Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

2023

or

[  ]
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file numberFile Number: 001-38424

Lazydays Holdings, Inc.

Lazydays Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)

Delaware82-4183498
Delaware82-4183498
(State or Other Jurisdiction of

Incorporation or Organization)
(I.R.S. Employer

Identification No.)
4042 Park Oaks Blvd, Tampa, Florida33610
6130 Lazy Days Blvd. Seffner, FL33584
(Address of Principal Executive Offices)(Zip Code)

813-246-4999

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockLAZYNasdaq Capital Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days. Yes [  ]x No [X]

¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]x No [  ]

¨

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

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

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

¨

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

x

There were 8,471,60813,843,006 shares of common stock, par value $0.0001, issued and outstanding as of May 10, 2018.

April 28, 2023.



Lazydays Holdings, Inc.

Form 10-Q for the Quarter Ended March 31, 2018

2023

Table of Contents


Page
Page
1
27
40
40
Item 1 – Legal Proceedings41
41
41
Item 3 – Defaults Upon Senior Securities41
Item 4 – Mine Safety Disclosures41
Item 5 – Other Information41
42

2


Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar 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 

In thousands except for share and per share data)

(Unaudited)
As of March 31, 2023As of December 31, 2022
ASSETS
Current assets
Cash$41,049 $61,687 
Receivables, net of allowance for doubtful accounts of $476 and $47628,405 25,053 
Inventories419,136 378,881 
Income tax receivable8,058 7,912 
Prepaid expenses and other5,971 3,316 
Total current assets502,619 476,849 
Property and equipment, net of accumulated depreciation of $37,788 and $35,275177,818 158,991 
Operating lease right-of-use assets25,797 26,984 
Goodwill89,128 83,460 
Intangible assets, net79,832 81,665 
Other assets2,947 2,769 
Total assets$878,141 $830,718 
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

3

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS, continued

CONTINUED

(Dollar 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 

In thousands except for share and per share data)

(Unaudited)
As of March 31, 2023As of December 31, 2022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$13,485 $10,843 
Accrued expenses and other current liabilities32,190 27,875 
Dividends payable1,184 1,210 
Floor plan notes payable, net of debt discount342,280 348,735 
Financing liability, current portion2,224 2,281 
Long-term debt, current portion400 3,607 
Operating lease liability, current portion5,139 5,074 
Total current liabilities396,902 399,625 
Long-term liabilities
Financing liability, non-current portion, net of debt discount90,694 89,770 
Revolving line of credit30,000 — 
Long term debt, non-current portion, net of debt discount306 10,131 
Operating lease liability, non-current portion21,620 22,755 
Deferred income tax liability15,536 15,536 
Warrant liabilities— 906 
Total liabilities555,058 538,723 
Commitments and Contingencies
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding; liquidation preference of $60,00054,983 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 capital162,301 130,828 
Treasury Stock, at cost, 3,412,222 and 3,402,789 shares(57,128)(57,019)
Retained earnings162,927 163,203 
Total stockholders’ equity268,100 237,012 
Total liabilities and stockholders’ equity$878,141 $830,718 
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

4

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(LOSS)

(Dollar amounts inIn thousands except for share and per share data)

(Unaudited)

  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,
20232022
Revenue
New vehicle retail$176,747 $217,436 
Pre-owned vehicle retail84,775 116,500 
Vehicle wholesale1,708 6,524 
Finance and insurance16,881 21,635 
Service, body and parts and other15,545 14,066 
Total revenue295,656 376,161 
Cost applicable to revenues
New vehicle retail153,331 172,605 
Pre-owned vehicle retail67,528 88,283 
Vehicle wholesale1,721 6,579 
Finance and insurance693 697 
Service, body and parts and other7,181 6,720 
LIFO1,311 2,460 
Total cost applicable to revenue231,765 277,344 
Gross profit63,891 98,817 
Depreciation and amortization4,403 4,084 
Selling, general, and administrative expenses53,532 56,104 
Income from operations5,956 38,629 
Other income (expense)
Floor plan interest expense(5,531)(976)
Other interest expense(1,700)(1,936)
Change in fair value of warrant liabilities856 1,540 
Total other expense, net(6,375)(1,372)
(Loss) income before income tax expense(419)37,257 
Income tax benefit (expense)143 (8,973)
Net (loss) income(276)28,284 
Dividends on Series A Convertible Preferred Stock(1,184)(1,184)
Net (loss) income and comprehensive (loss) income attributable to common stock and participating securities$(1,460)$27,100 
EPS:
Basic$(0.12)$1.44 
Diluted$(0.17)$1.17 
Weighted average shares outstanding:
Basic11,988,89912,798,100
Diluted11,988,89920,561,136
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

5

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

(SUCCESSOR)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

MARCH 15, 2018 THROUGH MARCH 31, 2018

(Dollar amounts in thousands)

In thousands except for share data)

(Unaudited)

  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 StockTreasury StockAdditional
Paid-In
capital
Retained
Earnings
Total Stock-holders’
Equity
SharesAmountSharesAmount
Balance at December 31, 202214,515,253$— 3,402,789$(57,019)$130,828 $163,203 $237,012 
Stock-based compensation— — 797 — 797 
Repurchase of treasury stock— 9,433(109)— — (109)
Exercise of warrants and options2,739,975— — 31,238 — 31,238 
Disgorgement of short-swing profits— — 622 — 622 
Dividends on Series A preferred stock— — (1,184)— (1,184)
Net loss— — — (276)(276)
Balance at March 31, 202317,255,228$— 3,412,222$(57,128)$162,301 $162,927 $268,100 
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

