NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar
amounts in thousands, except per share amounts)
NOTE
1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Lazydays
Holdings, Inc. (“Holdings”), a Delaware corporation, which was originally formed on October 24, 2017, as a wholly
owned subsidiary of Andina Acquisition Corp. II (“Andina”), an exempted company incorporated in the Cayman Islands
on July 1, 2015 for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization,
reorganization or other similar business combination with one or more business targets. On October 27, 2017, a merger agreement
was entered into by and among Andina, Andina II Holdco Corp. (“Holdco”), a Delaware corporation and wholly-owned subsidiary
of Andina, 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.
Lazydays
RV has subsidiaries that operate recreational vehicle (“RV”) dealerships in ten locations including two in the state
of Florida, two in the state of Colorado, two in the state of Arizona, one in the state of Tennessee, one in the state of Minnesota
and two in the state of Indiana. Lazydays RV also has a dedicated service center location near Houston, Texas which opened in
February 2020. Through its subsidiaries, Lazydays RV sells and services new and pre-owned recreational vehicles, and sells related
parts and accessories. 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 and extended
warranty providers.
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation
The
consolidated financial statements for the years ended December 31, 2020 and 2019 include the accounts of Holdings, Lazydays RV 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, Lazydays Mile Hi RV, LLC, Lazydays of Minneapolis LLC, LDRV of Tennessee
LLC, Lone Star Acquisition LLC, Lone Star Diversified LLC, LDRV Acquisition Corp of Nashville LLC, LDRV of Nashville LLC, Lazydays RV
of Phoenix, LLC, Lazydays RV of Elkhart, LLC, Lazydays Land of Elkhart, LLC, Lazydays Service of Elkhart, LLC, Lazydays RV of Chicagoland,
LLC and Lazydays Land of Chicagoland, LLC (collectively, the “Company” or “Lazydays”). All significant inter-company
accounts and transactions have been eliminated in consolidation.
Restatement
of Previously Reported Financial Statements
On
April 12, 2021, in the SEC Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies (“SPACs”) (the “SEC Staff Statement”), the SEC staff clarified its interpretations of certain generally
accepted accounting principles related to certain terms that are common in warrants issued in connection with the initial public offerings
of SPACs. The SEC Staff Statement addressed certain accounting and reporting considerations related to warrants of a kind similar to
those issued by the Company that preclude the warrants from being classified as components of equity. In May 2021, management of the
Company concluded that the Company’s previously issued consolidated financial statements for the years ended December 31, 2020,
2019 and 2018 and for each of the interim quarterly periods therein (the “Non-Reliance Period”) should no longer be relied
upon. As such, the Company is restating its financial statements in this Annual Report on Form 10-K/A to make the necessary accounting
adjustments related to the accounting for certain previously issued warrants to conform with the SEC Staff Statement described below.
These warrants include (i) warrants to purchase 155,000 shares of common stock at a price of $11.50 per share issued in a private placement
concurrently with the merger on March 15. 2018 (the “Private Warrants”) and (ii) warrants to purchase 2,522,458 shares of
common stock at a price of $11.50 per share issued in connection with the Private Investment in Public Equity (PIPE) transaction that
occurred with the merger on March 15, 2018. (the “PIPE Warrants”). Since issuance, these warrants were classified within
equity in the Company’s financial statements. A third class of warrants, the Company’s Public Warrants issued in connection
with the merger on March 15, 2018, were evaluated and determined to be properly stated as equity.
As
clarified by the SEC staff interpretation of Accounting Standards Codification 815-40, Contracts in an Entity’s Own Equity, (“ASC
815-40”), the Company’s Private Warrants and PIPE Warrants are classified as liabilities with changes in the estimated fair
values of the derivative instruments reported in the statement of operations.
As
a result of the above, the Company has restated its consolidated financial statements for the Non-Reliance Period to reflect (i) the
Private Warrants as liabilities for all periods presented and (ii) the PIPE Warrants as liabilities for all periods presented.
The
impact of the restatement on the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash
flows for the Non-Reliance Period is presented below. The restatement had no impact on net cash flows from operating, investing or financing
activities.
The
tables below set forth certain consolidated balance sheet amounts originally reported, adjustments, and the restated amounts as of December
31, 2020 and 2019.
|
|
December 31. 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
443,998
|
|
|
$
|
-
|
|
|
$
|
443,998
|
|
Liabilities and Stockholder’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
174,177
|
|
|
$
|
-
|
|
|
|
174,177
|
|
Financing liability, non-current portion, net of debt discount
|
|
|
78,634
|
|
|
|
-
|
|
|
|
78,634
|
|
Long term debt, non-current portion, net of debt discount
|
|
|
8,445
|
|
|
|
-
|
|
|
|
8,445
|
|
Operating lease liability, non-current portion
|
|
|
12,056
|
|
|
|
-
|
|
|
|
12,056
|
|
Deferred tax liability
|
|
|
15,091
|
|
|
|
-
|
|
|
|
15,091
|
|
Warrant liabilities
|
|
|
-
|
|
|
|
15,096
|
|
|
|
15,096
|
|
Total liabilities
|
|
|
288,403
|
|
|
|
15,096
|
|
|
|
303,499
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of December 31, 2020; liquidation
preference of $60,000 as of December 31, 2020
|
|
|
54,983
|
|
|
|
-
|
|
|
|
54,983
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 9,656,041 shares issued and 9,514,742 outstanding at December
31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
80,072
|
|
|
|
(8,846
|
)
|
|
|
71,226
|
|
Treasury Stock, at cost, 141,299 shares at December 31, 2020
|
|
|
(499
|
)
|
|
|
-
|
|
|
|
(499
|
)
|
Retained earnings
|
|
|
21,039
|
|
|
|
(6,250
|
)
|
|
|
14,789
|
|
Total stockholders’ equity
|
|
|
100,612
|
|
|
|
(15,096
|
)
|
|
|
85,516
|
|
Total liabilities and stockholders’ equity
|
|
$
|
443,998
|
|
|
$
|
-
|
|
|
$
|
443,998
|
|
|
|
December 31. 2019
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
406,636
|
|
|
$
|
-
|
|
|
$
|
406,636
|
|
Liabilities and Stockholder’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
174,733
|
|
|
$
|
-
|
|
|
|
174,733
|
|
Financing liability, non-current portion, net of debt discount
|
|
|
63,557
|
|
|
|
-
|
|
|
|
63,557
|
|
Long term debt, non-current portion, net of debt discount
|
|
|
15,573
|
|
|
|
-
|
|
|
|
15,573
|
|
Operating lease liability, non-current portion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Deferred tax liability
|
|
|
16,450
|
|
|
|
-
|
|
|
|
16,450
|
|
Warrant liabilities
|
|
|
-
|
|
|
|
747
|
|
|
|
747
|
|
Total liabilities
|
|
|
270,313
|
|
|
|
747
|
|
|
|
271,060
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of December 31, 2019; liquidation
preference of $65,910 as of December 31, 2019
|
|
|
60,893
|
|
|
|
-
|
|
|
|
60,893
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,506,666 shares issued and 8,428,666 outstanding at December
31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
79,186
|
|
|
|
(8,991
|
)
|
|
|
70,195
|
|
Treasury Stock, at cost, 78,000 shares at December 31, 2019
|
|
|
(314
|
)
|
|
|
-
|
|
|
|
(314
|
)
|
Retained earnings
|
|
|
(3,442
|
)
|
|
|
8,244
|
|
|
|
4,802
|
|
Total stockholders’ equity
|
|
|
75,430
|
|
|
|
(747
|
)
|
|
|
74,683
|
|
Total liabilities and stockholders’ equity
|
|
$
|
406,636
|
|
|
$
|
-
|
|
|
$
|
406,636
|
|
The
tables below set forth the consolidated statements of operations amounts originally reported, adjustments, and the restated balances
for the years ended December 31, 2020, 2019 and 2018.
|
|
December 31. 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
47,538
|
|
|
$
|
-
|
|
|
$
|
47,538
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of property and equipment
|
|
|
(7
|
)
|
|
|
-
|
|
|
|
(7
|
)
|
Interest expense
|
|
|
(8,047
|
)
|
|
|
-
|
|
|
|
(8,047
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
(14,494
|
)
|
|
|
(14,494
|
)
|
Total other expense
|
|
|
(8,054
|
)
|
|
|
(14,494
|
)
|
|
|
(22,548
|
)
|
Income before income tax expense
|
|
|
39,484
|
|
|
|
(14,494
|
)
|
|
|
24,990
|
|
Income tax expense
|
|
|
(10,364
|
)
|
|
|
-
|
|
|
|
(10,364
|
)
|
Net income
|
|
$
|
29,120
|
|
|
$
|
(14,494
|
)
|
|
$
|
14,626
|
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(6,283
|
)
|
|
|
-
|
|
|
|
(6,283
|
)
|
Net income (loss) attributable to common stock and
participating securities
|
|
$
|
22,837
|
|
|
$
|
(14,494
|
)
|
|
$
|
8,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share
|
|
$
|
1.56
|
|
|
$
|
(0.99
|
)
|
|
$
|
0.57
|
|
Weighted average shares outstanding basic and diluted
|
|
|
9,809,783
|
|
|
|
9,809,783
|
|
|
|
9,809,783
|
|
|
|
December 31. 2019
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
12,128
|
|
|
$
|
-
|
|
|
$
|
12,128
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of property and equipment
|
|
|
11
|
|
|
|
-
|
|
|
|
11
|
|
Interest expense
|
|
|
(10,328
|
)
|
|
|
-
|
|
|
|
(10,328
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
3,751
|
|
|
|
3,751
|
|
Total other expense
|
|
|
(10,317
|
)
|
|
|
3,751
|
|
|
|
(6,566
|
)
|
Income before income tax expense
|
|
|
1,811
|
|
|
|
3,751
|
|
|
|
5,562
|
|
Income tax expense
|
|
|
(1,097
|
)
|
|
|
-
|
|
|
|
(1,097
|
)
|
Net income
|
|
$
|
714
|
|
|
$
|
3,751
|
|
|
$
|
4,465
|
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(5,910
|
)
|
|
|
-
|
|
|
|
(5,910
|
)
|
Net income (loss) attributable to common stock and
participating securities
|
|
$
|
(5,196
|
)
|
|
$
|
3,751
|
|
|
$
|
(1,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share
|
|
$
|
(0.53
|
)
|
|
$
|
0.38
|
|
|
$
|
(0.15
|
)
|
Weighted average shares outstanding basic and diluted
|
|
|
9,781,870
|
|
|
|
9,781,870
|
|
|
|
9,781,870
|
|
|
|
December 31. 2018
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
7,698
|
|
|
$
|
-
|
|
|
$
|
7,698
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of property and equipment
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Interest expense
|
|
|
(8,001
|
)
|
|
|
-
|
|
|
|
(8,001
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
4,493
|
|
|
|
4,493
|
|
Total other expense
|
|
|
(8,000
|
)
|
|
|
4,493
|
|
|
|
(3,507
|
)
|
Income before income tax expense
|
|
|
(302
|
)
|
|
|
4,493
|
|
|
|
4,191
|
|
Income tax expense
|
|
|
(2,318
|
)
|
|
|
-
|
|
|
|
(2,318
|
)
|
Net income
|
|
$
|
(2,620
|
)
|
|
$
|
4,493
|
|
|
$
|
1,873
|
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(3,845
|
)
|
|
|
-
|
|
|
|
(3,845
|
)
|
Deemed dividend on Series A Convertible Preferred Stock
|
|
|
(3,392
|
)
|
|
|
|
|
|
|
(3,392
|
)
|
Net income (loss) attributable to common stock and
participating securities
|
|
$
|
(9,857
|
)
|
|
$
|
4,493
|
|
|
$
|
(5,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share
|
|
$
|
(1.02
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.55
|
)
|
Weighted average shares outstanding basic and diluted
|
|
|
9,668,250
|
|
|
|
9,668,250
|
|
|
|
9,668,250
|
|
The
tables below set forth the consolidated statements of cash flow amounts originally reported, adjustments, and the restated balances for
the years ended December 31, 2020, 2019 and 2018.
