2023 2023 In thousands except for share and per share data) Unaudited Condensed Consolidated Financial Statements. CONTINUED In thousands except for share and per share data) Unaudited Condensed Consolidated Financial Statements. (LOSS) Unaudited Condensed Consolidated Financial Statements. In thousands except for share data) Unaudited Condensed Consolidated Financial Statements. STOCKHOLDERS’ EQUITY In thousands except for share data) Unaudited Condensed Consolidated Financial Statements. Unaudited Condensed Consolidated Financial Statements. sources and extended warranty providers. We also offer our customers such ancillary services as overnight campground and restaurant facilities. full year. acquisition date for the 2023 acquisition: Condense federal income tax purposes. by three months ended March 31, 2023. 8. Operations and was as follows: follows: Black-Scholes option-pricing model. first quarter of 2023 compared to the same quarter of 2022 due primarily to less units sold and a 390 basis point decline in gross margins. The for growth through acquisitions and greenfielding. We although no assurances can be provided that these capital sources will be available in sufficient amounts or with terms acceptable to us. As of March 31, retail demand and margins. Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Washington and Wisconsin generally experience modestly higher vehicle sales during the spring months. Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2023. the related entities were acquired in purchase business combinations in 2023. Collectively, these operations accounted for approximately 0.77% of our total revenues for the quarter ended March 31, 2023. herewith[X]x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 2018[ ]¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 file numberFile Number: 001-38424Lazydays Holdings, Inc.Delaware82-4183498Delaware 82-4183498 (State or Other Jurisdiction of
Incorporation or Organization)(I.R.S. Employer
Identification No.)4042 Park Oaks Blvd, Tampa, Florida 33610 6130 Lazy Days Blvd. Seffner, FL33584(Address of Principal Executive Offices) (Zip Code) Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock LAZY Nasdaq Capital Market ,; and (2) has been subject to such filing requirements for the past 90 days. Yes [ ]x No [X]¨and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]x No [ ]¨Large accelerated filer [ ]¨ Accelerated filer [ ]x Non-accelerated filer [ ] (Do not check if a smaller reporting company)¨ Smaller reporting company [X]x Emerging growth company [X]o [ ]¨[ ]¨ No [X]x8,471,60813,843,006 shares of common stock, par value $0.0001, issued and outstanding as of May 10, 2018.2018PagePage 1274040Item 1 – Legal Proceedings414141Item 3 – Defaults Upon Senior Securities41Item 4 – Mine Safety Disclosures41Item 5 – Other Information4142Dollar amounts in thousands) Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) ASSETS Current assets Cash $ 33,063 $ 13,292 Receivables, net of allowance for doubtful accounts of $0 and $1,013 at March 31, 2018 and December 31, 2017, respectively 23,234 19,911 Inventories 120,209 114,170 Income tax receivable 1,588 - Prepaid expenses and other 1,999 2,062 Total current assets 180,093 149,435 Property and equipment, net 73,444 45,669 Goodwill 29,075 25,216 Intangible assets, net 68,068 25,862 Deferred tax asset - 144 Other assets 200 219 Total assets $ 350,880 $ 246,545 As of March 31, 2023 As of December 31, 2022 ASSETS Current assets Cash $ 41,049 $ 61,687 Receivables, net of allowance for doubtful accounts of $476 and $476 28,405 25,053 Inventories 419,136 378,881 Income tax receivable 8,058 7,912 Prepaid expenses and other 5,971 3,316 Total current assets 502,619 476,849 Property and equipment, net of accumulated depreciation of $37,788 and $35,275 177,818 158,991 Operating lease right-of-use assets 25,797 26,984 Goodwill 89,128 83,460 Intangible assets, net 79,832 81,665 Other assets 2,947 2,769 Total assets $ 878,141 $ 830,718 unaudited condensed consolidated financial statementscontinuedDollar amounts in thousands) Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable, accrued expenses and other current liabilities $ 24,561 $ 25,181 Income tax payable - 1,536 Contingent liability, current portion - 667 Financing liability, current portion 597 595 Floor plan notes payable, net of debt discount 99,368 104,976 Long-term debt, current portion 2,909 1,870 Total current liabilities 127,435 134,825 Long term liabilities Long term debt, non-current portion, net of debt discount 17,044 7,207 Financing liability, non-current portion, net of debt discount 55,574 53,680 Deferred tax liability 20,370 - Total liabilities 220,423 195,712 Commitments and Contingencies Series A Convertible Preferred Stock, 600,000 shares designated, issued and outstanding as of March 31, 2018; liquidation preference of $60,210 at March 31, 2018 55,194 - Stockholders’ Equity Successor: Preferred Stock, $0.0001 par value; 5,000,000 shares authorized; - - Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,471,608 shares issued and outstanding at March 31, 2018 - - Additional paid-in capital 76,108 - Accumulated deficit (845 ) - Predecessor: Preferred stock, $0.001 par value 150,000 shares authorized: Senior Convertible Preferred Stock 10,000 shares designated; -0- shares issued and outstanding; liquidation preference $0 at December 31, 2017 - - Common stock, $0.001 par value; 4,500,000 shares authorized; 3,333,331 and 3,333,166 shares issued and outstanding at December 31, 2017, respectively - 3 Additional paid-in capital - 49,756 Treasury stock, 165 shares, at cost - (11 ) Retained earnings - 1,085 Total stockholders’ equity 75,263 50,833 Total liabilities and stockholders’ equity $ 350,880 $ 246,545 As of March 31, 2023 As of December 31, 2022 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 13,485 $ 10,843 Accrued expenses and other current liabilities 32,190 27,875 Dividends payable 1,184 1,210 Floor plan notes payable, net of debt discount 342,280 348,735 Financing liability, current portion 2,224 2,281 Long-term debt, current portion 400 3,607 Operating lease liability, current portion 5,139 5,074 Total current liabilities 396,902 399,625 Long-term liabilities Financing liability, non-current portion, net of debt discount 90,694 89,770 Revolving line of credit 30,000 — Long term debt, non-current portion, net of debt discount 306 10,131 Operating lease liability, non-current portion 21,620 22,755 Deferred income tax liability 15,536 15,536 Warrant liabilities — 906 Total liabilities 555,058 538,723 Commitments and Contingencies Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding; liquidation preference of $60,000 54,983 54,983 Stockholders’ Equity Preferred Stock, $0.0001 par value; 5,000,000 shares authorized; — — Common stock, $0.0001 par value; 100,000,000 shares authorized; 17,255,228 and 14,515,253 shares issued and 13,843,006 and 11,112,464 outstanding — — Additional paid-in capital 162,301 130,828 Treasury Stock, at cost, 3,412,222 and 3,402,789 shares (57,128) (57,019) Retained earnings 162,927 163,203 Total stockholders’ equity 268,100 237,012 Total liabilities and stockholders’ equity $ 878,141 $ 830,718 unaudited condensed consolidated financial statementsDollar amounts inIn thousands except for share and per share data) Successor Predecessor March 15, 2018
to March 31, 2018 January 1, 2018
to March 14, 2018 January 1, 2017
to March 31, 2017 Revenues New and pre-owned vehicles $ 39,167 $ 119,111 $ 150,831 Parts, service and other 4,738 14,828 19,134 Total revenue 43,905 133,939 169,965 Cost of revenues New and pre-owned vehicles 33,489 101,830 130,845 Parts, service and other 538 3,047 3,459 Total cost of revenues 34,027 104,877 134,304 Gross profit 9,878 29,062 35,661 Transaction costs 2,806 438 46 Selling, general, and administrative expenses 5,247 23,552 27,033 Income from operations 1,825 5,072 8,582 Other income/expense Gain on sale of property and equipment - 1 - Interest expense (685 ) (2,019 ) (2,162 ) Total other expense (685 ) (2,018 ) (2,162 ) Income before income tax expense 1,140 3,054 6,420 Income tax expense (449 ) (718 ) (2,445 ) Net income $ 691 $ 2,336 $ 3,975 Dividends on Series A Convertible Preferred Stock (210 ) Deemed dividend on Series A Convertible Preferred Stock (3,392 ) Net loss attributable to common stockholders $ (2,911 ) Succesor EPS: Basic and diluted loss per share $ (0.30 ) Weighted average shares outstanding - basic and diluted 9,668,250 Three months ended March 31, 2023 2022 Revenue New vehicle retail $ 176,747 $ 217,436 Pre-owned vehicle retail 84,775 116,500 Vehicle wholesale 1,708 6,524 Finance and insurance 16,881 21,635 Service, body and parts and other 15,545 14,066 Total revenue 295,656 376,161 Cost applicable to revenues New vehicle retail 153,331 172,605 Pre-owned vehicle retail 67,528 88,283 Vehicle wholesale 1,721 6,579 Finance and insurance 693 697 Service, body and parts and other 7,181 6,720 LIFO 1,311 2,460 Total cost applicable to revenue 231,765 277,344 Gross profit 63,891 98,817 Depreciation and amortization 4,403 4,084 Selling, general, and administrative expenses 53,532 56,104 Income from operations 5,956 38,629 Other income (expense) Floor plan interest expense (5,531) (976) Other interest expense (1,700) (1,936) Change in fair value of warrant liabilities 856 1,540 Total other expense, net (6,375) (1,372) (Loss) income before income tax expense (419) 37,257 Income tax benefit (expense) 143 (8,973) Net (loss) income (276) 28,284 Dividends on Series A Convertible Preferred Stock (1,184) (1,184) Net (loss) income and comprehensive (loss) income attributable to common stock and participating securities $ (1,460) $ 27,100 EPS: Basic $ (0.12) $ 1.44 Diluted $ (0.17) $ 1.17 Weighted average shares outstanding: Basic 11,988,899 12,798,100 Diluted 11,988,899 20,561,136 unaudited condensed consolidated financial statements(SUCCESSOR)CHANGES IN STOCKHOLDERS’ EQUITYMARCH 15, 2018 THROUGH MARCH 31, 2018Dollar amounts in thousands) Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at March 15, 2018 1,872,428 $ - $ 6,139 $ (1,536 ) $ 4,603 Conversion of Andina rights into shares of Lazydays Holdings, Inc. 615,436 - - - - Reclassification of Andina common stock previously subject to redemption 472,571 - 4,910 - 4,910 Issuance of common stock, warrants and Series A convertible preferred stock in PIPE transaction, net 2,653,984 - 32,718 - 32,718 Issuance of shares in acquisition of Lazydays 2,857,189 - 29,400 29,400 Beneficial conversion feature of Series A convertible preferred stock - - 3,392 - 3,392 Deemed dividend related to immediate accretion of beneficial conversion feature of Series A convertible preferred stock - - (3,392 ) - (3,392 ) Issuance of warrants to Series A preferred stockholders and placement agent - - 2,666 - 2,666 Stock-based compensation - - 485 - 485 Accrued dividends on Series A preferred stock - - (210 ) - (210 ) Net income - - - 691 691 Balance at March 31, 2018 8,471,608 $ - $ 76,108 $ (845 ) $ 75,263 Common Stock Treasury Stock Additional
Paid-In
capitalRetained
EarningsTotal Stock-holders’
EquityShares Amount Shares Amount Balance at December 31, 2022 14,515,253 $ — 3,402,789 $ (57,019) $ 130,828 $ 163,203 $ 237,012 Stock-based compensation — — — — 797 — 797 Repurchase of treasury stock — — 9,433 (109) — — (109) Exercise of warrants and options 2,739,975 — — — 31,238 — 31,238 Disgorgement of short-swing profits — — — — 622 — 622 Dividends on Series A preferred stock — — — — (1,184) — (1,184) Net loss — — — — — (276) (276) Balance at March 31, 2023 17,255,228 $ — 3,412,222 $ (57,128) $ 162,301 $ 162,927 $ 268,100 unaudited condensed consolidated financial statementsSTATEMENTSSTATEMENT OF CASH FLOWSDollar amounts in thousands) Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Cash Flows From Operating Activities Net income $ 691 $ 2,336 $ 3,975 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Stock based compensation 485 140 119 Bad debt expense - - 47 Depreciation and amortization of property and equipment 269 1,058 1,347 Amortization of intangible assets 132 154 187 Amortization of debt discount and paid-in-kind interest 393 136 129 Gain on sale of property and equipment - (1 ) - Deferred income taxes - 630 - Changes in operating assets and liabilities: Receivables (8,466 ) 5,143 (6,404 ) Inventories 4,145 1,435 16,493 Prepaid expenses and other 19 44 332 Income tax receivable/payable 449 (3,573 ) 2,549 Other assets 1 18 (37 ) Accounts payable, accrued expenses and other liabilities (2,365 ) 2,463 173 Total Adjustments (4,938 ) 7,647 14,935 Net Cash (Used In) Provided By Operating Activities (4,247 ) 9,983 18,910 Cash Flows From Investing Activities Cash paid for purchase of Lazydays R.V. Center, Inc. (86,741 ) - - Cash acquired in the purchase of Lazy Days’ R.V. Center, Inc. 9,188 - - Purchases of property and equipment (71 ) (694 ) (710 ) Net Cash Used In Investing Activities (77,624 ) (694 ) (710 ) Cash Flows From Financing Activities Net borrowings under M&T floor plan 100,830 - - Repayment of Bank of America floor plan (96,740 ) - - Net (repayments)/borrowings under floor plan - (12,272 ) 11,657 Repayments under long term debt with Bank of America (8,820 ) (310 ) (464 ) Borrowings under long term debt with M&T bank 20,000 - - Net proceeds from the issuance of Series A preferred stock and warrants 57,650 - - Net proceeds from the issuance of common stock and warrants 32,719 - - Repayments of financing liability - (144 ) (113 ) Repayments of notes payable to Andina related parties (761 ) - - Payment of contingent liability - RV America acquisition - (667 ) - Loan issuance costs (615 ) - - Net Cash Provided by (Used In) Financing Activities 104,263 (13,393 ) 11,080 Net Increase (Decrease) In Cash 22,392 (4,104 ) 29,280 Cash - Beginning 10,671 13,292 4,158 Cash - Ending $ 33,063 $ 9,188 $ 33,438 Common Stock Treasury Stock Additional
Paid-In
capitalRetained
EarningsTotal Stock-holders’
EquityShares Amount Shares Amount Balance at December 31, 2021 13,694,417 $ — 707,312 $ (12,515) $ 121,831 $ 96,810 $ 206,126 Stock-based compensation — — — — 523 — 523 Purchase of treasury stock — — 1,086,797 (19,175) — — (19,175) Exercise of warrants and options 148,765 — — — 1,867 — 1,867 Dividends on Series A preferred stock — — — — (1,184) — (1,184) Net income — — — — — 28,284 28,284 Balance at March 31, 2022 13,843,182 $ — 1,794,109 $ (31,690) $ 123,037 $ 125,094 $ 216,441 unaudited condensed consolidated financial statementsFor the three months ended March 31, 2023 2022 Cash Flows From Operating Activities Net (loss) income $ (276) $ 28,284 Adjustments to reconcile net (loss) income to net cash used in operating activities: Stock based compensation 797 523 Bad debt expense 7 11 Depreciation of property and equipment 2,570 2,277 Amortization of intangible assets 1,833 1,807 Amortization of debt discount 91 108 Non-cash lease expense 22 36 Loss on sale of property and equipment — 6 Change in fair value of warrant liabilities (856) (1,540) Tax benefit related to stock-based awards — (74) Impairment charges 538 — Changes in operating assets and liabilities (net of acquisitions and dispositions): Receivables (3,359) (20,838) Inventories (33,650) (41,412) Prepaid expenses and other (2,766) 113 Income tax receivable/payable (146) 9,051 Other assets (603) 76 Accounts payable 2,642 3,578 Accrued expenses and other current liabilities 4,324 561 Total Adjustments (28,556) (45,717) Net Cash Used In Operating Activities (28,832) (17,433) Cash Flows From Investing Activities Cash paid for acquisitions (19,730) — Proceeds from sales of property and equipment 22 15 Purchases of property and equipment (13,936) (7,911) Net Cash Used In Investing Activities (33,644) (7,896) Cash Flows From Financing Activities Net borrowings (repayments) under M&T bank floor plan (6,495) 38,066 Borrowings under revolving line of credit 30,000 — Repayment of long term debt with M&T bank (12,067) (1,790) Proceeds from financing liability 1,384 254 Repayments of financing liability (680) (472) Payment of dividends on Series A preferred stock (1,184) (1,210) Repurchase of Treasury Stock (109) (19,175) Proceeds from exercise of warrants 30,543 — Proceeds from exercise of stock options 645 1,353 Disgorgement of short-swing profits 622 — Repayments of acquisition notes payable — (259) Loan issuance costs (821) — Net Cash Provided By Financing Activities 41,838 16,767 Net Decrease In Cash (20,638) (8,562) Cash - Beginning 61,687 98,120 Cash - Ending $ 41,049 $ 89,558 Dollar amounts inIn thousands) Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for interest $ 372 $ 2,182 $ 1,971 Cash paid during the period for income taxes net of refunds received $ - $ 3,587 $ - Non-Cash Investing and Financing Activities Rental vehicles transferred to inventory, net $ - $ 89 $ - Rental vehicles purchased under the floor plan $ - $ 2,911 $ - Conversion of Andina redeemable common stock to common stock of Lazydays Holdings, Inc. $ 4,910 $ - $ - Beneficial conversion feature on Series A Convertible Preferred Stock $ 3,392 $ - $ - Warrants issued to Series A Preferred stockholders and investment bank $ 2,666 $ - $ - Net assets acquired in the acquisition of Lazydays R.V. Center, Inc. excluding cash (See Note 3) $ 106,953 $ - $ - Common stock issued to former stock holders of Lazy Days’ R.V. Center, Inc. $ 29,400 $ - $ - For the three months ended March 31, 2023 2022 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for interest $ 5,144 $ 2,633 Cash paid during the period for income taxes net of refunds received 2 — Non-Cash Investing and Financing Activities Accrued dividends on Series A Preferred Stock $ 1,184 $ 1,184 Right-of use assets obtained in exchange for lease liabilities: Operating leases 142 — Decrease in PIPE warrant liability due to expiration of warrants 50 — unaudited condensed consolidated financial statementsDollar amounts inIn thousands, except share, per share and unit amounts)(unaudited)Holdings”RV”), dealerships in nineteen locations including two in the state of Florida, two in the state of Colorado, two in the state of Arizona, three in the state of Tennessee, two in the state of Minnesota, two in the state of Indiana, one in the state of Oregon, one in the state of Washington, one in the state of Wisconsin, one in the state of Oklahoma and one in the state of Nevada.Delaware corporation,dedicated service center location near Houston, Texas since early 2020, which was formed on October 24, 2017, asexpanded to include a wholly owned subsidiary of Andina Acquisition Corp. II (“Andina”), an exempted company incorporatedsales center in the Cayman Islands on July 1, 2015 for the purposefourth quarter of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more business targets. 