6

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTSSTATEMENT OF CASH FLOWS

STOCKHOLDERS’ EQUITY

(Dollar amounts in thousands)

In thousands except for share data)

(Unaudited)

  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 StockTreasury StockAdditional
Paid-In
capital
Retained
Earnings
Total Stock-holders’
Equity
SharesAmountSharesAmount
Balance at December 31, 202113,694,417$— 707,312$(12,515)$121,831 $96,810 $206,126 
Stock-based compensation— — 523 — 523 
Purchase of treasury stock— 1,086,797(19,175)— — (19,175)
Exercise of warrants and options148,765— — 1,867 — 1,867 
Dividends on Series A preferred stock— — (1,184)— (1,184)
Net income— — — 28,284 28,284 
Balance at March 31, 202213,843,182$— 1,794,109$(31,690)$123,037 $125,094 $216,441 
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

7

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the three months ended March 31,
20232022
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 compensation797 523 
Bad debt expense11 
Depreciation of property and equipment2,570 2,277 
Amortization of intangible assets1,833 1,807 
Amortization of debt discount91 108 
Non-cash lease expense22 36 
Loss on sale of property and equipment— 
Change in fair value of warrant liabilities(856)(1,540)
Tax benefit related to stock-based awards— (74)
Impairment charges538 — 
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 payable2,642 3,578 
Accrued expenses and other current liabilities4,324 561 
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 equipment22 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 credit30,000 — 
Repayment of long term debt with M&T bank(12,067)(1,790)
Proceeds from financing liability1,384 254 
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 warrants30,543 — 
Proceeds from exercise of stock options645 1,353 
Disgorgement of short-swing profits622 — 
Repayments of acquisition notes payable— (259)
Loan issuance costs(821)— 
Net Cash Provided By Financing Activities41,838 16,767 
Net Decrease In Cash(20,638)(8,562)
Cash - Beginning61,687 98,120 
Cash - Ending$41,049 $89,558 
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
8

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Dollar amounts inIn thousands)

(Unaudited)

  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,
20232022
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— 
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 leases142 — 
Decrease in PIPE warrant liability due to expiration of warrants50 — 
See the accompanying notes to the unaudited condensed consolidated financial statements

Unaudited Condensed Consolidated Financial Statements.

9

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts inIn thousands, except share, per share and unit amounts)

(unaudited)

(Unaudited)

NOTE 1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS


Lazydays RV Center, Inc., the operating subsidiary of Lazydays Holdings, Inc., operates recreational vehicle (“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.

Lazydays RV has also operated a 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.

sources and extended warranty providers. We also offer our customers such ancillary services as overnight campground and restaurant facilities.


NOTE 2 – SIGNIFICANTBASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES


Basis of Presentation

These Condensed Consolidated Financial Statements contain unaudited information as of March 31, 2023, and for the three months ended March 31, 2023 and 2022. The accompanying 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 Consolidation

Successor

full year.


The condensed 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.

Predecessor


Critical Accounting Policies
Our critical accounting policies have not materially changed during the three months ended March 31, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Reclassifications
Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on the previously reported net income.

NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This standard requires contract assets and contract liabilities, such as certain receivables and deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The adoption of ASU 2021-08 on January 1, 2023 did not have any effect on our condensed consolidated financial statementsstatements.

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in the periods from January 1, 2018 to March 14, 2018Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible
10

Instruments and January 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 Periods

As 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 Statements

The 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 Recognition

The 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 Costs

As 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.

Inventories

Vehicle 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 Equipment

Property 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.

Successor

Useful lives range from 2 to 26 years for buildings and improvements and from 2 to 12 years for vehicles and equipment.

Predecessor

Useful lives range from 15 to 20 years for buildings and improvements and from 2 to 7 years for vehicles and equipment.

Goodwill and Intangible Assets

The 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.

Successor

The estimated useful lives are 12 years for both the manufacturer and customer relationships.

Predecessor

The 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 Stock

The 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 Compensation

The 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 Share

The 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 Share
Weighted average outstanding common shares8,471,608
Weighted average shares held in escrow(142,857)
Weighted average prefunded warrants1,339,499
Weighted shares outstanding - basic9,668,250

For 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 Stock5,962,733
Shares underlying warrants4,677,458
Stock options3,673,544
Shares underlying unit purchase options657,142
Share equivalents excluded from EPS14,970,877

Advertising Costs

Advertising 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 Taxes

The 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.

Seasonality

The 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 Concentrations

The 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 Concentrations

Revenues 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 Events

Management 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 Standards

The 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.


NOTE 34 – BUSINESS COMBINATION

On March 15, 2018,COMBINATIONS


In the Company consummatedfirst three months of 2023, we completed the Mergers. Underfollowing acquisition:

February 16, 2023 - Findlay RV (Findlay) in Las Vegas, Nevada

Revenue and loss from operations contributed by the 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)

The following tables summarize the consideration paid and 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 

acquisition date for the 2023 acquisition:


(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
Property and equipment7,461 
Goodwill5,479 
Total assets acquired19,732 
Accounts payable
Net assets acquired$19,730 

The 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,goodwill in the closing price of Andina’s common stock on the date of the Mergers.

Condensed Consolidated Balance Sheets.


Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities 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 Years
Trade 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 profitability

11

growth, neither of which qualify for recognition as a discounted 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 asset. We expect substantially all of the business 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.

federal income tax purposes.


See Note 6 for additional information regarding Goodwill.

