What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-13 compared with 2020-11-12 · 318 added, 371 removed, 453 unchanged (60% of the section changed)

4 unchanged sentences

(in millions, except share and per share amounts)

September 30,

CURRENT ASSETS

Accounts receivable, net of allowances of $6.2 and $4.4 as of September 30, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowances of $7.9 and $7.1 as of March 31, 2021 and December 31, 2020, respectively

Inventories, net

4 unchanged sentences

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

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Buyback residual obligations, net of current portion

Guaranteed purchase obligation, net of current portion

Lease liability, net of current portion

Deferred tax liability

Guaranteed purchase obligation, net of current portion

Other liabilities

Warrant liability

TOTAL LIABILITIES

CONTINGENCIES - NOTE 11

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred stock, $0.0001 par value, 1,000,000 authorized and no shares outstanding at September 30, 2020

Common stock, $0.0001 par value, 29,511,359 and 7,300,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

STOCKHOLDERS’ EQUITY

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 March 31, 2021 and December 31, 2020

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

30,018,502 issued and outstanding at March 31, 2021 and December 31, 2020

Additional paid-in capital

Treasury stock

Retained deficit

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

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Three Months Ended

September 30,

Nine Months Ended

September 30,

(in millions, except share and per share amounts)

13 unchanged sentences

Total general and administrative expenses

(Loss) income from operations

Income (loss) from operations

Other income (expense)

1 unchanged sentence

Interest expense – other

Change in fair market of warrants

Loss on extinguishment of debt

1 unchanged sentence

Loss before taxes

Income tax benefit

Net income (loss)

Basic and diluted income (loss) per share

Income tax provision (benefit)

Basic and diluted loss per share

Basic and diluted weighted average common shares outstanding

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CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Preferred Stock

(amounts in millions, except share amounts)

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Stockholder’s

Equity (Deficit)

Balance at June 30, 2020

Disgorgement of short swing profits

Balance at December 31, 2020

Share based compensation

Repurchases of common stock

Balance at September 30, 2020

Three Months Ended September 30, 2019

(amounts in millions, except share amounts)

Treasury Stock

Stockholder’s

Equity (Deficit)

Balance at June 30, 2019

Balance at September 30, 2019

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

Nine Months Ended September 30, 2020

Balance at March 31, 2021

Three Months Ended March 31, 2020

Preferred Stock

(amounts in millions, except share amounts)

Accumulated Deficit

Treasury Stock

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Shares issued upon settlement of equity-linked incentive plan

Disgorgement of short swing profits

Share based compensation

Repurchases of common stock

Balance at September 30, 2020

Nine Months Ended September 30, 2019

(amounts in millions, except share amounts)

Earnings (Deficit)

Treasury Stock

Stockholder’s

Equity (Deficit)

Balance at December 31, 2018

Balance at September 30, 2019

Balance at March 31, 2020

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(amounts in millions)

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Amortization of debt discount and debt issuance costs

Inventory obsolescence

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

Repayment of paid-in-kind interest

Share-based compensation

Changes in deferred rent

Changes in deferred taxes

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Expenditures for acquisitions, net of cash acquired

Net activity on notes and land contract receivable

Net cash used in investing activities

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Equity proceeds from reverse recapitalization, net

Proceeds from disgorgement of short swing profits

Repurchases of common stock

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

NOTE 1 — ORGANIZATION A ND NATURE OF O PERATIONS

NOTE 1 — ORGANIZATION A ND 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.

and its subsidiaries (“Alta” or the “Company”) is engaged in the retail sale, service, and rental of material handling and construction equipment in the states of Michigan, Illinois, Indiana, New York (including New York City in our Material Handling segment), Virginia and Florida as well as the New England region (including Boston) of the United States.

Alta Equipment Holdings, Inc.

is the holding company for Alta Enterprises, LLC.

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

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Alta Industrial Equipment New York, LLC;

PeakLogix, LLC;

Alta Construction Equipment, LLC;

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Alta Heavy Equipment Services, LLC;

Alta Construction Equipment Florida, LLC, and PeakLogix, 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.

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

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.

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The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein.

Operating results for the nine months ended September 30, 2020 is not necessarily indicative of the results that may be expected for the year ending December 31, 2020, and therefore, the results and trends in these interim consolidated financial statements may not be the same for the entire year.

These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes in our Registration Statement on Form S-1, filed with the U.S.

Securities and Exchange Commission (the “SEC”) on March 25, 2020 (the “Registration Statement”), from which the consolidated balance sheet amounts as of December 31, 2019 were derived.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Registration Statement.

COVID-19 Pandemic

On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures.

Subsequent to this characterization international, federal, state, and local public health and governmental authorities have taken extraordinary measures to contain and combat the outbreak and spread of COVID-19.

These actions include travel restrictions, local quarantines, “stay-at-home” orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to drastically reduce or cease customary operations.

The Company’s response to the global COVID-19 pandemic has been measured, swift and determined with an emphasis on health and safety, operating costs and liquidity.

Consistent with the actions taken by governmental authorities, virtually all of our sales and back office operations employees began working remotely in mid-March in order to reduce the spread of COVID-19.

Broadly, as the Company was deemed “essential” by state and local governments, our facilities were able to remain open, albeit at reduced capacity since the beginning of the second quarter.

