SEC Filing Summary: RumbleOn, Inc. (Form 8-K)
Business Context and Reporting Period
This Current Report on Form 8-K, dated May 9, 2019 (with closing events on May 14, 2019), details a significant capital raise by RumbleOn, Inc. The company, an emerging growth company incorporated in Nevada, executed two concurrent private placements: a convertible notes offering and a common stock offering. The filing also reports the full repayment and termination of a prior loan agreement with Hercules Capital, Inc.
Key Financial Metrics and Capital Structure
- Convertible Notes Offering: Issued $30.0 million in aggregate principal amount of 6.75% Convertible Senior Notes due 2024. Net proceeds were approximately $27.3 million after a 7% discount and expenses.
- Common Stock Offering: Sold 1,900,000 shares of Class B Common Stock at $5.00 per share. Net proceeds were approximately $8.8 million after a 7% commission and expenses.
- Total Capital Raised: Approximately $36.1 million in net proceeds from the combined offerings.
- Debt Repayment: Paid $11,134,696 to Hercules Capital, Inc., covering principal, accrued interest, fees, and costs, fully extinguishing the prior indebtedness.
- Interest Rate: The new Notes bear interest at 6.75% per annum, payable semiannually starting November 1, 2019.
- Conversion Terms: Initial conversion rate is 173.9130 shares per $1,000 principal amount (approx. $5.75 conversion price).
Material Changes Versus Prior Period
The primary material change is the restructuring of the company's capital base. The company replaced a specific secured loan facility with Hercules Capital, Inc. with a larger, unsecured senior debt instrument (the Notes) and equity capital. This action increased the company's liquidity significantly while altering its debt maturity profile to 2024. The filing does not provide comparative revenue, profit, or cash flow metrics for the period, as this is a transactional report rather than a periodic financial statement.
Guidance, Outlook, and Risks
Use of Proceeds: Management intends to use the remaining net proceeds for general corporate purposes, specifically citing increased spending on marketing and advertising and expenditures necessary to grow the business.
Key Terms and Risks:
- Redemption: The Notes are not redeemable by the company prior to May 6, 2022, unless specific stock price thresholds are met.
- Conversion Restrictions: A "blocker provision" limits conversion to shares if the holder would beneficially own more than 4.99% of the outstanding Class B Common Stock.
- Make-Whole Provisions: Additional interest payments may be triggered upon conversion under specific stock price performance conditions or fundamental changes.
- Registration Rights: The company agreed to file a registration statement for the resale of the Notes and Private Placement Shares, with specific deadlines (120 days for Notes, 90-180 days for shares) to ensure liquidity for investors.
Investor Verification Checklist
- Verify the exact closing date and final net proceeds received from the $30.0 million Note Offering and the $9.5 million gross stock offering.
- Confirm the current trading price of Class B Common Stock relative to the $5.75 conversion price to assess immediate conversion risk.
- Review the full text of the Indenture (Exhibit 4.1) for specific covenants and events of default.
- Monitor the company's ability to file the required registration statements within the 120-day (Notes) and 90-180-day (Stock) windows to avoid liquidated damages.
- Assess the impact of the 6.75% interest expense on future earnings, given the company's growth-stage status.