RumbleOn, Inc. - FORM 10-Q - October 17, 2016

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EX-32.1 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - RumbleOn, Inc.svtc_ex321.htm
EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF THE SARBANES-OXLY ACT OF 2002 - RumbleOn, Inc.svtc_ex311.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended August 31, 2016
 
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number 000-55182
 
SMART SERVER, 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.)
 
4521 Sharon Road, Suite 370, Charlotte, NC
 
28211
(Address of principal executive offices)
 
(Zip Code)
 
(980) 297-2000
(Registrant’s telephone number, including area code)
 
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
 
 Large accelerated filer
 ☐
 Accelerated filer
 ☐
 Non-accelerated filer
 ☐
 Smaller reporting company
 ☑
 (Do not check if a smaller reporting company)      
 
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 Common Stock, $0.001 par value, outstanding on October 17, 2016 was 5,500,000 shares.
 

 
 
 
SMART SERVER, INC.
QUARTERLY PERIOD ENDED AUGUST 31, 2016
 
Index to Report on Form 10-Q
 
 
 
Page No.
 
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
 1
 
 
 
 9
 
 
 
 11
 
 
 
 11
 
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
 12
 
 
 
 12
 
 
 
 
 13
 
 
 
 
 
PART I – FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
SMART SERVER, INC.
BALANCE SHEETS
(unaudited)
 
 
 
August 31,
 
 
November 30,
 
 
 
2016
 
 
2015
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash
 $5,059 
 $1,563 
Prepaid expense
  5,000 
  - 
Total current assets
  10,059 
  1,563 
 
    
    
Website, net
  1,425 
  2,850 
 
    
    
Total assets
 $11,484 
 $4,413 
 
    
    
 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    
    
 
    
    
Current liabilities:
    
    
Accounts payable
 $12,851 
 $11,799 
Current portion of long term debt - related party
  - 
  100,000 
Total current liabilities
  12,851 
  111,799 
 
    
    
Long term liabilities:
    
    
Accrued interest payable - related party
  1,590 
  12,283 
Note payable - related party
  - 
  33,000 
Convertible note payable - related party
  197,358 
  - 
Total long term liabilities
  198,948 
  45,283 
 
    
    
Total liabilities
  211,799 
  157,082 
 
    
    
Stockholders' deficit:
    
    
Preferred stock, $0.001 par value, 10,000,000 shares
    
    
authorized, no and no shares issued and outstanding
    
    
as of August 31, 2016 and November 30, 2015, respectively
  - 
  - 
Common stock, $0.001 par value, 100,000,000 shares
    
    
authorized, 5,500,000 and 5,500,000 shares issued and outstanding
    
    
as of August 31, 2016 and November 30, 2015, respectively
  5,500 
  5,500 
Additional paid in capital
  66,500 
  64,500 
Subscriptions receivable
  - 
  (5,000)
Accumulated deficit
  (272,315)
  (217,669)
Total stockholders' equity (deficit)
  (200,315)
  (152,669)
 
    
    
Total liabilities and stockholders' equity (deficit)
 $11,484 
 $4,413 
 
See Accompanying Notes to Financial Statements.
 
 
1
 
 
SMART SERVER, INC.
STATEMENTS OF OPERATIONS
(unaudited)
 
 
 
For the
 
 
For the
 
 
For the
 
 
For the
 
 
 
three months
 
 
three months
 
 
nine months
 
 
nine months
 
 
 
ended
 
 
ended
 
 
ended
 
 
ended
 
 
 
August 31,
 
 
August 31,
 
 
August 31,
 
 
August 31,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 $- 
 $- 
 $- 
 $- 
 
    
    
    
    
Operating expenses:
    
    
    
    
General and administrative
  2,574 
  270 
  8,181 
  340 
Depreciation and amortization
  475 
  475 
  1,425 
  1,425 
Professional fees
  20,651 
  5,614 
  36,324 
  26,622 
Professional fees - related party
  1,500 
  - 
  1,500 
  600 
Total operating expenses
  25,200 
  6,359 
  47,430 
  28,987 
 
