RumbleON (RMBL) S-3/AShelf registration (amended)

As filed with the Securities and Exchange Commission on June 26, 2020

 

Registration No. 333-239285

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 1 to

REGISTRATION STATEMENT

ON FORM S-1

ON FORM S-3

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 901 W. Walnut Hill Lane

Irving, Texas 75038

Marshall Chesrown

Chairman and Chief Executive Officer

RumbleOn, Inc.

901 W. Walnut Hill Lane

Irving, Texas 75038

Michael Francis, Esq.

Christina C. Russo, Esq.

Akerman LLP

350 East Las Olas Boulevard, Suite 1600

Fort Lauderdale, Florida 33301

(954) 463-2700

CALCULATION OF REGISTRATION FEE

 

 

 

  

  

6.75% Convertible Senior Notes due 2025 and

 Shares of Class B Common Stock Issuable Upon Conversion of the Notes

 

You should rely only on the information contained in this prospectus. We have not authorized any dealer, salesperson or other person to provide you with information concerning us, except for the information contained in this prospectus. The information contained in this prospectus is complete and accurate only as of the date on the front cover page of this prospectus, regardless of the time of delivery of this prospectus or the sale of any Notes or shares of Class B Common Stock. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS

 

 

This prospectus does not contain all of the information set forth in the registration statement, portions of which we have omitted as permitted by the rules and regulations of the SEC. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract or document filed as an exhibit to the registration statement for a complete description.

 

You should rely only on the information contained in or incorporated by reference into this prospectus and any applicable prospectus supplements. Such documents contain important information you should consider when making your investment decision. We have not authorized anyone to provide you with different or additional information. The selling securityholders are offering to sell and seeking offers to buy our Notes and shares of our Class B Common Stock only in jurisdictions in which offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of Notes or Class B Common Stock.

 

The share amounts set forth in this prospectus have been adjusted to reflect the one-for-twenty reverse stock split of the Company’s Class A Common Stock and Class B Common Stock, effective May 20, 2020.

 

RISK FACTORS

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

 

 

 

 

 

The Company issued the Notes in a private placement in January 2020 to the purchasers in transactions exempt from registration pursuant to Rule 506 of Regulation D of the Securities Act. Selling securityholders may offer and sell the Notes and the underlying shares of Class B Common Stock pursuant to this prospectus. The net proceeds for the Note Offering were approximately $8.6 million, after deducting offering-related expenses. The information concerning beneficial ownership has been provided by the selling securityholders. Information concerning the selling securityholders may change from time to time, and any changed information will be set forth if and when required in prospectus supplements or other appropriate forms permitted to be used by the SEC.

We do not know when or in what amounts the selling securityholders may offer securities for sale. The selling securityholders may choose not to sell any or all of the securities offered by this prospectus. Because the selling securityholders may offer all or some of the securities, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the securities, we cannot accurately report the number of the securities that will be held by the selling securityholders after completion of the offering. However, for purposes of this table, we have assumed that, after completion of the offering, all of the securities covered by this prospectus will be sold by the selling securityholders.

The following table contains information as of June 22, 2020 with respect to the selling securityholders and the principal amount of Notes and the underlying shares of Class B Common Stock beneficially owned by each selling securityholder that may be offered using this prospectus. The number of shares outstanding, and the percentage of beneficial ownership, post-offering are based on 3,148,157 shares of Class B Common Stock issued and outstanding as of the conclusion of the offering, calculated on the basis of (i) 2,179,407 shares of Class B Common Stock issued and outstanding as of June 22, 2020 prior to the offering and (ii) assuming the conversion and sale by the selling securityholders of the 968,750 shares of Class B Common Stock underlying the Notes. For the purposes of the following table, the number of shares of Class B Common Stock beneficially owned has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), and such information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3, beneficial ownership includes any shares as to which the selling securityholders have sole or shared voting power or investment power and also any shares which each selling shareholder, respectively, has the right to acquire within 60 days of the date of this prospectus through the exercise of any stock option, warrant or other rights.

 

As set forth above, none of the selling securityholders or their affiliates hold securities of the Company other than the Notes. Also, none of the selling stockholders has, or within the past three years has had, any position, office or material relationship with us or any of our predecessors or affiliates, except as discussed below, the selling stockholders previously held an aggregate of $30.0 million in principal amount of the Company's Old Notes.

 

PLAN OF DISTRIBUTION

 

 

We are registering the Notes and the shares of Class B Common Stock to permit the resale of these Notes and the shares of Class B Common Stock by the holders of the Notes and the shares of Class B Common Stock from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the Notes or the shares of Class B Common Stock. We will bear all fees and expenses incident to our obligation to register the Notes and the shares of Class B Common Stock.

