RideNow Group, Inc.

Consolidated Balance Sheets

($ in millions, except per share amounts)

Consolidated Statements of Operations

($ in millions, except per share amounts)

Consolidated Statements of Stockholders' Equity (Deficit)

($ in millions)

Consolidated Statements of Cash Flows

($ in millions)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Effective August 13, 2025, we changed our corporate name to RideNow Group, Inc. (the “Company”). In connection with our name change and effective as of the same day, the ticker symbol for our Class B common stock changed to RDNW. The Company’s Class B common stock will continue to be listed on The NASDAQ Stock Market.

RideNow Group, Inc. operates throughtwo operating segments: a powersports dealership group and a vehicle transportation services entity, Wholesale Express, LLC (“Express”). The Company was incorporated in 2013, completed its initial public offering in 2017, and has grown primarily through acquisitions. Beginning August 13, 2025, the Company relocated its headquarters to Chandler, Arizona (Metro Phoenix) from Irving, Texas (the Dallas Metroplex). Unless the context requires otherwise, references in these financial statements to “RideNow Group,” the “Company,” “we,” “us,” “our,” and “us” refer to RideNow Group, Inc. and its consolidated subsidiaries.

We offer 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, including parts, apparel, accessories, finance & insurance products and services (“F&I”), and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. We operated 53 locations as of September 30, 2025, primarily in the Sunbelt region. We source high quality pre-owned inventory directly from consumers via our proprietary RideNow Cash Offer technology.

Express provides asset-light brokerage services facilitating automobile transportation primarily between and among dealerships and auctions throughout the United States.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for smaller reporting companies. In accordance with those rules and regulations, the Company has omitted certain information and notes required by GAAP for annual consolidated financial statements. In the opinion of management, these consolidated financial statements contain all normal, recurring adjustments necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented. The year-end balance sheet data was derived from audited financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 10-K”). The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results expected for the entire fiscal year. Intercompany accounts and material intercompany transactions have been eliminated.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year's presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. These estimates are based on management's best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Disaggregated Revenue

Accounts Receivable

(1) Balance as of September 30, 2025 includes $7.1 million due from the United States government for fleet purchases.

(2) Primarily amounts due from manufacturers for holdbacks, rebates, co-op advertising, warranty and supplies returns.

Recent Pronouncements Not Yet Adopted

Improvements to Income Tax Disclosures

Issued in December 2023, ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, focuses on the rate reconciliation and income taxes paid. This ASU requires disclosure, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, the ASU requires disclosure of income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The new standard is effective for the Company for 2025, with early adoption permitted. Amendments in this ASU may be applied prospectively for the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods or may be applied retrospectively by providing the revised disclosures for all periods presented. We expect this ASU to only impact our disclosures, with no impacts to our results of operations, cash flows, and financial condition.

Disaggregation of Income Statement Expenses

Issued in November 2024, ASU 2024-03, Disaggregation of income Statement Expenses (Subtopic 220-40), requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. While early adoption is permitted, we do not plan to adopt this standard early. This ASU will likely result in additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.

NOTE 2 –INVENTORY AND VEHICLE FLOOR PLAN NOTES PAYABLE

Floor plan notes payable as of September 30, 2025 and December 31, 2024 were as follows:

(1) Includes amounts borrowed under related-party pre-owned inventory floor plan line. See Note 10.

Floor plan notes payable - trade reflects amounts borrowed to finance the purchase of specific new and, to a lesser extent, pre-owned vehicle inventory with corresponding manufacturers' captive finance subsidiaries (“trade lenders”). Floor plan notes payable-non-trade represents amounts borrowed to finance the purchase of specific new and pre-owned vehicle inventories with non-trade lenders. Changes in vehicle floor plan notes payable-trade are reported as operating cash flows and changes in floor plan notes payable-non-trade are reported as financing cash flows in the accompanying Consolidated Statements of Cash Flows.

New 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 payables may 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 a few business days after the related vehicles are sold.

New vehicle floor plan facilities generally utilize Secured Overnight Financing Rate (“SOFR”)-based interest rates, which ranged between 7.8% and 19.5% as of September 30, 2025. Pre-owned vehicle floor plan facilities utilize prime or SOFR-based interest rates, which ranged between 8.0% and 10.8% as of September 30, 2025. The aggregate capacity to finance our inventory under the new and pre-owned vehicle floor plan facilities was $366.4 million as of September 30, 2025.

