabilities | 4,867,488 | 304,321 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 0 | 0 |
Additional Paid in Capital | 8,749,566 | 1,534,015 |
Subscriptions receivable | (1,000) | (1,000) |
Accumulated deficit | (5,578,597) | (445,974) |
Total stockholders' equity | 3,179,988 | 1,093,441 |
Total liabilities and stockholders' equity | 8,047,476 | 1,397,762 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 1,000 | 0 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 9,019 | $ 6,400 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,000,000 | 0 |
Common stock, shares outstanding | 1,000,000 | 0 |
Class B Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 99,000,000 | 99,000,000 |
Common stock, shares issued | 9,018,541 | 6,400,000 |
Common stock, shares outstanding | 9,018,541 | 6,400,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
Used vehicle sales: Consumer | $ 1,626,864 | $ 0 | $ 1,626,864 | $ 0 |
Used vehicle sales: Dealer | 1,745,948 | 0 | 1,745,948 | 0 |
Used vehicle sales: Auction | 171,560 | 0 | 253,500 | 0 |
Other sales and revenue | 134,573 | 0 | 134,573 | 0 |
Subscription and other fees | 27,197 | 0 | 100,668 | 0 |
Total Revenue | 3,706,142 | 0 | 3,861,553 | 0 |
Expenses: | ||||
Cost of revenue | 3,478,124 | 0 | 3,627,455 | 0 |
Selling, general and administrative | 2,326,043 | 36,706 | 4,690,216 | 58,135 |
Depreciation and amortization | 129,277 | 475 | 302,697 | 1,425 |
Total expenses | 5,933,444 | 37,181 | 8,620,368 | 59,560 |
Operating loss | (2,227,302) | (37,181) | (4,758,815) | (59,560) |
Interest expense | 90,201 | 2,878 | 373,808 | 7,431 |
Net loss before provision for income taxes | (2,317,503) | (40,059) | (5,132,623) | (66,991) |
Benefit for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (2,317,503) | $ (40,059) | $ (5,132,623) | $ (66,991) |
Weighted average number of common shares outstanding – basic and fully diluted | 10,018,541 | 5,500,000 | 9,105,429 | 5,500,000 |
Net loss per share – basic and fully diluted | $ (0.23) | $ (0.01) | $ (0.56) | $ (0.01) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid-In Capital | Subscription Receivable | Accumulated Deficit | Total |
Beginning Balance, shares at Dec. 31, 2016 | 0 | 0 | 6,400,000 | ||||
Beginning Balance, amount at Dec. 31, 2016 | $ 0 | $ 0 | $ 6,400 | $ 1,534,015 | $ (1,000) | $ (445,974) | $ 1,093,441 |
Exchange of common stock, shares | 1,000,000 | (1,000,000) | |||||
Exchange of common stock, amount | $ 1,000 | $ (1,000) | 0 | ||||
Issuance of common stock in connection with acquisition, shares | 1,523,809 | ||||||
Issuance of common stock in connection with acquisition, amount | $ 1,524 | 2,665,142 | 2,666,666 | ||||
Issuance of stock in private placements, shares | 657,500 | ||||||
Issuance of stock in private placements, amount | $ 658 | 2,629,342 | 2,630,000 | ||||
Issuance of common stock in connection with loan agreement, shares | 1,161,920 | ||||||
Issuance of common stock in connection with loan agreement, amount | $ 1,162 | 1,348,878 | 1,350,040 | ||||
Issuance of common stock in connection with conversion of Note Payable-related party, shares | 275,312 | ||||||
Issuance of common stock in connection with conversion of Note Payable-related party, amount | $ 275 | 284,639 | 284,914 | ||||
Stock-based compensation | 287,550 | 287,550 | |||||
Net loss | (5,132,623) | (5,132,623) | |||||
Ending Balance, shares at Sep. 30, 2017 | 0 | 1,000,000 | 9,018,541 | ||||
Ending Balance, amount at Sep. 30, 2017 | $ 0 | $ 10,000 | $ 9,019 | $ 8,749,566 | $ (1,000) | $ (5,578,597) | $ 3,179,988 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (5,132,623) | $ (66,991) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 302,697 | 1,425 |
Amortization of debt discount | 91,877 | 0 |
Interest expense on conversion of debt | 196,076 | 0 |
Share based compensation expense | 287,550 | 0 |
Changes in operating assets and liabilities: | ||
Increase in prepaid expenses | (121,846) | (4,167) |
Increase in inventory | (1,244,658) | |
Increase in accounts receivable | (320,575) | 0 |
Increase in other current assets | (174,419) | 0 |
Increase in accounts payable and accrued liabilities | 1,683,442 | 18,095 |
Increase in accrued interest payable - related party | 43,351 | (10,478) |
Net cash used in operating activities | (4,389,128) | (62,116) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash used for acquisitions | (750,000) | 0 |
Technology development | (435,097) | 0 |
Purchase of property and equipment | (600,175) | 0 |
Net cash used in investing activities | (1,785,272) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from note payable | 2,167,000 | 214,358 |
Repayments for note payable - related party | 0 | (158,000) |
Proceeds from sale of common stock | 3,313,040 | 7,000 |
Net cash provided by financing activities | 5,480,040 | 63,358 |
NET CHANGE IN CASH | (694,360) | 1,242 |
CASH AT BEGINNING OF PERIOD | 1,350,580 | 3,713 |
CASH AT END OF PERIOD | $ 656,220 | $ 4,955 |
Business Description
Business Description | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Business Description | 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 technology 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 601cc 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 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 platform provides vehicle appraisal, inventory management, customer relationship management and lead management, equity mining, and other key services necessary to drive the online marketplace. For additional information, see Note 3 - “Acquisitions.” Serving both consumers and dealers, through our online platform, we make cash offers for the purchase of their vehicles and intend to provide them the flexibility to trade, list, or auction their vehicle through our website and mobile applications. In addition, we offer a large inventory of used vehicles for sale along with third-party financing and associated products. Our 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 dealer partners. We utilize dealer partners in the acquisition of motorcycles as well as to provide inspection, reconditioning and distribution services. Correspondingly, we 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Summary of Significant Accounting Policies | 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 Securities and Exchange Commission (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) management believes are necessary for the fair presentation of the Company’s financial condition, results of operations, and cash flows for the periods presented. Certain prior period amounts have been reclassified to conform to the current year’s presentation. Amounts and percentages may not total due to rounding. 