The selling stockholders, or their pledgees, donees, transferees, or any of their successors in interest selling shares received from a named selling stockholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus (all of whom may be selling stockholders), may sell the securities from time to time on any stock exchange or automated interdealer quotation system on which the securities are listed, in the over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at prices otherwise negotiated. The selling stockholders may sell the securities by one or more of the following methods, without limitation:

 

 

 

 

 

 

 

 

 

 

 

CERTAIN U. S. FEDERAL INCOME TAX CONSIDERATIONS

In addition, upon certain conversions of the Notes we may pay additional shares or cash in certain circumstances. Due to a lack of relevant authority regarding the treatment of such payments, in particular the interest make-whole payment, the applicability of the Treasury Regulations governing contingent payment debt instrument is uncertain. While not free from doubt, we intend to take the position that the Notes should not be treated as contingent payment debt instruments because of the possibility of payment of these additional shares or cash. This position is based in part on the fact that the payments will be made only to holders who are converting their Notes under certain circumstances and as result are most appropriately treated as a change in conversion rate, however denominated. Depending upon the circumstances, such additional payments, if made in the form of additional shares, may be taxed as deemed dividends to you as described under ‘‘— Constructive Distributions.’’

U.S. holders should consult their own tax advisors regarding the tax consequences in the event we pay additional amounts and the tax consequences of the Notes being treated as contingent payment debt instruments.

A U.S. holder generally will recognize capital gain or loss if the U.S. holder disposes of a Note in a sale, exchange, redemption or other taxable disposition (other than conversion of a Note into either shares of our Class B Common Stock or a combination of cash and shares of our Class B Common Stock, the U.S. federal income tax consequences of which are described under “—Conversion of Notes” below). The U.S. holder’s gain or loss will equal the difference between the amount realized by the U.S. holder (other than amounts attributable to accrued but unpaid interest) and its tax basis in the note. The amount realized by the U.S. holder will include the amount of any cash and the fair market value of any other property received for the note. The U.S. holder’s tax basis in the Note generally will equal the amount it paid for the Note plus the amount, if any, included in income on an adjustment to the conversion rate of the Notes , as described in ‘‘— Constructive Distributions,’’ below. The portion of any amount realized that is attributable to accrued interest will not be taken into account in computing the U.S. holder’s capital gain or loss. Instead, that portion will be recognized as ordinary interest income to the extent that the U.S. holder has not previously included the accrued special in income. The gain or loss recognized by the U.S. holder on the disposition of the Note will be long-term capital gain or loss if it held the Note for more than one year, or short-term capital gain or loss if it held the Note for one year or less, at the time of the transaction. Long-term capital gains of non-corporate taxpayers currently are taxed at reduced rates. Short-term capital gains are taxed at ordinary income rates. The deductibility of capital losses is subject to limitations.

Upon conversion of a Note solely into cash, a U.S. holder generally will be subject to the rules described under “—Sale, Exchange, Redemption or Other Taxable Disposition of Notes” above, subject to the discussion under “—Constructive Distributions” below regarding the possibility that certain adjustments to the conversion rate of a Note may be treated as a taxable dividend. A U.S. holder generally will not recognize any income, gain or loss on the conversion of a Note solely into shares of our Class B Common Stock, except with respect to cash received in lieu of a fractional share of Class B Common Stock and the fair market value of any Class B Common Stock attributable to accrued and unpaid interest (which will be treated as ordinary income), subject to the discussion below under “—Constructive Distributions” regarding the possibility that certain adjustments to the conversion rate of a Note may be treated as a taxable dividend. The U.S. holder’s aggregate tax basis in the Class B Common Stock received upon conversion of a Note (including any fractional share for which cash is paid, but excluding shares attributable to accrued and unpaid interest) will equal the U.S. holder’s tax basis in the Note that was converted. The U.S. holder’s holding period in the Class B Common Stock received (other than shares attributable to accrued and unpaid interest) will include the holding period in the converted note.

The tax consequences of the conversion of a Note into a combination of cash (including an interest make-whole payment) and shares of our Class B Common Stock are not entirely clear. If the Note constitutes a “security” for U.S. federal income tax purposes, a U.S. holder may be treated as exchanging the Note for our Class B Common Stock and cash in a recapitalization for U.S. federal income tax purposes. The term “security” is not defined in the Code or in the Treasury Regulations, and has not been clearly defined by judicial decisions. An instrument is a “security” for these purposes if, based on all the facts and circumstances, the instrument constitutes a meaningful investment in the issuer of the instrument. Although there are a number of factors that may affect the determination of whether a debt instrument is a “security,” one of the most important factors is the original term of the instrument, or the length of time between the issuance of the instrument and its maturity. In general, instruments with an original term of more than ten years are likely to be treated as “securities,” and instruments with an original term of less than five years may not be treated as “securities.” In addition, the convertibility of a debt instrument into stock of the issuer may argue in favor of “security” treatment because of the possible equity participation in the issuer. We intend to take the position that the Notes are “securities” and that the conversion of a Note into a combination of cash (including an interest make-whole payment) and shares of our Class B Common Stock is treated as a recapitalization, in each case, for U.S. federal income tax purposes, although there can be no assurance in this regard.