The following unaudited pro forma financial information 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)20232022
Revenue$297,224 $391,857 
(Loss) income before income taxes$(598)$37,969 
Net (loss) income$(394)$28,846 

These amounts have been adjusted 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 that

NOTE 5 – INVENTORIES

Vehicle 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 as trade-ins, the cost is deductible 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

by LIFO method.


The current replacement costs of LIFO inventories exceeded their recorded values by $22.1 million and $20.8 million as of March 31, 2023 and December 31, 2022, respectively.

Inventories consist of the following:

  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, 2023As of December 31, 2022
New recreational vehicles$375,927 $342,415 
Pre-owned recreational vehicles56,801 50,457 
Parts, accessories and other8,541 6,831 
441,269 399,703 
Less: excess of current cost over LIFO(22,133)(20,822)
Total$419,136 $378,881 

12

NOTE 5 – PROPERTY6 - GOODWILL AND EQUIPMENT, NET

Property 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 ASSETS


Goodwill
The changes in the table 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 ASSETS


Balance as of December 31, 2021$80,318 
Additions through acquisitions4,692 
Measurement period adjustments related to prior acquisitions(1,550)
Balance as of December 31, 202283,460 
Additions through acquisitions5,479 
Measurement period adjustments related to prior acquisitions189 
Balance as of March 31, 2023$89,128 

Intangible Assets
Detail of Intangible assets 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, 2023December 31, 2022
(In thousands)Gross Carrying AmountAccumulated AmortizationNet Asset ValueGross Carrying AmountAccumulated AmortizationNet Asset Value
Amortizable intangible assets:
Manufacturer relationships$65,400 $21,943 $43,457 $65,400 $20,346 $45,054 
Customer relationships10,395 4,218 6,177 10,395 3,993 6,402 
Non-compete agreements230 132 98 230 121 109 
76,025 26,293 49,732 76,025 24,460 51,565 
Non-amortizable intangible assets:
Trade names and trademarks30,100 — 30,100 30,100 — 30,100 
$106,125 $26,293 $79,832 $106,125 $24,460 $81,665 

Amortization expense 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)20232022
Amortization expense$1,833 $1,807 

Future amortization 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
20247,332
20257,264
20266,585
20276,274
Thereafter16,778
Total$49,732



13

NOTE 7 – FINANCING LIABILITY

OnASSET IMPAIRMENT


In the first quarter of 2023, we recorded an asset impairment charge totaling $0.6 million as a component of Selling, general and administrative expenses related to capitalized software for an IT project that we decided not to utilize. $0.5 million had been recorded in Prepaid and other assets on our Condensed Consolidated Balance Sheets at December 23, 2015,31, 2022. The remainder was recorded in Selling, general and administrative expenses during the Predecessor sold certain land, buildingcurrent three month period.
NOTE 8 – LEASES

We lease property, equipment and 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.

Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 50 years (some leases include multiple renewal periods). The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for 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.

There were no new significant lease additions or terminations during the 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 LIABILITIES

Accounts 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 

three months ended March 31, 2023.

NOTE 9 – DEBT


M&T Financing Agreement

On 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.

The 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 Credit

The $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.


At the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.

At March 31, 2023, there was $383.3 million outstanding on the Floor Plan Line of Credit at 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 Floor Plan Line of Credit bears interest at: (a) 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 Loan

The $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 

Revolver

The $5,000 M&T Revolver allows the Company to draw up to $5,000. Floor Plan.


The M&T 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.

.

14


15

NOTE 10 - REVENUE AND CONCENTRATIONS

Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to customers at the expected amount we are entitled to for such goods and services. Taxes collected on revenue producing transactions are excluded from revenue in the Condensed Consolidated Statements of Operations.

Revenue from the sale of vehicle contracts is recognized at a point in time on delivery, transfer of title and completion of financing arrangements.

Revenue from the sale of parts, accessories, and related service is recognized as services and parts are delivered or as a customer approves elements of the completion of service. Revenue from the sale of parts, accessories, and related service is recognized in Service, body and parts and other revenue in the Condensed Consolidated Statements of Operations.

Charge-Backs
We receive commissions from the sale of insurance and vehicle service contracts to customers. In addition, we arrange financing for customers through various financial institutions and receive commissions. We 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 our customers. The revenues from financing fees and commissions are recorded at 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.

We have an accrual for charge-backs which totaled $8.3 million and $8.2 million at March 31, 2023 and December 31, 2022, respectively, and is included in “Accrued expenses, and other current liabilities” in the M&T Facility). Duringaccompanying Condensed Consolidated Balance Sheets.

Revenue by State
Revenues by state that generated 10% or more of revenues were as follows (unaudited):
Three months ended March 31,
20232022
Florida50 %52 %
Tennessee11 %13 %

These geographic concentrations increase the Successor period ended March 31, 2018, there were no outstanding borrowings under the M&T Revolver.

NOTE 10 – INCOME TAXES

The 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.


Vendor Concentrations
Vendors representing 10% or more of our total RV and replacement parts purchases were as follows:

Three months ended March 31,
20232022
Thor Industries,Inc.38.0 %49.8 %
Winnebago Industries, Inc.34.0 %29.1 %
Forest River, Inc.24.0 %17.2 %

We are subject to dealer agreements with each manufacturer. The manufacturer is entitled to terminate the non-deductibilitydealer agreement if we are in material breach of the agreement’s terms.


16

NOTE 11 - EARNINGS PER SHARE

We compute basic and diluted earnings per share (“EPS”) by dividing net earnings by the weighted average number of shares of common stock outstanding during the period.