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 Revenue Recognition Revenue is derived from two primary sources: ; The Company recognizes revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) the product or service has been provided to the customer; (iii) the amount to be paid by the customer is fixed or determinable; and (iv) the collection of the Company’s payment is probable. Used Vehicle Sales The Company sells used vehicles to consumers, dealers and at auctions. The source of these vehicles is primarily from the Company’s Sell Us Your Vehicle Revenue from used vehicle sales is recognized when the vehicle is delivered to a consumer, dealer or auction, a sales contract is signed, Online Listing and Sales Fees The Company charges a non-refundable fee for sellers to list their vehicle on the RumbleOn website. During the listing period, the Company manages all sales leads, handles all the documentation necessary to complete a sale, accepts a buyer’s trade and provides financing through third-party providers to the potential buyer, if necessary. Upon a successful sale, the seller pays a fee which is based on the difference between the actual retail sales price of the vehicle sold and the net proceeds agreed to be paid by RumbleOn to the seller when the listing agreement was signed. Revenue from non-refundable online listing fees is recognized once the listing agreement is signed, the vehicle is listed for sale and the listing fee has been received. Revenue for selling fees is recognized upon delivery of the vehicle to the customer, when the sales contract is signed, Retail Merchandise Sales The Company recognizes sales revenue, net of sales taxes at the time it sells the merchandise or in the case of online sales when the merchandise is delivered to the customer and payment has been received. Vehicle Financing Consumers can pay for their vehicle using cash or the Company offers a range of finance options through unrelated third-parties such as banks or credit unions. These third-party providers generally pay the Company a Revenue for these finance fees are recognized Vehicle Service Contracts At the time of vehicle sale, the Company provides customers, on behalf of unrelated third parties who are the primary obligors, a range of other related products and services, including extended protection plan (“EPP”) products and vehicle appearance protection. EPP products include extended service plans (“ESPs”) that are designed to cover unexpected expenses associated with mechanical breakdowns and guaranteed asset protection (“GAP”), which is intended to cover the unpaid balance on a vehicle loan in the event of a total loss of the vehicle or unrecovered theft. Vehicle appearance protection includes products aimed at maintaining vehicle appearance. The Company has no contractual liability to customers for claims under these products. Commission revenue is recognized at the time of sale, net of a reserve for estimated contract cancellations. The reserve for cancellations is estimated based upon historical industry experience and recent trends and is reflected as a reduction of other sales revenue in the accompanying Consolidated Statements of Operations and a component of accounts payable and accrued liabilities in the accompanying Consolidated Balance Sheets. Our risk related to contract cancellations is limited to the revenue that we receive. Subscription Fees Subscription fees are generated from dealer partners, under a license arrangement that provides access to our software solution and ongoing support. Select and Appraisal Dealers pay a monthly subscription fee for access to and ongoing support for portions of the RumbleOn software solution which includes: (i) a vehicle appraisal process; (ii) inventory management system; (iii) customer relationship and lead management program; and (iv) equity mining. Dealers may also be charged an initial software installation and training fee. Dealers do not have the contractual right to take possession of the software and may cancel the license for these products and services by providing a 30-day notice. Installation and training do not have value to the user without the license and ongoing support and maintenance. Because the dealer partner has the right to cancel the license with 30 days’ notice, revenue for installation and training is recognized when complete, acceptance has occurred, and collectability of a determinable amount is probable. Revenue recognition of monthly subscription fees commences upon completion of installation, acceptance has occurred, and collectability of a determinable amount 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 management regularly reviews the operating results of that component. The Company has concluded that currently it has one reporting unit. Determining fair value includes the use of significant estimates and assumptions. Management utilizes an income approach, specifically the discounted cash flow analysis 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 Sheets 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. Vehicle Inventory Vehicle inventory is accounted for pursuant to ASC 330, Inventory 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 The Company considers all cash accounts and all highly liquid short-term investments purchased with an original maturity of three months or less to be cash or cash equivalents. As of September 30, 2017 and 2016, the Company did not have any investments with maturities greater than three months. Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization 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 September 30, 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, 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. 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 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. Cost of Revenue Cost of vehicle sales includes the cost to acquire vehicles and the reconditioning and transportation costs associated with preparing the vehicles for resale. Vehicle acquisition costs are driven by the mix of vehicles the Company acquires, the source of those vehicles, and supply and demand dynamics in the vehicle market. Reconditioning costs are billed by third-party providers and include parts, labor, and other repair expenses directly attributable to specific vehicles. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition or delivery. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Cost of subscription and other fee revenue includes the (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 revenue as incurred. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses primarily include compensation and benefits, advertising and marketing, professional fees, technology development expenses, rent and other occupancy costs, insurance, travel and other administrative expenses. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. Advertising and marketing expenses were $775,456 and $1,071,398, respectively for the three and nine-month periods ended September 30, 2017. There were no Stock-Based Compensation On January 9, 2017, the Company’s Board of Directors approved, subject to stockholder approval, 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. On June 30, 2017, the Plan was approved by the Company's stockholders at the 2017 Annual Meeting of Stockholders. The Company estimates the fair value of awards granted under the Plan 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 Class B Common Stock on the date of grant and is recognized as an expense on a straight-line basis 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. During the nine-month period ended September 30, 2017, the Company granted 560,000 RSUs under the Plan to members of the Board of Directors, officers and employees. Compensation expense associated with RSU grants for the three and nine-month periods ended September 30, 2017 was $157,763 Income Taxes The Company follows ASC Topic 740, Income Taxes, 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 September 30, 2017, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a fifty percent likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company. The Company classifies tax-related penalties and net interest as income tax expense. As of September 30, 2017, no income tax expense has been incurred. Recent Pronouncements The Company has adopted Accounting Standards Update 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory, |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions | |
Acquisitions | 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”). The following table presents the purchase price consideration as of September 30, 2017: Issuance of shares $ 2,666,666 Debt 1,333,334 Cash paid 750,000 $ 4,750,000 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 both the three and nine-month periods ended September 30, 2017 and on January 1, 2016 for both the three and nine-month periods ended September 30, 2016. Pro forma adjustments for the nine-month period ended September 30, 2017 and 2016 primarily include adjustments to reflect additional depreciation and amortization of $29,866 and $48,788, 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 $42,833, respectively. Three-Months Ended September 30, Nine-Months Ended September 30, 2017 2016 2017 2016 Pro forma revenue $ 3,706,142 $ 45,606 $ 3,868,079 $ 100,006 Pro forma net loss $ (2,317,503 ) $ (567,401 ) $ (5,237,814 ) $ (1,625,690 ) Loss per share - basic and fully diluted $ (0.23 ) $ (0.08 ) $ (0.58 ) $ (0.23 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 10,018,541 7,023,809 9,105,429 7,023,809 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property And Equipment Net | |
Property and Equipment, Net | The following table summarizes property and equipment, net of accumulated depreciation and amortization as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Vehicles $ 472,870 $ - Furniture and equipment 127,306 - Technology development 1,835,097 - Total property and equipment 2,435,273 - Less: accumulated depreciation and amortization 268,947 - Property and equipment, net $ 2,166,326 $ - At September 30, 2017, capitalized technology development costs were $1,835,097, which includes $1,400,000 of software acquired in the NextGen transaction. For additional information, see Note 3 - “Acquisitions.” Total technology development costs incurred for the nine-month period ended September 30, 2017 were $713,766, of which $435,097 was capitalized and $278,669 was charged to expense in the accompanying Condensed Consolidated Statements of Operations. The amortization of capitalized technology development costs for the three and nine-month periods ended September 30, 2017 was $89,429 and $219,374, respectively. There were no technology development costs incurred and no amortization of capitalized development costs for the same periods in 2016. Depreciation expense on vehicles, furniture and equipment for the three and nine-month periods ended September 30, 2017 was $28,598 and $49,573, respectively. Depreciation on furniture and equipment for the three and nine-month periods ended September 30, 2016 was $475 and $1,425, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets Net | |
Intangible Assets, net | Intangible assets, net consist of the following at September 30, 2017 and December 31, 2016: September 30, 2017 Amortized Identifiable Intangible Assets: Customer agreements Balance at December 31, 2016 $ - Customers acquired 10,000 Amortization (3,750 ) Balance at September 30, 2017 $ 6,250 Non-compete agreements Balance at December 31, 2016 $ - Agreements 100,000 Amortization (30,000 ) Balance at September 30, 2017 $ 70,000 Unamortized Identifiable Intangible Assets: Domain names Balance at December 31, 2016 $ 45,515 Domain names acquired - Impairment or write down - Balance at September 30, 2017 $ 45,515 Intangible assets, net at September 30, 2017 $ 121,765 Amortization expense related to intangible assets for the three and nine-month periods ended September 30, 2017 was $11,250 and $33,750, respectively. The estimated future amortization expenses related to identifiable intangible assets is as follows: Remainder through December 31, 2017 $ 11,250 2018 45,000 2019 20,000 $ 76,250 |
Accounts Payable And Accrued Li
Accounts Payable And Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Payable And Accrued Liabilities | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | The following table summarizes accounts payable and other accrued liabilities as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Accounts payable $ 1,539,572 $ 219,101 Sales taxes 296 - Accrued compensation and benefits 354,790 - Other 7,885 - Total accounts payable and accrued liabilities $ 1,902,543 $ 219,101 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Notes Payable | Notes payable consisted of the following as of September 30, 2017 and December 31, 2016: September 30, 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 Senior Secured Promissory Notes dated September 5, 2017. Interest rate of 5.0% through December 31, 2017and a rate of 10% through maturity which is accrued and paid at maturity. Note matures on September 5, 2018. 