What changed in this filing

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Item 9A. Controls and Procedures

2021-03-18 compared with 2020-03-25 · 1211 added, 467 removed, 74 unchanged (96% of the section changed)

Controls and Procedures.

Controls and Procedures

controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed

in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods

specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures

designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated

and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding

required disclosure.

required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out

an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019.

Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and

procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Management’s

Report on Internal Control Over Financial Reporting

is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

assessed the effectiveness of our internal control over financial reporting as of December 31, 2019.

Based on its assessment,

management concluded that our internal control over financial reporting was effective as of December 31, 2019.

Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public

accounting firm due to our status as an emerging growth company under the JOBS Act.

in Internal Control Over Financial Reporting

the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has

materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ) as of the end of the period covered by this Annual Report on Form 10-K.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures .

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report , our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as our principal financial and accounting officer, to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management utilized the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020.

Management has excluded from its evaluation the internal control over financial

reporting of all current year acquisitions, which were included in the December 31, 2020 consolidated financial statements .

B ased on the assessment, management has concluded that, as of December 31, 2020, our internal control over financial reporting was effective.

As an emerging growth company, management’s assessment of internal control over financial reporting was not subject to attestation by our independent registered public accounting firm.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Directors, Executive Officers and Corporate Governance.

directors and executive officers of the Company are as follows:

Ryan Greenawalt

Chief Executive

Officer and Chairman

Chief Financial

Daniel Shribman

Andrew Studdert

Greenawalt , 45, joined Alta in December 2008 and has served as its Chief Executive Officer since December 2017.

Greenawalt leads Alta’s executive leadership team and is responsible for corporate strategy, operations, and corporate

He has led Alta’s acquisition activities since joining the company, expanding Alta’s geographic footprint,

and entering new end markets.

Greenawalt returned to the equipment industry after a career in financial services from

2002 to 2008.

He has a BA from the University of Michigan, Ann Arbor and holds an MBA from the Eli Broad College of Business at

Michigan State University.

Colucci , 41, has served as Alta’s Chief Financial Officer since February 2015.

Colucci leads

and is responsible for Alta’s finance function, including its financial reporting processes and procedures.

a central figure in Alta’s M&A and capital acquisition activities since joining Alta.

Previously, Mr.

Colucci served

as a Director of Corporate and Business Development at Blue Cross Blue Shield of Michigan from December 2013 to February 2014.

Prior to that, Mr.

Colucci worked with UHY Advisors Inc.

from January 2004 to December 2013.

At UHY Advisors Inc.,

Colucci focused on valuation, corporate finance, and financial consulting projects.

Colucci is a licensed CPA

in the state of Michigan and is also accredited by the AICPA in Business Valuation (ABV).

Colucci has a BA in Economics

from Alma College and an MBA from Western Michigan University.

Shribman , 35, served as the Chief Financial Officer of BRPM from its inception until the closing of the business combination

and has served as our director since the closing of the business combination.

Shribman has served as President of B.

Principal Investments, since September 2018 and Chief Investment Officer of B.

Riley Financial since September 2019.

Shribman brings 12 years of experience in both public and private equity to the company.

Prior to joining B.

Principal Investments, Mr.

Shribman was a Portfolio Manager at Anchorage Capital Group, a special situation asset manager

with over $15 billion in assets under management, from 2010 to 2018.

Shribman’s tenure at Anchorage,

he led investments in dozens of public and private opportunities across the general industrials, transportation, automotive, aerospace,

gaming, hospitality and real estate industries.

These investments ranged from public equities and bonds to deeply distressed securities,

par bank debt, minority owned private equity, and majority owned private equity.

Shribman worked in close collaboration

with management teams and boards to maximize shareholder value in the form of both operational turnarounds, capital markets financings

and communication and capital deployment initiatives.

Prior to Anchorage, Mr.

Shribman worked at Tinicum Capital Partners,

a private equity firm, and in the restructuring advisory group at Lazard Freres.

Shribman holds an MA in Economics and

History from Dartmouth.

We believe that Mr.

Shribman is qualified to serve as a member of our board of directors because

of his extensive experience in corporate finance.

Savas , 56, has served as our director since the closing of the business combination.

Savas has served President

of Cranbrook Partners & Co., a private company engaged in active ownership of other businesses since 2001, and, from 1991

to 2001, a boutique advisory firm primarily providing merger and acquisition and corporate finance services for both public and

private companies, since 1991.

He has also served as President of Production Spring, LLC, a manufacturer of metal fasteners for

the automotive industry, since March 2002.

He was a founder and Chairman of Fire Catt, LLC, a fire hose testing business

since October 2006 and has served as its Chief Executive Officer since January 2010.

He has served as a manager and

board member of Vexor Technology, LLC, an industrial waste services and alternative fuel company.

In addition, Mr.

has served as Chairman of Lewis IG, Inc., an information technology business since July 2004, President of Rislov Foundation,

a charitable organization, since November 2003 and Managing Member of Peponides Associates LLC, an investment vehicle for

real estate, stocks and private companies, since January 2000.

Savas has sat on numerous private company boards

and was lead director of Tecumseh Products Company from September 2009 to January 2014.

Savas began his career

at Citicorp in Mergers and Acquisitions in 1985 and graduated with high distinction from the University of Michigan Ross School

of Business with a BBA in 1985, concentrating in finance and accounting.

We believe that Mr.

Savas is qualified to serve

as a member of our board of directors because of his extensive corporate advisory experience and his experience in the industrial

Andrew Studdert , 63,

has served as our director since the closing of the business combination.

Studdert is currently the founder of Andrew P.

& Associates, a private consultancy, focusing on finance, operations, technology, network security, and crisis management,

that he established in 1994.

From 2004 to April 2017, Mr.

Studdert served as the Chairman and Chief Executive Officer

of NES Rentals Holdings, Inc., a heavy equipment rental company, which was sold to United Rentals, Inc.

URI) in April 2017.

From 1999 to 2002, Mr.

Studdert served as Chief Operating Officer and Executive Vice President of UAL Corporation and

of its subsidiary, United Airlines (Nasdaq:

UAL), during which time he lead the company through the 9/11 crisis.

also served as Senior Vice President, Fleet Operations from 1997 to 1999 and Chief Information Officer of United Airlines from

1995 to 1997.

Studdert has served on the board of directors of Target Hospitality Corp.

TH) since 2019 and Cramo

CRA1V) from 2019 through its sale in 2020.

Studdert holds a BA in History from San Francisco State University.

We believe that Mr.

Studdert is qualified to serve as a member of our board of directors because of his experience serving

on public company boards and his extensive knowledge of the industrial equipment and equipment rental space.

has served as our director since the closing of the business combination.

White is currently a Professor of Law at the Wayne

State University Law School.

White is a member of and has served as chair of the University of Michigan Board of Regents

and chair of the Finance and Audit Committee of the University of Michigan.

White has been a member of the Old National

Bancorp (Nasdaq:

ONB) board of directors since 2015.

In addition, Ms.

White is a Brigadier General in the U.S.

Army National

Guard, currently serving as the Deputy Commander of the 46 Military Police Command in Lansing, MI.

She was also appointed by the

Secretary of Agriculture to the U.S.

Department of Agriculture’s Plant Variety Protection Office Advisory Board in 2004

and continues to serve today.

From 2000 to 2002, she was appointed by the Secretary of Commerce to serve on the United States

Patent and Trademark Office Patent Public Advisory Committee.

From 1995 to 1996, Ms.

White was a judicial law clerk to the

Honorable Randall R.

Rader, Circuit Judge (ret.), U.S.

Court of Appeals for the Federal Circuit.

White received a B.S.E.

degree in Electrical Engineering and Computer Science from Princeton University, a J.D.

degree from the University of Washington,

degree from the George Washington University Law School, and a Master’s degree in Strategic Studies from the U.S.

Army War College.

She is a Fulbright Senior Scholar (Germany), a White House Fellow (2001–2002) and a registered patent

We believe that Ms.

White is qualified to serve as a member of our board of directors because of her long tenure

with the U.S.

government and military serving in advisory and operational roles and her previous experience on public company

Company’s business affairs are managed under the direction of our board of directors.

Our board of directors consists of

five members.

Company’s third amended and restated certificate of incorporation (the “Charter”) provides that the number of

directors, which is currently fixed at five members, may be increased or decreased from time to time by a resolution of our board

of directors.

Our board of directors is divided into two classes with only one class of directors being elected in each year and

each class serving a two-year term.

The directors hold their offices for a term of two years or until their respective successors

are elected and qualified, subject to such director’s earlier death, resignation, disqualification or removal.

of office of the first class of directors, consisting of Mr.

Shribman and Ms.

White, will expire at our 2021 annual

meeting of stockholders.

The term of office of the second class of directors, consisting of Messrs.

Greenawalt, Savas and Studdert,

will expire at our 2022 second annual meeting of stockholders.

Company’s board of directors consists of five directors, three of whom qualify as independent within the meaning of the

independent director guidelines of the NYSE.

Savas and Studdert and Ms.

White are “independent directors”

as defined in the rules of the NYSE and applicable SEC rules.

NYSE rules require that a majority of our board of directors be independent.

An “independent director”

generally as a person other than an executive officer or employee of a listed company or any other individual having a relationship

which, in the opinion of a listed company’s board of directors, would interfere with the exercise of independent judgment

in carrying out the responsibilities of a director.

of the Board of Directors

board of directors is comprised of the following committees:

an audit committee, a compensation committee, and a nominating and

corporate governance committee.

The composition and responsibilities of each committee are described below.

Members will serve

on these committees until their resignation or until otherwise determined by our board of directors.

and Corporate

Governance Committee

Company’s audit committee oversees the Company’s corporate accounting and financial reporting process.

matters, the audit committee:

our independent registered public accounting firm;

the independent registered public accounting firm’s qualifications, independence and performance;

the engagement of the independent registered public accounting firm;

and approves the scope of the annual audit and the audit fee;

with management and the independent registered public accounting firm the results of the annual audit and the review of the Company’s

quarterly financial statements;

the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;

the rotation of partners of the independent registered public accounting firm on the Company’s engagement team in accordance

with requirements established by the SEC;

responsible for reviewing the Company’s financial statements and the Company’s management’s discussion and analysis

of financial condition and results of operations to be included in the Company’s annual and quarterly reports to be filed

with the SEC;

the Company’s critical accounting policies and estimates;

the audit committee charter and the committee’s performance at least annually.

members of the audit committee are Messrs.

Savas and Studdert and Ms.

White, with Mr.

Studdert serving as the chair

of the committee.

Under the rules of the SEC, members of the audit committee must also meet heightened independence standards.

All of the members of the audit committee are independent directors as defined under the applicable rules and regulations of the

SEC and the NYSE with respect to audit committee membership.

Studdert qualifies as our “audit committee financial

expert,”

as such term is defined in Item 401(h) of Regulation S-K.

Our board of directors has adopted a written charter

for the audit committee.

compensation committee reviews and recommends policies relating to compensation and benefits of our officers and employees.

other matters, the compensation committee:

and recommends corporate goals and objectives relevant to compensation of our chief executive officer and other executive officers;

the performance of these officers in light of those goals and objectives and recommends to our board of directors the compensation

of these officers based on such evaluations;

to our board of directors the issuance of stock options and other awards under our stock plans;

and evaluates, at least annually, the performance of the compensation committee and its members, including compliance by the compensation

committee with its charter.

members of the compensation committee are Mr.

Studdert and Ms.

White, with Ms.

White serving as the chair of the

The members of the Company’s compensation committee are independent under the applicable rules of the NYSE, and

each is a “non-employee director”

as defined in Rule 16b-3 promulgated under the Exchange Act.

board of directors has adopted a written charter for the compensation committee.

and Corporate Governance Committee

nominating and corporate governance committee is responsible for making recommendations to our board of directors regarding candidates

for directorships and the size and composition of our board of directors.

In addition, the nominating and corporate governance

committee is responsible for overseeing the Company’s corporate governance policies and reporting and making recommendations

to our board of directors concerning governance matters.

members of the nominating and corporate governance committee are Messrs.

Savas and Studdert and Ms.

White, with Mr.

serving as the chair of the committee.

