Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Issuance of common stock in connection with loan agreement, shares | ||
Entity Registrant Name | RumbleON, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Entity Central Index Key | 0001596961 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 2,185,220 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NV | |
Entity File Number | 001-38248 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 3,061,091 | $ 49,660 |
Restricted Cash | 5,533,832 | 6,676,622 |
Accounts receivable, net | 14,796,028 | 8,482,707 |
Inventory | 31,488,211 | 57,381,281 |
Prepaid expense and other current assets | 1,131,320 | 1,210,474 |
Total current assets | 56,010,482 | 73,800,744 |
Property and equipment, net | 5,973,660 | 6,427,674 |
Right-of-use assets | 3,560,045 | 6,040,287 |
Goodwill | 26,886,563 | 26,886,563 |
Other assets | 70,637 | 237,823 |
Total assets | 92,501,387 | 113,393,091 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 9,255,126 | 12,421,094 |
Accrued interest payable | 1,619,105 | 749,305 |
Current portion of convertible debt | 999,061 | 1,363,590 |
Current portion of long term debt | 40,815,937 | 59,160,970 |
Total current liabilities | 52,689,229 | 73,694,959 |
Long term liabilities: | ||
Notes payable | 2,847,662 | 1,924,733 |
Convertible debt | 26,333,584 | 20,136,229 |
Derivative liabilities | 0 | 27,500 |
Other long-term liabilities | 3,470,617 | 4,722,101 |
Total long term liabilities | 32,651,863 | 26,810,563 |
Total liabilities | 85,341,092 | 100,505,522 |
Commitments and contingencies (Notes 4, 7, 8, 9, 13, 18) | ||
Stockholders' equity: | ||
Class B Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 and 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019 | 0 | 0 |
Additional paid in capital | 107,533,741 | 92,268,213 |
Accumulated deficit | (100,375,676) | (79,381,806) |
Total stockholders' equity | 7,160,295 | 12,887,569 |
Total liabilities and stockholders' equity | 92,501,387 | 113,393,091 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 50 | 50 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 2,180 | $ 1,112 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
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 | 50,000 | 50,000 |
Common stock, shares issued | 50,000 | 50,000 |
Common stock, shares outstanding | 50,000 | 50,000 |
Class B Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 4,950,000 | 4,950,000 |
Common stock, shares issued | 2,179,907 | 1,111,681 |
Common stock, shares outstanding | 2,179,907 | 1,111,681 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | ||||
Revenue | $ 84,341,293 | $ 270,179,904 | $ 228,490,554 | $ 493,357,663 |
Cost of revenue | 75,884,559 | 254,562,392 | 221,347,332 | 463,749,082 |
Cost of revenue before impairment loss | 75,884,559 | 254,562,392 | 209,608,919 | 463,749,082 |
Impairment loss on automotive inventory | 0 | 0 | 11,738,413 | 0 |
Gross (Loss) Profit | 8,456,734 | 15,617,512 | 7,143,222 | 29,608,581 |
Selling, general and administrative | 11,174,288 | 25,007,565 | 29,230,714 | 45,447,581 |
Insurance recovery proceeds | (5,615,268) | 0 | (5,615,268) | 0 |
Depreciation and amortization | 508,322 | 427,438 | 1,031,317 | 809,663 |
Operating income (loss) | 2,389,392 | (9,817,491) | (17,503,541) | (16,648,663) |
Interest expense | (1,482,408) | (1,874,858) | (3,699,166) | (3,319,991) |
Change in derivative liability | 137,488 | 190,000 | 20,673 | 190,000 |
Gain on early extinguishment of debt | 0 | (1,499,250) | 188,164 | (1,499,250) |
Income (loss) before provision for income taxes | 1,044,472 | (13,001,599) | (20,993,870) | (21,277,904) |
Benefit for income taxes | 0 | 0 | 0 | 0 |
Net income (loss) | $ 1,044,472 | $ (13,001,559) | $ (20,993,870) | $ (21,277,904) |
Weighted average number of common shares outstanding - basic and fully diluted | 2,214,241 | 1,111,809 | 2,130,332 | 1,068,257 |
Net loss per share - basic and fully diluted | $ .47 | $ (11.69) | $ (9.85) | $ (19.92) |
Powersports | ||||
Revenue: | ||||
Revenue | $ 8,199,396 | $ 30,305,687 | $ 31,338,476 | $ 57,234,846 |
Cost of revenue | 7,528,810 | 26,137,459 | 28,085,447 | 50,087,015 |
Automotive | ||||
Revenue: | ||||
Revenue | 68,294,841 | 233,856,329 | 181,927,108 | 424,763,517 |
Cost of revenue | 62,493,015 | 223,996,259 | 170,572,680 | 405,491,371 |
Transportation | ||||
Revenue: | ||||
Revenue | 7,663,500 | 6,017,888 | 14,751,091 | 11,359,300 |
Cost of revenue | 5,862,734 | 4,428,674 | 10,950,792 | 8,170,696 |
Other | ||||
Revenue: | ||||
Revenue | 183,556 | 0 | 473,879 | 0 |
Cost of revenue | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - USD ($) | Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 1,317,329 | 50,000 | 874,315 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 1,317 | $ 50 | $ 874 | $ 65,016,379 | $ (34,201,114) | $ 30,817,506 |
Cumulative effect of accounting change (see Note 1), amount | (3,639) | (3,639) | ||||
Equity component of convertible senior notes, net of issuance costs | 7,745,625 | 7,745,625 | ||||
Issuance of common stock for restricted stock units, shares | 7,250 | |||||
Issuance of common stock for restricted stock units, amount | $ 7 | (7) | 0 | |||
Beneficial conversion feature on convertible notes | 495,185 | 495,185 | ||||
Conversion of preferred shares to common stock, shares | (1,317,329) | 65,866 | ||||
Conversion of preferred shares to common stock, amount | $ (1,317) | $ 66 | 1,251 | 0 | ||
Issuance of common stock, shares | 158,825 | |||||
Issuance of common stock, amount | $ 159 | 15,155,387 | 15,155,546 | |||
Stock-based compensation | 1,646,112 | 1,646,112 | ||||
Net income (loss) | (21,277,904) | (21,277,904) | ||||
Ending balance, shares at Jun. 30, 2019 | 0 | 50,000 | 1,106,256 | |||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 50 | $ 1,106 | 90,059,932 | (55,482,657) | 34,578,431 |
Beginning balance, shares at Mar. 31, 2019 | 0 | 50,000 | 1,004,356 | |||
Beginning balance, amount at Mar. 31, 2019 | $ 0 | $ 50 | $ 1,004 | 72,727,646 | (42,481,058) | 30,247,642 |
Equity component of convertible senior notes, net of issuance costs | 7,745,625 | 7,745,625 | ||||
Issuance of common stock for restricted stock units, shares | 6,900 | |||||
Issuance of common stock for restricted stock units, amount | $ 7 | (7) | 0 | |||
Issuance of common stock, shares | 95,000 | |||||
Issuance of common stock, amount | $ 95 | 8,629,677 | 8,629,677 | |||
Stock-based compensation | 956,991 | 956,991 | ||||
Net income (loss) | (13,001,559) | (13,001,559) | ||||
Ending balance, shares at Jun. 30, 2019 | 0 | 50,000 | 1,106,256 | |||
Ending balance, amount at Jun. 30, 2019 | $ 0 | $ 50 | $ 1,106 | 90,059,932 | (55,482,657) | 34,578,431 |
Beginning balance, shares at Dec. 31, 2019 | 0 | 50,000 | 1,111,681 | |||
Beginning balance, amount at Dec. 31, 2019 | $ 0 | $ 50 | $ 1,112 | 92,268,213 | (79,381,806) | 12,887,569 |
Issuance of common stock for restricted stock units, shares | 26,095 | |||||
Issuance of common stock for restricted stock units, amount | $ 26 | (26) | 0 | |||
Issuance of common stock, shares | 1,035,000 | |||||
Issuance of common stock, amount | $ 1,035 | 10,779,045 | 10,780,080 | |||
Convertible note exchange | 2,923,755 | 2,923,755 | ||||
Adjustment for fractional shares in reverse stock split, shares | 7,131 | |||||
Adjustment for fractional shares in reverse stock split, amount | $ 7 | (7) | 0 | |||
Stock-based compensation | 1,562,761 | 1,562,761 | ||||
Net income (loss) | (20,993,870) | (20,993,870) | ||||
Ending balance, shares at Jun. 30, 2020 | 0 | 50,000 | 2,179,907 | |||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 50 | $ 2,180 | 107,533,741 | (100,375,676) | 7,160,295 |
Beginning balance, shares at Mar. 31, 2020 | 0 | 50,000 | 2,151,166 | |||
Beginning balance, amount at Mar. 31, 2020 | $ 0 | $ 50 | $ 2,151 | 106,817,379 | (101,420,148) | 5,399,432 |
Issuance of common stock for restricted stock units, shares | 21,610 | |||||
Issuance of common stock for restricted stock units, amount | $ 22 | (22) | 0 | |||
Adjustment for fractional shares in reverse stock split, shares | 7,131 | |||||
Adjustment for fractional shares in reverse stock split, amount | $ 7 | (7) | 0 | |||
Stock-based compensation | 716,391 | 716,391 | ||||
Net income (loss) | 1,044,472 | 1,044,472 | ||||
Ending balance, shares at Jun. 30, 2020 | 0 | 50,000 | 2,179,907 | |||
Ending balance, amount at Jun. 30, 2020 | $ 0 | $ 50 | $ 2,180 | $ 107,533,741 | $ (100,375,676) | $ 7,160,295 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (20,993,870) | $ (21,277,904) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,031,317 | 809,663 |
Amortization of debt discount | 1,051,898 | 714,629 |
Share based compensation | 1,562,761 | 1,646,112 |
Impairment loss on inventory | 11,738,413 | 0 |
Impairment loss on fixed assets | 177,626 | 0 |
Loss from change in value of derivatives | (27,500) | (190,000) |
Loss (gain) on early extinguishment of debt | (188,164) | 1,499,250 |
Changes in operating assets and liabilities: | ||
Decrease in prepaid expenses and other current assets | 79,154 | 576,940 |
(Increase) decrease in inventory | 14,154,657 | (12,902,749) |
(Increase) in accounts receivable | (6,313,321) | (1,148,365) |
Decrease in other assets | 167,186 | 5,545 |
(Decrease) increase in accounts payable and accrued liabilities | (2,732,098) | (3,721,211) |
Increase in accrued interest payable | 869,800 | 493,039 |
Net cash used in operating activities | 577,859 | (33,495,051) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash used for acquisitions; net of cash received | 0 | (835,000) |
Purchase of property and equipment | (174,786) | 0 |
Proceeds from sales of property and equipment | 0 | 40,620 |
Technology development | (614,113) | (1,919,569) |
Net cash used in investing activities | (788,899) | (2,713,949) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable | 8,272,375 | 27,455,537 |
Payments on notes payable | (1,521,825) | (11,134,695) |
Net proceeds (repayments) on line of credit | (20,627,794) | 8,181,254 |
Net proceeds from sale of common stock | 10,780,080 | 15,155,546 |
Proceeds from PPP loan | 5,176,845 | 0 |
Net cash provided by (used in) financing activities | 2,079,681 | 39,657,642 |
NET CHANGE IN CASH | 1,868,641 | 3,448,642 |
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD | 6,726,282 | 15,784,902 |
CASH AND RESTRICTED CASH AT END OF PERIOD | $ 8,594,923 | $ 19,233,544 |
Description of Business and Sig
Description of Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Description of Business and Significant Accounting Policies | Organization RumbleOn, Inc. was incorporated in October 2013 under the laws of the State of Nevada, as Smart Server, Inc. On February 13, 2017, the Company changed its name from Smart Server, Inc. to RumbleOn, Inc. The reference to the Company in these financial statements refers to the Company and its subsidiaries. Description of Business Overview 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 vehicles in one online location and in April 2017, the Company launched its platform. The Company's goal is to transform the way pre-owned vehicles are bought and sold by providing users with the most efficient, timely and transparent transaction experience. While the Company's initial customer facing emphasis through most of 2018 was on motorcycles and other powersports, the Company continues to enhance its platform to accommodate nearly any VIN-specific vehicle including motorcycles, ATVs, boats, RVs, cars and trucks, and via its acquisition of Wholesale, Inc. ("Wholesale") in October 2018, the Company is making a concerted effort to grow its cars and light truck categories. Serving both consumers and dealers, through its online marketplace platform, the Company makes cash offers for the purchase of pre-owned vehicles. In addition, the Company offers a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. The Company's operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with its regional partners, which are primarily auctions. The Company utilizes regional partners in the acquisition of pre-owned vehicles to provide inspection, reconditioning and distribution services. These regional partners earn incremental revenue and enhance profitability through fees from inspection, reconditioning and distribution programs. Our business model is driven by our proprietary technology platform. Our initial platform was acquired in February 2017, through our acquisition of substantially all of the assets of NextGen Dealer Solutions, LLC ("NextGen"). Since that time, we have expanded the functionality of that platform through a significant number of high-quality technology development projects and initiatives. Included in these new technology development projects and initiatives are modules or significant upgrades to the existing platforms for: (i) Retail online auction; (ii) native IOS and Android apps; (iii) new architecture on website design and functionality; (iv) RumbleOn Marketplace; (v) redesigned cash offer tool;(vi) deal-jacket tracking tool; (vii) inventory tracking tool; (viii) CRM and multiple third-party integrations; (ix) new analytics and machine learning initiatives; and (x) IT monitoring infrastructure. Acquisitions On February 3, 2019, the Company completed the acquisition (the "Autosport Acquisition") of all of the equity interests of Autosport USA, Inc. ("Autosport"), an independent pre-owned vehicle distributor, pursuant to a Stock Purchase Agreement, dated February 1, 2019 (the "Stock Purchase Agreement"), by and among RMBL Express, LLC (the "Buyer"), a wholly owned subsidiary of Company, Scott Bennie (the "Seller"), and Autosport. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) a fifteen-month $500,000 promissory note (the "Promissory Note") in favor of the Seller, plus (iii) a three-year $1,536,000 convertible promissory note (the "Convertible Note") in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock (the "Earn-Out Shares") for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed additional debt of $257,933 pursuant to a promissory note payable to Seller (the "Second Convertible Note"). Basis of Presentation The unaudited condensed consolidated financial statements of the Company as of June 30, 2020 and December 31, 2019 and for the three and six-months ended June 30, 2020 and June 30, 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All of the Company's subsidiaries are wholly owned. The condensed consolidated financial statements include the accounts of RumbleOn Inc. and its wholly owned subsidiaries. In accordance with those rules and regulations, the Company has omitted certain information and notes required by U.S. GAAP for annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all material adjustments, except as otherwise noted, necessary for the fair presentation of the Company's financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K ("Annual Report") for the fiscal year ended December 31, 2019. The results of operations for the three-month and six-month periods ended June 30, 2020 are not necessarily indicative of the results expected for the entire fiscal year. All intercompany accounts and material intercompany transactions have been eliminated. Liquidity We have incurred cumulative losses and negative cash flow from operations since inception through June 30, 2020 and expect to incur additional losses and negative cash flow in the future. As we continue to expand our business, build our brand name and awareness, and continue technology and software development efforts, we may need access to additional capital, including through debt and equity financing. Historically, we have raised additional capital to fund our expansion through equity issuances or debt instruments; refer to Note 8 — Notes Payable and Lines of Credit, Note 9 - Convertible Notes, and Note 11 — Stockholders Equity. Also, we have historically funded vehicle inventory purchases through our Line of Credit-Floor Plans. Due to the impact of COVID-19 on the economy, we have a strong focus on preserving liquidity. Our primary liquidity sources are available cash, amounts available under the NextGear Credit Line, proceeds from the Paycheck Protection Program loan, monetization of our retail loan portfolio, insurance recoveries and through rationalizing costs and expenses, including a workforce reduction. Although we have experienced a decrease in revenue as a result of the impact of the COVID-19 pandemic, as of August 13, 2020, the Company has approximately $11,100,000 of cash of which $5,500,000 is restricted and approximately $31,000,000 of remaining availability under the NextGear Credit Line. The Company expects to recover its insured losses resulting from the damage to the Company's facilities including inventory held for sale, as further discussed in Note The worldwide spread of the COVID-19 outbreak has resulted in a global slowdown of economic activity which decreased demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the outbreak is contained. This is impacting the Company's business and the powersport, automotive and transport industries as a whole. The Company has positioned its business today to be lean and flexible in this period of lower demand and higher uncertainty with the goal of preparing the Company for a strong recovery as the crisis is contained. The Company believes its online business model allows it to quickly respond to market demand or changes in the businesses it operates as the COVID-19 pandemic continues. The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which assumes the continuity of operations, the realization of assets and the satisfaction of liabilities as they come due in the normal course of business. Although the Company believes that it will be able to generate sufficient liquidity from the measures described above, its current circumstances including uncertainties due to COVID-19 pandemic raise substantial doubt about the Company's ability to operate as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management's experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates. In particular, the novel COVID-19 pandemic and the resulting adverse impacts to global economic conditions, as well as the Company's operations, may impact future estimates including, but not limited to inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions. Recent Pronouncements Adoption of New Accounting Standards In June 2016, the FASB issued Accounting Standards Update No. 2016-13 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," ("ASU 2016-13"), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses, otherwise known as "CECL". In addition, this guidance changes the recognition for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk and requires additional disclosures. On November 15, 2019, the FASB issued ASU No. 2019-10 "Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)" ("ASU 2019-10"), which provides a framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. ASU 2019-10 amends the effective dates for ASU 2016-13 for smaller reporting companies with fiscal years beginning after December 15, 2022, and interim periods within those years. The Company is evaluating the level of impact adopting ASU 2016-13 will have on the Company's condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic 842): Targeted Improvements, whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption. The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total operating lease liability in the amount of $3,118,038, representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $3,114,399. The cumulative effect of this accounting change of $3,639 is included in the accumulated deficit for the six-months ended June 30, 2019. The standard did not have a material impact on the Company's condensed consolidated statements of operations or statements of cash flows. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Accounts Receivable, Net | Accounts receivable consists of the following as of: June 30, 2020 December 31, 2019 Trade $ 10,039,627 $ 9,369,733 Insurance 5,615,268 - Finance 94,412 147,893 Other 8,813 - 15,758,120 9,517,626 Less: allowance for doubtful accounts (962,092 ) (1,034,919 ) $ 14,796,028 $ 8,482,707 The Company continues the process of reviewing damages and coverages with its insurance carriers resulting from the damage to the Company's facilities including inventory held for sale, as further discussed in Note |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consists of the following as of: June 30, 2020 December 31, 2019 Pre-owned vehicles: Powersport vehicles $ 1,771,970 $ 10,365,050 Automobiles and trucks 35,619,173 47,599,433 37,391,143 57,964,483 Less: Reserve (5,902,932 ) (583,202 ) $ 31,488,211 $ 57,381,281 Included in the inventory reserve at June 30, 2020 is an impairment loss on automotive inventory of $5,353,657 for vehicles partially damaged at the Company's facilities in Nashville, Tennessee by the tornado on March 3, 2020. In addition, the Company recorded an impairment of $4,453,775 for the write-down of vehicles that were declared a total loss from the tornado. The total impairment on inventory related to the tornado was $11,738,413 and is recorded as part of cost of revenue on the statement of operations for the six-months ended June 30, 2020. See Note 13 – Loss Contingencies and Insurance Recoveries. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition | On February 3, 2019, the Company completed the Autosport Acquisition pursuant to the Stock Purchase Agreement. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) the Promissory Note in favor of the Seller, plus (iii) the Convertible Note in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed debt of $257,933 pursuant to the Second Convertible Note. The fair value of the contingent earn-out payment was considered immaterial at the date of acquisition and was excluded from the purchase price allocation. As of June 30, 2020, there have been no payments earned under the performance threshold. See Note 1 – Description of Business and Significant Accounting Policies for additional information on the Autosport Acquisition. The following table summarizes the final allocation of the purchase price based on the estimated fair value of the acquired assets and assumed liabilities of Autosport as of December 31, 2019: Purchase price consideration: Cash $ 835,000 $1,536,000 convertible note 1,536,000 $500,000 promissory note 500,000 $257,933 Promissory note 257,933 Total purchase price consideration $ 3,128,933 Estimated fair value of assets: Accounts receivable $ 3,177,660 Inventory 2,862,004 6,039,664 Estimated fair value of accounts payable and other 5,875,009 Excess of assets over liabilities 164,655 Goodwill 2,964,278 Total net assets acquired $ 3,128,933 Supplemental pro forma unaudited information (unaudited) The following unaudited supplemental pro forma information presents the financial results as if the Autosport Acquisition was made as of January 1, 2019 for the three-months and six-months ended June 30, 2019. Pro-forma adjustments for the three-month and six-month periods ended June 30, 2019 primarily include adjustments to reflect the: (i) amortization of stock compensation expense of $17,722 and $18,351, respectively, and (ii) interest expense on convertible and promissory notes of $19,793 and $20,174, respectively. Three-Months Ended June 30, 2019 Six-Months Ended June 30, 2019 Unaudited Pro forma revenue $ 270,179,904 $ 499,676,272 Pro forma net loss $ (13,001,599 ) $ (21,314,928 ) Loss per share - basic and fully diluted $ (11.69 ) $ (19.64 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 1,111,809 1,085,183 |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | The following table summarizes property and equipment, net of accumulated depreciation and amortization as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Vehicles $ 316,764 $ 158,327 Furniture and equipment 191,047 448,074 Technology development and software 9,477,361 8,863,247 Leasehold improvements 180,617 246,135 Total property and equipment 10,165,789 9,715,783 Less: accumulated depreciation and amortization (4,192,129 ) (3,288,109 ) Total $ 5,973,660 $ 6,427,674 Amortization and depreciation on Property and Equipment is determined on a straight-line basis over the estimated useful lives ranging from 3 to 5 years. At June 30, 2020, capitalized technology development costs were $9,269,350, which includes $2,900,000 |
Goodwill And Intangible Assets
Goodwill And Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill And Intangible Assets | The following is a summary of the carrying amount of goodwill and other indefinite-lived asset as of December 31, 2019 and the six-months ended June 30, 2020. Due to the significant decline in the Company's stock price and the economic effect of COVID-19, the Company determined a triggering event for Goodwill impairment existed at March 31, 2020. As a result, the Company performed a quantitative impairment analysis for the Automotive segment. The Company's impairment test indicated no impairment existed as the estimated fair value of the reporting unit exceeded its carrying value at March 31, 2020. Management determined no triggering event occurred during the quarter ended June 30, 2020. June 30, 2020 December 31, 2019 Goodwill $ 26,886,563 $ 26,886,563 Indefinite lived intangible asset $ 45,515 $ 45,515 The $45,515 of indefinite lived intangible asset is included in other assets in the Company's condensed consolidated balance sheets. |