We are required, in periods in which we have net income, to calculate EPS using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders but does not require the presentation of basic and diluted EPS for securities other than common stock. The two-class method is required because our Series A preferred stock has the right to receive dividends or dividend equivalents should we declare dividends on our Common stock as if such holder of the Series A preferred stock had been converted to Common stock. Under the two-class method, earnings for the period are allocated to the common and preferred stockholders taking into consideration Series A preferred stockholders participation in dividends on an as converted basis. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. Diluted EPS is computed in the same manner as basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if certain 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.

In periods in which we have a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used because the preferred stock based compensation expenses. does not participate in losses.

The 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,
20232022
(Dollars in thousands - except share and per share amounts)
Distributed earnings allocated to common stock$— $— 
Net (loss) income attributable to common stock and participating securities used to calculate basic (loss) earnings per share(1,460)18,411 
Net earnings allocated to Series A convertible preferred stock8,689 
Net (loss) earnings allocated to common stock and participating securities$(1,460)$27,100 
Weighted average shares outstanding11,688,54212,497,743
Dilutive effect of pre-funded warrants300,357300,357
Weighted average shares outstanding - basic11,988,89912,798,100
Weighted average common shares outstanding11,688,54212,497,743
Weighted average pre-funded warrants300,357300,357
Weighted average warrants (equity)1,244,495
Weighted average warrants (liabilities)438,143
Weighted average options6,080,398
Weighted average shares outstanding - diluted11,988,89920,561,136
Basic income per common share$(0.12)$1.44 
Diluted income per common share$(0.17)$1.17 
17


The following common stock equivalent shares were excluded from the 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 TRANSACTIONS

On 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.

per share since their inclusion would have been anti-dilutive:
Three months ended March 31,
20232022
Stock options295,061270,032
Restricted stock units237,249
Shares issuable under the Employee Stock Purchase Plan18,80531,874
Share equivalents excluded from EPS551,115301,906

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

The 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.


Lease Obligations
See Note 15 – Subsequent Events.

Director Compensation

The 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.

8.


Legal Proceedings

The Company is aMatters

We are party to numerousmultiple 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 Leases

The 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 Plan

On 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.


NOTE 13 – PREFERRED STOCK

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 of


Our Series A Preferred Stock is cumulative redeemable convertible atpreferred 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.


Unpaid preferred dividends are accumulated, compounded at each quarterly dividend date and presented within the 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.

paid on April 3, 2023.

NOTE 14 – STOCKHOLDERS’ EQUITY

Successor

Authorized Capital

The Company is


Stock Repurchase Program
On September 13, 2021, our Board of Directors authorized the repurchase of up to issue 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 pursuant to the program were as follows:

Repurchases in 2023Cumulative Repurchases as of March 31, 2023
SharesAverage PriceSharesAverage Price
Stock repurchase program9,433 $11.56 3,412,222 $14.16 

All repurchased shares are included in Treasury stock on the Condensed Consolidated Balance Sheets. As of March 31, 2023 there was $63.4 million remaining available for future repurchases.


18

Disgorgement of Short-Swing Profit
During the quarter ended March 31, 2023, a significant shareholder bought and 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.
NOTE 15 - STOCK-BASED COMPENSATION

Stock-based compensation is included in Selling, general and administrative expense on our Condensed Consolidated Statements of 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.

Operations and was as follows:


Three months ended March 31,
(In thousands)20232022
Stock-based compensation$797 $523 

2018 Long-Term Incentive Equity Plan

On March 15, 2018, the Company adopted the

Our 2018 Long-Term Incentive Equity Plan, as amended (the “2018 Plan”). 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 Stock

On 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.


Stock Options
Stock option activity was as follows:
Shares Underlying
Options
Weighted Average Per Share
Exercise Price
Weighted Average Remaining
Contractual Life (Years)
Aggregate Intrinsic
Value (In Thousands)
Options outstanding at December 31, 20221,052,093$12.34 2.26$(427)
Granted94,32612.38 
Cancelled or terminated(349,274)15.65 
Exercised(81,561)7.91 
Options outstanding at March 31, 2023715,58411.80 2.36$(90)
Options vested at March 31, 2023366,90811.98 1.86$(112)
Options vested as of March 31, 2023 and expected to vest after March 31, 2023715,584

Restricted Stock Units
Restricted stock unit activity was as follows:
Number of Restricted Stock UnitsWeighted-Average Grant Date Fair Value
Outstanding at December 31, 2022200,250$14.98 
Granted87,63012.38
Vested(2,258)19.88
Outstanding at March 31, 2023285,62214.19

19

PIPE Warrants
PIPE warrant 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 Options

On 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.

follows:

Shares Underlying WarrantsWeighted Average
Exercise Price
Warrants outstanding December 31, 20222,865,068$11.50 
Cancelled or Expired(208,912)11.50 
Exercised(2,656,156)11.50 
Warrants outstanding March 31, 2023— 

Prefunded Warrants

As of March 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.


Unrecognized Stock-Based Compensation
At March 31, 2023 the total unrecognized stock-based compensation was $0.6 million which is expected to purchase 200,000 sharesbe recognized over a weighted average period of common stock which1.5 years.

NOTE 16 – FAIR VALUE MEASUREMENTS

Factors used in determining the fair value of our financial assets and liabilities are issuable upon exercisesummarized into three broad categories:
Level 1 - quoted prices in active markets for identical securities;
Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and
Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.

We determined the carrying value of the Unit Purchase Options.

Stock Options

Stock 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 Conditions

On 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.


There were no changes to our valuation techniques during the CEO’s stock options and 583,366 shares underlying the CFO’s stock options. A set percentagequarter ended March 31, 2023.

Asset Impairment
See Note 7 for discussion of 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.

PIPE Warrants
Our PIPE warrants were all exercised or expired in March 2023.

