UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

~~[X]~~☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31, 2018~~September 30, 2022

~~[ ]~~☐

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

For the transition period from ___________ to ___________

Commission ~~file number~~File Number: 001-38424

Lazydays Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		82-4183498
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		~~(I.R.S. Employer~~ Identification No.)

4042 Park Oaks Blvd, Tampa, Florida		33610

~~6130 Lazy Days Blvd. Seffner, FL~~		~~33584~~
(Address of Principal Executive Offices)		(Zip Code)

~~813-246-4999~~813-246-4999

(Registrant’s Telephone Number, Including Area Code)

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

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock		LAZY		Nasdaq Capital Market

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

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

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

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~ ☒
Non-accelerated filer ~~[ ] (Do not check if a smaller reporting company)~~☐	Smaller reporting company ~~[X]~~☒
	Emerging growth company ~~[X]~~	☐

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

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

There were ~~8,471,608~~10,536,703 shares of common stock, par value $0.0001, issued and outstanding as of ~~May 10, 2018.~~November 2, 2022.

Lazydays Holdings, Inc.

Form 10-Q for the Quarter Ended ~~March 31, 2018~~September 30, 2022

Table of Contents

	Page

PART I – FINANCIAL INFORMATION

Item 1 ~~–Financial~~– Financial Statements	16

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	2735

Item 3 – Quantitative and Qualitative Disclosures about Market Risk	4051

Item 4 – Controls and Procedures	4051

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings	4152

Item 1A – Risk Factors	4152

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	4152

Item 3 – Defaults Upon Senior Securities	4152

Item 4 – Mine Safety Disclosures	4152

Item 5 – Other Information	4152

Item 6 – Exhibits	4253

Disclosure Regarding Forward Looking Statements

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

●	An extended slowdown in the markets in which we operate.

●	The effects of inflation.

●	The fair value of warrant liabilities may fluctuate.

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

●	Risks related to the COVID-19 pandemic and related impacts on the Company’s business.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

●	The Company’s stock repurchase program could increase the volatility of the price of the Company’s Common Stock.

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

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~Dollar amounts~~Amounts in ~~thousands)~~thousands except for share and per share data)

	Successor		Predecessor		As of		As of
	As of		As of		September 30, 2022		December 31, 2021
	March 31, 2018		December 31, 2017		(Unaudited)
	(Unaudited)
ASSETS
Current assets
Cash	$	33,063	$	13,292	$	100,774	$	98,120
Receivables, net of allowance for doubtful accounts of $0 and $1,013 at March 31, 2018 and December 31, 2017, respectively		23,234		19,911
Receivables, net of allowance for doubtful accounts of $656 and $456 at September 30, 2022 and December 31, 2021, respectively						25,079		30,604
Inventories		120,209		114,170		319,436		242,906
Income tax receivable		1,588		-		5,819		1,302
Prepaid expenses and other		1,999		2,062		3,797		2,703
Total current assets		180,093		149,435		454,905		375,635

Property and equipment, net		73,444		45,669		145,217		120,748
Operating lease assets						27,772		32,004
Goodwill		29,075		25,216		83,460		80,318
Intangible assets, net		68,068		25,862		83,498		87,800
Deferred tax asset		-		144
Other assets		200		219		2,214		1,623
Total assets	$	350,880	$	246,545	$	797,066	$	698,128

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS, ~~continued~~CONTINUED

(~~Dollar amounts~~Amounts in ~~thousands)~~thousands except for share and per share data)

	Successor			Predecessor			As of			As of
	As of			As of			September 30, 2022			December 31, 2021
	March 31, 2018			December 31, 2017			(Unaudited)
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	24,561		$	25,181		$	46,223		$	58,999
Income tax payable		-			1,536
Contingent liability, current portion		-			667
Dividends payable								1,210			1,210
Floor plan notes payable, net of debt discount								290,298			192,220
Financing liability, current portion		597			595			2,223			1,970
Floor plan notes payable, net of debt discount		99,368			104,976
Long-term debt, current portion		2,909			1,870			3,886			5,510
Operating lease liability, current portion								4,972			6,441
Total current liabilities		127,435			134,825			348,812			266,350

Long term liabilities
Financing liability, non-current portion, net of debt discount								108,990			102,466
Long term debt, non-current portion, net of debt discount		17,044			7,207			10,924			13,684
Financing liability, non-current portion, net of debt discount		55,574			53,680
Deferred tax liability		20,370			-
Operating lease liability, non-current portion								23,459			25,563
Deferred income tax liability								13,663			13,663
Warrant liabilities								4,109			15,293
Total liabilities		220,423			195,712			509,957			437,019

Commitments and Contingencies								-

Series A Convertible Preferred Stock, 600,000 shares designated, issued and outstanding as of March 31, 2018; liquidation preference of $60,210 at March 31, 2018		55,194			-
Series A Convertible Preferred Stock; 600,000 shares, designated, issued, and outstanding as of September 30, 2022 and December 31, 2021; liquidation preference of $60,000 as of September 30, 2022 and December 31, 2021, respectively								54,983			54,983

Stockholders’ Equity

Successor:
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;		-			-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,471,608 shares issued and outstanding at March 31, 2018		-			-
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized;								-			-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 13,924,792 and 13,694,417 shares issued and 10,626,903 and 12,987,105 outstanding at September 30, 2022 and December 31, 2021, respectively								-			-
Additional paid-in capital		76,108			-			123,257			121,831
Accumulated deficit		(845	)		-

Predecessor:
Preferred stock, $0.001 par value 150,000 shares authorized:
Senior Convertible Preferred Stock 10,000 shares designated; -0- shares issued and outstanding; liquidation preference $0 at December 31, 2017		-			-
Common stock, $0.001 par value; 4,500,000 shares authorized; 3,333,331 and 3,333,166 shares issued and outstanding at December 31, 2017, respectively		-			3
Additional paid-in capital		-			49,756
Treasury stock, 165 shares, at cost		-			(11	)
Treasury Stock, at cost, 3,297,889 and 707,312 shares at September 30, 2022 and December 31, 2021, respectively								(55,734	)		(12,515	)
Retained earnings		-			1,085			164,603			96,810
Total stockholders’ equity		75,263			50,833			232,126			206,126
Total liabilities and stockholders’ equity	$	350,880		$	246,545		$	797,066		$	698,128

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(~~Dollar amounts~~Amounts in thousands except for share and per share data)

(Unaudited)

Successor Predecessor
March 15, 2018
to March 31, 2018 January 1, 2018
to March 14, 2018 January 1, 2017
to March 31, 2017
Revenues
New and pre-owned vehicles $ 39,167 $ 119,111 $ 150,831
Parts, service and other 4,738 14,828 19,134
Total revenue 43,905 133,939 169,965

Cost of revenues
New and pre-owned vehicles 33,489 101,830 130,845
Parts, service and other 538 3,047 3,459
Total cost of revenues 34,027 104,877 134,304

Gross profit 9,878 29,062 35,661

Transaction costs 2,806 438 46
Selling, general, and administrative expenses 5,247 23,552 27,033
Income from operations 1,825 5,072 8,582
Other income/expense
Gain on sale of property and equipment - 1 -
Interest expense (685 ) (2,019 ) (2,162 )
Total other expense (685 ) (2,018 ) (2,162 )
Income before income tax expense 1,140 3,054 6,420
Income tax expense (449 ) (718 ) (2,445 )
Net income $ 691 $ 2,336 $ 3,975
Dividends on Series A Convertible Preferred Stock (210 )
Deemed dividend on Series A Convertible Preferred Stock (3,392 )
Net loss attributable to common stockholders $ (2,911 )

Succesor EPS:
Basic and diluted loss per share $ (0.30 )
Weighted average shares outstanding - basic and diluted 9,668,250

	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
	For the Three Months Ended						For the Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues
New and pre-owned vehicles	$	300,803		$	285,781		$	978,583		$	820,875
Other		32,955			32,947			104,888			91,637
Total revenues		333,758			318,728			1,083,471			912,512

Cost applicable to revenues (excluding depreciation and amortization shown below)
New and pre-owned vehicles (including adjustments to the LIFO reserve of $3,904, $655, $8,230 and $1,409, respectively)		250,631			221,176			786,995			651,970
Other		7,284			7,289			22,159			19,947
Total cost applicable to revenue		257,915			228,465			809,154			671,917

Transaction costs		(38	)		678			83			1,528
Depreciation and amortization		4,202			3,717			12,338			10,276
Stock-based compensation		831			132			2,083			815
Selling, general, and administrative expenses		55,027			47,597			172,403			130,109
Income from operations		15,821			38,139			87,410			97,867
Other income/expenses
PPP loan forgiveness		-			-			-			6,626
Interest expense		(4,603	)		(2,006	)		(10,900	)		(5,733	)
Change in fair value of warrant liabilities		(521	)		2,162			10,671			(11,090	)
Inducement Loss on Warrant Conversion		-			-			-			(246	)
Total other income (expense)		(5,124	)		156			(229	)		(10,443	)
Income before income tax expense		10,697			38,295			87,181			87,424
Income tax expense		(3,032	)		(7,326	)		(19,388	)		(22,299	)
Net income	$	7,665		$	30,969		$	67,793		$	65,125
Dividends on Series A Convertible Preferred Stock		(1,210	)		(1,210	)		(3,590	)		(3,591	)
Net income attributable to common stock and participating securities	$	6,455		$	29,759		$	64,203		$	61,534


EPS:
Basic	$	0.38		$	1.69		$	3.57		$	3.58
Diluted	$	0.35		$	1.16		$	2.39		$	2.90
Weighted average shares outstanding:
Basic		11,132,317			11,556,423			11,930,649			11,146,020
Diluted		11,883,985			14,924,531			13,351,591			13,774,331

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

~~(SUCCESSOR)~~

CONDENSED CONSOLIDATED STATEMENT OF ~~CHANGES IN~~ STOCKHOLDERS’ EQUITY

~~MARCH 15, 2018~~JANUARY 1, 2022 THROUGH ~~MARCH 31, 2018~~SEPTEMBER 30, 2022

(~~Dollar amounts~~Amounts in ~~thousands)~~thousands except for share and per share data)

(Unaudited)

Common Stock Additional Paid-In Accumulated Total Stockholders’
Shares Amount Capital Deficit Equity
Balance at March 15, 2018 1,872,428 $ - $ 6,139 $ (1,536 ) $ 4,603
Conversion of Andina rights into shares of Lazydays Holdings, Inc. 615,436 - - - -
Reclassification of Andina common stock previously subject to redemption 472,571 - 4,910 - 4,910
Issuance of common stock, warrants and Series A convertible preferred stock in PIPE transaction, net 2,653,984 - 32,718 - 32,718
Issuance of shares in acquisition of Lazydays 2,857,189 - 29,400 29,400
Beneficial conversion feature of Series A convertible preferred stock - - 3,392 - 3,392
Deemed dividend related to immediate accretion of beneficial conversion feature of Series A convertible preferred stock - - (3,392 ) - (3,392 )
Issuance of warrants to Series A preferred stockholders and placement agent - - 2,666 - 2,666
Stock-based compensation - - 485 - 485
Accrued dividends on Series A preferred stock - - (210 ) - (210 )
Net income - - - 691 691
Balance at March 31, 2018 8,471,608 $ - $ 76,108 $ (845 ) $ 75,263

	Shares		Amount		Shares		Amount			capital			Earnings		Equity
	Common Stock				Treasury Stock					Additional Paid-In			Retained		Total Stockholders’
	Shares		Amount		Shares		Amount			capital			Earnings		Equity
Balance at December 31, 2021		13,694,417	$	-		707,312	$	(12,515	)	$	121,831		$	96,810	$	206,126
Stock-based compensation		-		-		-		-			523			-		523
Repurchase of treasury stock		-		-		1,086,797		(19,175	)		-			-		(19,175	)
Conversion of warrants and options		148,765		-		-		-			1,867			-		1,867
Dividends on Series A preferred stock		-		-		-		-			(1,184	)		-		(1,184	)
Net income		-		-		-		-			-			28,284		28,284
Balance at March 31, 2022		13,843,182		-		1,794,109	$	(31,690	)	$	123,037		$	125,094	$	216,441
Stock-based compensation		-		-		-		-			729			-		729
Repurchase of treasury stock		-		-		1,166,609		(18,991	)		-			-		(18,991	)
Conversion of warrants and options		31,750		-		-		-			354			-		354
Shares issued pursuant to the Employee Stock Purchase Plan		39,860		-		-		-			602			-		602
Dividends on Series A preferred stock		-		-		-		-			(1,197	)		-		(1,197	)
Net income		-		-		-		-			-			31,844		31,844
Balance at June 30, 2022		13,914,792		-		2,960,718	$	(50,681	)	$	123,525		$	156,938	$	229,782
Stock-based compensation		-		-		-		-			831			-		831
Repurchase of treasury stock		-		-		337,171		(5,053	)		-			-		(5,053	)
Conversion of warrants and options		10,000		-		-		-			111			-		111
Dividends on Series A preferred stock		-		-		-		-			(1,210	)		-		(1,210	)
Net income		-		-		-		-			-			7,665		7,665
Balance at September 30, 2022		13,924,792		-		3,297,889	$	(55,734	)	$	123,257		$	164,603	$	232,126

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY

JANUARY 1, 2021 THROUGH SEPTEMBER 30, 2021

(~~Dollar amounts~~Amounts in ~~thousands)~~thousands except for share and per share data)

(Unaudited) (Restated)

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017

Cash Flows From Operating Activities
Net income $ 691 $ 2,336 $ 3,975
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock based compensation 485 140 119
Bad debt expense - - 47
Depreciation and amortization of property and equipment 269 1,058 1,347
Amortization of intangible assets 132 154 187
Amortization of debt discount and paid-in-kind interest 393 136 129
Gain on sale of property and equipment - (1 ) -
Deferred income taxes - 630 -

Changes in operating assets and liabilities:
Receivables (8,466 ) 5,143 (6,404 )
Inventories 4,145 1,435 16,493
Prepaid expenses and other 19 44 332
Income tax receivable/payable 449 (3,573 ) 2,549
Other assets 1 18 (37 )
Accounts payable, accrued expenses and other liabilities (2,365 ) 2,463 173

Total Adjustments (4,938 ) 7,647 14,935

Net Cash (Used In) Provided By Operating Activities (4,247 ) 9,983 18,910

Cash Flows From Investing Activities
Cash paid for purchase of Lazydays R.V. Center, Inc. (86,741 ) - -
Cash acquired in the purchase of Lazy Days’ R.V. Center, Inc. 9,188 - -
Purchases of property and equipment (71 ) (694 ) (710 )

Net Cash Used In Investing Activities (77,624 ) (694 ) (710 )

Cash Flows From Financing Activities
Net borrowings under M&T floor plan 100,830 - -
Repayment of Bank of America floor plan (96,740 ) - -
Net (repayments)/borrowings under floor plan - (12,272 ) 11,657
Repayments under long term debt with Bank of America (8,820 ) (310 ) (464 )
Borrowings under long term debt with M&T bank 20,000 - -
Net proceeds from the issuance of Series A preferred stock and warrants 57,650 - -
Net proceeds from the issuance of common stock and warrants 32,719 - -
Repayments of financing liability - (144 ) (113 )
Repayments of notes payable to Andina related parties (761 ) - -
Payment of contingent liability - RV America acquisition - (667 ) -
Loan issuance costs (615 ) - -

Net Cash Provided by (Used In) Financing Activities 104,263 (13,393 ) 11,080

Net Increase (Decrease) In Cash 22,392 (4,104 ) 29,280

Cash - Beginning 10,671 13,292 4,158

Cash - Ending $ 33,063 $ 9,188 $ 33,438

	Common Stock				Treasury Stock					Additional Paid-In			Retained		Total Stockholders’
	Shares		Amount		Shares		Amount			capital			Earnings		Equity
Balance at December 31, 2020		9,656,041		-		141,299	$	(499	)	$	71,226		$	14,789	$	85,516
Stock-based compensation		-		-		-		-			372			-		372
Conversion of warrants and options		1,049,915		-		-		-			21,687			-		21,687
Shares issued pursuant to the Employee Stock Purchase Plan		51,437		-		-		-			-			-		-
Dividends on Series A preferred stock		-		-		-		-			(1,184	)				(1,184	)
Net income		-		-		-		-			-			8,844		8,844
Balance at March 31, 2021		10,757,393		-		141,299	$	(499	)	$	92,101		$	23,633	$	115,235
Stock-based compensation		-		-		-		-			311			-		311
Conversion of warrants and options		97,084		-		-		-			1,497			-		1,497
Shares issued pursuant to the Employee Stock Purchase Plan		-		-		-		-			327			-		327
Dividends on Series A preferred stock		-		-		-		-			(1,197	)				(1,197	)
Net income		-		-		-		-			-			25,309		25,309
Balance at June 30, 2021		10,854,477		-		141,299	$	(499	)	$	93,039		$	48,942	$	141,482
Stock-based compensation		-		-		-		-			132			-		132
Conversion of warrants and options		787,276		-		-		-			8,316			-		8,316
Shares issued pursuant to the Employee Stock Purchase Plan		23,670		-		-		-			-			-		-
Dividends on Series A preferred stock		-		-		-		-			(1,210	)		-		(1,210	)
Net income		-		-		-		-			-			30,969		30,969
Balance at September 30, 2021		11,665,423		-		141,299	$	(499	)	$	100,277		$	79,911	$	179,689

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~CONTINUED~~

(~~Dollar amounts~~Amounts in thousands)

(Unaudited)

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 372 $ 2,182 $ 1,971
Cash paid during the period for income taxes net of refunds received $ - $ 3,587 $ -

Non-Cash Investing and Financing Activities
Rental vehicles transferred to inventory, net $ - $ 89 $ -
Rental vehicles purchased under the floor plan $ - $ 2,911 $ -
Conversion of Andina redeemable common stock to common stock of Lazydays Holdings, Inc. $ 4,910 $ - $ -
Beneficial conversion feature on Series A Convertible Preferred Stock $ 3,392 $ - $ -
Warrants issued to Series A Preferred stockholders and investment bank $ 2,666 $ - $ -
Net assets acquired in the acquisition of Lazydays R.V. Center, Inc. excluding cash (See Note 3) $ 106,953 $ - $ -
Common stock issued to former stock holders of Lazy Days’ R.V. Center, Inc. $ 29,400 $ - $ -

	For the nine months ended September 30, 2022			For the nine months ended September 30, 2021

Cash Flows From Operating Activities
Net income	$	67,793		$	65,125
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock based compensation		2,083			815
Bad debt expense		76			11
Depreciation and amortization of property and equipment		6,893			6,068
Amortization of intangible assets		5,445			4,208
Amortization of debt discount		248			178
Non-cash lease expense		131			42
Loss (gain) on sale of property and equipment		(18	)		136
PPP loan forgiveness		-			(6,626	)
Change in fair value of warrant liabilities		(10,671	)		11,090
Inducement loss on warrant conversion		-			246
Changes in operating assets and liabilities:
Receivables		5,884			(8,770	)
Inventories		(68,046	)		(4,801	)
Prepaid expenses and other		(1,027	)		(1,229	)
Income tax receivable/payable		(4,584	)		2,976
Other assets		(591	)		(109	)
Accounts payable, accrued expenses and other current liabilities		(11,124	)		16,872
Total Adjustments		(75,301	)		21,107
Net Cash (Used In) Provided By Operating Activities		(7,508	)		86,232

Cash Flows From Investing Activities
Cash paid for acquisitions		(14,694	)		(63,036	)
Proceeds from sales of property and equipment		19			139
Purchases of property and equipment		(23,508	)		(16,907	)
Net Cash Used In Investing Activities		(38,183	)		(79,804	)
Cash Flows From Financing Activities
Net borrowings (repayments) under M&T bank floor plan		89,835			(23,995	)
Repayment of long term debt with M&T bank		(3,608	)		(2,815	)
Proceeds from financing liability		8,239			12,001
Repayments of financing liability		(1,494	)		(1,302	)
Payment of dividends on Series A preferred stock		(3,604	)		(3,591	)
Repurchase of Treasury Stock		(43,219	)		-
Proceeds from shares issued pursuant to the Employee Stock Purchase Plan		602			-
Proceeds from exercise of warrants		513			11,582
Proceeds from exercise of stock options		1,819			8,316
Tax benefit related to stock-based awards		67			-
Repayments of acquisition notes payable		(805	)		(2,244	)
Loan issuance costs		-			(865	)
Net Cash Provided By (Used In) Financing Activities		48,345			(2,913	)
Net Increase In Cash		2,654			3,515
Cash - Beginning		98,120			63,512
Cash - Ending	$	100,774		$	67,027

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Dollar amounts in thousands)

(Unaudited)

	For the nine months ended September 30, 2022			For the nine months ended September 30, 2021

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest	$	10,481		$	5,632
Cash paid during the period for income taxes net of refunds received	$	23,920		$	19,350

Non-Cash Investing and Financing Activities
Accrued dividends on Series A Preferred Stock	$	1,210		$	1,210
Operating lease assets	$	(285	)	$	(16,378	)
Operating lease liabilities	$	285		$	16,378
Net assets acquired in acquisitions	$	18,071		$	27,062

See the accompanying notes to the unaudited condensed consolidated financial statements.

LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

NOTE 1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

Lazydays Holdings, Inc. ~~(“Holdings”~~(the “Company” or “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, ~~(“Holdco”),~~ Andina II Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Holdco (“Merger Sub”), Lazy Days’ R.V. Center, Inc. (and its subsidiaries), a Delaware corporation (“Lazydays RV”), and solely for certain purposes set forth in the merger agreement, A. Lorne Weil (the “Merger Agreement”). The Merger Agreement provided for a business combination transaction by means of (i) ~~the~~a 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~~a 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 eighteen locations including two in the state of Florida, two in the state of Colorado, two in the state of Arizona, three in the state of Tennessee, two in the state of Minnesota, two in the state of Indiana, one in the state of Oregon, one in the state of Washington, one in the state of Wisconsin and one in the state of Oklahoma. Lazydays RV has also operated a dedicated service center location near Houston, Texas since early 2020, which was expanded to include a sales center in the fourth quarter 2022. Through its subsidiaries, Lazydays RV sells and services new and pre-owned ~~recreational vehicles, sells~~RVs, and related parts and ~~accessories,~~accessories. The Company also arranges financing and ~~rents recreational vehicles from five locations, one in the state of Florida, one in the state of Arizona~~extended service contracts for vehicle sales through third-party financing sources and ~~three in the state of Colorado.~~extended warranty providers. It also offers to its customers ~~such~~ ancillary services such as ~~extended service contracts,~~ overnight campground and restaurant facilities. ~~The Company also arranges financing for vehicle sales through third-party financing sources.~~

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission ~~(“SEC”~~(the “SEC”). Accordingly, ~~they~~these condensed consolidated financial statements do not include all of the information and footnotes required by ~~generally accepted accounting principles~~GAAP for complete financial statements. For additional information, these condensed consolidated financial statements should be read in conjunction with Lazydays ~~R.V, Center~~Holdings, Inc.’s consolidated financial statements and notes as of December 31, ~~2017~~2021 and ~~2016 and for the years then ended,~~2020 included in the Annual Report on Form ~~8-K~~10-K filed with the SEC on March ~~21, 2018.~~11, 2022. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Principles of Consolidation

~~Successor~~

The condensed consolidated financial statements ~~in the period from March 15, 2018 to March 31, 2018~~ include the accounts of Holdings, ~~Lazydays RV~~Lazy Days R.V. Center, Inc. and its wholly owned subsidiary LDRV Holdings Corp. LDRV Holdings Corp is the sole owner of Lazydays Land Holdings, ~~LLC, Lazydays Tampa Land Holdings, LLC,~~LLC; Lazydays RV America, ~~LLC,~~LLC; Lazydays RV Discount, ~~LLC, and~~LLC; Lazydays Mile Hi RV, LLC; LDRV of Tennessee LLC; Lazydays of Minneapolis LLC; Lazydays of Central Florida, LLC; Lone Star Acquisition LLC; Lone Star Diversified LLC; LDRV Acquisition Group 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; Lazydays Land of Chicagoland, LLC; Lazydays Land of Phoenix, LLC; LDL of Fort Pierce, LLC; Lazydays RV of Iowa, LLC; Lazydays land of Minneapolis, LLC; Lazydays RV of Reno, LLC; Lazydays RV of Ohio, LLC; Airstream of Knoxville at Lazydays RV, LLC; Lazydays of Maryville, LLC; Lazydays RV of Oregon, LLC; Lazydays RV of Wisconsin, LLC; and Lazydays RV of Oklahoma, LLC (collectively, the “Company”, “Lazydays” or “Successor”). All significant inter-company accounts and transactions have been eliminated in consolidation.

~~Predecessor~~

The condensed consolidated financial statements in the periods from January 1, 2018 to March 14, 2018 and January 1, 2017 through March 31, 2017 include the accounts of Lazydays RV and its wholly owned subsidiary LDRV Holdings Corp. LDRV Holdings Corp is the sole owner of Lazydays Arizona, LLC, Lazydays Land Holdings, LLC, Lazydays Tampa Land Holdings, LLC, Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays Mile Hi RV, LLC (collectively, the “Predecessor”). All significant inter-company accounts and transactions have been eliminated in consolidation.

~~Predecessor and Successor Periods~~

As a result of the Mergers, Holdings is the acquirer for accounting purposes and Lazydays R.V. Center, Inc. is the acquiree and the accounting predecessor. The financial statement presentation distinguishes the results into two distinct periods, the period up to March 15, 2018 (the “Acquisition Date”) (“Predecessor Periods”) and the period including and after that date (the “Successor Period”). The Mergers were accounted for as a business combination using the acquisition method of accounting and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired.

As a result of the application of the acquisition method of accounting as of the effective time of the Transaction Merger, the accompanying condensed consolidated financial statements include a black line division which indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are, therefore, not directly comparable.

The historical financial information of Andina, (which was a special purpose acquisition company) prior to the business combination has not been reflected in the Predecessor financial statements as these historical amounts have been considered de minimis. Accordingly, no other activity in the Company was reported in the Predecessor Period other than the activity of Lazydays RV.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the net assets acquired in business combinations, goodwill and other intangible assets, provision for charge-backs, inventory write-downs, ~~the~~ allowance for doubtful accounts, stock-based compensation and ~~stock-based compensation.~~fair value of warrant liabilities.

Revenue Recognition

The core principle of revenue recognition is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company ~~recognizes~~applies a five-step model for revenue measurement and recognition.

Revenues are recognized when control of the ~~following four criteria are met: (1) delivery has occurred~~promised goods or services ~~rendered; (2) persuasive evidence~~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 condensed consolidated statements of ~~an arrangement exists; (3) fees are fixed or determinable, and (4)~~income. The following table represents the ~~collection~~Company’s disaggregation of ~~related accounts receivable is probable.~~revenue:

SCHEDULE OF DISAGGREGATION OF REVENUE


	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021

New vehicle revenue	$	203,456	$	181,395	$	640,078	$	550,366
Pre-owned vehicle revenue		97,347		104,386		338,505		270,509
Parts, accessories, and related services		13,813		12,233		40,580		34,571
Finance and insurance revenue		18,574		20,130		61,591		54,476
Campground and other revenue		568		584		2,717		2,590
Total	$	333,758	$	318,728	$	1,083,471	$	912,512

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

Revenue from the sale of parts, ~~sales~~accessories and related service is recognized ~~on delivery~~as services and parts are delivered or as a customer approves elements of the ~~service or product.~~

completion of service. Revenue from ~~rental~~the sale of ~~vehicles~~parts, accessories and related service is recognized ~~pro rata over the period of the rental agreement. The rental agreements are generally short-term~~ in ~~nature. Revenue from rentals is included in parts, service, and~~ other revenue onin the accompanying condensed consolidated statements of income.

The Company receives commissions from the sale of insurance and vehicle service contracts to customers. In addition, the Company arranges financing for customers through various financial institutions and receives commissions. The Company may be charged back (“charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of ~~the~~some contracts by ~~the~~its 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 charge-backs 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, ~~net of chargebacks,~~less the additions to the charge-back allowance, which is included in other revenue as follows (unaudited):

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017

Gross finance and insurance revenues $ 2,517 $ 7,483 $ 8,951
Chargebacks (80 ) (622 ) (427 )
Net finance revenue $ 2,437 $ 6,861 $ 8,524

SCHEDULE OF REVENUE RECOGNIZED OF FINANCE AND INSURANCE REVENUES

	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
	Three months ended						Nine months ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021

Gross finance and insurance revenues	$	20,614		$	22,193		$	67,746		$	60,113
Additions to charge-back allowance		(2,040	)		(2,063	)		(6,155	)		(5,637	)
Net Finance Revenue	$	18,574		$	20,130		$	61,591		$	54,476

The Company has an accrual for charge-backs, which totaled ~~$2,582~~$9,188 and ~~$2,373~~$8,243 at ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017,~~2021, respectively, and is included in ~~accounts~~“Accounts payable, accrued expenses and other current ~~liabilities on~~liabilities” in the accompanying condensed consolidated balance sheets.

Deposits on vehicles received in advance are accounted for as a liability and recognized into revenue upon ~~completion~~satisfaction of each respective ~~transaction.~~performance obligation. These contract liabilities are included in Note 5 – Accounts Payable, Accrued Expenses, and Other Current Liabilities as customer deposits. During the nine months ended September 30, 2022, $6,124 of contract liabilities as of December 31, 2021 were recognized in revenue.

~~Occupancy Costs~~Inventories

~~As a retail merchandising organization, the Company has elected to classify occupancy costs as selling, general and administrative expense in the condensed consolidated statements of income.~~

~~Inventories~~

Vehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out (“LIFO”) method. Cost includes purchase costs, reconditioning costs, dealer-installed accessories and freight. For vehicles accepted in trades, the cost is the fair value of such ~~used~~pre-owned vehicles at the time of the trade-in. ~~Retail~~Other inventory includes parts and accessories ~~and other inventories primarily consist of~~as well as retail travel and leisure specialty merchandise. The current replacement costs of LIFO inventories exceeded their recorded values by $0$16,667 and ~~$11,930~~$8,437 as of ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017,~~2021, respectively. ~~The amount by which current replacement costs of LIFO inventories exceeded their recorded values as of March 31, 2018 was considered to be immaterial.~~

~~Property and Equipment~~

Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense in the period incurred. Betterments and additions are capitalized. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the lesser of the useful life of the asset or the term of the lease.

~~Successor~~

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

~~Predecessor~~

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

~~Goodwill and Intangible Assets~~

The Company’s goodwill, trade names and trademarks are deemed to have indefinite lives, and accordingly are not amortized, but are evaluated at least annually for impairment and more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. The Company’s manufacturer and customer relationships are amortized over their estimated useful lives on a straight-line basis.

~~Successor~~

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

~~Predecessor~~

~~The estimated useful lives were 13 to 18 years for the manufacturer relationships. The customer relationships were fully amortized and had a net carrying value of $0 at December 31, 2017.~~

Cumulative Redeemable Convertible Preferred Stock

The Company’s Series A Preferred Stock (See Note ~~13 -~~10 – Preferred Stock) is cumulative redeemable convertible preferred stock. Accordingly, it is classified as temporary equity and is shown net of issuance costs and the ~~relative~~ fair value of warrants issued in conjunction with the issuance of the Series A Preferred Stock. Unpaid preferred dividends are accumulated, compounded at each quarterly dividend date and presented within the carrying value of the Series A Preferred ~~Stock.~~Stock until a dividend is declared by the Company’s board of directors (the “Board”).

Stock Based Compensation

The Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, ~~Compensation (“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~~income 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~~

We record excess tax benefits and tax deficiencies ~~(including tax benefits~~resulting from the settlement of ~~dividends on share-based payment awards) are recognized~~stock-based awards as a benefit or expense within income ~~tax expense or benefit~~taxes in the ~~condensed~~ consolidated statements of ~~income.~~operations in the period in which they occur.

Earnings Per Share

The Company computes basic and diluted ~~earnings/(loss)~~earnings per share (“EPS”) by dividing net ~~earnings/(loss)~~earnings by the weighted average number of shares of common stock outstanding during the period. ~~During~~

The Company is required, in periods in which it has net income, to calculate EPS using the ~~Successor Period from March 15, 2018~~two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to ~~March 31, 2018,~~earnings that otherwise would have been available to common shareholders but does not require the presentation of basic and diluted ~~net loss per~~EPS for securities other than common ~~share are the same since the inclusion of common stock issuable pursuant to the exercise of~~shares. The two-class method is required because the Company’s Series A ~~Convertible~~ Preferred Stock ~~(utilizing~~have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock as if such holder of the Series A Preferred Stock had been converted ~~method), plus unit purchase options, stock options~~to common stock. Under the two-class method, earnings for the period are allocated to the common and ~~warrants~~preferred stockholders taking into consideration Series A Preferred Stockholders participation in dividends on an as converted basis. The weighted-average number of common and preferred shares outstanding during the ~~calculation~~period is then used to calculate basic EPS for each class of ~~diluted net loss per~~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 ~~share~~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 ~~loss~~income attributable to common stockholders used in the calculation of basic and diluted ~~loss~~income per common share:

SUMMARY OF NET INCOME (LOSS) ATTRIBUTE TO COMMON STOCKHOLDERS

Net income $ 691
Dividends on Series A Convertible Preferred Stock (210 )
Deemed dividend on Series A Convertible Preferred Stock (3,392 )
Net loss attributable to common stockholders $ (2,911 )

	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
(Dollars in thousands - except share and per share amounts)
Distributed earning allocated to common stock	$	-	$	-	$	-	$	-
Undistributed earnings allocated to common stock		4,184		19,541		42,619		39,903
Net earnings allocated to common stock		4,184		19,541		42,619		39,903
Net earnings allocated to participating securities		2,271		10,218		21,584		21,631
Net earnings allocated to common stock and participating securities	$	6,455	$	29,759	$	64,203	$	61,534

Weighted average shares outstanding for basic earnings per common share computation		10,831,960		11,256,066		11,630,292		10,845,663
Dilutive effect of pre-funded warrants		300,357		300,357		300,357		300,357
Weighted average shares outstanding for diluted earnings per share computation		11,132,317		11,556,423		11,930,649		11,146,020

Basic income per common share	$	0.38	$	1.69	$	3.57	$	3.58
Diluted income per common share	$	0.35	$	1.16	$	2.39	$	2.90

During the ~~Successor Period from March 15, 2018 to March 31, 2018,~~three and nine months ended September 30, 2022 and 2021, respectively, the denominator of the basic EPS was calculated as follow:

SCHEDULE OF DENOMINATOR OF BASIC EARNINGS PER SHARE

	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Weighted average outstanding common shares		10,831,960		11,256,066		11,630,292		10,845,663
Weighted average prefunded warrants		300,357		300,357		300,357		300,357
Weighted shares outstanding - basic	$	11,132,317	$	11,556,423	$	11,930,649	$	11,146,020

During the three and nine months ended September 30, 2022 and 2021, respectively, the denominator of the dilutive EPS was calculated as follows:

SCHEDULE OF DENOMINATOR OF DILUTIVE EARNINGS PER SHARE

	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Weighted average outstanding common shares		10,831,960		11,256,066		11,630,292		10,845,663
Weighted average prefunded warrants		300,357		300,357		300,357		300,357
Weighted average warrants (equity)		434,727		964,205		611,612		964,205
Weighted average warrants (liabilities)		-		739,797		425,210		-
Weighted average options		316,941		1,664,106		384,120		1,664,106
Weighted shares outstanding - diluted		11,883,985		14,924,531		13,351,591		13,774,331

~~Basic Earnings/(Loss) per Share~~

~~Weighted average outstanding common shares~~	~~8,471,608~~
~~Weighted average shares held in escrow~~	~~(142,857~~	)
~~Weighted average prefunded warrants~~	~~1,339,499~~
~~Weighted shares outstanding - basic~~	~~9,668,250~~

~~For the Successor period, the~~The following common stock equivalent shares were excluded from the computation of the diluted ~~loss~~income per share, since their inclusion would have been anti-dilutive:

SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

~~Shares underlying Series A Convertible Preferred Stock~~			~~5,962,733~~
~~Shares underlying warrants~~			~~4,677,458~~
~~Stock options~~			~~3,673,544~~
~~Shares underlying unit purchase options~~			~~657,142~~
~~Share equivalents excluded from EPS~~			~~14,970,877~~

	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Warrants (liabilities)		302,235		-		-		739,797
Stock options		245,032		20,000		245,032		20,000
Restricted stock units		88,605		-		45,361		-
Shares issuable under the Employee Stock Purchase Plan		25,418		17,129		25,418		17,129
Share equivalents excluded from EPS		572,685		37,129		270,450		776,926

As of September 30, 2022, the Company had declared dividends of $1,210 on its Series A Convertible Preferred Stock, which are included in dividends payable on the accompanying Condensed Consolidated Balance Sheets. The dividend was paid on October 1, 2022. As a result, the Series A Convertible Preferred Stock was convertible into 5,962,733 shares of common stock as of September 30, 2022. Upon conversion, the Company has the option to pay accrued dividends in cash or allow conversion into common stock.

Prior Period Financial Statement Correction of an Immaterial Misstatement

During the fourth quarter of 2021 and the second quarter of 2022, the Company identified adjustments required to correct earnings per share for the year ended December 31, 2021 and the first three quarters of 2021.The adjustments were due to an error in the allocation of net income to participating securities and the inclusion of liability classified warrants in determining diluted earnings per share in periods they were anti-dilutive. The errors discovered resulted an overstatement of $0.09 basic and understatement of $0.04 diluted for the three months ended March 31, 2021, an overstatement of $0.27 basic and $0.11 diluted and $0.36 basic and $0.17 diluted for the three and six months ended June 30, 2021, respectively, an understatement of $0.15 diluted for the nine months ended September 30, 2021, and an understatement of $0.19 for the year ended December 31, 2021.

Based on an analysis of “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 – “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 – “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), the Company determined that these errors were immaterial to the previously issued condensed consolidated financial statements, and as such, no restatement was necessary. Correcting prior period financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior period financial statements. Accordingly, the misstatements are being corrected prospectively in the Form 10-Q for the quarters ended June 30, 2022 and September 30, 2022, and the Form 10-K for the year ended December 31, 2022.

Advertising Costs

Advertising and promotion costs are charged to operations in the period ~~incurred and totaled approximately $357 for the period from March 15, 2018 to March 31, 2018 (Successor Period).~~incurred. Advertising and promotion ~~charges were $2,624~~costs totaled $7,684 and ~~$3,255~~$5,881 for the ~~Predecessor periods from January 1, 2018 to March 14, 2018~~three months ended September 30, 2022 and ~~January 1, 2017 to March 31, 2017,~~September 30, 2021, respectively, and $24,213 and $15,494 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction.

In its interim condensed consolidated financial statements, the Company follows the guidance in ASC 270, “Interim Reporting” and ASC 740 “Income Taxes”, whereby the Company utilizes the expected annual effective tax rate in determining its income tax provisions for the interim periods.

~~Seasonality~~

Seasonality

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

Vendor Concentrations

The Company purchases its new ~~recreational vehicles~~RVs and replacement parts from various manufacturers. During the ~~Successor period from March 15, 2018 to March 31, 2018, four~~three months ended September 30, 2022, three major manufacturers accounted for ~~40.1%~~50.5%, ~~27.7%, 11.5%~~28.0% and ~~11.3%~~19.1% of RV purchases. During the ~~Predecessor Period from January 1, 2018 to March 14, 2018, four~~nine months ended September 30, 2022, three major manufacturers accounted for ~~36.1%~~47.9%, ~~21.4%, 18.2%,~~30.9% and ~~16.1%~~17.9% of ~~total~~RV purchases.

During the ~~Predecessor period from January 1, 2017 to March 31, 2017, four~~three months ended September 30, 2021, three major manufacturers accounted for ~~32.6%~~46.7%, 31.8% and 18.0% of RV purchases. During the nine months ended September 30, 2021, three major manufacturers accounted for 46.3%, ~~22.7%, 21.6%,~~30.3% and ~~17.0%~~19.4% of ~~total~~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~~agreement’s terms.

Geographic Concentrations

~~Revenues~~The percent of revenues generated by ~~customers of~~ the Florida ~~location~~locations, Colorado locations, Arizona locations and ~~the Colorado location~~Tennessee locations, which generate greater than 10% of revenues, were as follows (unaudited):

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017

Florida 77 % 81 % 81 %
Colorado 16 % 11 % 11 %

SCHEDULE OF GEOGRAPHIC CONCENTRATION RISK PERCENTAGE

	Three months ended						Nine months ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021

Florida		35	%		44	%		43	%		49	%
Tennessee		16	%		16	%		15	%		14	%
Colorado		11	%		10	%		10	%		11	%
Arizona		<10	%		10	%		<10	%		11	%

These geographic concentrations increase the exposure to adverse developments related to competition, as well as economic, demographic ~~weather~~and weather.

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 COVID-19 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 7 - 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 $8,704 in loans (the “PPP Loans”) under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). We applied for loan forgiveness under the PPP Loans. As of September 30, 2022, all of the PPP Loans had a portion forgiven for a total of $6,626, and the Company paid the remaining balances.

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 2020 and December 2021, or at all, over any time period, and sales may ultimately decline. Furthermore, our improved sales and cost savings measures to date may not be sufficient to offset any later adverse impacts of the pandemic, including the Delta and Omicron variants, and our liquidity could be negatively impacted, if sales trends from May 2020 through December 2021 are reversed, which may occur, for example, if consumer preferences shift towards cruise line, air travel and hotel industries.

Our operations also depend on the continued health and productivity of our employees at our dealership and 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 in response by individuals, businesses and federal, state and local governments. Even after the COVID-19 pandemic has subsided, we may experience significant adverse effects to our business as a result of its global economic impact, including any economic recession or downturn and the impact of such a recession or downturn on unemployment levels, consumer confidence, levels of personal discretionary spending, credit availability and any long term disruptions in supply chain.

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.

Recently Issued Accounting Standards

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This standard requires contract assets and contract liabilities, such as certain receivables and deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The standard will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact that this new standard will have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

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 ~~changes~~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 was effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted ASU 2016-13 on January 1, 2021 and the adoption did not materially impact its condensed 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 adopted ASU 2020-04 on January 1, 2022 and the adoption did not materially impact its condensed consolidated financial statements.

Lease recognition

At the 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 ~~these regions.~~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. Leases that are determined to be finance leases are recorded as financing liabilities.

Subsequent Events

Management of the Company has analyzed the activities and transactions subsequent to ~~March 31, 2018~~September 30, 2022 through the date these condensed consolidated financial statements were issued to determine the need for any adjustments to or disclosures within the condensed consolidated financial statements. ~~Except as disclosed in Note 15 – Subsequent Events, the~~The Company did not identify any recognized or non-recognized subsequent events that would require disclosure in the condensed consolidated financial ~~statements.~~statements other than the following item.

~~Recently Issued Accounting Standards~~On October 4, 2022, the Board appointed Kelly Porter as the Company’s Chief Financial Officer. Ms. Porter’s tenure with the Company will commence on October 31, 2022, and she will assume the role of Chief Financial Officer on November 15, 2022. In connection with Ms. Porter’s appointment, Nicholas Tomashot, who currently services as Chief Financial Officer, will step down as Chief Financial Officer effective November 15, 2022. He is expected to remain an employee through November 1, 2023.