As of September 30, 2020, all of our branches are fully operational although some of our administrative employees continued to work remotely.

Despite the Company remaining operational since the second quarter of 2020, certain segments of our customer base were negatively impacted by COVID-19 and, as such, our revenues were negatively impacted as well.

To mitigate the impact of reduced revenues, the Company implemented various cost savings measure s in the second quarter of 2020.

As business conditions and customer demand returned to more normalized levels, many of these cost savings measures and furlough programs were removed and eliminated in the third quarter.

While our sales and service-related operations are performing near pre-COVID levels, our rental fleet utilization has lagged pre-COVID performance.

The Company will continue to monitor utilization and, in-turn, rationalize rental fleet levels to match expected demand in the fourth quarter of 2020 and beyond.

COVID-19’s impact on our last quarter of 2020 financial results and beyond will depend on future developments, such as the duration and scope of the outbreak and the potential for future “shelter in place” orders that could impact our employees, customers and suppliers.

Although we have seen improvements as a result of the easing of various restrictions, we expect our full year 2020 results to be adversely affected by COVID-19.

We believe we have sufficient liquidity to fund our operations as we work through the COVID-19 recovery.

However, if there are future “shelter in place” orders or similar measures taken in the geographies that we operate in and the demand for our products and services is adversely impacted, we may take additional actions to further reduce costs and/or seek additional financing.

Operating results for the three months ended March 31, 2021 is not necessarily indicative of the results that may be expected for the year ending December 31, 2021, and therefore, the results and trends in these interim consolidated financial statements may not be the same for the entire year.

These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K.

The Company updated the depreciable useful lives of certain of its rental equipment product categories based on our year-end analysis of fair value relative to book value, prior-year utilization trends and a review of market participants approach to depreciation for similar products .

Per our accounting policy the updates to depreciable useful lives will be adjusted on prospective basis.

Specifically, the notable changes for 2021 will be extending the depreciable life on lift trucks in our Material Handling segment to 84 months, extending the depreciable life on certain aerial and crane related assets in our Construction Equipment segment to 120 months and applying straight-line depreciation to underutilized construction equipment assets that are being depreciated on a unit-of-activity basis to the extent the assets meet certain underutilized thresholds.

These accounting policies of the Company were also described in Note 2 to the audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K.

Use of Estimates

The COVID-19 outbreak has caused significant disruptions to national and global economies.

Our businesses are designated as critical infrastructure companies by the government and, as such, have remained open.

We have instituted various initiatives throughout the Company as part of our business continuity programs, and we are working to mitigate risk when disruptions occur.

While we continue to expect this situation to be temporary, and we believe we have successfully navigated the second and third quarter of 2020, any longer-term impacts of COVID-19 (or a future pandemic of its nature) is currently difficult to predict with certainty.

The nature of our business requires that we make estimates and assumptions in accordance with GAAP.

These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

The COVID-19 outbreak has an impact on the approach to these estimates and assumptions and will continue to do so.

Any increased severity of the COVID outbreak and the related future financial impacts cannot be estimated at this time.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts COVID-19 as of September 30, 2020 and through the date of this report.

The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts, inventory and related reserves and the carrying value of goodwill and other long-lived assets.

While there was no material impact to the Company’s consolidated financial statements, as of and for the quarter ended September 30, 2020, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

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.

Additionally, the COVID-19 outbreak has had an impact on our approach to these estimates and assumptions and any increased severity of the pandemic on our business could result in a reassessment of these estimates and assumptions which, in turn, could affect the reported amounts on our financial statements.

Please see section titled Risk Factors in our 2020 Annual Report on Form 10-K for a discussion of risks associated with the COVID-19 pandemic.

Impairment of Long-lived Assets

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

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.

After evaluating and weighing all relevant events and circumstances, the Company concluded that it was not necessary to perform an interim impairment test for the long-lived assets as of and for the period ended September 30, 2020.

After evaluating and weighing all relevant events and circumstances, the Company did not identify any indications necessary to perform an interim impairment test for the long-lived assets as of and for the period ended March 31, 2021.

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.

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A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.

After evaluating and weighing all relevant events and circumstances, the Company concluded there was no triggering event that constitutes the need to perform a goodwill impairment test for the period ended September 30, 2020.

It should be noted that at March 31, 2020, the Company’s share price reduction as a result of the ongoing COVID-19 pandemic during the first quarter of 2020, was determined to be a triggering event for impairment testing under ASC 350.

The Company performed an interim quantitative impairment analysis and the fair value of reporting units was determined based on valuation techniques using the best available information, primarily cash flow projections.

At that time, we determined no goodwill impairment existed for the period.

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.

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

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

The Company was formed in 2020 for 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).

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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.

Equity and Warrants

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 of September 30, 2020, no shares of preferred stock authorized have been issued.

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 September 30, 2020, there were warrants outstanding to acquire 8,668,750 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 the completion of our initial reverse recapitalization or earlier upon redemption or liquidation.

We use the guidance in FASB ASC Topic 740-270, Income Taxes in Interim Periods, where tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period.

At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected income (loss) before income taxes for the year, projections of the proportion of income (and/or loss) earned and taxed, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year.

The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or the Company’s tax environment changes.

