| Notes Payable | March 31, 2018
December 31, 2017
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 $ 1,333,334
Notes payable-private placement dated March 31, 2017. Interest is payable semi-annually at 6.5% through March 31, 2019 and 8.5% through maturity which is March 31, 2020. 667,000 667,000
Line of credit-floor plan dated February 16, 2018. Facility provides up to $25,000,000 of available credit secured by vehicle inventory and other assets. Interest rate at March 31, 2018 was 6.9%. Principal and interest is payable on demand. 585,072 -
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 (493,810 ) (540,924 )
$ 2,091,596 $ 2,541,003
Current portion 585,072 1,081,593
Long-term portion $ 1,506,524 $ 1,459,410 Note Payable-NextGen On February 8, 2017, in connection with the acquisition
of NextGen, the Company issued a subordinated secured promissory note in favor of NextGen in the amount of $1,333,334 (the “NextGen
Note”). 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, which is February 8, 2020. 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, LLC, a wholly-owned subsidiary of the Company (“NextGen Pro”),
pursuant to an Unconditional Guaranty Agreement (the “Guaranty Agreement”), by and among NextGen and NextGen Pro, and
a related Security Agreement between the parties, each dated as of February 8, 2017. Under the terms of the Guaranty Agreement,
NextGen Pro has agreed to guarantee the performance of all the Company’s obligations under the NextGen Note. Interest expense
on the NextGen Note for the three-months ended March 31, 2018 was $22,320. 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 March 31, 2018 was 26.0%.
Interest expense on the Private Placement Notes for the three-months ended March 31, 2018
was $57,805, which included debt discount amortization of $47,114 for the three-months ended March 31, 2018. Line of Credit-Floor Plans On February 16, 2018, the Company, through its
wholly-owned subsidiary RMBL Missouri, LLC (the “Borrower”), 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 November
2, 2017, the Company through 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 December 31, 2017, the effective rate of interest
was NextGear NextGear NextGear 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. |