If the Note is a “security” and the conversion of a Note into a combination of cash (including an interest make-whole payment) and shares of our Class B Common Stock is treated as a recapitalization for U.S. federal income tax purposes, the U.S. holder would not be permitted to recognize loss, but would be required to recognize gain, if any. The amount of gain recognized by a U.S. holder would equal the lesser of (1) the excess (if any) of (a) the amount of cash received (excluding any cash received in lieu of a fractional share of our Class B Common Stock and any cash received attributable to accrued and unpaid interest, but including an interest make-whole payment) plus the fair market value of our Class B Common Stock received (treating a fractional share of our Class B Common Stock as issued and received for this purpose and excluding any such Class B Common Stock that is attributable to accrued and unpaid interest) upon conversion over (b) the U.S. holder’s tax basis in the converted note, and (2) the amount of cash received upon conversion (other than any cash received in lieu of a fractional share of our Class B Common Stock and any cash received attributable to accrued and unpaid interest). Subject to the discussion under “—Constructive Distributions” below regarding the possibility that certain adjustments to the conversion rate of a Note may be treated as a taxable dividend, the gain recognized by a U.S. holder upon conversion of a Note will be long-term capital gain if the U.S. holder held the Note for more than one year, or short-term capital gain if the U.S. holder held the Note for one year or less, at the time of the conversion. Long-term capital gains of non-corporate taxpayers currently are taxed at reduced rates. Short-term capital gains are taxed at ordinary income rates. The U.S. holder’s tax basis in the Class B Common Stock received (including any fractional share for which cash is paid, but excluding shares attributable to accrued and unpaid interest) generally would equal the tax basis of the converted note, decreased by the amount of cash received (other than cash in lieu of a fractional share of Class B Common Stock and any cash attributable to accrued and unpaid interest), and increased by the amount of gain (if any) recognized upon conversion (other than any gain recognized as a result of cash received in lieu of a fractional share of Class B Common Stock). The U.S. holder’s holding period in the Class B Common Stock received (other than shares attributable to accrued and unpaid interest) would include the holding period in the converted note.

Alternatively, the conversion of a Note into a combination of cash (including an interest make-whole payment) and shares of our Class B Common Stock may be treated as in part a payment in redemption for cash of a portion of the Note and in part a conversion of a portion of the Note into Class B Common Stock. In that case, a U.S. holder’s aggregate tax basis in the Note would be allocated between the portion of the Note treated as redeemed and the portion of the Note treated as converted into Class B Common Stock on a pro rata basis (based on relative fair market values). The U.S. holder generally would recognize capital gain or loss with respect to the portion of the Note treated as redeemed equal to the difference between the amount of cash received by the U.S. holder (other than amounts attributable to accrued and unpaid interest) and the U.S. holder’s tax basis in the portion of the Note treated as redeemed, subject to the discussion under “—Constructive Distributions” below regarding the possibility that certain adjustments to the conversion rate of a Note may be treated as a taxable dividend. See “—Sale, Exchange, Redemption or Other Taxable Disposition of Notes” above. With respect to the portion of the Note treated as converted, a U.S. holder generally would not recognize any gain or loss (except with respect to cash received in lieu of a fractional share of Class B Common Stock and Class B Common Stock received attributable to accrued and unpaid interest), subject to the discussion under “—Constructive Distributions” below regarding the possibility that certain adjustments to the conversion rate of a Note may be treated as a taxable dividend. The tax basis allocated to the portion of the Note treated as converted into Class B Common Stock would be the U.S. holder’s tax basis in the Class B Common Stock received (including any fractional share for which cash is paid, but excluding shares attributable to accrued and unpaid interest). The U.S. holder’s holding period in the Class B Common Stock received (other than shares attributable to accrued and unpaid interest) would include the holding period in the converted note.

With respect to cash received in lieu of a fractional share of our Class B Common Stock, a U.S. holder would be treated as if the fractional share were issued and received and then immediately redeemed for cash. Accordingly, the U.S. holder generally would recognize gain or loss equal to the difference between the cash received and that portion of the U.S. holder’s tax basis in the Class B Common Stock attributable to the fractional share on a proportionate basis in accordance with its relative fair market value. Any such gain or loss generally would be capital gain or loss and would be long-term capital gain or loss, if at the time of the conversion, the Notes had been held for more than one year.

Any cash and the value of any portion of our Class B Common Stock that is attributable to accrued and unpaid interest on the Notes not yet included in income by a U.S. holder would be taxed as ordinary income. The basis in any shares of Class B Common Stock attributable to accrued and unpaid interest not yet included in income would equal the fair market value of such shares when received. The holding period in any shares of Class B Common Stock attributable to accrued and unpaid interest would begin on the day after the date of conversion.

