UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38248

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, Texas		75038
(Address of principal executive offices)		(Zip Code)

(214) 771-9952

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of Class B common stock, $0.001 par value, outstanding on November 12, 2021 was 14,882,022 shares. In addition, 50,000 shares of Class A common stock, $0.001 par value, were outstanding on November 12, 2021.

RUMBLEON, INC.

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

Table of Contents to Report on Form 10-Q

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosure About Market Risk	43
Item 4. Controls and Procedures	43

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3. Defaults Upon Senior Securities	45
Item 4. Mine Safety Disclosures	45
Item 5. Other Information	45
Item 6. Exhibits	46
SIGNATURES	47

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

RumbleOn, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash	$	68,268		$	1,467
Restricted cash		3,049			2,049
Accounts receivable, net		42,117			9,408
Inventory		171,455			21,360
Prepaid expense and other current assets		4,745			3,446
Total current assets		289,634			37,730
Property and equipment, net		58,929			6,521
Right-of-use assets		92,944			5,690
Goodwill		263,107			26,887
Intangible assets, net		303,560			46
Other assets		3,678			105
Total assets	$	1,011,852		$	76,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	73,384		$	14,193
Floor plan notes payable		87,175			17,812
Current portion of convertible debt		279			563
Current portion of long-term debt		6,151			2,877
Total current liabilities		166,989			35,445
Long-term liabilities:
Senior secured debt		252,777			—
Convertible debt, net		28,648			27,166
Derivative liabilities		41			17
Notes payable		567			4,691
Long-term portion of operating lease liabilities		85,965			4,370
Long-term portion of financing lease liabilities		40,591			—
Deferred tax liabilities		19,579			—
Other long-term liabilities		7,765			720
Total long-term liabilities		435,933			36,964
Total liabilities		602,922			72,409
Commitments and contingencies (Notes 9, 10, 13, 18)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020		—			—
Class A common stock, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		0.05			0.05
Class B common stock, $0.001 par value, 100,000,000 shares authorized, 14,881,522 and 2,191,633 shares issued and outstanding as of September 30, 2021 and December 31, 2020		15			2
Additional paid-in capital		548,000			108,949
Accumulated deficit		(134,766	)		(104,381	)
Class B common stock in treasury, at cost 123,089 and 0 shares as of September 30, 2021 and December 31, 2020		(4,319	)		—
Total stockholders’ equity		408,930			4,570
Total liabilities and stockholders’ equity	$	1,011,852		$	76,979

See Notes to the Condensed Consolidated Financial Statements.

RumbleOn, Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

	Three-Months Ended September 30						Nine-Months Ended September 30
	2021			2020			2021			2020
Revenue:
Vehicles Sales
Powersports	$	83,292		$	7,303		$	121,307		$	38,642
Automotive		105,298			99,315			316,655			281,242
Finance and insurance, net		6,180			199			6,998			672
Parts, service and accessories		16,075			—			16,075			—
Transportation and vehicle logistics		10,369			10,440			32,788			25,192
Total revenue		221,214			117,257			493,823			345,748
Cost of revenue
Powersports		68,295			5,606			97,193			33,692
Automotive		98,773			86,473			293,751			257,046
Parts, service and accessories		8,845			—			8,845			—
Transportation and vehicle logistics		7,914			8,374			25,958			19,325
Cost of revenue before impairment loss		183,827			100,453			425,747			310,063
Impairment loss on automotive inventory		—			—			—			11,738
Total cost of revenue		183,827			100,453			425,747			321,801
Gross profit		37,387			16,804			68,076			23,947
Selling, general and administrative		37,564			13,279			69,077			42,510
Stock-based compensation and other issuances		23,943			—			23,943			—
Insurance recovery		(3,135	)		—			(3,135	)		(5,615	)
Depreciation and amortization		1,717			536			2,948			1,567
Operating income (loss)		(22,702	)		2,989			(24,757	)		(14,515	)
Interest expense		(4,577	)		(1,488	)		(8,107	)		(5,187	)
Forgiveness of PPP loan		572			—			572			—
Change in derivative liability		(6,518	)		(14	)		(8,774	)		7
Gain on early extinguishment of debt		—			—			—			188
Income (Loss) before benefit for income taxes		(33,225	)		1,487			(41,066	)		(19,507	)
Benefit for income taxes		10,681			—			10,681			—
Net income (loss)	$	(22,544	)	$	1,487		$	(30,385	)	$	(19,507	)
Weighted average number of common shares outstanding - basic and fully diluted		6,939,708			2,234,838			4,178,932			2,165,167
Net income (loss) per share - basic and fully diluted	$	(3.25	)	$	0.67		$	(7.27	)	$	(9.01	)