|
|
December 31. 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
29,120
|
|
|
$
|
(14,494
|
)
|
|
$
|
14,626
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
81,947
|
|
|
|
|
|
|
|
81,947
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
14,494
|
|
|
|
14,494
|
|
Net cash provided by operating activities
|
|
|
111,067
|
|
|
|
-
|
|
|
|
111,067
|
|
Net cash used in investing activities
|
|
|
(30,324
|
)
|
|
|
-
|
|
|
|
(30,324
|
)
|
Net cash used in financing activities
|
|
|
(48,689
|
)
|
|
|
-
|
|
|
|
(48,689
|
)
|
Net change in cash and cash equivalents
|
|
|
32,054
|
|
|
|
-
|
|
|
|
32,054
|
|
Cash - Beginning
|
|
|
31,458
|
|
|
|
-
|
|
|
|
31,458
|
|
Cash - Ending
|
|
$
|
63,512
|
|
|
$
|
-
|
|
|
$
|
63,512
|
|
|
|
December 31. 2019
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
714
|
|
|
$
|
3,751
|
|
|
$
|
4,465
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
38,208
|
|
|
|
|
|
|
|
38,208
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
(3,751
|
)
|
|
|
(3,751
|
)
|
Net cash provided by operating activities
|
|
|
38,922
|
|
|
|
-
|
|
|
|
38,922
|
|
Net cash used in investing activities
|
|
|
(19,406
|
)
|
|
|
-
|
|
|
|
(19,406
|
)
|
Net cash used in financing activities
|
|
|
(14,661
|
)
|
|
|
-
|
|
|
|
(14,661
|
)
|
Net change in cash and cash equivalents
|
|
|
4,855
|
|
|
|
-
|
|
|
|
4,855
|
|
Cash - Beginning
|
|
|
26,603
|
|
|
|
-
|
|
|
|
26,603
|
|
Cash - Ending
|
|
$
|
31,458
|
|
|
$
|
-
|
|
|
$
|
31,458
|
|
|
|
December 31. 2018
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
(2,620
|
)
|
|
$
|
4,493
|
|
|
$
|
1,873
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
(12,706
|
)
|
|
|
|
|
|
|
(12,706
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
(4,493
|
)
|
|
|
(4,493
|
)
|
Net cash used in operating activities
|
|
|
(15,326
|
)
|
|
|
-
|
|
|
|
(15,326
|
)
|
Net cash used in investing activities
|
|
|
(95,876
|
)
|
|
|
-
|
|
|
|
(95,876
|
)
|
Net cash provided by financing activities
|
|
|
127,134
|
|
|
|
-
|
|
|
|
127,134
|
|
Net change in cash and cash equivalents
|
|
|
15,932
|
|
|
|
-
|
|
|
|
15,932
|
|
Cash - Beginning
|
|
|
10,671
|
|
|
|
-
|
|
|
|
10,671
|
|
Cash - Ending
|
|
$
|
26,603
|
|
|
$
|
-
|
|
|
$
|
26,603
|
|
The
tables below set forth the unaudited condensed consolidated balance sheet and condensed consolidated statement of operations originally
reported, adjustments, and the restated balances as of and for the three and nine months ended September 30, 2020 and the condensed consolidated
statement of cash flow amounts originally reported, adjustments, and the restated balances for the nine months ended September 30, 2020.
|
|
September 30, 2020 (unaudited)
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
397,905
|
|
|
$
|
-
|
|
|
$
|
397,905
|
|
Liabilities and Stockholder’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
137,808
|
|
|
$
|
-
|
|
|
|
137,808
|
|
Financing liability, non-current portion, net of debt discount
|
|
|
71,095
|
|
|
|
-
|
|
|
|
71,095
|
|
Long term debt, non-current portion, net of debt discount
|
|
|
10,512
|
|
|
|
-
|
|
|
|
10,512
|
|
Operating lease liability, non-current portion
|
|
|
12,841
|
|
|
|
-
|
|
|
|
12,841
|
|
Deferred tax liability
|
|
|
16,451
|
|
|
|
-
|
|
|
|
16,451
|
|
Warrant liabilities
|
|
|
-
|
|
|
|
10,992
|
|
|
|
10,992
|
|
Total liabilities
|
|
|
248,707
|
|
|
|
10,992
|
|
|
|
259,699
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of December 31, 2020; liquidation
preference of $60,000 as of December 31, 2020
|
|
|
54,983
|
|
|
|
-
|
|
|
|
54,983
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 9,593,150 shares issued and 9,451,851 outstanding at September
30, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
78,931
|
|
|
|
(8,991
|
)
|
|
|
69,940
|
|
Treasury Stock, at cost, 141,299 shares at September 30, 2020
|
|
|
(499
|
)
|
|
|
-
|
|
|
|
(499
|
)
|
Retained earnings
|
|
|
15,783
|
|
|
|
(2,001
|
)
|
|
|
13,782
|
|
Total stockholders’ equity
|
|
|
94,215
|
|
|
|
(10,992
|
)
|
|
|
83,223
|
|
Total liabilities and stockholders’ equity
|
|
$
|
397,905
|
|
|
$
|
-
|
|
|
$
|
397,905
|
|
|
|
Three
months ended
September
30, 2020 (Unaudited)
|
|
|
Nine
months ended
September
30, 2020 (Unaudited)
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
17,532
|
|
|
$
|
-
|
|
|
$
|
17,532
|
|
|
$
|
36,944
|
|
|
$
|
-
|
|
|
$
|
36,944
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of property and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(8
|
)
|
Interest expense
|
|
|
(1,749
|
)
|
|
|
-
|
|
|
|
(1,749
|
)
|
|
|
(6,262
|
)
|
|
|
-
|
|
|
|
(6,262
|
)
|
Change in fair value of warrant
liabilities
|
|
|
-
|
|
|
|
(7,899
|
)
|
|
|
(7,899
|
)
|
|
|
-
|
|
|
|
(10,245
|
)
|
|
|
(10,245
|
)
|
Total other expense
|
|
|
(1,749
|
)
|
|
|
(7,899
|
)
|
|
|
(9,648
|
)
|
|
|
(6,270
|
)
|
|
|
(10,245
|
)
|
|
|
(16,515
|
)
|
Income before income tax expense
|
|
|
15,783
|
|
|
|
(7,899
|
)
|
|
|
7,884
|
|
|
|
30,674
|
|
|
|
(10,245
|
)
|
|
|
20,429
|
|
Income tax expense
|
|
|
(4,184
|
)
|
|
|
-
|
|
|
|
(4,184
|
)
|
|
|
(8,020
|
)
|
|
|
-
|
|
|
|
(8,020
|
)
|
Net income
|
|
$
|
11,599
|
|
|
$
|
(7,899
|
)
|
|
$
|
3,700
|
|
|
$
|
22,654
|
|
|
$
|
(10,245
|
)
|
|
$
|
12,409
|
|
Dividends of Series A Convertible
Preferred Stock
|
|
|
(1,745
|
)
|
|
|
-
|
|
|
|
(1,745
|
)
|
|
|
(5,073
|
)
|
|
|
-
|
|
|
|
(5,073
|
)
|
Net income (loss) attributable
to common stock and participating securities
|
|
$
|
9,854
|
|
|
$
|
(7,899
|
)
|
|
$
|
1,955
|
|
|
$
|
17,581
|
|
|
$
|
(10,245
|
)
|
|
$
|
7,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share
|
|
$
|
0.55
|
|
|
$
|
(0.42
|
)
|
|
$
|
0.13
|
|
|
$
|
1.00
|
|
|
$
|
(0.50
|
)
|
|
$
|
0.50
|
|
Weighted average shares outstanding basic and diluted
|
|
|
10,807,368
|
|
|
|
10,807,368
|
|
|
|
10,807,368
|
|
|
|
10,747,370
|
|
|
|
10,747,370
|
|
|
|
10,747,370
|
|
|
|
Nine Months Ended September 30, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
22,654
|
|
|
$
|
(10,245
|
)
|
|
$
|
12,409
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
119,247
|
|
|
|
|
|
|
|
119,247
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
10,245
|
|
|
|
10,245
|
|
Net cash provided by operating activities
|
|
|
141,901
|
|
|
|
-
|
|
|
|
141,901
|
|
Net cash used in investing activities
|
|
|
(7,005
|
)
|
|
|
-
|
|
|
|
(7,005
|
)
|
Net cash used in financing activities
|
|
|
(84,700
|
)
|
|
|
-
|
|
|
|
(84,700
|
)
|
Net change in cash and cash equivalents
|
|
|
50,196
|
|
|
|
-
|
|
|
|
50,196
|
|
Cash - Beginning
|
|
|
31,458
|
|
|
|
-
|
|
|
|
31,458
|
|
Cash - Ending
|
|
$
|
81,654
|
|
|
$
|
-
|
|
|
$
|
81,654
|
|
The
tables below set forth the unaudited condensed consolidated balance sheet and condensed consolidated statement of operations originally
reported, adjustments, and the restated balances as of and for the three and six months ended June 30, 2020 and the condensed consolidated
statement of cash flow amounts originally reported, adjustments, and the restated balances for the six months ended June 30, 2020.
|
|
June 30, 2020 (unaudited)
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
414,722
|
|
|
$
|
-
|
|
|
$
|
414,722
|
|
Liabilities and Stockholder’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
149,211
|
|
|
$
|
-
|
|
|
|
149,211
|
|
Financing liability, non-current portion, net of debt discount
|
|
|
71,403
|
|
|
|
-
|
|
|
|
71,403
|
|
Long term debt, non-current portion, net of debt discount
|
|
|
15,679
|
|
|
|
-
|
|
|
|
15,679
|
|
Operating lease liability, non-current portion
|
|
|
13,616
|
|
|
|
-
|
|
|
|
13,616
|
|
Deferred tax liability
|
|
|
16,450
|
|
|
|
-
|
|
|
|
16,450
|
|
Warrant liabilities
|
|
|
-
|
|
|
|
3,093
|
|
|
|
3,093
|
|
Total liabilities
|
|
|
266,359
|
|
|
|
3,093
|
|
|
|
269,452
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of December 31, 2020; liquidation
preference of $60,000 as of December 31, 2020
|
|
|
64,221
|
|
|
|
-
|
|
|
|
64,221
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,548,524 shares issued and 8,407,225 outstanding at June 30,
2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
78,712
|
|
|
|
(8,991
|
)
|
|
|
69,721
|
|
Treasury Stock, at cost, 141,299 shares at June 30, 2020
|
|
|
(499
|
)
|
|
|
-
|
|
|
|
(499
|
)
|
Retained earnings
|
|
|
5,929
|
|
|
|
5,898
|
|
|
|
11,827
|
|
Total stockholders’ equity
|
|
|
84,142
|
|
|
|
(3,093
|
)
|
|
|
81,049
|
|
Total liabilities and stockholders’ equity
|
|
$
|
414,722
|
|
|
$
|
-
|
|
|
$
|
414,722
|
|
|
|
Three
months ended June 30, 2020 (Unaudited)
|
|
|
Six
months ended June 30, 2020 (Unaudited)
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
12,628
|
|
|
$
|
-
|
|
|
$
|
12,628
|
|
|
$
|
19,412
|
|
|
$
|
-
|
|
|
$
|
19,412
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of property and equipment
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(8
|
)
|
Interest expense
|
|
|
(2,018
|
)
|
|
|
-
|
|
|
|
(2,018
|
)
|
|
|
(4,513
|
)
|
|
|
-
|
|
|
|
(4,513
|
)
|
Change in fair value of warrant
liabilities
|
|
|
-
|
|
|
|
(2,758
|
)
|
|
|
(2,758
|
)
|
|
|
-
|
|
|
|
(2,346
|
)
|
|
|
(2,346
|
)
|
Total other expense
|
|
|
(2,024
|
)
|
|
|
(2,758
|
)
|
|
|
(4,782
|
)
|
|
|
(4,521
|
)
|
|
|
(2,346
|
)
|
|
|
(6,867
|
)
|
Income before income tax expense
|
|
|
10,604
|
|
|
|
(2,758
|
)
|
|
|
7,846
|
|
|
|
14,891
|
|
|
|
(2,346
|
)
|
|
|
12,545
|
|
Income tax expense
|
|
|
(2,536
|
)
|
|
|
-
|
|
|
|
(2,536
|
)
|
|
|
(3,836
|
)
|
|
|
-
|
|
|
|
(3,836
|
)
|
Net income
|
|
$
|
8,068
|
|
|
$
|
(2,758
|
)
|
|
$
|
5,310
|
|
|
$
|
11,055
|
|
|
$
|
(2,346
|
)
|
|
$
|
8,709
|
|
Dividends of Series A Convertible
Preferred Stock
|
|
|
(1,684
|
)
|
|
|
-
|
|
|
|
(1,684
|
)
|
|
|
(3,328
|
)
|
|
|
-
|
|
|
|
(3,328
|
)
|
Net income attributable
to common stock and participating securities
|
|
$
|
6,384
|
|
|
$
|
(2,758
|
)
|
|
$
|
3,626
|
|
|
$
|
7,727
|
|
|
$
|
(2,346
|
)
|
|
$
|
5,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income per share
|
|
$
|
0.39
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.25
|
|
|
$
|
0.48
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.38
|
|
Weighted average shares outstanding basic and diluted
|
|
|
9,715,677
|
|
|
|
9,715,677
|
|
|
|
9,715,677
|
|
|
|
9,736,133
|
|
|
|
9,736,133
|
|
|
|
9,736,133
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
11,055
|
|
|
$
|
(2,346
|
)
|
|
$
|
8,709
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
72,555
|
|
|
|
|
|
|
|
72,555
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
2,346
|
|
|
|
2,346
|
|
Net cash provided by operating activities
|
|
|
83,610
|
|
|
|
-
|
|
|
|
83,610
|
|
Net cash used in investing activities
|
|
|
(765
|
)
|
|
|
-
|
|
|
|
(765
|
)
|
Net cash used in financing activities
|
|
|
(52,253
|
)
|
|
|
-
|
|
|
|
(52,253
|
)
|
Net change in cash and cash equivalents
|
|
|
30,592
|
|
|
|
-
|
|
|
|
30,592
|
|
Cash - Beginning
|
|
|
31,458
|
|
|
|
-
|
|
|
|
31,458
|
|
Cash - Ending
|
|
$
|
62,050
|
|
|
$
|
-
|
|
|
$
|
62,050
|
|
The
tables below set forth the unaudited condensed consolidated balance sheet and condensed consolidated statement of operations originally
reported, adjustments, and the restated balances as of and for the three months ended March 31, 2020 and the condensed consolidated statement
of cash flow amounts originally reported, adjustments, and the restated balances for the three months ended March 31, 2020.
