ALTA EQUIPMENT GROUP INC. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures. Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, as our principal financial and accounting officer, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting, described below. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management utilized the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021. Management has excluded from its evaluation the internal control over financial reporting of all current year acquisitions, which were included in the December 31, 2021 consolidated financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 36 We identified three material weakness es in internal control over financial reporting as of December 31, 2021: 1) The first related to ineffective information technology general controls (ITGCs) in the areas of user access and segregation of duties over certain information technology (IT) systems that support the Company’s financial reporting processes. Our business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were a result of IT control processes lacking sufficient documentation such that the successful operation of ITGCs was overly dependent upon knowledge and experience of certain individuals within the Company. 2) The second related to ineffective controls in aggregate over parts inventory, including cycle counts, receiving controls, and monitoring of adjustments to inventory. We believe that these control deficiencies were a result of inadequate policies and procedures and lack of training leading to the inconsistent control performance across our geographies. 3) The third related to ineffective controls in aggregate over the order-to-cash process, including proper review and authorization of pricing and discounts, work orders, sales agreements, and rental contracts. We believe that these control deficiencies were a result of inadequate policies and procedures and lack of training leading to the inconsistent control performance across our geographies. Based on the assessment and identification of the material weaknesses described above, management has concluded that, as of December 31, 2021, our internal control over financial reporting was not effective. Our chief executive officer and principal financial officer have certified that, based on each such officer’s knowledge, the financial statements, and other financial information included in this Annual Report on Form 10-K, fairly present in all material respects our financial condition, results of operations, and cash flows as of, and for, the periods presented in this Annual Report on Form 10-K. In addition, we have begun to develop a remediation plan for these material weaknesses, which is described below. The effectiveness of our internal control over financial reporting has been audited by UHY LLP , an independent registered public accounting firm. As stated in its report included herein, UHY LLP has issued an adverse audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. Remediation Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: 1) For the material weakness over user access and segregation of duties; (i) working with our enterprise resource planning (“ERP”) vendor to implement a specific system module to assist with the documentation and monitoring of user access and segregation of duties; (ii) dedicating personnel, including management, to focus on successful and timely implementation of the aforementioned ERP module; (iii) enhancing and expanding policies and procedures over the performance of user access reviews and the monitoring of segregation of duties; (iv) developing a training program and educating control owners concerning the principles and requirements of each control related to user access and segregation of duties within IT systems impacting financial reporting. 2) For the material weakness over parts inventory; (i) enhancing and expanding policies and procedures over the performance of controls around parts inventory, including cycle counts, receiving, and the monitoring of inventory adjustments; (ii) developing a training program and educating personnel concerning the principles and requirements of each control impacting parts inventory; (iii) dedicating personnel, including management, to focus on successful and timely development and implementation of the aforementioned policies, procedures, and training. 3) For the material weakness over order-to-cash; (i) enhancing and expanding policies and procedures over the performance of controls around the sales process, across all lines of business; (ii) developing a training program and educating personnel concerning the principles and requirements of each control impacting the sales cycle; (iii) dedicating personnel, including management, to focus on successful and timely development and implementation of the aforementioned policies, procedures, and training. We believe that these actions will remediate the material weaknesses. The weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. While there can be no assurance that our efforts will be successful, we expect that the remediation of these material weaknesses will be completed prior to the end of fiscal 2022. 37 Changes in Internal Control Over Financial Reporting Except for the material weaknesses identified during the quarter, there was no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 38 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report. Item 11. Executive Compensation. The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report. Item 14. Principal Accounting Fees and Services. The information required by this Item is incorporated by reference to the applicable information in our definitive proxy statement, which will be filed no later than 120 days after the close of the fiscal year covered by this annual report. 39 PART IV Item 15. Exhibits, Financial Statement Schedules. (1) Financial Statements The consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K. (2) Exhibits The Exhibits listed below are filed as part of this Annual Report on Form 10-K. Item 16. Form 10-K Summary None. 40 Exhibit Index Exhibit Number Description 2.1 Merger Agreement, dated as of December 12, 2019, by and among B. Riley Principal Merger Corp., BR Canyon Merger Sub Corp., Alta Equipment Holdings, Inc. and Ryan Greenawalt (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 13, 2019). 3.1 Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 8-A (File No. 001-38864) filed by the Company on February 14, 2020). 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Form 8-A (File No. 001-38864) filed by the Company on February 14, 2020). 3.3 Certificate of Designation for 10% Series A Cumulative Perpetual Preferred Stock of Alta Equipment Group Inc. (incorporated by reference to Exhibit 3.3 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 22, 2020) 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Form 8-A (File No. 001- 38864) filed by the Company on February 14, 2020). 4.2 Specimen Warrant Certificate (incorporated by reference to Exhibit 4.2 of the Form 8-A (File No. 001-38864) filed by the Company on February 14, 2020). 4.3 Warrant Agreement, dated April 8, 2019, between the B. Riley Principal Merger Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019). 4.4 Deposit Agreement, dated December 22, 2020, among Alta Equipment Group Inc., Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, with respect to Alta Equipment Group’s 10% Series A Cumulative Perpetual Preferred Stock (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 22, 2020) . 4.5 Form of Specimen Certificate representing the 10% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share, of Alta Equipment Group Inc. (incorporated by reference to Exhibit 4.5 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 22, 2020) . 4.6 Form of Depositary Receipt (included as Exhibit A to Exhibit 4.4) (incorporated by reference to Exhibit 4.6 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 22, 2020) . 4.7 Indenture, dated April 1, 2021, among the Company, the Guarantors listed therein and Wilmington Trust, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 5, 2021) . 4.8 Form of 5.625% Senior Secured Second Lien Notes due 2026 (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 5, 2021). Form of 5.625% Senior Secured Second Lien Notes due 2026 (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 5, 2021) . 4.9 Registration Rights Agreement, dated April 8, 2019, by and among the Company, B. Riley Principal Sponsor Co., LLC and the Company’s independent directors (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019). 4.10 Registration Rights Agreement, dated February 14, 2020, by and among the Company and Ryan Greenawalt, Robert Chiles, Anthony Colucci, Craig Brubaker, Alan Hammersley, Richard Papalia, Paul Ivankovics and Jeremy Cionca (incorporated by reference to Exhibit 10.2 of the Form 8-A (File No. 001- 38864) filed by the Company on February 14, 2020). 41 10.1 Sixth Amended and Restated ABL First Lien Credit Agreement, dated April 1, 2021, among Alta Equipment Group Inc., Alta Equipment Holdings, Inc., Alta Enterprises, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Industrial Equipment Michigan, LLC, Alta Construction Equipment, L.L.C., Alta Industrial Equipment Company, L.L.C., NITCO, LLC, Alta Construction Equipment Florida, LLC, Alta Industrial Equipment New York, LLC, Alta Construction Equipment New York and PEAKLOGIX, LLC the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019) . 10.2 Sixth Amended and Restated Floor Plan First Lien Credit Agreement, dated February 3, 2020, among Alta Equipment Group Inc., Alta Equipment Holdings, Inc., Alta Enterprises, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Industrial Equipment Michigan, LLC, Alta Construction Equipment, L.L.C., Alta Industrial Equipment Company, L.L.C., NITCO, LLC, Alta Construction Equipment Florida, LLC, Alta Industrial Equipment New York, LLC, Alta Construction Equipment New York and PEAKLOGIX, LLC the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019) . 10.3 Intercreditor Agreement, dated April 1, 2021, between JPMORGAN CHASE BANK, N.A., as Administrative Agent for the ABL First Lien Secured Parties, WILMINGTON TRUST, NATIONAL ASSOCIATION, as collateral agent for the Second Lien Secured Parties, and acknowledged by Alta Equipment Group Inc., Alta Equipment Holdings, Inc., Alta Enterprises, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Industrial Equipment Michigan, LLC, Alta Construction Equipment, L.L.C., Alta Industrial Equipment Company, L.L.C., NITCO, LLC, Alta Construction Equipment Florida, LLC, Alta Industrial Equipment New York, LLC, Alta Construction Equipment New York, LLC and PEAKLOGIX, LLC (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019) . 10.4 Letter Agreement, dated April 8, 2019, by and among the Company, its officers, its directors and B. Riley Principal Sponsor Co., LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019). 10.5 Forward Purchase Agreement, dated April 8, 2019, by and between the Company and B. Riley Principal Investments, LLC (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on April 11, 2019). 10.6 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.6 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on February 14, 2020). 10.7 Amendment to Subscription Agreement, dated February 12, 2020, by and between the Company and B. Riley Principal Investments, LLC (incorporated by reference to Exhibit 10.7 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on February 14, 2020). 10.8 Alta Equipment Group Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Annex C to the Definitive Proxy Statement filed by the Company on January 23, 2020). 10.9 Registration Side Letter — Howell Share Consideration (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1 (File No. 001-38864) filed by the Company on October 26, 2020) . 10.10 Underwriting Agreement, dated December 17, 2020, by and among Alta Equipment Group Inc. and B. Riley FBR, Inc., as representative of the several underwriters named therein (incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K (File No. 001-38864) filed by the Company on December 22, 2020) . 10.11* Form of Restricted Stock Unit Agreement (Employee) . 10.12* Form of Restricted Stock Unit Agreement (Non-Employee Director) 21.1* Subsidiaries of the Company. 23.1* Consent of UHY LLP. 24.1 Powers of Attorney (included on the signature page of this Annual Report on Form 10-K). 42 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EX-104  Cover Page Interactive Data File (embedded within the Inline XBRL document) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . ALTA EQUIPMENT GROUP INC. Date: March 31, 2022 By: /s/ Ryan Greenawalt Ryan Greenawalt Chief Executive Officer and Director Power of Attorney KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ryan Greenawalt and Tony Colucci, jointly and severally, their attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Ryan Greenawalt Chief Executive Officer and Director March 31, 2022 Ryan Greenawalt (Principal Executive Officer) /s/ Anthony J. Colucci Chief Financial Officer March 31, 2022 Anthony J. Colucci (Principal Financial Officer and Principal Accounting Officer) /s/ Zachary Savas Director March 31, 2022 Zachary Savas /s/ Daniel Shribman Director March 31, 2022 Daniel Shribman /s/ Andrew Studdert Director March 31, 2022 Andrew Studdert /s/ Katherine White Director March 31, 2022 Katherine White 44 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-6 Consolidated Statements of Operations for the Years ended December 31, 2021 and 2020 F-7 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2021 and 2020 F-8 Consolidated Statements of Cash Flows for the Years ended December 31, 2021 and 2020 F-9 Notes to Consolidated Financial Statements F-10 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alta Equipment Group Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Alta Equipment Group Inc. and Subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 31, 2022, expressed an adverse opinion. