Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 23, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | RumbleON, Inc. | ||
Entity Central Index Key | 1,596,961 | ||
Document Type | 10-K | ||
Trading Symbol | RMBL | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 18,000,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Class A Common Stock [Member] | |||
Entity Common Stock, Shares Outstanding | 1,000,000 | ||
Class B Common Stock [Member] | |||
Entity Common Stock, Shares Outstanding | 11,928,541 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 9,170,652 | $ 1,350,580 |
Accounts receivable, net | 577,107 | 0 |
Inventory | 2,834,666 | 0 |
Prepaid expense | 308,880 | 1,667 |
Total current assets | 12,891,305 | 1,352,247 |
Property and equipment, net | 3,360,832 | 0 |
Goodwill | 1,850,000 | 0 |
Other assets | 50,693 | 45,515 |
Total assets | 18,152,830 | 1,397,762 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,179,216 | 219,101 |
Accrued interest payable | 33,954 | 0 |
Current portion of long-term debt | 1,081,593 | 0 |
Total current liabilities | 2,294,763 | 219,101 |
Long term liabilities: | ||
Note payable | 1,459,410 | 1,282 |
Accrued interest payable - related party | 32,665 | 5,508 |
Deferred tax liability | 0 | 78,430 |
Total long-term liabilities | 1,492,075 | 85,220 |
Total liabilities | 3,786,838 | 304,321 |
Commitments and contingencies (Notes 4, 5, 7, 12, 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2017 and 2016 | 0 | 0 |
Additional paid in capital | 23,372,360 | 1,534,015 |
Subscriptions receivable | 0 | (1,000) |
Accumulated deficit | (9,019,297) | (445,974) |
Total stockholders' equity | 14,365,992 | 1,093,441 |
Total liabilities and stockholders' equity | 18,152,830 | 1,397,762 |
Class A Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | 1,000 | 0 |
Class B Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | $ 11,929 | $ 6,400 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Class A Common Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 1,000,000 | 1,000,000 |
Common stock, issued | 1,000,000 | 0 |
Common stock, outstanding | 1,000,000 | 0 |
Class B Common Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 99,000,000 | 99,000,000 |
Common stock, issued | 11,928,541 | 6,400,000 |
Common stock, outstanding | 11,928,541 | 6,400,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue: | ||
Pre-owned vehicle sales | $ 7,020,070 | $ 0 |
Other sales and revenue | 159,230 | 0 |
Subscription fees | 126,602 | 0 |
Total Revenue | 7,305,902 | 0 |
Expenses: | ||
Cost of revenue | 7,027,793 | 0 |
Selling, general and administrative | 7,586,999 | 211,493 |
Depreciation and amortization | 668,467 | 1,900 |
Total expenses | 15,283,259 | 213,393 |
Operating loss | (7,977,357) | (213,393) |
Interest expense | 595,966 | 11,698 |
Net loss before benefit for income taxes | (8,573,323) | (225,091) |
Benefit for income taxes | 0 | 513 |
Net loss | $ (8,573,323) | $ (224,578) |
Weighted average number of common shares outstanding - basic and fully diluted (in shares) | 9,917,584 | 5,581,370 |
Net loss per share - basic and fully diluted (in dollars per share) | $ (0.86) | $ (0.04) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Deficit) - USD ($) | Preferred Stock [Member] | Class A Common Stock [Member] | Class B Common Stock [Member] | Additional Paid-In Capital [Member] | Subscriptions Receivable [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2015 | $ 0 | $ 0 | $ 5,500 | $ 64,500 | $ (5,000) | $ (221,396) | $ (156,396) |
Balance at beginning (in shares) at Dec. 31, 2015 | 0 | 0 | 5,500,000 | ||||
Cash received for subscription receivable | 5,000 | 5,000 | |||||
Donated capital | 2,000 | 2,000 | |||||
Issuance of common stock | $ 900 | 1,349,100 | (1,000) | 1,349,000 | |||
Issuance of common stock (in shares) | 900,000 | ||||||
Beneficial conversion feature, net of deferred taxes | 118,415 | 118,415 | |||||
Issuance of common stock in connection with acquisition | 0 | ||||||
Stock-based compensation | 0 | ||||||
Net loss | (224,578) | (224,578) | |||||
Balance at end at Dec. 31, 2016 | $ 0 | $ 0 | $ 6,400 | 1,534,015 | (1,000) | (445,974) | 1,093,441 |
Balance at end (in shares) at Dec. 31, 2016 | 0 | 0 | 6,400,000 | ||||
Exchange of common stock | $ 1,000 | $ (1,000) | 0 | ||||
Exchange of common stock (in shares) | 1,000,000 | (1,000,000) | |||||
Issuance of common stock in connection with acquisition | $ 1,524 | 2,665,142 | 2,666,666 | ||||
Issuance of common stock in connection with acquisition (in shares) | 1,523,809 | ||||||
Issuance of stock in private placements | $ 658 | 2,629,342 | 2,630,000 | ||||
Issuance of stock in private placements (in shares) | 657,500 | ||||||
Issuance of common stock in connection with loan Agreement | $ 1,162 | 1,348,878 | 1,350,040 | ||||
Issuance of common stock in connection with loan Agreement (in shares) | 1,161,920 | ||||||
Issuance of common stock in connection with conversion of a Note Payable-related Party, net of debt discount | $ 275 | 284,639 | 284,914 | ||||
Issuance of common stock in connection with conversion of a Note Payable-related Party, net of debt discount (in shares) | 275,312 | ||||||
Issuance of common stock in connection with equity offering | $ 2,910 | 14,407,321 | 1,000 | 14,411,231 | |||
Issuance of common stock in connection with equity offering (in shares) | 2,910,000 | ||||||
Stock-based compensation | 503,023 | 503,023 | |||||
Net loss | (8,573,323) | (8,573,323) | |||||
Balance at end at Dec. 31, 2017 | $ 1,000 | $ 11,929 | $ 23,372,360 | $ 0 | $ (9,019,297) | $ 14,365,992 | |
Balance at end (in shares) at Dec. 31, 2017 | 1,000,000 | 11,928,541 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (8,573,323) | $ (224,578) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 668,467 | 1,900 |
Amortization of debt discount | 276,076 | 1,282 |
Interest expense on conversion of debt | 196,076 | 0 |
Share based compensation expense | 503,023 | 0 |
Impairment of asset | 0 | 792 |
Increase in deferred tax liability | 0 | (513) |
Changes in operating assets and liabilities: | ||
Increase in prepaid expenses | (307,213) | (1,667) |
Increase in inventory | (2,834,666) | 0 |
Increase in accounts receivable | (577,107) | 0 |
Increase in accounts payable and accrued liabilities | 960,115 | 210,302 |
Increase (decrease) in accrued interest payable | 70,237 | (7,494) |
Increase in other assets | (5,178) | 0 |
Net cash used in operating activities | (9,623,493) | (19,976) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash used for acquisitions | (750,000) | 0 |
Technology development | (506,786) | 0 |
Purchase of other assets | 0 | (45,515) |
Purchase of property and equipment | (622,512) | 0 |
Net cash used in investing activities | (1,879,298) | (45,515) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from note payable | 3,248,593 | 214,358 |
Repayments for notes payable | (1,650,000) | (158,000) |
Proceeds from sale of common stock | 17,724,270 | 1,354,000 |
Donated capital | 0 | 2,000 |
Net cash provided by financing activities | 19,322,863 | 1,412,358 |
NET CHANGE IN CASH | 7,820,072 | 1,346,867 |
CASH AT BEGINNING OF PERIOD | 1,350,580 | 3,713 |
CASH AT END OF PERIOD | $ 9,170,652 | $ 1,350,580 |
DESCRIPTION OF BUSINESS AND SIG
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | Organization RumbleOn, Inc. (the “Company”) was incorporated in October 2013 under the laws of the State of Nevada, as Smart Server, Inc. (“Smart Server”). On February 13, 2017, the Company changed its name from Smart Server, Inc. to RumbleOn, Inc. Description of Business Smart Server was originally formed to engage in the business of designing and developing mobile application payment software for smart phones and tablet computers. After Smart Server ceased its technology development activities in 2014, it had no operations and nominal assets, meeting the definition of a “shell company” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and regulations thereunder. In July 2016, Berrard Holdings Limited Partnership (“Berrard Holdings”) acquired 99.5% of the common stock of the Company from the principal stockholder. Shortly after the Berrard Holdings common stock purchase, the Company began exploring the development of a capital light e-commerce platform facilitating the ability of both consumers and dealers to Buy-Sell-Trade-Finance pre-owned recreation vehicles in one online location. The Company’s goal is for the platform to be widely recognized as the leading online solution for the sale, acquisition, and distribution of recreation vehicles by providing users with the most efficient, timely and transparent experience. The Company’s business plan is currently driven by a technology platform it acquired on February 8, 2017 from NextGen Dealer Solutions, LLC (“NextGen”), which the Company owns and operates through its wholly-owned subsidiary NextGen Pro, LLC (“NextGen Pro”). The NextGen platform provides vehicle appraisal, inventory management, customer relationship management and lead management, equity mining, and other key services necessary to drive the online marketplace. For additional information, see Note 2— “Acquisitions.” Serving both consumers and dealers, through our online marketplace platform, we make cash offers for the purchase of pre-owned vehicles. In addition, we offer a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. Our operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with regional partners. We utilize regional partners in the acquisition of pre-owned vehicles as well as to provide inspection, reconditioning and distribution services. Correspondingly, we earn fees and transaction income, and regional partners will earn incremental revenue and enhance profitability through increased sales, leads, and fees from inspection, reconditioning and distribution programs. Year end In October 2016, the Company changed its fiscal year-end from November 30 to December 31. Use of Estimates The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, depreciable lives, carrying value of intangible assets, sales returns, receivables valuation, restructuring-related liabilities, taxes, and contingencies. Actual results could differ materially from those estimates. Earnings (Loss) Per Share The Company follows the FASB Accounting Standards Codification (“ASC”) Topic 260- Earnings per share Revenue Recognition Revenue is derived from two primary sources: (1) the Company’s online marketplace, which is our largest source of revenue ; The Company recognizes revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) the product or service has been provided to the customer; (iii) the amount to be paid by the customer is fixed or determinable; and (iv) the collection of the Company’s payment is probable. Pre-owned Vehicle Sales The Company sells pre-owned vehicles to consumers and dealers primarily through our website or regional auctions. The source of these vehicles is primarily from the Company’s cash offer to buy program and customers who trade-in their existing vehicles when making a pre-owned vehicle purchase. Revenue from pre-owned vehicle sales is recognized when the vehicle is delivered, a sales contract is signed, Retail Merchandise Sales The Company sells branded and other merchandise and accessories at events and recognizes sales revenue, net of sales taxes at the time it sells the merchandise or in the case of online sales when the merchandise Vehicle Financing Consumers can pay for their vehicle using cash or the Company offers a range of finance options through unrelated third-parties such as banks or credit unions. These third-party providers generally pay the Company a fee either in a flat amount or in an amount equal to the difference between the interest rates charged to customers over the predetermined interest rates set by the financial institution. The Company may be charged back for commissions in the event a contract is prepaid, defaulted upon, or terminated. Revenue for these finance fees are recognized upon delivery of the vehicle to the customer, when the sales contract is signed, and the financing has been arranged. Vehicle Service Contracts At the time of vehicle sale, the Company provides customers, on