In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or to the extent that the expected annual effective income tax rate changes, the effect of the change on prior interim periods is included in the income tax provision in the period in which the change in estimate occurs.

We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not likely to allow for the use of the deduction or credit.

Share Based Compensation

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New Accounting Pronouncements

Recent Accounting Pronouncements Adopted in 2020

Fair Value Measurement — Disclosure Framework (Topic 820)

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

Leases (Topic 842)

In February 2016, the FASB issued ASU No.

2016-02, Leases (“Topic 842”) that replaces the existing leasing guidance.

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.

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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 begi nning January 1, 2023.

Early adoption is permitted.

The new accounting standard is effective for the annual reporting period ended December 31, 202 1 with an effective date of January 1, 202 1 , and the interim reporting periods beginning January 1, 202 2 .

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.

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

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

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.

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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 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

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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.

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.

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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 the repurchase of the sold equipment back or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases.

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”).

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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 September 30, 2020 and December 31, 2019, the total lease liability relating to these various equipment sale transactions amounted to $4.1 million and $5.5 million, respectively.

The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $10.6 million and $12.5 million as of September 30, 2020 and December 31, 2019, respectively.

At March 31, 2021 and December 31, 2020, the total lease liability relating to these various equipment sale transactions amounted to $3.4 million and $3.8 million, respectively.

The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $8.5 million and $9.0 million as of March 31, 2021 and December 31, 2020, respectively.

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

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

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

The Company also enters into contracts with customer where it provides automated equipment installation and system integration services and installation and set-up of warehouse management systems and related hardware and software support 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.

Revenue from recurring support services is recognized ratably over the contract period.

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.

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

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

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

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 they have previously 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 service sales agreements, rental agreements and automated equipment installation and system integration services as of September 30, 2020 and December 31, 2019 was $9.8 million and $4.7 million, respectively.

Total deferred revenue relating to automated equipment installation and system integration services, service sales agreements and rental agreements as of March 31, 2021 and December 31, 2020 was $10.0 million and $9.6 million, respectively.

Disaggregation of Revenues

The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statement of Operations for the three months and nine months ended September 30, 2020 and 2019 by revenue type, and by the applicable accounting standard.

The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statement of Operations for the three months March 31, 2021 and 2020 by revenue type, and by the applicable accounting standard.

Three months ended

September 30, 2020

March 31, 2021

Three months ended

September 30, 2019

New and used equipment sales

Service revenue

Rental revenue

Rental equipment sales

Nine months ended

September 30, 2020

Nine months ended

September 30, 2019

March 31, 2020

New and used equipment sales

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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.

Under bill-and-hold arra ngements, 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.

The Company does not offer material rights of return.

The Company recognized approximately $ 7.1 million in revenues for the year-to-date period ended September 30, 2020 from automated equipment installation and system integration services as performance obligation was satisfied over time using the cost-to-cost input method , based on contract costs incurred to date to total estimated contract costs .

The Company recognized approximately $7.9 million and $0 million in revenues for the year-to-date period ended March 31, 2021 and 2020, respectively, from automated equipment installation and system integration services as the 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.

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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 periodic maintenance service revenues at the time such services are completed, which is when the control of the promised service s 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 $12.0 million and $12.1 million for the year-to-date period ended September 30, 2020 and 2019, respectively.

Revenue recognized from guaranteed maintenance contracts totaled $ 4.3 million and $ 4.0 million for the year-to-date period ended March 31 , 20 2 1 and 20 20 , 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.

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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 for both the nine months ended September 30, 2020 and September 30, 2019 was $3.6 million and for both the three months ended September 30, 2020 and September 30, 2019 was $1.2 million.

Total rent expense under these lease agreements for both the three months ended March 31, 2021 and 2020 was $1.2 million.

NOTE 5 — INVENTORIES

The components of inventories, net, consisted of the following (amounts in millions):

September 30,

New equipment

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Gross Inventory

Inventory reserve

Direct labor of $1.4 million and $1.2 million incurred for open service orders were capitalized and included in work in process at both September 30, 2020 and December 31, 2019.

The remaining work in process balances as of September 30, 2020 and December 31, 2019 primarily represent parts applied to open service orders.

Rental depreciation expense in connection with our new and used equipment was $0.9 and $2.4 million for the three and nine months ended September 30, 2020 and was $0.2 million and $1.5 million for the three and nine months ended September 30, 2019.

Inventory reserves

Direct labor of $2.1 million and $1.7 million incurred for open service orders were capitalized and included in work in process at March 31, 2021 and December 31, 2020, respectively.

The remaining work in process balances as of March 31, 2021 and December 31, 2020 primarily represent parts applied to open service orders.

Rental depreciation expense in connection with our new and used equipment was $2.0 million and $0.8 million for the three months ended March 31, 2021 and 2020, respectively.

NOTE 6 — PROPERTY AND EQUIPMENT

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

September 30,

Equipment and leasehold improvements:

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accumulated depreciation and amortization

Equipment and leasehold improvements and computer equipment

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 $47.8 million and $33.2 million for the nine months ended September 30, 2020 and 2019 and $19.4 million and $14.0 million for the three months ended September 30, 2020 and 2019, respectively.

Total depreciation and amortization on property and equipment was $18.7 million and $13.0 million for the three months ended March 31, 2021 and 2020, 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 $3.9 million and $3.5 million, and accumulated amortization balances totaling $2.1 million and $1.3 million, as of September 30, 2020 and December 31, 2019, respectively.

