RDNW 10-K & 10-Q changes, risk factors and insider trading

Various risks and uncertainties could affect our business. In addition to the information contained elsewhere in this report and other filings that we make with the SEC, the risk factors described below could have a material impact on our business, financial condition, results of operations, cash flows or the trading price of our Class B common stock. It is not possible to identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.

Our strategic plan includes leveraging our nationwide network of dealerships, using our proprietary RideNow Cash Offer technologytool to grow our pre-owned inventory, reducing our cost structure, and rationalizing our retail footprint by acquiring new retail locations and closing or consolidating existing retail locations. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisition opportunities. The closing or consolidation of existing retail locations may not result in immediate cost savings. TheseIn activitiesaddition, can divert management time and focus from operating our business. We may encounter unforeseen expenses, difficulties, complications, and delays relating to the development and operationcertain of our businessdealerships have operated at a loss or generated insufficient returns. There is no assurance that our efforts to improve the performance of unprofitable stores will be successful, and thesuch executionefforts may require significant management attention and capital investment. If we are unable to restore these locations to profitability, we may be required to close or sell them, which could result in lease termination payments, employee severance, asset write-downs, loss of ourfranchise business plan, including our organicrights and acquisitioncustomer growthrelationships, strategies.and Achievingother exit -related charges. We closed or sold five underperforming dealership locations in 2025 and may take similar actions in the anticipated benefits of acquisitions depends in significant part upon our integrating any acquired entity’s businesses, operations, processes, and systems in an efficient and effective manner. We have incurred, and expect to continue to incur, a number of non-recurring costs associated with our acquisitions and the closing of retail locations. Our failure to identify successfully rationalize our dealership footprint could adversely affect our business, financial condition, and results of operations.future.

In recent periods, weWe have identified material weaknesses in our internal control over financial reporting. MostIf recently,our remediation of such material weaknesses is not effective, or if we haveexperience identified aadditional material weakness,weaknesses asor disclosedotherwise in this 2024 Form 10-K. If we are unablefail to effectively remediate this material weaknessdesign and maintain an effective system of internal control over financial reporting, weour may not be ableability to accurately report our financial condition and results of operations in a timely manner or preventcomply fraud.with Asapplicable laws and regulations could be impaired, which may adversely affect investor confidence in us, subject us to litigation or significant financial or other penalties, and as a result, investorsaffect couldthe losevalue confidenceof inour Class B common stock and our financial and other public reporting, which would harm our business.condition.

A material weakness is a deficiency, or a combination of deficiencies, in ourinternal ICOFR,control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interimconsolidated financial statements will not be prevented or detected on a timely basis. WeIn haveconnection identifiedwith andthe disclosedpreparation material weaknesses inof our ICOFRconsolidated infinancial recentstatements periods.for Forthe example,year asended discussedDecember herein,31, 2023, we have identified a material weakness in our ICOFRinternal forcontrol over financial reporting in the yearareas ended December 31, 2024. This material weakness relates toof user access and segregation of duties related to certain information technology systems that support the Company’s financial reporting processes.processes, Asincluding arevenue, resultinventory, purchasing and related expenditures, resulting in ineffective journal entry and other manual controls. In addition, in connection with the preparation of previouslyour consolidated financial statements for the year ended December 31, 2025, we identified an additional material weaknesses,weakness ourrelated disclosureto decentralized, manual processes associated with the design and operating effectiveness of certain process level controls related to the administrative oversight of the financial process and proceduresin asreview and assessment of processes and conclusions associated with infrequent, unusual transactions. These deficiencies impacted processes around revenue, cost of revenue, accounts receivable and inventory. As of December 31, 20242025, andthese 2023,material respectively,weaknesses were determinedhave not tobeen befully effectiveremediated atand, as a reasonableresult, assurancemanagement levelconcluded that our internal control over financial reporting was not effective as of eachthat of those dates.date.

We operate dealership locations and our Cash Offer technologytool under our RideNow brand. In addition, we operate certain dealership locations under OEM brands, such as Harley-Davidson, BMWHarley-Davidson and Indian. Our growth depends on our ability to attract and retain customers to our retail and online locations. We rely heavily on marketing and advertising to increase the visibility of our operations with potential customers and to drive traffic to our retail and online locations. Some of our methods of marketing and advertising may not be profitable because they may not result in the acquisition of sufficient users such that we may recover these costs by attaining corresponding revenue growth. If we are unable to recover our marketing and advertising costs, it could have a material adverse effect on our growth, results of operations and financial condition.

