RideNow Group, Inc 10-Q for FY2021 Q1

RideNow Group, Inc. (RDNW)

10-Q 2021-05-17 For: 2021-03-31

Added on April 12, 2026

About this 10-Q

RideNow Group, Inc filed this 10-Q on May 17, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $104.26M; down 27.8% from $144.42M a year earlier
Net loss: $4.45M; compared with a net loss of $22.04M a year earlier

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RumbleOn, Inc. (Exact name of registrant as specified in its charter)
Nevada		46-3951329
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

901 W Walnut Hill Lane Irving TX		75038
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class B Common Stock, $0.001 par value		RMBL		The NASDAQ Capital Market

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosure About Market Risk	46
Item 4. Controls and Procedures	46

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3. Defaults Upon Senior Securities	47
Item 4. Mine Safety Disclosures	47
Item 5. Other Information	47
Item 6. Exhibits	48
SIGNATURES	49

	As of March 31, 2021	As of December 31, 2020
ASSETS

Current assets:
Cash	$80,049	$1,466,831
Restricted cash	2,049,056	2,049,056
Accounts receivable, net	21,342,681	9,407,960
Inventory	24,034,754	21,360,441
Prepaid expense and other current assets	4,050,991	3,446,225
Total current assets	51,557,531	37,730,513

Property and equipment, net	6,317,167	6,521,446
Right-of-use assets	5,418,220	5,689,637
Goodwill	26,886,563	26,886,563
Deferred finance charge	10,950,000	-
Other assets	159,409	151,076
Total assets	$101,288,890	$76,979,235

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$17,523,899	$12,707,448
Accrued interest payable	827,903	1,485,854
Current portion of convertible debt	522,391	562,502
Current portion of long-term debt	32,826,176	20,688,651
Total current liabilities	51,700,369	35,444,455

Long-term liabilities:
Note payable	4,691,181	4,691,181
Warrant liability	10,950,000
Convertible debt, net	27,572,970	27,166,019
Derivative liabilities	37,346	16,694
Operating lease liabilities and other long-term liabilities	4,483,929	5,090,221
Total long-term liabilities	47,735,426	36,964,115

Total liabilities	99,435,795	72,408,570

Commitments and contingencies (Notes 6, 7, 8, 11, 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 March 31, 2021 and December 31, 2020	-	-
Common A stock, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020	50	50
Common B stock, $0.001 par value, 4,950,000 shares authorized, 2,286,404 and 2,191,633 shares issued and outstanding as of March 31, 2021 and December 31, 2020	2,286	2,192
Additional paid-in capital	110,683,126	108,949,204
Accumulated deficit	(108,832,367)	(104,380,781)
Total stockholders' equity	1,853,095	4,570,665

Total liabilities and stockholders' equity	$101,288,890	$76,979,235

		(214) 771-9952
		(Registrant's telephone number, including area code)
	(Former name, former address and former fiscal year, if changed since last report)

	Three-Months Ended March 31,
	2021	2020
Revenue:
Pre-owned vehicle sales:
Powersports	$10,854,884	$23,139,080
Automotive	84,070,855	114,198,079
Transportation and vehicle logistics	9,338,272	7,087,591
Total revenue	104,264,011	144,424,750

Cost of revenue
Powersports	7,876,391	20,558,286
Automotive	77,859,808	108,353,505
Transportation	7,349,342	5,088,059
Cost of revenue before impairment loss	93,085,541	133,999,850
Impairment loss on automotive inventory	-	11,738,413
Total cost of revenue	93,085,541	145,738,263

Gross profit (loss)	11,178,470	(1,313,513)

Selling, general and administrative	13,401,344	18,056,426

Depreciation and amortization	599,240	522,995

Operating income (loss)	(2,822,114)	(19,892,934)

Interest expense	(1,608,820)	(2,216,757)

Change in derivative liability	(20,652)	(116,815)

Gain (loss) on early extinguishment of debt	-	188,164

Loss before provision for income taxes	(4,451,586)	(22,038,342)

Benefit for income taxes	-	-

Loss	$(4,451,586)	$(22,038,342)