1,650,000 - $ 2,925,211 $ 1,282 Current portion (net of $139,726 of debt discount) 1,510,274 - Long-term portion $ 1,414,937 $ 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 $5,500 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 a note discount of $197,358 with the corresponding amount as an addition to paid in capital. This note discount was amortized to interest expense until the scheduled maturity of the BHLP Note in July 2026 or until it was converted using the effective interest method. 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. 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 the Company’s obligations under the NextGen Note. Interest expense on the NextGen Notes for the three and nine-month periods ended September 30, 2017 was $21,370 and $54,849, respectively. Notes Payable-Private Placement On March 31, 2017, the Company completed funding of the second tranche of the 2016 Private Placement (as defined below). 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. The debt discount is amortized to interest expense until the scheduled maturity of the Private Placement Notes in March 2020 using the effective interest method. The effective interest rate at September 30, 2017 was 26.0%. Interest expense on the Private Placement Notes for the three and nine-month periods ended September 30, 2017 was $94,885 and $184,943, respectively, which included debt discount amortization of $41,979 and $81,603, respectively for the three and nine-month periods ended September 30, 2017. Notes Payable-Senior Secured Promissory Notes On September 5, 2017, the Company executed Senior Secured Promissory Notes (the “Notes”) in favor of several investors, including certain executive officers and directors of the Company, in the aggregate principal amount of $1,650,000 (“Principal Amount”), which includes an aggregate original issue discount of $150,000. The proceeds to the Company from the Notes, net of original issuance discount, was $1,500,000. The Notes are secured by an interest in all the Company’s Collateral, as such term is defined in the Notes. The Notes mature on September 5, 2018 and bear interest at a rate equal to 5% per annum through December 31, 2017, and a rate of 10% per annum thereafter. Interest is payable monthly in arrears. The Principal Amount and any unpaid interest accrued thereon may be prepaid by the Company at any time prior to the maturity date without premium or penalty upon five days prior written notice to the noteholder. If the Company consummates in one or more transactions financing of any nature resulting in net proceeds available to the Company of $5,000,000 or more, then the noteholders may require the Company to prepay the Notes on thirty (30) days prior written notice to the Company. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Stockholders' Equity | On November 28, 2016, the Company completed a private placement with certain purchasers, with respect to the sale of an aggregate of 900,000 shares of common stock of the Company at a purchase price of $1.50 per share for total consideration of $1,350,000 (the “2016 Private Placement”). In connection with the 2016 Private Placement, the Company also entered into loan agreements, pursuant to which the purchasers would loan to the Company their pro rata share of up to $1,350,000 in the aggregate upon the request of the Company at any time on or after January 31, 2017 and before November 1, 2020. On March 31, 2017, the Company completed the second tranche of the 2016 Private Placement. For additional information, see Note 7 - “Notes Payable.” On January 9, 2017, the Company’s Board of Directors approved, subject to stockholder approval, the adoption of the Plan. On June 30, 2017, the Plan was approved by the Company’s stockholders at the 2017 Annual Meeting of Stockholders. 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 Class B Common Stock from time to time are reserved for issuance under the Plan. As of September 30, 2017, 9,018,541 shares are issued and outstanding, resulting in up to 1,082,225 shares available for issuance under the Plan. As of September 30, 2017, the Company has granted 560,000 RSUs under the Plan to certain officers and employees of the Company. The aggregate fair value of the RSUs was $2,103,500. 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. Compensation expense recognized for these grants for the three and nine-month periods ended September 30, 2017 was $157,763 and $287,550, respectively. The Company has approximately $1,605,600 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 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 material 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 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. In May 2017, the Company completed the sale of an additional 37,500 shares of Class B Common Stock in the 2017 Private Placement. Proceeds from the 2017 Private Placement were used to complete the launch of the Company’s website, www.rumbleon.com On June 30, 2017, the Company filed a Registration Statement on Form S-1 (the “Registration Statement”) with the SEC covering the resale of 8,993,541 shares of Class B Common Stock issued in the NextGen acquisition and the 2017 Private Placement and other shares previously held by our stockholders, including our officers and directors. The SEC declared the Registration Statement effective on July 7, 2017. In connection with the filing of the Registration Statement, our officers and directors and certain stockholders entered into a lock-up agreement restricting, through December 31, 2017, the resale of an aggregate of 6,848,800 shares of our common stock held by them and subject to the Registration Statement. |
Selling, General And Administra
Selling, General And Administrative | 9 Months Ended |
Sep. 30, 2017 | |
Selling General And Administrative | |
SELLING, GENERAL AND ADMINISTRATIVE | The following table summarizes the detail of selling, general and administrative expense for the three and nine-month periods ended September 30, 2017 and 2016: Three-months ended September 30, Nine-months ended September 30, 2017 2016 2017 2016 Selling, general and administrative: Compensation and related costs $ 1,028,819 $ - $ 1,951,911 $ - Advertising and marketing 752,017 - 1,060,195 - Professional fees 192,041 34,044 724,486 49,017 Technology development 91,967 - 278,668 - General and administrative 261,199 2,662 674,956 9,118 $ 2,326,043 $ 36,706 $ 4,690,216 $ 58,135 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | The following table includes supplemental cash flow information, including noncash investing and financing activity for the nine-month periods ended September 30, 2017 and 2016. Nine-Months Ended September 30, 2017 2016 Cash paid for interest $ 42,502 $ - Note payable issued on acquisition $ 1,333,334 $ - Conversion of notes payable-related party $ 206,484 $ - Issuance of shares for acquisition $ 2,666,666 $ - |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | In projecting the Company’s income tax expense for the year ended December 31, 2017, management has concluded it is not likely to recognize the benefit of its deferred tax asset, net of deferred tax liabilities, and as a result a full valuation allowance will be required. As such, no income tax benefit has been recorded for the three and nine-month periods ended September 30, 2017 or 2016. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share | |