Inventory serves as collateral under floor plan notes payable borrowings. The inventory balance in its entirety also serves as collateral under the Credit Agreement. Refer to Note 4 for further detail.

NOTE 3 –FRANCHISE RIGHTS AND OTHER INTANGIBLE ASSETS

The carrying amount of franchise rights and other intangible assets was as follows:

(1) Attributed to the Company's powersports reporting unit and powersports reportable segment. Gross amount of $343.0 million was net of accumulated impairment of $216.0 million as of September 30, 2025 and $182.0 million as of December 31, 2024.

(2) Balance was attributed to the Company's vehicle transportation services reporting unit. Goodwill of $241.7 million attributed to the powersports reporting unit was fully impaired as of December 31, 2023.

Franchise rights and other intangible assets are tested for impairment annually as of October 1, or whenever events or changes in circumstances indicate that an impairment may exist. For the quarter ended June 30, 2025, management determined that a triggering event had occurred resulting from the prolonged economic uncertainty and our sustained depressed stock price through the last day of the second quarter of 2025. We elected to bypass the qualitative test at that time, and we performed a quantitative interim impairment test for our franchise rights and goodwill.

The fair value of franchise rights was determined using an excess earnings method. This analysis incorporates estimates and forward-looking projections, such as future revenue growth rates, corresponding gross margin, return on debt-free working capital, contributory asset returns, and the discount rate. Based on the interim impairment test, the carrying value of the franchise rights exceeded their fair value, and an impairment charge of $34.0 million was recorded to impairment of franchise rights on the consolidated statement of operations in the second quarter of 2025. The Company also tested its goodwill for impairment and determined that the fair value of its vehicle transportation reporting unit exceeded its carrying value as of June 30, 2025, andno impairment of goodwill was recorded.

The fair value measurements associated with the quantitative franchise rights and goodwill tests are based on significant inputs that are not observable in the market and are thus considered Level 3 inputs. Significant changes in the underlying assumptions used to value franchise rights and goodwill could significantly increase or decrease the fair value estimates used for impairment assessments.

For the quarter ended September 30, 2025, management determined that there were no triggering events that would require the intangible assets be tested for impairment.

NOTE 4 –LONG-TERM DEBT

Long-term debt consisted of the following as of September 30, 2025 and December 31, 2024:

(1) Fair value of $222.3 million and$243.8 million, respectively.

(2) Fair value of $8.6 million as of September 30, 2025. See Note 10 for a description of the Subordinated Loans, which are with related parties.

Term Loan Credit Agreement

The Company has a term loan credit agreement (as amended, the “Credit Agreement”) among the Company, as borrower, the lenders party thereto, and Oaktree Fund Administration, LLC (“Oaktree”), as administrative agent and collateral agent. Borrowings under the Credit Agreement bear interest at a rate per annum equal, at the Company’s option, to either (a) SOFR with a floor of 3.00%, plus an applicable margin of 7.75%, or (b) a fluctuating adjusted base rate in effect from time to time, plus an applicable margin of 6.75%. At the Company’s option, up to 1.0% of interest may be paid in kind. The interest rate on September 30, 2025 was 12.3%. The Company was in compliance with all financial and non-financial covenants with the Credit Agreement at September 30, 2025.

Obligations under the Credit Agreement are secured by a first-priority lien on substantially all of the assets of the Company and its wholly owned subsidiaries (the “Subsidiary Guarantors”), although certain assets of the Company and Subsidiary Guarantors are subject to a first-priority lien in favor of floor plan lenders, and such liens and priority are subject to certain other exceptions. The Subsidiary Guarantors also guarantee the obligations of the Company under the Credit Agreement.

