[10-Q] OFF THE HOOK YS INC. Quarterly Earnings Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period Ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from ______ to ______
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
The
number of shares of the registrant’s common stock, par value $
Off The Hook YS Inc.
Table of Contents
| PART I. FINANCIAL INFORMATION | 4 |
| Item 1. Financial statements | 4 |
| Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 4 |
| Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2026 and 2025 | 5 |
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2026 and 2025 | 6 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2026 and 2025 | 7 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 8 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 29 |
| Item 4. Controls and Procedures | 29 |
| PART II. OTHER INFORMATION | 30 |
| Item 1. Legal Proceedings | 30 |
| Item 1A. Risk Factors | 30 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 30 |
| Item 3. Defaults Upon Senior Securities | 30 |
| Item 4. Mine Safety Disclosures | 30 |
| Item 5. Other Information | 30 |
| Item 6. Exhibits | 31 |
| SIGNATURES | 32 |
| 2 |
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of the federal securities laws concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, our actual results and the timing of selected events may differ materially. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk factors” in Part II, Item 1A of this Quarterly Report and elsewhere in this Quarterly Report. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
| 3 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
OFF THE HOOK YS INC.
Condensed Consolidated Balance Sheets
As of March 31, 2026 and December 31, 2025
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expense | ||||||||
| Other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Other receivable | ||||||||
| Due from related party | ||||||||
| Right-of-use assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Lease liabilities, current | ||||||||
| Current portion of long-term debt | ||||||||
| Due to related party | ||||||||
| Customer deposits | ||||||||
| Short-term debt | - | |||||||
| Floor plan notes payable | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities | ||||||||
| Long-term debt, noncurrent | ||||||||
| Lease liabilities, noncurrent | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Common stock payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 4 |
OFF THE HOOK YS INC.
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended March 31, 2026 and 2025
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross Profit | ||||||||
| Operating Expenses: | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative | ||||||||
| Advertising and marketing | ||||||||
| Professional services | ||||||||
| Salaries and wages | ||||||||
| Rent expenses | ||||||||
| Total Operating Expenses | ||||||||
| (Loss) Income from Operations | ( | ) | ||||||
| Other Income (Expenses): | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Total Other Expenses | ( | ) | ( | ) | ||||
| (Loss) Income Before Income Taxes | ( | ) | ||||||
| Income tax expenses | - | |||||||
| Net (Loss) Income | $ | ( | ) | $ | ||||
| Basic and Diluted Net (Loss) Income Per Common Share | $ | ( | ) | $ | ||||
| Basic and diluted weighted average common share outstanding | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 5 |
OFF THE HOOK YS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
For the Three Months Ended March 31, 2026 and 2025
| Common Stock | Additional Paid-in | Common Stock | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Payable | Deficit | Equity | |||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | - | $ | ( | ) | $ | ||||||||||||||||
| Member Distribution | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance, March 31, 2025, Unaudited | $ | $ | $ | - | $ | ( | ) | $ | ||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||
| Stock issued for professional service | - | - | ||||||||||||||||||||||
Net (loss) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net income (loss) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance, March 31, 2026, Unaudited | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 6 |
OFF THE HOOK YS INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31, 2026 and 2025
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation | - | |||||||
| Stock issued for professional fees | - | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Private label receivable | - | |||||||
| Other receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expense | ( | ) | ( | ) | ||||
| Other current assets | ||||||||
| Due from related party | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Customer deposits | ( | ) | ||||||
| Other current liabilities | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditure for fixed assets | ( | ) | ( | ) | ||||
| Acquisition of intangible assets | ( | ) | - | |||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Member distribution | - | ( | ) | |||||
| Proceeds from short-term loan payable | - | |||||||
| Proceeds from floorplan notes payable | ||||||||
| Payment to floor plan notes payable | ( | ) | ( | ) | ||||
| Payment to long-term debt | ( | ) | ( | ) | ||||
| Proceeds from related-party debt | ||||||||
| Repayments of related party debts | - | ( | ) | |||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | - | - | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 7 |
OFF THE HOOK YS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Off The Hook YS Inc. (“OTH”) was incorporated in Nevada on January 3, 2025 and operates as a holding company with no independent operations. Through its subsidiaries, the Company is engaged in the retail sale, brokerage, and servicing of new and pre-owned boats, yachts, and trailers, and in arranging related financing and insurance products.
The Company conducts its operations through several subsidiaries, including Off The Hook Yacht Sales NC, LLC, OTH Marine Asset Recovery LLC, Azure Funding, LLC, and Autograph Yacht Group Inc.
Effective February 10, 2026, the Boat Center’s business operations were transferred to OTH. On February 10, 2026, OTH Simon Marine YF, LLC (“Boat Center”) was liquidated and is no longer part of the Company’s operating structure.
On March 26, 2026,
There have been no other material changes to the Company’s business or organizational structure from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Basis of Presentation and Significant Accounting Policies
The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included. All intercompany balances and transactions have been eliminated in consolidation. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any other interim period or for any other future year.
There have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Use of Estimates
The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
| 8 |
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which opted out of utilizing the emerging growth company reduced reporting requirements difficult.
Recent Accounting Pronouncements Recently Adopted
In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this ASU on December 31, 2025 and no material impact is observed to the financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2025, for emerging growth companies, with early adoption permitted. The amendments should be applied prospectively however, retrospective application is also permitted. We adopted this ASU on January 1, 2026, no material impact is observed to the financial statements.
NOTE 2. INVENTORY
Inventories consisted of the following:
SCHEDULE OF INVENTORIES
| March 31, 2026 | December 31, 2025 | |||||||
| New boats | $ | $ | ||||||
| Used boats | ||||||||
| Trailers | ||||||||
| Total | $ | $ | ||||||
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Property and equipment, net consisted of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT, NET
| March 31, 2026 | December 31, 2025 | |||||||
| Leasehold improvement | $ | $ | ||||||
| Buildings | ||||||||
| Furniture and Fixtures | ||||||||
| Equipment | ||||||||
| Vehicles | ||||||||
| Property, plant and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
During the three months ended March 31, 2026 and 2025, the Company incurred depreciation expense of $
| 9 |
NOTE 4. GOODWILL
Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business acquisition that are not individually identified and separately recognized.
