Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 26, 2021 | Jun. 30, 2020 | |
Entity Registrant Name | RumbleON, Inc. | ||
Entity Central Index Key | 0001596961 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 001-38248 | ||
Entity Public Float | $ 17,500,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 2,286,404 | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 50,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Current assets: | |||
Cash | $ 1,466,831 | $ 49,660 | |
Restricted cash | [1] | 2,049,056 | 6,676,622 |
Accounts receivable, net | 9,407,960 | 8,482,707 | |
Inventory | 21,360,441 | 57,381,281 | |
Prepaid expense and other current assets | 3,446,225 | 1,210,474 | |
Total current assets | 37,730,513 | 73,800,744 | |
Property and equipment, net | 6,521,446 | 6,427,674 | |
Right-of-use assets | 5,689,637 | 6,040,287 | |
Goodwill | 26,886,563 | 26,886,563 | |
Other assets | 151,076 | 237,823 | |
Total assets | 76,979,235 | 113,393,091 | |
Current liabilities: | |||
Accounts payable and accrued liabilities | 12,707,448 | 12,421,094 | |
Accrued interest payable | 1,485,854 | 749,305 | |
Current portion of convertible debt | 562,502 | 1,363,590 | |
Current portion of long-term debt | 20,688,651 | 59,160,970 | |
Total current liabilities | 35,444,455 | 73,694,959 | |
Long term liabilities: | |||
Notes payable | 4,691,181 | 1,924,733 | |
Convertible debt | 27,166,019 | 20,136,229 | |
Derivative liabilities | 16,694 | 27,500 | |
Operating lease liabilities and other long-term liabilities | 5,090,221 | 4,722,101 | |
Total long term liabilities | 36,964,115 | 26,810,563 | |
Total liabilities | 72,408,570 | 100,505,522 | |
Commitments and contingencies (Notes 4, 7, 8, 9, 13, 16) | |||
Stockholders' equity: | |||
Class B Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 and 0 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 0 | 0 | |
Common stock | |||
Additional paid in capital | 108,949,204 | 92,268,213 | |
Accumulated deficit | (104,380,781) | (79,381,806) | |
Total stockholders' equity | 4,570,665 | 12,887,569 | |
Total liabilities and stockholders' equity | 76,979,235 | 113,393,091 | |
Class A Common Stock | |||
Stockholders' equity: | |||
Common stock | 50 | 50 | |
Class B Common Stock | |||
Stockholders' equity: | |||
Common stock | $ 2,192 | $ 1,112 | |
[1] | Amounts included in restricted cash represent the deposits required under the Company's short-term revolving facilities |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Class B preferred stock, par value | $ 0.001 | $ 0.001 |
Class B preferred stock, authorized | 10,000,000 | 10,000,000 |
Class B preferred stock, issued | 0 | 0 |
Class B preferred stock, outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 50,000 | 50,000 |
Common stock, issued | 50,000 | 50,000 |
Common stock, outstanding | 50,000 | 50,000 |
Class B Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 4,950,000 | 4,950,000 |
Common stock, issued | 2,191,633 | 1,111,681 |
Common stock, outstanding | 2,191,633 | 1,111,681 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | ||
Revenue | $ 416,427,243 | $ 840,629,347 |
Cost of revenue | 384,799,844 | 790,011,371 |
Gross profit | 31,627,399 | 50,617,976 |
Selling, general and administrative | 53,659,348 | 86,624,249 |
Insurance recovery proceeds | (5,615,268) | 0 |
Depreciation and amortization | 2,142,939 | 1,786,426 |
Operating loss | (18,559,620) | (37,792,699) |
Interest expense | (6,638,325) | (7,187,604) |
Decrease in derivative liability | 10,806 | 1,302,500 |
Loss on early extinguishment of debt | 188,164 | (1,499,250) |
Net loss before benefit for income taxes | (24,998,975) | (45,177,053) |
Benefit for income taxes | 0 | 0 |
Net loss | $ (24,998,975) | $ (45,177,053) |
Weighted average number of common shares outstanding - basic and fully diluted | 2,184,441 | 1,114,714 |
Net loss per share - basic and fully diluted | $ (11.44) | $ (40.53) |
Powersports | ||
Revenue: | ||
Revenue | $ 46,653,668 | $ 101,008,976 |
Cost of revenue | 40,060,571 | 88,673,515 |
Automotive | ||
Revenue: | ||
Revenue | 337,084,959 | 717,042,511 |
Cost of revenue | 308,800,631 | 685,313,894 |
Transportation and Vehicle Logistics | ||
Revenue: | ||
Revenue | 31,816,157 | 22,577,860 |
Cost of revenue | 24,200,229 | 16,023,962 |
Other | ||
Revenue: | ||
Revenue | 872,459 | 0 |
Cost of revenue | 0 | 0 |
Impairment loss on automotive industry | ||
Revenue: | ||
Revenue | 0 | 0 |
Cost of revenue | $ 11,738,413 | $ 0 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 1,317,329 | 50,000 | 874,315 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 1,317 | $ 50 | $ 874 | $ 65,016,379 | $ (34,201,114) | $ 30,817,506 |
Cumulative effect of accounting change (see Note 1) | (3,639) | (3,639) | ||||
Equity component of convertible senior notes, net of issuance costs | 7,745,625 | 7,745,625 | ||||
Issuance of common stock, shares | 158,825 | |||||
Issuance of common stock, amount | $ 159 | 15,173,268 | 15,173,427 | |||
Issuance of common stock for restricted stock units exercise, shares | 12,675 | |||||
Issuance of common stock for restricted stock units exercise, amount | $ 13 | (13) | 0 | |||
Beneficial conversion feature on convertible notes | 495,185 | 495,185 | ||||
Conversion of preferred shares to common stock, shares | (1,317,329) | 65,886 | ||||
Conversion of preferred shares to common stock, amount | $ (1,317) | $ 66 | 1,251 | 0 | ||
Stock-based compensation | 3,836,518 | 3,836,518 | ||||
Issuance of preferred stock in connection with acquisition, amount | 0 | |||||
Net loss | (45,177,053) | (45,177,053) | ||||
Ending balance, shares at Dec. 31, 2019 | 0 | 50,000 | 1,111,681 | |||
Ending balance, amount at Dec. 31, 2019 | $ 0 | $ 50 | $ 1,112 | 92,268,213 | (79,381,806) | 12,887,569 |
Issuance of common stock, shares | 1,035,000 | |||||
Issuance of common stock, amount | $ 1,035 | 10,779,045 | 10,780,080 | |||
Issuance of common stock for restricted stock units exercise, shares | 37,821 | |||||
Issuance of common stock for restricted stock units exercise, amount | $ 38 | (38) | 0 | |||
Adjustment for fractional shares in reverse stock split, shares | 7,131 | |||||
Adjustment for fractional shares in reverse stock split, amount | $ 7 | (7) | 0 | |||
Convertible note exchange | 2,923,755 | 2,923,755 | ||||
Stock-based compensation | 2,978,236 | 2,978,236 | ||||
Net loss | (24,998,975) | (24,998,975) | ||||
Ending balance, shares at Dec. 31, 2020 | 0 | 50,000 | 2,191,633 | |||
Ending balance, amount at Dec. 31, 2020 | $ 0 | $ 50 | $ 2,192 | $ 108,949,204 | $ (104,380,781) | $ 4,570,665 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (24,998,975) | $ (45,177,053) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,142,939 | 1,786,426 |
Amortization of debt discount | 2,027,046 | 1,664,000 |
Bad debt expense | 310,721 | 1,123,739 |
Stock based compensation expense | 2,978,236 | 3,836,518 |
Impairment loss on inventory | 11,738,413 | 0 |
Impairment loss on property and equipment | 177,626 | 0 |
Gain from change in value of derivatives | (10,806) | (1,302,500) |
Loss from extinguishment of debt | (188,164) | 1,499,250 |
Goodwill impairment | 0 | 1,850,000 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | (1,235,974) | 2,037,023 |
(Increase) decrease in inventory | 24,282,427 | (2,327,754) |
(Increase) decrease in prepaid expenses and other current assets | (2,235,751) | (113,529) |
(Increase) decrease in other assets | 86,747 | (135,645) |
Decrease in other liabilities | 720,067 | 0 |
(Decrease) increase in accounts payable and accrued liabilities | 152,126 | (5,031,073) |
Increase in accrued interest payable | 1,196,549 | 543,268 |
Net cash used in operating activities | 17,143,227 | (39,747,330) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Net cash used for acquisitions | 0 | (835,000) |
Proceeds from sales of property and equipment | 38,436 | 169,268 |
Technology development | (2,145,055) | (3,085,743) |
Purchase of property and equipment | (174,786) | (119,748) |
Net cash used in investing activities | (2,281,405) | (3,871,223) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable and convertible debt | 8,272,375 | 27,455,537 |
Repayments for notes payable | (1,767,758) | (10,857,500) |
Net proceeds from (payments on) lines of credit | (40,533,759) | 2,788,469 |
Proceeds from PPP Loan | 5,176,845 | 0 |
Proceeds from sale of common stock | 10,780,080 | 15,173,427 |
Net cash provided by financing activities | (18,072,217) | 34,559,933 |
NET CHANGE IN CASH | (3,210,395) | (9,058,620) |
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD | 6,726,282 | 15,784,902 |
CASH AND RESTRICTED CASH AT END OF PERIOD | $ 3,515,887 | $ 6,726,282 |
DESCRIPTION OF BUSINESS AND SIG
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
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 In July 2016, Berrard Holdings Limited Partnership ("Berrard Holdings") acquired 99.5% of the common stock of the Company from the principal stockholder. Shortly after the Berrard Holdings common stock purchase, the Company began exploring the development of a capital light e-commerce platform facilitating the ability of both consumers and dealers to Buy-Sell-Trade-Finance pre-owned vehicles in one online location and in April 2017, the Company launched its platform. The Company's goal was to transform the way pre-owned vehicles are bought and sold by providing users with the most efficient, timely and transparent transaction experience. While the Company's initial customer facing emphasis through most of 2018 was on motorcycles and other powersports, the Company continues to enhance its platform to accommodate nearly any VIN-specific vehicle including motorcycles, ATVs, boats, RVs, cars and trucks, and via its acquisition of Wholesale, Inc. in October 2018, the Company wanted to make a concerted effort to grow its cars and light truck categories. On October 26, 2018, the Company entered into an Agreement and Plan of Merger (as amended, the "Merger Agreement") with the Company's newly-formed acquisition subsidiary RMBL Tennessee, LLC, a Delaware limited liability company ("Merger Sub"), Wholesale Holdings, Inc., a Tennessee corporation ("Holdings"), Wholesale, LLC, a Tennessee limited liability company ("Wholesale"), Steven Brewster and Janelle Brewster (each a "Stockholder," and together the "Stockholders"), Steven Brewster, a Tennessee resident, as the representative of each Stockholder (the "Representative"), and Marshall Chesrown and Steven R. Berrard, providing for the merger of Holdings with and into Merger Sub, with Merger Sub surviving the merger as a wholly-owned subsidiary of the Company (the "Wholesale Transaction"). On October 29, 2018, the Company entered into an Amendment to the Merger Agreement making a technical correction to the definition of "Parent Consideration Shares" contained in the Merger Agreement. Also, on October 26, 2018, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), by and among the Company, Steven Brewster and Justin Becker (together the "Express Sellers"), and Steven Brewster as representative of the Express Sellers, pursuant to which the Company acquired all of the membership interests (the "Express Transaction," and together with the Wholesale Transaction, the "Transactions") in Wholesale Express, LLC, a Tennessee limited liability company ("Wholesale Express"). The Transactions were both completed on October 30, 2018 (the "Acquisition Date"). As consideration for the Wholesale Transaction, the Company (i) paid cash consideration of $12,353,941, subject to certain customary post-closing adjustments, and (ii) issued to the Stockholders 1,317,329 shares (the "Stock Consideration") of the Company's Series B Non-Voting Convertible Preferred Stock, par value $0.001 (the "Series B Preferred"). As consideration for the Express Transaction, the Company paid cash consideration of $4,000,000, subject to certain customary post-closing adjustments. Wholesale Inc. is one of the largest independent distributors of pre-owned vehicles in the United States and Wholesale Express, LLC is a related logistics company. On February 3, 2019, the Company completed the acquisition (the "Autosport Acquisition") of all of the equity interests of Autosport USA, Inc. ("Autosport"), an independent pre-owned vehicle distributor, pursuant to a Stock Purchase Agreement, dated February 1, 2019 (the "Stock Purchase Agreement"), by and among RMBL Express, LLC (the "Buyer"), a wholly owned subsidiary of Company, Scott Bennie (the "Seller") and Autosport. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) a fifteen-month $500,000 promissory note (the "Promissory Note") in favor of the Seller, plus (iii) a three-year $1,536,000 convertible promissory note (the "Convertible Note") in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock (the "Earn-Out Shares") for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed additional debt of $257,933 pursuant to a promissory note payable to Seller (the "Second Convertible Note"). Serving both consumers and dealers, through its online marketplace platform, the Company makes cash offers for the purchase of pre-owned vehicles. In addition, the Company offers a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. The Company's operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with both dealers and regional partners, which are primarily auctions. The Company utilizes regional partners in the acquisition of pre-owned vehicles to provide inspection, reconditioning and distribution services. These regional partners earn incremental revenue and enhance profitability through fees from inspection, reconditioning and distribution programs. Our business model is driven by our proprietary technology platform. Our initial platform was acquired in February 2017, through our acquisition of substantially all of the assets of NextGen Dealer Solutions, LLC ("NextGen"). Since that time, we have expanded the functionality of that platform through a significant number of high-quality technology development projects and initiatives. Included in these new technology development projects and initiatives are modules or significant upgrades to the existing platforms for: (i) Retail and dealer online auctions; (ii) native IOS and Android apps; (iii) new architecture on website design and functionality; (iv) RumbleOn Marketplace; (v) redesigned cash offer tool;(vi) deal-jacket tracking tool; (vii) inventory tracking tool; (viii) CRM and multiple third-party integrations; (ix) new analytics and machine learning initiatives; and (x) IT monitoring infrastructure. The rapid spread of COVID-19 since March 2020 has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns. These measures have impacted and may further impact all or portions of our workforce and operations, the behavior of our customers, and the operations of our partners, vendors, and suppliers. While the federal and state governments have taken measures to try to contain the COVID-19 pandemic, there is considerable uncertainty regarding such measures and potential future measures. The COVID-19 situation has created an unprecedented and challenging time for our Company. Our current focus is on positioning the Company for a strong recovery when this crisis is over. During 2020 we took steps to reduce our inventory and align our operating expenses to the state of the business. We plan to continue to operate as permitted to support our customers’ needs for reliable vehicles and to provide as many jobs as possible for our associates; however, in April 2020 we laid-off 169 associates. Future restrictions on our access to and utilization of our logistics and distribution network, our corporate offices, the inspection and reconditioning centers of our partners, and/or our support operations or workforce, or similar limitations for our partners, vendors, or suppliers, and restrictions or disruptions of transportation, could further limit our ability to conduct our business and have a material adverse effect on our business, operating results, financial condition and prospects. There is no certainty that measures taken by governmental authorities will be sufficient to mitigate the risks posed by the COVID-19 pandemic, and our ability to perform critical functions could be harmed. The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations, financial condition, and liquidity will depend on the success of the roll out of the vaccines and the efficacy of the vaccines and other future developments, which are highly uncertain and cannot be predicted. Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future. Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All of the Company’s subsidiaries are wholly owned. All intercompany accounts and material intercompany transactions have been eliminated. Liquidity The accompanying consolidated financial statements of the Company have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. The Company has incurred losses from inception through December 31, 2020 and may incur additional losses in the future. As the Company continues to expand its business, build its brand name and awareness and continues technology and software development efforts, it may need access to additional capital. Historically, the Company has raised additional equity or debt instruments to fund the expansion; refer to Note 8 - NOTES PAYABLE and Note 9 - STOCKHOLDER'S EQUITY. Management believes that current working capital, availability of equity under its current shelf registration statement, results of operations, and expected continued inventory financing are sufficient to fund operations for at least one year from the financial statement issuance date. The worldwide spread of the COVID-19 outbreak has resulted in a global slowdown of economic activity which decreased demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the outbreak is contained. This is impacting the Company's business and the powersport, automotive and transport industries as a whole. The Company has positioned its business today to be lean and flexible in this period of lower demand and higher uncertainty with the goal of preparing the Company for a strong recovery as the crisis is contained. The Company believes its online business model allows it to quickly respond to market demand or changes in the businesses it operates as the COVID-19 pandemic continues. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management's experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates. In particular, the novel COVID-19 pandemic and the resulting adverse impacts to global economic conditions, as well as the Company's operations, may impact future estimates including, but not limited to inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions. Loss Per Share The Company follows the FASB Accounting Standards Codification ("ASC") Topic 260-Earnings per share. Basic earnings per common share ("EPS") calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. Common share and dilutive common share equivalents include: (i) Class A common: (ii) Class B common; (iii) Class B participating preferred shares; (iv) restrictive stock units; (v) stock options; (vi) warrants to acquire Class B common stock; and (vii) shares issued in connection with convertible debt. Revenue Recognition Revenue for our powersports and automotive segments is derived from our online marketplace and auctions and primarily includes the sale of pre-owned vehicles to consumer and dealers. Revenue from our vehicle logistics and transportation service segment is derived by providing automotive transportation services between dealerships and auctions throughout the United States. We adopted ASC 606, Revenue from Contracts with Customers For vehicles sold at wholesale to dealers we satisfy our performance obligation when the wholesale purchaser obtains control of the underlying vehicle, which is upon delivery when the transfer of title, risks and rewards of ownership and control pass to the dealer. We recognize revenue at the amount we expect to receive for the used vehicle, which is the fixed price determined at the auction. The purchase price of the wholesale vehicle is typically due and collected within 30 days of delivery of the wholesale vehicle. For vehicles sold to consumers the purchase price is set forth in the customer contracts at a stand-alone selling price which is agreed upon prior to delivery. We satisfy our performance obligation for used vehicle sales upon delivery when the transfer of title, risks and rewards of ownership and control pass to the customer. We recognize revenue at the agreed upon purchase price stated in the contract, including any delivery charges, less an estimate for returns. Our return policy allows customers to initiate a return during the first three days after delivery. Estimates for returns are based on an analysis of historical experience, trends and sales data. Changes in these estimates are reflected as an adjustment to revenue in the period identified. The amount of consideration received for used vehicle sales to consumers includes noncash consideration representing the value of trade-in vehicles, if applicable, as stated in the contract. Prior to the delivery of the vehicle, the payment is received, or financing has been arranged. Payments from customers that finance their purchases with third parties are typically due and collected within 30 days of delivery of the used vehicle. In future periods additional provisions may be necessary due to a variety of factors, including changing customer return patterns due to the maturation of the online vehicle buying market, macro- and micro-economic factors that could influence customer return behavior and future pricing environments. If these factors result in adjustments to sales returns, they could significantly impact our future operating results. Revenue exclude any sales taxes, title and registration fees, and other government fees that are collected from customers. Vehicle logistics and transportation services revenue is generated primarily by entering into freight brokerage The transaction price is based on the consideration specified in the customer's contract. A performance obligation is created when the customer under a transportation contract submits a bill of lading for the transport of goods from origin to destination. These performance obligations are satisfied as the shipments move from origin to destination. freight brokerage Performance obligations are short-term, with transit days less than one week. Generally, customers are billed either upon shipment of the vehicle or on a monthly basis, and remit payment according to approved payment terms, generally not to exceed 30 days. 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. During the year ended December 31, 2019, the Company finalized the preliminary purchase price allocation recorded at the acquisition date for Wholesale Express and made a measurement period adjustment to the preliminary purchase price allocation which resulted in a decrease in goodwill of $334,861. The Company made this measurement period adjustment to reflect facts and circumstances related to accounts receivable and accounts payable that existed as of the acquisition date and did not result from intervening events subsequent to such date. Goodwill Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed in business combinations. Goodwill is tested for impairment annually as of December 31, or whenever events or changes in circumstances indicate that an impairment may exist. We have three reportable segments as defined in generally accepted accounting principles for segment reporting: (1) powersports, (2) automotive and (3) vehicle logistics and transportation. Due to the significant decline in the Company’s stock price and the economic effect of COVID-19, the Company determined a triggering event for Goodwill impairment existed as of March 31, 2020. As a result, the Company performed a quantitative impairment analysis for the Automotive segment. The Company’s impairment test indicated no impairment existed as the estimated fair value of the reporting unit exceeded its carrying value at March 31, 2020. In connection with its annual goodwill impairment test as of December 31, 2020, the Company performed impairment assessments by reviewing qualitative factors for each of its reporting units. The results of the assessments indicated that it was not more likely than not that the fair value of the reporting units were less than the carrying values and no goodwill impairment was determined to exist for the years ended December 31, 2020. In connection with its annual goodwill impairment test as of December 31, 2019 for the three reportable segments we performed quantitative impairment testing of the fair value of our reporting units using an income and market valuation approach. The income valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. We also validated the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed in the industry. As part of that assessment, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, profit margins, residual values and the cost of capital. For the year ended December 31, 2019, we recognized an impairment loss on goodwill of $1,850,000 related to powersports, which is recorded in selling, general and administrative expenses in the Consolidated Statement of Operations. No goodwill impairment resulted from the quantitative impairments tests of the remaining reporting units as of December 31, 2019. Leases Effective January 1, 2019, the Company adopted ASC 842, Leases. In accordance with ASC 842, the Company first determines if an arrangement contains a lease and the classification of that lease, if applicable, at inception. This standard requires the recognition of right-of-use ("ROU") assets and lease liabilities for the Company's operating leases. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. The Company has also elected not to recognize a lease liability or ROU asset for leases with a term of 12 months or less and recognize lease payments for those short-term leases on a straight-line basis over the lease term in the Consolidated Statements of Operations. Operating leases are included in Right-of-use assets, Accounts payable and accrued liabilities and Operating lease liabilities, long-term portion in the Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the Company's leases is generally not determinable and therefore the incremental borrowing rate at the lease commencement date is utilized to determine the present value of lease payments. The determination of the incremental borrowing rate requires judgment. Management determines the incremental borrowing rate for each lease using the Company's estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The ROU asset also includes any lease prepayments, offset by lease incentives. Certain of the Company's leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when the Company is reasonably certain that the option will be exercised. An option to terminate is considered unless the Company is reasonably certain the option will not be exercised. 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. There was no impairment of indefinite lived assets as of December 31, 2020 and 2019. 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. For the year ended December 31, 2020, the Company recorded an impairment loss on property and equipment of $177,626 due to the Nashville Tornado. No impairment charges on property and equipment were recorded during the year ended December 31, 2019. See Note 5 — Property and Equipment, Net for additional information on property and equipment. 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 Accounts Receivable, Net Accounts receivable, net of an allowance for doubtful accounts, includes certain amounts due from customers. 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, 2020, and 2019, the Company did not have any investments with maturities greater than three months. At times, the Company has cash balances in domestic bank accounts that exceed Federal Deposit Insurance Corporation limits. The Company has not experienced any losses related to these cash concentrations. Restricted Cash In connection with the execution of the Inventory Financing and Security Agreement (the "Credit Facility") by and among the Company's subsidiary, RMBL Missouri, LLC ("RMBL MO"), Ally Bank ("Ally") and Ally Financial, Inc., dated February 16, 2018 the parties entered into a Credit Balance Agreement, and so long as the Company owes any debt to Ally or until the bank otherwise consents, the Company agreed to maintain a Credit Balance at Ally of 1) at least 10.0% of the amount of the Company's approved and available credit line under the Credit Facility and 2) no greater than 25.0% of the total principal amount owed to Ally for inventory financed under the Credit Facility. The Credit Facility ended in February 2020. In connection with the inventory financing contract (the "NextGear Facility"), entered into by the Company, its wholly owned subsidiary RMBL Tennessee, Inc, Wholesale, Inc. and NextGear Capital, Inc. ("NextGear"), dated October 30, 2018, Wholesale, as borrower, entered into a $70,000,000 floorplan vehicle financing credit line (the "NextGear Credit Line") with NextGear Capital, Inc. ("NextGear"). During the quarter ended September 30, 2020 the Company and NextGear agreed to reduce the credit line to $55,000,000 with Wholesale and Autosport limiting the aggregate amount of advances under the credit line to $20,000,000 through June 30, 2021, at which time the credit line will be repaid in full. Advances under the NextGear Credit Line require Wholesale to maintain at least $2,000,000 cash collateral in a reserve account in favor of NextGear, which amount is subject to change in NextGear's sole discretion. Upon the satisfaction of all obligations and the termination by NextGear of the NextGear Facility, NextGear will return to Wholesale, Inc., upon its written request to NextGear no earlier than ten (10 business days from the date the obligations were indefeasibly paid and satisfied in full and the NextGear Facility and terminated by Lender. 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, 2020 and December 31, 2019. 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. Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815, Derivatives and Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20; Debt with Conversion and Other Options. Under the ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer's economic interest cost. The effect of ASC 470-20 on the accounting for our convertible debt instruments is that the equity component is required to be included in the additional paid-in capital section of stockholders' equity on the consolidated balance sheets and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component of the notes. As a result, we are required to record non-cash interest expense as a result of the amortization of the discounted carrying value of the convertible debt to their face amount over the term of the convertible debt. 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. The Beneficial Conversion Feature ("BCF") of a convertible security is normally characterized as the convertible portion or feature of certain securities that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible security when issued and also records the estimated fair value of any conversion feature issued with those securities. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. 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) an open-form binomial option pricing model (“lattice model”) that |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE, NET | Accounts receivable consists of the following as of December 31, 2020 2019 Trade $ 8,859,237 $ 9,369,733 Finance 2,117,809 147,893 10,977,046 9,517,626 Less: allowance for doubtful accounts 1,569,086 1,034,919 $ 9,407,960 $ 8,482,707 |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | Inventory consists of the following as of December 31, 2020 2019 Pre-owned vehicles: Powersport vehicles $ 1,869,830 $ 10,365,050 Automobiles and trucks 19,592,896 47,599,433 21,462,726 57,964,483 Less: Reserve 102,285 583,202 $ 21,360,441 $ 57,381,281 |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | On February 3, 2019, the Company completed the Autosport Acquisition pursuant to the Stock Purchase Agreement, by and among the Buyer, the Seller and Autosport. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) the Promissory Note in favor of the Seller, plus (iii) the Convertible Note in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed debt of $257,933 pursuant to the Second Convertible Note. The fair value of the contingent earn-out payment was considered immaterial at the date of acquisition and was excluded from the purchase price allocation. As of December 31, 2020, there have been no payments earned under the performance threshold. See Note 1 – Description of Business and Significant Accounting Policies for additional information on the Autosport Acquisition. The following table summarizes the final allocation of the purchase price based on the estimated fair value of the acquired assets and assumed liabilities of Autosport as of December 31, 2019. Purchase price consideration: Cash $ 835,000 $1,536,000 convertible note 1,536,000 $500,000 promissory note 500,000 $257,933 Promissory note 257,933 Total purchase price consideration $ 3,128,933 Estimated fair value of assets: Accounts receivable 3,177,660 Inventory 2,862,004 6,039,664 Estimated fair value of accounts payable and other 5,875,009 Excess of assets over liabilities 164,655 Goodwill 2,964,278 Total net assets acquired $ 3,128,933 Supplemental pro forma unaudited information (unaudited) There were no acquisitions in 2020. Pro forma adjustments for the year ended December 31, 2019 related to the Autosport Acquisition primarily include adjustments to reflect the: (i) amortization of stock compensation expense of $ 18,351 Year Ended December 31, Unaudited 2019 Pro forma revenue $ 846,947,956 Pro forma net loss $ (45,296,568 ) Loss per share - basic and fully diluted $ (40.37 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 1,122,058 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Vehicles $ 240,603 $ 158,327 Furniture and equipment 191,047 448,074 Technology development and software 11,008,302 8,863,247 Leasehold improvements 321,082 246,135 Total property and equipment 11,761,035 9,715,783 Less: accumulated depreciation and amortization 5,239,589 3,288,109 Total $ 6,521,446 $ 6,427,674 Amortization and depreciation on Property and Equipment is determined on a straight-line basis over the estimated useful lives ranging from 3 to 5 years. On December 31, 2020, capitalized technology development costs were $ 10,800,292 2,900,000 3,529,743 1,384,688, 2,142,939 5,494,082 3,085,743 2,408,338 1,786,426 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | Following is a summary of the changes in the carrying amount of goodwill and other indefinite-lived asset during the years ended December 31, 2020 and 2019. Goodwill Indefinite Lived Intangible Assets Balance at December 31, 2018 $ 26,107,146 $ 45,515 Acquisitions 2,964,278 - Impairment (1,850,000 ) - Measurement period adjustment (334,861 ) - Balance at December 31, 2019 26,886,563 45,515 Acquisitions - - Impairment - - Balance at December 31, 2020 $ 26,886,563 $ 45,515 The following is a summary of the changes in the carrying amount of goodwill by reportable segment during the years ended December 31, 2020 and 2019. Powersports Automotive Vehicle Logistics Total Balance at December 31, 2018 $ 1,850,000 $ 23,074,775 $ 1,182,371 $ 26,107,146 Acquisitions - 2,964,278 - 2,964,278 Impairment (1,850,000 ) - - (1,850,000 ) Measurement period adjustment - - (334,861 ) (334,861 ) Balance at December 31, 2019 - 26,039,053 847,510 26,886,563 Acquisitions - - - - Impairment - - - - Balance at December 31, 2020 $ - $ 26,039,053 $ 847,510 $ 26,886,563 We test for impairment of our intangible assets at least annually. During the year ended December 31, 2020, we did not recognize any impairment loss on goodwill. During the year ended December 31, 2019, we recognized an impairment loss on goodwill of $1,850,000 related to powersports, which is recorded in selling, general and administrative expenses in the Consolidated Statement of Operations. During the quarter ended September 30, 2019, the Company finalized the preliminary purchase price allocation recorded at the acquisition date for Wholesale Express and made a measurement period adjustment to the preliminary purchase price allocation which resulted in a decrease in goodwill of $334,861. The Company made this measurement period adjustment to reflect facts and circumstances related to accounts receivable and accounts payable that existed as of the acquisition date and did not result from intervening events subsequent to such date. |
ACCOUNTS PAYABLE AND OTHER ACCR
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES | The following table summarizes accounts payable and other accrued liabilities as of December 31, 2020 and 2019: 2020 2019 Accounts payable $ 8,167,957 $ 8,730,624 Operating lease liability-current portion 1,630,002 1,423,610 Accrued payroll 1,079,771 715,658 State and local taxes 856,341 912,062 Other accrued expenses 973,377 639,140 Total $ 12,707,448 $ 12,421,094 |
NOTES PAYABLE AND LINES OF CRED