    
    
    
    
Other expense:
    
    
    
    
Interest expense - related party
  (2,681)
  (1,972)
  (7,216)
  (5,268)
Total other expense
  (2,681)
  (1,972)
  (7,216)
  (5,268)
 
    
    
    
    
Net loss
 $(27,881)
 $(8,331)
 $(54,646)
 $(34,255)
 
    
    
    
    
Weighted average number of common
    
    
    
    
shares outstanding - basic
  5,500,000 
  3,869,565 
  5,500,000 
  4,952,555 
 
    
    
    
    
Net loss per share - basic
 $(0.02)
 $(0.00)
 $(0.02)
 $(0.01)
 
See Accompanying Notes to Financial Statements.
 
 
2
 
 
SMART SERVER, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
 
 
 
For the
 
 
For the
 
 
 
nine months
 
 
nine months
 
 
 
ended
 
 
ended
 
 
 
August 31,
 
 
August 31,
 
 
 
2016
 
 
2015
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net loss
 $(54,646)
 $(34,255)
Adjustments to reconcile net income
    
    
to net cash used in operating activities:
    
    
Depreciation and amortization
  1,425 
  1,425 
Changes in operating assets and liabilities:
    
    
(Increase) in prepaid expenses
  (5,000)
  - 
Increase in accounts payable
  1,052 
  5,620 
(Decrease) Increase in accrued interest payable - related party
  (10,693)
  5,268 
 
    
    
Net cash used in operating activities
  (67,862)
  (21,942)
 
    
    
CASH FLOWS FROM INVESTING ACTIVITIES
    
    
Net cash used in investing activities
  - 
  - 
 
    
    
CASH FLOWS FROM FINANCING ACTIVITIES
    
    
Proceeds from note payable - related party
  222,358 
  33,000 
Repayments for note payable - related party
  (158,000)
  - 
Proceeds from sale of common stock
  5,000 
  - 
Donated capital
  2,000 
  - 
Payments for the purchase of treasury stock
  - 
  (5,000)
 
    
    
Net cash provided by financing activities
  71,358 
  28,000 
 
    
    
NET CHANGE IN CASH
  3,496 
  6,058 
 
    
    
CASH AT BEGINNING OF PERIOD
  1,563 
  6,195 
 
    
    
CASH AT END OF PERIOD
 $5,059 
 $12,253 
 
    
    
SUPPLEMENTAL INFORMATION:
    
    
Interest paid
 $- 
 $- 
Income taxes paid
 $- 
 $- 
 
See Accompanying Notes to Financial Statements.
 
 
3
 
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of presentation
 
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
 
These statements reflect all material adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. These interim financial statements should be read in conjunction with the financial statements of the Company for the year ended November 30, 2015 and notes thereto included in the Company’s annual report. The Company follows the same accounting policies in the preparation of interim reports.
 
Results of operations for the interim period are not indicative of annual results.
 
Organization
 
The Company was incorporated on October 24, 2013 (Date of Inception) under the laws of the State of Nevada, as Smart Server, Inc.
 
Nature of operations
 
The Company is a shell company with no current operations. Previously, the Company was in the process of designing and developing a mobile payment application.
 
Year end
 
The Company’s year end is November 30.
 
Cash and cash equivalents
 
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.
 
Website
 
In connection with its prior operations, the Company capitalized the costs associated with the development of the proposed website pursuant to ASC Topic 350.  Other costs related to the maintenance of the website were expensed as incurred.  Amortization is provided over the estimated useful lives of 3 years using the straight-line method for financial statement purposes.   The Company commenced amortization upon completion of the website, however, the Company is no longer continuing these operations.  Amortization expense for the nine months ended August 31, 2016 was $1,425.
 
Revenue recognition
 
We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.
 
The Company will record revenue when it is realizable and earned and the services have been rendered to the customers.
 
 
4
 
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Advertising costs
 
In connection with the Company’s prior operations, advertising costs were expensed as incurred; however there were no advertising costs included in general and administrative expenses for the nine months ended August 31, 2016.
 