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 a wholly-owned subsidiary of Holdco (“Merger Sub”), Lazy Days’ R.V. Center, Inc. (and its subsidiaries), a Delaware corporation (“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, changing its name to Lazydays Holdings, Inc. and becoming a new public company (the “Redomestication Merger”) and (ii) the merger of Lazydays RV with and into Merger Sub with Lazydays RV surviving and becoming a direct wholly-owned subsidiary of Holdings (the “Transaction Merger” and together with the Redomestication Merger, the “Mergers”). On March 15, 2018, the Mergers were consummated.Through its subsidiaries,2022. Lazydays RV sells and services new and pre-owned recreational vehicles and sells related parts and accessories,accessories. We also arrange financing and rents recreational vehicles from five locations, one in the state of Florida, one in the state of Arizona and three in the state of Colorado. It also offers to its customers such ancillary services as extended service contracts overnight campground and restaurant facilities. The Company also arranges financing for vehicle sales through third-party financing sources.SIGNIFICANTBASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIESaccompanying unaudited condensed consolidatedinterim financial statements have been prepared in accordance withpursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted accounting principles in the United States of America (“GAAP”)for annual financial statements are not included herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2022 audited Consolidated Financial Statements and the rules and regulationsrelated notes thereto. The financial information as of December 31, 2022 is derived from our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For additional information, these condensed consolidated financial statements should be read in conjunction with Lazydays R.V, Center Inc.’s consolidated financial statements and notes ason March 1, 2023. The results of December 31, 2017 and 2016 andoperations for the years then ended, included ininterim periods presented are not necessarily indicative of the Report on Form 8-K filed withresults to be expected for the SEC on March 21, 2018. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.Principles of ConsolidationSuccessorcondensed consolidated financial statements in the period from March 15, 2018 to March 31, 2018Condensed Consolidated Financial Statements include the accounts of Lazydays Holdings, LazydaysInc. and Lazy Days RV Center, Inc. and its wholly owned subsidiary LDRV Holdings Corp. LDRV Holdings Corp is the sole owner of Lazydays Land Holdings, LLC, Lazydays Tampa Land Holdings, LLC, Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays Mile Hi RV, LLC (collectively, the “Company”, “Lazydays” or “Successor”).subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.Predecessorstatementsstatements.the periods from January 1, 2018 to March 14, 2018Entity’s Own Equity (Subtopic 815-40): Accounting for ConvertibleJanuary 1, 2017 through March 31, 2017 include the accounts of Lazydays RV and its wholly owned subsidiary LDRV Holdings Corp. LDRV Holdings Corp is the sole owner of Lazydays Arizona, LLC, Lazydays Land Holdings, LLC, Lazydays Tampa Land Holdings, LLC, Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays Mile Hi RV, LLC (collectively, the “Predecessor”). All significant inter-company accounts and transactions have been eliminatedContracts in consolidation.Predecessor and Successor PeriodsAs a result of the Mergers, Holdings is the acquirer for accounting purposes and Lazydays R.V. Center, Inc. is the acquiree andan Entity’s Own Equity. The update simplifies the accounting predecessor. The financial statement presentation distinguishesfor convertible debt instruments and convertible preferred stock by reducing the results into two distinct periods, the period up to March 15, 2018 (the “Acquisition Date”) (“Predecessor Periods”) and the period including and after that date (the “Successor Period”). The Mergers were accounted for as a business combination using the acquisition methodnumber of accounting models and limiting the Successor financial statements reflect anumber of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We are currently evaluating the impact that this new basis of accounting that is basedstandard will have on the fair value of the net assets acquired.As a result of the application of the acquisition method of accounting as of the effective time of the Transaction Merger, the accompanying condensedour consolidated financial statements include a black line division which indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are, therefore, not directly comparable.The historical financial information of Andina, (which was a special purpose acquisition company) prior to the business combination has not been reflected in the Predecessor financial statements as these historical amounts have been considered de minimis. Accordingly, no other activity in the Company was reported in the Predecessor Period other than the activity of Lazydays RV.Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the net assets acquired in business combinations, goodwill and other intangible assets, provision for charge-backs, inventory write-downs, the allowance for doubtful accounts and stock-based compensation.Revenue RecognitionThe Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) fees are fixed or determinable, and (4) the collection of related accounts receivable is probable.Revenue from the sale of vehicles is recognized on delivery, transfer of title and completion of financing arrangements. Revenue from parts sales and service is recognized on delivery of the service or product.Revenue from rental of vehicles is recognized pro rata over the period of the rental agreement. The rental agreements are generally short-term in nature. Revenue from rentals is included in parts, service, and other revenue on the accompanying statements of income.The Company receives commissions from the sale of insurance and vehicle service contracts to customers. In addition, the Company arranges financing for customers through various financial institutions and receives commissions. 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. The revenues from financing fees and commissions are recorded at the time of the sale of the vehicles and an allowance for future charge-backs is established based on historical operating results and the termination provision of the applicable contracts. The Company recognized finance and insurance revenues, net of chargebacks, as follows (unaudited): Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Gross finance and insurance revenues $ 2,517 $ 7,483 $ 8,951 Chargebacks (80 ) (622 ) (427 ) Net finance revenue $ 2,437 $ 6,861 $ 8,524 The Company has an accrual for charge-backs which totaled $2,582 and $2,373 at March 31, 2018 and December 31, 2017, respectively, and is included in accounts payable, accrued expenses, and other current liabilities on the accompanying condensed consolidated balance sheets.Deposits on vehicles received in advance are accounted for as a liability and recognized into revenue upon completion of each respective transaction.Occupancy CostsAs a retail merchandising organization, the Company has elected to classify occupancy costs as selling, general and administrative expense in the condensed consolidated statements of income.InventoriesVehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out (“LIFO”) method. Cost includes purchase costs, reconditioning costs, dealer-installed accessories, and freight. For vehicles accepted in trades, the cost is the fair value of such used vehicles at the time of the trade-in. Retail parts, accessories, and other inventories primarily consist of retail travel and leisure specialty merchandise. The current replacement costs of LIFO inventories exceeded their recorded values by $0 and $11,930 as of March 31, 2018 and December 31, 2017, respectively. The amount by which current replacement costs of LIFO inventories exceeded their recorded values as of March 31, 2018 was considered to be immaterial.Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense in the period incurred. Betterments and additions are capitalized. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the lesser of the useful life of the asset or the term of the lease.SuccessorUseful lives range from 2 to 26 years for buildings and improvements and from 2 to 12 years for vehicles and equipment.PredecessorUseful lives range from 15 to 20 years for buildings and improvements and from 2 to 7 years for vehicles and equipment.Goodwill and Intangible AssetsThe Company’s goodwill, trade names and trademarks are deemed to have indefinite lives, and accordingly are not amortized, but are evaluated at least annually for impairment and more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. The Company’s manufacturer and customer relationships are amortized over their estimated useful lives on a straight-line basis.SuccessorThe estimated useful lives are 12 years for both the manufacturer and customer relationships.PredecessorThe estimated useful lives were 13 to 18 years for the manufacturer relationships. The customer relationships were fully amortized and had a net carrying value of $0 at December 31, 2017.Cumulative Redeemable Convertible Preferred StockThe Company’s Series A Preferred Stock (See Note 13 - Preferred Stock) is cumulative redeemable convertible preferred stock. Accordingly, it is classified as temporary equity and is shown net of issuance costs and the relative fair value of warrants issued in conjunction with the issuance of the Series A Preferred Stock. Unpaid preferred dividends are accumulated, compounded at each quarterly dividend date and presented within the carrying value of the Series A Preferred Stock.Stock Based CompensationThe Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite or derived service period. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the condensed consolidated statements of income.Earnings Per ShareThe Company computes basic and diluted earnings/(loss) per share (“EPS”) by dividing net earnings/(loss) by the weighted average number of shares of common stock outstanding during the period. During the Successor Period from March 15, 2018 to March 31, 2018, basic and diluted net loss per common share are the same since the inclusion of common stock issuable pursuant to the exercise of the Company’s Series A Convertible Preferred Stock (utilizing the if converted method), plus unit purchase options, stock options and warrants on the calculation of diluted net loss per common share would have been anti-dilutive.The following table summarizes net loss attributable to common stockholders used in the calculation of basic and diluted loss per common share:Net income $ 691 Dividends on Series A Convertible Preferred Stock (210 ) Deemed dividend on Series A Convertible Preferred Stock (3,392 ) Net loss attributable to common stockholders $ (2,911 ) During the Successor Period from March 15, 2018 to March 31, 2018, the denominator of the basic and dilutive EPS was calculated as follows:Basic Earnings/(Loss) per ShareWeighted average outstanding common shares8,471,608Weighted average shares held in escrow(142,857)Weighted average prefunded warrants1,339,499Weighted shares outstanding - basic9,668,250For the Successor period, the following common stock equivalent shares were excluded from the computation of the diluted loss per share, since their inclusion would have been anti-dilutive:Shares underlying Series A Convertible Preferred Stock5,962,733Shares underlying warrants4,677,458Stock options3,673,544Shares underlying unit purchase options657,142Share equivalents excluded from EPS14,970,877Advertising CostsAdvertising and promotion costs are charged to operations in the period incurred and totaled approximately $357 for the period from March 15, 2018 to March 31, 2018 (Successor Period). Advertising and promotion charges were $2,624 and $3,255 for the Predecessor periods from January 1, 2018 to March 14, 2018 and January 1, 2017 to March 31, 2017, respectively.Income TaxesThe Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction.In its interim financial statements, the Company follows the guidance in ASC 270, “Interim Reporting” and ASC 740 “Income Taxes”, whereby the Company utilizes the expected annual effective tax rate in determining its income tax provisions for the interim periods.SeasonalityThe Company’s operations generally experience modestly higher volumes of vehicle sales in the first quarter of each year due in part to consumer buying trends and the hospitable warm climate during the winter months at our largest location (Tampa).Vendor ConcentrationsThe Company purchases its new recreational vehicles and replacement parts from various manufacturers. During the Successor period from March 15, 2018 to March 31, 2018, four major manufacturers accounted for 40.1%, 27.7%, 11.5% and 11.3% of purchases. During the Predecessor Period from January 1, 2018 to March 14, 2018, four major manufacturers accounted for 36.1%, 21.4%, 18.2%, and 16.1% of total purchases. During the Predecessor period from January 1, 2017 to March 31, 2017, four major manufacturers accounted for 32.6%, 22.7%, 21.6%, and 17.0% of total purchases.The Company is subject to dealer agreements with each manufacturer. The manufacturer is entitled to terminate the dealer agreement if the Company is in material breach of the agreement terms.Geographic ConcentrationsRevenues generated by customers of the Florida location and the Colorado location were as follows (unaudited): Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Florida 77 % 81 % 81 % Colorado 16 % 11 % 11 % These geographic concentrations increase the exposure to adverse developments related to competition, as well as economic, demographic, weather and other changes in these regions.Subsequent EventsManagement of the Company has analyzed the activities and transactions subsequent to March 31, 2018 through the date these condensed consolidated financial statements were issued to determine the need for any adjustments to or disclosures within the financial statements. Except as disclosed in Note 15 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would require disclosure in the condensed consolidated financial statements.Recently Issued Accounting StandardsThe Company qualifies as an emerging growth company pursuant to the provision of the Jumpstart Our Business Startups (“JOBS”) Act.Section 107 of the JOBS Act provides that an emerging growth company can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the extended transition periodprovided by the JOBSAct for complying with new or revised accounting standards.34 – BUSINESS COMBINATIONOn March 15, 2018,COMBINATIONSCompany consummatedfirst three months of 2023, we completed the Mergers. Underfollowing acquisition:Merger Agreement, upon consummation of the Redomestication Merger, (i) each ordinary share of Andina was exchanged for one share of common stock of Holdings (“Holdings Shares”), except that holders of ordinary shares of Andina sold in