On August 10, 2025, the parties to the Credit Agreement executed Amendment No. 10 to the Credit Agreement (“Amendment No. 10”), which, among other things: (i) extended the maturity date of the Credit Agreement from August 31, 2026 to September 30, 2027; (ii) required the Company to prepay $20.0 million of the borrowings under the Credit Agreement (“Senior Loans”) using the proceeds of the Subordinated Loans, as defined in Note 10, and other funds; (iii) reduced the interest rate applicable to the Senior Loans by 0.5% per annum, which is reflected in the interest rates described above; (iv) added certain reporting covenants; (v) added milestones requiring the Company to commence a refinancing process prior to September 30, 2026 and complete the refinancing on or prior to November 30, 2026, and provided that failure to achieve such milestones will be an event of default under the Credit Agreement unless, prior to such milestone dates the Company (a) reduces the outstanding principal amount of the Senior Loans to the lesser of (1) $150 million and (2)3.25 x Consolidated EBITDA or (b) both (1) forms a special committee of the Company’s board of directors (the “Board”) to negotiate and recommend to the Board for approval any strategic alternatives, including any recapitalization, refinancing, any transaction resulting in a change of control or a sale of all or substantially all assets of the Company and its subsidiaries and (2) engages an investment banker or financial advisor acceptable to the Administrative Agent to evaluate and execute the strategic alternatives of the Company, and (vi) modified the financial maintenance covenants in the Credit Agreement. In connection with Amendment No. 10, the Company will pay a customary exit fee equal to $2.1 million, representing 1.0% of the aggregate outstanding principal amount due under the Credit Agreement at the time of the execution of the amendment after giving effect to the aforementioned prepayment of borrowings, that is due at the maturity of the Credit Agreement. Due to the extension of the maturity date and the reduced rate described above, the new effective interest rate for borrowings under the Credit Agreement is lower than it was prior to the debt modification.

Pursuant to Amendment No. 10, on August 28, 2025, the Company amended and restated warrants, dated August 14, 2023, between the Company and each applicable Lender to (i) reset the strike price at a 25% premium to the 30-day post-announcement volume weighted average trading price of the Company Class B common stock and (ii) extended the term of such warrants to August 10, 2030, which was the effective date of Amendment No. 10. See Note 6. Following the measurement period, the new strike price was determined to be $4.02.

6.75% Convertible Senior Notes

The 6.75% convertible senior notes (the “Notes”) were outstanding pursuant to an Indenture (the “Indenture”), by and between the Company and Wilmington Trust, the National Association as the Trustee and collateral agent for the Trustee and the holders of the Notes. The Indenture included customary representations, warranties and covenants by the Company and customary closing conditions. The Notes matured on January 1, 2025 and were repaid on January 2, 2025, as permitted.

Other Interest Expense

(1) Includes the amortization of debt discount and issuance costs of $2.2 million and $7.1 million for the three and nine months ended September 30, 2025, respectively, and $2.1 million and $6.5 million for the three and nine months ended September 30, 2024, respectively.

(2) Finance lease obligation is reported in other long-term liabilities on the consolidated balance sheets.

(3) Interest will be paid in kind on interest payment dates. See Note 10.

NOTE 5 –SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT)

Stock-Based Compensation

(1) Amount for the nine months ended September 30, 2025 represents the reversal of expense for stock options forfeited by our former CEO.

On June 4, 2025, the Company’s stockholders approved a proposal to increase the number of shares available for grant under the Company’s 2017 Stock Incentive Plan by 2,500,000 shares.

During the nine months ended September 30, 2025, the Company granted a total of 1,664,272 time-vested restricted stock units (predominantly on a pro rata basis over three years) and 729,856 performance-based restricted stock units that vest if and when the Company’s Class B common stock price reaches and sustains target prices ranging from $11 to $23 per share for a 20-day trading period within three years. The fair value of the performance-based restricted stock units was estimated using a Monte Carlo model. Unamortized stock compensation expense for all outstanding awards as of September 30, 2025 totalled $3.9 million.

Warrants

In 2023, the Company issued warrants to Oaktree and the lenders party to the Credit Agreement to purchase up to 1.2 million shares of Class B common stock at an exercise price that was subject to adjustment based on the terms of the Credit Agreement (“Old Warrants”). As disclosed in Note 4, the parties to the Credit Agreement executed Amendment No. 10 on August 10, 2025. As required by Amendment No. 10, the Company amended these warrants and extended their term to August 10, 2030 (“New Warrants”). The new strike price of the warrants was set at $4.02 following the measurement period and is subject to certain adjustments as defined in the Credit Agreement. These warrants were classified as equity, and the incremental fair value of the New Warrants was determined to be $1.1 million higher than the Old Warrants using the Black-Scholes option pricing model with the following assumptions as of the valuation date:

(1) The strike price for the new warrants was estimated using a Monte Carlo simulation, as the actual exercise price was not yet known as of the valuation date (i.e., the lesser of $11.09 or a 25% premium to the volume-weighted average price of the Company’s Class B common stock over trading days that extended beyond the valuation date).

NOTE 7 –INCOME TAXES

The Company recognized income tax expense of $0.1 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, representing effective income tax rates of (2.5)% and (0.7)%, respectively. The Company recognized no income taxes for the three months ended September 30, 2024 and an income tax benefit of $0.4 million for the nine months ended September 30, 2024, representing effective tax rates of 0.0% and 1.8%, respectively. The difference between the U.S. federal income tax rate of 21.0% and the Company's overall income tax rate in all periods presented was primarily due to state income tax and a change in the valuation allowance for federal and state tax purposes.