Accounts Payable And Other Accr
Accounts Payable And Other Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Accounts Payable and Other Accrued Liabilities | The following table summarizes accounts payable and other accrued liabilities as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Accounts payable $ 4,464,282 $ 8,730,624 Operating lease liability-current portion 1,006,951 1,423,610 Accrued payroll 1,201,170 715,658 State and local taxes 661,920 912,062 Other accrued expenses 1,920,803 639,140 Total $ 9,255,126 $ 12,421,094 |
Notes Payable and Lines of Cred
Notes Payable and Lines of Credit | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
Notes Payable and Lines of Credit | Notes payable and lines of credit consisted of the following as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Notes payable-NextGen dated February 8, 2017 and exchanged January 14, 2020. Interest payable semi-annually at 6.5% through February 9, 2019 and 10.0% quarterly through maturity, which is January 31, 2021. $ 833,334 $ 1,333,334 Notes payable-private placement dated March 31, 2017 and exchanged January 14, 2020. Interest payable semi-annually at 6.5% through September 30, 2019 and 10.0% quarterly through maturity which is January 31, 2021. 669,175 667,000 Line of credit-floor plan-Ally dated February 16, 2018. Facility provides up to $25,000,000 of available credit secured by vehicle inventory and other assets. Principal and interest are payable on demand. - 8,419,897 Line of credit-floor plan-NextGear dated October 30, 2018. Secured by vehicle inventory and other assets. Interest rate at June 30, 2020 was 4.25%. Principal and interest is payable on demand. 36,984,245 50,741,073 PPP Loans dated May 1, 2020. Interest is payable monthly at 1.0% through maturity which is April 30, 2022. Payments of principle and interest is deferred until October 30, 2020. 5,176,845 - Less: Debt discount - (75,601 ) Total notes payable and lines of credit $ 43,663,599 61,085,703 Less: Current portion $ 40,815,937 59,160,970 Long-term portion $ 2,847,662 $ 1,924,733 Line of Credit-Floor Plan-NextGear On October 30, 2018, Wholesale, as borrower, entered into a floorplan vehicle financing credit line (the "NextGear Credit Line") with NextGear Capital, Inc. ("NextGear"). Under the terms of the existing agreement, NextGear may provide up to $70,000,000 in floor plan financing. As of the date of this filing, based on on-going discussions with NextGear, at some future date advances under the NextGear Credit Line for Wholesale and Autosport will be limited to $55,000,000. Advances under the NextGear Credit Line require Wholesale to maintain at least $5,500,000 cash collateral in a reserve account in favor of NextGear, which amount is subject to change in NextGear's sole discretion. Advances under the NextGear Credit Line will bear interest at an initial per annum rate of 5.25%, based upon a 360-day year, and compounded daily, and the per annum interest rate will vary based on a base rate, plus the contract rate, which is currently negative 2.0%, until the outstanding liabilities to NextGear are paid in full. Interest expense on the NextGear Credit Line for the three-month and six-month periods ended June 30, 2020 was $513,301 and $1,211,159, respectively. Interest expense on the line of credit-floor plan for the three-month and six-month periods ended June 30, 2019 was $824,308 and $1,510,891, respectively. Line of Credit-Floor Plan-Ally On February 16, 2018, the Company, through its wholly-owned subsidiary RMBL MO, entered into an Inventory Financing and Security Agreement (the "Credit Facility") with Ally Bank ("Ally") and Ally Financial, Inc., a Delaware corporation ("Ally" together with Ally Bank, the "Lender"), pursuant to which the Lender may provide up to $25,000,000 in financing, or such lesser sum which may be advanced to or on behalf of RMBL MO from time to time, as part of its floorplan vehicle financing program. Advances under the Credit Facility required that the Company maintain 10.0% of the advance amount as restricted cash. Advances under the Credit Facility bore interest at a per annum rate designated from time to time by the Lender and were determined using a 365/360 simple interest method of calculation, unless expressly prohibited by law. Advances under the Credit Facility, if not demanded earlier, were due and payable for each vehicle financed under the Credit Facility as and when such vehicle was sold, leased, consigned, gifted, exchanged, transferred, or otherwise disposed of. Interest under the Credit Facility was due and payable upon demand, but, in general, in no event later than 60 days from the date of request for payment. Upon any event of default (including, without limitation, RMBL MO's obligation to pay upon demand any outstanding liabilities of the Credit Facility), the Lender could, at its option and without notice to the RMBL MO, exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to Lender and its affiliates by RMBL MO and its affiliates. The Credit Facility was secured by a grant of a security interest in the vehicle inventory and other assets of RMBL MO and payment was guaranteed by the Company pursuant to a guaranty in favor of the Lender and secured by the Company pursuant to a General Security Agreement. Interest expense on the Credit Facility for the three-month and six-month periods ended June 30, 2020 was $ 77,266 Interest expense on the Credit Facility for the three-month and six-month periods ended June 30, 2019 was $136,223 and $293,600, respectively. RumbleOn Finance Loan On June 23, 2020, RumbleOn Finance, LLC, a wholly owned subsidiary of the Company ("RumbleOn Finance"), entered into a loan agreement providing for up to $1,500,000 in proceeds (the "RumbleOn Finance Facility") with CL Rider Finance, L.P. (the "CL Rider") as evidenced by the loan commitment dated as of June 17, 2020. In connection with the loan agreement, RumbleOn Finance pledged its assets to CL Rider to secure the RumbleOn Finance Facility and executed a promissory note in favor of the CL Rider pursuant to which the RumbleOn Finance Facility will accrue interest at an initial rate of 4.0% per annum. The RumbleOn Finance Facility is payable on demand by CL Rider. On July 16, 2020, the Company received net proceeds of $1,150,000. Loan Agreement-Hercules Capital Inc. On May 14, 2019, the Company made a payment to Hercules Capital Inc. ("Hercules") of $11,134,695, representing the principal, accrued and unpaid interest, fees, costs and expenses outstanding under its Loan and Security Agreement (the "Loan Agreement") with Hercules dated April 30, 2018 (the "Hercules Indebtedness"). Upon the payment, all outstanding indebtedness and obligations of the Company owed to Hercules under the Loan Agreement were paid in full, and the Loan Agreement was terminated. The Company used a portion of the net proceeds from the Note Offering (described below) to pay the Hercules Indebtedness. In accordance with the guidance in ASC 470-50, Debt Notes 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 (which note was subsequently assigned to Halcyon Consulting LLC ("Halcyon") in February 2018) 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 January 31, 2021 maturity date (the "NextGen Note"). Upon the occurrence of any event of default, the outstanding balance under the 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, LLC, the Company's wholly-owned subsidiary ("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 Note for the three-month and six-month periods ended June 30, 2020 were $22,387 and $45,119, respectively, as compared to $21,607 and $43,927, respectively, for the same periods of 2019. In connection with the Investor Note Exchange Agreement (described below), in January 2020, $500,000 of the NextGen Note was paid down and the NexGen Note was exchanged for a New Investor Note (as defined below). Private Placement On March 31, 2017, the Company completed funding of the second tranche of a private placement commenced in 2016 (the "2016 Private Placement"). The investors were issued 58,096 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 January 31, 2021. 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 recorded as an addition to paid-in capital. The debt discount was amortized to interest expense using an effective interest rate of 26.0%. Interest expense on the Private Placement Notes for the three-month and six-month periods ended June 30, 2020 was $16,684 and $108,576, respectively, and included $0 and Exchange of Notes Payable Certain of the Company's investors extended the maturity of outstanding promissory notes, and exchanged such notes for new notes (the "New Investor Notes"), pursuant to that certain Note Exchange Agreement, dated January 14, 2020 (the "Investor Note Exchange Agreement"), by and between the Company and each investor thereto (the "Investors"), including Halcyon, an entity affiliated with Kartik Kakarala, a former director of the Company, such New Investor Note for an aggregate principal amount of $833,333 (after taking account of a $500,000 pay down of the NextGen Note), Blue Flame Capital, LLC ("Blue Flame"), an entity affiliated with Denmar Dixon, a director of the Company, such New Investor Note for an aggregate principal amount of $99,114, and Mr. Dixon, individually, such New Investor Note for an aggregate principal amount of $272,563. The New Investor Notes, having an aggregate principal amount of approximately $1,500,000, will mature on January 31, 2021, and will be convertible at any time at the Investor's option at a price of $60.00 per share. Interest under the New Investor Notes accrue on the outstanding and unpaid principal amount at the rate of 10.0% per annum and shall be paid quarterly in arrears on the last day of each of the Company's fiscal quarters beginning on March 30, 2020, and, if applicable, on the January 31, 2021 maturity date. PPP Loans On May 1, 2020, the Company, and its wholly-owned subsidiaries Wholesale and Wholesale Express (together, the "Subsidiaries," and with the Company, the "Borrowers"), each entered into loan agreements and related promissory notes (the "SBA Loan Documents") to receive U.S. Small Business Administration Loans (the "SBA Loans") pursuant to the Paycheck Protection Program (the "PPP") established under the CARES Act, in the aggregate amount of $5,176,845 (the "Loan Proceeds"). The Borrowers received the Loan Proceeds on May 1, 2020. Under the SBA Loan Documents, the SBA Loans have current terms of two years with maturity dates of April 30, 2022 and an annual interest rate of 1.0%. Payments of principle and interest on the PPP Loans will be deferred for the first six months of the term of the PPP Loans until October 30, 2020. Principle and interest are payable monthly and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Pursuant to the terms of the SBA Loan Documents, the Borrowers can apply for and receive forgiveness for all, or a portion of the loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs, mortgage interest, rent or utility costs (collectively, "Qualifying Expenses"), and on the maintenance of employee and compensation levels during a certain time period following the funding of the PPP Loans. The Company has been using the proceeds of the PPP Loans for Qualifying Expenses. However, no assurance is provided that the Company will be able to obtain forgiveness of the PPP Loans in whole or in part. As of June 30, 2020, the PPP related loans are classified as a current liability on the condensed consolidated balance sheets. Interest expense on the PPP Note for the three-month and six-month periods ended June 30, 2020 was $7,708. |
Convertible Notes