Each of the members of the Company’s nominating and corporate governance committee

is an independent director under the applicable rules of the NYSE relating to nominating and corporate governance committee independence.

of Business Conduct and Ethics

Company has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including

those officers responsible for financial reporting.

The Company expects that, to the extent required by law, any amendments to

the code, or any waivers of its requirements, will be disclosed on our website.

The information on our website is not part of

this registration statement.

Section 16(a)

Beneficial Ownership Reporting Compliance

Section 16(a)

of the Exchange Act requires our officers, directors and persons who beneficially own more than 10% of our common stock to file

reports of ownership and changes in ownership with the SEC.

These reporting persons are also required to furnish us with copies

of all Section 16(a) forms they file.

Based solely upon a review of such forms, we believe that during the year ended December 31,

2019 there were no delinquent filers.

The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report.

Executive Compensation.

to the consummation of the business combination, none of BRPM’s executive officers or directors received any cash compensation

for services rendered to the Company.

Commencing on April 8, 2019, BRPM agreed pay $10,000 per month to B.

Riley Corporate Services,

Inc., an affiliate of the Sponsor, for office space, utilities and secretarial and administrative support provided to us for up

to eighteen months.

Upon completion of the business combination, the Company ceased making these monthly payments.

these payments, no compensation of any kind, including finder’s and consulting fees, was paid by BRPM to the Sponsor, executive

officers and directors, or any of their respective affiliates, prior to completion of the business combination.

However, these

individuals were reimbursed for any out-of-pocket expenses incurred in connection with activities on BRPM’s behalf such

as identifying potential target businesses and performing due diligence on suitable business combinations.

BRPM’s audit

committee reviewed on a quarterly basis all payments that were made to the Sponsor, BRPM’s officers or directors or any

of their affiliates.

Any such payments prior to the business combination were made using funds held outside the Trust Account.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

following table sets forth information known to the Company regarding the beneficial ownership of Company common stock as of March

person known to the Company to be the beneficial owner of more than 5% of outstanding Company common stock;

of the Company’s executive officers and directors;

executive officers and directors of the Company as a group.

ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a

security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants

that are currently exercisable or exercisable within 60 days.

Company stock issuable upon exercise of options and warrants currently

exercisable within 60 days are deemed outstanding solely for purposes of calculating the percentage of total voting power of the

beneficial owner thereof.

beneficial ownership of Company common stock is based on 29,511,359 shares of Company common stock issued and outstanding as of

March 23, 2020.

otherwise indicated, the Company believes that each person named in the table below has sole voting and investment power with

respect to all shares of the Company common stock beneficially owned by them.

Directors and Officers (1)

Number of Shares Beneficially Owned

Percentage of Outstanding Common Stock

Ryan Greenawalt

Daniel Shribman

Andrew Studdert (3)

All Executive Officers and Directors as a Group (six individuals)

Greater than 5% Stockholders

Riley Financial, Inc.

information is based on 29,511,359 shares of common stock outstanding at March 23, 2020.

Except as described in the footnotes

below and subject to applicable community property laws and similar laws, the Company believes that each person listed above

has sole voting and investment power with respect to such shares.

Unless otherwise indicated, the business address of each

of the entities, directors and executives in this table is 13211 Merriman Road, Livonia, Michigan 48150.

Comprised of 26,316

shares of common stock and 9,375 warrants.

Comprised of 10,526

shares of common stock and 3,750 warrants.

Comprised of 4,978,212

shares of common stock and 348,575 warrants.

Represents securities held directly by B.

Riley Principal Sponsor Co., LLC, the

Riley Principal Investments, LLC, or BRPI, B.

Riley FBR, Inc., or BRFBR, and BRC Partners Opportunity Fund, LP,

Riley Financial is the sole member of the managing member of the Sponsor and BRPI is a wholly-owned subsidiary

Riley Financial.

Riley Financial has voting and dispositive power over the securities held by the Sponsor, BRPI,

BRFBR and BRCPOF.

Riley Financial disclaims beneficial ownership over any securities directly held by the Sponsor other

than to the extent of any pecuniary interest it may have therein, directly or indirectly.

The business address of B.

Financial, Inc.

is 299 Park Avenue, 21 st Floor, New York, NY 10171.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Certain Relationships and Related Transactions, and Director Independence.

to the consummation of the initial public offering, in November 2018, we conducted a 1:3,593,750 stock split and reclassification

of our common stock, resulting in our sole stockholder owning 3,593,750 founder shares.

On March 12, 2019, the Company’s

sole stockholder transferred 20,000 founder shares to each of Patrick J.

Bartels, Jr., James L.

Kempner, Timothy M.

Robert Suss, then our independent directors, at their par value, and on April 4, 2019, the remaining 3,513,750 founder shares

were contributed to our Sponsor.

The number of founder shares outstanding was determined based on the expectation that the founder

shares would represent 20% of the outstanding shares after the IPO.

As such, prior to the business combination, our initial stockholders

collectively owned founder shares representing 20% of our issued and outstanding shares, excluding the private placement shares

underlying the private placement units.

Up to 468,750 founder shares were subject to forfeiture by our sponsor depending on the

extent to which the underwriters’

over-allotment option was exercised so that our initial stockholders would maintain ownership

of founder shares representing 20% of our common stock after the IPO excluding the private placement shares underlying the private

placement units.

As the underwriters exercised their over-allotment option in full, such shares are no longer subject to forfeiture.

Simultaneously

with the closing of the initial public offering, we consummated the sale of 462,500 private placement units to our Sponsor, including

the issuance of 37,500 private placement units as a result of the underwriter’s exercise of their over-allotment option,

at a price of $10.00 per private placement unit, generating gross proceeds of approximately $4.625 million.

on April 8, 2019, BRPM agreed pay $10,000 per month to B.

Riley Corporate Services, Inc., an affiliate of the Sponsor, for office

space, utilities and secretarial and administrative support provided to us for up to eighteen months.

Upon completion of the business

combination, the Company ceased making these monthly payments.

Other than these payments, no compensation of any kind, including

finder’s and consulting fees, was paid by BRPM to the Sponsor, executive officers and directors, or any of their respective

affiliates, prior to completion of the business combination.

However, these individuals were reimbursed for any out-of-pocket

expenses incurred in connection with activities on BRPM’s behalf such as identifying potential target businesses and performing

due diligence on suitable business combinations.

BRPM’s audit committee reviewed on a quarterly basis all payments that

were made to the Sponsor, BRPM’s officers or directors or any of their affiliates.

Any such payments prior to the business

combination were made using funds held outside the Trust Account.

August 22, 2018, BRPM issued a promissory note to the Sponsor (the “Promissory Note”), pursuant to which BRPM

borrowed an aggregate principal amount of $300,000.

The Promissory Note was non-interest bearing, unsecured and due on the

earlier of May 30, 2019 or the completion of the IPO.

The Promissory Note was repaid upon the consummation of the IPO.

the time of our IPO, we entered into the forward purchase agreement which provided for the purchase, immediately prior to the

closing of the business combination, by BRPI, an affiliate of the Sponsor, or its designees of $25,000,000 of our units at a price

of $10.00 per unit, or an aggregate of 2,500,000 units, each comprised of one forward purchase share and one-half of one

forward purchase warrant.

The forward purchase was to be made regardless of whether any shares of Class A common stock were

redeemed in connection with the business combination.

addition, the holders of the founder shares, the private placement shares, the private placement warrants, the shares of Common

Stock underlying the private placement warrants, the forward purchase shares, the forward purchase warrants and the shares of

Common Stock underlying the forward purchase warrants are entitled to registration rights.

The holders of these securities are

entitled to make up to three demands, excluding short form demands, that the Company register such securities.

In addition, the

holders have certain “piggy-back”

registration rights with respect to registration statements filed subsequent to

the consummation of a business combination.

The Company will bear the expenses incurred in connection with the filing of any such

registration statements.

Combination Marketing Agreement

to the business combination marketing agreement entered into upon the closing of the IPO by BRPM and BRFBR, upon closing of the

business combination we paid BRFBR a fee of $5,031,250 in consideration of services provides in connection with marketing and

completing our business combination, or 3.5% of the gross proceeds of the IPO.

Agent Engagement

engaged BRFBR to act as our sole placement agent in connection with the issuance of our securities in a private placement to certain

accredited investors, or PIPE investors, in connection with the business combination.

BRFBR did not receive a fee for acting as

placement agent.

We agreed to reimburse BRFBR for its fees relating to the private placement.

listing standards require that a majority of the Company’s board of directors be independent.

An “independent director”

is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual

having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s

exercise of independent judgment in carrying out the responsibilities of a director.

The Company’s board of directors has

determined that Messrs.

Savas and Studdert and Ms.

White are “independent directors”

as defined in Rule 10A-3 of the

Exchange Act and the rules of the NYSE.

The Company’s independent directors have regularly scheduled meetings at which only

independent directors are present.

Principal Accounting Fees and Services.

Fees for professional

services provided by our independent registered public accounting firm, Marcum LLP since inception include:

Audit Fees (1)

Audit-Related Fees (2)

All Other Fees

Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements,

reviews of our quarterly interim financial statements, services in connection with the acquisition audits, and services that

are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.

Audit-Related

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance

of the audit or review of our year-end financial statements and are not reported under “Audit Fees.”

These services

include attest services that are not required by statute or regulation and consultation concerning financial accounting and

reporting standards.

on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Registered Independent Public Accounting Firm

audit committee is responsible for appointing, setting compensation and overseeing the work of the registered independent public

accounting firm.

In recognition of this responsibility, the audit committee shall review and, in its sole discretion, pre-approve

all audit and permitted non-audit services to be provided by the registered independent public accounting firm as provided under

the audit committee charter.

Exhibits, Financial Statement Schedules.

following documents are filed as part of this Annual Report on Form 10-K:

Financial Statements

See “Index to Consolidated Financial Statements”

“Item 8.

Consolidated Financial Statements and Supplementary Data”

Financial Statement Schedules.

All schedules are omitted for the reason that the information is included in the consolidated

financial statements or the notes thereto or that they are not required or are not applicable.

The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form

The consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.

The Exhibits listed below are filed as part of this Annual Report on Form 10-K.

Form 10-K Summary

Exhibit Index

Merger Agreement, dated as of December 12, 2019, by and among B.

2 unchanged sentences

001-38864) filed by the Company on December 13, 2019).

Second Amended and Restated Certificate of Incorporation of Alta Equipment Group Inc.

Riley Principal Merger Corp.) (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by the Company on April 11, 2019).

Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-A (File No.

2 unchanged sentences

001-38864) filed by the Company on February 14, 2020).

Certificate of Designation for 10% Series A Cumulative Perpetual Preferred Stock of Alta Equipment Group Inc.

(incorporated by reference to Exhibit 3.3 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on December 22, 2020)

Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Form 8-A (File No.

2 unchanged sentences

001-38864) filed by the Company on February 14, 2020).

Warrant Agreement, dated April 8, 2019, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No.

Warrant Agreement, dated April 8, 2019, between the B.

Riley Principal Merger Corp.

and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on April 11, 2019).

Description of Securities.

Deposit Agreement, dated December 22, 2020, among Alta Equipment Group Inc., Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, with respect to Alta Equipment Group’s 10% Series A Cumulative Perpetual Preferred Stock (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on December 22, 2020) .

Form of Specimen Certificate representing the 10% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share, of Alta Equipment Group Inc.

(incorporated by reference to Exhibit 4.5 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on December 22, 2020) .

Form of Depositary Receipt (included as Exhibit A to Exhibit 4.4) (incorporated by reference to Exhibit 4.6 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on December 22, 2020) .

Fifth Amended and Restated ABL First Lien Credit Agreement, dated February 3, 2020, among the B.

Riley Principal Merger Corp., Alta Equipment Holdings, Inc., Alta Enterprises, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Industrial Equipment Michigan, LLC, Alta Construction Equipment, L.L.C., Alta Industrial Equipment Company, L.L.C., NITCO, LLC, Alta Construction Equipment Florida, LLC, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on February 4, 2020).

Note Purchase Agreement, dated February 3, 2020, among B.

Bank National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on February 4, 2020).

Fifth Amended and Restated Floor Plan First Lien Credit Agreement, dated February 3, 2020, among B.

