UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

or

For the transition period from _________ to ________

Commission file number: 001-38424

Lazydays Holdings, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (813) 246-4999

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

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the 7,348,8227,925,647 voting and non-voting shares of common stock held by non-affiliates of the registrant as of June 30, 20212022 (based on the last reported sales price of such stock on the Nasdaq Capital Market on such date, the last business day of the registrant’s quarter ended June 30, 2021,2022, of $22.00$11.78 per share) was approximately $161.7$93.4 million.

As of March 9, 2022,February 24, 2023, the registrant had 13,747,932 11,112,989 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant’s definitive proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934 for its 20222023 annual meeting of stockholders, which will be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this report, are incorporated by reference into Part III of this reportreport..

TABLE OF CONTENTS

Forward Looking Statements

Certain statements in this Annual Report on Form 10-K (including but not limited to this Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Annual Report on Form 10-K, including, without limitation, statements regarding the impact of the COVID-19 pandemic on the Company’sour business, results of operations and financial condition, and the measures the Company has taken in response to the COVID-19 pandemic, the Company’sour future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and the Companywe can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to:

PART I

Item 1. Business

As used in this report, the terms “Lazydays,” “the Company,” “Holdco,” “we,” “us,” and “our” refer to Lazydays Holdings, Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context otherwise requires.

Overview

Andina Acquisition Corp. II (“Andina”) was originally formed for the purpose of effecting a business combination with one or more businesses or entities. On March 15, 2018, the initial business combination was consummated. As a result, the business of Lazy Days’ R.V. Center, Inc. and its subsidiaries became the Company’sour business. Accordingly, Lazydays Holdings, Inc. is now a holding company operating through our direct and indirect subsidiaries.

Company History

Andina was formed as an exempted company incorporated in the Cayman Islands on July 1, 2015 for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more target businesses.

From the consummation of the initial public offering (“IPO”) of Andina until October 27, 2017, Andina was searching for a suitable target business to acquire. On October 27, 2017, a merger agreement was entered into by and among Andina, Andina II Holdco Corp., a Delaware corporation and wholly owned subsidiary of Andina (“Holdco”), Andina II Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“Merger Sub”), Lazy Days’ R.V. Center, Inc. (“Lazydays RV”) and solely for certain purposes set forth in the merger agreement, A. Lorne Weil (the “Merger Agreement”). The Merger Agreement provided for a business combination transaction by means of (i) the merger of Andina with and into Holdco, with Holdco surviving and becoming a new public company (the “Redomestication Merger”) and (ii) the merger of Lazy Days’ R.V. Center, Inc. with and into Merger Sub with Lazy Days’ R.V. Center, Inc. surviving and becoming a direct wholly owned subsidiary of Holdco (the “Transaction Merger” and together with the Redomestication Merger, the “Mergers”). On March 15, 2018, Holdco held an extraordinary general meeting of the shareholders, at which the Andina shareholders approved the Mergers and other related proposals. On the same date, the Mergers were closed. In connection with the Mergers, the business of Lazy Days’ R.V. Center, Inc. and its subsidiaries became the business of Holdco. As a result of the Mergers, the Company’sour stockholders and the shareholders of Andina became stockholders of Holdco and the Company changed the name of Holdco to “Lazydays Holdings, Inc.”

Our BusinessOverview

The CompanyLazydays Holdings, Inc. operates Recreational Vehicle (“RV”) dealerships across the U.S. and offers a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. The Company generatesWe generate revenue by providing a full spectrum of RV products: New and pre-owned RV sales, RV-parts and service, financing and insurance products, third-party protection plans, after-market parts and accessories, and RV camping facilities. The Company provides these offerings through its Lazydays branded dealerships. Lazydays is known nationally as The RV Authority^®, a registered trademark that has been consistently used by the Company in its marketing and branding communications since 2013.

The Company believes,We believe, based on industry research and management’sinternal estimates, it operatesthat we operate one of the world’s largest RV dealerships, measured in terms of on-site inventory, located on 126 acres outside Tampa, Florida. The Company also has dealerships located at The Villages, Florida; Tucson and Phoenix, Arizona; Minneapolis, Minnesota; Knoxville, Nashville and Maryville, Tennessee; Loveland and Denver, Colorado; Elkhart and Burns Harbor, Indiana; Portland, Oregon; Vancouver, Washington; and Milwaukee, Wisconsin. Lazydays also has a dedicated Service Center location near Houston, Texas. Lazydays offers one of the largest selections of leading RV brands in the nation, featuring more than 4,000 new and pre-owned RVs. The Company has nearly 500 service bays and a RV parts and accessories stores at all locations. Lazydays also has access to two on-site campgrounds with over 700 RV campsites. The Company employs approximately 1,500 people at its sixteen dealership and service locations. The Company’s locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. The Company believes its locations are strategically located in key RV markets. Based on information collected by the Company from reports prepared by Statistical Surveys, these RV markets (Florida, Colorado, Arizona, Minnesota, Tennessee, Indiana, Oregon, Washington, Wisconsin and Texas) account for a significant portion of new RV units sold on an annual basis in the U.S. The Company’s dealerships in these key markets attract customers from all states, except Hawaii.

The Company attracts new prospectsWe strive to create diversification in our products, services, brands and customers primarily through Lazydays dealershipgeographic locations as well as digitalto reduce dependence on any one manufacturer, reduce susceptibility to changing consumer preferences, manage seasonality and traditional marketing efforts. Once the Company acquires prospectsmarket risk and customers through an inquiry or transaction, they become partmaintain profitability. As of the Company’s customer database where the Company leverages customer relationship managementDecember 31, 2022, we operated 18 locations, representing more than 30 original equipment manufacturers (“CRM”OEM’s”) tools and analytics to actively engage, market and sell its products and services.across 11 states.

SegmentsBusiness Strategy

The Company operates one reportable segment, which includes all aspects of our RV dealership operations which include sales of new and pre-owned RVs, assisting customers with vehicle financing and protection plans, servicing and repairing new and pre-owned RVs, sales of RV parts and accessories and campground facilities. We identified our reporting segment by considering the level at which the operating results are regularly reviewed by the Company’s chief operating decision maker to allocate resources and assess performance.

Highlights

On January 4, 2021, the Company commenced sales and service operations at its new dealership in Murfreesboro, Tennessee located just outside of Nashville, Tennessee on I-24.

On March 23, 2021, the Company consummated its asset purchase agreement with Chilhowee Trailer Sales, Inc. (“Chilhowee”). The purchase price consisted solely of cash paid to Chilhowee. As part of the acquisition, the Company acquired the inventory of Chilhowee and has added the inventory to the M&T Floor Plan Line of Credit.

On July 14, 2021, the Company entered into an amended and restated credit agreement with M&T, as a Lender Administrative Agent, Swingline Lender, and Issuing Bank, and other financial institutions as Lender parties. The credit agreement evidences an approximately $369.1 million aggregate credit facility, consisting of a $327 million floor plan credit facility, a term loan of approximately $11.3 million, a $25 million revolving credit and a $5.8 million mortgage loan facility.

On August 3, 2021, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with of BYRV, Inc. (“BYRV”) located in Portland, Oregon and BYRV Washington, Inc. (“BYRV Washington”) located in Woodland, Washington in one transaction (“BYRV”). The purchase price consisted solely of cash paid to BYRV. As part of the acquisition, the Company acquired the inventory of BYRV and has added the inventory to the M&T Floor Plan Line of Credit (as defined below).

On August 24, 2021, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with Burlington RV Superstore, Inc. (“Burlington”). The purchase price consisted solely of cash paid to Burlington. As part of the acquisition, the Company acquired the inventory of Burlington and has added the inventory to the M&T Floor Plan Line of Credit (as defined below).

On September 13, 2021, the Board of Directors of the Company authorized the repurchase of up to $25 million of the Company’s common stock through December 31, 2022. These shares may be purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.

On October 1, 2021, the Company entered into an agreement for the sale of the Tucson, Arizona dealership to CARS-DB4, LLC (“CARS”). The Company has entered into a lease agreement with CARS with lease payments commencing on October 1, 2021. The lease has been evaluated in accordance with ASC 842 and determined to be a failed sale leaseback. As such, it has been recorded as a finance lease and classified as financing liability in the Consolidated Balance Sheets.

COVID-19 Developments

Please refer to the discussion in “Item 5. Management’s Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” for a discussion of recent developments in connection with the COVID-19 pandemic, which is incorporated into this section by reference.

Company Strengths

The Iconic Brand. With over forty years of history dating back to 1976, Lazydays is an iconic brand that we believe is synonymous with the RV lifestyle, and is known nationally as The RV Authority ^®, a registered trademark. The trademark has been consistently used by the CompanyWe seek to provide customers with a seamless online and in its marketing and branding communications since 2013. Based on a research report prepared by Russell Research in November / December 2017, Lazydays is the second most well-known R.V. dealership brand among a national audience of non-Lazydays customers surveyed. According to the report, over 85% of Lazydays customers and over 80% of prospective customers surveyed believe that Lazydays is among the category leaders in the industry. The Company’s consistent quality, breadth and depth of offerings, as well as its comprehensive range of RV lifestyle resources, have resulted in the Company’s customers having loyalty to, and trust in, the Lazydays brands.

Comprehensive RV Products and Services. The Company is a provider of a comprehensive portfolio of RV products, services, third-party protection plans, and resources for RV enthusiasts. The Company represents the top manufacturers in the industry with more than 4,000 RVs available nationwide. Lazydays provides an extensive service and repair offering for all RV brands, with nearly 500 service bays staffed by certified technicians. The Company’s offerings are based on more than four decades ofstore experience, and feedback from RV enthusiasts.

Customer Experience. Lazydays target customers aretargeting RV enthusiasts who are seeking a lifestyle centered around the RV.RV. Lazydays believes it has built its reputation on providing an outstanding customer experience with exceptional service and product expertise. One of the Company’sour primary goals is to create “Customers for Life” by offering a unique purchasing experience that combines itsour large selection of new and used RV inventory with a nationwide team of experienced sales and service, customer-focused professionals.

Our long-term strategy to create value for our customers, employees and shareholders includes the Company’s unique scenic facilities with multiple amenities, and its customer focused, process-oriented approach to servicing the customer. Building a welcoming atmosphere that caters to the RV enthusiast community is an intangible element critical to the Company’s success, and the Company’s philosophy is thoroughly ingrained in and continually reinforced throughout its corporate culture at every level. The Company believes that its customer-focused business model has resulted in a loyal, stable and growing customer base, as well as a strong reputation within the RV community.following:

Employee Service and CommitmentDriving Operational Excellence Across Our Existing Stores. Lazydays believes its commitment to ongoing training and talent development has been instrumental in providing employees an outstanding workplace experience and growth opportunities. As a result of this commitment, the Lazydays team of experienced professionals is able to provide an exceptional level of service that we believe is very difficult to replicate and is a significant competitive advantage.

We are focused on improving performance through increasing market share and profitability at each of our locations. By promoting an entrepreneurial model, we are building strong businesses responsive to each of our local markets. Utilizing performance-based action plans, we strive to drive operational performance and develop high-performing teams. We believe our strong brands, market position, ongoing investment in our service platform, broad product portfolio and full array of RV offerings will continue to provide us with a competitive advantage in targeting and capturing a larger share of consumers, including the growing number of new RV enthusiasts that we believe are entering the market. We continuously work to attract new customers to our dealership locations through targeted integrated digital and traditional marketing efforts, attractive offerings, and access to our wide array of resources for RV enthusiasts. The Company has focused specifically on marketing to the fast-growing RV demographics of Baby Boomers, Gen X and Millennials. The Company also markets to these segments through RV lifestyle-focused partnership and sponsorship efforts.

Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our personnel. We develop pay plans that are measured upon various factors such as customer satisfaction, profitability and individual performance metrics. These plans serve to reward team members for creating exceptional customer experiences, customer loyalty and achieving store potential. This approach allows us to mitigate fluctuations in RV sales and general economic conditions.

Growth Through Acquisitions and Greenfields

The RV industry is highly fragmented with primarily independent dealers. We target increasing our physical network of stores through acquisitions to strategically grow our presence and create density in our network to provide convenience for our customers across the country. Our value-based acquisition strategy targets underperforming stores with strong brands in desirable markets. As we integrate these stores into our network, we focus on increasing profitability through gaining market share, elevating the customer experience and leveraging our cost structure.

In addition to acquisitions, we will, from time to time, open greenfield sites in new or existing markets. We are currently on track to open four future greenfield sites located in the following markets: Council Bluffs, Iowa; Fort Pierce, Florida; Wilmington, Ohio; and Surprise, Arizona.

Leveraging Our Scale and Cost Structure to Create Operational Efficiencies

As we grow, we are positioned to leverage our scale to improve operating margins. We have centralized many administrative functions to drive efficiencies and streamline store-level operations. The reduction of administrative functions at our stores allows our local teams to focus on customer-facing opportunities to increase revenues and gross profit. Our stores also receive supply chain management support, ensuring optimal levels of new and used RV inventory; and finance and insurance product and training support to provide a full array of offerings to our customers.