On
July 22, 2022, the Company acquired
NOTE 5. INTANGIBLE ASSETS
On
April 25, 2025, the Company entered into a Stock Purchase Agreement with the shareholders of Boats and Buyers, Inc. (the “Acquiree”),
pursuant to which the Company acquired
The
transaction has been accounted for as an asset acquisition. Substantially all of the fair value of the gross assets acquired was concentrated
in a group of similar identifiable assets, specifically, website and related intellectual property. Accordingly, the purchase price was
allocated to intangible assets and an intangible asset of approximately $
The common stock consideration related to this acquisition has not been issued as of March 31, 2026 and was recorded as a Common Stock Payable on the consolidated balance sheet.
SCHEDULE OF INTANGIBLE ASSETS
Estimated
Useful | March 31, 2026 | December 31, 2025 | |||||||||
| Website and intellectual property | $ | $ | |||||||||
| Software(1) | |||||||||||
| Accumulated amortization | ( | ) | ( | ) | |||||||
| Net book value | $ | $ | |||||||||
| (1) |
Amortization expense related to the Company’s intangible assets was immaterial for the three months ended March 31, 2026 and 2025. Estimated future amortization expense for the intangible assets is as follows:
SCHEDULE OF FUTURE AMORTIZATION OF THE INTANGIBLE ASSET
| Calendar Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total Intangible Asset Amortization | $ | |||
| 10 |
NOTE 6. ACCOUNTS PAYABLE
Accounts payable consisted of the following as of March 31, 2026 and December 31, 2025:
SCHEDULE OF ACCOUNTS PAYABLE
| March 31, 2026 | December 31, 2025 | |||||||
| Accounts Payable | $ | $ | ||||||
| Credit Card Payable | ||||||||
| Total | $ | $ | ||||||
NOTE 7. NOTES PAYABLE – FLOOR PLAN
The
Company has a floor plan agreement with Red Oak Inventory Finance (“the Lender”), which has a stated borrowing capacity of
$
Borrowings
bear interest at Secured Overnight Financing Rate (“SOFR”) plus a margin that varies based on whether the inventory is new
or used and the length of time the inventory is held.
Outstanding
borrowings under the agreement were $
NOTE 8. LONG-TERM LOAN PAYABLE
SCHEDULE OF LONG-TERM LOAN PAYABLES
March 31, 2026 | December 31, 2025 | |||||||
| Total loan payables | $ | $ | ||||||
| Payable to Wells Fargo bearing interest at | $ | $ | ||||||
| Payable to GMC Financial, secured by a Company vehicle. Monthly payments of principal and interest totaling $ | - | |||||||
| Payable to Land Rover Financial Group, secured by a Company vehicle. Monthly interest payments are due at the beginning of each month. Interest accrues at a rate of | ||||||||
| Total Long-Term Debt | $ | $ | ||||||
Maturity of long-term debt is as follows:
SCHEDULE OF FUTURE PRINCIPAL AMOUNT OF LOAN PAYMENTS
| As of March 31: | Amount | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total | $ | |||
| 11 |
NOTE 9. LEASES
The balances for operating leases where the Company is the lessee are presented within the condensed balance sheets as follows:
SCHEDULE OF BALANCES FOR THE OPERATING LEASES
| Operating Leases | March 31, 2026 | December 31, 2025 | ||||||
| Right of use-assets | $ | $ | ||||||
| Lease liability-current | ||||||||
| Lease liability-non-current | ||||||||
| Total Operating Lease Liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate (%) | ||||||||
The components of lease expenses for the three months ended March 31, 2026 and 2025 were as follows:
SCHEDULE OF COMPONENTS OF LEASE EXPENSES
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease cost | $ | $ | ||||||
| Cost of other leases with period less than one year and variable lease costs | ||||||||
| Lease expenses | $ | $ | ||||||
The
components of lease expenses for the three months ended March 31, 2026 and 2025 were approximately $
Supplemental cash flow information related to leases for the three months ended March 31, 2026 and 2025 were as follows:
SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES
| Cash Paid for Amounts Included in the Measurement of Lease Liabilities: | 2026 | 2025 | ||||||
| For the Three Months Ended March 31, | ||||||||
| Cash Paid for Amounts Included in the Measurement of Lease Liabilities: | 2026 | 2025 | ||||||
| Operating cash flows from operating leases | $ | $ | ||||||
As of March 31, 2026, the maturities of operating lease liabilities (excluding short-term lease) are as follows:
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES
| For the Three Months Ended March 31, 2026 | Operating Lease | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| 2032 and thereafter | ||||
| Total Lease Payments | ||||
| Less: imputed interest | ( | ) | ||
| Present Value of Lease Liabilities | $ | |||
| Less: current portion | ( | ) | ||
| Lease Obligations, Noncurrent | $ | |||
| 12 |
NOTE 10. REVENUE
Net revenue by category:
SCHEDULE OF NET REVENUE
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Pre-owned boat sales | $ | $ | ||||||
| New boats sales | ||||||||
| Finance income | ||||||||
| Service, parts & other sales | ||||||||
| Total Consolidated Revenue | $ | $ | ||||||
As
of March 31, 2026 and 2025, trade-in boats recorded as inventory totaled $
Customer deposits are recorded as deferred revenue and recognized as revenue upon transfer of control to the customer, generally upon delivery or acceptance.