A U.S. holder that converts a Note between a record date for an interest payment and the next interest payment date and consequently receives a payment of cash interest, as described in “Description of Notes—Conversion Rights—General,” should consult its own tax advisor concerning the appropriate treatment of such payment.

If we undergo certain corporate transactions, as described under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” above, the conversion obligation may be adjusted so that holders would be entitled to convert the Notes into the type of consideration that they would have been entitled to receive upon such corporate transaction had the Notes been converted into our Class B Common Stock immediately prior to such corporate transaction, except that such holders will not be entitled to receive the additional shares resulting from the adjustment described under “Description of Notes—Conversion Rights—Rate Adjustments” unless such Notes are converted in connection with the relevant make-whole fundamental change. Depending on the facts and circumstances at the time of such corporate transaction, such adjustment may result in a deemed exchange of the outstanding Notes , which may be a taxable event for U.S. federal income tax purposes. Whether or not such an adjustment results in a deemed exchange, a conversion of a Note into such consideration might be a taxable event. U.S. holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of such an adjustment upon a business combination or other corporate transaction.

Holders of convertible debt instruments such as the Notes may, in certain circumstances, be deemed to have received distributions of stock if the conversion rate of such instruments is adjusted. In addition, the failure to provide for such an adjustment may also result in a deemed distribution to U.S. holders who hold the Notes. However, adjustments to the conversion rate made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing the dilution of the interest of the holders of the debt instruments will generally not be deemed to result in a constructive distribution of stock. Certain of the possible adjustments (or failures to make adjustments) provided in the Notes may not qualify as being pursuant to a bona fide reasonable adjustment formula. If such adjustments are made in connection with other shareholders of our company receiving a distribution of money or other property, holders will be deemed to have received constructive distributions in amounts based on the value of their increased interest in our equity resulting from such adjustments. Generally, such deemed distributions will be taxable in the same manner as an actual distribution as described below under ‘‘— Distributions on the Class B Common Stock,” even though holders have not received any cash or property as a result of such adjustments, except that it is unclear whether such deemed distributions would be eligible for the reduced tax rate applicable to certain dividends paid to non-corporate U.S. holders or the dividend-received deduction applicable to certain dividends paid to corporate U.S. holders. You should consult your tax advisor as to whether such deemed distributions are eligible for dividends-received deduction or the preferential rates applicable to certain dividends. Generally, a U.S. holder’s tax basis in a Note will be increased to the extent any such constructive distribution is treated as a dividend. Because a constructive dividend deemed received by you would not give rise to any cash from which any applicable withholding could be satisfied, if we pay backup withholding on your behalf (because you failed to establish an exemption from backup withholding), we may, at our option, set off any such payment against payments of cash and Class B Common Stock payable on the Notes (or, in certain circumstances, from any payments on the Class B Common Stock).

Distributions, if any, made on our Class B Common Stock generally will be included in your income as dividend income to the extent paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions in excess of our current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of your adjusted tax basis in the Class B Common Stock, and thereafter as capital gain from the sale or exchange of such Class B Common Stock. Dividends received by a corporate U.S. holder may be eligible for the dividends-received deduction, and dividends received by non-corporate U.S. holders generally will be subject to tax at the current lower applicable capital gains rates, provided in each case that certain holding period and other applicable requirements are satisfied.

Upon the sale, exchange or other taxable disposition of our Class B Common Stock, you generally will recognize capital gain or loss equal to the difference between (i) the amount of cash and the fair market value of all other property received upon such disposition and (ii) your adjusted tax basis in such Class B Common Stock. Such capital gain or loss will be long-term capital gain or loss if your holding period for our Class B Common Stock exceeds one year at the time of such disposition. Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, will generally be subject to a reduced rate of U.S. federal income tax. Your ability to deduct capital losses may be limited.

We (or the applicable paying agent) are required to furnish to the record holders of the Notes and Class B Common Stock, other than exempt holders, and to the Internal Revenue Service information with respect to interest and principal paid on the Notes, constructive distributions on the Notes treated as dividends, dividends paid on the Class B Common Stock and the proceeds received upon the sale, exchange or other disposition of such Notes or Class B Common Stock. You may be subject to backup withholding with respect to interest paid on the Notes, constructive distributions on the Notes treated as dividends, dividends paid on the Class B Common Stock or proceeds received from a disposition of the Notes or shares of Class B Common Stock. If you are a U.S. holder and not otherwise exempt from information reporting and backup withholding, payments to you will be subject to backup withholding if:

The amount of any reportable payments, such as interest or dividends, made to you (unless you are an exempt recipient) and the amount withheld, if any, with respect to such payments will be reported to you and to the Internal Revenue Service for each calendar year. You should consult your tax advisor regarding your qualification for an exemption from backup withholding and information reporting and the procedures for obtaining such an exemption, if applicable. Backup withholding is not an additional tax, and you may use amounts withheld under the backup withholding rules as a credit against your U.S. federal income tax liability or may claim a refund as long as you provide the required information to the Internal Revenue Service in a timely manner.