On October 10, 2022, the Company commenced operations at its new sales center located near Houston, Texas. The ~~Company qualifies as~~new sales center is part of an ~~emerging growth company pursuant to the provision~~expansion of the ~~Jumpstart Our Business Startups (“JOBS”) Act.~~Section 107 of the JOBS Act provides that an emerging growth company can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the extended transition period~~provided by the JOBSAct for complying with new or revised accounting standards~~.Company’s dedicated Service Center located near Houston, Texas.

NOTE 3 – BUSINESS COMBINATION

Acquisitions of Dealerships

On March ~~15, 2018,~~23, 2021, the Company consummated the ~~Mergers. Under~~acquisition contemplated by the ~~Merger Agreement, upon consummation~~Company’s asset purchase agreement with Chilhowee Trailer Sales, Inc. (“Chilhowee”). The purchase price consisted solely of cash paid to Chilhowee. As part of the ~~Redomestication Merger, (i) each ordinary share~~acquisition, the Company acquired the inventory of ~~Andina was exchanged for one share~~Chilhowee and has added the inventory to the M&T Floor Plan Line of ~~common stock~~Credit (as defined below).

On August 3, 2021, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with BYRV, Inc., BYRV Oregon, Inc. and BYRV Washington, Inc. (“BYRV”). The purchase price consisted solely of ~~Holdings (“Holdings Shares”), except that holders of ordinary shares of Andina sold in its initial public offering (“public shares”) were entitled~~cash paid to elect instead to receive a pro rata portion of Andina’s trust account, as provided in Andina’s charter documents, (ii) each Andina right entitled the holder to receive one-seventh of a Holdings Share and (iii) each Andina warrant entitled the holder to purchase one-half of one Holdings Share at a price of $11.50 per whole share. Upon consummationBYRV. As part of the ~~Transaction Merger,~~acquisition, the ~~Lazydays RV’s stockholders received their pro rata portion of: (i) 2,857,189 Holdings Shares;~~Company acquired the inventory of BYRV and ~~(ii) $86,741 in~~has added the inventory to the M&T Floor Plan Line of Credit (as defined below).

On August 24, 2021, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with Burlington RV Superstore, Inc. (“Burlington”). The purchase price consisted solely of cash ~~subject to adjustments based on the Predecessor’s finalization of working capital and debt as of closing and also subject to any such Holdings Shares and cash that was issued and~~ paid to Burlington. As part of the ~~Predecessor’s option holders~~acquisition, the Company acquired the inventory of Burlington and ~~participants under~~has added the ~~transaction incentive plan (the “Transaction Incentive Plan”~~inventory to the M&T Floor Plan Line of Credit (as defined below).

On July 23, 2022, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with Dave’s Claremore RV, Inc. (“Dave’s Claremore RV”). The purchase price consisted solely of cash paid to Dave’s Claremore RV. As part of the acquisition, the Company acquired the inventory of Dave’s Claremore RV and has added the inventory to the M&T Floor Plan Line of Credit (as defined below).

The Company accounted for the ~~Mergers~~asset purchase agreements as a business ~~combination~~combinations using the purchase method of ~~accounting.~~accounting as it was determined that Chilhowee, BYRV, Burlington and Dave’s Claremore RV each constituted a business. The allocation of the fair value of the assets acquired is final for Chilhowee, BYRV and Burlington. The allocation of the fair value of the assets acquired is still preliminary for Dave’s Claremore RV primarily due to any final adjustments necessary to parts inventory as the examination and inventory of parts acquired is not yet complete. As a result, the Company determined its final allocation for Chilhowee, BYRV and Burlington, and preliminary allocation for Dave’s Claremore RV of the fair value of the assets acquired and the liabilities assumed ~~of the Predecessor~~for these dealerships as follows:

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

					BYRV		Other		Total
			2022		2021
					BYRV		Other		Total

Cash	$	9,188	$	5	$	-	$	11	$	11
Receivables		14,768
Inventories		124,354		9,504		10,189		10,087		20,276
Prepaid expenses and other		4,055
Accounts receivable and prepaid expenses				98		2,295		875		3,170
Property and equipment		73,642		7,353		939		629		1,568
Intangible assets		68,200		1,140		17,795		3,270		21,065
Other assets		200
Total assets acquired		294,407		18,100		31,218		14,872		46,090


Accounts payable, accrued expenses and other current liabilities		26,527		29		788		1,297		2,085
Floor plan notes payable		95,663
Financing liability		56,000
Deferred tax liability		20,370
Long-term debt		8,781
Total liabilities assumed		207,341		29		788		1,297		2,085

Net assets acquired	$	87,066	$	18,071	$	30,430	$	13,575	$	44,005

The fair value of ~~the~~ consideration paid was as follows:

SCHEDULE OF FAIR VALUE OF CONSIDERATION PAID

Cash consideration paid $ 86,741
Common stock issued to former stockholders, option holders, and bonus receipients of Lazydays RV 29,400
Total consideration $ 116,141


	2022		2021
			BYRV		Other		Total

Purchase Price	$	14,694	$	49,506	$	13,530	$	63,036
Floor plan notes payable		8,069		6,912		7,373		14,285
Fair value consideration paid	$	22,763	$	56,418	$	20,903	$	77,321

~~The common stock was valued at $10.29 per share, the closing price of Andina’s common stock on the date of the Mergers.~~

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, Chilhowee, BYRV and Burlington. The primary items that generated the ~~Predecessor.~~goodwill are the value of the synergies between the acquired businesses and the Company, and the growth and operational improvements that drive profitability growth, neither of which qualify for recognition as a separately identified intangible asset. Goodwill associated with the ~~Mergers~~transactions is detailed below:

SCHEDULE OF GOODWILL ASSOCIATED WITH MERGER

			2022		2021
					BYRV		Other		Total

Total consideration	$	116,141	$	22,763	$	56,418	$	20,903	$	77,321
Less net assets acquired		87,066		18,071		30,430		13,575		44,005
Goodwill	$	29,075	$	4,692	$	25,988	$	7,328	$	33,316

The Company recorded measurement period adjustments to goodwill of $631 and $(1,533) for the three and nine months ended September 30, 2022, respectively. Goodwill is expected to be deductible for income tax purposes to the extent the Company has income tax basis.

The following table summarizes the Company’s ~~preliminary~~ allocation of the purchase price to the identifiable intangible assets acquired as of the date of the ~~closing of the Mergers.~~closings.

SCHEDULE OF IDENTIFIABLE INTANGIBLE ASSETS ACQUIRED

Gross Asset
Amount at
Acquisition Date Weighted
Average
Amortization
Period in Years
Trade names and trademarks $ 30,100 N/A
Customer relationships 9,100 12 years
Manufacturer relationships 29,000 12 Years
Total intangible assets $ 68,200

	Gross Asset Amount at Acquisition Date				Weighted Average Amortization Period in Years
	2022		2021		2022		2021
Customer Lists	$	240	$	365		15 years		10 years
Dealer Agreements	$	900	$	20,700		10 years		10 years

Trade names and trademarks are indefinite-lived assets and are not subject to amortization. The value of trade names, trademarks, and customer relationships was determined utilizing the relief from royalty method. The Company ~~determined the fair value of the manufacturer relationships utilizing a discounted cash flow model.~~

~~Direct transaction related costs consist of costs incurred~~recorded approximately $67,357 in ~~connection with the Merger Agreement. These costs totaled $2,730 for~~revenue and $5,394 in income before income taxes during the period from ~~March 15, 2018~~July 1, 2022 to ~~March 31, 2018 which primarily consisted of the business combination expenses of Andina that were contingent upon the completion of the Mergers. These costs total $381~~September 30, 2022 related to these acquisitions. The Company recorded approximately $125,404 in revenue and $17,437 in income before income taxes for the ~~period from January 1, 2018~~nine months ended September 30, 2022 related to ~~March 14, 2018.~~these acquisitions.

Pro Forma Information

The following unaudited pro forma financial information summarizes the combined results of operations for the Company as though the ~~Mergers~~purchase Chilhowee, BYRV, Burlington and Dave’s Claremore RV had been consummated on January 1, ~~2017.~~2021.

SCHEDULE OF PRO FORMA FINANCIAL INFORMATION

	Pro Forma Combined Statements of Income				2022		2021		2022		2021
	For the Three Months Ended March 31,				For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2022		2021		2022		2021
Revenue	$	177,844	$	169,965	$	335,954	$	339,784	$	1,102,949	$	1,056,841
Income before income tax expense	$	6,111	$	5,411
Income before income taxes					$	10,725	$	40,762	$	87,603	$	103,216
Net income	$	4,196	$	3,349	$	7,687	$	32,918	$	68,126	$	77,601

The Company adjusted the combined income of Lazydays RV with ~~Andina~~Chilhowee, BYRV, Burlington and Dave’s Claremore RV and adjusted net income to ~~add back~~eliminate business combination expenses, ~~as well as~~ the incremental depreciation and amortization associated with the preliminary purchase price allocation as well as the income taxes for the previously untaxed acquired entities to determine pro forma net income.

~~Goodwill that is deductible for tax purposes wasdetermined to be $6,089.~~

NOTE 4 – INVENTORIES

Inventories consist of the following:

SCHEDULE OF INVENTORIES

Successor Predecessor
As of As of
March 31, 2018 December 31, 2017
(Unaudited)
New recreational vehicles $ 80,890 $ 89,668
Pre-owned recreational vehicles 34,676 31,378
Parts, accessories and other 4,643 5,054
120,209 126,100
Less: excess of current cost over LIFO - (11,930 )
$ 120,209 $ 114,170

~~NOTE 5 – PROPERTY AND EQUIPMENT, NET~~

~~Property and equipment consist of the following:~~

Successor Predecessor
As of As of
March 31, 2018 December 31, 2017
(Unaudited)
Land $ 13,775 $ 10,366
Building and improvments including leasehold improvements 50,907 41,890
Furniture and equipment 3,491 14,753
Company vehicles and rental units 4,847 3,612
Construction in progress 693 396
73,713 71,017
Less: Accumulated depreciation and amortization (269 ) (25,348 )
$ 73,444 $ 45,669

~~Depreciation and amortization expense amounted to the amounts set forth in the table below (unaudited):~~

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017

Depreciation and amortization $ 269 $ 1,058 $ 1,347

~~NOTE 6 – INTANGIBLE ASSETS~~

~~Intangible assets and the related accumulated amortization are summarized as follows:~~

Successor Predecessor
As of March 31, 2018 (Unaudited) As of December 31, 2017
Gross
Carrying
Amount Accumulated
Amortization Net Asset
Value Gross
Carrying
Amount Accumulated
Amortization Net Asset
Value
Amortizable intangible assets:
Manufacturer relationships $ 29,000 $ 100 $ 28,900 $ 11,100 $ 3,238 $ 7,862
Customer relationships 9,100 32 9,068 1,300 1,300 -
38,100 132 37,968 12,400 4,538 7,862
Non-amortizable intangible assets:
Trade names and trademarks 30,100 - 30,100 18,000 - 18,000
$ 68,200 $ 132 $ 68,068 $ 30,400 $ 4,538 $ 25,862

~~Amortization expense amounted to the amounts set forth in the table below (unaudited):~~

Successor Predecessor
March 15, 2018 to March 31, 2018 January 1, 2018 to March 14, 2018 January 1, 2017 to March 31, 2017
Amortization $ 132 $ 154 $ 187

~~Estimated future amortization expense is as follows:~~

Years ending
2018 (9 months) $ 2,381
2019 3,175
2020 3,175
2021 3,175
2022 3,175
Thereafter 22,887
$ 37,968

~~As of March 31, 2018, the weighted average remaining amortization period was 11.9 years.~~

~~NOTE 7 – FINANCING LIABILITY~~

On December 23, 2015, the Predecessor 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, net of debt discount, is summarized as follows:~~

Successor Predecessor
As of As of
March 31, 2018 December 31, 2017
(Unaudited)
Financing liability $ 56,000 $ 55,158
Interest added to principal amount 171 -
Debt discount - (883 )
Financing liability, net of debt discount 56,171 54,275
Less: current portion 597 595
Financing liability, non-current portion $ 55,574 $ 53,680

~~The future minimum payments required by the arrangement are as follows:~~

Years ending December 31, Principal Interest Total Payment
2018 (9 months) $ 426 $ 3,070 $ 3,496
2019 702 4,052 4,754
2020 853 3,995 4,848
2021 1,018 3,927 4,945
2022 1,198 3,847 5,045
Thereafter 40,974 34,574 75,548
$ 45,171 $ 53,465 $ 98,636

The financing liability has an implied interest rate of 7.3%. At the conclusion of the 20-year lease period, the financing liability residual will be $11,000, which will correspond to the carrying value of the land.

	As of			As of
	September 30, 2022			December 31, 2021

New recreational vehicles	$	282,184		$	177,744
Pre-owned recreational vehicles		49,436			66,013
Parts, accessories and other		4,483			7,586
Inventories, gross		336,103			251,343
Less: excess of current cost over LIFO		(16,667	)		(8,437	)
Total	$	319,436		$	242,906

NOTE 85 – ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable, accrued expenses and other current liabilities consist of the following:

SCHEDULE OF ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

	Successor		Predecessor
	As of		As of
	March 31, 2018		December 31, 2017		As of September 30, 2022		As of December 31, 2021
	(Unaudited)
Accounts payable	$	9,741	$	12,394	$	23,431	$	28,356
Other accrued expenses		2,315		2,893		3,291		5,064
Customer deposits		5,127		3,999		3,074		8,511
Accrued compensation		4,538		3,211		6,292		8,564
Accrued charge-backs		2,582		2,373		9,188		8,243
Accrued interest		258		311		947		261
Total	$	24,561	$	25,181	$	46,223	$	58,999

NOTE 96 – ~~DEBT~~LEASES

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 Condensed Consolidated Balance Sheets.

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

As of September 30, 2022, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 7.0 years and 5.0%, respectively.

Operating lease costs for the nine month period ended September 30, 2022 was $4,868, including variable lease costs. There were no short term leases for the nine months ended September 30, 2022.

Maturities of lease liabilities as of September 30, 2022 were as follows:

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Maturity Date	Operating Leases
2022	$	1,574
2023		6,094
2024		5,270
2025		4,353
2026		3,119
Thereafter		13,450
Total lease payments		33,860
Less: Imputed interest		5,429
Present value of lease liabilities	$	28,431

The following presents supplemental cash flow information related to leases during 2022:

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

	Nine months ended
	September 30, 2022		September 30, 2021
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows for operating leases	$	4,868	$	1,929

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	285	$	16,378
Finance lease		24	$	24
	$	309	$	16,402

On March 10, 2020, the Company entered into an agreement for the sale of land to LD Murfreesboro TN Landlord, LLC (“LDMTL”) for $4,921. The Company has entered into a lease agreement with LDMTL with lease payments to commence upon granting of a certificate of occupancy and completion of planned construction, the cost of which was be paid for by LDMTL. The commencement date of the lease occurred at the completion of construction which occurred in late March 2021. The lease has been evaluated in accordance with ASC 842 and determined to be a failed sale leaseback. As such, it has been recorded as a finance lease and classified as financing liability in the Condensed Consolidated Balance Sheets. Lease payments began in April 2021.

On June 22, 2021, the Company entered into an agreement for the sale of property to CARS-DB13, LLC (“CARS”). The Company has entered into a lease agreement with CARS with lease payments commencing on June 22, 2021. The lease has been evaluated in accordance with ASC 842 and determined to be a failed sale leaseback. As such, it has been recorded as a finance lease and classified as financing liability in the Condensed Consolidated Balance Sheets.

On August 11, 2021, the Company entered into an agreement for the sale of property to LD Elkhart IN Landlord, LLC (“LD Elkhart”). The Company has entered into a lease agreement with LD Elkhart with lease payments commencing on August 1, 2022. The lease has been evaluated in accordance with ASC 842 and determined to be a failed sale leaseback. As such, it has been recorded as a finance lease and classified as financing liability in the Condensed Consolidated Balance Sheets.

On May 13, 2022, the Company entered into an agreement for the sale of property to National Retail Properties, LP (“National”). The Company has entered into a lease agreement with National with lease payments to commence upon granting of a certificate of occupancy and completion of planned construction, the cost of which was be paid for by National. The commencement date of the lease will occur at the completion of construction.

NOTE 7 – 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~~$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 ~~will~~was originally due to mature on March 15, ~~2021.~~2021. On February 13, 2021, the Company signed an agreement with M&T to extend the maturity date to June 15, 2021. On June 14, 2021, an additional agreement was signed to extend the maturity date to September 15, 2021. The M&T Facility requires the Company to meet certain financial and other covenants and is secured by substantially all the assets of the Company. The costs of the M&T Facility were recorded as a debt discount.

On March ~~15, 2018,~~6, 2020, the Company ~~repaid $96.7 million outstanding~~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 ~~BOA~~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. On February 13, 2021, the Company signed an agreement with M&T to extend the maturity date to June 15, 2021. On June 14, 2021, an additional agreement was signed to extend the maturity date to September 15, 2021.

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 ~~notes payable~~unused commitment fees and ~~$8.8~~ 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.

On July 14, 2021, the Company entered into an amended and restated credit agreement with M&T, as a Lender, Administrative Agent, Swingline Lender, and Issuing Bank, and other financial institutions as Lender parties, (“new M&T Facility”). The credit agreement evidences an approximately $369.1 million ~~outstanding under~~aggregate credit facility, consisting of a $327 million floor plan credit facility, a term loan of approximately $11.3 million, a $25 million revolving credit and a $5.8 million mortgage loan facility. The new M&T Facility requires the ~~BOA term loan.~~Company to meet certain financial and other covenants and is secured by substantially all the assets of the Company. The costs of the new M&T Facility were recorded as a debt discount. The new M&T facility matures on July 14, 2024.

On May 13, 2022, the Company entered into the First Amendment to the Amended and Restated Credit Agreement (“First Amendment”). Pursuant to this amendment, LIBOR was replaced with the Secured Overnight Financing Rate (“SOFR”) as the applicable reference rate.

As of ~~March 31, 2018,~~September 30, 2022, the payment of dividends by the Company (other than from proceeds of revolving loans) was permitted under the new M&T Facility, so long as at the time of the payment of any such dividend, no event of default existed under the new M&T Facility, or would result from the payment of such dividend, and so long as any such dividend was permitted under the new M&T Facility. As of ~~March 31, 2018,~~September 30, 2022, the maximum amount of cash dividends that the Company could make from legally available funds to its stockholders was limited to an aggregate of ~~$12,600~~$20,179 pursuant to a trailing twelve month calculation as defined in the new M&T Facility.

Mortgage Loan Facility

The mortgage loan facility (“mortgage”) has SOFR borrowings bearing interest at SOFR plus 2.25% and a base rate margin of 1.25%. The mortgage requires monthly payments of principal of $0.03 million. As of September 30, 2022, the mortgage balance was $5,471 and the interest rate was 5.01%.

Floor Plan Line of Credit

The ~~$175,000~~$327,000 M&T Floor Plan Line of Credit may be used to finance new vehicle inventory, but only ~~$45,000~~$90,000 may be used to finance pre-owned vehicle inventory and ~~$4,500 may be used to finance rental units.~~$1,000 for permitted Company vehicles. Principal becomes due upon the sale of the related vehicle. The M&T Floor Plan Line of Credit shall accrue interest at ~~either~~either: (a) the fluctuating 30-day ~~LIBOR~~SOFR rate plus an applicable margin which ranges from ~~2.00%~~2.00% to ~~2.30%~~2.30% based upon the Company’s total leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus an applicable margin ranging from ~~1.00%~~1.00% to ~~1.30%~~1.30% based upon the Company’s total leverage ratio (as defined in the new M&T Facility). The Base Rate is defined in the new M&T Facility as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month ~~LIBOR~~SOFR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of ~~0.15%~~0.15%. As of September 30, 2022, the interest rate on the M&T Floor Plan Line of Credit was approximately 5.16%.

The M&T Floor Plan Line of Credit consists of the ~~following as of March 31, 2018:~~following:

SCHEDULE OF FLOOR PLAN NOTES PAYABLE

	Successor
	As of March 31, 2018			As of September 30, 2022			As of December 31, 2021
	(Unaudited)
Floor plan notes payable, gross	$	99,926		$	290,755		$	192,868
Debt discount		(558	)		(457	)		(648	)
Floor plan notes payable, net of debt discount	$	99,368		$	290,298		$	192,220

Term Loan

The ~~$20,000~~$11,300 M&T Term Loan will be repaid in equal monthly principal installments of ~~$242~~$242 plus accrued interest through the maturity ~~date of March 15, 2021.~~date. At the maturity date, the Company ~~will~~must pay a principal balloon payment of ~~$11,300~~$2,600 plus any accrued interest. The M&T Term Loan shall bear interest atat: (a) ~~LIBOR~~SOFR plus an applicable margin of ~~2.25%~~2.25% to ~~3.00%~~3.00% based on the total leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of ~~1.25%-2.00%~~1.25% to 2.00% based on the total leverage ratio (as defined in the new M&T Facility). As of September 30, 2022, there was $7,917 outstanding under the M&T Term Loan. As of September 30, 2022, the interest rate on the M&T Term Loan was 5.2%.