NOTES PAYABLE AND LINES OF CREDIT | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND LINES OF CREDIT | Notes payable consisted of the following as of December 31, 2020 2019 Notes payable-NextGen dated February 8, 2017. Interest is payable semi-annually at 6.5% through February 9, 2019 and 8.5% through February 10, 2020 and 10.0% thereafter through maturity, which is January 31, 2021. $ 833,334 $ 1,333,334 Notes payable-private placement dated March 31, 2017. Interest is payable semi-annually at 8.5% through March 31, 2020 and 10.0% thereafter through maturity which is June 30, 2021. Unamortized debt discount was $0 and $75,601 as of December 31, 2020 and December 31, 2019, respectively. 669,175 667,000 Line of credit-floor plan Ally dated February 16, 2018. Facility provides up to $25,000,000 of available credit secured by vehicle inventory and other assets. Interest rate at December 31, 2019 was 7.05%. Principal and interest are payable on demand. - 8,419,897 Line of credit-floor plan NextGear dated October 30, 2018. Secured by vehicle inventory and other assets. Interest rate at December 31, 2020 was 4.75%. Principal and interest is payable on demand. 17,811,626 50,741,073 Revolving Line of Credit note secured by the loans and other assets of RumbleOn Finance, LLC. Interest rate at December 31, 2020 was 7.25% 888,852 - PPP Loans dated May 1, 2020. Payments of principal and interest were deferred until September 1, 2021, at which time the Company will make equal payments of principal and interest through maturity, which is April 1, 2025. 5,176,845 - Less: Debt discount - (75,601 ) Total notes payable and lines of credit 25,379,832 61,085,703 Less: Current portion 20,688,651 59,160,970 Long-term portion $ 4,691,181 $ 1,924,733 As of December 31, 2020, future principal debt payments are due as follows: 2021 $ 485,664 2022 1,391,145 2023 1,405,367 2024 1,419,732 2025 474,936 Total debt payments $ 5,176,845 Line of Credit-Floor Plan-NextGear On October 30, 2018, Wholesale, as borrower, entered into a floorplan vehicle financing credit line (the "NextGear Credit Line") with NextGear. As of the date of this filing, based on on-going discussions with NextGear, we will limit our advances under the NextGear Credit Line for Wholesale and Autosport to $55,000,000 with Wholesale and Autosport limiting the aggregate amount of advances under the credit line to $20,000,000 through June 30, 2021, at which time the credit line will be repaid in full Interest expense on the line of credit-floor plan for the years ended December 31, 2020 and 2019, was $1,634,802 and $2,697,591, respectively. Line of Credit-Floor Plan-Ally On February 16, 2018, the Company, through its wholly owned subsidiary RMBL MO entered into an Inventory Financing and Security Agreement (the "Credit Facility") with Ally and Ally Financial, Inc., a Delaware corporation ("Ally" together with Ally Bank, the "Lender"), pursuant to which the Lender could provide up to $25,000,000 in financing, or such lesser sum which may be advanced to or on behalf of RMBL MO from time to time, as part of its floorplan vehicle financing program. Advances under the Credit Facility required that the Company maintain 10.0% of the advance amount as restricted cash. Advances under the Credit Facility bore interest at a per annum rate designated from time to time by the Lender and were determined using a 365/360 simple interest method of calculation, unless expressly prohibited by law. Interest expense on the Credit Facility for the years ended December 31, 2020 and 2019 was $77,266 and $541,702, respectively. The Ally Line of Credit ended in February 2020. Loan Agreement-Hercules Capital Inc. On May 14, 2019, the Company made a payment to Hercules Capital Inc. ("Hercules") of $11,134,695, representing the principal, accrued and unpaid interest, fees, costs and expenses outstanding under its Loan and Security Agreement (the "Loan Agreement") with Hercules dated April 30, 2018 (the "Hercules Indebtedness"). Upon the payment, all outstanding indebtedness and obligations of the Company owed to Hercules under the Loan Agreement were paid in full, and the Loan Agreement has been terminated. The Company used a portion of the net proceeds from the Note Offering (described below) to pay the Hercules Indebtedness. In accordance with the guidance in ASC 470-50, Debt year ended December 31, 2019 in the Notes Payable NextGen On February 8, 2017, in connection with the acquisition of NextGen, the Company issued a subordinated secured promissory note in favor of NextGen (which note was subsequently assigned to Halcyon in February 2018) in the amount of $1,333,334. Interest accrues and will be paid semi-annually (i) at a rate of 6.5% annually from the closing date through the second anniversary of such date; (ii) at a rate of 8.5% annually from the second anniversary of the closing date through February 10, 2020; and 10.0% thereafter 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. As discussed below the note was exchanged for a new note in January 2020 which extended the maturity date of the note until January 31, 2021. Interest expense on the Credit Facility for the years ended December 31, 2020 and 2019 was $87,128 and $ , respectively. The NextGen Note plus accrued interest was paid in full on January 31, 2021. 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 58,096 shares of Class B Common Stock of the Company and promissory notes (the "Private Placement Notes") in the amount of $667,000, in consideration of cancellation of loan agreements having an aggregate principal amount committed by the purchasers of $1,350,000. Under the terms of the Private Placement Notes, interest shall accrue on the outstanding and unpaid principal amounts until paid in full. The Private Placement Notes mature on January 31, 2021. Interest accrues at a rate of 6.5% annually from the closing date through the second anniversary of such date; at a rate of 8.5% annually from the second anniversary of the closing date through March 31, 2020; and at a rate of 10% thereafter through the Maturity Date. Upon the occurrence of any event of default, the outstanding balance under the Private Placement Notes shall become immediately due and payable upon election of the holders. Based on the relative fair values attributed to the Class B Common Stock and promissory notes issued in the 2016 Private Placement, the Company recorded a debt discount on the promissory notes of $667,000 with the corresponding amounts recorded as an addition to paid-in capital. The debt discount was amortized to interest expense until the scheduled maturity of the Private Placement Notes in January 2021 using the effective interest method. The effective interest rate at December 31, 2020 was 26.0%. Interest expense on the Private Placement Notes was $140,136 and $316,091, respectively for the years ended December 31, 2020 and 2019, which included debt discount amortization of $75,601 and $70,565, respectively for the years ended December 31, 2020 and 2019. On January 31, 2021, a payment of $371,764 was made on the Private Placement Note and the remaining balance of $297,411 was extended through June 30, 2021. Exchange of Notes Payable Certain of the Company's investors extended the maturity of currently outstanding promissory notes, and exchanged such notes for new notes (the "New Investor Notes"), pursuant to that certain Note Exchange Agreement, dated January 14, 2020 (the "Investor Note Exchange Agreement"), by and between the Company and each investor thereto (the "Investors"), including Halcyon, an entity affiliated with Kartik Kakarala, a former director of the Company, such New Investor Note for an aggregate principal amount of $833,333 (after taking account of a $500,000 pay down of the previously outstanding Halcyon note), Blue Flame Capital, LLC ("Blue Flame"), an entity affiliated with Denmar Dixon, a director of the Company, such New Investor Note for an aggregate principal amount of $99,114, and Mr. Dixon, individually, such New Investor Note for an aggregate principal amount of $272,563. The Halcyon and Blue Flame outstanding principal plus accrued interest were paid in full on January 31, 2021. PPP Loans On May 1, 2020, the Company, and its wholly owned subsidiaries Wholesale and Wholesale Express (together, the "Subsidiaries," and with the Company, the "Borrowers"), each entered into loan agreements and related promissory notes (the "SBA Loan Documents") to receive U.S. Small Business Administration Loans (the "SBA Loans") pursuant to the Paycheck Protection Program (the "PPP") established under the CARES Act, in the aggregate amount of $5,176,845 (the "Loan Proceeds"). The Borrowers received the Loan Proceeds on May 1, 2020, and under the SBA Loan Documents, the SBA Loans had an initial maturity date of April 30, 2022 and an annual interest rate of 1.0%. Payment of principal and interest, to be paid monthly, on the PPP Loans can be prepaid by the Company at any time and was originally deferred through October 30, 2020. On October 7, 2020, the Small Business Administration published guidance of its interpretation of the CARES ACT and of the Paycheck Protection Program Interim Final Rules that indicates, pursuant to the PPP Flexibility Act of 2020, the deferral period for borrow payments of principal, interest and fees on all PPP was extended 10 months after the borrower’s loan forgiveness period. Additionally, the SBA lender agreed to extend the maturity pursuant to the Interim Final Rules. As a result, monthly equal payments of principal and interest will begin September 1, 2021, with the last payment due April 1, 2025. Pursuant to the terms of the SBA Loan Documents, the Borrowers can apply for and receive forgiveness for all, or a portion of the loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs, mortgage interest, rent or utility costs (collectively, "Qualifying Expenses"), and on the maintenance of employee and compensation levels during a certain time period following the funding of the PPP Loans. The Company used a portion of the proceeds of the PPP Loans for Qualifying Expenses. However, no assurance is provided that the Company will be able to obtain forgiveness of the PPP Loans in whole or in part. The Company and its PPP lender have not yet discussed extending the maturity, nor has the Company applied for loan forgiveness. Interest expense on the PPP Notes for the year ended December 31, 2020 as $30,960. Convertible Notes As of December 31, 2020, the outstanding convertible promissory notes net of debt discount and issue costs are summarized as follows: December 31, 2020 December 31, 2019 Face Amount Debt Discount Carrying Amount Face Amount Debt Discount Carrying Amount Convertible senior notes $ 38,750,000 $ 11,737,521 $ 27,012,479 $ 30,000,000 $ 10,402,024 $ 19,597,976 Convertible notes-Autosport $1,536,000 unsecured note 1,024,000 307,958 716,042 1,536,000 379,616 1,156,384 $500,000 unsecured note - - - 500,000 6,092 493,908 $257,933 unsecured note - - - 257,933 6,382 251,551 39,774,000 12,045,479 27,728,521 32,293,933 10,794,114 21,499,819 Less: Current portion (768,000 ) (205,498 ) (562,502 ) (1,461,933 ) (98,343 ) (1,363,590 ) Long-term portion $ 39,006,000 $ 11,839,981 $ 27,166,019 $ 30,832,000 $ 10,695,771 $ 20,136,229 Convertible Senior Notes On May 9, 2019, the Company entered into a purchase agreement (the "Purchase Agreement") with JMP Securities LLC ("JMP Securities") to issue and sell $30,000,000 in aggregate principal amount of its 6.75% Convertible Senior Notes due 2024 (the "Old Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") (the "2019 Note Offering"). The Company paid JMP Securities a fee of 7.0% of the gross proceeds in the 2019 Note Offering. The proceeds for the 2019 Note Offering after deducting the initial purchaser's discounts, advisory fees, and related offering expenses, were approximately $27,385,500. The Old Notes were issued on May 14, 2019 pursuant to an Indenture (the "Old Indenture") by and between the Company and Wilmington Trust, National Association, as trustee (the "Trustee"). The Purchase Agreement included customary representations, warranties and covenants by the Company and customary closing conditions. Under the terms of the Purchase Agreement, the Company agreed to indemnify JMP Securities against certain liabilities. The Old Notes bore interest at 6.75% per annum, payable semiannually on May 1 and November 1 of each year, beginning on November 1, 2019. The Old Notes could bear additional interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the Old Indenture or if the Old Notes were not freely tradeable as required by the Old Indenture. The Old Notes would have matured on May 1, 2024, unless earlier converted, redeemed or repurchased pursuant to their terms. The initial conversion rate of the Old Notes was 8.6956 shares of Class B Common Stock, per $1,000 principal amount of the Old Notes, subject to adjustment (which is equivalent to an initial conversion price of approximately $115.00 per share, subject to adjustment). The conversion rate was subject to adjustment in some events but would not have been adjusted for any accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the Old Indenture), the Company would, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elected to convert its Old Notes in connection with such make-whole fundamental change. The Old Notes were not redeemable by the Company prior to the May 6, 2022. The Company could have redeemed for cash all or any portion of the Old Notes, at its option, on or after May 6, 2022 if the last reported sale price of the Company's Class B Common Stock had been at least 150.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund was provided for the Old Notes. If redeemed, the Company would have made an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the Old Notes to be converted had such Old Notes remained outstanding from the conversion date through the earlier of the date that is two years after the conversion date and June 15, 2022. In connection with the 2019 Note Offering, the Company entered into a registration rights agreement with JMP Securities, pursuant to which the Company agreed to file with the SEC a resale shelf registration statement providing for the resale of the Old Notes and the shares of Class B Common Stock issuable upon conversion of the Old Notes. This resale registration statement was filed on August 22, 2019 and declared effective on August 30, 2019. On January 10, 2020, the Company entered into a Note Exchange and Subscription Agreement, as amended by a Joinder Agreement (together, the "New Note Agreement"), with the investors in the 2019 Note Offering, pursuant to which the Company agreed to complete (i) a note exchange pursuant to which $30,000,000 of the Old Notes would be cancelled in exchange for a new series of 6.75% Convertible Senior Notes due 2025 (the "New Notes," and together with the Old Notes, the "Notes") and (ii) the issuance of additional New Notes in a private placement in reliance on the exemption from registration provided by Rule 506 of Regulation D of the Securities Act as a sale not involving any public offering (the "2020 Note Offering"). On January 14, 2020, the Company closed the 2020 Note Offering. The proceeds for the 2020 Note Offering after deducting for payment of accrued interest on the Old Notes and offering-related expenses were approximately $8,272,375. The New Notes were issued on January 14, 2020 pursuant to an Indenture (the "New Indenture"), by and between the Company and the Trustee. The New Note Agreement includes customary representations, warranties and covenants by the Company and customary closing conditions. The New Notes bear interest at 6.75% per annum, payable semiannually on January 1 and July 1 of each year, beginning on July 1, 2020. The New Notes may bear additional interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the New Indenture or if the New Notes are not freely tradeable as required by the New Indenture. The New Notes mature on January 1, 2025, unless earlier converted, redeemed or repurchased pursuant to their terms. The initial conversion rate of the New Notes is 25 shares of Class B Common Stock per $1,000 principal amount of New Notes, which is equal to an initial conversion price of $40.00 per share. The conversion rate is subject to adjustment in certain events as set forth in the New Indenture but will not be adjusted for any accrued and unpaid interest. In addition, upon the occurrence of a "make-whole fundamental change" (as defined in the New Indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its New Notes in connection with such make-whole fundamental change. Before July 1, 2024, the New Notes will be convertible only under circumstances as described in the New Indenture. No adjustment to the conversion rate as a result of conversion or a make-whole fundamental change adjustment will result in a conversion rate greater than 62.0 shares per $1,000 in principal amount. The New Indenture contains a "blocker provision" which provides that no holder (other than the depositary with respect to the notes) or beneficial owner of a New Note shall have the right to receive shares of the Class B Common Stock upon conversion to the extent that, following receipt of such shares, such holder or beneficial owner would be the beneficial owner of more than 4.99% of the outstanding shares of the Class B Common Stock. The New Notes are not redeemable by the Company before the January 14, 2023. The Company may redeem for cash all or any portion of the New Notes, at its option, on or after January 14, 2023 if the last reported sale price of the Class B Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the New Notes. The New Notes rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the New Notes; equal in right of payment to any of the Company's unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities of current or future subsidiaries of the Company (including trade payables). The New Notes are subject to events of default typical for this type of instrument. If an event of default, other than an event of default in connection with certain events of bankruptcy, insolvency or reorganization of the Company or any significant subsidiary, occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding New Notes by notice to the Company and the Trustee, may declare 100.0% of the principal of and accrued and unpaid interest, if any, on all the New Notes then outstanding to be due and payable. In connection with the 2020 Note Offering, on January 14, 2020, the Company entered into a registration rights agreement with the Note Investors, pursuant to which the Company has agreed to file with the SEC a shelf registration statement registering the sale, on a continuous or delayed basis, of all of the New Notes and to use its commercially reasonable efforts to cause the shelf registration statement to become or be declared effective under the Securities Act no later than May 29, 2020 (which date was adjusted for certain intervening events, including the COVID-19 pandemic). The registration statement was filed on June 19, 2020 and declared effective on June 30, 2020. In connection with the filing of the registration statement, the Company deregistered the Old Notes previously registered for resale. As of December 31, 2020, the conditions allowing holders of the New Notes to convert have not been met and therefore the New Notes are not yet convertible. The Company accounted for the exchange of the Old Notes and the issuance of the New Notes in accordance with the conversion guidance in ASC 470-20 "Debt – Debt with Conversion and Other Option" (ASC 470-20) and determined that the exchange of the Old Notes for the New Notes required derecognition of the Old Notes given that the difference in the fair value of the embedded the conversion feature of the New Notes relative to the Old Notes was in excess of 10 percent of the Old Notes conversion feature fair value. In derecognizing the Old Notes, the Company recognized a gain of $188,164 equal to difference between the fair value of the Old Notes liability immediately prior to extinguishment and the carry amount of the liability component of the Old Notes, including any all-unamortized debt issuance costs. The remaining consideration of $2,593,163 was allocated to the reacquisition of the equity component and recognized as a reduction of stockholder's equity. The New Notes were accounted for in accordance with FASB ASC 470, Debt Derivatives and Hedging The Company further valued a derivative liability in connection with the interest make-whole provision at $20,673 on the issuance date based on a lattice model. This amount was recorded as a debt discount and is amortized to interest expense over the term of the New Notes using the effective interest rate. The value of the derivative liability increased to $137,488 as of March 31, 2020. The derivative liability is remeasured at each reporting date with an increase in value of $ being recorded in other income for the year ended December 31, 2020. The value of the derivative liability as of December 31, 2020 was $16,694. The interest expense recognized with respect to the Convertible Senior Notes for the years ended December 31, 2020 and 2019 were as follows: 2020 2019 Contractual interest expense $ 2,566,171 $ 1,305,000 Amortization of debt discounts 1,867,313 1,218,064 Total $ 4,433,485 $ 2,523,064 Convertible Notes-Autosport USA On February 3, 2019, in connection with the Autosport Acquisition, the Company issued (i) the Promissory Note, and (ii) the Convertible Note in favor of the Seller. In connection with the Autosport Acquisition, the Buyer also assumed additional debt of $257,933 pursuant to the Second Convertible Note. The $500,000 Promissory Note had a term of fifteen months and accrued interest at a simple rate of 5.0% per annum. Interest under the Promissory Note was payable upon maturity. In June 2020, principal payments of $122,000 were made and the promissory note maturity date was extended to October 1, 2020. Any interest and principal due under the Promissory Note was convertible, at the Buyer's option into shares of the Company's Class B Common Stock at a conversion price equal to the weighted average trading price of the Company's Class B Common Stock on the Nasdaq Stock Exchange for the twenty (20) consecutive trading days preceding the conversion date. The Buyer elected not to convert any principal or interest and the loan has been repaid in full. The $1,536,000 Convertible Note matures on January 31, 2022 accrues interest at a rate of 6.5% per annum. Interest under the Convertible Note is payable monthly for the first 12 months, and thereafter monthly payments of amortized principal and interest will be due. Any interest and principal due under the Convertible Note is convertible into shares of the Company's Class B Common Stock at a conversion price of $115.00 per share, (i) at the Seller's option, or (ii) at the Buyer's option, on any day that (a) any portion of the principal of the Convertible Note remains unpaid and (b) the weighted average trading price of the Company's Class B Common Stock on Nasdaq for the twenty (20) consecutive trading days preceding such day has exceeded $140.00 per share. The maximum number of shares issuable pursuant to the Convertible Note is 15,962 shares of the Company's Class B Common Stock. The Second Convertible Note had a term of one year and accrued interest at a simple rate of 5.0% per annum. The Note was repaid in full during the year ended December 31, 2020. For the years ended December 31, 2020 and 2019, interest expense on the convertible notes was $187,751 and $228,001, respectively, and included $84,131 and $103,095, respectively of debt discount amortization. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCKHOLDERS' EQUITY | Share-Based Compensation On June 30, 2017 the Company's shareholders approved a Stock Incentive Plan (the "Plan") reserving for issuance under the Plan in the form of restricted stock units ("RSUs"), stock options ("Options"), Performance Units, and other equity awards (collectively "Awards") for our employees, consultants, directors, independent contractors and certain prospective employees who have committed to become an employee (each an "Eligible Individual") of up to 12.0% of the shares of Class B Common Stock outstanding from time to time. On June 25, 2018, the Company's shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 12.0% of the Company's issued and outstanding shares of Class B Common Stock from time to time to 100,000 shares of Class B Common Stock (the "First Plan Amendment"). On May 20, 2019, the Company's stockholders approved another amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 100,000 shares of Class B Common Stock to 200,000 shares of Class B Common Stock (the "Second Plan Amendment"). On August 25, 2020, the Company's stockholders approved another amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 200,000 shares of Class B Common Stock to 700,000 shares of Class B Common Stock (the "Third Plan Amendment"). To date, the vesting of RSU and Option awards is service / time based. Substantially all service/time based RSU and Option awards issued typically vest over a three-year period approximating the following vesting schedule: (i) 20.0% vesting anywhere from eight-months to thirteen months after grant date, (ii) an additional 30.0% during the subsequent twelve months of the initial vesting, and (iii) the final 50.0% during the following twelve months. Performance-based awards and market condition-based awards granted to date have vesting schedules that are typically dependent on achieving a particular objective within thirty (30) months. The Company estimates the fair value of awards granted under the Plan on the date of grant. The Company estimates the fair value of awards granted under the Plan on the date of grant. In the case of time or service based RSU awards, the fair value based on the share price of the Class B Common Stock on the date of the award. Performance Awards use the share prices of the Class B Common Stock but the Company, both at grant and each subsequent quarter, considers whether to a apply discount to the fair in situations where the Company believes there is risk that the relevant performance metrics may not be met. Options are calculated using the Black-Scholes option valuation model while market-condition based awards are estimated using a Monte Carlo simulation model as these awards are tied to a market condition. Both the Black-Sholes and Monte-Carlo simulations utilize multiple input variables to determine the probability of the Company’s Class B stock price being at certain prices over certain time periods, resulting in an implied value to the holder; the 2020 market-condition based awards assumed expected volatility to be 125% and a risk-free interest rate of 1.0%. We generally expense the grant-date fair value of all awards on a straight-line basis over the vesting period. For the Years Ended December 31, 2020 2019 Restricted stock units $ 2,957,415 $ 3,812,993 Options 20,821 23,525 Total stock-based compensation $ 2,978,236 $ 3,836,518 As of December 31, 2020, unrecognized stock-based amortization related to outstanding RSU and stock awards and the related weighted-average period over which it is expected to be recognized subsequent to December 31, 2020 is presented in the table below. Total unrecognized equity will be adjusted for actual forfeitures. Unrecognized Stock Based Compensations Related to Outstanding Awards Remaining Weighted-Average Amortization Period (in years) Restricted stock units $ 3,210,906 1.08 Options 47,840 .83 Total unrecognized stock-based amortization $ 3,258,746 1.91 Restricted Stock Units RSU activity during the years ending December 31, 2020 and December 31, 2019 was as follows: Number of RSUs Weighted -Average Grant Date Fair Value Outstanding at December 31, 2018 75,389 $ 104.63 Granted 80,050 $ 60.81 Vested (9,000 ) $ 86.54 Forfeited (16,501 ) $ 61.45 Outstanding at December 31, 2019 129,938 $ 99.00 Granted 416,435 $ 6.60 Vested (35,274 ) $ 87.91 Forfeited (67,256 ) $ 98.53 Outstanding at December 31, 2020 443,843 $ 13.26 Expected to vest 443,843 $ 13.26 Non-qualified Stock Options Non-qualified stock options allow recipients to purchase shares of Class B common stock at a fixed exercise price. The fixed exercise price is equal to the price of a share of Class B common stock at the time of grant. The options expire ten years after the grant date and typically vest 20% between nine-months and one-year after the grant date and thereafter in quarterly installments of 7.5% and 12.5% during the 2nd and 3rd vesting years, respectively. Number of Options Weighted Average Exercise Price Weighted-AverageRemainingContractualLife (in years) Aggregate Intrinsic Value Outstanding at December 31, 2018 - n/a n/a Options granted 5,608 78.10 n/a Options exercised - n/a n/a Options forfeited or expires (521 ) 81.60 n/a Outstanding at December 31, 2019 5,087 78.10 9.6 n/a Options granted 250 $ 61.40 $ n/a Options exercised - Options forfeited or expires (2,586 ) 74.72 $ n/a Outstanding at December 31, 2020 2,751 $ 79.76 8.7 $ n/a Vested / exercisable at December 31, 2020 937 80.13 8.7 $ n/a Expected to vest as of December 31, 2020 2,751 79.57 8.7 $ n/a Fair value of all option awards is based on the share price of the Class B Common Stock on the date of the award and is calculated using the Black-Scholes option valuation model using the assumptions in the following table: 2020 2019 Risk-free rate 0.3 % 1.5 % Expected volatility 194.75 % 85.0 % Expected life (in years) 5.48 5.75 Expected dividend yield - - Weighted average grant date fair value per option $ 29.66 $ 34.20 Security Offerings On February 11, 2019, the Company completed an underwritten public offering of 63,825 shares of its Class B Common Stock at a price of $111.00 per share for net proceeds to the Company of $6,543,655. The completed offering included 8,325 shares of Class B Common Stock issued upon the underwriter's exercise in full of its over-allotment option. On May 9, 2019, the Company entered into a Securities Purchase Agreement with certain accredited investors (the "Investors") pursuant to which the Company agreed to sell in a private placement (the "Private Placement") an aggregate of 95,000 shares of its Class B Common Stock, at a purchase price of $100.00 per share. JMP Securities served as the placement agent for the Private Placement. The Company paid JMP Securities a fee of 7.0% of the gross proceeds in the Private Placement. The Private Placement closed on May 17, 2019. The proceeds for the Private Placement, were $8,665,000. 2020 Public Offering On January 14, 2020, pursuant to an underwritten public offering, the Company issued 900,000 shares of Class B Common Stock at a public price of $11.40 per share (the "2020 Public Offering"). On January 16, 2020, the Company received notice of the Underwriters' intent to exercise the over-allotment option in full (the "Over-allotment Exercise"). On January 17, 2020, the Company issued an additional 135,000 shares of Class B Common Stock and closed the Over-allotment Exercise. The Over-allotment Exercise increased the aggregate number of shares sold in the 2020 Public Offering to 1,035,000. Including the Over-allotment Exercise, net proceeds from the 2020 Public Offering, after deducting the 8.0% underwriter's commission and $75,000 for underwriter expenses, were $10,780,080. Certain of the Company's officers and directors participated in the 2020 Public Offering. The Company used the net proceeds of the 2020 Public Offering for working capital and general corporate purposes, which included further technology development, increased spending on marketing and advertising and capital expenditures necessary to grow the business. Reverse Stock Split On May 18, 2020, the Company filed a Certificate of Change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to effect a one-for-twenty reverse stock split of its issued and outstanding Class A Common Stock and Class B Common Stock (the “Reverse Stock Split”). The Reverse Stock Split was effective at 12:01 a.m., Eastern Time, on May 20, 2020. No fractional shares were issued as a result of the Reverse Stock Split. There was a 7,131 fractional share adjustment as a result of rounding up to the nearest whole share in connection with the Reverse Stock Split. The authorized preferred stock of the Company was not impacted by the Reverse Stock Split. The Company has retrospectively adjusted the per share and share amounts included in this Annual Report on Form 10-K for the Reverse Stock Split. |
COMMON STOCK WARRANTS
COMMON STOCK WARRANTS | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
COMMON STOCK WARRANTS | In connection with the October 23, 2017 public offering of 145,500 shares of Class B common stock the Company issued to underwriters warrants to purchase 10,913 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 $126.50, which was equal to 115.0% of the Offering price per share of the shares sold in the Offering and mature on April 20, 2023. In April, 2018, pursuant to the Loan Agreement by and among Hercules Capital, the Company, and its wholly owned subsidiaries, the Company issued Hercules a warrant to purchase 4,091 (increasing to 5,455 if a fourth tranche in the principal amount of up to $5,000,000 is advanced at the parties agreement) shares of the Company's Class B Common Stock (the "Hercules April Warrant") at an exercise price of $110.00 per share (the "Hercules April Warrant Price"). The Hercules April Warrant is immediately exercisable and expires on April 30, 2023. In October, 2018, under an amendment to the Loan Agreement, the company issued Hercules a warrant to purchase 1,048 shares of the Company's Class B Common Stock (the "Hercules October Warrant") at an exercise price of $143.13 per share (the "Hercules October Warrant Price"). The Hercules October Warrant is immediately exercisable and expires on October 30, 2023. The Hercules warrants contain anti-dilutive provisions that increase the number of shares covered by the warrants in the event the Company makes a New Issuance (as defined in the Loan Agreement) for no consideration or consideration that is less than the Warrant Prices. The following table summarizes the warrants outstanding as of December 31, 2020 and 2019: 2020 2019 Warrants outstanding at the beginning of the year 16,530 16,051 New warrant issuances to Hercules - - Adjustment to the Hercules warrants due to the anti-dilutive provisions - 479 Warrants outstanding at the end of the year 16,530 16,530 The Company has classified the warrants as equity in accordance with ASC 815. The fair value of the warrants were valued at issuance using the Black-Scholes option pricing model with the following assumptions: Underwriter Warrants Hercules April Warrants Hercules October Warrants Warrants exercise price $ 126.50 $ 110.00 $ 143.20 Fair value price per share of common stock $ 110.00 $ 101.40 $ 114.60 Volatility 62.0 % 70.0 % 70.0 % Expected term remaining (years) 5.0 5.0 5.0 Risk-free interest rate 1.31 % 2.79 % 2.94 % Discount for lack of marketability 20.0 % 20.0 % 20.0 % Dividend yield - - - Fair value at initial valuation date $ 505,273 $ 208,369 $ 59,292 |
SELLING, GENERAL AND ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE | 12 Months Ended |
Dec. 31, 2020 | |
General and Administrative Expense [Abstract] | |
SELLING, GENERAL AND ADMINISTRATIVE | The following table summarizes the detail of selling, general and administrative expense for the years ended December 31, 2020 2019 Compensation and related costs $ 25,734,308 $ 33,502,020 Advertising and marketing 5,287,284 18,228,262 Professional fees 3,148,381 2,542,357 Technology development 1,421,138 2,408,338 General and administrative 18,068,237 29,943,272 $ 53,659,348 $ 86,624,249 |
LOSS ON CONTINGENCIES AND INSUR
LOSS ON CONTINGENCIES AND INSURANCE RECOVERIES | 12 Months Ended |
Dec. 31, 2020 | |
Loss On Contingencies And Insurance Recoveries | |
LOSS ON CONTINGENCIES AND INSURANCE RECOVERIES | On March 3, 2020, a severe tornado struck the greater Nashville area causing significant damage to the Company's facilities including contents and inventory held for sale. The Company maintains insurance coverage for damage to its facilities and inventory, as well as business interruption insurance. The loss was comprised of three components: (1) inventory loss, assessed by the insurance carrier at approximately $13,000,000; (2) building and personal property loss, primarily impacting our leased facilities, assessed by the insurance carrier at $2,783,000; and (3) loss of business income, for which the company has coverage in the amount of $6,000,000. All three components of the Company's loss claim have been submitted to its insurers. The Company's inventory claim is subject to a dispute with the carrier as to the policy limits applicable to the loss,however, the insurer has advanced $5,615,268 against the final settlement. The insurer has agreed to pay $2,778,000 on the building and personal property loss, reflecting limits of $2,783,000 net of a $5,000 deductible. The insurer has made an interim payment on the building and personal property loss of $2,269,507 to the landlord. The loss of business income claim is ongoing and remains in the process of negotiation, however, the insurer has advanced $250,000 against the final settlement. The Company believes there will be a recovery of all three loss components, however no assurance can be given regarding the amounts, if any, that will be ultimately recovered or when any such recoveries will be made. As a result of the damage caused by the tornado the Company concluded that the utility of the inventory damaged by the storm was impaired as a result of physical damage sustained. Whether the impairment is caused by physical destruction or an adverse change in the utility of the inventory, entities should assess whether an inventory impairment or write-off is required in accordance with ASC 330-10-35-1 through 35-11, which address adjustments of inventory balances to the lower of cost or market and requires that when there is evidence that the utility of goods will be less than cost, the difference is recognized as a loss of the current period. During the year ended December 31, 2020 the Company recorded an impairment loss on inventory of $11,738,413 comprised of $4,453,775 for vehicles that were a total loss and $7,284,638 in loss in value for vehicles partially damaged and subject to repair. The impairment loss is reported in cost of revenue in the consolidated statements of operations. On July 23, 2020, the insurer made an advance against the final settlement of the damage claim on inventory of $5,615,268. This recovery has been recorded as a separate component of operating loss for the year ended December 31, 2020. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | The following table includes supplemental cash flow information, including noncash investing and financing activity for the years ended December 31, 2020 and 2019: 2020 2019 Cash paid for interest $ 3,834,758 $ 4,888,070 Convertible notes payable issued in acquisition $ - $ 2,293,933 The following table provides a reconciliation of cash and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same amounts shown in the accompanying consolidated statements of cash flows as of December 31, December 31, 2020 2019 Cash and cash equivalents $ 1,466,831 $ 49,660 Restricted cash (1) 2,049,056 6,676,622 Total cash, cash equivalents, and restricted cash $ 3,515,887 $ 6,726,282 (1) Amounts included in restricted cash represent the deposits required under the Company's short-term revolving facilities. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
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 into law. The Tax Act, among other changes, reduced the U.S. federal corporate tax rate from 35.0% to 21.0%, required taxpayers to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. For the two years ended December 31, 2020, 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 26.0% including state income taxes. The remeasurement of the Company's deferred tax balance was primarily offset by application of its valuation allowance. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted in response to the novel coronavirus (COVID-19) pandemic. The CARES Act includes numerous provisions relating to, among other things, refundable payroll tax credits, deferment of employer portion of certain payroll taxes, net operating loss amounts and carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Due to the recent enactment of the CARES Act, the Company is currently analyzing the potential impacts of this legislation on its financial position and results of operations. 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 as of December 31, 2020 2019 Deferred tax assets: Net operating loss carryforward $ 21,494,873 $ 17,380,733 Business interest carryforward 1,651,179 645,165 Stock-based compensation 518,320 1,287,424 Accounts receivable allowance 361,606 269,403 Lease liabilities 1,568,773 1,599,651 Inventory reserve 26,574 151,815 Basis difference in goodwill 351,993 385,570 Accrued liabilities 122,644 - Property and equipment 372,896 191,259 Total deferred income tax assets 26,468,858 21,911,020 Deferred tax liabilities: Right-of-use assets 1,478,224 1,572,368 Debt issuance costs amortization 1,248,455 28,818 Total deferred tax liabilities 2,726,679 1,601,186 Net deferred tax asset before valuation allowance 23,742,179 20,309,834 Valuation allowance (23,742,179 ) (20,309,834 ) Net deferred taxes $ - $ - A reconciliation of the statutory U.S. Federal income tax rate to the Company's effective income tax rate for the years ended December 31, 2020 and 2019. 