Loss Per Share | Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The computation of diluted net loss per share for the three-month and nine-month periods ended September 30, 2017 did not include 560,000 of restricted stock units to purchase shares of Class B Common Stock as their inclusion would be antidilutive. There were no restricted stock units outstanding for the three and nine-month periods ended September 30, 2016. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Related Party Transactions | 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. Interest expense on these loans for the three and nine-month period ended September 30, 2016 was $2,878 and $7,431, respectively. All convertible notes and related party notes outstanding as of July 13, 2016 were paid in full in July 2016. As of December 31, 2016, the Company had the BHLP Note payable of $197,358 and accrued interest of $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. The accrued interest is included in accrued interest under Long-term liabilities in the Condensed Consolidated Balance Sheets. For additional information, see Note 7 - “Notes Payable.” 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. In May 2017, the Company completed the sale of an additional 37,500 shares of Class B Common Stock in the 2017 Private Placement. For additional information, see Note 8 - “Stockholders’ Equity.” 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 may earn incremental revenue and enhance profitability through increased sales, leads, and fees from inspection, reconditioning and distribution programs. In connection with the development of the dealer program, the Company tested various aspects of the program by utilizing a dealership (the “Test Dealer”) to which Mr. Chesrown, the Company’s Chief Executive Officer 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. Revenue generated by the Company from the Test Dealer for the three and nine-month periods ended September 30, 2017 was $924,069 and $946,824, respectively. Included in accounts receivable at September 30, 2017 is $264,464 owed to the Company by the Test Dealer. 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 serves 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 is $5,000 per month. For the three and nine-month periods ended September 30, 2017, the Company paid $15,000 and $35,000, respectively under the Consulting Agreement. These amounts are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. For additional information, see Note 3 - “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. For the three and nine-month periods ended September 30, 2017 the Company paid $221,400 and $678,766, respectively under the Services Agreement. As of September 30, 2017, the Company had promissory notes of $370,556 and accrued interest of $12,076 due to an entity controlled by a director and to the director of the Company. The promissory notes were issued in connection with the completion of the 2016 Private Placement on March 31, 2017. Interest expense on the promissory notes for the three and nine-month periods ended September 30, 2017 was $29,392 and $63,416, respectively, which included debt discount amortization of $23,321 and $45,335, respectively for the three and nine-month periods ended September 30, 2017. The interest was charged to interest expense in the Condensed Consolidated Statements of Operations and included in accrued interest under long-term liabilities in the Condensed Consolidated Balance Sheets. On September 5, 2017, the Company executed Senior Secured Promissory Notes (the “Notes”) in favor of several investors, including certain executive officers and directors of the Company, in the aggregate principal amount of $1,650,000 (“Principal Amount”), which includes an aggregate original issue discount of $150,000. As of September 30, 2017, the Company had Notes of $1,214,144 and accrued interest of $4,144 due to certain executive officers and directors of the Company. Interest expense on the Notes due to certain executive officers and directors for the three and nine-month periods ended September 30, 2017 was $11,678, which included $7,534 of original issue discount amortization. On October 23, 2017, the Company completed a public offering and used $1,661,075 of the net proceeds of the offering for the repayment of the Notes in the aggregate principal amount of $1,650,000, plus accrued interest, which resulted in the termination of the Notes. For additional information, see Note 7 - “Notes Payable” and Note 15 “Subsequent Events.” |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies | |
Commitments and Contingencies | 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. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 23, 2017, the Company completed an underwritten public offering of 2,910,000 shares of Class B common stock at a public offering price of $5.50 per share 14,500,000 The Company intends to use the remaining net proceeds of the Offering for working capital and general corporate purposes, which may include purchases of additional inventory held for sale, increased spending on marketing and advertising and capital expenditures necessary to grow the business. In connection with the Offering, on October 23, 2017, the Company issued to the representatives of the underwriters warrants to purchase 218,250 shares of Class B common stock, which is equal to 7.5% of the aggregate number of shares of Class B common stock sold in the Offering (the “Representatives’ Warrants”). The Representatives’ Warrants are exercisable at a per share price of $6.325, which is equal to 115% of the Offering price per share of the shares sold in the Offering. The Representatives’ Warrants are exercisable at any time and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the registration statement related to the Offering. Also, in connection with the Offering, on October 19, 2017, the Class B Common Stock uplisted from the OTCQB and began trading on The NASDAQ Capital Market under the symbol “RMBL.” On November 2, 2017, the Company through its wholly-owned subsidiary RMBL Missouri, LLC (the “Borrower”), entered into a floor plan line of credit (the "Credit Line") with NextGear Capital, Inc. (the “Lender”) in the amount of $2,000,000, or such lesser sum which may be advanced to or on behalf of the Borrower from time to time, pursuant to that certain Demand Promissory Note and Loan and Security Agreement. Any advance under the Credit Line bears interest on a per annum basis from the date of the request of such advance (or date of the financed receivable, as applicable), based upon a 360-day year, and such interest shall be compounded daily until such outstanding advances are paid in full at a rate of interest set forth in schedules published by the Lender. As of November 2, 2017, the effective rate of interest is |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies Policies | |