Subject to the discussion of backup withholding below and the discussion of withholding on foreign accounts below, interest paid to a non-U.S. holder should not be subject to the U.S. federal income or withholding tax provided that:

If you hold your Notes through certain foreign intermediaries or certain foreign partnerships, such foreign intermediaries or partnerships must also satisfy the certification requirements of applicable Treasury Regulations.

 

If you cannot satisfy the requirements described above, you will be subject to the 30% U.S. federal withholding tax with respect to payments of interest on the Notes , unless you provide us with a properly executed (1) Internal Revenue Service Form W-8BEN or Form W-8BEN-E, as applicable, (or successor form) claiming an exemption from or reduction in withholding under the benefit of an applicable U.S. income tax treaty or (2) Internal Revenue Service Form W-8ECI (or successor form) stating that the interest paid on the Note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States.

If you are engaged in a trade or business in the United States and interest on a Note is effectively connected with your conduct of that trade or business (and if an income tax treaty applies and so requires, such interest is attributable to a permanent establishment or fixed base maintained by you in the United States), you will be subject to U.S. federal income tax on that interest on a net income basis (although you will be exempt from the 30% withholding tax, provided the certification requirements described above are satisfied) in the same manner as if you were a U.S. person as defined under the Code. In addition, if you are a non-U.S. corporation for U.S. federal income tax purposes, you may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with your conduct of a trade or business in the United States. For this purpose, interest will be included in the earnings and profits of such non-U.S. corporation.

We may be required to make additional payments to holders of the Notes under the circumstances described under “Description of Notes — Interest Make-Whole Payment upon Certain Conversions,” “Description of Notes — Events of Default,” “Description of Notes — Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change,” and “Description of Notes —Registration Rights; Additional Interest.” For a discussion of the impact of additional payments on the Notes, see the discussion under “Consequences to U.S. holders—Additional Amounts.” It is possible that certain of such payments might be subject to U.S. federal withholding tax at a rate of 30% or lower treaty rate, if applicable. We will determine if any withholding is required if and when any such amounts become payable. Non-U.S. holders should consult their own tax advisors as to the tax considerations that relate to the potential additional interest payments.

Subject to the discussion of backup withholding and withholding on foreign accounts below, any gain realized upon the sale, exchange, repurchase, redemption or other taxable disposition of a Note or a share of Class B Common Stock generally will not be subject to U.S. federal income tax unless:

If your gain is effectively connected with your conduct of a U.S. trade or business (and if an income tax treaty applies and so requires, such gain is attributable to a permanent establishment or fixed base maintained by you in the United States), you generally will be subject to U.S. federal income tax on the net gain derived from the sale, exchange, repurchase, redemption or other disposition. If you are a non-U.S. corporation for U.S. federal income tax purposes, any such effectively connected gain received by you may also, under certain circumstances, be subject to the branch profits tax at a 30% rate (or such lower rate as may be prescribed under an applicable U.S. income tax treaty).

If you are described in the second bullet point above, you will be subject to a 30% U.S. federal income tax on the gain derived from the sale, exchange, repurchase, redemption or other disposition, which gain may be offset by U.S. source capital losses, even though you are not considered a resident of the United States.

With respect to the third bullet point above, generally, a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests, as defined in the Code and applicable regulations, equals or exceeds 50% of the aggregate fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe we are not currently and do not anticipate becoming a USRPHC for U.S. federal income tax purposes. Any amount paid to you on a sale, exchange, repurchase or redemption of a Note by us which represents interest will be taxable as described above under “— Payments of Interest on the Notes.”

A non-U.S. holder’s conversion of a Note into Class B Common Stock or a combination of Class B Common Stock and cash (including an interest make-whole payment), will be treated as described under “U.S. Holders — Conversion of the Notes”. To the extent a non-U.S. holder realizes gain, such gain will be treated as described under “— Sale, Exchange, Repurchase, Redemption or Other Taxable Disposition of the Notes or the Class B Common Stock” above. To the extent a non-U.S. holder receives amounts attributable to accrued interest, such amounts will be taxed in the manner described above under ‘‘— Payments of Interest on the Notes.”