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. As disclosed in Note 12 of the consolidated financial statements, the Company leases its operating branch facilities and fleet of service vehicles. Auditing management’s accounting and presentation for leases was especially complex and challenging as the Company’s right-of-use assets and lease liabilities totaled $104 million and $106 million, respectively, at the date of adoption of ASC 842, Leases. We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process for determining the classification, valuation and completeness of the right-of-use assets and lease liabilities. Such controls include management’s review of the completeness of the population of leases, including lease modifications, verification of the accuracy of the computation of the right-of-use asset and lease liability, including the determination of the incremental borrowing rate. We tested the completeness of the lease population through evidence obtained from Company personnel and an assessment of leases on a location-by-location basis based upon our understanding of the Company’s branches and master lease agreements. For a sample of leases, we performed audit procedures that included, testing the accuracy of data used in the calculation of the right-of-use asset and lease liability, by agreeing the underlying inputs, such as lease term and payment terms to source documents. We evaluated key assumptions and methodologies used in the Company’s selection of the incremental borrowing rate by developing a comparative calculation. We have served as the Company’s auditor since 2019. F-2 /s/ UHY LLP Sterling Heights, Michigan March 31, 2022 F-3 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Alta Equipment Group Inc. and Subsidiaries Adverse Opinion on Internal Control over Financial Reporting We have audited Alta Equipment Group Inc. and Subsidiaries’ (the Company’s) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on the criteria established in Internal Control---Integrated Framework (2013) issued by COSO. A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s assessment: (1) The Company had ineffective information technology general controls (ITGCs) in aggregate over systems that support the Company’s financial reporting processes in the areas of user access and segregation of duties conflicts. These items were pervasive due to a system limitation and included access to master files and initiating, authorizing, and recording transactions. (2) The Company had ineffective controls in aggregate over inventory related to cycle counting of parts inventory, including review and approval of adjustments to inventory, and ensuring timely receipt and validation of parts inventory received. (3) The Company had ineffective controls in aggregate over the order-to-cash process, including proper review and authorization of pricing and discounts, work orders, sales agreements, and rental contracts. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report dated March 31, 2022, on those consolidated financial statements. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets and the related statements of operations, stockholders’ equity, and cash flows of the Company, and our report dated March 31, 2022, expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. F-4 To the Board of Directors and Stockholders of Alta Equipment Group Inc. and Subsidiaries Page Two As indicated in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the entities that were acquired by the Company during 2021 (the “2021 Acquisitions”), which are included in the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of operations, cash flows and changes in stockholders’ equity for the year then ended. The 2021 Acquisitions’ net revenue represented approximately two percent of consolidated net revenue for the year ended December 31, 2021. As of December 31, 2021, the 2021 Acquisitions’ total assets represented approximately nine percent of consolidated total assets. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the 2021 Acquisitions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ UHY LLP Sterling Heights, Michigan March 31, 2022 F-5 ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share amounts) December 31, 2021 December 31, 2020 ASSETS CURRENT ASSETS Cash $ 2.3 $ 1.2 Accounts receivable, net of allowances of $ 10.7 and $ 7.1 as of December 31, 2021 and December 31, 2020, respectively 182.7 137.8 Inventories, net 239.2 229.0 Prepaid expenses and other current assets 24.4 13.6 Total current assets 448.6 381.6 PROPERTY AND EQUIPMENT, NET 344.5 311.9 OPERATING LEASE RIGHT-OF-USE ASSETS, NET 102.6 — OTHER ASSETS Goodwill 41.9 24.3 Intangible assets, net 43.4 26.3 Other assets 1.6 2.1 Total other assets 86.9 52.7 TOTAL ASSETS $ 982.6 $ 746.2 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Lines of credit, net $ 98.4 $ 157.7 Floor plan payable – new equipment 114.2 127.6 Floor plan payable – used and rental equipment 40.6 29.8 Current portion of long-term debt 2.6 8.7 Accounts payable 73.5 58.9 Customer deposits 16.7 9.3 Accrued expenses 39.3 30.1 Current operating lease liabilities 16.2 — Other current liabilities 19.1 12.2 Total current liabilities 420.6 434.3 LONG-TERM LIABILITIES Long-term debt, net of current portion 310.0 135.0 Finance lease obligations, net of current portion 9.0 0.6 Deferred revenue, net of current portion 4.2 4.9 Guaranteed purchase obligations, net of current portion 5.2 7.6 Long-term operating lease liabilities 88.4 — Other liabilities 3.6 6.9 Deferred tax liability 6.9 — TOTAL LIABILITIES $ 847.9 $ 589.3 CONTINGENCIES - NOTE 14 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 December 31, 2021 and December 31, 2020 $ — $ — Common stock, $ 0.0001 par value, 200,000,000 shares authorized; 32,363,376 issued and outstanding at December 31, 2021, 30,018,502 issued and outstanding at December 31, 2020 — — Additional paid-in capital 217.4 216.2 Treasury stock ( 5.9 ) ( 5.9 ) Accumulated deficit ( 76.8 ) ( 53.4 ) TOTAL STOCKHOLDERS’ EQUITY 134.7 156.9 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 982.6 $ 746.2 The accompanying notes are an integral part of these consolidated financial statements. F-6 ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (in millions, except share and per share amounts) 2021 2020 Revenues: New and used equipment sales $ 568.8 $ 410.3 Parts sales 178.5 129.6 Service revenue 165.5 128.5 Rental revenue 155.5 118.8 Rental equipment sales 144.5 86.4 Net revenue $ 1,212.8 $ 873.6 Cost of revenues: New and used equipment sales 478.0 356.4 Parts sales 123.4 89.1 Service revenue 68.2 49.5 Rental revenue 20.6 20.2 Rental depreciation 85.3 68.4 Rental equipment sales 122.9 75.5 Cost of revenue $ 898.4 $ 659.1 Gross profit $ 314.4 $ 214.5 General and administrative expenses 285.9 216.0 Depreciation and amortization expense 10.5 6.6 Total general and administrative expenses 296.4 222.6 Income (loss) from operations $ 18.0 $ ( 8.1 ) Other (expense) income Interest expense, floor plan payable – new equipment ( 1.7 ) ( 2.3 ) Interest expense – other ( 22.3 ) ( 21.5 ) Other income 0.7 8.9 Loss on extinguishment of debt ( 11.9 ) ( 7.6 ) Total other (expense) income $ ( 35.2 ) $ ( 22.5 ) Loss before taxes $ ( 17.2 ) $ ( 30.6 ) Income tax provision (benefit) 3.6 ( 6.6 ) Net loss $ ( 20.8 ) $ ( 24.0 ) Preferred stock dividends ( 2.6 ) — Net loss available to common shareholders $ ( 23.4 ) $ ( 24.0 ) Basic loss per share $ ( 0.74 ) $ ( 0.90 ) Diluted loss per share $ ( 0.74 ) $ ( 0.90 ) Basic weighted average common shares outstanding 31,706,329 26,612,982 Diluted weighted average common shares outstanding 31,706,329 26,612,982 The accompanying notes are an integral part of these consolidated financial statements. F-7 ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2021 and 2020 Preferred Stock Common Stock (amounts in millions, except share amounts) Number of Shares Amount Number of Shares Amount Additional Paid-in Capital Accumulated (Deficit) Treasury Stock Total Stockholders' Equity (Deficit) Balance at December 31, 2019 — $ — 7,300,000 $ — $ — $ ( 23.2 ) $ — $ ( 23.2 ) Net loss — — — — — ( 24.0 ) — ( 24.0 ) Preferred stock - Depositary Shares representing a 1/1000th fractional interest in a share of 10 % Series A Cumulative Perpetual Preferred Stock 1,200,000 — — — 28.2 — — 28.2 Common stock issued — — 507,143 — 4.0 — — 4.0 Opening deferred tax liabilities under reverse recapitalization — — — — — ( 6.2 ) — ( 6.2 ) Equity infusion from reverse recapitalization, net of transaction costs — — 21,911,359 — 175.7 — — 175.7 Shares issued upon settlement of equity-linked incentive plan — — 300,000 — 3.1 — — 3.1 Disgorgement of short swing profits — — — — 1.6 — — 1.6 Share based compensation — — 390,000 — 3.6 — — 3.6 Repurchases of common stock — — ( 390,000 ) — — — ( 5.9 ) ( 5.9 ) Balance at December 31, 2020 1,200,000 $ — 30,018,502 $ — $ 216.2 $ ( 53.4 ) $ ( 5.9 ) $ 156.9 Net loss — — — — — ( 20.8 ) — ( 20.8 ) Dividends on preferred stock — — — — — ( 2.6 ) — ( 2.6 ) Share based compensation — — — — 1.2 — — 1.2 Warrants exchanged into common stock — — 2,279,874 — — — — — Issuance of restricted stock units to employees — — 65,000 — — — — — Balance at December 31, 2021 1,200,000 $ — 32,363,376 $ — $ 217.4 $ ( 76.8 ) $ ( 5.9 ) $ 134.7 The accompanying notes are an integral part of these consolidated financial statements. F-8 ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (amounts in millions) 2021 2020 OPERATING ACTIVITIES Net loss $ ( 20.8 ) $ ( 24.0 ) Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: Depreciation and amortization 95.8 75.0 Amortization of debt discount and debt issuance costs 2.0 1.8 Imputed interest 0.2 0.1 Gain on sale of assets ( 0.1 ) — Gain on sale of rental equipment ( 21.6 ) ( 10.9 ) Inventory obsolescence 0.9 1.0 Provision for bad debt 4.2 4.3 Loss on debt extinguishment 11.9 7.6 Share based compensation 1.2 6.7 Repayment of paid-in-kind interest — ( 11.2 ) Changes in deferred taxes 3.6 ( 6.6 ) Changes in: Accounts receivable ( 40.7 ) ( 1.5 ) Inventories ( 154.1 ) ( 136.5 ) Proceeds from sale of rental equipment 144.5 86.4 Prepaid expenses and other assets ( 10.7 ) ( 5.3 ) Proceeds from floor plans with manufacturers 381.4 338.1 Payments under floor plans with manufacturers ( 396.0 ) ( 376.1 ) Accounts payable, accrued expenses, customer deposits, and other current liabilities 30.2 15.8 Leases, deferred revenue and other liabilities ( 1.2 ) 0.3 Net cash provided by (used in) operating activities $ 30.7 $ ( 35.0 ) INVESTING ACTIVITIES Proceeds from the sale of assets 2.3 1.4 Expenditures for rental equipment ( 42.3 ) ( 41.5 ) Expenditures for property and equipment ( 8.1 ) ( 4.4 ) Expenditures for guaranteed purchase obligations ( 1.9 ) ( 3.4 ) Expenditures for acquisitions, net of cash acquired ( 63.4 ) ( 180.0 ) Net cash used in investing activities $ ( 113.4 ) $ ( 227.9 ) FINANCING ACTIVITIES Expenditures for debt issuance costs ( 1.7 ) ( 2.7 ) Extinguishment of floor plans and line of credit — ( 132.9 ) Extinguishment of long-term debt ( 153.1 ) ( 82.0 ) Redemption of former shareholder notes payable — ( 6.7 ) Extinguishment of warrant liability — ( 29.6 ) Proceeds from lines of credit 323.0 428.7 Payments under lines of credit ( 382.4 ) ( 262.6 ) Proceeds from floor plans with unaffiliated source 105.3 87.7 Payments under floor plans with unaffiliated source ( 110.1 ) ( 80.9 ) Proceeds from issuance of long-term debt, net — 149.4 Proceeds from issuance of notes 310.2 — Preferred dividends paid ( 2.6 ) — Payment of promissory note ( 1.0 ) — Payments on long-term debt ( 1.9 ) ( 6.8 ) Payments on finance lease obligations ( 1.9 ) ( 1.1 ) Equity proceeds from reverse recapitalization, net — 175.7 Proceeds from issuance of common stock, net — 4.0 Proceeds from issuance of preferred stock, net — 28.2 Proceeds from disgorgement of short swing profits — 1.6 Repurchases of common stock — ( 5.9 ) Net cash provided by financing activities $ 83.8 $ 264.1 NET CHANGE IN CASH 1.1 1.2 Cash, Beginning of year 1.2 — Cash, End of period $ 2.3 $ 1.2 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 20.2 $ 29.3 The accompanying notes are an integral part of these consolidated financial statements. F-9 ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 1 — ORGANIZATION AND NATURE OF OPERATIONS Alta Equipment Group Inc. 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, Ohio, 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; LLC; Alta Industrial Equipment Company, LLC; Alta Industrial Equipment New York, LLC; PeakLogix, LLC; Alta Material Handling New York State, LLC; Alta Construction Equipment, LLC; Alta Construction Equipment Illinois, LLC; Alta Heavy Equipment Services, LLC; NITCO, LLC; Alta Construction Equipment Florida, LLC; Alta Construction Equipment Ohio, LLC; Alta Construction Equipment New England, LLC; Alta Mine Services, LLC; and Alta Construction Equipment New York, LLC. Alta Construction Equipment, LLC is the holding company for Alta Kubota Michigan, LLC which is the holding company of Ginop Sales, Inc. Unless the context otherwise requires, the use of the terms “the Company”, “we,” “us,” and “our” in these notes to the unaudited consolidated financial statements refers to Alta Equipment Group Inc. and its consolidated subsidiaries. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements include the consolidated accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All significant intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements. Certain amounts in the prior year have been reclassified to conform with the presentation in the current year. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on assumptions that we believe are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company records trade accounts receivables at sales value and establishes specific reserves for certain customer accounts identified as known collection problems due to insolvency, disputes or other collection issues. The amounts of the specific reserves estimated by management are based on the following assumptions and variables: the customer’s financial position, age of the customer’s receivables and changes in payment schedules. In addition to the specific reserves, management establishes a non-specific allowance for doubtful accounts by applying specific percentages to the different receivable aging categories (excluding the specifically reserved accounts). The percentage applied against the aging categories increases as the accounts become further past due. The allowance for doubtful accounts is charged with the write-off of uncollectible customer accounts. Credit risk can be negatively impacted by adverse changes in the economy or by disruptions in the credit markets. However, the Company believes that credit risk with respect to trade accounts receivable is somewhat mitigated by the Company’s credit evaluation procedures. Although generally no collateral is required, when feasible, mechanics’ liens are filed, and personal guarantees are signed to protect the Company’s interests. Concentration of Supplier Risk The Company purchases a significant portion of their new equipment and parts inventory and rental fleet from two vendors. The Company purchased approximately 35 % and 40 % of total purchases from these vendors for the years ended December 31, 2021 and 2020, respectively. Although no change in suppliers is anticipated, the occurrence of such a change could cause a possible loss of sales and adversely affect operating results. F-10 Cash Equivalents The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts Receivable/Allowance of Doubtful Accounts The Company records their accounts receivable at invoiced amounts less an allowance for doubtful accounts. On a periodic basis, the Company evaluates their accounts receivable and establishes an allowance for doubtful accounts, when deemed necessary, based on the history of past write-offs and collections and current customer credit conditions. At December 31, 2021 and 2020, the Company has recorded an allowance for doubtful accounts in the amount of $ 10.7 million and $ 7.1 million, respectively. Although generally no collateral is required, when feasible, mechanics’ liens are filed, and personal guarantees are signed to protect the Company’s interests. A receivable is considered past due if payments have not been received by the Company based on established customer payment terms. At that time, the Company will review all past due accounts and determine what action to take. Certain accounts are turned over to collection agencies, while the Company places liens and pursues a variety of other collection strategies on others. Accounts will be written off when deemed uncollectible by management. Finance charges associated with late payments of $ 0.1 million and $ 0.4 million were recognized as income for the years ended December 31, 2021 and 2020, respectively. Generally, the Company does not accrue interest on past due receivables. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific identification for equipment and a weighted-average method for parts. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Included in new and used inventory is equipment that is currently on short-term lease to customers, has been classified as inventory and is available for sale. The Company mainly transfers equipment from inventory into rental fleet based on the management’s determination of the highest and best use of the equipment. This inventory is carried at the cost of the equipment less any accumulated depreciation. At December 31, 2021 and 2020, the Company recorded a reserve for slow moving and obsolete parts, tires, and used equipment inventory in the amount of $ 3.5 million and $ 2.9 million, respectively. Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The Company capitalizes expenditures for equipment, leasehold improvements, and rental fleet. Expenditures for repairs, maintenance, and minor renewals are expensed as incurred. Expenditures for betterments and major renewals that significantly extend the useful life of the asset are capitalized in the period incurred. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income from operations. The Company assigns useful lives to property and equipment categories as follows: Estimated Useful Life Transportation equipment (autos and trucks) 2 – 5 years Machinery and equipment including rental fleet 3 – 20 years Office equipment 5 – 7 years Computer equipment 2 – 5 years Leasehold improvements 3 – 15 years The estimated useful lives are reviewed at each financial year-end and adjusted prospectively, if appropriate. Intangible Assets Intangible assets with a finite life consist of customer relationships, non-compete agreements, tradenames and favorable market rent and are carried at cost less accumulated amortization. During the 4 th quarter of 2021, the Company reassessed the useful lives of our intangible assets acquired from recent acquisitions. Given our recent rebranding efforts, the Company shortened the remaining F-11 useful lives of some tradename intangible assets resulting in accelerated amortization in the 4 th quarter of 2021 and beyond. The estimated useful lives of the definite lived intangible assets are as follows: Estimated Useful Life Customer relationships 10 years Non-compete agreements 3 – 5 years Tradenames 2 – 5 years Depreciation and Amortization For financial reporting purposes, depreciation of property and equipment is determined on a straight-line basis over the estimated useful lives of the assets at acquisition. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter. Certain categories of our rental equipment, specifically in what we determine to be rent-to-sell equipment categories, are depreciated on a percentage of rental revenue realized on the asset, or a unit of activity method of depreciation. The Company believes that the unit of activity method on these categories of equipment more appropriately matches revenue and depreciation expense versus a straight-line methodology, as asset utilization can vary month to month especially in our northern geographies where seasonality is a factor. In rent-to-rent product categories, where asset utilization is more stable, like in our material handling segment, we use a straight-line depreciation methodology, where estimated useful lives can range from five to ten years . The useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate. Depreciation and amortization expense related to non-revenue generating property and equipment and revenue-generating rental fleet is recognized in “general administrative expenses” and “cost of revenues”, respectively, in the Consolidated Statements of Operations. The Company amortizes the cost of identified intangible assets on a straight-line basis over the expected period of benefit. Amortization expense related to intangible assets is recognized in “general and administrative expenses” in the Consolidated Statements of Operations. Impairment of Long-lived Assets The Company evaluates long-lived assets, such as property and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of any asset group may not be recoverable. If the estimated future cash flow (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. When reviewing long-lived assets for impairment, the Company groups long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company did no t identify any impairment of long-lived assets for the years ended December 31, 2021 and 2020. Goodwill Pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, Intangibles-Goodwill and Other (“ASC 350”), goodwill is recorded as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. We estimate the fair value of our reporting units (which are our reportable segments) using a discounted cash flow methodology under an income approach, corroborating the results with a market approach-based guideline-company methodology which analyzes the enterprise value (market capitalization plus interest-bearing liabilities) and operating metrics (e.g., EBITDA) of companies engaged in the same or similar line of business and compares those metrics to those of the Company. We believe the combination of these valuation approaches, yields the most appropriate evidence of fair value. A decrease in our EBITDA could materially affect the determination of the fair value and could result in an impairment charge to reduce the carrying value of goodwill, which could be material to our financial position and results of operations. The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. If a quantitative impairment test is performed, the fair value of the reporting unit is estimated using the valuation approach previously described. F-12 While the Company does not believe a qualitative assessment would have triggered the required quantitative assessment, a quantitative assessment was performed nonetheless. Our annual goodwill impairment testing conducted as of September 30 , 2021, indicated that our reporting units had estimated fair values which exceeded their respective carrying amounts. Our goodwill impairment testing as of September 30 , 2020, indicated that our reporting units had estimated fair values which exceeded their respective carrying amounts. Based on the results of the test s , there was no goodwill impairment. Deferred Financing Costs and Debt Discount Deferred financing costs include legal, accounting and other direct costs incurred in connection with the issuance and amendments thereto, of the Company’s debt and line of credit. These costs are amortized over the terms of the related debt using the effective interest method. Debt discount and premium is the difference between the price paid to an issuer for the new issue and the prices (below and above, respectively) at which the securities are initially offered to investors or lenders. The amortization expense of deferred financing costs and debt premium and accretion of discounts are included in interest expense as an overall cost of the related financings and are amortized using the effective interest method. Such costs are presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Deferred financing costs and debt discounts with an original cost of $ 9.3 million and $ 9.8 million at December 31, 2021 and 2020, respectively, and accumulated amortization of $ 1.9 million and $ 1.8 million at December 31, 2021 and 2020, respectively, have been deferred. Amortization of deferred costs was $ 2.0 million and $ 1.8 million at December 31, 2021 and 2020, respectively, and is included in interest expense in the accompanying Consolidated Statements of Operations. Revenue Recognition Revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. For agreements with multiple performance obligations, which are infrequent, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, the Company generally allocates sales prices to each distinct performance obligation based on the observable selling price. The Company enters into various equipment sales transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party. In some cases, the Company provides a guarantee to repurchase the equipment back at the end of the lease term between the customer and third-party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value. The Company is precluded from recognizing a sale of equipment if it guarantees to repurchase the sold equipment back or guarantees the resale value of the equipment. Rather, these transactions are accounted for in accordance with ASC 842, Leases (“ASC 842”) for 2021 and ASC 840, Leases (“ASC 840”) for 2020. Deferred revenue, with respect to the aforementioned sale transactions, represents the net proceeds upon the equipment’s initial transfer. These amounts, excluding the guaranteed residual value, are recognized into rental revenue on a pro-rata basis over the leased contract period up to the first exercise date of the guarantee. At December 31, 2021 and 2020, the total deferred revenue relating to these various equipment sale transactions amounted to $ 2.9 million and $ 3.8 million, respectively. The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $ 7.2 million and $ 9.0 million as of December 31, 2021 and 2020. The Company also enters into various rental agreements whereby owned equipment is leased to customers. Revenue from the majority of rental agreements is recognized over the term of the agreement in accordance with ASC 840 for 2020 and ASC 842 for 2021. A rental contract includes rates for daily, weekly, or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period. Unbilled rental revenues are included as a component of “Accounts receivable” on the Consolidated Balance Sheets. Rental equipment is also purchased outright (“rental conversions”). Rental revenue and revenue attributable to rental conversions, are recognized in “Rental revenue” and “Rental equipment sales” on the Consolidated Statements of Operations, respectively. T he Company recognizes deferred revenue with respect to automated equipment installation and system integration services, service maintenance contracts and equipment rental agreements. Deferred revenue with respect to service sales represents the unearned portion of fees related to guaranteed maintenance contracts for customers covering equipment previously purchased. These F-13 amounts are recognized based on an estimated rate at which the services are provided over the life of the contract. The Company also recognizes deferred revenue related to rental agreements. Total deferred revenue relating to automated equipment installation and system integration services, service maintenance contracts and equipment rental agreements as of December 31, 2021 and 2020 was $ 16.5 million and $ 9.6 million, respectively. Revenue from periodic maintenance service sales is recognized upon completion of the service. Revenue from guaranteed maintenance contracts is recognized over the contract period in proportion to the costs expected to be incurred in performing services under the contract, typically three to five years . The Company also enters into sales contracts with customers 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. Revenues from these sales contracts 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. 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, are 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. Advertising and Marketing Advertising and marketing costs are expensed as incurred. Advertising and marketing costs for the years ended December 31, 2021 and 2020 were $ 5.5 million and $ 3.5 million, respectively. Offering Costs and Transaction Expenses The Company incurred costs directly attributable to its initial public offering, such as underwriter, registration and filing fees along with direct incremental legal, accounting, and professional fees relating to the reverse recapitalization. The Company evaluated all the fees and approximately $ 2.6 million of expenses were recorded as an offset against proceeds of the reverse recapitalization. On November 3, 2020, the Company had declared effective a registration statement on Form S-1 covering the resale of 507,143 shares of the Company’s common stock issued as partial consideration for the acquisition of Howell Tractor . The Company incurred direct and incremental legal, accounting, and professional fees related to the registration of these shares of approximately $ 0.2 million. On December 22, 2020, the Company closed its underwritten public offering of depositary shares (the “Depositary Shares”), each representing 1/1000 th of a share of 10 % Series A Cumulative Perpetual Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”). The Company incurred direct and incremental costs related to its issuance of depositary shares such as legal, accounting, and professional fees. The Company evaluated all the fees and approximately $ 1.8 million of expenses were recorded as an offset against proceeds from the depositary shares. Recurring and other incremental corporate costs including accounting and legal fees that were not directly attributable to these offerings were expensed as incurred. Income Taxes The Company is a newly formed corporation 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). There is no federal income tax expense (benefit) reflected in the Company’s financial statements for any period prior to the reverse recapitalization on February 14, 2020. As the activity resides in Alta Enterprises, LLC, the income tax impact to the Company represents the current income tax calculated at the consolidated return level, (“Alta Equipment Group Inc. and Subsidiaries”), and the deferred impact of the interest in the lower tier partnership. F-14 As it relates to being a c onsolidated r eturn filer, and considering the operating entity is a 100 % owned partnership, the Company uses the guidance in FASB ASC 740 - Income Taxes, asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (ii) operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. Deferred income tax assets are subject to valuation allowance considerations to recognize only amounts that are more likely than not to be ultimately realized. Fair Value of Financial Instruments Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The