|
|
March 31, 2020 (unaudited)
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
428,130
|
|
|
$
|
-
|
|
|
$
|
428,130
|
|
Liabilities and Stockholder’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
181,526
|
|
|
$
|
-
|
|
|
|
181,526
|
|
Financing liability, non-current portion, net of debt discount
|
|
|
68,158
|
|
|
|
-
|
|
|
|
68,158
|
|
Long term debt, non-current portion, net of debt discount
|
|
|
7,746
|
|
|
|
-
|
|
|
|
7,746
|
|
Operating lease liability, non-current portion
|
|
|
14,405
|
|
|
|
-
|
|
|
|
14,405
|
|
Deferred tax liability
|
|
|
16,450
|
|
|
|
-
|
|
|
|
16,450
|
|
Warrant liabilities
|
|
|
-
|
|
|
|
335
|
|
|
|
335
|
|
Total liabilities
|
|
|
288,285
|
|
|
|
335
|
|
|
|
288,620
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of December 31, 2020; liquidation
preference of $60,000 as of December 31, 2020
|
|
|
62,537
|
|
|
|
-
|
|
|
|
62,537
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,506,666 shares issued and outstanding at March 31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
78,222
|
|
|
|
(8,991
|
)
|
|
|
69,231
|
|
Treasury Stock, at cost, 122,729 shares at March 31, 2020
|
|
|
(459
|
)
|
|
|
-
|
|
|
|
(459
|
)
|
(Accumulated deficit) Retained earnings
|
|
|
(455
|
)
|
|
|
8,656
|
|
|
|
8,201
|
|
Total stockholders’ equity
|
|
|
77,308
|
|
|
|
(335
|
)
|
|
|
76,973
|
|
Total liabilities and stockholders’ equity
|
|
$
|
428,130
|
|
|
$
|
-
|
|
|
$
|
428,130
|
|
|
|
Three months ended March 31, 2020 (Unaudited)
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
6,784
|
|
|
$
|
-
|
|
|
$
|
6,784
|
|
Other income/expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of property and equipment
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
Interest expense
|
|
|
(2,495
|
)
|
|
|
-
|
|
|
|
(2,495
|
)
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
412
|
|
|
|
412
|
|
Total other expense
|
|
|
(2,497
|
)
|
|
|
412
|
|
|
|
(2,085
|
)
|
Income before income tax expense
|
|
|
4,287
|
|
|
|
412
|
|
|
|
4,699
|
|
Income tax expense
|
|
|
(1,300
|
)
|
|
|
-
|
|
|
|
(1,300
|
)
|
Net income
|
|
$
|
2,987
|
|
|
$
|
412
|
|
|
$
|
3,399
|
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(1,644
|
)
|
|
|
-
|
|
|
|
(1,644
|
)
|
Net income attributable to common stock and participating
securities
|
|
$
|
1,343
|
|
|
$
|
412
|
|
|
$
|
1,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income per share
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
0.12
|
|
Weighted average shares outstanding basic and diluted
|
|
|
9,757,036
|
|
|
|
9,757,036
|
|
|
|
9,757,036
|
|
|
|
Three Months Ended March 31, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
2,987
|
|
|
$
|
412
|
|
|
$
|
3,399
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
13,140
|
|
|
|
|
|
|
|
13,140
|
|
Change in fair value of warrant liabilities
|
|
|
-
|
|
|
|
(412
|
)
|
|
|
(412
|
)
|
Net cash provided by operating activities
|
|
|
16,127
|
|
|
|
-
|
|
|
|
16,127
|
|
Net cash provided by investing activities
|
|
|
3,158
|
|
|
|
-
|
|
|
|
3,158
|
|
Net cash used in financing activities
|
|
|
(7,474
|
)
|
|
|
-
|
|
|
|
(7,474
|
)
|
Net change in cash and cash equivalents
|
|
|
11,811
|
|
|
|
-
|
|
|
|
11,811
|
|
Cash - Beginning
|
|
|
31,458
|
|
|
|
-
|
|
|
|
31,458
|
|
Cash - Ending
|
|
$
|
43,269
|
|
|
$
|
-
|
|
|
$
|
43,269
|
|
Use
of Estimates in the Preparation of Financial Statements
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States of America
(“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 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.
Cash
and Cash Equivalents
The
Company considers all short-term, highly liquid investments purchased with a maturity date of three months or less to be cash
equivalents. The carrying amount approximates fair value because of the short-term maturity of these instruments. Cash consists
of business checking accounts with its banks, the first $250 of which is insured by the Federal Deposit Insurance Corporation.
There are no cash equivalents as of December 31, 2020 and 2019.
Revenue
Recognition
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting standard updates which clarified principles
for recognizing revenue arising from contracts with customers (Accounting Standards Codification (“ASC”) 606 (“ASC
606”). The core principle of the revenue standard is that an entity recognizes revenue to depict the transfer of promised
goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. The new guidance applies a five-step model for revenue measurement and recognition and also requires
increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with
clients.
The
Company adopted the new revenue recognition standard at the beginning of the first quarter of fiscal 2019 using the modified retrospective
method of adoption and applied the guidance to those contracts that were not completed as of December 31, 2018. Based on the evaluation,
the Company did not identify customer contracts which will require different recognition under the new guidance.
Revenues
are recognized when control of the promised goods or services is transferred to the customers at the expected amount the Company
is entitled to for such goods and services. Taxes collected on revenue producing transactions are excluded from revenue in the
consolidated statements of operations. The following table represents the Company’s disaggregation of revenue:
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
New vehicle revenue
|
|
$
|
479,611
|
|
|
$
|
353,228
|
|
Preowned vehicle revenue
|
|
|
250,261
|
|
|
|
213,830
|
|
Parts, accessories, and related services
|
|
|
38,630
|
|
|
|
35,607
|
|
Finance and insurance revenue
|
|
|
45,123
|
|
|
|
36,698
|
|
Campground, rental, and other revenue
|
|
|
3,485
|
|
|
|
5,549
|
|
|
|
$
|
817,110
|
|
|
$
|
644,912
|
|
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 other
revenue in the accompanying consolidated statements of operations.
Revenue
from the 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 other revenue in the accompanying consolidated statements of operations
for the year ended December 31, 2019 during which the rental business was discontinued. Campground revenue is also recognized
over the time period of use of the campground.
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 estimates for future chargebacks require judgment by management, and as a result, there is an element of risk associated with
these revenue streams. The Company recognized finance and insurance revenues, less the addition to the charge-back allowance,
which is included in other revenue as follows:
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Gross finance and insurance revenues
|
|
$
|
50,341
|
|
|
$
|
41,169
|
|
Additions to charge-back allowance
|
|
|
(6,217
|
)
|
|
|
(4,471
|
)
|
Net Finance Revenue
|
|
$
|
44,124
|
|
|
$
|
36,698
|
|
The
Company has an accrual for charge-backs which totaled $5,553 and $4,221 at December 31, 2020 and December 31, 2019, respectively,
and is included in “Accounts payable, accrued expenses, and other current liabilities” in the accompanying 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. These contract liabilities are included in Note 9 – Accounts Payable, Accrued Expenses, and Other Current Liabilities
as customer deposits. During the year ended December 31, 2020, substantially all of the contract liabilities as of December 31,
2019 were either recognized in revenue or cancelled.
Occupancy
Costs
As
a retail merchandising organization, the Company has elected to classify occupancy costs as selling, general and administrative
expense in the consolidated statements of operations.
Shipping
and Handling Fees and Costs
The
Company reports shipping and handling costs billed to customers as a component of revenues, and related costs are reported as
a component of costs applicable to revenues. For the years ended December 31, 2020 and December 31, 2019, respectively, shipping
and handling included as a component of revenue were $3,262 and $2,284.
Receivables
The
Company sells to customers and arranges third-party financing, as is customary in the industry. Interest is not normally charged
on receivables. Management establishes an allowance for doubtful accounts based on its historic loss experience and current economic
conditions. Losses are charged to the allowance when management deems further collection efforts will not produce additional recoveries.
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 $3,627 and $3,719 as of December 31, 2020 and 2019, respectively.
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. Improvements 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.
Useful
lives range from 2 to 39 years for buildings and improvements and from 2 to 12 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. Application of the goodwill impairment test requires judgment, including the identification
of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining
fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash
flows, determining appropriate discount rates, consideration of the Company’s aggregate fair value, and other assumptions.
Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.
When
testing goodwill for impairment, the Company may assess qualitative factors for some or all of our reporting units to determine
whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is
less than the carrying amount, including goodwill. Alternatively, the Company may bypass this qualitative assessment for some
or all our reporting units and perform a detailed quantitative test of impairment (Step 1). If the Company performs the detailed
quantitative impairment test and the carrying amount of the reporting unit exceeds its fair value, the Company would perform an
analysis, (Step 2) to measure such impairment. At December 31, 2020, the Company performed a qualitative assessment to identify
and evaluate events and circumstances to conclude whether it is more likely than not that the fair value of the Company’s
reporting units is less than their carrying amounts. Based on the Company’s qualitative assessments, the Company concluded
that a positive assertion can be made that it is more likely than not that the fair value of the reporting units exceeded their
carrying values and no impairments were identified at December 31, 2020.
The
Company’s manufacturer and customer relationships are amortized over their estimated useful lives on a straight-line basis.
The
estimated useful lives are 7 to 12 years for both the manufacturer and customer relationships.
Vendor
Allowances
As
a component of the Company’s consolidated procurement program, the Company frequently enters into contracts with vendors
that provide for payments of rebates. These vendor payments are reflected in the carrying value of the inventory when earned or
as progress is made toward earning the rebates and as a component of costs of sales as the inventory is sold. Certain of these
vendor contracts provide for rebates that are contingent upon the Company meeting specified performance measures such as a cumulative
level of purchases over a specified period of time. Such contingent rebates are given accounting recognition at the point at which
achievement of the specified performance measures is deemed to be probable and reasonably estimable.
Financing
Costs
Debt
financing costs are recorded as a debt discount and are amortized over the term of the related debt. Amortization of debt discount
included in interest expense was $170 and $220 for the years ended December 31, 2020 and December 31, 2019, respectively.