Community Involvement

We are committed to making an impact in our communities. In 2005, Lazydays employees formed the Lazydays Employee Foundation (the “Foundation”), a 501(c)(3) non-profit organization focused on making a positive impact in the lives of at-risk children. The Foundation is run exclusively by employees as volunteers and members of the Foundation’s board of directors, and their mission is to measurably change the lives of children by instilling hope, inspiring dreams and empowering them with education. Since its inception, the Foundation has donated more than $2$2.5 million to help disadvantaged children in Florida, Arizona, Colorado, Minnesota and Tennessee. The Foundation sponsors two facilities in Florida that carry its name; The Lazydays House at a Kids Place which houses foster children in a facility where siblings can remain together and the Lazydays House at Bridging Freedom which houses and rehabilitates children rescued from human trafficking. The Foundation also provides financial contributions to other smaller community programs that benefit at-risk youth by providing educational tutoring, expression through the arts, and education scholarships. Lazydays employees also volunteer their time to many worthwhile charities and engage in life enriching activities with at-risk youth. The Foundation has received multiple awards for their philanthropic work, including the national Arthur J. Decio Humanitarian Award for outstanding civic and community outreach in the RV industry.

Leading Market Positionindustry, as well as the Olin Mott Golden Heart Award and Scale. Lazydays believes it is one of the largest RV retailers in the United States. According to a research report prepared by Russell Research in November / December 2017, Lazydays is the second most well-known RV brand among the national audience. We believe the Company’s scale and its long-term stability make it attractive to the Company’s original equipment manufacturers (“OEMs”), suppliers, financiers and business partners. The Company believes its strong relationship with OEMs and suppliers enables the Company to negotiate attractive product pricing and availability. The Company also aligns with its OEMs on product development in which the Company leverages its customer base to provide feedback on new products. The Company also believes its scale and strong relationship with its financing and insurance partners enable it to offer extensive financing products and insurance plans that fit almost every customer’s needs.

Consistent Processes and Procedures. Lazydays utilizes a system of process documentation and implementation called the “Lazydays Way.” Lazydays believes that the Lazydays Way allows it to implement and maintain consistent and efficient operating procedures across all of its dealerships.

Variable Cost Structure and Capital Efficient Model. Lazydays flat and decentralized management structure, coupled with incentive programs focused on profitability, have allowed Lazydays to achieve a highly variable cost structure. The Company’s digital marketing and analytics capabilities provide it with flexibility and meaningfully improve its marketing productivity and efficiency via targeted marketing programs. The Company believes its operating model leads to strong and stable margins through economic cycles, resulting in what it believes to be high cash flow generation, low capital expenditure requirements and strong returns on invested capital.

Experienced Team. The Lazydays management team has extensive industry and dealership experience. The Company offers highly competitive compensation tightly tied to performance, which has allowed the Company to attract and retain its highly capable team.several WEDU Be More awards.

Lazydays Product and Service Offerings

New and Pre-Owned Vehicles

New Vehicles: Lazydays offers a comprehensive selection of new RVs across a wide range of price points, classes and floor plans, from entry level travel trailers to Class A motorhomes, at its dealership locations and on its website. Lazydays has formed strategic alliances with leading RV manufacturers. The core brands that the Company sells, representing 96.0% of the new vehicles that were sold by the Company in 2021, are manufactured by Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc.

Pre-Owned Vehicles: Lazydays sells a comprehensive selection of pre-owned RVs at its dealership locations. The primary source of pre-owned RVs is through trade-ins associated with our RV sales. Lazydays is also very active in the pre-owned RV market, and its extensive RV knowledge and experience allows Lazydays to buy pre-owned RVs at attractive prices. Pre-owned RVs are generally reconditioned by the Company’s service operation prior to sale. Pre-owned RVs that do not meet the Company’s standards for retail sale are wholesaled.

Dealership Finance and Insurance

Vehicle financing: Lazydays arranges for financing for vehicle purchases through third-party financing providers in exchange for a commission. Lazydays does not directly finance its customers’ purchases, and its exposure to loss in connection with these financing arrangements is generally limited to the commissions it receives. For the years ended December 31, 2021 and 2020, the Company arranged financing transactions for a majority of the new and pre-owned units sold.

Protection Plans: Lazydays offers a variety of third-party protection plans and services to the purchasers of its RVs as part of the delivery process, including extended vehicle service contracts, tire and wheel protection, guaranteed auto protection (known as “GAP”, this protection covers the shortfall between a customer’s loan balance and insurance payoff in the event of a casualty) and property insurance. These products are underwritten and administered by independent third parties. Lazydays is primarily compensated on a straight commission basis. The Company may be charged back (“charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of the contracts by the customers.

Parts and Services and Other

Repair and Maintenance: In addition to preparing RVs for delivery to customers, Lazydays service and repair operations, with nearly 500 service bays, provide onsite general RV maintenance and repair services at all of the Company’s dealership locations. Lazydays employs over 300 highly skilled technicians, many of them certified by the Recreational Vehicle Industry Association (“RVIA”) or the National RV Dealers Association (“RVDA”). The Company is equipped to offer comprehensive services and perform OEM warranty repairs for most RV components.

Installation of Parts and Accessories: Lazydays full-service repair facilities enable Lazydays to install all parts and accessories sold at its dealership locations, including, among other items, towing and hitching products, satellite systems, braking systems, leveling systems and appliances. While other RV dealerships may be able to install RV parts and accessories and other retailers may be able to sell certain parts and accessories, Lazydays believes its ability to both sell and install necessary parts and accessories affords the Company a competitive advantage over online retailers and big box retailers that do not have service centers designed to accommodate RVs, and other RV dealerships that do not offer a comprehensive inventory of parts and accessories.

Collision Repair: Lazydays offers collision repair services in all markets and the Company’s Tampa and The Villages, Florida, Tucson, Arizona, Loveland, Colorado, Knoxville, Tennessee, and Minneapolis, Minnesota locations are equipped with full body paint booths. Lazydays facilities are equipped to offer a wide selection of collision repair services, including fiberglass front and rear cap replacement, windshield replacement, interior remodel solutions and paint work. The Company can perform collision repair services for a wide array of insurance carriers.

Parts and Accessories Store: With sizable parts and accessories inventory, in addition to onsite retail and accessory stores and access through the Lazydays networks for hard-to-find parts, Lazydays provides new and pre-owned RV buyers the option of dealer installed accessories, such as tow hitches, satellite dishes and specialized suspension systems that can be included in each buyer’s financing, or aftermarket through the Lazydays retail store footprint. The Company believes that its Tampa, Florida Accessories & More store is among the largest aftermarket parts and accessories stores in the state of Florida.

RV Campground: Lazydays also operates the Lazydays RV Resort at its Tampa, Florida location. Also known as the Lazydays RV Campground, the Lazydays RV Resort includes amenities designed to allow guests to relax, unwind, and enjoy fun activities as a family. The resort offers 300 RV sites with full 50-amp hookups, a full-time activities coordinator, sports courts, trolley service to and from the Lazydays dealership, and a screened and heated pool. The resort also operates on-site restaurants.

Growth Strategy

Grow the Company’s Customer Base. Lazydays believes its strong brands, market position, ongoing investment in its service platform, broad product portfolio and full array of RV offerings will continue to provide the Company with a competitive advantage in targeting and capturing a larger share of consumers, including the growing number of new RV enthusiasts that we believe are entering the market. The Company continuously works to attract new customers to its dealership locations through targeted integrated digital and traditional marketing efforts, attractive offerings, and access to its wide array of resources for RV enthusiasts. The Company has focused specifically on marketing to the fast-growing RV demographics of Baby Boomers, Gen X and Millennials. The Company also markets to these segments through RV lifestyle-focused partnership and sponsorship efforts.

Dealership Location Acquisitions. The RV dealership industry is highly fragmented with many independent RV dealers. The Company has used, and plans to continue to use, acquisitions of independent dealers as an alternative to Greenfield dealership location openings to expand its business and grow the Company’s customer base. Lazydays believes its experience and scale allow it to operate acquired locations efficiently. During 2021, Lazydays acquired Chilhowee Trailer Sales, Inc. located near Maryville, Tennessee; BYRV, Inc. and BYRV Washington, Inc. with locations in Portland, Oregon and Vancouver, Washington; and Burlington RV Superstore, Inc. in Milwaukee, Wisconsin. Lazydays intends to continue to pursue acquisitions that it expects will grow its customer base and present attractive value-creation opportunities and risk-adjusted returns.

Greenfield Dealership and Service Locations. Lazydays may establish dealership and/or service locations in new and existing markets to expand its customer base. Target markets and locations are identified by employing proprietary data and analytical tools. The Company believes there is ample white space for additional development opportunities. The Company intends to open greenfield sites that will grow its customer base and present attractive risk-adjusted returns and value-creation opportunities. The Company commenced development of a greenfield dealership near Nashville, Tennessee during 2019, which opened in January 2021, and opened its first dedicated service center in Waller, TX, a suburb northwest of Houston, in February 2020. The Company has also announced future greenfield start-up plans for Monticello, Minnesota (suburban Minneapolis); near Omaha, Nebraska; and Fort Pierce, Florida.

Service and Collision. Lazydays believes that its service and repair capabilities represent a significant opportunity for incremental revenue growth, especially as the Company grows geographically. Lazydays frequently welcomes customers who travel from across the country to have their vehicles serviced by its team of service and repair professionals. As a result, the service and repair department serves as a means of attracting potential customers to the Lazydays facilities and offers additional sales opportunities for Lazydays.

Parts and Accessories Store “Accessories & More”. Aftermarket RV parts and accessories are typically under-represented at RV dealerships. The Company believes that parts and accessories are an important part of the RV lifestyle, and serves to engage customers with the Lazydays brand outside of the typical RV buying and servicing cycle. The Company believes that RV owners need a reliable resource for RV necessities and products that make their camping experience more enjoyable. Lazydays stores have expansive offerings and provide access to RV product experts to assist RV owners in their RV lifestyle needs.

Leverage the Company’s scale and cost structure to improve operating efficiency. As Lazydays grows, it is positioned to leverage its scale to improve operating margins. The Company manages its new and pre-owned RV inventories so that its dealerships’ supply and assortment of vehicles are in line with seasonal sales trends and minimize the Company’s carrying costs. In addition, the Company leverages its scale to reduce costs related to purchasing certain equipment, supplies, and services through national vendor relationships.

Customers and Markets

The RV industry is characterized by RV enthusiasts’ investment in, and steadfast commitment to, the RV lifestyle. Approximately 11 million U.S. households are estimated to own an RV.

Owners invest in insurance, extended service contracts, parts and accessories, roadside assistance and regular maintenance to protect and maintain their RVs. They typically invest in new accessories and the necessary installation costs as they upgrade their RVs. They also spend on services and resources as they plan, engage in, and return from their road trips. Furthermore, based on industry research and management’s estimates, the Company believeswe believe that RV owners typically trade-in to buy another RV every four to five years.

Per the RV Industry Association’s (RVIA) December 20212022 survey of manufacturers, total RV wholesale shipments ended 20212022 at 600,240, up 39.5%493,268, down 17.8% compared to 430,412600,240 units in 2020.2021. Towable RVs were up 39.6%down 20.1% at 544,028434,858 from 389,613544,028 units and motorhome shipments were up 37.8%3.9% at 58,410 units from 56,212 units from 40,799 units in 2020.2021. Per the RVIA survey, 20212022 ended with athe third best year on record number of wholesale shipments. Generally, pre-owned RVs are sold at a lower price point than comparable new RVs and the sale of pre-owned RVs has historically been more stable than the sale of new vehicles through business cycles.

Lazydays believesWe believe RV trips remain one of the least expensive types of vacation, allowing RV owners to travel more while spending less. RV trips offer savings on a variety of vacation costs, including, among others, airfare, lodging, pet boarding and dining. While fuel costs are a component of the overall vacation cost, the Company believeswe believe fluctuations in fuel prices are not a significant factor affecting a family’s decision to take RV trips. Based on RVIA information, the average annual mileage use of an RV is between 3,000 and 5,000 miles. In addition, Lazydaysour customer research indicates that customers are attracted to RV ownership based on the comfortable and convenient travel it provides.

Competition

The Company believesWe believe that the principal competitive factors in the RV industry are breadth and depth of product selection, pricing, convenient dealership locations, quality technical services, customer service, and overall experience. The Company competesWe compete directly and/or indirectly with RV dealers, RV service providers, and RV parts and accessories retailers. One of the Company’sour direct competitors, Camping World Holdings, Inc., is publicly listed on the New York Stock Exchange. Additional competitors may enter the businesses in which the Companywe currently operates.operate.

Lazydays RV Dealerships

The Company operates sixteen Lazydays dealership and service locations across ten states. The Company’s dealership and service locations are strategically located in key RV markets. Based on information collected by the Company from reports prepared by Statistical Surveys, these key RV markets of Florida, Colorado, Arizona, Minnesota, Tennessee, Texas, Indiana, Oregon, Washington and Wisconsin account for a significant portion of new RV units sold on an annual basis in the U.S. The Company’s dealerships in these key markets attract customers from all states, except Hawaii. Generally, the Company’s dealership locations provide RV repair and installation services, collision repair, parts, and accessories, and all of the Company’s dealership locations sell new and pre-owned RVs. The Company believes its dealership strategy of offering a comprehensive range of RV parts, services, accessories, products, and new and pre-owned RVs, generates powerful cross-selling opportunities.