~~Long-term debt consists of the following as of March 31, 2018:~~

Successor
As of March 31, 2018
(Unaudited)
Gross Principal
Amount Debt Discount Total Debt, Net
of Debt Discount

M&T Term Loan $ 20,000 $ (56 ) $ 19,944
Capital lease obligation-equipment 9 - 9
Total long-term debt 20,009 (56 ) 19,953
Less: current portion 2,909 - 2,909
Long term debt, non-current $ 17,100 $ (56 ) $ 17,044

Revolver

The ~~$5,000~~$25,000 M&T Revolver allows the Company to draw up to ~~$5,000.~~$25,000. The M&T Revolver ~~shall bear~~bears interest atat: (a) 30-day ~~LIBOR~~SOFR plus an applicable margin of ~~2.25%~~2.25% to ~~3.00%~~3.00% based on the total leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of ~~1.25%-2.00%~~ 1.25% to 2.00% based on the total leverage ratio (as defined in the new M&T Facility). The M&T Revolver is also subject to unused commitment fees at rates varying from ~~0.25%~~0.25% to ~~0.50%~~0.50% based on the total leverage ratio (as defined in the new M&T Facility). During the ~~Successor period~~three and nine month periods ended ~~March 31, 2018,~~September 30, 2022, there were no outstanding borrowings under the M&T Revolver.

PPP Loan

In response to economic uncertainty caused by the COVID-19 pandemic, subsidiaries of the Company took the additional step of applying for PPP Loans 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 the 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 matured on April 30, 2022 and May 4, 2022, respectively. Pursuant to the promissory notes evidencing the PPP Loans (the “Notes”), such PPP Loans will 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 will be 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. As of September 30, 2022, all of the PPP Loans had a portion forgiven for a total of $6,626, and the Company paid the remaining balances.

The following schedule includes future payments on the term loan, mortgage, and loans for acquisitions.

Future Maturities of Long Term Debt

SCHEDULE OF MATURITIES OF LONG-TERM DEBT


Years ending December 31,
2022	$	1,073
2023		3,575
2024		9,762
2025		400
Total	$	14,810

NOTE 108 – INCOME TAXES

The Company recorded a provision for federal and state income taxes of ~~$449 for the Successor Period from March 15, 2018, $718for the Predecessor periods from January 1, 2018 to March 14, 2018~~$3,032 and ~~$2,445~~$7,326 for the three months ended ~~March 31, 2017,~~September 30, 2022 and 2021, respectively, which represent effective tax rates of approximately ~~39.4%, 23.9%,~~28.3% and ~~38.1%~~19.1%, respectively. The Company recorded a provision for federal and state income taxes of $19,388 and $22,299 for the nine months ended September 30, 2022 and 2021, respectively, which represent effective tax rates of approximately 22.2% and 25.5%, respectively.

The Company’s ~~2018~~ effective tax rates differ from the federal statutory rate of ~~21%~~21% primarily due to local and state income tax rates, net of the federal tax effect as well as the non-deductibility of ~~certain transaction costs and stock based~~stock-based compensation ~~expenses. The Company’s 2017 effective~~expense, the tax rates differ from the federal statutory rate of 35% primarily due to local and state income tax rates, net of the federal tax effect. Due to the Tax Cuts and Jobs Act, the Company’s federal income tax rate decreased from 35% in 2017 to 21% in 2018.

~~Deferred tax assets and liabilities were as follows:~~

Successor Predecessor
As of As of
March 31, 2018 December 31, 2017
(Unaudited)
Deferred tax assets:
Accounts receivable $ 253 $ 253
Accrued charge-backs 634 594
Other accrued liabilities 527 424
Goodwill - 274
Financing liability 14,005 13,574
Transaction costs - 579
Stock based compensation - 165
Other, net (65 ) 215
15,354 16,078

Deferred tax liabilities:
Prepaid expenses (118 ) (202 )
Inventories (4,605 ) (1,531 )
Property and equipment (15,349 ) (9,178 )
Intangible assets (15,652 ) (5,023 )
(35,724 ) (15,934 )

Net deferred tax assets/ (liabilities) $ (20,370 ) $ 144

~~NOTE 11 – RELATED PARTY TRANSACTIONS~~

~~On March 15, 2018, the non-executive Chairman of the Board of Andina was repaid aggregate outstanding notes payable totaling $662. In addition, $100 was repaid to other employees of Andina.~~

~~On March 15, 2018, in connection~~benefit associated with the ~~Mergers, the Company paid Hydra Management, LLC, an affiliate~~exercise of ~~A. Lorne Weil, an initial shareholder of Andina~~stock options and the ~~father~~change in the fair value of ~~B. Luke Weil, a member of the Company’s Board of Directors, $500 as compensation~~warrants recorded for ~~advisory services in connection with the Mergers.~~financial statement purposes.

NOTE 129 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

The Company entered into employment agreements with the former Chief Executive Officer (“CEO”~~) and the Chief Financial Officer (“CFO”~~) of the Company effective as of the consummation of the Mergers. The employment agreements with the former CEO ~~and the CFO provide~~provided for an initial base ~~salaries~~salary of ~~$540 and $325, respectively,~~$540, subject to annual discretionary increases. In addition, the former CEO was eligible to participate in any employee benefit plans adopted by the Company from time to time and was eligible to receive an annual cash bonus based on the achievement of performance objectives. The former CEO’s target bonus was 100% of his base salary. The employment agreements also provided that the former CEO was to be granted an option to purchase shares of common stock of the Company (See Note 11- Stockholders’ Equity).

The employment agreements provided that if the former CEO was terminated for any reason, he was 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 resigned for good reason or was terminated without cause (all as defined in the employment agreement) prior to January 1, 2022, subject to entering into a release, the Company would pay the executive severance equal to two times base salary and average bonus for the former CEO.

On December 17, 2021, William P. Murnane, the Company’s CEO and Chairman of the Board notified the Company’s Board of Directors (the “Board”) of his decision to resign as the Company’s CEO. On December 22, 2021, Mr. Murnane resigned as Chairman of the Board, effective immediately. On December 23, 2021, the Company accelerated the Date of Termination of Mr. Murnane under his employment agreement to January 1, 2022.

On December 23, 2021, the Board appointed director Robert T DeVincenzi as interim Chief Executive Officer, effective January 1, 2022. In connection with his appointment, Mr. DeVincenzi and the Company entered into an employment agreement, dated January 3, 2022 (the “Employment Agreement”). Under the terms of the Employment Agreement, Mr. DeVincenzi is entitled to receive a monthly base salary of $37.5 and a one-time transition payment of $25. Additionally, Mr. DeVincenzi was granted an option to purchase 25,032 shares of common stock at an exercise price of $30.00 (the “Option Award”) under the Company’s 2018 Long Term Incentive Plan (the “Plan”), as well as a one-time restricted stock unit award under the Plan of 10,613 restricted stock units (the “RSU Award”). The RSU Award and Option Award each ~~executive~~become vested on December 31, 2022, provided that Mr. DeVincenzi remains employed by the Company or on the Company’s Board of Directors, in each case, from the grant date of each such award through December 31, 2022. Pursuant to the terms of the Employment Agreement, Mr. DeVincenzi’s employment may be terminated at any time by the Company or Mr. DeVincenzi.

On June 10, 2022, in consideration of his extended service, Mr. DeVincenzi was granted an additional option award to purchase 29,599 shares of common stock at an exercise price of $14.55 under the Plan, as well as an additional RSU award under the Plan of 15,464 restricted stock units. The additional awards each become vested on April 30, 2023 provided that Mr. DeVincenzi continues in the role of interim Chief Executive Officer until August 31, 2022 or until appointment of a permanent Chief Executive Officer, and as long as he remains a member of the Board of Directors of the Company until April 30, 2023.

On July 14, 2022, the Board appointed John North as Chief Executive Officer. On September 6, 2022, Mr. North commenced his service with the Company. Mr. North also serves as a director on the Company’s board. Under Mr. North’s employment agreement, his base salary is $600. He is also eligible to receive annual cash bonuses and annual grants of options to purchase the Company’s shares. Additionally, Mr. North may be eligible to receive a bonus of up to $300 under certain circumstances. Mr. North was granted a one-time restricted stock unit award under the Company’s Amended and Restated Long Term Incentive Plan of 105,308 restricted stock units (“RSU Award”). The RSU Award vests over three years, with one-third of the RSU Award vesting on each anniversary of Mr. North’s start date with the Company, provided he remains employed by the Company from the grant date through each vesting period. Robert DeVincenzi, the Company’s interim Chief Executive Officer, ended his service as interim Chief Executive Officer and returned to his position on the Board on September 6, 2022.

In May 2018, the Company entered into an offer letter with the new Chief Financial Officer (the “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 CFO 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~~CFO’s target bonus is ~~100%~~75% of his annual base salary (with a potential to earn a maximum of up to 150% of his target bonus). He was also provided with a relocation allowance of $100, which the CFO would have been required to repay if he had resigned from the Company or had been 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 ~~and~~as severance. If he is terminated following a change in control, he is also eligible to receive a pro-rated bonus, if the ~~CFO’s target bonus is 75% of her base salary. The employment agreements~~Board determines that the performance objectives have been met. He also ~~provide that each executive is to be~~was granted an option to purchase shares of common stock of the Company (See Note ~~14 –~~11- Stockholders’ Equity).

The employment agreements provide that if the executive is terminated for any reason, he or she is entitled to receive any accrued benefits, including any earned but unpaid portion of base salary through the date of termination, subject to withholding and other appropriate deductions. In addition, in the event the executive resigns for good reason or is terminated without cause (all as defined in the employment agreement) prior to January 1, 2022, subject to entering into a release, the Company will pay the executive severance equal to (i) two times base salary and average bonus for the CEO and (ii) one times base salary and average bonus for the CFO. See Note 15 – Subsequent Events.

Director Compensation

The Company’s non-employee members of the ~~board of directors will~~Board receive annual cash compensation of ~~$50~~$50 for serving on the ~~board of directors, $5~~Board, $5 for serving on a committee of the ~~board of directors~~Board (other than the Chairman of each of the committees) and ~~$10~~$10 for serving as the Chairman of any of the committees of the ~~board of directors.~~Board.

Legal Proceedings

The Company is a party to ~~numerous~~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 matters could have a material adverse effect on the Company’s business, results of operations, financial condition and/or cash flows.

~~Operating Leases~~

~~The Company leases various land, office and dealership equipment under non-cancellable operating leases. These leases have terms ranging from 36 months to 4 years and expire through 2022.~~

~~Rent expense associated with operating leases was as follows (unaudited):~~

Successor Predecessor
March 15, 2018 to
March 31, 2018 January 1, 2018 to
March 14, 2018 January 1, 2017 to
March 31, 2017
Rent expense $ 79 $ 394 $ 454

~~Transaction Incentive Plan~~

On January 30, 2017, the Company’s Board of Directors approved the Company’s Transaction Incentive Plan, which provides incentives to eight directors and employees of the Company upon the consummation of a qualifying sale transaction. The Transaction Incentive Plan expires on October 31, 2020. To the extent the proceeds received in a qualifying sale transaction exceed certain specified thresholds (the “Excess Amount”), participants in the Transaction Incentive Plan who meet the specified service requirements are entitled to a cash and stock award on the closing date of the qualifying sale transaction equal to their awarded percentage of the Excess Amount. The cash and stock awards will be paid from the consideration of the qualifying sale transaction. The Mergers (see Note 3NOTE 10 – Business Combination) represented a qualifying sale transaction that resulted in the payment to plan participants of an aggregate of $1,510 of cash (including amounts held in escrow) and 51,896 shares of Holdings’ common stock with a value of $534 based on the March 15, 2018 closing price of $10.29 per Andina share. An additional $250 will be paid in cash and stock upon the release of amounts held in escrow under the Merger Agreement.

~~NOTE 13 –~~ PREFERRED STOCK

Simultaneous with the closing of the Mergers, the Company consummated a private placement with institutional investors for the sale of convertible preferred stock, common stock and warrants for an aggregate purchase price of ~~$94,800~~$94,800 (the “PIPE Investment”). At the closing, the Company issued an aggregate of 600,000 shares of Series A Preferred Stock ~~(with a stated value~~for gross proceeds of ~~$60,000),~~$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,~~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~~$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%8% per annum (the “Dividend Rate”), compounded quarterly, on each ~~$100~~$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 there is a current registration statement in effect, 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~~$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) receive 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~~Board of ~~directors.~~Directors.

In addition, ~~five-year~~five-year warrants to purchase 596,273 shares of common stock at an exercise price of ~~$11.50~~$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~~$0.01 per share of common stock, if the last reported sales price of the Company’s common stock equals or exceeds ~~$24.00~~$24.00 per share for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, if there is a current registration statement in effect with respect to the shares underlying the warrants.

The Series A Preferred Stock, while convertible into common stock, is also redeemable at the holder’s option and, as a result, is classified as temporary equity in the condensed consolidated balance sheets. An analysis of its features determined that the Series A Preferred Stock was more akin to equity. While the embedded conversion option (“ECO”) was subject to an anti-dilution price adjustment, since the ECO was clearly and closely related to the equity host, it was not required to be bifurcated and it was not accounted for as a derivative liability under ASC ~~815.~~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~~$9.72 per share, compared to the market price of ~~$10.29~~$10.29 per share on the date of issuance. As a result, a ~~$3,392~~$3,392 beneficial conversion feature was recorded as a deemed dividend in the condensed consolidated statement of income because the Series A Preferred Stock is immediately convertible, with a credit to additional paid-in capital. The ~~relative~~ fair value of the warrants issued with the Series A Preferred Stock of ~~$2,035~~$2,035 was recorded as a reduction to the carrying amount of the preferred stock in the condensed consolidated balance sheet. In addition, aggregate offering costs of ~~$2,981~~$2,981 consisting of cash and the value of ~~five-year~~five-year warrants to purchase 178,882 shares of common stock at an exercise price of ~~$11.50~~$11.50 per share issued to the placement agent were recorded as a reduction to the carrying amount of the preferred stock. The ~~$632~~$632 value of the warrants was determined utilizing the Black-Scholes option pricing model using a term of 5 years, a volatility of ~~39%~~39%, a risk-free interest rate of ~~2.61%,~~2.61% and a 0%0% rate of dividends.

The discount associated with the Series A Preferred Stock ~~wasn’t~~was not accreted during the ~~Successor period~~three or nine month periods ended September 30, 2022 because redemption was not currently deemed to be probable.

The Board declared a dividend payment on the Series A Preferred Stock of $1,210 for the three months ended September 30, 2022 which is included in dividends payable in the accompanying condensed consolidated balance sheet. The dividend was paid on October 1, 2022 to the holders.

NOTE 1411 – STOCKHOLDERS’ EQUITY

~~Successor~~

Authorized Capital

The Company is authorized to issue 100,000,000 shares of common stock, ~~$0.0001~~$0.0001 par value, and 5,000,000 shares of preferred stock, ~~$0.0001~~$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 1310 – Preferred Stock, for additional information associated with the Series A Preferred Stock.

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 value per share of the common on the first day of the purchase period or the last day of the purchase period. During the three and nine month periods ended September 30, 2022, the Company recorded $65 and $351, respectively, of stock based compensation related to the ESPP. During the three and nine month periods ended September 30, 2021, the Company recorded $41 and $246, respectively, of stock based compensation related to the ESPP.

Stock Repurchase Program

On September 13, 2021, the Board of Directors of the Company authorized the repurchase of up to $25 million of the Company’s stock through December 31, 2022. On February 24, 2022, the Board of Directors authorized an additional $45 million to be used for repurchases, of which $20 million can be used through July 31, 2022, and the remaining $25 million can be used for repurchases through December 31, 2022. These shares may be purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.

During the three months ended September 30, 2022, the Company repurchased 337,171 shares of common stock for $5,053. During the nine months ended September 30, 2022, the Company repurchased 2,590,577 shares of common stock for $43,218. During the year ended December 31, 2021, the Company repurchased 566,013 shares of common stock for $12,016. All repurchased shares are included in treasury stock in the consolidated balance sheets.

Warrants

The Company had the following activity related to shares of common stock underlying warrants:

SCHEDULE OF WARRANTS ACTIVITY

	Shares Underlying Warrants			Weighted Average Exercise Price
Warrants outstanding January 1, 2022		3,419,105		$	11.50
Granted		-		$	-
Cancelled or Expired		-		$	-
Exercised		(57,143	)	$	11.50
Warrants outstanding September 30, 2022		3,361,962		$	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.

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 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. The Company recorded an inducement loss on warrant conversion of $246 related to these warrant exercises.

The Company accounts for its warrants in the following ways: (i) the public warrants (“Public Warrants”) as equity for all periods presented; (ii) the private placement warrants (“Private Warrants”) as liabilities for all periods presented; and (iii) the warrants issued in connection with the Private Investment in Public Equity (“PIPE”) transaction (“PIPE Warrants”) as liabilities for all periods presented. The Company determined the following fair values for the outstanding common stock warrants recorded as liabilities:

SCHEDULE OF FAIR VALUES FOR OUTSTANDING WARRANTS LIABILITIES

	September 30, 2022		December 31, 2021
PIPE Warrants	$	3,647	$	13,603
Private Warrants		462		1,690
Total warrant liabilities	$	4,109	$	15,293

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%~~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,~~Board, 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~~$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%~~18% of shares of common stock then outstanding on a fully diluted basis.

~~Common Stock~~

On ~~March 15, 2018,~~May 20, 2019, the ~~Company had 1,872,428 shares of common stock outstanding prior to~~Company’s stockholders approved the ~~consummation~~adoption of the ~~Mergers.~~

~~On March 15,~~Lazydays Holdings, Inc. Amended and Restated 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~~Long Term Incentive Plan (the “Incentive Plan”). The Incentive Plan amends and restates the ~~Company were issued~~previously adopted 2018 Plan in order 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~~replenish the ~~Mergers, were reclassified from temporary equity to stockholders’ equity at their carrying value of $4,910.~~

~~On March 15, 2018, 2,857,189 shares of common stock at a price per share of $10.29 were issued to the former stockholders of Lazydays RV in conjunction with the Mergers for a total value of $29,400.~~

Simultaneous with the Mergers, in addition to the Series A Preferred Stock and warrants issued in the PIPE investment, the Company sold 2,653,984 shares of common stock, perpetual non-redeemable pre-funded warrants to purchase 1,339,499 shares of common stock at an exercise price of $0.01 per share, and five-year warrants to purchase 1,630,927 shares of common stock at an exercise price of $11.50 per share for gross proceeds of $34,783. The Company incurred offering costs of $2,065 which was recorded as a reduction to additional paid-in capital in the condensed consolidated balance sheet.

The five-year warrants may be exercised for cash or, at the option of the holder, on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act by surrendering the warrants for that numberpool of shares of common stock ~~as determined~~available 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 116,376Incentive Plan by adding an additional 600,000 shares of common stock ~~at an exercise price~~and making certain changes in light 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~~Tax Cuts and Jobs Act and its ~~designees for $100. The Unit Purchase Options are exercisable at $10.00 per unit, as a result~~impact on Section 162(m) of the ~~Merger described in Note 3 – Business Combination and they expire on November 24, 2020. The Unit Purchase Options represent~~Internal Revenue Code of 1986, as amended. On June 9, 2022, the ~~right to purchase an aggregate~~Company’s stockholders approved the addition of ~~457,142~~510,000 shares of common stock ~~(which includes 57,142~~to the Incentive Plan. Stock options are canceled upon termination of employment. As of September 30, 2022, there were 565,471 shares of common stock ~~issuable~~available to be issued under the Incentive Plan.

Stock Options

Stock option activity is summarized below:

SCHEDULE OF STOCK OPTION ACTIVITY

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Options outstanding at January 1, 2022		1,286,672		$	11.87
Granted		54,631		$	21.63
Cancelled or terminated		(25,000	)	$	22.41
Exercised		(166,239	)	$	10.92
Options outstanding at September 30, 2022		1,150,064		$	12.24		2.34	$	1,449
Options vested at September 30, 2022		392,656		$	9.20		2.10	$	1,690

Awards with Market Conditions

The expense recorded for awards with market conditions was $0 during the ~~rights~~three and nine month periods ended September 30, 2022, respectively, and $0 and $96 during the three and nine month periods ended September 30, 2021, respectively, which is included in stock-based compensation in the ~~units, as well as warrants~~condensed consolidated statements of income.

Awards with Service Conditions

During the year ended December 31, 2021, stock options to purchase 200,000 shares of common stock for $11.50 per share). The Unit Purchase Options grant to the holders “demand” and “piggy back” registration rights for periods of five and seven years, respectively, with respect to the securities directly and indirectly issuable upon exercise of the Unit Purchase Options. The Unit Purchase Options may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the Unit Purchase Options (the difference between the exercise price of the Unit Purchase Option and the market price of the Unit Purchase Options and the underlying shares of common stock) to exercise the Unit Purchase Options without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the Unit Purchase Options or the underlying rights or warrants.

~~Warrants~~

As of March 15, 2018, holders of Andina warrants exchanged their existing warrants to purchase 2,155,000 shares of common stock for warrants to purchase 2,155,000 shares of Company common stock at an exercise price of $11.50 per share and a contractual life of five years from the date of the Mergers. If a registration statement covering the 2,000,000 of the shares issuable upon exercise of the public warrants is not effective, warrant holders may, until such time 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 are not redeemable and are exercisable on a cashless basis at the holder’s option.