behalf of unrelated third parties who are the primary obligors, a range of other related products and services, including extended protection plan products and vehicle appearance protection. Extended protection plan products include extended service plans that are designed to cover unexpected expenses associated with mechanical breakdowns and guaranteed asset protection, which is intended to cover the unpaid balance on a vehicle loan in the event of a total loss of the vehicle or unrecovered theft. Vehicle appearance protection includes products aimed at maintaining vehicle appearance. The Company receives commissions from the sale of these product and service contracts and has no contractual liability to customers for claims under these products. The extended protection plan and vehicle appearance protection currently offered to consumers provide coverage up to 60 months (subject to mileage limitations), while guaranteed asset protection covers the customer for the term of their finance contract. Commission revenue on vehicle sales contracts is recognized at the time of sale, net of a reserve for estimated contract cancellations. The reserve for cancellations is estimated based upon historical industry experience and recent trends and is reflected as a reduction of Other sales revenue in the accompanying Consolidated Statements of Operations and a component of Accounts payable and accrued liabilities in the accompanying Consolidated Balance Sheets. Our risk related to contract cancellations is limited to the commission revenue that we receive. Subscription Fees Subscription fees are generated from dealer partners, under a license arrangement that provides access to our software solution and ongoing support. Unless waived by the Company dealers pay a monthly subscription fee for access to and ongoing support for portions of the RumbleOn software solution which includes: (i) a vehicle appraisal process; (ii) inventory management system; (iii) customer relationship and lead management program; and (iv) equity mining. Dealers may also be charged an initial software installation and training fee. Dealers do not have the contractual right to take possession of the software and may cancel the license for these products and services by providing a 30-day notice. Installation and training do not have value to the user without the license and ongoing support and maintenance. Revenue for installation and training is recognized when complete, acceptance has occurred, and collectability of a determinable amount is probable. Because a dealer has the right to cancel the license with 30 days’ notice revenue recognition of monthly subscription fees commences upon completion of installation, acceptance has occurred, and collectability of a determinable amount is probable. Purchase Accounting for Business Combinations The Company accounts for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference is recorded as goodwill. Adjustments may be made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition surface during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration is recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value are recorded through earnings each reporting period. Goodwill Goodwill is not amortized but rather tested for impairment at least annually. The Company tests goodwill for impairment annually during the fourth quarter of each year. Goodwill will also be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill is done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available, and management regularly reviews the operating results of that component. The Company has concluded that currently it has one reporting unit. Goodwill is being amortized for income tax purposes over a 15-year period. We performed our test for impairment at the end of the fourth quarter of 2017 using a two-step quantitative process. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and step two of the impairment test (measurement) must be performed. Step two of the impairment test, if necessary, requires the estimation of the fair value for the assets and liabilities of a reporting unit in order to calculate the implied fair value of the reporting unit’s goodwill. Under step two, an impairment loss is recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill. The fair value of the reporting unit is determined by management and includes the use of significant estimates and assumptions. Fair value can be determined by utilizing a combination of valuation methods, including EBITDA and revenue multiples (market approach) and the present value of discounted cash flows (income approach). Management utilized the income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis requires various assumptions including those about future cash flows, transactional and customer growth rates and discount rates. Expected cash flows will be based on historical customer growth and the growth in transactions, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis will reflect a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates can be affected by factors such as customer and transaction growth, pricing, and economic conditions that can be difficult to predict. There was no impairment of Goodwill as of December 31, 2017. In , the FASB issued new guidance, ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the test for Goodwill Impairment Other Assets Included in “Other assets” on the Company’s Consolidated Balance Sheets are amounts related to acquired internet domain names which are considered to be an indefinite lived intangible assets. Indefinite lived intangible assets are tested for impairment, at a minimum, on an annual basis using an income approach or sooner whenever events or changes in circumstances indicate that an asset may be impaired. Long-Lived Assets Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used are measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets or asset groups are considered to be impaired, the impairment to be recognized will be measured by the amount by which the carrying amount of the assets or asset groups exceeds the related fair values. The Company also performs a periodic assessment of the useful lives assigned to the long-lived assets. Technology Development Costs Technology development costs are accounted for pursuant to ASC 350, Intangibles — Goodwill and Other. Vehicle Inventory Vehicle inventory is accounted for pursuant to ASC 330, Inventory Valuation Allowance for Accounts Receivable The Company estimates the allowance for doubtful accounts for accounts receivable by considering a number of factors, including overall credit quality, age of outstanding balances, historical write-off experience and specific account analysis that projects the ultimate collectability of the outstanding balances. Ultimately, actual results could differ from these assumptions. Cash and Cash Equivalents The Company considers all cash accounts and all highly liquid short-term investments purchased with an original maturity of three months or less to be cash or cash equivalents. As of December 31, 2017 and 2016, the Company did not have any investments with maturities greater than three months. Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization and consists of capitalized technology development costs, furniture and equipment. Depreciation and amortization is recorded on a straight-line basis over the estimated useful life of the assets. Costs of significant additions, renewals and betterments, are capitalized and depreciated. Maintenance and repairs are charged to expense when incurred. Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. ASC Topic 820-10-30-2 -Fair Value Measurement Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets. Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. Inputs other than quoted market prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, are Level 2 inputs. Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants. Beneficial Conversion Feature From time to time, the Company has issued convertible notes that have conversion prices that create an embedded beneficial conversion feature pursuant to the guidelines established by the ASC Topic 470-20, Debt with Conversion and Other Options The BCF of a convertible note is measured by allocating a portion of the note’s proceeds to the conversion feature, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. The Company calculates the fair value of the conversion feature embedded in any convertible security using either a) the Black Scholes valuation model, or b) a discount cash flow analysis tested for sensitivity to key Level 3 inputs using Monte Carlo simulation. Common Stock Warrants The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in Accounting Standards Codification (ASC) 815, Derivatives and Hedging – Contracts in Entity’s Own Equity Cost of Revenue Cost of vehicle sales includes the cost to acquire vehicles and the reconditioning and transportation costs associated with preparing the vehicles for resale. Vehicle acquisition costs are driven by the mix of vehicles the Company acquires, the source of those vehicles, and supply and demand dynamics in the vehicle market. Reconditioning costs are billed by third-party providers and include parts, labor, and other repair expenses directly attributable to specific vehicles. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Cost of subscription and other fee revenue includes the (i) various data feeds from third parties; (ii) hosting of the customer facing website; (iii) commissions for new sales; and (iv) implementation and training of new and existing customers. These costs and expenses are charged to Cost of revenue as incurred. Selling, General and Administrative Expenses Selling, general and administrative expenses include costs and expenses for compensation and benefits, advertising to consumers and dealers, development and operating our product procurement and distribution system, managing our logistics system, transportation cost associated with selling vehicles, establishing our dealer partner arrangements, and other corporate overhead expenses, including expenses associated with technology development, legal, accounting, finance, and business development. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and are included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Advertising and marketing expenses was $1,731,028 for the year ended December 31, 2017. There were no advertising and marketing costs incurred for the year ended December 31, 2016. Stock-Based Compensation On June 30, 2017 the Company’s shareholders approved a Stock Incentive Plan (the “Plan”) under which restricted stock units (“RSUs”) and other equity awards may be granted to employees and non-employee members of the Board of Directors. The Company estimates the fair value of awards granted under the Plan on the date of grant. The fair value of an RSU is based on the average of the high and low market prices of the Company’s Class B Common Stock on the date of grant and is recognized as an expense on a straight-line basis over its vesting period; to date, substantially all the RSUs issued vest over a three-year period utilizing the following vesting schedule: (i) 20% on the first anniversary of the grant date; (ii) 30% on the second anniversary of the grant date; and (iii) 50% on the third anniversary of the grant date. During the year ended December 31, 2017 the Company granted 741,000 RSUs under the Plan to members of the Board of Directors, officers and employees. and is included in selling, general and administrative expenses in the consolidated statements of operations. Income Taxes The Company follows ASC Topic 740, Income Taxes, The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of December 31, 2017, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a fifty percent likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months. Recent Pronouncements Effective in the Current Period. The Company has adopted Accounting Standards Update 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory, Effective in Future Periods In May 2014, the FASB issued an accounting pronouncement (FASB ASU 