Dealership Design and Layout

The Company’s operating dealership locations range in size from approximately 14,000 to 384,000 square feet and are situated on 11 to 126 acres. The Company’s dealership locations feature service centers staffed with expert, in-house trained product specialists and are equipped with merchandise demonstrations to assist in educating customers about RV performance products. The Company’s dealership locations also provide opportunities to promote a more interactive and consultative selling environment. The Lazydays staff is trained to cross-sell and explain the benefits of the Company’s breadth of available services, third party protection plans and products to which the Company’s customers have become accustomed, such as extended service contracts, emergency roadside assistance products, club memberships, discount camping and travel assistance.

The Company regularly refreshes its dealership locations to enhance the customers’ shopping experience and maximize product and service offerings. New products and services are introduced to capitalize on the advances of the RV industry and to satisfy needs of the Company’s customers. Store dress, promotional signage and directional signage are also periodically refreshed to further enhance the Lazydays customer shopping experience at Lazydays dealership locations.

Expansion Opportunities and Site Selection

The Company’s disciplined expansion and acquisition strategy focuses on growing its geographic footprint and customer base. The Company believes it has developed a rigorous and flexible process that employs exclusive data and analytical tools to identify target markets for acquisitions and new dealership and service center openings. The Company evaluates acquisition opportunities or selects sites for new locations based on criteria such as local demographics, traffic patterns, proximity to RV parks and campgrounds, proximity to major interstates, analytics from the Company’s customer database, RV sales and registrations, product availability and availability of attractive acquisition and/or lease terms. Members of the Lazydays development team spend considerable time evaluating markets and prospective sites.

Dealership Management and Training

The Company’s Vice President, National General Manager oversees all dealership operations. He has more than 41 years of experience in the RV industry and has been employed by Lazydays for over 8 years.

Every dealership location is overseen by a General Manager (the “GM”) that has responsibility for the daily operations of the dealership. Areas of responsibility include sales and service management, inventory management, hiring, associate training and development, maintenance of the facilities, and customer service and satisfaction. A GM’s management team includes a sales manager, a parts and accessories manager, a service manager, and a finance and insurance manager who help oversee the operations of each dealership location department. A typical Lazydays dealership location employs approximately 30 to 100 full-time equivalent employees.

The Company employs a Vice President, Operations and Supply Chain, and a centralized inventory management team to oversee and manage the Company’s RV inventory and provide consistency and controls in the forecasting, ordering, purchasing and distribution of RV inventory.

The Company employs a Vice President of Service who has responsibility for the service operations of the dealership locations. His responsibilities include ensuring the efficiency, logistics, and scheduling of service operations to deliver a premium customer experience.

The Company is constantly seeking to add top talent through a robust talent acquisition process and by partnering with local trade schools and community organizations. The interview and selection process identifies current and future candidates with the goal of hiring talented people that are customer focused and align with our core values. The Company has incorporated candidate assessment tools and technology to help it with its talent acquisition and development processes.

The Company has made a significant investment in developing comprehensive Tech and Sales training programs. In addition, we have incorporated a robust skills assessment and corporate training curriculum to help identify and grow our key talent and ultimately prepare them for a successful career in our growing business. Training is continuous throughout employment by the Company via scheduled e-learning modules, in-person workshops and knowledge checks.

Product Sourcing

New and Pre-owned RVs

The Company generally acquires new RVs for retail sale directly from the applicable manufacturer. Lazydays has strategic contractual arrangements with many of the leading RV manufacturers. Lazydays maintains a central inventory management and purchasing group to manage and maintain adequate inventory levels and assortment. RVs are transported directly from a manufacturer’s facility to Lazydays dealership locations via various third-party transportation companies.

Lazydays strategy is to partner with financially sound manufacturers that make quality products, have adequate manufacturing capacity and distribution, and maintain an appropriate product mix.

Lazydays supply arrangements with OEMs are typically governed by dealer agreements, which are customary in the RV industry. The Company’s dealer agreements with OEMs are generally made on a location-by-location basis. These dealer agreements generally designate a specific geographic territory, exclusive to Lazydays, provided that Lazydays meets the material obligations of the dealer agreement. The terms of these dealer agreements are typically subject to Lazydays, among other things, meeting all the requirements and conditions of the dealer agreement, maintaining certain sales objectives, performing services and repairs for owners of the manufacturer’s RVs that are still under manufacturer warranty, carrying in stock at all times the manufacturer’s parts and accessories needed to service and repair the manufacturer’s RVs, actively advertising and promoting the manufacturer’s RVs and indemnifying the manufacturer under certain circumstances. Wholesale pricing is generally established on a model year basis and is subject to change at the manufacturer’s sole discretion. In certain cases, the manufacturer may also establish a suggested retail price, below which the Company cannot advertise that manufacturer’s RVs for some specified period.

Lazydays generally acquires pre-owned RVs from customers, primarily through trade-ins, as well as through private sales, auctions, and other sources, and the Company generally reconditions pre-owned RVs acquired for retail sale in its service operation. Pre-owned RVs that Lazydays has determined are not suited for sale at a Lazydays dealership location generally are sold at wholesale prices through auctions.

Lazydays finances the purchase of substantially all of the Company’s new RV inventory from OEMs through a floor plan facility. Pre-owned vehicles may also be financed from time to time through the floor plan facility. For more information on the floor plan facility, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — M&T Credit Facility” below.

Parts and Accessories

The purchasing activities for the Company’s parts and accessories departments are focused on RV maintenance products, outdoor lifestyle products, RV parts and accessories, such as, among other things, generators and electrical supplies, satellite receivers and GPS systems, towing and hitching products, RV appliances, and essential supplies and other products and services necessary or desirable for the RV lifestyle. The Company maintains central purchasing functions to manage inventory, product-planning, allocate merchandise to the Company’s dealership locations and oversee the replenishment of basic merchandise. The Company has no long-term purchase commitments. The Company leverages its scale to reduce costs related to purchasing certain equipment, supplies, and services through long-standing, continuous relationships with its largest vendors.

Marketing and Advertising

The Company markets itsWe market our product offerings through integrated marketing campaigns across all digital and traditional marketing disciplines, with an emphasis on digital. The Company’sOur marketing efforts include itsour website, paid and organic search efforts, email, social media, online blog and video content, television, radio, billboards, direct mail, and RV shows and rallies. LazydaysWe also hashave exclusive partnership and sponsorship relationships with various RV lifestyle properties. The CompanyWe currently hashave a segmented marketing database of over 2.22.5 million RV owners and prospects. LazydaysOur principal marketing strategy is to leverage itsour unique brand positioning, extensive product selection, exclusive benefits, and high quality customer experience among RV owners. As per a research report prepared by Russell Research in November / December 2017, over 70% of Lazydays customers and over 60% of prospective customers surveyed strongly agree that Lazydays provides a high quality customer experience.

The Company’sOur total website traffic for the year ended December 31, 20212022 was approximately 17.228.1 million visits with approximately 15.527.6 million unique visitors. The LazydaysOur website features over 4,0006,000 new and pre-owned RVs, as well as information regarding Lazydaysour RV financing and insurance products, service capabilities, parts and accessories offerings, and other RV lifestyle content.

The Company measures itsWe measure our marketing productivity and effectiveness on an ongoing basiswith front end analytics integrated with 1^st party data to optimize marketing efforts.

Customer Service

Lazydays strives to exceed expectations by providing the best overall customer experience throughout every interaction with the Company. The Company believes customer service and access to a live person are a critical component of its digital marketing, sales, and service operations, and to achieving a best-in-class customer experience. The Company’s sales and customer service centers are multi-channel, full-service contact centers. RV enthusiasts can visit the Company’s locations, call, email, internet chat, text and use social media to contact Lazydays regarding products, services, protection plans, concerns and anything else related to the RV lifestyle. RV enthusiasts can also speak with Lazydays customer service specialists for help with aftermarket accessory orders, installations, scheduling, answers to questions, and to make purchases for any product and installation services offered through the Lazydays website.

Lazydays contact center specialists are trained to assist customers with complex orders and provide a level of service that leads to long-term customer relationships. In addition, the Company’s quality assurance team monitors contacts daily and provides the management with tools to maintain sales and service standards. Callers are assisted by experienced contact center agents who are familiar with the RV lifestyle and Lazydays services, protection plans and products.

Management Information Systems

The Company utilizes multiple computer systems to support its operations, including a third-party dealer management system (“DMS”), point-of-sale (“POS”) registers, enterprise resource planning system, supply chain tools, CRM system, marketing database and other business intelligence tools. In addition, the Company utilizes proprietary systems and data warehouses to provide analytical views of its data.

To support these applications, the Company has multiple data centers and cloud services with advanced servers, storage and networking capabilities, giving the Company the ability to scale quickly to meet demand. The Company has a secure wide area network that facilitates communication within and between its offices and provides both voice and data services. The Company’s business critical systems are replicated in real time and all systems are protected with on and off-site backups.

The Company utilizes information technology, data and analytics to actively market and sell multiple products and services to its customers, including list segmentation and merge and purge programs, to select prospects for email and direct mail solicitations and other direct marketing efforts. Comprehensive information on each customer, including a profile of the purchasing activities, is utilized to drive future sales. In addition, the Company’s website has been designed to display inventory and also to capture and route leads to our contact centers.

The Company’s management information systems and electronic data processing systems consist of an extensive range of retail, financial and merchandising systems, including purchasing, inventory distribution and logistics, sales reporting, accounts payable and merchandise management. The Company’s POS and dealer management systems report comprehensive data in near real time to the Company’s data warehouses, including detailed sales volume, inventory information by product, merchandise transfers and receipts, special orders, supply orders and returns of product purchases to vendors. The Company can capture associated sales and reference to specific promotional campaigns. Lazydays management monitors the performance of each dealership location to evaluate inventory levels and analyze gross profit margins by product.

Lazydays RV (LDRV) has developed a Cyber Security Strategy based on the Center for Internet Security’s (CIS) 18 CIS Critical Security Controls. Based on the CIS Critical Security Control Framework Lazydays has fully or partially implemented 11 of the 18 Critical CIS controls. This includes implementation of industry leading Next Generation Anti-Virus, monitored by a 24/7 Security Operation Center (SOC), implementation of a vulnerability management program, implemented a system capable of automatically identifying hardware assets. Lazydays has implemented processes, tools to monitor and analyze Audit Logs to review real time network activity. Lazydays is in the process of implementing a cloud based Privileged Access Management (PAM) system which will secure key accounts critical to managing LDRV’s network infrastructure. Lazydays has teamed with industry leading Identity and Access Management (IAM) providers to control and secure user accounts with Multi-Factor Authentication (MFA). Additionally, Lazydays is in the process of implementing procedures and tools to identify and classify sensitive data (PCI, PII etc.) to better protect and enable controls for employee and customer data.

Trademarks and Other Intellectual Property

The Company ownsWe own a variety of registered trademarks and service marks related to itsour brands and itsour services, protection plans, products and resources, including Lazydays, Lazydays The RV Authority ^®, Lazydays RV Accessories & More, Crown Club, and Exit 10, among others. The CompanyWe also ownsown numerous domain names, including Lazydays.com, LazydaysRVSale.com, LazydaysEvents.com, and LazydaysService.com among many others. The Company believesWe believe that itsour trademarks and other intellectual property have significant value and are important to itsour marketing efforts.

Government Regulation

The Company’sOur operations are subject to varying degrees of federal, state and local regulation, including the Company’sour RV sales, vehicle financing, outbound telemarketing, email, direct mail, roadside assistance programs, extended vehicle service contracts and insurance activities. These laws and regulations include consumer protection laws, so-called “lemon laws,” privacy laws, escheatment laws, anti-money laundering laws, environmental laws and other extensive laws and regulations applicable to new and pre-owned vehicle dealers, as well as a variety of other laws and regulations. These laws also include federal and state wage and hour, anti-discrimination and other employment practices laws.

Motor Vehicle Laws and Regulations

The Company’sOur operations are subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards promulgated by the United States Department of Transportation and the rules and regulations of various state motor vehicle regulatory agencies. The Company isWe are also subject to federal and state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles. Federal, state and local laws and regulations also impose upon vehicle operators’ various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions. Federal and state authorities also have various environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal.

The Company’sOur financing activities with customers are subject to federal truth-in-lending, consumer leasing and equal credit opportunity laws and regulations as well as state and local motor vehicle finance laws, leasing laws, installment finance laws, usury laws and other installment sales and leasing laws and regulations, some of which regulate finance and other fees and charges that may be imposed or received in connection with motor vehicle retail installment sales.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial Protection (“BCFP”), an independent federal agency funded by the United States Federal Reserve with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its regulation of automotive finance companies and other financial institutions.

Insurance Laws and Regulations

As a marketer of insurance programs, the Company iswe are subject to state rules and regulations governing the business of insurance including, without limitation, laws governing the administration, underwriting, marketing, solicitation and/or sale of insurance programs. The insurance carriers that underwrite the programs that the Company sellswe sell are required to file their rates for approval by state regulators. Additionally, certain state laws and regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offering of any insurance program to a consumer. The Company isWe are required to maintain certain licenses to market insurance programs.