001-38864) filed by the Company on February 4, 2020).

Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No.

4 unchanged sentences

Registration Rights Agreement, dated April 8, 2019, by and among the Company, B.

Riley Principal Sponsor Co., LLC and the Company’s independent directors (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on April 11, 2019).

11 unchanged sentences

2020 Omnibus Incentive Plan (incorporated by reference to Annex C to the Definitive Proxy Statement filed by the Company on January 23, 2020).

Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Current Report on Form 8-K (File No.

001-38864) filed by the Company on February 14, 2020).

Power of Attorney (included on the signature page herein).

Registration Side Letter — Howell Share Consideration (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1 (File No.

001-38864) filed by the Company on October 26, 2020) .

Underwriting Agreement, dated December 17, 2020, by and among Alta Equipment Group Inc.

Riley FBR, Inc., as representative of the several underwriters named therein (incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K (File No.

001-38864) filed by the Company on December 22, 2020) .

Form of Restricted Stock Unit Agreement (Employee)

Form of Restricted Stock Unit Agreement (Non-Employee Director)

Subsidiaries of the Company .

Consent of UHY LLP

Powers of Attorney (included on the signature page of this Annual Report on Form 10-K) .

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

10 unchanged sentences

XBRL Taxonomy Extension Presentation Linkbase Document

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused

this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

EQUIPMENT GROUP INC.

Filed herewith.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .

ALTA EQUIPMENT GROUP INC.

March 18, 2021

/s/ Ryan Greenawalt

Ryan Greenawalt

Executive Officer

ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ryan Greenawalt and Anthony

Colucci and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution,

for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form

10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the United States Securities

and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and

perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes

as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them,

or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below

by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

/s/ Ryan Greenawalt

3 unchanged sentences

(Principal Executive Officer)

/s/ Anthony Colucci

/s/ Anthony J.

Chief Financial Officer

March 18, 2021

Anthony Colucci

(Principal Financial Officer and Principal Accounting Officer)

11 unchanged sentences

Katherine White

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations for the Years ended December 31, 2020 and 2019

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the Years ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Alta Equipment Holdings Inc.

and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Alta Equipment Group Inc.

and Subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of stockholders’ equity (deficit), operations, and cash flows for the years ended December 31, 2020 and 2019, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years ended December 31, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2019.

Sterling Heights, Michigan

March 18, 2021

ALTA EQUIPMENT GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)

CURRENT ASSETS

Accounts receivable, net

Inventories, net

Prepaid expenses and other current assets

Total current assets

PROPERTY AND EQUIPMENT, NET

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES

Lines of credit

Floor plan payable — new equipment

Floor plan payable — used and rental equipment

Current portion of long-term debt

Accounts payable

Customer deposits

Accrued expenses

Other current liabilities

Total current liabilities

LONG-TERM LIABILITIES

Long-term debt, net of current portion

Capital lease obligations, net of current portion

Buyback residual obligations, net of current portion

Guaranteed purchase obligation, net of current portion

Lease liability, net of current portion

Other liabilities

Warrant liability

TOTAL LIABILITIES

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred stock, $0.0001 par value, 1,000,000 shares authorized, 1,200,000 Depositary Shares representing a 1/1000th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value per share, issued and outstanding at December 31, 2020, no shares issued and outstanding at December 31, 2019

Common stock, $0.0001 par value, 200,000,000 shares authorized;

30,018,502 issued and outstanding at December 31, 2020, $0.01 par value, 7,300,000 issued and outstanding at December 31, 2019

Additional paid-in capital

Treasury stock

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED S TATEMENTS OF OPERATIONS

Years ended December 31,

(in millions, except share and per share amounts)

New and used equipment sales

Service revenue

Rental revenue

Rental equipment sales

Cost of revenues:

New and used equipment sales

Service revenue

Rental revenue

Rental depreciation

Rental equipment sales

Cost of revenue

General and administrative expenses

Depreciation and amortization expense

Total general and administrative expenses

(Loss) income from operations

Other income (expense)

Interest expense, floor plan payable — new equipment

Interest expense — other

Change in fair market value of warrants

Loss on extinguishment of debt

Total other income (expense)

Loss before taxes

Income tax benefit

Basic and diluted loss per share

Basic and diluted weighted average common shares outstanding

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Preferred Stock

(amounts in millions, except share amounts)

Accumulated Deficit

Stockholder’s

Equity (Deficit)

Balance at January 1, 2019

Balance at December 31, 2019

Preferred stock - Depositary Shares representing a 1/1000th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock

Common stock issued

Opening deferred tax liabilities under reverse recapitalization

Equity infusion from reverse recapitalization, net of transaction costs

Shares issued upon settlement of equity-linked incentive plan

Disgorgement of short swing profits

Share based compensation

Repurchases of common stock

Balance at December 31, 2020

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC.

AND SUBSIDIARIES

CONSOLIDATED S TATEMENTS OF CASH FLOWS

Years Ended December 31,

(amounts in millions)

OPERATING ACTIVITIES

Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:

Depreciation and amortization

Amortization of debt discount and debt issuance costs

Imputed interest

Gain on sale of assets

Gain on sale of rental equipment

Inventory obsolescence

Provision for bad debt

Loss on debt extinguishment

(Repayment) accrual of paid-in-kind interest

Change in fair value of warrants

Share-based payment

Changes in deferred rent

Changes in deferred taxes

Accounts receivable

Proceeds from sale of rental equipment

Prepaid expenses and other assets

Proceeds from floor plans with manufacturers

Payments under floor plans with manufacturers

Accounts payable, accrued expenses, customer deposits, and other current liabilities

Leases and other liabilities

Net cash used in operating activities

INVESTING ACTIVITIES

Proceeds from the sale of assets

Expenditures for rental equipment

Expenditures for property and equipment

Expenditures for acquisitions, net of cash acquired

Net cash used in investing activities

FINANCING ACTIVITIES

Expenditures for debt issuance costs

Extinguishment of floor plans and line of credit

Extinguishment of long-term debt

Redemption of former shareholder notes payable

Extinguishment of warrant liability

Proceeds from lines of credit

Payments under lines of credit

Proceeds from floor plans with unaffiliated source

Payments under floor plans with unaffiliated source

Proceeds from issuance of long-term debt, net

Payments on long-term debt

Payments on capital lease obligations

Equity proceeds from reverse recapitalization, net

Proceeds from disgorgement of short swing profits

Proceeds from issuance of common stock, net

Proceeds from issuance of preferred stock, net

Repurchases of common stock

Net cash provided by financing activities

NET CHANGE IN CASH

Cash, Beginning of year

Cash, End of year

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest

Non-cash investing and financing activities:

Equipment acquired through capital lease

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND NATURE OF OPERATIONS

Alta Equipment Group, Inc.

(formerly known as B.

Riley Principal Merger Corp.) (individually or as sometimes collectively together with its direct and indirect subsidiaries referred to herein as the “Company”), was incorporated in Delaware on October 30, 2018 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.

On February 14, 2020, the Company consummated a reverse recapitalization pursuant to which the Company acquired Alta Equipment Holdings, Inc.

pursuant to an agreement and plan of merger between the Company, BR Canyon Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), Alta Equipment Holdings, Inc.

and Ryan Greenawalt.

This business merger will be referred to as “reverse recapitalization” throughout this document.

In connection with the reverse recapitalization, Merger Sub merged with and into Alta Equipment Holdings, Inc., with Alta Equipment Holdings, Inc.

surviving the reverse recapitalization as a direct, wholly owned subsidiary of the Company, and the Company changed its name from B.

Riley Principal Merger Corp.

to Alta Equipment Group Inc.

The Company and Alta Equipment Holdings, Inc.

are the holding companies for Alta Enterprises, LLC.

Alta Enterprises, LLC is the holding company for Alta Industrial Equipment Michigan;

Alta Industrial Equipment Company, LLC;

Alta Industrial Equipment New York, LLC;

PeakLogix, LLC;

Alta Construction Equipment, LLC;

Alta Construction Equipment Illinois, LLC;

Alta Heavy Equipment Services, LLC;

Alta Construction Equipment Florida, LLC, and Alta Construction Equipment New York, LLC.

The Company is engaged in the retail sale, service, and rental of lift trucks and construction equipment in the states of Michigan, Illinois, Indiana, Virginia and Florida as well as the Northeastern part of the United States.

Unless the context otherwise requires, the use of the terms “the Company”, “we,” “us,” and “our” in these notes to the unaudited consolidated financial statements refers to Alta Equipment Group Inc.

and its consolidated subsidiaries.

The COVID-19 pandemic has created significant volatility in the global economy and resulted in significant disruptions to our business in the year ended December 31, 2020.

The extent and duration of the COVID-19 impact on our operations and financial position, and on the domestic and global economy, remain uncertain.

Prior to mid-March 2020, our performance was generally in accordance with our expectations.

In mid-March 2020, the Company started to see a slowdown in its business activity, initially and primarily in the automotive industry and in the state of Michigan due to its customers being impacted by the COVID-19 pandemic.

COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the consolidated accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

All significant intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements.

Certain amounts in the prior year have been reclassified to conform with the presentation in the current year.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates are based on assumptions that we believe are reasonable under the circumstances.

Due to the inherent uncertainty involved with estimates, actual results may differ.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable.

The Company records trade accounts receivables at sales value and establishes specific reserves for certain customer accounts identified as known collection problems due to insolvency, disputes or other collection issues.

The amounts of the specific reserves estimated by management are based on the following assumptions and variables:

the customer’s financial position, age of the customer’s receivables and changes in payment schedules.

In addition to the specific reserves, management establishes a non-specific allowance for doubtful accounts by applying specific percentages to the different receivable aging categories (excluding the specifically reserved accounts).

The percentage applied against the aging categories increases as the accounts become further past due.

The allowance for doubtful accounts is charged with the write-off of uncollectible customer accounts.

Credit risk can be negatively impacted by adverse changes in the economy or by disruptions in the credit markets.

However, the Company believes that credit risk with respect to trade accounts receivable is somewhat mitigated by the Company’s credit evaluation procedures.

Although generally no collateral is required, when feasible, mechanics’ liens are filed, and personal guarantees are signed to protect the Company’s interests.

Concentration of Supplier Risk

The Company purchases a significant portion of their inventory and related equipment and rental fleet from two vendors.

The Company purchased approximately 40% and 43% of total purchases from these vendors for the years ended December 31, 2020 and 2019, respectively.

Although no change in suppliers is anticipated, the occurrence of such a change could cause a possible loss of sales and adversely affect operating results.

Cash Equivalents

The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts Receivable/Allowance of Doubtful Accounts

The Company records their accounts receivable at invoiced amounts less an allowance for doubtful accounts.

On a periodic basis, the Company evaluates their accounts receivable and establishes an allowance for doubtful accounts, when deemed necessary, based on the history of past write-offs and collections and current customer credit conditions.

At December 31, 2020 and 2019, the Company has recorded an allowance for doubtful accounts in the amount of $7.1 million and $4.4 million, respectively.

Generally, the Company does not require collateral for its accounts receivable.

A receivable is considered past due if payments have not been received by the Company for 30 days.

At that time, the Company will review all past due accounts and determine what action to take.

Certain accounts are turned over to collection, while the Company places liens on others.

Accounts will be written off when deemed uncollectible by management.

Finance charges associated with late payments of $0.4 million and $0.7 million were recognized as income for the years ended December 31, 2020 and 2019, respectively.

Generally, the Company does not accrue interest on past due receivables.

Inventory Valuation

Inventories are stated at the lower of cost or net realizable value.

Cost is determined by specific identification for equipment and a weighted-average method for parts.

Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

Included in new and used inventory is equipment that is currently on short-term lease to customers, has been classified as inventory and is available for sale.

The Company mainly transfers equipment from inventory into rental fleet based on the management’s determination of the highest and best use of the equipment.

This inventory is carried at the cost of the equipment less any accumulated depreciation.

At December 31, 2020 and 2019, the Company recorded a reserve for slow moving parts, tires and used equipment inventory in the amount of $2.9 million and $1.9 million, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.

The Company capitalizes expenditures for equipment, leasehold improvements, and rental fleet.

Expenditures for repairs, maintenance, and minor renewals are expensed as incurred.