Of the $396.8 million and $285.1 million of gross cost of rental fleet, $15.4 million and $18.4 million were represented by guaranteed purchase obligation (“GPO”) assets as of September 30, 2020 and December 31, 2019, respectively.

Such assets had gross carrying values totaling $4.0 million and $4.0 million, and accumulated amortization balances totaling $2.7 million and $2.5 million, as of March 31, 2021 and December 31, 2020, respectively.

Of the $421.2 million and $418.5 million of gross cost of rental fleet, $12.4 million and $13.0 million were represented by guaranteed purchase obligation (“GPO”) assets as of March 31, 2021 and December 31, 2020, respectively.

NOTE 7 — GOODWILL

The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment as of September 30, 2020 and December 31, 2019 (amounts in millions):

The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment as of March 31, 2021 and December 31, 2020 (amounts in millions):

Balance, December 31, 2020

Balance, September 30, 2020

Balance, March 31, 2021

See Note 16, Business Combinations for further information.

NOTE 8 — INTANGIBLE ASSETS

The gross carrying amount of intangible assets and accumulated amortization as of September 30, 2020 and December 31, 2019 were as follows (amounts in millions):

September 30, 2020

The gross carrying amount of intangible assets and accumulated amortization as of March 31, 2021 and December 31, 2020 were as follows (amounts in millions):

March 31, 2021

December 31, 2020

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Non-compete agreements

Amortization of intangible assets were $0.7 million and $1.4 million for the three and nine months ended September 30, 2020 and $0.1 million and $0.2 million for the three and nine months ended September 30, 2019, respectively.

The Company concluded there was no triggering event that constitutes the need to perform finite-lived intangible assets for impairment for the period ended September 30, 2020.

Favorable Market Rent

Amortization of intangible assets were $0.7 million and $0.1 million for the three months ended March 31, 2021 and March 31, 2020, respectively.

NOTE 9 — LINES OF CREDIT AND FLOOR PLANS

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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 Agr eement, 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 in debtedness 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 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.

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.

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 .

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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 September 30, 2020, the Company had an outstanding ABL Facility balance of $140.5 million, excluding unamortized debt issuance costs.

The effective interest rate was 2.1% at September 30, 2020.

The Company has Floor Plan Facility with its first lien lender to finance new and used inventory and rental fleet equipment.

As of March 31, 2021, the Company had an outstanding ABL Facility balance of $170.9 million, excluding unamortized debt issuance costs.

The effective interest rate was 2.0% at March 31, 2021.

As of December 31, 2020, the Company had an outstanding ABL Facility balance of $159.1 million, excluding unamortized debt issuance costs.

The effective interest rate was 2.0% at December 31, 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 September 30, 2020 was 2.9%.

The effective interest rate at March 31, 2021 was 2.9%.

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

As of September 30, 2020, the Company had an outstanding balance on their first lien lender floor plan facility of $30.7 million, excluding unamortized debt issuance costs.

In relation to information regarding to our former line of credit and floor plans as of December 31, 2019, please refer to the “Lines of Credit and Floor Plans” footnote in our Registration Statement on Form S-1, filed with the SEC on March 25, 2020.

As of March 31, 2021, the Company had an outstanding balance on their first lien lender floor plan facility of $34.3 million, excluding unamortized debt issuance costs.

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.

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

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

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

Certain floor plans provide for a five to twelve-month interest only or deferred payment periods.

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.

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The interest is LIBOR plus an applicable margin.

The effective rates, excluding the favorable effect of interest-subsidies, as of September 30, 2020 ranged from 3.0% to 4.2%.

As of September 30, 2020, the Company had an outstanding balance on these floor plans of $124.3 million.

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

Total borrowings related to floorplan financing as of September 30, 2020 was $155.0 million excluding unamortized debt issuance costs.

For the nine months ended and three months ended September 30, 2020 the Company recognized interest expense associated with new equipment financed under its floor plan facilities of $1.8 million and $0.5 million.

The effective rates, excluding the favorable effect of interest-subsidies, as of March 31, 2021 ranged from 3.2% to 4.1%.

As of March 31, 2021, the Company had an outstanding balance on these floor plans of $120.0 million.

The total aggregate amount of floor plan financing (including the first lien lender floor plan) cannot exceed $250.0 million at any time.

Total balance related to floorplan financing as of March 31, 2021 and December 31, 2020 was $154.3 million and $157.5 million, respectively, excluding unamortized debt issuance costs.

For the three months ended March 31, 2021 and 2020, the Company recognized interest expense associated with new equipment financed under its floor plan facilities of $0.5 million and $0.7 million, respectively.

Maximum borrowings under the floor plans and ABL Facility are limited to $550 million.

The total amount outstanding as of September 30, 2020 was $295.5 million, exclusive of debt issuance and deferred financings costs of $1.6 million.

The total amount outstanding as of March 31, 2021 and December 31, 2020 was $325.2 million and $316.6 million, exclusive of debt issuance and deferred financings costs of $1.4 million and $1.5 million, respectively.

Each of the ABL Facility and the Floor Plan Facility was amended and restated in its entirety on April 1, 2021.