~~Additionally, warrants to purchase 2,522,458~~245,000 shares of common stock were issued ~~with the PIPE Investment, including warrants issued~~ to ~~the investment bank but excluding prefunded warrants.~~

employees board members. The ~~Company had the following activity related to shares underlying warrants:~~

Shares
Underlying
Warrants Weighted
Average
Exercise Price

Warrants outstanding March 15, 2018 - $ -
Granted 4,677,458 11.50
Cancelled or Expired - -
Exercised - -
Warrants outstanding March 31, 2018 4,677,458 $ 11.50

~~The table above excludes perpetual non-redeemable prefunded warrants to purchase 1,339,499 shares of common stock with~~options have an exercise price of ~~$0.01 per share. The table also excludes warrants to purchase 200,000 shares of common stock which are issuable upon exercise of the Unit Purchase Options.~~

~~Stock Options~~

~~Stock option activity is summarized below:~~

Shares
Underlying
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic Value
Options outstanding at March 15, 2018 - $ -
Granted 3,687,762 11.10
Cancelled or terminated (14,218 ) 11.10
Exercised - -
Options outstanding at March 31, 2018 3,673,544 $ 11.10 4.96 $ -

Options exercisable at March 31, 2018 - $ - - $ -

~~Awards with Market Conditions~~

On March 16, 2018, the Company granted five-year incentive stock options to purchase 3,573,113 shares of common stock at an exercise price of $11.10 per share to employees pursuant to the 2018 Plan, including 1,458,414 shares underlying the CEO’s stock options and 583,366 shares underlying the CFO’s stock options.$21.01, $22.41 or $23.11. A set percentage of the stock options shall vest upon the volume weighted average price (“VWAP”) of the common stock, as defined in the option agreements, being equal to or greater than a specified price per share for at least thirty (30) out of thirty-five (35) consecutive trading days, as follows and are exercisable only to the extent that they are vested: 30%portion of the options ~~shall vest upon exceeding $13.125 per share; an additional 30% of the~~have a five year life and a four year vesting period. The remaining options ~~shall vest upon exceeding $17.50 per share; an additional 30% of the options shall vest upon exceeding $21.875 per share;~~had a five year life and an additional 10% of the options shall vest upon exceeding $35.00 per share; provided that the option holder remains continuously employed by the Company (and/or any of its subsidiaries) from the grant date through (and including) the relevant date of vesting.

a three year vesting period. The fair value of the awards of $15,004 was determined using a Monte Carlo simulation based on a 5-year term, a risk-free rate of 2.62%, an annual dividend yield of 0%, and an annual volatility of 42.8%. The expense is being recognized over the derived service period of each vesting tranche which was determined to be 0.74 years, 1.64 years, 2.24 years, and 3.13 years. The expense recorded for these awards was $485 during the Successor period from March 15, 2018 to March 31, 2018, which is included in operating expenses in the condensed consolidated statements of income.

~~Awards with Service Conditions~~

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

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

~~The $350 fair value of these awards~~$2,920 was determined using the Black-Scholes option pricing ~~model based on a 3.5 year expected life, a risk-free rate~~model.

During the nine months ended September 30, 2022, stock options to purchase 54,631 shares of ~~2.42%,~~common stock were issued to employees. The options have an ~~annual dividend yield~~exercise price of ~~0%, and an annual volatility of 39%~~$30.00 or $14.55. The ~~expense is being recognized over the three-year~~options have a five year life and a one year vesting period. The ~~expense recorded~~fair value of the awards of $450 was determined using the Black-Scholes option pricing model. The fair values for ~~these awards~~the 2022 and 2021 options was ~~$4 during~~based on the ~~Successor period from March 15, 2018 to March 31, 2018, which is included in operating expenses in the condensed consolidated statements~~following range of ~~income.~~ assumptions:

SCHEDULE OF FAIR VALUE ASSUMPTIONS OF AWARDS

Risk free interest rate	0.77%-3.21	%
Expected term (years)	3.0-3.75
Expected volatility	73%-81	%
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 $452 and $1,185 for the three and nine month periods ended September 30, 2022, respectively, and $92 and $473 for the three and nine month periods ended September 30, 2021, respectively, which is included in stock-based compensation in the condensed consolidated statements of income.

As of ~~March 31, 2018,~~September 30, 2022, total unrecorded compensation cost related to all non-vested awards was ~~$14,867~~$2,869 which is expected to be amortized over a weighted average service period of approximately ~~1.62~~ 2.21 years.

Restricted Stock Units

A summary of restricted stock unit activity for the nine months ended September 30, 2022 is as follows:

SCHEDULE OF RESTRICTED STOCK UNITS

	Restricted Stock Units
Outstanding at January 1, 2022		-
Granted		165,297
Vested		-
Forfeited		-
Outstanding at September 30, 2022		165,297

The weighted average grant date fair value of ~~awards issued~~restricted stock units granted during the ~~Successor~~nine months ended September 30, 2022 was $16.77. At September 30, 2022, the intrinsic value of unvested restricted stock units was $2,232. At September 30, 2022 the total unrecognized compensation cost related to unvested restricted stock units was $2,226 and is expected to be recognized over a weighted average period ~~was $4.18 per share.~~of 2.36 years.

~~Predecessor~~NOTE 12 – FAIR VALUE MEASURES

~~Stock Options~~The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The Company ~~recognized stock-based compensation expense~~utilizes the suggested accounting guidance for the three levels of ~~$140~~inputs that may be used to measure fair value:

	Level 1 -	Observable inputs such as quoted prices in active markets for identical assets or liabilities;
	Level 2 -	Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and
	Level 3 -	Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions

The Company has assessed that the fair value of cash and ~~$119~~cash equivalents, trade receivables, trade payables, and other current liabilities approximate their carrying amounts.

The Public Warrants trade in active markets. When classified as liabilities, warrants traded in active markets with sufficient trading volume represent Level 1 financial instruments as they are publicly traded in active markets and thus have observable market prices which are used to estimate the fair value adjustments for the related common stock warrant liabilities. When classified as liabilities, warrants not traded in active markets, or traded with insufficient volume, represent Level 3 financial instruments that are valued using a Black-Scholes option-pricing model to estimate the fair value adjustments for the related common stock warrant liabilities.

SCHEDULE OF FAIR VALUE ADJUSTMENTS FOR PRIVATE WARRANTS LIABILITIES

	September 30, 2022								December 31, 2021
	Carrying Amount		Level 1		Level 2		Level 3		Carrying Amount		Level 1		Level 2		Level 3

PIPE Warrants	$	3,647	$	3,647	$	-	$	-	$	13,603	$	13,603	$	-	$	-
Private Warrants		462		-		-		462		1,690		-		-		1,690
Total	$	4,109	$	3,647	$	-	$	462	$	15,293	$	13,603	$	-	$	1,690

The PIPE Warrants are considered a Level 1 measurement, since they are similar to the ~~2017 Stock Option Plan~~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.

Level 3 Disclosures

The Company utilizes a Black Scholes option-pricing model to value the Private Warrants at each reporting period ~~from January 1, 2018 to March 14, 2018~~ and transaction date, with changes in fair value recognized in the ~~period from January 1, 2017 to March 31, 2017, respectively, which is included within operating expenses on the condensed consolidated~~ statements of income.

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

~~NOTE 15 – SUBSEQUENT EVENTS~~

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

Subsequent to March 31, 2018, the Company entered into an offer letter with the new Chief Financial Officer (the “new CFO”) of the Company. The offer letter provides for an initial base salary of $325 per year subject to annual discretionary increases. In addition, the executiverisk-free interest rate 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~~continuously compounded interest rate on U.S. Treasury Separate Trading of ~~performance objectives.~~Registered Interest and Principal of Securities having a maturity similar to the contractual life of the warrants. The ~~new CFO’s target bonus~~expected life of the warrants 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~~assumed to be ~~granted an option~~equivalent to ~~purchase shares of common stock of~~their remaining contractual term. The dividend rate is based on the ~~Company. He is also being provided with a relocation allowance of $100~~historical rate, which the ~~new CFO~~Company anticipates will ~~be required to repay if he resigns from~~remain at zero.

The following table provides quantitative information regarding Level 3 fair value measurements:

SCHEDULE OF FAIR VALUE MEASUREMENTS

	September 30, 2022			December 31, 2021
Stock Price	$	13.50		$	21.54
Strike Price	$	11.50		$	11.50
Expected life		0.45			1.20
Volatility		50.0	%		57.4	%
Risk Free rate		3.73	%		0.46	%
Dividend yield		0.00	%		0.00	%
Fair value of warrants	$	1.49		$	5.45

The following table presents changes in Level 1 and Level 3 liabilities measured at fair value for the ~~Company or is terminated by~~nine months ended September 30, 2022 and 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.year ended December 31, 2021:

SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE

	September 30, 2022						December 31, 2021
	PIPE Warrants			Private Warrants			PIPE Warrants			Private Warrants
Balance - beginning of year	$	13,603		$	1,690		$	13,716		$	1,380
Exercise or conversion		(607	)		-			(7,208	)		-
Measurement adjustment		(9,349	)		(1,228	)		7,095			310
Balance at September 30, 2022	$	3,647		$	462		$	13,603		$	1,690

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

~~Forward Looking Statements~~

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	●	~~The Company may not be able to satisfy its debt obligations upon the occurrence of a change in control under the M&T Credit Facility.~~

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

	●	~~The documentation governing the Company’s M&T Facility contain restrictive covenants that may impair the Company’s ability to access sufficient capital and operate its business.~~

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

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

	●	A portion of the Company’s revenue is from financing, insurance and extended service contracts, which depend on third party lenders and insurance companies. The Company cannot assure you that third party lending institutions will continue to provide financing for RV purchases.

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

	●	~~The Company’s business depends on its ability to meet its labor needs.~~

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

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

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

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

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

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

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

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

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

	●	~~Increases in the minimum wage could adversely affect the Company’s financial results.~~

	●	~~The Company may be subject to product liability claims if people or property are harmed by the products the Company sells.~~

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

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

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

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

	●	Nasdaq may delist the Company’s common stock on its exchange, which could limit investors’ ability to make transactions in the Company’s common stock and subject the Company to additional trading restrictions.

	●	The Company’s ability to request indemnification from the stockholders for damages arising out of the business combination are limited in certain instances to those claims where damages exceed $1.0 million and is limited to the cash and shares placed in escrow.

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

	●	~~We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.~~

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

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

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

The following discussion and analysis of ~~our~~the Company’s financial condition and results of operations should be read together with ~~our~~the Company’s financial statements and related notes included in Part I, Item 1 of this Form 10-Q, as well as ~~our~~the Annual Report on Form ~~10 Information~~10-K filed with the Securities and Exchange Commission on March ~~21, 2018 on Form 8-K.~~11, 2022.

The amounts set forth below are in thousands unless otherwise indicated except for unit (including the average selling price per unit), share and per share data.

Business Overview

Overview

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

Company History

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

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

For the purposes of this Management Discussion and Analysis of Financial Condition and Results of Operations, we combined the results of Lazy Days’ R.V. Center, Inc. (the “Predecessor”) for the period from January 1, 2018 to March 14, 2018 with the results of Lazydays Holdings, Inc. (the “Successor”) for the period from March 15, 2018 to March 31, 2018.

Our Business

The Company operates ~~Recreation Vehicle~~recreational vehicle (“RV”) dealerships and offers a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. The Company generates revenue by providing RV owners and outdoor enthusiasts a full spectrum of products: RV sales, ~~RV-repair~~RV repair and services, financing and insurance products, third-party protection plans, after-market parts and accessories ~~RV rentals~~ and RV ~~camping.~~camping facilities. The Company provides these offerings through its Lazydays branded dealerships. Lazydays is known nationally as The RV ~~Authority~~^TMAuthority®, a registered trademark that has been consistently used by the Company in its marketing and branding communications since 2013. In this Quarterly Report on Form 10-Q, ~~we refer~~the Company refers to Lazydays Holdings, Inc. as “Lazydays,” the “Company,” “Holdco,” “we,” “us,” “our,” and similar words.

The Company believes, based on industry research and management’s estimates, it operates ~~one of~~ the world’s largest RV ~~dealerships,~~dealership, measured in terms of on-site inventory, located on 126 acres outside Tampa, ~~FL.~~Florida. The Company also ~~operates RV~~has dealerships located at The Villages, Florida; Tucson and Phoenix, Arizona; two near Minneapolis, Minnesota; Knoxville, Nashville and Maryville, Tennessee; Loveland and Denver, Colorado; Elkhart and Burns Harbor, Indiana; Portland, Oregon; Vancouver, Washington; Milwaukee, Wisconsin and Tulsa, Oklahoma. Additionally, Lazydays has operated a dedicated Service Center located near Houston, Texas since early 2020, which was expanded to include a sales center in ~~Tucson, AZ and three cities in Colorado, Loveland, Denver and Longmont.~~ the fourth quarter of 2022.

Lazydays offers one of the largest ~~selection~~selections of leading RV brands in the nation, featuring more than ~~2,500~~4,000 new and pre-owned RVs. The Company has ~~over 300~~nearly 500 service bays, ~~across all locations~~ and each location has an RV parts and accessories ~~stores at all locations.~~store. Lazydays also has ~~RV rental fleets in all three markets and availability~~access to two on-site campgrounds with over 700 RV campsites. The Company ~~welcomes over 500,000 visitors to its dealership locations annually, and~~ employs ~~over 700~~approximately 1,500 people at ~~the five facilities.~~its eighteen dealership and service locations. The Company’s ~~dealership~~ locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. The Company believes its ~~dealership~~ locations are strategically located in key RV markets. Based on information collected by the Company from reports prepared by Statistical Surveys, these ~~key~~ RV markets (Florida, Colorado, Arizona, Minnesota, Tennessee, Indiana, Oregon, Washington, Wisconsin, Oklahoma and ~~Arizona)~~Texas) account for a significant portion of new RV units sold on an annual basis in the U.S. The Company’s dealerships in these key markets attract customers from all states, except Hawaii.

The Company attracts new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once the Company acquires customers, ~~through a transaction,~~ those customers become part of the Company’s customer database where the Company leverages ~~customized~~ customer relationship management (“CRM”) tools and analytics to actively engage, market and sell its products and services.

~~Recent Developments~~Highlights

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

~~Simultaneously~~On March 23, 2021, the Company consummated its asset purchase agreement with ~~the closing~~Chilhowee Trailer Sales, Inc. (“Chilhowee”). The purchase price consisted solely of cash paid to Chilhowee. As part of the ~~Mergers, we consummated a series~~acquisition, the Company acquired the inventory of ~~securities purchase agreements with institutional investors for~~Chilhowee and has added the ~~sale of convertible preferred stock, common stock, and warrants of Holdco for an aggregate purchase price of $94.8 million (the “PIPE Investment~~”) in a private placement. At the closing, Holdco issued an aggregate of 600,000 shares of Series A Preferred Stock of Holdco (with a stated value of $60.0 million), 2,653,984 shares of common stock, 1,339,499 prefunded warrants, and warrants to purchase 2,522,458 Holdco shares exercisable at $11.50 per share. The investors in the PIPE Investment were granted certain registration rights as set forth in the securities purchase agreements.

The Series A Preferred Stock ranks senior to all outstanding common 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. However, the Certificate of Designation relatedinventory to the Series A Convertible Preferred Stock provides the holders of the Series A Convertible Preferred Stock with a separate vote relating to certain actions. Each share of Series A Preferred Stock is convertible at the holder’s election at any time, at an initial conversion price of $10.0625 per share, subject to adjustment (as applicable, the “Conversion Price”). Upon any conversion of the Series A Preferred Stock, the Company will be required to pay each holder converting shares of Series A Preferred Stock all 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 will accrue at an initial rate of 8% per annum (the “Dividend Rate”), compounded quarterly, on each $100 of Series A Preferred Stock (the “Issue Price”) and be payable quarterly in arrears. Accrued and unpaid dividends, until paid in full in cash, will accrue at the then applicable Dividend Rate plus 2%. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event Holdco’s senior indebtedness less unrestricted cash during any trailing twelve month period ending at the end of any fiscal quarter is greater than 2.25 times EBITDA. The Dividend Rate will be reset to 8% at the end of the first fiscal quarter when Holdco’s senior indebtedness less unrestricted cash during the trailing twelve month period ending at the end of such quarter is less than 2.25 times EBITDA.

If, at any time following the second anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of the Company’s Common Stock equals or exceeds $25.00 (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, the Company may elect to force the conversion of any or all of the outstanding Series A Preferred Stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, the Company may elect to redeem all, but not less than all, of the outstanding Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the Series A Preferred Stock, each holder of Series A Preferred Stock has the right to require the Company to redeem all of the holder’s outstanding shares of Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends.

In the event of any liquidation, merger, sale, dissolution or winding up of the Company, holders of the Series A Preferred Stock will have the right to (i) payment in cash of the Issue Price plus all accrued and unpaid dividends, or (ii) convert the shares of Series A Preferred Stock into Common Stock and participate on an as-converted basis with the holders of Common Stock.

M~~&T Credit Facility~~

On March 15, 2018, the Company replaced its existing debt agreements with Bank of America with a $200,000 Senior Secured Credit Facility with M&T Bank (the “M&T Facility”). The M&T Facility includes a $175,000 Floor Plan Facility (the “M&T Floor Plan Line of ~~Credit”),~~Credit.

On July 14, 2021, the Company entered into an amended and restated credit agreement with M&T, as a ~~$20,000 Term Loan (the “M&T Term Loan”),~~Lender Administrative Agent, Swingline Lender, and Issuing Bank, and other financial institutions as Lender parties. The credit agreement evidences an approximately $369.1 million aggregate credit facility, consisting of a $327 million floor plan credit facility, a term loan of approximately $11.3 million, a $25 million revolving credit and a ~~$5,000 Revolving Credit Facility (the “M&T Revolver”~~$5.8 million mortgage loan facility.

On August 3, 2021, the Company completed its acquisition of BYRV, Inc. (“BYRV”) located in Portland, Oregon and BYRV Washington, Inc. (“BYRV Washington”) located in Woodland, Washington in one transaction (“BYRV”). The ~~M&T Facility will mature on March 15, 2021. The M&T Facility requires~~purchase price for the transaction consists of the following, in each case subject to adjustment in accordance with the terms of the purchase agreement: (a) a cash payment, subject to a working capital adjustment and an inventory adjustment and (b) the assumption of BYRV’s floorplan debt, which was paid off and added to the Company’s current floorplan.

On August 24, 2021, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with Burlington RV Superstore, Inc. (“Burlington”). The purchase price consisted solely of cash paid to ~~meet certain financial covenants and is secured by substantially all assets~~Burlington. As part of the ~~Company.~~

~~The~~acquisition, the Company acquired the inventory of Burlington and has added the inventory to the M&T Floor Plan Line of Credit (as defined below).

On September 13, 2021, the Board of Directors of the Company authorized the repurchase of up to $25 million of the Company’s common stock through December 31, 2022. These shares may be ~~used to finance new vehicle inventory, but only $45,000 may be used to finance pre-owned vehicle inventory and only $4,500 may be used to finance rental units. Principal becomes due upon~~purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades. This repurchase authorization was exhausted in February 2022.

On October 1, 2021, the Company entered into an agreement for the sale of property to CARS-DB4, LLC (“CARS4”). The Company has entered into a lease agreement with CARS4 with lease payments commencing on October 1, 2021. The lease has been evaluated in accordance with ASC 842 and determined to be a failed sale leaseback. As such, it has been recorded as a finance lease and classified as financing liability in the ~~respective vehicle.~~Condensed Consolidated Balance Sheets.

On February 24, 2022, the Board of Directors of the Company authorized the repurchase of up to $45 million of the Company’s common stock. A portion of the authorized amount of $20 million can be used for repurchases through July 31, 2022. The remaining $25 million can be used for repurchases through December 31, 2022. These shares may be purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.

On March 1, 2022, the Company commenced operations at its new dealership location in Monticello, Minnesota near Minneapolis.

On May 13, 2022, the Company entered into an agreement for the sale of property in Council Bluffs, Iowa to National Retail Properties, LP (“National”). The Company has entered into a lease agreement with National with lease payments to commence upon granting of a certificate of occupancy and completion of planned construction, the cost of which was be paid for by National. The commencement date of the lease will occur at the completion of construction.

On July 23, 2022, the Company consummated the acquisition contemplated by the Company’s asset purchase agreement with Dave’s Claremore RV, Inc. located in Claremore, Oklahoma (“Dave’s Claremore RV”). The purchase price consisted solely of cash paid to Dave’s Claremore RV. As part of the acquisition, the Company acquired the inventory of Dave’s Claremore RV and has added the inventory to the M&T Floor Plan Line of ~~Credit shall accrue interest at either (a) the fluctuating 30-day LIBOR rate plus an applicable margin which ranges from 2.00% to 2.30% based upon the Company’s total leverage ratio~~Credit. (as defined below).

COVID-19 Developments

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 COVID-19 pandemic on public health, including through “shelter in place” or “stay at home” orders in the ~~M&T Facility) or (b)~~states in which we operate. As we modified our business practices to conform to government guidelines and best practices to ensure the ~~Base Rate plus an applicable margin ranging from 1.00%~~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 1.30% based upon the Company’s total leverage ratio (as defined in the M&T Facility). The Base Rate is defined in the M&T Facility as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month LIBOR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of 0.15%.

The M&T Term Loan will be repaid in equal monthly principal instalments of $242 plus accrued interest through the maturity date. At the maturity date, the Company will pay a principal balloon payment of $11,300 plus any accrued interest. The M&T Term Loan shall bear interest at (a) LIBOR plus an applicable margin of 2.25%adjust resources and costs to ~~3.0% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00% based on the total leverage ratio (as defined in the M&T Facility).~~

The M&T Revolver allows the Company to draw up to $5,000. The M&T Revolver shall bear interest at (a) 30-day LIBOR plus an applicable margin of 2.25% to 3.0% based on the total leverage ratio (as defined in the M&T Facility) or (b) the Base Rate plus a margin of 1.25%-2.00% based on the total leverage ratio (as defined in the M&T Facility). The M&T Revolver is also subject to the unused commitment fees at rates varying from 0.25% to 0.50% based on the total leverage ratio (as defined in the M&T Facility).

~~As of March 31, 2018, the payment of dividends~~align with reduced demand caused 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.COVID-19 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.

3137

~~2018 Long-Term Incentive Equity Plan~~

~~On March~~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, ~~2018, we adopted~~2020 through June 15, 2020 and for the ~~2018 Long-Term Incentive Equity Plan~~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 ~~“2018 Plan”~~“PPP Loans”). ~~The 2018 Plan reserves up to 13%~~As of September 30, 2022, all of the ~~Holdco shares outstanding on~~PPP Loans had a ~~fully diluted basis. The 2018 Plan is administered by~~portion forgiven for a total of $6,626, and the ~~Compensation Committee~~Company paid the remaining balances. We expect no further forgiveness of the ~~board~~remaining loans.