See Notes to the Condensed Consolidated Financial Statements.

RumbleOn, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(dollars in thousands)

(unaudited)

	Class A Common Shares			Class B Common Shares					Additional Paid in			Accumulated		Class B Common Shares in Treasury					Total Stockholders’
	Shares		Amount	Shares			Amount		Capital			Deficit		Shares		Amount			Equity
Balance, as of December 31, 2020	50,000	$	0.05	2,191,633		$	2	$	108,949		$	(104,381	)	—	$	—		$	4,570
Issuance of common stock for restricted stock units	—		—	94,771			—		—			—		—		—			—
Stock-based compensation	—		—	—			—		1,734			—		—		—			1,734
Net loss	—		—	—			—		—			(4,451	)	—		—			(4,451	)
Balance as of March 31, 2021	50,000		0.05	2,286,404			2		110,683			(108,832	)	—		—			1,853
Issuance of common stock, net of issuance cost	—		—	1,048,998			1		36,796			—		—		—			36,797
Issuance of common stock for restricted stock units	—		—	7,660			—		—			—		—		—			—
Stock-based compensation	—		—	—			—		702			—		—		—			702
Net loss	—		—	—			—		—			(3,390	)	—		—			(3,390	)
Balance as of June 30, 2021	50,000		0.05	3,343,062			3		148,181			(112,222	)	—		—			35,962

Issuance of common stock, net of issuance cost	—		—	5,053,029			5		154,438			—		—		—			154,443
Issuance of common stock in acquisition	—		—	5,833,333			6		200,952			—		—		—			200,958
Issuance of common stock for restricted stock units	—		—	775,187			1		(1	)		—		—		—			—
Issuance of warrant	—		—	—			—		19,700			—		—		—			19,700
Stock-based compensation	—		—	—			—		24,730			—		—		—			24,730
Treasury stock purchases	—		—	(123,089	)		—		—			—		123,089		(4,319	)		(4,319	)
Net loss	—		—	—			—		—			(22,544	)	—		—			(22,544	)
Balance as of September 30, 2021	50,000	$	0.05	14,881,522		$	15	$	548,000		$	(134,766	)	123,089	$	(4,319	)	$	408,930

RumbleOn, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(dollars in thousands)

(unaudited)

	Class A Common Shares				Class B Common Shares				Additional Paid in		Accumulated			Class B Common Shares in Treasury				Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Shares		Amount		Equity
Balance, as of December 31, 2019		50,000	$	0.05		1,111,681	$	1	$	92,268	$	(79,382	)		—	$	—	$	12,887
Issuance of common stock, net of issuance cost		—		—		1,035,000		1		10,779		—			—		—		10,780
Issuance of common stock for restricted stock units		—		—		4,485		—		—		—					—		—
Convertible note exchange		—		—		—		—		2,924		—			—		—		2,924
Stock-based compensation		—		—		—		—		846		—			—		—		846
Net loss		—		—		—		—		—		(22,038	)		—		—		(22,038	)
Balance as of March 31, 2020		50,000		0.05		2,151,166		2		106,817		(101,420	)		—		—		5,399
Issuance of common stock for restricted stock units		—		—		21,610		—		—		—			—		—		—
Stock-based compensation		—		—		—		—		717		—			—		—		717
Adjust for fractional shares in reverse stock split		—		—		7,131		—		—		—			—		—		—
Net income		—		—		—		—		—		1,044							1,044
Balance as of June 30, 2020		50,000		0.05		2,179,907		2		107,534		(100,376	)		—		—		7,160
Issuance of common stock for restricted stock units		—		—		11,726		—		—		—			—		—		—
Stock-based compensation		—		—		—		—		862		—			—		—		862
Net income		—		—		—		—		—		1,487			—		—		1,487
Balance as of September 30, 2020		50,000	$	0.05		2,191,633	$	2	$	108,396	$	(98,889	)		—		—	$	9,509

See Notes to the Condensed Consolidated Financial Statements.