2014-09) related to revenue recognition. This ASU, along with subsequent ASUs issued to clarify certain provisions and the effective date of ASU 2014-09, provides a single, comprehensive revenue recognition model for all contracts with customers. The standard contains principles that an entity will apply to determine the measurement of revenue and the timing of when it is recognized. The entity will recognize revenue to reflect the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This standard will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ASU 2014-09 may be adopted using either a full retrospective method, which requires a restatement of prior periods presented, or a modified retrospective method with the cumulative effect of applying the standard recognized at the date of adoption. We will adopt this standard for our fiscal year beginning January 1, 2018. While we continue to assess all potential impacts of this standard, we generally do not expect adoption of the standard to have a material impact on our consolidated financial statements. We primarily sell products and recognize revenue at the point of sale or delivery to customers, at which point the earnings process is deemed to be complete. Our performance obligations are clearly identifiable, and we do not anticipate significant changes to the assessment of such performance obligations or the timing of our revenue recognition upon adoption of the new standard. Our primary business processes are consistent with the principles contained in the ASU, and we do not expect significant changes to those processes, our internal controls or systems. We are still evaluating the impact of the new standard on our financial statement disclosures. In February 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-02) related to the accounting for leases. This pronouncement requires lessees to record most leases on their balance sheet while also disclosing key information about those lease arrangements. Under the new guidance, lease classification as either a finance lease or an operating lease will affect the pattern and classification of expense recognition in the income statement. The classification criteria to distinguish between finance and operating leases are generally consistent with the classification criteria to distinguish between capital and operating leases under existing lease accounting guidance. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. We expect to adopt the new standard for our fiscal year beginning January 1, 2018. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with practical expedients available for election as a package. We do not expect that this standard will have a material effect on our Consolidated balance sheets since we currently do not have a significant number of leases in effect. In May 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-12), which provided narrow scope improvements and practical expedients related to FASB ASU 2014-09, Revenue from Contracts with Customers In August 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-15) related to the classification of certain cash receipts and cash payments on the statement of cash flows. The pronouncement provides clarification guidance on eight specific cash flow presentation issues that have developed due to diversity in practice. The issues include, but are not limited to, debt prepayment or extinguishment costs, settlement of zero-coupon debt, proceeds from the settlement of insurance claims, and cash receipts from payments on beneficial interests in securitization transactions. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2018, and do not expect it to have a material effect on our Consolidated financial statements. In , the FASB issued new guidance, ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the test for Goodwill Impairment with early adoption permitted for annual goodwill impairment tests performed after . The standard must be applied prospectively. Upon adoption, the standard will impact how the Company assesses goodwill for impairment. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions | |
ACQUISITIONS | On February 8, 2017, the Company acquired substantially all of the assets of NextGen in exchange for $750,000 in cash, plus 1,523,809 unregistered shares of Class B Common Stock of the Company, which were issued at a negotiated fair value of $1.75 per share and a subordinated secured promissory note issued by the Company in favor of NextGen in the amount of $1,333,334 (the “NextGen Note”). The NextGen Note matures on the third anniversary of the closing date (the “Maturity Date”). the company finalized the preliminary purchase price allocation recorded at the acquisition date and made a measurement period adjustment to the preliminary purchase price allocation which included:(i) an increase to technology development of $1,500,000; (ii) a decrease in goodwill of $1,390,000; (iii) a decrease to customer contracts of $10,000; and (iv) a decrease to non-compete agreements of $100,000. The measurement period adjustment also resulted in a $166,250 net increase in accumulated amortization and amortization expense previously recorded for the nine-months ended September 30, 2017. This measurement period adjustment has been recorded as of December 31, 2017 and is reflected in the table below. The company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date . The measurement period adjustment did not have a material impact on the Company’s net loss in any period during the year ended December 31, 2017. The following table presents the purchase price consideration as of December 31, 2017: Preliminary Purchase Price Allocation Cumulative Measurement Period Adjustment Final Purchase Price Allocation Net tangible assets acquired: Technology development 1,400,000 1,500,000 2,900,000 Customer contracts 10,000 (10,000 ) - Non-compete agreements 100,000 (100,000 ) - Tangible assets acquired 1,510,000 1,390,000 2,900,000 Goodwill 3,240,000 (1,390,000 ) 1,850,000 Total purchase price 4,750,000 - 4,750,000 Less: Issuance of shares (2,666,666 ) - (2,666,666 ) Less: Debt issued (1,333,334 ) - (1,333,334 ) Cash paid $ 750,000 $ - $ 750,000 Supplemental pro forma information The results of operations of NextGen since the acquisition date are included in the accompanying consolidated financial statements. The following supplemental pro forma information presents the financial results as if the acquisition of NextGen was made as of January 1, 2017 for the year ended December 31, 2017 and on January 1, 2016 for the year ended December 31, 2016. Pro forma adjustments for the year ended December 31, 2017 and 2016 primarily include adjustments to reflect additional depreciation and amortization of $61,866 and $352,576, respectively, related to technology development and identifiable intangible assets recorded as part of the acquisition, and interest expense related to the NextGen Note of $27,353 and $85,772, respectively. 2017 2016 Pro forma revenue $ 7,312,428 $ 138,141 Pro forma net loss $ (8,710,513 ) $ (2,450,829 ) Loss per share-basic and fully diluted $ (0.86 ) $ (0.34 ) Weighted average common shares and common stock equivalents outstanding-Basic and fully diluted 10,076,227 7,105,179 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | The following table summarizes property and equipment, net of accumulated depreciation and amortization as of December 31, 2017 and 2016: 2017 2016 Vehicles $ 472,870 - Furniture and equipment 149,643 - Technology development 3,406,786 - Total property and equipment 4,029,299 - Less: accumulated depreciation and amortization 668,467 - $ 3,360,832 - 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. During the fourth quarter of 2017, the company finalized the preliminary purchase price allocation of the NextGen acquisition and made a measurement period adjustment to increase the amount of the preliminary purchase price that was allocated to technology development from $1,400,000 to $2,900,000 and increased the amount of amortization previously reported for the nine-month period ended September 30, 2017 by $200,000. At December 31, 2017, capitalized technology development costs were $3,406,786 which includes $2,900,000 of software acquired in the NextGen transaction. Total technology development costs incurred was $959,743 for the year ended December 31, 2017 of which $506,786 was capitalized and $452,957 was charged to expense in the accompanying Consolidated statements of operations. The amortization of capitalized technology development costs was $588,519 for the year ended December 31, 2017. There were no technology development costs incurred and no amortization of capitalized development costs for the year ended December 31, 2016. Depreciation expense on vehicles, furniture and equipment was $79,948 and $475, respectively for the years ended December 31, 2017 and 2016. |
ACCOUNTS PAYABLE AND OTHER ACCR
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Other Assets [Abstract] | |
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES | The following table summarizes accounts payable and other accrued liabilities as of December 31, 2017 and 2016: 2017 2016 Accounts payable $ 1,094,310 $ 219,101 Accrued Payroll 79,288 - Other accrued expenses 5,618 - $ 1,179,216 $ 219,101 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Notes payable consisted of the following as of December 31, 2017 and 2016: 2017 2016 Notes payable-NextGen dated February 8, 2017. Interest is payable semi-annually at 6.5% through February 9, 2019 and 8.5% through maturity which is February 8, 2020. $ 1,333,334 $ - Notes payable-private placement dated March 31, 2017. Interest is payable at maturity and accrues at 6.5% through March 31, 2019 and 8.5% through maturity which is March 31, 2020. 667,000 - Convertible note payable-related party dated July 13, 2016. Interest rate of 6.0% which is accrued and paid at maturity. Note matures on July 26, 2026. Note is convertible into common stock, in whole at any time before maturity at the option of the holder at $.75 per share. - 197,358 Line of credit-floor plan dated November 2, 2017. Facility provides up to $2,000,000 of available credit secured by vehicle inventory and other assets. Interest rate at December 31, 2017 was 6.5%. Principal and interest is payable on demand. 1,081,593 - Less: Debt discount (540,924 ) (196,076 ) $ 2,541,003 $ 1,282 Current portion 1,081,593 - Long-term portion $ 1,459,410 $ 1,282 Note Payable-NextGen On February 8, 2017, in connection with the acquisition of NextGen, the Company issued a subordinated secured promissory note in favor of NextGen in the amount of $1,333,334. Interest accrues and will be paid semi-annually (i) at a rate of 6.5% annually from the closing date through the second anniversary of such date and (ii) at a rate of 8.5% annually from the second anniversary of the closing date through the Maturity Date. Upon the occurrence of any event of default, the outstanding balance under the NextGen Note shall become immediately due and payable upon election of the holder. The Company’s obligations under the NextGen Note are secured by substantially all the assets of NextGen Pro, pursuant to an Unconditional Guaranty Agreement (the “Guaranty Agreement”), by and among NextGen and NextGen Pro, and a related Security Agreement between the parties, each dated as of February 8, 2017. Under the terms of the Guaranty Agreement, NextGen Pro has agreed to guarantee the performance of all the Company’s obligations under the NextGen Note. Interest expense on the NextGen Notes for the year ended December 31, 2017 was $76,457. Notes Payable-Private Placement On March 31, 2017, the Company completed funding of the second tranche of the 2016 Private Placement (as defined below). The investors were issued 1,161,920 shares of Class B Common Stock of the Company and promissory notes (the “Private Placement Notes”) in the amount of $667,000, in consideration of cancellation of loan agreements having an aggregate principal amount committed by the purchasers of $1,350,000. Under the terms of the Private Placement Notes, interest shall accrue on the outstanding and unpaid principal amounts until paid