See Note 18, Subsequent Events – Amended and Restated Credit Arrangements for further information.

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;

T he Company entered into a new Note Purchase Agreement (the “Term Loan”) dated as of February 3, 2020 i n connection with the reverse recapitalization, 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 September 30, 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.

1 unchanged sentence

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 September 30, 2020, the effective interest rate was 9.8%.

As of March 31, 2021, the effective interest rate was 9.8%.

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

As of September 30, 2020, outstanding borrowings under the term loan were $151.1 million, which included $6.9 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 September 30, 2020, there were no notes payable to an OEM captive lender on our Consolidated Balance Sheet.

As of March 31, 2021, outstanding borrowings under the term loan were $147.3 million, which included $6.0 million deferred financing costs and original issue discounts.

On April 1, 2021, we completed a private offering of $315 million of our 5.625% Senior Secured Second Lien Notes due 2026 (the “Notes”).

The Company used the net proceeds from the sale of the Notes and the new borrowings under the ABL Facility and the Floor Plan Facility, to repay its $147.3 million second lien term loan facility, to repay and refinance a portion of the ABL Facility and the Floor Plan Facility and to pay related fees and expenses.

See Note 18, Subsequent events – Issuance of 5.625% Senior Secured Second Lien Notes due 2026 for further information.

Extinguishment of Debt

In accordance with ASC Topic No.

In the first quarter of 2020, 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.

This was 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.

470), as the transaction was determined to be an extinguishment of the existing debt and an issuance of new debt.

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

September 30,

Senior lien holder

OEM captive lender

Subordinated debt

First lien lender – term loan

Unamortized debt issuance costs

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Long-term debt, net

As of September 30, 2020, the Company was in compliance with the financial covenants set forth in its debt agreements.

As of March 31, 2021, the Company was in compliance with the financial covenants set forth in its debt agreements.

Promissory Note

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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 September 30, 2020.

Due to the short-term nature of the note, the liability was included in “Other current liabilities” on the Consolidated Balance Sheet as of March 31, 2021.

Notes Payable – Non-Contingent Consideration

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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 September 30, 2020, the Company recorded a $1.7 million liability related to present value of these minimum cash payments using a market participant discount rate.

As of March 31, 2021, 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.

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NOTE 11 — CONTINGENCIES

As of September 30, 2020, and December 31, 2019, the Company was party to certain contracts in which it guarantees the performance of agreements between various third-party financial institutions.

As of March 31, 2021, and December 31, 2020, the Company was party to certain contracts in which it guarantees the performance of agreements between various third-party financial institutions.

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 obligations as specified in the contract.

The estimated exposure related to these guarantees was $2.6 million and $3.3 million at September 30, 2020 and December 31, 2019, respectively.

The estimated exposure related to these guarantees was $1.9 million and $2.4 million at March 31, 2021 and December 31, 2020, 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 September 30, 2020 and December 31, 2019.

therefore, no amount has been accrued on the Consolidated Balance Sheets at March 31, 2021 and December 31, 2020, respectively.

Legal Proceedings

During the nine months ended September 30, 2020 and September 30, 2019, various claims and lawsuits, incidental to the ordinary course of business, were pending against the Company.

During the three months ended March 31, 2021 and March 31, 2020, various claims and lawsuits, incidental to the ordinary course of business, were pending against the Company.

In the opinion of management, after consultation with legal counsel, resolution of these matters is 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 March 31, 2021, and December 31, 2020 there was $1.4 million in outstanding letters of credits issued in the normal course of business, respectively.

NOTE 12 — INCOME TAXES

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

The income tax benefit for the three and nine months ended September 30, 2020 and 2019 consisted of the following:

Three Months Ended September 30,

Nine Months Ended September 30,

The income tax provision (benefit) for the three months ended March 31, 2021 and 2020 consisted of the following:

Three Months Ended March 31,

Federal taxes-current

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State taxes-deferred

The Company recorded an income tax benefit of $1.9 million and $0 for the three months ended September 30, 2020 and 2019, income tax benefit of $3.4 million and $0 for the nine months ended September 30, 2020 and 2019, respectively.

For the period ended September 30, 2019, the Company was not in existence and therefore does not have a comparable period.

The income tax benefit covers the period starting with the reverse recapitalization on February 14, 2020 through the period ended September 30, 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.

The Company finalized the February 14, 2020 pre-tax income calculation in the third quarter of 2020.

As a result, for the three months and nine months ended September 30, 2020, the income tax benefit was $1.9 million and $3.4 million, respectively.

This was primarily driven by the level of pre-tax loss of $14.1 million for the period from February 14, 2020 to September 30, 2020.

The effective income tax rate for the period from February 14, 2020 to September 30, 2020 of 24.1% was affected by non-deductible expenses and state income taxes.

As of September 30, 2020, the Company had $15.6 million of net deferred tax liabilities.

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.

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period.

At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

The Company recorded an income tax expense of $0.5 million for the three months ended March 31, 2021 and an income tax benefit of $1.1 million for the three months ended March 31, 2020.

As a result of Alta’s first quarter 2021 analysis of the realizability of its deferred tax assets, and after considering tax planning initiatives and other inputs, Alta determined that it was more likely than not that deferred tax assets would not be realized and recorded income tax expense of $0.5 million to establish a valuation allowance.

Alta reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required.

