RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| 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 $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, or $10.0 million, to prepay outstanding principal amounts owed under the Credit Agreement (as defined in Note 8), which was a requirement set forth in Amendment No. 10 (as defined in Note 8). 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. Interest expense on the Subordinated Loans was $0.5 million in 2025. Leases As of December 31, 2025, the Company has 26 leases of properties consisting primarily of dealerships and offices from 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. The aggregate annual rent payments for these leases was approximately $16.9 million in 2025. See Note 9 for the ROU assets and liabilities associated with the related party leases. 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. 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 were $6.2 million and $15.9 million as of December 31, 2025 and 2024, respectively. 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. The EVP received aggregate gross pay, including grants of restricted stock, of $0.5 million in 2025 and $0.4 million in 2024, including the income from vested RSUs under the Plan. The second family member received aggregate gross pay of $0.3 million in 2025 and $0.1 million in 2024. Sale of Property On December 27, 2024, the Company sold a certain dealership property in Florida to an entity controlled by Coulter and Tkach, for $4.0 million, which was deemed to be at fair market value. The Company then entered into an operating lease with an entity controlled by Coulter and Tkach commencing on December 28, 2024 with initial annual base rent of $0.3 million and is included in “Leases” above. 2024 Backstop Purchase On December 19, 2024, under the terms of the Support and Standby Purchase Agreement dated as of November 26, 2024 (the “Support and Standby Purchase Agreement”), among the Company, Stone House Capital Management, LLC, (together with its affiliates, “Stone House” or “Standby Purchaser”), and Coulter and Tkach (collectively, the “Support Purchasers” and, together with the Standby Purchaser, the “Investors”), the Company issued and sold to the Standby Purchaser 349,333 shares of Class B common stock at an exercise price of $4.18 per share (the “Backstop Securities”) for an aggregate purchase price of approximately $1.5 million. The Backstop Securities represented the shares of the Company’s Class B common stock that remained unsubscribed for by the stockholders of the Company as of the expiration of the subscription period of its $10.0 million rights offering. In connection with the Support and Standby Purchase Agreement, other than reimbursement of legal and other fees by the Company, the Investors did not receive any fees or other remuneration. On December 19, 2024, the Company entered into a registration rights agreement (the "Registration Rights Agreement") by and among the Company and the Investors granting the Investors registration rights in respect of certain shares of Class B common stock (the "Registrable Securities"), as required under the Support and Standby Purchase Agreement. Pursuant to the Registration Rights Agreement, the Company has agreed to file a resale registration statement for the Registrable Securities as soon as practicable after the execution of the Registration Rights Agreement, and to use commercially reasonable efforts to cause it to become effective as soon as possible after such filing, but in not event later than sixty (60) days after the date of such filing. The Registration Rights Agreement also contains indemnification and other provisions customary for transactions of this nature.
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