Our PIPE warrants were recorded at fair value at the end of each reporting period and transaction date with changes in fair value recorded on our Condensed Consolidated Statements of Operations.

The public PIPE warrants traded in active markets with sufficient trading volume to qualify as Level 1 financial instruments as they had observable market prices which were used to estimate the fair value.

The private placement PIPE warrants were not traded in active markets, or 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.

Black-Scholes option-pricing model.


The fair value of the awardsPIPE warrant liability was as follows:

December 31, 2022
Carrying
Amount
Level 1Level 2Level 3
PIPE Warrants$742 $742 $— $— 
Private Warrants164 — — 164 
Total$906 $742 $— $164 
20


Level 3 Disclosures
Changes in the condensed consolidated statementsLevel 3 PIPE warrant liability were as follows:

Three months ended March 31, 2023Year ended December 31, 2022
Balance at December 31, 2022$164 $1,690 
Measurement adjustment(164)(1,526)
Balance at March 31, 2023$$164 
21

Table of income.

Awards with Service Conditions

On March 16, 2018, the Company granted five-year stock options to purchase an aggregate of 99,526 shares at an exercise price of $11.10 per share to the non-employee directors of the Company, pursuant to the 2018 Plan. These options vest over three years with one-third vesting on each of the respective anniversary dates.

On March 23, 2018, stock options to purchase 14,218 shares of common stock that had been issued to one non-employee director were canceled, while new five-year options to purchase 15,123 shares of common stock at an exercise price of $10.40 per share were issued to certain investment funds pursuant to an arrangement between the same non-employee director and the investment adviser to the funds. The new options vest over three years with one-third vesting on each of the respective anniversary dates.

The $350 fair value of these awards was determined using the Black-Scholes option pricing model based on a 3.5 year expected life, a risk-free rate of 2.42%, an annual dividend yield of 0%, and an annual volatility of 39%. The expense is being recognized over the three-year vesting period. The expense recorded for these awards was $4 during the Successor period from March 15, 2018 to March 31, 2018, which is included in operating expenses in the condensed consolidated statements of income. The expected life was determined using the simplified method as the awards were determined to be plain-vanilla options.

As of March 31, 2018, total unrecorded compensation cost related to non-vested awards was $14,867 which is expected to be amortized over a weighted average service period of approximately 1.62 years. The weighted average grant date fair value of awards issued during the Successor period was $4.18 per share.

Predecessor

Stock Options

The Company recognized stock-based compensation expense of $140 and $119 related to the 2017 Stock Option Plan for the period from January 1, 2018 to March 14, 2018 and the period from January 1, 2017 to March 31, 2017, respectively, which is included within operating expenses on the condensed consolidated statements of income.

On March 15, 2018, as a result of the consummation of the Mergers (see Note 3 – Business Combination), the vesting of the existing options accelerated and the option holders of the Predecessor became entitled to receive an aggregate of $2,636, of which $1,500 was distributable in cash and $530 was distributable in the form of 51,529 shares of common stock. An additional amount will be paid to the option holders in cash and stock upon the release of the amounts held in escrow under the Merger Agreement. These payments were allocated from the purchase consideration due to the sellers associated with the Business Combination.

NOTE 15 – SUBSEQUENT EVENTS

On April 30, 2018, the current CFO announced her voluntary resignation from the Company, effective May 11, 2018 immediately following the filing of the Form 10-Q for the quarter ended March 31, 2018. The current CFO will continue to be employed by the Company through June 15, 2018. The current CFO will be entitled to her accrued and unpaid salary upon her departure and her unvested options will be forfeited.

Subsequent to March 31, 2018, the Company entered into an offer letter with the new Chief Financial Officer (the “new CFO”) of the Company. The offer letter provides for an initial base salary of $325 per year subject to annual discretionary increases. In addition, the 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 new CFO’s target bonus is 75% of his annual base salary (with a potential to earn a maximum of up to 150% of his target bonus). The offer letter also provides that the executive is to be granted an option to purchase shares of common stock of the Company. He is also being provided with a relocation allowance of $100 which the new CFO will be required to repay if he resigns from the Company or is terminated by the Company for cause within two years of his start date. If he is terminated without cause, he will receive twelve months of his base salary as severance. If he is terminated following a change in control, he is also eligible to receive a pro-rated bonus, if the board of directors determines that the performance objectives have been met.

Contents

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following should be read together with our financial statements and related notes included in Part I, Item 1 of this Form 10-Q, as well as our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2023.
Disclosure Regarding Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q (including but not limited to this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the impact of the COVID-19 pandemic on our business, results of operations and financial condition, our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ 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

Future market conditions in its markets, and ongoing economic and financial uncertainties may cause a decline in consumer spending that may adversely affect its business, financial condition and results of operations.
The Company depends on its ability to attract and retain customers.
Competition in the market for services, protection plans and products targeting the RV lifestyle or RV enthusiast could reduce the Company’s revenues and profitability.
The Company’s expansion into new, unfamiliar markets presents increased risks that may prevent it from being profitable in these new markets. Delays in 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;    

Changes in U.S. or global economic conditions;
Changes in expected operating results, such as store performance, selling, general and administrative expenses (“SG&A”) as a percentage of our financial conditiongross profit and results of operations should be read together with our financial statementsall projections;
Our ability to procure and 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 Overview

Overview

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

Company History

Andina Acquisition Corp. II was formed as an exempted company incorporatedmanage inventory levels to reflect consumer demand;

Our ability to find accretive acquisitions;
Changes in the 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;
Changes in our expected liquidity from our cash, availability under our credit facility and unfinanced real estate;
Compliance with financial and restrictive covenants under our credit facility and other similar business combination with one or more target businesses.