Weighted average number of common shares outstanding - basic and fully diluted	2,303,525	2,046,423

Net income (loss) per share - basic and fully diluted	$(1.93)	$(10.77)

	Preferred Shares		Class A Common Shares		Class B Common Shares		Additional Paid in	Accumulated	Total Stockholders'
	Shares	Amount	Shares	Amount	Shares	Amount	Capital	Deficit	Equity
Balance, as of December 31, 2020	-	-	50,000	$50	2,191,633	$2,192	$108,949,204	$(104,380,781)	$4,570,665
Issuance of common stock for restricted stock units	-	-	-	-	94,771	94	(94)	-	-
Stock-based compensation	-	-	-	-	-	-	1,734,016	-	1,734,016
Net loss	-	-	-	-	-	-	-	(4,451,586)	(4,451,586)
Balance as of March 31, 2021	-	$-	50,000	$50	2,286,404	$2,286	$110,683,126	$(108,832,367)	$1,853,095

	Three Months Ended March 31,
	2021	2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$(4,451,586)	$(22,038,342)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	599,240	522,995
Amortization of debt discounts	558,840	627,755
Share based compensation	1,734,016	846,370
Impairment loss on inventory	-	11,738,413
Impairment loss on property and equipment	-	177,626
Loss from change in value of derivatives	20,652	116,815
Gain on early extinguishment of debt	-	(188,164)
Changes in operating assets and liabilities:
Increase in prepaid expenses and other current assets	(604,766)	(159,175)
Increase in inventory	(2,674,313)	(9,765,663)
(Increase) decrease in accounts receivable	(11,934,721)	240,682
(Increase) decrease in other assets	(8,333)	155,175
Increase (decrease) in accounts payable and accrued liabilities	4,695,873	(2,176,064)
Increase in other liabilities	(214,296)	-
(Decrease) increase in accrued interest payable	(657,951)	434,318
Net cash used in operating activities	(12,937,345)	(19,467,259)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	-	(132,366)
Technology development	(394,962)	(290,376)
Net cash used in investing activities	(394,962)	(422,742)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable	2,500,000	8,272,375
Payments on notes payable	(1,397,098)
Net proceeds from line of credit	10,842,623	2,097,755
Net Proceeds from sale of common stock	-	10,780,080
Net cash provided by financing activities	11,945,525	21,150,210

NET CHANGE IN CASH	(1,386,782)	1,260,209

CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD	3,515,887	6,726,282

CASH AND RESTRICTED CASH AT END OF PERIOD	$2,129,105	$7,986,491

	March 31, 2021	December 31, 2020
Trade	$16,518,164	$8,859,237
Finance	5,237,860	2,117,809
	21,756,024	10,977,046
Less: allowance for doubtful accounts	413,343	1,569,086
	$21,342,681	$9,407,960

	March 31, 2021	December 31, 2020
Pre-owned vehicles:
Powersport vehicles	$1,176,343	$1,869,830
Automobiles and trucks	23,147,940	19,592,896
	24,324,283	21,462,726
Less: Reserve	289,529	102,285
	$24,034,754	$21,360,441

	March 31, 2021	December 31, 2020
Vehicles	$240,603	$240,603
Furniture and equipment	191,047	191,047
Technology development and software	11,403,264	11,008,303
Leasehold improvements	321,082	321,082
Total property and equipment	12,155,996	11,761,035
Less: accumulated depreciation and amortization	5,838,829	5,239,589
Total	$6,317,167	$6,521,446

	Goodwill	Indefinite Lived Intangible Assets
Balance at December 31, 2020	$26,886,563	$45,515
Acquisitions	-	-
Impairment	-	-
Balance at March 31, 2021	$26,886,563	$45,515

	March 31, 2021	December 31, 2020
Accounts payable	$11,128,671	$8,167,957
Operating lease liability-current portion	1,696,078	1,630,002
Accrued payroll	1,663,436	1,079,771
State and local taxes	709,988	856,341
Other accrued expenses	2,325,726	973,377
Total	$17,523,899	$12,707,448

	March 31, 2021	December 31, 2020
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