Expenditures for betterments and major renewals that significantly extend the useful life of the asset are capitalized in the period incurred.

When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income from operations.

The Company assigns useful lives to property and equipment categories as follows:

Transportation equipment

Machinery and equipment

Office equipment

Computer equipment

Leasehold improvements

The estimated useful lives are reviewed at each financial year-end and adjusted prospectively, if appropriate.

Intangible Assets

Intangible assets with a finite life consist of customer relationships, non-compete agreements, tradenames and favorable market rent and are carried at cost less accumulated amortization.

The estimated useful lives of the definite lived intangible assets are as follows:

Customer relationships

Non-compete agreements

Favorable market rent

Depreciation and Amortization

For financial reporting purposes, depreciation of property and equipment is determined on a straight-line basis over the estimated useful lives of the assets at acquisition.

Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter.

Certain categories of our rental equipment, specifically in what we determine to be rent-to-sell equipment categories, are depreciated on a percentage of rental revenue realized on the asset, or a unit of activity method of depreciation.

The Company believes that the unit of activity method on these categories of equipment more appropriately matches revenue and depreciation expense versus a straight-line methodology, as asset utilization can vary month to month especially in our northern geographies where seasonality is a factor.

In rent-to-rent product categories, where asset utilization is more stable, like in our material handling segment, we use a straight-line depreciation methodology, where estimated useful lives can range from five to ten years.

The useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

Depreciation and amortization expense related to non-operational property and equipment and rental fleet is recognized in “general administrative expenses” and “cost of revenues”, respectively, in the Consolidated Statements of Operations.

The Company amortizes the cost of identified intangible assets on a straight-line basis over the expected period of benefit.

Amortization expense related to intangible assets is recognized in “general and administrative expenses” in the Consolidated Statements of Operations.

Impairment of Long-lived Assets

The Company evaluates long-lived assets, such as property and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of any asset group may not be recoverable.

If the estimated future cash flow (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

When reviewing long-lived assets for impairment, the Company groups long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

The Company did not identify any impairment of long-lived assets for the years ended December 31, 2020 and 2019.

Pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 350, Intangibles-Goodwill and Other (“ASC 350”), goodwill is recorded as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired.

We estimate the fair value of our reporting units (which are our reportable segments) using a discounted cash flow methodology under an income approach, corroborating the results with a market approach based guideline-company methodology which analyzes the enterprise value (market capitalization plus interest-bearing liabilities) and operating metrics (e.g., EBITDA) of companies engaged in the same or similar line of business and compares those metrics to those of the Company .

We believe the combination of these valuation approach es , yields the most appropriate evidence of fair value.

A decrease in our EBITDA could materially affect the determination of the fair value and could result in an impairment charge to reduce the carrying value of goodwill, which could be material to our financial position and results of operations.

The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test.

If a quantitative impairment test is performed, the fair value of the reporting unit is estimated using a market approach based on published earnings multiples of comparable entities with similar operations and economic characteristics as well as acquisition multiples paid in recent transactions.

Our annual goodwill impairment testing conducted as of September 30, 2020, indicated that all of our reporting units had estimated fair values which exceeded their respective carrying amounts.

Our goodwill impairment testing as of December 31, 2019, indicated that all of our reporting units had estimated fair values which exceeded their respective carrying amounts.

Based on the results of the test, there was no goodwill impairment.

Deferred Financing Costs and Debt Discount

Deferred financing costs include legal, accounting and other direct costs incurred in connection with the issuance and amendments thereto, of the Company’s debt and line of credit.

These costs are amortized over the terms of the related debt using the effective interest method.

Debt discount and premium is the difference between the price paid to an issuer for the new issue and the prices (below and above, respectively) at which the securities are initially offered to investors or lenders.

The amortization expense of deferred financing costs and debt premium and accretion of discounts are included in interest expense as an overall cost of the related financings and are amortized using the effective interest method.

Such costs are presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount.

Deferred financing costs and debt discounts with an original cost of $9.8 million and $5.8 million at December 31, 2020 and 2019, respectively, and accumulated amortization of $1.8 million and $1.9 million at December 31, 2020 and 2019, respectively, have been deferred.

Amortization of these deferred costs was $1.8 million and $1.0 million at December 31, 2020 and 2019, respectively, and is included in interest expense in the accompanying Consolidated Statements of Operations.

Revenue Recognition

Revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services.

Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer.

For agreements with multiple performance obligations, which are infrequent, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes.

In these types of agreements, the Company generally allocates sales prices to each distinct performance obligation based on the observable selling price.

The Company enters into various equipment sales transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party.

In some cases, the Company provides a guarantee to repurchase the equipment back at the end of the lease term between the customer and third party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value.

The Company is precluded from recognizing a sale of equipment if it guarantees to repurchase the sold equipment back or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases.

Rather, these transactions are accounted for in accordance with ASC 840, Lease Accounting (“Topic 840”).

Lease liability, with respect to the aforementioned sale transactions, represents the net proceeds upon the equipment’s initial transfer.

These amounts, excluding the guaranteed residual value, are recognized into rental revenue on a pro-rata basis over the leased contract period up to the first exercise date of the guarantee.

At December 31, 2020 and 2019, the total lease liability relating to these various equipment sale transactions amounted to $3.8 million and $5.5 million, respectively.

The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $9.0 million and $12.5 million as of December 31, 2020 and 2019, respectively.

The Company also enters into various rental agreements whereby owned equipment is leased to customers.

Revenue from the majority of rental agreements is recognized over the term of the agreement in accordance with Topic 840.

A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding.

Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period.

Unbilled rental revenues are included as a component of “Accounts receivable” on the Consolidated Balance Sheets.

Rental equipment is also purchased outright (“rental conversions”).

Rental revenue and revenue attributable to rental conversions, are recognized in “Rental revenue” and “Rental equipment sales” on the Consolidated Statements of Operations, respectively.

Revenue from periodic maintenance service sales is recognized upon completion of the service.

Revenue from guaranteed maintenance contracts is recognized over the contract period in proportion to the costs expected to be incurred in performing services under the contract, typically three to five years.

The Company also enters into contracts with customers where it provides automated equipment installation and system integration services.

Revenue from the installation services are recognized over time as the performance obligation is satisfied, determined using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs.

Payment terms vary by the type and location of the customer and the products or services offered.

Generally, the time between when revenue is recognized, and payment is due is not significant.

The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year, or if payment is expected to be received less than a year after the good or service has been provided.

Sales and other taxes collected from customers and remitted to government authorities are accounted for on a net basis and, therefore, excluded from revenue.

Shipping and handling costs are treated as fulfillment costs and are included in cost of revenue.

Costs to obtain contracts, such as sales commissions, are expensed as incurred given that the terms of the contracts are generally less than one year.

Under bill-and-hold arrangements, revenue is recognized when all configuration work is complete and the equipment has been set aside for final shipment, at which point the Company has determined control has been transferred.

Deferred Revenue

T he Company recognizes deferred revenue with respect to automated equipment installation and system integration services, service sales and rental agreements.

Deferred revenue with respect to service sales represents the unearned portion of fees related to guaranteed maintenance contracts for customers covering equipment purchased.

These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract.

The Company also recognizes deferred revenue related to rental agreements.

Total deferred revenue relating to automated equipment installation and system integration services, service sales agreements and rental agreements as of December 31, 2020 and 2019 was $9.6 million and $4.7 million, respectively.

Advertising and Marketing

Advertising and marketing costs are expensed as incurred.

Advertising and marketing costs for the years ended December 31, 2020 and 2019 were $3.5 million and $2.7 million, respectively.

Offering Costs and Transaction Expenses

The Company incurred costs directly attributable to its initial public offering, such as underwriter, registration and filing fees along with direct incremental legal, accounting, and professional fees relating to the Business Combination.

The Company evaluated all the fees and approximately $2.6 million of expenses were recorded as an offset against proceeds of the reverse recapitalization.

As of December 31, 2019, there were $0.7 million deferred as prepaid expenses and other current assets in our accompanying Consolidated Balance Sheets.

These were deferred until completion of the reverse recapitalization, at which time $0.4 million were reclassified to additional paid-in capital as a reduction of the proceeds.

On November 3, 2020, the Company had declared effective a registration statement on Form S-1 covering the resale of 507,143 shares of the Company’s common stock issued as partial consideration for the acquisition of Howell Tractor and Equipment, LLC.

The Company incurred direct and incremental legal, accounting and professional fees related to the registration of these shares of approximately $0.2 million.

On December 22, 2020, the Company closed its underwritten public offering of depositary shares (the “Depositary Shares”), each representing 1/1000th of a share of 10% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”).

The Company incurred direct and incremental costs related to its issuance of depositary shares such as legal, accounting and professional fees.

The Company evaluated all the fees and approximately $ 1.8 million of expenses were recorded as an offset against proceeds from the depositary shares.

Recurring and other incremental organizational costs including accounting and legal fees that were not directly attributable to these offerings were expensed as incurred.

The Company is a newly formed corporation for the income tax purposes.

Alta Enterprises, LLC was historically and remains a partnership for federal income tax purposes, with each partner being separately taxed on its share of taxable income (loss).

There is no federal income tax expense (benefit) reflected in the Company’s financial statements for any period prior to the reverse recapitalization on February 14, 2020.

As the activity resides in Alta Enterprises, LLC, the income tax impact to the Company represents the current income tax calculated at the consolidated return level, (“Alta Equipment Group Inc.

and Subsidiaries”), and the deferred impact of the interest in the lower tier partnership.

When looking at the consolidated return filer, and considering the operating entity is a 100% owned partnership, the Company uses the guidance in FASB ASC Topic 740 - Income Taxes, asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (ii) operating loss and tax credit carryforwards.

Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted.

Deferred income tax assets are subject to valuation allowance considerations to recognize only amounts that are more likely than not to be ultimately realized.

Fair Value of Financial Instruments

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a 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.

The FASB fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value.

We assess the inputs used to measure fair value using the three-tier hierarchy.

The three broad levels of the fair value hierarchy are as follows:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly

Level 3 — Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The assets acquired, liabilities assumed, and contingent purchase consideration are recorded at fair value on the acquisition date.

These estimates are inherently uncertain and are subject to refinement.

Management develops estimates based on assumptions as part of the purchase price allocation process to value the assets acquired, and liabilities assumed as of the acquisition date.

As a result, during the preliminary purchase price measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, the Company will record any subsequent adjustments to the assets acquired or liabilities assumed in operating expenses in the period in which the adjustments were determined.

Segment Reporting

The Company has determined in accordance with ASC 280, Segment Reporting (“Topic 280”), that it has two reportable segments:

1) Material Handling and 2) Construction Equipment.

These segments are based upon how the Company allocates resources and assesses performance.

See Note 22 regarding segment information.

S hare Based Compensation

The Board of Directors approved the Company’s 2020 Omnibus Incentive Plan, which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other share based awards and cash awards to directors, employees and consultants to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company.

We measure the employee stock-based awards at grant-date fair value using provisions of ASC 718 – Stock Compensation and record compensation expense over the vesting period of the award.

The Company made an accounting election upon adoption of Accounting Standard Update (“ASU”) 2016-09 and will recognize forfeitures when they occur .

The Company treated equity awards granted to non-employee directors similarly to the equity awards to employees upon adoption of ASU 2018-07.

New Accounting Pronouncements

Recent Accounting Pronouncements Adopted in 2020

Fair Value Measurement — Disclosure Framework

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, modifies, and adds certain disclosure requirements on fair value measurements.

Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies are required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

For public companies, this ASU is effective for financial statements issued for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted.

Entities were permitted to early adopt any eliminated or amended disclosures and delay adoption of the additional disclosure requirements until the effective date.

We adopted this ASU on the effective date of January 1, 2020.

The adoption of this accounting standard update has not had a material impact on our consolidated financial statements and disclosures.

Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”) that replaces the existing leasing guidance.

Topic 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months.

Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

This guidance also expands the requirements for lessees to record leases embedded in other arrangements and the required quantitative and qualitative disclosures surrounding leases.

Accounting guidance for lessors is largely unchanged.

The Company is still assessing the impact Topic 842 will have on its future revenue and expenses.

The new accounting standard is effective for the annual reporting period ended December 31, 2022 with an effective date of January 1, 2022, and the interim reporting periods beginning January 1, 2023.