its initial public offering (“public shares”) were entitled to elect instead to receive a pro rata portion of Andina’s trust account, as provided in Andina’s charter documents, (ii) each Andina right entitled the holder to receive one-seventh of a Holdings Share and (iii) each Andina warrant entitled the holder to purchase one-half of one Holdings Share at a price of $11.50 per whole share. Upon consummation of the Transaction Merger, the Lazydays RV’s stockholders received their pro rata portion of: (i) 2,857,189 Holdings Shares; and (ii) $86,741 in cash, subject to adjustments based on the Predecessor’s finalization of working capital and debt as of closing and also subject to any such Holdings Shares and cash that was issued and paid2023 acquisition subsequent to the Predecessor’s option holdersdate of acquisition were as follows:(In thousands) Three months ended March 31, 2023 Revenue $ 2,264 Loss from operations (71) participants under the transaction incentive plan (the “Transaction Incentive Plan”).The Company accountedpreliminary purchase price allocation for the Mergers as a business combination using the purchase method of accounting. As a result, the Company determined its preliminary allocation of the fair value of theidentified assets acquired and the liabilities assumed as of the Predecessor as follows:Cash $ 9,188 Receivables 14,768 Inventories 124,354 Prepaid expenses and other 4,055 Property and equipment 73,642 Intangible assets 68,200 Other assets 200 Total assets acquired 294,407 Accounts payable, accrued expenses and other current liabilities 26,527 Floor plan notes payable 95,663 Financing liability 56,000 Deferred tax liability 20,370 Long-term debt 8,781 Total liabilities assumed 207,341 Net assets acquired $ 87,066 (In thousands) Consideration Cash paid, net of cash acquired $ 19,730 (In thousands) Assets Acquired and Liabilities Assumed Inventories $ 6,787 Prepaid expenses and other 5 Property and equipment 7,461 Goodwill 5,479 Total assets acquired 19,732 Accounts payable 2 Net assets acquired $ 19,730 fair valuepurchase price allocations for the acquisition from the first quarter of 2023 are preliminary, and we have not obtained and evaluated all of the consideration paid wasdetailed information necessary to finalize the opening balance sheet amounts in all respects. We recorded the purchase price allocations based upon information that is currently available and recorded unallocated items as follows:Cash consideration paid $ 86,741 Common stock issued to former stockholders, option holders, and bonus receipients of Lazydays RV 29,400 Total consideration $ 116,141 The common stock was valued at $10.29 per share,closing price of Andina’s common stock on the date of the Mergers.assumed fromassumed. The primary items that generated the Predecessor. Goodwill associated withgoodwill are the Mergers is detailed below:Total consideration $ 116,141 Less net assets acquired 87,066 Goodwill $ 29,075 The following table summarizes the Company’s preliminary allocation of the purchase price to the identifiable intangible assets acquired as of the date of the closing of the Mergers. Gross Asset
Amount at
Acquisition Date Weighted
Average
Amortization
Period in YearsTrade names and trademarks $ 30,100 N/A Customer relationships 9,100 12 years Manufacturer relationships 29,000 12 Years Total intangible assets $ 68,200 Trade names and trademarks are indefinite-lived assets and are not subject to amortization. The value of trade names, trademarks, and customer relationships was determined utilizing the relief from royalty method. The Company determined the fair value of the manufacturer relationships utilizingsynergies between us and the acquired businesses and the growth and operational improvements that drive profitabilitydiscounted cash flow model.Direct transaction related costs consist of costs incurred in connection with the Merger Agreement. These costs totaled $2,730 for the period from March 15, 2018 to March 31, 2018 which primarily consistedseparately identified intangible assbusiness combination expenses of Andina that were contingent upon the completion of the Mergers. These costs total $381goodwill related to acquisitions completed in 2023 to be deductible for the period from January 1, 2018 to March 14, 2018.summarizes the combined results of operations for the Companypresents consolidated information as though the Mergersacquisitions of Dave’s Claremore RV and Findlay had been consummated on January 1, 2017. Pro Forma
Combined Statements of Income For the Three Months Ended March 31, 2018 2017 Revenue $ 177,844 $ 169,965 Income before income tax expense $ 6,111 $ 5,411 Net income $ 4,196 $ 3,349 The Company2022:Three months ended March 31, (In thousands) 2023 2022 Revenue $ 297,224 $ 391,857 (Loss) income before income taxes $ (598) $ 37,969 Net (loss) income $ (394) $ 28,846 the combined income of Lazydays RV with Andina and adjusted net income to add backeliminate business combination expenses, as well as the incremental depreciation and amortization associated with the preliminary purchase price allocation as well as the income taxes for the previously untaxed acquired entities to determine pro forma net (loss) income.Goodwill thatdeductible for tax purposes wasthe fair value of such pre-owned vehicles at the time of the trade-in. Other inventory includes parts and accessories, as well as retail travel and leisure specialty merchandise, and is recorded at the lower of cost or net realizable value with cost determined to be $6,089.NOTE 4 – INVENTORIES Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) New recreational vehicles $ 80,890 $ 89,668 Pre-owned recreational vehicles 34,676 31,378 Parts, accessories and other 4,643 5,054 120,209 126,100 Less: excess of current cost over LIFO - (11,930 ) $ 120,209 $ 114,170 (In thousands) As of March 31, 2023 As of December 31, 2022 New recreational vehicles $ 375,927 $ 342,415 Pre-owned recreational vehicles 56,801 50,457 Parts, accessories and other 8,541 6,831 441,269 399,703 Less: excess of current cost over LIFO (22,133) (20,822) Total $ 419,136 $ 378,881 5 – PROPERTY6 - GOODWILL AND EQUIPMENT, NETProperty and equipment consist of the following: Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) Land $ 13,775 $ 10,366 Building and improvments including leasehold improvements 50,907 41,890 Furniture and equipment 3,491 14,753 Company vehicles and rental units 4,847 3,612 Construction in progress 693 396 73,713 71,017 Less: Accumulated depreciation and amortization (269 ) (25,348 ) $ 73,444 $ 45,669 Depreciation and amortization expense amounted to the amounts set forthINTANGIBLE ASSETStable below (unaudited)carrying amount of goodwill were as follows (in thousands): Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Depreciation and amortization $ 269 $ 1,058 $ 1,347 NOTE 6 – INTANGIBLE ASSETSBalance as of December 31, 2021 $ 80,318 Additions through acquisitions 4,692 Measurement period adjustments related to prior acquisitions (1,550) Balance as of December 31, 2022 83,460 Additions through acquisitions 5,479 Measurement period adjustments related to prior acquisitions 189 Balance as of March 31, 2023 $ 89,128 and the related accumulated amortization are summarizedwas as follows: Successor Predecessor As of March 31, 2018 (Unaudited) As of December 31, 2017 Gross
Carrying
Amount Accumulated
Amortization Net Asset
Value Gross
Carrying
Amount Accumulated
Amortization Net Asset
Value Amortizable intangible assets: Manufacturer relationships $ 29,000 $ 100 $ 28,900 $ 11,100 $ 3,238 $ 7,862 Customer relationships 9,100 32 9,068 1,300 1,300 - 38,100 132 37,968 12,400 4,538 7,862 Non-amortizable intangible assets: Trade names and trademarks 30,100 - 30,100 18,000 - 18,000 $ 68,200 $ 132 $ 68,068 $ 30,400 $ 4,538 $ 25,862 March 31, 2023 December 31, 2022 (In thousands) Gross Carrying Amount Accumulated Amortization Net Asset Value Gross Carrying Amount Accumulated Amortization Net Asset Value Amortizable intangible assets: Manufacturer relationships $ 65,400 $ 21,943 $ 43,457 $ 65,400 $ 20,346 $ 45,054 Customer relationships 10,395 4,218 6,177 10,395 3,993 6,402 Non-compete agreements 230 132 98 230 121 109 76,025 26,293 49,732 76,025 24,460 51,565 Non-amortizable intangible assets: Trade names and trademarks 30,100 — 30,100 30,100 — 30,100 $ 106,125 $ 26,293 $ 79,832 $ 106,125 $ 24,460 $ 81,665 amountedrelated to the amounts set forth in the table below (unaudited): Successor Predecessor March 15, 2018 to March 31, 2018 January 1, 2018 to March 14, 2018 January 1, 2017 to March 31, 2017 Amortization $ 132 $ 154 $ 187 Estimated futureIntangible assets was as follows:Three months ended March 31, (In thousands) 2023 2022 Amortization expense $ 1,833 $ 1,807 expenseof Trade names and trademarks is as follows:Years ending 2018 (9 months) $ 2,381 2019 3,175 2020 3,175 2021 3,175 2022 3,175 Thereafter 22,887 $ 37,968 As(In thousands) Remainder of 2023 $5,499 2024 7,332 2025 7,264 2026 6,585 2027 6,274 Thereafter 16,778 Total $49,732 FINANCING LIABILITYOnASSET IMPAIRMENT23, 2015,31, 2022. The remainder was recorded in Selling, general and administrative expenses during the Predecessor sold certain land, buildingcurrent three month period.improvementsbillboards throughout the United States primarily under operating leases. The related right-of-use (“ROU”) assets for $56,000these operating leases are included in operating lease right-of-use assets. Leases with lease terms of 12 months or less are expensed on a straight-line basis over the lease term and is leasing backare not recorded in the property from the purchaser over a non-cancellable period of 20 years. The lease contains renewal options at lease termination, with threeCondensed Consolidated Balance Sheets.10 additional years each and contains a right of first offer ininflation. Our lease agreements neither contain any residual value guarantees nor impose any significant restrictions or covenants.event the property owner intends to sell any portion or all of the property to a third party. These rights and obligations constitute continuing involvement, which resulted in failed sale-leaseback (financing) accounting.The financing liability, net of debt discount, is summarized as follows: Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) Financing liability $ 56,000 $ 55,158 Interest added to principal amount 171 - Debt discount - (883 ) Financing liability, net of debt discount 56,171 54,275 Less: current portion 597 595 Financing liability, non-current portion $ 55,574 $ 53,680 The future minimum payments required by the arrangement are as follows:Years ending December 31, Principal Interest Total Payment 2018 (9 months) $ 426 $ 3,070 $ 3,496 2019 702 4,052 4,754 2020 853 3,995 4,848 2021 1,018 3,927 4,945 2022 1,198 3,847 5,045 Thereafter 40,974 34,574 75,548 $ 45,171 $ 53,465 $ 98,636 The financing liability has an implied interest rate of 7.3%. At the conclusion of the 20-year lease period, the financing liability residual will be $11,000, which will correspond to the carrying value of the land.NOTE 8 – ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAccounts payable, accrued expenses and other current liabilities consist of the following: Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) Accounts payable $ 9,741 $ 12,394 Other accrued expenses 2,315 2,893 Customer deposits 5,127 3,999 Accrued compensation 4,538 3,211 Accrued charge-backs 2,582 2,373 Accrued interest 258 311 Total $ 24,561 $ 25,181 March 15, 2018, the Company terminated and replaced the Bank of America (“BOA”) credit facility with a $200,000February 21, 2023, we amended our $369 million Senior Secured Credit Facility with M&T Bank (the “M&T Facility”). Bank.M&T Facility includes a Floor Plan Facility (the “M&T Floor Plan Line of Credit”), a Term Loan (the “M&T Term Loan”), and a Revolving Credit Facility (the “M&T Revolver”). The M&T Facility will mature on March 15, 2021. The M&T Facility requires the Company to meet certain financial and other covenants and is secured by substantially all the assetsmaterial provisions of the Company. The costs ofamendment were to (i) increase the M&T Facility were recorded as a debt discount.On March 15, 2018, the Company repaid $96.7 million outstandingcapacity under the BOA floor plan notes payable and $8.8 million outstanding under the BOA term loan.As of March 31, 2018, the payment of dividends by the Company (other than from proceeds of revolving loans) was permitted under the M&T Facility, so long as at the time of payment of any such dividend, no event of default existed under the M&T Facility, or would result from the payment of such dividend, and so long as any such dividend was permitted under the M&T Facility. As of March 31, 2018, the maximum amount of cash dividends that the Company could make from legally available funds to its stockholders was limited to an aggregate of $12,600 pursuant to a calculation as defined in the M&T Facility.Floor Plan Line of CreditThe $175,000 M&T Floor Plan Line of Credit may be used to finance new vehicle inventory, but only $45,000 may be usedup to finance pre-owned vehicle inventory$525.0 million from $327.0 million and $4,500 may be usedincrease the capacity under the Revolving Credit Facility to finance rental units. Principal becomes due uponup to $50.0 million from $25.0 million; (ii) remove the saleMortgage Loan Facility and Term Loan Facility; (iii) extend the term of the related vehicle. The M&T Floor Plan Line of Credit shall accrueand the Revolving Credit to February 21, 2027; (iv) lower interest rates on the Floor Plan Line of Credit and the Revolving Credit facility; and (v) remove certain guarantors.eitheran interest rate of 6.82% and $30.0 million outstanding on the Revolving Credit Facility at an interest rate of 7.06%. We were in compliance with all financial and restrictive covenants at March 31, 2023.the fluctuating 30-day LIBOR rateSOFR plus an applicable margin which ranges from 2.00%of 1.90% to 2.30%2.05% based uponon the Company’s total net leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus an applicable margin ranging from 1.00% to 1.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility). The Base Rate is defined in the M&T Facility as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month LIBOR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of 0.15%.The M&T Floor Plan Line of Credit consists of the following as of March 31, 2018: Successor As of March 31, 2018 (Unaudited) Floor plan notes payable, gross $ 99,926 Debt discount (558 ) Floor plan notes payable, net of debt discount $ 99,368 Term LoanThe $20,000 M&T Term Loan will be repaid in equal monthly principal installments of $242 plus accrued interest through the maturity date of March 15, 2021. At the maturity date, the Company will pay a principal balloon payment of $11,300 plus any accrued interest. The M&T Term Loan shall bear interest at (a) LIBOR plus an applicable margin of 2.25% to 3.00% based on the total leverage ratio (as defined in thenew M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00%0.90% to 1.05% based on the total net leverage ratio (as defined in the new M&T Facility).Long-term debt consists Base Rate means, for any day, the fluctuating rate per annum equal to the highest of (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points. The Floor Plan Line of Credit is also subject to an annual unused commitment fee at 0.15% of the following asaverage daily unused portion of March 31, 2018: Successor As of March 31, 2018 (Unaudited) Gross Principal
Amount Debt Discount Total Debt, Net