The improvement in sales beginning in May 2020 likely relates, at least in part, to an increase in consumer demand as consumers seek outdoor travel and leisure activities that permit appropriate social distancing. However, we can provide no assurances that such growth in sales will continue at the same rate that occurred between May 2020 and December 2021, or at all, over any time period, and sales may ultimately decline. Furthermore, our improved sales and cost savings measures to date may not be sufficient to offset any later adverse impacts of ~~directors,~~the COVID-19 pandemic, including the Delta and ~~provides for awards of options, stock appreciation rights, restricted stock, restricted stock units, warrants or other securities~~Omicron variants, and our liquidity could be negatively impacted, if prior sales trends from May 2020 through June 2022 are reversed, which may occur, for example, if consumer preferences shift towards cruise line, air travel and hotel industries.

Our operations also depend on the continued health and productivity of our employees at our dealerships service locations and corporate headquarters throughout the COVID-19 pandemic. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be ~~convertible, exercisable or exchangeable for or into common stock. If~~predicted, including the ~~fair market value per share of common stock immediately following the closing~~severity and duration of the ~~Mergers is greater than $8.75 per Holdco Share,~~COVID-19 pandemic, the ~~number~~efficacy and availability of ~~Holdco shares authorized for awards under~~vaccines, and further actions that may be taken by individuals, businesses and federal, state and local governments in response. Even after the ~~2018 Plan shall be increased by~~COVID-19 pandemic has subsided, we may experience significant adverse effects to our business as a ~~formula (as defined~~result of its global economic impact, including any economic recession or downturn and the impact of such a recession or downturn on unemployment levels, consumer confidence, levels of personal discretionary spending, credit availability and any long term disruptions in ~~the 2018 Plan) not to exceed 18% of Holdco shares then outstanding on a fully diluted basis.~~supply chains.

On March 16, 2018, we granted 3,573,113 stock options to employees under the 2018 Plan, including 1,458,414 to the CEO and 583,366 to the CFO. The options have an exercise price of $11.10 and a contractual life of five years. The options shall vest as follows and shall be exercisable only to the extent that it has vested: 30% of the option shall vest once the volume weighted average price (“VWAP”), as defined in the options agreement, is equal to or greater than $13.125 per Holdco share for at least thirty (30) out of thirty-five (35) consecutive trading days; an additional 30% of the options shall vest once the VWAP is equal to or greater than $17.50 per Holdco share for at least thirty (30) out of thirty-five (35) consecutive trading days; an additional 30% of the option shall vest once the VWAP is equal to or greater than $21.875 per share for at least thirty (30) out of thirty-five (35) consecutive trading days; and an additional 10% of the option shall vest once the VWAP is equal to or greater than $35 per share for at least thirty (30) out of thirty-five (35) consecutive trading days; provided that the option-holder remains continuously employed byHow the Company ~~(and/or any of~~Generates Revenue

The Company derives its ~~subsidiaries) from the grant date through (and including) the relevant date of vesting.~~

~~How We Generate Revenue~~

~~We derive our~~ revenues from sales of new RV units, sales of pre-owned RV units and ~~sales of parts, service, and other. Parts, service and~~ other revenue. Other revenue consists of RV parts, service and repairs, commissions earned on sales of third-party financing and insurance products, ~~visitor fees at our~~ Tampa campground and food facilities revenue and other revenues. During the three ~~months~~and nine month periods ended ~~March 31, 2018~~September 30, 2022 and ~~2017, we~~2021, the Company derived ~~our~~its revenues from these categories in the following percentages:

	Percentages of Revenues
	Combined Successor and
	Predecessor			Predecessor
	For the Three Months Ended March 31,						For the three months ended September 30,						For the nine months ended September 30,
	2018			2017			2022			2021			2022			2021
New vehicles		55.7	%		50.8	%		61.0	%		56.9	%		59.1	%		60.3	%
Pre-owned vehicles		33.3	%		37.9	%		29.1	%		32.8	%		31.2	%		29.6	%
Parts, service, and other		11.0	%		11.3	%
Other								9.9	%		10.3	%		9.7	%		10.1	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

~~We believe that we are the nation’s largest single point of distribution for RVs and a primary retail outlet for most of the leading manufacturers in the industry.~~ New and pre-owned RV sales accounted for approximately ~~89%~~90% of total revenues ~~in each of~~for the three and nine months ended ~~March 31, 2018~~September 30, 2022 and ~~2017.~~approximately 90% of total revenues for the three and nine months ended September 30, 2021, respectively. These revenue contributions have remained relatively ~~consistent year over year.~~consistent.

Key Performance Indicators

Gross Profit and Gross ~~Margins.~~Margins (excluding depreciation and amortization). Gross profit is ~~our~~ total revenue less ~~our~~ total costs applicable to ~~revenue.~~revenue excluding depreciation and amortization. The vast majority of ~~our~~the cost applicable to revenues is related to the cost of vehicles. New and pre-owned vehicles have accounted for approximately 97% of the cost of revenues for the three and nine months ended ~~March 31, 2018~~September 30, 2022 and ~~2017.~~approximately 97% of the cost of revenues for the three and nine months ended September 30, 2021, respectively. Gross margin is gross profit as a percentage of revenue. Gross profit and gross margin are GAAP metrics commonly used (including by Company management) to compare results between periods and entities.

~~Our~~

The Company’s gross profit is variable in nature and generally follows changes in ~~our~~ revenue. For the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, gross profit was ~~$38,940~~$75.8 million and ~~$35,661,~~$90.3 million, respectively, and gross margin was ~~21.9%~~22.7% and ~~21.0% in each of~~28.3%, respectively. For the nine months ended September 30, 2022 and 2021, gross profit was $274.3 million and $240.6 million, respectively, and gross margin was 25.3% and 26.4%, respectively. Last-in, first-out (“LIFO”) adjustments were $3.9 million and $8.2 million for the three ~~month periods. Our vehicle~~and nine months ended September 30, 2022, respectively, which reduced gross margins are expected to be negatively impacted over the next two quarters following the Mergers as a result of our LIFO-based inventory being written up to fair market value pursuant to the requirements of purchase accounting.

~~Our gross margins on pre-owned vehicles are typically higher than gross margins on new vehicles, on a percentage basis. During~~profit. LIFO adjustments were $(0.7) million and $1.4 million for the three and nine months ended ~~March 31, 2018~~September 30, 2021.

For the three and ~~2017, the~~nine months ended September 30, 2022, gross margins were ~~also favorably~~unfavorably impacted by parts, service, and other revenue whose combined revenues were 11.0% and 11.3%, respectively, of total revenues. Our margins on these lines of business typically carry higher gross margin percentages than ourfor the Company’s new and pre-owned vehicle ~~sales.~~sales primarily driven by: (i) increases in inventory costs as manufacturers passed through higher costs due to supply chain and (ii) inflation impacts. Additionally, the average margin for pre-owned vehicles decreased in the third quarter. Vehicle sales margins are generally lower than the Company’s other lines of business but represent by far the majority of the Company’s revenues. New and pre-owned vehicle margins excluding LIFO impacts decreased from 20.7% in the first three quarters of 2021 to 20.4% in 2022.

SG&A as a percentage of Gross Profit. Selling, general and administrative (“SG&A”) expenses ~~as a percentage of gross profit allows us to monitor our expense control over a period of time. SG&A consists~~consist primarily of wage-related expenses, selling expenses related to commissions and advertising, lease expenses and corporate overhead expenses. ~~Salaries,~~Historically, salaries, commissions and benefits represent the largest component of ~~our~~the Company’s total selling, general and administrative expense and ~~averages~~typically average approximately ~~53%~~55% to 63% of total selling, general and administrative expenses. SG&A expenses do not include transaction costs, stock based compensation and depreciation and amortization expense. SG&A expenses as a percentage of gross profit allows the Company to monitor its overhead expenses relative to profitability over a period of time.

~~We calculate~~The Company calculates SG&A expenses as a percentage of gross profit by dividing SG&A expenses for the period by total gross profit. For the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, SG&A, ~~excluding transaction costs,~~ as a percentage of gross profit was ~~74.0%~~72.6% and ~~75.9%~~52.7%, respectively. ~~We expect that our~~For the nine months ended September 30, 2022 and 2021, SG&A, ~~expenses will increase marginally in future periods in part due to additional legal, accounting, insurance and other expenses that we expect to incur~~ as a ~~result~~percentage of ~~being a public company, including compliance~~gross profit was 62.8% and 54.1%, respectively. The increase in this percentage is driven primarily by the lower comparable gross profit generated by the business as margins normalize, and overhead costs associated with locations added between the ~~Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act~~two periods, marketing, support costs and ~~the related rules~~investments in IT infrastructure and ~~regulations.~~compliance.

Adjusted EBITDA. Adjusted EBITDA is a not a U.S. Generally Accepted Accounting Principle (“GAAP”) financial measure, but it is one of the primary non-GAAP ~~measure~~measures management uses to evaluate the financial performance of ~~our~~the business. Adjusted EBITDA is also frequently used by analysts, investors and other interested parties to evaluate companies in ~~our~~the recreational vehicle industry. ~~We use~~The Company uses Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance as follows:

	●	as a measurement of operating performance to assist us in comparing the operating performance of ~~our~~the Company’s business on a consistent basis, and remove the impact of items not directly resulting from ~~our~~the Company’s core operations;

	●	for planning purposes, including the preparation of ~~our~~the Company’s internal annual operating budget and financial projections;

	●	to evaluate the performance and effectiveness of ~~our~~the Company’s operational strategies; and

	●	to evaluate ~~our~~the Company’s capacity to fund capital expenditures and expand ~~our~~the business.

~~We define~~The Company believes Adjusted EBITDA can provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of financial performance and prospects for the future. The Company defines Adjusted EBITDA as net income excluding depreciation and amortization of property and equipment, non-floor plan interest expense, ~~interest income,~~amortization of intangible assets, income tax expense, stock-based compensation, transaction costs and other supplemental adjustments which for the periods presented includes LIFO adjustments, ~~and~~PPP loan forgiveness, severance costs, other one-time charges, gain ~~or loss~~(loss) on sale of property and ~~equipment. We believe~~equipment and change in fair value of warrant liabilities. The Company believes Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance.

Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations, or a measure comparable to net income as it does not take into account certain requirements such as non-recurring gains and losses which are not deemed to be a normal part of the underlying business activities.

~~Our use~~ The Company’s measure of Adjusted EBITDA ~~may~~is not benecessarily comparable to similarly titled captions of other companies ~~within the industry. We~~due to different methods of calculation. The Company strives to compensate for these limitations by using Adjusted EBITDA as only one of several measures for evaluating ~~our~~ business performance. In addition, capital expenditures, which impact depreciation and amortization, interest expense, and income tax expense, are reviewed separately by management. ~~Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.~~ For a reconciliation of Adjusted EBITDA to net income, a reconciliation of Adjusted EBITDA Margin to net income margin, and a further discussion of how ~~we utilize this~~the Company utilizes these non-GAAP financial ~~measure,~~measures, see “Non-GAAP Financial Measures” below.

3339

Results of Operations

Three Months

The following table sets forth information comparing ~~the~~certain components of net income for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017.~~2021.

Summary Financial Data

(in thousands)

	Combined Successor
	and Predecessor			Predecessor
	Three Months ended March 31, 2018 (Unaudited)			Three Months ended March 31, 2017 (Unaudited)			Three Months Ended September 30, 2022			Three Months Ended September 30, 2021

Revenues
New and pre-owned vehicles	$	158,278		$	150,831		$	300,803		$	285,781
Parts, service and other		19,566			19,134
Other								32,955			32,947
Total revenue		177,844			169,965			333,758			318,728

Cost of revenues
Cost of revenues (excluding depreciation and amortization expense)
New and pre-owned vehicles		135,319			130,845			246,727			221,831
Parts, service and other		3,585			3,459
Total cost of revenues		138,904			134,304
Adjustments to LIFO reserve								3,904			(655	)
Other								7,284			7,289
Total cost of revenues (excluding depreciation and amortization)								257,915			228,465

Gross profit		38,940			35,661
Gross profit (excluding depreciation and amortization)								75,843			90,263

Transaction costs		3,244			46			(38	)		678
Depreciation and amortization expense								4,202			3,717
Stock-based compensation expense								831			132
Selling, general, and administrative expenses		28,799			27,033			55,027			47,597
Income from operations		6,897			8,582			15,821			38,139
Other income/expenses
Gain on sale of property and equipment		1			-
PPP loan forgiveness								-			-
Interest expense		(2,704	)		(2,162	)		(4,603	)		(2,006	)
Change in fair value of warrant liabilities								(521	)		2,162
Total other income (expense)								(5,124	)		156
Income before income tax expense		4,194			6,420			10,697			38,295
Income tax expense		(1,167	)		(2,445	)		(3,032	)		(7,326	)
Net income	$	3,027		$	3,975		$	7,665		$	30,969

Three Months Ended ~~March 31, 2018~~September 30, 2022 Compared to the Three Months Ended ~~March 31, 2017~~September 30, 2021

Revenue

Revenue increased by approximately ~~$7.8~~$15.1 million, or ~~4.6%~~4.7%, to ~~$177.8~~$333.8 million from ~~$170.0~~$318.7 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. ~~This growth primarily resulted from a 5.1% increase in the average selling price per unit on new and pre-owned vehicles.~~

New ~~Vehicles~~ and Pre-Owned Vehicles Revenue

Revenue from ~~our~~ new and pre-owned ~~vehicles~~vehicle sales increased by approximately ~~$7.5~~$15.0 million, or ~~4.9%~~5.2%, to ~~$158.3~~$300.8 million from ~~$150.8~~$285.8 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively.

Revenue from new vehicle sales increased by approximately ~~$12.7~~$22.1 million, or ~~14.7%~~12.2%, to ~~$99.1~~$203.5 million from ~~$86.4~~$181.4 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. This increase was ~~primarily attributable~~due to an increase in the average selling price from $82,800 to $85,500 per unit reflecting higher invoiced manufacturer cost, as well as an increase in the number of new ~~vehicles~~vehicle units sold from ~~1,077~~2,192 to 1,205 due to strong customer demand. The average revenue per unit sold was approximately $82,300 per unit and increased by 2.5% for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017.2,377.

Revenue from pre-owned vehicle sales decreased by approximately ~~$5.2~~$(7.1) million, or ~~8.2%~~6.8%, to ~~$59.2~~$97.3 million from ~~$64.4~~$104.4 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. ~~For~~This was primarily due to a decrease in the ~~three months ended March 31, 2018 compared~~average selling price from approximately $70,900 to ~~the three months ended March 31, 2017, there was~~$68,000 per unit, as well as a decrease in the number of ~~retail~~ pre-owned vehicles sold, from 980 to 849 and a decrease in the number of wholesale pre-owned vehicles sold from 307 to 185. The decline in retail pre-owned units sold was substantially offset by a 14.7% increase in the average selling price per unit. However, the decline inexcluding wholesale units, ~~resulted in a $4.9 million decrease in wholesale sales.~~from 1,417 to 1,335.

~~Parts, Service and~~ Other Revenue

~~Parts, service, and other~~Other revenue consists of sales of parts, accessories and related services. It also consists of finance and insurance revenues as well as campground and ~~other~~miscellaneous revenues. ~~Parts, service and other~~Other revenue ~~increased by approximately $0.5~~stayed consistent at $33.0 million ~~quarter over quarter, or 2.3%,~~compared to ~~$19.6 million from $19.1~~$32.9 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively.

As a component of ~~parts, service and~~ other revenue, s~~ales~~sales of parts, accessories and related services ~~decreased~~increased by approximately ~~$0.3~~$1.6 million, or ~~4.4%~~13.1%, to ~~$8.0~~$13.8 million from ~~$8.3 million. The primary reason for the decrease is that the Company no longer operated its e-commerce store effective September 2017. This decrease in revenue is the result of the loss of $0.5~~$12.2 million ~~in e-commerce revenue generated during the three months ended March 31, 2017 partially offset by increases in parts and services revenue of $0.2 million~~primarily due to increased ~~volume.~~level of business.

Finance and insurance revenue ~~increased~~decreased by approximately ~~$0.8~~$1.5 million, or ~~9.1%~~7.5%, to ~~$9.3~~$18.6 million from ~~$8.5~~$20.1 million for the three months ended ~~March 31, 2018~~September 30, 2022 as compared to ~~March 31, 2017,~~September 30, 2021, respectively, primarily due to ~~higher sales volume in new vehicles, partially offset by an increase in chargebacks due to cancellations and early payoffs for the three months ended March 31, 2018.~~lower RV unit sales.

~~Campground and other revenue, which includes RV rental revenue, remained flat at approximately $2.3 million for each three month period presented.~~

Gross Profit (excluding depreciation and amortization)

Gross profit consists of gross revenues less ~~our~~ cost of sales and ~~services.~~services and excludes depreciation and amortization. Gross profit ~~increased~~decreased by approximately ~~$3.2~~$(14.5) million, or ~~9.2%~~16.1%, to ~~$38.9~~$75.8 million from ~~$35.7~~$90.3 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. This ~~increase~~decrease was ~~primarily~~ attributable to the ~~increase~~increased costs from the manufacturers reducing gross profit per new unit as well as a decrease in ~~revenue discussed above.~~the pre-owned average selling price reducing gross profit per pre-owned unit.

New and Pre-Owned Vehicles Gross Profit

New and pre-owned vehicle gross profit ~~increased 14.9%~~excluding LIFO decreased $(9.9) million, or 15.5%, to ~~$23.0~~$54.1 million from ~~$20.0~~$64.6 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. ~~The increase in new~~New and pre-owned vehicle gross profit ~~is attributable~~including LIFO decreased $(14.4) million, or 22.3%, to ~~a combined 8.8% increase in the average retail revenue per unit sold due to a favorable shift in sales mix in our new product lines.~~

~~Parts, Service and Other Gross Profit~~

~~Parts, services and other gross profit increased 2.0% to $16.0~~$50.2 million from ~~$15.7~~$64.6 million for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017,~~2021, respectively. ~~This was~~The decrease is primarily attributable to increased costs passed through from the manufacturers reducing gross profit per new unit, a decrease in the pre-owned average selling price reducing gross profit per pre-owned unit, and a $3.9 million increase in LIFO adjustments due to ~~an increase~~increases in ~~finance~~inventory levels and ~~insurance revenues~~unit costs.

Other Gross Profit

Other gross profit was consistent at $25.7 million for ~~the reasons described above. Finance and insurance revenues typically carry higher margins than sales of parts, accessories, and related services.~~

~~Transaction Costs~~

~~During~~ the three months ended ~~March 31, 2018, we incurred one-time transaction costs of approximately $3.2 million related to the Mergers, including $2.7 million incurred on the date of the Mergers.~~September 30, 2022 and 2021, respectively, with improved parts, accessories and service gross profit offsetting reduced finance and insurance gross profit associated with lower unit sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses, ~~including~~which, as explained above, do not include transaction costs, stock-based compensation and depreciation and amortization, increased 6.5% to $28.8 million during the three months ended March 31, 2018, from $27.0 million during the three months ended March 31, 2017. The increase resulted primarily from increases in salary, commissions and benefits expenses, as a result of increases in revenue during the period which drive commissions and bonuses. Salary, commissions, payroll taxes and benefits have comprised the majority of our total SG&A expenses and were equal to 53.1% of SG&A expenses during the three months ended March 31, 2018 as compared to 51.3% during the three months ended March 31, 2017.

~~Interest Expense~~

~~Interest expense increased by approximately $0.5~~$7.4 million, or ~~25.1%~~15.5%, to ~~$2.7 million from $2.2~~$55.0 million for the three months ended September 30, 2022, from $47.6 million for the three months ended September 30, 2021. The increase was primarily related to: (a) overhead associated with: (i) the Portland, Oregon, Vancouver, Washington and Milwaukee, Wisconsin dealerships acquired in August 2021; (ii) the Monticello, Minnesota dealership opened in March ~~31, 2018~~2022 and ~~2017,~~(iii) the Tulsa, Oklahoma dealership acquired in July 2022: and (b) increased marketing expense, support costs and investments in IT infrastructure and compliance.

Interest Expense

Interest expense increased by approximately $2.6 million to $4.6 million from $2.0 million for the three months ended September 30, 2022 and 2021, respectively, due primarily to higher floorplan balances and higher interest rates, offset by the use of an interest reduction equity account, which earns interest to offset floorplan interest expense.

Income Taxes

Income tax expense was $3.0 million and $7.3 million for the three month periods ending September 30, 2022 and 2021, respectively.

Results of Operations

Nine Months

The following table sets forth information comparing certain components of net income for the nine months ended September 30, 2022 and 2021.

Summary Financial Data

(in thousands)

	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021

Revenues
New and pre-owned vehicles	$	978,583		$	820,875
Other		104,888			91,637
Total revenue		1,083,471			912,512

Cost of revenues (excluding depreciation and amortization expense)
New and pre-owned vehicles		778,765			650,561
Adjustments to LIFO reserve		8,230			1,409
Other		22,159			19,947
Total cost of revenues (excluding depreciation and amortization)		809,154			671,917

Gross profit (excluding depreciation and amortization)		274,317			240,595

Transaction costs		83			1,528
Depreciation and amortization expense		12,338			10,276
Stock-based compensation expense		2,083			815
Selling, general, and administrative expenses		172,403			130,109
Income from operations		87,410			97,867
Other income/expenses
PPP Loan forgiveness		-			6,626
Interest expense		(10,900	)		(5,733	)
Change in fair value of warrant liabilities		10,671			(11,090	)
Inducement Loss on Warrant Conversion		-			(246	)
Total other income (expense)		(229	)		(10,443	)
Income before income tax expense		87,181			87,424
Income tax expense		(19,388	)		(22,299	)
Net income	$	67,793		$	65,125

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Revenue

Revenue increased by approximately $171.0 million, or 18.7%, to $1,083.5 million from $912.5 million for the nine months ended September 30, 2022 and 2021, respectively.