Convertible Notes | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes | As of June 30, 2020, the outstanding convertible promissory notes net of debt discount and issue costs are summarized as follows: Principal Amount Debt Discount Carrying Amount Convertible senior notes $ 38,750,000 (12,716,699 ) $ 26,033,301 Convertible notes-Autosport: $1,536,000 unsecured note 1,133,061 (211,717 ) 921,344 $500,000 unsecured note 378,000 - 378,000 40,261,061 (12,928,416 ) 27,332,645 Less: Current portion (1,146,000 ) 146,939 (999,061 ) Long-term portion $ 39,115,061 $ (12,781,477 ) $ 26,333,584 Convertible Senior Notes On May 9, 2019, the Company entered into a purchase agreement (the "Purchase Agreement") with JMP Securities LLC ("JMP Securities") to issue and sell $30,000,000 in aggregate principal amount of its 6.75% Convertible Senior Notes due 2024 (the "Old Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") (the "2019 Note Offering"). The Company paid JMP Securities a fee of 7.0% of the gross proceeds in the 2019 Note Offering. The proceeds for the 2019 Note Offering after deducting the initial purchaser's discounts, advisory fees, and related offering expenses, were approximately $27,385,500. The Old Notes were issued on May 14, 2019 pursuant to an Indenture (the "Old Indenture") by and between the Company and Wilmington Trust, National Association, as trustee (the "Trustee"). The Purchase Agreement included customary representations, warranties and covenants by the Company and customary closing conditions. Under the terms of the Purchase Agreement, the Company agreed to indemnify JMP Securities against certain liabilities. The Old Notes bore interest at 6.75% per annum, payable semiannually on May 1 and November 1 of each year, beginning on November 1, 2019. The Old Notes could bear additional interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the Old Indenture or if the Old Notes were not freely tradeable as required by the Old Indenture. The Old Notes would have matured on May 1, 2024, unless earlier converted, redeemed or repurchased pursuant to their terms. The initial conversion rate of the Old Notes was 8.6956 shares of Class B Common Stock, per $1,000 principal amount of the Old Notes, subject to adjustment (which is equivalent to an initial conversion price of approximately $115.00 per share, subject to adjustment). The conversion rate was subject to adjustment in some events but would not have been adjusted for any accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the Old Indenture), the Company would, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elected to convert its Old Notes in connection with such make-whole fundamental change. The Old Notes were not redeemable by the Company prior to the May 6, 2022. The Company could have redeemed for cash all or any portion of the Old Notes, at its option, on or after May 6, 2022 if the last reported sale price of the Company's Class B Common Stock had been at least 150.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund was provided for the Old Notes. If redeemed, the Company would have made an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the Old Notes to be converted had such Old Notes remained outstanding from the conversion date through the earlier of the date that is two years after the conversion date and June 15, 2022. In connection with the 2019 Note Offering, the Company entered into a registration rights agreement with JMP Securities, pursuant to which the Company agreed to file with the SEC a resale shelf registration statement providing for the resale of the Old Notes and the shares of Class B Common Stock issuable upon conversion of the Old Notes. This resale registration statement was filed on August 22, 2019 and declared effective on August 30, 2019. On January 10, 2020, the Company entered into a Note Exchange and Subscription Agreement, as amended by a Joinder Agreement (together, the "New Note Agreement"), with the investors in the 2019 Note Offering, pursuant to which the Company agreed to complete (i) a note exchange pursuant to which $30,000,000 of the Old Notes would be cancelled in exchange for a new series of 6.75% Convertible Senior Notes due 2025 (the "New Notes," and together with the Old Notes, the "Notes") and (ii) the issuance of additional New Notes in a private placement in reliance on the exemption from registration provided by Rule 506 of Regulation D of the Securities Act as a sale not involving any public offering (the "2020 Note Offering"). On January 14, 2020, the Company closed the 2020 Note Offering. The proceeds for the 2020 Note Offering after deducting for payment of accrued interest on the Old Notes and offering-related expenses were approximately $8,272,375. The New Notes were issued on January 14, 2020 pursuant to an Indenture (the "New Indenture"), by and between the Company and the Trustee. The New Note Agreement includes customary representations, warranties and covenants by the Company and customary closing conditions. The New Notes bear interest at 6.75% per annum, payable semiannually on January 1 and July 1 of each year, beginning on July 1, 2020. The New Notes may bear additional interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the New Indenture or if the New Notes are not freely tradeable as required by the New Indenture. The New Notes mature on January 1, 2025, unless earlier converted, redeemed or repurchased pursuant to their terms. The initial conversion rate of the New Notes is 25 shares of Class B Common Stock per $1,000 principal amount of New Notes, which is equal to an initial conversion price of $40.00 per share. The conversion rate is subject to adjustment in certain events as set forth in the New Indenture but will not be adjusted for any accrued and unpaid interest. In addition, upon the occurrence of a "make-whole fundamental change" (as defined in the New Indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its New Notes in connection with such make-whole fundamental change. Before July 1, 2024, the New Notes will be convertible only under circumstances as described in the New Indenture. No adjustment to the conversion rate as a result of conversion or a make-whole fundamental change adjustment will result in a conversion rate greater than 62.0 shares per $1,000 in principal amount. The New Indenture contains a "blocker provision" which provides that no holder (other than the depositary with respect to the notes) or beneficial owner of a New Note shall have the right to receive shares of the Class B Common Stock upon conversion to the extent that, following receipt of such shares, such holder or beneficial owner would be the beneficial owner of more than 4.99% of the outstanding shares of the Class B Common Stock. The New Notes are not redeemable by the Company before the January 14, 2023. The Company may redeem for cash all or any portion of the New Notes, at its option, on or after January 14, 2023 if the last reported sale price of the Class B Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the New Notes. The New Notes rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the New Notes; equal in right of payment to any of the Company's unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities of current or future subsidiaries of the Company (including trade payables). The New Notes are subject to events of default typical for this type of instrument. If an event of default, other than an event of default in connection with certain events of bankruptcy, insolvency or reorganization of the Company or any significant subsidiary, occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding New Notes by notice to the Company and the Trustee, may declare 100.0% of the principal of and accrued and unpaid interest, if any, on all the New Notes then outstanding to be due and payable. In connection with the 2020 Note Offering, on January 14, 2020, the Company entered into a registration rights agreement with the Note Investors, pursuant to which the Company has agreed to file with the SEC a shelf registration statement registering the sale, on a continuous or delayed basis, of all of the New Notes and to use its commercially reasonable efforts to cause the shelf registration statement to become or be declared effective under the Securities Act no later than May 29, 2020 (which date was adjusted for certain intervening events, including the COVID-19 pandemic). The registration statement was filed on June 19, 2020 and declared effective on June 30, 2020. In connection with the filing of this registration statement, the Company deregistered the Old Notes previously registered for resale. As of June 30, 2020, the conditions allowing holders of the New Notes to convert have not been met and therefore the New Notes are not yet convertible. The Company accounted for the exchange of the Old Notes and the issuance of the New Notes in accordance with the conversion guidance in ASC 470-20 "Debt – Debt with Conversion and Other Option" (ASC 470-20) and determined that the exchange of the Old Notes for the New Notes required derecognition of the Old Notes given that the difference in the fair value of the embedded the conversion feature of the New Notes relative to the Old Notes was in excess of 10 percent of the Old Notes conversion feature fair value. In derecognizing the Old Notes, the Company recognized a gain of $188,164 equal to difference between the fair value of the Old Notes liability immediately prior to extinguishment and the carry amount of the liability component of the Old Notes, including any all unamortized debt issuance costs. The remaining consideration of $2,593,163 was allocated to the reacquisition of the equity component and recognized as a reduction of stockholder's equity. The New Notes were accounted for in accordance with FASB ASC 470, Debt Derivatives and Hedging The Company further valued a derivative liability in connection with the interest make-whole provision at $20,673 on the issuance date based on a lattice model. This amount was recorded as a debt discount and is amortized to interest expense over the term of the New Notes using the effective interest rate. The value of the derivative liability increased to $137,488 as of March 31, 2020. The derivative liability is remeasured at each reporting date with a decrease in value of $137,488 being recorded in other income for the three-months ended June 30, 2020. The value of the derivative liability as of June 30, 2020 was $0. The interest expense recognized with respect to the Convertible Senior Notes was as follows: Six-Months Ended June 30, 2020 Contractual interest expense $ 1,258,359 Amortization of debt discounts 888,136 Total $ 2,146,495 Convertible Notes-Autosport USA On February 3, 2019, in connection with the Autosport Acquisition, the Company issued (i) the Promissory Note and (ii) the Convertible Note in favor of the Seller. In connection with the Autosport Acquisition, the Buyer also assumed additional debt of $257,933 pursuant to the Second Convertible Note. The $500,000 Promissory Note has a term of fifteen months and will accrue interest at a simple rate of 5.0% per annum. Interest under the Promissory Note is payable upon maturity. In June 2020, principal payments of $122,000 were made and the promissory note maturity date was extended to October 1, 2020 and the remaining principal balance of $378,000 will be repaid in four equal principal plus interest payments beginning July 1, 2020 through maturity. Any interest and principal due under the Promissory Note is convertible, at the Buyer's option into shares of the Company's Class B Common Stock at a conversion price equal to the weighted average trading price of the Company's Class B Common Stock on the Nasdaq Stock Exchange for the twenty (20) consecutive trading days preceding the conversion date. The number of shares of the Company's Class B Common Stock issuable pursuant to the Promissory Note is indeterminate at this time. The $1,536,000 Convertible Note matures on January 31, 2022 and accrues interest at a rate of 6.5% per annum. Interest under the Convertible Note is payable monthly for the first 12 months, and thereafter monthly payments of amortized principal and interest will be due. Any interest and principal due under the Convertible Note is convertible into shares of the Company's Class B Common Stock at a conversion price of $115.00 per share, (i) at the Seller's option, or (ii) at the Buyer's option, on any day that (a) any portion of the principal of the Convertible Note remains unpaid and (b) the weighted average trading price of the Company's Class B Common Stock on Nasdaq for the twenty (20) consecutive trading days preceding such day has exceeded $140.00 per share. The maximum number of shares issuable pursuant to the Convertible Note is 15,962 shares of the Company's Class B Common Stock. The Second Convertible Note had a term of one year and accrued interest at a simple rate of 5.0% per annum. The note was repaid in full during the six-months ended June 30, 2020. For the three and six months ended June 30, 2020, interest expense on convertible notes was $42,300 and $93,860, respectively, and included $13,740 and $33,433, respectively, of debt discount amortization. |