Our efforts to maintain the trust of and deliver value to our userscustomers depend on our ability to develop and maintain our RideNow brand and on the reputation of brands we represent in our dealership locations. If our current and potential customers perceive that we are not focused on providing them with a better powersports experience, our reputation will be adversely affected. Consumers are increasingly shopping for new and pre-owned powersports vehicles, vehicle repair and maintenance services, and other vehicle products and services online and through mobile applications, including through third-party online and mobile sales platforms, with which we compete. If we fail to preserve the value of our retail brands, maintain our reputation, or attract consumers, our business could be adversely impacted.

Our dealerships are concentrated in certain states, including Arizona, Florida and Texas, in which actual or threatened natural disasters and severe weather events (such as tornadoes, earthquakes, wildfires, landslides, hailstorms, floods and hurricanes) may disrupt our store operations, which may adversely impact our business, financial condition, results of operations and cash flows. In addition to business interruption, the powersports retailing business is subject to substantial risk of property loss due to the significant concentration of property at store locations, including property stored outside. Although we have substantial insurance, subject to certain deductibles, limitations and exclusions, we may be exposed to uninsured or under-insured losses that could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We rely on a combination of trademark, trade secret, and copyright law as well as on contractual restrictions with employees and third parties to protect our intellectual property, including our proprietary RideNow Cash Offer technology.tool. These mechanisms may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property, or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property, or technology. Despite our efforts to protect our proprietary rights, unauthorized parties including former employees may attempt to copy aspects of our website features, software, and functionality or obtain and use information that we consider proprietary. Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. The failure to protect our intellectual property, including from unauthorized uses, could erode consumer trust and our brand and have a material adverse effect on our business.

We have a substantial amount of debt, which has had and will continue to have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. Our debt agreements impose operating and financial restrictions on us. These restrictions limit our ability and that of our subsidiaries to, among other things: (i) incur additional indebtedness; (ii) make investments or loans; (iii) create liens; (iv) consummate mergers and similar fundamental changes; (v) make restricted payments; (vi) make investments in unrestricted subsidiaries; (vii) enter into transactions with affiliates; and (viii) use proceeds from asset sales. They also impose certain financial test ratios and financial condition teststests, or “financial covenants”, that we must satisfy in future periods to remain in compliance with the terms applicable to our debt. We may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive or financial covenants under our debt agreements. The restrictions contained in the covenants could: (i) limit our ability to plan for or react to market conditions, to meet capital needs, or otherwise to restrict our activities or business strategy; and (ii) adversely affect our ability to finance our operations, enter into acquisitions or divestitures or engage in other business activities that would be in our interest.

We intend to continue making investments to support the development and growth of our business and to make strategic acquisitions. Although we currently intend to self-fund our growth initiatives, under certain circumstances we may determine that it is necessary or advisable to raise additional financing or capital. Additional financing or capital may not be available when we need it, on terms that are acceptable to us, or at all. If we decide to raise additional capital through issuances of equity, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class B common stock. In 2023, our three largest stockholders backstopped our $100.0 million rights offering, and in 2024 they provided $30.0 million in incremental capital commitments, which included a $10.0 million backstopped rights offering.offering, and in 2025, they loaned the Company an additional $10.0 million through the issuance of subordinated promissory notes. If we decide to raise additional debt, our existing stockholders may be subject to the risks associated with higher leverage. In addition, we may need to refinance all or a portion of our existing debt. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, or we are unable to obtain additional capital, including from any of our stockholders, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition, and prospects could be adversely affected.

We are subject to interest rate risk in connection with our floorplanfloor plan payables and our other debt instruments that could have a material adverse effect on our profitability.