On July 4, 2025, the U.S. federal legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, introducing significant changes to the U.S. tax code. The Company determined that the provisions of the OBBBA are not expected to have a material impact on its effective income tax rate or income tax accounts.

NOTE 8 –LOSS PER SHARE

The following common stock equivalents were outstanding as of September 30, and they were excluded from the calculations of loss per share because they were anti-dilutive or because their market condition had not been met:

NOTE 9 –SUPPLEMENTAL CASH FLOW INFORMATION

The following table includes supplemental cash flow information, including non-cash investing and financing activity for the nine months ended September 30, 2025 and 2024:

Of the cash paid for interest, $8.3 million and $12.1 million in thenine months ended September 30, 2025 and 2024, respectively, related to floor plan payables to finance inventory.

The following shows cash and restricted cash for the Statements of Cash Flows:

(1) Amounts included in restricted cash are primarily comprised of the deposits required under the Company's various floor plan lines of credit.

NOTE 10 –RELATED-PARTY TRANSACTIONS

Pre-Owned Inventory Floor Plan Line

In December 2024, the Company entered into a floor plan facility agreement with related parties William Coulter (“Coulter”), Mark Tkach (“Tkach”), and Ridenow Management LLLP, an entity controlled by Coulter and/or Tkach that provides up to $16.0 million of revolving availability that bears interest based on SOFR plus 5.0%. Coulter and Tkach are holders of the Company’s Class B common stock, members of the Board, and former executive officers of the Company. In August 2025, as conditioned by Amendment No. 10, this floor plan facility agreement was extended to October 1, 2029. As of September 30, 2025, the amount owed by the Company to the related parties under this facility was$9.1 million.

Leases

As of September 30, 2025, 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 has a purchase option. Rent expense associated with the related-party operating leases was$4.8 million and$4.8 million for the three months ended September 30, 2025 and 2024, respectively, and$14.5 million and$14.3 million for the nine months ended September 30, 2025 and 2024, respectively, and is included in selling, general and administrative expenses on the 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.

Termination Payment Associated with Related Party Lease

In September 2025, the Company paid a $0.5 million fee that was associated with the termination of a lease for a property that was no longer being used in operations. The lease was with an entity controlled by Coulter and Tkach, as the landlord.

Employment of Immediate Family Members

Mr. Tkach hastwo immediate family members that are employed by the Company: one as an executive vice president andone as a commissioned sales representative. The executive vice president received aggregate gross pay, including grants of restricted stock, of $0.1 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2024, respectively. The commissioned sales representative received gross pay of $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively, while 2024 amounts for the three and nine months ended September 30, 2024 were below the $120,000 reporting threshold. All compensation-related decisions for the executive vice president are approved by the compensation committee of the Company’s board of directors. In addition, compensation-related decisions for the commissioned sales representative were made in a manner that is consistent with internal practices and policies.

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 Stone House Capital Management, LLC (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 $3.3 million of unsecured subordinated loans made by each Lender to the Company. The Company used the aggregate gross proceeds of the Subordinated Loans, or $10.0 million, to prepay outstanding principal amounts owed under the Credit Agreement (as defined in Note 4), which was a requirement set forth in Amendment No. 10 (as defined in

Note 4). 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, beginning February 27, 2026. 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 September 30, 2025, the balance of the Subordinated Loans was $10.0 million. Interest expense on the Subordinated Loans was$0.1 million for the three and nine months ended September 30, 2025.

NOTE 11 -SEGMENT INFORMATION

Business segments are components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) to assess operating performance and allocate resources. Our CODM is our Chairman, Chief Executive Officer, and President. Our operations are organized by management into operating segments by line of business. The CODM evaluates performance and allocates resources based on the segment operating income (loss) of the operating segments, which excludes impairment charges, amortization and depreciation that are included in operating income (loss) on the consolidated statements of operations and includes floor plan interest expense, which is not included in operating income (loss) on the consolidated statements of operations. The CODM uses segment operating income in the annual budget and forecasting process, and considers budget-to-actual variances on a periodic basis.