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	297,411	669,175

Notes payable-Bridge loan dated March 12, 2021. Facility provides up to $2,500,000 of available credit secured by certain intellectual assets. Interest rate at 12.0% annually payable at maturity which is the earlier of September 21, 2021 or upon the issuance of debt or equity above a certain threshold.	2,500,000	-

Line of credit-NextGear floor plan dated October 30, 2018. Secured by vehicle inventory and other assets. Interest rate on March 31, 2021 was 8.25%. Principal and interest is payable on demand.	27,043,101	17,811,626

Line of Credit- RumbleOn Finance. Line of credit secured by the loans and other assets of RumbleOn Finance, LLC. Interest rate on March 31, 2021 was 7.25%. Principal and interest is payable on demand.	2,500,000	888,852

Notes payable-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	5,176,845
Total notes payable and lines of credit	$37,517,357	$25,379,832
Less: Current portion	32,826,176	20,688,651

Long-term portion	$4,691,181	$4,691,181

	Principal Amount	Debt Discount	Carrying Amount
Convertible senior notes	$38,750,000	$11,215,473	$27,534,527
Convertible notes-Autosport:
$1,536,000 unsecured note	832,000	271,166	560,834

	39,582,000	11,486,639	28,095,361
Less: Current portion	768,000	245,609	522,391
Long-term portion	$38,814,000	$11,241,030	$27,572,970

	Three-Months Ended March 31,
	2021	2020
Restricted Stock Units	$1,725,782	$831,079

Options	8,234	15,291

Total stock-based compensation	$1,734,016	$846,370

	Three-Months Ended March 31,
	2021	2020
Compensation and related costs	$5,981,459	$8,180,100
Advertising and marketing	1,596,304	2,948,155
Professional fees	1,667,096	842,703
Technology development and software	403,475	622,144
General and administrative	3,753,010	5,463,324
	$13,401,344	$18,056,426

	March 31, 2021
Weighted-average remaining lease term	3.3 Years
Weighted-average discount rate	6.0%

	Three-months Ended March 31, 2021
Contractual interest expense	$653,906
Amortization of debt discounts	522,048
Total	$1,175,954

	March 31, 2021	December 31, 2020
Cash and cash equivalents	$80,049	$1,466,831
Restricted cash (1)	2,049,056	2,049,056
Total cash, cash equivalents, and restricted cash	$2,129,105	$3,515,887

2021	$1,485,913
2022	1,970,141
2023	1,224,208
2024	855,309
2025	553,334
Thereafter	285,500
Total lease payments	6,374,405
Less imputed interest	(700,168)
Present value of lease liabilities	$5,674,237

	Powersports	Automotive	Vehicle Logistics and Transportation	Eliminations(1)	Total
Three Months Ended March 31, 2021
Total assets	$48,002,418	$56,970,224	$12,650,687	$(27,284,439)	$90,338,890
Revenue	$10,854,884	$84,070,855	$10,030,352	$(692,080)	$104,264,011
Operating income (loss)	$(5,175,280)	$1,641,087	$712,079	$-	$(2,822,114)
Depreciation and amortization	$572,515	$26,725	$-	$-	$599,240
Interest expense	$(1,246,322)	$(360,527)	$(1,971)	$-	$(1,608,820)
Change in derivative liability	$(20,652)	$-	$-	$-	$(20,652)

Three Months Ended March 31, 2020
Total assets	$54,583,357	$75,520,584	$8,470,887	$(26,610,708)	$111,964,120
Revenue	$23,139,080	$114,198,079	$8,990,181	$(1,902,590)	$144,424,750
Operating income (loss)	$(7,189,585)	$(13,360,432)	$657,083	$-	$(19,892,934)
Depreciation and amortization	$462,537	$58,607	$1,851	$-	$522,995
Interest expense	$(1,464,627)	$(751,834)	$(296)	$-	$(2,216,757)
Change in derivative liability	$(116,815)	$-	$-	$-	$(116,815)
Gain on early extinguishment of debt	$188,164	$-	$-	$-	$188,164