in full. The Private Placement Notes mature on March 31, 2020. Interest accrues at a rate of 6.5% annually from the closing date through the second anniversary of such date and at a rate of 8.5% annually from the second anniversary of the closing date through the maturity date. Upon the occurrence of any event of default, the outstanding balance under the Private Placement Notes shall become immediately due and payable upon election of the holders. Based on the relative fair values attributed to the Class B Common Stock and promissory notes issued in the 2016 Private Placement, the Company recorded a debt discount on the promissory notes of $667,000 with the corresponding amounts as addition to paid in capital. The debt discount is amortized to interest expense until the scheduled maturity of the Private Placement Notes in March 2020 using the effective interest method. The effective interest rate at December 31, 2017 was 26.0%. Interest expense on the Private Placement Notes for the year ended December 31, 2017 was $158,740, which included debt discount amortization of $126,076 for the year ended December 31, 2017. Notes Payable-Senior Secured Promissory Notes On September 5, 2017, the Company executed Senior Secured Promissory Notes (the “Notes”) in favor of several investors, including certain executive officers and directors of the Company, in the aggregate principal amount of $1,650,000 (“Principal Amount”), which includes an aggregate original issue discount of $150,000. The proceeds to the Company from the Senior Secured Promissory Notes, net of original issuance discount, was $1,500,000. The Senior Secured Promissory Notes are secured by an interest in all the Company’s Collateral, as such term is defined in the Senior Secured Promissory Notes. The Notes mature on September 5, 2018 and bear interest at a rate equal to 5% per annum through December 31, 2017, and a rate of 10% per annum thereafter. Interest is payable monthly in arrears. The Principal Amount and any unpaid interest accrued thereon may be prepaid by the Company at any time prior to the maturity date without premium or penalty upon five days prior written notice to the noteholder. If the Company consummates in one or more transactions financing of any nature resulting in net proceeds available to the Company of $5,000,000 or more, then the noteholders may require the Company to prepay the Notes on thirty (30) days prior written notice to the Company. Line of Credit-Floor Plan On November 2, 2017, the Company through its wholly-owned subsidiary RMBL Missouri, LLC (the “Borrower”), entered into a floor plan line of credit (the “Credit Line”) with NextGear Capital, Inc. (“NextGear”) in the amount of $2,000,000, or such lesser sum which may be advanced to or on behalf of the Borrower from time to time, pursuant to that certain Demand Promissory Note and Loan and Security Agreement. Any advance under the Credit Line bears interest on a per annum basis from the date of the request of such advance (or date of the financed receivable, as applicable), based upon a 360-day year, and such interest shall be compounded daily until such outstanding advances are paid in full at a rate of interest set forth in schedules published by NextGear. As of November 2, 2017, the effective rate of interest is NextGear NextGear NextGear Convertible Note Payable-Related Party On July 13, 2016, the Company entered into an unsecured convertible note (the “BHLP Note”) with Berrard Holdings, an entity owned and controlled by a current officer and director, Mr. Berrard, pursuant to which the Company was required to repay $191,858 on or before July 13, 2026 plus interest at 6% per annum. The BHLP Note was also convertible into common stock, in whole, at any time before maturity at the option of the holder at the greater of $0.06 per share or 50% of the price per share of the next qualified financing which is defined as $500,000 or greater. Effective August 31, 2016, the principal amount of the BHLP Note was amended to include an additional $5,500 loaned to the Company, on the same terms. On November 28, 2016, the Company completed its qualified financing at $1.50 per share which established the conversion price per share for the BHLP Note of $0.75 per share, resulting in the principal amount of the BHLP Note being convertible into 263,144 shares of Class B Common Stock. As such, November 28, 2016 became the “commitment date” for determining the value of the BHLP Note conversion feature. Because there had been no trading in the Company’s common stock since July 2014, other than the purchase by Berrard Holdings of 99.5% of the outstanding shares in a single transaction, the Company used the Monte Carlo simulation to determine the intrinsic value of the conversion feature of the BHLP Note, which resulted in a value in excess of the principal amount of the BHLP Note. Thus, the Company recorded a note discount of $197,358 with the corresponding amount as an addition to paid in capital. This note discount was amortized to interest expense until the scheduled maturity of the BHLP Note in July 2026 or until it was converted using the effective interest method. On March 31, 2017, the Company issued 275,312 shares of Class B Common Stock upon full conversion of the BHLP Note, having an aggregate principal amount, including accrued interest, of $206,484 and a conversion price of $0.75 per share. In connection with the conversion of the BHLP Note, the remaining debt discount of $196,076 was charged to interest expense in the Consolidated statements of operations and the related deferred tax liability was credited to Additional paid in capital in the Consolidated Balance Sheets. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | On January 9, 2017, the Company’s Board of Directors approved, subject to stockholder approval, the adoption of the RumbleOn, Inc. 2017 Stock Incentive Plan (the “Plan”), On January 9, 2017, the Company’s Board of Directors and stockholders holding 6,375,000 of the Company’s issued and outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation (the “Certificate of Amendment”), to change the name of the Company to RumbleOn, Inc. and to create an additional class of common stock of the Company, which was effective on February 13, 2017 (the “Effective Date”). Immediately before approving the Certificate of Amendment, the Company had authorized 100,000,000 shares of common stock, $0.001 par value (the “Authorized Common Stock”), including 6,400,000 issued and outstanding shares of common stock (the “Outstanding Common Stock, and together with the Authorized Common Stock, the “Common Stock”). Pursuant to the Certificate of Amendment, the Company designated 1,000,000 shares of Authorized Common Stock as Class A Common Stock (the “Class A Common Stock”), which Class A Common Stock ranks pari passu with all of the rights and privileges of the Common Stock, except that holders of the Class A Common Stock are entitled to ten votes per share of Class A Common Stock issued and outstanding, and all other shares of Common Stock, including all shares of Outstanding Common Stock shall be deemed Class B Common Stock (the “Class B Common Stock”), which Class B Common Stock is identical to the Class A Common Stock in all material respects, except that holders of the Class B Common Stock are entitled to one vote per share of Class B Common Stock issued and outstanding. Also on January 9, 2017, the Company’s Board of Directors and stockholders holding 6,375,000 of the Company’s issued and outstanding shares of common stock approved the issuance to (i) Marshall Chesrown of 875,000 shares of Class A Common Stock in exchange for an equal number of shares of Class B Common Stock held by Mr. Chesrown, and (ii) Steven R. Berrard of 125,000 shares of Class A Common Stock in exchange for an equal number of shares of Class B Common Stock held by Mr. Berrard, effective at the time the Certificate of Amendment was filed with the Secretary of State of Nevada. On February 13, 2017, On March 31, 2017, the Company completed the sale of 620,000 shares of Class B Common Stock, par value $0.001, at a price of $4.00 per share for aggregate proceeds of $2,480,000 in the private placement (the “2017 Private Placement”). Officers and directors of the Company acquired 175,000 shares of Class B Common Stock in the 2017 Private Placement. In May 2017, the Company completed the sale of an additional 37,500 shares of Class B Common Stock in the 2017 Private Placement. Proceeds from the 2017 Private Placement were used to complete the launch of the Company’s website, www.rumbleon.com On June 30, 2017, the Company filed a Registration Statement on Form S-1 (the “Registration Statement”) with the SEC covering the resale of 8,993,541 shares of Class B Common Stock issued in the NextGen acquisition and the 2017 Private Placement and other shares previously held by our stockholders, including our officers and directors. The SEC declared the Registration Statement effective on July 7, 2017. In connection with the filing of the Registration Statement, our officers and directors and certain stockholders entered into a lock-up agreement restricting, through December 31, 2017, the resale of an aggregate of 6,848,800 shares of our common stock held by them and subject to the Registration Statement. On October 23, 2017, the Company completed an underwritten public offering of 2,910,000 shares of Class B common stock at a public offering price of $5.50 per share 14,500,000 The Company intends to use the remaining net proceeds of the Offering for working capital and general corporate purposes, which may include purchases of additional inventory held for sale, increased spending on marketing and advertising and capital expenditures necessary to grow the business. Also, in connection with the Offering, on October 19, 2017, the Class B Common Stock uplisted from the OTCQB and began trading on The NASDAQ Capital Market under the symbol “RMBL.” At December 31, 2016, the Company was authorized to issue 100,000,000 shares of common stock, $0.001 par value (the “Authorized Common Stock”), including 6,400,000 issued and outstanding shares of common stock (the “Outstanding Common Stock, and together with the Authorized Common Stock, the “Common Stock”). Pursuant to the Certificate of Amendment, the Company designated 1,000,000 shares of Authorized Common Stock as Class A Common Stock (the “Class A Common Stock”), which Class A Common Stock ranks pari passu with all of the rights and privileges of the Common Stock, except that holders of the Class A Common Stock are entitled to ten votes per share of Class A Common Stock issued and outstanding, and (ii) all other shares of Common Stock, including all shares of Outstanding Common Stock shall be deemed Class B Common Stock (the “Class B Common Stock”), which Class B Common Stock will be identical to the Class A Common Stock in all respects, except that holders of the Class B Common Stock are entitled to one vote per share of Class B Common Stock issued and outstanding. On November 28, 2016, the Company completed a private placement with certain purchasers, with respect to the sale of an aggregate of 900,000 shares of common stock of the Company at a purchase price of $1.50 per share for total consideration of $1,350,000 (the “2016 Private Placement”). In connection with the 2016 Private Placement, the Company also entered into loan agreements, pursuant to which the purchasers would loan to the Company their pro rata share of up to $1,350,000 in the aggregate upon the request of the Company at any time on or after January 31, 2017 and before November 1, 2020. On March 31, 2017, the Company completed the second tranche of the 2016 Private Placement. For additional information, see Note 5 — “Notes Payable.” |
COMMON STOCK WARRANTS
COMMON STOCK WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block [Abstract] | |