Marketing Laws and Regulations

The Federal Trade Commission (the “FTC”) and each of the states have enacted consumer protection statutes designed to ensure that consumers are protected from unfair and deceptive marketing practices. Lazydays reviewsWe review all of itsour marketing materials for compliance with applicable FTC regulations and state marketing laws.

Environmental, Health and Safety Laws and Regulations

The Company’sOur operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, the Company’sour business is subject to a variety of federal, state and local requirements that regulate the environment and public health and safety.

Most of the Lazydaysour dealership locations utilize aboveground storage tanks, and to a lesser extent underground storage tanks, primarily for petroleum-based products. Storage tanks are subject to periodic testing, containment, upgrading and removal requirements under the Resource Conservation and Recovery Act and its state law counterparts. Clean-up or other remedial action may be necessary in the event of leaks or other discharges from storage tanks or other sources. In addition, water quality protection programs under the federal Water Pollution Control Act (commonly known as the Clean Water Act), the Safe Drinking Water Act and comparable state and local programs govern certain discharges from some of the Company’sour operations. Similarly, air emissions from the Company’sour operations, such as RV painting, are subject to the federal Clean Air Act and related state and local laws. Certain health and safety standards promulgated by the Occupational Safety and Health Administration of the United States Department of Labor and related state agencies also apply to certain of the Company’sour operations.

Although the Company incurswe incur costs to comply with applicable environmental, health and safety laws and regulations in the ordinary course of itsour business, the Company doeswe do not presently anticipate that these costs will have a material adverse effect on itsour business, financial condition or results of operations. The Company doesWe do not have any material known environmental commitments or contingencies.

Insurance

The Company utilizesWe utilize insurance to provide for the potential liabilities for workers’ compensation, product liability, general liability, business interruption, property liability, director and officers’ liability, cyber, environmental issues, and vehicle liability. Beginning in 2020, the Companywe became self-insured for employee health-care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering actuarial reports, historical claims experience, demographic factors, severity factors, stop loss coverage and other assumptions. The Company’sOur results could be adversely affected by claims and other expenses related to such plans and policies if future occurrences and claims differ from these assumptions and historical trends.

Employees

As of December 31, 2021, Lazydays2022, we had approximately 1,500over 1,400 employees, almost all of which are full-time employees. None of the Lazydaysour employees are represented by a labor union or are party to a collective bargaining agreement, and Lazydays haswe have not had any labor-related work stoppages. The Company believesWe believe that itsour employee relations are in good standing.

Seasonality and Effects of Weather

The Company’sOur operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in part to consumer buying trends and the hospitable warm climate during the winter months at our Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Oklahoma, Washington and Wisconsin generally experience modestly higher vehicle sales during the spring months.

The Company’sOur largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to property and inventory and decrease the traffic to our dealerships. Although the Company believeswe believe that it haswe have adequate insurance coverage, if the Companywe were to experience a catastrophic loss, the Companywe may exceed itsour policy limits, and/or may have difficulty obtaining similar insurance coverage in the future.

Principal Executive Offices

Our principal executive offices are located at 4042 Park Oaks Boulevard, Suite 350, Tampa, Florida 33610 and our telephone number is (813) 246-4999.

Available Information

Our Internet website is www.lazydays.com. Our reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, under the Investor Relations – Finance Information tab of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). You may also read and copy any materials we file with the SEC at the SEC’s Internet website located at www.sec.gov.

Item 1A. Risk Factors

Summary Risk Factors

The Company is subject to a number of risks that if realized could materially adversely affect its business, financial condition or results of operations. The following is a summary of the principal risk factors facing the Company:

● The fair value of warrant liabilities may fluctuate.

● The Company must be able to maintain an effective system of internal controls and accurately report our financial results and remediate material weaknesses.

● The COVID-19 pandemic had a significant adverse impact on the Company’s business, results of operations and financial condition in the first months of the pandemic; while increased sales since then have more than offset the initial adverse impact, there can be no assurance that such sales growth will continue at the same rate or at all, and the Company’s sales may ultimately decline, meaning that, in the long term, COVID-19 could result in a net negative impact on its business.

● The Company’s business is affected by the availability of financing to the it and its customers.

● The Company’s business may be affected by fuel shortages, or high prices for fuel.

● The Company’s success will depend to a significant extent on the wellbeing, as well as the continued popularity and reputation for quality, of the Company’s manufacturers, particularly, Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc.

● Any change, non-renewal, unfavorable renegotiation or termination of the Company’s supply arrangements for any reason could have a material adverse effect on product availability and cost and the Company’s financial performance.

● The Company’s business is impacted by general economic conditions in its markets, and ongoing economic and financial uncertainties may cause a decline in consumer spending that may adversely affect its business, financial condition and results of operations.

● The Company depends on its ability to attract and retain customers.

● Competition in the market for services, protection plans and products targeting the RV lifestyle or RV enthusiast could reduce the Company’s revenues and profitability.

● The Company’s expansion into new, unfamiliar markets presents increased risks that may prevent it from being profitable in these new markets. Delays in acquiring or opening new retail locations could have a material adverse effect on the Company’s business, finance condition and results of operations.

● Unforeseen expenses, difficulties, and delays encountered in connection with expansion through acquisitions could inhibit the Company’s growth and negatively impact its profitability.

● Failure to maintain the strength and value of the Company’s brands could have a material adverse effect on the Company’s business, financial condition and results of operations.

● Failure to successfully procure and manage its inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends could have a material adverse effect on the Company’s business, financial conditions and results of operations.

● The Company’s same store sales may fluctuate and may not be a meaningful indicator of future performance.

● The cyclical nature of the Company’s business has caused its sales and results of operations to fluctuate. These fluctuations may continue in the future, which could result in operating losses during downturns.

● The Company’s business is seasonal, which leads to fluctuations in sales and revenues.

● The Company’s business may be adversely affected by unfavorable conditions in its local markets, even if those conditions are not prominent nationally.

● The Company’s may not be able to satisfy its debt obligations upon the occurrence of a change in control under its credit facility.

● The Company’s ability to operate and expand its business and to respond to changing business and economic conditions will depend on the availability of adequate capital.

● The restrictive covenants governing the Company’s credit facilities may impair the Company’s ability to access sufficient capital and operate its business.

● Uncertainty relating to the LIBOR calculation process and the phasing out of LIBOR may adversely affect the Company.

● Natural disasters (including hurricanes) whether or not caused by climate change, unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt business and result in lower sales and otherwise adversely affect the Company’s financial performance.

● The Company depends on its relationships with third party providers of services, protection plans, products and resources, and a disruption of these relationships or of these providers’ operations could have an adverse effect on the Company’s business and results of operations.

● A portion of the Company’s revenue is from financing, insurance and extended service contracts that depend on third party lenders and insurance companies. The Company cannot ensure these third parties will continue to provide RV financing and other products.

● If the Company is unable to retain senior executives and attract and retain qualified employees, the Company’s business might be adversely affected.

● The Company’s business depends on its ability to maintain sufficient quantity and quality of staff.

● The Company primarily leases its retail locations. If the Company is unable to maintain those leases or locate alternative sites for retail locations in its target markets and on terms that are acceptable to it, the Company’s revenues and profitability could be adversely affected.

● The Company’s business is subject to numerous federal, state and local regulations.

● Regulations applicable to the sale of extended service contracts could materially impact the Company’s business and results of operations.

● If state dealer laws are repealed or weakened, the Company’s dealerships will be more susceptible to termination, non-renewal or renegotiation of dealer agreements.

● The Company failing to comply with certain environmental regulations could adversely affect the Company’s business, financial condition and results of operations.

● Climate change legislation or regulations restricting emission of “greenhouse gases” could result in increased operating costs and reduced demand for the RVs the Company sells.

● The Company may be unable to enforce its intellectual property rights and/or the Company infringing the intellectual property rights of third parties which could have a material adverse effect on the Company’s business, financial condition and results of operations.

● If the Company is unable to protect, maintain or upgrade its information technology systems or if the Company is unable to convert to alternate systems in an efficient and timely manner, the Company’s operations may be disrupted or become less efficient.

● Any disruptions to the Company’s information technology systems or breaches of the Company’s network security could impair or interrupt its operations, compromise its reputation, compromise its data, expose it to litigation, government enforcement actions and costly response measures and could have a material adverse effect on the Company’s business, financial condition and results of operations.

● Increases in the minimum wage or overall wage levels could adversely affect the Company’s financial results.

● The Company may be subject to liability claims if people or property are harmed by the products the Company sells and services and may be adversely impacted by manufacturer safety recalls.

● The Company may be named in litigation, which may result in substantial costs and reputation harm and divert management’s attention and resources.

● The Company’s risk management policies and procedures may not be fully effective in achieving their purposes.

● The Company could incur asset impairment charges for goodwill, intangible assets or other long-lived assets.

● Future resales of the shares of common stock of the Company issued to the stockholders and the investors in the PIPE Investment may cause the market price of the Company’s securities to drop significantly, even if the Company’s business is doing well.

● The Company, as a party to a prior transaction with a special purpose acquisition company (or SPAC), may receive negative scrutiny of, or attention towards, its financial statements (including from the Securities and Exchange Commission), which could have a material adverse effect on the Company’s business, financial condition and results of operations.

● The Company’s outstanding convertible preferred stock, warrants and options may have an adverse effect on the market price of its common stock.

● Stockholders may become diluted as a result of issuance of options under existing or future incentive plans or the issuance of common stock as a result of acquisitions or otherwise.

● The price of the Company’s common stock may be volatile for a variety of reasons.

● The conversion of the Series A Preferred Stock into Company common stock may dilute the value for the other holders of the Company common stock.

● The holders of Series A Preferred Stock own a large portion of the voting power of the Company common stock and have the right to nominate and elect two members to the Company’s board of directors (the “Board”). As a result, these holders may influence the composition of the Board and future actions taken by the Board.

● The holders of the Series A Preferred Stock have certain rights that may not allow the Company to take certain actions.

● The Company’s stock repurchase program could impact the volatility of the price of the Company’s common stock.

● The Company’s amended and restated certificate of incorporation provides to the fullest extent permitted by law that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the Company and its stockholders, which could limit the Company’s stockholders ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with the Company or the Company’s directors, officers or employees.

The above list is not exhaustive, and the Company faces additional challenges and risks. Investors should carefully consider all of the information set forth in this Form 10-K, including the following risk factors, before deciding to invest in any of the Company’s securities.

The following are material risks to which our business operations are subject. Any of these risks could materially adversely affect our business, financial condition, or results of operations. These risks could also cause our actual results to differ materially from those indicated in the forward-looking statements contained herein and elsewhere. The risks described below are not the only risks we face. Additional risks not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations.

Risks Related to Lazydays Business

Certain of our warrants are accounted for as liabilities and the changes in the fair values of the warrants could have a material effect on our financial results.

The Company accountsWe account for the Private Warrants and PIPE Warrants as liabilities for all periods presented. Prior to the SEC Staff Statement on April 12, 2021, the Companywe had previously accounted for itsour Warrants as components of equity, consistent with common market practice. Under liability accounting treatment, the Company iswe are required to measure the fair value of the warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’sour operating results for the current period. Fluctuations in the fair value of our warrants are primarily driven by changes in our stock price. As a result of this recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, through March 2023 when our warrants expire, based on factors which are outside our control. We expect that we will periodically recognize non-cash gains or losses due to the quarterly mark-to-market of our warrants and that such gains or losses could be material and may not be reflective of the performance of our underlying business operations.

A material weakness in our internal control over financial reporting related to our information technology systems was determined to exist. If we are unable to maintain an effective system of internal controls, we may not be able to accurately report our financial results, which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.

As of December 31, 2021, the Company’s2022, management identified a material weakness in internal controls related to ineffective information technology general controls. The material weakness did not result in any identified misstatements to the financial statements and there were no changes to previously released financial results. The Company’s managementManagement has developed and implemented a remediation plan to address the material weakness. However, we cannot assure you that the testing of the operational effectiveness of the new control will be complete within a specific timeframe. Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002 as amended (the “Sarbanes-Oxley Act”). There is no assurance that material weaknesses or significant deficiencies will not occur or that we will be successful in adequately remediating any such material weaknesses and significant deficiencies. We may in the future discover areas of our internal controls that need improvement. We cannot be certain that we will be successful in maintaining adequate internal control over our financial reporting and financial processes. Furthermore, as we grow our business, including through acquisition, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective. Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, subject us to investigations from regulatory authorities or cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us.

Natural disasters, whether or not caused by climate change, unusual weather conditions, epidemic and pandemic outbreaks, terrorist acts and political events could disrupt business and result in lower sales and otherwise adversely affect our financial performance.

The COVID-19occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, floods, hail storms and earthquakes, unusual weather conditions, epidemic and pandemic has had, andoutbreaks such as Coronavirus, or other global health emergencies, terrorist attacks or disruptive political events in certain regions where our stores are located could have in the future, certain negative impacts onadversely affect our business and result in lower sales. Severe weather, such impactsas heavy snowfall or extreme temperatures, may discourage or restrict customers in a particular region from traveling to our dealerships or utilizing our products, thereby reducing our sales and profitability. Natural disasters including tornadoes, hurricanes, floods, hail storms and earthquakes may damage our stores or other operations, which may materially adversely affect our financial results. Any of these events could have a material adverse effect on our results of operations,business, financial condition and cash flows. The long term effectsresults of COVID-19 could result in a net negative impact on our business.operations.