	For the Three-Months Ended March 31, 2021				For the Three-Months Ended March 31, 2020
	Revenue	Revenue%	Gross Profit	GP%	Revenue	Revenue%	Gross Profit	GP%
Segment
Powersports	$10,854,884	10.4%	$2,978,493	27.4%	$23,139,080	16.0%	$2,580,794	11.2%
Automotive	84,070,855	80.6%	6,211,047	7.4%	114,198,079	79.1%	5,844,574	5.1%
Transportation	9,338,272	9.0%	1,988,930	21.3%	7,087,591	4.9%	1,999,532	28.2%
Gross profit before impairment loss	104,264,011	100.0%	11,178,470	10.7%	144,424,750	% -	10,424,900	7.2%
Impairment loss (1)	-	-%	-	-%	-	%-	(11,738,413)	(8.1)%
	$104,264,011	100.0%	$11,178,470	10.7%	$144,424,750	100.0%	$(1,313,513)	(0.9)%

	Three Months Ended March 31,
Powersports:	2021	2020
Vehicles sold	1,006	2,817
Average days to sale	19	43
Total vehicle revenue	$10,854,884	$23,139,080
Gross Profit	$2,978,493	$2,926,263

	Three Months Ended March 31,
Automotive(1):	2021	2020
Vehicles sold	2,494	4,603
Average days to sale	21	31
Total vehicle revenue	$84,070,855	$113,632,267
Gross Profit	$6,211,047	$6,348,968

	For the Three Months ended March 31, 2021
	Powersports	Automotive	Vehicle Logistics and Transportation Services	Elimination(1)	Total
Revenue:
Pre-owned vehicle sales:
Powersports	$10,854,884 $	$-	$-	$-	$10,854,884
Automotive	-	84,070,855	-	-	84,070,855
Transportation and vehicle logistics	-		10,030,352	(692,080)	9,338,272
Total revenue	10,854,884	84,070,855	10,030,352	(692,080)	104,264,011

Cost of revenue:
Powersports	7,876,391	-	-	-	7,876,391
Automotive	-	77,859,808	-	-	77,859,808
Transportation	-	-	8,041,422	(692,080)	7,349,342
Total cost of revenue before impairment loss	7,876,391	77,859,808	8,041,422	(692,080)	93,085,541
Impairment loss	-	-	-	-	-
Total cost of revenue	7,876,391	77,859,808	8,041,422	(692,080)	93,085,541

Gross profit	$2,978,493	$6,211,047	$1,988,930	$-	$11,178,470

	For the Three-Months Ended March 31,
	2021	2020
Revenue:
Pre-owned Vehicle Sales:
Powersports	$10,854,884	$23,139,080
Automotive	84,070,855	114,198,079
Total vehicle revenue	94,925,739	137,337,159

Cost of Revenue:
Powersports	7,876,391	20,558,286
Automotive	77,859,808	108,353,505
Cost of revenue before impairment loss on vehicle inventory	85,736,199	128,911,791
Impairment loss on vehicle inventory	-	11,738,413
Total cost of revenue	85,736,199	140,650,204

Gross Profit	9,189,540	(3,313,045)

Selling, General and Administrative	12,124,493	16,571,828

Depreciation and Amortization	599,240	521,144

Operating loss	(3,534,193)	(20,406,017)

Interest expense	(1,606,849)	(2,216,460)

Change in derivative liability	(20,652)	(116,815)

Gain on early extinguishment of debt	-	188,664

Net loss before provision for income taxes	(5,161,694)	(22,550,628)

Benefit for income taxes	-	-

Net loss	$(5,161,694)	$(22,550,628)

	For the Three-Months Ended March 31
	2021	2020
Powersports

Vehicle revenue:
Consumer	$-	$2,656,880
Dealer	10,854,884	20,482,200
Total vehicle revenue	$10,854,884	$23,139,080

Vehicle gross profit:
Consumer	$-	$646,412
Dealer	2,978,493	2,279,850
Total vehicle gross profit	$2,978,493	$2,926,262

Vehicles sold:
Consumer	-	280
Dealer	1,006	2,537
Total vehicles sold	1,006	2,817

Gross profit per vehicle:
Consumer	$-	$2,309
Dealer	$2,961	$899
Total	$2,961	$1,039