Our floorplanfloor plan payables, Credit Agreement and other debt instruments are subject to variable interest rates. Accordingly, our interest expense will fluctuate with changing market conditions and will increase if interest rates rise. Instability or disruptions of the capital markets, including credit markets, or the deterioration of our financial condition due to internal or external factors, could restrict or prohibit our access to capital markets and increase our financing costs. In addition, our net new inventory carrying cost (new vehicle floorplanfloor plan interest expense net of floorplanfloor plan assistance that we receive from powersports manufacturers) may increase due to changes in interest rates, inventory levels, and manufacturer assistance. A significant increase in interest rates or decrease in manufacturer floorplanfloor plan assistance could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Retail powersports sales are cyclical and historically have experienced periodic downturns characterized by oversupply and weak demand, which could result in a need to lower the prices at which we sell our powersports offering, which would reduce revenue per vehicle sold and margins. Additionally, a shift in consumer’s vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenue, margins, and results of operations. Our ability to increase or maintain our sales margins on new and pre-owned powersports vehicles, parts, service, accessories, and finance and insurance products is also subject to a variety of factors, many of which are beyond our control. These factors include changes in consumer demand and buying patterns, pricing pressure from competitors, inflationary increases in labor and reconditioning costs, and the mix of new versus pre-owned vehicles sold. To remain competitive, we may be required to offer pricing incentives or otherwise reduce prices, which would compress our margins. If we are unable to offset these pressures through operational efficiencies, cost reductions, or other measures, our profitability could be materially adversely affected.

In January 2025, the globalUnited tariffStates landscape began to quickly change with the U.S. implementingimplemented new or increased tariffs onaffecting variouscertain foreignproducts and countries, eitherand generallyadditional retaliatory measures could be imposed. In February 2026, the United States Supreme Court ruled that the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs that had been effect since April 2025. While the ruling struck down the IEEPA-based tariffs, it does not prevent the administration from imposing tariffs using other legal authorities, and the administration has indicated its intention to pursue alternative statutory mechanisms to reinstate or withimpose respectnew tariffs. OEMs that manufacture in Mexico, Canada, or China may pass increased costs to certainus, products.impacting Certainpricing, foreigndemand, countriesand may change their tariff policies in response to changes in the U.S. tariff policy.margins. We acquire certain new unit inventory from OEMs that is manufactured in countries that may be subject to new or increased tariffs, including Mexico, Canada and China. In addition, tariffs could increase the costs of components for new units and/or other products that we sell and have the potential to disrupt existing supply chains. An increase in the costs of the goods that we sell could make them less affordable for customers, which would negatively impact customer demand and have a material adverse impact on our business and results of operations. It is uncertain whether OEMs will pass through increased costs to us, which would result in a negative impact on our profitability. It is impossible to predict with any certainty the effects that any new tariffs may ultimately have on our industry or our financial condition.

We believe that our proprietary RideNow Cash Offer technologytool provides us with a competitive advantage in purchasing pre-owned powersports vehicles directly from customers. However, there are low barriers to enter the online marketplace for powersports and we expect that competitors, both new and existing, will continue to enter the online marketplace with competing brands, business models, products, and services, which could make it difficult to acquire inventory, attract customers, and sell vehicles at a profitable price. Some of these companies have significantly greater resources than we do and may be able to provide customers access to a greater inventory of powersports vehicles at lower prices or purchase vehicles from consumers at higher prices while delivering a competitive overall experience.

Our revenue trends are likely to be a reflection of consumers' powersports vehicle buying patterns. Because different types of vehicles are designed for different seasons, our revenue may be cyclical. Historically, the powersports industry has been seasonal, with traffic and sales strongest in the spring and summer quarters. Sales and traffic are typically slowest in the winter but increase in spring and summer, coinciding with tax refund season and the coming warmer months. OurOther businessfactors isthat alsomay impactedcause byour cyclicalresults trendsto affectingfluctuate including, without limitation, the overallregulatory economy,environment, macroeconomic conditions, including as a result of tariffs, interest rates, inflation, unemployment and employment rates, vehicle supply and demand and labor costs, government shutdowns, changes in the competitive dynamics of our industry, our liquidity and ability to raise capital through equity or debt financings, as well as by actual or threatened severe weather events, such as hurricanes, tornadoes, and wildfires.

DisruptionsWe or breaches involving our orand our third-party providers’providers ITare systemsexposed couldto cybersecurity risks and incidents which may interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations.

We rely on the integrity, security and successful functioning of our computer systems, hardware, software, technology infrastructure, and online sites and networks (collectively, “IT Systems”) across both our internal and external operations. While we own and operate certain parts of our IT Systems, we also rely on critical third-party service providers for an array of IT Systems and related products and services. WeFor example, we use IT Systems for external and internal functions, such as to support product sales, track inventory information at our store locations, and to aggregate daily sales, margin and promotional information. We also use IT Systems to report and audit our operational results. We and certain of our third-party providers collect, maintain and process data about customers, employees, business partners and others, including Personal Information, as well as proprietary information belonging to our business (collectively, “Confidential Information”).