RumbleOn, Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	Nine Months Ended September 30
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(30,385	)	$	(19,507	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		2,948			1,568
Amortization of debt discounts		2,284			1,499
Forgiveness of PPP loan		(572	)		—
Share based compensation		27,165			2,425
Impairment loss on inventory		—			11,738
Impairment loss on property and equipment		—			178
Loss (gain) from change in value of derivatives		8,774			(7	)
Gain on early extinguishment of debt		—			(188	)
Deferred taxes		(10,969	)		—
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses and other current assets		486			(1,296	)
(Increase) decrease in inventory		(33,343	)		34,219
(Increase) in accounts receivable		(6,476	)		(2,860	)
(Increase) decrease in other assets		(3,452	)		63
Increase (decrease) in accounts payable and accrued liabilities		16,306			(1,634	)
Increase in other liabilities		1,406			—
Decrease in floor plan trade note borrowings		(3,951	)		—
Net cash (used in) provided by operating activities		(29,779	)		26,198
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used for acquisition, net of cash received		(365,946	)		—
Purchase of property and equipment		(7,613	)		(175	)
Technology development		(1,266	)		(1,598	)
Net cash used in investing activities		(374,825	)		(1,773	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from senior secured debt		261,451			8,272
(Repayments of) proceeds from notes payable		(7,974	)		789
Increase (decrease) in borrowings from non-trade floor plans		27,688			(47,211	)
Net proceeds from PPP loan		—			5,177
Net proceeds from sale of common stock		191,240			10,780
Net cash provided by (used in) financing activities		472,405			(22,193	)
NET INCREASE IN CASH		67,801			2,232
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD		3,516			6,726
CASH AND RESTRICTED CASH AT END OF PERIOD	$	71,317		$	8,958

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

(unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Unless the context requires otherwise, references in these financial statements to “RumbleOn,” the “Company,” “we,” “us,” and “our” refer to RumbleOn and its consolidated subsidiaries.

Overview

RumbleOn, Inc. was incorporated in October 2013 under the laws of the State of Nevada. We are the nation’s first Omnichannel marketplace platform in powersports, leveraging proprietary technology to transform the powersports supply chain from acquisition of supply through distribution of retail and wholesale. RumbleOn provides an unparalleled technology suite, national footprint of physical locations, and full line manufacturer representation to transform the entire customer journey and experience worldwide through technology. Headquartered in the Dallas Metroplex, RumbleOn is revolutionizing the customer experience for outdoor enthusiasts across the country and making powersport vehicles accessible to more people, in more places than ever before. On August 31, 2021 (the “Closing Date”), we completed our business combination with the RideNow Powersports group, the nation’s largest powersports retailer group (“RideNow”) (see Note 3 - RideNow Transaction below).

Basis of Presentation

The accompanying Condensed Consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Condensed Consolidated financial statements include the accounts of RumbleOn Inc. and its subsidiaries, which are all wholly owned, including RideNow from the Closing Date. In accordance with those rules and regulations, the Company has omitted certain information and notes required by U.S. GAAP for annual consolidated financial statements. In the opinion of management, the Condensed Consolidated financial statements contain all adjustments, except as otherwise noted, necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These Condensed Consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K (the “2020 Form 10-K”) for the year ended December 31, 2020. The results of operations for the three and nine-months ended September 30, 2021 are not necessarily indicative of the results expected for the entire fiscal year. All intercompany accounts and material intercompany transactions have been eliminated.

Use of Estimates

The preparation of these Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period, which management considers to be critical accounting estimates. Such estimates include certain assumptions related to goodwill and other intangible assets, long-lived assets, assets held for sale, accruals for chargebacks against revenue recognized from the sale of finance and insurance products, and estimated tax liabilities. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates. In particular, the Covid-19 pandemic and the continuing adverse impacts to global economic conditions, as well as the Company’s operations, may impact future estimates including, but not limited to inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions.