FASB fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. We assess the inputs used to measure fair value using the three-tier hierarchy. The three broad levels of the fair value hierarchy are as follows: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly • Level 3 — Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed (including contingent purchase consideration), and intangible assets acquired based on their estimated fair values on the acquisition date. Management develops estimates based on assumptions as part of the purchase price allocation process to value the assets acquired, and liabilities assumed as of the acquisition date. These estimates are inherently uncertain and are subject to refinement. As a result, during the preliminary purchase price measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, the Company will record any subsequent adjustments to the assets acquired or liabilities assumed in operating expenses in the period in which the adjustments were determined. Segment Reporting The Company has determined in accordance with ASC 280, Segment Reporting (“ASC 280”), that it has two reportable segments: 1) Material Handling and 2) Construction Equipment. These segments are based upon how the Company allocates resources and assesses performance. See Note 22 regarding segment information. Share Based Compensation The Board of Directors approved the Company’s 2020 Omnibus Incentive Plan, which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other share based awards and cash awards to directors, employees and consultants to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. We measure the employee stock-based awards at grant-date fair value using provisions of ASC 718 – Stock Compensation and record compensation expense over the vesting period of the award. The Company made an accounting election based upon the adoption of Accounting Standard Update (“ASU”) 2016-09 and will recognize forfeitures when they occur. The Company treated equity awards granted to non-employee directors similarly to the equity awards to employees based upon the adoption of ASU 2018-07. F-15 New Accounting Pronouncements Recent Accounting Pronouncements Adopted in 2021 Leases The new ASC 842, Leases , is effective for the annual reporting period ended December 31, 2021, with an effective date of January 1, 2021, and the interim reporting periods beginning January 1, 2022. The Company adopted ASC 842 and all related amendments using the modified retrospective method whereby the cumulative effect of adopting the standard was recognized in equity at the date of initial application and ASC 842 applies to all leases existing at, or entered into after, January 1, 2021. Comparative information has not been restated for 2020 and continues to be reported under the accounting standards in effect for that period. Comparative information in subsequent quarterly filings in 2022 will recast 2021 results to reflect the adoption of ASC 842. Lessor Accounting Our equipment rental business involves rental contracts with customers whereby we are the lessor in the transaction and therefore, we believe that such transactions are subject to ASC 842. We account for such rental contracts as operating leases pursuant to ASC 842, as well as pursuant to the previous lease accounting guidance (ASC 840) in effect for the periods prior to the effective date of ASC 842. There was no material impact on the Company’s consolidated income statement from the adoption of ASC 842 as of January 1, 2021 as a lessor. Lessee Accounting The most prominent among the changes in the standard is the recognition of right-of-use assets and lease liabilities for all leases (except for short-term leases). The Company made a policy election for all asset classes to exclude the balance sheet recognition of leases with a lease term, at lease commencement, of 12 months or less and no purchase option reasonably certain to be exercised. The standard also requires additional disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from lease transactions. The new standard resulted in a material increase in right-of-use assets and lease liabilities on the Company’s consolidated balance sheet beginning in 2021. There was no material impact on the Company’s consolidated income statement and consolidated statement of cash flows from the adoption of ASC 842 as of January 1, 2021 as a lessee. The difference between the lease assets and lease liabilities was recorded as an adjustment to the opening balance of retained earnings. The cumulative effects of the changes made to the Company’s consolidated balance sheet as of January 1, 2021 were as follows: Balance as of December 31, 2020 Adjustments due to adoption of ASC 842 Balance as of January 1, 2021 Prepaid expenses and other current assets $ 13.6 $ ( 0.5 ) $ 13.1 Operating lease right-of-use assets — 103.4 103.4 Property and equipment, net 311.9 ( 0.2 ) 311.7 Intangible assets, net 26.3 ( 1.6 ) 24.7 Other current liabilities ( 13.1 ) 0.2 ( 12.9 ) Current operating lease liabilities — ( 15.2 ) ( 15.2 ) Other liabilities ( 9.3 ) 3.3 ( 6.0 ) Long-term operating lease liabilities — ( 89.4 ) ( 89.4 ) Finance lease liabilities were included in Other current liabilities and Other liabilities in the Consolidated Balance Sheet as of December 31, 2020 and are now included in Current portion of long-term debt and Long-term debt, net of current portion as of December 31, 2021. The Company elected the package of practical expedients on existing leases as of the effective date which permits the Company to carry forward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. The Company did not elect the hindsight practical expedient. Additionally, the Company elected the practical expedient to not reassess whether any expired or existing land easements contain leases. Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848) In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 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 became effective for the Company during 2021 and apply on F-16 a prospective basis. Our exposure related to the cessation of LIBOR is limited to the interest expense we incur on our Credit Facilit ies . The impact of the transition from LIBOR to alternative reference interest rates (e.g., Secured Overnight Financing Rate “SOFR”) was not material on our consolidated financial position and results of operations. Pronouncements Not Yet Adopted Financial Instruments — Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments . This standard prescribes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in the timely recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of the financial instrument. Measurement of expected credit losses is to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. As amended by ASU 2019-10, the ASU 2016-13 is effective for the annual reporting period beginning on or after December 15, 2022. The Company believes ASU 2016-13 will only have applicability to the Company’s receivables from revenue transactions, or trade receivables, except those arising from rental revenues as ASU 2016-13 does not apply to receivables arising from operating leases. The Company is currently evaluating whether the new guidance, while limited to our non-operating lease trade receivables, will have an impact on the consolidated financial statements or existing internal controls. NOTE 3 — REVENUE RECOGNITION We recognize revenue in accordance with two different accounting standards: 1) ASC 606 (which addresses revenue from contracts with customers) and 2) ASC 840 in 2020 and ASC 842 in 2021 (which addresses lease revenue). Under ASC 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. For agreements with multiple performance obligations, which are 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. Disaggregation of Revenues The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statement of Operations for the year ended December 31, 2021 and 2020 by revenue type, and by the applicable accounting standard. Year Ended December 31, 2021 Year Ended December 31, 2020 Topic 842 Topic 606 Total Topic 840 Topic 606 Total Revenues: New and used equipment sales $ — $ 568.8 $ 568.8 $ — $ 410.3 $ 410.3 Parts sales — 178.5 178.5 — 129.6 129.6 Service revenue — 165.5 165.5 — 128.5 128.5 Rental revenue 155.5 — 155.5 118.8 — 118.8 Rental equipment sales — 144.5 144.5 — 86.4 86.4 Net revenue $ 155.5 $ 1,057.3 $ 1,212.8 $ 118.8 $ 754.8 $ 873.6 The Company believes that the disaggregation of revenues from contracts to customers as summarized above, together with the discussion below, depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors. Leases revenues (ASC 840 in 2020 and ASC 842 in 2021) New and used equipment sales: The Company enters into various equipment sale transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party. 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 F-17 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 when it is obligated or has an option to repurchase or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases. For these arrangements, because the Company generally receives the full amount of the consideration at the beginning of the arrangement, the Company initially records deferred revenue for the amount received and recognizes revenue on a pro-rata basis over the term of the contract under ASC 840 and ASC 84 2 . Rental revenue: Owned equipment rentals represent revenues from renting equipment. The Company accounts for these rental contracts as operating leases. The Company recognizes revenue from equipment rentals in the period earned, regardless of the timing of billing to customers. A rental contract includes rates for daily, weekly, or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period. The adoption of ASC 842 in 2021 did not have a material impact on how lease revenues are recorded by the Company. Revenues from contracts with customers (ASC 606) Accounting for the different types of revenues pursuant to ASC 606 are discussed below. Substantially all of the Company’s revenues under ASC 606 are recognized at a point in time rather than over time. New and used equipment sales: With the exception of bill-and-hold arrangements, the Company’s revenues from the sale of new and used equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. 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. The bill-and-hold arrangements primarily apply to sales when physical shipment of heavy equipment to the customer is prohibited by law (e.g. frost laws) or requested by the customer due to their inability to arrange freight simultaneous to revenue being recognized, both are limited circumstances. The customer equipment sold under a bill-and-hold arrangement is physically separated from Company inventory and that equipment cannot be used by Alta or sold to another customer. The Company does not offer material rights of return. The Company recognized approximately $ 55.9 million and $ 14.9 million in revenues for the years ended December 31, 2021 and 2020, respectively, from automated equipment installation and system integration services as performance obligations were satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. Parts sales: Revenues from the sale of parts are recognized at the time of pick-up by the customer for over-the-counter sales transactions. For parts sold in connection with the performance of a service, revenue is recognized simultaneously with the associated service revenue. For parts that are shipped to a customer, the Company elected to use a practical expedient of ASC 606 and treat such shipping activities as fulfillment costs, thereby recognizing revenues at the time of shipment. The Company does not offer material rights of return. Service revenue: The Company records service revenue primarily from guaranteed maintenance and periodic maintenance contracts with customers. The Company recognizes periodic maintenance service revenues at the time such services are completed, which is when the control of the promised services is transferred over to the customer. The Company recognizes guaranteed maintenance service revenues over-time using an input method of costs incurred to estimated costs over the life of the related contract. Revenue recognized from guaranteed maintenance contracts totaled $ 18.8 million and $ 16.4 million for the years ended December 31, 2021 and 2020, respectively. The Company also records service revenue from warranty contracts whereby the Company performs service on behalf of the Original Equipment Manufacturer (“OEM”) or third-party warranty provider. Rental equipment sales: The Company also sells rental equipment from our rental fleet, these sales are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. In some cases, certain rental agreements contain a rental purchase option, whereby the customer has an option to purchase the rented equipment during the term of the rental agreement. Revenues from the sale of rental equipment that are in the midst of a rental agreement are recognized at the time the rental purchase agreement has been approved and signed by both parties, as the equipment is already in the customer’s possession under the previous rental agreement, and therefore control has been transferred as title has been transferred. Contract costs The Company does not recognize assets associated with the incremental costs of obtaining a contract with a customer that the Company expects to recover (for example, a sales commission). Most of the Company’s revenue is recognized at a point in time or over a period of one year or less, and the Company has used the practical expedient that allows it to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. The amount of the costs associated with the revenue recognized over a period of greater than one year is insignificant. F-18 Receivables and contract assets and liabilities The Company has contract assets associated with contracts with customers. Contract assets as of December 31, 2021 and 2020 were $ 6.0 million and $ 0.1 million, respectively. Deferred revenue associated with service contracts represents the unearned portion of revenue related to guaranteed maintenance contracts for customers covering equipment previously purchased. These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract. The deferred revenue also includes the unearned portion of revenue from automated equipment installation and system integration services where revenue is recognized as performance obligations are satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. Deferred revenue also includes the net proceeds upon sale of equipment with certain guaranteed purchase obligations for leases depending on lease classification. In total, deferred revenue as of December 31, 2021 and 2020 was $ 19.4 million and $ 13.4 million, respectively. The Company recognized revenue of $ 8.5 million from the prior year ending deferred revenue balance during the current year. Consideration and Payment terms The Company’s revenues do not include material amounts of variable consideration under ASC 606. Payment terms may