In determining the requirement for a valuation allowance, the historical and projected financial results are considered, along with any other positive or negative evidence.

All of the factors that Alta considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment.

The effective tax rate for the three months ended March 31, 2021 was (8.8) % when compared to 24.1 % for the period from February 14, 2020 to March 31, 2020 in connection with the reverse recapitalization.

This was mainly due to the impact of the application of the valuation allowance during the first quarter.

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.

At this time, we plan to take advantage of both the payroll tax deferral and the employee retention credit.

We are currently evaluating the full impact of these provisions and recent IRS guidance, but note that any portion of accrued payroll tax not paid out by December 31, 2020 may not be deductible for income tax purposes in 2020.

Further evaluation is required to determine the current year impact.

With regard to the Employee Retention Credit, as this only impacts payroll taxes which are recorded in pre-tax income, there would be no impact on the income tax provision.

The CARES Act, among other things, 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 prior periods, although it will impact the timing of future cash payments for taxes.

As of March 31, 2021, 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 13 — EQUITY

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 $2,500 or $2.50 per depositary share).

Dividends are 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 was scheduled to be paid and was paid on or about April 30, 2021 in the amount of $0.88889 per depositary share.

This dividend payment covered the period from and including December 22, 2020 through, but not including, April 30, 2021.

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 2017 Warrants”).

The 2017 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 2017 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.

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

As a result, the Company redeemed all the 2017 Warrants outstanding upon closing of the reverse recapitalization and as of December 31, 2020, there were no warrant liabilities on the Consolidated Balance Sheet associated with the 2017 Warrants.

On April 12, 2021, we exchanged all 8,668,746 of our outstanding warrants into shares of our common stock at an exchange ratio of 0.263 shares of common stock per warrant, for an aggregate issuance of approximately 2,279,874 shares of common stock in the exchange.

Also, on April 12, 2021, the Acting Chief Accountant and Acting Director of the Division of Corporation Finance of the

Securities and Exchange Commission (the “SEC”) released the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.

See Note 18, Subsequent Events – Warrant Exchange and Part II, 1A “Risk Factors” fo r further information.

NOTE 14 — SHARE BASED COMPENSATION

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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 $3.2 million for the three months and nine months ended September 30, 2020, respectively .

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 September 30, 2020, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $2.0 million, which is expected to be recognized over a weighted average period of 3.0 years.

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

Restricted Stock Awards

The Company recognized total compensation expense of $0.3 million and $0 million for the three months ended March 31, 2021, and 2020 respectively.

As of March 31, 2021, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $1.4 million, which is expected to be recognized over a weighted average period of 2.4 years.

The following table summarizes our restricted stock unit activity as of March 31, 2021:

Restricted Stock Units

Number of units

Weighted average grant date fair value

As of September 30, 2020

As of December 31, 2020

As of March 31, 2021

NOTE 15 — 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 September 30, 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.

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 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 industrial 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 reported 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 September 30, 2020, there were no warrant liabilities on the Consolidated Balance Sheet.

Contingent Consideration

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Hilo Equipment & Services (“Hilo”)

The purchase agreement for the Hilo acquisition provides for one additional 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 present value of probability weighted expected future results.

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 16, Business Combinations for further information.

The following table sets forth, by level of hierarchy, the provisional fair value of contingent liability for the earn-out considerations at net present value as of September 30, 2020, which was presented in “Other liabilities” on the Consolidated Balance Sheet:

September 30, 2020

The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of March 31, 2021 and December 31, 2020, which was presented in “Other Liabilities” on the Consolidated Balance Sheet:

March 31, 2021

Contingent consideration

December 30, 2020

Contingent consideration

The following is a summary of changes to Level 3 instruments as of March 31, 2021 and December 31, 2020:

Contingent Consideration

Balance, January 1, 2020

Acquisition of PeakLogix

Acquisition of Hilo

Change in fair value

Balance, December 31, 2020

Change in fair value

Balance, March 31, 2021

NOTE 16 — BUSINESS COMBINATIONS

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Prepaid and other assets

Property, plant, and equipment

Property and equipment, net

Accounts payable

Accrued expenses

Other current liabilities

Total Liabilities

Net Assets Acquired

Assets acquired net of cash

SCOTTTECH, LLC (“ScottTech”)

On March 1, 2021, the Company acquired all the assets of ScottTech, for a total purchase price of $2.4 million, paid out of available funds.

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.

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

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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 of $75.8 million, which was paid out of funds from the closing of the reverse recapitalization.

T he 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 and may be subject to adjustment pending completion of final valuation.

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.

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.

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

It should be further noted that, upon the acquisition’s close, the Company established additional floorplan borrowings for new equipment on its Floor Plan Facility with its first lien lender in the amount of $1.2 million, for a total enterprise value of $74.2 million net of cash acquired.

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.

T he acquisition has been accounted for as a purchase business combination.

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.

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

It should be further noted that, upon the acquisition’s close, the Company established additional floorplan borrowings for new equipment on its Floor Plan Facility with its first lien lender in the amount of $2.5 million, for a total enterprise value of $15.9 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 $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 through-out 5-year earn-out period, collectively resulting in an estimated enterprise value of $6.4 million net of cash acquired.

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 15, Fair Value Instruments for further information.

T he acquisition has been accounted for as a purchase business combination.