Equity-based Compensation
Equity-based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' equity: | |
Equity-based Compensation | Share-Based Compensation On June 30, 2017, the Company's shareholders approved a Stock Incentive Plan (the "Plan") reserving for issuance under the Plan in the form of restricted stock units ("RSUs"), stock options ("Options"), Performance Units, and other equity awards (collectively "Awards") for the Company's employees, consultants, directors, independent contractors and certain prospective employees who have committed to become an employee (each an "Eligible Individual") of up to 12% of the shares of Class B Common Stock outstanding from time to time. On June 25, 2018, the Company's shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 12.0% of the Company's issued and outstanding shares of Class B Common Stock from time to time to 100,000 shares of Class B Common Stock (the "First Plan Amendment"). On May 20, 2019, the Company's stockholders approved another amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 100,000 shares of Class B Common Stock to 200,000 shares of Class B Common Stock (the "Second Plan Amendment"). To date, the vesting of RSU and Option awards for most employees is service/time based. Substantially all service/time based RSU and Option awards issued typically vest over a three-year period with the following vesting schedule: (i) 20.0% vesting anywhere from eight-months to thirteen month after grant date, (ii) an additional 30.0% during the subsequent twelve months of the initial vesting, and (iii) the final 50.0% during the following twelve months. In 2019 the Company granted to certain members of management an aggregate of (i) 12,213 performance-based awards that vest after two consecutive quarters of $1.00 or greater operating income and trailing four quarter revenue of $900,000,000 at any time through September 30, 2020, and (ii) 36,938 market-based awards; these awards were terminated effective as of December 31, 2019 and the entire expense value of the market based awards was recognized in 2019. The Company estimates the fair value of awards granted under the Plan on the date of grant. Stock-based compensation expense is recognized as an expense on a straight-line basis over the vesting periods described above and is recognized in Selling, General and Administrative expense. A summary of equity-based compensation expense recognized during the three and six months ended June 30, 2020 and 2019 is as follows (in thousands): Three-Months Ended June 30, Six-Months Ended June 30, 2020 2019 2020 2019 Restricted Stock Units $ 701,098 $ 956,991 $ 1,532,177 $ 1,646,112 Options 15,291 - 30,582 - Total stock-based compensation $ 716,389 $ 956,991 $ 1,562,759 $ 1,646,112 As of June 30, 2020, the total unrecognized compensation expense related to outstanding equity awards was approximately $2,972,595, which the Company expects to recognize over a weighted-average period of approximately 2.5 years. Total unrecognized equity-based compensation expense will be adjusted for actual forfeitures. |
Stockholders Equity
Stockholders Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders Equity | 2019 Offerings On February 11, 2019, the Company completed an underwritten public offering of 63,825 shares of its Class B Common Stock at a price of $111.00 per share for net proceeds to the Company of $6,543,655. The completed offering included 8,325 shares of Class B Common Stock issued upon the underwriter's exercise in full of its over-allotment option. On May 9, 2019, the Company entered into a Securities Purchase Agreement with certain accredited investors pursuant to which the Company agreed to sell in a private placement (the "Private Placement") an aggregate of 95,000 shares of its Class B Common Stock, at a purchase price of $100.00 per share. JMP Securities served as the placement agent for the Private Placement. The Company paid JMP Securities a fee of 7.0% of the gross proceeds in the Private Placement. The Private Placement closed on May 17, 2019. The proceeds for the Private Placement, after deducting commissions and related offering expenses, were $8,665,000. 2020 Public Offering On January 14, 2020, pursuant to an underwritten public offering, the Company issued 900,000 shares of Class B Common Stock at a public price of $11.40 per share (the "2020 Public Offering"). On January 16, 2020, the Company received notice of the Underwriters' intent to exercise the over-allotment option in full (the "Over-allotment Exercise"). On January 17, 2020, the Company issued an additional 135,000 shares of Class B Common Stock and closed the Over-allotment Exercise. The Over-allotment Exercise increased the aggregate number of shares sold in the 2020 Public Offering to 1,035,000. Including the Over-allotment Exercise, net proceeds from the 2020 Public Offering, after deducting the 8.0% underwriter's commission and $75,000 for underwriter expenses, were $10,780,080. Certain of the Company's officers and directors participated in the 2020 Public Offering. The Company intends to use the net proceeds of the 2020 Public Offering for working capital and general corporate purposes, which may include further technology development, increased spending on marketing and advertising and capital expenditures necessary to grow the business. Pending these uses, the Company may invest the net proceeds in short-term interest-bearing investment grade instruments. Reverse Stock Split On May 18, 2020, the Company filed a Certificate of Change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to effect a one-for-twenty reverse stock split of its issued and outstanding Class A Common Stock and Class B Common Stock (the “Reverse Stock Split”). The Reverse Stock Split was effective at 12:01 a.m., Eastern Time, on May 20, 2020. No fractional shares were issued as a result of the Reverse Stock Split. There were 7,152 fractional shares issued as a result of rounding up to the nearest whole share in connection with the Reverse Stock Split. The authorized preferred stock of the Company was not impacted by the Reverse Stock Split. The Company has retrospectively adjusted the per share and share amounts included in this Quarterly Report on Form 10-Q for the Reverse Stock Split. |
Selling, General And Administra
Selling, General And Administrative | 6 Months Ended |
Jun. 30, 2020 | |
Selling, General and Administrative Expense [Abstract] | |
Selling, General And Administrative | The following table summarizes the detail of selling, general and administrative expense for the three-month and six-month periods ended June 30, 2020 and 2019: Three-Months Ended June 30, Six-Months Ended June 30, 2020 2019 2020 2019 Compensation and related costs $ 5,146,791 $ 9,163,530 $ 13,326,891 $ 16,217,793 Advertising and marketing 541,922 5,960,110 3,490,077 11,451,682 Professional fees 1,075,831 639,773 1,918,534 1,290,217 Technology development 235,014 538,580 857,159 1,031,293 General and administrative 4,174,730 8,705,572 9,638,053 15,456,596 $ 11,174,288 $ 25,007,565 $ 29,230,714 $ 45,447,581 |
Loss Contingencies And Insuranc
Loss Contingencies And Insurance Recoveries | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingencies and Insurance Recoveries | On March 3, 2020, a severe tornado struck the greater Nashville area causing significant damage to the Company's facilities including contents and inventory held for sale. The Company maintains insurance coverage for damage to its facilities and inventory, as well as business interruption insurance. The Company continues in the process of reviewing damages and coverages with its insurance carriers. The loss comprises three components: (i) inventory loss, currently assessed by the insurance carrier at approximately $13,000,000; (ii) building and personal property loss, primarily impacting the Company's leased facilities, currently assessed by the insurance carrier at $3,801,203; and (iii) loss of business income, for which the Company has coverage in the amount of $6,000,000. All three components of the Company's loss claim have been submitted to its insurers. The Company's inventory claim is subject to a dispute with the carrier as to the policy limits applicable to the loss however, the insurer has advanced $5,615,268 against the final settlement of the inventory claim. The insurer has agreed to pay $2,778,000 on the building and personal property loss, reflecting limits of $2,783,000 net of a $5,000 deductible and has made an interim payment on the building and personal property loss of $2,269,507 to the landlord. The loss of business income claim is ongoing and remains in the process of negotiation, however, the insurer has advanced $250,000 against the final settlement. The Company believes there will be a recovery of all three loss components, however no assurance can be given regarding the amounts, if any, that will be ultimately recovered or when any such recoveries will be made. As a result of the damage caused by the tornado, the Company has concluded that the utility of the inventory damaged by the storm is impaired as a result of physical damage sustained. Whether the impairment is caused by physical destruction or an adverse change in the utility of the inventory, entities should assess whether an inventory impairment or write-off is required in accordance with ASC 330-10-35-1 through 35-11, which address adjustments of inventory balances to the lower of cost or net realizable value and requires that when there is evidence that the utility of goods will be less than cost, the difference is recognized as a loss in the current period. For the six-months ended June 30, 2020, the Company has recorded an impairment loss on inventory of $ 11,738,413 4,453,775 7,284,638 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2020 | |
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 six-months ended June 30, 2020 and 2019: Six-Months Ended June 30, 2020 2019 Cash paid for interest $ 1,818,671 $ 2,112,323 Convertible notes payable issued in acquisition $ - $ 2,293,933 The following table provides a reconciliation of cash and restricted cash reported within the accompanying condensed consolidated balance sheets that sum to the total of the same amounts shown in the accompanying condensed consolidated statements of cash flows as of June 30: June 30, 2020 2019 Cash and cash equivalents $ 3,061,091 $ 49,660 Restricted cash (1) 5,533,832 6,676,622 Total cash, cash equivalents, and restricted cash $ 8,594,923 $ 6,726,282 _________________________ (1) Amounts included in restricted cash represent the deposits required under the Company's lines of credit. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | CARES Act In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic. The Company does not expect the provisions of the legislation to have a significant impact on the effective tax rate or income tax payable and deferred income tax positions of the Company. No current provision for Federal income taxes was recorded for the three-month and six-month periods ended June 30, 2020 and 2019 due to the Company's operating losses. The Company has provided a valuation allowance on the net deferred tax assets. In assessing the recovery of the net deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | The Company computes basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighed-average number of shares of common stock outstanding during the period. The diluted net loss per share attributable to common stockholders is computed giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, 94,466 of RSUs, 2,156 of stock options, 16,530 of warrants to purchase shares of Class B Common Stock and 982,107 shares of Class B Common Stock issuable in connection with convertible debt are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as the effect is antidilutive. In connection with the Company's acquisition of Wholesale, the Company issued 1,317,329 shares of Series B Non-Voting Convertible Preferred Stock. The rights of the holder of the Series B Preferred and Class A and Class B Common Stock are identical, except with respect to voting. The Series B Preferred automatically converted to Class B Common Stock 21 days after the mailing of the definitive information statement prepared in accordance with Regulation 14C of the Exchange Act, without further action on the part of the Company. The conversion of the Series B Preferred to Class B Common was effected on March 4, 2019. The Company applies the two-class method of calculating earnings per share, but as the rights of the Series B Preferred and Class A and Class B Common Stock are identical, except in respect of voting, basic and diluted earnings per share are the same for all classes. Weighted average number of shares outstanding of Class A Common Stock, Class B Common Stock, and Series B Preferred for the three and six-month periods ended June 30, 2020 were 50,000, 2,214,241,0 and 50,000, 2,130,332, and 0, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | As of June 30, 2020, the Company had promissory notes of $371,764 and accrued interest of $1,426 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 and exchanged in January 2020 for New Investor Notes. Interest expense on the promissory notes due to Blue Flame, for the three-month and six-month periods ended June 30, 2020 was $9,269 and $51,052, respectively, and included $0 and $42,001, respectively, of debt discount amortization as compared to interest expense of $ 42,783 and $83,520, respectively, which included debt discount amortization of $34,930 and $67,901, respectively, See Note 8 – Notes Payable and Lines of Credit for a discussion of the NextGen Note. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Lease Commitments The Company determines whether an arrangement is a lease at inception and whether such leases are operating or financing leases. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company uses these options in determining its right-of-use assets and lease liabilities. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the Company's leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at commencement date in determine the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. Total operating lease expenses for the three and six-months periods ended June 30, 2020 was $336,874 and $863,919, respectively. Total operating lease expenses for the three and six-months periods ended June 30, 2019 was $371,941 and $609,197, respectively. The current portion of the Company's operating lease liabilities as of June 30, 2020 is $1,006,951 and is included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. The long-term portion of the Company's operating lease liabilities as of June 30, 2020 is $3,641,758 and is included in other liabilities in the accompanying condensed consolidated balance sheets. The weighted-average remaining lease term and discount rate for the Company's operating leases are as follows: June 30, 2020 Weighted-average remaining lease term 3.6 Years Weighted-average discount rate 7.0% Supplemental cash flow information related to operating leases for the six-months ended June 30, 2020 was as follows: June 30, 2020 Cash payments for operating leases $ 798,985 The following table summarizes the future minimum payments for operating leases at June 30, 2020 due in each year ending December 31, 2020 $ 653,560 2021 1,134,025 2022 1,088,215 2023 472,108 2024 310,200 Thereafter 568,700 Total lease payments 4,226,808 Less imputed interest (578,099 ) Present value of lease liabilities $ 3,648,709 Legal Matters From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, as of June 30, 2020 and December 31, 2019, the Company does not believe that the ultimate resolution of any legal actions, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity, and capital resources. Future litigation may be necessary to defend the Company by determining the scope, enforceability and validity of third-party proprietary rights or to establish its own proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentrations | The Company is dependent on third-party providers of wholesale vehicle auctions. The Company is dependent on their ability to provide services on a timely basis and at favorable pricing terms. The loss of these principal providers or a significant reduction in service availability could have a material adverse effect on the Company. The Company believes that its relationships with these providers are satisfactory. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Business segments are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing operating performance. The Company's operations are organized by management into operating segments by line of business. The Company has determined that it has three reportable segments as defined in U.S. GAAP for segment reporting: (1) powersports, (2) automotive, and (3) vehicle logistics and transportation. The Company's powersports and automotive segments consist of the distribution of pre-owned vehicles. The powersports segment consists of the distribution principally of motorcycles, while the automotive segment distributes cars and trucks. Our vehicle logistics and transportation service segment provides nationwide automotive transportation services between dealerships and auctions. The accounting policies of the segments are the same and are described in Note 1 – Description of Business and Significant Accounting Policies. The following table summarizes revenue, operating income (loss), depreciation and amortization and interest expense which are the measure by which management allocates resources to its segments to each of our reportable segments. Powersports Automotive Other Vehicle Logistics and Transportation Eliminations(1) Total Three Months Ended June 30, 2020 Total assets $ 42,129,514 $ 64,873,563 $ 1,907,282 $ 10,295,397 $ (26,704,369 ) $ 92,501,387 Revenue $ 8,199,396 $ 68,294,841 $ 183,556 $ 8,251,605 $ (588,105 ) $ 84,341,293 Operating income (loss) $ (4,313,011 ) $ 6,058,005 $ (80,314 ) $ 724,712 $ - $ 2,389,392 Depreciation and amortization $ 481,675 $ 24,796 $ - $ 1,851 $ - $ 508,322 Interest expense $ (998,106 ) $ (484,302 ) $ - $ - $ - $ (1,482,408 ) Loss in derivative liability $ 137,488 $ - $ - $ - $ - $ 137,488 Gain on early extinguishment of debt $ - $ - $ - $ - $ - $ - Three Months Ended June 30, 2019 Total assets $ 60,785,871 $ 99,158,385 $ - $ 6,782,885 $ (27,778,983 ) $ 138,948,158 Revenue $ 30,305,687 $ 233,856,329 $ - $ 8,829,632 $ (2,811,744 ) $ 270,179,904 Operating income (loss) $ (9,249,450 ) $ (1,000,739 ) $ - $ 432,698 $ - $ (9,817,491 ) Depreciation and amortization $ 366,587 $ 59,000 $ - $ 1,851 $ - $ 427,438 Interest expense $ (989,318 ) $ (885,392 ) $ - $ (148 ) $ - $ (1,874,858 ) Six Months Ended June 30, 2020 Total assets $ 42,129,514 $ 64,873,563 $ 1,907,282 $ 10,295,397 $ (26,704,369 ) $ 92,501,387 Revenue $ 31,338,476 $ 181,927,108 $ 473,879 $ 17,241,786 $ (2,490,695 ) $ 228,490,554 Operating income (loss) $ (11,506,328 ) $ (7,068,095 ) $ (310,913 ) $ 1,381,795 $ - $ (17,503,541 ) Depreciation and amortization $ 944,211 $ 83,403 $ - $ 3,703 $ - $ 1,031,317 Interest expense $ (2,574,895 ) $ (1,123,975 ) $ - $ (296 ) $ - $ (3,699,166 ) Loss in derivative liability $ 20,673 $ - $ - $ - $ - $ 20,673 Gain on early extinguishment of debt $ 188,164 $ - $ - $ - $ - $ 188,164 Six Months Ended June 30, 2019 Total assets $ 60,785,871 $ 99,158,385 $ - $ 6,782,885 $ (27,778,983 ) $ 138,948,158 Revenue $ 76,506,992 $ 405,491,371 $ - $ 17,005,642 $ (5,646,342 ) $ 493,357,663 Operating income (loss) $ (17,184,137 ) $ (443,614 ) $ - $ 979,088 $ - $ (16,648,663 ) Depreciation and amortization $ 687,961 $ 117,999 $ - $ 3,703 $ - $ 809,663 Interest expense $ (1,712,857 ) $ (1,606,986 ) $ - $ (148 ) $ - $ (3,319,991 ) _________________________ (1) Intercompany investment balances related to the acquisitions of Wholesale and Wholesale Express, LLC ("Wholesale Express") and receivables and other balances related intercompany freight services of Wholesale Express are eliminated in the Condensed Consolidated Balance Sheets. Revenue and costs for these intercompany freight services have been eliminated in the Condensed Consolidated Statements of Operations. |
Description of Business and S_2
Description of Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization | RumbleOn, Inc. was incorporated in October 2013 under the laws of the State of Nevada, as Smart Server, Inc. On February 13, 2017, the Company changed its name from Smart Server, Inc. to RumbleOn, Inc. The reference to the Company in these financial statements refers to the Company and its subsidiaries. |
Description of Business | Overview 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 vehicles in one online location and in April 2017, the Company launched its platform. The Company's goal is to transform the way pre-owned vehicles are bought and sold by providing users with the most efficient, timely and transparent transaction experience. While the Company's initial customer facing emphasis through most of 2018 was on motorcycles and other powersports, the Company continues to enhance its platform to accommodate nearly any VIN-specific vehicle including motorcycles, ATVs, boats, RVs, cars and trucks, and via its acquisition of Wholesale, Inc. ("Wholesale") in October 2018, the Company is making a concerted effort to grow its cars and light truck categories. Serving both consumers and dealers, through its online marketplace platform, the Company makes cash offers for the purchase of pre-owned vehicles. In addition, the Company offers a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. The Company's operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with its regional partners, which are primarily auctions. The Company utilizes regional partners in the acquisition of pre-owned vehicles to provide inspection, reconditioning and distribution services. These regional partners earn incremental revenue and enhance profitability through fees from inspection, reconditioning and distribution programs. Our business model is driven by our proprietary technology platform. Our initial platform was acquired in February 2017, through our acquisition of substantially all of the assets of NextGen Dealer Solutions, LLC ("NextGen"). Since that time, we have expanded the functionality of that platform through a significant number of high-quality technology development projects and initiatives. Included in these new technology development projects and initiatives are modules or significant upgrades to the existing platforms for: (i) Retail online auction; (ii) native IOS and Android apps; (iii) new architecture on website design and functionality; (iv) RumbleOn Marketplace; (v) redesigned cash offer tool;(vi) deal-jacket tracking tool; (vii) inventory tracking tool; (viii) CRM and multiple third-party integrations; (ix) new analytics and machine learning initiatives; and (x) IT monitoring infrastructure. Acquisitions On February 3, 2019, the Company completed the acquisition (the "Autosport Acquisition") of all of the equity interests of Autosport USA, Inc. ("Autosport"), an independent pre-owned vehicle distributor, pursuant to a Stock Purchase Agreement, dated February 1, 2019 (the "Stock Purchase Agreement"), by and among RMBL Express, LLC (the "Buyer"), a wholly owned subsidiary of Company, Scott Bennie (the "Seller"), and Autosport. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) a fifteen-month $500,000 promissory note (the "Promissory Note") in favor of the Seller, plus (iii) a three-year $1,536,000 convertible promissory note (the "Convertible Note") in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock (the "Earn-Out Shares") for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed additional debt of $257,933 pursuant to a promissory note payable to Seller (the "Second Convertible Note"). |
Basis of Presentation | The unaudited condensed consolidated financial statements of the Company as of June 30, 2020 and December 31, 2019 and for the three and six-months ended June 30, 2020 and June 30, 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All of the Company's subsidiaries are wholly owned. The condensed consolidated financial statements include the accounts of RumbleOn Inc. and its wholly owned subsidiaries. In accordance with those rules and regulations, the Company has omitted certain information and notes required by U.S. GAAP for annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all material adjustments, except as otherwise noted, necessary for the fair presentation of the Company's financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K ("Annual Report") for the fiscal year ended December 31, 2019. The results of operations for the three-month and six-month periods ended June 30, 2020 are not necessarily indicative of the results expected for the entire fiscal year. All intercompany accounts and material intercompany transactions have been eliminated. |