Of
the customer deposits recorded as of December 31, 2025 and 2024, $
The movement in customer deposits is as follows:
SCHEDULE OF MOVEMENT IN CUSTOMER DEPOSITS
March 31, 2026 | December 31, 2025 | |||||||
| Balance at Beginning of Period | $ | $ | ||||||
| Decrease due to revenue recognized during the period | ( | ) | ( | ) | ||||
| Increase from customer deposits received in advance of performance obligations | ||||||||
| Refunds to customers | - | ( | ) | |||||
| Balance at End of Period | $ | $ | ||||||
NOTE 11. RELATED PARTIES TRANSACTIONS
The principal related parties with which the Company had transactions for the three months ended March 31, 2026, and 2025 are as follows:
SCHEDULE OF RELATED PARTIES RELATIONSHIP WITH THE COMPANY
| 13 |
SCHEDULE OF RELATED PARTIES
Amounts Due To Related Parties
| March 31, 2026 | December 31, 2025 | |||||||
| Tom Ruegg (2) | $ | $ | ||||||
| Jason Ruegg (1) | - | |||||||
| Andrew Simmons (1) | - | |||||||
| Total | $ | $ | ||||||
| Amounts due to related parties | $ | $ | ||||||
| (1) | ||
| (2) |
Amounts Due From Related Parties
Amounts due from related parties consisted of the following for the periods indicated:
| March 31, 2026 | December 31, 2025 | |||||||
| OTH Equipment | $ | $ | ||||||
| OTH Realty II, LLC | ||||||||
| OTH Sloop Point LLC | ||||||||
| Jason Ruegg | - | |||||||
| Lewis Landing LLC | - | |||||||
| Total | $ | $ | ||||||
| Amounts due from related parties | $ | $ | ||||||
Member Distribution
Prior
to the Company’s initial public offering (“IPO”), the Company made distributions to members of $
NOTE 12. INCOME TAXES
OTHYS, Boat Center, and Azure, each limited liability companies since inception, were taxed as partnerships for U.S. federal and applicable state income tax purposes. Accordingly, taxable income or loss was passed through to the respective members, and no provision for income taxes was recorded at the entity level.
OTH
incorporated on January 3, 2025 and is taxed as C corporation under the Code. AYG was incorporated in the State of Florida on August
8, 2025 and is taxed as C corporation under the Code. Income tax liability as of March 31, 2026 was $
The Company is an Emerging Growth Company and has elected to use the extended transition period for complying with new or revised accounting standards. The Company adopted ASU 2023-09, effective January 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements for the interim period.
On July 4th, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to: permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions. The Company does not expect the Tax Reform Act of 2025 to have a material impact on its effective tax rate for the fiscal year ended December 31, 2026.
| 14 |
The income tax provision for the three months ended March 31, 2026 and 2025 consisted of the following:
SCHEDULE OF INCOME TAX PROVISION
| As of March 31, 2026 | As of December 31, 2025 | |||||||
| Entity Level State Income Tax on LLC Income | $ | $ | ||||||
| Income tax payable | ||||||||
| For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 | |||||||
| Current | $ | $ | ||||||
| Federal | - | - | ||||||
| State | - | |||||||
| Total Current Income Tax Provision | - | |||||||
| Deferred | ||||||||
| Federal | - | - | ||||||
| State | - | - | ||||||
| Total deferred taxes | - | - | ||||||
| Total Provision for Income Taxes | $ | $ | - | |||||
The tax effect of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases that give rise to deferred tax assets and liabilities is as follows:
SCHEDULE OF DEFERRED TAX ASSETS
| March 31, 2026 | December 31, 2025 | |||||||
| Deferred Tax Assets: | $ | $ | ||||||
| Stock based compensation | ||||||||
| Operating lease, right-of-use assets | - | |||||||
| Interest deduction limitation | - | |||||||
| Net operating loss carryforward | - | |||||||
| Accruals and reserves | - | |||||||
| Operating lease liabilities | - | |||||||
| Other assets | - | |||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total Deferred Tax Assets | $ | $ | ||||||
| Deferred Tax Liabilities: | ||||||||
| Interest deduction limitation | ( | ) | - | |||||
| Net operating loss carryforward | ( | ) | - | |||||
| Depreciation and allowance | ( | ) | - | |||||
| Operating lease liabilities | ( | ) | - | |||||
| Goodwill and identifiable intangible assets | - | ( | ) | |||||
| Operating lease, right-of-use assets | - | ( | ) | |||||
| Total Deferred Tax Liabilities | $ | ( | ) | $ | ( | ) | ||
| Net Deferred Tax Asset (Liability) | $ | - | $ | - | ||||
| * | In connection with the Company’s 2025 incorporation and related acquisition/accounting, the Company recorded deferred tax liabilities associated with purchase accounting adjustments (primarily identifiable intangible assets). These deferred tax liabilities were recorded as part of acquisition accounting and did not affect the current-year income tax provision. |
The Company’s effective tax rates for the
three months ended March 31, 2026 and March 31, 2025 were (
| 15 |
Net operating losses and tax credit carryforwards as of March 31, 2026 were as follows:
SCHEDULE OF NET OPERATING LOSSES AND TAX CREDIT CARRYFORWARDS
| Amount | Expiration Year | ||||||
| As of March 31, 2026 | |||||||
| Amount | Expiration Year | ||||||
| Net operating losses, federal | $ | ||||||
| Net operating losses, state | |||||||
| Tax credits, federal | - | - | |||||
| Tax credits, state | - | - | |||||
Pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), annual use of the Company’s net operating losses (“NOLs”) and research and development (“R&D”) credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not undergone an analysis to determine whether this limitation would apply to the utilization of the NOL carryforward. However, as the federal NOLs do not expire, the Company does not believe that any potential limitations to federal or state NOLs, or federal credit carryforwards, if applicable, would be material to the financial statements.
Uncertain Tax Positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2026 and December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income taxes for the three months ended March 31, 2026 and 2025.
As of March 31, 2026, there were no active taxing authority examinations in any of the Company’s major tax jurisdictions.
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While the OBBBA did not have a significant impact on the Company’s total tax provision as of December 2025, the Company is still evaluating the Company’s position on the elective provisions of the law and the potential impacts of those elections on the condensed consolidated financial statements.
