| Notes Payable | Notes payable consisted of the following
as of September 30, 2018 and December 31, 2017:
September 30, 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. Net of debt discount of $391,018 and $540,924 as of September 30, 2018 and December 31, 2017, respectively. 275,982 126,076
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 September 30, 2018 was 6.5%. Principal and interest is payable on demand. 2,829,319 -
Loan Agreement with Hercules Capital Inc. dated April 30, 2018. Interest only at 10.5% and is payable monthly through December 1, 2018. Principal and interest payments commence on January 1, 2019 through maturity which is May 1, 2021. Net of $649,233 of unamortized debt issuance costs. 4,564,819 -
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
$ 9,003,454 $ 2,541,003
Current portion 4,349,746 1,081,593
Long-term portion $ 4,653,708 $ 1,459,410 Note Payable-NextGen On February 8, 2017, in connection with
the acquisition of NextGen, the Company issued the NextGen Note. Interest will be paid semi-annually and accrues (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 such 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”), in favor of NextGen from NextGen Pro, and a related Security Agreement by and among NextGen and NextGen Pro
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. On or about December 31, 2017, NextGen assigned all of its right,
title and interest in the NextGen Note to Halcyon Consulting LLC (“Halcyon”). Interest expense on the NextGen Note
for the three-month and nine-month periods ended September 30, 2018 was $21,845 and $65,772, respectively. Notes Payable-Private Placement On March 31, 2017, the Company completed
funding of the second tranche of a private placement. The investors were issued 1,161,920 shares of Class B Common Stock of the
Company and promissory notes in the amount of $667,000 (the “Private Placement Notes”), 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 the Private
Placement Notes, the Company recorded a debt discount on the Private Promissory Notes of $667,000 with the corresponding amounts
as addition to paid in capital. The debt discount is amortized to interest expense until the scheduled maturity of the Private
Placement Notes in March 2020 using the effective interest method. The effective interest rate at September 67,169 188,867 52,879 149,906 September Line of Credit-Floor Plans On November 2, 2017, the Company, through
RMBL MO, entered into a floor plan line of credit (the “Floor Plan 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 RMBL MO from time to time, pursuant to
that certain Demand Promissory Note and Loan and Security Agreement. Any advance under the Floor Plan 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 6.5%. Advances and interest
under the Floor Plan Line are due and payable upon demand, but, in general, in no event later than 150 days from the date of request
for the advance (or the date of purchase in the case of a universal funding agreement), or of the receivable, as applicable. The
Floor Plan Line was secured by a grant of a security interest in the vehicle inventory and other assets of RMBL MO and payment
was guaranteed by the Company pursuant to a guaranty in favor of the NextGear and its affiliates. On February 20, 2018, the Company
notified NextGear that it was terminating the Floor Plan 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 Floor Plan Line. On February 16, 2018, the Company, through
its wholly-owned subsidiary RMBL MO entered into an Inventory Financing and Security Agreement (the “Credit Facility”)
with Ally 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 RMBL MO from time to time, as part of its floorplan vehicle financing program. Advances under the Credit Facility require that
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, RMBL MO’s obligation to pay
upon demand any outstanding liabilities of the Credit Facility), the Lender may, at its option and without notice to the RMBL MO,
exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to Lender and its affiliates
by RMBL MO and its affiliates. The Credit Facility is secured by a grant of a security interest in the vehicle inventory and other
assets of RMBL MO and payment is guaranteed by the Company pursuant to a guaranty in favor of the Lender and secured by the Company
pursuant to a General Security Agreement. Interest expense on the Credit Facility for the three-month and nine-month periods ended
September 30, 2018 was $18,123 and $27,724, respectively. Loan Agreement-Hercules Capital On April 30, 2018 (the “Closing
Date”), the Company, and its wholly owned subsidiaries (collectively the “Borrowers”), entered into a Loan and
Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. a Maryland Corporation (“Hercules”)
pursuant to which Hercules may provide one or more term loans in an aggregate principal amount of up to $15.0 million (the “Hercules
Loan”). Under the terms of the Loan Agreement, $5.0 million was funded at closing with the balance available in two additional
tranches over the term of the Loan Agreement, subject to certain operating targets and otherwise as set forth in the Loan Agreement.
The Hercules Loan has an initial 36-month maturity and initial 10.5% interest rate. Under the Loan Agreement, on the Closing
Date, the Company issued Hercules a warrant to purchase 81,818 (increasing to 109,091 if a fourth tranche in the principal amount
of up to $5.0 million is advanced at the party’s agreement) shares of the Company’s Class B Common Stock (the “Warrant”)
at an exercise price of $5.50 per share (the “Warrant Price”). The Warrant is immediately exercisable and expires on
April 30, 2023. If at any time before April 30, 2019, the Company makes a New Issuance (as defined below) for no consideration
or for a consideration per share less than the Warrant Price in effect immediately before the New Issuance (a “Dilutive Issuance”)
or the consideration for an issuance is later adjusted downward with certain exceptions as set forth in the Warrant, then the Warrant
Price will be reduced to an amount equal to the lower consideration price or adjusted exercise price or conversion price (the “New
Issuance Price”). If at any time after April 30, 2019, the Company makes a Dilutive Issuance, then the Warrant Price
will be reduced to the amount computed using the following formula: A*[(C+D)/B]. For purposes of this formula, (i) A
represents the Warrant Price in effect immediately before the Dilutive Issuance, (ii) B represents the number of shares of common
stock outstanding immediately after the New Issuance (on a fully-diluted basis), (iii) C represents the number of shares of common
stock outstanding immediately before the New Issuance (on a fully-diluted basis), and (iv) D represents the number of shares of
common stock that would be issuable for total consideration to be received for the New Issuance if the purchaser paid the Warrant
Price in effect immediately prior to the New Issuance. New Issuance shall mean (A) any issuance or sale by the Company of
any class of shares of the Company (including the issuance or sale of any shares owned or held by or for the account of the Company)
other than certain excluded securities as set forth in the Warrant, (B) any issuance or sale by the Company of any options, rights
or warrants to subscribe for any class of shares of the Company other than certain excluded securities as set forth in the Warrant,
or (C) the issuance or sale of any securities convertible into or exchangeable for any class of shares of the Company other than
certain excluded securities as set forth in the Warrant. Advances under the Hercules Loan (“Advances”)
will bear interest at a per annum rate equal to the greater of either (i) the prime rate plus 5.75%, and (ii) 10.25%,
based on a year consisting of 360 days. Advances under the Loan Agreement are due and payable on May 1, 2021, unless Borrowers
achieve certain performance milestones, in which case Advances will be due and payable on November 1, 2021. Upon any event of default, Hercules may,
at its option, exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to Hercules
by Borrowers. In connection with the Loan Agreement, Hercules required the holders of the NextGen Note and the Private Placement
Notes to enter into subordination agreements and required Ally to enter into an intercreditor agreement. The Hercules Loan is secured by a grant
of a security interest in substantially all assets of the Borrowers (the “Collateral”), except the Collateral does
not include (a) certain outstanding equity of Borrowers’ foreign subsidiaries, if any, or (b) nonassignable licenses or contracts
of Borrowers, if any. The effective interest rate at September 30, 2018 was 22.0%. Interest expense on the Hercules Loan for the
three-month and nine-month periods ended September 30, 2018 was $ 226,311 and $375,427,
respectively 88,950 146,607 September |