Fair value of financial instruments
 
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.
 
Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.
 
Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
 
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.
 
Stock-based compensation
 
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. 
 
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
 
 
5
 
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Earnings per share
 
The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
 
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
 
Recent pronouncements
 
The Company has evaluated the recent accounting pronouncements through October 2016 and believes that none of them will have a material effect on the company’s financial statements.
 
NOTE 2 – GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is a shell company with no operations and, accordingly, has not yet generated revenue from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred net losses for the nine months ended August 31, 2016 of $54,646. In addition, the Company’s previous development activities since inception were financially sustained through debt and equity financing.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenue. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
 
NOTE 3 – PREPAID EXPENSES
 
As of August 31, 2016 and November 30, 2015, the Company had prepaid expenses for a prepaid OTC listing fee totaling $5,000 and $0, respectively. The prepaid OTC listing fees will be expensed on a straight line basis over the remaining life of the service period.
 
NOTE 4 – NOTES PAYABLE – RELATED PARTY
 
On November 7, 2013, the Company executed a promissory note with a related party for $20,000. The unsecured note bears interest at 6% per annum with principal and interest due on November 7, 2015. During the year ended November 30, 2014, this promissory note was reclassified to current portion of long term debt – related party.
 
On December 5, 2013, the Company executed a promissory note with a related party for $10,000. The unsecured note bears interest at 6% per annum with principal and interest due on December 5, 2015. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
 
6
 
 
NOTE 4 – NOTES PAYABLE – RELATED PARTY (CONTINUED)
 
On January 30, 2014, the Company executed a promissory note with a related party for $20,000. The unsecured note bears interest at 6% per annum with principal and interest due on January 30, 2016. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
On March 3, 2014, the Company executed a promissory note with a related party for $10,000. The unsecured note bears interest at 6% per annum with principal and interest due on March 3, 2016. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
On March 25, 2014, the Company executed a promissory note with a related party for $10,000. The unsecured note bears interest at 6% per annum with principal and interest due on March 25, 2016. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
On April 3, 2014, the Company executed a promissory note with a related party for $15,000. The unsecured note bears interest at 6% per annum with principal and interest due on April 3, 2016. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
On July 25, 2014, the Company executed a promissory note with a related party for $15,000. The unsecured note bears interest at 6% per annum with principal and interest due on July 25, 2016. During the nine months ended August 31, 2015, this promissory note was reclassified to current portion of long term debt – related party.
 
On February 27, 2015, the Company executed a promissory note with a related party for $5,000. The unsecured note bears interest at 6% per annum with principal and interest due on February 27, 2017. During the three months ended February 29, 2016, this promissory note was reclassified to current portion of long term debt – related party.
 
On April 1, 2015, the Company executed a promissory note with a related party for $8,000. The unsecured note bears interest at 6% per annum with principal and interest due on April 1, 2017. During the three months ended May 31, 2016, this promissory note was reclassified to current portion of long term debt – related party.
 
On May 19, 2015, the Company executed a promissory note with a related party for $5,000. The unsecured note bears interest at 6% per annum with principal and interest due on May 19, 2017. During the three months ended May 31, 2016, this promissory note was reclassified to current portion of long term debt – related party.
 
On June 4, 2015, the Company executed a promissory note with a related party for $5,000. The unsecured note bears interest at 6% per annum with principal and interest due on June 4, 2017.
 
On August 4, 2015, the Company executed a promissory note with a related party for $10,000. The unsecured note bears interest at 6% per annum with principal and interest due on August 4, 2017.
 
On December 10, 2015, the Company executed a promissory note with a related party for $8,000. The unsecured note bears interest at 6% per annum with principal and interest due on December 10, 2017.
 
On February 5, 2016, the Company executed a promissory note with a related party for $5,000. The unsecured note bears interest at 6% per annum with principal and interest due on February 5, 2018.
 
On March 24, 2016, the Company executed a promissory note with a related party for $10,000. The unsecured note bears interest at 6% per annum with principal and interest due on March 24, 2018.
 