For the three months ended March 31, 2026, there was no cash paid for federal or state taxes.
NOTE 13. STOCKHOLDERS’ EQUITY
Common Stock
On
January 3, 2025, Off The Hook YS Inc. was incorporated in Nevada and became the holding company pursuant to a reorganization. The total
authorized shares of common stock were
Each
share of common stock has a par value of $
Preferred Stock
The
Company authorized
| 16 |
Additional Paid-in Capital
During the three months ended March 31, 2025, the Company did not receive any member contributions.
On
November 14, 2025, the Company completed its initial public offering (“IPO”) of
Member Distribution
Prior
to the Company’s IPO, the Company made distributions to members of $
Common Stock Payable
On
April 25, 2025, The Company committed
NOTE 14. STOCK COMPENSATION
Equity Incentive Plan
On
April 29, 2025, the Company’s Board of Directors and stockholders approved the 2025 Equity Incentive Plan (the “2025 Plan”).
The Compensation Committee of the Board of Directors has the authority to administer the 2025 Plan and to determine the recipients and
terms of awards granted thereunder. The 2025 Plan provides for the issuance of up to
Restricted Stock Unit
Following
the Company’s initial public offering on November 14, 2025, the Company granted restricted stock units (“RSUs”) to
employees and contractors under the 2025 Plan.
During
the three months ended March 31, 2026, the Company recognized $
A summary of RSU activity is as follows:
SCHEDULE OF RESTRICTED STOCK UNITS GRANTS
| Total RSUs Issued | Total Fair Market Value of RSUs Issued as Compensation (1) | |||||||
| RSUs Granted but Not Vested at January 1, 2026 | $ | |||||||
| RSUs granted | ||||||||
| RSUs forfeited | ( | ) | ( | ) | ||||
| RSUs vested and released | ( | ) | ( | ) | ||||
| RSUs Granted but Not Vested at March 31, 2026 | $ | |||||||
| (1) |
The Company had no restricted stock units outstanding and no restricted stock unit activity during the three months ended March 31, 2025, as the Company’s 2025 Equity Incentive Plan had not yet been adopted.
As
of March 31, 2026,
| 17 |
Stock Options
During
the three months ended March 31, 2026, the Company granted
Equity Issued for Services
During the three months ended March 31, 2026, the Company entered into multiple consulting and service arrangements with third-party providers. As consideration for services, the Company issued shares of its common stock upon execution of the respective agreements. These shares were not subject to vesting conditions and were deemed fully earned upon issuance.
The Company measured these awards at the grant-date fair value of its common stock. As the awards were not subject to substantive future service requirements, the total fair value of the equity consideration was recognized as share-based compensation expense on the respective grant dates.
During the three months ended March 31, 2026, the
Company issued an aggregate of
NOTE 15. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025:
SCHEDULE OF EARNINGS PER SHARE
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net (loss) income attributable to the Company | $ | ( | ) | $ | ||||
| Weighted average number of shares * | ||||||||
| (Loss) earnings per share - Basic and Diluted | $ | ( | ) | $ | ||||
| * | ||
| * |
NOTE 16. SEGMENT INFORMATION
The
Company operates primarily in
Dealerships: Specializing in the buying, selling, servicing and wholesaling of yachts and boats.
Financial Services: A recreational loan broker and lender providing financing solutions for individuals, dealerships, and brokerages.
The Company’s segments are evaluated based on operating income (loss), which is the primary measure used by the chief operating decision maker (“CODM”) to assess performance and allocate resources. The CODM is the Company’s President and Founder.
Gross profit, defined as revenue less direct costs, is also reviewed for operational purposes.
| 18 |
Segment information is as follows:
SCHEDULE OF SEGMENT INFORMATION
| Dealerships | Financial Services | Consolidated | ||||||||||
| For the Three Months Ended March 31, 2026 | ||||||||||||
| Dealerships | Financial Services | Consolidated | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Operating Expenses | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Selling, general and administrative | ||||||||||||
| Advertising and marketing | ||||||||||||
| Professional services | - | |||||||||||
| Salaries and wages | ||||||||||||
| Rent expenses | ||||||||||||
| Total operating expenses | ||||||||||||
| Other Income (Expenses) | ||||||||||||
| Interest expense, net | ( | ) | - | ( | ) | |||||||
| Other income | ||||||||||||
| Total Other (Expense) Income | ( | ) | ( | ) | ||||||||
| Income tax expenses | $ | |||||||||||
| Net Loss | $ | ( | ) | ( | ) | $ | ( | ) | ||||
| Dealerships | Financial Services | Consolidated | ||||||||||
| For the Three Months Ended March 31, 2025 | ||||||||||||
| Dealerships | Financial Services | Consolidated | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Operating Expenses | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Selling, general and administrative | ||||||||||||
| Advertising and marketing | ||||||||||||
| Professional services | ||||||||||||
| Salaries and wages | ||||||||||||
| Rent expenses | ||||||||||||
| Total Operating Expenses | ||||||||||||
| Other income (expenses) | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Other income | ||||||||||||
| Total Other Expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net Income | $ | $ | $ | |||||||||
The total assets for each segment are presented in accordance with segment reporting requirements of ASC 280-10, which requires the disclosure of total assets for each reportable segment.
| Dealerships | Financial Services | Consolidated | ||||||||||
| As of March 31, 2026 | ||||||||||||
| Dealerships | Financial Services | Consolidated | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Accounts receivable, net | ||||||||||||
| Inventory | ||||||||||||
| Prepaid expense | ||||||||||||
| Other current assets | ||||||||||||
| Property, plant and equipment, net | ||||||||||||
| Other receivable | - | |||||||||||
| Due from related party | ||||||||||||
| Intangible assets, net | - | |||||||||||
| Right-of-use assets | - | |||||||||||
| Goodwill | - | |||||||||||
| Total Assets | $ | $ | $ | |||||||||
| 19 |
| Dealerships | Financial Services | Consolidated | ||||||||||
| As of December 31, 2025 | ||||||||||||
| Dealerships | Financial Services | Consolidated | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Accounts receivable, net | ||||||||||||
| Inventory | ||||||||||||
| Prepaid expense | ||||||||||||
| Other current assets | ||||||||||||
| Property, plant and equipment, net | ||||||||||||
| Other receivable | - | |||||||||||
| Due from related party | - | |||||||||||
| Intangible assets, net | - | |||||||||||
| Right-of-use assets | - | |||||||||||
| Goodwill | - | |||||||||||
| Total Assets | $ | $ | $ | |||||||||
NOTE 17. COMMITMENTS AND CONTINGENCIES
Commitments
As of March 31, 2026 and December 31, 2025, the Company did not have any significant capital and other commitments.