Impairment
of Long-Lived Assets
The
Company evaluates the carrying value of long-lived assets whenever events or changes in circumstances indicate that intangible
asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant
decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used,
or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The
Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should
the sum of the expected future net cash flows be less than the carrying amount of the asset being evaluated, an impairment loss
would be recognized for the amount by which the carrying value of the asset exceeds its fair value. The evaluation of asset impairment
requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions
require significant judgment and actual results may differ from assumed and estimated amounts. Management believes no impairment
of long-lived assets existed as of December 31, 2020 and 2019.
Fair
Value of Financial Instruments
The
carrying amounts of financial instruments approximate fair value as of December 31, 2020 and 2019 because of the relatively short
maturities of these instruments. The carrying amount of the Company’s bank debt approximates fair value as of December 31,
2020 and 2019 because the debt bears interest at a rate that approximates the current market rate at which the Company could borrow
funds with similar maturities.
Cumulative
Redeemable Convertible Preferred Stock
The
Company’s Series A Preferred Stock (See Note 16 – 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. Any unpaid preferred dividends are accumulated, compounded
at each quarterly dividend date and presented within the carrying value of the Series A Preferred Stock until a dividend is declared
by the Board of Directors.
Stock
Based Compensation
The
Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation. 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 consolidated statements of operations.
Earnings
Per Share
The
Company computes 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.
The
Company is required, in periods in which it has 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 shareholders but does not require the presentation of basic and diluted EPS for securities other than
common shares. The two-class method is required because the Company’s Series A Preferred Stock have the right to receive
dividends or dividend equivalents should the Company declare dividends on its common stock. Under the two-class method, earnings
for the period are allocated on a pro-rata basis to the common and preferred stockholders. 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 shares issuable upon exercise of common share 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 the Company has 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 does not participate in losses.
The
following table summarizes net income (loss) attributable to common stockholders used in the calculation of basic and diluted loss per
common share:
|
|
Year ended
|
|
|
Year ended
|
|
(Dollars in thousands - except share and per share amounts)
|
|
December 31. 2020
(Restated)
|
|
|
December 31, 2019
(Restated)
|
|
Distributed earning allocated to common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
Undistributed earnings allocated to common stock
|
|
|
5,579
|
|
|
|
(1,445
|
)
|
Net earnings allocated to common stock
|
|
|
5,579
|
|
|
|
(1,445
|
)
|
Net earnings allocated to participating securities
|
|
|
2,764
|
|
|
|
-
|
|
Net earnings allocated to common stock and participating securities
|
|
$
|
8,343
|
|
|
$
|
(1,445
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for basic earning per common share
|
|
|
9,809,783
|
|
|
|
9,781,870
|
|
Dilutive effect of warrants and options
|
|
|
-
|
|
|
|
-
|
|
Weighted average shares outstanding for diluted earnings per share computation
|
|
|
9,809,783
|
|
|
|
9,781,870
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share
|
|
$
|
0.57
|
|
|
$
|
(0.15
|
)
|
Diluted income per common share
|
|
$
|
0.57
|
|
|
$
|
(0.15
|
)
|
During
the years ended December 31, 2020 and 2019, respectively, the denominator of the basic EPS was calculated as follows:
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Weighted average outstanding common shares
|
|
|
9,509,426
|
|
|
|
8,442,371
|
|
Weighted average prefunded warrants
|
|
|
300,357
|
|
|
|
1,339,499
|
|
Weighted shares outstanding - basic
|
|
|
9,809,783
|
|
|
|
9,781,870
|
|
During the years ended
December 31, 2020 and 2019, respectively, the denominator of the dilutive EPS was calculated as follows:
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Weighted average outstanding common shares
|
|
|
9,509,426
|
|
|
|
8,442,371
|
|
Weighted average prefunded warrants
|
|
|
300,357
|
|
|
|
1,339,499
|
|
Weighted average warrants
|
|
|
1,068,198
|
|
|
|
-
|
|
Weighted average options
|
|
|
1,128,295
|
|
|
|
-
|
|
Weighted average convertible preferred stock
|
|
|
6,082,981
|
|
|
|
-
|
|
Weighted shares outstanding - diluted
|
|
|
18,089,257
|
|
|
|
9,781,870
|
|
For
the years ended December 31, 2020 and 2019, respectively, the following common stock equivalent shares were excluded from the
computation of the diluted income (loss) per share, since their inclusion would have been anti-dilutive:
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Shares underlying Series A Convertible Preferred Stock
|
|
|
-
|
|
|
|
5,962,733
|
|
Shares underlying warrants
|
|
|
-
|
|
|
|
4,677,458
|
|
Stock options
|
|
|
-
|
|
|
|
3,798,818
|
|
Shares issuable under the Employee Stock Purchase Plan
|
|
|
54,721
|
|
|
|
49,300
|
|
Share equivalents excluded from EPS
|
|
|
54,721
|
|
|
|
14,488,309
|
|
Advertising
Costs
Advertising
and promotion costs are charged to operations in the period incurred. Advertising and promotion costs totaled $12,941 and $12,083
for the years ended December 31, 2020 and December 31, 2019, respectively.
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will
be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset
deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the
deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss
in the period that includes the enactment date.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return.
Tax
benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit
from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements
from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s financial condition, results of operations
or cash flows. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the
reporting date.
The
Company’s policy is to classify assessments, if any, for tax related interest and penalties as income tax expense in the
consolidated statements of operations.
Seasonality
and Effects of Weather
The
Company’s operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in
part to consumer buying trends and the hospitable warm climate during the winter months at our Florida and Arizona locations.
In addition, the northern locations in Colorado, Tennessee, Minnesota and Indiana generally experience modestly higher vehicle
sales during the spring months.
The
Company’s largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe
weather event, such as a hurricane, could cause severe damage to property and inventory and decrease the traffic to our dealerships.
Although the Company believes that it has adequate insurance coverage, if the Company were to experience a catastrophic loss,
the Company may exceed its policy limits, and/or may have difficulty obtaining similar insurance coverage in the future.
Vendor
Concentrations
The
Company purchases its new recreational vehicles and replacement parts from various manufacturers. During the year ended December
31, 2020, four manufacturers accounted for 26.1%, 25.0%, 24.0% and 19.5% of RV purchases. During the year ended December
31, 2019, four manufacturers accounted for 33.9%, 20.5%, 20.2% and 14.7% of RV 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 locations, the Colorado locations, and the Arizona locations which generate greater than
10% of revenues, were as follows:
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Florida
|
|
|
63
|
%
|
|
|
68
|
%
|
Colorado
|
|
|
14
|
%
|
|
|
14
|
%
|
Arizona
|
|
|
10
|
%
|
|
|
<10
|
%
|
These
geographic concentrations increase the exposure to adverse developments related to competition, as well as economic, demographic,
weather and other changes in these regions.
Impact
of COVID-19
In
March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease COVID-19 a pandemic, which continues
to spread throughout the United States and globally. Beginning in mid-to-late March of 2020, the COVID-19 pandemic led to severe
disruptions in general economic activity as businesses and federal, state, and local governments took increasingly broad actions
to mitigate the impact of the pandemic on public health, including through “shelter in place” or “stay at home”
orders in the states in which we operate. As we modified our business practices to conform to government guidelines and best practices
to ensure the health and safety of our customers, employees and the communities we serve, we saw significant early declines in
new and pre-owned vehicle unit sales, sales of parts, accessories and related services, including finance and insurance revenues
as well as campground and miscellaneous revenues.
We
took a number of actions in April 2020 to adjust resources and costs to align with reduced demand caused by the pandemic. These
actions included:
|
●
|
Reduction
of our workforce by 25%;
|
|
●
|
Temporary
reduction of senior management salaries (April 2020 through May 2020);
|
|
●
|
Suspension
of 2020 annual pay increases;
|
|
●
|
Temporary
suspension of 401k match (April 2020 through May 2020);
|
|
●
|
Delay
of non-critical capital projects; and
|
|
●
|
Focus
of resources on core sales and service operations.
|
As
described under Note 11 - Debt below, to further protect our liquidity and cash position, we negotiated with our lenders for the
temporary suspension of scheduled principal and interest payments on our term and mortgage loans from April 15, 2020 through June
15, 2020 and for the temporary suspension of scheduled floorplan curtailment payments from April 1, 2020 through June 15, 2020.
We also received $8.7 million in loans under the Paycheck Protection Program (the “PPP Loans”). While we applied for
loan forgiveness under the PPP loans, there can be no assurances that the loans will be forgiven.
The
improvement in sales beginning in May 2020 likely relates, at least in part, to an increase in consumer demand as consumers seek
outdoor travel and leisure activities that permit appropriate social distancing. However,
we can provide no assurances that such growth in sales will continue at the same rate as between May and December 2020,
or at all, over any time period, and sales may ultimately decline. Furthermore, our improved sales and cost savings measures to
date may not be sufficient to offset any later adverse impacts of the pandemic, and our liquidity could be negatively impacted,
if sales trends from May through December 2020 are reversed, which may occur, for example, if the cruise line, air travel and
hotel industries begin to recover.
Our
operations also depend on the continued health and productivity of our employees at our dealerships service locations and corporate
headquarters throughout this pandemic. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations,
and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the
severity and duration of the COVID-19 pandemic, the efficacy and availability of vaccines, and further actions that may be taken
by individuals, businesses and federal, state and local governments in response. Even after the COVID-19 pandemic has subsided,
we may experience significant adverse effects to our business as a result of its global economic impact, including any economic
recession or downturn and the impact of such a recession or downturn on unemployment levels, consumer confidence, levels of personal
discretionary spending and credit availability.
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 (loss).
Leases
Adoption
of new lease standard
In
February 2016, the FASB issued a new accounting standard that amends the guidance for the accounting and disclosure of leases.
This new standard requires that lessees recognize the assets and liabilities that arise from leases on the balance sheet, including
leases classified as operating leases, and disclose qualitative and quantitative information about leasing arrangements. The FASB
subsequently issued additional amendments to address issues arising from the implementation of the new lease standard. We adopted
this standard as of January 1, 2020, using the modified-retrospective method. This approach provides a method for recording existing
leases at adoption. We used the adoption date as our date of initial application, and thus comparative-period financial information
is not presented for periods prior to the adoption date. In addition, we elected the package of practical expedients permitted
under the transition guidance within the new standard, which, among other things, allowed the Company to carry forward the historical
lease classification.
Adoption
of the new standard resulted in total operating lease liabilities of approximately $17,800 and operating lease assets of approximately
$17,800 as of January 1, 2020. The standard did not materially impact our Consolidated Statements of Operations and had
no impact on our Consolidated Statements of Cash Flows. Our accounting policies under the new standard are described below. See
Note 10, Leases.
Lease
recognition
At
inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we determine the classification
as either operating or financing.
Operating
lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation
to make lease payments under the lease. Lease recognition occurs at the commencement date and lease liability amounts are based
on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease
when it is reasonably certain that we will exercise that option. Because most of our leases do not provide information to determine
an implicit interest rate, we use our incremental borrowing rate in determining the present value of lease payments. Operating
lease assets also include any lease payments made prior to the commencement date and exclude lease incentives received. Operating
lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with both lease and non-lease
components, which are generally accounted for together as a single lease component.
Subsequent
Events
Management
of the Company has analyzed the activities and transactions subsequent to December 31, 2020 through the date these consolidated
financial statements were issued to determine the need for any adjustments to or disclosures within the financial statements.
On
January 4, 2021, the Company commenced sales and service operations at its new dealership in Murfreesboro, TN located just south
of Nashville on I-24. The 42,000 square facility becomes Lazydays eleventh full-service RV dealership and its second dealership
located in Tennessee. Lazydays RV of Nashville will carry Grand Design, Coachmen, Thor Motor Coach, Forest River, Tiffin and Winnebago
brands.
On March 17, 2021,
two institutional investors exercised warrants issued in the PIPE Investment with respect to an aggregate of 1,005,308 shares
of our common stock for cash, resulting in the issuance of 1,005,308 shares of common stock and gross proceeds to the Company
of $11,315,250 pursuant to agreements executed with the Company. The above issuances were exempt from registration
under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of such act, and Rule
506(b) thereunder, as issuances made in a private placement to accredited investors.
On
February 13, 2021, the Company signed an agreement with M&T to extend the maturity date of the credit facility to June 15,
2021.
On June 10, 2021, the Company
was granted forgiveness on four PPP Loans in the amount of $2,136.