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 Securities and Exchange Commission (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) management believes are necessary for the fair presentation of the Company’s financial condition, results of operations, and cash flows for the periods presented. Certain prior period amounts have been reclassified to conform to the current year’s presentation. Amounts and percentages may not total due to rounding. |
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 |
Revenue Recognition | Revenue is derived from two primary sources: ; The Company recognizes revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) the product or service has been provided to the customer; (iii) the amount to be paid by the customer is fixed or determinable; and (iv) the collection of the Company’s payment is probable. Used Vehicle Sales The Company sells used vehicles to consumers, dealers and at auctions. The source of these vehicles is primarily from the Company’s Sell Us Your Vehicle Revenue from used vehicle sales is recognized when the vehicle is delivered to a consumer, dealer or auction, a sales contract is signed, Online Listing and Sales Fees The Company charges a non-refundable fee for sellers to list their vehicle on the RumbleOn website. During the listing period, the Company manages all sales leads, handles all the documentation necessary to complete a sale, accepts a buyer’s trade and provides financing through third-party providers to the potential buyer, if necessary. Upon a successful sale, the seller pays a fee which is based on the difference between the actual retail sales price of the vehicle sold and the net proceeds agreed to be paid by RumbleOn to the seller when the listing agreement was signed. Revenue from non-refundable online listing fees is recognized once the listing agreement is signed, the vehicle is listed for sale and the listing fee has been received. Revenue for selling fees is recognized upon delivery of the vehicle to the customer, when the sales contract is signed, Retail Merchandise Sales The Company recognizes sales revenue, net of sales taxes at the time it sells the merchandise or in the case of online sales when the merchandise is delivered to the customer and payment has been received. Vehicle Financing Consumers can pay for their vehicle using cash or the Company offers a range of finance options through unrelated third-parties such as banks or credit unions. These third-party providers generally pay the Company a Revenue for these finance fees are recognized Vehicle Service Contracts At the time of vehicle sale, the Company provides customers, on behalf of unrelated third parties who are the primary obligors, a range of other related products and services, including extended protection plan (“EPP”) products and vehicle appearance protection. EPP products include extended service plans (“ESPs”) that are designed to cover unexpected expenses associated with mechanical breakdowns and guaranteed asset protection (“GAP”), which is intended to cover the unpaid balance on a vehicle loan in the event of a total loss of the vehicle or unrecovered theft. Vehicle appearance protection includes products aimed at maintaining vehicle appearance. The Company has no contractual liability to customers for claims under these products. Commission revenue is recognized at the time of sale, net of a reserve for estimated contract cancellations. The reserve for cancellations is estimated based upon historical industry experience and recent trends and is reflected as a reduction of other sales revenue in the accompanying Consolidated Statements of Operations and a component of accounts payable and accrued liabilities in the accompanying Consolidated Balance Sheets. Our risk related to contract cancellations is limited to the revenue that we receive. Subscription Fees Subscription fees are generated from dealer partners, under a license arrangement that provides access to our software solution and ongoing support. Select and Appraisal Dealers pay a monthly subscription fee for access to and ongoing support for portions of the RumbleOn software solution which includes: (i) a vehicle appraisal process; (ii) inventory management system; (iii) customer relationship and lead management program; and (iv) equity mining. Dealers may also be charged an initial software installation and training fee. Dealers do not have the contractual right to take possession of the software and may cancel the license for these products and services by providing a 30-day notice. Installation and training do not have value to the user without the license and ongoing support and maintenance. Because the dealer partner has the right to cancel the license with 30 days’ notice, revenue for installation and training is recognized when complete, acceptance has occurred, and collectability of a determinable amount is probable. Revenue recognition of monthly subscription fees commences upon completion of installation, acceptance has occurred, and collectability of a determinable amount 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 management regularly reviews the operating results of that component. The Company has concluded that currently it has one reporting unit. Determining fair value includes the use of significant estimates and assumptions. Management utilizes an income approach, specifically the discounted cash flow analysis 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 Sheets 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. |
Vehicle Inventory | Vehicle inventory is accounted for pursuant to ASC 330, Inventory |
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 | The Company considers all cash accounts and all highly liquid short-term investments purchased with an original maturity of three months or less to be cash or cash equivalents. As of September 30, 2017 and 2016, the Company did not have any investments with maturities greater than three months. |