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease COVID-19 a pandemic, which continues to spread throughout the United States and globally. Beginning in mid-to-late March of 2020, the COVID-19 pandemic led to severe disruptions in general economic activity as businesses and federal, state, and local governments took increasingly broad actions to mitigate the impact of the pandemic on public health, including through “shelter in place” or “stay at home” orders in states in which we operate. As we modified our business practices to conform to government guidelines and best practices to ensure the health and safety of our customers, employees and the communities we serve, we saw significant early declines in new and pre-owned vehicle unit sales, sales of parts, accessories and related services, including finance and insurance revenues as well as campground and miscellaneous revenues.

We took a number of actions in April 2020 to adjust resources and costs to align with reduced demand caused by the COVID-19 pandemic. These actions included:

To further protect our liquidity and cash position, we negotiated with our lenders for the temporary suspension of scheduled principal and interest payments on our term and mortgage loans from April 15, 2020 through June 15, 2020 and for the temporary suspension of scheduled floorplan curtailment payments from April 1, 2020 through June 15, 2020. We also received $8.7 million in loans under the Paycheck Protection Program (the “PPP Loans”). As of December 31, 2021, all of the PPP Loans had a portion forgiven for a total of $6,626. We expect no further forgiveness of the remaining loans.

The improvement in sales beginning in May 2020 likely relates, at least in part, to an increase in consumer demand as consumers seek outdoor travel and leisure activities that permit appropriate social distancing. However, we can provide no assurances that such growth in sales will continue at the same rate that occurred between May 2020 and December 2021, or at all, over any time period, and sales may ultimately decline. Furthermore, our improved sales and cost savings measures to date may not be sufficient to offset any later adverse impacts of the COVID-19 pandemic, including the Delta and Omicron variants, and our liquidity could be negatively impacted, if prior sales trends from May 2020 through December 2021 are reversed, which may occur, for example, if consumer preferences shift towards cruise line, air travel and hotel industries.

The public health crisis caused by the COVID-19 pandemic and its consequences have had, and could again have in the future, certain negative impacts on our business including, without limitation, the following:

● previous and potentially future delays in the delivery of certain products from our vendors as a result of shipping delays due to, among other things, additional safety requirements imposed on our suppliers by governmental authorities and capacity constraints experienced by our transportation contractors;

● some of our vendors having experienced, and potentially experiencing in the future, temporary facility closures, production slowdowns and disruption to operations as a result of the impact of the pandemic on their respective businesses;

● disruptions in supply chains that may place constraints on our ability to source products, which may increase our product costs or lead to shortages;

● National parks and RV parks temporarily closing, which may again occur in the future, in response to the COVID-19 pandemic, which could cause consumers to use their RVs less frequently, or be less inclined to need or renew certain of our services or purchase products;

● deteriorating economic conditions as a result of the COVID-19 pandemic, such as increased unemployment, decreases in disposable income, declines in consumer confidence, or economic slowdowns or recessions, which could cause a decrease in demand for our products and services;

● the ability of third-party service providers and business partners, such as cloud data storage and other information technology service providers, suppliers, distributors, contractors, and other external business partners, to fulfill their respective commitments and responsibilities to us in a timely manner and in accordance with the agreed-upon terms in light of risks and uncertainties related to the COVID-19 pandemic; and

● the possibility of legal claims or litigation against us relating to actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic.

Our operations also depend on the continued health and productivity of our employees at our dealerships’ service locations and corporate headquarters throughout the COVID-19 pandemic. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic, the efficacy and availability of vaccines, and further actions that may be taken by individuals, businesses and federal, state and local governments in response. Even after the COVID-19 pandemic has subsided, we may experience significant adverse effects to our business as a result of its global economic impact, including any economic recession or downturn and the impact of such a recession or downturn on unemployment levels, consumer confidence, levels of personal discretionary spending, credit availability and any long term disruptions in supply chains.

The Biden administration recently announced a regulation to be administered through the Occupational Safety and Health Administration (“OSHA”) requiring all U.S. private businesses with 100 or more employees to ensure that their employees are fully vaccinated or require unvaccinated workers to undergo weekly COVID-19 testing. The regulation was immediately legally challenged. At this time, OSHA has suspended enforcement of the mandate pending future developments in the litigation.

The Company’sOur business is affected by the availability of financing to itus and itsour customers.

The Company’sOur business is affected by the availability of financing to itus and itsour customers. Generally, RV dealers finance their purchases of inventory with financing provided by lending institutions. On July 14, 2021, the Companywe entered into a $369.1 million amended and restated credit agreement with M&T Bank including a new floor plan facility that increased the committed floor plan financing to $327.0 million. As of December 31, 2021, the Company2022, we had $192.2$349.1 million outstanding under itsthe M&T floor plan facility and $10.1$7.2 million outstanding under the M&T term loan. As of December 31, 2021,2022, substantially all of the invoice cost of new RV inventory was financed under the floor plan facility. A decrease in the availability of this type of wholesale financing or an increase in the cost of such wholesale financing could prevent the Companyus from carrying adequate levels of inventory, which may limit product offerings and could lead to reduced sales and revenues.

Furthermore, manymost of the Company’sour customers finance their RV purchases. Although consumer credit markets are generally favorable, consumerConsumer credit market conditions, including rising interest rates, continue to influence demand, especially for RVs, and may continue to do so. There continues to be fewer lenders, more stringent underwriting and loan approval criteria, and greater down payment requirements than in the past. If credit conditions or the credit worthiness of the Company’sour customers worsen, and adversely affect the ability of consumers to finance potential purchases on acceptable terms and interest rates, it could result in a decrease in the sales of the Company’sour products and have a material adverse effect on the Company’sour business, financial condition and results of operations.

Fuel shortages, or high prices for fuel, could have a negative effect on the Company’s business.

Gasoline or diesel fuel is required for the operation of motorized RVs. There can be no assurance that the supply of these petroleum products will continue uninterrupted, that rationing will not be imposed, that the price of or tax on these petroleum products will not significantly increase in the future. Shortages of gasoline and diesel fuel have had a material adverse effect on the RV industry as a whole in the past and any such shortages or substantial increases in the price of fuel could have a material adverse effect on the Company’s business, financial condition or results of operations.

Climate change legislation or regulations restricting emission of “greenhouse gases” could result in increased operating costs and reduced demand for the RVs the Company sells.we sell.

The United States Environmental Protection Agency has adopted rules under existing provisions of the federal Clean Air Act that require a reduction in emissions of greenhouse gases from motor vehicles. The newBiden Administration has focused significant attention on greenhouse gases and climate change. The adoption of any laws or regulations requiring significant increases in fuel economy requirements or new federal or state restrictions on vehicles and automotive fuels in the United States or internationally could adversely affect demand for those vehicles and could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur success depends to a significant extent on the well-being, popularity, financial condition and reputation for quality, of the Company’sour manufacturers, particularly Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc., as well as their respective supply chains.

Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc. supplied approximately 46.4%49.1%, 30.6%29.1%, and 18.9%18.3%, respectively, of the Company’sour purchases of new RV inventory during the year ended December 31, 2021. The Company depends2022. We depend on itsour manufacturers to provide itus with products that compare favorably with competing products in terms of quality, performance, safety and advanced features. Any adverse change in the production efficiency, product development efforts, technological advancement, marketplace acceptance, reputation, marketing capabilities or financial condition of the Company’sour manufacturers or their respective supply chains could have a substantial adverse impact on the Company’sour business. Any difficulties encountered by any of the Company’sour manufacturers resulting from economic, financial, or other factors could adversely affect the quality and number of products that they are able to supply to the Companyus and the services and support they provide to the Company.us. The interruption or discontinuance of the operations of the Company’sour manufacturers or their respective supply chains could cause the Companyus to experience shortfalls, disruptions, or delays with respect to needed inventory. Although the Company believeswe believe that adequate alternate sources would be available that could replace any manufacturer as a product source, those alternate sources may not be available at the time of any interruption, alternative products may not be available at comparable quality and prices and alternative products may not be equally appealing to the Company’sour customers.

Any change, non-renewal, unfavorable renegotiation or termination of the Company’sour supply arrangements for any reason could have a material adverse effect on product availability and cost and the Company’sour financial performance.

The Company’sOur supply arrangements with manufacturers are typically governed by dealer agreements, which are customary in the RV industry. The Company’sOur dealer agreements with manufacturers are generally made on a location-by-location basis, and each retail location typically enters into multiple dealer agreements with multiple manufacturers. The terms of the Company’sour dealer agreements are typically subject to the Company meeting program requirements and retail sales objectives, performing services and repairs for customers still under warranty (regardless from whom the RV was purchased), carrying the relevant manufacturer’s parts and accessories needed to service and repair its RVs, actively advertising and promoting the manufacturer’s RVs, and in some instances indemnifying the manufacturer.

The Company’sOur dealer agreements designate a specific geographic territory for the Company, exclusive to the Company,us, provided that the Company iswe are able to meet the material obligations of the applicable dealer agreement.

In addition, many of the Company’sour dealer agreements contain contractual provisions concerning minimum advertised product pricing for current model year units. Wholesale pricing is generally established on a model year basis and is subject to change in the manufacturer’s sole discretion. Any change, non-renewal, unfavorable renegotiation or termination of these dealer agreements for any reason could have a material adverse effect on product availability and cost and the Company’sour financial performance.

The Company’sOur growth in existing or expansion into new, unfamiliar markets, whether through acquisitions or otherwise, presents risks that could materially affect profitability.

The Company’sOur success will depend, in part, on theour ability of the Company to make successful acquisitions and to integrate the operations of acquired retail locations, including centralizing certain functions to achieve cost savings and pursuing programs and processes that promote cooperation and the sharing of opportunities and resources among the Company’sour retail locations and consumer services and plans. The CompanyWe may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of itsour acquisitions within the anticipated timing or at all. For as long as the first year after a substantial acquisition and possibly longer, the benefits from the acquisition may be offset by the costs incurred in integrating the business and operations.

In 2021, the Companywe acquired three dealerships; one dealership in Tennessee, one with two locations in Oregon and Washington and one in Wisconsin. The Company intendsOklahoma. We intend to continue to expand in part by acquiring or building new retail or service locations in new markets. As a result the Companyof this and any future expansion, we may have less familiarity with local consumer preferences and could encounter difficulties in attracting customers due to a reduced level of consumer familiarity with the Company and itsour brands.

Other factors, many of which are beyond the Company’sour control, may impact the Company’sour ability to acquire or open retail locations successfully, whether in existing or new markets, and operate them profitably. These factors include (a) the ability to (i) identify suitable acquisition opportunities at purchase prices likely to provide returns required by the Company’sour acquisition criteria, (ii) control expenses associated with sourcing, evaluating and negotiating acquisitions (including those that are not completed), (iii) accurately assess the profitability of potential acquisitions or new locations, (iv) secure required third party or governmental permits and approvals, (v) negotiate favorable lease agreements, (vi) hire and train skilled operating personnel, especially management personnel, (vii) provide a satisfactory product mix responsive to local market preferences where new retail locations are built or acquired, (viii) secure product lines, (ix) supply new retail locations with inventory in a timely manner; (b) the availability of construction materials and labor for new retail locations and the occurrence of significant construction delays or cost overruns; (c) competitors in the same geographic area and regional economic variants; (d) the absence of disagreements with potential acquisition targets that could lead to litigation; (e) successfully integrating the operations of acquired dealers with the Company’sour own operations; (f) managing acquired dealers and stores profitably without substantial costs, delays, or other operational or financial problems; and (g) the ability of the Company’sour information management systems to process increased information accurately and in a timely fashion. A negative outcome associated with any of these factors could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Once the Company decideswe decide on a new market and identifies a suitable acquisition or location opportunity, any delays in acquiring or opening or developing new retail locations could impact the Company’sour financial results. For example, delays in the acquisition process or construction delays caused by permitting or licensing issues, material shortages, labor issues, weather delays or other acts of God, discovery of contaminants, accidents, deaths or injuries, third parties attempting to impose unsatisfactory restrictions on the Company in connection with their approval of acquisitions, and other factors could delay planned openings or force the Companyus to abandon planned openings altogether.

As the Company grows, itwe grow, we will face the risk that itsour existing resources and systems, including management resources, accounting and finance personnel and operating systems, may be inadequate to support itsour growth.