We and certain of our third-party providers may experience cyberattacks and security incidents. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities or incidents to avoid a material adverse impact to our IT Systems or business. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems.Systems and Confidential Information.

Because we make extensive use of third-party suppliers and service providers, such as cloud services that support our internal and customer-facing operations, successful cyberattacks that disrupt or result in unauthorized access to third-party IT Systems can materially impact our operations and financial results. We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. Any adverse impact to the confidentiality, availability, integrity or successful functioningintegrity of our IT Systems or Confidential Information could result in interruptions in our services, noncompliance with certain laws and regulations, negative publicity, damage to our customer and supplier relationships, exposure to litigation,litigation (such as class actions), regulatory investigations,investigations and enforcement action, and lost sales, fines, penalties, lawsuits and system restoration or remediation costs, anyand future compliance costs. Any or all of whichthe foregoing could have a material adverse effect on our business, financial condition and results of operations.

We collect, process, store, share, disclose and use personalPersonal informationInformation, and other data, and ourany actual or perceived failure to protectcomply suchwith informationnew or existing laws, regulations and dataother requirements relating to the privacy, security, and processing of Personal Information could damage our reputation and brand and harm our business and operating results.

ThereEven though we believe we and our vendors are numerousgenerally federal,in state, and local laws around the world regarding privacy and the collection, processing, storing, sharing, disclosing, using, and protecting of personal information and other data, the scope of which are changing, subject to differing interpretations, and which may be costly to complycompliance with and may be inconsistent between countries and jurisdictions or conflict with other rules. We generally comply with industry standards and are subject to the terms of our privacy policies and privacy-related obligations to third parties. We strive to comply with all applicable laws, policies, legal obligationsrules and industry codes of conductregulations relating to privacy and data protection,security, tothese laws are in some cases relatively new and the extentinterpretation possible.and However,application it is possible thatof these obligationslaws mayare be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices or that new regulations could be enacted.uncertain. Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards, our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which may include personallyPersonal identifiable informationInformation or other user data, may result in proceedings or actions against us by individuals or government agencies, governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause consumers and our OEM partners to lose trust in us, which could have an adverse effect on our business. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. Additionally, if vendors, developers, or other third parties that we work with violate applicable laws or our policies, such violations may also put consumer or dealer information at risk and could in turn harm our reputation, business, and operating results. If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

We are subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle, retail installment sales, finance and insurance, marketing, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, environmental, vehicle emissions and fuel economy, and health and safety. The regulatory bodies that regulate our business include, at the federal level: the Consumer Financial Protection Bureau, the FTC, the DOT, the Occupational Health and Safety Administration, the Department of Justice, and the Federal Communications Commission; at the state level: various state dealer licensing authorities, state consumer protection agencies including state attorney general offices, and state financial and insurance regulatory agencies; and at the municipal level our business is regulated by various municipal authorities covering licensing, zoning, occupancy, and tax obligations. We are subject to compliance audits of our operations by many of these authorities.

ThisThe “Management’sfollowing Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) is provided as a supplement to, anddiscussion should be read in conjunction with,with our audited consolidated financial statements and the related notesNotes includedthat appear in Part IV of this 2024 Form2025 10-K. ThisReferences discussionto may“Note” containor forward-looking“Notes” statements.pertains See Forward-Looking and Cautionary Statements and Risk Factors for a discussion ofto the uncertaintiesNotes andto risksthe associatedConsolidated withFinancial these statements.Statements. Unless otherwise specified, the meanings of all defined terms in this MD&A are consistent with the meanings of such terms as defined in the Notes to Consolidated Financial Statements. Terms not defined in this MD&A have the meanings ascribed to them in the consolidated financial statements. Unless otherwise noted, comparisons are of results for the year ended December 31, 20242025 or (“this year”) to those for for the year ended December 31, 20232024 or (“last year.year”).

Powersports Segment

We believe our powersports business is the largest powersports retail group in the United States offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products. We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Additionally, we offersource ahigh fullquality suitepre-owned ofinventory repairdirectly andfrom maintenanceconsumers services.via Asour ofproprietary DecemberRideNow 31,Cash 2024,Offer we operated 56 retail locations located predominantly in the Sunbelt region.tool.