2020 2019 U.S. Federal statutory rate 21.0 % 21.0 % State and local, net of federal benefit 5.0 % 5.0 % Permanent difference (1.4 )% (1.1 )% Valuation allowance (24.6 )% (24.9 )% Effective tax rate - % - % No current provision for Federal income taxes was recorded for the years ended December 31, 2020 and 2019 due to the Company's operating losses. As of December 31, 2020 and 2019, the Company has operating loss carryforwards of $82,733,046 and $66,717,013, respectively, a portion of which begin to expire in 2033. We have provided a valuation allowance on the deferred tax assets of $23,742,179 and $20,309,834 for the periods ended December 31, 2020 and 2019, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | The Company computes basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighed-average number of shares of common stock outstanding during the period. The diluted net loss per share attributable to common stockholders is computed giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, 443,843 of RSUs, 2,751 of stock options, 16,530 of warrants to purchase shares of Class B Common Stock and 982,107 shares of Class B Common Stock issuable in connection with convertible debt are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as the effect is antidilutive. In connection with the Company's acquisition of Wholesale, the Company issued 1,317,329 shares of Series B Non-Voting Convertible Preferred Stock. The rights of the holder of the Series B Preferred and Class A and Class B Common Stock are identical, except with respect to voting. The Series B Preferred automatically converted to Class B Common Stock 21 days after the mailing of a definitive information statement prepared in accordance with Regulation 14C of the Exchange Act, without further action on the part of the Company, to the holders of Series B Preferred. The conversion of Series B Preferred to Class B Common was effected on March 4, 2019. The Company applies the two-class method of calculating earnings per share, but as the rights of the Series B Non-Voting Convertible Preferred Stock and Class A and Class B Common Stock are identical, except in respect of voting, basic and diluted earnings per share are the same for all classes. Weighted average number of shares outstanding of Class A Common Stock, Class B Common Stock, and Series B Preferred Stock at December 31, 2020 were 50,000, 2,191,633, and 0, respectively . |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | As of December 31, 2020 and 2019, the Company had promissory notes of $370,556 and $370,556 and accrued interest of $9,370 and $23,731, respectively, due to Blue Flame, an entity controlled by a Denmar Dixon, a 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 due to Blue Flame, for the years ended December 31, 2020 and 2019 was $77,853 and $183,286, respectively, which included debt discount amortization of $42,001 and $144,409, respectively. The interest was charged to interest expense in the Consolidated Statements of Operations. The Blue Flame Notes plus accrued interest were paid in full on January 31, 2021. Nashville Leases In connection with the acquisition of Wholesale, we entered into leases for two facilities in the greater Nashville area owned by Mr. Brewster, a former 5% or greater holder of our Class B Common Stock. One of the leases was terminated in 2019. The other location has a lease term expiring on October 30, 2021, for which we have two (2) renewal options, each of which provides for five (5) additional years with a ten percent (10.0%) increase in the base rent. The rent for the current location is approximately $25,000 per month. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Lease Commitments We determine whether an arrangement is a lease at inception and whether such leases are operating or financing leases. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. We use these options in determining our right-of-use assets and lease liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determine the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. Total operating lease expenses for the year ended December 31, 2020 and 2019 was $2,200,288 and $1,661,649, respectively. The current portion of our operating lease liabilities as of December 31, 2020 is $1,630,002 and is included in accounts payable and accrued liabilities. The long-term portion of our operating lease liabilities as of December 31, 2020 is $4,370,154. The weighted-average remaining lease term and discount rate for our operating leases are as follows: 2020 Weighted-average remaining lease term 3.7 Weighted-average discount rate 6.2 % Supplemental cash flow information related to operating leases for the year ended December 31, 2020 was as follows: 2020 Cash payments for operating leases $ 1,691,637 New operating lease assets obtained in exchange for operating lease liabilities $ 2,901,318 The following table summarizes the future minimum payments for operating leases at December 31, 2020 due in each year ending December 31, 2021 $ 1,957,188 2022 1,955,037 2023 1,222,866 2024 835,309 2025 553,334 thereafter 285,500 Total lease payments 6,809,234 Less imputed interest (809,078 ) Present value of lease liabilities $ 6,000,156 Legal Matters From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, as of December 31, 2020 and 2019, the Company does not believe that the ultimate resolution of any legal actions, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity, and capital resources. Future litigation may be necessary to defend the Company by determining the scope, enforceability and validity of third-party proprietary rights or to establish its own proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | The Company is dependent on third-party providers of wholesale vehicle auctions. The Company is dependent on their ability to provide services on a timely basis and at favorable pricing terms. The loss of these principal providers or a significant reduction in service availability could have a material adverse effect on the Company. The Company believes that its relationships with these providers are satisfactory. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | Business segments are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing operating performance. Our operations are organized by management into operating segments by line of business. We have determined that we have three reportable segments as defined in generally accepted accounting principles for segment reporting: (1) powersports, (2) automotive and (3) vehicle logistics and transportation. Our powersports and automotive segments consist of the distribution of pre-owned vehicles. The powersports segment consists of the distribution principally of motorcycles and other powersports vehicles, while the automotive segment distributes cars and trucks. Our vehicle logistics and transportation service segment provides nationwide automotive transportation services between dealerships and auctions. Our vehicle logistics and transportation service reportable segment has been determined to represent one operating segment and reporting unit. The accounting policies of the segments are the same and are described in Note 1. The following table summarizes revenue, operating income (loss), Depreciation and Amortization and interest expense which are the measure by which management allocates resources to its segments to each of our reportable segments. Powersports Automotive Vehicle Logistics and Transportation Eliminations(1) Total Year Ended December 31, 2020 Total assets $ 45,694,127 $ 47,841,306 $ 10,535,065 $ (27,091,263 ) 76,979,235 Revenue $ 47,526,127 $ 337,084,959 $ 35,887,132 $ (4,070,975 ) 416,427,243 Operating income (loss) $ (19,865,965 ) $ (1,364,786 ) $ 2,671,131 $ - (18,559,620 ) Depreciation and amortization $ 1,997,142 $ 139,734 $ 6,063 $ - 2,142,939 Interest expense $ (4,793,732 ) $ (1,839,529 ) $ (5,064 ) $ - (6,638,325 ) Gain on early extinguishment of debt $ 188,164 $ - $ - $ - 188,164 Year Ended December 31, 2019 Total assets $ 55,992,165 $ 77,033,326 $ 7,921,578 $ (27,553,978 ) 113,393,091 Revenue $ 101,008,976 $ 717,042,511 $ 31,931,488 $ (9,353,628 ) 840,629,347 Operating income (loss) $ (34,402,724 ) $ (5,318,549 ) $ 1,928,574 $ - (37,792,699 ) Depreciation and amortization $ 1,543,023 $ 235,998 $ 7,405 $ - 1,786,426 Interest expense $ (4,453,549 ) $ (2,732,869 ) $ (1,186 ) $ - (7,187,604 ) Loss on early extinguishment of debt $ (1,499,250 ) $ - $ - $ - (1,499,250 ) (1) Intercompany investment balances related to the acquisitions of Wholesale, Inc. and Wholesale Express, and receivables and other balances related intercompany freight services of Wholesale Express are eliminated in the Consolidated Balance Sheets. Revenue and costs for these intercompany freight services have been eliminated in the Consolidated Statements of Operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | RideNow Definitive Agreement On March 12, 2021, the Company entered into a Plan of Merger and Equity Purchase Agreement (the “RideNow Agreement”) with RO Merger Sub I, Inc., an Arizona corporation and wholly owned subsidiary of the Company (“Merger Sub I”), RO Merger Sub II, Inc., an Arizona corporation and wholly owned subsidiary of the Company (“Merger Sub II”), RO Merger Sub III, Inc., an Arizona corporation and wholly owned subsidiary of the Company (“Merger Sub III”), RO Merger Sub IV, Inc., an Arizona corporation and wholly owned subsidiary of the Company (“Merger Sub IV,” and together with Merger Sub I, Merger Sub II, and Merger Sub III, the “Merger Subs”), C&W Motors, Inc., an Arizona corporation, Metro Motorcycle, Inc., an Arizona corporation, Tucson Motorcycles, Inc., an Arizona corporation, and Tucson Motorsports, Inc., an Arizona corporation, William Coulter, an individual (“Coulter”), Mark Tkach, an individual (“Tkach” and together with Coulter, the “Principal Owners”), and certain other persons who own equity interests in the Acquired Companies (as defined in the RideNow Agreement) and execute a Seller Joinder (as defined in the RideNow Agreement) (together with the Principal Owners, the “Sellers” and each, a “Seller”), and Tkach, as the representative of the Sellers (the “Sellers’ Representative”). The Acquired Companies own and operate powersports retail dealerships under the RideNow brand which include sales, financing, and parts and service of new and used motorcycles, ATVs, UTVs, scooters, side by sides, sport bikes, cruisers, watercraft, and other vehicles and ancillary businesses and activities relating thereto. The RideNow Agreement provides that, upon the terms and subject to the conditions set forth in the RideNow Agreement, (i) the Company will acquire all of the equity interests (the “Equity Purchases”) in the Transferred Entities (as defined in the RideNow Agreement), (ii) Merger Sub I will merge with and into C&W Motors, Inc., with C&W Motors, Inc. continuing as a surviving corporation, (iii) Merger Sub II will merge with and into Metro Motorcycle, Inc., with Metro Motorcycle, Inc. continuing as a surviving corporation, (iv) Merger Sub III will merge with and into Tucson Motorcycles, Inc., with Tucson Motorcycles, Inc. continuing as a surviving corporation, and (v) Merger Sub IV will merge with and into Tucson Motorsports, Inc., with Tucson Motorsports, Inc. continuing as a surviving corporation, in each case under the laws of the State of Arizona and each as a wholly-owned subsidiary of the Company (the “Mergers”). The Equity Purchases and the Mergers will result in the acquisition from the Sellers of up to 46 Acquired Companies (the “RideNow Transaction”). The RideNow Transaction is expected to close (the “Closing”) in the second or third quarter of 2021. Effective as of the Closing, Tkach and Coulter will become executive officers and directors of the Company. The RideNow Agreement provides that the Company will acquire the Acquired Companies in exchange for (i) $400,400,000 in cash plus or minus any adjustments for net working capital and closing indebtedness, and (ii) shares of the Company's Class B Common Stock having a value of $175,000,000 (the “Closing Payment Shares”), valued equally, on a per share basis, based upon the lowest value of (A) $30.00; (B) the VWAP of the Company's Class B Common Stock for the twenty (20) trading days immediately preceding the Closing, and (C) the value on a per share basis paid for the Class B Common Stock or any shares underlying securities convertible into or exercisable for Class B Common Stock by any person which purchases Class B Common Stock or any shares underlying securities convertible into or exercisable for Class B Common Stock from the Company from the date of the RideNow Agreement until the Closing not including purchases of Class B Common Stock underlying currently outstanding options, warrants, convertible notes, or other derivative securities. Ten percent (10%) of the Closing Payment Shares will be escrowed at Closing and will be released pursuant to the terms of the RideNow Agreement. The Company will finance the cash consideration through a combination of approximately $280,000,000 of debt provided by the Initial Lender (as defined below) and through the issuance of new equity for the remainder thereof. Each of the Company, the Merger Subs, and the Sellers has provided customary representations, warranties and covenants in the RideNow Agreement. The completion of the RideNow Transaction is subject to various closing conditions, including (a) the making of all filings and other notifications required to be made under any Antitrust Law (as defined in the RideNow Agreement) for the consummation of the RideNow Transaction, the expiration or termination of all waiting periods relating thereto, and the receipt of all clearances, authorizations, actions, non-actions, or other consents required from a governmental authority under any Antitrust Law for the consummation of the RideNow Transaction, (b) performance in all respects by each party of its covenants and agreements, (c) the Company obtaining stockholder approval of the RideNow Transaction and related matters, (d) the Closing Payment Shares being approved for listing on Nasdaq, and (e) the receipt of consent to the RideNow Transaction from certain powersports manufacturers. Certain RideNow minority equity holders are not initially parties to the RideNow Agreement and some of such minority holders have rights of first refusal (“ROFR”) with respect to the RideNow entity in which they own a stake. If any of these equity holders either decide not to sell their interests to the Company or to exercise their ROFR, RumbleOn will not be able to acquire all of the Equity Interests of the Acquired Companies, or in certain cases any interests in an Acquired Company, and the consideration payable therefor in the RideNow Transaction will be correspondingly reduced. RideNow anticipates that all minority owners will participate in the RideNow Transaction and that no minority owners will exercise their ROFR, but there is no assurance this will occur. The RideNow Agreement contains certain termination rights for both the Company and the Sellers' Representative. Both the Company and the Sellers' Representative have the right to terminate the RideNow Agreement if the Closing does not occur on or before June 30, 2021, subject to certain rights of the parties to extend the termination date to July 31, 2021, as set forth in the RideNow Agreement. Commitment Letter On March 12, 2021, the Company entered into a commitment letter (the “Commitment Letter”) with Oaktree Capital Management, L.P. ( “Oaktree”). The Commitment Letter provides that, subject to the conditions set forth therein, Oaktree or certain funds or accounts within its Strategic Credit Strategy (the “Initial Lender”) commits to provide senior secured term loan facilities in an aggregate principal amount of up to $400,000,000 (the “Credit Facility”), comprised of (i) an initial advance of $280,000,000 to fund the RideNow Transaction, consummate the Refinancing (as defined in the Commitment Letter) and pay the RideNow Transaction costs and (ii) a delayed draw term facility of up to $120,000,000 to fund permitted acquisitions and similar investments and related fees and expenses. The Credit Facility interest rates will be, at the option of the Company, (a) Adjusted LIBOR (as defined in the Commitment Letter) plus 8.25%, of which (i) Adjusted LIBOR plus 7.25% shall be paid in cash and (ii) 1.00% shall be payable in kind or (b) ABR (as defined in the Commitment Letter) plus 7.25%, of which (i) ABR plus 6.25% shall be paid in cash and (ii) 1.00% shall be payable in kind. The Credit Facility shall mature on the fifth anniversary of the Closing date of the RideNow Transaction (subject to extension with the consent of only the extending lender). The Company and its subsidiaries will grant certain security interests to the Initial Lender to secure the Credit Facility, subject to certain exceptions and permitted liens, all to be more fully set forth in the definitive documentation for the Credit Facility. The Credit Facility will be subject to prepayment with the proceeds of certain events including 50% of excess cash flow, 100% of certain asset sales, 100% of proceeds of certain debt issuances, and 50% of certain public or private equity financings. The Commitment Letter provides that the Credit Facility will contain customary affirmative and negative covenants, and events of default, subject to certain carve-outs and exceptions as more fully described in the Commitment Letter. The commitment to provide the Credit Facility is subject to certain conditions, including: the receipt of customary closing documents, completion of applicable “know your customer” requests and delivery of documentation related thereto, no material adverse change, delivery of customary financial reporting, specified representations and warranties, perfection of certain security interests, and delivery of customary legal opinions. The Company will pay certain fees and expenses in connection with obtaining the Credit Facility. Warrant In connection with the Commitment Letter, in lieu of a commitment fee, the Company has agreed to issue to Oaktree a warrant to purchase a number of shares of Class B Common Stock at an exercise price per share to be determined either at Closing or at termination of the Commitment Letter (the “Warrant”). If issued at Closing, the Warrant will be for that number of shares equal to $40,000,000 divided by the lowest price per share at which equity is issued in connection with financing the RideNow Transaction, which price shall also be the exercise price. If issued in connection with a termination of the Commitment Letter, the Warrant will be issued to purchase that number of shares equal to five percent (5%) of the Company's fully diluted market capitalization at the close of business on the day after a termination of the Commitment Letter is publicly announced divided by the weighted average price of the Company's Class B Common Stock for the five days immediately preceding such date, which price shall also be the exercise price. The Warrant is immediately exercisable upon the Closing or five days after the termination of the Commitment Letter and expires eighteen (18) months after the Closing or termination of the Commitment Letter. Bridge Loan Also in connection with the RideNow Transaction, on March 12, 2021, the Company and its subsidiary, NextGen Pro, LLC (“NextGen Pro”), executed a secured promissory note with BRF Finance Co., LLC (“BRF Finance”), an affiliate of B. Riley Securities, Inc., pursuant to which BRF Finance has loaned the Company $2,500,000 (the “Bridge Loan”). The Bridge Loan matures on the earlier of September 30, 2021 or upon the issuance of debt or equity above a threshold. The Bridge Loan is secured by certain intellectual property assets held by NextGen Pro as set forth in Exhibit A to the secured promissory note. Interest will accrue on the Bridge Loan until maturity (by acceleration or otherwise) at a rate of 12% annually. Certificate of Amendment and Changes to Incentive Plan In contemplation of the RideNow Transaction, on March 9, 2021, the Board of Directors (the "Board") approved, subject to stockholder approval, (i) an amendment to the Articles of Incorporation of the Company to increase the number of shares of authorized Class B Common Stock to 100,000,000 (the “Certificate of Amendment”), and (ii) an amendment to the RumbleOn, Inc. 2017 Stock Incentive Plan (the “Incentive Plan”) to increase the authorized shares of Class B Common Stock available under the Incentive Plan from 700,000 shares to 2,700,000 shares and extend the term of the Incentive Plan for an additional ten years. Registration Rights and Lock-Up Agreement In connection with the RideNow Transaction, on March 12, 2021, the Company entered into a registration rights and lock-up agreement, by and among the Company and certain equity holders of the Acquired Companies (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement (i) the Company agreed to file a resale registration statement for the Registrable Securities (as defined in the Registration Rights Agreement) no later than thirty (30) days following the Closing, and to use commercially reasonable efforts to cause it to become effective as promptly as practicable following such filing, (ii) the equity holders were granted certain piggyback registration rights with respect to registration statements filed subsequent to the Closing, and (iii) the Lock-Up Holders (as defined in the Registration Rights Agreement) agreed, subject to certain customary exceptions, not to sell, transfer or dispose of any Company common stock for a period of one hundred and eighty (180) days from the Closing. |