From the consummationdebt agreements;

Changes in our anticipated levels of 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;
The Merger Agreement providedrepurchase of shares under our share repurchase program; and
Our business strategies for a 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 Business

The Company operates Recreation Vehiclerisk management.

Overview
We operate recreational vehicle (“RV”) dealerships and 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, based


Based on industry research and management’s estimates, it 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.

Lazydays offers one of the largest 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 attracts


22

We attract new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once the 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 Developments

PIPE Investment

Simultaneously with


Results of Operations
Three months ended March 31,
(In thousands, except per vehicle data)20232022Change% Change
Revenues
New vehicle retail$176,747 $217,436 $(40,689)(18.7)%
Pre-owned vehicle retail84,775 116,500 (31,725)(27.2)%
Vehicle wholesale1,708 6,524 (4,816)(73.8)%
Finance and insurance16,881 21,635 (4,754)(22.0)%
Service, body and parts and other15,545 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 retail17,247 28,217 (10,970)(38.9)%
Vehicle wholesale(13)(55)42 (76.4)%
Finance and insurance16,188 20,938 (4,750)(22.7)%
Service, body and parts and other8,364 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 retail13.2 %20.6 %(740)bps
Pre-owned vehicle retail20.3 %24.2 %(390)bps
Vehicle wholesale(0.8)%(0.8)%— bps
Finance and insurance95.9 %96.8 %(90)bps
Service, body and parts and other53.8 %52.2 %160 bps
Total gross profit margin21.6 %26.3 %(470)bps
Total gross profit margin (excluding LIFO)22.1 %26.9 %(480)bps
Retail units sold
New vehicle retail1,980 2,270 (290)(12.8)%
Used vehicle retail1,304 1,478 (174)(11.8)%
Total retail units sold3,284 3,748 (464)(12.4)%
Average selling price per retail unit
New vehicle retail$89,266 $95,787 $(6,521)(6.8)%
Used vehicle retail65,012 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 retail13,227 19,091 (5,864)(30.7)%
Finance and insurance4,929 5,586 (657)(11.8)%

23

Same Store Results of Operations
We believe that same store comparisons are an important indicator of our financial performance. Same store measures demonstrate our ability to grow operations in our existing locations.

Same store measures reflect results for stores that were operating in each comparison period, and only include the 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)20232022Change% Change
Revenues
New vehicle retail$167,966 $217,436 $(49,470)(22.8)%
Pre-owned vehicle retail81,961 116,500 (34,539)(29.6)%
Vehicle wholesale1,708 6,524 (4,816)(73.8)%
Finance and insurance16,129 21,635 (5,506)(25.4)%
Service, body and parts and other14,950 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 retail16,672 28,217 (11,545)(40.9)%
Vehicle wholesale(13)(55)42 (76.4)%
Finance and insurance15,466 20,938 (5,472)(26.1)%
Service, body and parts and other8,032 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 retail13.3 %20.6 %(730)bps
Pre-owned vehicle retail20.3 %24.2 %(390)bps
Vehicle wholesale(0.8)%(0.8)%— bps
Finance and insurance95.9 %96.8 %(90)bps
Service, body and parts and other53.7 %52.2 %150 bps
Total gross profit margin21.6 %26.3 %(470)bps
Total gross profit margin (excluding LIFO)22.1 %26.9 %(480)bps
Retail units sold
New vehicle retail1,841 2,270 (429)(18.9)%
Used vehicle retail1,248 1,478 (230)(15.6)%
Total retail units sold3,089 3,748 (659)(17.6)%
Average selling price per retail unit
New vehicle retail$91,236 $95,787 $(4,551)(4.8)%
Used vehicle retail65,674 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 retail13,359 19,091 (5,732)(30.0)%
Finance and insurance5,007 5,586 (579)(10.4)%

24

Revenue and warrantsGross Margin Discussion

New Vehicles Retail
We offer a comprehensive selection of Holdconew 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.

Under our business strategy, we believe that our new RV sales create incremental profit opportunities by providing used RV inventory through trade-ins, arranging of third-party financing, RV service and insurance contracts, future resale of trade-ins and parts and service work.

New vehicle revenue decreased $40.7 million, or 18.7%, in the first quarter of 2023 compared to the same quarter of 2022 due primarily to a 12.8% decrease in units sold and a 6.8% decrease in average selling price per retail unit. The decrease in 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.

New vehicle gross profit decreased $21.4 million, or 47.8%, in the first quarter of 2023 compared to the same quarter of 2022 due primarily to less units sold and 740 basis point decrease in gross margins. The decline in gross margins was primarily driven by discounted pricing of 2022 new vehicle model year units.

On a same store basis, new vehicle retail revenue decreased $49.5 million, or 22.8%, due primarily to a 18.9% decrease in retail units sold and a 4.8% decrease in average selling prices per retail unit.

New vehicle retail gross profits on a same store basis decreased $22.5 million, or 50.2%, in the first quarter of 2023 compared to the same quarter of 2022 due primarily to less units sold and a 730 basis point decrease in gross margins.

Although supply chain and inventory continued to normalize in the first quarter, our stores continued discounted pricing on 2022 new vehicle model year inventory to limit the percentage of previous model year inventory by year end. We ended the first quarter of 2023 with approximately 87% of our inventory as current model year.

Pre-Owned Vehicles Retail
Pre-owned vehicle retail sales are a strategic focus for growth. Our pre-owned vehicle operations provide an 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.