In general, dividends, if any, received by you with respect to our Class B Common Stock (and any deemed dividends resulting from certain adjustments, or failures to make certain adjustments, to the conversion rate of the Notes (see “—U.S. Holders — Constructive Distributions” above)) will be subject to withholding of U.S. federal income tax at a 30% rate, unless such rate is reduced by an applicable U.S. income tax treaty. In the case of any deemed dividend, this tax could be withheld from amounts owed to you, including interest payments, shares of our Class B Common Stock received upon exchange of the Notes and payments on shares of our Class B Common Stock. Dividends that are effectively connected with your conduct of a trade or business in the United States (and if an income tax treaty applies and so requires, are attributable to a permanent establishment or fixed base maintained by you in the United States) are generally subject to U.S. federal income tax as if you were a U.S. holder and are exempt from the 30% withholding tax (assuming compliance with certain certification requirements). Any such effectively connected dividends received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to the branch profits tax at a 30% rate or such lower rate as may be prescribed under an applicable U.S. income tax treaty. In order to claim the benefit of a U.S. income tax treaty or to claim exemption from withholding because dividends paid to you on our Class B Common Stock (or any constructive distributions on the Notes treated as dividends) are effectively connected with your conduct of a trade or business in the United States, you must provide a properly executed Internal Revenue Service Form W-8BEN or Form W-8BEN-E, as applicable, for treaty benefits or W-8ECI for effectively connected income (or such successor forms as the Internal Revenue Service designates), prior to the payment of dividends. These forms must be periodically updated. You may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund.

If you are a non-U.S. holder, in general, you will not be subject to backup withholding with respect to payments that we make to you provided that we do not have actual knowledge or reason to know that you are a U.S. person, as defined under the Code, and you have given us the statement described above under “Non-U.S. Holders — Payments of Interest on the Notes.” In addition, you will not be subject to backup withholding or information reporting with respect to the proceeds of the sale of a Note or a share of Class B Common Stock within the United States or conducted through certain U.S.-related financial intermediaries, if the payer receives the statement described above and does not have actual knowledge or reason to know that you are a U.S. person, as defined under the Code, or you otherwise establish an exemption. However, we (or the applicable paying agent) will be required to report annually to the Internal Revenue Service and to you the amount of, and the tax withheld with respect to, any interest and dividends paid to you, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which you reside. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability provided that the required information is furnished to the Internal Revenue Service in a timely manner.

The Foreign Account Tax Compliance Act, or FATCA, and guidance issued thereunder may impose withholding taxes on certain types of payments made to ‘‘foreign financial institutions’’ (as specifically defined) and certain other non-U.S. entities (including financial intermediaries). Under FATCA, failure to comply with certification, information reporting and other specified requirements could result in withholding tax being imposed on payments of interest, dividends and sales proceeds of any property of a type which can produce U.S. source interest or dividends to foreign intermediaries and certain non-U.S. holders. FATCA imposes a 30% withholding tax on interest, dividends, or gross proceeds from the sale or other disposition of Class B Common Stock or Notes paid to a foreign financial institution or to a non-financial foreign entity, unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non- financial foreign entity either certifies it does not have any “substantial United States owners” as specifically defined in FATCA or furnishes identifying information regarding each substantial United States owner or (iii) the foreign financial institution or the non-financial foreign entity qualifies for an exemption from the withholding tax. If the payee is a foreign financial institution, in the absence of any applicable exemption, it must enter into an agreement with the United States Treasury requiring, among other things, that it undertake to identify accounts held by certain United States persons or United States-owned foreign entities, annually report certain information about such accounts, and withhold 30% on “withholdable payments” (as specifically defined) made to certain account holders. An intergovernmental agreement between the United States and the foreign entity’s jurisdiction may modify these requirements. Prospective investors should consult their tax advisors regarding the implications of FATCA with respect to an investment in the Notes.

Section 871(m) of the Code requires withholding (of up to 30%, depending on whether a treaty applies) on certain financial instruments to the extent that the payments or deemed payments on the financial instruments are treated as being contingent upon or determined by reference to U.S.-source dividends. Under Treasury Regulations promulgated under Section 871(m), Section 871(m) will apply to financial instruments issued in 2019 only if they are “delta-one.” A “delta-one” instrument is one in which, as of the pricing date, the ratio of the change in the fair market value of the instrument to a small change in the fair market value of the property referenced by the instrument is equal to 1.00. We have determined that the Notes are not delta-one instruments. Accordingly, non-U.S. holders of the Notes should not be subject to tax under Section 871(m). However, it is possible that Section 871(m) withholding tax could apply to the Notes under these rules in the future if, pursuant to a deemed taxable exchange, the Notes are treated as newly issued after January 1, 2021. If withholding is required, we (or the applicable withholding agent) would be entitled to withhold such taxes without being required to pay any additional amounts with respect to amounts so withheld. Non-U.S. holders should consult with their tax advisors regarding the application of Section 871(m) and the regulations thereunder in respect of their acquisition and ownership of the Notes .