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.

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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:

The following table summarizes the component s of the purchase price at June 12, 2020 :

Cash consideration paid *

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* 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 a total purchase cash consideration of $18.2 million which was paid out of available funds, and potential earn out payments of an additional $1.0 million.

T he acquisition has been accounted for as a purchase 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.

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

It should be further noted that, upon the close of the acquisition, total enterprise value was $16.9 million net of cash acquired.

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:

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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.

T he 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.

T he 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 .

It should be further noted that, upon the close of the acquisition, the Company established additional floorplan borrowings for new equipment on its Floor Plan Facility with its first lien lender in the amount of $2.1 million, for a total enterprise value of $14.1 million.

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 total balance of goodwill was allocated to the Industrial Equipment segment.

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 on its Floor Plan Facility with its first lien lender, and OEMs, in the amount of $23.5 million, for a total enterprise value of $42.1 million.

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 .

Pro forma financial information – 2021

The financial effect of the 2021 acquisition, was not material to the consolidated financial statements.

As such, pro forma results of operations have not been presented.

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 from February 14, 2020.

Pursuant to ASC 805, pro forma disclosures should be

reported w henever the year or interim period of the acquisition is presented.

Th e pro forma information below gives effect to the Flagler acquisition as if the acquisition occurred on January 1, 2020.

9 Months ended September 30, 2020

Total revenues

Pro forma financial information - 2019

The Company completed the NITCO acquisition on May 1, 2019.

Therefore, operating results of NITCO are included in the Company’s Consolidated Statement of Operations from May 1, 2019.

Pursuant to ASC 805, pro forma disclosures should be reported whenever the year or interim period of the acquisition is presented.

Since the NITCO acquisition was completed in the period ended December 31, 2019, the pro forma information below gives effect to the NITCO acquisition as if the acquisition occurred on January 1, 2019.

The Company, for this presentation, prorated NITCO pro forma financial information presented in our Registration Statement on Form S-1, filed with the SEC on March 25, 2020.

9 Months ended September 30, 2019

3 Months ended September 30, 2019

The pro forma information below gives effect to the Flagler acquisition as if the acquisition occurred on January 1, 2020.

For the three months ended March 31, 2020

(amounts in millions)

Total revenues

Net (loss) income

The financial effect of the other acquisitions, individually and in the aggregate, was not material to the consolidated financial statements.

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The Company has two reportable segments:

Industrial Equipment and Construction Equipment.

Material Handling and Construction Equipment.

The “Material Handling” segment has been previously reported as our “Industrial” segment.

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 Industrial Equipment segment is principally engaged in operations related to the sale, service, and rental of lift trucks in Michigan, Illinois, Indiana and New York, as well as parts of the northeastern United States.

As of September 30, 2020, the Industrial Equipment 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 September 30, 2020, the Construction Equipment segment included the Flagler and Martin acquisitions.

The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks and other m aterial h andling equipment in Michigan, Illinois, Indiana , New York (including New York City) , Virginia as well as the New England region (including Boston) of the United States .

As of March 31, 202 1 , the Material Handling segment included the ScottTech acquisition and its related results for the quarter .

The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Illinois, New York (not including New York City), Florida and the New England region (including Boston) of the United States.

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 nine months ended September 30, 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 quarter, Corporate primarily incurred expenses associated with consulting and legal fees related to acquisition costs, 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 nine months ended September 3 0 , 20 20 (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 three months ended September 30, 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 nine months ended September 30, 2019 (amounts in millions):

For the quarter ended March 31, 2021, Corporate incurred expenses associated with compensation (including shared based compensation) of our directors, corporate officers and certain members of our shared-services leadership team, consulting and legal fees related to acquisitions and capital raising activities, corporate governance and compliance related matters, certain corporate development related expenses and interest expense associated with original issue discounts and deferred financing cost related to previous capital raises, which were offset with income tax benefit.

For the quarter ended March 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.

Additionally, as it relates to certain allocated corporate level expenses (e.g.

audit, tax and other professional fees, interest, IT and HR related expenses, certain corporate marketing expenses, etc.), the Company evaluates and analyzes the appropriateness of expense allocations to each of its business units (and therefore segments) on an annual basis and makes necessary adjustments to these allocations at year-end.

The Company uses metrics such as headcount, revenue and total assets, where appropriate, to develop these allocations.

In connection with the purchase of NITCO LLC in 2019, the Company expanded its full-service material handling and construction equipment dealer operations into New England market.

Given that the sales of the business was more heavily-weighted to material handling versus construction and that NITCO’s reporting systems made it difficult for the construction business to be observed separate from the Material Handling operation, NITCO’s total financial results were historically presented within our Material Handling segment.

On January 1, 2021, with the migration of the NITCO business to the Company’s main ERP system, the Company is now able to report the results for the Material Handling and Construction Equipment results within their respective segments for the NITCO business unit.

As such, the Company has re-casted certain prior period segment-level results for the NITCO business unit to be consistent with the current period presentation for appropriate period-over-period comparability.