On June 14, 2021, the Company signed an agreement
with M&T Bank to extend the maturity date of the credit facility to September 15, 2021.
Recently
Issued Accounting Standards
In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”). This
standard requires the use of a forward-looking expected loss impairment model for trade and other receivables, held-to-maturity
debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt
securities to be recorded through an allowance account and revises certain disclosure requirements. In April 2019, the FASB issued
ASU 2019-04, Codification Improvements, which provides guidance on accounting for credit losses on accrued interest receivable
balances and guidance on including recoveries when estimating the allowance. In May 2019, the FASB issued ASU 2019-05, Targeted
Transition Relief, which allows entities with an option to elect fair value for certain instruments upon adoption of Topic 326.
The standard is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2020. The Company is currently evaluating the impact that the adoption of the provisions of ASU 2016-03 will have on its consolidated
financial statements.
In
March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). This standard, effective
for reporting periods through December 31, 2022, provides accounting relief for contract modifications that replace an interest
rate impacted by reference rate reform (e.g., London Interbank Offered Rate (“LIBOR”)) with a new alternative reference
rate. The guidance is applicable to investment securities, receivables, loans, debt, leases, derivatives and hedge accounting
elections and other contractual arrangements. The new standard provides temporary optional expedients and exceptions to current
GAAP guidance on contract modifications and hedge accounting. Specifically, a modification to transition to an alternative reference
rate is treated as an event that does not require contract remeasurement or reassessment of a previous accounting treatment. The
standard is generally effective for all contract modifications made and hedging relationships evaluated through December 31, 2022,
as a result of reference rate reform. The Company is currently evaluating the impact that this new standard will have on our financial
statements.
NOTE
3 – BUSINESS COMBINATIONS
Acquisitions
of Dealerships
On
August 1, 2019, the Company consummated its asset purchase agreement with Alliance Coach Inc. (“Alliance”). The purchase
price consisted of cash and a note payable to the seller of Alliance. The note payable is a two year note which matures on August
1, 2021, which requires monthly payments of $134 in principal and interest. The note bears interest at 5.0% per year. As part
of the acquisition, the Company acquired the inventory of Alliance and has added the inventory to the M&T Floor Plan Line
of Credit.
On
May 19, 2020, the Company consummated its asset purchase agreement with Korges Enterprises, Inc. (“Korges”). The purchase
price consisted solely of cash paid to Korges. As part of the acquisition, the Company acquired the inventory of Korges and has
added the inventory to the M&T Floor Plan Line of Credit (as defined below).
On
October 6, 2020, the Company consummated its asset purchase agreement with Total Value Recreation Vehicles of Indiana, Inc. (“Total
RV”). The purchase price consisted solely of cash paid to Total RV. As part of the acquisition, the Company acquired the
inventory of Total RV and has added the inventory to the M&T Floor Plan Line of Credit (as defined below).
On
December 1, 2020, the Company consummated its asset purchase agreement with Camp-Land, Inc. (“Camp-Land”). The purchase
price consisted of cash paid to Camp-Land and a note payable to the seller of Camp-Land. The note payable is a four year note
which matures on January 5, 2025, which requires annual payments of $435 in principal and interest. The note bears interest at
3.25% per year. As part of the acquisition, the Company acquired the inventory of Camp-Land and has added the inventory to the
M&T Floor Plan Line of Credit (as defined below).
The
Company accounted for the asset purchase agreements as business combinations using the purchase method of accounting as it was
determined that Alliance, Korges, Total RV and Camp-Land each constituted a business. As a result, the Company determined its
preliminary allocation of the fair value of the assets acquired and the liabilities assumed for these dealerships as follows:
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Inventories
|
|
$
|
18,932
|
|
|
$
|
12,171
|
|
Accounts receivable and prepaid expenses
|
|
|
1,167
|
|
|
|
53
|
|
Property and equipment
|
|
|
5,417
|
|
|
|
77
|
|
Intangible assets
|
|
|
8,480
|
|
|
|
2,630
|
|
Total assets acquired
|
|
|
33,996
|
|
|
|
14,931
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities
|
|
|
1,004
|
|
|
|
243
|
|
Floor plan notes payable
|
|
|
20,855
|
|
|
|
11,434
|
|
Total liabilities assumed
|
|
|
21,859
|
|
|
|
11,677
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
12,137
|
|
|
$
|
3,254
|
|
The
fair value of consideration paid was as follows:
|
|
2020
|
|
|
2019
|
|
Purchase Price:
|
|
$
|
16,653
|
|
|
$
|
2,568
|
|
Cash consideration paid
|
|
|
|
|
|
|
(107
|
)
|
Note payable issued to former owners
|
|
|
1,600
|
|
|
|
3,045
|
|
|
|
$
|
18,253
|
|
|
$
|
5,506
|
|
Goodwill
represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets
acquired and liabilities assumed from Alliance, Korges, Total RV and Camp-Land. Goodwill associated with the transaction is detailed
below:
|
|
2020
|
|
|
2019
|
|
Total
consideration
|
|
$
|
18,253
|
|
|
$
|
5,506
|
|
Less
net assets acquired
|
|
|
12,137
|
|
|
|
3,254
|
|
Goodwill
|
|
$
|
6,116
|
|
|
$
|
2,252
|
|
The
following table summarizes the Company’s allocation of the purchase price to the identifiable intangible assets acquired
as of the date of the closing during 2019.
|
|
Gross Asset Amount at
Acquisition Date
|
|
|
Weighted Average Amortization Period in Years
|
|
Customer Lists
|
|
$
|
230
|
|
|
|
7 years
|
|
Dealer Agreements
|
|
$
|
2,400
|
|
|
|
7 years
|
|
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 during 2020
|
|
Gross Asset Amount at Acquisition Date
|
|
|
Weighted Average Amortization Period in Years
|
|
Customer Lists
|
|
$
|
250
|
|
|
|
8-10 years
|
|
Dealer Agreements
|
|
$
|
8,000
|
|
|
|
8-10 years
|
|
Noncompete Agreement
|
|
$
|
230
|
|
|
|
5 years
|
|
The
Company recorded approximately $39,514 in revenue and $2,389 in net income prior to income taxes during the year
ended December 31, 2020 related to the 2020 acquisitions. The Company recorded approximately $91.2 million in revenue and $3.9
million in pre-tax income during the year ended December 31, 2019 related to the 2019 acquisitions.
Pro
Forma Information
The
following unaudited pro forma financial information summarizes the combined results of operations for the Company as though the
purchase of Alliance, Korges, Total RV and Camp-Land had been consummated on January 1, 2019.
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
December 31, 2020
(Restated)
|
|
|
December 31, 2019
(Restated)
|
|
Revenue
|
|
$
|
881,122
|
|
|
$
|
791,408
|
|
Income before income taxes
|
|
$
|
40,717
|
|
|
$
|
2,289
|
|
Net income
|
|
$
|
30,094
|
|
|
$
|
1,092
|
|
The
Company adjusted the combined income of Lazydays RV with Alliance, Korges, Total RV and Camp-Land and adjusted net income to eliminate
business combination expenses as well as the incremental depreciation and amortization associated with the purchase price allocation
for Alliance and the preliminary purchase price allocation for Korges, Total RV and Camp-Land to determine pro forma net income.
Goodwill
that is deductible for tax purposes was determined to be $20,735.
NOTE
4 – RECEIVABLES, NET
Receivables
consist of the following:
|
|
As of
|
|
|
As of
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Contracts in transit and vehicle receivables
|
|
$
|
15,995
|
|
|
$
|
11,544
|
|
Manufacturer receivables
|
|
|
2,705
|
|
|
|
3,539
|
|
Finance and other receivables
|
|
|
1,423
|
|
|
|
1,324
|
|
|
|
|
20,123
|
|
|
|
16,407
|
|
Less: Allowance for doubtful accounts
|
|
|
(659
|
)
|
|
|
(382
|
)
|
|
|
$
|
19,464
|
|
|
$
|
16,025
|
|
Contracts
in transit represent receivables from financial institutions for the portion of the vehicle and other products sales price financed
by the Company’s customers through financing sources arranged by the Company. Manufacturer receivables are due from the
manufacturers for incentives, rebates, and other programs. These incentives and rebates are treated as a reduction of cost of
revenues.
NOTE
5 – INVENTORIES
Inventories
consist of the following:
|
|
As of
|
|
|
As of
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
New recreational vehicles
|
|
$
|
92,434
|
|
|
$
|
124,096
|
|
Pre-owned recreational vehicles
|
|
|
22,967
|
|
|
|
36,639
|
|
Parts, accessories and other
|
|
|
4,493
|
|
|
|
3,848
|
|
|
|
|
119,894
|
|
|
|
164,583
|
|
Less: excess of current cost over LIFO
|
|
|
(3,627
|
)
|
|
|
(3,719
|
)
|
|
|
$
|
116,267
|
|
|
$
|
160,864
|
|
During
2019, the Company retired the RV rental units and moved the rental units to pre-owned inventory for sale. Upon transfer to pre-owned
inventory, the carrying value of these units was adjusted to market value for similar units acquired by the Company for resale.
NOTE
6 – PROPERTY AND EQUIPMENT, NET
Property
and equipment consist of the following:
|
|
As of
|
|
|
As of
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
25,954
|
|
|
$
|
22,496
|
|
Building and improvements including leasehold improvements
|
|
|
74,767
|
|
|
|
62,206
|
|
Furniture and equipment
|
|
|
8,572
|
|
|
|
6,747
|
|
Company vehicles
|
|
|
987
|
|
|
|
747
|
|
Construction in progress
|
|
|
13,606
|
|
|
|
5,603
|
|
|
|
|
123,886
|
|
|
|
97,799
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation and amortization
|
|
|
(17,566
|
)
|
|
|
(10,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
106,320
|
|
|
$
|
86,876
|
|
Depreciation
and amortization expense is set forth in the table below:
|
|
As of
|
|
|
As of
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
6,682
|
|
|
|
6,848
|
|
NOTE
7 – INTANGIBLE ASSETS
Intangible
assets and the related accumulated amortization are summarized as follows:
|
|
As of December 31, 2020
|
|
|
As of December 31, 2019
|
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Asset
Value
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Asset
Value
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturer relationships
|
|
$
|
43,800
|
|
|
$
|
8,901
|
|
|
$
|
34,899
|
|
|
$
|
35,800
|
|
|
$
|
5,180
|
|
|
$
|
30,620
|
|
Customer relationships
|
|
|
9,790
|
|
|
|
2,233
|
|
|
|
7,557
|
|
|
|
9,540
|
|
|
|
1,406
|
|
|
|
8,134
|
|
Non-Compete agreements
|
|
|
230
|
|
|
|
29
|
|
|
|
201
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
53,820
|
|
|
|
11,163
|
|
|
|
42,657
|
|
|
|
45,340
|
|
|
|
6,586
|
|
|
|
38,754
|
|
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names and trademarks
|
|
|
30,100
|
|
|
|
-
|
|
|
|
30,100
|
|
|
|
30,100
|
|
|
|
-
|
|
|
|
30,100
|
|
|
|
$
|
83,920
|
|
|
$
|
11,163
|
|
|
$
|
72,757
|
|
|
$
|
75,440
|
|
|
$
|
6,586
|
|
|
$
|
68,854
|
|
Amortization
expense is set forth in the table below:
|
|
As of
|
|
|
As of
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
$
|
4,580
|
|
|
$
|
3,965
|
|
Estimated
future amortization expense is as follows:
Years ending
|
|
|
|
2021
|
|
$
|
5,120
|
|
2022
|
|
|
5,120
|
|
2023
|
|
|
5,120
|
|
2024
|
|
|
5,120
|
|
2025
|
|
|
5,051
|
|
Thereafter
|
|
|
17,126
|
|
|
|
$
|
42,657
|
|
As
of December 31, 2020, the weighted average remaining amortization period was 8.6 years.
NOTE
8 – FINANCING LIABILITY
On
December 23, 2015, the Company sold certain land, building and improvements for $56,000 and is leasing back the property
from the purchaser over a non-cancellable period of 20 years. The lease contains renewal options at lease termination, with three
options to renew for 10 additional years each and contains a right of first offer in 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 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.