vary by the type of customer, location, and the type of products or services offered. The time between invoicing and when payment is due is not significant, and contracts do not generally include a significant financing component. Contracts with customers do not generally result in significant obligations associated with returns, refunds, or warranties. Contract estimates and judgments The Company’s revenues accounted for under ASC 606 generally do not require significant estimates or judgments as the transaction price is generally fixed and clearly stated in the customer contracts. Contracts generally do not include multiple performance obligations, and accordingly do not require estimates of the standalone selling price for each performance obligation. Substantially all of the Company’s revenues are recognized at a point in time and the timing of the satisfaction of the applicable performance obligations is readily determinable. The Company’s revenues under ASC 606 are generally recognized at the time of delivery to, or pick-up by, the customer. NOTE 4 — RELATED PARTY TRANSACTIONS The Company leases a subset of its operating facilities from three real estate entities related through common ownership. Total rent expense under these lease agreements for both years ended December 31, 2021 and December 31, 2020 was $ 4.8 million. At December 31, 2021, the Company had net operating right-of-use assets and operating lease liabilities associated with related party leases of $ 24.0 million and $ 26.3 million, respectively. See Note 12 for a schedule of future minimum lease payments under operating leases with both related parties and unrelated third parties. NOTE 5 — INVENTORIES December 31, December 31, 2021 2020 New equipment $ 146.0 $ 153.5 Used equipment 34.3 31.4 Work in process 6.7 5.4 Parts 55.7 41.6 Gross Inventory $ 242.7 $ 231.9 Inventory reserves ( 3.5 ) ( 2.9 ) $ 239.2 $ 229.0 Direct labor of $ 1.6 million and $ 1.7 million incurred for open service orders were capitalized and included in work in process at December 31, 2021 and 2020, respectively. The remaining work in process balances as of December 31, 2021 and 2020, primarily represent parts applied to open service orders. Rental depreciation expense, for new and used equipment inventory under short-term leases with purchase options, was $ 5.8 million and $ 3.0 million for the year ended December 31, 2021 and 2020, respectively. F-19 NOTE 6 — PROPERTY AND EQUIPMENT Property and equipment, net, consisted of the following (amounts in millions): December 31, December 31, 2021 2020 Land $ 2.1 $ 0.1 Rental fleet 461.4 418.5 Equipment and leasehold improvements: Machinery and equipment 7.2 1.5 Autos and trucks 6.6 7.0 Leasehold improvements 10.6 8.7 Finance lease right-of-use assets 15.1 4.0 Office equipment 3.5 3.1 Computer equipment 11.1 9.4 Total Cost $ 517.6 $ 452.3 Less: accumulated depreciation and amortization Rental fleet ( 149.8 ) ( 124.6 ) Equipment, autos and trucks, leasehold improvements, finance leases and office and computer equipment ( 23.3 ) ( 15.8 ) Total accumulated depreciation and amortization ( 173.1 ) ( 140.4 ) $ 344.5 $ 311.9 Total depreciation and amortization on property and equipment was $ 86.7 million and $ 69.7 million for the years ended December 31, 2021 and 2020, respectively. The Company had assets related to finance leases with gross carrying values totaling $ 15.1 million and $ 4.0 million, and accumulated amortization balances totaling $ 3.8 million and $ 2.5 million, as of December 31, 2021 and 2020, respectively. Of the $ 461.4 million and $ 418.5 million of gross cost of rental fleet, $ 9.7 million and $ 13.0 million were represented by guaranteed purchase obligation assets as of December 31, 2021 and 2020, respectively. NOTE 7 — GOODWILL The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment during the years ended December 31, 2020 and 2021, respectively (amounts in millions): Material Handling Construction Equipment Total Balance, December 31, 2019 $ 4.8 $ 3.8 $ 8.6 Additions 5.4 10.3 15.7 Balance, December 31, 2020 $ 10.2 $ 14.1 $ 24.3 Additions 1.4 17.6 19.0 Adjustments to purchase price allocations — ( 1.4 ) ( 1.4 ) Balance, December 31, 2021 $ 11.6 $ 30.3 $ 41.9 See Note 20, Business Combinations for further information. F-20 NOTE 8 — INTANGIBLE ASSETS The gross carrying amount of intangible assets and accumulated amortization as of December 31, 2021 and 2020 were as follows (amounts in millions): December 31, 2021 Weighted Average Remaining Life (in years) Gross carrying amount Accumulated amortization Net carrying amount Customer relationships 9.0 $ 44.8 $ ( 5.9 ) $ 38.9 Tradenames 4.3 4.5 ( 0.9 ) 3.6 Non-compete agreements 3.3 0.7 ( 0.2 ) 0.5 Internal use software 3.2 0.5 ( 0.1 ) 0.4 Total 8.5 $ 50.5 $ ( 7.1 ) $ 43.4 December 31, 2020 Weighted Average Remaining Life (in years) Gross carrying amount Accumulated amortization Net carrying amount Customer relationships 9.2 $ 25.9 $ ( 3.1 ) $ 22.8 Tradenames 5.2 1.6 ( 0.4 ) 1.2 Non-compete agreements 4.3 0.8 ( 0.1 ) 0.7 Favorable market rent 9.5 1.7 ( 0.1 ) 1.6 Total 8.9 $ 30.0 $ ( 3.7 ) $ 26.3 Amortization of intangible assets, excluding favorable market rent which is amortized to lease expense, was $ 3.3 million and $ 2.3 million for the years ended December 31, 2021 and 2020, respectively. During the 4 th quarter of 2021, the Company reassessed the useful lives of our intangible assets acquired from recent acquisitions. Given our recent rebranding efforts, the Company shortened the remaining useful lives of some tradename intangible assets resulting in accelerated amortization in the 4 th quarter of 2021 and beyond. The Company reviewed its finite-lived intangible assets for impairment and determined that none of the assets were impaired during the years ended December 31, 2021 and 2020. As of December 31, 2021, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows (amounts in millions): Years ending December 31, Amount 2022 $ 5.7 2023 5.4 2024 5.3 2025 5.0 2026 4.9 Thereafter 17.1 Total $ 43.4 NOTE 9 — LINES OF CREDIT AND FLOOR PLANS 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 allowed for dividend payments to be made on the Preferred Stock without having to meet a leverage threshold, it excluded the preferred dividend payments from affecting the second lien prepayment requirement, and it increased OEM Floor Plan Facility (as hereinafter defined) limits from $ 225 million to $ 250 million; however, credit line borrowings would begin to be limited in the instance amounts borrowed on OEM Floor Plan Facilities exceed $ 225 million. F-21 On April 1, 2021, the Company entered into a Sixth Amended and Restated ABL First Lien Credit Agreement (the “Amended and Restated ABL 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, superseding and replacing the Fifth Amended and Restated ABL First Lien Credit Agreement. The Amended and Restated ABL Credit Agreement, among other things, (i) increased the asset based revolving line of credit (the “ABL Facility”) borrowing capacity from $ 300 million to $ 350 million, (ii) modified certain financial covenants, and (iii) removed the certain limitations on credit line borrowings if OEM Floor Plan Facility) borrowings exceeded $225 million. The ABL Facility was amended on December 20, 2021 to increase the OEM Floor Plan Facility limits to $ 350 million, as a result of Business Combinations. Line of Credit and Floor Plan — First Lien Lender The Company has an ABL Facility with its first lien holder with advances on the line being supported by eligible accounts receivable, parts, and otherwise unencumbered new and used equipment inventory and rental equipment. The ABL Facility, which is collateralized by substantially all assets of the Company, has a maximum borrowing capacity of $ 350 million and interest cost is the SOFR plus an applicable margin or the CB Floating Rate, depending on the borrowing. As of December 31, 2021, the Company had an outstanding ABL Facility balance of $ 100.7 million, excluding unamortized debt issuance costs. The effective interest rate was 2.3 % at December 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 First Lien Floor Plan Facility with its first lien lender to primarily finance new inventory. This First Lien Floor Plan Facility has a maximum borrowing capacity of $ 50 million. The interest cost for the First Lien Floor Plan Facility is SOFR plus an applicable margin. The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of December 31, 2021, the Company had an outstanding balance on their First Lien Floor Plan Facility of $ 30.6 million, excluding unamortized debt issuance costs. The effective interest rate at December 31, 2021 was 2.8 %. As of December 31, 2020, the Company had an outstanding balance on their First Lien Floor Plan Facility of $ 35.3 million, excluding unamortized debt issuance costs. The effective interest rate at December 31, 2020 was 2.9 %. The Company routinely sells equipment that is financed under the First Lien Floor Plan Facility. When this occurs the payable under the applicable First Lien Floor Plan Facility related to the financed equipment being sold becomes due to be paid at the time of sale. Original Equipment Manufacturer (“OEM”) Captive Lenders and Suppliers’ Floor Plans The Company has floor plan financing facilities with several OEM captive lenders and suppliers (the “OEM Floor Plan Facilities”, and together with the First Lien Floor Plan Facility, are collectively referred to herein as the “Floor Plan Facilities”) for new and used inventory and rental equipment, each with borrowing capacities ranging from $ 2 million to $ 102 million. Primarily, the Company utilizes the OEM Floor Plan Facilities for purchases of new equipment inventories. Certain OEM Floor Plan Facilities provide for up to twelve-months interest only or deferred payment periods. In addition, certain OEM Floor Plan Facilities regularly provide for interest and principal free payment terms. The Company routinely sells equipment that is financed under OEM Floor Plan Facilities. When this occurs the payable under the applicable OEM Floor Plan Facilities related to the financed equipment being sold becomes due to be paid at the time of sale. With the recent acquisitions, some of the Company’s OEM Floor Plan Facilities were amended to include new locations and new entities. The OEM Floor Plan Facilities are secured by the equipment being financed, and contain operating company guarantees. The interest is SOFR plus an applicable margin. The effective rates, excluding the favorable effect of interest-subsidies, as of December 31, 2021 ranged from 3.1 % to 6.0 %. As of December 31, 2021, and December 31, 2020, the Company had an outstanding balance on the OEM Floor Plan Facilities of $ 124.3 million and $ 122.2 million, respectively. The total aggregate amount of financing under the OEM Floor Plan Facilities and the First Lien Floor Plan Facility cannot exceed $ 400.0 million at any time. The total aggregate outstanding balance under the OEM Floor Plan Facilities and the First Lien Floor Plan Facility as of December 31, 2021, and December 31, 2020, was $ 154.9 million and $ 157.5 million, respectively, excluding unamortized debt issuance costs. For the years ended December 31, 2021, and December 31, 2020, the Company recognized interest expense associated with new equipment financed under its OEM Floor Plan Facilities and First Lien Floor Plan Facility of $ 1.7 million and $ 2.3 million, respectively. Maximum aggregate borrowings under the First Lien Floor Plan Facility, OEM Floor Plan Facilities, and ABL Facility are limited to $ 750.0 million unless certain other conditions are met. The total amount outstanding as of December 31, 2021, and December 31, 2020, was $ 255.6 million and $ 316.6 million, exclusive of debt issuance and deferred financings costs of $ 2.4 million and $ 1.5 million, respectively. F-22 NOTE 10 — LONG-TERM DEBT On April 1, 2021, the Company completed a private offering of our Senior Secured Second Lien Notes (the “Notes”), for the purposes of, among other things, repayment and refinancing of a portion of the Company’s prior existing debt, reducing interest rate exposure and providing liquidity for financing of future growth initiatives. Senior Secured Second Lien Notes On April 1, 2021, the Company sold $ 315.0 million of our 5.625% Notes which are due in 2026. The Notes are guaranteed (the “Guarantees” and, together with the Notes, are herein referred to as the “Securities”) by the guarantors that are party thereto (the “Guarantors”) on a second lien, senior secured basis. 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, and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are 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 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 and the First Lien Floor Plan Facility and certain hedging and cash management obligations, including, but not limited to, equipment, fixtures, inventory, intangibles and capital stock of our subsidiaries now owned or acquired in the future by us or the Guarantors. The Notes 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. The October 15, 2021 interest payment was made on or about October 15, 2021. As of December 31, 2021, outstanding borrowings under the Notes were $ 310.0 million, which included $ 5.0 million deferred financing costs and original issue discount. The effective interest rate on the Notes, taking into account the original issue discount, is 5.93 %. Term Loan On February 14, 2020, the Company entered into a Note Purchase Agreement which comprised of a second lien term loan (the “Term Loan”) in an aggregate principal amount of $ 155.0 million with a second priority lien lender through syndication, with an initial maturity date of August 2025 . The term loan was payable, at the lender’s option, in quarterly installments of $ 1.9 million plus interest at SOFR plus 8 %. On April 1, 2021, in connection with the issuance of the new Notes, the Company repaid all of its outstanding obligations under the Term Loan, $ 147.3 million, completely discharging the Company of any further obligations to the lender . Extinguishment of Debt In the second quarter of 2021, and in connection with the repayment of the Term Loan, the Company recorded a loss on the extinguishment of debt in the amount of $ 11.9 million in the line item “Loss on Extinguishment of Debt” in its Consolidated Statements of Operations. This was in accordance with ASC No. 470-50, “Debt – Modifications and Extinguishments” (ASC 470), as the transaction was determined to be an extinguishment of the existing debt and an issuance of new debt. In the second 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 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): December 31, December 31, 2021 2020 High yield notes $ 315.0 $ — Term loan — 149.2 Unamortized debt issuance costs ( 1.0 ) ( 1.8 ) Debt discount ( 4.0 ) ( 4.6 ) Finance leases 11.6 1.5 Total debt and finance leases $ 321.6 $ 144.3 Less: current maturities ( 2.6 ) ( 8.7 ) Long-term debt and finance leases, net $ 319.0 $ 135.6 F-23 As of December 31, 