Contingencies
Legal Proceedings
From time to time, the Company may become involved in litigation and other legal proceedings arising in the ordinary course of business. While the Company does not currently believe that any pending legal proceeding will have a material adverse effect on its financial position, results of operations, or cash flows, litigation is inherently uncertain and adverse outcomes could occur.
Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may be incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. We follow a process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.
Carl Austin Rosen v. Off The Hook yacht Sales NC LLC
Carl
Austin Rosen v. Off The Hook Yacht Sales NC, LLC et al (Case No. 2024-004493-CA-01), pending in Miami-Dade’s Complex Business Litigation
Division, Plaintiff Carl Rosen alleges he was fraudulently induced into purchasing a $
Reistad et al v. Off The Hook YS, Inc.
In
March 2026,
Regarding the remaining claims, the Company believes it terminated the plaintiffs for cause in accordance with the applicable employment agreements and therefore, no severance or additional compensation is owed. The Company has filed its answer in the matter and has asserted counterclaims. The Company intends to defend the matter fully.
| 20 |
OneWater Marine Inc. v. Off The Hook YS Inc. et al
The Company and two of its subsidiaries are named as defendants in OneWater Marine Inc. v. Off The Hook YS Inc. a civil case pending in the State of Florida in the Circuit Court for Palm Beach County wherein claims have been made against the Company and such subsidiaries for tortious interference with contract and related claim. The Company has filed its answer and intends to fully defend the matter.
NOTE 18. SUBSEQUENT EVENTS
Apex Marine Acquisition
On
May 13, 2026, the Company completed the acquisition of Apex Marine, LLC, Apex Marine Sales, LLC and Apex Marine Stuart, LLC for aggregate
consideration of approximately $
The acquisition will be accounted for as a business combination under ASC 805. The Company is in the process of determining the preliminary allocation of the purchase price to the assets acquired and liabilities assumed. Accordingly, the initial accounting for the acquisition is incomplete as of the date of issuance of these financial statements.
| 21 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) should be read in conjunction with our financial statements and the related notes thereto included elsewhere herein. The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Quarterly Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.
Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.
Overview and Business Trends
We are a premier yacht and boat dealership specializing in the buying, selling, and wholesaling of yachts and boats. As one of the largest boat buyers and sellers in the industry, OTH has become a nationally recognized leader in the marine industry, offering a comprehensive suite of services that spans the entire boat value chain from purchasing, financing, servicing, to selling, disposing, asset recovery, and repossession of boats. The Company has eight physical locations strategically located across the United States and with brokers operating nationwide, that the Company believes that it provides unparalleled reach and accessibility to clients around the country, and believes that it is the largest used boat buyer and seller in the United States.
The Company has approximately 65 brokers, positioned throughout the United States, who specialize in navigating the pre-owned regional markets while maintaining a client-focused approach. By leveraging its nationwide broker network, advanced AI-enabled CRM technology, and synergistic portfolio of entities, the Company delivers exceptional value to clients.
Our research indicates that buyers are taking a more deliberate, research-driven approach, engagement remains strong as consumers recognize the lasting value of pre-owned boats compared to new models. We believe that we are ideally suited to servicing this pre-owned boating market with our digital tools and virtual sales platforms that empower smoother connections between buyers and sellers, streamlining the experience and expanding reach of opportunities. As the price maker in our markets, we can respond to changes in pre-owned boat pricing, and we are able to quickly capitalize on the changing market conditions, providing for consistency and predictability in our margins. Our investment in innovative technology and customer engagement tools allows us to connect with new audiences, nurture relationships, and deliver an exceptional ownership experience that builds long-term loyalty.
In addition to our corporate website, we own webuyboats.com which provides lead generation services. Our proprietary lead-generation platform, www.webuyboats.com, serves as a national pipeline for high-quality pre-owned boat inventory. The site attracts private sellers and dealers looking to quickly liquidate trade-in boats and pre-owned vessels. These leads directly fuel the Company’s wholesale and brokerage operations, supporting our high volume, showroom-free model.
During the first quarter of 2026, the Company entered into an agreement to acquire Bellhart Marine Group and its affiliated entities in order to expand the Company’s in-house marine service, refit, and maintenance capabilities. Management believes the acquisition would further support the Company’s vertically integrated operating model and enhance inventory reconditioning and service capacity. The transaction remains subject to customary closing conditions.
Looking ahead, our established market position, proprietary software platform, and forward-looking operating model position the Company to capitalize on opportunities within the pre-owned boating market in 2026 and beyond.
| 22 |
Corporate Structure and Background
Off The Hook YS Inc. (“OTH”) is a Nevada holding company formed on January 3, 2025 with no independent operations. The Company conducts its business through its subsidiaries, which are engaged in the retail sale, brokerage, and servicing of new and pre-owned boats, yachts, and trailers, and in arranging related financing and insurance products.
The Company’s operations include yacht and boat sales and brokerage, marine servicing and storage, and financing activities conducted through its subsidiary, Azure Funding, LLC.