DESCRIPTION OF BUSINESS AND S_2
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 | In July 2016, Berrard Holdings Limited Partnership ("Berrard Holdings") acquired 99.5% of the common stock of the Company from the principal stockholder. Shortly after the Berrard Holdings common stock purchase, the Company began exploring the development of a capital light e-commerce platform facilitating the ability of both consumers and dealers to Buy-Sell-Trade-Finance pre-owned vehicles in one online location and in April 2017, the Company launched its platform. The Company's goal was to transform the way pre-owned vehicles are bought and sold by providing users with the most efficient, timely and transparent transaction experience. While the Company's initial customer facing emphasis through most of 2018 was on motorcycles and other powersports, the Company continues to enhance its platform to accommodate nearly any VIN-specific vehicle including motorcycles, ATVs, boats, RVs, cars and trucks, and via its acquisition of Wholesale, Inc. in October 2018, the Company wanted to make a concerted effort to grow its cars and light truck categories. On October 26, 2018, the Company entered into an Agreement and Plan of Merger (as amended, the "Merger Agreement") with the Company's newly-formed acquisition subsidiary RMBL Tennessee, LLC, a Delaware limited liability company ("Merger Sub"), Wholesale Holdings, Inc., a Tennessee corporation ("Holdings"), Wholesale, LLC, a Tennessee limited liability company ("Wholesale"), Steven Brewster and Janelle Brewster (each a "Stockholder," and together the "Stockholders"), Steven Brewster, a Tennessee resident, as the representative of each Stockholder (the "Representative"), and Marshall Chesrown and Steven R. Berrard, providing for the merger of Holdings with and into Merger Sub, with Merger Sub surviving the merger as a wholly-owned subsidiary of the Company (the "Wholesale Transaction"). On October 29, 2018, the Company entered into an Amendment to the Merger Agreement making a technical correction to the definition of "Parent Consideration Shares" contained in the Merger Agreement. Also, on October 26, 2018, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), by and among the Company, Steven Brewster and Justin Becker (together the "Express Sellers"), and Steven Brewster as representative of the Express Sellers, pursuant to which the Company acquired all of the membership interests (the "Express Transaction," and together with the Wholesale Transaction, the "Transactions") in Wholesale Express, LLC, a Tennessee limited liability company ("Wholesale Express"). The Transactions were both completed on October 30, 2018 (the "Acquisition Date"). As consideration for the Wholesale Transaction, the Company (i) paid cash consideration of $12,353,941, subject to certain customary post-closing adjustments, and (ii) issued to the Stockholders 1,317,329 shares (the "Stock Consideration") of the Company's Series B Non-Voting Convertible Preferred Stock, par value $0.001 (the "Series B Preferred"). As consideration for the Express Transaction, the Company paid cash consideration of $4,000,000, subject to certain customary post-closing adjustments. Wholesale Inc. is one of the largest independent distributors of pre-owned vehicles in the United States and Wholesale Express, LLC is a related logistics company. On February 3, 2019, the Company completed the acquisition (the "Autosport Acquisition") of all of the equity interests of Autosport USA, Inc. ("Autosport"), an independent pre-owned vehicle distributor, pursuant to a Stock Purchase Agreement, dated February 1, 2019 (the "Stock Purchase Agreement"), by and among RMBL Express, LLC (the "Buyer"), a wholly owned subsidiary of Company, Scott Bennie (the "Seller") and Autosport. Aggregate consideration for the Autosport Acquisition consisted of (i) a closing cash payment of $600,000, plus (ii) a fifteen-month $500,000 promissory note (the "Promissory Note") in favor of the Seller, plus (iii) a three-year $1,536,000 convertible promissory note (the "Convertible Note") in favor of the Seller, plus (iv) contingent earn-out payments payable in the form of cash and/or the Company's Class B Common Stock (the "Earn-Out Shares") for up to an additional $787,500 if Autosport achieves certain performance thresholds. In connection with the Autosport Acquisition, the Buyer also paid outstanding debt of Autosport of $235,000 and assumed additional debt of $257,933 pursuant to a promissory note payable to Seller (the "Second Convertible Note"). Serving both consumers and dealers, through its online marketplace platform, the Company makes cash offers for the purchase of pre-owned vehicles. In addition, the Company offers a large inventory of pre-owned vehicles for sale along with third-party financing and associated products. The Company's operations are designed to be scalable by working through an infrastructure and capital light model that is achievable by virtue of a synergistic relationship with both dealers and regional partners, which are primarily auctions. The Company utilizes regional partners in the acquisition of pre-owned vehicles to provide inspection, reconditioning and distribution services. These regional partners earn incremental revenue and enhance profitability through fees from inspection, reconditioning and distribution programs. Our business model is driven by our proprietary technology platform. Our initial platform was acquired in February 2017, through our acquisition of substantially all of the assets of NextGen Dealer Solutions, LLC ("NextGen"). Since that time, we have expanded the functionality of that platform through a significant number of high-quality technology development projects and initiatives. Included in these new technology development projects and initiatives are modules or significant upgrades to the existing platforms for: (i) Retail and dealer online auctions; (ii) native IOS and Android apps; (iii) new architecture on website design and functionality; (iv) RumbleOn Marketplace; (v) redesigned cash offer tool;(vi) deal-jacket tracking tool; (vii) inventory tracking tool; (viii) CRM and multiple third-party integrations; (ix) new analytics and machine learning initiatives; and (x) IT monitoring infrastructure. The rapid spread of COVID-19 since March 2020 has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns. These measures have impacted and may further impact all or portions of our workforce and operations, the behavior of our customers, and the operations of our partners, vendors, and suppliers. While the federal and state governments have taken measures to try to contain the COVID-19 pandemic, there is considerable uncertainty regarding such measures and potential future measures. The COVID-19 situation has created an unprecedented and challenging time for our Company. Our current focus is on positioning the Company for a strong recovery when this crisis is over. During 2020 we took steps to reduce our inventory and align our operating expenses to the state of the business. We plan to continue to operate as permitted to support our customers’ needs for reliable vehicles and to provide as many jobs as possible for our associates; however, in April 2020 we laid-off 169 associates. Future restrictions on our access to and utilization of our logistics and distribution network, our corporate offices, the inspection and reconditioning centers of our partners, and/or our support operations or workforce, or similar limitations for our partners, vendors, or suppliers, and restrictions or disruptions of transportation, could further limit our ability to conduct our business and have a material adverse effect on our business, operating results, financial condition and prospects. There is no certainty that measures taken by governmental authorities will be sufficient to mitigate the risks posed by the COVID-19 pandemic, and our ability to perform critical functions could be harmed. The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations, financial condition, and liquidity will depend on the success of the roll out of the vaccines and the efficacy of the vaccines and other future developments, which are highly uncertain and cannot be predicted. Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future. |
Basis of Presentation | The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All of the Company’s subsidiaries are wholly owned. All intercompany accounts and material intercompany transactions have been eliminated. |
Liquidity | The accompanying consolidated financial statements of the Company have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. The Company has incurred losses from inception through December 31, 2020 and may incur additional losses in the future. As the Company continues to expand its business, build its brand name and awareness and continues technology and software development efforts, it may need access to additional capital. Historically, the Company has raised additional equity or debt instruments to fund the expansion; refer to Note 8 - NOTES PAYABLE and Note 9 - STOCKHOLDER'S EQUITY. Management believes that current working capital, availability of equity under its current shelf registration statement, results of operations, and expected continued inventory financing are sufficient to fund operations for at least one year from the financial statement issuance date. The worldwide spread of the COVID-19 outbreak has resulted in a global slowdown of economic activity which decreased demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the outbreak is contained. This is impacting the Company's business and the powersport, automotive and transport industries as a whole. The Company has positioned its business today to be lean and flexible in this period of lower demand and higher uncertainty with the goal of preparing the Company for a strong recovery as the crisis is contained. The Company believes its online business model allows it to quickly respond to market demand or changes in the businesses it operates as the COVID-19 pandemic continues. |
Use of Estimates | The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management's experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates. In particular, the novel COVID-19 pandemic and the resulting adverse impacts to global economic conditions, as well as the Company's operations, may impact future estimates including, but not limited to inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions. |
Loss Per Share | The Company follows the FASB Accounting Standards Codification ("ASC") Topic 260-Earnings per share. Basic earnings per common share ("EPS") calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. Common share and dilutive common share equivalents include: (i) Class A common: (ii) Class B common; (iii) Class B participating preferred shares; (iv) restrictive stock units; (v) stock options; (vi) warrants to acquire Class B common stock; and (vii) shares issued in connection with convertible debt. |
Revenue Recognition | Revenue for our powersports and automotive segments is derived from our online marketplace and auctions and primarily includes the sale of pre-owned vehicles to consumer and dealers. Revenue from our vehicle logistics and transportation service segment is derived by providing automotive transportation services between dealerships and auctions throughout the United States. We adopted ASC 606, Revenue from Contracts with Customers For vehicles sold at wholesale to dealers we satisfy our performance obligation when the wholesale purchaser obtains control of the underlying vehicle, which is upon delivery when the transfer of title, risks and rewards of ownership and control pass to the dealer. We recognize revenue at the amount we expect to receive for the used vehicle, which is the fixed price determined at the auction. The purchase price of the wholesale vehicle is typically due and collected within 30 days of delivery of the wholesale vehicle. For vehicles sold to consumers the purchase price is set forth in the customer contracts at a stand-alone selling price which is agreed upon prior to delivery. We satisfy our performance obligation for used vehicle sales upon delivery when the transfer of title, risks and rewards of ownership and control pass to the customer. We recognize revenue at the agreed upon purchase price stated in the contract, including any delivery charges, less an estimate for returns. Our return policy allows customers to initiate a return during the first three days after delivery. Estimates for returns are based on an analysis of historical experience, trends and sales data. Changes in these estimates are reflected as an adjustment to revenue in the period identified. The amount of consideration received for used vehicle sales to consumers includes noncash consideration representing the value of trade-in vehicles, if applicable, as stated in the contract. Prior to the delivery of the vehicle, the payment is received, or financing has been arranged. Payments from customers that finance their purchases with third parties are typically due and collected within 30 days of delivery of the used vehicle. In future periods additional provisions may be necessary due to a variety of factors, including changing customer return patterns due to the maturation of the online vehicle buying market, macro- and micro-economic factors that could influence customer return behavior and future pricing environments. If these factors result in adjustments to sales returns, they could significantly impact our future operating results. Revenue exclude any sales taxes, title and registration fees, and other government fees that are collected from customers. Vehicle logistics and transportation services revenue is generated primarily by entering into freight brokerage The transaction price is based on the consideration specified in the customer's contract. A performance obligation is created when the customer under a transportation contract submits a bill of lading for the transport of goods from origin to destination. These performance obligations are satisfied as the shipments move from origin to destination. freight brokerage Performance obligations are short-term, with transit days less than one week. Generally, customers are billed either upon shipment of the vehicle or on a monthly basis, and remit payment according to approved payment terms, generally not to exceed 30 days. |
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. During the year ended December 31, 2019, the Company finalized the preliminary purchase price allocation recorded at the acquisition date for Wholesale Express and made a measurement period adjustment to the preliminary purchase price allocation which resulted in a decrease in goodwill of $334,861. The Company made this measurement period adjustment to reflect facts and circumstances related to accounts receivable and accounts payable that existed as of the acquisition date and did not result from intervening events subsequent to such date. |
Goodwill | Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed in business combinations. Goodwill is tested for impairment annually as of December 31, or whenever events or changes in circumstances indicate that an impairment may exist. We have three reportable segments as defined in generally accepted accounting principles for segment reporting: (1) powersports, (2) automotive and (3) vehicle logistics and transportation. Due to the significant decline in the Company’s stock price and the economic effect of COVID-19, the Company determined a triggering event for Goodwill impairment existed as of March 31, 2020. As a result, the Company performed a quantitative impairment analysis for the Automotive segment. The Company’s impairment test indicated no impairment existed as the estimated fair value of the reporting unit exceeded its carrying value at March 31, 2020. In connection with its annual goodwill impairment test as of December 31, 2020, the Company performed impairment assessments by reviewing qualitative factors for each of its reporting units. The results of the assessments indicated that it was not more likely than not that the fair value of the reporting units were less than the carrying values and no goodwill impairment was determined to exist for the years ended December 31, 2020. In connection with its annual goodwill impairment test as of December 31, 2019 for the three reportable segments we performed quantitative impairment testing of the fair value of our reporting units using an income and market valuation approach. The income valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. We also validated the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed in the industry. As part of that assessment, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, profit margins, residual values and the cost of capital. For the year ended December 31, 2019, we recognized an impairment loss on goodwill of $1,850,000 related to powersports, which is recorded in selling, general and administrative expenses in the Consolidated Statement of Operations. No goodwill impairment resulted from the quantitative impairments tests of the remaining reporting units as of December 31, 2019. |
Leases | Effective January 1, 2019, the Company adopted ASC 842, Leases. In accordance with ASC 842, the Company first determines if an arrangement contains a lease and the classification of that lease, if applicable, at inception. This standard requires the recognition of right-of-use ("ROU") assets and lease liabilities for the Company's operating leases. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. The Company has also elected not to recognize a lease liability or ROU asset for leases with a term of 12 months or less and recognize lease payments for those short-term leases on a straight-line basis over the lease term in the Consolidated Statements of Operations. Operating leases are included in Right-of-use assets, Accounts payable and accrued liabilities and Operating lease liabilities, long-term portion in the Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the Company's leases is generally not determinable and therefore the incremental borrowing rate at the lease commencement date is utilized to determine the present value of lease payments. The determination of the incremental borrowing rate requires judgment. Management determines the incremental borrowing rate for each lease using the Company's estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The ROU asset also includes any lease prepayments, offset by lease incentives. Certain of the Company's leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when the Company is reasonably certain that the option will be exercised. An option to terminate is considered unless the Company is reasonably certain the option will not be exercised. |
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. There was no impairment of indefinite lived assets as of December 31, 2020 and 2019. |
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. For the year ended December 31, 2020, the Company recorded an impairment loss on property and equipment of $177,626 due to the Nashville Tornado. No impairment charges on property and equipment were recorded during the year ended December 31, 2019. See Note 5 — Property and Equipment, Net for additional information on property and equipment. |
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 |
Accounts Receivable, Net | Accounts receivable, net of an allowance for doubtful accounts, includes certain amounts due from customers. |