On
August 7, 2018, the Company sold certain land, building and improvements for $5,350 and is leasing back the property from
the purchaser over a non-cancellable period of 20 years. The lease contains renewal options at lease termination, with three options
to renew for 10 additional years each and contains a right of first offer in 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 has an implied interest rate of 7.9%. At the conclusion
of the 20-year lease period, the financing liability residual will be $1,780, which will correspond to the carrying value of the
land. As part of the lease, the Company could have drawn up to $5,000 from the lessor through September 30, 2019 to pay for certain
improvements on the premises. As of December 31, 2019, the Company drew $4,206 to make such improvements. Repayments on advances
are made over the term of the lease and are factored into the calculation of the outstanding financing liability. Annual payments
are made at a rate of the amount of the outstanding advance multiplied by an advance rate of 8%.
The
financing liabilities, net of debt discount, is summarized as follows:
|
|
As of
|
|
|
As of
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Financing liability
|
|
$
|
80,254
|
|
|
$
|
64,568
|
|
Debt discount
|
|
|
(158
|
)
|
|
|
(75
|
)
|
Financing liability, net of debt discount
|
|
|
80,096
|
|
|
|
64,493
|
|
Less: current portion
|
|
|
1,462
|
|
|
|
936
|
|
Financing liability, non-current portion
|
|
$
|
78,634
|
|
|
$
|
63,557
|
|
The
future minimum payments required by the arrangements are as follows:
|
|
|
|
|
|
|
|
Total
|
|
Years ending December 31,
|
|
Principal
|
|
|
Interest
|
|
|
Payments
|
|
2021
|
|
|
1,639
|
|
|
|
5,233
|
|
|
|
6,872
|
|
2022
|
|
|
1,890
|
|
|
|
5,329
|
|
|
|
7,219
|
|
2023
|
|
|
2,168
|
|
|
|
5,196
|
|
|
|
7,364
|
|
2024
|
|
|
2,469
|
|
|
|
5,042
|
|
|
|
7,511
|
|
2025
|
|
|
2,794
|
|
|
|
4,868
|
|
|
|
7,662
|
|
Thereafter
|
|
|
56,513
|
|
|
|
34,792
|
|
|
|
91,305
|
|
|
|
$
|
67,473
|
|
|
$
|
60,460
|
|
|
$
|
127,933
|
|
For
the year ended December 31, 2020, the Company made interest payments of $4,816 and principal payments of $1,118. For the year
ended December 31, 2019, the Company made interest payments of $4,655 and principal payments of $730.
NOTE
9 – ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accounts
payable, accrued expenses and other current liabilities consist of the following:
|
|
As of
December 31, 2020
|
|
|
As of
December 31, 2019
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
18,077
|
|
|
$
|
11,231
|
|
Other accrued expenses
|
|
|
4,713
|
|
|
|
3,392
|
|
Customer deposits
|
|
|
6,002
|
|
|
|
2,267
|
|
Accrued compensation
|
|
|
4,311
|
|
|
|
2,388
|
|
Accrued charge-backs
|
|
|
5,553
|
|
|
|
4,221
|
|
Accrued interest
|
|
|
125
|
|
|
|
356
|
|
Total
|
|
$
|
38,781
|
|
|
$
|
23,855
|
|
NOTE
10 – LEASES
On
January 1, 2020, we adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. Certain
required disclosures have been made on a prospective basis in accordance with the guidance of the standard. See Note 2, Significant
Accounting Policies.
The
Company leases property and equipment throughout the United States primarily under operating leases. Leases with lease terms of
12 months or less are expensed on a straight-line basis over the lease term and are not recorded in the Consolidated Balance Sheets.
Most
leases include one or more options to renew, with renewal terms that can extend the lease term up to 20 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 inflation. Our lease agreements neither contain any residual value guarantees
nor impose any significant restrictions or covenants.
The
Company leases properties for its RV retail locations through nine operating leases. The Company also leases billboards and certain
of its equipment through operating leases. The related right-of-use (“ROU”) assets for these operating leases are
included in operating lease assets.
On
May 19, 2020, the Company entered into a new lease for the property associated with the Korges acquisition. The lease was evaluated
as a finance lease. As a result, a right of use asset was recorded in property and equipment for $4,015 with an offsetting $4,015
financing liability.
As
of December 31, 2020, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 5.2
years and 5.0%, respectively.
Operating
lease costs for the year ended December 31, 2020 was $3,809 including variable lease costs. There were no short term leases for
the year ended December 31, 2020.
Maturities
of lease liabilities as of December 31, 2020 were as follows:
Maturity Date
|
|
Operating Leases
|
|
2021
|
|
|
3,838
|
|
2022
|
|
|
3,520
|
|
2023
|
|
|
3,317
|
|
2024
|
|
|
2,586
|
|
2025
|
|
|
1,939
|
|
Thereafter
|
|
|
2,179
|
|
Total lease payments
|
|
|
17,379
|
|
Less: Imputed Interest
|
|
|
2,159
|
|
Present value of lease liabilities
|
|
$
|
15,220
|
|
The
following presents supplemental cash flow information related to leases during 2020:
|
|
For the year ended December 31, 2020
|
|
Cash paid for amounts included in the measurement of lease liability:
|
|
|
|
|
Operating cash flows for operating leases
|
|
$
|
3,809
|
|
|
|
|
|
|
ROU assets obtained in exchange for lease liabilities:
|
|
|
|
|
Operating leases
|
|
$
|
756
|
|
Finance lease
|
|
$
|
4,015
|
|
|
|
$
|
4,771
|
|
On
March 10, 2020, the Company entered into an agreement for the sale of land to LD Murfreesboro TN Landlord, LLC for $4,921. The
Company has entered into a lease agreement with the buyer with lease payments to commence upon granting of a certificate of occupancy
and completion of planned construction, the cost of which will be paid for by LD Murfreesboro TN Landlord, LLC. The commencement
date of the lease will occur at the completion of construction which is expected to occur in the first quarter of 2021.
NOTE
11 – DEBT
M&T
Financing Agreement
On
March 15, 2018, the Company terminated and replaced the Bank of America (“BOA”) credit facility with a $200,000 Senior
Secured Credit Facility with M&T Bank (the “M&T Facility”). 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 was originally due to mature on March 15, 2021. The maturity
date was subsequently extended to June 15, 2021. The M&T Facility requires the Company to meet certain financial and other
covenants and is secured by substantially all of the assets of the Company. The costs of the M&T Facility were recorded as
a debt discount.
On
March 15, 2018, the Company repaid $96,740 outstanding under the BOA floor plan notes payable and $8,820 outstanding under the
BOA term loan with the proceeds of the M&T Facility.
On
March 6, 2020, the Company entered into the Third Amendment and Joinder to Credit Agreement (“Third Amendment”) on
the M&T Facility. Pursuant to the Third Amendment, Lone Star Land of Houston, LLC (the “Mortgage Loan Borrower”)
and Lone Star Diversified, LLC (“Diversified”), wholly owned subsidiaries of LDRV, became parties to the credit agreement
related to the M&T Facility (the “Credit Agreement”) and were identified as additional loan parties. The existing
borrowers and guarantors also requested that the lenders provide a mortgage loan credit facility (the “M&T Mortgage”)
covering acquisition, construction, and permanent mortgage financing for a property acquired by the Mortgage Loan Borrower. The
amount borrowed under the M&T Mortgage was $6,136. The M&T Mortgage bears interest at (a) LIBOR plus an applicable margin
of 2.25% or (b) the Base Rate plus a margin of 1.25%. The mortgage requires monthly payments of principal of $0.03 million and
was originally due to mature on March 15, 2021. The maturity date was subsequently extended to June 15, 2021. As of December 31,
2020, the mortgage balance was $6,008 and the interest rate was 2.4375%.
In
order to help mitigate the early effects of the COVID-19 pandemic, the Company entered into the Fourth Amendment to the Credit
Agreement on April 15, 2020 (the “Fourth Amendment”). Pursuant to the Fourth Amendment, the parties agreed to a suspension
of scheduled principal payments on the M&T Term Loan and M&T Mortgage (to the extent the permanent loan period had begun
for the M&T Mortgage) for the period from April 15, 2020 through June 15, 2020. Interest on the outstanding principal balances
of the M&T Term Loan and M&T Mortgage continued to accrue and be paid at the applicable interest rate during the deferment
period. At the end of the deferment period, the borrowers resumed making all required payments of principal on the M&T Term
Loan and M&T Mortgage. All principal payments of the M&T Term Loan and M&T Mortgage deferred during the deferment
period are due and payable on the M&T Term Loan maturity date or the M&T Mortgage maturity date, as applicable. Additionally,
all principal payments deferred during the deferment period are due and payable (a) as described above or (b) if earlier, the
date all outstanding amounts are otherwise due and payable under the terms of the Credit Agreement (including, without limitation,
upon maturity, acceleration or, to the extent applicable under the Credit Agreement, demand for payment). In addition, the amendment
includes a temporary suspension of scheduled curtailment payments required by the Credit Agreement for the period from April 1,
2020 through June 15, 2020. Amounts related to floor plan unused commitment fees and interest on the outstanding principal balance
of the M&T Floor Plan Line of Credit continued to accrue and be paid at the applicable rate and on the terms set forth in
the Credit Agreement during the suspension period.
As
of December 31, 2020, 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 December 31, 2020, the maximum amount of cash dividends that the Company could make from legally available funds to its
stockholders was limited to an aggregate of $26,903 pursuant to a trailing twelve month calculation as defined in the M&T
Facility.
The
$175,000 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 $4,500 may be used to finance rental units. Principal becomes due upon the sale of the related
vehicle. The M&T Floor Plan Line of Credit accrues interest at either (a) the fluctuating 30-day London Interbank Offered
Rate (“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 Credit Agreement), 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 Credit Agreement). The Base Rate is defined in the Credit
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 interest rate in effect as of December 31, 2020 was
2.14675%. Principal payments become due upon the sale of the vehicle. Additionally, principal payments are required to be made
once the vehicle reaches a certain number of days on the lot. The average outstanding principal balance was $99,200 and the related
floor plan interest expense was $2,255 for the year ended December 31, 2020.
The
M&T Floor Plan Line of Credit consists of the following as of December 31, 2020 and 2019:
|
|
As of December 31, 2020
|
|
|
As of December 31, 2019
|
|
|
|
|
|
|
|
|
Floor plan notes payable, gross
|
|
$
|
105,486
|
|
|
$
|
144,133
|
|
Debt discount
|
|
|
(87
|
)
|
|
|
(184
|
)
|
Floor plan notes payable, net of debt discount
|
|
$
|
105,399
|
|
|
$
|
143,949
|
|
The
$20,000 M&T Term Loan is being 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 must pay a principal balloon payment of $11,300 plus any accrued interest.
The M&T Term Loan bears interest at (a) LIBOR plus an applicable margin of 2.25% to 3.00% based on the total leverage ratio
(as defined in the Credit Agreement) or (b) the Base Rate plus a margin of 1.25% to 2.00% based on the total leverage ratio (as
defined in the Credit Agreement). The interest rate in effect at December 31, 2020 was 2.4375%.
On
February 13, 2021 the Company signed an agreement with M&T to extend the maturity date of the M&T Facility to June 15,
2021.
PPP
Loans
In
response to economic uncertainty caused by the COVID-19 pandemic, subsidiaries of the Company took the additional step of applying
for loans (“PPP Loans”) under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security
Act (“CARES Act”) with M&T Bank (the “Lender”). On April 28, 2020, certain of the Company’s
subsidiaries executed promissory notes (the “Notes”) in favor of the Lender for PPP Loans in an aggregate amount of
$6,831 which mature on April 29, 2022. Applications were submitted by other subsidiaries of the Company, which resulted in the
execution of a promissory note on April 30, 2020 for $1,236 and on May 4, 2020 for $637, which will mature on April 30, 2022 and
May 4, 2022, respectively. Pursuant to the promissory notes evidencing the PPP loans (the “Notes”), such PPP Loans
bear interest at a rate of 1.0% per year. Commencing six months after each PPP Loan was disbursed, monthly payments of principal
and interest are required in amounts necessary to fully amortize the principal amount by the maturity date. The PPP Loans are
unsecured and are non-recourse obligations. The Notes provide for customary events of default, and the PPP Loans may be accelerated
upon the occurrence of an event of default. All or a portion of the PPP Loans may be forgiven upon application to the Lender for
payroll and certain other costs incurred during the 8-week period beginning on the date each PPP Loan is disbursed, in accordance
with the requirements and limitations under the CARES Act. While the Company’s subsidiaries used the entire amount of the
PPP Loans for qualifying expenses, no assurance can be provided that forgiveness of any portion of the PPP Loans will be obtained.