The Company completed a corporate reorganization in connection with its initial public offering in 2025. For additional information regarding the Company’s organizational structure, see Item 1. Business and Note 1. Nature of Business and Organization to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
There have been no material changes to the Company’s corporate structure during the three months ended March 31, 2026.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
Revenue
Overall, revenue increased by $2.6 million, or 9.6%, to $29.8 million for the three months ended March 31, 2026, from $27.2 million for the three months ended March 31, 2025. The revenue growth is mainly driven by a higher floor plan limit, which enabled us to sustain greater utilization throughout the period. Additionally, the brokers we recently hired for OTHYS and our new premier brokerage division, Autograph Yacht Group, contributed to our revenue growth. These two moves allowed us to increase the number of pre-owned boats sold and brokerage deals closed.
New Boat Sales
New boat sales decreased by $4.2 million, or 76.4%, to $1.3 million for the three months ended March 31, 2026, from $5.5 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, we sold 3 new units compared to approximately 7 units for the three months ended March 31, 2025, a decrease partially attributable to decreased marketing efforts and a slowdown in the new boat market.
Pre-owned Boat Sales
Pre-owned boat sales increased by $6.7 million, or 31.8%, to $27.8 million for the three months ended March 31, 2026, from $21.1 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, we sold approximately 124 pre-owned units compared to approximately 80 pre-owned units for the three months ended March 31, 2025. Average price per pre-owned boat sale transaction was approximately $224,000 (124 units) for the three months ended March 31, 2026 and $263,000 (80 units) for the three months ended March 31, 2025. We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage and consignment), which causes periodic and seasonal fluctuations in the average sales price.
Finance Income – Azure
Revenue from arranging financing products, including financing, insurance and extended warranty contracts, to customers through various third-party financial institutions and insurance companies decreased by approximately $0.3 million, or approximately 50.0%, to $0.3 million for the three months ended March 31, 2026, from $0.6 million for the three months ended March 31, 2025. This decrease can be attributed to fluctuations in our customer mix, with more high-end buyers using cash to purchase, compared to entry-level and lower ticket customers who typically are more finance dependent.
| 23 |
Service, Parts & Other Sales
Revenue from service, parts & other sales increased by $0.4 million, or 679.9%, to $0.4 million for the three months ended March 31, 2026, from less than $0.1 million for the three months ended March 31, 2025. The increase is mainly attributed to expanded focus on marine asset recovery services, increased Finance & Insurance (“F&I”) sales, and increased trailer sales, as well as an increase in processing fees from deals associated directly with the increase in overall units sold.
Gross Profit
Gross profit increased by $0.5 million, or 18.5%, to $3.2 million for the three months ended March 31, 2026, compared to $2.7 million for the three months ended March 31, 2025. Our gross profit as a percentage of sales increased modestly. The increase was primarily driven by higher gross profit from pre-owned boat sales and an increase in brokerage transactions, which generally carry higher margin profiles due to lower direct costs. These increases were partially offset by a decline in gross profit from new boat sales, reflecting margin compression and pricing pressures in that segment.
New Boat Gross Profit
New boat gross profit decreased by $0.2 million or 94.3%, to $0.01 million for the three months ended March 31, 2026, compared to $0.3 million for the three months ended March 31, 2025. Overall gross margins on new boat sales declined due to increased price sensitivity among consumers and broader industry-wide margin compression. New boat gross profit as a percentage of new boat revenue was 1.1% for the three months ended March 31, 2026, compared to 4.5% for the three months ended March 31, 2025. The decline in margin percentage reflects both the shift in market conditions and our strategic decision to accelerate inventory turnover in response to slowing demand.
Pre-owned Boat Gross Profit
Pre-owned boat gross profit increased by $0.6 million, or 30.0%, to $2.6 million for the three months ended March 31, 2026, compared to $2.0 million for the three months ended March 31, 2025. This modest increase occurred despite market seasonality, which resulted in downward pressure on pricing and the need to move certain inventory at reduced margins to maintain turnover and liquidity.
Pre-owned boat gross profit as a percentage of pre-owned boat revenue was 9.4% for the three months ended March 31, 2026 and 9.6% for the three months ended March 31, 2025. We sell a diverse mix of pre-owned boats across various price points, brands, and sales channels, including trade-ins, consignment, wholesale, and brokerage, which naturally contributes to fluctuations in gross profit margins due to varying transaction structures and sales dynamics.
Finance Income – Azure
Finance gross profit decreased by $0.1 million, to $0.2 million for the three months ended March 31, 2026, from $0.3 million for the three months ended March 31, 2025. Finance income is fee-based revenue for which we do not recognize incremental expenses.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses consist primarily of lease expense, insurance, utilities, and other customary operating expenses. SG&A increased $0.9 million, or 225.0%, to $1.3 million for the three months ended March 31, 2026, compared to $0.4 million for the three months ended March 31, 2025. The increase was primarily attributable to the cost of additional leases executed in 2025, higher indirect marketing expenses associated with our attendance at two boat shows during the quarter, and higher insurance costs related to increased inventory levels under floorplan financing arrangements, each in line with the Company’s planned business expansion for 2026.
| 24 |
Salaries and Wages
Salaries and wages expense increased $2.2 million or 244.4%, to $3.1 million for the three months ended March 31, 2026, compared to $0.9 million for the three months ended March 31, 2025. Leading into and following our initial public offering, salaries and wages increased as we aligned our compensation with public-company market benchmarks, and enhanced retention packages to ensure we can attract, motivate, and retain the talent required to deliver long-term shareholder value. Further, the Company issued stock-based compensation to employees after the initial public offering which was $1.8 million for the three months ended March 31, 2026. These equity awards have several vesting conditions including service based and performance-based requirements and vest between one and five years.
Comparison of Non-GAAP Financial Measures
In addition to our results of operations and measures of performance determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we believe that certain non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans, and making strategic decisions, as they are similar to measures reported by our public competitors.
Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and for internal planning and forecasting purposes. These metrics are not intended to be substitutes for any GAAP financial measures and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Additionally, investors should not solely rely on our non-GAAP financial measures as they do not reflect our current or future cash requirements and working capital needs.