COMMON STOCK WARRANTS | In connection with the October 23, 2017 public offering of 2,910,000 shares of Class B common stock the Company issued to underwriters warrants to purchase 218,250 shares of Class B common stock, which was equal to 7.5% of the aggregate number of shares of Class B common stock sold in the Offering. The Warrants are exercisable at a per share price of $6.325, which was equal to 115% of the Offering price per share of the shares sold in the Offering. The Warrants are exercisable at any time and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the registration statement related to the Offering. Warrants exercise price $ 6.325 Fair value price per share of common stock $ 5.50 Warrants outstanding 218,250 Volatility 62.0 % Expected term remaining (years) 5.0 Risk-free interest rate 1.31 % Dividend yield — The dividend yield assumption of zero is based upon the fact that we have never paid cash dividends and presently have no intention to do so. The risk-free interest rate used for each warrant classified as a derivative is equal to the U.S. Treasury rate. The expected term is based on the remaining contractual lives of the warrants at the valuation date. Since the Company’s stock was not traded frequently in the years before the valuation date the volatility may not reasonably reflect the Company’s true volatility. Therefore, we relied on the average volatility of selected comparable companies. There were no warrants exercised or forfeited for the year ended December 31, 2017. There was no aggregate intrinsic value in the warrants at December 31, 2017. The fair value of the warrants at the initial valuation date was $505,273. |
SELLING, GENERAL AND ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE | 12 Months Ended |
Dec. 31, 2017 | |
Selling General And Administrative | |
SELLING, GENERAL AND ADMINISTRATIVE | The following table summarizes the detail of selling, general and administrative expense for the years ended December 31, 2017 and 2016: 2017 2016 Selling, General and Administrative Compensation and related costs $ 3,111,363 $ - Advertising and marketing 1,731,028 - Professional fees 890,580 153,668 Technology development 452,957 - General and administrative 1,401,071 57,825 $ 7,586,999 $ 211,493 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | The following table includes supplemental cash flow information, including noncash investing and financing activity for the years ended December 31, 2017 and 2016: 2017 2016 Cash paid for interest $ 203,578 $ 17,909 Note payable issued on acquisition $ 1,333,334 $ - Conversion of notes payable-related party $ 206,209 $ - Issuance of shares for acquisition $ 2,666,666 $ - |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | U.S. Tax Reform On December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act, or the Act, was signed in to law. The Tax Act, among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%, requires taxpayers to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. On December 31, 2017, the Company did not have any foreign subsidiaries and the international aspects of the Tax Act are not applicable. In connection with the initial analysis of the impact of the Tax Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 26.1%. The remeasurement of the Company’s deferred tax balance was primarily offset by application of its valuation allowance. Deferred income taxes reflect the net tax effect of temporary difference between amounts recorded for financial reporting purposes and amounts used for tax purposes. The major components of deferred tax assets and liabilities are as follows: 2017 2016 Deferred tax assets: Net operating loss carryforward $ 2,281,369 $ 87,614 Stock-based compensation 131,465 - Total deferred income taxes 2,412,834 87,614 Deferred tax liabilities: Basis difference in property and equipment 114,150 - Basis difference in goodwill 32,190 - Debt discount-private placement 116,840 78,430 Total deferred tax liabilities 263,180 78,430 Net deferred tax asset 2,149,654 9,184 Valuation allowance (2,149,654 ) (87,614 ) Net deferred tax asset (liability) $ - $ (78,430 ) A reconciliation of the statutory U.S. Federal income tax rate to the Company’s effective income tax rate on income tax rate on continuing operations for the years ended December 31, 2017 and 2016. 2017 2016 U.S. Federal statutory rate 34.0% 34.0% Impact of tax reform on net deferred tax assets (13.0) - State and local, net of Federal benefit 5.1% 6.0% Valuation allowance (26.1)% (39.9)% Effective tax rate - 0.01% No current provision for Federal income taxes was required for the years ended December 31, 2017 and 2016 due to the Company’s operating losses. At December 31, 2017 and 2016, the Company has operating loss carryforwards of $8,740,879 and $230,564, respectively, which begin to expire in 2033. We have provided a valuation allowance on the deferred tax assets of $2,149,654 and $87,614 for the periods ended December 31, 2017 and 2016, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of 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 | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The computation of diluted net loss per share for the year ended, 2017 did not include 735,000 of restricted stock units or 218,250 of warrants to purchase shares of Class B Common Stock as their inclusion would be antidilutive. There were no restricted stock units or warrants outstanding for the year ended December 31, 2016. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | On March 31, 2017, the Company completed the sale of 620,000 shares of Class B Common Stock in the 2017 Private Placement. Officers and directors of the Company acquired 175,000 shares of Class B Common Stock in the 2017 Private Placement. In May 2017, the Company completed the sale of an additional 37,500 shares of Class B Common Stock in the 2017 Private Placement. For additional information, see Note 6 — A key component of the Company’s business model is to regional partners in the acquisition of pre-owned vehicles as well as utilize these regional partners to provide inspection, reconditioning and distribution services. Correspondingly, the Company will earn fees and transaction income, and the regional partner may earn incremental revenue and enhance profitability through increased sales, leads, and fees from inspection, reconditioning and distribution programs. In connection with the development of the regional partner program, the Company tested various aspects of the program by utilizing a dealership to which Mr. Chesrown, the Company’s Chief Executive Officer has provided financing in the form of a $400,000 convertible promissory note. The note matures on May 1, 2019, interest is payable monthly at 5% per annum and can be converted into a 25% ownership interest in the Dealer at any time. Revenue recognized by the Company from the Dealer for the year ended December 31, 2017 was $1,618,958 or 22,1% of total Revenue. Included in Cost of Revenue for the Company at December 31, 2017 includes $1,451,712 or 20.6% of Total Cost of Sales. Included in Accounts receivable at December 31, 2017 is $449,119 owed to the Company by the Dealer. In addition, the Company presently subleases warehouse space from the Dealer that is separate and distinct from the location of the dealership, on the same terms as paid by the Dealer. This subleased facility serves as the northwestern regional distribution center for the Company. Included in accounts payable at December 31, 2017 is $30,000 for rent owed to the Dealer. In connection with the NextGen acquisition, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Kartik Kakarala, who formerly served as the Chief Executive Officer of NextGen and now serves as a director of the Company. Pursuant to the Consulting Agreement, Mr. Kakarala serves as a consultant to the Company. The Consulting Agreement may be cancelled by either party, effective upon delivery of a written notice to the other party. Mr. Kakarala’s compensation pursuant to the Consulting Agreement is $5,000 per month. For the year ended December 31, 2017 the Company paid $40,000 under the Consulting Agreement. This amount is included in Selling, general and administrative expenses in the Consolidated Statements of Operations. For additional information, see Note 2 — In connection with the NextGen acquisition, the Company entered into a Services Agreement (the “Services Agreement”) with Halcyon Consulting, LLC (“Halcyon”), to provide development and support services to the Company. Mr. Kakarala currently serves as the Chief Executive Officer of Halcyon. Pursuant to the Services Agreement, the Company will pay Halcyon hourly fees for specific services, set forth in the Services Agreement, and such fees may increase on an annual basis, provided that the rates may not be higher than 110% of the immediately preceding year’s rates. The Company will reimburse Halcyon for any reasonable travel and pre-approved out-of-pocket expenses in connection with its services to the Company. For the year ended December 31, 2017 the Company paid $914,099 under the Services Agreement. As of December 31, 2017, the Company had promissory notes of $370,556 and accrued interest of $18,147 due to an entity controlled by a director and to the director of the Company. The promissory notes were issued in connection with the completion of the 2016 Private Placement on March 31, 2017. Interest expense on the promissory notes for the year ended December 31, 2017 was $158,740 which included debt discount amortization of $126,076. The interest was charged to interest expense in the Consolidated Statements of Operations and included in accrued interest under long-term liabilities in the Consolidated Balance Sheets. On September 5, 2017, the Company executed $1,650,000 (“Principal Amount”) of Senior Secured Promissory Notes (the “Notes”) in favor of several investors, including certain executive officers and directors of the Company. The Notes included an aggregate of $150,000 in original issue discount. Officers and directors held $1,214,144 of the Notes. On October 23, 2017, the Company completed a public offering and used $1,661,075 of the net proceeds of the offering for the repayment of the Notes in the aggregate principal amount of $1,650,000, plus accrued interest, which resulted in the termination of the Notes. Officers and directors received in the aggregate principal amount of $1,218,122, plus accrued interest of $4,144. For the year ended December 31, 2017 interest on the officer and director Notes was $118,121, including $110,000 of debt discount amortization and is included in interest expense in the Consolidated Statements of Operations. As of December 31, 2016, the Company had the BHLP Note payable of $197,358 and accrued interest of $5,508 due to an entity that is owned and controlled by a current officer and director of the Company. On March 31, 2017, the Company issued 275,312 shares of Class B Common Stock upon full conversion of the BHLP Note. The accrued interest is included in accrued interest under Long-term liabilities in the Consolidated Balance Sheets. For additional information, see Note 5 — As of December 31, 2015, the Company had loans of $141,000 and accrued interest of $13,002 due to an entity that is owned and controlled by a family member of an officer and director of the Company. All convertible notes and related party notes outstanding as of July 13, 2016 were paid in full in July 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies | |
COMMITMENTS AND CONTINGENCIES | The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions (or settlements) may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On February 16, 2018, the Company, through Borrower, entered into an Inventory Financing and Security Agreement (the “Credit Facility”) with Ally Bank, a Utah chartered state bank (“Ally Bank”) and Ally Financial, Inc., a Delaware corporation (“Ally” together with Ally Bank, the “Lender”), pursuant to which the Lender may provide up to $25 million in financing, or such lesser sum which may be advanced to or on behalf of the Borrower from time to time, as part of its floorplan vehicle financing program. Advances under the Credit Facility require the Company maintain 10.0% of the advance amount as restricted cash. Advances under the Credit Facility will bear interest at a per annum rate designated from time to time by the Lender and will be determined using a 365/360 simple interest method of calculation, unless expressly prohibited by law. Advances under the Credit Facility, if not demanded earlier, are due and payable for each vehicle financed under the Credit Facility as and when such vehicle is sold, leased, consigned, gifted, exchanged, transferred, or otherwise disposed of. Interest under the Credit Facility is 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, the Borrower’s obligation to pay upon demand any outstanding liabilities of the Credit Facility), the Lender may, at its option and without notice to the Borrower, exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to Lender and its affiliates by the Borrower and its affiliates. On February 20, 2018, the Company notified NextGear that it was terminating the Credit Line, and all security or other credit documents entered into in connection therewith. At the time of the notification, there was no indebtedness outstanding under the Credit Line. |