New and Pre-Owned Vehicles Revenue

Revenue from new and pre-owned vehicle sales increased by approximately $157.7 million, or 19.2%, to $978.6 million from $820.9 million for the nine months ended September 30, 2022 and 2021, respectively.

Revenue from new vehicle sales increased by approximately $89.7 million, or 16.3%, to $640.1 million from $550.4 million for the nine months ended September 30, 2022 and 2021, respectively. This increase was due to an increase in the average selling price from $77,500 for the nine months ended September 30, 2021 as compared to $90,100 for the nine months ended September 30, 2022 as well as an increase in the number of new vehicle units sold from 7,097 to 7,103.

Revenue from pre-owned vehicle sales increased by approximately $68.0 million, or 25.1%, to $338.5 million from $270.5 million for the nine months ended September 30, 2022 and 2021, respectively. This was primarily due to an increase in ~~interest expense on our floor plan credit facility~~the average selling price from approximately $65,800 for the nine months ended September 30, 2021 as compared to $72,500 for the nine months ended September 30, 2022, as well as ~~additional~~an increase in the number of pre-owned vehicles sold, excluding wholesale units, from 3,917 to 4,410.

Other Revenue

Other revenue consists of sales of parts, accessories and related services. It also consists of finance and insurance revenues as well as campground and miscellaneous revenues. Other revenue increased by approximately $13.3 million, or 14.5% to $104.9 million from $91.6 million for the nine months ended September 30, 2022 and 2021, respectively.

As a component of other revenue, sales of parts, accessories and related services increased by approximately $6.0 million, or 17.3%, to $40.6 million from $34.6 million primarily due to increased level of business.

Finance and insurance revenue increased by approximately $7.1 million, or 13.0%, to $61.6 million from $54.5 million for the nine months ended September 30, 2022 as compared to September 30, 2021, respectively, primarily due to higher RV unit sales.

Gross Profit (excluding depreciation and amortization)

Gross profit consists of gross revenues less cost of sales and services and excludes depreciation and amortization. Gross profit increased by approximately $33.7 million, or 14.0%, to $274.3 million from $240.6 million for the nine months ended September 30, 2022 and 2021, respectively. This increase was attributable to growth in all lines of business.

New and Pre-Owned Vehicles Gross Profit

New and pre-owned vehicle gross profit excluding LIFO increased $29.5 million, or 17.3%, to $199.8 million from $170.3 million for the nine months ended September 30, 2022 and 2021, respectively. New and pre-owned vehicle gross profit including LIFO increased $22.7 million, or 13.4%, to $191.6 million from $168.9 million for the nine months ended September 30, 2022 and 2021, respectively. The increase is primarily attributable to the increase in units sold and the increase in the average selling price and gross profit per unit of new and pre-owned units for the period. This increase was partially offset by a $8.2 million increase in LIFO adjustments due to increases in inventory levels and unit costs.

Other Gross Profit

Other gross profit increased by $11.0 million, or 15.3% to $82.7 million from $71.7 million for the nine months ended September 30, 2022 and 2021, respectively, primarily due to: (i) increased finance and insurance revenues and (ii) parts, accessories and related services, each associated with increased RV sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses, which, as explained above, do not include transaction costs, stock-based compensation and depreciation and amortization, increased $42.3 million, or 32.5%, to $172.4 million for the nine months ended September 30, 2022, from $130.1 million for the nine months ended September 30, 2021. The increase was primarily related to (a) overhead associated with the Maryville, Tennessee dealership acquired in March 2021; (b) overhead associated with the Portland, Oregon, Vancouver, Washington and Milwaukee, Wisconsin dealerships acquired in August 2021; (c) overhead associated with the Monticello, Minnesota dealership opened in March 2022; (d) overhead associated with the Tulsa, Oklahoma dealership acquired in July 2022 and; (e) increases in other SG&A expense including marketing expense, performance wages, support costs and investments in IT infrastructure and compliance.

Interest Expense

Interest expense increased by approximately $5.2 million to $10.9 million from $5.7 million for the nine months ended September 30, 2022 and 2021, respectively, due to higher floorplan balances and interest ~~incurred on our financing liability.~~rates, partially offset by the use of an interest reduction equity account, which earns interest to offset floorplan interest expense.

Income Taxes

Income tax expense ~~decreased~~was $19.4 million and $22.3 million for the nine month periods ending September 30, 2022 and 2021, respectively.

Inflation

The Company has experienced higher than normal RV wholesale price increases as manufacturers have passed through increased supply chain costs in their pricing to ~~$1.2 million during~~dealers. The Company has sought to increase its retail prices to offset these cost increases as much as possible without significantly dampening consumer demand or becoming non-competitive in the ~~three months ended March 31, 2018~~markets in which it operates. The Company cannot accurately anticipate the effect of inflation on its operations from ~~$2.4 million during~~possible continued cost increases, consumers’ willingness to accept higher prices and the ~~same period of 2017, due to the decrease in pre-tax income.~~potential impact on retail demand and margins.

~~Non-Gaap~~Non-GAAP Financial Measures

~~We use~~The Company uses certain non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, to ~~enable us to~~ analyze ~~our~~its performance and financial condition as described in “Key Performance ~~Indicators”,~~Indicators,” above. ~~We utilize~~The Company utilizes these financial measures to manage ~~our~~the business on a day-to-day basis and ~~believe~~believes that they are ~~the most~~ relevant measures of performance. ~~We believe~~The Company believes that these supplemental measures are commonly used in the industry to measure performance. ~~We believe~~The Company believes these non-GAAP measures, in addition to the standard GAAP-based financial measures, provide expanded insight to measure revenue and cost ~~performance, in addition to the standard GAAP-based financial measures.~~performance.

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of the Company’s financial condition and results of operations together with the consolidated financial statements of the Company and the related notes thereto also included herein.

EBITDAis defined as net income excluding depreciation and amortization of property and equipment, interest expense, ~~interest income~~net, amortization of intangible assets and income tax expense.

Adjusted EBITDA is defined as net income excluding depreciation and amortization of property and equipment, amortization of intangible assets, income tax expense, non-floor plan interest ~~expense, interest income, income tax~~ expense, stock-based compensation, transaction costs and other supplemental adjustments which for the periods presented includes LIFO adjustments, ~~and~~PPP Loan forgiveness, other one-time charges, gain or loss on sale of property and ~~equipment.~~equipment and change in fair value of warrant liabilities.

Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenues.

Reconciliations from Net Income per the Condensed Consolidated Statements of Income to EBITDA and Adjusted EBITDA and Net income margin to EBITDA margin and Adjusted EBITDA margin for the three months ended ~~March 31, 2018~~September 30, 2022 and ~~2017~~2021 are shown in the tables below.

Combined Successor
and Predecessor Predecessor
($ in thousands) Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited)

Net income $ 3,027 $ 3,975
Interest expense, net 2,704 2,162
Depreciation and amortization of property and equipment 1,327 1,347
Amortization of intangible assets 286 187
Income tax expense 1,167 2,445
Subtotal EBITDA 8,511 10,116
Floor plan interest expense (1,031 ) (892 )
LIFO adjustment 148 576
Transaction costs 3,244 46
Gain on sale of property and equipment (1 ) -
Stock-based compensation 625 119
Adjusted EBITDA $ 11,496 $ 9,965

Combined Successor
and Predecessor Predecessor
(as percentage of total revenue) Three Months ended
March 31, 2018
(Unaudited) Three Months ended
March 31, 2017
(Unaudited)

Net income margin 1.7 % 2.3 %
Interest expense, net 1.5 % 1.3 %
Depreciation and amortization of property and equipment 0.7 % 0.8 %
Amortization of intangible assets 0.2 % 0.1 %
Income tax expense 0.7 % 1.4 %
Subtotal EBITDA margin 4.8 % 6.0 %
Floor plan interest expense (0.6 %) (0.5 %)
LIFO adjustment 0.1 % 0.3 %
Transaction costs 1.8 % 0.0 %
Gain on sale of property and equipment (0.0 %) 0.0 %
Stock-based compensation 0.4 % 0.1 %
Adjusted EBITDA margin 6.5 % 5.9 %

	Three Months Ended September 30,
	2022			2021

EBITDA
Net income	$	7,665		$	30,969
Interest expense, net*		4,603			2,006
Depreciation and amortization of property and equipment		2,372			2,099
Amortization of intangible assets		1,830			1,618
Income tax expense		3,032			7,326
Subtotal EBITDA		19,502			44,018
Floor plan interest		(2,621	)		(414	)
LIFO adjustment		3,904			(655	)
Transaction costs		(38	)		678
Gain on sale of property and equipment		(20	)		(133	)
Change in fair value of warrant liabilities		521			(2,162	)
Inducement loss on warrant conversion		-			-
Non-compete, severance and other		60			-
Stock-based compensation		831			132
Adjusted EBITDA	$	22,139		$	41,464

* Interest expense includes $1,748 and $1,201 relating to finance lease payments for the three months ended September 30, 2022 and 2021, respectively. Depreciation on leased assets under finance leases is included in depreciation expense and included in net income. Operating lease payments are included as rent expense and included in net income.

	Three Months Ended September 30,
	2022			2021

EBITDA margin
Net income margin		2.3	%		9.7	%
Interest expense, net		1.4	%		0.6	%
Depreciation and amortization of property and equipment		0.7	%		0.7	%
Amortization of intangible assets		0.5	%		0.5	%
Income tax expense		0.9	%		2.3	%
Subtotal EBITDA margin		5.8	%		13.8	%
Floor plan interest		-0.8	%		-0.1	%
LIFO adjustment		1.2	%		-0.2	%
Transaction costs		0.0	%		0.2	%
Gain on sale of property and equipment		0.0	%		0.0	%
Change in fair value of warrant liabilities		0.2	%		-0.7	%
Non-compete, severance and other		0.0	%		0.0	%
Stock-based compensation		0.2	%		0.0	%
Adjusted EBITDA Margin		6.6	%		13.0	%

Note: Figures in the table may not ~~recalculate exactly~~total due to rounding.

Reconciliations from Net Income per the Condensed Consolidated Statements of Income to EBITDA and Adjusted EBITDA and Net income margin to EBITDA margin and Adjusted EBITDA margin for the nine months ended September 30, 2022 and 2021 are shown in the tables below.

	Nine Months Ended September 30,
	2022			2021

EBITDA
Net income	$	67,793		$	65,125
Interest expense, net*		10,900			5,733
Depreciation and amortization of property and equipment		6,893			6,068
Amortization of intangible assets		5,445			4,208
Income tax expense		19,388			22,299
Subtotal EBITDA		110,419			103,433
Floor plan interest		(5,063	)		(1,197	)
LIFO adjustment		8,230			1,409
Transaction costs		83			1,528
PPP loan forgiveness		-			(6,626	)
Gain on sale of property and equipment		(18	)		(136	)
Change in fair value of warrant liabilities		(10,671	)		11,090
Inducement loss on warrant conversion		-			246
Non-compete, severance and other		283			-
Stock-based compensation		2,083			815
Adjusted EBITDA	$	105,346		$	110,562

* Interest expense includes $5,199 and $3,619 relating to finance lease payments for the nine months ended September 30, 2022 and 2021, respectively. Depreciation on leased assets under finance leases is included in depreciation expense and included in net income. Operating lease payments are included as rent expense and included in net income.

	Nine Months Ended September 30,
	2022			2021

EBITDA margin
Net income margin		6.3	%		7.1	%
Interest expense, net		1.0	%		0.6	%
Depreciation and amortization of property and equipment		0.6	%		0.7	%
Amortization of intangible assets		0.5	%		0.5	%
Income tax expense		1.8	%		2.4	%
Subtotal EBITDA margin		10.2	%		11.3	%
Floor plan interest		-0.5	%		-0.1	%
LIFO adjustment		0.8	%		0.2	%
Transaction costs		0.0	%		0.2	%
PPP loan forgiveness		0.0	%		-0.7	%
Loss on sale of property and equipment		0.0	%		0.0	%
Change in fair value of warrant liabilities		-1.0	%		1.2	%
Non-compete, severance and other		0.0	%		0.0	%
Stock-based compensation		0.2	%		0.1	%
Adjusted EBITDA Margin		9.7	%		12.1	%

Note: Figures in the table may not total due to rounding.

Liquidity and Capital Resources

Cash Flow Summary

($ in thousands)
	Combined Successor						Nine months ended September 30,
	and Predecessor			Predecessor
($ in thousands)	Three Months ended March 31, 2018 (Unaudited)			Three Months ended March 31, 2017 (Unaudited)
							2022			2021
Net income	$	3,027		$	3,975		$	67,793		$	65,125
Non cash adjustments		3,396			1,829			4,187			16,168
Changes in operating assets and liabilities		(687	)		13,106			(79,488	)		4,939
Net cash provided by (used in) operating activities		5,736			18,910
Net cash (used in) provided by operating activities								(7,508	)		86,232

Net cash used in investing activites		(78,318	)		(710	)
Net cash provided by financing activities		90,870			11,080
Net Increase in Cash	$	18,288		$	29,280
Net cash used in investing activities								(38,183	)		(79,804	)
Net cash provided by (used) in financing activities								48,345			(2,913	)
Net increase in cash							$	2,654		$	3,515

~~Net Cash from Operating Activities~~

The Company ~~generated~~used cash ~~from~~in operating activities of approximately ~~$5.7~~$7.5 million ~~during~~for the ~~three~~nine months ended ~~March 31, 2018,~~September 30, 2022, compared to cash provided by operating activities of approximately ~~$18.9~~$86.2 million for the ~~three~~nine months ended ~~March 31, 2017.~~September 30, 2021. Net income ~~decreased~~increased by approximately ~~$0.8~~$2.7 million for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2022 compared to the ~~three~~nine months ended ~~March 31, 2017.~~September 30, 2021. Adjustments for non-cash expenses, ~~were $3.4~~included in net income, decreased $12.0 million to $4.2 million for the ~~three~~nine months ended ~~March 31, 2018, as~~September 30, 2022 compared to ~~$1.8 million for~~ the ~~three~~prior period. For the nine months ended ~~March 31, 2017. During the three months ended March 31, 2018,~~September 30, 2022, there was approximately ~~$0.7~~$(79.5) million of cash ~~used by~~ changes in operating assets and liabilities as compared to ~~$13.1~~$4.9 million of cash ~~provided by~~ changes in operating assets and liabilities ~~during~~for the ~~three~~nine months ended March 31, 2017. The fluctuation in operating assets and liabilities was primarily due to changes in the balances of prepaid expenses, accounts receivable, and inventory balances during the three months ended March 31, 2018.September 30, 2021. The fluctuations in assets and liabilities for the nine months ended September 30, 2022 were primarily due to the increase in inventory of $68.0 million, mainly associated with RV inventory restocking as manufacturers recover from supply chain issues, the decrease in ~~inventory during~~accounts receivable of $5.9 million, the ~~three months ended March 31, 2017. The Company sold a greater amount~~decrease of ~~wholesale inventory during~~$11.1 million in accounts payable and accrued expenses and other current liabilities, and the ~~three months ended March 31, 2017.~~decrease of $4.6 in income tax receivable/payable.

Net Cash from Investing Activities

The Company used cash in investing activities of approximately ~~$78.3 million during the three months ended March 31, 2018, compared to approximately $0.7~~$38.2 million for the ~~three~~nine months ended ~~March 31, 2017. The Company~~September 30, 2022, compared to cash used ~~net cash~~in investing activities of approximately ~~$77.5~~$79.8 million for the ~~acquisition of Lazydays R.V. Center, Inc. as well as~~nine months ended September 30, 2021. Net cash used in investing activities for the ~~purchase~~nine months ended September 30, 2022 was related to cash used for purchases of property and equipment of ~~approximately $0.7~~$23.5 million ~~during the three months ended March 31, 2018.~~and cash paid for acquisitions of $14.7 million.

Net Cash from Financing Activities

The Company had cash provided by financing activities of approximately ~~$90.9~~$48.3 million ~~during~~for the ~~three~~nine months ended ~~March 31, 2018,~~September 30, 2022, compared to ~~net~~ cash ~~provided by~~used in financing activities of approximately ~~$11.1~~$2.9 million for the ~~three months ending March 31, 2017. During the three~~nine months ended March 31, 2018, the Company raised net proceeds of $90.3 million through the PIPE investment through the issuance of common stock, Series A Convertible Preferred Stock, and warrants. During the three months ended March 31, 2018, the Company also received net proceeds of approximately $20.0 million from the proceeds of a new term loan with M&T Bank which was offset by the repayment of approximately $8.8 million of long term debt with Bank of America. The Company also repaid $96.7 million in floor plan notes payable to Bank of America and received net proceeds of $100.8 million from the new floor plan loan with M&T Bank. The Company also made net repayments to Bank of America of $12.2 million during the Predecessor period prior to the Merger.September 30, 2021. Net cash provided by financing activities for the ~~three~~nine months ended ~~March 31, 2017~~September 30, 2022 was primarily ~~consisted~~related to net borrowings on the M&T Floor Plan Line of ~~$11.7~~Credit of $89.8 million associated with the restocking of ~~net borrowing under~~RV inventory noted above, proceeds from financing liabilities of $8.2 million and proceeds from the ~~floor plan loan.~~exercise of stock options and warrants of $2.3 million. These cash inflows were partially offset by cash payments for the repurchase of treasury stock of $43.2 million, repayments of long term debt of $3.6 million and payments of dividends of $3.6 million.

Funding Needs and Sources

The Company has historically satisfied its liquidity needs through cash from operations and various borrowing arrangements. Cash requirements consist principally of scheduled payments of principal and interest on outstanding indebtedness (including indebtedness under its existing floor plan credit facility), the acquisition of inventory, capital expenditures, salary and sales commissions and lease ~~expenses.~~expenses, the acquisition of three dealerships in 2021 and the acquisition of one dealership in 2022. The Company expects that it has adequate cash on hand, cash from operations and borrowing capacity to meet it liquidity needs for the next twelve months. Management continually evaluates capital requirements and options to facilitate our growth strategy, and currently believes capital is adequate to support the business and its growth strategy under various market conditions.

As of ~~March 31, 2018,~~September 30, 2022, the Company had liquidity of approximately ~~$33.1~~$100.8 million in cash and had working capital of approximately ~~$52.7~~$106.1 million.

Capital expenditures include expenditures to extend the useful life of current facilities, to purchase new capital assets, construction, and to expand operations. For the ~~three~~nine months ended ~~March 31, 2018 and 2017,~~September 30, 2022, the Company invested approximately ~~$0.7 million and $0.7~~$23.5 million in capital expenditures, ~~respectively.~~including $5.6 million in land purchases for future greenfield development, $6.0 million on dealership improvements financed under sale leasebacks and $1.7 million on greenfield construction.

The Company maintains sizable inventory in order to meet the expectations of its customers and believes that it will continue to require working capital consistent with past experience. Historically, the Company has funded its operations with internally generated cash flow and borrowings. Changes in working capital are driven primarily by ~~profit levels.~~levels of business activity. The Company maintains a floor plan credit facility to finance its vehicle inventory. At times, the Company has made temporary repayments on its existing floor plan credit facility using excess cash flow from operations.

Short-Term Material Cash Requirements

For at least the next twelve months, our primary capital requirements are capital to maintain our current operations and to support our planned pipeline of greenfield build-to-suits. We may also use our resources for the funding of potential acquisitions. As of September 30, 2022, we anticipate discretionary capital spending for maintaining current operations of approximately $8 million. We also anticipate spending approximately $50.0 million to complete the buildout of our greenfield dealerships in Council Bluffs, Iowa, Fort Pierce, Florida, Wilmington, Ohio and Surprise, Arizona. Greenfield land purchases and build-to-suits are expected to be financed through mortgage or leasing partners. Cash used for acquisitions will be dependent upon deal flow and individual targets. Inventory associated with acquisitions and stocking new greenfield location inventories will mostly be financed using the M&T floorplan facility.

We have financing commitments that will require $3.6 million for the current portion of long-term debt associated with our M&T Bank term loan and repayment of notes associated with acquisitions. We also have approximately $2.3 million in obligations associated with 2022 payments on our current financing leases.

We expect to meet our short-term liquidity requirements primarily through current cash on hand and cash generated by operations. We also have a ~~result~~firm commitment to finance the completion of our Council Bluffs greenfield dealership and plan to obtain lease or mortgage financing for land purchased and the ~~Mergers~~additional costs of building out greenfield dealerships on ~~March 15, 2018, approximately $105.5 million of incremental cash was made available from various~~these properties. Additional sources of funds, should we need them, include the $25 million M&T revolving credit line, all of which ~~$86.7~~is available.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to support our ongoing operations and to fund our operating and growth requirements for at least the next twelve months. We believe that we have access to additional funds, if needed, through the capital markets under the current market conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all.

Long-Term Material Cash Requirements

Beyond the next twelve months, our principal demands for funds will be for maintenance of our core business, and continued growth through greenfields and acquisitions. Additional funds may be spent on technology and efficiency investments, at our discretion.

Known obligations beyond the next twelve months include approximately $8 million ~~was paid out~~in annual maintenance capital. Our long-term debt repayment will require $11.0 million beyond the next twelve months. Our average greenfield dealership requires $16 to $20 million for land and development, all of which are expected to be financed through mortgages or leases, plus approximately $1.5 million in self-funded start-up operational capital. RV inventory will be financed through our floorplan facility with M&T. The average acquisition costs $4 to $13 million, plus (i) RV inventory which is financed using our floorplan facility, and (ii) entering into a lease arrangement with the ~~Stockholders, leaving~~seller or a ~~minimum (after payment of transaction expenses) of approximately $9.0 million of cash available for future opportunities, including potential acquisitions.~~third party.