We havetwo reportable segments: (1) powersports dealership group and (2) vehicle transportation services. The powersports dealership group segment is primarily comprised of powersports dealerships that sell new and pre-owned powersports vehicles; parts, service and accessories; and finance and inventory products for powersports vehicles sold. The vehicle transportation services segment provides nationwide transportation brokerage services between dealerships and auctions. Revenue is all from external customers.

The powersports dealership group segment is significantly larger and requires more investment than our vehicle transportation services segment. The operating income of the powersports segment includes certain operating overhead and corporate costs. Assets are not used for purposes of assessing performance or allocating resources and, as a result, such information has not been presented.

(1) Other operating expenses represent general and administrative expenses, advertising, professional fees and stock-based compensation expenses. The detail for these expenses on a consolidated basis is in Note 5 and is primarily attributable to the Powersports Dealership Group.

(1) Other operating expenses represent general and administrative expenses, advertising, professional fees and stock-based compensation expenses. The detail for these expenses on a consolidated basis is in Note 5 and is primarily attributable to the Powersports Dealership Group.

(1) Other operating expenses represent general and administrative expenses, advertising, professional fees and stock-based compensation expenses. The detail for these expenses on a consolidated basis is in Note 5 and is primarily attributable to the Powersports Dealership Group.

(1) Other operating expenses represent general and administrative expenses, advertising, professional fees and stock-based compensation expenses. The detail for these expenses on a consolidated basis is in Note 5 and is primarily attributable to the Powersports Dealership Group.

NOTE 12 –COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, as of September 30, 2025, the Company does not believe that the ultimate resolution of any legal actions, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity, and capital resources.

Future litigation may be necessary to defend the Company by determining the scope, enforceability and validity of third-party proprietary rights or to establish its own proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

SEC Investigation

On June 28, 2024, the Company received a subpoena from the SEC requesting documents created during or relating to the period from January 1, 2021 through the date of the subpoena. The subpoena covers documents relating to, among other matters, the Company’s previously disclosed internal investigation into the use of Company resources by former Chairman and CEO Marshall Chesrown; the Company’s review, consideration and approval, and the underlying terms of, related party transactions; employment, compensation, reimbursement and severance arrangements; and disclosures and communications to customers and investors regarding the company’s RideNow Cash Offer tool and certain of its technology. The Company intends to continue responding to any information requests and otherwise cooperate with the SEC’s inquiry.

The Company cannot predict the ultimate outcome or timing of the SEC investigation, what, if any, actions may be taken by the SEC or the effect that such actions may have on the business, prospects, operating results and financial condition of the Company.

Delaware Litigation

As previously disclosed, the Company began an investigation of certain allegations surrounding Marshall Chesrown’s use of Company resources in 2023. On June 11, 2023, Mr. Chesrown delivered a resignation letter to the Board in his capacity as CEO (the “CEO Resignation Letter”) and on July 7, 2023, Mr. Chesrown delivered a resignation letter to the Board in his capacity as a member of the Board of Directors (the “Board Resignation Letter” and together with the CEO Resignation Letter, the “Resignation Letters”). In the CEO Resignation Letter, Mr. Chesrown indicated that he was resigning for “good reason” under his employment agreement and described his disagreement with several recent corporate governance, disclosure and other actions taken by the Company, the Board and certain of its members. In the Board Resignation Letter, Mr. Chesrown further detailed his disagreement with actions taken by the Company, the Board and certain of its members and indicated his intent to pursue legal claims. The Company disagrees with the characterization of the allegations and assertions described in the Resignation Letters. The Company and Mr. Chesrown conducted a pre-suit mediation in October 2023, as required in his employment agreement, but did not resolve the matter. On March 13, 2024, Mr. Chesrown filed suit against the Company in Delaware Superior Court for the claims asserted in his Resignation Letters. Mr. Chesrown is seeking a declaratory judgment that he resigned with good reason, termination compensation damages in the amount of $7.5 million, general and reputational damages in the amount of $50.0 million, punitive damages, attorney's fees and litigation costs. The parties are now engaged in the initial stages of discovery. The subject matter of the litigation overlaps with the investigation begun by the Company in 2023. As of the date of this filing, the Company has not decided what further actions, if any, may be taken with regard to the investigation allegations.

The Company intends to defend the litigation claims vigorously; however, we can provide no assurance regarding the outcome of this matter.

Letters of Credit

We issue letters of credit to secure the Company’s various financial obligations, including floor plan financing arrangements and insurance policy deductibles and other claims. The total amount of outstanding letters of credit as of September 30, 2025 was $10.5 million. We do not believe that it is probable that any of the letters of credit will be drawn upon.