of Debt Discount M&T Term Loan $ 20,000 $ (56 ) $ 19,944 Capital lease obligation-equipment 9 - 9 Total long-term debt 20,009 (56 ) 19,953 Less: current portion 2,909 - 2,909 Long term debt, non-current $ 17,100 $ (56 ) $ 17,044 RevolverThe $5,000 M&T Revolver allows the Company to draw up to $5,000. Floor Plan.Revolver shall bearRevolving Credit facility bears interest atat: (a) 30-day LIBORSOFR plus an applicable margin of 2.25%2.15% to 3.00%2.90% based on the total net leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00%1.15% to 1.90% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal to the highest of (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points. The M&T RevolverRevolving Credit facility is also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the Credit facility.rates varying from 0.25% to 0.50%the time of the sale of the vehicle and an allowance for future charge-backs is established based on historical operating results and the total leverage ratio (as definedtermination provision of the applicable contracts. The estimates for future chargebacks require judgment by management, and as a result, there is an element of risk associated with these revenue streams.M&T Facility). Duringaccompanying Condensed Consolidated Balance Sheets.Three months ended March 31, 2023 2022 Florida 50 % 52 % Tennessee 11 % 13 % Successor period ended March 31, 2018, there were no outstanding borrowings under the M&T Revolver.NOTE 10 – INCOME TAXESThe Company recorded a provision for federal and state income taxes of $449 for the Successor Period from March 15, 2018, $718for the Predecessor periods from January 1, 2018exposure to March 14, 2018 and $2,445 for the three months ended March 31, 2017, respectively, which represent effective tax rates of approximately 39.4%, 23.9%, and 38.1%, respectively. The Company’s 2018 effective tax rates differ from the federal statutory rate of 21% primarily dueadverse developments related to local and state income tax rates, net of the federal tax effectcompetition, as well as economic, demographic and weather conditions.Three months ended March 31, 2023 2022 Thor Industries,Inc. 38.0 % 49.8 % Winnebago Industries, Inc. 34.0 % 29.1 % Forest River, Inc. 24.0 % 17.2 % non-deductibilitydealer agreement if we are in material breach of the agreement’s terms.transaction costsshares issuable upon exercise of common stock options or warrants were included unless those additional shares would have been anti-dilutive. For the diluted EPS computation, the treasury stock method is applied and compared to the two-class method and whichever method results in a more dilutive impact is utilized to calculate diluted EPS.based compensation expenses. does not participate in losses.Company’s 2017 effective tax rates differfollowing table summarizes net income attributable to common stockholders used in the calculation of basic and diluted income per common share:Three months ended March 31, 2023 2022 (Dollars in thousands - except share and per share amounts) Distributed earnings allocated to common stock $ — $ — Net (loss) income attributable to common stock and participating securities used to calculate basic (loss) earnings per share (1,460) 18,411 Net earnings allocated to Series A convertible preferred stock — 8,689 Net (loss) earnings allocated to common stock and participating securities $ (1,460) $ 27,100 Weighted average shares outstanding 11,688,542 12,497,743 Dilutive effect of pre-funded warrants 300,357 300,357 Weighted average shares outstanding - basic 11,988,899 12,798,100 Weighted average common shares outstanding 11,688,542 12,497,743 Weighted average pre-funded warrants 300,357 300,357 Weighted average warrants (equity) — 1,244,495 Weighted average warrants (liabilities) — 438,143 Weighted average options — 6,080,398 Weighted average shares outstanding - diluted 11,988,899 20,561,136 Basic income per common share $ (0.12) $ 1.44 Diluted income per common share $ (0.17) $ 1.17 federal statutory rate of 35% primarily due to local and state income tax rates, netcomputation of the federal tax effect. Due to the Tax Cuts and Jobs Act, the Company’s federaldiluted income tax rate decreased from 35% in 2017 to 21% in 2018.Deferred tax assets and liabilities were as follows: Successor Predecessor As of As of March 31, 2018 December 31, 2017 (Unaudited) Deferred tax assets: Accounts receivable $ 253 $ 253 Accrued charge-backs 634 594 Other accrued liabilities 527 424 Goodwill - 274 Financing liability 14,005 13,574 Transaction costs - 579 Stock based compensation - 165 Other, net (65 ) 215 15,354 16,078 Deferred tax liabilities: Prepaid expenses (118 ) (202 ) Inventories (4,605 ) (1,531 ) Property and equipment (15,349 ) (9,178 ) Intangible assets (15,652 ) (5,023 ) (35,724 ) (15,934 ) Net deferred tax assets/ (liabilities) $ (20,370 ) $ 144 NOTE 11 – RELATED PARTY TRANSACTIONSOn March 15, 2018, the non-executive Chairman of the Board of Andina was repaid aggregate outstanding notes payable totaling $662. In addition, $100 was repaid to other employees of Andina.On March 15, 2018, in connection with the Mergers, the Company paid Hydra Management, LLC, an affiliate of A. Lorne Weil, an initial shareholder of Andina and the father of B. Luke Weil, a member of the Company’s Board of Directors, $500 as compensation for advisory services in connection with the Mergers.Three months ended March 31, 2023 2022 Stock options 295,061 270,032 Restricted stock units 237,249 — Shares issuable under the Employee Stock Purchase Plan 18,805 31,874 Share equivalents excluded from EPS 551,115 301,906 Employment AgreementsThe Company entered into employment agreements with the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company effective as of the consummation of the Mergers. The employment agreements with the CEO and the CFO provide for initial base salaries of $540 and $325, respectively, subject to annual discretionary increases. In addition, each executive is eligible to participate in any employee benefit plans adopted by the Company from time to time and is eligible to receive an annual cash bonus based on the achievement of performance objectives. The CEO’s target bonus is 100% of his base salary and the CFO’s target bonus is 75% of her base salary. The employment agreements also provide that each executive is to be granted an option to purchase shares of common stock of the Company (See Note 14 – Stockholders’ Equity).The employment agreements provide that if the executive is terminated for any reason, he or she is entitled to receive any accrued benefits, including any earned but unpaid portion of base salary through the date of termination, subject to withholding and other appropriate deductions. In addition, in the event the executive resigns for good reason or is terminated without cause (all as defined in the employment agreement) prior to January 1, 2022, subject to entering into a release, the Company will pay the executive severance equal to (i) two times base salary and average bonus for the CEO and (ii) one times base salary and average bonus for the CFO. 15 – Subsequent Events.Director CompensationThe Company’s non-employee members of the board of directors will receive annual cash compensation of $50 for serving on the board of directors, $5 for serving on a committee of the board of directors (other than the Chairman of each of the committees) and $10 for serving as the Chairman of any of the committees of the board of directors.ProceedingsThe Company is aMattersnumerousmultiple legal proceedings that arise in the ordinary course of business. The Company hasWe have certain insurance coverage and rights of indemnification. The Company doesWe do not believe that the ultimate resolution of these matters will have a material adverse effect on the Company’sour business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’sour business, results of operations, financial condition and/or cash flows.Operating LeasesThe Company leases various land, office and dealership equipment under non-cancellable operating leases. These leases have terms ranging from 36 months to 4 years and expire through 2022.Rent expense associated with operating leases was as follows (unaudited): Successor Predecessor March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017 Rent expense $ 79 $ 394 $ 454 Transaction Incentive PlanOn January 30, 2017, the Company’s Board of Directors approved the Company’s Transaction Incentive Plan, which provides incentives to eight directors and employees of the Company upon the consummation of a qualifying sale transaction. The Transaction Incentive Plan expires on October 31, 2020. To the extent the proceeds received in a qualifying sale transaction exceed certain specified thresholds (the “Excess Amount”), participants in the Transaction Incentive Plan who meet the specified service requirements are entitled to a cash and stock award on the closing date of the qualifying sale transaction equal to their awarded percentage of the Excess Amount. The cash and stock awards will be paid from the consideration of the qualifying sale transaction. The Mergers (see Note 3 – Business Combination) represented a qualifying sale transaction that resulted in the payment to plan participants of an aggregate of $1,510 of cash (including amounts held in escrow) and 51,896 shares of Holdings’ common stock with a value of $534 based on the March 15, 2018 closing price of $10.29 per Andina share. An additional $250 will be paid in cash and stock upon the release of amounts held in escrow under the Merger Agreement.Simultaneous with the closing of the Mergers, the Company consummated a private placement with institutional investors for the sale of convertible preferred stock, common stock, and warrants for an aggregate purchase price of $94,800 (the “PIPE Investment”). At the closing, the Company issued an aggregate of 600,000 shares of Series A Preferred Stock (with a stated value of $60,000), The investors in the PIPE Investment were granted certain registration rights as set forth in the securities purchase agreements.The Series A Preferred Stock ranks senior to all outstanding stock of the Company. Holders of the Series A Preferred Stock are entitled to vote on an as-converted basis together with the holders of the Common Stock, and not as a separate class, at any annual or special meeting of stockholders. Each share ofatpreferred stock. Accordingly, it is classified as temporary equity and is shown net of issuance costs and the holder’s election at any time, at an initial conversion pricefair value of $10.0625 per share, subject to adjustment (as applicable, the “Conversion Price”). Upon any conversion of the Series A Preferred Stock, the Company will be required to pay each holder converting shares of Series A Preferred Stock all accrued and unpaid dividends, in either cash or shares of common stock, at the Company’s option. The Conversion Price will be subject to adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain dilutive issuances.Dividends on the Series A Preferred Stock accrue at an initial rate of 8% per annum (the “Dividend Rate”), compounded quarterly, on each $100 of Series A Preferred Stock (the “Issue Price”) and are payable quarterly in arrears. Accrued and unpaid dividends, until paid in full in cash, will accrue at the then applicable Dividend Rate plus 2%. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event that the Company’s senior indebtedness less unrestricted cash during any trailing twelve-month period ending at the end of any fiscal quarter is greater than 2.25 times earnings before interest, taxes, depreciation and amortization (“EBITDA”). The Dividend Rate will be reset to 8% at the end of the first fiscal quarter when the Company’s senior indebtedness less unrestricted cash during the trailing twelve-month period ending at the end of such quarter is less than 2.25 times EBITDA.If, at any time following the second anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of the Company’s common stock equals or exceeds $25.00 per share (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, the Company may elect to force the conversion of any or all of the outstanding Series A Preferred Stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, the Company may elect to redeem all, but not less than all, of the outstanding Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the Series A Preferred Stock, each holder of Series A Preferred Stock has the right to require the Company to redeem all of the holder’s outstanding shares of Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends.In the event of any liquidation, merger, sale, dissolution or winding up of the Company, holders of the Series A Preferred Stock will have the right to (i) payment in cash of the Issue Price plus all accrued and unpaid dividends, or (ii) convert the shares of Series A Preferred Stock into common stock and participate on an as-converted basis with the holders of common stock.So long as the Series A Preferred Stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the outstanding Series A Preferred Stock, shall have the right to designate two members to the board of directors.In addition, five-year warrants to purchase 596,273 shares of common stock at an exercise price of $11.50 per were issued in conjunction with the issuance of the Series A Preferred Stock. The warrants may be exercised for cash or,preferred stock.optioncarrying value of the holder, on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act. The warrants may be called for redemption in whole and not in part, at a price of $0.01 per share of common stock, if the last reported sales price of the Company’s common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, if there is a current registration statement in effect with respect to the shares underlying the warrants.The Series A Preferred Stock, while convertible into common stock, is also redeemable at the holder’s option and, as a result, is classified as temporary equity in the condensed consolidated balance sheets. An analysis of its features determined that the Series A Preferred Stock was more akin to equity. While the embedded conversion option (“ECO”) was subject to an anti-dilution price adjustment, since the ECO was clearly and closely related to the equity host, it was not required to be bifurcated and it was not accounted for aspreferred stock until a derivative liability under ASC 815.After factoring in the relative fair valuedividend is declared by our Board of the warrants issued in conjunction with the Series A Preferred Stock, the effective conversion price is $9.72 per share, compared to the market price of $10.29 per shareDirectors. The Board declared a dividend payment on the date of issuance. As a result, a $3,392 beneficial conversion feature was recorded as a deemed dividend in the condensed consolidated statement of income because the Series A Preferred Stock is immediately convertible, with a credit to additional paid-in capital. The relative fair value of the warrants issued with the Series A Preferred Stock of $2,035 was recorded as a reduction to$1.2 million for the carrying amount of the preferred stockthree months ended March 31, 2023 which is included in Dividends payable in the condensed consolidated balance sheet. In addition, aggregate offering costs of $2,981 consisting of cash and the value of five-year warrants to purchase 178,882 shares of common stock at an exercise price of $11.50 per share issued to the placement agent were recorded as a reduction to the carrying amount of the preferred stock.accompanying Condensed Consolidated Balance Sheets. The $632 value of the warrantsdividend was determined utilizing the Black-Scholes option pricing model using a term of 5 years, a volatility of 39%, a risk-free interest rate of 2.61%, and a 0% rate of dividends.The discount associated with the Series A Preferred Stock wasn’t accreted during the Successor period because redemption was not currently deemed to be probable.SuccessorAuthorized CapitalThe Company isissue 100,000,000 shares$25 million of our Common stock through December 31, 2024. On December 15, 2022, our Board of Directors authorized the repurchase of up to an additional $50 million of our common stock $0.0001 par value,through December 31, 2024. These shares may be purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.Repurchases in 2023 Cumulative Repurchases as of March 31, 2023 Shares Average Price Shares Average Price Stock repurchase program 9,433 $ 11.56 3,412,222 $ 14.16 5,000,000 shares of preferredsold our Common stock $0.0001 par value. The holderswithin a time period that was in violation of the Company’s common stock are entitledshort-swing profit rules and, accordingly, profit from the transactions totaling $0.6 million was paid to one vote per share. The holdersus and recorded as Additional Paid in Capital on our Condensed Consolidated Balance Sheets.Series A Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which the holder’s shares are convertible. These holders of Series A Preferred Stock also participate in dividends if they are declared by the Board. See Note 13 – Preferred Stock for additional information associated with the Series A Preferred Stock.Three months ended March 31, (In thousands) 2023 2022 Stock-based compensation $ 797 $ 523 On March 15, 2018, the Company adopted the. The 2018 Plan reserves up to 13% of the shares outstanding on a fully diluted basis. The 2018 Plan is administered by the Compensation Committee of the board of directors, and provides for awards of options, stock appreciation rights, restricted stock, restricted stock units, warrants or other securities which may be convertible, exercisable or exchangeable for or into our common stock. Due to the fact that the fair market value per share immediately following the closingAs of the Mergers was greater than $8.75 per share, the number of shares authorized for awards under the 2018 Plan was increased by a formula (as defined in the 2018 Plan) not to exceed 18% of shares then outstanding on a fully diluted basis.Common StockOn March 15, 2018, the Company had 1,872,42831, 2023, there were 941,088 shares of common stock outstanding prioravailable to the consummation of the Mergers.On March 15, 2018, Andina rights holders converted their existing rights at a ratio of one share of common stock for seven Andina rights. As a result, 615,436 shares of common stock of the Company werebe issued to former Andina rights holders.On March 15, 2018, holders of 472,571 shares of Andina common stock, which had been subject to redemption prior to the Mergers, were reclassified from temporary equity to stockholders’ equity at their carrying value of $4,910.On March 15, 2018, 2,857,189 shares of common stock at a price per share of $10.29 were issued to the former stockholders of Lazydays RV in conjunction with the Mergers for a total value of $29,400.Simultaneous with the Mergers, in addition to the Series A Preferred Stock and warrants issued in the PIPE investment, the Company sold 2,653,984 shares of common stock, perpetual non-redeemable pre-funded warrants to purchase 1,339,499 shares of common stock at an exercise price of $0.01 per share, and five-year warrants to purchase 1,630,927 shares of common stock at an exercise price of $11.50 per share for gross proceeds of $34,783. The Company incurred offering costs of $2,065 which was recorded as a reduction to additional paid-in capital in the condensed consolidated balance sheet.The five-year warrants may be exercised for cash or, at the option of the holder, on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act by surrendering the warrants for that number of shares of common stock as determined under the warrants. These warrants may be called for redemption in whole and not in part, at a price2018 Plan.Shares Underlying