Early adoption is permitted.

Management is currently assessing the impact the adoption of this standard will have on the Company’s consolidated financial statements as well as the available transition methods.

Financial Instruments — Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

This standard prescribes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses.

Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in the timely recognition of losses.

Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of the financial instrument.

Measurement of expected credit losses is to be based on relevant forecasts that affect collectability.

The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures.

Different components of the guidance require modified retrospective or prospective adoption.

As amended by ASU 2019-10, the ASU 2016-13 is effective for the annual reporting period beginning on or after December 15, 2022.

The Company believes ASU 2016-13 will only have applicability to the Company’s receivables from revenue transactions, or trade receivables, except those arising from rental revenues as ASU 2016-13 does not apply to receivables arising from operating leases.

The Company is currently evaluating whether the new guidance, while limited to our non-operating lease trade receivables, will have an impact on the consolidated financial statements or existing internal controls.

Reference Rate Reform:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) .

This guidance is intended to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform (e.g., discontinuation of LIBOR) if certain criteria are met .

The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

The amendments of this ASU should be applied on a prospective basis.

Our potential exposure related to the expected cessation of LIBOR is limited to the interest expense we incur on our Credit Facility.

We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates.

We cannot predict the effect of the potential changes to or elimination of LIBOR, the establishment and use of alternative rates or benchmarks, but do not expect a significant impact on our consolidated financial position, and results of operations .

NOTE 3 — REVENUE RECOGNITION

We recognize revenue in accordance with two different accounting standards:

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 840 (which addresses lease revenue).

Under Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services.

Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer.

For agreements with multiple performance obligations, which are rare, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes.

In these types of agreements, the Company generally allocates sales prices to each distinct performance obligation based on the observable selling price.

Disaggregation of Revenues

The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statement of Operations for the year ended December 31, 2020 and 2019 by revenue type, and by the applicable accounting standard.

Year ended December 31, 2020

Year ended December 31, 2019

New and used equipment sales

Service revenue

Rental revenue

Rental equipment sales

The 2019 presentation conforms with our 2020 presentation.

The Company believes that the disaggregation of revenues from contracts to customers as summarized above, together with the discussion below, depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors.

Leases revenues (Topic 840)

New and used equipment sales:

The Company enters into various equipment sale transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party.

The Company is precluded from recognizing a sale of equipment when it is obligated or has an option to repurchase or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases.

For these arrangements, because the Company generally receives the full amount of the consideration at the beginning of the arrangement, the Company initially records deferred revenue for the amount received and recognizes revenue on a pro-rata basis over the term of the contract under Topic 840.

Rental revenue:

Owned equipment rentals represent revenues from renting equipment.

The Company accounts for these rental contracts as operating leases.

The Company recognizes revenue from equipment rentals in the period earned, regardless of the timing of billing to customers.

A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding.

Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period.

Revenues from contracts with customers (Topic 606)

Accounting for the different types of revenues pursuant to Topic 606 are discussed below.

Substantially all of the Company’s revenues under Topic 606 are recognized at a point in time rather than over time.

New and used equipment sales:

With the exception of bill-and-hold arrangements, the Company’s revenues from the sale of new and used equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good.

The Company does not offer material rights of return.

The Company recognized approximately $14.9 million in revenues for the year-to-date period ended December 31, 2020 from automated equipment installation and system integration services as performance obligations were satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs.

Revenues from the sale of parts are recognized at the time of pick-up by the customer for over the counter sales transactions.

For parts that are shipped to a customer, the Company elected to use a practical expedient of Topic 606 and treat such shipping activities as fulfillment costs, thereby recognizing revenues at the time of shipment.

The Company does not offer material rights of return.

Service revenue:

The Company records service revenue primarily from guaranteed maintenance and periodic maintenance contracts with customers.

The Company recognizes periodic maintenance service revenues at the time such services are completed, which is when the control of the promised services is transferred over to the customer.

The Company recognizes guaranteed maintenance service revenues over-time using an input method of costs incurred to estimated costs over the life of the related contract.

Revenue recognized from guaranteed maintenance contracts totaled $16.4 million and $15.7 million for the year-to-date period ended December 31, 2020 and 2019, respectively.

The Company also records service revenue from warranty contracts whereby the Company performs service on behalf of the Original Equipment Manufacturer (“OEM”) or third-party warranty provider.

Rental equipment sales:

The Company also sells rental equipment from our rental fleet, these sales are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good.

In some cases, certain rental agreements contain a rental purchase option, whereby the customer has an option to purchase the rented equipment during the term of the rental agreement.

Revenues from the sale of rental equipment are recognized at the time the rental purchase option agreement has been approved and signed by both parties, as the equipment is already in the customer’s possession under the previous rental agreement, and therefore control has been transferred as title has been transferred.

Contract costs

The Company does not recognize assets associated with the incremental costs of obtaining a contract with a customer that the Company expects to recover (for example, a sales commission).

Most of the Company’s revenue is recognized at a point in time or over a period of one year or less, and the Company has used the practical expedient that allows it to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.

The amount of the costs associated with the revenue recognized over a period of greater than one year is insignificant.

Receivables and contract assets and liabilities

The Company has contract assets associated with contracts with customers.

Contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue.

Deferred revenue associated with service contracts represents the unearned portion of revenue related to guaranteed maintenance contracts for customers covering equipment purchased.

These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract.

Payment terms

The Company’s revenues do not include material amounts of variable consideration under Topic 606.

Payment terms may vary by the type of customer, location, and the type of products or services offered.

The time between invoicing and when payment is due

is not significant, and contracts do not generally include a significant financing component.

Contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties.

Contract estimates and judgments

The Company’s revenues accounted for under Topic 606 generally do not require significant estimates or judgments as the transaction price is generally fixed and clearly stated in the customer contracts.

Contracts generally do not include multiple performance obligations, and accordingly do not require estimates of the standalone selling price for each performance obligation.

Substantially all of the Company’s revenues are recognized at a point in time and the timing of the satisfaction of the applicable performance obligations is readily determinable.

The Company’s revenues under Topic 606 are generally recognized at the time of delivery to, or pick-up by, the customer.

NOTE 4 — RELATED PARTY TRANSACTIONS

The Company leases a subset of its operating facilities from three real estate entities related through common ownership.

Total rent expense under these lease agreements was $4.8 million for the year ended December 31, 2020 and $4.6 million for the year ended December 31, 2019.

See Note 14 for a schedule of future minimum lease payments under operating leases with both related parties and unrelated third parties.

NOTE 5 — INVENTORIES

New equipment

Used equipment

Work in process

Gross Inventory

Inventory reserve

Direct labor of $1.7 million and $1.2 million incurred for open service orders were capitalized and included in work in process at December 31, 2020 and 2019, respectively.

The remaining work in process balances as of December 31, 2020 and 2019, primarily represent parts applied to open service orders.

Rental depreciation expense, for new and used equipment inventory under short-term leases with purchase options, was $3.0 and $3.4 million for the year ended December 31, 2020 and 2019, respectively.

NOTE 6 — PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following (amounts in millions):

Equipment and leasehold improvements:

Machinery and equipment

Autos and trucks

Leasehold improvements

Office equipment

Computer equipment

accumulated depreciation and amortization

Equipment, auto and trucks, leasehold improvements and computer and office equipment

Total accumulated depreciation and amortization

Total depreciation and amortization on property and equipment was $69.7 million and $46.4 million for the years ended December 31, 2020 and 2019, respectively.

The Company had assets related to capital leases, which are included in the machinery and equipment balance above.

Such assets had gross carrying values totaling $4.0 million and $3.5 million, and accumulated amortization balances totaling $2.5 million and $1.3 million, as of December 31, 2020 and 2019, respectively.

Of the $418.5 million and $285.1 million of gross cost of rental fleet, $13.0 million and $18.4 million were represented by guaranteed purchase obligation (“GPO”) assets as of December 31, 2020 and 2019, respectively.

NOTE 7 — GOODWILL

The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment during the years ended December 31, 2019 and 2020, respectively (amounts in millions):

Balance, January 1, 2019

Balance, December 31, 2019

Balance, December 31, 2020

See Note 20, Business Combinations for further information.

NOTE 8 — INTANGIBLE ASSETS

The gross carrying amount of intangible assets and accumulated amortization as of December 31, 2020 and 2019 were as follows (amounts in millions):

December 31, 2020

December 31, 2019

Customer relationships

Non-compete agreements

Favorable Market Rent

Amortization of intangible assets was $2.3 million and $0.3 million for the years ended December 31, 2020 and 2019, respectively.

The Company reviewed its finite-lived intangible assets for impairment and determined that none of the assets were impaired during the years ended December 31, 2020 and 2019.

As of December 31, 2020, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows (amounts in millions):

Years ending December 31,

NOTE 9 — LINES OF CREDIT AND FLOOR PLANS

Effective February 14, 2020, the Company amended and restated its credit facility with its first lien lender by entering into the Fifth Amended and Restated ABL First Lien Credit Agreement (“Amended and Restated Credit Agreement”) and the facility thereunder, the “ABL Facility”) by and among Alta Equipment Group Inc.

and the other credit parties named therein, the lenders named therein, JP Morgan Chase Bank, N.A., as Administrative Agent, and the syndication agents and documentation agent named therein.

In connection with the Amended and Restated Credit Agreement, the Company amended and restated its floor plan facility with its first lien lender by entering into the Fifth Amended and Restated Floor Plan First Lien Credit Agreement (“Floor Plan Credit Agreement” and the facility thereunder, the “Floor Plan Facility”) by and among Alta Equipment Group Inc.

and the other credit parties named therein, the lender JP Morgan Chase Bank, N.A., as Administrative Agent, Sole Bookrunner and Sole Lead Arranger.

The Amended and Restated Credit Agreement, among other things, (i) moved the $85 million floor plan financing facility of the Fourth Amended and Restated First Lien Credit Agreement out of syndication and into the Floor Plan Credit Agreement, (ii) increased the total aggregate amount of indebtedness of all floor plans from $220 million to $225 million, (iii) increased the revolving line of credit borrowing capacity from $110 million to $300 million, and (iv) modified certain financial covenants.

The Floor Plan Credit Agreement, among other things, (i) modified the floor plan financing facility with its first lien lender from $85 million to $40 million, and (ii) modified certain financial covenants.

Line of Credit and Floor Plan — First Lien Lender

The Company has an ABL Facility with its first lien holder with advances on the line being supported by eligible accounts receivable, parts, and otherwise unencumbered new and used equipment inventory and rental equipment.

The ABL Facility has a maximum borrowing capacity of $300 million and interest cost is the London Interbank Offered Rate (“LIBOR”) plus an applicable

margin or the CB Floating Rate, depending on the borrowing.

As of Dec ember 3 1 , 2020, the Company had an outstanding ABL Facility balance of $ 1 59.1 million, excluding unamortized debt issuance costs.

The effective interest rate was 2.

0 % at Dec ember 3 1 , 2020.

The Company has a Floor Plan Facility with its first lien lender to primarily finance new inventory.

This Floor Plan Facility has a maximum borrowing capacity of $40 million.

The interest cost for the first lien lender floor plan facility is LIBOR plus an applicable margin.

The effective interest rate at December 31, 2020 was 2.9%.

The floor plan is collateralized by substantially all assets of the Company.

As of December 31, 2020, the Company had an outstanding balance on their first lien lender floor plan facility of $35.3 million, excluding unamortized debt issuance costs.

Under our previous Fourth Amended and Restated Credit Agreement, the Company had an outstanding revolving line of credit balance of $72.7 million, excluding unamortized debt issuance costs and an effective interest rate of 3.9% at December 31, 2019.

Original Equipment Manufacturer (“OEM”) Captive Lenders and Suppliers’ Floor Plans

The Company has floor plan financing facilities with several OEM captive lenders and suppliers for new and used inventory and rental equipment, each with borrowing capacities ranging from $2.0 million to $102.0 million.

Primarily, the Company utilizes the facilities for purchases of new equipment inventories.

Certain floor plans provide for up to twelve-months interest only or deferred payment periods.

In addition, certain floor plans provide for interest and principal free terms at the suppliers’ discretion.