Property and Equipment, Net | Property and equipment is stated at cost less accumulated depreciation and amortization 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 September 30, 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, 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. 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 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. |
Cost of Revenue | Cost of vehicle sales includes the cost to acquire vehicles and the reconditioning and transportation costs associated with preparing the vehicles for resale. Vehicle acquisition costs are driven by the mix of vehicles the Company acquires, the source of those vehicles, and supply and demand dynamics in the vehicle market. Reconditioning costs are billed by third-party providers and include parts, labor, and other repair expenses directly attributable to specific vehicles. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition or delivery. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Cost of subscription and other fee revenue includes the (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 revenue as incurred. |
Selling, General and Administrative Expenses | Selling, general and administrative (“SG&A”) expenses primarily include compensation and benefits, advertising and marketing, professional fees, technology development expenses, rent and other occupancy costs, insurance, travel and other administrative expenses. |
Advertising and Marketing Costs | Advertising and marketing costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. Advertising and marketing expenses were $775,456 and $1,071,398, respectively for the three and nine-month periods ended September 30, 2017. There were no |
Stock-based Compensation | On January 9, 2017, the Company’s Board of Directors approved, subject to stockholder approval, 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. On June 30, 2017, the Plan was approved by the Company's stockholders at the 2017 Annual Meeting of Stockholders. The Company estimates the fair value of awards granted under the Plan 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 Class B Common Stock on the date of grant and is recognized as an expense on a straight-line basis 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. During the nine-month period ended September 30, 2017, the Company granted 560,000 RSUs under the Plan to members of the Board of Directors, officers and employees. Compensation expense associated with RSU grants for the three and nine-month periods ended September 30, 2017 was $157,763 |
Income Taxes | The Company follows ASC Topic 740, Income Taxes, 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 September 30, 2017, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a fifty percent likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company. The Company classifies tax-related penalties and net interest as income tax expense. As of September 30, 2017, no income tax expense has been incurred. |
Recent Pronouncements | The Company has adopted Accounting Standards Update 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory, |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions Tables | |
Purchase price consideration | Issuance of shares $ 2,666,666 Debt 1,333,334 Cash paid 750,000 $ 4,750,000 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 | Three-Months Ended September 30, Nine-Months Ended September 30, 2017 2016 2017 2016 Pro forma revenue $ 3,706,142 $ 45,606 $ 3,868,079 $ 100,006 Pro forma net loss $ (2,317,503 ) $ (567,401 ) $ (5,237,814 ) $ (1,625,690 ) Loss per share - basic and fully diluted $ (0.23 ) $ (0.08 ) $ (0.58 ) $ (0.23 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 10,018,541 7,023,809 9,105,429 7,023,809 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property And Equipment Net Tables | |
Property and equipment | September 30, 2017 December 31, 2016 Vehicles $ 472,870 $ - Furniture and equipment 127,306 - Technology development 1,835,097 - Total property and equipment 2,435,273 - Less: accumulated depreciation and amortization 268,947 - Property and equipment, net $ 2,166,326 $ - |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets Net Tables | |
Intangible assets | September 30, 2017 Amortized Identifiable Intangible Assets: Customer agreements Balance at December 31, 2016 $ - Customers acquired 10,000 Amortization (3,750 ) Balance at September 30, 2017 $ 6,250 Non-compete agreements Balance at December 31, 2016 $ - Agreements 100,000 Amortization (30,000 ) Balance at September 30, 2017 $ 70,000 Unamortized Identifiable Intangible Assets: Domain names Balance at December 31, 2016 $ 45,515 Domain names acquired - Impairment or write down - Balance at September 30, 2017 $ 45,515 Intangible assets, net at September 30, 2017 $ 121,765 |
Estimated future amortization | Remainder through December 31, 2017 $ 11,250 2018 45,000 2019 20,000 $ 76,250 |
Accounts Payable And Accrued 26
Accounts Payable And Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Payable And Accrued Liabilities Tables | |
Accounts Payable And Accrued Liabilities | September 30, 2017 December 31, 2016 Accounts payable $ 1,539,572 $ 219,101 Sales taxes 296 - Accrued compensation and benefits 354,790 - Other 7,885 - Total accounts payable and accrued liabilities $ 1,902,543 $ 219,101 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable Tables | |
Notes payable | September 30, 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 Senior Secured Promissory Notes dated September 5, 2017. Interest rate of 5.0% through December 31, 2017 and a rate of 10% through maturity which is accrued and paid at maturity. Note matures on September 5, 2018. 1,65 0,000 - $ 2,925,211 $ 1,282 Current portion (net of $139,726 of debt discount) 1,510,274 - Long-term portion $ 1,414,937 $ 1,282 |
Selling, General And Administ28
Selling, General And Administrative (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Selling General And Administrative Tables | |
Selling, general and administrative expense | Three-months ended September 30, Nine-months ended September 30, 2017 2016 2017 2016 Selling, general and administrative: Compensation and related costs $ 1,028,819 $ - $ 1,951,911 $ - Advertising and marketing 752,017 - 1,060,195 - Professional fees 192,041 34,044 724,486 49,017 Technology development 91,967 - 278,668 - General and administrative 261,199 2,662 674,956 9,118 $ 2,326,043 $ 36,706 $ 4,690,216 $ 58,135 |
Supplemental Cash Flow Inform29
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Information Tables | |