Comprehensive Income (Loss)

During the three and nine-month periods ended September 30, 2021, and 2020, the Company did not have any other comprehensive income and, therefore, the net loss and comprehensive income (loss) were the same for all periods presented.

Recent Pronouncements

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the guidance on the impairment of financial instruments by requiring measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, and earlier adoption is permitted beginning in the first quarter of fiscal 2019. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates (“ASU 2019-10”). The purpose of this amendment is to create a two-tier rollout of major updates, staggering the effective dates between larger public companies and all other entities. This granted certain classes of companies, including Smaller Reporting Companies (“SRCs”), additional time to implement major FASB standards, including ASU 2016-13. Larger public companies will still have an effective date for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities are permitted to defer adoption of ASU 2016-13, and its related amendments, until the earlier of fiscal periods beginning after December 15, 2022. Under the current SEC definitions, the Company meets the definition of an SRC as of the ASU 2019-10 issuance date and is adopting the deferral period for ASU 2016-13.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 for its fiscal year beginning January 1, 2021, and it did not have a material effect on its consolidated financial statements.

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our revenue consists of new vehicles sales, retail and wholesale used vehicle sales, sales of finance and insurance products and sales of parts, service, accessories and apparel. Due to the impact of RideNow’s revenue streams, specifically the additions of parts and service, and finance and insurance revenue, the following information is being provided.

New and Used Powersports Vehicles

RumbleOn sells new and used powersports vehicles. The transaction price for a powersports vehicle sale is determined with the customer at the time of sale. Customers often trade in their own powersports vehicle to apply toward the purchase of a retail new or used powersports vehicle. The “trade-in” powersports vehicle is a type of noncash consideration measured at fair value, based on external and internal market data for a specific powersports vehicle, and applied as payment of the contract price for the purchased powersports vehicle.

When the Company sells a new or used powersports vehicle, transfer of control typically occurs at a point in time upon delivery of the vehicle to the customer, which is generally at the time of sale, as the customer is able to direct the use of and obtain substantially all benefits from the powersports vehicle at such time. Except for limited circumstances, the Company does not directly finance its customer’s purchases or provide leasing. In many cases, RumbleOn arranges third- party financing for the retail sale or lease of powersports vehicles to customers in exchange for a fee paid to RumbleOn by a third-party financial institution. RumbleOn receives payment directly from the customer at the time of sale or from a third-party financial institution (referred to as contracts-in-transit) within a short period of time following the sale. The Company establishes provisions, which are not significant, for estimated returns and warranties on the basis of both historical information and current trends.

Parts and Service

RumbleOn sells parts and vehicle services related to customer-paid repairs and maintenance, repairs and maintenance under manufacturer warranties and extended service contracts, and collision-related repairs. The Company also sells parts through wholesale and retail counter channels.

Each repair and maintenance service is a single performance obligation that includes both the parts and labor associated with the vehicle service. Payment for each vehicle service work is typically due upon completion of the service, which is generally completed within a short period from contract inception. The transaction price for repair and maintenance services is based on the parts used, the number of labor hours applied, and standardized hourly labor rates. The performance obligation for repair and maintenance service are satisfied over time and create an asset with no alternative use and with an enforceable right to payment for performance completed to date. Revenue is recognized over time based on a direct measurement of labor hours, parts and accessories that are allocated to open service and repair orders at the end of each reporting period. As a practical expedient, the time value of money is not considered since repair and maintenance service contracts have a duration of one year or less. The transaction price for wholesale and retail counter parts sales is determined at the time of sale based on the quantity and price of each product purchased. Payment is typically due at time of sale, or within a short period following the sale. RumbleOn establishes provisions, which are not significant, for estimated parts returns based on historical information and current trends. Delivery method of wholesale and retail counter parts vary.

RumbleOn generally considers control of wholesale and retail counter parts to transfer when the products are shipped, which typically occurs the same day as or within a few days of sale. RumbleOn also offers customer loyalty points for parts and services for select franchises. RumbleOn satisfies its performance obligations and recognizes revenue when the loyalty points are redeemed. Amounts deferred related to the customer loyalty programs are insignificant.

