RELATED-PARTY TRANSACTIONS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Subordinated Loans with Related Parties On August 25, 2025, the Company issued separate unsecured subordinated promissory notes (collectively, the “Subordinated Loans”) payable to each of SH Capital Partners, L.P. (an entity controlled by Mark Cohen who is a holder of the Company’s Class B common stock and a member of the Board), Face Canyon LLC (an entity controlled by William Coulter), and Mark Tkach (collectively, the “Lenders”) to evidence the $3.3 million of unsecured subordinated loans made by each Lender to the Company. William Coulter (“Coulter”) and Mark Tkach (“Tkach”) are both directors and former executive officers of the Company and holders of the Company’s Class B common stock. The Company used the aggregate gross proceeds of the Subordinated Loans, to prepay outstanding principal amounts owed under the Credit Agreement (as defined in Note 6) which was a requirement set forth in Amendment No. 10 (also defined in Note 6). The Subordinated Loans bear interest at a rate of 13.0% per annum, payable semi-annually in arrears on the last business day of each February and August. Interest is in-kind and capitalized to the principal balance of the Subordinated Loans. Each Subordinated Loan matures on August 31, 2028, unless earlier repaid or accelerated in accordance with its terms. In the event a Lender participates in a Specified Equity Offering (as defined in the Subordinated Loan), the Company is required to use the net cash proceeds received from such Lender in such Specified Equity Offering to make a mandatory prepayment of such Lender’s Subordinated Loan. Each Subordinated Loan is guaranteed on a joint and several basis by the Company’s subsidiaries that are guarantors under the Credit Agreement (each, a “Subordinated Guaranty”). Subject to the terms of the corresponding Subordinated Loan, each Subordinated Guaranty is irrevocable and unconditional and will remain in effect until all obligations under such Subordinated Note are satisfied. The Subordinated Loans are contractually subordinated in right of payment to the loans outstanding under the Company’s Credit Agreement. As of June 30, 2026, the balance of the Subordinated Loans was $10.7 million. Interest expense on the Subordinated Loans was $0.3 million and $0.7 million for the three and six months ended June 30, 2026, respectively. Pre-Owned Inventory Floor Plan Line On December 6, 2024, the Company entered into a floor plan facility agreement with related parties Coulter, Tkach and RideNow Management LLLP, an entity controlled by Coulter and Tkach that provides up to $16.0 million of revolving availability that bears interest based on SOFR plus 5.0%. The amounts owed by the Company to the related parties under this facility was $4.0 million and $6.2 million as of June 30, 2026 and December 31, 2025, respectively. Leases As of June 30, 2026, the Company had 26 leases of properties consisting primarily of dealerships and offices with related parties. Each related-party lease is with a wholly owned subsidiary of the Company as the tenant and an entity controlled by Coulter and/or Tkach, as the landlord. The leases generally have 20-year terms, most of which commenced on September 1, 2021, with base rent increasing 2% annually. Two of the leases were entered into in 2024, one of which includes an option to purchase. Rent expense associated with the related-party operating leases was $4.7 million and $4.8 million for the three months ended June 30, 2026 and 2025, respectively, and $9.3 million and $9.7 million for the six months ended June 30, 2026 and 2025, respectively, and is included in selling, general and administrative expenses on the Unaudited Condensed Consolidated Statements of Operations. The following table provides the amounts for related party leases that were included on the balance sheets:
(1) Included in accounts payable and other current liabilities. Employment of Immediate Family Members Mr. Tkach has two immediate family members that were employed by the Company during the past two years: one as an executive vice president (“EVP”) and one as a commissioned sales representative in the Company’s vehicle transportation business. The EVP received aggregate gross pay, including grants of restricted stock of $0.1 million and $0.2 million for the three and six months ended June 30, 2026, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively. The second family member resigned on January 2, 2026, due to the cessation of our vehicle transportation business. The commissioned sales representative received gross pay of $0.1 million and $0.2 million for the three and six months ended June 30, 2025, respectively.
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