Finally, the size, timing, and integration of any future new retail location openings or acquisitions may cause substantial fluctuations in the Company’sour results of operations from quarter to quarter. Consequently, the Company’sour results of operations for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These fluctuations could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Failure to maintain the strength and value of the Company’sour brands could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur success depends on the value and strength of the Lazydays brands. The Lazydays name and Lazydays brands are integral to the Company’sour business as well as to the implementation of the Company’sour strategies for expanding itsour business. Maintaining, enhancing, promoting and positioning the Company’sour brands, particularly in new markets where the Company haswe have limited brand recognition, will depend largely on the success of the Company’sour marketing efforts and itsour ability to provide high quality products, services, protection plans, and resources and a consistent, high quality customer experience. The Company’sOur brands could be adversely affected if: (a) the Company failswe fail to achieve these objectives or to comply with local laws and regulations; (b) the Company iswe are subject to publicized litigation; or (c) the Company’sour public image or reputation were to be tarnished by negative publicity. Some of these risks are not within the Company’sour control, such as the effects of negative publicity regarding the Company’sour manufacturers, suppliers or third party providers of services or negative publicity related to members of management. Any of these events could result in decreases in revenues. Further, maintaining, enhancing, promoting and positioning the Company’sour brand image may require the Companyus to make substantial investments in areas such as marketing, dealership operations, community relations, store graphics and employee training, which could adversely affect the Company’sour cash flow and profitability. Furthermore, efforts to maintain, enhance or promote the Company’sour brand image may ultimately be unsuccessful. These factors could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur failure to successfully procure and manage itsour inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur success depends upon the Company’sour ability to successfully manage the Company’sour inventory and to anticipate and respond to product trends and consumer demands in a timely manner. The preferences of the Company’sour target consumers cannot be predicted with certainty and are subject to change. The CompanyWe may order products in advance of the following selling season. Extended lead times for the Company’sour purchases may make it difficult for the Companyus to respond rapidly to new or changing product trends, increases or decreases in consumer demand or changes in prices. If the Company misjudgeswe misjudge either the market for the Company’sour products or itsour consumers’ purchasing habits in the future, the Company’sour revenues may decline significantly, the Companywe may not have sufficient inventory to satisfy consumer demand or sales orders, or the Companywe may be required to discount excess inventory; all of which could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur business is impacted by general economic conditions, ongoing economic and financial uncertainties, and or a change in consumer tastes, may cause a decline in consumer spending that may adversely affect itsour business, financial condition and results of operations.

The Company dependsWe depend on consumer discretionary spending and, accordingly, the Companywe may be adversely affected if itsour customers reduce, delay or forego their purchases of the Company’sour products, services, and protection plans as a result of, including but not limited to, recessionary conditions, job loss, bankruptcy, higher consumer debt, andrising interest rates, inflation, reduced access to credit, higher energy and fuel costs, relative or perceived cost, availability and comfort of RV use versus other modes of travel, such as air travel and rail (including as a result of consumer tastes in response to climate change), falling home prices, lower consumer confidence, uncertain or changes in tax policies, uncertainty due to national or international security or health concerns, volatility in the stock market, or epidemics.

Decreases in the number of customers, average spend per customer, or retention and renewal rates for the Company’sour consumer services and plans would negatively affect the Company’sour financial performance. A prolonged period of depressed consumer spending could have a material adverse effect on the Company’sour business. In addition, adverse economic conditions may result in an increase in the Company’sour operating expenses due to, among other things, higher costs of labor, energy, equipment and facilities. Due to recent fluctuations in the U.S. economy and the COVID-19 pandemic, the Company’sour sales, operating and financial results for a particular period are difficult to predict, making it difficult to forecast results for future periods. Additionally, the Company iswe are subject to economic fluctuations in local markets, most significantly Florida, that may not reflect the general economic conditions of the broader U.S. economy. Any of the foregoing factors could have a material adverse effect on our business, financial condition and results of operations.

Additionally, economic uncertainty and business downturns in the Company’s business,U.S. markets have adversely affected, and may in the future adversely affect, our financial condition and results of operations.

Competition in the market for products, services, and protection plans and products targeting the RV lifestyle or RV enthusiast could reduce the Company’sour revenues and profitability.

Competition in the RV market is fragmented, driven by price, product and service features, technology, performance, reliability, quality, availability, variety, delivery and customer service. In addition to competing with other dealers of new and pre-owned RVs the Company competeswe compete directly or indirectly with major national insurance and warranty companies, providers of roadside assistance and providers of extended service contracts.

Additional competitors may enter the businesses in which the Companywe currently operates.operate. If any of the Company’sour competitors successfully provides a broader, more efficient or attractive combination of products, services and protection plans and products to the Company’sour target customers, the Company’sour business results could be materially adversely affected. The Company’sOur inability to compete effectively with existing or potential competitors, some of which may have greater resources or be better positioned to absorb economic downturns in local markets, could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’s same store sales may fluctuate and may not be a meaningful indicator of future performance.

The Company’s same store sales may vary from quarter to quarter. A number of factors affect and will continue to affect the Company’s same store sales results, including: (a) changes or anticipated changes to regulations related to the products the Company offers; (b) consumer preferences and buying trends; (c) overall economic trends; (d) the Company’s ability to identify and respond effectively to local and regional trends and customer preferences; (e) the Company’s ability to provide quality customer service that will increase its conversion of shoppers into paying customers; (f) competition in the regional market of a store; (g) extreme weather patterns; (h) changes in the Company’s product mix; (i) changes to local or regional regulations affecting the Company’s stores; (j) changes in sales of consumer services and plans and retention and renewal rates for the Company’s annually renewing consumer services and plans; and (k) changes in pricing and average unit sales.

An unanticipated decline in revenues or same store sales could have a material adverse effect on the Company’s business, financial condition and results of operations.

The cyclical nature of the Company’sour business has caused itsour sales and results of operations to fluctuate. These fluctuations may continue in the future, which could result in operating losses during downturns.

The RV industry is cyclical and is influenced by many national and regional economic and demographic factors, including: (a) the terms and availability of financing for retailers and consumers; (b) overall consumer confidence and the level of discretionary consumer spending; (c) population and employment trends; and (d) income levels and general economic conditions, such as inflation, including as a result of tariffs, deflation, increasing interest rates and recessions. As a result of these factors, the Company’sour sales and results of operations have fluctuated, and the Company expectswe expect that they will continue to fluctuate in the future.

The Company’sOur business is seasonal, and this leads to fluctuations in sales and revenues.

The Company hasWe have experienced, and expectsexpect to continue to experience, some variability in revenue, net income and cash flows as a result of seasonality in itsour business. Because the Company’sour largest dealership is located in the southern United States, demand for services, protection plans, products and resources generally increases during the winter season when people move south for the winter or vacation in warmer climates, while sales and profits are generally lower during the summer months. In addition, unusually severe weather conditions in some geographic areas may impact demand. This includes the threat of hurricanes in Florida, which could substantially damage property and inventory in the Company’sour Florida dealerships, especially in Tampa, and lead to a material disruption of operations at the Company’sour Tampa, Florida headquarters and dealership.

For the years ended December 31, 2022 and 2021, and 2020, the Companywe generated 51%58% and 51% (excluding the impact of acquisitions) of itsour annual revenue in the first and second fiscal quarters, respectively, which include the peak winter months. The COVID-19 pandemic affected our sales patterns in 2021 and 2020. The Company incurs2021. We incur additional expenses in the first and second fiscal quarters due to higher purchase volumes, increased staffing in the Company’sour retail locations and program costs. If, for any reason, the Company miscalculateswe miscalculate the demand for itsour products or itsour product mix during the first and second fiscal quarters, the Company’sour sales in these quarters could decline, resulting in higher labor costs as a percentage of sales, lower margins and excess inventory, which could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Due to the Company’sour seasonality, the possible adverse impact from other risks associated with itsour business, including extreme weather, consumer spending levels and general business conditions, is potentially greater if any such risks occur during the Company’sour peak sales seasons.seasons, which are the first and second fiscal quarters.

The Company’s business may be adversely affected by unfavorable conditions in its local markets, even if those conditions are not prominent nationally.

Since a large portion of the Company’s sales are generated in Florida, the Company’s results of operations depend substantially on general economic conditions and consumer spending habits in the Southeastern United States. In the event that this geographic area experiences a downturn in economic conditions, it could have a material adverse effect on the Company’s business, financial condition and results of operations.

The CompanyWe primarily leases itslease our retail locations and if the Company iswe are unable to maintain those leases or locate alternative sites for retail locations in itsour target markets and on terms that are acceptable to it, the Company’sour revenues and profitability could be materially adversely affected.

The Company leases 14We lease 12 of the 1618 real properties where it haswe have operations. At inception of the leases, they generally provide for fixed monthly rentals with escalation clauses and range from three to twenty years. There can be no assurance that the Companywe will be able to maintain itsour existing retail locations as leases expire, extend the leases or be able to locate alternative sites in itsour target markets and on favorable terms. Any failure to maintain itsour existing retail locations, extend the leases or locate alternative sites on favorable or acceptable terms could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The CompanyWe may be unable to enforce itsour intellectual property rights and/or the Companywe may be accused of infringing the intellectual property rights of third parties which could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company ownsWe own a variety of registered trademarks and service marks. The Company believesWe believe that itsour trademarks have significant value and are important to itsour marketing efforts. If the Company iswe are unable to continue to protect the trademarks and service marks for itsour proprietary brands, if such marks become generic or if third parties adopt marks similar to the Company’sour marks, the Company’sour ability to differentiate itsour products and services may be diminished. In the event that the Company’sour trademarks or service marks are successfully challenged by third parties, the Companywe could lose brand recognition and be forced to devote additional resources to advertising and marketing new brands for itsour products.

From time to time, the Companywe may be compelled to protect itsour intellectual property, which may involve litigation. Such litigation may be time-consuming, expensive and distract the Company’sour management from running the day-to-day operations of itsour business, and could result in the impairment or loss of the involved intellectual property. There is no guarantee that the steps the Company takeswe take to protect itsour intellectual property, including litigation when necessary, will be successful. The loss or reduction of any of the Company’sour significant intellectual property rights could diminish the Company’sour ability to distinguish itsour products and services from competitors’ products and services and retain itsour market share for itsour products and services. The Company’sOur inability to effectively protect the Company’sour proprietary intellectual property rights could have a material adverse effect on the Company’sour business, results of operations and financial condition.

Other parties also may claim that the Company infringeswe infringe on their proprietary rights. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against the Companyus or the payment of damages. These claims could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Regulations applicable to the sale of extended service contracts could materially impact the Company’sour business and results of operations.

The Company offersWe offer extended service contracts that may be purchased as a supplement to the original purchaser’s warranty as well as other optional products to protect the consumer’s investment. These products are subject to complex federal and state laws and regulations. There can be no assurance that regulatory authorities in the jurisdictions in which these products are offered will not seek to further regulate or restrict these products. Failure to comply with applicable laws and regulations could result in fines or other penalties including orders by state regulators to discontinue sales of the warranty products in one or more jurisdictions. Such a result could materially and adversely affect the Company’sour business, results of operations and financial condition.

Third parties bear the majority of the administration and liability obligations associated with these extended service contracts upon purchase by the customer. State laws and regulations, however, may limit or condition the Company’sour ability to transfer these administration and liability obligations to third parties, which could in turn impact the way revenue is recognized from these products. Failure to comply with these laws could result in fines or other penalties, including orders by state regulators to discontinue sales of these product offerings as currently structured. Such a result could materially and adversely affect the Company’sour business, financial condition and results of operations.

If state dealer laws are repealed or weakened, the Company’sour dealerships will be more susceptible to termination, non-renewal or renegotiation of dealer agreements.

State dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with written notice setting forth good cause and stating the grounds for termination or non-renewal. Some state dealer laws allow dealers to file protests or petitions or attempt to comply with the manufacturer’s criteria within a specified notice period to avoid the termination or non-renewal. Manufacturers have been lobbying and continue to lobby for the repeal or revision of state dealer laws. If dealer laws are repealed in the states in which the Company operates,we operate, or manufacturers convince legislators to pass legislation in those states allowing termination or non-renewal of dealerships without cause, manufacturers may be able to terminate the Company’sour dealer agreements without providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer laws, it may also be more difficult for the Companyus to renew itsour dealer agreements upon expiration.

The ability of a manufacturer to grant additional dealer agreements is based on a number of factors which the Companywe cannot control. If manufacturers grant new dealer agreements in areas near the Company’sour existing markets, such new dealer agreements could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Risks Associated with Our Debt Obligations

The CompanyWe may not be able to satisfy itsour debt obligations upon the occurrence of a change in control under itsour credit facility.

A change in control is an event of default under the credit facility. Upon the occurrence of a change in control, M&T Bank will have the right to declare all outstanding obligations under the credit facility immediately due and payable and to terminate the availability of future advances to the Company. There can be no assurance that the Company’sour lenders will agree to an amendment of the credit facility or a waiver of any such event of default. There can be no assurance that the Companywe will have sufficient resources available to satisfy all of itsour obligations under the credit facility if no waiver or amendment is obtained. The effect of this provision may be to make a change in control less likely, potentially decreasing the value of our shares of common stock. In the event the Company waswe are unable to satisfy these obligations, it could have a material adverse impact on the Company’sour business, financial condition and results of operations.

The Company’sOur ability to operate and expand itsour business and to respond to changing business and economic conditions will depend on the availability of adequate capital.

The operation of the Company’sour business, the rate of the Company’sour expansion and the Company’sour ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn depends on cash flow generated by the Company’sour business and, if necessary, the availability of equity or debt capital. The CompanyWe also requiresrequire sufficient cash flow to meet itsour obligations under itsour existing debt agreements. The Company’sOur term loan requires it to pay monthly principal installments of $0.242 million plus accrued interest through the maturity date. At the maturity date, the Companywe will pay a principal balloon payment of $2.6 million plus accrued interest.

The Company isWe are dependent to a significant extent on itsour ability to finance itsour new and certain of itsour pre-owned RV inventory under the credit facility. Floor plan financing arrangements allow the Companyus to borrow money to purchase new RVs from the manufacturer or pre-owned RVs on trade-in or at auction and pay off the loan when the Company sellswe sell the financed RV. The CompanyWe may need to increase the capacity of itsour existing credit facility in connection with itsour acquisition of dealerships and overall growth. In the event that the Company iswe are unable to obtain such incremental financing, the Company’sour ability to complete acquisitions could be limited.

The CompanyWe cannot ensure that itsour cash flow from operations or cash available under itsour credit facility will be sufficient to meet itsour needs. If the Company iswe are unable to generate sufficient cash flows from operations in the future, and if availability under itsour credit facility is not sufficient, the Companywe may have to obtain additional financing. If the Company obtainswe obtain additional capital through the issuance of equity, the interests of existing stockholders of the Company may be diluted. If the Company incurswe incur additional indebtedness, such indebtedness may contain significant financial covenants and other negative covenants that may significantly restrict the Company’sour ability to operate. The CompanyWe cannot ensure that itwe could obtain additional financing on favorable terms or at all.

The Company’s

Our credit facility contains restrictive covenants that may impair the Company’sour ability to access sufficient capital and operate itsour business.

The Company’sOur credit facility contains various provisions that limit the Company’sour ability to, among other things: (a) incur additional indebtedness or liens; (b) consolidate or merge; (c) alter the business conducted by the Company and itsour subsidiaries; (d) make investments, loans, advances, guarantees and acquisitions; (e) sell assets, including capital stock of itsour subsidiaries; (f) enter into certain sale and leaseback transactions; (g) pay dividends on capital stock or redeem, repurchase or retire capital stock or certain other indebtedness; (h) engage in transactions with affiliates; and (i) and enter into agreements restricting itsour subsidiaries’ ability to pay dividends.

In addition, the restrictive covenants contained in the documentation governing the credit facility require the Companyus to maintain specified financial ratios. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” below. The Company’sOur ability to comply with those financial ratios may be affected by events beyond itsour control, and itsour failure to comply with these ratios could result in an event of default. The restrictive covenants may affect the Company’sour ability to operate and finance itsour business as it deemswe deem appropriate. The Company’sOur inability to meet obligations as they become due or to comply with various financial covenants contained in the instruments governing itsour current or future indebtedness could constitute an event of default under the instruments governing the Company’sour indebtedness.

If there were an event of default under the instruments governing the Company’sour indebtedness, the holders of the affected indebtedness could declare all of the affected indebtedness immediately due and payable, which, in turn, could cause the acceleration of the maturity of all of the Company’sour other indebtedness. The CompanyWe may not have sufficient funds available, or the Companywe may not have access to sufficient capital from other sources, to repay any accelerated debt. Even if the Companywe could obtain additional financing, the terms of such financing may not be favorable to the Company.us. In addition, substantially all of the Company’sour assets are subject to liens securing the obligations under the credit facility. If amounts outstanding under the credit facility were accelerated, the Company’sour lenders could foreclose on these liens and the Companywe could lose substantially all of itsour assets. Any event of default under the instruments governing the Company’sour indebtedness could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company dependsWe depend on itsour relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’ operations could have an adverse effect on the Company’sour business and results of operations.

The Company’sOur business depends in part on developing and maintaining productive relationships with third party providers of products, services, protection plans, and resources that the Company marketswe market to itsour customers. Additionally, the Company relieswe rely on certain third party providers to support itsour products, services, protection plans, and resources, including insurance carriers for the Company’sour property and casualty insurance and extended service contracts, banks and captive financing companies for vehicle financing and refinancing. The CompanyWe cannot accurately predict whether, or the extent to which, itwe will experience any disruption in the supply of products from itsour vendors or services from itsour third party providers. Any such disruption could negatively impact the Company’sour ability to market and sell itsour products, services, protection plans, and resources, which could have a material adverse effect on the Company’sour business, financial condition and results of operations.

With respect to the insurance programs that the Company offers, the Company iswe offer, we are dependent on the insurance carriers that underwrite the insurance to obtain appropriate regulatory approvals and maintain compliance with insurance regulations. If such carriers do not obtain appropriate state regulatory approvals or comply with such changing regulations, the Companywe may be required to use an alternative carrier or change itsour insurance products or cease marketing certain insurance related products in certain states, which could have a material adverse effect on the Company’sour business, financial condition and results of operations. If the Company iswe are required to use an alternative insurance carrier or change itsour insurance related products, itwe may materially increase the time required to bring an insurance related product to market. Any disruption in the Company’sour service offerings could harm the Company’sour reputation and result in customer dissatisfaction.

Additionally, the Company provideswe provide financing to qualified customers through a number of third party financing providers. If one or more of these third party providers ceases to provide financing to the Company’sour customers, provides financing to fewer customers or no longer provides financing on competitive terms, or if the Company iswe are unable to replace the current third party providers upon the occurrence of one or more of the foregoing events, it could have a material adverse effect on the Company’sour business, financial condition and results of operations.

A portion of the Company’sour revenue is from financing, insurance and extended service contracts, which depend on third party lenders and insurance companies. The CompanyWe cannot ensure these third parties will continue to provide RV financing and other products.

A portion of the Company’sour revenue comes from the fees the Company receiveswe receive from lending institutions and insurance companies for arranging financing and insurance coverage for the Company’sour customers. The lending institution pays the Company a fee for each loan that it arranges. If these lenders were to lend to the Company’sour customers directly rather than through the Company, the Companyus, we would not receive a fee. In addition, if customers prepay financing the Companywe arranged within a specified period (generally within six months of making the loan), the Company iswe are required to rebate (or “chargeback”) all or a portion of the commissions paid to the Company by the lending institution. The same process applies to vehicle services contract fees, which are also subject to chargebacks if a customer chooses to terminate the contract early. The Company receivesWe receive a chargeback for a portion of the initial fees received. The Company’sOur revenues from financing fees and vehicle service contract fees are recorded net of a reserve for estimated future chargebacks based on historical operating results. Lending institutions may change the criteria or terms they use to make loan decisions, which could reduce the number of customers for whom the Companywe can arrange financing, or may elect to not continue to provide these products with respect to RVs. The Company’sOur customers may also use the internet or other electronic methods to find financing alternatives. If any of these events occur the Companyon a large scale, we could lose a significant portion of itsour income and profit.

Furthermore, new and pre-owned vehicles may be sold and financed through retail installment sales contracts entered into between the Company and third-party purchasers. Prior to entering into a retail installment sales contract with a third-party purchaser, the Companywe typically hashave a commitment from a third-party lender for the assignment of such retail installment sales contract, subject to final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales contracts are typically assigned by the Company to third-party lenders simultaneously with the execution of the retail installment sales contracts. Contracts in transit represent amounts due from third-party lenders from whom pre-arranged assignment agreements have been determined, and to whom the retail installment sales contract have been assigned. The Company recognizesWe recognize revenue when the applicable new or pre-owned vehicle is delivered and the Company haswe have assigned the retail installment sales contract to a third-party lender and collectability is reasonably assured. Funding from the third-party lender is provided upon receipt, final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales contracts are typically funded within ten days of the initial approval of the retail installment sales contract by the third-party lender. Contracts in transit are included in current assets and totaled $24.2$15.4 million and $16.0$24.2 million as of December 31, 20212022 and December 31, 2020,2021, respectively. Any significant number of defaults on these retail installment sales contracts could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur business is subject to numerous federal, state and local regulations.regulations.

The Company’sOur operations are subject to varying degrees of federal, state and local regulation, including regulations with respect to the Company’sour RV sales, RV financing, marketing, direct mail, roadside assistance programs and insurance activities. New regulatory efforts may be proposed from time to time that may affect the way the Company operates itswe operate our businesses. For example, in the past a principal source of leads for the Company’sour direct response marketing efforts was new vehicle registrations provided by motor vehicle departments in various states. Currently, all states restrict access to motor vehicle registration information.

The Company isWe are also subject to federal and state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles. Federal, state and local laws and regulations also impose upon vehicle operators various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions.

Further, certain federal and state laws and regulations affect the Company’sour activities. Areas of the Company’sour business affected by such laws and regulations include, but are not limited to, labor, advertising, consumer protection, digital marketing, real estate, promotions, quality of services, intellectual property, tax, import and export, anti-corruption, anti-competition, environmental, health and safety. Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction which further complicates compliance efforts.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial Protection (“BCFP”), an independent federal agency with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its regulation of automotive finance companies and other financial institutionsinstitutions.

In addition, the Patient Protection and Affordable Care Act (the “Affordable Care Act”), which was signed into law on March 23, 2010, may increase the Company’sour annual employee health care costs that it fundswe fund and has increased the Company’sour cost of compliance and compliance risk related to offering health care benefits. Efforts to modify, repeal or otherwise invalidate all, or certain provisions of, the Affordable Care Act and/or adopt a replacement healthcare reform law may impact the Company’sour employee healthcare costs. If healthcare costs rise, the Companywe may experience increased operating costs, which may adversely affect the Company’sour business, financial condition and results of operations.

Furthermore, the Company’sour property and casualty insurance programs that it offerswe offer through third party insurance carriers are subject to state laws and regulations governing the business of insurance, including, without limitation, laws and regulations governing the administration, underwriting, marketing, solicitation or sale of insurance products. The Company’sOur third party insurance carriers are required to apply for, renew, and maintain licenses issued by state, federal or foreign regulatory authorities. Such regulatory authorities have relatively broad discretion to grant, renew and revoke such licenses. Accordingly, any failure by such parties to comply with the then current licensing requirements, which may include any determination of financial instability by such regulatory authorities, could result in such regulatory authorities denying third party insurance carriers’ initial or renewal applications for such licenses, modifying the terms of licenses or revoking licenses that they currently possess, which could severely inhibit the Company’sour ability to market these insurance products. Additionally, certain state laws and regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offer of any insurance program to a consumer. The Company reviewsWe review all marketing materials it disseminateswe disseminate to the public for compliance with applicable insurance regulations. The Company isWe are required to maintain certain licenses and approvals in order to market insurance products.

The Company hasWe have instituted various comprehensive policies and procedures to address compliance. However, there can be no assurance that employees, contractors, vendors or the Company’sour agents will not violate such laws and regulations or the Company’sour policies and procedures.

The Company’sOur failure to comply with certain environmental regulations could adversely affect the Company’sour business, financial condition and results of operations.

The Company’sOur operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, the Company’sour business is subject to federal, state and local requirements that regulate the environment and public health and safety. The CompanyWe may incur significant costs to comply with such requirements. The Company’sOur failure to comply with these regulations and requirements could cause the Companyus to become subject to fines and penalties or otherwise have an adverse impact on the Company’sour business. In addition, the Company haswe have indemnified certain of itsour landlords for any hazardous waste which may be found on or about property the Company leases.we lease. If any such hazardous waste were to be found on property that the Company occupies,we occupy, a significant claim giving rise to the Company’sour indemnity obligation could have a negative effect on the Company’sour business, financial condition and results of operations.

Risks Related to Our Capital Stock

Future resales of the shares of common stock of the Company issued to the stockholders and the investors in the Private Investment in Public Equity (PIPE) Investment may cause the market price of the Company’sour securities to drop significantly, even if the Company’sour business is doing well.

The Company isWe are party to a registration rights agreement pursuant to which certain stockholders have been granted certain demand and “piggy-back” registration rights with respect to their securities. Additionally, the investors who simultaneously with the closing of the Merger purchased convertible preferred stock, common stock and warrants for an aggregate purchase price of $94.8 million (the “PIPE Investment”) were granted registration rights pursuant to which the Companywe filed a registration statement covering the resale of granted securities. This resale registration statement is currently effective.

Furthermore, the stockholders and investors in the PIPE Investment may sell Company common stock pursuant to Rule 144 under the Securities Act, if available, rather than under a registration statement. In these cases, the resales must meet the criteria and conform to the requirements of that rule.

Subject to the continuing effectiveness of the resale registration statement or upon satisfaction of the requirements of Rule 144 under the Securities Act, the stockholders and investors in the PIPE Investment may sell large amounts of Company common stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the Company’sour stock price or putting significant downward pressure on the price of the Company’sour common stock.

The Company’sOur outstanding Series A convertible preferred stock, warrants, options and optionsrestricted stock units may have an adverse effect on the market price of itsour common stock.

As of December 31, 2021,2022, we had outstanding (i) stock options issued to the board of directors and employees to purchase 1,286,6711,052,093 shares of common stock at exercise prices ranging from $5.05 to $23.11$30.00 per share, (ii) pre-funded warrants to purchase up to 300,357 shares of common stock that were issued in the PIPE Investment, (iii) warrants to purchase 1,280,915726,878 shares of our common stock at $11.50 per share issued in the PIPE Investment, (iv) warrants to purchase 2,138,190 shares of our common stock at $11.50 per share held by Andina public shareholders, and (v) 600,000 shares of Series A Preferred Stock which are convertible into up to 5,962,733 shares of common stock, taking into account any accrued dividends which we may elect to pay in cash or shares of common stock.stock, and (vi) 207,822 restricted stock units. We may also issue additional equity awards under our Amended and Restated 2018 Long-Term Incentive Plan (the “Amended 2018 Plan”).