M&T Credit Facility

On March 15, 2018, the Company replaced its existing debt agreements with Bank of America with a ~~$200,000~~$200 million Senior Secured Credit Facility (the “M&T Facility” and the related credit agreement, the “Credit Agreement”). The M&T Facility ~~includes~~included a ~~$175,000~~ $175 million M&T floor plan line of credit (“M&T Floor Plan Line of ~~Credit,~~Credit”), a ~~$20,000~~ $20 million M&T term loan (“M&T Term ~~Loan,~~Loan”), and a ~~$5,000~~$5 million M&T ~~Revolver. The~~ revolver (“M&T ~~Facility will mature on March 15, 2021.~~Revolver”). The M&T Facility requires the Company to meet certain financial covenants and is secured by substantially all of the assets of the Company. The M&T Facility was originally due to mature on March 15, 2021. The maturity date was subsequently extended to September 15, 2021.

On March 6, 2020, the Company entered into the Third Amendment and Joinder to Credit Agreement (“Third Amendment”). Pursuant to the Third Amendment, Star Land of Houston, LLC (the “Mortgage Loan Borrower”) and Lone Star Diversified, LLC (“Diversified”), wholly owned subsidiaries of LDRV Holdings Corp, became parties to 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 covering acquisition, construction, and permanent mortgage financing for a property acquired by the Mortgage Loan Borrower (the “M&T Mortgage”). The amount borrowed under the M&T Mortgage was $6.136 million. 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 M&T Mortgage requires monthly payments of principal of $0.03 million and was due to mature on September 15, 2021 when all remaining principal and accrued interest payments become due.

In order to help mitigate the early effects of the COVID-19 pandemic, the Company entered into the Fourth Amendment to the M&T 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 Fourth Amendment included 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.

On July 14, 2021, the Company entered into an amended and restated credit agreement with M&T, as a Lender, Administrative Agent, Swingline Lender, and Issuing Bank, and other financial institutions as Lender parties, (“new M&T Facility”). The credit agreement evidences an approximately $369.1 million aggregate credit facility, consisting of a $327 million floor plan credit facility, a term loan of approximately $11.3 million, a $25 million revolving credit and a $5.8 million mortgage loan facility. The new M&T Facility requires the Company to meet certain financial and other covenants and is secured by substantially all the assets of the Company. The costs of the new M&T Facility were recorded as a debt discount.

The M&T Floor Plan Line of Credit may be used to finance new vehicle inventory, but only ~~$45,000~~$90 million may be used to finance pre-owned vehicle inventory and ~~only $4,500~~$1.0 million may be used to finance ~~rental units.~~permitted Company vehicles. Principal becomes due upon the sale of the respective vehicle. The M&T Floor Plan Line of Credit shall accrue interest at ~~either~~either: (a) the fluctuating 30-day ~~LIBOR~~SOFR 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 new M&T Facility); or (b) the Base Rate plus an applicable margin ranging from 1.00% to 1.30% based upon the Company’s total leverage ratio (as defined in the new M&T Facility). The Base Rate is defined in the agreement as the highest of M&T’s prime rate, the Federal Funds rate plus 0.50% or one-month ~~LIBOR~~SOFR plus 1.00%. In addition, the Company will be charged for unused commitments at a rate of 0.15%.

The M&T Term Loan will be repaid in equal monthly principal installments of $242 plus accrued interest through the maturity date. At the maturity date, the Company will pay a principal balloon payment of ~~$11,300~~$2.6 million plus any accrued interest. The M&T Term Loan shall bear interest atat: (a) ~~LIBOR~~SOFR plus an applicable margin of 2.25% to 3.00% based on the total leverage ratio (as defined in the new 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 new M&T Facility).

The M&T Revolver allows the Company to draw up to ~~$5,000.~~$25 million. The M&T Revolver shall bear interest atat: (a) 30-day ~~LIBOR~~SOFR plus an applicable margin of 2.25% to ~~3.0%~~3.00% based on the total leverage ratio (as defined in the new 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 new M&T Facility). The M&T Revolver is also subject to the unused commitment fees at rates varying from 0.25% to 0.50% based on the total leverage ratio (as defined).

As of ~~March 31, 2018,~~September 30, 2022, there was ~~$99,926~~$290.8 million outstanding under the M&T Floor Plan Line of Credit, ~~and $20,000~~$7.9 million outstanding under the M&T Term Loan. and $5.5 million outstanding on the M&T Mortgage.

Contractual and Commercial Commitments

During the ~~three~~nine months ~~ending March 31, 2018, we had~~ended September 30, 2022, the ~~following significant~~Company did not have any material changes in ~~our~~its contractual and commercial ~~commitments:~~

~~As a result~~commitments outside of the ~~repayment~~ordinary course of our former term loan with Bank of America and the proceeds of $20,000 from our new term loan with M&T, the Company will make monthly principal payments in the amount of $242 until March 15, 2021. On March 15, 2021 the Company will make a payment of principal and interest of $11,300.business.

~~Off-Balance Sheet Arrangements~~Cyclicality

~~As of March 31, 2018, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

~~Inflation~~

Although we cannot accurately anticipate the effect of inflation on our operations, we believe that inflation has not had, and is not likely in the foreseeable future to have, a material impact on our results of operations.

~~Cyclicality~~

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

Seasonality and Effects of Weather

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

~~Our~~

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 ~~our~~ property and ~~inventory.~~inventory and decrease the traffic to our dealerships. Although ~~we believe we have~~the Company believes that it has adequate insurance coverage, if wethe Company were to experience a catastrophic loss, wethe Company may exceed ~~our~~its policy limits, and/or we may have difficulty obtaining similar insurance coverage in the future.

On September 28, 2022, Hurricane Ian made landfall in the State of Florida. The Company did not sustain damage to property or inventory, but telephone and internet capabilities were temporarily impacted. In addition, insurance companies halted binding of policies for six days during the storm’s progress, which resulted in certain sales and service activity being delayed into the fourth quarter. The Company does not anticipate a material loss of revenue due to Hurricane Ian.

Critical Accounting Policies and Estimates

~~We prepare our~~The Company prepares its condensed consolidated financial statements in accordance with GAAP, and in doing so, ~~we have~~it has to make estimates, assumptions and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. ~~We base our~~The Company bases its estimates, assumptions and judgments on historical experience and on various other factors ~~we believe~~it believes to be reasonable under the circumstances. Different assumptions and judgments would change estimates used in the preparation of ~~our~~the condensed consolidated financial statements, which, in turn, could change ~~our~~the results from those reported. ~~We evaluate our~~The Company evaluates its critical accounting estimates, assumptions and judgments on an ongoing basis.

There ~~has~~have been no material ~~change~~changes in ~~our~~the Company’s critical accounting policies from those previously reported and disclosed in ~~our~~its Annual ~~Report.~~Report on Form 10-K.

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

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

Item 4. — Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, wethe Company conducted an evaluation (the “Evaluation”), under the supervision and with the participation of ~~our~~ management, including ~~our~~the Chief Executive Officer and the Chief Financial Officer, of ~~our~~the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). ~~Based~~That evaluation included consideration of management’s review of the Company’s information technology general controls (ITGCs) which identified a material weakness in two areas: (a) Program change-management over certain information technology (IT) systems that support the Company’s financial reporting processes. Our business process controls (automated and manual) that are dependent on the ~~evaluation~~affected ITGCs were also deemed ineffective because they could have been adversely impacted. These control deficiencies were a result of the inability to systematically identify all changes made to the financial reporting system. Although a change process is in place, system limitations prevented the systematic identification of all changes. In addition, some users were found to have the ability to facilitate changes beyond what was necessary for their specific job responsibilities; (b) Review of access of user permissions and separation of duties. Our current technology platform makes the provisioning and maintenance of user permissions difficult to categorize and assess for possible conflicts that could weaken controls. The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results. Management has been designing and implementing, and continues to implement, measures intended to ensure that control deficiencies contributing to the material weakness are remediated, such that these ~~disclosure~~controls are designed, implemented, and operating effectively. The remediation actions include: (a) Developing enhanced risk assessment procedures and controls related to changes in IT systems, including the development and deployment of reporting and tools that allows for improved controls and ~~procedures,~~monitoring of changes in our IT environment; and (b) Developing and maintaining documentation underlying ITGCs to promote knowledge transfer upon personnel and function changes; (c) Implementing an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes; (d) Designing and implementing role-based access and permissions, supported by implementing technology that provides for improving controls and monitoring around assigning and changing the assignment of roles and permissions to users; and (e) enhanced quarterly reporting on the remediation measures to the Audit Committee of the Board of Directors. We believe that these actions will remediate the material weakness. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal 2022.

Notwithstanding the material weakness discussed above, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, has concluded that asthe Company’s financial statements included in this Form 10-Q present fairly, in all material respects, the Company’s financial position, results of ~~March 31, 2018, our disclosure controls~~operations and ~~procedures were effective to ensure that~~cash flows for the ~~information required to be disclosed by us~~periods presented in ~~reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.~~accordance with U.S. generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

~~During the fiscal quarter ended March 31, 2018, we completed the Mergers and the internal controls of Lazy Days’ R.V. Center, Inc became our internal controls. We are engaged~~There were no changes in ~~the process of the design and implementation of~~ our internal control over financial reporting identified in ~~a manner commensurate~~connection with the ~~scale of~~Evaluation that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our ~~operations subsequent to the Mergers.~~internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

~~We are~~The Company is a party to ~~numerous~~multiple legal proceedings that arise in the ordinary course of ~~our~~its business. ~~We do~~The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on ~~our~~its business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these matters could have a material adverse effect on ~~our~~the Company’s business, results of operations, financial condition and/or cash flows.

Item 1A – Risk Factors

~~There have been no material changes to~~Item 1A of Part I of our ~~risk factors as previously disclosed on our~~Annual Report on Form ~~8-K filed with~~10-K for the ~~Securities and Exchange Commission on March 21, 2018.~~year ended December 31, 2021, includes a detailed discussion of the risk factors that could materially affect our business, financial condition or future prospects. We encourage you to read these risk factors in their entirety.

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

~~Information regarding equity securities sold~~Issuer Purchases of Equity Securities

The table below sets forth the information with respect to purchases made by usor on behalf of Lazydays Holdings, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our shares of common stock during the ~~quarter~~three months ended ~~March 31, 2018 that were not registered under the Securities Actwas previously disclosed on our Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2018.~~September 30, 2022.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2)
July 1, 2022 - July 31, 2022		23,367	$	12.99		2,984,085	$	19,514
August 1, 2022 - August 31, 2022		153,221	$	15.66		3,137,306	$	17,115
September 1, 2022 - September 30, 2022		160,583	$	14.63		3,297,889	$	14,765

	(1)	On September 13, 2021, we announced that the Board authorized a stock repurchase program authorizing us to repurchase up to $25.0 million of our shares of common stock. The program will be effective through December 31, 2022.
	(2)	On February 24, 2022, the Board authorized a stock repurchase program authorizing us to repurchase up to $45.0 million of our shares of common stock. A portion of the program in the amount of $20.0 million was effective through July 31, 2022. The remaining portion of the program will be effective through December 31, 2022.

Item 3 – Default Upon Senior Securities

None.

Item 4 – Mine Safety Disclosures

None.

Item 5 – Other Information

None.

4152

Item 6. — Exhibits.

~~10.2~~3.1		~~2018 Long-Term Incentive Plan+ (included as Annex C to the Proxy Statement/Prospectus/Information Statement filed on February 15, 2018~~Amended and ~~incorporated herein by reference)~~

~~10.3~~	~~Employment Agreement between~~Restated Certificate of Incorporation of Lazydays Holdings, Inc. ~~and William Murnane+~~, including the Certificate of Designations of Series A Convertible Preferred Stock (filed as Exhibit ~~10.11~~3.1 to the ~~Registration Statement~~Current Report on ~~Form S-4 (SEC File No. 333-221723) and incorporated herein by reference)~~

~~10.4~~	~~Employment Agreement between Lazydays Holdings, Inc. and Maura Berney+ (filed as Exhibit 10.12 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference)~~

~~10.10~~	Credit Agreement, dated March 15, 2018, among LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, and various other affiliated entities thereafter parties thereto, as Borrowers, Manufacturers and Traders Trust Company, as Administrative Agent, Swingline Lender, Issuing Bank and Lender, and various other financial institutions who may become lender parties thereto.(filed as Exhibit 10.10 to the Form 8-K filed on ~~March 21, 2018)~~June 3, 2022 and incorporated into this Form 10-Q by reference).

~~10.11~~10.1*		~~Security~~Amended and Restated Employment Agreement, dated ~~March 15, 2018,~~September 6, 2022, by and between ~~LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC,~~the Company and Lazydays Mile HI RV, LLC, as Borrowers, Lazydays Holdings Inc., Lazy Days’ R.V. Center, Inc., Lazydays RV America, LLC, and Lazydays Land Holdings, LLC, as Guarantors, and Manufacturers and Traders Trust Company, as administrative agent under the Credit Agreement of even date therewith.(filed as Exhibit 10.11 to the Form 8-K filed on March 21, 2018).John North.

~~10.12~~31.1*	~~Guaranty Agreement, dated March 15, 2018, by certain parties named therein.(filed as Exhibit 10.12 to the Form 8-K filed on March 21, 2018).~~

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended

32.1**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)

32.2**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

101 INS**		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022, formatted in inline XBRL, ~~Instance Document~~include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.

101 SCH104		Cover Page Interactive Data File (embedded within the Inline XBRL ~~Taxonomy Extension Schema Document~~

101 CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

101 DEF*	~~XBRL Taxonomy Extension Definition Linkbase Document~~

101 LAB*	~~XBRL Extension Label Linkbase Document~~

101 PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~document and included in Exhibit 101)

* Filed herewith.

** Furnished ~~herewith.~~herewith

~~+ Management compensatory plan or arrangement.~~

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

~~Signatures~~

Signatures

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

		Lazydays Holdings, Inc.

Dated ~~May 11, 2018~~November 4, 2022		/s/ ~~WILLIAM P. MURNANE~~John North
		~~William P. Murnane~~John North
		Chief Executive Officer Principal Executive Officer
		~~(Duly authorized officer and~~
Dated November 4, 2022		~~principal executive officer)~~/s/ Nicholas J. Tomashot
		Nicholas J. Tomashot
~~Dated May 11, 2018~~		~~/s/ MAURA BERNEY~~
		~~Maura Berney~~
		Chief Financial Officer
		~~(Duly authorized officer~~ Principal Financial and
		~~principal financial and accounting officer)~~ Accounting Officer

	Successor			Predecessor
	March 15, 2018 to March 31, 2018			January 1, 2018 to March 14, 2018			January 1, 2017 to March 31, 2017
Revenues
New and pre-owned vehicles	$	39,167		$	119,111		$	150,831
Parts, service and other		4,738			14,828			19,134
Total revenue		43,905			133,939			169,965

Cost of revenues
New and pre-owned vehicles		33,489			101,830			130,845
Parts, service and other		538			3,047			3,459
Total cost of revenues		34,027			104,877			134,304

Gross profit		9,878			29,062			35,661

Transaction costs		2,806			438			46
Selling, general, and administrative expenses		5,247			23,552			27,033
Income from operations		1,825			5,072			8,582
Other income/expense
Gain on sale of property and equipment		-			1			-
Interest expense		(685	)		(2,019	)		(2,162	)
Total other expense		(685	)		(2,018	)		(2,162	)
Income before income tax expense		1,140			3,054			6,420
Income tax expense		(449	)		(718	)		(2,445	)
Net income	$	691		$	2,336		$	3,975
Dividends on Series A Convertible Preferred Stock		(210	)
Deemed dividend on Series A Convertible Preferred Stock		(3,392	)
Net loss attributable to common stockholders	$	(2,911	)

Succesor EPS:
Basic and diluted loss per share	$	(0.30	)
Weighted average shares outstanding - basic and diluted		9,668,250

	Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Equity
Balance at March 15, 2018		1,872,428	$	-	$	6,139		$	(1,536	)	$	4,603
Conversion of Andina rights into shares of Lazydays Holdings, Inc.		615,436		-		-			-			-
Reclassification of Andina common stock previously subject to redemption		472,571		-		4,910			-			4,910
Issuance of common stock, warrants and Series A convertible preferred stock in PIPE transaction, net		2,653,984		-		32,718			-			32,718
Issuance of shares in acquisition of Lazydays		2,857,189		-		29,400						29,400
Beneficial conversion feature of Series A convertible preferred stock		-		-		3,392			-			3,392
Deemed dividend related to immediate accretion of beneficial conversion feature of Series A convertible preferred stock		-		-		(3,392	)		-			(3,392	)
Issuance of warrants to Series A preferred stockholders and placement agent		-		-		2,666			-			2,666
Stock-based compensation		-		-		485			-			485
Accrued dividends on Series A preferred stock		-		-		(210	)		-			(210	)
Net income		-		-		-			691			691
Balance at March 31, 2018		8,471,608	$	-	$	76,108		$	(845	)	$	75,263

	Successor			Predecessor
	March 15, 2018 to March 31, 2018			January 1, 2018 to March 14, 2018			January 1, 2017 to March 31, 2017

Cash Flows From Operating Activities
Net income	$	691		$	2,336		$	3,975
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock based compensation		485			140			119
Bad debt expense		-			-			47
Depreciation and amortization of property and equipment		269			1,058			1,347
Amortization of intangible assets		132			154			187
Amortization of debt discount and paid-in-kind interest		393			136			129
Gain on sale of property and equipment		-			(1	)		-
Deferred income taxes		-			630			-

Changes in operating assets and liabilities:
Receivables		(8,466	)		5,143			(6,404	)
Inventories		4,145			1,435			16,493
Prepaid expenses and other		19			44			332
Income tax receivable/payable		449			(3,573	)		2,549
Other assets		1			18			(37	)
Accounts payable, accrued expenses and other liabilities		(2,365	)		2,463			173

Total Adjustments		(4,938	)		7,647			14,935

Net Cash (Used In) Provided By Operating Activities		(4,247	)		9,983			18,910

Cash Flows From Investing Activities
Cash paid for purchase of Lazydays R.V. Center, Inc.		(86,741	)		-			-
Cash acquired in the purchase of Lazy Days’ R.V. Center, Inc.		9,188			-			-
Purchases of property and equipment		(71	)		(694	)		(710	)

Net Cash Used In Investing Activities		(77,624	)		(694	)		(710	)

Cash Flows From Financing Activities
Net borrowings under M&T floor plan		100,830			-			-
Repayment of Bank of America floor plan		(96,740	)		-			-
Net (repayments)/borrowings under floor plan		-			(12,272	)		11,657
Repayments under long term debt with Bank of America		(8,820	)		(310	)		(464	)
Borrowings under long term debt with M&T bank		20,000			-			-
Net proceeds from the issuance of Series A preferred stock and warrants		57,650			-			-
Net proceeds from the issuance of common stock and warrants		32,719			-			-
Repayments of financing liability		-			(144	)		(113	)
Repayments of notes payable to Andina related parties		(761	)		-			-
Payment of contingent liability - RV America acquisition		-			(667	)		-
Loan issuance costs		(615	)		-			-

Net Cash Provided by (Used In) Financing Activities		104,263			(13,393	)		11,080

Net Increase (Decrease) In Cash		22,392			(4,104	)		29,280

Cash - Beginning		10,671			13,292			4,158

Cash - Ending	$	33,063		$	9,188		$	33,438

Cash consideration paid	$	86,741
Common stock issued to former stockholders, option holders, and bonus receipients of Lazydays RV		29,400
Total consideration	$	116,141

	Gross Asset Amount at Acquisition Date		Weighted Average Amortization Period in Years
Trade names and trademarks	$	30,100	N/A
Customer relationships		9,100	12 years
Manufacturer relationships		29,000	12 Years
Total intangible assets	$	68,200

	Successor						Predecessor
	As of March 31, 2018 (Unaudited)						As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Net Asset Value		Gross Carrying Amount		Accumulated Amortization		Net Asset Value
Amortizable intangible assets:
Manufacturer relationships	$	29,000	$	100	$	28,900	$	11,100	$	3,238	$	7,862
Customer relationships		9,100		32		9,068		1,300		1,300		-
		38,100		132		37,968		12,400		4,538		7,862
Non-amortizable intangible assets:
Trade names and trademarks		30,100		-		30,100		18,000		-		18,000
	$	68,200	$	132	$	68,068	$	30,400	$	4,538	$	25,862

	Successor		Predecessor
	March 15, 2018 to March 31, 2018		January 1, 2018 to March 14, 2018		January 1, 2017 to March 31, 2017
Amortization	$	132	$	154	$	187

Years ending
2018 (9 months)	$	2,381
2019		3,175
2020		3,175
2021		3,175
2022		3,175
Thereafter		22,887
	$	37,968

Years ending December 31,	Principal		Interest		Total Payment
2018 (9 months)	$	426	$	3,070	$	3,496
2019		702		4,052		4,754
2020		853		3,995		4,848
2021		1,018		3,927		4,945
2022		1,198		3,847		5,045
Thereafter		40,974		34,574		75,548
	$	45,171	$	53,465	$	98,636

	Shares Underlying Warrants		Weighted Average Exercise Price

Warrants outstanding March 15, 2018		-	$	-
Granted		4,677,458		11.50
Cancelled or Expired		-		-
Exercised		-		-
Warrants outstanding March 31, 2018		4,677,458	$	11.50

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Options outstanding at March 15, 2018		-		$	-
Granted		3,687,762			11.10
Cancelled or terminated		(14,218	)		11.10
Exercised		-			-
Options outstanding at March 31, 2018		3,673,544		$	11.10		4.96	$	-

Options exercisable at March 31, 2018		-		$	-		-	$	-