RumbleOn, Inc. 8-K Filing Summary
Business Context and Reporting Period
This Form 8-K, dated February 1, 2019, reports the completion of an acquisition by RumbleOn, Inc. (the "Company"). The transaction closed on February 3, 2019, involving the purchase of all equity interests of Autosport USA, Inc. ("Autosport"). The Company is an emerging growth company incorporated in Nevada.
Key Financial Metrics and Transaction Details
The filing details the consideration paid for the acquisition rather than standard operating financial metrics. The aggregate consideration structure is as follows:
- Cash Payment: $662,818.26 paid at closing.
- Promissory Note: $500,000 principal, 15-month term, 5% simple interest, convertible at the Buyer's option based on a 20-day weighted average trading price.
- Convertible Note: $1,536,000 principal, 3-year term, 6.5% interest. Convertible at $5.75/share (Seller option) or if stock price exceeds $7.00 (Buyer option). Maximum issuance capped at 319,221 shares.
- Earn-Out: Up to $787,500 in cash and/or Class B Common Stock contingent on Autosport achieving performance thresholds.
- Debt Assumption: The Company paid $235,000 of outstanding Autosport debt and assumed an additional $257,933 via a "Second Convertible Note" (1-year term, 5% interest, convertible at $5.75/share, max 47,101 shares).
The filing text does not provide clear values for the Company's current revenue, profit, cash flow, or overall liquidity position outside of this specific transaction.
Material Changes
The primary material change is the expansion of the Company's operations through the acquisition of Autosport USA, Inc. This transaction introduces new debt obligations and potential equity dilution through the convertible notes and earn-out shares. The securities issued were exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
Outlook, Risks, and Contingencies
Contingencies: A portion of the purchase price ($787,500) is contingent on future performance thresholds met by Autosport.
Equity Dilution Risk: The transaction includes up to 366,322 shares of Class B Common Stock potentially issuable upon conversion of the notes (319,221 from the Convertible Note and 47,101 from the Second Convertible Note), plus additional shares from the earn-out.
Interest Obligations: The Company assumes monthly interest and amortization payments on the convertible notes.
Investor Verification Checklist
- Verify the specific performance thresholds required to trigger the $787,500 earn-out payment.
- Monitor the Company's Class B Common Stock price relative to the $5.75 and $7.00 conversion triggers to assess potential dilution.
- Review the impact of the new debt service obligations ($257,933 assumed debt plus interest on notes) on the Company's cash flow.
- Confirm the integration status of Autosport USA, Inc. into RumbleOn's operations.