Finance and Insurance

RumbleOn sells and receives commissions on the following types of finance and insurance products: extended service contracts, maintenance programs, guaranteed auto protection, tire and wheel protection, and theft protection products, among others. RumbleOn offers products that are sold and administered by independent third parties, including the vehicle manufacturers’ captive finance subsidiaries.

Pursuant to the arrangements with these third-party providers, RumbleOn sells the products on a commission basis. For the majority of finance and insurance product sales, RumbleOn’s performance obligation is to arrange for the provision of goods and services by another party. RumbleOn’s performance obligation is satisfied when this arrangement is made, which is when the finance and insurance product is delivered to the end customer, generally at the time of the vehicle sale. As agent, RumbleOn recognizes revenue in the amount of any fee or commission to which it expects to be entitled, which is the net amount of consideration that it retains after paying the third-party provider the consideration received in exchange for the goods or services to be fulfilled by that party.

RumbleOn’s customers are concentrated in the Sunbelt region. There are no significant judgements or estimates required in determining the satisfaction of the performance obligations or the transaction price allocated to the performance obligations. As revenue are recognized at a point-in-time, costs to obtain the customer (i.e. commissions) do not require capitalization.

Transportation and Vehicle Logistics

Vehicle logistics and transportation services revenue is generated primarily by entering into freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination. The Company’s subsidiary, Wholesale Express, provides these services. The transaction price is based on the consideration specified in the customer's contract. A performance obligation is created when the customer under a transportation contract submits a bill of lading for the transport of goods from origin to destination. These performance obligations are satisfied as the shipments move from origin to destination. The freight brokerage agreements are fulfilled by independent third-party transporters. While the Company is primarily responsible for fulfilling to customers, these transporters are obligated to meet our performance obligations and standards. Performance obligations are short-term, with transit days less than one week. Generally, customers are billed either upon shipment of the vehicle or on a monthly basis, and remit payment according to approved payment terms, generally not to exceed 30 days. Revenue is recognized as risks and rewards of transportation of the vehicle are transferred to the owner during delivery. Wholesale Express is considered the principal in the delivery transactions since it is primarily responsible for fulfilling the service. As a result, revenue is recorded gross.

Disaggregation of Revenue

The significant majority of RumbleOn’s revenue is from contracts with customers. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. We have determined that these categories depict how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.

Revenue from contracts with customers consists of the following:

	Three-Months Ended September 30,				Nine-Months Ended September 30,
	2021		2020		2021		2020
Revenue
New vehicles	$	42,943	$	—	$	42,943	$	—
Used vehicles
Powersports		40,349		7,303		78,364		38,642
Automotive		105,298		99,315		316,655		281,242
Total used vehicles		145,647		106,618		395,019		319,884
Total new and used vehicles		188,590		106,618		437,962		319,884

Parts, service and accessories		16,075		—		16,075		—
Finance and insurance, net		6,180		199		6,998		672
Transportation and vehicle logistics		10,369		10,440		32,788		25,192
Total revenue	$	221,214	$	117,257	$	493,823	$	345,748

Timing of revenue recognition
Goods and services transferred at a point in time	$	210,920	$	117,257	$	483,529	$	345,748
Good and services transferred over time		10,294		—		10,294		—
Total revenue	$	221,214	$	117,257	$	493,823	$	345,748

NOTE 3 – RIDENOW TRANSACTION

On the Closing Date, RumbleOn completed its business combination with RideNow (the “RideNow Transaction”). Pursuant to the Plan of Merger and Equity Purchase Agreement, as amended (the “RideNow Agreement”), on the Closing Date, there were both mergers and transfers of ownership interest comprising in aggregate the RideNow Transaction. For the mergers, five newly-created RumbleOn subsidiaries were merged with and into five RideNow entities (“Merged RideNow Entities”) with the Merged RideNow Entities continuing as the surviving corporations and with the Company obtaining ownership of these entities through these mergers and the transfers noted below. Merged RideNow Entities owned powersports retail locations representing approximately 30% of RideNow retail locations. For the transfers of ownership interest, the Company acquired all the outstanding equity interests of 21 entities comprising the remaining 70% of the RideNow’s retail locations (“Acquired RideNow Entities,” and together with the Merged RideNow Entities, the “RideNow Entities”) that directly or indirectly operate the remaining RideNow powersports retail locations.