OptionsWeighted Average Per Share
Exercise PriceWeighted Average Remaining
Contractual Life (Years)Aggregate Intrinsic
Value (In Thousands)Options outstanding at December 31, 2022 1,052,093 $ 12.34 2.26 $ (427) Granted 94,326 12.38 Cancelled or terminated (349,274) 15.65 Exercised (81,561) 7.91 Options outstanding at March 31, 2023 715,584 11.80 2.36 $ (90) Options vested at March 31, 2023 366,908 11.98 1.86 $ (112) Options vested as of March 31, 2023 and expected to vest after March 31, 2023 715,584 Number of Restricted Stock Units Weighted-Average Grant Date Fair Value Outstanding at December 31, 2022 200,250 $ 14.98 Granted 87,630 12.38 Vested (2,258) 19.88 Outstanding at March 31, 2023 285,622 14.19 holders, if there is a current registration statement in effect with respect to the common stock underlying the warrants. In addition, five-year warrants to purchase 116,376 shares of common stock at an exercise price of $11.50 per share were issued to the placement agent.Unit Purchase OptionsOn November 24, 2015, Andina sold options to purchase an aggregate of 400,000 units (collectively, the “Unit Purchase Options”) to an investment bank and its designees for $100. The Unit Purchase Options are exercisable at $10.00 per unit,activity was as a result of the Merger described in Note 3 – Business Combination and they expire on November 24, 2020. The Unit Purchase Options represent the right to purchase an aggregate of 457,142 shares of common stock (which includes 57,142 shares of common stock issuable for the rights included in the units, as well as warrants to purchase 200,000 shares of common stock for $11.50 per share). The Unit Purchase Options grant to the holders “demand” and “piggy back” registration rights for periods of five and seven years, respectively, with respect to the securities directly and indirectly issuable upon exercise of the Unit Purchase Options. The Unit Purchase Options may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the Unit Purchase Options (the difference between the exercise price of the Unit Purchase Option and the market price of the Unit Purchase Options and the underlying shares of common stock) to exercise the Unit Purchase Options without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the Unit Purchase Options or the underlying rights or warrants.Shares Underlying Warrants Weighted Average
Exercise PriceWarrants outstanding December 31, 2022 2,865,068 $ 11.50 Cancelled or Expired (208,912) 11.50 Exercised (2,656,156) 11.50 Warrants outstanding March 31, 2023 — — 15, 2018, holders of Andina warrants exchanged their existing warrants to purchase 2,155,000 shares of common stock for warrants to purchase 2,155,000 shares of Company common stock at an exercise price of $11.50 per share and a contractual life of five years from the date of the Mergers. If a registration statement covering the 2,000,000 of the shares issuable upon exercise of the public warrants is not effective, warrant holders may, until such time as31, 2023, there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis. The warrants may be called for redemption in whole and not in part, at a price of $0.01 per warrant, if the last reported sales price of the Company’s common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, if there is a current registration statement in effect with respect to the shares underlying the warrants. Of the warrants to purchase 2,155,000 shares of common stock originally issued by Andina, 155,000 are not redeemable and are exercisable on a cashless basis at the holder’s option.Additionally, warrants to purchase 2,522,458 shares of common stock were issued with the PIPE Investment, including warrants issued to the investment bank but excluding prefunded warrants.The Company had the following activity related to shares underlying warrants: Shares
Underlying
Warrants Weighted
Average
Exercise Price Warrants outstanding March 15, 2018 - $ - Granted 4,677,458 11.50 Cancelled or Expired - - Exercised - - Warrants outstanding March 31, 2018 4,677,458 $ 11.50 The table above excludes300,357 perpetual non-redeemable prefunded warrants to purchase 1,339,499 shares of common stockoutstanding with an exercise price of $0.01 per share. The table also excludes warrantsThere was no activity during the quarter ended March 31, 2023.purchase 200,000 sharesbe recognized over a weighted average period of common stock which1.5 years.issuable upon exercisesummarized into three broad categories:the Unit Purchase Options.Stock OptionsStock option activity is summarized below: Shares
Underlying
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic Value Options outstanding at March 15, 2018 - $ - Granted 3,687,762 11.10 Cancelled or terminated (14,218 ) 11.10 Exercised - - Options outstanding at March 31, 2018 3,673,544 $ 11.10 4.96 $ - Options exercisable at March 31, 2018 - $ - - $ - Awards with Market ConditionsOn March 16, 2018, the Company granted five-year incentive stock options to purchase 3,573,113 shares of common stock at an exercise price of $11.10 per share to employees pursuantCash, Receivables, Accounts payable and Accrued expenses and other current liabilities approximate their fair values due to the 2018 Plan, including 1,458,414 shares underlyingshort-term nature of their terms.CEO’s stock options and 583,366 shares underlying the CFO’s stock options. A set percentagequarter ended March 31, 2023.the stock options shall vest upon the volume weighted average price (“VWAP”) of the common stock, as definedan asset impairment charge recorded in the option agreements, being equalquarter ended March 31, 2023.greater thanwere traded with insufficient volume and therefore represented Level 3 financial instruments that are valued using a specified price per share for at least thirty (30) out of thirty-five (35) consecutive trading days, as follows and are exercisable only to the extent that they are vested: 30% of the options shall vest upon exceeding $13.125 per share; an additional 30% of the options shall vest upon exceeding $17.50 per share; an additional 30% of the options shall vest upon exceeding $21.875 per share; and an additional 10% of the options shall vest upon exceeding $35.00 per share; provided that the option holder remains continuously employed by the Company (and/or any of its subsidiaries) from the grant date through (and including) the relevant date of vesting.awardsPIPE warrant liability was as follows:December 31, 2022 Carrying
AmountLevel 1 Level 2 Level 3 PIPE Warrants $ 742 $ 742 $ — $ — Private Warrants 164 — — 164 Total $ 906 $ 742 $ — $ 164 condensed consolidated statementsLevel 3 PIPE warrant liability were as follows:Three months ended March 31, 2023 Year ended December 31, 2022 Balance at December 31, 2022 $ 164 $ 1,690 Measurement adjustment (164) (1,526) Balance at March 31, 2023 $ - $ 164 materallymaterially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to:●The Company’s business is affected by the availability of financing to it and its customers;●Fuel shortages, or high prices for fuel, could have a negative effect on the Company’s business;●The Company’s success will depend to a significant extent on the well being, as well as the continued popularity and reputation for quality, of the Company’s manufacturers, particularly, Thor Industries, Inc., Tiffin Motorhomes, 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 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 opening or acquiring new retail locations could have a material adverse effect on the Company’s business, financial 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.●The Company’s failure to successfully order 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 condition 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 and this 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 may not be able to satisfy its debt obligations upon the occurrence of a change in control under the M&T 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 documentation governing the Company’s M&T Facility contain restrictive covenants that may impair the Company’s ability to access sufficient capital and operate its business.●Natural disasters, 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, which depend on third party lenders and insurance companies. The Company cannot assure you that third party lending institutions will continue to provide financing for RV purchases.●If the Company is unable to retain senior executives and attract and retain other qualified employees, the Company’s business might be adversely affected.●The Company’s business depends on its ability to meet its labor needs.●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’s failure 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 the Company may be accused of 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 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 interrupt its operations, compromise its reputation, 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 could adversely affect the Company’s financial results.●The Company may be subject to product liability claims if people or property are harmed by the products the Company sells.●The Company may be named in litigation, which may result in substantial costs and reputational 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.●Nasdaq may delist the Company’s common stock on its exchange, which could limit investors’ ability to make transactions in the Company’s common stock and subject the Company to additional trading restrictions.●The Company’s ability to request indemnification from the stockholders for damages arising out of the business combination are limited in certain instances to those claims where damages exceed $1.0 million and is limited to the cash and shares placed in escrow.●The Company’s outstanding convertible preferred stock, warrants and options may have an adverse effect on the market price of our common stock.●We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.●The conversion of the Series A Preferred Stock into Company common stock may dilute the value for the other holders 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 nominate two members to the Company’s board of directors. As a result, these holders may influence the composition of the board of directors of the Company and future actions taken by the board of directors of the Company.●The holders of the Series A Preferred Stock have certain rights that may not allow the Company to take certain actions.The following discussion and analysisindustry trends, including anticipated national new recreational vehicle (“RV”) wholesale shipments; our financial conditiongross profit and results of operations should be read together with our financial statementsall projections;related notes included in Part I, Item 1 of this Form 10-Q, as well as our Form 10 Information filed with the Securities and Exchange Commission on March 21, 2018 on Form 8-K.Business OverviewOverviewAndina 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’s business. Accordingly, Lazydays Holdings, Inc. is now a holding company operating through its direct and indirect subsidiaries.Company HistoryAndina Acquisition Corp. II was formed as an exempted company incorporatedmanage inventory levels to reflect consumer demand;Cayman Islands on July 1, 2015 for the purposeplanned integration, success and growth of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization oracquired dealerships and greenfield locations;similar business combination with one or more target businesses.From the consummationdebt agreements;the initial public offering 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 Acquisition Corp. II, 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. and solely for certain purposes set forthcapital expenditures in the Merger Agreement, A. Lorne Weil (the “Merger Agreement”). future;Merger Agreement providedrepurchase of shares under our share repurchase program; anda business combination transaction by means of (i) the merger of Andina withcustomer retention, growth, market position, financial results 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’s stockholders and the shareholders of Andina became stockholders of Holdco and the name of Holdco was changed to “Lazydays Holdings, Inc.”For the purposes of this Management Discussion and Analysis of Financial Condition and Results of Operations, we combined the results of Lazy Days’ R.V. Center, Inc. (the “Predecessor”) for the period from January 1, 2018 to March 14, 2018 with the results of Lazydays Holdings, Inc. (the “Successor”) for the period from March 15, 2018 to March 31, 2018.Our BusinessThe Company operates Recreation Vehiclerisk management.offersoffer a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. The Company generatesWe generate revenue by providing RV owners and outdoor enthusiasts a full spectrum of products: RV sales, RV-repairRV repair and services, financing and insurance products, third-party protection plans, after-market parts and accessories RV rentals and RV camping. The Company providescamping facilities. We provide these offerings through itsour Lazydays branded dealerships. Lazydays is known nationally as The RV AuthorityTM , a registered trademark that has been consistently used by the Company in its marketing and branding communications since 2013. In this Quarterly Report on Form 10-Q, we refer to Lazydays Holdings, Inc. as “Lazydays,” the “Company,” “Holdco,” “we,” “us,” “our,” and similar words.The Company believes, basedit operates one ofwe believe we operate the world’s largest RV dealerships,dealership, measured in terms of on-site inventory, located on 126 acres outside Tampa, FL.Florida. We also have dealerships located at The Company also operates RV dealershipsVillages, Florida; Tucson and Phoenix, Arizona; two near Minneapolis, Minnesota; Knoxville, Nashville and Maryville, Tennessee; Loveland and Denver, Colorado; Elkhart and Burns Harbor, Indiana; Portland, Oregon; Vancouver, Washington; Milwaukee, Wisconsin; Tulsa, Oklahoma, and Las Vegas, Nevada. Additionally, Lazydays has operated a dedicated Service Center located near Houston, Texas since early 2020, which was expanded to include a sales center in Tucson, AZ and three cities in Colorado, Loveland, Denver and Longmont. the fourth quarter of 2022.selectionselections of leading RV brands in the nation, featuring more than 2,5004,000 new and pre-owned RVs. The Company has over 300We have more than 575 service bays, across all locations and each location has an RV parts and accessories stores at all locations. Lazydays also has RV rental fleets in all three markets and availability to two on-site campgrounds with over 700 RV campsites. The Company welcomes over 500,000 visitors to its dealership locations annually, and employs over 700store. We employ approximately 1,500 people at the five facilities. The Company’sour nineteen dealership locations. Our locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. The Company believes its dealershipWe believe our locations are strategically located in key RV markets. Based on information collected by the Companyus from reports prepared by Statistical Surveys, these key RV markets (Florida, Colorado, Arizona, Minnesota, Tennessee, Indiana, Oregon, Washington, Wisconsin, Oklahoma and Arizona)Texas) account for a significant portion of new RV units sold on an annual basis in the U.S. The Company’sOur dealerships in these key markets attract