On June 15, 2016, the Company executed a promissory note with a related party for $2,000. The usecured note bears interest at 6% per annum with principal and interest due on June 15, 2018.
 
On July 13, 2016, the Company repaid the outstanding principal and accrued interest to the lender under the promissory notes identified above.
 
Interest expense for the nine months ended August 31, 2016 and 2015 for notes payable – related party was $5,626 and $5,268, respectively.
 
 
7
 
 
NOTE 5 – CONVERTIBLE NOTES PAYABLE – RELATED PARTY
 
On July 13, 2016, the Company received financing of $191,858 from an entity owned and controlled by its current officer and director, Steven R. Berrard. Effective August 31, 2016, the Company increased the amount of the unsecured loan to $197,358. The unsecured loan is due on July 13, 2026 and bears interest at 6% per annum. The loan is convertible at the greater of $0.06 per share or 50% of the price per share of the next qualified financing which is defined as $500,000 or greater. The estimated conversion price of $0.06 was higher than the last sale of common stock for cash and therefore no beneficial conversion feature was recorded.
 
Effective August 31, 2016, the principal amount of the loan was amended to include additional amounts loaned to the Company totaling $5,500. The additional funds have the same terms as the original note dated July 13, 2016 as discussed above. As of August 31, 2016, the total amount owed is $197,358.
 
Interest expense for the nine months ended August 31, 2016 and 2015 for convertible notes payable – related party was $1,590 and $0, respectively.
 
NOTE 6 – STOCKHOLDERS’ EQUITY
 
The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value preferred stock.
 
In February 2016, the Company received $5,000 for the subscriptions receivable from the sale of common stock in November 2015.
 
In July 2016, the Company received donated capital of $2,000 from a shareholder of the Company.
 
NOTE 7 – WARRANTS AND OPTIONS
 
As of August 31, 2016, there were no warrants or options outstanding to acquire any additional shares of common stock.
 
NOTE 8 – RELATED PARTY TRANSACTIONS
 
As of August 31, 2016, the Company had loans totaling $197,358 and accrued interest totaling $1,590 due to an entity. The lender is an entity that is owned and controlled by a current officer and director of the Company.
 
 
8
 
 
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Overview
 
This Quarterly Report on Form 10-Q contains forward-looking statements. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. The words “believes,” “anticipates,” “plans,” “expects,” ‘intends” and similar expressions identify some of the forward-looking statements. Forward-looking statements are not guarantees of performance or future results and involve risks, uncertainties and assumptions. The factors discussed elsewhere in this Form 10-Q and in subsequent Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K could also cause actual results to differ materially from those indicated by the Company’s forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law.
 
Smart Server was incorporated in the State of Nevada in October of 2013. In November of 2013 we commenced our previously planned operations relating to the design and development of a mobile payment application. These operations have ceased and we have no current operations and no significant assets.
 
Since our inception on October 24, 2013 through August 31, 2016, we have not generated any revenue and have accumulated a deficit of $272,315. Previously, our business activity has focused around the development of our corporate entity, business plan, marketing strategy, contact development, website design and the program writing of our mobile payment solution app. Currently, the Company is a shell company with no current operations.
 
On July 13, 2016, Berrard Holdings Limited Partnership (“Berrard Holdings”) acquired 5,475,000 shares of common stock (the “Shares”) of the Company from Pamela Elliott, pursuant to an Amended and Restated Stock Purchase Agreement, dated July 13, 2016. The Shares acquired by Berrard Holdings represent 99.5% of the Company’s issued and outstanding shares of common stock. Steven R. Berrard has voting and dispositive control over Berrard Holdings.
 
RESULTS OF OPERATIONS
 
Results of Operations for the Three Months Ended August 31, 2016 and 2015
 
Operating expenses totaled $25,200 during the three months ended August 31, 2016, as compared to $6,359 in the prior year period. In the three month period ended August 31, 2016, our expenses consisted of legal and accounting expenses and general and administrative costs associated with filing of regulatory reports for public reporting companies, $22,151 represented professional fees, $2,574 represented general and administrative costs, and the remaining $475 represented depreciation and amortization. The increase in professional fees is due to the increase in legal work related to the public filings and for work associated with the change of control transaction during the three months ended August 31, 2016, as described above.
 