DESCRIPTION OF BUSINESS AND S21
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization | RumbleOn, Inc. (the “Company”) was incorporated in October 2013 under the laws of the State of Nevada, as Smart Server, Inc. (“Smart Server”). On February 13, 2017, the Company changed its name from Smart Server, Inc. to RumbleOn, Inc. |
Description of Business | Smart Server was originally formed to engage in the business of designing and developing mobile application payment software for smart phones and tablet computers. After Smart Server ceased its technology development activities in 2014, it had no operations and nominal assets, meeting the definition of a “shell company” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and regulations thereunder. In July 2016, Berrard Holdings Limited Partnership (“Berrard Holdings”) acquired 99.5% of the common stock of the Company from the principal stockholder. Shortly after the Berrard Holdings common stock purchase, the Company began exploring the development of a capital light e-commerce platform facilitating the ability of both consumers and dealers to Buy-Sell-Trade-Finance pre-owned recreation vehicles in one online location. The Company’s goal is for the platform to be widely recognized as the leading online solution for the sale, acquisition, and distribution of recreation vehicles by providing users with the most efficient, timely and transparent experience. The Company’s business plan is currently driven by a technology platform it acquired on February 8, 2017 from NextGen Dealer Solutions, LLC (“NextGen”), which the Company owns and operates through its wholly-owned subsidiary NextGen Pro, LLC (“NextGen Pro”). The NextGen platform provides vehicle appraisal, inventory management, customer relationship management and lead management, equity mining, and other key services necessary to drive the online marketplace. For additional information, see Note 2— “Acquisitions.” Serving both consumers and dealers, through our online marketplace platform, we make cash offers for the purchase of pre-owned vehicles. In addition, we offer a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. Our operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with regional partners. We utilize regional partners in the acquisition of pre-owned vehicles as well as to provide inspection, reconditioning and distribution services. Correspondingly, we earn fees and transaction income, and regional partners will earn incremental revenue and enhance profitability through increased sales, leads, and fees from inspection, reconditioning and distribution programs. |
Year End | In October 2016, the Company changed its fiscal year-end from November 30 to December 31. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, depreciable lives, carrying value of intangible assets, sales returns, receivables valuation, restructuring-related liabilities, taxes, and contingencies. Actual results could differ materially from those estimates. |
Earnings (Loss) Per Share | The Company follows the FASB Accounting Standards Codification (“ASC”) Topic 260- Earnings per share |
Revenue Recognition | Revenue is derived from two primary sources: (1) the Company’s online marketplace, which is our largest source of revenue ; The Company recognizes revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) the product or service has been provided to the customer; (iii) the amount to be paid by the customer is fixed or determinable; and (iv) the collection of the Company’s payment is probable. Pre-owned Vehicle Sales The Company sells pre-owned vehicles to consumers and dealers primarily through our website or regional auctions. The source of these vehicles is primarily from the Company’s cash offer to buy program and customers who trade-in their existing vehicles when making a pre-owned vehicle purchase. Revenue from pre-owned vehicle sales is recognized when the vehicle is delivered, a sales contract is signed, Retail Merchandise Sales The Company sells branded and other merchandise and accessories at events and recognizes sales revenue, net of sales taxes at the time it sells the merchandise or in the case of online sales when the merchandise Vehicle Financing Consumers can pay for their vehicle using cash or the Company offers a range of finance options through unrelated third-parties such as banks or credit unions. These third-party providers generally pay the Company a fee either in a flat amount or in an amount equal to the difference between the interest rates charged to customers over the predetermined interest rates set by the financial institution. The Company may be charged back for commissions in the event a contract is prepaid, defaulted upon, or terminated. Revenue for these finance fees are recognized upon delivery of the vehicle to the customer, when the sales contract is signed, and the financing has been arranged. Vehicle Service Contracts At the time of vehicle sale, the Company provides customers, on behalf of unrelated third parties who are the primary obligors, a range of other related products and services, including extended protection plan products and vehicle appearance protection. Extended protection plan products include extended service plans that are designed to cover unexpected expenses associated with mechanical breakdowns and guaranteed asset protection, which is intended to cover the unpaid balance on a vehicle loan in the event of a total loss of the vehicle or unrecovered theft. Vehicle appearance protection includes products aimed at maintaining vehicle appearance. The Company receives commissions from the sale of these product and service contracts and has no contractual liability to customers for claims under these products. The extended protection plan and vehicle appearance protection currently offered to consumers provide coverage up to 60 months (subject to mileage limitations), while guaranteed asset protection covers the customer for the term of their finance contract. Commission revenue on vehicle sales contracts is recognized at the time of sale, net of a reserve for estimated contract cancellations. The reserve for cancellations is estimated based upon historical industry experience and recent trends and is reflected as a reduction of Other sales revenue in the accompanying Consolidated Statements of Operations and a component of Accounts payable and accrued liabilities in the accompanying Consolidated Balance Sheets. Our risk related to contract cancellations is limited to the commission revenue that we receive. Subscription Fees Subscription fees are generated from dealer partners, under a license arrangement that provides access to our software solution and ongoing support. Unless waived by the Company dealers pay a monthly subscription fee for access to and ongoing support for portions of the RumbleOn software solution which includes: (i) a vehicle appraisal process; (ii) inventory management system; (iii) customer relationship and lead management program; and (iv) equity mining. Dealers may also be charged an initial software installation and training fee. Dealers do not have the contractual right to take possession of the software and may cancel the license for these products and services by providing a 30-day notice. Installation and training do not have value to the user without the license and ongoing support and maintenance. Revenue for installation and training is recognized when complete, acceptance has occurred, and collectability of a determinable amount is probable. Because a dealer has the right to cancel the license with 30 days’ notice revenue recognition of monthly subscription fees commences upon completion of installation, acceptance has occurred, and collectability of a determinable amount is probable. |
Purchase Accounting for Business Combinations | The Company accounts for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference is recorded as goodwill. Adjustments may be made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition surface during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration is recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value are recorded through earnings each reporting period. |
Goodwill | Goodwill is not amortized but rather tested for impairment at least annually. The Company tests goodwill for impairment annually during the fourth quarter of each year. Goodwill will also be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill is done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available, and management regularly reviews the operating results of that component. The Company has concluded that currently it has one reporting unit. Goodwill is being amortized for income tax purposes over a 15-year period. We performed our test for impairment at the end of the fourth quarter of 2017 using a two-step quantitative process. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and step two of the impairment test (measurement) must be performed. Step two of the impairment test, if necessary, requires the estimation of the fair value for the assets and liabilities of a reporting unit in order to calculate the implied fair value of the reporting unit’s goodwill. Under step two, an impairment loss is recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill. The fair value of the reporting unit is determined by management and includes the use of significant estimates and assumptions. Fair value can be determined by utilizing a combination of valuation methods, including EBITDA and revenue multiples (market approach) and the present value of discounted cash flows (income approach). Management utilized the income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis requires various assumptions including those about future cash flows, transactional and customer growth rates and discount rates. Expected cash flows will be based on historical customer growth and the growth in transactions, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis will reflect a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates can be affected by factors such as customer and transaction growth, pricing, and economic conditions that can be difficult to predict. There was no impairment of Goodwill as of December 31, 2017. In , the FASB issued new guidance, ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the test for Goodwill Impairment |
Other Assets | Included in “Other assets” on the Company’s Consolidated Balance Sheets are amounts related to acquired internet domain names which are considered to be an indefinite lived intangible assets. Indefinite lived intangible assets are tested for impairment, at a minimum, on an annual basis using an income approach or sooner whenever events or changes in circumstances indicate that an asset may be impaired. |
Long-Lived Assets | Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used are measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets or asset groups are considered to be impaired, the impairment to be recognized will be measured by the amount by which the carrying amount of the assets or asset groups exceeds the related fair values. The Company also performs a periodic assessment of the useful lives assigned to the long-lived assets. |