DESCRIPTION OF THE NOTES

On January 10, 2020, the Company entered into a note exchange and subscription agreement (the "Note Exchange & Subscription Agreement"), as amended by that certain Joinder and Amendment effective January 13, 2020 (the "Joinder Agreement," and together with the Note Exchange & Subscription Agreement, the "Note Agreement"), with the investors in the Company's May 2019 144A Convertible Note transaction (the "Note Investors"), pursuant to which the Company agreed to complete (i) a note exchange pursuant to which $30 million of the Company's 6.75% Convertible Senior Notes due 2024 would be cancelled in exchange for a new series of 6.75% Convertible Senior Notes due 2025 (the “Notes”) and (ii) the issuance of additional Notes in a private placement in reliance on the exemption from registration provided by Rule 506 of Regulation D of the Securities Act as a sale not involving any public offering (the "Note Offering"). On January 14, 2020, the Company closed the Note Offering. The net proceeds for the Note Offering were approximately $8.6 million, after deducting offering-related expenses.

 

 

 

 

 

 

 

 

 

We may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to us), repurchase Notes in the open market or otherwise, whether by us or our subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives. We will cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other derivatives) to be surrendered to the trustee for cancellation, and they will no longer be considered “outstanding” under the Indenture upon their repurchase.

A holder of Notes may transfer or exchange Notes at the office of the registrar in accordance with the Indenture. The registrar and the trustee may require a holder, among other things, to offer indemnity or security satisfactory to it and to furnish appropriate endorsements and transfer documents. No service charge will be imposed by us, the trustee or the registrar for any registration of transfer or exchange of Notes, but we may require a holder to pay a sum sufficient to cover any transfer tax or other similar governmental charge required by law or permitted by the Indenture. Holders of Notes may not sell or otherwise transfer Notes or any Class B Common Stock issuable upon conversion of Notes except in compliance with the provisions set forth below under “Transfer Restrictions.” We are not required to transfer or exchange any Note selected for redemption or surrendered for conversion or required repurchase.

The registered holder of a Note will be treated as its owner for all purposes.

The “trading price” of the Notes on any date of determination means the average of the secondary market bid quotations obtained by the bid solicitation agent for $2,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select for this purpose;provided that if three such bids cannot reasonably be obtained by the bid solicitation agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the bid solicitation agent, that one bid shall be used. If the bid solicitation agent cannot reasonably obtain at least one bid for $2,000,000 principal amount of Notes from a nationally recognized securities dealer, then the trading price per $1,000 principal amount of Notes will be deemed to be less than 98% of the product of the last reported sale price of our Class B Common Stock and the conversion rate. If we do not, when we are required to, instruct the bid solicitation agent to obtain bids, or if we give such instruction to the bid solicitation agent, and the bid solicitation agent fails to make such determination, then, in either case, the trading price per $1,000 principal amount of Notes will be deemed to be less than 98% of the product of the last reported sale price of our Class B Common Stock and the conversion rate on each trading day of such failure.

 

The bid solicitation agent shall have no obligation to determine the trading price per $1,000 principal amount of Notes unless we have requested such determination in writing; and we shall have no obligation to make such request unless a holder of a Note provides us with reasonable evidence that the trading price per $1,000 principal amount of Notes would be less than 98% of the product of the last reported sale price of our Class B Common Stock and the conversion rate. At such time, we shall instruct the bid solicitation agent to determine the trading price per $1,000 principal amount of Notes beginning on the next trading day and on each successive trading day until the trading price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the last reported sale price of our Class B Common Stock and the conversion rate, and we shall instruct the three independent nationally recognized securities dealers to deliver bids to the bid solicitation agent. If the trading price condition has been met, we will so notify the holders, the trustee and the conversion agent (if other than the trustee) in writing. If, at any time after the trading price condition has been met, the trading price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the last reported sale price of our Class B Common Stock and the conversion rate for such date, we will so notify the holders, the trustee and the conversion agent (if other than the trustee).

We are initially acting as the bid solicitation agent.

then, in either case, we must notify the holders of the Notes, the trustee and the conversion agent (if other than the trustee) in writing at least 50 scheduled trading days prior to the ex-dividend date for such issuance or distribution. Once we have given such notice, holders may surrender all or any portion of their Notes for conversion at any time until the earlier of the close of business on the business day immediately preceding the ex-dividend date for such issuance or distribution and our announcement that such issuance or distribution will not take place, even if the Notes are not otherwise convertible at such time.

We will pay any documentary, stamp or similar issue or transfer tax on the issuance of any shares of our Class B Common Stock upon conversion of the Notes, unless the tax is due because the holder requests such shares to be issued in a name other than the holder’s name, in which case the holder will pay the tax.

We refer to the date any holder complies with the relevant procedures for conversion described above as the “conversion date.”

If a holder has already delivered a repurchase notice as described under “—Fundamental Change Permits Holders to Require Us to Repurchase Notes” with respect to a note, the holder may not surrender that Note for conversion until the holder has withdrawn the repurchase notice in accordance with the relevant provisions of the Indenture. If a holder submits its Notes for required repurchase, the holder’s right to withdraw the fundamental change repurchase notice and convert the Notes that are subject to repurchase will terminate at the close of business on the business day immediately preceding the relevant fundamental change repurchase date.