2021, the Company was in compliance with the financial covenants set forth in its debt agreements. Long term debt principal maturities, excluding finance leases which are disclosed in Note 12, Leases, are as follows (amounts in millions): Years ending December 31, Amount 2022 $ — 2023 — 2024 — 2025 — 2026 315.0 Thereafter — $ 315.0 Promissory Note On June 12, 2020, the Company entered into an unsecured promissory note for $ 1.0 million at an interest rate of 6.0 % on the unpaid principal sum in connection with the PeakLogix acquisition which was due one year from the date of the acquisition and recorded in “Other current liabilities” as of December 31, 2020. During the second quarter of 2021, the Promissory Note of $ 1.1 million, inclusive of accrued interest, was paid in full. Notes Payable – Non-Contingent Consideration The Company acquired all the assets of PeakLogix on June 12, 2020. Pursuant to the asset purchase agreement, Sellers are entitled to additional cash payments of a minimum of $ 2.0 million throughout a 5 -year earn-out period . As of December 31, 2021, the Company recorded a $ 1.8 million liability which included $ 1.7 million related to present value of these minimum cash payments using a market participant discount rate and $ 0.1 million of imputed interest. As of December 31, 2020, the liability was $ 1.7 million. This additional future liability is recorded as non-contingent liability in “Other current liabilities” and “Other liabilities” on the December 31, 2021 Consolidated Balance Sheets. See Note 17, Fair Value Instruments, and Note 20, Business Combinations, for further information. NOTE 11 — 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 ($ 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. On April 9, 2021, the Company declared a cash dividend $ 0.89 per depositary share, which was paid on April 30, 2021 to holders of record as of the close of business on April 15, 2021. This dividend payment covered the period from and including December 22, 2020 through, but not including April 30, 2021. On July 2, 2021, the Company declared a cash dividend $ 0.625 per depository share, which was paid on August 2, 2021 to holders of record as of the close of business on July 15, 2021. The dividend payment covered the period from and including April 30, 2021 through, but not including July 31, 2021. On October 4, 2021, the Company declared a cash dividend $ 0.625 per depository share, which was paid on November 1, 2021 to holders of record as of the close of business on October 15, 2021. The dividend payment covered the period from and including July 31, 2021 through, but not including October 31, 2021. Common Stock 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. F-24 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. 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. 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 entitled 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 were to expire five years after February 14, 2020, the date the 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 in the sale transaction. In connection with the reverse recapitalization closing on February 14, 2020, the Company redeemed all the 2017 Warrants outstanding and as of December 31, 2020, there were no warrant liabilities on the Consolidated Balance Sheets associated with the 2017 Warrants. NOTE 12 — LEASES The Company adopted ASC 842, Leases , and all related amendments effective for the annual reporting period ended December 31, 2021, with an effective date of January 1, 2021, using the modified retrospective method. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and long-term operating lease liabilities on the Company’s consolidated balance sheet as of December 31, 2021. Finance leases are included in property and equipment, net, current portion of long-term debt, and finance lease obligations, net of current portion on the Company’s consolidated balance sheets. Lease right-of-use assets are recognized at commencement date based upon the present value of the remaining future minimum lease payments over the lease term. The Company’s lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based upon information available at the commencement date to determine the present value of future lease payments. The Company applies the portfolio approach for the incremental borrowing rate on its leases based upon similar lease term and payments. The lease right-of-use asset also includes lease payments made in advance of lease commencement and excludes lease incentives. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. For real estate leases, these components are accounted for as a single lease component. For all equipment leases excluding vehicles, the lease and non-lease components are accounted for as a single lease component. For vehicle leases, these components are accounted for separately. Variable lease expenses include payments based upon changes in a rate or index, such as consumer price indexes, as well as usage of the leased asset. Short-term lease expenses include leases with terms, at lease commencement, of 12 months or less and no purchase option reasonably certain to be exercised, including leases with a duration of one month or less. Low-value lease expense includes leases with terms, at lease commencement, of greater than 12 months, but do not meet our capitalization threshold, which is consistent with our property and equipment capitalization threshold. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants; however, there are certain lease agreements that include guaranteed purchase obligations for lift trucks. See guaranteed purchase obligations in Note 13, Leases – Lessor. The Company primarily has operating and finance leases for branch facilities, corporate office, and certain equipment which encompass both related party and third-party leases. The Company’s leases have remaining lease terms that range from less than one year to leases that mature through February 2035 and contain provisions to renew the leases for additional terms of five to fifteen years . F-25 The Company leases and subleases certain lift trucks to customers under short and long-term operating lease agreements. The sublease income is included in Rental revenue on our consolidated statement of operations and is included in sublease revenue referenced in Note 13, Operating Leases - Lessor. Sublease income below includes subleases that are not included in Rental revenue due to being outside our normal business operations. The costs of the head lease for these subleases are included in operating lease expense below. At December 31, 2021 and 2020, assets recorded under finance leases (previously capital), net of accumulated depreciation were $ 11.3 million and $ 1.5 million, respectively. The assets are depreciated over the lower of their related lease terms or their estimated useful lives. The components of lease expense (including related party leases) were as follows: Year ending December 31, 2021 Operating lease expense $ 23.3 Short-term lease expense 4.3 Low-value lease expense 0.6 Variable lease expense 1.5 Finance lease expense: Amortization of right-of-use assets 2.0 Interest on lease liabilities 0.4 Sublease income ( 0.1 ) Total lease expense $ 32.0 Total lease expense under the third-party operating leases for the year ended December 31, 2020 were $ 19.3 million operating and $ 1.0 million finance (previously capital). Included in operating lease expense for 2020 is deferred rent expense of $ 0.9 million. Other information related to leases is presented in the table below: Supplemental Cash Flows Information Year ending December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 22.3 Operating cash flows for finance leases 0.4 Financing cash flows for finance leases 1.9 Non-cash right-of-use assets obtained in exchange for lease obligations Operating leases 15.5 Finance leases 12.6 Weighted Average Remaining Lease Term (in years) Operating leases 6.9 Finance leases 4.7 Weighted Average Discount Rate Operating leases 6.3 Finance leases 5.6 F-26 Minimum future lease payments under non-cancellable operating and finance leases described above as of December 31, 2021 were as follows (amounts in millions): Years ending December 31, Operating Leases Finance Leases 2022 $ 22.0 $ 3.1 2023 21.1 2.7 2024 19.9 2.5 2025 16.9 2.4 2026 13.8 1.7 Thereafter 37.4 0.7 Total future minimum lease payments $ 131.1 $ 13.1 Less: imputed interest ( 26.5 ) ( 1.5 ) Total $ 104.6 $ 11.6 Amounts recognized in the condensed consolidated balance sheet as of December 31, 2021 Current portion of long-term debt $ — $ 2.6 Current operating lease liabilities 16.2 — Finance lease obligations, net of current portion — 9.0 Long-term operating lease liabilities 88.4 — $ 104.6 $ 11.6 As of December 31, 2021, the Company did no t have leases that were executed but had not yet commenced. See Note 14, Contingencies, for more information on certain contracts where the Company guarantees the performance of the third-party lessee. NOTE 13 — LEASES — LESSOR The Company leases and subleases certain lift trucks to customers under long-term operating lease agreements which expire at various dates through 2028. Approximate minimum rentals receivable, none of which are recorded in our consolidated Balance Sheets, under such leases for each of the next five years are as follows (amounts in millions): Years ending December 31, Amount 2022 $ 2.4 2023 1.6 2024 1.3 2025 0.2 2026 0.2 Thereafter 0.1 $ 5.8 Sublease income recorded in rental revenue in our consolidated Statement of Operations for the years ended December 31, 2021 and December 31, 2020 was $ 7.5 million and $ 7.9 million, respectively. Future guaranteed purchase obligations under operating and sales-type leases to be paid by the Company for each of the next five years and thereafter are as follows (amounts in millions): Years ending December 31, Amount 2022 $ 2.7 2023 2.4 2024 2.0 2025 0.7 2026 0.1 Thereafter — Total $ 7.9 For more information on our rental revenue as a lessor, please refer to Note 3, Revenue Recognition. F-27 NOTE 14 — CONTINGENCIES Guarantees As of December 31, 2021, and December 31, 2020, the Company was party to certain contracts in which it guarantees the performance of agreements with various third-party financial institutions. The terms of the guarantees range from two to six 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 $ 1.7 million and $ 2.4 million at December 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 December 31, 2021 and December 31, 2020, respectively. Legal Proceedings During the years ended December 31, 2021 and December 31, 2020, various claims and lawsuits, incidental to the ordinary course of business, are pending against the Company. In the opinion of management, after consultation with legal counsel, resolution of these matters are not expected to have a material effect on the Company’s consolidated financial statements. Contractual Obligations The Company does not believe there are any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company. As of December 31, 2021, and December 31, 2020 there was $ 3.4 million and $ 1.4 million, respectively, in outstanding letters of credits issued in the normal course of business. NOTE 15 — INCOME TAXES The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference is expected to reverse. Additionally, the impact of changes in the tax rates and laws on deferred taxes, if any, is reflected in the financial statement in the period of enactment. The deferred tax liabilities and assets for the Company represent the difference between the financial statement and tax basis of the partnership interest in Alta Enterprises, LLC. The Company is using the single line-item approach for financial statement presentation of deferred tax assets and liabilities. The income tax provision (benefit) for the years ended December 31, 2021 and 2020 consisted of the following: Year Ended December 31, 2021 2020 Federal taxes-current $ — $ — Federal taxes-deferred 2.8 ( 5.0 ) State taxes-current — — State taxes-deferred 0.8 ( 1.6 ) $ 3.6 $ ( 6.6 ) For the years ended December 31, 2021 and 2020, the reconciliation between the income tax expense (benefit) computed by applying the statutory U.S. federal and state related income tax rate to the pre-tax loss before income taxes and total income tax expense (benefit) recognized in the financial statements was as follows: Year Ended December 31, 2021 2020 Income tax benefit at statutory U.S. federal rate $ ( 3.6 ) $ ( 4.3 ) Income tax benefit at statutory U.S. states rate, net ( 0.6 ) ( 1.2 ) Permanent differences: Officer's life insurance — ( 1.7 ) Valuation allowance 7.6 — Other 0.2 0.6 Total income tax expense (benefit) $ 3.6 $ ( 6.6 ) F-28 The Company recorded an income tax expense of $ 3.6 million and a benefit of $ 6.6 million for the years ended December 31, 2021 and 2020, respectively. This was primarily driven by the level of pre-tax loss of $ 17.2 million in 2021 as compared to $ 20.7 million for the period from February 14, 2020 to December 31, 2020. As a result of the Company’s 2021 analysis of the realizability of its deferred tax asset, and after considering tax planning initiatives and other inputs, the Company determined that it was more likely than not that deferred tax asset would not be realized and has thus maintained a full valuation allowance against the deferred tax asset. In addition, the scheduling of deferred items highlighted the need to book a deferred tax liability in order to properly reflect the limitation of the use of net operating losses at 80 % in any given year. The income tax benefit in 2020 covers the period starting with the reverse recapitalization on February 14, 2020 through the year ended December 31, 2020. The income tax results from the period January 1, 2020 through the day prior to the reverse recapitalization have been recognized by the predecessor. As a result of the reverse recapitalization, there was a step-up in the tax value of the Company. The Company reviews the realizability of its deferred tax asset 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 the Company considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involves significant judgment. The effective income tax rate for the years December 31, 2021 and December 31, 2020 were ( 20.9 )% and 31.9 %, respectively. The effective income tax rate in 2021 was primarily due to the impact of the establishment of the valuation allowance and the resulting realization of a deferred tax liability. The effective income tax rate in 2020 was primarily due to the impact of expenses and resulting tax losses associated with the r everse capitalization. The components of deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 Deferred Tax Assets Net operating loss carryforwards $ 10.8 $ 4.7 Deferred revenue 0.7 0.6 Accounts receivable and inventories 4.3 3.8 Goodwill & intangibles 1.0 6.0 Accrued liabilities 3.4 2.8 Deferred payroll taxes and other 3.0 2.0 Gross deferred tax assets 23.2 19.9 Deferred Tax Liabilities Property and equipment ( 21.3 ) ( 18.2 ) Prepaid expenses ( 1.2 ) ( 1.2 ) Gross deferred tax liabilities ( 22.5 ) ( 19.4 ) Valuation allowance ( 7.6 ) — Deferred tax (liabilities) assets, net $ ( 6.9 ) $ 0.5 As of December 31, 2021, and December 31, 2020, the Company has federal net operating tax loss carryforwards of approximately $ 10.8 million and $ 4.7 million, respectively, which may be carried forward indefinitely and are eligible to offset 80 % of future taxable income. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other thing s, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property. The CARES Act did not materially impact our effective tax rate for the years ended December 31, 2021 and December 31, 2020, although it impacted the timing of cash payments for taxes. Under the CARES Act, as of December 31, 2021, we have deferred employer payroll taxes of $ 5.0 million as compared to $ 5.6 million as of December 31, 2020. F-29 NOTE 16 — SHARE BASED COMPENSATION The Company’s long-term incentive plans allow for the grant of various types of share-based awards to key employees to key employees and directors of the Company. The Company generally awards grants on an annual basis. There are 3,468,000 shares of common stock authorized for awards granted under the current plan. During the second quarter 2021, the Compensation Committee of our Board of Directors approved the grant of 114,292 shares of Restricted Stock Units (“RSUs”) to certain directors, officers and employees of the Company under the 2020 Omnibus Incentive Plan. During 2020, 690,000 shares RSUs were approved and granted to certain directors, officers, and employees of the Company. The Company’s plan is to have broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant. The compensation expense is recognized on a straight-line basis over the requisite vesting period of the award. The Company recognized total share based compensation expense of $ 1.2 million and $ 3.6 million for the years ended December 31, 2021 and 2020 respectively. On August 18, 2020, Robert T. Chiles, President of our Construction Group, passed away. Mr. Chiles was the holder of RSUs for 390,000 shares of common stock of the Company, and at his passing these RSUs 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 a $ 3.0 million expense. As of December 31, 2021, 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 1.9 years. As of December 31, 2020, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $ 1.7 million, which is expected to be recognized over a weighted average period of 2.8 years. The following table shows the number of restricted stock awards that were granted and vested during 2020 and 2021: Restricted Stock Units Number of units Weighted average grant date fair value Granted at inception of 2020 Omnibus Plan 690,000 $ 7.60 Vested ( 390,000 ) $ 7.60 Forfeited - - Unvested as of December 31, 2020 300,000 $ 7.60 Granted 114,292 13.31 Vested-issued ( 65,000 ) 7.60 Vested-unissued ( 40,000 ) 7.60 Forfeited — — Unvested as of December 31, 2021 309,292 $ 9.71 NOTE 17 — FAIR VALUE INSTRUMENTS The carrying value of financial instruments reported in the accompanying Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments. Based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs, the carrying value of lines of credit, long-term debt, and the guaranteed purchase obligations approximate fair value as of December 31, 2021 and December 31, 2020. The following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis: Contingent Consideration The contingent consideration liability represents the fair value of the future earn-out liability that the Company may be required to pay in conjunction with acquisitions upon the achievement of certain performance milestones. The earn-outs for the acquisitions are measured at fair value in each reporting period, based on level 3 inputs, with any change to the fair value recorded in the Consolidated Statements of Operations. PeakLogix LLC (“PeakLogix”) The purchase agreement for the PeakLogix acquisition provides for earn-out payments of a minimum of $ 2.0 million up to $ 3.7 million which can be earned through June 30, 2025 based on meeting certain performance milestones . We estimated the fair value of the incremental $ 1.7 million earn-out payment based on a probability weighted range of outcomes analysis and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation. This analysis considered the earn-out payment thresholds, the minimum and maximum range of earn-out payments per the agreement and the expected future cash flows of PeakLogix. F-30 The Company concluded the future minimum cash payments of $ 2.0 million will be treated as a non-contingent liability and recorded a $ 1.7 million liability related to the present value of these minimum cash payments at the acquisition date in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheet. See Note 10, Long-Term Debt and Note 20, Business Combinations for further information. In addition to the non-contingent liability, there is a potential earn out payment of $ 1.7 million to be paid to Sellers over a five-year period. The Company recorded a $ 1.0 million earn out liability as the acquisition date fair value in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheet. As of December 31, 2021, the earn-out was remeasured resulting in an $ 0.4 million increase in fair value. The remeasurement impact was included in the Consolidated Statement of Operations. The earn-out will be remeasured at each balance sheet date using this approach and any resulting increase or decrease will be reflected in the Consolidated Statement of Operations. Going forward, volatility in the amount of PeakLogix’s actual results and forecasted scenarios could impact the fair value of this contingent consideration. See Note 20, Business Combinations for further information. Hilo Equipment & Services (“Hilo”) The purchase agreement for the Hilo acquisition provides an earn-out payment of $ 1.0 million based on meeting certain financial target which can be earned through July 1, 2023 . We estimated the fair value of the earn-out liability based on the present value of probability weighted expected future results. The Company recorded a $ 0.8 million earn out liability as the acquisition date fair value in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheet. As of December 31, 2021, the earn-out was remeasured resulting in a decrease of $ 0.4 million in fair value. The earn-out will be remeasured at each balance sheet date using this approach and any resulting increase or decrease will be reflected in the Consolidated Statement of Operations. Going forward, volatility in the amount of Hilo’s actual results and forecasted scenarios could impact the fair value of this contingent consideration. See Note 20, Business Combinations for further information. Ginop Sales, Inc (“Ginop”) The purchase agreement for the Ginop acquisition provides an opportunity for earn-out payments up to $ 1.5 million based on meeting certain financial targets which can be earned through December 31, 2023 . We estimated the fair value of the incremental earn-out payment based on a probability weighted range of outcomes analysis and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation. This analysis considered the earn-out payment thresholds, the minimum and maximum range of earn-out payments per the agreement and the expected future results of Ginop. The earn-out will be remeasured at each balance sheet date using this approach and any resulting increase or decrease will be reflected in the Consolidated Statement of Operations. The Company recorded a $ 0.9 million earn out liability as the acquisition date fair value in “Other Liabilities” on the Consolidated Balance Sheet. Going forward, volatility in the amount of Ginop’s actual results and forecasted scenarios could impact the fair value of this contingent consideration. See Note 20, Business Combinations for further information. The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of December 31, 2021 and 2020 (amounts in millions): December 31, 2021 Level 1 Level 2 Level 3 Liabilities: Contingent consideration $ — $ — $ 2.8 December 31, 2020 Level 1 Level 2 Level 3 Liabilities: Contingent consideration $ — $ — $ 1.8 F-31 The following is a summary of changes to Level 3 instruments during the year ended December 31, 2021 and 2020, which were recognized in a separate line item on the Consolidated Statements of Operations (amounts in millions): Contingent Consideration Balance, January 1, 2020 $ — Acquisition of PeakLogix 1.0 Acquisition of Hilo 0.8 Change in fair value — Balance, December 31, 2020 1.8 Acquisition of Ginop 0.9 Changes in fair value 0.1 Balance, December 31, 2021 $ 2.8 The following table represents the Company’s Level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments as of December 31, 2021 and 2020, respectively, and the significant unobservable inputs (amounts in millions): Instrument Fair Value 12/31/2021 Fair Value 12/31/2020 Principal Valuation Technique Significant Unobservable Inputs Contingent consideration $ 2.8 $ 1.8 Probability weighted range of outcomes See above NOTE 18 — SELF INSURED For the years ended December 31, 2021 and 2020, the Company has various health plans that covers eligible employees, including a self-insured group health plan, which contains certain stop-loss provisions. The Company has accrued health insurance in the amount of $ 1.1 million and $ 1.1 million for both known claims and an estimated amount of claims incurred but not reported at December 31, 2021 and 2020, respectively. Health benefit plan expenses, including benefits paid and insurance premiums, totaled approximately $ 21.3 million and $ 15.9 million for the years ended December 31, 2021 and 2020 respectively. NOTE 19 — EMPLOYEE BENEFIT PLANS Employee 401(k) Profit Sharing Plan Substantially all of the Company’s employees are eligible to participate in the Company’s 401(k) and profit-sharing plan. Eligible employees may contribute a percentage of their salary up to the Internal Revenue Service (“IRS”) limit. The Company may contribute a discretionary percentage of the amount deferred by the employee. The Company may also contribute a discretionary profit-sharing amount, as determined annually by the Board of Directors and management, to the plan each year. Total contributions, made by the Company, to the plan amounted to approximately $ 3.9 million and $ 1.9 million for the years ended December 31, 2021 and 2020, respectively. The Company has funded or accrued all calculated contributions as of the Consolidated Balance Sheet date. Equity Linked Incentive Plan Prior to 2020, t he Company had implemented a Long-Term Equity Linked Incentive Plan (“the Plan”) for key employees. The purpose of the Plan was to retain and attract key employees with an opportunity to receive additional compensation in connection with a change in control of the company (“qualifying event”). The plan permitted the award of up to 15,686.28 incentive units and 7,843.14 appreciation rights . For the year ended December 31, 2020, the Company incurred $ 3.1 million of share-based compensation expense as a result of vesting and extinguishment of the equity linked incentive plan as a result of the qualifying event on February 14, 2020. F-32 NOTE 20 — BUSINESS COMBINATIONS The following table summarizes the net assets acquired from the acquisitions in 2021 (amounts in millions): ScottTech Baron Gibson Midwest Mine Ambrose Ginop Total Cash $ 0.5 $ — $ — $ 0.4 $ 0.2 $ 0.7 $ 1.8 Accounts receivable 0.9 — 2.4 3.3 1.5 0.4 8.5 Inventory 0.3 0.3 3.6 1.4 7.9 14.7 28.2 Prepaid and other assets 0.1 0.3 0.5 — — — 0.9 Rental fleet, net — — 8.8 0.9 3.4 — 13.1 Property and equipment, net 0.4 0.2 1.0 1.3 0.4 — 3.3 Intangible assets 0.9 — — 1.3 2.5 15.2 19.9 Goodwill 0.6 0.8 0.3 1.1 2.2 14.0 19.0 Total Assets $ 3.7 $ 1.6 $ 16.6 $ 9.7 $ 18.1 $ 45.0 $ 94.7 Floor plan payable — — ( 4.4 ) — ( 3.3 ) ( 9.4 ) ( 17.1 ) Accounts payable ( 0.3 ) — ( 0.6 ) ( 1.5 ) ( 1.6 ) ( 1.1 ) ( 5.1 ) Accrued expenses ( 0.1 ) — ( 0.3 ) ( 0.2 ) ( 0.1 ) ( 0.2 ) ( 0.9 ) Other current liabilities ( 0.9 ) ( 0.3 ) — ( 1.1 ) — ( 0.4 ) ( 2.7 ) Other liabilities — — ( 0.7 ) — — — ( 0.7 ) Deferred tax liability — — — — — ( 3.7 ) ( 3.7 ) Total liabilities $ ( 1.3 ) $ ( 0.3 ) $ ( 6.0 ) $ ( 2.8 ) $ ( 5.0 ) $ ( 14.8 ) $ ( 30.2 ) Net Assets Acquired $ 2.4 $ 1.3 $ 10.6 $ 6.9 $ 13.1 $ 30.2 $ 64.5 Assets acquired net of cash $ 1.9 $ 1.3 $ 10.6 $ 6.5 $ 12.9 $ 29.5 $ 62.7 Ginop On December 31, 2021, the Company acquired the stock of Ginop, a privately held construction and agricultural equipment distributor, for a total purchase price of $ 30.2 million, which includes $ 0.9 million of the potential $ 1.5 million additional earn-out payments tied to post closing performance of the Ginop business. The Company acquired $ 0.7 million of cash and $ 0.3 million of estimated excess working capital in the transaction, yielding an enterprise value of approximately $ 29.2 million. The acquisition strengthens our construction product and service offerings in Northern Michigan and expands our relationship with Kubota. 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. 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 December 31, 2021 Cash consideration paid * $ 29.3 Earn-out liability 0.9 Total purchase price $ 30.2 * Includes $ 0.7 million cash acquired as part of the Business Combination Ambrose On December 31, 2021, the Company acquired the assets of Ambrose, a privately held construction equipment distributor, for a total purchase price of $ 13.1 million, including a $ 2.8 million purchase price adjustment due to working capital. The Company acquired $ 0.2 million of cash and $ 0.6 million of estimated working capital deficit in the transaction, yielding an enterprise value of approximately $ 13.5 million. Ambrose is the Northeast’s premier asphalt equipment dealer for more than 33 years, with locations in New Hampshire and Massachusetts. F-33 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. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses. Midwest Mine On December 1, 2021, the Company acquired the assets of Midwest Mine for a total purchase price of $ 6.9 million. Midwest Mine fabricates, and installs full aggregate processing plants for quarries, mines and recycling operations throughout the United States and is well-established in the Ohio and Michigan markets. 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. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses. Gibson On October 1, 2021, the Company acquired the assets of Gibson, a privately held premium equipment distributor, for a total purchase price of $ 10.6 million. The acquisition included $ 1.2 million of floorplan-eligible new equipment inventory and the Company assumed $ 4.4 million of equipment financing at closing, yielding an enterprise value at close of approximately $ 13.8 million. Gibson expands our geographic footprint and presence into Ohio and broadens our construction equipment product portfolio, OEM relationships, and service offerings. 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. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses. Baron On September 1, 2021, the Company acquired Baron, a privately held dock & door business, for a total purchase price of $ 1.3 million. Baron specializes in commercial overhead loading dock doors and equipment, hydraulic lifts, and vertical reciprocating conveyors. The acquisition is another step in the Company’s strategy to build out a full-service warehousing and logistics offering within the material handling segment. 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. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses. ScottTech On March 1, 2021, the Company acquired the assets of ScottTech, a material handling, warehouse control software, and turn-key warehouse system integration services provider, for a total purchase price of $ 2.4 million. The acquisition has natural synergies with the Company’s prior year acquisition of PeakLogix and further bolsters our capabilities with customers in the warehousing and logistics, distribution, and e-commerce end-markets. The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. F-34 The following table summarizes the net assets acquired from the acquisitions in 2020 (amounts in millions): Flagler Liftech Peak Hilo Martin Howell Vantage Total Cash $ 0.4 $ — $ 3.0 $ 2.1 $ — $ — $ — $ 5.5 Accounts receivable 15.1 4.4 4.6 5.4 1.0 5.2 3.6 39.3 Inventory 37.5 9.6 0.4 4.7 6.8 6.3 7.5 72.8 Prepaid and other assets 0.5 1.0 0.2 0.2 — — — 1.9 Rental fleet, net 47.8 4.7 — 7.5 6.3 12.4 15.9 94.6 Property and equipment, net 2.9 1.2 0.2 1.7 — 1.1 1.0 8.1 Intangible assets 14.6 1.2 5.8 2.4 1.5 2.4 — 27.9 Goodwill 5.8 1.5 0.7 3.2 0.8 1.7 0.5 14.2 Total Assets $ 124.6 $ 23.6 $ 14.9 $ 27.2 $ 16.4 $ 29.1 $ 28.5 $ 264.3 Floor plan payable ( 29.0 ) ( 3.5 ) — ( 4.4 ) — ( 0.8 ) ( 2.1 ) ( 39.8 ) Accounts payable ( 14.0 ) ( 1.6 ) ( 1.5 ) ( 2.8 ) ( 0.2 ) ( 1.0 ) ( 1.4 ) ( 22.5 ) Accrued expenses ( 4.1 ) — ( 0.1 ) ( 0.3 ) ( 0.1 ) ( 0.3 ) ( 0.6 ) ( 5.5 ) Other current liabilities — ( 0.1 ) ( 3.9 ) ( 0.4 ) — — ( 0.1 ) ( 4.5 ) Other liabilities ( 1.3 ) — — — — — — ( 1.3 ) Total Liabilities $ ( 48.4 ) $ ( 5.2 ) $ ( 5.5 ) $ ( 7.9 ) $ ( 0.3 ) $ ( 2.1 ) $ ( 4.2 ) $ ( 73.6 ) Net Assets Acquired $ 76.2 $ 18.4 $ 9.4 $ 19.3 $ 16.1 $ 27.0 $ 24.3 $ 190.7 Assets acquired net of cash $ 75.8 $ 18.4 $ 6.4 $ 17.2 $ 16.1 $ 27.0 $ 24.3 $ 185.2 Flagler On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Flagler for a total purchase price, net of cash, of $ 75.8 million, which was paid out of funds from the closing of the reverse recapitalization. The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $ 79.0 million. Liftech On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Liftech for a total purchase price of $ 18.4 million, which was paid out of funds from the closing of the reverse recapitalization. The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $ 15.2 million. PeakLogix 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 included a $ 1.0 million unsecured one-year promissory note at 6 % and an 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. See Note 10, Long-Term Debt and Note 15, Fair Value Instruments for further information. F-35 The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory, property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. The following table summarizes the components of the purchase price at June 12, 2020: Cash consideration paid * $ 5.7 Promissory Note 1.0 Present value of non-contingent earn-out liability 1.7 Earn-out liability 1.0 Total purchase price $ 9.4 * Includes $ 3.0 million cash acquired as part of the Business Combination Hilo 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. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $ 19.0 million. The following table summarizes the components of the purchase price at July 1, 2020: Cash consideration paid * $ 18.5 Earn-out liability 0.8 Total purchase price $ 19.3 * Includes $ 2.1 million cash acquired as part of the Business Combination Martin On September 1, 2020, the Company acquired all the assets of Martin for a total purchase price of $ 16.1 million, which was paid out of available funds. The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were 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. F-36 Howell Tractor On October 30, 2020, the Company acquired all the assets of Howell Tractor for a total cash consideration of $ 22.4 million. The Company also 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 acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. Subsequent to the 2020 year-end audit, before one year from the acquisition date, the Company recorded a purchase price allocation and working capital adjustment of $ 0.6 million which yielded a total purchase price of $ 27.0 million. 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 acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses. Subsequent to the 2020 year-end audit, before one year from the acquisition date, the Company recorded a purchase accounting adjustment to its Vantage acquisition that increased net assets acquired by $ 0.1 million which yielded a total purchase price of $ 24.3 million. Pro forma financial information - 2020 The Company completed the Flagler acquisition on February 14, 2020. Therefore, operating results of Flagler are included in the Company’s Consolidated Statement of Operations after February 14, 2020. Pursuant to ASC 805 and given Flagler’s size, pro forma disclosures should be reported whenever the year or interim period of the acquisition is presented. The pro forma information below gives effect to the Flagler acquisition as if the acquisition occurred on January 1, 2020. December 31, 2020 1/1-12/31 1/1-2/14 The Company Flagler Total Total revenues $ 873.6 $ 25.8 $ 899.4 Net loss $ ( 24.0 ) $ ( 0.1 ) $ ( 24.1 ) The financial effect of the other acquisitions in 2020, individually and in the aggregate, was not material to the consolidated financial statements. As such, pro forma results of operations including other acquisitions have not been presented. F-37 NOTE 21 — UNION PENSION PLAN The Company began contributing to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain union represented employees in 2018. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects: (a) Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (b) If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) If the Company ceases to have a continuing obligation to contribute to the multiemployer plan in which the Company had been a contributing employer, the Company may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company’s participation in the plan prior to the cessation of its obligation to contribute. The Company’s participation in multiemployer plans for the annual period ended December 31, 2021 and 2020 is outlined in the table below. For each plan that is individually significant to the Company, the following information is provided: • The “Pension Protection Act Zone Status” available is for plan years that ended in 2021 and 2020. The zone status is based on information provided to the Company and other participating employers by each plan and is certified by the plan’s actuary. This indicates the funded status of the plan with the status indicated by the colors of green, yellow, and red with green being the most funded and red being the least funded. • The “FIP/RP Status Pending/Implemented” column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the plan year. • The “Surcharge Imposed” column indicates whether a surcharge was paid during the most recent annual period presented for the Company’s contributions to any plan in the red zone in accordance with the requirements of the Code. • The last column lists the expiration dates of the collective bargaining agreements with the Company. There are no plans where the amount contributed by the Company represents more than 5% of the total contributions to the plan for the years ended December 31, 2021, and 2020. F-38 Multiple Employer Pension Plans (amounts in thousands): Pension Fund EIN Pension Protection Act Zone Status & Plan Year- End FIP/RP Status Contributions of Alta Equipment Group Inc. and Subsidiaries Surcharge Imposed Expiration Date of Collective- Bargaining Agreement 2021 2020 2021 2020 Operating Engineers I.U.O.E. Local 37 Pension Trust 52-6128064 — — None $ — $ — No 3/31/2020 Midwest Operating Engineers Local Union No. 150 Pension Trust Fund 36-6140097 Yellow 3/31/2021 Green 3/31/2020 Implemented 2,218 1,472 No 5/31/2024 Operating Engineers Local Union No. 324 Pension Fund 38-1900637 Red 4/30/2021 Red 4/30/2020 Implemented 925 783 No 9/30/2024 Central Pension Fund of the International Union of Operation Engineers Local Union No. 649 and 841 36-6052390 Green 1/31/2021 Green 1/31/2020 None 99 70 No 3/31/2024 Upstate New York Engineers Pension Fund Local Union 17C Engineers Local Union No. 639 15-0614642 Red 3/31/2021 Red 3/31/2020 Implemented 4 52 No 11/30/2025 Central Pension Fund of Operating Engineers Local Union 17C 36-6052390 Green 1/31/2021 Green 1/31/2020 None 147 19 No various through 11/30/2025 Central Pension Fund of the International Union of Operating Engineers Local 158 District 832 36-6052390 Green 1/31/2021 Green 1/31/2020 None 188 72 No various through 6/19/2025 Central Pension Fund of the International Union of Operating Engineers - Local 158 District 545 36-6052390 Green 1/31/2021 Green 1/31/2020 None 134 — No 5/14/2025 Central Pension Fund of the International Union of Operating Engineers - Local 158 District 106 36-6052390 Green 1/31/2021 Green 1/31/2020 None 117 — No various through 1/9/2026 Operating Engineers Local 825 Fund 22-6033380 Green 6/30/2021 Green 6/30/2020 None 20 — No 6/30/2022 Iron Workers District Council of New England and the Int'l Assoc of Bridge, Structural, Ornamental and Reinforcing Iron Workers, AFL-CIO - Ironworkers' Local 15 & 424 Pension Fund 06-6077019 Green 6/30/2021 — Implemented 29 — Yes 5/31/2022 National Pension Fund of the International Association of Machinists & Aerospace Workers - Local 701 36-6042061 Green 12/31/2021 Green 6/30/2020 None — — No 5/1/2025 $ 3,881 $ 2,468 NOTE 22 — SEGMENTS The Company has two reportable segments: Material Handling and Construction Equipment. The Company’s segments are determined based on management structure, which is organized based on types of products sold, as described in the following paragraph. The operating results for each segment are reported separately to the Company’s Chief Executive Officer to make decisions regarding the allocation of resources, to assess the Company’s operating performance and to make strategic decisions. The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks and other material handling equipment in Michigan, Illinois, Virginia, Indiana and New York (including New York City), and New England (including Boston). As of December 31, 2021, the Material Handling segment includes the ScottTech, Baron, 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, Indiana, Ohio, New York, and Florida. As of December 31, 2021, the Construction Equipment segment includes the Gibson, Midwest Mine, Ambrose, Ginop, Flagler, Martin, Howell Tractor, and Vantage acquisitions. F-39 The Company retains various unallocated expense items at the general corporate level, which the Company refers to as “Corporate” in the table below. Corporate holds corporate debt and has minor activity all together. For the year ended December 31, 2021, Corporate incurred $ 11.9 million in debt extinguishment fees as compared to $ 7.6 million in the prior year. Corporate primarily incurs expenses associated with the compensation of our directors and our corporate senior leadership team, corporate expenses related to being a public company, preferred stock dividends, consulting and legal fees related to acquisition costs, costs related to capital raising activities, interest expense, and in the prior year ended December 31, 2020 incurred costs associated with the reverse capitalization transaction, fees on the issuance of the common and preferred stock which were partially offset with income tax benefit and $ 8.0 million in income from a life insurance policy on our Construction Group President. The following table presents the Company’s results of operations by reportable segment for the year ended December 31, 2021 (amounts in millions): Year Ended December 31, 2021 Material Handling Construction Equipment Corporate Total New and used equipment sales $ 258.3 $ 310.5 $ — $ 568.8 Parts sales 65.4 113.1 — 178.5 Service revenue 94.6 70.9 — 165.5 Rental revenue 48.4 107.1 — 155.5 Rental equipment sales 0.8 143.7 — 144.5 Total revenue $ 467.5 $ 745.3 $ — $ 1,212.8 Interest expense 8.2 13.9 1.9 24.0 Depreciation and amortization 19.3 76.5 — 95.8 Net income (loss) $ 10.2 $ ( 2.9 ) $ ( 30.7 ) $ ( 23.4 ) The following table presents the Company’s results of operations by reportable segment for the year ended December 31, 2020 (amounts in millions): Year Ended December 31, 2020 Material Handling Construction Equipment Corporate Total New and used equipment sales $ 195.1 $ 215.2 $ — $ 410.3 Parts sales 55.5 74.1 — 129.6 Service revenue 80.0 48.5 — 128.5 Rental revenue 42.4 76.4 — 118.8 Rental equipment sales 7.5 78.9 — 86.4 Total revenue $ 380.5 $ 493.1 $ — $ 873.6 Interest expense 5.2 11.1 7.5 23.8 Depreciation and amortization 21.1 53.9 — 75.0 Net income (loss) $ 7.1 $ ( 16.7 ) $ ( 14.4 ) $ ( 24.0 ) The following table presents the Company’s identified assets by reportable segment for the period ending December 31, 2021 and 2020 (amounts in millions): December 31, 2021 December 31, 2020 Segment assets: Material handling $ 325.1 $ 221.5 Construction equipment 655.8 523.4 Corporate 1.7 1.3 Total assets $ 982.6 $ 746.2 F-40 NOTE 23 — EARNINGS PER SHARE Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. We include all common shares granted under our share-based compensation plan which remain unvested (“restricted stock units”), in the number of shares outstanding for our diluted EPS calculations using the treasury method. Basic and diluted EPS for the year ended December 31, 2021, and 2020 were calculated as follows (amounts in millions, except per share amounts): Year Ended December 31, 2021 2020 Basic net (loss) income per share: Net (loss) income $ ( 23.4 ) $ ( 24.0 ) Basic weighted average common shares outstanding 31,706,329 26,612,982 Basic net (loss) income per share of common stock: $ ( 0.74 ) $ ( 0.90 ) Diluted net (loss) income per share: Net (loss) income $ ( 23.4 ) $ ( 24.0 ) Basic weighted average common shares outstanding 31,706,329 26,612,982 Effect of dilutive securities: Effect of dilutive non-vested restricted stock units — — Diluted weighted average common shares outstanding 31,706,329 26,612,982 Diluted net (loss) income per share of common stock: $ ( 0.74 ) $ ( 0.90 ) Securities excluded from the calculation of diluted loss per share were approximately 174,000 and 90,000 for the years ended December 31, 2021 and 2020, respectively, because the inclusion of such securities in the calculation would have been anti-dilutive. NOTE 24 — SUBSEQUENT EVENTS We do not have any subsequent events to disclose. F-41