Supplemental cash flow information | Nine-Months Ended September 30, 2017 2016 Cash paid for interest $ 42,502 $ - Note payable issued on acquisition $ 1,333,334 $ - Conversion of notes payable-related party $ 206,484 $ - Issuance of shares for acquisition $ 2,666,666 $ - |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Compensation expense | $ 15,763 | $ 287,500 |
RSU Member | ||
Granted RSU | 560,000 | |
Compensation expense | $ 157,763 | $ 287,550 |
Acquisitions (Details)
Acquisitions (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Acquisitions Details | |
Issuance of shares | $ 2,666,666 |
Debt | 1,333,334 |
Cash paid | 750,000 |
Total | $ 4,750,000 |
Acquisitions (Details 1)
Acquisitions (Details 1) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Net tangible assets acquired: | |
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 |
Technology development | |
Net tangible assets acquired: | |
Tangible assets acquired | 1,400,000 |
Customer Contracts | |
Net tangible assets acquired: | |
Tangible assets acquired | 10,000 |
Non-Compete Agreements | |
Net tangible assets acquired: | |
Tangible assets acquired | $ 100,000 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Acquisitions Details 2 | ||||
Pro forma revenue | $ 3,706,142 | $ 45,606 | $ 3,868,079 | $ 100,006 |
Pro forma net loss | $ (2,317,503) | $ (567,401) | $ (5,237,814) | $ (1,625,690) |
Loss per share - basic and fully diluted | $ (.23) | $ (.08) | $ (.58) | $ (.23) |
Weighted-average common shares and common stock equivalents outstanding basic and fully diluted | 10,018,541 | 7,023,809 | 9,105,429 | 7,023,809 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquisitions Details Narrative | ||||
Depreciation and amortization | $ 29,866 | $ 48,788 | ||
Interest expense | $ 27,353 | $ 42,833 | $ 5,508 | $ 13,002 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property And Equipment Net Details | ||
Vehicles | $ 472,870 | $ 0 |
Furniture and equipment | 127,306 | 0 |
Technology development | 1,835,097 | 0 |
Total property and equipment | 2,435,273 | 0 |
Less: accumulated depreciation and amortization | 268,947 | 0 |
Property and equipment, net | $ 2,166,326 | $ 0 |
Property and Equipment, Net (36
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property And Equipment Net Details Narrative | |||||
Technology development costs | $ 713,766 | ||||
Software acquired | $ 1,835,097 | 1,835,097 | $ 0 | ||
Depreciation expense | $ 28,598 | $ 475 | $ 49,573 | $ 1,425 |
Intangible Assets, net (Details
Intangible Assets, net (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Intangible assets, net | $ 121,765 | $ 45,515 |
Customer Agreements | ||
Balance at December 31, 2016 | 0 | |
Customers acquired | 10,000 | |
Amortization | (3,750) | |
Balance at September 30, 2017 | 6,250 | |
Non-Compete Agreements | ||
Balance at December 31, 2016 | 0 | |
Agreements | 100,000 | |
Amortization | (30,000) | |
Balance at September 30, 2017 | 70,000 | |
Domain names | ||
Balance at December 31, 2016 | 45,515 | |
Domain names acquired | 0 | |
Impairment or write down | 0 | |
Balance at September 30, 2017 | $ 45,515 |
Intangible Assets, net (Detai38
Intangible Assets, net (Details 1) | Sep. 30, 2017USD ($) |
Intangible Assets Net Details 1 | |
Remainder through December 31, 2017 | $ 11,250 |
2,018 | 45,000 |
2,019 | 20,000 |
Total | $ 76,250 |
Intangible Assets, net (Detai39
Intangible Assets, net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Intangible Assets Net Details Narrative | ||
Amortization expense | $ 11,250 | $ 33,750 |
Accounts Payable And Accrued 40
Accounts Payable And Accrued Liabilities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Accounts Payable And Accrued Liabilities Details | ||
Accounts payable | $ 1,539,572 | $ 219,101 |
Sales taxes | 296 | 0 |
Accrued compensation and benefits | 354,790 | 0 |
Other | 7,885 | 0 |
Total accounts payable and accrued liabilities | $ 1,902,543 | $ 219,101 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Less: Debt discount | $ (725,123) | $ (196,076) |
Current portion | 1,510,274 | 0 |
Long-term portion | 1,414,937 | 1,282 |
Notes Payable 1 | ||
Notes payable | 1,333,334 | 0 |
Notes Payable 2 | ||
Notes payable | 667,000 | 0 |
Notes Payable 3 | ||
Notes payable | 0 | 197,358 |
Notes Payable 4 | ||
Notes payable | $ 1,650,000 | $ 0 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Notes Payable Details Narrative | |||||
Interest expense | $ 90,201 | $ 2,878 | $ 373,808 | $ 7,431 | |
Aggregate principal amount | 206,484 | 206,484 | |||
Interest expense on the Private Placement | 15,925 | 15,925 | |||
Debt discount | $ (725,123) | $ (725,123) | $ (196,076) |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Aggregate fair value | $ 2,103,500 | $ 2,103,500 | |
Compensation expense | $ 15,763 | $ 287,500 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
RSU Member | |||
Compensation expense | $ 157,763 | $ 287,550 |
Selling, General And Administ44
Selling, General And Administrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Selling, general and administrative: | ||||
Compensation and related costs | $ 1,028,819 | $ 0 | $ 1,951,911 | $ 0 |
Advertising and marketing | 752,017 | 0 | 1,060,195 | 0 |
Professional fees | 192,041 | 34,044 | 724,486 | 49,017 |
Technology development | 91,967 | 0 | 278,668 | 0 |
General and administrative | 261,199 | 2,662 | 674,956 | 9,118 |
Total selling general and administrative | $ 2,326,043 | $ 36,706 | $ 4,690,216 | $ 58,135 |
Supplemental Cash Flow Inform45
Supplemental Cash Flow Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental Cash Flow Information Details | ||
Cash paid for interest | $ 42,502 | $ 0 |
Note payable issued on acquisition | 1,333,334 | 0 |
Conversion of notes payable-related party | 206,484 | 0 |
Issuance of shares for acquisition | $ 2,666,666 | $ 0 |
Loss Per Share (Details Narrati
Loss Per Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Loss Per Share Details Narrative | ||||
Antidilutive shares excluded from computation | 560,000 | 0 | 560,000 | 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2017 | |
Note payable | $ 197,358 | ||||||
loans | $ 141,000 | ||||||
Accrued interest | $ 27,353 | $ 42,833 | $ 5,508 | $ 13,002 | |||
Interest Expenses | $ 2,878 | $ 7,431 | |||||
Revenue generated | $ 924,069 | 946,824 | |||||
Consulting Agreement | 15,000 | 35,000 | |||||
Services Agreement | 221,400 | 678,766 | |||||
Promissory notes | 370,556 | ||||||
Amortization | $ 23,321 | $ 45,335 | |||||
Class B Common Stock | |||||||
Issued Shares | 9,018,541 | 9,018,541 | 6,400,000 | 275,312 | |||
Company acquired Shares | 175,000 | ||||||
Sale of an additional Shares | 37,500 |