ACQUISITIONS

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

RideNow Transaction

On the Closing Date, RumbleOn completed its business combination with RideNow (“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 approximately 30% of RideNow retail location. 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 consideration of $400,400 and 5,833,333 shares of RumbleOn’s Class B Common Stock, valued at $200,958 based on the close price of the Company’s Class B Common Stock on the Closing Date. The cash consideration of $400,400 includes funds against which the Company may make claims for indemnification; this amount is included in consideration transferred. 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 $154,443 (the “August 2021 Offering”), and (ii) net proceeds of approximately $261,000 pursuant to the Oaktree Credit Facility entered into on the Closing Date (as further described in Note 9 - Notes Payable and Lines of Credit, the (“Oaktree Credit Agreement”). The remaining funds received from these financing transactions were used for working capital purposes.

The following table summarizes the provisional consideration for the acquisitions:


Cash	$	400,400
Class B Common Stock	200,958
Total provisional purchase price consideration	$	601,358

The final purchase price allocation will be completed upon payment of final consideration for working capital and other adjustments. RideNow is included in the Powersports reporting segment, including goodwill, as the RideNow business is entirely within the Company’s Powersports segment. As of December 31, 2021, we have performed an initial valuation of the amounts below; however, our assessment of these amounts remains open for completion. The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates. The final purchase price allocation may include changes to: (1) property and equipment; (2) right-of-use assets and lease liabilities; (3) deferred tax liabilities, net; (4) allocations to intangible assets as well as goodwill; (5) final consideration paid related to working capital and other adjustments; and (6) other assets and liabilities. We are required to finalize our purchase price allocations within one year after the Closing Date.

The following amounts represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed from RideNow. Any potential adjustments made could be material in relation to the preliminary values presented below.


Estimated fair value of assets acquired:
Cash	$	34,454
Contracts in transit	10,878
Accounts receivable	10,124
Inventory	127,080
Prepaid expenses	1,785
Right-of-use assets	126,886
Property & equipment	15,509
Franchise rights	282,000
Other intangible assets, net	22,129
Other assets	119
Total assets acquired	630,964

Estimated fair value of liabilities assumed:
Accounts payable, accrued expenses and other current liabilities	43,409
Notes payable - floor plan	47,161
Lease liabilities	130,181
Notes payable	6,549
Deferred tax liabilities	30,548
Other long-term liabilities	6,210
Total liabilities assumed	264,058

Total net assets acquired	366,906

Goodwill	234,452

Total consideration	$	601,358

The Company assumed two promissory notes liabilities with aggregate principal and accrued interest of $2,200 as of the Closing Date due to entities controlled by William Coulter and/or Mark Tkach. See Footnote 18 for further details of these two related party promissory notes.

The results of operations of RideNow from the Closing Date are included in the accompanying Consolidated Financial Statements. Acquisition related costs of $4,281 were incurred for the year ended December 31, 2021 and are included in Selling, General and Administrative expenses in the Consolidated Statement 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 of $23,943 is reported within selling, general and administrative expense in the Consolidated Statement of Operations.

Supplemental pro forma information (Unaudited)

The following unaudited supplemental pro forma information presents the financial results as if the RideNow Transaction was completed at January 1, 2020. Pro forma net income for the year ended December 31, 2021 includes income tax benefit of $2,706 reported in the Consolidated Statements of Operations.


	December 31,
	2021		2020
Pro forma revenue	$	1,650,625	$	1,348,211
Pro forma net income	$	45,565	$	18,854
Net income per share-basic	$	6.58	$	8.63
Weighted average number of shares-basic	6,920,318		2,184,441
Net income per share-fully diluted	$	6.42	$	5.75
Weighted average number of shares-fully diluted	7,099,041		3,279,699

Pro forma adjustments for the year ended December 31, 2021 and 2020, primarily include:


	December 31,
	2021		2020
Stock compensation and other administrative costs	$	29,219	$	3,175
Depreciation and amortization	$	13,199	$	13,607
Interest expense	$	40,347	$	47,312
Income tax provision (benefit)	$	(2,706)	$	6,305