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, 2020, and 2019, the Company did not have any investments with maturities greater than three months. At times, the Company has cash balances in domestic bank accounts that exceed Federal Deposit Insurance Corporation limits. The Company has not experienced any losses related to these cash concentrations. |
Restricted Cash | In connection with the execution of the Inventory Financing and Security Agreement (the "Credit Facility") by and among the Company's subsidiary, RMBL Missouri, LLC ("RMBL MO"), Ally Bank ("Ally") and Ally Financial, Inc., dated February 16, 2018 the parties entered into a Credit Balance Agreement, and so long as the Company owes any debt to Ally or until the bank otherwise consents, the Company agreed to maintain a Credit Balance at Ally of 1) at least 10.0% of the amount of the Company's approved and available credit line under the Credit Facility and 2) no greater than 25.0% of the total principal amount owed to Ally for inventory financed under the Credit Facility. The Credit Facility ended in February 2020. In connection with the inventory financing contract (the "NextGear Facility"), entered into by the Company, its wholly owned subsidiary RMBL Tennessee, Inc, Wholesale, Inc. and NextGear Capital, Inc. ("NextGear"), dated October 30, 2018, Wholesale, as borrower, entered into a $70,000,000 floorplan vehicle financing credit line (the "NextGear Credit Line") with NextGear Capital, Inc. ("NextGear"). During the quarter ended September 30, 2020 the Company and NextGear agreed to reduce the credit line to $55,000,000 with Wholesale and Autosport limiting the aggregate amount of advances under the credit line to $20,000,000 through June 30, 2021, at which time the credit line will be repaid in full. Advances under the NextGear Credit Line require Wholesale to maintain at least $2,000,000 cash collateral in a reserve account in favor of NextGear, which amount is subject to change in NextGear's sole discretion. Upon the satisfaction of all obligations and the termination by NextGear of the NextGear Facility, NextGear will return to Wholesale, Inc., upon its written request to NextGear no earlier than ten (10 business days from the date the obligations were indefeasibly paid and satisfied in full and the NextGear Facility and terminated by Lender. |
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, 2020 and December 31, 2019. 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. |
Embedded Conversion Feature | The Company evaluates embedded conversion features within convertible debt under ASC 815, Derivatives and Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20; Debt with Conversion and Other Options. Under the ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer's economic interest cost. The effect of ASC 470-20 on the accounting for our convertible debt instruments is that the equity component is required to be included in the additional paid-in capital section of stockholders' equity on the consolidated balance sheets and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component of the notes. As a result, we are required to record non-cash interest expense as a result of the amortization of the discounted carrying value of the convertible debt to their face amount over the term of the convertible debt. 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. The Beneficial Conversion Feature ("BCF") of a convertible security is normally characterized as the convertible portion or feature of certain securities that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible security when issued and also records the estimated fair value of any conversion feature issued with those securities. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. 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) an open-form binomial option pricing model (“lattice model”) that simulates, in a non-linear, risk-neutral framework, the stock price of the Company’s common stock. |
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 In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity |
Debt Issuance Costs | Debt issuance costs are accounted for pursuant to FASB ASU 2015-03 , "Simplifying the Presentation of Debt Issuance Costs" |
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 revenue also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. |
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 $5,287,284 and $18,228,262 for the years ended December 31, 2020 and 2019, respectively. |
Stock-Based Compensation | On June 30, 2017 the Company's shareholders approved a Stock Incentive Plan (the "Plan") reserving for issuance under the Plan in the form of restricted stock units ("RSUs"), stock options ("Options"), Performance Units, and other equity awards (collectively "Awards") for our employees, consultants, directors, independent contractors and certain prospective employees who have committed to become an employee (each an "Eligible Individual") of up to 12.0% of the shares of Class B Common Stock outstanding from time to time. On June 25, 2018, the Company's shareholders approved an amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 12.0% of the Company's issued and outstanding shares of Class B Common Stock from time to time to 100,000 shares of Class B Common Stock (the "First Plan Amendment"). On May 20, 2019, the Company's stockholders approved another amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 100,000 shares of Class B Common Stock to 200,000 shares of Class B Common Stock (the "Second Plan Amendment"). On August 25, 2020, the Company's stockholders approved another amendment to the Plan to increase the number of shares authorized for issuance under the Plan from 200,000 shares of Class B Common Stock to 700,000 shares of Class B Common Stock (the "Third Plan Amendment"). To date, the vesting of RSU and Option awards is service / time based. Substantially all service/time based RSU and Option awards issued typically vest over a three-year period approximating the following vesting schedule: (i) 20.0% vesting anywhere from eight-months to thirteen months after grant date, (ii) an additional 30.0% during the subsequent twelve months of the initial vesting, and (iii) the final 50.0% during the following twelve months. Performance-based awards and market condition-based awards granted to date have vesting schedules that are typically dependent on achieving a particular objective within thirty (30) months. The Company estimates the fair value of awards granted under the Plan on the date of grant. In the case of time or service based RSU awards, the fair value based on the share price of the Class B Common Stock on the date of the award. Performance Awards use the share prices of the Class B Common Stock but the Company, both at grant and each subsequent quarter, considers whether to a apply discount to the fair in situations where the Company believes there is risk that the relevant performance metrics may not be met. Options are calculated using the Black-Scholes option valuation model while market-condition based awards are estimated using a Monte Carlo simulation model as these awards are tied to a market condition. Both the Black-Sholes and Monte-Carlo simulations utilize multiple input variables to determine the probability of the Company’s Class B stock price being at certain prices over certain time periods, resulting in an implied value to the holder; the 2020 market-condition based awards assumed expected volatility to be 125% and a risk-free interest rate of 1.0%. We generally expense the grant-date fair value of all awards on a straight-line basis over the vesting period. During the year ended December 31, 2020, the Company granted 416,685 RSUs and 250 Options under the Plan to members of the Board of Directors, officers and employees. Compensation expense for the years ended December 31, 2020 and 2019 was $2,978,236 and $3,836,518, respectively, and is included in selling, general and administrative expenses in the consolidated statements of operations. At December 31, 2020, total unrecognized compensation cost related to awards issued under the Plan and still outstanding and unvested was $3,258,746 and the weighted average period over which this cost is expected to be recognized is approximately 1.04 years. |
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, 2020, 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 positions within the next 12 months. |
Recent Pronouncements | Adoption of New Accounting Standards . In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic 842): Targeted Improvements, whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption. The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total operating lease liability in the amount of $3,118,038, representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $3,114,399. The cumulative effect of this accounting change of $3,639 is included in the accumulated deficit for the year ended December 31, 2020. The standard did not have a material impact on the Company's consolidated statements of operations or statements of cash flows. In June 2016, the FASB issued ASU 2016-13, Financial instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"). |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of accounts receivable | 2020 2019 Trade $ 8,859,237 $ 9,369,733 Finance 2,117,809 147,893 10,977,046 9,517,626 Less: allowance for doubtful accounts 1,569,086 1,034,919 $ 9,407,960 $ 8,482,707 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | 2020 2019 Pre-owned vehicles: Powersport vehicles $ 1,869,830 $ 10,365,050 Automobiles and trucks 19,592,896 47,599,433 21,462,726 57,964,483 Less: Reserve 102,285 583,202 $ 21,360,441 $ 57,381,281 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of purchase price consideration | Purchase price consideration: Cash $ 835,000 $1,536,000 convertible note 1,536,000 $500,000 promissory note 500,000 $257,933 Promissory note 257,933 Total purchase price consideration $ 3,128,933 Estimated fair value of assets: Accounts receivable 3,177,660 Inventory 2,862,004 6,039,664 Estimated fair value of accounts payable and other 5,875,009 Excess of assets over liabilities 164,655 Goodwill 2,964,278 Total net assets acquired $ 3,128,933 |
Schedule of pro forma information | Year Ended December 31, Unaudited 2019 Pro forma revenue $ 846,947,956 Pro forma net loss $ (45,296,568 ) Loss per share - basic and fully diluted $ (40.37 ) Weighted-average common shares and common stock equivalents outstanding basic and fully diluted 1,122,058 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property and equipment | 2020 2019 Vehicles $ 240,603 $ 158,327 Furniture and equipment 191,047 448,074 Technology development and software 11,008,302 8,863,247 Leasehold improvements 321,082 246,135 Total property and equipment 11,761,035 9,715,783 Less: accumulated depreciation and amortization 5,239,589 3,288,109 Total $ 6,521,446 $ 6,427,674 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and intangible assets | Goodwill Indefinite Lived Intangible Assets Balance at December 31, 2018 $ 26,107,146 $ 45,515 Acquisitions 2,964,278 - Impairment (1,850,000 ) - Measurement period adjustment (334,861 ) - Balance at December 31, 2019 26,886,563 45,515 Acquisitions - - Impairment - - Balance at December 31, 2020 $ 26,886,563 $ 45,515 |
Schedule of goodwill | Powersports Automotive Vehicle Logistics Total Balance at December 31, 2018 $ 1,850,000 $ 23,074,775 $ 1,182,371 $ 26,107,146 Acquisitions - 2,964,278 - 2,964,278 Impairment (1,850,000 ) - - (1,850,000 ) Measurement period adjustment - - (334,861 ) (334,861 ) Balance at December 31, 2019 - 26,039,053 847,510 26,886,563 Acquisitions - - - - Impairment - - - - Balance at December 31, 2020 $ - $ 26,039,053 $ 847,510 $ 26,886,563 |
ACCOUNTS PAYABLE AND OTHER AC_2
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and other accrued liabilities | 2020 2019 Accounts payable $ 8,167,957 $ 8,730,624 Operating lease liability-current portion 1,630,002 1,423,610 Accrued payroll 1,079,771 715,658 State and local taxes 856,341 912,062 Other accrued expenses 973,377 639,140 Total $ 12,707,448 $ 12,421,094 |
NOTES PAYABLE AND LINES OF CR_2
NOTES PAYABLE AND LINES OF CREDIT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | 2020 2019 Notes payable-NextGen dated February 8, 2017. Interest is payable semi-annually at 6.5% through February 9, 2019 and 8.5% through February 10, 2020 and 10.0% thereafter through maturity, which is January 31, 2021. $ 833,334 $ 1,333,334 Notes payable-private placement dated March 31, 2017. Interest is payable semi-annually at 8.5% through March 31, 2020 and 10.0% thereafter through maturity which is June 30, 2021. Unamortized debt discount was $0 and $75,601 as of December 31, 2020 and December 31, 2019, respectively. 669,175 667,000 Line of credit-floor plan Ally dated February 16, 2018. Facility provides up to $25,000,000 of available credit secured by vehicle inventory and other assets. Interest rate at December 31, 2019 was 7.05%. Principal and interest are payable on demand. - 8,419,897 Line of credit-floor plan NextGear dated October 30, 2018. Secured by vehicle inventory and other assets. Interest rate at December 31, 2020 was 4.75%. Principal and interest is payable on demand. 17,811,626 50,741,073 Revolving Line of Credit note secured by the loans and other assets of RumbleOn Finance, LLC. Interest rate at December 31, 2020 was 7.25% 888,852 - PPP Loans dated May 1, 2020. Payments of principal and interest were deferred until September 1, 2021, at which time the Company will make equal payments of principal and interest through maturity, which is April 1, 2025. 5,176,845 - Less: Debt discount - (75,601 ) Total notes payable and lines of credit 25,379,832 61,085,703 Less: Current portion 20,688,651 59,160,970 Long-term portion $ 4,691,181 $ 1,924,733 |
Schedule of convertible notes | December 31, 2020 December 31, 2019 Face Amount Debt Discount Carrying Amount Face Amount Debt Discount Carrying Amount Convertible senior notes $ 38,750,000 $ 11,737,521 $ 27,012,479 $ 30,000,000 $ 10,402,024 $ 19,597,976 Convertible notes-Autosport $1,536,000 unsecured note 1,024,000 307,958 716,042 1,536,000 379,616 1,156,384 $500,000 unsecured note - - - 500,000 6,092 493,908 $257,933 unsecured note - - - 257,933 6,382 251,551 39,774,000 12,045,479 27,728,521 32,293,933 10,794,114 21,499,819 Less: Current portion (768,000 ) (205,498 ) (562,502 ) (1,461,933 ) (98,343 ) (1,363,590 ) Long-term portion $ 39,006,000 $ 11,839,981 $ 27,166,019 $ 30,832,000 $ 10,695,771 $ 20,136,229 |
Schedule of interest expense | 2020 2019 Contractual interest expense $ 2,566,171 $ 1,305,000 Amortization of debt discounts 1,867,313 1,218,064 Total $ 4,433,485 $ 2,523,064 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation | For the Years Ended December 31, 2020 2019 Restricted stock units $ 2,957,415 $ 3,812,993 Options 20,821 23,525 Total stock-based compensation $ 2,978,236 $ 3,836,518 |
Schedule of unrecognized stock-based compensation | Unrecognized Stock Based Compensations Related to Outstanding Awards Remaining Weighted-Average Amortization Period (in years) Restricted stock units $ 3,210,906 1.08 Options 47,840 .83 Total unrecognized stock-based amortization $ 3,258,746 1.91 |
Schedule of restricted stock unit activity | Number of RSUs Weighted -Average Grant Date Fair Value Outstanding at December 31, 2018 75,389 $ 104.63 Granted 80,050 $ 60.81 Vested (9,000 ) $ 86.54 Forfeited (16,501 ) $ 61.45 Outstanding at December 31, 2019 129,938 $ 99.00 Granted 416,435 $ 6.60 Vested (35,274 ) $ 87.91 Forfeited (67,256 ) $ 98.53 Outstanding at December 31, 2020 443,843 $ 13.26 Expected to vest 443,843 $ 13.26 |
Schedule of stock option activity | Number of Options Weighted Average Exercise Price Weighted-AverageRemainingContractualLife (in years) Aggregate Intrinsic Value Outstanding at December 31, 2018 - n/a n/a Options granted 5,608 78.10 n/a Options exercised - n/a n/a Options forfeited or expires (521 ) 81.60 n/a Outstanding at December 31, 2019 5,087 78.10 9.6 n/a Options granted 250 $ 61.40 $ n/a Options exercised - Options forfeited or expires (2,586 ) 74.72 $ n/a Outstanding at December 31, 2020 2,751 $ 79.76 8.7 $ n/a Vested / exercisable at December 31, 2020 937 80.13 8.7 $ n/a Expected to vest as of December 31, 2020 2,751 79.57 8.7 $ n/a |
Schedule of stock option assumptions | 2020 2019 Risk-free rate 0.3 % 1.5 % Expected volatility 194.75 % 85.0 % Expected life (in years) 5.48 5.75 Expected dividend yield - - Weighted average grant date fair value per option $ 29.66 $ 34.20 |
COMMON STOCK WARRANTS (Tables)
COMMON STOCK WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of common stock warrants outstanding | 2020 2019 Warrants outstanding at the beginning of the year 16,530 16,051 New warrant issuances to Hercules - - Adjustment to the Hercules warrants due to the anti-dilutive provisions - 479 Warrants outstanding at the end of the year 16,530 16,530 |
Schedule of common stock warrants assumptions | Underwriter Warrants Hercules April Warrants Hercules October Warrants Warrants exercise price $ 126.50 $ 110.00 $ 143.20 Fair value price per share of common stock $ 110.00 $ 101.40 $ 114.60 Volatility 62.0 % 70.0 % 70.0 % Expected term remaining (years) 5.0 5.0 5.0 Risk-free interest rate 1.31 % 2.79 % 2.94 % Discount for lack of marketability 20.0 % 20.0 % 20.0 % Dividend yield - - - Fair value at initial valuation date $ 505,273 $ 208,369 $ 59,292 |
SELLING, GENERAL AND ADMINIST_2
SELLING, GENERAL AND ADMINISTRATIVE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
General and Administrative Expense [Abstract] | |
Schedule of selling, general and administrative expense | 2020 2019 Compensation and related costs $ 25,734,308 $ 33,502,020 Advertising and marketing 5,287,284 18,228,262 Professional fees 3,148,381 2,542,357 Technology development 1,421,138 2,408,338 General and administrative 18,068,237 29,943,272 $ 53,659,348 $ 86,624,249 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information | 2020 2019 Cash paid for interest $ 3,834,758 $ 4,888,070 Convertible notes payable issued in acquisition $ - $ 2,293,933 |
Schedule of cash, cash equivalents, and restricted cash | December 31, 2020 2019 Cash and cash equivalents $ 1,466,831 $ 49,660 Restricted cash (1) 2,049,056 6,676,622 Total cash, cash equivalents, and restricted cash $ 3,515,887 $ 6,726,282 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | 2020 2019 Deferred tax assets: Net operating loss carryforward $ 21,494,873 $ 17,380,733 Business interest carryforward 1,651,179 645,165 Stock-based compensation 518,320 1,287,424 Accounts receivable allowance 361,606 269,403 Lease liabilities 1,568,773 1,599,651 Inventory reserve 26,574 151,815 Basis difference in goodwill 351,993 385,570 Accrued liabilities 122,644 - Property and equipment 372,896 191,259 Total deferred income tax assets 26,468,858 21,911,020 Deferred tax liabilities: Right-of-use assets 1,478,224 1,572,368 Debt issuance costs amortization 1,248,455 28,818 Total deferred tax liabilities 2,726,679 1,601,186 Net deferred tax asset before valuation allowance 23,742,179 20,309,834 Valuation allowance (23,742,179 ) (20,309,834 ) Net deferred taxes $ - $ - |
Schedule of reconciliation of U.S. federal income | 2020 2019 U.S. Federal statutory rate 21.0 % 21.0 % State and local, net of federal benefit 5.0 % 5.0 % Permanent difference (1.4 )% (1.1 )% Valuation allowance (24.6 )% (24.9 )% Effective tax rate - % - % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of weighted-average remaining lease term and discount rate for our operating leases | 2020 Weighted-average remaining lease term 3.7 Weighted-average discount rate 6.2 % |
Schedule of supplemental cash flow information related to operating leases | 2020 Cash payments for operating leases $ 1,691,637 New operating lease assets obtained in exchange for operating lease liabilities $ 2,901,318 |