Pursuant to the RideNow Agreement, on the Closing Date, the RideNow equity holders received cash in the aggregate amount of $400,400 and 5,833,333 shares of RumbleOn’s Class B common stock. The cash consideration for the RideNow Transaction was funded from (i) the Company’s underwritten public offering of 5,053,029 shares of Class B common stock, which resulted in net proceeds of approximately $154,438 (the “August 2021 Offering”), and (ii) net proceeds of approximately $261,451 pursuant to the Oaktree Credit Facility entered into on the Closing Date (as further described in Note 9, the “Oaktree Credit Agreement”). The remaining funds received from these financing transactions were used for working capital purposes.

The following table summarizes the consideration paid in cash and equity securities for the acquisitions:

Cash, net of cash acquired	$	365,946
Fair value of Class B common stock issued		200,958
Total estimated purchase price consideration¹	$	566,904

The purchase price consideration is subject to a net working capital and debt adjustments. These adjustments are currently under review by management. The amount of these adjustments could not be reasonably estimated as of September 30, 2021, and therefore, no adjustment amount has been reflected in the current estimated purchase price consideration reflected above.

The following amounts represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed from RideNow. RideNow is included in the Powersports reporting segment, including goodwill, as the RideNow business is entirely within the Company’s Powersports segment. As of September 30, 2021, we have performed an initial valuation of the amounts below; however, our assessment of these amounts remains open for completion. We expect to finalize the purchase price allocation process in 2022 as we complete our review of valuations. We are required to finalize our purchase price allocations within one year after the Closing Date. Any potential adjustments made could be material in relation to the preliminary values presented below.

Estimated fair value of assets:
Contracts in transit	$	10,878
Accounts receivable		15,356
Inventory		116,752
Prepaid expenses		1,785
Right-of-use assets		92,715
Property & equipment		45,801
Franchise rights		282,000
Other intangible assets, net		22,129
Other Assets		119
Total assets acquired		587,535

Estimated fair value of liabilities assumed:
Accounts payable, accrued expenses and other current liabilities		41,616
Notes payable - floor plan		45,626
Lease liabilities		126,302
Deferred tax liability		30,548
Notes payable		6,549
Other long-term liabilities		6,210
Total liabilities assumed		256,851

Total net assets acquired		330,684

Goodwill		236,220

Total consideration	$	566,904

The results of operations of RideNow from the Closing Date are included in the accompanying Condensed Consolidated Financial Statements. Acquisition related costs of $1,558 and $3,515 were incurred during the three and nine-months ended September 30, 2021, respectively, and are included in Selling, General and Administrative expenses in the Condensed Consolidated Statements of Operations. In addition, the Company elected to accelerate the vesting of restricted stock units (“RSUs”) and grant other stock awards in connection with the RideNow Transaction. The total value of these awards is $23,943 and is reported as stock-based compensation and other issuances in the Condensed Consolidated Statement of Operations.

Supplemental Pro Forma Information

The following supplemental pro forma information presents the financial results as if the RideNow Transaction was completed as of January 1, 2020 for the three and nine-months ended September 30, 2021 and September 30, 2020. Pro forma net income for the three and nine-months ended September 30, 2021, includes the tax benefit of $10,681 reported in the Condensed Consolidated Statements of Operations.

	Three-Months Ended September 30,					Nine-Months Ended September 30,
	2021			2020		2021		2020
Pro forma total revenue	$	384,724		$	337,001	$	1,148,597	$	1,015,260
Pro forma net income	$	(6,045	)	$	9,703	$	50,524	$	11,102
Net income per share-basic	$	(0.45	)	$	0.81	$	3.91	$	0.93
Weighted average number of shares-basic		13,305,416			11,960,127

SEC Form 10-Q filed by RumbleOn, Inc.