The Company routinely sells equipment that is financed under OEM captive lender floor plans prior to the original maturity date of the financing agreement.

When this occurs, the related OEM captive lender floor plan payable becomes due to be paid at the time the equipment being financed is sold.

With the recent acquisitions, the Company’s floor plan financing facilities with its OEM capital lenders and suppliers were amended to include the new locations and new entities.

The floor plan financing facilities are secured by the equipment being financed, and contain operating company guarantees.

The interest is LIBOR plus an applicable margin.

The effective rates, excluding the favorable effect of interest-subsidies, as of December 31, 2020 ranged from 3.1% to 6.5%.

As of December 31, 2020, and December 31, 2019, the Company had an outstanding balance on these OEM floor plans of $122.2 million and $122.6 million, respectively.

The total aggregate amount of floor plan financing (including the first lien lender floor plan) facilities cannot exceed $225.0 million at any time.

The total balance related to floorplan financing as of December 31, 2020 was $157.5 million excluding unamortized debt issuance costs.

For the years ended December 31, 2020, and December 31, 2019, the Company recognized interest expense associated with new equipment financed under its floor plan facilities of $2.3 million and $2.9 million, respectively.

Maximum borrowings under the floor plans and ABL Facility are limited to $525 million.

The total amount outstanding as of December 31, 2020 was $316.6 million, exclusive of debt issuance and deferred financings costs of $1.5 million.

Maximum borrowings under the previous floor plans and the revolving line of credit were limited to $330 million.

The total amount outstanding was $272.7 million, net of debt issuance costs of $0.5 million as of December 31, 2019.

NOTE 10 — LONG-TERM DEBT

In connection with the reverse recapitalization, the Company entered into a new Note Purchase Agreement (the “Term Loan”) dated as of February 3, 2020, for the purposes of, among other things, (i) financing the reverse recapitalization, (ii) financing the acquisitions of Flagler and Liftech;

and (iii) providing for the repayment and refinance of a portion of the Company’s prior existing debt.

Notes Payable — Senior Lien Holder

On December 27, 2017, the Company entered into a Note Purchase Agreement (the “Prior Note Purchase Agreement”) with a lender with an initial note commitment of $40 million, plus an additional delayed draw note commitment of $20 million.

On April 31, 2018 and July 31, 2018, the Company borrowed $3.5 million and $5 million, respectively, against the $20 million delayed draw commitment.

On May 1, 2019, the Company borrowed an additional $11.5 million against the $20 million delayed draw commitment.

The notes were subject to payment-in-kind (PIK) interest at 10% on any unpaid principal amount from the date of issue through repayment, with all PIK interest added to the outstanding principal.

The balance at December 31, 2019 included the initial note commitment of $40 million and delayed draws totaling $20 million, plus PIK interest of approximately $11.2 million, accrued from the initial funding date through the end of the year.

The note was secured by a second priority lien on substantially all of the assets of the Company, including a pledge of equity interests, and were to mature on June 27, 2023.

In connection with the December 27, 2017 note, warrants were issued enabling the purchase of 25% of the common units outstanding on a fully diluted basis at $0.01 per warrant unit.

On February 14, 2020, in connection with the reverse recapitalization and in conjunction with entering into the Amended and Restated Credit Agreement and Term Loan, the Company repaid this note payable in full, completely discharging the Company of any obligations to the lender .

Subordinated Debt

On December 27, 2017, the Company entered into notes payable to former shareholders of Alta Equipment Company, Inc., the Company’s former parent Company.

The notes were unsecured, were subject to interest at 5%, with rights subordinated to the first lien lender and second lien lender.

During the term of the notes, the Company paid holders’ semi-annual installments of accrued interest but maintained the option to capitalize such accrued interest amounts into the principal sum of each note.

The notes were to mature December 2027.

On February 14, 2020, in connection with the reverse recapitalization, and i n conjunction with entering into the Amended and Restated Credit Agreement and Term Loan, the Company repaid in full the subordinated debt to the former shareholders of Alta Equipment Company and terminated all commitments and discharged all guarantees related to those agreements.

As of December 31, 2020, the Company has no subordinated debt on its Consolidated Balance Sheet.

On February 14, 2020, the Company entered into a Note Purchase Agreement which comprised of a term loan in an aggregate principal amount of $155.0 million with its second priority lien lender through syndication, with an initial maturity date of August 2025.

In connection with the new Term Loan, the Company retired the Prior Note Purchase Agreement.

The term loan is payable, at the lender’s option, in quarterly installments of $1.9 million plus interest at LIBOR plus 8%.

As of December 31, 2020, the effective interest rate was 9.8%.

The Term loan is collateralized by substantially all assets of the Company.

As of December 31, 2020, outstanding borrowings under the term loan were $149.2 million, which included $6.4 million deferred financing costs and original issue discounts.

Notes Payable — OEM Captive Lender

On May 9, 2014, the Company entered into a Master Note Agreement with an OEM captive lender.

These notes were payable in monthly installments, with interest ranging from 3.29% to 4.99%.

The notes were secured by the specific assets financed and were to mature at various dates through October 2024.

On February 14, 2020, in connection with the reverse recapitalization, the Company repaid in full the balance of the notes payable to the OEM captive lender.

As of December 30, 2020, there were no notes payable to an OEM captive lender on our Consolidated Balance Sheet.

Extinguishment of Debt

In accordance with ASC Topic No.

470-50, “Debt – Modifications and Extinguishments” (Topic No.

470), the transactions noted above were determined to be an extinguishment of the existing debt and an issuance of new debt.

As a result, the Company recorded a loss on the extinguishment of debt in the amount of $7.6 million in the line item “Loss on Extinguishment of Debt” in its Consolidated Statements of Operations.

Of the $7.6 million loss on the extinguishment of debt, $3.9 million represented early call premiums that the Company paid to the holders of its Senior Lien Notes and OEM Captive Lender as a result of repurchasing both notes prior to their maturity.

The remaining balance represented the write off of deferred financing fees related to the extinguishment of these debt facilities.

The Company’s long-term debt consists of the following (amounts in millions):

Senior lien holder

OEM captive lender

Subordinated debt

First lien lender – term loan

Unamortized debt issuance costs

Debt discount

Current maturities of long-term debt, net

Long-term debt, net

As of December 31, 2020, the Company was in compliance with the financial covenants set forth in its debt agreements.

Long term debt maturities, excluding unamortized debt discounts and debt issuance costs, are as follows (amounts in millions):

Years ending December 31,

Promissory Note

On June 12, 2020, the Company entered into an unsecured promissory note for $1.0 million at an interest rate of 6.0% on the unpaid principal sum in connection with the PeakLogix acquisition.

The promissory note is due one year from the date of the acquisition.

Due to the short-term nature of the note, the liability was included in “Other current liabilities” on the Consolidated Balance Sheet as of December 31, 2020.

Notes Payable – Non-Contingent Consideration

The Company acquired all the assets of PeakLogix on June 12, 2020.

Pursuant to the purchase agreement, Sellers are entitled to additional cash payments of a minimum of $2.0 million through-out 5-year earn-out period.

As of December 31, 2020, the Company recorded a $1.7 million liability related to present value of these minimum cash payments using a market participant discount rate.

This additional future liability is recorded as non-contingent liability in “Other liabilities” on the Consolidated Balance Sheet.

See Note 17, Fair Value Instruments and Note 20, Business Combinations for further information.

NOTE 11 — EQUITY AND WARRANTS

Preferred Stock

On December 22, 2020, the Company closed its underwritten public offering of depositary shares, each representing 1/1000th of a share of 10% Series A Preferred Stock, par value $0.0001 per share.

The liquidation preference of each share of Series A Preferred Stock is $25,000 ($25.00 per Depositary Share).

At the closing, the Company issued 1,200 shares of Series A Preferred Stock represented by 1,200,000 Depositary Shares issued.

We will pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, at the rate of 10% of the $25,000.00 liquidation preference ($25.00 per depositary share) per year (equivalent to $2500 or $2.50 per depositary share).

Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October, beginning on or about April 30, 2021;

provided that if any dividend payment date is not a business day, then the dividend which would otherwise have

been payable on that dividend payment date may be paid on the next succeeding business day, and no interest, additional dividends or other sums will accumulate.

Dividends will accumulate and be cumulative from, and including December 22, 2020 , the date of original issuance.

The first dividend, which is scheduled to be paid on or about April 30, 2021 in the amount of $ 0.88889 per depositary share, will be for more than a full quarter and will cover the period from, and including, the first date we issue and sell the depositary shares through, but not including, April 30, 2021 .

In conjunction with the reverse recapitalization, the Company made changes to its capital stock.

The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 201,000,000 shares of capital stock, consisting of (i) 200,000,000 shares of common stock, (the “Common Stock”) and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share.

As a result of the reverse recapitalization, the shares issued to Alta Equipment Holdings, Inc.

shareholders in connection with the transaction are reflected as if they were issued and outstanding beginning on January 1, 2019.

As of December 31, 2020, there were warrants outstanding to acquire 8,668,746 shares of the Company’s Common Stock.

These warrants were issued in connection with the equity infusion related to reverse recapitalization.

The warrants entitle the registered holder to purchase one share of our Class A Common Stock at a price of $11.50 per share, subject to certain adjustments.

The warrants will expire five years after February 14, 2020, the date reverse recapitalization was completed or earlier upon redemption or liquidation.

Prior to the reverse recapitalization, t he Company granted warrants to purchase 33,333.33 shares of common units in connection with the stock purchase and redemption that occurred on December 27, 2017.

The warrants had an exercise price of $0.01 and included a conditional put option, allowing the holder to require the Company to purchase the outstanding warrants, via a settlement upon the following events:

(1) upon 75% repayment of senior indebtedness, (2) change in control from a sale transaction, and (3) the maturity of the related debt, which required the Company to settle the warrants in cash.

The warrants were to expire December 27, 2027.

The warrants also included a limited call right, where in the event of a sale transaction, the Company had the right to redeem, in cash, all of the warrants simultaneously at a per common share price equal to the per unit set for the sale transaction.

For the year ended December 31, 2019, the change in fair value of warrants was included in other income (expense) on the Consolidated Statements of Operations.

See Note 17 for more information.

On February 14, 2020, the Company consummated its reverse recapitalization.

As a result, the Company redeemed all the warrants outstanding upon closing of the reverse recapitalization and as of December 31, 2020, there were no warrant liabilities on the Consolidated Balance Sheet.

NOTE 12 — CAPITAL LEASES

At December 31, 2020 and 2019, the Company had capital leases payable to financial institutions in the amount of $1.5 million and $2.2 million, respectively.

The assets and liabilities under these capital leases are initially recorded at the fair value of the assets under capital lease.

The assets are depreciated over the lower of their related lease terms or their estimated useful lives.

Minimum future lease payments under capital leases described above for each of the next five years and in the aggregate are as follows (amounts in millions):

Years ending December 31,

current portion presented in Other current liabilities

Long-term capital lease obligation

NOTE 13 — OPERATING LEASES — LESSOR

The Company leases and subleases lift trucks to customers under long-term operating lease agreements which expire at various dates through 2024.

Approximate minimum rentals receivable under such leases for each of the next four years are as follows (amounts in millions):

Years ending December 31,

NOTE 14 — COMMITMENTS AND CONTINGENCIES

Operating leases

The Company leases buildings and equipment under various operating leases with both related (see Note 5) and unrelated third parties.

The leases expire at various dates through February 2035 and contain provisions to renew the leases for additional terms of five to fifteen years.

Total lease expense under the third-party operating leases for the years ended December 31, 2020 and 2019 was $19.3 million and $10.9 million, respectively.

Included in rent expense for 2020 and 2019 is deferred rent expense of $0.9 million, and $0.7 million, respectively, attributable to third party and related party lease agreements with escalating rent payments.

Minimum future payments under the operating leases described above and in Note 4 for each of the next five years and thereafter and in the aggregate are as follows (amounts in millions):

Years ending December 31,

Future guaranteed purchase obligations under capital leases for each of the next five years and thereafter are as follows (amounts in millions):

Years ending December 31,

At December 31, 2020 and 2019, the Company was party to certain contracts in which it guarantees the performance of lease agreements between various third-party leasing companies.

The terms of the guarantees range from three to five years.