There are limitations to non-GAAP financial measures because they exclude charges and credits that are required to be included in GAAP financial presentation. The items excluded from GAAP financial measures to arrive at non-GAAP financial measures are significant components for understanding and assessing our financial performance. Non-GAAP financial measures should be considered together with, and not alternatives to, financial measures prepared in accordance with GAAP.
| 25 |
Adjusted EBITDA
We define and calculate Adjusted EBITDA as GAAP net income (loss) before interest income or expense, income tax (benefit) expense, depreciation and amortization, and further adjusted for the items as described in the reconciliation below. We believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.
Adjusted EBITDA excludes certain expenses that are required to be presented in accordance with GAAP because management believes they are non-core to our regular business. These include, but are not limited to the following:
| ● | Non-cash expenses, such as depreciation, amortization and stock-based compensation; | |
| ● | Non-floorplan related interest expense; and | |
| ● | Income tax expense or benefit. |
The following tables present a reconciliation of Adjusted EBITDA to our net (loss) income, which is the most directly comparable GAAP measure for the periods presented.
The Three Months Ended March 31, 2026, Compared to The Three Months Ended March 31, 2025
| For the Three Months Ended March 31, | ||||||||||||
| Description | 2026 | 2025 | Change | |||||||||
| Net (loss) income | $ | (3,467,522 | ) | $ | 289,774 | $ | (3,757,296 | ) | ||||
| Interest expense – other | 13,592 | - | 13,592 | |||||||||
| Income tax expenses | 163,032 | - | 163,032 | |||||||||
| Depreciation and amortization | 158,688 | 36,373 | 122,315 | |||||||||
| Stock-based compensation | 1,761,613 | - | 1,761,613 | |||||||||
| Adjusted EBITDA | $ | (1,370,597 | ) | $ | 326,147 | $ | (1,696,744 | ) | ||||
Adjusted EBITDA was a loss of $1.4 million for the three months ended March 31, 2026, compared to income of $0.3 million for the three months ended March 31, 2025. The decrease in Adjusted EBITDA resulted from an increase in operating expenses, primarily related to additional headcount and fees that were necessary in order to operate as a public company.
Liquidity and Capital Resources
The following table summarizes key liquidity and capital resources information as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | $ Change | ||||||||||
| Cash | $ | 5,330,457 | $ | 12,428,774 | $ | (7,098,317 | ) | |||||
| Current assets | 53,425,445 | 39,875,396 | 13,550,049 | |||||||||
| Current liabilities | 48,538,503 | 30,870,236 | 17,668,267 | |||||||||
| Working capital | 4,886,942 | 9,005,160 | (4,118,218 | ) | ||||||||
As of March 31, 2026, the Company had $5.3 million in cash and working capital of $4.9 million, compared to $12.4 million in cash and working capital of $9.0 million as of December 31, 2025. Current liabilities were primarily comprised of floor plan notes payable of $40.0 million, which are repaid as inventory is sold, as well as accounts payable, customer deposits, and short-term obligations.
Management believes that existing cash, operating cash flows, and available borrowing capacity under its floor plan facility are sufficient to meet the Company’s short-term liquidity needs.
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Working capital decreased by $4.1 million to $4.9 million as of March 31, 2026 from $9.0 million as of December 31, 2025. The decrease was primarily driven by a $7.1 million reduction in cash, partially offset by an increase in inventory of $20.3 million, which was financed by a $14.7 million increase in floor plan notes payable.
Income Tax Expenses
Historically, the OTH Companies were treated as a partnership for U.S. federal and certain state income tax purposes and, as such, was not subject to entity-level income taxes. Upon completion of the Reorganization, the OTH Companies, together with the Company, became subject to U.S. federal income tax and state income taxes in jurisdictions in which they operate. Income tax expenses for the three months ended March 31, 2026 was $0.2 million.
Cash Flow Changes for the Three Months Ended March 31, 2026, and 2025
The following table summarizes our cash flows for the periods indicated:
For the Three Months Ended | ||||||||||||
| March 31, 2026 | March 31, 2025 | $ Change | ||||||||||
| Net cash used in operating activities | $ | (20,867,206 | ) | $ | (5,376,344 | ) | $ | (15,490,862 | ) | |||
| Net cash used in investing activities | (2,915,264 | ) | (10,833 | ) | (2,904,431 | ) | ||||||
| Net cash provided by financing activities | 16,684,153 | 3,394,323 | 13,289,830 | |||||||||
| Net change in cash | $ | (7,098,317 | ) | $ | (1,992,854 | ) | $ | (5,105,463 | ) | |||
Cash Flow from Operating Activities
For the three months ended March 31, 2026, net cash flows used in operating activities totaled $20.9 million compared to a use of $5.4 million for the three months ended March 31, 2025. The increase in cash used in operating activities was primarily attributable to a $20.3 million increase in inventory, reflecting higher inventory purchases supported by increased floorplan financing capacity and proceeds from the Company’s initial public offering, as well as seasonal inventory build in advance of the spring and summer selling periods. This was partially offset by an increase in customer deposits of $0.8 million.
Net cash used in operating activities amounted to $5.4 million for the three months ended March 31, 2025, mainly derived from an increase in inventory of $4.1 million and an increase in customer deposits of $0.9 million.
Cash Flows from Investing Activities
For the three months ended March 31, 2026, net cash used in investing activities totaled $2.9 million, representing an increase of $2.9 million from the prior year. This increase is due to increased investment in fixed assets and software as the business grows.
Cash Flows from Financing Activities
Net cash provided by financing activities amounted to $16.7 million for the three months ended March 31, 2026, mainly derived from the proceeds from floorplan notes payables of $30.5 million. This was offset by a net payment to floor plan notes payable of $15.9 million.
Net cash provided by financing activities amounted to $3.4 million for the three months ended March 31, 2025, mainly derived from the contribution from proceeds from floorplan notes, mainly offset by payments to floor plan notes payables.
