SEC Filing Summary: RumbleOn, Inc. (Form 8-K)
Business Context and Reporting Period
This Current Report on Form 8-K was filed by RumbleOn, Inc. (the "Company") on April 30, 2018. The Company is a Nevada corporation and an emerging growth company. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation.
Key Financial Metrics and Obligations
- Debt Facility: Entered into a Loan and Security Agreement with Hercules Capital, Inc. and other lenders for an aggregate principal amount of up to $20 million.
- Initial Funding: $5.0 million was funded at closing on April 30, 2018.
- Tranche Structure: The remaining balance is available in three additional tranches, subject to operating targets.
- Interest Rate: Initial rate of 10.5%. Subsequent advances bear interest at the greater of (i) Prime Rate + 5.75% or (ii) 10.25%.
- Maturity: Initial maturity of 36 months. Principal is due May 1, 2021, or November 1, 2021, if certain performance milestones are achieved.
- Equity Component: Issued a warrant to purchase 81,818 shares (potentially increasing to 109,091 shares) of Class B common stock at an exercise price of $5.50 per share.
- Collateral: The loan is secured by a security interest in substantially all assets of the Borrowers, including intellectual property, with specific exceptions for foreign subsidiary voting stock and nonassignable licenses.
Material Changes and Agreements
The filing details the execution of several ancillary agreements to facilitate the loan:
- Subordination Agreements: Executed with Halcyon Consulting, LLC and certain Note Holders, subordinating their existing indebtedness and security interests to the new Hercules facility.
- Intercreditor Agreement: Established priority and enforcement methods between Hercules and Ally Bank/Ally Financial Inc.
- Intellectual Property Security: A specific security agreement was signed covering all current and future intellectual property of the Company and NextGen Pro, LLC.
Guidance, Risks, and Contingencies
The filing does not provide specific revenue guidance or management commentary on future financial performance. However, it outlines significant contingencies and risks:
- Performance Milestones: Full funding of the $20 million facility is contingent upon the Borrowers achieving certain operating targets.
- Default Provisions: Upon an event of default, the Agent may demand immediate payment of all liabilities.
- Asset Encumbrance: The Company has pledged substantially all assets, including intellectual property, as collateral, which limits future borrowing capacity against these assets.
Investor Verification Checklist
- Verify the specific "operating targets" required to unlock the remaining $15 million in loan tranches.
- Review the full text of the Loan Agreement (Exhibit 10.1) for detailed covenants and default triggers.
- Confirm the impact of the warrant issuance (81,818 shares) on existing shareholder dilution.
- Assess the implications of the subordination agreements on the Company's existing debt obligations to Halcyon and Note Holders.
- Check the status of the registration statement for the resale of warrant shares, which must be filed within 90 days of issuance.