In the event of a default by a third-party lessee, the Company would be required to pay all or a portion of the remaining unpaid lease obligation as specified in the contract.

The estimated exposure related to these guarantees was $2.4 million and $3.3 million at December 31, 2020 and 2019, respectively.

It is anticipated that the third parties will have the ability to repay the debt without the Company having to honor the guarantee;

therefore, no amount has been accrued on the Consolidated Balance Sheets at December 31, 2020 and 2019.

Legal Proceedings

During the years ended December 31, 2020 and 2019, various claims and lawsuits, incidental to the ordinary course of business, are pending against the Company.

In the opinion of management, after consultation with legal counsel, resolution of these matters are not expected to have a material effect on the Company’s consolidated financial statements.

Contractual Obligations

The Company does not believe there are any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company.

As of December 31, 2020, there was $1.4 million in outstanding letters of credits issued in the normal course of business.

As of December 2019, there was no outstanding letters of credits.

NOTE 15 — INCOME TAXES

The Company accounts for income taxes under the asset and liability method.

Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates in effect for the year in which the difference is expected to reverse.

Additionally, the impact of changes in the tax rates and laws on deferred taxes, if any, is reflected in the financial statement in the period of enactment.

The deferred tax liabilities and assets for the Company represent the difference between the financial statement and tax basis of the partnership interest in Alta Enterprises, LLC.

As such, the Company is using the single line item approach.

The income tax benefit for the years ended December 31, 2020 and 2019 consisted of the following:

Federal taxes-current

Federal taxes-deferred

State taxes-current

State taxes-deferred

For the years ended December 31, 2020 and 2019, the reconciliation between the income tax benefit computed by applying the statutory U.S.

federal income tax rate to the pre-tax loss before income taxes and total income tax expense recognized in the financial statements was as follows:

Income tax (expense) benefit at statutory U.S.

Permanent differences:

Officer's life insurance

Total income tax benefit

The Company recorded an income tax benefit of $6.6 million and $0 for the years ended December 31, 2020 and 2019, respectively.

For the year ended December 31, 2019, the reverse recapitalization had yet to occur and therefore the Company does not have a comparable period.

The income tax benefit covers the period starting with the reverse recapitalization on February 14, 2020 through the year ended December 31, 2020.

The income tax results from the period January 1, 2020 through the day prior to the reverse recapitalization will be recognized by the predecessor.

As a result of the recapitalization transaction, there was a step-up in the tax value of the Company.

The step-up tax value has been estimated as of the date of these financials.

The value will be finalized in conjunction with the finalization of the tax reporting obligations associated with the pre-IPO period dated January 1, 2020 through February 13, 2020.

Due to the nature of the transaction, these tax filings are not due until 2021.

As such, there is a possibility that the estimate used for the value step up could change, which would in turn change the opening balance sheet.

We believe any true-up to the value step up will be immaterial, however further work is required to make a final determination.

As of December 31, 2020, the Company had $ 0.5 million of net deferred tax assets, which was presented in “Other Assets” on the Consolidated Balance Sheet.

As discussed above, this represents the GAAP to tax difference in the basis of the underlying partnership, Alta Enterprises, LLC.

This basis difference mirrors the GAAP to tax differences within the partnership, which primarily relate to property and equipment assets and other temporary items where the tax basis differs from the GAAP carrying amounts.

At December 31, 2020, the income tax benefit was $6.6 million.

This was primarily driven by the level of pre-tax loss of $20.7 million for the period from February 14, 2020 to December 31, 2020.

The effective income tax rate for the period from February 14, 2020 to December 31, 2020 of 31.9% was affected by non-deductible expenses and state income taxes.

The components of deferred tax assets and liabilities as of December 31, 2020 and 2019 were as follows:

Deferred Tax Assets

Net operating loss carryforwards

Deferred revenue

Accounts receivable and inventories

Goodwill & intangibles

Accrued liabilities

Deferred payroll taxes and other

Gross deferred tax assets

Deferred Tax Liabilities

Property and equipment

Prepaid expenses

Gross deferred tax liabilities

Deferred tax assets, net

As of December 31, 2020, the Company has federal net operating tax loss carryforwards of approximately $4.7 million which may be carried forward indefinitely and are eligible to offset 80% of future taxable income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other thing s, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property.

The CARES Act did not materially impact our effective tax rate for the year ended December 31, 2020, although it will impact the timing of future cash payments for taxes.

As of December 31, 2020, we have deferred employer payroll taxes of $5.6 million under the CARES Act, with half of the deferred amounts due by December 31, 2021, and the remaining half due by December 31, 2022.

NOTE 16 — SHARE BASED COMPENSATION

During the third quarter 2020, the Compensation Committee of our Board of Directors approved the grant of 690,000 shares of Restricted Stock Units (“RSUs”) to certain directors, officers and employees of the Company under the 2020 Omnibus Incentive Plan.

The Company’s plan is to have broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests.

We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant.

The compensation expense is recognized on a straight-line basis over the requisite vesting period of the award.

The Company recognized total compensation expense of $3.6 million for the year ended December 31, 2020.

On August 18, 2020, Robert T.

Chiles, President of our Construction Group, passed away.

Chiles was the holder of RSUs for 390,000 shares of common stock of the Company, and at his passing these RSU’s became fully vested and converted into 390,000 shares of our common stock.

As a result of the immediate vesting of these RSUs, the Company incurred $3.0 million expense.

As of Dec ember 3 1 , 2020, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $ 1 .

7 million, which is expected to be recognized over a weighted average period of 2 .

The following table shows the number of restricted stock awards that were granted and vested during 2020:

Restricted Stock Awards

Weighted average

grant date fair value

As of December 31, 2020

NOTE 17 — FAIR VALUE INSTRUMENTS

The carrying value of financial instruments reported in the accompanying Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments.

Based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs, the carrying value of lines of credit, long-term debt, and the guaranteed purchase obligations approximates the fair value as of December 31, 2020 and December 31, 2019.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:

The Company granted warrants to purchase 33,333.33 shares of common units in connection with the stock purchase and redemption that occurred on December 27, 2017.

(1) upon 75% repayment of senior indebtedness, (2) change in control from a sale transaction, and (3) the maturity of the related debt, which required the Company to settle the warrants in cash.

The warrants were to expire December 27, 2027.

The warrants also included a limited call right, where in the event of a sale transaction, the Company had the right to redeem, in cash, all the warrants simultaneously at the per common share price equal to the price set for the sale transaction.

On February 14, 2020, the Company consummated its reverse recapitalization.

The Company recorded the warrants issued based on the fair value at the date of grant and re-measured at each balance sheet date.

The fair value of warrants classified as liabilities at the date of grant was estimated using a market approach.

The valuation methodology was primarily a market-based approach using participants in the material handling and heavy-equipment retailing, wholesaling, and rental industry.

A range of multiples was established taking company-specific risks into consideration and applied to Alta’s adjusted EBITDA to derive an implied enterprise value.

To derive equity value, interest-bearing debt was removed.

The preceding methods described produced a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

Furthermore, although management believed its valuation methods to be appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could have resulted in a different fair value measurement at the reporting date.

The Company redeemed all the warrants outstanding upon closing of the reverse recapitalization on February 14, 2020 and as of December 31, 2020, there were no warrant liabilities on the Consolidated Balance Sheet.

Contingent Consideration

The contingent consideration liability represents the fair value of the future earn-out liability that the Company may be required to pay in conjunction with the acquisitions upon the achievement of certain performance milestones.

The earn-out for the acquisitions is measured at fair value in each reporting period, based on level 3 inputs, with any change to the fair value recorded in the Consolidated Statements of Operations.

PeakLogix LLC (“PeakLogix”)

The purchase agreement for the PeakLogix acquisition provides for earn-out payments of a minimum of $2.0 million up to $3.7 million which can be earned through June 30, 2025 based on meeting certain performance milestones .

We estimated the fair value of the incremental $1.7 million earn-out payment based on a probability weighted range of outcomes analysis and applied a discount rate

that appropriately captures a market participant's view of the risk associated with the obligation.

This analysis considered the earn-out payment thresholds, the minimum and maximum range of earn-out payments per the agreement and the expected future cash flows of PeakLogix.

The earn-out will be remeasured at each balance sheet date using this approach and any resulting increase or decrease will be reflected in the income statement.

Going forward, volatility in the amount of PeakLogix’s actual results and forecasted scenarios could impact the fair value of this contingent consideration.

The Company concluded the future minimum cash payments of $2.0 million will be treated as a non-contingent liability and recorded a $1.7 million liability related to the present value of these minimum cash payments.

See Note 10, Long-Term Debt and Note 20, Business Combinations for further information.

In addition to the non-contingent liability, there is a potential earn out payment of $1.7 million to be paid to Sellers over a five-year period.

The Company recorded a $1.0 million earn out liability as the acquisition date fair value in “Other Liabilities” on the Consolidated Balance Sheet.

See Note 20, Business Combinations for further information.

Hilo Equipment & Services (“Hilo”)

The purchase agreement for the Hilo acquisition provides an earn-out payment of $1.0 million based on meeting certain financial target which can be earned through July 1, 2023 .

We estimated the fair value of the earn-out liability based on the present value of probability weighted expected future results.

See Note 20, Business Combinations for further information.

The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of December 31, 2020 and 2019 (amounts in millions):

December 31, 2020

Contingent consideration

December 31, 2019

The following is a summary of changes to level 3 instruments during the year ended December 31, 2020 and 2019, which were recognized in a separate line item on the Consolidated Statements of Operations (amounts in millions):

Balance, January 1, 2019

Warrants granted during the period

Change in fair value during the period

Balance, December 31, 2019

Warrants settled at reverse recapitalization

Balance, December 31, 2020

Contingent Consideration

Balance, January 1, 2020

Acquisition of PeakLogix

Acquisition of Hilo

Change in fair value

Balance, December 31, 2020

The following table represents the Company’s level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments as of December 31, 2020 and 2019 , respectively, and the significant unobservable inputs (amounts in millions):

Principal Valuation Technique

Significant Unobservable Inputs

Contingent consideration

Probability weighted range of outcomes

Market approach

NOTE 18 — SELF INSURED

For the years ended December 31, 2020 and 2019, the Company has various health plans that covers eligible employees, including a self-insured group health plan, which contains certain stop-loss provisions.

The Company has accrued health insurance in the amount of $1.1 million and $0.6 million for both known claims and an estimated amount of claims incurred but not reported at December 31, 2020 and 2019, respectively.

Health benefit plan expenses, including benefits paid and insurance premiums, totaled approximately $15.9 million and $8.5 million for the years ended December 31, 2020 and 2019, respectively.

NOTE 19 — EMPLOYEE BENEFIT PLANS

Employee 401(k) Profit Sharing Plan

Substantially all of the Company’s employees are eligible to participate in the Company’s 401(k) and profit-sharing plan.

Eligible employees may contribute a percentage of their salary up to the Internal Revenue Service (“IRS”) limit.

The Company may contribute a discretionary percentage of the amount deferred by the employee.

The Company may also contribute a discretionary profit-sharing amount, as determined annually by the Board of Directors and management, to the plan each year.

Total contributions, made by the Company, to the plan amounted to approximately $1.9 million and $1.3 million for the years ended December 31, 2020 and 2019, respectively.

The Company has funded or accrued all calculated contributions as of the Consolidated Balance Sheet date.

Equity Linked Incentive Plan

The Company had a Long-Term Equity Linked Incentive Plan (“the Plan”) to award key employees.

The purpose of the Plan was to retain and attract key employees with an opportunity to receive additional compensation in connection with a change in control of the company (“qualifying event”).

The plan permitted the award of up to 15,686.28 incentive units and 7,843.14 appreciation rights.

The Company did not award any incentive units or appreciation rights during the year ended December 31, 2019.

At December 31, 2019 there were 12,549 incentive units and 6,275 appreciation rights outstanding.

No expense or liability was recognized in the accompanying consolidated financial statements as the likelihood of a qualifying event was not imminent as of December 31, 2019.

As of December 31, 2020, the Company incurred $3.1 million of share-based compensation expense as a result of vesting of the equity linked incentive plan as a result of the qualifying event on February 14, 2020.