Gross margin per vehicle:
Consumer	-%	24.3%
Dealer	27.4%	11.1%
Total	27.4%	12.6%

Average vehicle selling price:
Consumer	$-	$9,489
Dealer	$10,790	$8,073
Total	$10,790	$8,214

	For the Three-Months Ended March 31,
	2021	2020
Vehicle Logistics and Transportation Services

Total revenue	$10,030,352	$8,990,181

Cost of revenue	8,041,422	6,990,649

Gross profit	1,988,930	1,999,532

Selling, general and administrative	1,276,851	1,340,598

Depreciation and amortization	-	1,851

Operating income	712,079	657,083

Interest expense	1,971	296

Net Income before income tax	$710,108	$656,787

Vehicles delivered	18,907	21,027

Revenue per delivery	$531	$428

Gross profit per delivery	$105	$95

Gross margin per delivery	19.8%	22.2%

	Three Months Ended March 31,
	2021	2020
Net loss	$(4,451,586)	$(22,038,342)
Add back:
Interest expense (including debt extinguishment)	1,608,820	2,028,593
Depreciation and amortization	599,240	522,995
Increase in derivative liability	20,652	116,815
EBITDA	(2,222,874)	(19,369,939)
Adjustments:
Impairment loss on automotive inventory	-	11,738,413
Non-cash-stock-based compensation	1,026,216	846,370
Acquisition costs associated with the RideNow Agreement	1,096,653	-
Litigation expenses	88,259	277,995
Other non-reoccurring costs	32,985	-
Adjusted EBITDA	$21,239	$(6,507,161)

Asset-Based Financing:	March 31, 2021	December 31, 2020
Inventory	$27,043,101	$17,811,626
Total asset-based financing	27,043,101	17,811,626
Secured notes payable	5,297,411	2,391,361
Unsecured senior convertible notes	39,582,000	39,774,000
PPP loans	5,176,845	5,176,845
Total debt	77,099,357	65,153,832
Less: unamortized discount and debt issuance costs	(11,486,639)	(12,045,479)
Total debt, net	$65,612,718	$53,108,353

	Three-months Ended March 31,
	2021	2020
Net cash used in operating activities	$(12,937,345)	$(19,467,259)
Net cash used in investing activities	(394,962)	(422,742)
Net cash provided by financing activities	11,945,525	21,150,210
Net (decrease) increase in cash	$(1,386,782)	$1,260,209

Item 6.	Exhibits.

Exhibit No.	Description
2.1+	Plan of Merger and Equity Purchase Agreement, dated March 12, 2021 (Incorporated by reference to Exhibit 2.1 in the Company's Current Report on Form 8-K, filed on March 15, 2021).
4.1	Warrant, dated March 12, 2021 (Incorporated by reference to Exhibit 4.1 in the Company's Current Report on Form 8-K, filed on March 15, 2021).
10.1	Commitment Letter, dated March 12, 2021 (Incorporated by reference to Exhibit 10.1 in the Company's Current Report on Form 8-K, filed on March 15, 2021).
10.2	Secured Promissory Note, dated March 12, 2021 (Incorporated by reference to Exhibit 10.2 in the Company's Current Report on Form 8-K, filed on March 15, 2021).
10.3	Registration Rights and Lock-Up Agreement, dated March 12, 2021 (Incorporated by reference to Exhibit 10.3 in the Company's Current Report on Form 8-K, filed on March 15, 2021).
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2	Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

	RUMBLEON, INC.

Date: May 17, 2021	By:	/s/ Marshall Chesrown
		Marshall Chesrown
		Chief Executive Officer (Principal Executive Officer)



Date: May 17, 2021	By:	/s/ Steven R. Berrard
		Steven R. Berrard
		Chief Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer)

May 17, 2021	By:	/s/ Marshall Chesrown
		Marshall Chesrown
		Chairman and Chief Executive Officer

Maay 17, 2021	By:	/s/ Steven R. Berrard
		Steven R. Berrard
		Chief Financial Officer