customers from all states, except Hawaii.The Company attractsthe Company acquireswe acquire customers, through a transaction, those customers become part of the Company’sour customer database where the Company leverages customizedwe leverage customer relationship management (“CRM”) tools and analytics to actively engage, market and sell itsour products and services.Recent DevelopmentsPIPE InvestmentSimultaneously withThree months ended March 31, (In thousands, except per vehicle data) 2023 2022 Change % Change Revenues New vehicle retail $ 176,747 $ 217,436 $ (40,689) (18.7) % Pre-owned vehicle retail 84,775 116,500 (31,725) (27.2) % Vehicle wholesale 1,708 6,524 (4,816) (73.8) % Finance and insurance 16,881 21,635 (4,754) (22.0) % Service, body and parts and other 15,545 14,066 1,479 10.5 % Total revenues $ 295,656 $ 376,161 $ (80,505) (21.4) % Gross profit New vehicle retail $ 23,416 $ 44,831 $ (21,415) (47.8) % Pre-owned vehicle retail 17,247 28,217 (10,970) (38.9) % Vehicle wholesale (13) (55) 42 (76.4) % Finance and insurance 16,188 20,938 (4,750) (22.7) % Service, body and parts and other 8,364 7,346 1,018 13.9 % LIFO (1,311) (2,460) 1,149 (46.7) % Total gross profit $ 63,891 $ 98,817 $ (34,926) (35.3) % Gross profit margins New vehicle retail 13.2 % 20.6 % (740) bps Pre-owned vehicle retail 20.3 % 24.2 % (390) bps Vehicle wholesale (0.8) % (0.8) % — bps Finance and insurance 95.9 % 96.8 % (90) bps Service, body and parts and other 53.8 % 52.2 % 160 bps Total gross profit margin 21.6 % 26.3 % (470) bps Total gross profit margin (excluding LIFO) 22.1 % 26.9 % (480) bps Retail units sold New vehicle retail 1,980 2,270 (290) (12.8) % Used vehicle retail 1,304 1,478 (174) (11.8) % Total retail units sold 3,284 3,748 (464) (12.4) % Average selling price per retail unit New vehicle retail $ 89,266 $ 95,787 $ (6,521) (6.8) % Used vehicle retail 65,012 78,823 (13,811) (17.5) % Average gross profit per retail unit (excluding LIFO) New vehicle retail $ 11,826 $ 19,749 $ (7,923) (40.1) % Used vehicle retail 13,227 19,091 (5,864) (30.7) % Finance and insurance 4,929 5,586 (657) (11.8) % closingmonths when operations occurred in both periods. For example, a store acquired in February 2022 would be included in same store operating data beginning in March 2023, after its first complete comparable month of the Mergers, we consummated a series of securities purchase agreements with institutional investorsoperations. The first quarter operating results for the salesame store comparisons would include results for that store in only the month of convertible preferred stock, common stock,March for both comparable periods.Three months ended March 31, ($ in thousands, except per vehicle data) 2023 2022 Change % Change Revenues New vehicle retail $ 167,966 $ 217,436 $ (49,470) (22.8) % Pre-owned vehicle retail 81,961 116,500 (34,539) (29.6) % Vehicle wholesale 1,708 6,524 (4,816) (73.8) % Finance and insurance 16,129 21,635 (5,506) (25.4) % Service, body and parts and other 14,950 14,066 884 6.3 % Total revenues $ 282,714 $ 376,161 $ (93,447) (24.8) % Gross profit New vehicle retail $ 22,336 $ 44,831 $ (22,495) (50.2) % Pre-owned vehicle retail 16,672 28,217 (11,545) (40.9) % Vehicle wholesale (13) (55) 42 (76.4) % Finance and insurance 15,466 20,938 (5,472) (26.1) % Service, body and parts and other 8,032 7,346 686 9.3 % LIFO (1,311) (2,460) 1,149 (46.7) % Total gross profit $ 61,182 $ 98,817 $ (37,635) (38.1) % Gross profit margins New vehicle retail 13.3 % 20.6 % (730) bps Pre-owned vehicle retail 20.3 % 24.2 % (390) bps Vehicle wholesale (0.8) % (0.8) % — bps Finance and insurance 95.9 % 96.8 % (90) bps Service, body and parts and other 53.7 % 52.2 % 150 bps Total gross profit margin 21.6 % 26.3 % (470) bps Total gross profit margin (excluding LIFO) 22.1 % 26.9 % (480) bps Retail units sold New vehicle retail 1,841 2,270 (429) (18.9) % Used vehicle retail 1,248 1,478 (230) (15.6) % Total retail units sold 3,089 3,748 (659) (17.6) % Average selling price per retail unit New vehicle retail $ 91,236 $ 95,787 $ (4,551) (4.8) % Used vehicle retail 65,674 78,823 (13,149) (16.7) % Average gross profit per retail unit (excluding LIFO) New vehicle retail $ 12,132 $ 19,749 $ (7,617) (38.6) % Used vehicle retail 13,359 19,091 (5,732) (30.0) % Finance and insurance 5,007 5,586 (579) (10.4) % warrantsGross Margin DiscussionHoldconew RVs across a wide range of price points, classes and floor plans, from entry level travel trailers to Class A motorhomes, at our dealership locations and on our website. We have strong strategic alliances with leading RV manufacturers. The core brands that we sell, representing 99.9% of the new vehicles that we sold in the first quarter of 2023, are manufactured by Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc.aggregate purchase price of $94.8 million (the “PIPE Investment”) in a private placement. At the closing, Holdco issued an aggregate of 600,000 shares of Series A Preferred Stock of Holdco (with a stated value of $60.0 million), 2,653,984 shares of common stock, 1,339,499 prefunded warrants, and warrantsopportunity to generate sales to customers unable or unwilling to purchase 2,522,458 Holdco shares exercisablea new vehicle, to sell models other than the store’s new vehicle models, access additional used vehicle inventory through trade-ins and increase sales from finance and insurance products. We sell a comprehensive selection of pre-owned RVs at $11.50 per share. The investorsour dealership locations. We have established a goal to reach a used to new ratio of 1:1. Strategies to achieve this target include reducing wholesale sales, procuring additional used RV inventory direct from consumers and selling deeper into the pre-owned RV spectrum. We achieved a used to new ratio of 0.67 :1 in the first quarter of 2023.PIPE Investment were granted certain registration rights as set forthfirst quarter of 2023 compared to the same quarter of 2022 due primarily to a 11.8% decrease in retail units sold and a 17.5% decrease in average selling price per retail unit. The decrease in retail units sold was primarily due to a contracting market after coming off a year of all time highs. The decrease in average selling price per retail unit was primarily due to a shift towards more towable units and less high price-tag motorized units, along with dealer discounts.securities purchase agreements.Series A Preferred Stock ranks seniordecline in gross margins was primarily due to all outstanding common stocksupply normalizing after increased demand during 2022 saw inventories depleted, which led to higher margins in 2022.Company. Holderssame quarter of 2022 due primarily to the Series A Preferred Stock are entitleddecrease in units sold and a 390 basis point decrease in gross margins.vote onthe RV lifestyle and we attempt to arrange financing for every vehicle we sell. We also offer related products such as extended warranties, insurance contracts and other maintenance products.as-converted11.8% decrease in F&I per unit. The decreases in F&I per unit was driven by a decrease in penetration rate due to rising interest rates resulting in more cash buyers.together with the holders of the Common Stock,finance and notinsurance revenue decreased $5.5 million, or 25.4%, primarily due to a 17.6% decrease in units sold, as well as a separate class,10.4% decrease in F&I per unit due to rising interest rates resulting in more cash buyers.Three months ended March 31, Overall 2023 2022 Change % Change F&I per unit $ 4,929 $ 5,586 $ (657) (11.8) % F&I penetration rate 61.2 % 65.0 % (380) bps Same store F&I per unit $ 5,007 $ 5,586 $ (579) (10.4) % F&I penetration rate 61.3 % 65.0 % (370) bps any annualall of our dealership locations. We employ over 300 highly skilled technicians, many of them certified by the Recreational Vehicle Industry Association (“RVIA”) or special meetingthe National RV Dealers Association (“RVDA”) and we are equipped to offer comprehensive services and perform OEM warranty repairs for most RV components. Earnings from service, body and parts have historically been more resilient during economic downturns, when owners have tended to hold and repair their existing RVs rather than buy a new one.stockholders. However,focus and area of opportunity to grow additional earnings. Our service, body and parts revenue and gross profit increased 10.5% and 13.9%, respectively, during the Certificatefirst quarter of Designation2023 compared to the same quarter of 2022 primarily due to more units in operation and an increase in warranty rates.Three months ended March 31, ($ in thousands) 2023 2022 Change % Change Depreciation and amortization $ 4,403 $ 4,084 $ 319 7.8 % Series A Convertible Preferred Stock provides the holders of the Series A Convertible Preferred Stock with a separate vote relating to certain actions. Each share of Series A Preferred Stock is convertible at the holder’s election at any time, at an initial conversion price of $10.0625 per share, subject to adjustment (as applicable, the “Conversion Price”). Upon any conversion of the Series A Preferred Stock, the Company will be required to pay each holder converting shares of Series A Preferred Stock all accruedincrease in Property and unpaid dividends, in either cash or shares of Common Stock, at the Company’s option. The Conversion Price will be subject to adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain dilutive issuances.Dividends on the Series A Preferred Stock will accrue at an initial rate of 8% per annum (the “Dividend Rate”), compounded quarterly, on each $100 of Series A Preferred Stock (the “Issue Price”) and be payable quarterly in arrears. Accrued and unpaid dividends, until paid in full in cash, will accrue at the then applicable Dividend Rate plus 2%. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event Holdco’s senior indebtedness less unrestricted cash during any trailing twelve month period ending at the end of any fiscal quarter is greater than 2.25 times EBITDA. The Dividend Rate will be reset to 8% at the end of the first fiscal quarter when Holdco’s senior indebtedness less unrestricted cash during the trailing twelve month period ending at the end of such quarter is less than 2.25 times EBITDA.If, at any time following the second anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of the Company’s Common Stock equals or exceeds $25.00 (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, the Company may elect to force the conversion of any or all of the outstanding Series A Preferred Stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, the Company may elect to redeem all, but not less than all, of the outstanding Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the Series A Preferred Stock, each holder of Series A Preferred Stock has the right to require the Company to redeem all of the holder’s outstanding shares of Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends.In the event of any liquidation, merger, sale, dissolution or winding up of the Company, holders of the Series A Preferred Stock will have the right to (i) payment in cash of the Issue Price plus all accrued and unpaid dividends, or (ii) convert the shares of Series A Preferred Stock into Common Stock and participate on an as-converted basis with the holders of Common Stock.So long as the Series A Preferred Stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the outstanding Series A Preferred Stock, shall have the right to designate two members to the board of directors.M&T Credit FacilityOn March 15, 2018, the Company replaced its existing debt agreements with Bank of America with a $200,000 Senior Secured Credit Facility with M&T Bank (the “M&T Facility”). The M&T Facility includes a $175,000 Floor Plan Facility (the “M&T Floor Plan Line of Credit”), a $20,000 Term Loan (the “M&T Term Loan”), and a $5,000 Revolving Credit Facility (the “M&T Revolver”). The M&T Facility will mature on March 15, 2021. The M&T Facility requires the Company to meet certain financial covenants and is secured by substantially all assets of the Company.The M&T Floor Plan Line of Credit may be used to finance new vehicle inventory, but only $45,000 may be used to finance pre-owned vehicle inventory and only $4,500 may be used to finance rental units. Principal becomes due upon the sale of the respective vehicle. The M&T Floor Plan Line of Credit shall accrue interest at either (a) the fluctuating 30-day LIBOR rate plus an applicable margin which ranges from 2.00% to 2.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus an applicable margin ranging from 1.00% to 1.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility). The Base Rate is defined in the M&T Facility as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month LIBOR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of 0.15%.The M&T Term Loan will be repaid in equal monthly principal instalments of $242 plus accrued interest through the maturity date. At the maturity date, the Company will pay a principal balloon payment of $11,300 plus any accrued interest. The M&T Term Loan shall bear interest at (a) LIBOR plus an applicable margin of 2.25% to 3.0% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00% based on the total leverage ratio (as defined in the M&T Facility).The M&T Revolver allows the Company to draw up to $5,000. The M&T Revolver shall bear interest at (a) 30-day LIBOR plus an applicable margin of 2.25% to 3.0% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00% based on the total leverage ratio (as defined in the M&T Facility). The M&T Revolver is also subject to the unused commitment fees at rates varying from 0.25% to 0.50% based on the total leverage ratio (as defined in the M&T Facility).As of March 31, 2018, the payment of dividends by the Company (other than from proceeds of revolving loans) was permitted under the M&T Facility, so long as at the time of payment of any such dividend, no event of default existed under the M&T Facility, or would result from the payment of such dividend, and so long as any such dividend was permitted under the M&T Facility.312018 Long-Term Incentive Equity PlanOn March 15, 2018, we adopted the 2018 Long-Term Incentive Equity Plan (the “2018 Plan”). The 2018 Plan reserves up to 13% of the Holdco shares outstanding on a fully diluted basis. The 2018 Plan is administered by the Compensation Committee of the board of directors, and provides for awards of options, stock appreciation rights, restricted stock, restricted stock units, warrants or other securities which may be convertible, exercisable or exchangeable for or into common stock. If the fair market value per share of common stock immediately following the closing of the Mergers is greater than $8.75 per Holdco Share, the number of Holdco shares authorized for awards under the 2018 Plan shall be increased by a formula (as defined in the 2018 Plan) not to exceed 18% of Holdco shares then outstanding on a fully diluted basis.On March 16, 2018, we granted 3,573,113 stock options to employees under the 2018 Plan, including 1,458,414 to the CEO and 583,366 to the CFO. The options have an exercise price of $11.10 and a contractual life of five years. The options shall vest as follows and shall be exercisable only to the extent that it has vested: 30% of the option shall vest once the volume weighted average price (“VWAP”), as defined in the options agreement, is equal to or greater than $13.125 per Holdco share for at least thirty (30) out of thirty-five (35) consecutive trading days; an additional 30% of the options shall vest once the VWAP is equal to or greater than $17.50 per Holdco share for at least thirty (30) out of thirty-five (35) consecutive trading days; an additional 30% of the option shall vest once the VWAP is equal to or greater than $21.875 per share for at least thirty (30) out of thirty-five (35) consecutive trading days; and an additional 10% of the option shall vest once the VWAP is equal to or greater than $35 per share for at least thirty (30) out of thirty-five (35) consecutive trading days; provided that the option-holder remains continuously employed by the Company (and/or any of its subsidiaries) from the grant date through (and including) the relevant date of vesting.How We Generate RevenueWe derive our revenues from sales of new units, sales of pre-owned units, and sales of parts, service, and other. Parts, service and other consists of RV parts, service and repairs, commissions earned on sales of third-party financing and insurance products, visitor fees at our Tampa campground and food facilities, and other revenues. During the three months ended March 31, 2018 and 2017, we derived our revenues from these categories in the following percentages: Percentages of Revenues Combined