The sale, or even the possibility of sale, of the shares of common stock underlying the warrants, stock options, restricted stock units and Series A Preferred Stock and the shares issuable under the Amended 2018 Plan could have an adverse effect on the market price of the common stock or on our ability to obtain future financing. If and to the extent these warrants, and stock options and restricted stock units are exercised or the Series A Preferred Stock is converted to common stock, you may experience substantial dilution to your holdings.

The conversion of the Series A Preferred Stock into Company common stock may dilute the value for the other holders of Companyour common stock.

The Series A Preferred Stock is convertible into Company common stock. As a result of the conversion of any issued and outstanding Series A Preferred Stock, the existing holders of Company common stock will own a smaller percentage of the outstanding Company common stock. Further, additional Company common stock may be issuable pursuant to certain other features of the Series A Preferred Stock, with such issuances being further dilutive to existing holders of Company common stock.

If the Series A Preferred Stock is converted into Company common stock, holders of such converted Company common stock will be entitled to the same dividend and distribution rights as other holders of Company common stock. As such, another dilutive effect which may result from the conversion of any shares of Series A Preferred Stock will be a dilution to dividends and distributions receivable on account of Company common stock.

The holders of Series A Preferred Stock own a large portion of the voting power of the Company common stock and have the right to designate two members to the Company’sour board of directors. This significantly influences the composition of the board of directors of the Company and future actions taken by the board of directors of the Company.

The Company’sOur board of directors currently has sixseven members. The holders of the Series A Preferred Stock are exclusively entitled to designate two members to the Company’sour board of directors. In addition, the holders of the Series A Preferred Stock are entitled to vote upon all matters upon which holders of the Companyour common stock have the right to vote and are entitled to the number of votes equal to the number of full shares of Company common stock into which such shares of Series A Preferred Stock could be converted at the then applicable conversion rate. These matters include the election of all director nominees not designated by the holders of the Series A Preferred Stock. As a result, the holders of the Series A Preferred Stock have significant influence on the composition of the Company’sour board of directors.

As of December 31, 2021,2022, the holders of the Series A Preferred Stock held approximately 31.9%34.9% of the voting power of the Company on an as-converted basis, taking into account the accrued dividends which we may elect to pay in cash or shares of common stock. As a result, the holders of the Series A Preferred Stock maywill have the ability to influence future actions by the Company requiring stockholder approval.

Pursuant to the Certificate of Designations governing the Series A Preferred Stock, the holders of the Series A Preferred Stock must consent to the Company taking certain actions, including among others, the increase in the number of directors constituting the Company’sour board of directors above eight members, the incurrence of certain indebtedness and the sale of certain assets. The holders of the Series A Preferred Stock are not obligated to consent to any specific action and there can be no assurance that the holders will consent to any action the Company’sour board of directors determines is in the best interests of itsour stockholders as a whole.

Additionally, the holders of the Series A Preferred Stock have been granted a right of first refusal on certain debt financings. Pursuant to this right, the holders of the Series A Preferred Stock have 15 business days to determine whether they want to undertake a covered debt financing. This may delay the Company’sour ability to undertake a debt financing and may cause certain third parties to be less willing to engage in any debt financing with the Company.us. As a shareholder Series A Preferred shareholders could negatively impact your investment and may not take actions that will be in your best interest.

As of December 31, 2020, the Company is no longer an emerging growth company and will be required to comply with more stringent reporting requirements as a public company.

The Company is no longer an emerging growth company and as such will no longer qualify for certain accommodations under SEC rules and regulations. While the Company’s scaled disclosure will remain substantially the same so long as it qualifies as a smaller reporting company, the Company’s public float exceeded $75 million on June 30, 2021, and the Company became an accelerated filer in 2022 and will be required to produce an auditor’s assessment of the effectiveness of the Company’s internal control over financial reporting in its annual report for the year ending December 31, 2021. As a result, the Company’s compliance costs would increase.

Our board of directors approved a new stock repurchase program, which could increase the volatility of the price of our common stock.

In September 2021, our board of directors approved a stock repurchase program authorizing us to repurchase up to a maximum of $25.0 million of our shares of common stock through December 31, 2022. On December 15, 2022, our board of directors approved the extension of the program for the remaining balance of $13.7 million and approved additional repurchases of $50.0 million, each through December 31, 2024. Repurchases may be made at management’s discretion from time to time in the open market, through privately negotiated transactions or pursuant to a trading plan subject to market conditions, applicable legal requirements and other factors. There can be no assurance that we would buy shares of our common stock or the timeframe for repurchases under our stock repurchase program or that any repurchases would have a positive impact on our stock price or earnings per share.

The Company’sOur amended and restated certificate of incorporation provides to the fullest extent permitted by law that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the Companyus and itsour stockholders, which could increase the costs to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with the Companyus or the Company’sour directors, officers or employees.

The Company’sOur amended and restated certificate of incorporation provides to the fullest extent permitted by law that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, of the Company, any action asserting a claim of breach of a fiduciary duty owed by any of the Company’sour directors, officers or other employees to the Company or the Company’sour stockholders, any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), or any action asserting a claim governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’sour directors, officers or other employees, which may discourage such lawsuits against the Company or the Company’sour directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Company’sour amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, the Companywe may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in the Company’sour amended and restated certificate of incorporation does not apply to actions arising under the federal securities laws and will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.

General Risk Factors

The Company dependsWe depend on itsour ability to attract and retain customers.

The Company’sOur future success depends upon the Company’sour ability to attract and retain customers for itsour products, services, protection plans, and resources. The extent to which the Company achieveswe achieve growth in itsour customer base materially influences the Company’sour profitability. Any number of factors could affect the Company’sour ability to grow itsour customer base. These factors include consumer preferences and general economic conditions, the Company’sour ability to maintain itsour retail locations, weather conditions, the availability of alternative products, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of the Company’sour brands. Any significant decline in the Company’sour customer base, the rate of growth of itsour customer base or customer demand could have a material adverse effect on itsour business, financial condition and results of operations.

If the Company iswe are unable to protect, maintain or upgrade itsour information technology systems or if the Company iswe are unable to convert to alternate systems in an efficient and timely manner, the Company’sour operations may be disrupted or become less efficient.

The Company dependsWe depend on a variety of information technology systems for the efficient operation of itsour business. The Company reliesWe rely on hardware, telecommunications and software vendors to maintain and periodically upgrade many of these information technology systems so that the Companywe can continue to operate itsour business. Various components of the Company’sour information technology systems, including hardware, networks, and software, are licensed to the Companyus by third party vendors. The Company reliesWe rely extensively on itsour information technology systems to process transactions, summarize results and efficiently manage itsour business. Additionally, because the Company acceptswe accept debit and credit cards for payment, the Company iswe are subject to the Payment Card Industry Data Security Standard (the “PCI Standard”), issued by the Payment Card Industry Security Standards Council. The PCI Standard contains various compliance guidelines with respect to the Company’sour security surrounding the physical and electronic storage, processing and transmission of cardholder data. The Company isWe are currently in compliance with the PCI Standard, however, complying with the PCI Standard and implementing related procedures, technology and information security measures requires significant resources and ongoing attention to compliance. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to maintain compliance with the PCI Standard or with respect to maintenance or support of existing systems could also disrupt or reduce the efficiency of the Company’sour operations. Any material interruptions or failures in the Company’sour payment-related systems could have a material adverse effect on the Company’sour business, financial condition and results of operations.

Any disruptions to the Company’sour information technology systems or breaches of the Company’sour network security could interrupt itsour operations, compromise itsour reputation, expose itus to litigation, government enforcement actions and costly response measures and could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company reliesWe rely on the integrity, security and successful functioning of itsour information technology systems and network infrastructure across the Company’sour operations. The Company usesWe use information technology systems to, among other things, generate and manage sales leads, support itsour consumer services and plans, manage procurement, manage itsour supply chain, track inventory information at itsour retail locations, communicate customer information and aggregate daily sales, margin and promotional information. The CompanyWe also usesuse information systems to report and audit itsour operational results.

In connection with sales, the Company transmitswe transmit encrypted confidential credit and debit card information. Although the Company iswe are currently in compliance with the PCI Standard, there can be no assurance that in the future the Companywe will be able to remain compliant with the PCI Standard or other industry recommended or contractually required practices. Even if the Company continueswe continue to be compliant with such standards, itwe still may not be able to prevent security breaches.

The CompanyWe also hashave access to, collectscollect or maintainsmaintain private or confidential information regarding itsour customers, associates and suppliers, as well as the Company’sour business. The protection of the Company’sour customer, associate, supplier and company data is critical to the Company.us. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across the Company’sour business and operations. In addition, the Company’sour customers have a high expectation that the Companywe will adequately protect their personal information from cyber-attacks and other security breaches. The Company hasWe have procedures in place to safeguard itsour customer’s data and information. However, a significant breach of customer, employee, supplier, or company data could attract a substantial amount of negative media attention, damage the Company’sour relationships with itsour customers and suppliers, harm the Company’sour reputation and result in lost sales, fines and/or lawsuits.

An increasingly significant portion of the Company’sour sales depends on the continuing operation of itsour information technology and communications systems, including but not limited to itsour point-of-sale system and itsour credit card processing systems. The Company’sOur information technology, communication systems and electronic data may be vulnerable to damage or interruption from earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, computer and telecommunications failures, computer viruses, loss of data, unauthorized data breaches, usage errors by the Company’sour associates or the Company’sour contractors or other attempts to harm the Company’sour systems, including cyber-security attacks, hacking by third parties, computer viruses or other breaches of cardholder data. Some of the Company’sour information technology and communication systems are not fully redundant and the Company’sour disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, intentional sabotage or other unanticipated problems could result in lengthy interruptions in the Company’sour information technology and communications systems. Any errors or vulnerabilities in the Company’sour information technology and communications systems, or damage to or failure of itsour information technology and communications systems, could result in interruptions in the Company’s services and non-compliance with certain regulations or expose the Companyus to risk of litigation and liability, which could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company

We may be subject to product liability claims if people or property are harmed by the products the Company sellswe sell and may be adversely impacted by manufacturer safety recalls.

Some of the products the Company sellswe sell may expose the Companyus to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions. Although the Company maintainswe maintain liability insurance, the Companywe cannot be certain that itsour insurance coverage will be adequate for losses actually incurred or that insurance will continue to be available to the Companyus on economically reasonable terms, or at all. In addition, some of the Company’sour agreements with itsour vendors and sellers do not indemnify the Companyus from losses attributable to product liability. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that the products sold by the Company caused property damage or personal injury could damage the Company’s brand image and itsour reputation with existing and potential consumers and have a material adverse effect on the Company’sour business, financial condition and results of operations.

The Company’sOur risk management policies and procedures may not be fully effective in achieving their purposes.

The Company’sOur policies, procedures, controls and oversight to monitor and manage itsour enterprise risks may not be fully effective in achieving their purpose and may leave the Companyus exposed to identified or unidentified risks. Past or future misconduct by the Company’sour employees or vendors could result in violations of law by the Company, regulatory sanctions and/or serious reputational or financial harm to the Company. The Company monitors itsus. We monitor our policies, procedures and controls; however, there can be no assurance that these will be sufficient to prevent all forms of misconduct. The Company reviews itsWe review our compensation policies and practices as part of the Company’sour overall enterprise risk management program, but it is possible that itsour compensation policies could incentivize inappropriate risk taking or misconduct. If such inappropriate risks or misconduct occurs, it is possible that it could have a material adverse effect on the Company’sour business, financial condition and results of operations.

The CompanyWe could incur asset impairment charges for goodwill, intangible assets or other long-lived assets.

The Company hasWe have a significant amount of goodwill, intangible assets and other long-lived assets. At least annually, the Company reviewswe review goodwill, trademarks and tradenamestrade names for impairment. Long-lived assets, identifiable intangible assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. The Company’sOur determination of future cash flows, future recoverability and fair value of the Company’sour long-lived assets includes significant estimates and assumptions. Changes in those estimates and/or assumptions or lower than anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect the Company.

We may be unable to retain senior executives and attract and retain other qualified employees.

Our success depends in part on our ability to attract, hire, train and retain qualified personnel. Competition for the personnel required is high. We may be unsuccessful in attracting and retaining the personnel needed to conduct operations successfully. In this event, our business could be materially and adversely affected. In addition, the loss of members of our senior management team could impair our ability to execute our business plan and could have a material and adverse effect on our business, results of operations and financial condition.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Although we own the property inat five of our Houston, Texas and Burns Harbor, Indiana locations, we have typically leaseleased all the real estate properties where we have operations. As of December 31, 2021,2022, there was an outstanding balance on the Houston property mortgage of $5.7$5.4 million. Our real property leases generally provide for fixed monthly rents with annual escalation clauses and multiple renewal terms of 3 to 20 years each. The leases are typically “triple net” requiring us to pay real estate taxes, insurance and maintenance costs. We believe that our properties are suitable and adequate for present purposes, and that the productive capacity in such properties is substantially being utilized.

The table below sets forth certain information concerning ourOur largest leased dealership locations.property is located in Tampa, Florida. The dealership is 384,000 square feet and sits on 126 acres. The lease term is 20 years with an initial expiration date in 2035.