Pre-owned vehicle retail revenue decreased $31.7 million, or 27.2%, in the 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.

Pre-owned vehicle retail gross profit decreased $11.0 million, or 38.9%, in the securities purchase agreements.

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 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.


On a same store basis, pre-owned vehicle retail revenue decreased $34.5 million, or 29.6% due to a 16.7% decrease in average selling prices and a 15.6% decrease in retail units sold.

Pre-owned vehicle retail gross profits on a same store basis decreased $11.5 million, or 40.9% in the first quarter of 2023 compared to the 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.

25

Finance and Insurance
We believe that arranging timely financing is an important part of providing access to 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.

Finance and insurance (“F&I”) revenues decreased $4.8 million, or 22.0%, in the first quarter of 2023 compared to the same quarter of 2022 primarily due to a decrease in total retail units sold of 12.4% and an 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.

On a same store basis, 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.

Certain information regarding our F&I operations was as follows:

Three months ended March 31,
Overall20232022Change% Change
F&I per unit$4,929 $5,586 $(657)(11.8)%
F&I penetration rate61.2 %65.0 %(380)bps
Same store
F&I per unit$5,007 $5,586 $(579)(10.4)%
F&I penetration rate61.3 %65.0 %(370)bps

Our gross margin on finance and insurance revenues is approximately 95.9%.

Service, Body and Parts
With approximately 575 service bays, we provide onsite general RV maintenance and repair services at 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.

Service, body and parts is a strategic area of 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.

Our same store service, body and parts revenue increased 6.3% and our gross profit increased 9.3% during the first quarter of 2023 compared to the same quarter of 2022.
Depreciation and Amortization

Depreciation and amortization was as follows:

Three months ended March 31,
($ in thousands)20232022Change% Change
Depreciation and amortization$4,403 $4,084 $319 7.8 %

The increase in Depreciation and amortization in the first quarter of 2023 compared to the same quarter of 2022 was primarily related to the 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 Facility

On 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.

31

2018 Long-Term Incentive Equity Plan

On 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 Revenue

We 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 Indicators

Gross 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 acquisitions, the requirementsexpansion 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.


26

Selling, General and 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.Administrative


Selling, general, and administrative (“SG&A”) expenses as 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.

SG&A expense was as follows:

Three months ended March 31,
($ in thousands)20232022Change% Change
SG&A expense$53,532 $56,104 $(2,572)(4.6)%
SG&A as percentage of gross profit83.8 %56.8 %2,700bps

The decrease in SG&A in the first quarter of 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.


The increase in SG&A 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.

SG&A 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.


Floor Plan Interest Expense

Floor plan interest expense was as follows:

Three months ended March 31,
($ in thousands)20232022Change% Change
Floor plan interest expense$5,531 $976 $4,555 466.7 %

Of the increase in Floor plan interest 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.
Other Interest Expense
Three months ended March 31,
($ in thousands)20232022Change% Change
Other interest expense$1,700 $1,936 $(236)(12.2)%

The decrease in other 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.




27

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments 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.

33

Results of Operations

The 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, 2017

Revenue

Revenue 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 Revenue

Revenue 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.

Income Tax Expense
Income tax expense was as follows:

Three months ended March 31,
($ in thousands)20232022Change% Change
Income tax benefit (expense)$143 $(8,973)$9,116 (101.6)%
Effective tax rate34.1 %24.1 %

The tax benefit differs from 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 Revenue

Parts, 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 Profit

Gross 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 Profit

New 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 Profit

Parts, 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 Costs

During 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 Expenses

Selling, 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.

Liquidity and 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 Expense

Interest expense increased by approximately $0.5 million, or 25.1%, to $2.7 million from $2.2 millionCapital Resources

Our principal needs for the 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 Taxes

Income 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 Measures

for growth through acquisitions and greenfielding. We use 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 Resources

Cash 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 Activities

The 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 Activities

The 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 Activities

The 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 Sources

The 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.

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, 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.

Cash Flow Summary
Three months ended March 31,
(In thousands)20232022
Net (loss) income$(276)$28,284 
Non-cash adjustments5,002 3,154 
Changes in operating assets and liabilities(33,558)(48,871)
Net cash used in operating activities(28,832)(17,433)
Net cash used in investing activities(33,644)(7,896)
Net cash provided by financing activities41,838 16,767 
Net decrease in cash$(20,638)$(8,562)

Operating Activities
Cash used in 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.

Inventories are the 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 Facility

On 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).

As of March 31, 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.


28

Borrowings from and repayments to the M&T Floor Plan Line of Credit related to our new vehicle inventory floor plan financing are presented as financing activities. Additionally, the cash paid for inventory purchased as part of an acquisition is presented as an investing activity, while the subsequent flooring of the new inventory is included in our floor plan payable cash activities.

To better understand the impact of these items, adjusted net cash provided by operating activities, a non-GAAP financial measure, is presented below:
Three months ended March 31,
(In thousands)20232022Change
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 account40,000 — 40,000 
Net cash (used in) provided by operating activities, as adjusted$402 $20,633 $(20,231)

Investing Activities
We used $19.7 million for the acquisition of one dealership in the first quarter of 2023 and $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.

Financing Activities
Significant financing activities included the payoff of our term and mortgage loans in February 2023 of $12.1 million and the receipt of approximately $30.5 million from the exercise of warrants.

M&T Credit Facility
On February 21, 2023, we amended our $369 million Senior Secured Credit Facility with M&T Bank.

The material provisions of the amendment were to (i) increase the capacity under the 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 Commitments

During 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.


At the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.

At March 31, 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.