Liquidity | We have incurred cumulative losses and negative cash flow from operations since inception through June 30, 2020 and expect to incur additional losses and negative cash flow in the future. As we continue to expand our business, build our brand name and awareness, and continue technology and software development efforts, we may need access to additional capital, including through debt and equity financing. Historically, we have raised additional capital to fund our expansion through equity issuances or debt instruments; refer to Note 8 — Notes Payable and Lines of Credit, Note 9 - Convertible Notes, and Note 11 — Stockholders Equity. Also, we have historically funded vehicle inventory purchases through our Line of Credit-Floor Plans. Due to the impact of COVID-19 on the economy, we have a strong focus on preserving liquidity. Our primary liquidity sources are available cash, amounts available under the NextGear Credit Line, proceeds from the Paycheck Protection Program loan, monetization of our retail loan portfolio, insurance recoveries and through rationalizing costs and expenses, including a workforce reduction. Although we have experienced a decrease in revenue as a result of the impact of the COVID-19 pandemic, as of August 13, 2020, the Company has approximately $11,100,000 of cash of which $5,500,000 is restricted and approximately $31,000,000 of remaining availability under the NextGear Credit Line. The Company expects to recover its insured losses resulting from the damage to the Company's facilities including inventory held for sale, as further discussed in Note The worldwide spread of the COVID-19 outbreak has resulted in a global slowdown of economic activity which decreased demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the outbreak is contained. This is impacting the Company's business and the powersport, automotive and transport industries as a whole. The Company has positioned its business today to be lean and flexible in this period of lower demand and higher uncertainty with the goal of preparing the Company for a strong recovery as the crisis is contained. The Company believes its online business model allows it to quickly respond to market demand or changes in the businesses it operates as the COVID-19 pandemic continues. The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which assumes the continuity of operations, the realization of assets and the satisfaction of liabilities as they come due in the normal course of business. Although the Company believes that it will be able to generate sufficient liquidity from the measures described above, its current circumstances including uncertainties due to COVID-19 pandemic raise substantial doubt about the Company's ability to operate as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Use of Estimates | The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management's experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates. In particular, the novel COVID-19 pandemic and the resulting adverse impacts to global economic conditions, as well as the Company's operations, may impact future estimates including, but not limited to inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions. |
Recent Pronouncements | Adoption of New Accounting Standards In June 2016, the FASB issued Accounting Standards Update No. 2016-13 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," ("ASU 2016-13"), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses, otherwise known as "CECL". In addition, this guidance changes the recognition for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk and requires additional disclosures. On November 15, 2019, the FASB issued ASU No. 2019-10 "Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)" ("ASU 2019-10"), which provides a framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. ASU 2019-10 amends the effective dates for ASU 2016-13 for smaller reporting companies with fiscal years beginning after December 15, 2022, and interim periods within those years. The Company is evaluating the level of impact adopting ASU 2016-13 will have on the Company's condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic 842): Targeted Improvements, whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption. The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total operating lease liability in the amount of $3,118,038, representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $3,114,399. The cumulative effect of this accounting change of $3,639 is included in the accumulated deficit for the six-months ended June 30, 2019. The standard did not have a material impact on the Company's condensed consolidated statements of operations or statements of cash flows. |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Accounts receivable, net | June 30, December 31, Trade $ 10,039,627 $ 9,369,733 Insurance 5,615,268 - Finance 94,412 147,893 Other 8,813 - 15,758,120 9,517,626 Less: allowance for doubtful accounts (962,092 ) (1,034,919 ) $ 14,796,028 $ 8,482,707 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | June 30, December 31, Pre-owned vehicles: Powersport vehicles $ 1,771,970 $ 10,365,050 Automobiles and trucks 35,619,173 47,599,433 37,391,143 57,964,483 Less: Reserve (5,902,932 ) (583,202 ) $ 31,488,211 $ 57,381,281 |
Acquisition (Tables)
Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Purchase price consideration | Purchase price consideration: Cash $ 835,000 $1,536,000 convertible note 1,536,000 $500,000 promissory note 500,000 $257,933 Promissory note 257,933 Total purchase price consideration $ 3,128,933 Estimated fair value of assets: Accounts receivable $ 3,177,660 Inventory 2,862,004 6,039,664 Estimated fair value of accounts payable and other 5,875,009 Excess of assets over liabilities 164,655 Goodwill 2,964,278 Total net assets acquired $ 3,128,933 |
Supplemental pro forma information | Three-Months Ended June 30, 2019 Six-Months Ended June 30, 2019 Unaudited Pro forma revenue $ 270,179,904 $ 499,676,272 Pro forma net loss $ (13,001,599 ) $ (21,314,928 ) Loss per share - basic and fully diluted $ (11.69 ) $ (19.64 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 1,111,809 1,085,183 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | June 30, December 31, Vehicles $ 316,764 $ 158,327 Furniture and equipment 191,047 448,074 Technology development and software 9,477,361 8,863,247 Leasehold improvements 180,617 246,135 Total property and equipment 10,165,789 9,715,783 Less: accumulated depreciation and amortization (4,192,129 ) (3,288,109 ) Total $ 5,973,660 $ 6,427,674 |
Goodwill And Intangible Assets
Goodwill And Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets and goodwill | June 30, December 31, Goodwill $ 26,886,563 $ 26,886,563 Indefinite lived intangible asset $ 45,515 $ 45,515 |
Accounts Payable And Accrued Li
Accounts Payable And Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Accounts payable and accrued liabilities | June 30, December 31, Accounts payable $ 4,464,282 $ 8,730,624 Operating lease liability-current portion 1,006,951 1,423,610 Accrued payroll 1,201,170 715,658 State and local taxes 661,920 912,062 Other accrued expenses 1,920,803 639,140 Total $ 9,255,126 $ 12,421,094 |
Notes Payable and Lines of Cr_2
Notes Payable and Lines of Credit (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
Notes payable | June 30, December 31, Notes payable-NextGen dated February 8, 2017 and exchanged January 14, 2020. Interest payable semi-annually at 6.5% through February 9, 2019 and 10.0% quarterly through maturity, which is January 31, 2021. $ 833,334 $ 1,333,334 Notes payable-private placement dated March 31, 2017 and exchanged January 14, 2020. Interest payable semi-annually at 6.5% through September 30, 2019 and 10.0% quarterly through maturity which is January 31, 2021. 669,175 667,000 Line of credit-floor plan-Ally dated February 16, 2018. Facility provides up to $25,000,000 of available credit secured by vehicle inventory and other assets. Principal and interest are payable on demand. - 8,419,897 Line of credit-floor plan-NextGear dated October 30, 2018. Secured by vehicle inventory and other assets. Interest rate at June 30, 2020 was 4.25%. Principal and interest is payable on demand. 36,984,245 50,741,073 PPP Loans dated May 1, 2020. Interest is payable monthly at 1.0% through maturity which is April 30, 2022. Payments of principle and interest is deferred until October 30, 2020. 5,176,845 - Less: Debt discount - (75,601 ) Total notes payable and lines of credit $ 43,663,599 61,085,703 Less: Current portion $ 40,815,937 59,160,970 Long-term portion $ 2,847,662 $ 1,924,733 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible notes | Principal Debt Carrying Convertible senior notes $ 38,750,000 (12,716,699 ) $ 26,033,301 Convertible notes-Autosport: $1,536,000 unsecured note 1,133,061 (211,717 ) 921,344 $500,000 unsecured note 378,000 - 378,000 40,261,061 (12,928,416 ) 27,332,645 Less: Current portion (1,146,000 ) 146,939 (999,061 ) Long-term portion $ 39,115,061 $ (12,781,477 ) $ 26,333,584 |
Interest expense | Six-Months Ended Contractual interest expense $ 1,258,359 Amortization of debt discounts 888,136 Total $ 2,146,495 |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equitybased Compensation Tables Abstract | |
Equity-based compensation expense | Three-Months Ended June 30, Six-Months Ended June 30, 2020 2019 2020 2019 Restricted Stock Units $ 701,098 $ 956,991 $ 1,532,177 $ 1,646,112 Options 15,291 - 30,582 - Total stock-based compensation $ 716,389 $ 956,991 $ 1,562,759 $ 1,646,112 |
Selling, General And Administ_2
Selling, General And Administrative (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Selling, General and Administrative Expense [Abstract] | |
Selling, general and administrative expense | Three-Months Ended Six-Months Ended 2020 2019 2020 2019 Compensation and related costs $ 5,146,791 $ 9,163,530 $ 13,326,891 $ 16,217,793 Advertising and marketing 541,922 5,960,110 3,490,077 11,451,682 Professional fees 1,075,831 639,773 1,918,534 1,290,217 Technology development 235,014 538,580 857,159 1,031,293 General and administrative 4,174,730 8,705,572 9,638,053 15,456,596 $ 11,174,288 $ 25,007,565 $ 29,230,714 $ 45,447,581 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental cash flow information | Six-Months Ended 2020 2019 Cash paid for interest $ 1,818,671 $ 2,112,323 Convertible notes payable issued in acquisition $ - $ 2,293,933 |
Cash, cash equivalents, and restricted cash | June 30, 2020 2019 Cash and cash equivalents $ 3,061,091 $ 49,660 Restricted cash (1) 5,533,832 6,676,622 Total cash, cash equivalents, and restricted cash $ 8,594,923 $ 6,726,282 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Supplemental cash flow information related to operating leases | The weighted-average remaining lease term and discount rate for the Company's operating leases are as follows: June 30, 2020 Weighted-average remaining lease term 3.6 Years Weighted-average discount rate 7.0% Supplemental cash flow information related to operating leases for the six-months ended June 30, 2020 was as follows: June 30, 2020 Cash payments for operating leases $ 798,985 |