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Contractual Obligations and Other Commitments
The following table sets forth a summary of our material contractual obligations and commercial commitments as of March 31, 2026:
| Payments Due by Period as of March 31, 2026 | ||||||||||||||||||||
| Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | ||||||||||||||||
| Long-term debt (1) | $ | 87,071 | $ | 31,105 | $ | 55,966 | $ | - | $ | - | ||||||||||
| Operating leases (2) | 6,603,919 | 1,064,941 | 2,098,369 | 1,541,943 | 1,898,666 | |||||||||||||||
| Total | $ | 6,690,990 | $ | 1,096,046 | $ | 2,154,335 | $ | 1,541,943 | $ | 1,898,666 | ||||||||||
(1) The amounts included in long-term debt refer to future cash principal payments. Refer to Note 8. Long-Term Loan Payable of the Notes for disclosure of borrowing availability, interest rates, and terms of our long-term debt.
(2) Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes.
The Company utilizes a floor plan financing facility to fund inventory purchases. Borrowings under this facility were $40.0 million as of March 31, 2026 and are repaid as inventory is sold. As such, repayment timing is dependent on inventory turnover and borrowing activity and is not included in the tabular presentation above. For details regarding borrowing availability, interest rates, and terms related to our floor plan notes payable, refer to Note 7. Notes Payable – Floor Plan of the Notes.
Off Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of March 31, 2026 and December 31, 2025.
Critical Accounting Policies, Significant Judgments and Estimates
The preparation of our financial statements requires that we make estimates and judgments. We base these on historical experience and on other assumptions that we believe to be reasonable. Except as disclosed in Note 1. Description of Business, Basis of Presentation and Significant Accounting Policies, included in Item 1, Part I, Financial Statements of this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in Critical Accounting Policies and Significant Judgments and Estimates, included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 2. Basis of Presentation and Summary of Significant Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, 2025.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide disclosure regarding quantitative and qualitative market risk.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures Over Financial Reporting
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2026.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective at a reasonable assurance level due to aspects of our disclosure control framework that are still being formalized and documented, including processes for accumulating and communicating information required to be disclosed in our reports filed under the Exchange Act that are not yet fully implemented or consistently applied. As a newly public company we are in the process of designing and implementing our disclosure controls and procedures to comply with the requirements of the Exchange Act. We are taking steps to establish formal processes and controls and documenting our internal controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. During the quarter, management continued efforts to design and document formal internal controls; however, these efforts have not yet resulted in changes that materially affect internal control over financial reporting.
As we continue to mature as a public company, we expect to further formalize and enhance our internal control environment. As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, we are not required to provide an auditor’s attestation report on management’s assessment of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are from time to time subject to legal proceedings, claims and litigation arising in the ordinary course of business. We are not currently a party to any matters that management expects will have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows.
Item 1A. Risk Factors.
Our business, financial condition, and results of operations are subject to various risks and uncertainties, including those described in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025.
There have been no material changes to those risk factors except as set forth below. You should carefully consider those risk factors, together with the other information contained in this Quarterly Report on Form 10-Q.
We may not successfully complete or integrate acquisitions, which could adversely affect our business, financial condition, and results of operations.
We have completed, and are actively pursuing, strategic acquisitions as part of our growth strategy, including the pending acquisition of Bellhart Marine Group, LLC and the recently completed acquisition of Apex Marine Sales, LLC and its affiliates (see Note 18 – Subsequent Events). These transactions involve significant risks, including the inability to complete pending acquisitions on favorable terms or at all, the need to obtain additional financing on acceptable terms, and the potential diversion of management’s attention from our existing operations. If completed, acquisitions may present integration challenges, including difficulties in combining operations, technology systems, and personnel, retaining key employees, and may result in the assumption of unknown or contingent liabilities. We may also be required to record goodwill and other intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges. In addition, we may not realize the anticipated benefits of such acquisitions, including expected synergies, cost savings, or revenue growth, and the costs of integrating acquired businesses may exceed our current estimates. Any of these factors could adversely affect our business, financial condition, and results of operations.
We are subject to litigation that could adversely affect our business and financial condition.
We are, and may in the future become, subject to various legal proceedings, claims, and governmental investigations in the ordinary course of business and otherwise. Such matters are subject to many uncertainties, and outcomes are not predictable. An adverse outcome in one or more of these matters could have a material adverse effect on our financial condition, results of operations, or cash flows. Even where we ultimately prevail, litigation can be costly and time-consuming and may divert the attention of management and key personnel from business operations. See Note 17. Commitments and Contingencies to our Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our pending legal proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
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Item 6. Exhibits.
INDEX TO EXHIBITS
| Exhibit Number | Exhibit Description | |
| 4.1 | Promissory Note dated May 13, 2026 in the amount of $500,000 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed May 14, 2026). | |
| 4.2 | Promissory Note dated May 13, 2026 in the amount of $2,466,667 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed May 14, 2026). | |
10.1*† |
First Amendment to Employment Agreement, dated March 20, 2026, by and between the Company and Chad Corbin. | |
| 10.2* | Equity Interest Purchase Agreement, effective as of February 27, 2026, by and among Off The Hook YS Inc., Bellhart Marine Group, LLC, Bellhart Marine Services, LLC, Specialized Mechanical Services, LLC, Specialized Mechanical Services, Inc., and the equityholders party thereto. | |
| 31.1* | Section 302 Certification of Chief Executive Officer. | |
| 31.2* | Section 302 Certification of Chief Financial Officer. | |
| 32.1** | Section 906 Certifications of Chief Executive Officer and Chief Financial Officer. | |
| 101.INS | Inline XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * | Filed herewith. |
| ** | Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
| † | Indicates a management compensatory plan, contract or arrangement. |
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SIGNATURES
Pursuant to the requirements 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.
| Off The Hook YS Inc. | |||
| May 14, 2026 | By: | /s/ Brian John | |
| Date | Brian John Chief Executive Officer (Principal Executive Officer) | ||
| May 14, 2026 | By: | /s/ Chad Corbin | |
| Date | Chad Corbin Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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