Inflation
We have experienced higher than normal RV retail and wholesale price increases as manufacturers have passed through increased supply chain costs in their pricing to dealers. We monitor the 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 Arrangements

As 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.

Inflation

Although 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.

retail demand and margins.


Cyclicality

Unit sales of RV vehicles historically have been cyclical, fluctuating with general economic cycles. During economic downturns the RV retailing industry tends to experience similar periods of decline and recession as the general economy. We believe that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, fuel prices, interest rates and credit availability.

29


Seasonality and Effects of Weather

Our operations generally experience modestly higher volumes of vehicle sales in the first 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).

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.


Our largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to 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.


Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP, and in doing so, we

There have 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.

Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2023.

Item 3.— Quantitative and Qualitative Disclosures About Market Risk.


Information requested by this Item 3 is not applicable as we are electinghave elected scaled disclosure requirements available to smaller reporting companies with respect to this Item.

Item 3.


Item 4. — Controls and Procedures.


Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation (the “Evaluation”), under the supervision and with the participation of 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).

Based on such evaluation, management determined that a material weakness in internal control identified in the 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.

The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results. Based on this material weakness, management concluded that at March 31, 2023, our internal control over financial reporting was not effective. However, additional manual business process controls were executed to address the risk of material misstatement heightened by the ineffective ITGCs.

Following identification of the material weakness and prior to filing this Quarterly Report on Form 10-Q, we completed substantive procedures for the quarter ended March 31, 2023. Based on these procedures, management believes that our consolidated financial statements included in this Form 10-Q have been prepared in accordance with U.S. GAAP. Our CEO and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-Q, fairly present in all material respects the financial condition, results of operations and cash flows as of, and for, the periods presented in this Form 10-Q.

Management will continue to design and implement controls to ensure that control deficiencies contributing to the material weakness are remediated. The remediation actions include but are not limited to: (a) improving the processes and documentation around provisioning, deprovisioning, and reviews of access; and (b) modifying controls to include reviews of implemented application changes against supporting documents. The additional manual business process controls will continue to be performed while we remediate the ITGCs.

We believe that these actions will remediate the material weakness. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through
30

testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of 2023.

Management excluded the operations of the dealership acquired in February 2023 from the assessment of internal control over financial reporting as of March 31, 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.

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.


Changes in Internal Control over Financial Reporting

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

There were no changes in 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.
31

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

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.

Item 1A – Risk Factors


The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our 2022 Annual Report on Form 10-K, which was filed with the SEC on March 1, 2023. There have been no material changes to the primary risks related to our 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.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

Information regarding equity securities sold by us


Recent Sales of Unregistered Securities
As detailed in the following table, during the quarterthree 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.
DateWarrants ExercisedCommon
Shares Issued
February 27, 20237,500 215 
March 14, 2023670,807 670,807 
678,307 671,022 
The above issuances were 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.

Issuer Purchases of Equity Securities
The table below sets forth the information with respect to purchases made by of our 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 Securities

None.

Item 4 – Mine Safety Disclosures

None.

Item 5 – Other Information

None.

41
31, 2023:

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plan or Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
January 1 - January 31, 2023— $— — $63,479,500 
February 1 - February 28, 2023— — — 63,479,500 
March 1 - March 31, 20239,433 11.563,412,222 63,370,543 
9,433 11.563,412,222 

(1)On September 13, 2021, our Board of Directors authorized the repurchase of up to $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 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.
32

Item 6. — Exhibits.

10.22018 Long-Term Incentive Plan+ (included as Annex C to the Proxy Statement/Prospectus/Information Statement filed on February 15, 2018 and incorporated herein by reference)
3.1
10.3
10.1*
10.4
10.10Restated Credit Agreement dated March 15, 2018, among LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, and various other affiliated entities thereafter parties thereto, as Borrowers,February 21, 2023 with Manufacturers and Traders Trust Company (“M&T”), as Administrative Agent, Swingline Lender, Issuing Bank and a Lender, and various other financial institutions who may become lender parties thereto.(filed as Exhibit 10.10 to the Form 8-K filed on March 21, 2018).Lender parties.
31.1*
10.11Security Agreement, dated March 15, 2018, by and between LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays Mile HI RV, LLC, as Borrowers, Lazydays Holdings Inc., Lazy Days’ R.V. Center, Inc., Lazydays RV America, LLC, and Lazydays Land Holdings, LLC, as Guarantors, and Manufacturers and Traders Trust Company, as administrative agent under the Credit Agreement of even date therewith.(filed as Exhibit 10.11 to the Form 8-K filed on March 21, 2018).
10.12Guaranty Agreement, dated March 15, 2018, by certain parties named therein.(filed as Exhibit 10.12 to the Form 8-K filed on March 21, 2018).

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 Document
101 SCH*XBRL Taxonomy Extension Schema Document
101 CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101 DEF*XBRL Taxonomy Extension Definition Linkbase Document
101 LAB*XBRL Extension Label Linkbase Document
101 PRE*XBRL Taxonomy Extension Presentation Linkbase Documentdocument and included in Exhibit 101)

*Filed herewith.

**Furnished herewith.

+ Management compensatory plan or arrangement.

herewith

Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise stated in any such filing.

33

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Lazydays Holdings, Inc.
Dated May 11, 2018April 28, 2023/s/ WILLIAM P. MURNANEKelly A. Porter
William P. MurnaneKelly A. Porter
Chief Executive Officer
(Duly authorized officer and
principal executive officer)
Dated May 11, 2018/s/ MAURA BERNEY
Maura Berney
Chief Financial Officer
(Duly authorized officerPrincipal Financial and
principal financial and accounting officer) Accounting Officer
34