Technology Development Costs | Technology development costs are accounted for pursuant to ASC 350, Intangibles — Goodwill and Other. |
Vehicle Inventory | Vehicle inventory is accounted for pursuant to ASC 330, Inventory |
Valuation Allowance for Accounts Receivable | The Company estimates the allowance for doubtful accounts for accounts receivable by considering a number of factors, including overall credit quality, age of outstanding balances, historical write-off experience and specific account analysis that projects the ultimate collectability of the outstanding balances. Ultimately, actual results could differ from these assumptions. |
Cash and Cash Equivalents | The Company considers all cash accounts and all highly liquid short-term investments purchased with an original maturity of three months or less to be cash or cash equivalents. As of December 31, 2017 and 2016, the Company did not have any investments with maturities greater than three months. |
Property and Equipment, Net | Property and equipment is stated at cost less accumulated depreciation and amortization and consists of capitalized technology development costs, furniture and equipment. Depreciation and amortization is recorded on a straight-line basis over the estimated useful life of the assets. Costs of significant additions, renewals and betterments, are capitalized and depreciated. Maintenance and repairs are charged to expense when incurred. |
Fair Value of Financial Instruments | Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. ASC Topic 820-10-30-2 -Fair Value Measurement Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets. Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. Inputs other than quoted market prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, are Level 2 inputs. Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants. |
Beneficial Conversion Feature | From time to time, the Company has issued convertible notes that have conversion prices that create an embedded beneficial conversion feature pursuant to the guidelines established by the ASC Topic 470-20, Debt with Conversion and Other Options The BCF of a convertible note is measured by allocating a portion of the note’s proceeds to the conversion feature, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. The Company calculates the fair value of the conversion feature embedded in any convertible security using either a) the Black Scholes valuation model, or b) a discount cash flow analysis tested for sensitivity to key Level 3 inputs using Monte Carlo simulation. |
Common Stock Warrants | The Company accounts for common stock warrants in accordance with applicable accounting guidance provided in Accounting Standards Codification (ASC) 815, Derivatives and Hedging – Contracts in Entity’s Own Equity |
Cost of Revenue | Cost of vehicle sales includes the cost to acquire vehicles and the reconditioning and transportation costs associated with preparing the vehicles for resale. Vehicle acquisition costs are driven by the mix of vehicles the Company acquires, the source of those vehicles, and supply and demand dynamics in the vehicle market. Reconditioning costs are billed by third-party providers and include parts, labor, and other repair expenses directly attributable to specific vehicles. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Cost of subscription and other fee revenue includes the (i) various data feeds from third parties; (ii) hosting of the customer facing website; (iii) commissions for new sales; and (iv) implementation and training of new and existing customers. These costs and expenses are charged to Cost of revenue as incurred. |
Selling, General and Administrative Expenses | Selling, general and administrative expenses include costs and expenses for compensation and benefits, advertising to consumers and dealers, development and operating our product procurement and distribution system, managing our logistics system, transportation cost associated with selling vehicles, establishing our dealer partner arrangements, and other corporate overhead expenses, including expenses associated with technology development, legal, accounting, finance, and business development. |
Advertising and Marketing Costs | Advertising and marketing costs are expensed as incurred and are included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Advertising and marketing expenses was $1,731,028 for the year ended December 31, 2017. There were no advertising and marketing costs incurred for the year ended December 31, 2016. |
Stock-based Compensation | On June 30, 2017 the Company’s shareholders approved a Stock Incentive Plan (the “Plan”) under which restricted stock units (“RSUs”) and other equity awards may be granted to employees and non-employee members of the Board of Directors. The Company estimates the fair value of awards granted under the Plan on the date of grant. The fair value of an RSU is based on the average of the high and low market prices of the Company’s Class B Common Stock on the date of grant and is recognized as an expense on a straight-line basis over its vesting period; to date, substantially all the RSUs issued vest over a three-year period utilizing the following vesting schedule: (i) 20% on the first anniversary of the grant date; (ii) 30% on the second anniversary of the grant date; and (iii) 50% on the third anniversary of the grant date. During the year ended December 31, 2017 the Company granted 741,000 RSUs under the Plan to members of the Board of Directors, officers and employees. and is included in selling, general and administrative expenses in the consolidated statements of operations. |
Income Taxes | The Company follows ASC Topic 740, Income Taxes, The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of December 31, 2017, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a fifty percent likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months. |
Recent Pronouncements | Effective in the Current Period. The Company has adopted Accounting Standards Update 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory, Effective in Future Periods In May 2014, the FASB issued an accounting pronouncement (FASB ASU 2014-09) related to revenue recognition. This ASU, along with subsequent ASUs issued to clarify certain provisions and the effective date of ASU 2014-09, provides a single, comprehensive revenue recognition model for all contracts with customers. The standard contains principles that an entity will apply to determine the measurement of revenue and the timing of when it is recognized. The entity will recognize revenue to reflect the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This standard will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. ASU 2014-09 may be adopted using either a full retrospective method, which requires a restatement of prior periods presented, or a modified retrospective method with the cumulative effect of applying the standard recognized at the date of adoption. We will adopt this standard for our fiscal year beginning January 1, 2018. While we continue to assess all potential impacts of this standard, we generally do not expect adoption of the standard to have a material impact on our consolidated financial statements. We primarily sell products and recognize revenue at the point of sale or delivery to customers, at which point the earnings process is deemed to be complete. Our performance obligations are clearly identifiable, and we do not anticipate significant changes to the assessment of such performance obligations or the timing of our revenue recognition upon adoption of the new standard. Our primary business processes are consistent with the principles contained in the ASU, and we do not expect significant changes to those processes, our internal controls or systems. We are still evaluating the impact of the new standard on our financial statement disclosures. In February 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-02) related to the accounting for leases. This pronouncement requires lessees to record most leases on their balance sheet while also disclosing key information about those lease arrangements. Under the new guidance, lease classification as either a finance lease or an operating lease will affect the pattern and classification of expense recognition in the income statement. The classification criteria to distinguish between finance and operating leases are generally consistent with the classification criteria to distinguish between capital and operating leases under existing lease accounting guidance. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. We expect to adopt the new standard for our fiscal year beginning January 1, 2018. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with practical expedients available for election as a package. We do not expect that this standard will have a material effect on our Consolidated balance sheets since we currently do not have a significant number of leases in effect. In May 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-12), which provided narrow scope improvements and practical expedients related to FASB ASU 2014-09, Revenue from Contracts with Customers In August 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-15) related to the classification of certain cash receipts and cash payments on the statement of cash flows. The pronouncement provides clarification guidance on eight specific cash flow presentation issues that have developed due to diversity in practice. The issues include, but are not limited to, debt prepayment or extinguishment costs, settlement of zero-coupon debt, proceeds from the settlement of insurance claims, and cash receipts from payments on beneficial interests in securitization transactions. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2018, and do not expect it to have a material effect on our Consolidated financial statements. In , the FASB issued new guidance, ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the test for Goodwill Impairment with early adoption permitted for annual goodwill impairment tests performed after . The standard must be applied prospectively. Upon adoption, the standard will impact how the Company assesses goodwill for impairment. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions | |
Schedule of purchase price consideration | Preliminary Purchase Price Allocation Cumulative Measurement Period Adjustment Final Purchase Price Allocation Net tangible assets acquired: Technology development 1,400,000 1,500,000 2,900,000 Customer contracts 10,000 (10,000 ) - Non-compete agreements 100,000 (100,000 ) - Tangible assets acquired 1,510,000 1,390,000 2,900,000 Goodwill 3,240,000 (1,390,000 ) 1,850,000 Total purchase price 4,750,000 - 4,750,000 Less: Issuance of shares (2,666,666 ) - (2,666,666 ) Less: Debt issued (1,333,334 ) - (1,333,334 ) Cash paid $ 750,000 $ - $ 750,000 |
Schedule of pro forma information | 2017 2016 Pro forma revenue $ 7,312,428 $ 138,141 Pro forma net loss $ (8,710,513 ) $ (2,450,829 ) Loss per share-basic and fully diluted $ (0.86 ) $ (0.34 ) Weighted average common shares and common stock equivalents outstanding-Basic and fully diluted 10,076,227 7,105,179 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property and equipment | 2017 2016 Vehicles $ 472,870 - Furniture and equipment 149,643 - Technology development 3,406,786 - Total property and equipment 4,029,299 - Less: accumulated depreciation and amortization 668,467 - $ 3,360,832 - |
ACCOUNTS PAYABLE AND OTHER AC24
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable And Accrued Liabilities Tables | |
Schedule of accounts payable and other accrued liabilities | 2017 2016 Accounts payable $ 1,094,310 $ 219,101 Accrued Payroll 79,288 - Other accrued expenses 5,618 - $ 1,179,216 $ 219,101 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