Long-term
debt consists of the following as of December 31, 2020 and 2019:
|
|
As of December 31, 2020
|
|
|
As of December 31, 2019
|
|
|
|
Gross Principal Amount
|
|
|
Debt Discount
|
|
|
Total Debt, Net of Debt Discount
|
|
|
Gross Principal Amount
|
|
|
Debt Discount
|
|
|
Total Debt, Net of Debt Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loan and Mortgage
|
|
$
|
18,758
|
|
|
$
|
(41
|
)
|
|
$
|
18,717
|
|
|
$
|
14,925
|
|
|
$
|
(47
|
)
|
|
$
|
14,878
|
|
Paycheck Protection Program Loans
|
|
|
8,704
|
|
|
|
-
|
|
|
$
|
8,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition notes payable (See Note 3)
|
|
|
5,185
|
|
|
|
-
|
|
|
|
5,185
|
|
|
|
6,688
|
|
|
|
-
|
|
|
|
6,688
|
|
Total long-term debt
|
|
|
32,647
|
|
|
|
(41
|
)
|
|
|
32,606
|
|
|
|
21,613
|
|
|
|
(47
|
)
|
|
|
21,566
|
|
Less: current portion
|
|
|
24,161
|
|
|
|
-
|
|
|
|
24,161
|
|
|
|
5,993
|
|
|
|
-
|
|
|
|
5,993
|
|
Long term debt, non-current
|
|
$
|
8,486
|
|
|
$
|
(41
|
)
|
|
$
|
8,445
|
|
|
$
|
15,620
|
|
|
$
|
(47
|
)
|
|
$
|
15,573
|
|
Future
maturities of long term debt are as follows:
Future
Maturities of Long Term Debt
Years ending December 31,
|
|
|
|
2021
|
|
$
|
24,161
|
|
2022
|
|
|
5,824
|
|
2023
|
|
|
1,844
|
|
2024
|
|
|
396
|
|
2025
|
|
|
422
|
|
Total
|
|
$
|
32,647
|
|
The
$5,000 M&T Revolver allows the Company to draw up to $5,000. The M&T Revolver bears interest at (a) 30-day 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
is also subject to unused commitment fees at rates varying from 0.25% to 0.50% based on the total leverage ratio (as defined in
the Credit Agreement). During the year ended December 31, 2020, there were no outstanding borrowings under the M&T Revolver.
The M&T Revolver also includes a $1,000 Letter of Credit Sublimit which decreases the availability of the line. As of December
31, 2020, there were no outstanding letters of credit. As a result, there was $5,000 available under the M&T Revolver.
NOTE
12 – INCOME TAXES
The
components of the Company’s income tax expense are as follows:
|
|
Year ended
December 31, 2020
|
|
|
Year ended
December 31, 2019
|
|
Current:
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
9,187
|
|
|
$
|
2,699
|
|
State
|
|
|
2,536
|
|
|
|
664
|
|
|
|
|
11,723
|
|
|
|
3,363
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(1,177
|
)
|
|
|
(1,746
|
)
|
State
|
|
|
(182
|
)
|
|
|
(520
|
)
|
|
|
|
(1,359
|
)
|
|
|
(2,266
|
)
|
Income tax expense
|
|
$
|
10,364
|
|
|
$
|
1,097
|
|
A
reconciliation of income taxes calculated using the statutory federal income tax rate (21% in 2020 and 2019) to the Company’s
income tax expense is as follows:
|
|
Year Ended
December 31, 2020
|
|
|
Year Ended
December 31, 2019
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Income taxes at statutory rate
|
|
$
|
5,248
|
|
|
|
21.0
|
%
|
|
$
|
1,168
|
|
|
|
21.0
|
%
|
Non-deductible expense
|
|
|
40
|
|
|
|
0.2
|
%
|
|
|
43
|
|
|
|
0.8
|
%
|
State income taxes, net of federal tax effect
|
|
|
1,856
|
|
|
|
7.4
|
%
|
|
|
(75
|
)
|
|
|
-1.4
|
%
|
Transaction costs
|
|
|
-
|
|
|
|
0.0
|
%
|
|
|
(61
|
)
|
|
|
-1.1
|
%
|
Stock-based compensation and officer compensation
|
|
|
235
|
|
|
|
0.9
|
%
|
|
|
824
|
|
|
|
14.0
|
%
|
Change in fair value of warrant liabilities
|
|
|
3,043
|
|
|
|
12.2
|
%
|
|
|
-788
|
|
|
|
-14.2
|
%
|
Other credits and changes in estimate
|
|
|
(58
|
)
|
|
|
-0.2
|
%
|
|
|
(14
|
)
|
|
|
0.6
|
%
|
Income tax expense
|
|
$
|
10,364
|
|
|
|
41.5
|
%
|
|
$
|
1,097
|
|
|
|
19.7
|
%
|
Due
to limitations on the deductibility of compensation under Section 162(m) stock-based compensation expense attributable to certain
employees has been treated as a permanent difference in the calculation of tax expense. The Company does not expect that these
expenses will be deductible on the estimated exercise date of the awards. As such, no deferred tax asset has been established
related to these amounts.
Deferred
tax assets and liabilities were as follows:
|
|
As of
|
|
|
As of
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
167
|
|
|
$
|
96
|
|
Accrued charge-backs
|
|
|
1,412
|
|
|
|
1,063
|
|
Other accrued liabilities
|
|
|
1,530
|
|
|
|
166
|
|
Financing liability
|
|
|
15,085
|
|
|
|
16,247
|
|
Stock based compensation
|
|
|
1,009
|
|
|
|
894
|
|
Other, net
|
|
|
535
|
|
|
|
262
|
|
|
|
|
19,738
|
|
|
|
18,728
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(198
|
)
|
|
|
(271
|
)
|
Goodwill
|
|
|
(480
|
)
|
|
|
(370
|
)
|
Inventories
|
|
|
(5,343
|
)
|
|
|
(4,702
|
)
|
Property and equipment
|
|
|
(15,073
|
)
|
|
|
(15,457
|
)
|
Intangible assets
|
|
|
(13,735
|
)
|
|
|
(14,378
|
)
|
|
|
|
(34,829
|
)
|
|
|
(35,178
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax (liabilities)/assets
|
|
$
|
(15,091
|
)
|
|
$
|
(16,450
|
)
|
No
significant increases or decreases in the amounts of unrecognized tax benefits are expected in the next 12 months.
The
Company is subject to U.S. federal income tax and income tax in the states of Florida, Arizona, Colorado, Minnesota, Tennessee,
Texas and Indiana. The Company is no longer subject to the examination by Federal and state taxing authorities for years prior
to 2017. Florida has completed its examinations through December 31, 2017 with no additional taxes due. The Company recognizes
interest and penalties related to income tax matters in income tax expense. Interest and penalties recorded in the statements
of operations for the periods presented were insignificant.
NOTE
13 – RELATED PARTY TRANSACTIONS
On
December 18, 2019, pursuant to the Company’s stock repurchase program, the Company repurchased 75,000 shares of common stock
from B. Luke Weil for $302 including broker fees. (See Note 17-Stockholders’ Equity)
NOTE
14 – EMPLOYEE BENEFIT PLANS
The
Company has a 401(k) plan with profit sharing provisions (the “Plan”). The Plan covers substantially all employees.
The Plan allows employee contributions to be made on a salary reduction basis under Section 401(k) of the Internal Revenue Code.
Under the 401(k) provisions, the Company makes discretionary matching contributions to employees’ 401(k). The Company made
contributions to the Plan of $847 and $785 for the year ended December 31, 2020 and 2019, respectively.
NOTE
15 - COMMITMENTS AND CONTINGENCIES
Employment
Agreements
The
Company entered into employment agreements with the Chief Executive Officer (“CEO”) and the former Chief Financial
Officer (“CFO”) of the Company effective as of the consummation of the Mergers. The employment agreements with the
CEO and the former 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 former CFO’s target bonus was 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 17 –
Stockholders’ Equity).
The
employment agreements provide that if the CEO is terminated for any reason, he 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 former CFO.
In
May 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. He also was granted an option to purchase
shares of common stock of the Company (See Note 17- Stockholders’ Equity).
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. In addition, in lieu of stock options
for the year ended December 31, 2019, the board members received a one time cash payment of $50 during the year ended December
31, 2020.
Legal
Proceedings
The
Company is a party to multiple legal proceedings that arise in the ordinary course of business. The Company has certain insurance
coverage and rights of indemnification. The Company does not believe that the ultimate resolution of these matters will have a
material adverse effect on the Company’s 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 or other matters
could have a material adverse effect on the Company’s business, results of operations, financial condition, and/or cash
flows.
The
Company records legal expenses as incurred in its consolidated statements of operations.
NOTE
16 – 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 for gross proceeds of $60,000. The
investors in the PIPE Investment were granted certain registration rights as set forth in the securities purchase agreements.
The holders of the Series A Preferred Stock include 500,000 shares owned by funds managed by a member of the Company’s Board
of Directors.
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 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 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 share were issued in
conjunction with the issuance of the Series A Preferred Stock. The 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. 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 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 as a derivative liability under ASC 815, Derivatives and Hedging.
After
factoring in the relative fair value 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 share on the date of issuance. As a result, a $3,392 beneficial
conversion feature was recorded as a deemed dividend in the 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 the carrying amount of the preferred stock in the 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. The $632 value of the warrants 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 was not accreted during the year ended December 31, 2020 because redemption
was not currently deemed to be probable.
In
September 2020, the Company declared a dividend payment for all outstanding dividends through September 30, 2020 of $10,983, which
was paid on October 5, 2020. In December 2020, the Company declared a dividend payment of $1,210 for outstanding dividends through
December 31, 2020 which is included in dividends payable in the accompanying consolidated balance sheets.
NOTE
17 – STOCKHOLDERS’ EQUITY
Authorized
Capital
The
Company is authorized to issue 100,000,000 shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred stock,
$0.0001 par value. The holders of the Company’s common stock are entitled to one vote per share. The holders 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 16 – Preferred Stock for additional information associated with the Series A Preferred Stock.
2018
Long-Term Incentive Equity Plan
On
March 15, 2018, the Company adopted the 2018 Long-Term Incentive Equity Plan (the “2018 Plan”). The 2018 Plan reserves
up to 13% of the shares of common stock 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. Due
to the fact that the fair market value per share immediately following the closing 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 of common stock then outstanding on a fully diluted basis. On May 20, 2019, the Company’s stockholders
approved the adoption of the Lazydays Holdings, Inc. Amended and Restated 2018 Long Term Incentive Plan (the “Incentive
Plan”). The Incentive Plan amends and restates the previously adopted 2018 Plan in order to replenish the pool of shares
of common stock available under the Incentive Plan by adding an additional 600,000 shares of common stock and making certain changes
in light of the Tax Cuts and Jobs Act and its impact on Section 162(m) of the Internal Revenue Code of 1986, as amended. As of
December 31, 2020, there were 299,557 shares of common stock available to be issued under the Incentive Plan.
2019
Employee Stock Purchase Plan
On
May 20, 2019, the Company’s stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”). The
ESPP reserved 900,000 shares of common stock for purchase by participants in the ESPP. Participants in the plan may purchase
shares of common stock at a purchase price which will not be less than the lesser of 85% of the fair market value per share
of the common on the first day of the purchase period or the last day of the purchase period. On June 1, 2020, the Company
issued 41,858 shares of common stock pursuant to the ESPP. As a result, as of December 31, 2020, there were 822,748
shares available for issuance. During the years ended December 31, 2020 and 2019, the Company recorded $135 and $65,
respectively of stock based compensation expense related to the ESPP.
Stock
Repurchase Program
On
November 6, 2019, the Board of Directors of Lazydays authorized the repurchase of up to $4.0 million of the Company’s common
stock through December 31, 2020.
Repurchases
may be made at management’s discretion from time to time on the open market, through privately negotiated transactions or
a trading plan in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and pursuant to applicable Securities
and Exchange Commission requirements. The repurchase program may be suspended for periods or discontinued at any time.
During
the year ended December 31, 2020, the Company repurchased 63,299 shares of common stock for $185. During the year ended December
31, 2019, the Company repurchased 78,000 shares of common stock for $314. All repurchased shares are included in treasury stock
in the consolidated balance sheets.
