Business Context and Reporting Period
This Form 8-K Current Report was filed by RumbleOn, Inc. (formerly Ridenow Group, Inc.) on September 11, 2017, reporting events occurring on September 5, 2017. The company is a Nevada corporation and has elected to be treated as an emerging growth company. The filing discloses the creation of a direct financial obligation through the issuance of Senior Secured Promissory Notes.
Key Financial Metrics
The filing details a specific debt financing transaction rather than providing comprehensive financial statements for a reporting period.
- Debt Issuance: Aggregate principal amount of $1,650,000.
- Original Issue Discount (OID): $150,000.
- Net Proceeds: Approximately $1,500,000.
- Interest Rate: 5% per annum through December 31, 2017; 10% per annum thereafter.
- Maturity Date: September 5, 2018.
- Security: Notes are secured by an interest in all of the Company's Collateral.
- Default Interest: 2% above the applicable rate upon default.
Material Changes
The primary material change is the incurrence of new senior secured debt. The Notes are classified as "Senior Debt Documents" and hold priority over a previously existing Subordinated Secured Confessed Judgment Promissory Note dated February 8, 2017, payable to NextGen Dealer Solutions, LLC. Noteholders have entered into a Sharing Agreement to ensure equal priority among themselves regarding payment obligations and foreclosure proceeds.
Guidance, Outlook, and Risks
The filing does not provide revenue guidance or management commentary on future operations. However, it outlines specific financial contingencies and risks associated with the new debt:
- Prepayment Trigger: If the Company consummates financing resulting in net proceeds of $5,000,000 or more, Noteholders may require prepayment of the Notes on 30 days' notice.
- Voluntary Prepayment: The Company may prepay the Notes at any time without penalty upon 5 days' notice.
- Default Risk: In the event of default, the entire unpaid principal and accrued interest become immediately due and payable.
- Related Party Transactions: Investors include certain executive officers and directors of the Company.
Investor Verification Checklist
- Verify the full text of the Senior Secured Promissory Note (Exhibit 10.1) for specific definitions of "Collateral" and "Event of Default."
- Confirm the status and terms of the existing Subordinated Note to NextGen Dealer Solutions, LLC to understand the full capital structure.
- Assess the Company's current liquidity position to determine the ability to service monthly interest payments and the $1.65M principal due in 2018.
- Monitor for any future financing rounds exceeding $5 million, which would trigger an immediate repayment obligation.