Results of Operations for the Nine Months Ended August 31, 2016 and 2015
 
Operating expenses totaled $47,430 during the nine months ended August 31, 2016, as compared to $28,987 in the prior year period. In the nine month period ended August 31, 2016, our expenses consisted of legal and accounting expenses and general and administrative costs associated with filing of regulatory reports for public reporting companies, $37,824 represented professional fees, $8,181 represented general and administrative costs, and the remaining $1,425 represented depreciation and amortization. The increase in professional fees is mainly due to the increase in legal work related to the public filings and for work associated with the change of control transaction during the nine months ended August 31, 2016, described above.
 
 
9
 
 
Liquidity and Capital Resources
 
As of August 31, 2016, the Company has a total of $5,059 in available cash. If we do not receive additional funds, we will not be able to continue in business for the next 12 months with our currently available capital.
 
Since inception, we have financed our cash flow requirements through equity and debt financing. We may, and most likely will, continue to experience net negative cash flows from operations. During the three months ended August 31, 2016, we received debt financing from a related party totaling $197,358. The convertible debt is due on July 13, 2026 and bears interest at 6% per annum. The debt is convertible at the greater of $0.06 per share or 50% of the price per share in the next qualified offering which is defined as $500,000. In addition, we have repaid all promissory notes with E. Venture Resources, Inc., for a total of $158,000. The terms of the promissory notes provided for an interest rate of 6% per annum with all accrued balances due and payable within 24 months of the date of the promissory note. See Notes 4 and 5 for additional information related to the convertible debt and promissory note. In the future we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.
 
The following table sets forth a summary of our cash flows for the periods indicated:
 
 
 
Nine Months ended
August 31,
 
 
Nine Months ended
August 31,
 
 
 
2016
 
 
2015
 
Net cash used in operating activities
 $(67,862)
 $(21,942)
Net cash used in investing activities
 $- 
 $- 
Net cash provided by financing activities
 $71,358 
 $28,000 
Net increase in Cash
 $3,496 
 $6,058 
Cash, beginning
 $1,563 
 $6,195 
Cash, ending
 $5,059 
 $12,253 
 
Operating Expenses
 
Net cash used in operating activities was $67,862 for the period ended August 31, 2016, as compared to $21,942 used in operating activities for the period ended August 31, 2015. The increase in net cash used in operating activities was primarily due to the increase in net loss, and the increase in prepaid expenses and an decrease in accrued interest payable – related party.
 
Financing activities
 
Net cash provided by financing activities for the period ended August 31, 2016 was $71,358, as compared to $28,000 for the period ended August 31, 2015. The increase in net cash provided by financing activities was mainly attributable to increased loans from a related party.
 
 
10
 
 
Off-Balance Sheet Arrangements
 
We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
 
Emerging Growth Company
 
We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.
 
Item 3.    Quantitative and Qualitative Disclosure About Market Risk
 
Not applicable.
 
Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
 
As required by Rule 13a-15 under the Exchange Act, as of the end of the Company’s last fiscal quarter, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s current management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer (Principal Financial and Accounting Officer), who concluded that the Company’s disclosure controls and procedures are effective.
 
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer (Principal Financial and Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Limitations on Effectiveness of Controls and Procedures
 
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
 
 
11
 
 
PART II—OTHER INFORMATION
 
Item 1.    Legal Proceedings.
 
We are not a party to any material legal proceedings.
 
None.
 
Item 6.    Exhibits.
 
Exhibit No.
 
Description
 
 
 
 
Certification of Principal Executive Officer & Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
 
Certifications of Principal Executive Officer & Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase
 
 
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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
SMART SERVER, INC.
 
 
 
 
 
Date: October 17, 2016
By:  
/s/ Steven R. Berrard
 
 
 
 Steven R. Berrard
 
 
 
 Chief Executive Officer, Interim Chief Financial Officer and Secretary
 
 
 
 
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RumbleOn, Inc. Reports