The following sets forth the number of Additional Shares by which the Conversion Rate shall be increased:

 

where,

 

AS          =     the number of Additional Shares calculated pursuant to the Indenture;

 

 

MWRP   =    the Make-Whole Adjustment Reference Price in effect as of the calculation of the number of Additional Shares pursuant to the Indenture; and

 

SP           =    the Stock Price; and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DESCRIPTION OF CAPITAL STOCK

Our Articles of Incorporation authorize the issuance of 5,000,000 shares of common stock, $0.001 par value per share, of which 50,000 shares are designated as Class A Common Stock and all other shares of common stock are designated as Class B Common Stock. The Class A Common Stock ranks pari passu with all of the rights and privileges of the Class B Common Stock, except that holders of the Class A Common Stock are entitled to ten votes per share of Class A Common Stock issued and outstanding. The Class B Common Stock are identical to the Class A Common Stock in all material respects, except that holders of the Class B Common Stock will be entitled to one vote per share of Class B Common Stock issued and outstanding. Our Class B Common Stock is registered pursuant to Section 12(b) of the Exchange Act. The number of shares of Class B Common Stock, $0.001 par value, outstanding on June 22, 2020 was 2,179,407 shares. In addition, 50,000 shares of Class A Common Stock, $0.001 par value, were outstanding on June 22, 2020.

The Nevada Business Corporation Law contains a provision governing “Acquisition of Controlling Interest.” This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires “control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:

A “control share acquisition” is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our Articles of Incorporation and bylaws do exempt our Class A Common Stock and Class B Common Stock from the control share acquisition act.

Our Articles of Incorporation and bylaws do not contain an exclusive forum provision.

Our Class B Common Stock Is Traded on the Nasdaq Capital Market under the symbol “RMBL.”

 The transfer agent and registrar for our Class A Common Stock and Class B Common Stock is West Coast Stock Transfer, Inc.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

 

 

In addition, all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, shall be deemed to be incorporated by reference in this prospectus and to be a part hereof from the date of filing of such documents. In addition, all reports and other documents filed by us pursuant to the Exchange Act after the date of the initial registration statement and prior to effectiveness of the registration statement shall be deemed to be incorporated by reference into this prospectus. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any subsequently filed document that also is or is deemed to be incorporated by reference herein, as the case may be, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

 

We will provide, without charge, to any person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon oral or written request of such person, a copy of any or all of the documents that have been incorporated by reference in this prospectus but not delivered with the prospectus, including any exhibits to such documents that are specifically incorporated by reference in those documents.

 

Please make your request by writing or telephoning us at the following address or telephone number:

 

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

 

 

LEGAL MATTERS

 

 

 

EXPERTS

The financial statements incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of RumbleOn, Inc. as of December 31, 2018 and for the year ended December 31, 2018 incorporated by reference in this prospectus have been so incorporated in reliance on the report of Scharf Pera & Co., PLLC, incorporated herein by reference, given the authority of said firm as experts in accounting and auditing.

 

 

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

 

 

We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling securityholders. The selling securityholders, however, will pay all underwriting discounts and selling commissions, if any.

 

 

No director of RumbleOn will have personal liability to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director involving any act or omission of any such director since provisions have been made in our Articles of Incorporation limiting such liability. The foregoing provisions shall not eliminate or limit the liability of a director for:

 

 

 

Section 78.7502 of the NRS permits a company to indemnify its directors and officers against expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending, or completed action, suit, or proceeding, if the officer or director (i) is not liable pursuant to NRS 78.138, or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful. Section 78.7502 of the NRS requires a corporation to indemnify a director or officer that has been successful on the merits or otherwise in defense of any action or suit. Section 78.7502 of the NRS precludes indemnification by the corporation if the officer or director has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court determines that in view of all the circumstances, the person is fairly and reasonably entitled to indemnity for such expenses and requires a corporation to indemnify its officers and directors if they have been successful on the merits or otherwise in defense of any claim, issue, or matter resulting from their service as a director or officer.

 

Section 78.752 of the NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee, or agent of the company, or is or was serving at the request of the company as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee, or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses.

 

Article VI of our amended Bylaws provide for indemnification of our directors, officers, and employees in most cases for any liability suffered by them or arising out of their activities as directors, officers, and employees if they were not engaged in willful misfeasance or malfeasance in the performance of his or her duties; provided that in the event of a settlement the indemnification will apply only when the Board of Directors approves such settlement and reimbursement as being for our best interests. Our Bylaws, therefore, limit the liability of directors to the maximum extent permitted by Nevada law (Section 78.751).

 

 

At present, there is no pending litigation or proceeding involving any of our directors or officers in which indemnification or advancement is sought. We are not aware of any threatened litigation that may result in claims for advancement or indemnification.

 

We have been advised that in the opinion of the SEC, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and other persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than payment of expenses incurred or paid by a director or officer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or other person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

  

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.