Common
Stock
On
March 15, 2018, the Company had 1,872,428 shares of common stock outstanding prior 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 were 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.
On
December 2, 2019, 35,058 shares of common stock at a price per share of $3.587 were issued to the participants of the ESPP for
a value of $126.
On
June 1, 2020, 42,194 shares of common stock at a price per share of $3.587 were issued to the participants of the ESPP for a value
of $335.
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 consolidated balance sheet. As of December 31, 2020, 300,357 of the pre-funded warrants remain outstanding.
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 price of $0.01 per
share 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 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 were exercisable at $10.00 per unit as a result of
the Mergers and they were set to expire on November 24, 2020. The Unit Purchase
Options represented the right to purchase an aggregate of 457,142 shares of common stock (which included 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 granted 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 were exercisable for cash or on a “cashless” basis, at the
holder’s option, such that the holder could have used 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 had no obligation to net cash
settle the exercise of the Unit Purchase Options or the underlying rights or warrants. During January 2019, the Company exchanged
$500 for all of the Unit Purchase Options, and as a result, the Unit Purchase Options and any obligation to issue any underlying
securities were cancelled.
Warrants
As
of March 15, 2018, holders of Andina warrants exchanged their existing 4,310,000 warrants with Andina with 4,310,000 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 2,000,000 of the shares issuable upon exercise of the public
warrants is not effective, warrant holders may, until such time as 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, the Private Warrants, 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, (the PIPE Warrants), 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 January 1, 2020
|
|
|
4,677,458
|
|
|
$
|
11.50
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Cancelled or Expired
|
|
|
-
|
|
|
$
|
-
|
|
Exercised
|
|
|
(45,371
|
)
|
|
$
|
11.50
|
|
Warrants outstanding December 31, 2020
|
|
|
4,632,087
|
|
|
$
|
11.50
|
|
The
table above excludes perpetual non-redeemable prefunded warrants to purchase 300,357 shares of common stock with an exercise price
of $0.01 per share.
The
Company determined the following fair values for the outstanding warrants recorded as liabilities at December 31:
|
|
2020
|
|
|
2019
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
PIPE Warrants
|
|
$
|
13,716
|
|
|
$
|
555
|
|
Private Warrants
|
|
|
1,380
|
|
|
|
192
|
|
Total warrant liabilities
|
|
$
|
15,096
|
|
|
$
|
747
|
|
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 January 1, 2020
|
|
|
3,798,818
|
|
|
$
|
10.63
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
530,000
|
|
|
$
|
10.08
|
|
|
|
|
|
|
|
|
|
Cancelled or terminated
|
|
|
(203,809
|
)
|
|
$
|
(9.76
|
)
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(61,647
|
)
|
|
$
|
(10.72
|
)
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2020
|
|
|
4,063,362
|
|
|
$
|
10.60
|
|
|
|
2.65
|
|
|
$
|
22,954
|
|
Options vested at December 31, 2020
|
|
|
1,085,720
|
|
|
$
|
11.10
|
|
|
|
2.23
|
|
|
$
|
5,626
|
|
Awards
with Market Conditions
The
expense recorded for awards with market conditions was $923 and $4,556 for the years ended December 31, 2020 and 2019, respectively,
which is included in operating expenses in the consolidated statements of operations.
Awards
with Service Conditions
During
the year ended December 31, 2019, stock options to purchase 505,000 shares of common stock were issued to employees. The options
have exercise prices ranging from $4.50 to $8.50. The options had a five year life and a four year vesting period. The fair value
of the awards of $957 was determined using the Black-Scholes option pricing model based on a 3.75 expected life, a risk free rate
of 1.70%-2.51%, an annual dividend yield of 0% and an annual volatility of 52%-55%.
During
the year ended December 31, 2020, stock options to purchase 530,000 shares of common stock were issued to employees and board
members. The options have an exercise price of $7.91, $8.50 or $14.68. The options had a five year life and a four year vesting
period. The fair value of the awards of $1,915 was determined using the Black-Scholes option pricing model based on the follow
range of assumptions:
|
|
Year ended
December 31, 2020
|
|
Risk free interest rate
|
|
|
0.25% - 0.43%
|
|
Expected term (years)
|
|
|
3.50-3.75
|
|
Expected volatility
|
|
|
55% - 73%
|
|
Expected dividends
|
|
|
0.00
|
%
|
The
expected life was determined using the simplified method as the awards were determined to be plain-vanilla options.
The
expense recorded for awards with service conditions was $508 for the year ended December 31, 2020 and $243 for the year ended
December 31, 2019, which is included in operating expenses in the consolidated statements of operations.
As
of December 31, 2020, total unrecorded compensation cost related to non-vested awards was $2,214 which is expected to be amortized
over a weighted average service period of approximately 2.65 years. For year ended December 31, 2020, the weighted average grant
date fair value of awards issued during the period was $4.07 per share.
NOTE
18 – FAIR VALUE MEASURES
Warrant
Liabilities:
The
PIPE Warrants are considered a Level 1 measurement, because they are similar to the Public Warrants which trade under the symbol LAZYW
and thus have observable market prices which were used to estimate the fair value adjustments for the PIPE Warrants liabilities. The
Private Warrants are considered a Level 3 measurement and were valued using a Black-Scholes Valuation Model to estimate the fair value
adjustments for the Private Warrants liabilities.
|
|
December 31, 2020
(Restated)
|
|
|
December 31, 2019
(Restated)
|
|
|
|
Carrying Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Carrying Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIPE Warrants
|
|
$
|
13,716
|
|
|
$
|
13,716
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
555
|
|
|
$
|
555
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Private Warrants
|
|
|
1,380
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,380
|
|
|
|
192
|
|
|
|
-
|
|
|
|
-
|
|
|
|
192
|
|
Total
|
|
$
|
15,096
|
|
|
$
|
13,716
|
|
|
$
|
-
|
|
|
$
|
1,380
|
|
|
$
|
747
|
|
|
$
|
555
|
|
|
$
|
-
|
|
|
$
|
192
|
|
Level
3 Disclosures
The
Company utilizes a Black Scholes option-pricing model to value the Private Warrants at each reporting period and transaction date, with
changes in fair value recognized in the statements of operations. The estimated fair value of the warrant liabilities is determined using
Level 3 inputs. Inherent in the pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest
rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the
expected remaining life of the warrants. The risk-free interest rate is based on the continuously compounded interest rate on U.S. Treasury
Separate Trading of Registered Interest and Principal of Securities having a maturity similar to the contractual life of the warrants.
The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the
historical rate, which the Company anticipates to remain at zero.
The
following table provides quantitative information regarding Level 3 fair value measurements:
|
|
December 31, 2020
(Restated)
|
|
|
December 31, 2019
(Restated)
|
|
Stock Price
|
|
$
|
16.25
|
|
|
$
|
4.10
|
|
Strike Price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Expected life
|
|
|
2.20
|
|
|
|
3.21
|
|
Volatility
|
|
|
81.2
|
%
|
|
|
80.9
|
%
|
Risk Free rate
|
|
|
0.14
|
%
|
|
|
1.61
|
%
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Fair value of warrants
|
|
$
|
4.45
|
|
|
$
|
0.62
|
|
The
following table presents changes in Level 1 and Level 3 liabilities measured at fair value for the year ended December 31, 2020
and 2019:
|
|
December 31, 2020
(Restated)
|
|
|
December 31, 2019
(Restated)
|
|
|
|
PIPE Warrants
|
|
|
Private Warrants
|
|
|
PIPE Warrants
|
|
|
Private Warrants
|
|
Balance - beginning of year
|
|
$
|
555
|
|
|
$
|
192
|
|
|
$
|
4,163
|
|
|
$
|
335
|
|
Exercise or conversion
|
|
|
(145
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Measurement adjustment
|
|
|
13,307
|
|
|
|
1,187
|
|
|
|
(3,608
|
)
|
|
|
(143
|
)
|
Balance - end of year
|
|
$
|
13,717
|
|
|
$
|
1,379
|
|
|
$
|
555
|
|
|
$
|
192
|
|
NOTE
19 – QUARTERLY FINANCIAL DATA (Unaudited and Restated)
The
following tables present certain unaudited consolidated quarterly financial information for each of the quarters previously issued in
2020, 2019 and 2018.
|
|
2020
|
|
|
|
Quarter Ended (unaudited and restated)
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
6,784
|
|
|
$
|
12,628
|
|
|
$
|
17,532
|
|
Other income/expenses (1)
|
|
|
(2,085
|
)
|
|
|
(4,782
|
)
|
|
|
(9,648
|
)
|
Income tax expense
|
|
|
(1,300
|
)
|
|
|
(2,536
|
)
|
|
|
(4,184
|
)
|
Net income (1)
|
|
$
|
3,399
|
|
|
$
|
5,310
|
|
|
$
|
3,700
|
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(1,644
|
)
|
|
|
(1,684
|
)
|
|
|
(1,745
|
)
|
Net income attributable to common stock and participating securities
|
|
$
|
1,755
|
|
|
$
|
3,626
|
|
|
$
|
1,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income per share (1)
|
|
$
|
0.12
|
|
|
$
|
0.25
|
|
|
$
|
0.13
|
|
Weighted average shares outstanding basic and diluted
|
|
|
9,757,036
|
|
|
|
9,715,677
|
|
|
|
10,807,368
|
|
|
|
2019
|
|
|
|
Quarter Ended (unaudited and restated)
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
6,058
|
|
|
$
|
6,488
|
|
|
$
|
763
|
|
Other income/expenses (1)
|
|
|
(1,074
|
)
|
|
|
(577
|
)
|
|
|
(2,382
|
)
|
Income tax expense
|
|
|
(1,185
|
)
|
|
|
(2,099
|
)
|
|
|
(941
|
)
|
Net income (1)
|
|
$
|
3,799
|
|
|
$
|
3,812
|
|
|
$
|
(2,560
|
)
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(1,184
|
)
|
|
|
(1,525
|
)
|
|
|
(1,581
|
)
|
Net income (loss) attributable to common stock and participating securities
|
|
$
|
2,615
|
|
|
$
|
2,287
|
|
|
$
|
(4,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share (1)
|
|
$
|
0.17
|
|
|
$
|
0.14
|
|
|
$
|
(0.42
|
)
|
Weighted average shares outstanding basic and diluted
|
|
|
9,695,234
|
|
|
|
9,811,107
|
|
|
|
9,811,107
|
|
|
|
2018
|
|
|
|
Quarter Ended (unaudited and restated)
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
1,825
|
|
|
$
|
5,241
|
|
|
$
|
849
|
|
Other income/expenses (1)
|
|
|
(934
|
)
|
|
|
(2,460
|
)
|
|
|
(1,153
|
)
|
Income tax expense
|
|
|
(449
|
)
|
|
|
(1,176
|
)
|
|
|
(1,141
|
)
|
Net income (1)
|
|
$
|
442
|
|
|
$
|
1,605
|
|
|
$
|
(1,445
|
)
|
Dividends of Series A Convertible Preferred Stock
|
|
|
(210
|
)
|
|
|
(1,215
|
)
|
|
|
(1,210
|
)
|
Deemed dividend on Series A Convertible Preferred Stock
|
|
|
(3,392
|
)
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stock and participating securities
|
|
$
|
(3,160
|
)
|
|
$
|
390
|
|
|
$
|
(2,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share (1)
|
|
$
|
(0.33
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.27
|
)
|
Weighted average shares outstanding basic and diluted
|
|
|
9,668,250
|
|
|
|
9,668,250
|
|
|
|
9,668,250
|
|
(1)
Due to the impact of the restatement described in Note 2, amounts presented herein do not agree to amounts included within previously
filed Form 10-Q’s. For the quarters ended March 31, June 30, and September 30, 2020: Net income has been adjusted by $412, ($2,758),
and ($7,899), respectively; loss per share – basic and diluted has been adjusted by $0.04, ($0.14), and ($0.42), respectively.
For the quarters ended March 31, June 30 and September 30, 2019: Net income has been adjusted by $1,955, $1,954 and ($74), respectively;
loss per share – basic and diluted has been adjusted by $0.13, $0.12, and ($0.01), respectively. For the quarters ended March 31,
June 30 and September 20, 2018: Net income has been adjusted by ($249), ($237), and $1,284, respectively; loss per share – basic
and diluted has been adjusted by ($0.03), ($0.02), and $0.14, respectively.