Successor and Predecessor Predecessor For the Three Months Ended March 31, 2018 2017 New vehicles 55.7 % 50.8 % Pre-owned vehicles 33.3 % 37.9 % Parts, service, and other 11.0 % 11.3 % 100.0 % 100.0 % We believe that we are the nation’s largest single point of distribution for RVs and a primary retail outlet for most of the leading manufacturers in the industry. New and pre-owned RV sales accounted for approximately 89% of total revenues in each of the three months ended March 31, 2018 and 2017. These revenue contributions have remained relatively consistent year over year.Key Performance IndicatorsGross Profit and Gross Margins. Gross profit is our total revenue less our total costs applicable to revenue. The vast majority of our cost applicable to revenues is related to the cost of vehicles. New and pre-owned vehicles have accounted for 97% of the cost of revenues for the three months ended March 31, 2018 and 2017. Gross margin is gross profit as a percentage of revenue.Our gross profit is variable in nature and generally follows changes in our revenue. For the three months ended March 31, 2018 and 2017, gross profit was $38,940 and $35,661, respectively, and gross margin was 21.9% and 21.0% in each of the three month periods. Our vehicle gross margins are expected to be negatively impacted over the next two quarters following the Mergersequipment as a result of our LIFO-based inventory being written up to fair market value pursuant toseveral acquisitirequirementsexpansion of purchase accounting.Our gross margins on pre-owned vehicles are typically higher than gross margins onseveral dealerships, and opening of new vehicles, on a percentage basis. During the three months endedstores since March 31, 20182022.2017, the gross margins were also favorably impacted by parts, service, and other revenue whose combined revenues were 11.0% and 11.3%, respectively, of total revenues. Our margins on these lines of business typically carry higher gross margin percentages than our new and pre-owned vehicle sales.SG&A as a percentage of Gross Profit.Administrativeas a percentage of gross profit allows us to monitor our expense control over a period of time. SG&A consistsconsist primarily of wage-related expenses, selling expenses related to commissions and advertising, lease expenses, and corporate overhead expenses. Salaries, commissionsexpenses, transaction costs, and benefits represent the largest component of our total selling, general and administrativestock-based compensation expense, and averages approximately 53%do not include depreciation and amortization expense.Three months ended March 31, ($ in thousands) 2023 2022 Change % Change SG&A expense $ 53,532 $ 56,104 $ (2,572) (4.6) % SG&A as percentage of gross profit 83.8 % 56.8 % 2,700 bps total selling, general2023 compared to the first quarter of 2022 was primarily related to decreased marketing expenses, reduced headcount and administrative expense.We calculatelower commissions paid due to fewer units sold. Offsetting these decreases was an impairment charge of $0.6 million related to the write-off of capitalized software that we determined we would not utilize. expenses as a percentage of gross profit by dividing SG&A expenses forin the period by total gross profit. Forfirst quarter of 2023 compared to the three months ended March 31, 2018 and 2017, SG&A, excluding transaction costs, as a percentagefirst quarter of 2022 was primarily related to lower gross profit was 74.0% and 75.9%, respectively. We expect that our the impairment charge mentioned above.expenses willincluded stock-based compensation of $0.8 million and $0.5 million in the first quarters of 2023 and 2022, respectively. The increase marginally in future periods in partstock-based compensation was primarily due to additional legal, accounting, insurance and other expenses that we expect to incur as a result of being a public company, including compliance withawards granted during the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act and the related rules and regulations.Adjusted EBITDA. Adjusted EBITDA is not a U.S. Generally Accepted Accounting Principle (“GAAP”) financial measure, but it is one of the primary non-GAAP measure management uses to evaluate the financial performance of our business. Adjusted EBITDA is also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. We use Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance as follows:●as a measurement of operating performance to assist us in comparing the operating performance of our business on a consistent basis, and remove the impact of items not directly resulting from our core operations;●for planning purposes, including the preparation of our internal annual operating budget and financial projections;●to evaluate the performance and effectiveness of our operational strategies; and●to evaluate our capacity to fund capital expenditures and expand our business.We define Adjusted EBITDA as net income excluding depreciation and amortization, non-floorquarter.Three months ended March 31, ($ in thousands) 2023 2022 Change % Change Floor plan interest expense $ 5,531 $ 976 $ 4,555 466.7 % income, income tax expense stock-based compensation, transaction costsin the first quarter of 2023 compared to the same quarter of 2022 was primarily related to increased inventory levels to normalize inventory, higher interest rates, and the flooring of inventory related to several acquisitions.Three months ended March 31, ($ in thousands) 2023 2022 Change % Change Other interest expense $ 1,700 $ 1,936 $ (236) (12.2) % supplementalinterest expense was primarily due to the pay off of our Mortgage loan facility and our Term loan in February 2023 for $12.1 million as well as the purchase of our Nashville and Elkhart dealership properties in December 2022. These properties were previously recorded as finance leases.which forto the periods presented includes LIFO adjustments, and gain or loss on sale of property and equipment. We believe Adjusted EBITDA, when considered alongoutstanding PIPE warrants issued in connection with other performance measures, is a useful measure as it reflects certain operating driversour SPAC merger in March 2018. The decrease in the fair value of the business, such as sales growth, operating costs, sellingoutstanding warrants was $0.9 million and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations, or a measure comparable to net income as it does not take into account certain requirements such as non-recurring gains and losses which are not deemed to be a normal part of the underlying business activities.Our use of Adjusted EBITDA may not be comparable to other companies within the industry. We compensate for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our business performance. In addition, capital expenditures, which impact depreciation and amortization, interest expense, and income tax expense, are reviewed separately by management. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income, a reconciliation of Adjusted EBITDA Margin to net income margin, and a further discussion of how we utilize this non-GAAP financial measure, see “Non-GAAP Financial Measures” below.33Results of OperationsThe following table sets forth information comparing the components of net income for the three months ended March 31, 2018 and 2017.Summary Financial Data(in thousands) Combined Successor and Predecessor Predecessor Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited) Revenues New and pre-owned vehicles $ 158,278 $ 150,831 Parts, service and other 19,566 19,134 Total revenue 177,844 169,965 Cost of revenues New and pre-owned vehicles 135,319 130,845 Parts, service and other 3,585 3,459 Total cost of revenues 138,904 134,304 Gross profit 38,940 35,661 Transaction costs 3,244 46 Selling, general, and administrative expenses 28,799 27,033 Income from operations 6,897 8,582 Other income/expenses Gain on sale of property and equipment 1 - Interest expense (2,704 ) (2,162 ) Income before income tax expense 4,194 6,420 Income tax expense (1,167 ) (2,445 ) Net income $ 3,027 $ 3,975 Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017RevenueRevenue increased by approximately $7.8 million, or 4.6%, to $177.8 million from $170.0$1.5 million for the three months ended March 31, 20182023 and 2017,2022, respectively. This growth primarily resulted from a 5.1% increaseThe fair value of the warrants fluctuated with changes in the average selling price per unit on newvalue of our Common stock. All of the warrants were exercised or expired during the first quarter of 2023 and, pre-owned vehicles.New Vehicles and Pre-Owned Vehicles RevenueRevenue from our new and pre-owned vehicles sales increased by approximately $7.5 million, or 4.9%, to $158.3 million from $150.8 for the three months endedaccordingly, as of March 31, 2018 and 2017, respectively.Revenue2023, no PIPE warrants remained outstanding.Three months ended March 31, ($ in thousands) 2023 2022 Change % Change Income tax benefit (expense) $ 143 $ (8,973) $ 9,116 (101.6) % Effective tax rate 34.1 % 24.1 % new vehicle sales increased by approximately $12.7 million, or 14.7%, to $99.1 million from $86.4 million for the three months ended March 31, 2018 and 2017, respectively. This wasstatutory rate primarily attributable to an increase in the number of new vehicles sold from 1,077 to 1,205 due to strong customer demand. The average revenue per unit sold was approximately $82,300 per unit and increased by 2.5% for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017.Revenue from pre-owned vehicle sales decreased by approximately $5.2 million, or 8.2%, to $59.2 million from $64.4 million for the three months ended March 31, 2018 and 2017, respectively. For the three months ended March 31, 2018 compared to the three months ended March 31, 2017, there was a decrease in the number of retail pre-owned vehicles sold from 980 to 849 and a decrease in the number of wholesale pre-owned vehicles sold from 307 to 185. The decline in retail pre-owned units sold was substantially offset by a 14.7% increase in the average selling price per unit. However, the decline in wholesale units resulted in a $4.9 million decrease in wholesale sales.Parts, Service and Other RevenueParts, service, and other revenue consists of sales of parts, accessories, and related services. It also consists of finance and insurance revenues as well as campground and other revenues. Parts, service and other revenue increased by approximately $0.5 million quarter over quarter, or 2.3%, to $19.6 million from $19.1 million for the three months ended March 31, 2018 and 2017, respectively.As a component of parts, service and other revenue, sales of parts, accessories and related services decreased by approximately $0.3 million, or 4.4%, to $8.0 million from $8.3 million. The primary reason for the decrease is that the Company no longer operated its e-commerce store effective September 2017. This decrease in revenue is the result of the loss of $0.5 million in e-commerce revenue generated during the three months ended March 31, 2017 partially offset by increases in parts and services revenue of $0.2 million due to increased volume.Finance and insurance revenue increased by approximately $0.8 million, or 9.1%, to $9.3 million from $8.5 million for the three months ended March 31, 2018 as compared to March 31, 2017, respectively, primarily due to higher sales volume in new vehicles, partially offset by an increase in chargebacks due to cancellations and early payoffs for the three months ended March 31, 2018.Campground and other revenue, which includes RV rental revenue, remained flat at approximately $2.3 million for each three month period presented.Gross ProfitGross profit consists of gross revenues less our cost of sales and services. Gross profit increased by approximately $3.2 million, or 9.2%, to $38.9 million from $35.7 million for the three months ended March 31, 2018 and 2017, respectively. This increase was primarily attributable to the increase in revenue discussed above.New and Pre-Owned Vehicles Gross ProfitNew and pre-owned vehicle gross profit increased 14.9% to $23.0 million from $20.0 million for the three months ended March 31, 2018 and 2017, respectively. The increase in new and pre-owned vehicle gross profit is attributable to a combined 8.8% increase in the average retail revenue per unit sold due to a favorable shift in sales mix in our new product lines.Parts, Service and Other Gross ProfitParts, services and other gross profit increased 2.0% to $16.0 million from $15.7 million for the three months ended March 31, 2018 and 2017, respectively. This was due to an increase in finance and insurance revenues for the reasons described above. Finance and insurance revenues typically carry higher margins than sales of parts, accessories, and related services.Transaction CostsDuring the three months ended March 31, 2018, we incurred one-time transaction costs of approximately $3.2 million related to the Mergers, including $2.7 million incurred on the date of the Mergers.Selling, General and Administrative ExpensesSelling, general, and administrative (“SG&A”) expenses, including depreciation and amortization, increased 6.5% to $28.8 million during the three months ended March 31, 2018, from $27.0 million during the three months ended March 31, 2017. The increase resulted primarily from increases in salary, commissions and benefits expenses, as a result of increases in revenue during the period which drive commissions and bonuses. Salary, commissions, payrollstate income taxes and the excess tax benefits have comprisedon stock awards vesting and options exercised in the majority of our total SG&A expensescurrent period.were equal to 53.1% of SG&A expenses during the three months ended March 31, 2018 as compared to 51.3% during the three months ended March 31, 2017.Interest ExpenseInterest expense increased by approximately $0.5 million, or 25.1%, to $2.7 million from $2.2 millionCapital Resourcesthe three months ended March 31, 2018liquidity and 2017, respectively, primarily due to an increase in interest expense on our floor plan credit facilitycapital resources are for capital expenditures and working capital as well as additional interest incurred on our financing liability.Income TaxesIncome tax expense decreased to $1.2 million during the three months ended March 31, 2018 from $2.4 million during the same period of 2017, due to the decrease in pre-tax income.Non-Gaap Financial Measuresuse certain non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, to enable us to analyze our performance and financial condition, as described in “Key Performance Indicators”, above. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. We believe that these measures are commonly used in the industry to measure performance. We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance, in addition to the standard GAAP-based financial measures.The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of the Company’s financial condition and results of operations together with the consolidated financial statements of the Company and the related notes thereto also included herein.EBITDAis defined as net income excluding depreciation and amortization, interest expense, interest income and income tax expense.Adjusted EBITDA is defined as net income excluding depreciation and amortization, non-floor plan interest expense, interest income, income tax expense, stock-based compensation, transaction costs and other supplemental adjustments which for the periods presented includes LIFO adjustments, and gain or loss on sale of property and equipment.Reconciliations from Net Income per the Condensed Consolidated Statements of Income to Adjusted EBITDA for the three months ended March 31, 2018 and 2017 are shown in the tables below. Combined Successor and Predecessor Predecessor ($ in thousands) Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited) Net income $ 3,027 $ 3,975 Interest expense, net 2,704 2,162 Depreciation and amortization of property and equipment 1,327 1,347 Amortization of intangible assets 286 187 Income tax expense 1,167 2,445 Subtotal EBITDA 8,511 10,116 Floor plan interest expense (1,031 ) (892 ) LIFO adjustment 148 576 Transaction costs 3,244 46 Gain on sale of property and equipment (1 ) - Stock-based compensation 625 119 Adjusted EBITDA $ 11,496 $ 9,965 Combined Successor and Predecessor Predecessor (as percentage of total revenue) Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited) Net income margin 1.7 % 2.3 % Interest expense, net 1.5 % 1.3 % Depreciation and amortization of property and equipment 0.7 % 0.8 % Amortization of intangible assets 0.2 % 0.1 % Income tax expense 0.7 % 1.4 % Subtotal EBITDA margin 4.8 % 6.0 % Floor plan interest expense (0.6 %) (0.5 %) LIFO adjustment 0.1 % 0.3 % Transaction costs 1.8 % 0.0 % Gain on sale of property and equipment (0.0 %) 0.0 % Stock-based compensation 0.4 % 0.1 % Adjusted EBITDA margin 6.5 % 5.9 % Note: Figures in the table may not recalculate exactly due to rounding.Liquidity and Capital ResourcesCash Flow Summary Combined Successor and Predecessor Predecessor ($ in thousands) Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited) Net income $ 3,027 $ 3,975 Non cash adjustments 3,396 1,829 Changes in operating assets and liabilities (687 ) 13,106 Net cash provided by (used in) operating activities 5,736 18,910 Net cash used in investing activites (78,318 ) (710 ) Net cash provided by financing activities 90,870 11,080 Net Increase in Cash $ 18,288 $ 29,280 Net Cash from Operating ActivitiesThe Company generated cash from operating activities of approximately $5.7 million during the three months ended March 31, 2018, compared to cash provided by operating activities of approximately $18.9 million for the three months ended March 31, 2017. Net income decreased by approximately $0.8 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Adjustments for non-cash expenses were $3.4 million for the three months ended March 31, 2018, as compared to $1.8 million for the three months ended March 31, 2017. During the three months ended March 31, 2018, there was approximately $0.7 million of cash used by changes in operating assets and liabilities as compared to $13.1 million of cash provided by changes in operating assets and liabilities during the three months ended March 31, 2017. The fluctuation in operating assets and liabilities was primarily due to changes in the balances of prepaid expenses, accounts receivable, and inventory balances during the three months ended March 31, 2018. The fluctuations in assets and liabilities were primarily due to the decrease in inventory during the three months ended March 31, 2017. The Company sold a greater amount of wholesale inventory during the three months ended March 31, 2017.Net Cash from Investing ActivitiesThe Company used cash in investing activities of approximately $78.3 million during the three months ended March 31, 2018, compared to approximately $0.7 million for the three months ended March 31, 2017. The Company used net cash of approximately $77.5 million for the acquisition of Lazydays R.V. Center, Inc. as well as the purchase of property and equipment of approximately $0.7 million during the three months ended March 31, 2018.Net Cash from Financing ActivitiesThe Company had cash provided by financing activities of approximately $90.9 million during the three months ended March 31, 2018, compared to net cash provided by financing activities of approximately $11.1 million for the three months ending March 31, 2017. During the three months ended March 31, 2018, the Company raised net proceeds of $90.3 million through the PIPE investment through the issuance of common stock, Series A Convertible Preferred Stock, and warrants. During the three months ended March 31, 2018, the Company also received net proceeds of approximately $20.0 million from the proceeds of a new term loan with M&T Bank which was offset by the repayment of approximately $8.8 million of long term debt with Bank of America. The Company also repaid $96.7 million in floor plan notes payable to Bank of America and received net proceeds of $100.8 million from the new floor plan loan with M&T Bank. The Company also made net repayments to Bank of America of $12.2 million during the Predecessor period prior to the Merger. Net cash provided by financing activities for the three months ended March 31, 2017 primarily consisted of $11.7 million of net borrowing under the floor plan loan.Funding Needs and SourcesThe Company hashave historically satisfied itsour liquidity needs through cash flows from operations, borrowings under our credit facilities as well as occasional sale-leaseback arrangements. In addition to these sources of liquidity, potential sources to fund our business strategy include financing of owned real estate, construction loans, and various borrowing arrangements. Cash requirements consist principallyproceeds from debt or equity offerings. We evaluate all of scheduled paymentsthese options and may select one or more of principalthem depending upon overall capital needs and interest on outstanding indebtedness (including indebtedness under its existing floor plan credit facility), the acquisitionavailability and cost of inventory, capital, expenditures, salary and sales commissions and lease expenses.2018, the Company2023, we had total estimated liquidity of $175.1 million, including cash of $41.0 million, $20.0 million of availability on our M&T Revolving Credit facility, $62.5 million available from undrawn floor plan capacity and our floor plan offset account. Additionally, we hold unfinanced real estate of $60.8 million that we estimate could provide liquidity of approximately $33.1 million$51.6 million.Three months ended March 31, (In thousands) 2023 2022 Net (loss) income $ (276) $ 28,284 Non-cash adjustments 5,002 3,154 Changes in operating assets and liabilities (33,558) (48,871) Net cash used in operating activities (28,832) (17,433) Net cash used in investing activities (33,644) (7,896) Net cash provided by financing activities 41,838 16,767 Net decrease in cash $ (20,638) $ (8,562) cash and had working capitaloperating activities in the first quarter of approximately $52.7 million.Capital expenditures include expenditures to extend2023 was primarily for the useful lifebuild up of current facilities and expand operations. Forinventory.three months ended March 31, 2018 and 2017, the Company invested approximately $0.7 million and $0.7 million in capital expenditures, respectively.The Company maintains sizable inventory in order to meet the expectationsmost significant component of its customers and believes that it will continue to require working capital consistent with past experience. Historically, the Company has funded its operations with internally generated cash flow and borrowings. Changes in working capital are driven primarily by profit levels. The Company maintains a floor plan credit facility to finance its vehicle inventory. At times, the Company has made repayments on its existing floor plan credit facility using excessour cash flow from operations.As a result of the Mergers on March 15, 2018, approximately $105.5 million of incremental cash was made available from various sources, of which $86.7 million was paid out to the Stockholders, leaving a minimum (after payment of transaction expenses) of approximately $9.0 million of cash available for future opportunities, including potential acquisitions.M&T Credit FacilityOn March 15, 2018, the Company replaced its existing debt agreements with Bank of America with a $200,000 Senior Secured Credit Facility (the “M&T Facility”). The M&T Facility includes a $175,000 M&T Floor Plan Line of Credit, a $20,000 M&T Term Loan, and a $5,000 M&T Revolver. The M&T Facility will mature on March 15, 2021. The M&T Facility requires the Company to meet certain financial covenants and is secured by substantially all assets of the Company.The M&T Floor Plan Line of Credit may be used to finance new vehicle inventory, but only $45,000 may be used to finance pre-owned vehicle inventory and only $4,500 may be used to finance rental units. Principal becomes due upon the sale of the respective vehicle. The M&T Floor Plan Line of Credit shall accrue interest at either (a) the fluctuating 30-day LIBOR rate plus an applicable margin which ranges from 2.00% to 2.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus an applicable margin ranging from 1.00% to 1.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility). The Base Rate is defined in the agreement as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month LIBOR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of 0.15%.The M&T Term Loan will be repaid in equal monthly principal installments of $242 plus accrued interest through the maturity date. At the maturity date, the Company will pay a principal balloon payment of $11,300 plus any accrued interest. The M&T Term Loan shall bear interest at (a) LIBOR plus an applicable margin of 2.25% to 3.00% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25% to 2.00% based on the total leverage ratio (as defined in the M&T Facility).The M&T Revolver allows the Company to draw up to $5,000. The M&T Revolver shall bear interest at (a) 30-day LIBOR plus an applicable margin of 2.25% to 3.0% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25% to 2.00% based on the total leverage ratio (as defined in the M&T Facility). The M&T Revolver is also subject to the unused commitment fees at rates varying from 0.25% to 0.50% based on the total leverage ratio (as defined).2018, there2023, our new vehicle days’ supply was $99,926 outstanding under207 days which was 43 days lower than our days’ supply as of December 31, 2022. As of March 31, 2023, our days’ supply of pre-owned vehicles was 77 days, which was 1 day lower than our days’ supply at December 31, 2022. We calculate days’ supply of inventory based on current inventory levels and a 90 day historical cost of sales level. We continue to focus on managing our unit mix and maintaining appropriate levels of new and used vehicle inventory.Three months ended March 31, (In thousands) 2023 2022 Change Net cash used in operating activities, as reported $ (28,832) $ (17,433) $ (11,399) Net (repayments) borrowings on floor plan notes payable (6,495) 38,066 (44,561) Minus borrowings on floor plan notes payable associated with acquired new inventory (4,271) — (4,271) Plus net increase to floor plan offset account 40,000 — 40,000 Net cash (used in) provided by operating activities, as adjusted $ 402 $ 20,633 $ (20,231) $20,000 outstanding$13.9 million for the purchase of property and equipment, primarily related to the construction of our greenfield locations in Arizona, Ohio and Florida, as well as the purchase of real estate in Tennessee.M&TFloor Plan Line of Credit to up to $525.0 million from $327.0 million and increase the capacity under the Revolving Credit Facility to up to $50.0 million from $25.0 million; (ii) remove the Mortgage Loan Facility and Term Loan.Contractual Facility; (iii) extend the term of the Floor Plan Line of Credit and Commercial CommitmentsDuring the three months endingRevolving Credit to February 21, 2027; (iv) lower interest rates on the Floor Plan Line of Credit and the Revolving Credit facility; and (v) remove certain guarantors.2018, we had2023, there was $383.3 million outstanding on the following significant changesFloor Plan Line of Credit at an interest rate of 6.82% and $30.0 million outstanding on the Revolving Credit Facility at an interest rate of 7.06%. We were in our contractualcompliance with all financial and commercial commitments:As a result ofrestrictive covenants at March 31, 2023.repaymenthealth of our former term loan with Bank of Americainventory and the proceeds of $20,000 from our new term loan with M&T, the Company will make monthly principal payments in the amount of $242 until March 15, 2021. On March 15, 2021 the Company will make a payment of principal and interest of $11,300.Off-Balance Sheet ArrangementsAs of March 31, 2018, there were no off-balance sheet arrangements,focus on discounting prior model year units as defined in Item 303(a)(4)(ii) of Regulation S-K.InflationAlthough weneeded. We cannot accurately anticipate the effect of inflation on our operations we believe that inflation has not had,from possible continued cost increases, the introduction of 2024 model year units into inventory and is not likely in the foreseeable futurerelated pricing of those units, consumers’ willingness to have, a materialaccept higher prices and the potential impact on our results of operations.quarterhalf of each year due in part to consumer buying trends and the hospitable warm climate during the winter months at our largest location (Tampa).our property and inventory.inventory and decrease the traffic to our dealerships. Although we believe that we have adequate insurance coverage, if we were to experience a catastrophic loss, we may exceed our policy limits and/or we may have difficulty obtaining similar insurance coverage in the future.We prepare our condensed consolidated financial statements in accordance with GAAP, and in doing so, we to make estimates, assumptions and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. We base our estimates, assumptions and judgments on historical experience and on various other factors we believe to be reasonable under the circumstances. Different assumptions and judgments would change estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change our results from those reported. We evaluate our critical accounting estimates, assumptions and judgments on an ongoing basis.There has been no material changechanges in ourthe critical accounting policies from those previously reported and discloseduse of estimates described in our 2022 Annual Report.are electinghave elected scaled disclosure requirements available to smaller reporting companies with respect to this Item. our management, including our Chief Executive Officer and Chief Financial Officer, of ourthe effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).evaluationquarter ended December 31, 2022 related to ineffective information technology general controls ("ITGCs") in the areas of these disclosure controlslogical access, change management and procedures,security administration over information technology ("IT") systems that support our financial reporting processes had not yet been remediated. These control deficiencies were a result of lack of documentation to evidence that (a) access provisioned match the Chief Executive Officeraccess requested and; (b) user access reviews were performed with complete and Chief Financial Officeraccurate data. In addition, evidence was not retained to support that changes to internally developed applications were approved prior to deployment to production. We were also unable to determine who has access to some server and database accounts impacting the same portal applications.2018, our disclosure controls and procedures2023. These operations were effective to ensure that the information required to be disclosed by usexcluded in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified inaccordance with the SEC’s rulesgeneral guidance because they and forms.During the fiscal quarter ended March 31, 2018, we completed the Mergers and the internal controls of Lazy Days’ R.V. Center, Inc became our internal controls. We are engaged the process of the design and implementation of our internal control over financial reporting identified in a manner commensurateconnection with the scaleEvaluation that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.We are party to numerous legal proceedings that arise in the ordinary course of our business. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.risk factorsbusiness and securities as previously disclosed ondescribed in our 2022 Annual Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2018.10-K, under “Risk Factors” in Item 1A.Information regarding equity securities sold by usquarterthree months ended March 31, 2018 that2023, several institutional investors exercised warrants issued in the PIPE Investment resulting in the issuance of shares of our common stock.Date Warrants Exercised Common
Shares IssuedFebruary 27, 2023 7,500 215 March 14, 2023 670,807 670,807 678,307 671,022 not registeredexempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 3(a)(9) of such act, as exchanges of our securities by existing security holders where no commission or remuneration was previously disclosed onpaid or given directly or indirectly for soliciting the exchanges.Report on Form 8-K filed withshares of Common stock during the Securities and Exchange Commission onthree months ended March 21, 2018.Item 3 – Default Upon Senior SecuritiesNone.Item 4 – Mine Safety DisclosuresNone.None.
31, 2023:41Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program January 1 - January 31, 2023 — $ — — $ 63,479,500 February 1 - February 28, 2023 — — — 63,479,500 March 1 - March 31, 2023 9,433 11.56 3,412,222 63,370,543 9,433 11.56 3,412,222 31.1*31.2* 31.2*32.1** 32.1**32.2** 32.2**101* The following financial statements from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2023, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements. 101 INS*104*Cover Page Interactive Data File (embedded within the Inline XBRL Instance Document101 SCH*XBRL Taxonomy Extension Schema Document101 CAL*XBRL Taxonomy Extension Calculation Linkbase Document101 DEF*XBRL Taxonomy Extension Definition Linkbase Document101 LAB*XBRL Extension Label Linkbase Document101 PRE*XBRL Taxonomy Extension Presentation Linkbase Documentdocument and included in Exhibit 101)herewith.+ Management compensatory plan or arrangement.Lazydays Holdings, Inc. Dated May 11, 2018April 28, 2023/s/ WILLIAM P. MURNANEKelly A. PorterWilliam P. MurnaneKelly A. PorterChief Executive Officer(Duly authorized officer andprincipal executive officer)Dated May 11, 2018/s/ MAURA BERNEYMaura BerneyChief Financial Officer (Duly authorized officerPrincipal Financial andprincipal financial and accounting officer) Accounting Officer