NOTE 2 0 — BUSINESS COMBINATIONS

The following table summarizes the net assets acquired from the acquisitions in 2020 (amounts in millions):

Accounts receivable

Prepaid and other assets

Rental fleet, net

Property and equipment, net

Intangible assets

Floor plan payable

Accounts payable

Accrued expenses

Other current liabilities

Other liabilities

Total Liabilities

Net Assets Acquired

Assets acquired net of cash

On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Flagler for a total purchase price, net of cash, of $75.8 million, which was paid out of funds from the closing of the reverse recapitalization.

The acquisition has been accounted for as a purchase business combination.

Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $79.0 million.

On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Liftech for a total purchase price of $18.4 million, which was paid out of funds from the closing of the reverse recapitalization.

The acquisition has been accounted for as a purchase business combination.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $15.2 million.

On June 12, 2020, the Company acquired all the assets of PeakLogix for a total purchase cash consideration of $5.7 million, which was paid out of available funds.

Additional consideration includes $1.0 million in an unsecured one-year promissory note at 6% and earn-out payment of a minimum $2.0 million up to a $3.7 million to be paid out to former owners based on meeting certain financial targets throughout a 5-year earn-out period, collectively resulting in an estimated enterprise value of $6.4 million net of cash acquired.

In connection with the purchase, PeakLogix LLC was created.

See Note 10, Long-Term Debt and Note 17, Fair Value Instruments for further information.

The acquisition has been accounted for as a purchase business combination.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

The following table summarizes the components of the purchase price at June 12, 2020:

Cash consideration paid *

Promissory Note

Present value of non-contingent earn-out liability

Earn-out liability

Total purchase price

Includes $3.0 million cash acquired as part of the Business Combination

On July 1, 2020, the Company acquired all the assets of Hilo for total purchase price, net of cash, of $17.2 million which was paid out of available funds, and potential earn out payments of an additional $1.0 million.

The acquisition has been accounted for as a purchase business combination.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $19.0 million.

The following table summarizes the component of the purchase price at July 1, 2020:

Cash consideration paid *

Earn-out liability

Total purchase price

Includes $2.1 million cash acquired as part of the Business Combination

Martin Implement Sales, Inc.

On September 1, 2020, the Company acquired all the assets of Martin for a total purchase price of $16.1 million, which included floorplan eligible new equipment inventories that was paid out of available funds.

The acquisition has been accounted for as a purchase business combination.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses .

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $10.6 million.

Howell Tractor and Equipment, LLC (“Howell”)

On October 30, 2020, the Company acquired all the assets of Howell for a total cash consideration of $22.4 million.

The Company issued 507,143 shares of its common stock, valued at $4.0 million, in connection with the purchase agreement, yielding a total purchase price of $26.4 million.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $23.1 million.

The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date.

The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

Vantage Equipment, LLC (“Vantage”)

On December 31, 2020, the Company acquired all the assets of Vantage for a total purchase price of $24.2 million.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $22.5 million.

The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date.

The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date.

The Company expects the goodwill recognized to be 100% deductible for income tax purposes.

Costs and expenses related to the acquisition have been expensed as incurred in operating expenses .

Incremental costs including accounting and legal fees that were attributable to the acquisition activities were expensed as incurred and these costs were $1.3 million as of December 31, 2020.

Northland Industrial Truck Co., Inc.

The following table summarizes the net assets acquired from the acquisition in 2019 (amounts in millions):

Accounts receivable

Other current & non-current assets

Guaranteed purchase obligation asset

Property, plant, and equipment

Identifiable intangible assets

Accounts payable

Guaranteed purchase obligation liability

Capital lease obligations

Other liabilities

Total Liabilities

Net Assets Acquired

On May 1, 2019, the Company purchased the assets of NITCO, for a total purchase price of $65.6 million.

In connection with the purchase, NITCO, LLC was created.

The goodwill of $1.0 million arising from the acquisition consists largely of an assembled workforce and is expected to be deductible for income tax purposes.

The acquisition has been accounted for as a purchase business combination.

Under the purchase method of accounting, the assets and liabilities assumed are recorded at the date of acquisition at their respective fair values.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection.

The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

It should be further noted that, upon the close of the acquisition, the Company established additional floorplan borrowings for new equipment in the amount of $23.5 million, for a total enterprise value of $42.1 million.

Pro forma financial information - 2020

The Company completed the Flagler acquisition on February 14, 2020.

Therefore, operating results of Flagler are included in the Company’s Consolidated Statement of Operations after February 14, 2020.

Pursuant to ASC 805, pro forma disclosures should be reported whenever the year or interim period of the acquisition is presented.

The pro forma information below gives effect to the Flagler acquisition as if the acquisition occurred on January 1, 2020.

December 31, 2020

Total revenues

The financial effect of the other acquisitions in 2020, individually and in the aggregate, was not material to the consolidated financial statements.

As such, pro forma results of operations including other acquisitions have not been presented.

Pro forma financial information - 2019

Pro forma balance sheet of Alta Equipment Group Inc.

The following table provides the pro forma balance sheet of Alta Equipment Group Inc.

as of December 31, 2019 as if Flagler had been acquired on December 31, 2019.

As NITCO was acquired by Alta effective May 1, 2019, they are included within the Alta amounts as of December 31, 2019.

(in millions, except share and per share amounts)

Flagler Pro Forma

Pro Forma Combined

CURRENT ASSETS

Accounts receivable, net

Inventories, net

Prepaid expenses and other current assets

Total current assets

PROPERTY AND EQUIPMENT, NET

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES

Lines of credit

Floor plan payable — new equipment

Floor plan payable — used and rental equipment

Current portion of long-term debt

Accounts payable

Customer deposits

Accrued expenses

Other current liabilities

Total current liabilities

LONG-TERM LIABILITIES

Long-term debt, net of current portion

Capital lease obligations, net of current portion

Buyback residual obligations, net of current portion

Guaranteed purchase obligation, net of current portion

Lease liability, net of current portion

Other liabilities

Warrant liability

TOTAL LIABILITIES

STOCKHOLDERS’ EQUITY (DEFICIT)

Additional paid-in capital

Retained earnings (deficit)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Pro forma statement of operations of Alta Equipment Group Inc.

The following table provides the pro forma statement of operations of Alta Equipment Group Inc.

for the year ended December 31, 2019 as if NITCO and Flagler had been acquired on January 1, 2019.

NITCO was acquired by Alta effective May 1, 2019.

Flagler was acquired on February 14, 2020.

Pursuant to ASC 805, pro forma disclosures should be reported whenever the year or interim

period of the acquisition is presented.

The pro forma results do not include any anticipated cost synergies or other effects of the integration of these entities into Alta.

(in millions, except share and per share amounts)

Alta Pro Forma

NITCO Pro Forma

Flagler Pro Forma

Pro Forma Combined

New, used and rental equipment sales

Service revenue

Rental revenue

Cost of revenues:

New, used and rental equipment sales

Service revenue

Rental revenue

Rental depreciation

Cost of revenue

General and administrative expenses

Depreciation and amortization expense

Total general and administrative expenses

Income (loss) from operations

Other income (expense)

Interest expense

Change in fair market value of warrants

Total other income (expense)

Loss before taxes

Income tax benefit

Net income (loss)

NOTE 21 — UNION PENSION PLAN

The Company began contributing to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain union represented employees in 2018.

The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:

Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers;

If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers;

If the Company ceases to have an obligation to contribute to the multiemployer plan in which the Company had been a contributing employer, the Company may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company’s participation in the plan prior to the cessation of its obligation to contribute.

The Company’s participation in multiemployer plans for the annual period ended December 31, 2020 and 2019 is outlined in the table below.

For each plan that is individually significant to the Company, the following information is provided:

The “Pension Protection Act Zone Status” available is for plan years that ended in 2020 and 2019.

The zone status is based on information provided to the Company and other participating employers by each plan and is certified by the

plan’s actuary.

This indicates the funded status of the plan with the status indicated by the colors of green, yellow, and red with green being the most funded and red being the least funded.

The “FIP/RP Status Pending/Implemented” column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the plan year.

The “Surcharge Imposed” column indicates whether a surcharge was paid during the most recent annual period presented for the Company’s contributions to any plan in the red zone in accordance with the requirements of the Code.

The last column lists the expiration dates of the collective bargaining agreements pursuant to which the Company contributed to the plans.

There are no plans where the amount contributed by the Company represents more than 5% of the total contributions to the plan for the years ended December 31, 2020, and 2019.

Multiple Employer Pension Plans (amounts in thousands):

Pension Protection Act Zone Status & Plan Year- End

Contributions of Alta Equipment Group Inc.

and Subsidiaries

Operating Engineers I.U.O.E.

Local 37 Pension Trust

Midwest Operating Engineers

Local Union No.

150 Pension Trust Fund

Operating Engineers Local

324 Pension Fund

Central Pension Fund of the International Union of Operation Engineers Local Union No.

Upstate New York Engineers Pension Fund Local Union 17C

Engineers Local Union No.

Central Pension Fund of Operating Engineers Local Union 17C

Central Pension Fund of the International Union of Operating Engineers Local 158 District 832

Central Pension Fund of the International Union of Operating Engineers

Operating Engineers Local 825 Fund

NOTE 22 — SEGMENTS

The Company has two reportable segments:

Material Handling and Construction Equipment.

The Company’s segments are determined based on management structure, which is organized based on types of products sold, as described in the following paragraph.

The operating results for each segment are reported separately to the Company’s Chief Executive Officer to make decisions regarding the allocation of resources, to assess the Company’s operating performance and to make strategic decisions.

The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks and other material handling equipment in Michigan, Illinois, Indiana and New York, as well as parts of the Northeastern United States.

As of December 31, 2020, the Material Handling segment included the Liftech, PeakLogix and Hilo acquisitions.

The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Illinois and Florida.

As of Dec ember 3 1 , 2020, the Construction Equipment segment included the Flagler , Martin , Howell and Vantage acquisitions.

The Company retains various unallocated expense items at the general corporate level, which the Company refers to as “Corporate” in the table below.

Corporate holds corporate debt and has minor activity all together.

For the year ended December 31, 2020, Corporate incurred $7.6 million in debt extinguishment fees, $7.6 million in transaction costs and other expenses associated with the reverse recapitalization.

During the year, Corporate primarily incurred expenses associated with consulting and legal fees related to acquisition costs, fees associated with the issuance of the common stock and preferred stock, shared based compensation expense and interest expense, which were offset with income tax benefit and $8.0 million in income from a life insurance policy on our Construction Group President.

The following table presents the Company’s results of operations by reportable segment for the year ended December 31, 2020 (amounts in millions):

New and used equipment sales

Service revenue

Rental revenue

Rental equipment sales

Total revenue

Interest expense

Depreciation and amortization

Net income (loss)

The following table presents the Company’s results of operations by reportable segment for the year ended December 31, 2019 (amounts in millions):

New and used equipment sales

Service revenue

Rental revenue

Rental equipment sales

Total revenue

Interest expense

Depreciation and amortization

Net income (loss)

The following table presents the Company’s identified assets by reportable segment for the period ending December 31, 2020 and 2019 (amounts in millions):

Segment assets:

Material handling

Construction equipment

NOTE 23 — SUBSEQUENT EVENTS

Warrant Exchange

On March 3, 2021, the Company entered into Amendment No.

1 to the warrant agreement, dated as of April 8, 2019.

The Warrant Amendment amends the warrant agreement to provide for the mandatory exchange of the Company’s outstanding warrants for shares of the Company’s common stock at an exchange ratio of 0.263 shares of common stock per warrant.

Amendment to Credit Agreement

On January 11, 2021, the Company amended its Fifth Amended and Restated ABL First Lien Credit Agreement by and among Alta Equipment Group Inc.

and the other credit parties named therein, the lenders named therein, JP Morgan Chase Bank, N.A., as Administrative Agent, and the syndication agents and documentation agent named therein.

The amendment generally allows for dividend payments to be made on the Preferred Stock without having to meet a leverage threshold, it excludes the Preferred dividend payments from affecting the second lien prepayment requirement, and it increases vendor floor plan limits from $225 Million to $250 Million, however, credit line borrowings would begin to be limited in the instance amounts borrowed on floor plan facilities exceed $225 Million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures