Attached files
Exhibit 99.1
RIDENOW GROUP AND AFFILIATES
CONDENSED
COMBINED FINANCIAL STATEMENTS
JUNE 30, 2021
RideNow Group and Affiliates
Table of Contents
Condensed Combined Balance Sheets
|
F-1
|
Condensed Combined Statements of Operations
|
F-2
|
Condensed Combined Statements of Owners’ Equity
|
F-3
|
Condensed Combined Statements of Cash Flows
|
F-4
|
Notes to Condensed Combined Financial Statements
|
F-5
|
RideNow Group and Affiliates
(Unaudited)
|
As
of June 30, 2021
|
As
of December 31, 2020
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$5,830,482
|
$3,905,686
|
Contracts in
transit
|
10,149,513
|
10,736,791
|
Accounts
receivable, net
|
16,028,725
|
10,023,174
|
Accounts receivable
– related parties
|
72,071,921
|
84,535,861
|
Inventories,
net
|
101,214,125
|
109,749,521
|
Prepaid
expenses
|
1,864,297
|
1,625,109
|
Total current
assets
|
207,159,063
|
220,576,142
|
|
|
|
Right-of-use
assets
|
73,921,130
|
71,280,471
|
Property and
equipment, net of accumulated depreciation
|
22,936,755
|
23,705,230
|
Goodwill
|
55,294,222
|
55,294,222
|
Note receivable
– related party
|
1,026,605
|
1,264,425
|
Other non-current
assets
|
259,615
|
288,758
|
Total
assets
|
$360,597,390
|
$372,409,248
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts payable
and accrued liabilities
|
$43,002,834
|
$36,806,476
|
Accounts payable
– related parties
|
40,130,446
|
27,615,211
|
Floor plan notes
payable
|
44,753,947
|
68,533,679
|
Revolving line of
credit
|
6,000,000
|
-
|
Current portion of
operating lease liabilities
|
17,459,193
|
15,755,805
|
Current portion of
financing lease liabilities
|
3,984,945
|
4,059,496
|
Current portion of
notes payable – related parties
|
1,159,322
|
504,000
|
Current portion of
note payable – other
|
5,684,640
|
8,093,444
|
Total current
liabilities
|
162,175,327
|
161,368,111
|
|
|
|
Long-term
liabilities:
|
|
|
Notes payable
– related parties
|
-
|
6,907,322
|
Long-term portion
of operating lease liabilities
|
58,345,599
|
57,473,929
|
Long-term portion
of financing lease liabilities
|
14,323,137
|
14,550,947
|
Note payable- PPP
loans
|
-
|
16,923,759
|
Note payable
– other
|
-
|
985,052
|
Other long-term
liabilities
|
6,497,347
|
4,779,112
|
Total long-term
liabilities
|
79,166,083
|
101,620,121
|
|
|
|
Total
liabilities
|
241,341,410
|
262,988,232
|
|
|
|
Owners’
equity
|
119,255,980
|
109,421,016
|
|
|
|
Total liabilities
and owners' equity
|
$360,597,390
|
$372,409,248
|
See accompanying Notes to Condensed Combined Financial
Statements
F-1
RideNow Group and Affiliates
(Unaudited)
|
Three-Months
Ended June 30,
|
Six-Months
Ended June 30,
|
||
|
2021
|
2020
|
2021
|
2020
|
Revenue:
|
|
|
|
|
New
vehicles
|
$142,731,660
|
$163,624,341
|
$285,957,987
|
$255,370,861
|
Used
vehicles
|
56,344,912
|
41,552,540
|
95,333,182
|
80,489,256
|
Service, parts and
others
|
47,480,825
|
40,534,371
|
91,009,927
|
76,748,115
|
Finance and
insurance, net
|
21,633,640
|
22,271,089
|
41,065,839
|
36,046,990
|
Total
revenue
|
268,191,037
|
267,982,341
|
513,366,935
|
448,655,222
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
New
vehicles
|
112,811,489
|
136,783,464
|
228,166,682
|
217,211,790
|
Used
vehicles
|
45,642,378
|
34,936,296
|
77,388,609
|
69,082,545
|
Service, parts and
others
|
24,705,698
|
22,146,629
|
48,182,298
|
41,794,184
|
Total cost of
sales
|
183,159,565
|
193,866,389
|
353,737,589
|
328,088,519
|
|
|
|
|
|
Gross
profit
|
85,031,472
|
74,115,952
|
159,629,346
|
120,566,703
|
|
|
|
|
|
Selling, general
and administrative
|
48,570,799
|
39,604,867
|
91,682,133
|
75,094,774
|
|
|
|
|
|
Depreciation and
amortization
|
903,494
|
948,129
|
1,717,001
|
1,384,768
|
|
|
|
|
|
Operating
income
|
35,557,179
|
33,562,956
|
66,230,212
|
44,087,161
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
Floor plan interest
expense
|
(373,860)
|
(547,006)
|
(865,775)
|
(1,794,333)
|
Interest expense
– other
|
(84,028)
|
(318,462)
|
(299,726)
|
(670,926)
|
Interest
income
|
87,215
|
201,847
|
251,022
|
471,793
|
Miscellaneous
income
|
19,340,670
|
255,759
|
19,909,539
|
656,053
|
Total other income
(expense)
|
18,969,997
|
(407,862)
|
18,995,060
|
(1,337,413)
|
|
|
|
|
|
Net
income
|
$54,527,176
|
$33,155,094
|
$85,225,272
|
$42,749,748
|
See accompanying Notes to Condensed Combined Financial
Statements
F-2
RideNow Group and Affiliates
(Unaudited)
|
Owner’s
Equity
|
Balance
at March 31, 2021
|
$126,542,174
|
Contributions
|
-
|
Distributions
|
(61,813,370)
|
Net
income
|
54,527,176
|
Balance
at June 30, 2021
|
$119,255,980
|
|
|
Balance
at December 31, 2020
|
$109,421,016
|
Contributions
|
-
|
Distributions
|
(75,390,308)
|
Net
income
|
85,225,272
|
Balance
at June 30, 2021
|
$119,255,980
|
|
|
Balance
at March 31, 2020
|
$84,945,856
|
Contributions
|
-
|
Distributions
|
(26,061,859)
|
Net
income
|
33,155,094
|
Balance
at June 30, 2020
|
$92,039,091
|
|
|
Balance
at December 31, 2019
|
$77,762,608
|
Contributions
|
-
|
Distributions
|
(28,473,265)
|
Net
income
|
42,749,748
|
Balance
at June 30, 2020
|
$92,039,091
|
See accompanying Notes to Condensed Combined Financial
Statements
F-3
RideNow Group and Affiliates
(Unaudited)
|
Six
Months Ended June 30,
|
|
|
2021
|
2020
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
Net
income
|
$85,225,272
|
$42,749,748
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
1,727,001
|
1,394,768
|
Provision for
allowance for doubtful accounts
|
204,147
|
57,654
|
PPP loans
forgiven
|
(19,039,229)
|
-
|
Changes in
operating assets and liabilities:
|
|
|
Contracts in
transit
|
587,278
|
(3,378,258)
|
Accounts
receivable
|
(6,209,698)
|
(1,048,144)
|
Accounts receivable
– related parties
|
12,463,941
|
(31,566,574)
|
Inventories
|
8,535,396
|
78,811,123
|
Prepaid
expenses
|
(239,188)
|
(194,776)
|
Other
assets
|
19,143
|
884,207
|
Floor plan notes,
net
|
(23,779,732)
|
(61,994,442)
|
Accounts
payable
|
6,130,757
|
(2,569,063)
|
Payables to related
parties
|
12,515,235
|
5,481,256
|
Accrued
liabilities
|
1,718,232
|
(1,397,647)
|
Net cash provided
by operating activities
|
79,858,555
|
27,229,852
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
Purchases of
property and equipment
|
(948,526)
|
(2,982,882)
|
Proceeds from sale
of property and equipment
|
31,634
|
-
|
Net cash (used in)
investing activities
|
(916,892)
|
(2,982,882)
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
Payments received
on notes receivables
|
237,820
|
-
|
Payments on
borrowings from related party
|
(6,252,000)
|
(4,376,271)
|
Proceeds from
(payments of) revolving line of credit
|
6,000,000
|
(17,958,961)
|
Payments of
borrowings from bank
|
(585,000)
|
(585,000)
|
(Payments)
borrowing on other notes payable
|
(693,385)
|
5,156,429
|
Proceeds from PPP
loans
|
-
|
19,039,229
|
Net change in
finance lease liabilities
|
(302,361)
|
2,359,037
|
Distributions to
owners
|
(75,421,942)
|
(28,473,265)
|
Net cash (used in)
financing activities
|
(77,016,868)
|
(24,838,802)
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
1,924,797
|
(591,832)
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
3,905,686
|
4,980,718
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$5,830,482
|
$4,388,886
|
See accompanying Notes to Condensed Combined Financial
Statements
F-4
RideNow Group and Affiliates
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Business
RideNow
Group and Affiliates, a non-legal entity, (“RideNow” or
“The Group” or the “Company”) is a
collection of franchised dealerships operating in the powersports
industry. The Group is engaged in the sale of new and used
motorcycles, all-terrain vehicles, personal watercraft, other
powersports vehicles, and related products and services, including
repair and maintenance services, parts and accessories, riding
gear, and apparel. As of December 31, 2020, RideNow owned and
operated more than 43 retail dealerships in the United States,
predominately in the Sunbelt region. The core brands sold by
RideNow are Harley-Davidson, Honda, Yamaha, Kawasaki, Suzuki,
Bombardier, Polaris, BMW, Ducati and Triumph, which are sold
through franchise dealer agreements.
Basis of Presentation
The
Condensed Combined Financial Statements include the accounts of the
following affiliated companies: CMG Powersports Inc.,
America’s Powersports, Inc., Woods Fun Center, LLC, San Diego
House of Motorcycles, LLC, APS of Oklahoma, LLC, APS of Georgetown,
LLC, APS of Ohio, LLC, APS of Texas, LLC, C&W Motors, Inc., BJ
Motorsports, LLC, Coyote Motorsports - Allen, LTD, Coyote
Motorsports - Garland, LTD, East Valley Motorcycles, LLC, Glendale
Motorcycles, LLC, JJB Properties, LLC, Metro Motorcycle, Inc.,
RideNow Carolina, LLC, RideNow, LLC, Ride USA, LLC, Top Cat
Enterprises, LLC, Tucson Motorcycle, Inc., Tucson Motorsports,
Inc., YSA Motorsports, LLC, RN Tri-Cities, LLC, ECHD Motorcycles,
LLC, IOT Motorcycles, LLC, RideNow 6 Garland, LLC, RideNow
Gainesville, LLC, RNKC, LLC, RNMC Daytona, LLC, TC Motorcycles,
LLC, Ride Now 5 Allen, LLC, RHND Ocala, LLC and Bayou Motorcycles,
LLC.
These
condensed combined financial statements were prepared on a combined
basis using the accrual method of accounting. All transactions and
accounts between and among the combined entities have been
eliminated.
The
preparation of financial statements in conformity with U.S.
generally accepted accounting principles 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 financial statements and the
reported amounts of revenue and expenses during the reporting
period. In preparing these financial statements, management has
made its best estimates and judgments of certain amounts included
in the financial statements. RideNow bases its estimates and
judgments on historical experience and other assumptions that
management believes are reasonable. However, application of these
accounting policies involves the exercise of judgment and use of
assumptions as to future uncertainties and, as a result, actual
results could differ materially from these estimates. RideNow
periodically evaluates estimates and assumptions used in the
preparation of the financial statements and make changes on a
prospective basis when adjustments are necessary. The critical
accounting estimates made in the accompanying Condensed Combined
Financial Statements include certain assumptions related to
goodwill and other intangible assets. Other significant accounting
estimates include certain assumptions related to long-lived assets,
assets held for sale, accruals for chargebacks against revenue
recognized from the sale of finance and insurance products, certain
legal proceedings, and estimated tax liabilities. Actual results
could differ from those estimates.
Revenue from Contracts with Customers
RideNow
adopted ASU 2014-09 Revenue from Contracts with Customers and all
subsequent amendments to the ASU, collectively referred to as
Accounting Standards Codification (ASC) Topic 606, which (i)
creates a single framework for recognizing revenue from contracts
with customers that fall within its scope. RideNow’s goods
and services that fall within the scope of Topic 606 are recognized
as revenue when promised goods or services are transferred to
customers in amounts that reflect the consideration to which
RideNow expects to be entitled in exchange for those goods or
services.
F-5
Accounting for Leases
In
February 2016, the Financial Accounting Standards Board
(“FASB”) issued an accounting standard update (ASC
Topic 842) that amends the accounting guidance on leases. The new
standard establishes a right-of-use (ROU) model that requires a
lessee to record an ROU asset and a lease liability on the balance
sheet for all leases with terms longer than 12 months. Leases are
classified as either finance or operating, with classification
affecting the pattern of expense recognition in the income
statement. The FASB also subsequently issued amendments to the
standard, including providing an additional and optional transition
method to adopt the new standard, described below, as well as
certain practical expedients related to land easements and lessor
accounting.
The
accounting standard update originally required the use of a
modified retrospective approach reflecting the application of the
standard to the leases existing at, or entered into after, the
beginning of the earliest comparative period presented in the
financial statements with the option to elect certain practical
expedients. A subsequent amendment to the standard provides an
additional and optional transition method that allows entities to
initially apply the new leases standard at the adoption date and
recognize a cumulative effect adjustment to the opening balance of
retained earnings in the period of adoption. RideNow adopted this
accounting standard effective January 1, 2018, using the optional
transition method with no restatement of comparative
periods.
RideNow
elected certain practical expedients available under the transition
guidance within the new standard, which among other things, allowed
it to carry forward the historical lease classification of
RideNow’s existing leases. RideNow did not elect the
use-of-hindsight or the practical expedient pertaining to land
easements; the latter not being applicable to RideNow. The new
standard also provides practical expedients for an entity’s
ongoing accounting. RideNow elected the short- term lease
recognition exemption for all leases that qualify. As a result, for
those leases that qualify, RideNow will not recognize ROU assets or
lease liabilities, and RideNow did not recognize ROU asset or lease
liabilities for existing short-term leases of those assets in
transition. RideNow also elected the practical expedient to not
separate lease and non-lease components of leases for the majority
of RideNow classes of underlying assets.
NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS
New and Used Recreational Vehicles
RideNow
sells new and used recreational vehicles. The transaction price for
a recreational vehicle sale is determined with the customer at the
time of sale. Customers often trade in their own recreational
vehicle to apply toward the purchase of a retail new or used
recreational vehicle. The “trade-in” recreational
vehicle is a type of noncash consideration measured at fair value,
based on external and internal market data for a specific
recreational vehicle, and applied as payment of the contract price
for the purchased recreational vehicle.
When
RideNow sells a new or used recreational vehicle, transfer of
control typically occurs at a point in time upon delivery of the
vehicle to the customer, which is generally at the time of sale, as
the customer is able to direct the use of, and obtain substantially
all benefits from the recreational vehicle at such time. RideNow
does not directly finance its customer’s purchases or provide
leasing. In many cases, RideNow arranges third- party financing for
the retail sale or lease of recreational vehicles to customers in
exchange for a fee paid to RideNow by a third-party financial
institution. RideNow receives payment directly from the customer at
the time of sale or from a third-party financial institution
(referred to as contracts-in-transit) within a short period of time
following the sale. RideNow establishes provisions, which are not
significant, for estimated returns and warranties on the basis of
both historical information and current trends.
F-6
Parts and Service
RideNow
sells parts and vehicle services related to customer-paid repairs
and maintenance, repairs and maintenance under manufacturer
warranties and extended service contracts, and collision-related
repairs. RideNow also sells parts through wholesale and retail
counter channels.
Each
repair and maintenance service is a single performance obligation
that includes both the parts and labor associated with the vehicle
service. Payment for each vehicle service work is typically due
upon completion of the service, which is generally completed within
a short period from contract inception. The transaction price for
repair and maintenance services is based on the parts used, the
number of labor hours applied, and standardized hourly labor rates.
The performance obligation for repair and maintenance service are
satisfied over time and create an asset with no alternative use and
with an enforceable right to payment for performance completed to
date. Revenue is recognized over time based on a direct measurement
of labor hours, parts and accessories that are allocated to open
service and repair orders at the end of each reporting period. As a
practical expedient, the time value of money is not considered
since repair and maintenance service contracts have a duration of
one year or less. The transaction price for wholesale and retail
counter parts sales is determined at the time of sale based on the
quantity and price of each product purchased. Payment is typically
due at time of sale, or within a short period following the sale.
RideNow establishes provisions, which are not significant, for
estimated parts returns based on historical information and current
trends. Delivery method of wholesale and retail counter parts
vary.
RideNow
generally considers control of wholesale and retail counter parts
to transfer when the products are shipped, which typically occurs
the same day as or within a few days of sale. RideNow also offers
customer loyalty points for parts and services for select
franchises. RideNow satisfies its performance obligations and
recognizes revenue when the loyalty points are redeemed. Amounts
deferred related to the customer loyalty programs are
insignificant.
Finance and Insurance
RideNow
sells and receives commissions on the following types of finance
and insurance products: extended service contracts, maintenance
programs, guaranteed auto protection, tire and wheel protection,
and theft protection products, among others. RideNow offers
products that are sold and administered by independent third
parties, including the vehicle manufacturers’ captive finance
subsidiaries.
Pursuant
to the arrangements with these third-party providers, RideNow sells
the products on a commission basis. For the majority of finance and
insurance product sales, RideNow’s performance obligation is
to arrange for the provision of goods and services by another
party. RideNow’s performance obligation is satisfied when
this arrangement is made, which is when the finance and insurance
product is delivered to the end customer, generally at the time of
the vehicle sale. As agent, RideNow recognizes revenue in the
amount of any fee or commission to which it expects to be entitled,
which is the net amount of consideration that it retains after
paying the third-party provider the consideration received in
exchange for the goods or services to be fulfilled by that
party.
RideNow’s
customers are concentrated in the Sunbelt region. There are no
significant judgements or estimates required in determining the
satisfaction of the performance obligations or the transaction
price allocated to the performance obligations. As revenue are
recognized at a point-in-time, costs to obtain the customer (i.e.
commissions) do not require capitalization.
Disaggregation of Revenue
The
significant majority of RideNow’s revenue is from contracts
with customers. In the following tables, revenue is disaggregated
by major lines of goods and services and timing of transfer of
goods and services. We have determined that these categories depict
how the nature, amount, timing, and uncertainty of our revenue and
cash flows are affected by economic factors.
F-7
Revenue
from contracts with customers consists of the
following:
|
Three-Months
Ended June 30,
|
Six-Months Ended
June 30,
|
||
|
2021
|
2020
|
2021
|
2020
|
Revenue:
|
|
|
|
|
New
vehicle
|
$142,731,660
|
$163,624,341
|
$285,957,987
|
$255,370,861
|
Used
vehicle
|
56,344,912
|
41,552,540
|
95,333,182
|
80,489,256
|
New and used
vehicle
|
199,076,572
|
205,176,881
|
381,291,169
|
335,860,117
|
|
|
|
|
|
Service, parts and
others
|
47,480,825
|
40,534,371
|
91,009,927
|
76,748,115
|
Finance and
insurance, net
|
21,633,640
|
22,271,089
|
41,065,839
|
36,046,990
|
Total
revenue
|
268,191,037
|
267,982,341
|
513,366,935
|
448,655,222
|
|
|
|
|
|
Timing of revenue recognition:
|
|
|
|
|
Goods and services
transferred at a point in time
|
238,333,876
|
243,143,335
|
456,535,306
|
400,066,090
|
Goods and services
transferred over time
|
29,857,161
|
24,839,006
|
56,831,629
|
48,589,132
|
Total
revenue
|
$268,191,037
|
$267,982,341
|
$513,366,935
|
$448,655,222
|
NOTE 3 – ACCOUNTS RECEIVABLE
Accounts
receivable consisted of the following as of June 30, 2021 and
December 31, 2020.
|
June
30, 2021
|
December
31, 2020
|
Trade
receivables
|
$4,323,424
|
$3,145,226
|
Factory
receivables
|
5,300,553
|
6,624,129
|
Other
receivables
|
6,828,126
|
720,861
|
Total accounts
receivables
|
16,452,103
|
10,490,216
|
Less: Allowance for
doubtful accounts
|
(423,378)
|
(467,042)
|
Accounts
receivables, net
|
$16,028,725
|
$10,023,174
|
NOTE 4 – INVENTORIES AND VEHICLE FLOOR PLAN NOTES
PAYABLE
Inventories
consisted of the following as of June 30, 2021 and December 31,
2020.
|
June
30, 2021
|
December
31, 2020
|
New
vehicles
|
$42,073,801
|
$67,416,505
|
Used
vehicles
|
36,304,982
|
22,225,209
|
Parts, accessories
and other
|
22,835,342
|
20,107,807
|
Total
cost
|
$101,214,125
|
$109,749,521
|
The
components of vehicle Floor Plan notes payable at June 30, 2021 and
December 31, 2020.
|
June
30, 2021
|
December
31, 2020
|
Vehicle Floor Plan
notes payable – trade
|
$17,070,794
|
$18,516,327
|
Vehicle Floor
Plan notes payable – non-trade
|
27,683,153
|
50,017,352
|
Vehicle Floor Plan
notes payable
|
$44,753,947
|
$68,533,679
|
Vehicle
Floor Plan notes payable - trade reflects amounts borrowed to
finance the purchase of specific new and, to a lesser extent, used
vehicle inventories with the corresponding manufacturers’
captive finance subsidiaries (“trade lenders”). Vehicle
Floor Plan notes payable-non-trade represents amounts borrowed to
finance the purchase of specific new and, to a lesser extent, used
vehicle inventories with non-trade lenders, as well as amounts
borrowed under RideNow’s secured used vehicle Floor Plan
facilities. Changes in vehicle Floor Plan notes payable- trade are
reported as operating cash flows and changes in vehicle Floor Plan
payable-non-trade are reported as financing cash flows in the
accompanying Condensed Combined Statements of Cash
Flows.
F-8
RideNow’s
inventory costs are generally reduced by manufacturer holdbacks,
incentives, Floor Plan assistance, and non-reimbursement-based
manufacturer advertising rebates, while the related vehicle Floor
Plan payables are reflective of the gross cost of the vehicle. The
vehicle Floor Plan notes payable, as shown in the above table, will
generally also be higher than the inventory cost due to the timing
of the sale of a vehicle and payment of the related liability.
Vehicle Floor Plan facilities are due on demand, but in the case of
new vehicle inventories, are generally paid within several business
days after the related vehicles are sold. Vehicle Floor Plan
facilities are primarily collateralized by vehicle inventories and
related receivables.
NOTE 5 – PROPERTY AND EQUIPMENT, NET
The
following table summarizes property and equipment, net of
accumulated depreciation and amortization as of June 30, 2021 and
December 31, 2020.
|
June
30, 2021
|
December
31, 2020
|
Equipment
|
$4,186,122
|
$4,231,451
|
Furniture and
fixtures
|
19,516,679
|
19,307,497
|
Buildings
|
11,750,692
|
13,522,538
|
Vehicles
|
4,322,238
|
4,191,156
|
Leasehold
improvements
|
10,307,053
|
10,296,570
|
Construction in
progress
|
244,686
|
26,183
|
Total property and
equipment
|
50,327,470
|
51,575,395
|
Less: Accumulated
depreciation
|
27,390,715
|
27,870,165
|
Property and
equipment, net
|
$22,936,755
|
$23,705,230
|
Depreciation
and amortization expense for the three and six-month periods ending
June 30, 2021, were $903,494 and $1,717,001, respectively.
Depreciation and amortization expense for the three and six-month
periods ending June 30, 2020, were $948,129 and $1,627,293,
respectively.
NOTE 6 – GOODWILL AND INTANGIBLE ASSETS, NET
RideNow’s
acquisitions have resulted in the recording of goodwill and other
intangible assets. Goodwill is an asset representing operational
synergies, franchise rights and future economic benefits arising
from other assets acquired in a business combination that are not
individually identified and separately recognized. Other intangible
assets represent non-compete agreements entered into with sellers
from the acquired businesses and are not significant to the
condensed combined financial statements.
The
changes in goodwill for the three months ended June 30, 2021 and
the year ended December 31, 2020 are as follows:
|
Goodwill
|
Balance at December
31, 2020
|
$55,294,222
|
Acquisitions
|
-
|
Balance at June 30,
2021
|
$55,294,222
|
F-9
NOTE 7 - LINE OF CREDIT
RideNow
has a $19,000,000 revolving line of credit established at a bank.
RideNow participates in the line of credit with certain affiliates.
Interest is payable monthly at the lesser of the prime rate (3.25%
and 3.25% at June 30, 2021 and December 31, 2020, respectively) or
LIBOR plus 2.75% (2.90% and 2.98% at June 30, 2021 and December 31,
2020, respectively). The line of credit is secured by substantially
all of the assets of the participating affiliates. The line of
credit has been amended and renewed multiple times under similar
terms since its inception and has a maturity date of January 15,
2022. The outstanding balance on the line of credit was $6,000,000-
and $0 at June 30, 2021 and December 31, 2020, respectively. On
July 28, 2021, RideNow paid off the remaining $6,000,000 on its
revolving line of credit and terminated this credit facility with
the bank. This move was done to facilitate the closing of the
RumbleOn transaction scheduled for the third quarter
2021.
NOTE 8 – NOTES PAYABLE
The
following consist of a note payable to a bank and other
third-parties as of June 30, 2021 and December 31,
2020:
|
June
30,
2021
|
December
31,
2020
|
Northern Trust Bank
term loan agreement that requires monthly principal payments of
approximately $190,500 and accrues interest at the one-month LIBOR
plus 2.0%. This loan is guaranteed by the owners of CMG
Powersports, Inc. and matures January 1, 2022.
|
$4,571,429
|
$5,714,286
|
|
|
|
Unsecured note
payable to P&D Motorcycles in the original amount of $1,724,000
with an interest rate of 4% and note payable matures on July 1,
2022
|
1,113,211
|
1,248,740
|
|
|
|
PPP Loans dated
April 6, 2020. Payments of principal and interest were deferred
until August 6, 2021. Effective June 22, 2021, all PPP Loans were
forgiven by the SBA.
|
-
|
19,039,229
|
Total notes
payable
|
$5,684,640
|
26,002,255
|
Less: Current
portion
|
$5,684,640
|
8,093,444
|
|
|
|
Long-term
maturities of notes payable
|
$-
|
$17,908,811
|
The
future maturities of long-term note payables to other as of June
30, 2021:
2021
|
$5,684,641
|
2022
|
-
|
Total of long-term
notes payable - other
|
$5,684,641
|
Note Payable to Northern Trust Bank
RideNow
is a collective borrower to a $16,000,000 term loan agreement with
Northern Trust Bank held by CMG Powersports, Inc. The term loan
agreement requires monthly principal payments of approximately
$190,500 and accrues interest at the one-month LIBOR plus 2.0%.
This loan is guaranteed by the owners of CMG Powersports, Inc. The
term loan includes required covenants to be met. Management
believes RideNow is in compliance with these covenants as of June
30, 2021 and December 31, 2020. For the three months ended June 30,
2021, and 2020 interest expense was $41,060 and $60,012,
respectively and for the six months ended June 30, 2021, and 2020
interest expense was $92,356 and $124,751,
respectively.
Note Payable to P&D Motorcycles
On June
28, 2017 TC Motorcycles, LLC “DBA–RideNow Powersports
Jacksonville” (the buyer) entered into a promissory note with
P&D Motorcycles (the seller) as part of an acquisition. The
original principal sum was $1,724,000 accruing interest at 4%
including 59 monthly payments of $17,454 with final balloon payment
due July 1, 2022. For the three months ended June 30,
2021 and 2020 interest expense was $11,775 and $13,543
respectively, and for the six months ended June 30, 2021 and 2020
interest expense was $23,432 and $26,832 respectively.
F-10
PPP Loan
On
April 6, 2020, RideNow entered into loan agreements and related
promissory notes (the “SBA Loan Documents”) to receive
U.S. Small Business Administration Loans (the “SBA
Loans”) pursuant to the Paycheck Protection Program (the
“PPP”) established under the CARES Act, in the
aggregate amount of $19,039,229 (the “Loan Proceeds”).
The Companies received the Loan Proceeds on April 6, 2020, and
under the SBA Loan Documents, the SBA Loans had an initial maturity
date of April 5, 2022 and an annual interest rate of 0.98%. As of
June 22, 2021, all RideNow PPP loans were forgiven which
extinguished this $19,039,229 loan and increased other income.
Additionally, all accrued interest of $143,631 was removed and
credited against interest expense. The SBA requires that businesses
maintain all relevant information and keep good records for an
audit or other review as there is a six-year (6) statute of
limitations at play from the time that the loan is forgiven (or
repaid in full).
NOTE 9 – RELATED PARTY TRANSACTIONS
Due
from (to) related parties consist of the following balances as of
June 30, 2021 and December 31, 2020.
|
June
30, 2021
|
December
31, 2020
|
Accounts
receivable-related parties
|
$72,071,921
|
$84,535,861
|
Notes receivable
– related parties
|
1,026,605
|
1,264,425
|
Total balances due
from related parties
|
$73,098,526
|
$85,800,286
|
|
June
30, 2021
|
December
31, 2020
|
Accounts payable
– related parties
|
$40,130,446
|
$27,615,211
|
Notes payable
– related parties
|
1,159,322
|
7,411,322
|
Total balances due
to related parties
|
$41,289,768
|
$35,026,533
|
Accounts Receivable and Payables
Receivables Due from Related Parties
|
June
30, 2021
|
December
31, 2020
|
Cash sweep
receivables
|
$72,071,921
|
$84,478,128
|
Other receivables
due from related parties
|
-
|
57,733
|
Total receivables
due from related parties
|
$72,071,921
|
$84,535,861
|
Cash Sweep Account Receivables/Payables
RideNow
is a participant in a Cash Sweep Account arrangement with a bank
and its affiliates. The Cash Sweep Account combines the cash
balances of all the participating affiliates and invests excess
cash on a daily basis. Interest is paid to each participant based
on the average cash balance in the Cash Sweep account over the
course of the year. Any participant that develops an overdraft cash
balance is charged interest. For June 30, 2021 and December 31,
2020, the Cash Sweep Account was earning interest at 0.85% and
1.30%, respectively, and for overdraft balances, the interest
charged was 3.25% and 3.00%, respectively.
F-11
|
June
30, 2021
|
December
31, 2020
|
Cash Sweep
Accounts:
|
$72,071,919
|
$84,478,128
|
Related party
payable
|
(39,367,501)
|
(27,956,598)
|
Net Cash Sweep
Account Balance
|
$32,704,418
|
$56,521,530
|
Payables Due to Related Parties
|
June
30, 2021
|
December
31, 2020
|
Cash sweep
payables
|
$39,367,501
|
$27,956,598
|
Other payables due
to related parties
|
762,945
|
(341,387)
|
Total payables due
to related parties
|
$40,130,446
|
$27,615,211
|
Notes payable – Related Parties
The
following table summarizes the notes payable to related parties as
of June 30, 2021 and December 31, 2020:
|
June
30, 2021
|
December
31, 2020
|
Various unsecured
notes payable to Steele IV, LLLP, a related party through common
ownership; monthly principal payments range from $10,000 to
$20,000; interest accruing at rates ranging from LIBOR + 1.3% to
LIBOR + 2.0%
|
$-
|
$3,000,000
|
|
|
|
Various unsecured
notes payable to RideNow Management, LLLP, a related party through
common ownership; monthly principal payments ranging from $7,000 to
$13,500; interest accruing at rates ranging from LIBOR + 0.6% to
LIBOR + 1.3%.
|
1,159,322
|
1,411,322
|
|
|
|
Various unsecured
notes payable to Denex, LLLP, a related party through common
ownership; monthly principal payments ranging from $10,000 to
$20,000 interest accruing at rates ranging from LIBOR + 0.5% to
LIBOR + 2.0%.
|
-
|
3,000,000
|
Total notes
payable
|
$1,159,322
|
7,411,322
|
Less: Current
maturities
|
$1,159,322
|
504,000
|
|
|
|
Long-term
maturities due to related party
|
$-
|
$6,907,322
|
Related Party Leases
Included
in the leases are leases for twenty-five (25) locations which are
owned by the owners of RideNow or their affiliates. Lease expense
charged to operations in connection with these related party leases
was $10,126,669 and $8,715,266 for the six months ended June 30,
2021 and December 31, 2020, respectively.
Shared Services
RideNow
receives administrative support from RideNow Management, LLLP and
Coulter Management Group, LLLP, which are related parties due to
common ownership. Total administrative services received from these
entities and charged to operations were $160,000 and $210,000 for
the six-months ended June 30, 2021 and 2020,
respectively.
F-12
NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION
The
following table includes supplemental cash flow information,
including noncash investing and financing activity for the
six-months ended June 30,
|
Six-Months
Ended June 30,
|
|
|
2021
|
2020
|
Cash paid for
interest
|
$1,165,501
|
$2,465,259
|
|
|
|
Non-cash
activities
|
$-
|
$-
|
NOTE 11 - RETIREMENT PLAN
RideNow
maintains a 401(k) plan (the Plan) covering substantially all
employees who are over the age of 21 and meet specified service
requirements. Participants may voluntarily contribute to the Plan,
not to exceed the maximum limits imposed by the Internal Revenue
Service regulations. Contributions to the Plan are made by the
participants to their individual accounts through payroll
withholding. Additionally, RideNow provides a matching contribution
of 25% up to the first 6% of participants’ annual earnings
with a maximum of $2,000 annually. RideNow’s contribution to
the Plan are made annually and were $563,624 for the three and six
month periods ending June 30, 2021, respectively. RideNow’s
contribution to the Plan was $495,297 for the three and six month
periods ending June 30, 2020, respectively.
NOTE 12 – CONTINGENCIES
From
time-to-time, RideNow is contingently liable in respect to lawsuits
and claims incidental to the ordinary course of its operations.
Management has determined that the outcome of any such matters will
not have a material effect on the Combined Financial Statements. No
provision has been made in the accompanying Condensed Combined
Financial Statements for losses, if any, that might result from the
ultimate outcome of such matters.
Coronavirus Pandemic (COVID-19)
Subsequent
to year-end, the World Health Organization declared the spread of
Coronavirus Disease (COVID-19) a worldwide pandemic. The COVID-19
pandemic is having significant effects on global markets, supply
chains, businesses, and communities. Specific to RideNow, COVID-19
may impact various parts of its 2020 operations and financial
results. Management believes RideNow is taking appropriate actions
to mitigate the negative impact. However, the full impact of
COVID-19 is unknown and cannot be reasonably estimated at June 30,
2021.
NOTE 13 – BUSINESS AND CREDIT CONCENTRATIONS
Financial
instruments that potentially subject us to concentrations of credit
risk consist principally of cash on deposit with financial
institutions. At times, amounts invested with financial
institutions exceed Federal Deposit Insurance Corporation insurance
limits. Concentrations of credit risk with respect to receivables
are limited primarily to receivables from powersports manufacturers
or distributors which RideNow holds franchises, totaling
approximately $5,300,553 and $6,624,129 at June 30, 2021 and
December 31, 2020, respectively.
RideNow
is subject to a concentration of risk in the event of financial
distress or other adverse events related to any of the
manufacturers whose franchised dealerships are included in
RideNow’s brand portfolio. RideNow purchases new vehicle
inventory from various powersports manufacturers at the prevailing
prices available to all franchised dealerships. In addition,
RideNow finances a substantial portion of its new vehicle inventory
with manufacturer-affiliated finance companies. RideNow’s
results of operations could be adversely affected by the
manufacturers’ inability to supply RideNow dealerships with
an adequate supply of new vehicle inventory and related floor plan
financing. RideNow also has concentrations of risk related to the
geographic markets in which RideNow dealerships operate. Changes in
overall economic, retail powersports or regulatory environments in
one or more of these markets could adversely impact the results of
RideNow’s operations.
F-13
Concentrations
of credit risk with respect to non-manufacturer trade receivables
are limited due to the wide variety of customers and markets in
which RideNow’s products are sold as well as their dispersion
across many different geographic areas in the United States.
Consequently, at June 30, 2021, RideNow does not consider itself to
have any significant non-manufacturer concentrations of credit
risk.
NOTE 14 – FINANCIAL INSTRUMENTS AND FAIR VALUE
MEASUREMENTS
The
fair value of a financial instrument represents the amount at which
the instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation. Fair
value estimates are made at a specific point in time, based on
relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and
matters of judgment, and therefore cannot be determined with
precision.
Accounting
standards define fair value as the price that would be received
from selling an asset or paid to transfer a liability in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants at the
measurement date. Accounting standards establish a fair value
hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when
measuring fair value and also establishes the following three
levels of inputs that may be used to measure fair
value:
Level 1
Quoted prices in active markets for identical assets or
liabilities
Level 2
Observable inputs other than Level 1 prices such as quoted prices
for similar assets or liabilities; quoted market prices in markets
that are not active; or model-derived valuations or other inputs
that are observable or can be corroborated by observable market
data for substantially the full term of the assets or
liabilities.
Level 3
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
The
following methods and assumptions were used by us in estimating
fair value disclosures for financial instruments:
●
Cash and cash
equivalents, receivables, other current assets, vehicle Floor Plan
payable, accounts payable, other current liabilities, and variable
rate debt: The amounts reported in the accompanying Condensed
Combined Balance Sheets approximate fair value due to their
short-term nature or the existence of variable interest rates that
approximate prevailing market rates.
●
Fixed rate
long-term debt: RideNow’s fixed rate long-term debt consists
primarily of amounts outstanding under its senior unsecured notes.
The amounts reported in the accompanying Combined Balance Sheets
approximate fair value due to its senior unsecured notes using
quoted prices for the identical liability
(Level 1).
Nonfinancial
assets such as goodwill, other intangible assets, and long-lived
assets held and used are measured at fair value when there is an
indicator of impairment and recorded at fair value only when
impairment is recognized or for a business combination. The fair
values less costs to sell of long-lived assets or disposal groups
held for sale are assessed each reporting period they remain
classified as held for sale. Subsequent changes in the held for
sale long-lived asset’s or disposal group’s fair value
less cost to sell (increase or decrease) are reported as an
adjustment to its carrying amount, except that the adjusted
carrying amount cannot exceed the carrying amount of the long-lived
asset or disposal group at the time it was initially classified as
held for sale.
NOTE 15 – SEGMENT INFORMATION
As of
June 30, 2021, and December 31, 2020, RideNow had two operating
segments: (1) Harley-Davidson motor sports dealerships and (2)
Metric motor sports dealerships (representing all
Non-Harley-Davidson motor sports dealerships). RideNow’s
Harley-Davidson dealership segment is comprised of retail
franchises that sell new and used motorcycles and related
accessories, riding gear and apparel, replacement parts, equipment
repair and maintenance services, and also arrange for the delivery
of finance and insurance products through third party providers.
RideNow’s Metric dealerships segment is comprised of retail
franchises that sell new and used motorcycles (non-Harley-Davidson)
and other motor sports equipment, including all-terrain vehicles,
utility terrain vehicles, boats, personal watercraft, snowmobiles
and scooters from manufacturers such as Honda, Yamaha, Kawasaki,
Suzuki, Bombardier, Polaris, BMW, Ducati and Triumph. Additionally,
dealerships in RideNow’s Metric segment sell related products
and services, including repair and maintenance services and also
arrange for the delivery of finance and insurance products through
third party providers.
F-14
RideNow
has determined that the operating segments also represent the
reportable segments. The reportable segments identified above are
the business activities of RideNow for which discrete financial
information is available and for which operating results are
regularly reviewed by the chief operating decision maker to assess
operating performance and allocate resources. RideNow’s chief
operating decision maker is comprised of its two owners, who are
also RideNow’s (1) Chairman of the Board and (2) Chief
Executive Officer.
The
following tables provide reportable segment revenue, gross profit,
Floor Plan interest expense, segment income and
inventories:
|
For
the Three Months Ended
June
30, 2021
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
Revenue
|
$75,393,766
|
$192,797,271
|
$268,191,037
|
|
|
|
|
Gross
Profit
|
$24,418,507
|
$60,612,121
|
$85,031,472
|
Gross profit
%
|
32.4%
|
31.4%
|
31.7%
|
|
|
|
|
Floor Plan interest
expense
|
$(127,633)
|
$(246,227)
|
$(373,860)
|
Segment
income%
|
(0.2%)
|
(0.1%)
|
(0.1%)
|
|
|
|
|
Segment income
(1)
|
$12,324,242
|
$33,257,400
|
$45,581,642
|
Segment income
%
|
16.3%
|
17.2%
|
17.0%
|
|
|
|
|
Inventories
|
$30,770,221
|
$70,443,904
|
$101,214,125
|
|
For
the Three Months Ended
June
30, 2020
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
Revenue
|
$59,364,748
|
$208,617,593
|
$267,982,341
|
|
|
|
|
Gross
Profit
|
$17,887,949
|
$56,244,290
|
$74,132,239
|
Gross profit
%
|
27.6%
|
23.4%
|
24.7%
|
|
|
|
|
Floor Plan interest
expense
|
$(254,769)
|
$(292,237)
|
$(547,006)
|
Segment
income%
|
(0.4%)
|
(0.1%)
|
(0.2%)
|
|
|
|
|
Segment income
(1)
|
$5,195,393
|
$24,256,956
|
$29,452,349
|
Segment income
%
|
5.3%
|
4.5%
|
4.7%
|
|
|
|
|
Inventories
|
$32,812,988
|
$105,366,484
|
$138,179,472
|
F-15
|
For
the Six Months Ended
June
30, 2021
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
Revenue
|
$131,601,035
|
$381,765,900
|
$513,366,935
|
|
|
|
|
Gross
Profit
|
$41,695,435
|
$117,932,399
|
$159,629,346
|
Gross profit
%
|
31.7%
|
30.9%
|
31.1%
|
|
|
|
|
Floor Plan interest
expense
|
$(291,745)
|
$(574,030)
|
$(865,775)
|
Segment
income%
|
(0.2%)
|
(0.2%)
|
(0.2%)
|
|
|
|
|
Segment income
(1)
|
$16,626,598
|
$57,551,760
|
$74,178,358
|
Segment income
%
|
12.6%
|
15.1%
|
14.4%
|
|
|
|
|
Inventories
|
$30,770,221
|
$70,443,904
|
$101,214,125
|
|
For
the Six Months Ended
June
30, 2020
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
Revenue
|
$114,490,471
|
$334,164,751
|
$448,655,222
|
|
|
|
|
Gross
Profit
|
$32,171,634
|
$88,433,303
|
$120,604,937
|
Gross profit
%
|
27.6%
|
23.4%
|
24.7%
|
|
|
|
|
Floor Plan interest
expense
|
$(535,573)
|
$(1,258,759)
|
$(1,794,332)
|
Segment
income%
|
(0.5%)
|
(0.4%)
|
(0.4%)
|
|
|
|
|
Segment income
(1)
|
$7,125,274
|
$31,910,508
|
$39,035,782
|
Segment income
%
|
5.3%
|
4.5%
|
4.7%
|
|
|
|
|
Inventories
|
$32,812,988
|
$105,366,484
|
$138,179,472
|
_____________________
(1)
Segment income represents income for each reportable segment and is
defined as income from operations less Floor Plan interest expense,
which is the measure by which management allocates resources to its
segments.
The
following is a reconciliation of the total of the reportable
segments’ segment income to the combined net
income:
|
Three-Months
Ended June 30,
|
Six-Months
Ended June 30,
|
||
|
2021
|
2020
|
2021
|
2020
|
Reportable segment
income
|
$45,581,642
|
$29,452,349
|
$74,178,358
|
$39,035,782
|
Corporate operating
income/expense
|
(11,799)
|
63,633
|
(42,347)
|
(85,352)
|
Other interest
expense
|
(7,153)
|
(74,366)
|
(61,076)
|
(150,465)
|
Interest
income
|
7,742
|
20,306
|
15,830
|
53,283
|
Miscellaneous
income
|
8,956,744
|
3,693,172
|
11,134,507
|
3,896,500
|
Combined net
income
|
$54,527,176
|
$33,155,094
|
$85,225,272
|
$42,749,748
|
F-16
The
following tables provide revenue by products and
services:
|
For
the Three Months Ended
June
30, 2021
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
New
vehicles
|
$25,433,262
|
$117,298,398
|
$142,731,660
|
Used
vehicles
|
27,575,982
|
28,768,930
|
56,344,912
|
Service, parts and
other
|
17,101,707
|
30,379,119
|
47,480,826
|
Finance and
insurance income
|
5,282,815
|
16,350,824
|
21,633,639
|
|
$75,393,766
|
$192,797,271
|
$268,191,037
|
|
For
the Three Months Ended
June
30, 2020
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
New
vehicles
|
$17,701,733
|
$145,922,609
|
$163,624,342
|
Used
vehicles
|
23,906,858
|
17,645,683
|
41,552,541
|
Service, parts and
other
|
13,489,909
|
27,044,461
|
40,534,370
|
Finance and
insurance income
|
4,266,248
|
18,004,840
|
22,271,088
|
|
$59,364,748
|
$208,617,593
|
$267,982,341
|
|
For
the Six Months Ended
June
30, 2021
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
New
vehicles
|
$46,818,053
|
$239,139,935
|
$285,957,988
|
Used
vehicles
|
45,048,530
|
50,284,653
|
95,333,183
|
Service, parts and
other
|
30,687,305
|
60,322,622
|
91,009,927
|
Finance and
insurance income
|
9,047,147
|
32,018,690
|
41,065,837
|
|
$131,601,035
|
$381,765,900
|
$513,366,935
|
|
For
the Six Months Ended
June
30, 2020
|
||
|
Harley
Davidson Dealerships
|
Metric
Dealerships
|
Total
Segments
|
New
vehicles
|
$34,476,136
|
$220,894,725
|
$255,370,861
|
Used
vehicles
|
45,694,613
|
34,794,643
|
80,489,256
|
Service, parts and
other
|
26,605,290
|
50,142,825
|
76,748,115
|
Finance and
insurance income
|
7,714,432
|
28,332,558
|
36,046,990
|
|
$114,490,471
|
$334,164,751
|
$448,655,222
|
NOTE 16 – BUSINESS COMBINATION
RideNow Transaction
On
March 12, 2021, RumbleOn, Inc. announced a definitive agreement to
combine with RideNow Group to create the only omnichannel customer
experience in powersports and the largest publicly traded
powersports dealership platform (the “RideNow
Transaction”). Under the terms of the definitive agreement,
RumbleOn will combine with up to 46 entities operating under the
RideNow brand for a total consideration of up to $575.4 million,
consisting of $400.4 million of cash and approximately 5.8 million
shares of RumbleOn Class B Common Stock. RumbleOn will finance the
cash consideration through a combination of up to $280.0 million of
debt and the remainder through the issuance of new equity. RumbleOn
has entered into a commitment letter with Oaktree Capital
Management, L.P. (“Oaktree”) to provide for the debt
financing, subject to certain conditions (the “Oaktree
Financing”). The number of shares to be issued to RideNow is
subject to increase as described in the definitive agreement. The
RideNow Transaction is subject to successful completion of the debt
and equity financing, RumbleOn stockholder approval, manufacturer
approval, other federal and state regulatory approvals, and other
customary closing conditions as described in the definitive
agreement. We expect to close the RideNow Transaction during the
third quarter of 2021.
F-17