Future minimum payments | 2020 $ 653,560 2021 1,134,025 2022 1,088,215 2023 472,108 2024 310,200 Thereafter 568,700 Total lease payments 4,226,808 Less imputed interest (578,099 ) Present value of lease liabilities $ 3,648,709 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment information | Powersports Automotive Other Vehicle Logistics and Transportation Eliminations(1) Total Three Months Ended June 30, 2020 Total assets $ 42,129,514 $ 64,873,563 $ 1,907,282 $ 10,295,397 $ (26,704,369 ) $ 92,501,387 Revenue $ 8,199,396 $ 68,294,841 $ 183,556 $ 8,251,605 $ (588,105 ) $ 84,341,293 Operating income (loss) $ (4,313,011 ) $ 6,058,005 $ (80,314 ) $ 724,712 $ - $ 2,389,392 Depreciation and amortization $ 481,675 $ 24,796 $ - $ 1,851 $ - $ 508,322 Interest expense $ (998,106 ) $ (484,302 ) $ - $ - $ - $ (1,482,408 ) Loss in derivative liability $ 137,488 $ - $ - $ - $ - $ 137,488 Gain on early extinguishment of debt $ - $ - $ - $ - $ - $ - Three Months Ended June 30, 2019 Total assets $ 60,785,871 $ 99,158,385 $ - $ 6,782,885 $ (27,778,983 ) $ 138,948,158 Revenue $ 30,305,687 $ 233,856,329 $ - $ 8,829,632 $ (2,811,744 ) $ 270,179,904 Operating income (loss) $ (9,249,450 ) $ (1,000,739 ) $ - $ 432,698 $ - $ (9,817,491 ) Depreciation and amortization $ 366,587 $ 59,000 $ - $ 1,851 $ - $ 427,438 Interest expense $ (989,318 ) $ (885,392 ) $ - $ (148 ) $ - $ (1,874,858 ) Six Months Ended June 30, 2020 Total assets $ 42,129,514 $ 64,873,563 $ 1,907,282 $ 10,295,397 $ (26,704,369 ) $ 92,501,387 Revenue $ 31,338,476 $ 181,927,108 $ 473,879 $ 17,241,786 $ (2,490,695 ) $ 228,490,554 Operating income (loss) $ (11,506,328 ) $ (7,068,095 ) $ (310,913 ) $ 1,381,795 $ - $ (17,503,541 ) Depreciation and amortization $ 944,211 $ 83,403 $ - $ 3,703 $ - $ 1,031,317 Interest expense $ (2,574,895 ) $ (1,123,975 ) $ - $ (296 ) $ - $ (3,699,166 ) Loss in derivative liability $ 20,673 $ - $ - $ - $ - $ 20,673 Gain on early extinguishment of debt $ 188,164 $ - $ - $ - $ - $ 188,164 Six Months Ended June 30, 2019 Total assets $ 60,785,871 $ 99,158,385 $ - $ 6,782,885 $ (27,778,983 ) $ 138,948,158 Revenue $ 76,506,992 $ 405,491,371 $ - $ 17,005,642 $ (5,646,342 ) $ 493,357,663 Operating income (loss) $ (17,184,137 ) $ (443,614 ) $ - $ 979,088 $ - $ (16,648,663 ) Depreciation and amortization $ 687,961 $ 117,999 $ - $ 3,703 $ - $ 809,663 Interest expense $ (1,712,857 ) $ (1,606,986 ) $ - $ (148 ) $ - $ (3,319,991 ) |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Trade | $ 10,039,627 | $ 9,369,733 |
Insurance | 5,615,268 | 0 |
Finance | 94,412 | 147,893 |
Other | 8,813 | 0 |
Accounts receivable, gross | 15,758,120 | 9,517,626 |
Less: allowance for doubtful accounts | (962,092) | (1,034,919) |
Accounts receivable, net | $ 14,796,028 | $ 8,482,707 |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory, gross | $ 37,391,143 | $ 57,964,483 |
Less: Reserve | (5,902,932) | (583,202) |
Inventory, net | 31,488,211 | 57,381,281 |
Powersport Vehicles | ||
Inventory, gross | 1,771,970 | 10,365,050 |
Automobiles and Trucks | ||
Inventory, gross | $ 35,619,173 | $ 47,599,433 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 26,886,563 | $ 26,886,563 | $ 26,886,563 |
Autosport | |||
Cash | 835,000 | ||
$1,536,000 convertible note | 1,536,000 | ||
$500,000 promissory note | 500,000 | ||
$257,933 Promissory note | 257,933 | ||
Total purchase price | 3,128,933 | ||
Accounts receivable | 3,177,660 | ||
Inventory | 2,862,004 | ||
Estimated fair value of assets | 6,039,664 | ||
Accounts payable and other | 5,875,009 | ||
Excess of assets over liabilities | 164,655 | ||
Goodwill | 2,964,278 | ||
Total | $ 3,128,933 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Business Combinations [Abstract] | ||
Pro forma revenue | $ 270,179,904 | $ 499,676,272 |
Pro forma net loss | $ (13,001,599) | $ (21,314,928) |
Loss per share - basic and fully diluted | $ (11.69) | $ (19.64) |
Weighted average common shares and common stock equivalents outstanding - basic and fully diluted | 1,111,809 | 1,085,183 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Vehicles | $ 316,764 | $ 158,327 |
Furniture and equipment | 191,047 | 448,074 |
Technology development and software | 9,477,361 | 8,863,247 |
Leasehold improvements | 180,617 | 246,135 |
Total property and equipment | 10,165,789 | 9,715,783 |
Less: accumulated depreciation and amortization | (4,192,129) | (3,288,109) |
Property and equipment, net | $ 5,973,660 | $ 6,427,674 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Capitalized technology development cost | $ 9,269,350 | $ 9,269,350 | ||
Technology costs incurred | 554,551 | 1,465,761 | ||
Depreciation expense | 508,322 | $ 427,438 | 1,031,317 | $ 809,663 |
Amortization of capitalized technology development costs | $ 1,039,740 | $ 340,286 | $ 1,919,569 | $ 632,032 |
Goodwill And Intangible Asset_2
Goodwill And Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Intangible Assets And Goodwill Details Usd Abstract | ||
Goodwill, beginning | $ 26,886,563 | $ 26,886,563 |
Impairment | 0 | 0 |
Goodwill, ending | 26,886,563 | 26,886,563 |
Indefinite lived intangible assets, beginning | 45,515 | 45,515 |
Impairment | 0 | 0 |
Indefinite lived intangible assets, ending | $ 45,515 | $ 45,515 |
Accounts Payable And Accrued _2
Accounts Payable And Accrued Liabilities (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accounts payable | $ 4,464,282 | $ 8,730,624 |
Operating lease liability-current portion | 1,006,951 | 1,423,610 |
Accrued payroll | 1,201,170 | 715,658 |
State and local taxes | 661,920 | 912,062 |
Other accrued expenses | 1,920,803 | 639,140 |
Total accounts payable and accrued liabilities | $ 9,255,126 | $ 12,421,094 |
Notes Payable and Lines of Cr_3
Notes Payable and Lines of Credit (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Note payable | $ 43,663,599 | $ 61,085,703 |
Less: debt discount | 0 | (75,601) |
Less: Current portion | 40,815,937 | 59,160,970 |
Long-term portion | 2,847,662 | 1,924,733 |
Notes Payable 1 | ||
Note payable | 833,334 | 1,333,334 |
Note Payable 2 | ||
Note payable | 669,175 | 667,000 |
Notes Payable 3 | ||
Note payable | 0 | 8,419,897 |
Notes Payable 4 | ||
Note payable | 36,984,245 | 50,741,073 |
Notes Payable 5 | ||
Note payable | $ 5,176,845 | $ 0 |
Notes Payable and Lines of Cr_4
Notes Payable and Lines of Credit (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Interest expense | $ 1,482,408 | $ 1,874,858 | $ 3,699,166 | $ 3,319,991 |
Line of Credit-NextGear | ||||
Interest expense | 513,301 | 824,308 | 1,211,159 | 1,510,891 |
Line of Credit-Ally | ||||
Interest expense | 77,266 | 136,223 | 77,266 | 293,600 |
Hercules Loan | ||||
Interest expense | 274,975 | 758,466 | ||
NextGen | ||||
Interest expense | 22,387 | 21,607 | 45,119 | 43,927 |
Private Placement | ||||
Interest expense | 16,684 | $ 77,008 | 108,576 | $ 150,336 |
PPP Loans | ||||
Interest expense | $ 7,708 | $ 7,708 |
Convertible Notes (Details)
Convertible Notes (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt discount | $ 0 | $ (75,601) |
Carrying amount, current | (999,061) | (1,363,590) |
Carrying amount, noncurrent | 26,333,584 | $ 20,136,229 |
Convertible Note 1 | ||
Face amount | 38,750,000 | |
Debt discount | (12,716,699) | |
Carrying amount | 26,033,301 | |
Convertible Note 2 | ||
Face amount | 1,133,061 | |
Debt discount | (211,717) | |
Carrying amount | 921,344 | |
Convertible Note 3 | ||
Face amount | 378,000 | |
Debt discount | 0 | |
Carrying amount | 378,000 | |
Total Convertible Notes | ||
Face amount | 40,261,061 | |
Face amount, current | (1,146,000) | |
Face amount, noncurrent | 39,115,061 | |
Debt discount | (12,928,416) | |
Debt discount, current | 146,939 | |
Debt discount, noncurrent | (12,781,477) | |
Carrying amount | 27,332,645 | |
Carrying amount, current | (999,061) | |
Carrying amount, noncurrent | $ 26,333,584 |
Convertible Notes (Details 1)
Convertible Notes (Details 1) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Debt Disclosure [Abstract] | |
Contractual interest expense | $ 1,258,359 |
Amortization of debt discounts | 888,136 |
Total | $ 2,146,495 |
Equity-based Compensation (Deta
Equity-based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Equitybased Compensation Tables Abstract | ||||
Restricted stock units | $ 701,098 | $ 956,991 | $ 1,532,177 | $ 1,646,112 |
Options | 15,291 | 0 | 30,582 | 0 |
Total stock-based compensation | $ 716,389 | $ 956,991 | $ 1,562,761 | $ 1,646,112 |
Equity-based Compensation (De_2
Equity-based Compensation (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Stockholders' equity: | |
Unrecognized stock-based compensation | $ 2,972,595 |
Unrecognized stock-based compensation, recognition period | 2 years 6 months |
Selling, General And Administ_3
Selling, General And Administrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Selling, General and Administrative Expense [Abstract] | ||||
Compensation and related costs | $ 5,146,791 | $ 9,163,530 | $ 13,326,891 | $ 16,217,793 |
Advertising and marketing | 541,922 | 5,960,110 | 3,490,077 | 11,451,682 |
Professional fees | 1,075,831 | 639,773 | 1,918,534 | 1,290,217 |
Technology development | 235,014 | 538,580 | 857,159 | 1,031,293 |
General and administrative | 4,174,730 | 8,705,572 | 9,638,053 | 15,456,596 |
Total selling general and administrative | $ 11,174,288 | $ 25,007,565 | $ 29,230,714 | $ 45,447,581 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 1,818,671 | $ 2,112,323 |
Convertible note payable issued acquisition | $ 0 | $ 2,293,933 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | $ 3,061,091 | $ 49,660 | ||
Restricted cash | 5,533,832 | 6,676,622 | ||
Total cash, cash equivalents, and restricted cash | $ 8,594,923 | $ 6,726,282 | $ 19,233,544 | $ 15,784,902 |
Loss Per Share (Details Narrati
Loss Per Share (Details Narrative) - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
RSU | ||
Antidilutive shares excluded from computation | 94,466 | 94,466 |
Stock option | ||
Antidilutive shares excluded from computation | 2,156 | 2,156 |
Warrants | ||
Antidilutive shares excluded from computation | 16,530 | 16,530 |
Class B Common Stock | ||
Antidilutive shares excluded from computation | 982,107 | 982,107 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Promissory notes | $ 371,764 | $ 371,764 | ||
Blue Flame | ||||
Interest expense | $ 9,269 | $ 0 | $ 51,052 | $ 42,001 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Leases [Abstract] | |
Weighted-average remaining lease term | 3 years 7 months 6 days |
Weighted-average discount rate | 7.00% |
Cash payments for operating leases | $ 798,985 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 653,560 |
2021 | 1,134,025 |
2022 | 1,088,215 |
2023 | 472,108 |
2024 | 310,200 |
Thereafter | 568,700 |
Total | 4,226,808 |
Less imputed interest | (578,099) |
Present value of lease liabilities | $ 3,648,709 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Total assets | $ 92,501,387 | $ 138,948,158 | $ 92,501,387 | $ 138,948,158 | $ 113,393,091 |
Revenue | 84,341,293 | 270,179,904 | 228,490,554 | 493,357,663 | |
Operating income (loss) | 2,389,392 | (9,817,491) | (17,503,541) | (16,648,663) | |
Depreciation and amortization | 508,322 | 427,438 | 1,031,317 | 809,663 | |
Interest expense | (1,482,408) | (1,874,858) | (3,699,166) | (3,319,991) | |
Loss in derivative liability | 137,488 | 190,000 | 20,673 | 190,000 | |
Gain on early extinguishment of debt | 0 | (1,499,250) | 188,164 | (1,499,250) | |
Powersports | |||||
Total assets | 42,129,514 | 60,785,871 | 42,129,514 | 60,785,871 | |
Revenue | 8,199,396 | 30,305,687 | 31,338,476 | 76,506,992 | |
Operating income (loss) | (4,313,011) | (9,249,450) | (11,506,328) | (17,184,137) | |
Depreciation and amortization | 481,675 | 366,587 | 944,211 | 687,961 | |
Interest expense | (998,106) | (989,318) | (2,574,895) | (1,712,857) | |
Loss in derivative liability | 137,488 | 0 | 20,673 | 0 | |
Gain on early extinguishment of debt | 0 | 0 | 188,164 | 0 | |
Automotive | |||||
Total assets | 64,873,563 | 99,158,385 | 64,873,563 | 99,158,385 | |
Revenue | 68,294,841 | 233,856,329 | 181,927,108 | 405,491,371 | |
Operating income (loss) | 6,058,005 | (1,000,739) | (7,068,095) | (443,614) | |
Depreciation and amortization | 24,796 | 59,000 | 83,403 | 117,999 | |
Interest expense | (484,302) | (885,392) | (1,123,975) | (1,606,986) | |
Loss in derivative liability | 0 | 0 | 0 | 0 | |
Gain on early extinguishment of debt | 0 | 0 | 0 | 0 | |
Other | |||||
Total assets | 1,907,282 | 0 | 1,907,282 | 0 | |
Revenue | 183,556 | 0 | 473,879 | 0 | |
Operating income (loss) | (80,314) | 0 | (310,913) | 0 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Loss in derivative liability | 0 | 0 | 0 | 0 | |
Gain on early extinguishment of debt | 0 | 0 | 0 | 0 | |
Vehicle Logistics and Transportation | |||||
Total assets | 10,295,397 | 6,782,885 | 10,295,397 | 6,782,885 | |
Revenue | 8,251,605 | 8,829,632 | 17,241,786 | 17,005,642 | |
Operating income (loss) | 724,712 | 432,698 | 1,381,795 | 979,088 | |
Depreciation and amortization | 1,851 | 1,851 | 3,703 | 3,703 | |
Interest expense | 0 | (148) | (296) | (148) | |
Loss in derivative liability | 0 | 0 | 0 | 0 | |
Gain on early extinguishment of debt | 0 | 0 | 0 | 0 | |
Eliminations | |||||
Total assets | (26,704,369) | (27,778,983) | (26,704,369) | (27,778,983) | |
Revenue | (588,105) | (2,811,744) | (2,490,695) | (5,646,342) | |
Operating income (loss) | 0 | 0 | 0 | 0 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Loss in derivative liability | 0 | 0 | 0 | 0 | |
Gain on early extinguishment of debt | $ 0 | $ 0 | $ 0 | $ 0 |