Schedule of future minimum payments for operating leases | 2021 $ 1,957,188 2022 1,955,037 2023 1,222,866 2024 835,309 2025 553,334 thereafter 285,500 Total lease payments 6,809,234 Less imputed interest (809,078 ) Present value of lease liabilities $ 6,000,156 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment information | Powersports Automotive Vehicle Logistics and Transportation Eliminations(1) Total Year Ended December 31, 2020 Total assets $ 45,694,127 $ 47,841,306 $ 10,535,065 $ (27,091,263 ) 76,979,235 Revenue $ 47,526,127 $ 337,084,959 $ 35,887,132 $ (4,070,975 ) 416,427,243 Operating income (loss) $ (19,865,965 ) $ (1,364,786 ) $ 2,671,131 $ - (18,559,620 ) Depreciation and amortization $ 1,997,142 $ 139,734 $ 6,063 $ - 2,142,939 Interest expense $ (4,793,732 ) $ (1,839,529 ) $ (5,064 ) $ - (6,638,325 ) Gain on early extinguishment of debt $ 188,164 $ - $ - $ - 188,164 Year Ended December 31, 2019 Total assets $ 55,992,165 $ 77,033,326 $ 7,921,578 $ (27,553,978 ) 113,393,091 Revenue $ 101,008,976 $ 717,042,511 $ 31,931,488 $ (9,353,628 ) 840,629,347 Operating income (loss) $ (34,402,724 ) $ (5,318,549 ) $ 1,928,574 $ - (37,792,699 ) Depreciation and amortization $ 1,543,023 $ 235,998 $ 7,405 $ - 1,786,426 Interest expense $ (4,453,549 ) $ (2,732,869 ) $ (1,186 ) $ - (7,187,604 ) Loss on early extinguishment of debt $ (1,499,250 ) $ - $ - $ - (1,499,250 ) |
DESCRIPTION OF BUSINESS AND S_3
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Decrease in goodwill | $ (334,861) | |
Goodwill impairment | 0 | 1,850,000 |
Impairment loss on property and equipment | (177,626) | 0 |
Allowance for doubtful accounts | 1,569,086 | 1,034,919 |
Advertising and marketing expense | $ 5,287,284 | $ 18,228,262 |
RSUs granted | 416,685 | 80,050 |
Stock based compensation expense | $ 2,978,236 | $ 3,836,518 |
Unrecognized stock-based compensation expense | $ 3,258,746 | $ 0 |
Unrecognized stock-based compensation expense remaining weighted-average period | 1 year 14 days | 9 months 18 days |
Finance receivables | $ 2,117,809 | $ 147,893 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts receivable, gross | $ 10,977,046 | $ 9,517,626 |
Less: allowance for doubtful accounts | 1,569,086 | 1,034,919 |
Accounts receivable, net | 9,407,960 | 8,482,707 |
Trade | ||
Accounts receivable, gross | 8,859,237 | 9,369,733 |
Finance | ||
Accounts receivable, gross | $ 2,117,809 | $ 147,893 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory, gross | $ 21,462,726 | $ 57,964,483 |
Less: valuation allowance | 102,285 | 583,202 |
Inventory, net | 21,360,441 | 57,381,281 |
Powersport Vehicles | ||
Inventory, gross | 1,869,830 | 10,365,050 |
Automobiles and Trucks | ||
Inventory, gross | $ 19,592,896 | $ 47,599,433 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 26,886,563 | $ 26,886,563 | $ 26,107,146 |
Autosport | |||
Cash | 835,000 | ||
$1,536,000 convertible note | 1,536,000 | ||
$500,000 promissory note | 500,000 | ||
$257,933 Promissory note | 257,933 | ||
Total purchase price | 3,128,933 | ||
Accounts receivable | 3,177,660 | ||
Inventory | 2,862,004 | ||
Estimated fair value of assets | 6,039,664 | ||
Estimated fair value of accounts payable and other | 5,875,009 | ||
Excess of assets over liabilities | 164,655 | ||
Goodwill | 2,964,278 | ||
Total | $ 3,128,933 |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Business Combinations [Abstract] | |
Pro forma revenue | $ 846,947,956 |
Pro forma net loss | $ (45,296,568) |
Loss per share - fully diluted | $ / shares | $ (40.37) |
Weighted average common shares and common stock equivalents | shares | 1,122,058 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 11,761,035 | $ 9,715,783 |
Less: accumulated depreciation and amortization | 5,239,589 | 3,288,109 |
Property and equipment, net | 6,521,446 | 6,427,674 |
Vehicles | ||
Property and equipment, gross | 240,603 | 158,327 |
Furniture and Equipment | ||
Property and equipment, gross | 191,047 | 448,074 |
Technology Development and Software | ||
Property and equipment, gross | 1,108,302 | 8,863,247 |
Leasehold improvements | ||
Property and equipment, gross | $ 321,082 | $ 246,135 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment, Net [Abstract] | ||
Capitalized cost technology development costs | $ 10,800,292 | |
Technology development costs | 3,529,743 | $ 5,494,081 |
Technology development costs capitalized | 2,145,055 | 2,408,338 |
Depreciation expense | 2,142,939 | 1,786,426 |
Capitalized cost amortization | $ 1,887,305 | $ 1,436,088 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning | $ 26,886,563 | $ 26,107,146 |
Acquisitions | 0 | 2,964,278 |
Impairment | 0 | (1,850,000) |
Measurement period adjustment | 0 | (334,861) |
Goodwill, ending | 26,886,563 | 26,886,563 |
Indefinite lived intangible assets, beginning | 45,515 | 45,515 |
Acquisitions | 0 | 0 |
Impairment | 0 | 0 |
Measurement period adjustment | 0 | 0 |
Indefinite lived intangible assets, ending | $ 45,515 | $ 45,515 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill, beginning | $ 26,886,563 | $ 26,107,146 |
Acquisitions | 0 | 2,964,278 |
Impairment | 0 | (1,850,000) |
Measurement period adjustment | 0 | (334,861) |
Goodwill, ending | 26,886,563 | 26,886,563 |
Powersports | ||
Goodwill, beginning | 0 | 1,850,000 |
Acquisitions | 0 | 0 |
Impairment | 0 | (1,850,000) |
Measurement period adjustment | 0 | 0 |
Goodwill, ending | 0 | 0 |
Automotive | ||
Goodwill, beginning | 26,039,053 | 23,074,775 |
Acquisitions | 0 | 2,964,278 |
Impairment | 0 | 0 |
Measurement period adjustment | 0 | 0 |
Goodwill, ending | 26,039,053 | 26,039,053 |
Vehicle Logistics | ||
Goodwill, beginning | 847,510 | 1,182,371 |
Acquisitions | 0 | 0 |
Impairment | 0 | 0 |
Measurement period adjustment | 0 | (334,861) |
Goodwill, ending | $ 847,510 | $ 847,510 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Measurement period adjustment | $ 0 | $ (334,861) |
Goodwill impairment | $ 0 | $ (1,850,000) |
ACCOUNTS PAYABLE AND OTHER AC_3
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 8,167,957 | $ 8,730,624 |
Operating lease liability-current portion | 1,630,002 | 1,423,610 |
Accrued payroll | 1,079,771 | 715,658 |
State and local taxes | 856,341 | 912,062 |
Other accrued expenses | 973,377 | 639,140 |
Total accounts payable and accrued liabilities | $ 12,707,448 | $ 12,421,094 |
NOTES PAYABLE AND LINES OF CR_3
NOTES PAYABLE AND LINES OF CREDIT (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Less: debt discount | $ 0 | $ (75,601) |
Notes payable, net | 25,379,832 | 61,085,703 |
Current portion | 20,688,651 | 59,160,970 |
Long-term portion | 4,691,181 | 1,924,733 |
Notes Payable 1 | ||
Notes payable, gross | 833,334 | 1,333,334 |
Notes Payable 2 | ||
Notes payable, gross | 669,175 | 667,000 |
Notes Payable 3 | ||
Notes payable, gross | 0 | 8,419,897 |
Notes Payable 4 | ||
Notes payable, gross | 17,811,626 | 50,741,073 |
Notes Payable 5 | ||
Notes payable, gross | 888,852 | 0 |
Notes Payable 6 | ||
Notes payable, gross | $ 5,176,845 | $ 0 |
NOTES PAYABLE AND LINES OF CR_4
NOTES PAYABLE AND LINES OF CREDIT (Details 1) | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 485,664 |
2022 | 1,391,145 |
2023 | 1,405,367 |
2024 | 1,419,732 |
2025 | 474,936 |
Total debt payments | $ 5,176,845 |
NOTES PAYABLE AND LINES OF CR_5
NOTES PAYABLE AND LINES OF CREDIT (Details 2) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt discount | $ 0 | $ 75,601 |
Carrying amount, current | (562,502) | (1,363,590) |
Carrying amount, noncurrent | 27,166,019 | 20,136,229 |
Convertible Note 1 | ||
Face amount | 38,750,000 | 30,000,000 |
Debt discount | 11,737,521 | 10,402,024 |
Carrying amount | 27,012,479 | 19,597,976 |
Convertible Note 2 | ||
Face amount | 1,024,000 | 1,536,000 |
Debt discount | 307,958 | 379,616 |
Carrying amount | 716,042 | 1,156,384 |
Convertible Note 3 | ||
Face amount | 0 | 500,000 |
Debt discount | 0 | 6,092 |
Carrying amount | 0 | 493,908 |
Convertible Note 4 | ||
Face amount | 0 | 257,933 |
Debt discount | 0 | 6,382 |
Carrying amount | 0 | 251,551 |
Total Convertible Notes | ||
Face amount | 39,774,000 | 32,293,933 |
Face amount, current | (768,000) | (1,461,933) |
Face amount, noncurrent | 39,006,000 | 30,832,000 |
Debt discount | 12,045,479 | 10,794,114 |
Debt discount, current | (205,498) | (98,343) |
Debt discount, noncurrent | 11,839,981 | 10,695,771 |
Carrying amount | 32,293,933 | 21,499,819 |
Carrying amount, current | (562,502) | (1,363,590) |
Carrying amount, noncurrent | $ 27,166,019 | $ 20,136,229 |
NOTES PAYABLE AND LINES OF CR_6
NOTES PAYABLE AND LINES OF CREDIT (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Contractual interest expense | $ 2,566,171 | $ 1,305,000 |
Amortization of debt discounts | 1,867,313 | 1,218,064 |
Total | $ 4,433,485 | $ 2,523,064 |
NOTES PAYABLE AND LINES OF CR_7
NOTES PAYABLE AND LINES OF CREDIT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Interest expense | $ (6,638,325) | $ (7,187,604) |
Loss on early extinguishment of debt | 188,164 | (1,499,250) |
Debt discount amortization | 42,001 | 144,409 |
Decrease in derivative liability | 10,806 | 1,302,500 |
Derivative liabilities | 16,694 | 27,500 |
Transactions costs attributable to the derivative liability | 118,038 | |
Line of Credit - NextGear | ||
Interest expense | 1,634,802 | 2,697,591 |
Line of Credit - Ally | ||
Interest expense | 77,266 | 541,702 |
Loan Agreement - Hercules Capital Inc. | ||
Loss on early extinguishment of debt | 0 | (1,499,250) |
Note Payable - NextGen | ||
Interest expense | 87,128 | 110,484 |
Notes Payable - Private Placement | ||
Interest expense | 140,136 | 316,091 |
Debt discount amortization | 75,601 | 70,565 |
Convertible Notes | ||
Interest expense | 187,751 | 228,001 |
Debt discount amortization | $ 84,131 | $ 103,095 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Restricted stock units | $ 2,957,415 | $ 3,812,993 |
Options | 20,821 | 23,525 |
Total stock-based compensation | $ 2,978,236 | $ 3,836,518 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Unrecognized stock based compensation related to outstanding awards | $ 3,258,746 |
Remaining weighted-average amortization period | 1 year 10 months 28 days |
Restricted Stock Units | |
Unrecognized stock based compensation related to outstanding awards | $ 3,210,906 |
Remaining weighted-average amortization period | 1 year 29 days |
Options | |
Unrecognized stock based compensation related to outstanding awards | $ 47,840 |
Remaining weighted-average amortization period | 9 months 29 days |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Restricted stock units outstanding, beginning | 129,938 | 75,389 |
Granted | 416,685 | 80,050 |
Vested | (35,274) | (9,000) |
Forfeited | (67,256) | (16,501) |
Restricted stock units outstanding, ending | 443,843 | 129,938 |
Weighted-average grant date fair value outstanding, beginning | $ 99 | $ 104.63 |
Granted | 6.60 | 60.81 |
Vested | 87.91 | 86.54 |
Forfeited | 98.53 | 61.45 |
Weighted-average grant date fair value outstanding, ending | $ 13.26 | $ 99 |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options outstanding, beginning | 5,087 | 0 |
Granted | 250 | 5,608 |
Exercised | 0 | 0 |
Forfeited or expired | (2,586) | (521) |
Stock options outstanding, ending | 2,751 | 5,087 |
Stock options vested/exercisable | 937 | 0 |
Stock options expected to vest | 2,751 | 3,944 |
Weighted average exercise price outstanding, beginning | $ 78.10 | $ 0 |
Granted | 61.40 | 78.10 |
Exercised | .00 | 0 |
Forfeited or expired | 74.72 | 81.60 |
Weighted average exercise price outstanding, ending | 79.76 | 78.10 |
Weighted average exercise price vested/exercisable | 80.13 | 0 |
Weighted average exercise price expected to vest | $ 79.57 | $ 34.20 |
Weighted-average remaining contractual life outstanding | 8 years 8 months 12 days | 9 years 7 months 6 days |
Weighted-average remaining contractual life vested/exercisable | 8 years 8 months 12 days | 0 years |
Weighted-average remaining contractual life expected to vest | 8 years 8 months 12 days | 9 years 7 months 6 days |
Aggregate intrinsic value outstanding | $ 0 | $ 0 |
Aggregate intrinsic value vested/exercisable | 0 | 0 |
Aggregate intrinsic value expected to vest | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY (Details 4
STOCKHOLDERS' EQUITY (Details 4) - Options - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Risk-free rate | 0.30% | 1.50% |
Expected volatility | 194.75% | 85.00% |
Expected life | 5 years 5 months 23 days | 5 years 9 months |
Expected dividend yield | 0.00% | 0.00% |
Weighted average grant date fair value per option | $ 29.66 | $ 34.20 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock based compensation expense | $ 2,978,236 | $ 3,836,518 |
COMMON STOCK WARRANTS (Details)
COMMON STOCK WARRANTS (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | ||
Warrants outstanding, beginning | 16,530 | 16,051 |
New warrant issuances to Hercules | 0 | 0 |
Adjustment to the Hercules warrants due to the anti-dilutive provisions | 0 | 479 |
Warrants outstanding, ending | 16,530 | 16,530 |
COMMON STOCK WARRANTS (Details
COMMON STOCK WARRANTS (Details 1) | 12 Months Ended |
Dec. 31, 2020USD ($)$ / shares | |
Underwriter Warrants | |
Warrants exercise price | $ 126.50 |
Fair value price per share of common stock | $ 110 |
Volatility | 62.00% |
Expected term remaining | 5 years |
Risk-free interest rate | 1.31% |
Discount for lack of marketability | 20.00% |
Dividend yield | 0.00% |
Fair value at initial valuation date | $ | $ 505,273 |
Hercules April Warrants | |
Warrants exercise price | $ 110 |
Fair value price per share of common stock | $ 101.40 |
Volatility | 70.00% |
Expected term remaining | 5 years |
Risk-free interest rate | 2.79% |
Discount for lack of marketability | 20.00% |
Dividend yield | 0.00% |
Fair value at initial valuation date | $ | $ 208,369 |
Hercules October Warrants | |
Warrants exercise price | $ 143.20 |
Fair value price per share of common stock | $ 114.60 |
Volatility | 70.00% |
Expected term remaining | 5 years |
Risk-free interest rate | 2.94% |
Discount for lack of marketability | 20.00% |
Dividend yield | 0.00% |
Fair value at initial valuation date | $ | $ 59,292 |
SELLING, GENERAL AND ADMINIST_3
SELLING, GENERAL AND ADMINISTRATIVE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
General and Administrative Expense [Abstract] | ||
Compensation and related costs | $ 25,734,308 | $ 33,502,020 |
Advertising and marketing | 5,287,284 | 18,228,262 |
Professional fees | 3,148,381 | 2,542,357 |
Technology development | 1,421,138 | 2,408,338 |
General and administrative | 18,068,237 | 29,943,272 |
Total | $ 53,659,348 | $ 86,624,249 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 3,834,758 | $ 4,888,070 |
Convertible notes payable issued in acquisition | $ 0 | $ 2,293,933 |
SUPPLEMENTAL CASH FLOW INFORM_4
SUPPLEMENTAL CASH FLOW INFORMATION (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | $ 1,466,831 | $ 49,660 | ||
Restricted cash | [1] | 2,049,056 | 6,676,622 | |
Total cash, cash equivalents, and restricted cash | $ 3,515,887 | $ 6,726,282 | $ 15,784,902 | |
[1] | Amounts included in restricted cash represent the deposits required under the Company's short-term revolving facilities |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Net operating loss and interest limitation carryforward | $ 21,494,873 | $ 17,380,733 |
Business interest carryforward | 1,651,179 | 645,165 |
Stock-based compensation | 518,320 | 1,287,424 |
Accounts receivable allowance | 361,606 | 269,403 |
Lease liabilities | 1,568,773 | 1,599,651 |
Inventory reserve | 26,574 | 151,815 |
Basis difference in goodwill | 351,993 | 385,570 |
Accrued liabilities | 122,644 | 0 |
Property and equipment | 372,896 | 191,259 |
Total deferred income taxes | 26,468,858 | 21,911,020 |
Deferred tax liabilities: | ||
Right-of-use assets | 1,478,224 | 1,572,368 |
Debt issuance costs amortization | 1,248,455 | 28,818 |
Total deferred tax liabilities | 2,726,679 | 1,601,186 |
Net deferred tax asset before valuation allowance | 23,742,179 | 20,309,834 |
Valuation allowance | (23,742,179) | (20,309,834) |
Net deferred taxed | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
U.S. Federal statutory rate | 21.00% | 21.00% |
State and local, net of Federal benefit | 2.10% | 5.00% |
Permanent difference | (5.60%) | (1.10%) |
Valuation allowance | (17.50%) | (24.90%) |
Effective tax rate | 0.00% | 0.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 82,733,046 | $ 66,717,013 |
Valuation allowance on the deferred tax assets | $ 23,742,179 | $ 20,309,834 |
LOSS PER SHARE (Details Narrati
LOSS PER SHARE (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Class B preferred stock, outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, outstanding | 50,000 | 50,000 |
Class B Common Stock | ||
Common stock, outstanding | 2,191,633 | 1,111,681 |
Restricted Stock Units | ||
Antidilutive shares excluded from computation | 443,843 | |
Options | ||
Antidilutive shares excluded from computation | 2,751 | |
Warrants | ||
Antidilutive shares excluded from computation | 16,530 | |
Class B Common Stock | ||
Antidilutive shares excluded from computation | 982,107 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Promissory notes | $ 370,556 | $ 370,556 |
Accrued interest | 9,370 | 23,731 |
Interest expense | 77,853 | 183,286 |
Debt discount amortization | $ 42,001 | $ 144,409 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted-average remaining lease term | 3 years 8 months 12 days |
Weighted-average discount rate | 6.20% |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Cash payments for operating leases | $ 1,691,637 |
New operating lease assets obtained in exchange for operating lease liabilities | $ 2,901,318 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 2) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 1,957,188 |
2022 | 1,955,037 |
2023 | 1,222,866 |
2024 | 835,309 |
2025 | 553,334 |
Thereafter | 285,500 |
Total lease payments | 6,809,234 |
Less imputed interest | (809,078) |
Present value of lease liabilities | $ 6,000,156 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expenses | $ 2,200,288 | $ 1,661,649 |
Operating lease liabilities, current | 1,630,002 | 1,423,610 |
Operating lease liabilities, noncurrent | $ 5,090,221 | $ 4,722,101 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Total assets | $ 76,979,235 | $ 113,393,091 | |
Revenue | 416,427,243 | 840,629,347 | |
Operating income (loss) | (18,559,620) | (37,792,699) | |
Depreciation and amortization | 2,142,939 | 1,786,426 | |
Interest expense | (6,638,325) | (7,187,604) | |
Gain (loss) on early extinguishment of debt | 188,164 | (1,499,250) | |
Powersports | |||
Total assets | 45,694,127 | 55,992,165 | |
Revenue | 47,526,127 | 101,008,976 | |
Operating income (loss) | (19,865,965) | (34,402,724) | |
Depreciation and amortization | 1,997,142 | 1,543,023 | |
Interest expense | (4,793,732) | 4,453,549 | |
Gain (loss) on early extinguishment of debt | 188,164 | (1,499,250) | |
Automotive | |||
Total assets | 47,841,306 | 77,033,326 | |
Revenue | 337,084,959 | 717,042,511 | |
Operating income (loss) | (1,364,786) | (5,318,549) | |
Depreciation and amortization | 139,734 | 235,998 | |
Interest expense | (1,839,529) | 2,732,869 | |
Gain (loss) on early extinguishment of debt | 0 | 0 | |
Vehicle Logistics and Transportation | |||
Total assets | 10,535,065 | 7,921,578 | |
Revenue | 35,887,132 | 31,931,488 | |
Operating income (loss) | 2,671,131 | 1,928,574 | |
Depreciation and amortization | 6,063 | 7,405 | |
Interest expense | (5,064) | 1,186 | |
Gain (loss) on early extinguishment of debt | 0 | 0 | |
Eliminations | |||
Total assets | [1] | (27,091,263) | (27,553,978) |
Revenue | [1] | (4,070,975) | (9,353,628) |
Operating income (loss) | 0 | 0 | |
Depreciation and amortization | 0 | 0 | |
Interest expense | 0 | 0 | |
Gain (loss) on early extinguishment of debt | $ 0 | $ 0 | |
[1] | Intercompany investment balances related to the acquisitions of Wholesale, Inc. and Wholesale Express, and receivables and other balances related intercompany freight services of Wholesale Express are eliminated in the Consolidated Balance Sheets. Revenue and costs for these intercompany freight services have been eliminated in the Consolidated Statements of Operations. |