Schedule of notes payable | 2017 2016 Notes payable-NextGen dated February 8, 2017. Interest is payable semi-annually at 6.5% through February 9, 2019 and 8.5% through maturity which is February 8, 2020. $ 1,333,334 $ - Notes payable-private placement dated March 31, 2017. Interest is payable at maturity and accrues at 6.5% through March 31, 2019 and 8.5% through maturity which is March 31, 2020. 667,000 - Convertible note payable-related party dated July 13, 2016. Interest rate of 6.0% which is accrued and paid at maturity. Note matures on July 26, 2026. Note is convertible into common stock, in whole at any time before maturity at the option of the holder at $.75 per share. - 197,358 Line of credit-floor plan dated November 2, 2017. Facility provides up to $2,000,000 of available credit secured by vehicle inventory and other assets. Interest rate at December 31, 2017 was 6.5%. Principal and interest is payable on demand. 1,081,593 - Less: Debt discount (540,924 ) (196,076 ) $ 2,541,003 $ 1,282 Current portion 1,081,593 - Long-term portion $ 1,459,410 $ 1,282 |
COMMON STOCK WARRANTS (Tables)
COMMON STOCK WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Common Stock Warrants Tables | |
Schedule of common stock warrants | Warrants exercise price $ 6.325 Fair value price per share of common stock $ 5.50 Warrants outstanding 218,250 Volatility 62.0 % Expected term remaining (years) 5.0 Risk-free interest rate 1.31 % Dividend yield — |
SELLING, GENERAL AND ADMINIST27
SELLING, GENERAL AND ADMINISTRATIVE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selling General And Administrative | |
Schedule of selling, general and administrative expense | 2017 2016 Selling, General and Administrative Compensation and related costs $ 3,111,363 $ - Advertising and marketing 1,731,028 - Professional fees 890,580 153,668 Technology development 452,957 - General and administrative 1,401,071 57,825 $ 7,586,999 $ 211,493 |
SUPPLEMENTAL CASH FLOW INFORM28
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information | 2017 2016 Cash paid for interest $ 203,578 $ 17,909 Note payable issued on acquisition $ 1,333,334 $ - Conversion of notes payable-related party $ 206,209 $ - Issuance of shares for acquisition $ 2,666,666 $ - |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | 2017 2016 Deferred tax assets: Net operating loss carryforward $ 2,281,369 $ 87,614 Stock-based compensation 131,465 - Total deferred income taxes 2,412,834 87,614 Deferred tax liabilities: Basis difference in property and equipment 114,150 - Basis difference in goodwill 32,190 - Debt discount-private placement 116,840 78,430 Total deferred tax liabilities 263,180 78,430 Net deferred tax asset 2,149,654 9,184 Valuation allowance (2,149,654 ) (87,614 ) Net deferred tax asset (liability) $ - $ (78,430 ) |
Schedule of reconciliation of U.S. federal income | 2017 2016 U.S. Federal statutory rate 34.0% 34.0% Impact of tax reform on net deferred tax assets (13.0) - State and local, net of Federal benefit 5.1% 6.0% Valuation allowance (26.1)% (39.9)% Effective tax rate - 0.01% |
DESCRIPTION OF BUSINESS AND S30
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Advertising and marketing expense | $ 1,731,028 | $ 0 |
Number of shares granted under plan | 741,000 | |
Compensation expense | $ 503,023 | $ 0 |
Unrecognized stock-based compensation expense | $ 2,258,718 | |
Unrecognized stock-based compensation expense remaining weighted-average period | 2 years 6 months |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - NextGen Dealer Solutions, LLC [Member] | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Net tangible assets acquired: | |
Tangible assets acquired | $ 2,900,000 |
Goodwill | 1,850,000 |
Total purchase price | 4,750,000 |
Less: Issuance of shares | (2,666,666) |
Less: Debt issued | (1,333,334) |
Cash paid | 750,000 |
Technology Development [Member] | |
Net tangible assets acquired: | |
Tangible assets acquired | 2,900,000 |
Customer Contracts | |
Net tangible assets acquired: | |
Tangible assets acquired | 0 |
Non-Compete Agreements | |
Net tangible assets acquired: | |
Tangible assets acquired | 0 |
Preliminary Purchase Price Allocation [Member] | |
Net tangible assets acquired: | |
Tangible assets acquired | 1,510,000 |
Goodwill | 3,240,000 |
Total purchase price | 4,750,000 |
Less: Issuance of shares | (2,666,666) |
Less: Debt issued | (1,333,334) |
Cash paid | 750,000 |
Preliminary Purchase Price Allocation [Member] | Technology Development [Member] | |
Net tangible assets acquired: | |
Tangible assets acquired | 1,400,000 |
Preliminary Purchase Price Allocation [Member] | Customer Contracts | |
Net tangible assets acquired: | |
Tangible assets acquired | 10,000 |
Preliminary Purchase Price Allocation [Member] | Non-Compete Agreements | |
Net tangible assets acquired: | |
Tangible assets acquired | 100,000 |
Cumulative Measurement Period Adjustment [Member] | |
Net tangible assets acquired: | |
Tangible assets acquired | 1,390,000 |
Goodwill | (1,390,000) |
Total purchase price | 0 |
Less: Issuance of shares | 0 |
Less: Debt issued | 0 |
Cash paid | 0 |
Cumulative Measurement Period Adjustment [Member] | Technology Development [Member] | |
Net tangible assets acquired: | |
Tangible assets acquired | 1,500,000 |
Cumulative Measurement Period Adjustment [Member] | Customer Contracts | |
Net tangible assets acquired: | |
Tangible assets acquired | (10,000) |
Cumulative Measurement Period Adjustment [Member] | Non-Compete Agreements | |
Net tangible assets acquired: | |
Tangible assets acquired | $ (100,000) |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) - NextGen Dealer Solutions, LLC [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pro forma revenue | $ 7,312,428 | $ 138,141 |
Pro forma net loss | $ (8,710,513) | $ (2,450,829) |
Loss per share - basic and fully diluted | $ (0.86) | $ (0.34) |
Weighted average common shares and common stock equivalents | 10,076,227 | 7,105,179 |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
NextGen Dealer Solutions, LLC [Member] | ||
Depreciation and amortization | $ 61,866 | $ 352,576 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total property and equipment | $ 4,029,299 | $ 0 |
Less: accumulated depreciation and amortization | 668,467 | 0 |
Property and equipment, net | 3,360,832 | 0 |
Vehicles [Member] | ||
Total property and equipment | 472,870 | 0 |
Furniture And Equipment [Member] | ||
Total property and equipment | 149,643 | 0 |
Technology Development [Member] | ||
Total property and equipment | $ 3,406,786 | $ 0 |
PROPERTY AND EQUIPMENT, NET (35
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Capitalized cost technology development costs | $ 3,406,786 | |
Technology development costs | 959,743 | $ 0 |
Technology development costs capitalized | 506,786 | |
Capitalized cost amortization | 588,519 | 0 |
Vehicles [Member] | ||
Depreciation expense | 79,948 | 79,948 |
Furniture And Equipment [Member] | ||
Depreciation expense | $ 475 | $ 475 |
ACCOUNTS PAYABLE AND OTHER AC36
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable And Accrued Liabilities Details | ||
Accounts payable | $ 1,094,310 | $ 219,101 |
Accrued Payroll | 79,288 | 0 |
Other accrued expenses | 5,618 | 0 |
Total accounts payable and accrued liabilities | $ 1,179,216 | $ 219,101 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Less: Debt discount | $ (540,924) | $ (196,076) |
Net Notes payable | 2,541,003 | 1,282 |
Current portion | 1,081,593 | 0 |
Long-term portion | 1,459,410 | 1,282 |
Notes Payable 1 | ||
Gross Notes payable | 1,333,334 | 0 |
Notes Payable 2 | ||
Gross Notes payable | 667,000 | 0 |
Notes Payable 3 | ||
Gross Notes payable | 0 | 197,358 |
Notes Payable 4 | ||
Gross Notes payable | $ 1,081,593 | $ 0 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Interest expense on debt | $ 196,076 | $ 0 |
Amortization debt discount | 276,076 | $ 1,282 |
Note Payable-NextGen [Member] | ||
Interest expense on debt | 76,457 | |
Notes Payable-Private Placement [Member] | ||
Interest expense on debt | $ 158,740 | |
Intrest rate annually | 26.00% | |
Amortization debt discount | $ 126,076 | |
Notes Payable-Senior Secured Promissory Notes [Member] | ||
Interest expense on debt | 161,075 | |
Amortization debt discount | $ 150,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share based compensation expense | $ 503,023 | $ 0 |
Unrecognized stock-based compensation | $ 2,258,718 | |
Average remaining vesting period | 2 years 6 months | |
2017 Stock Incentive Plan [Member] | ||
Number of shares available for issuance | 1,431,424 | |
Class B Common Stock [Member] | ||
Common stock, authorized | 99,000,000 | 99,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, issued | 11,928,541 | 6,400,000 |
Common stock, outstanding | 11,928,541 | 6,400,000 |
Common Stock [Member] | ||
Common stock, authorized | 100,000,000 | |
Common stock, par value | $ 0.001 | |
Common stock, issued | 6,400,000 | |
Common stock, outstanding | 6,400,000 |
COMMON STOCK WARRANTS (Details)
COMMON STOCK WARRANTS (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Common Stock Warrants Details | |
Warrants exercise price | $ 6.325 |
Fair value price per share of common stock | $ 5.50 |
Warrants outstanding | shares | 218,250 |
Volatility | 62.00% |
Expected term remaining (years) | 5 years |
Risk-free interest rate | 1.31% |
Dividend yield | 0.00% |
SELLING, GENERAL AND ADMINIST41
SELLING, GENERAL AND ADMINISTRATIVE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Selling, General and Administrative | ||
Compensation and related costs | $ 3,111,363 | $ 0 |
Advertising and marketing | 1,731,028 | 0 |
Professional fees | 890,580 | 153,668 |
Technology development | 452,957 | 0 |
General and administrative | 1,401,071 | 57,825 |
Total | $ 7,586,999 | $ 211,493 |
SUPPLEMENTAL CASH FLOW INFORM42
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 203,578 | $ 17,909 |
Note payable issued on acquisition | 1,333,334 | 0 |
Conversion of notes payable-related party | 206,209 | 0 |
Issuance of shares for acquisition | $ 2,666,666 | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 2,281,369 | $ 87,614 |
Stock-based compensation | 131,465 | 0 |
Total deferred income taxes | 2,412,834 | 87,614 |
Deferred tax liabilities: | ||
Basis difference in property and equipment | 114,150 | 0 |
Basis difference in goodwill | 32,190 | 0 |
Debt discount-private placement | 116,840 | 78,430 |
Total deferred tax liabilities | 263,180 | 78,430 |
Net deferred tax asset | 2,149,654 | 9,184 |
Valuation allowance | (2,149,654) | (87,614) |
Net deferred tax asset | $ 0 | $ (78,430) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
U.S. Federal statutory rate | 34.00% | 34.00% |
Impact of tax reform on net deferred tax assets | (13.00%) | 0.00% |
State and local, net of Federal benefit | 5.10% | 6.00% |
Valuation allowance | (26.10%) | (39.90%) |
Effective tax rate | 0.00% | 0.01% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 8,740,879 | $ 230,564 |
Valuation allowance on the deferred tax assets | $ 2,149,654 | $ 87,614 |
LOSS PER SHARE (Details Narrati
LOSS PER SHARE (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warrant [Member] | ||
Antidilutive shares excluded from computation | 218,250 | 0 |
Restricted Stock [Member] | ||
Antidilutive shares excluded from computation | 735,000 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pre-owned vehicle sales | $ 7,020,070 | $ 0 |
Cost of revenue | 7,027,793 | 0 |
Accounts receivable | 577,107 | 0 |
Notes payable | 2,541,003 | 1,282 |
Accrued interest | 32,665 | 5,508 |
Amortization debt discount | 276,076 | 1,282 |
Promissory Notes [Member] | ||
Notes payable | 370,556 | |
Accrued interest | 18,147 | |
Interest expense | 158,740 | |
Amortization debt discount | 126,076 | |
Senior Secured Promissory Notes [Member] | ||
Interest expense | 118,121 | |
Amortization debt discount | 110,000 | |
BHLP Note Payable [Member] | ||
Notes payable | 197,358 | |
Accrued interest | $ 5,508 | |
Consulting Agreement [Member] | NextGen Dealer Solutions, LLC [Member] | ||
Selling, general and administrative expenses | 40,000 | |
Services Agreement [Member] | NextGen Dealer Solutions, LLC [Member] | ||
Out-of-pocket expenses | 914,099 | |
Regional Partner Dealer [Member] | ||
Pre-owned vehicle sales | 1,618,958 | |
Cost of revenue | 1,451,712 | |
Accounts receivable | 449,119 | |
Accounts payable | $ 30,000 | |
Regional Partner Dealer [Member] | Revenue [Member] | ||
Concentration risk | 22.10% | |
Regional Partner Dealer [Member] | Cost of Revenue [Member] | ||
Concentration risk | 20.60% |