Vehicle Transportation Services Segment

ExpressDuring providesthe years ended December 31, 2024 and 2025, we provided transportation brokerage services facilitating automobile transportation primarily between and among automotive dealerships and auctions through an asset-light business model. In the first quarter of 2025, several employees, including almost all brokers, exited Express,the Company, which isresulted expectedin toa reducesignificant decline in shipping volume. Ultimately, the volumeCompany ceased the operations of business conducted by this segment in December 2025.

On•Repaid January$61.1 2, 2025, we repaid principalmillion of debt principal, including the full repayment of the $38.8 million plus accrued interest due under our 6.75% convertible senior notes.

We regularly review a number of key metricsmetrics, including revenue, sales volume and gross profit in order to manage ourthe business and evaluate financial and operating performance, such as revenue, volume and gross profit measures. Key factors impacting our operating results include increasing brand awareness,awareness; maximizing the opportunity to source pre-owned vehicles from consumersconsumers, dealers and dealers,auctions; and enhancing the selection and timing of vehicles we make available for sale to our customers. We review the Powersports segment metrics in total. As previously disclosed, we sold or closed five underperforming stores during 2025. As a result, management has now begun reviewing Powersports segment metrics on a same store basis as well. Same store measures reflect results for stores that were operating as of December 31, 2025 and exclude fleet sales. We believe same store metrics assist in providing insight on operating trends within our core business.

Powersports Segment

We define vehicles sold as the number of vehicles sold through retail and wholesale channels in each period. VehiclesThis soldmetric is the primary driver of our revenue and gross profit.profit Vehicles soldand also impacts complementary revenue streams, such as F&I and PSA. VehiclesAdditionally, vehicles sold increases our base of customers and improves brand awareness and repeat sales.

Vehicle Transportation Services Segment

Revenue iswas derived from freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination. The freight brokerage agreements arewere fulfilled by independent third-party transporters who must meetmet our performance obligations and standards. ExpressWe iswere considered the principal in the delivery transactions since itwe iswere primarily responsible for fulfilling the service. Express provided transportation services to the discontinued automotive segment, prior to its wind down.

We define vehicles delivered as the number of vehicles delivered from a point of origin to a designated destination under freight brokerage agreements with dealers, distributors, or individuals. Vehicles delivered arewere the primary driver of revenue and, in turn, profitability in the vehicle transportation services segment.

Total gross profit per vehicle transported representsrepresented the difference between the price received from non-affiliated customers and our cost to contract an independent third-party transporter divided by the number of third-party vehicles transported.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the related notes and the MD&A included in our 2025 10-K, as well as our Unaudited Condensed Consolidated Financial Statements and the accompanying condensed notes included in Item 1 of this Quarterly Report on Form 10-Q. This discussion may contain forward-looking statements. See “Forward-Looking and Cautionary Statements” for a discussion of the uncertainties and risks associated with these statements. Terms not defined in this MD&A have the meanings ascribed to them in the consolidated financial statements and related footnotes. Unless otherwise noted, comparisons are of results for the quarter ended MarchJune 31,30, 2026, or firstsecond quarter, to the quarter ended MarchJune 31,30, 2025.

We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Further, we offer a full suite of powersports repair and maintenance services. As of MarchJune 31,30, 2026, we operated 4847 retail dealerships located predominantly in the Sunbelt region. Additionally, we source high quality pre-owned inventory directly from consumers via our proprietary RideNow Cash Offer tool.

Our results of operations and financial condition are significantly influenced by general macroeconomic conditions that affect consumer confidence and discretionary spending. During the firstsecond quarter of 2026, we continued to navigate a complex economicmacroeconomic environment characterized by shiftingpersistent tradeinflationary policies,pressures, fluctuating interest rates, and broadercritical inflationarylegal pressures.developments reshaping trade policy.

Additionally, our business is sensitive to the interest rate environment. Elevated interest rates affect us in twoin primarythe following ways:

General macroeconomic uncertainty, including concerns regarding labor market stability and persistent cost-of-living increases, has led to more cautious spending patterns among our core demographic. While we have seen resilience in certain premium segments, the broader consumer base is increasingly focused on affordability. If economic conditions deteriorate or if "stagflationary" pressures, where inflation persists alongside cooling economic growth intensify, we may experience further declines in same-store revenue and unit sales.