The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2021 (amounts in millions):

Material Handling

New and used equipment sales

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Net income (loss)

The following table presents the Company’s results of operations by reportable segment for the three months ended September 3 0 , 201 9 (amounts in millions):

The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2020 (amounts in millions):

Material Handling

New and used equipment sales

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Net income (loss)

The following table presents the Company’s identified assets by reportable segment for the period ending September 30, 2020 and December 31, 2019 (amounts in millions):

September 30,

The following table presents the Company’s identified assets by reportable segment for the period ending March 31, 2021 and December 31, 2020 (amounts in millions):

Segment assets:

Industrial equipment

Material Handling

Construction Equipment

NOTE 18 — SUBSEQUENT EVENTS

On October 30, 2020, the Company closed its acquisition of all the assets of Howell Tractor and Equipment, LLC.

(“Howell”), a privately held heavy equipment dealer serving Northern Illinois and Northwest Indiana.

The purchase price consisted of $23.3 million in cash paid at closing, subject to certain adjustments based upon Howell’s net working capital at closing.

Additionally, the Company issued 507,143 shares of its common stock in connection with the purchase agreement, yielding a total enterprise value of approximately $23.8 million, excluding approximately $3.4 million of floorplan eligible new equipment inventories.

Warrant Exchange

Also, o n April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “SEC Statement”).

The SEC Statement sets forth the conclusion of the SEC’s Office of the Chief Accountant that certain provisions included in the warrant agreements entered into by many special purpose acquisition companies require such warrants to be accounted for as liabilities measured at fair value, rather than as equity.

The SEC Statement also directs issuers who have accounted for these warrants as equity to consider whether the impact of the change in accounting treatment is material and thus require a restatement of previously issued financial statements.

In this Form 10-Q and in our financial statements prior to the exchange of warrants for shares of our common stock, we have classified our private placement warrants and public warrants as equity.

We evaluated the SEC Statement with respect to our accounting treatment of our warrants and have determined that such guidance would have resulted in the private placement warrants, and not the public warrants, being classified as liabilities on the balance sheet as of December 31, 2020 with the mark to market change in fair value reflected in the statement of operations.

Accordingly, we have performed an evaluation of the materiality of this matter in accordance with Staff Accounting Bulletin 99 (“SAB 99”).

Notably, of the 8,668,746 warrants that were outstanding since the Business Combination was consummated on February 14, 2020 only 206,250 were private placement warrants subject to liability treatment based on the SEC Statement.

To that end, based on our SAB 99 assessment, which included fair value analysis of the 206,250 private placement warrants, we determined that classifying the private placement warrants as liabilities on the balance sheet, versus equity, is immaterial to our historic financial statements and that a restatement is unnecessary.

Issuance of 5.625% Senior Secured Second Lien Notes due 2026

On April 1, 2021,we completed a private offering of $ 315 million of our 5.625 % Senior Secured Second Lien Notes due 2026 (the “Notes”).

The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement among the Company, the guarantors party thereto (the “Guarantors”) and J.P.

Morgan Securities LLC, as representative of the initial purchasers.

The Notes are guaranteed by the Guarantors (the “Guarantees” and, together with the Notes, the “Securities”) on a second lien, senior secured basis.

The Notes will also be guaranteed by each of our existing and future domestic subsidiaries that becomes a borrower or guarantor under our or the Guarantors’ indebtedness, including the Credit Agreements (as defined below), amended and restated concurrently with the closing of the Notes offering.

The Notes and the Guarantees are secured, subject to certain exceptions and permitted liens, by second-priority liens on substantially all of our assets and the assets of the Guarantors that secure on a first-priority basis all of the indebtedness under our ABL Facility (as defined below) and the Floor Plan Facility (as defined below) and certain hedging and cash management obligations, including, but not limited to, equipment, fixtures, inventory, intangibles and capital stock of our restricted subsidiaries now owned or acquired in the future by us or the Guarantors.

The Notes were issued pursuant to an indenture dated April 1, 2021 (the “Indenture”), among us, the Guarantors and Wilmington Trust, National Association, as trustee and as collateral agent.

The Notes will bear interest at the rate of 5.625% per annum and will mature on April 15, 2026.

Interest on the Notes is payable in cash on April 15 and October 15 of each year, beginning on October 15, 2021.

Amended and Restated Credit Arrangements

On April 1, 2021, in connection with the offering of the Notes, we entered into:

(i) a Sixth Amended and Restated ABL First Lien Credit Agreement, dated April 1, 2021, among us, our subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders who are parties to the agreement (the “ABL Credit Agreement” and the facility thereunder, the “ABL Facility”);

(ii) a Sixth Amended and Restated Floor Plan First Lien Credit Agreement among us, certain of our subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders who are parties to the agreement (the “Floor Plan Credit Agreement” and the facility thereunder, the “Floor Plan Facility”).

The ABL Facility is an asset-based revolving loan facility that provides for borrowings of up to the lesser of $350 million or the borrowing base, in each case, less outstanding loans and letters of credit.

The ABL Facility has a maturity date of the earlier of (a) April 1, 2026, or (b) December 1, 2025 if the Notes remain outstanding on December 1, 2025.

The Floor Plan Facility is an asset-based revolving loan facility related to the floor plan equipment that provides for borrowings of up to the lesser of $40 million or the borrowing base.

The Floor Plan Facility has an expiration date of the earlier of (a) April 1, 2026, or (b) December 1, 2025 if the Notes remain outstanding on December 1, 2025.

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-Q

Item 1. Financial Statements