We regularly review a number of key operating metrics such as revenue, sales volume and gross profit in order to manage the business and evaluate financial and operating performance. Key factors impacting our operating results include increasing brand awareness; maximizing the opportunity to source vehicles from consumers, dealers, and auctions; and enhancing the selection and timing of vehicles we make available for sale to our customers. We review these metrics in total. As previously disclosed, we sold or closed five underperforming stores during 2025. As a result, management has also begun reviewing metrics on a same store basis. Same store measures reflect results for stores that were operating during the three and six months ended MarchJune 31,30, 2026 and 2025, respectively, and exclude fleet sales. We believe same store metrics assist in providing insight on operating trends within our core business.

Total revenue for the quarter increaseddecreased $15.7$3.1 million compared to the same period in 2025. While revenue in all of the key lines of business increased, theThe primary driver was higherthe salesresult of newoperating andfour pre-ownedfewer retailstores vehicles. Offsettingthan the revenueprior increaseyear wasperiod. Further contributing to the decrease is a decrease of $5.5$1.3 million in revenuereduction in our vehicle transportation services business, which, as discussed, was wound down at the end of 2025. Additional information on our revenue is depicted in the tables below.

Total gross profit increased $4.4$0.9 million for the quarter dueand in$5.3 partmillion tofor higherthe volume,first withhalf driven by an improvement in retail vehicles, PSA and F&I. TotalPowersports gross profit perof retail$1.1 vehiclemillion wasfor consistentthe withquarter lastand year’s$6.6 quarter.million for the first half of the year, partially offset by the termination of Vehicle Transportation Services of $1.3 million. Additional detail on our gross profit is depicted in the tables that follow.

Selling, general and administrative expenseexpenses (“SG&A”)for increasedthe $1.0quarter decreased $1.7 million, or 2% as compared to the firstsame quarterperiod ofin 2025. The primary driver of the SG&A increasedecrease were higherlower professional fees, general and administrative expenses, compensation and related costs,costs partiallyand offsetfacilities. byPartially aoffsetting this reduction was an increase in facilities and advertising, marketing and selling expenses.

Depreciation and amortization decreaseddid primarilynot duematerially change when compared to the closureprior and/or sale of five dealerships during 2025 as previously disclosed.period.

Other interest expense consists primarily of interest on the term loan facility, finance lease obligation, and beginning in the third quarter of 2025, the Subordinated Loans, as defined in Note 12. Other interest expense decreased for the quarter due primarily to lower average borrowings and a lower interest rate on the term loan in 2026 compared to 2025. Other interest expense decreased during the six months primarily due to lower average borrowing in 2026 compared to 2025. Amortization of debt discount and issuance costs of $1.6 million and $2.5$3.2 million for the three and six months ended MarchJune 31,30, 2026, respectively, and $2.4 million and $4.9 million for the three and six months ended June 30, 2025, respectively, were included in term loan interest expense depicted above.

We had the following liquidity resources available as of MarchJune 31,30, 2026 and December 31, 2025:

Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, and other business and risk factors described under “Risk Factors” in our 2025 10-K. We believe that current cash balances plus cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months from the date of issuance; however, there can be no assurance that we will not require additional financing within this time frame.

Our Unaudited Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which assumes the continuity of operations, the realization of assets and satisfaction of liabilities as they come due in the normal course of business. We believe that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least twelve months from the financialdate statementof date.issuance. The Company may need to obtain additional financing to support its long range plans and to refinance its indebtedness on or prior to its maturity.

Our primary sources of operating cash flows result from the sales of vehicles and ancillary products. Our primary use of cash from operating activities are purchases of inventory, parts and merchandise; marketing costs; interest payments on trade floor plans, long-term debt, and finance lease obligations; rental costs for facilities; and personnel-related expenses. Operating cash flow for the threesix months ended MarchJune 31,30, 20262026, decreased $20.7$31.7 million from the comparable period in the prior year. The change was primarily driven by higher inventory to support revenue growth. Inventory levels represent a primary driver of our operating cash flows.flow. We remain focused on optimizing inventory turnover by actively monitoring the mix and volume of new and pre-owned powersports units to ensure alignment with current consumer demand.

Cash flows from financing activities primarily relate to our short and long-term borrowings. Cash flows from financing activities increased $64.9$88.3 million as a result of higher non tradenon-trade floorplan borrowings period over period in addition to a repayment of the Company’s convertible senior notes in the prior year’s comparable period. In January 2025, we repaid our 6.75% convertible senior notes at their maturity date.