NextBoat Inc.: Form 10-K for the period ended Dec 31, 2025

Off the Hook YS Inc (“Off the Hook”, or “OTH”) is a holding company and the sole managing member of Off the Hook Yacht Sales NC, LLC (“OTHYS”), OTH Simon Marine YF, LLC (the “Boat Center”), Azure Funding, LLC (“Azure”) and Autograph Yacht Group Inc. (“AYG”) which was established on January 3, 2025. Except as otherwise indicated or required by the context, all references in this Annual Report on Form 10-K to the “Company”, the “Business”, “Off the Hook”, “we”, “us”, or “our” relate to Off the Hook YS Inc. and its consolidated subsidiaries.

Overview

We are a premier yacht and boat dealership specializing in the buying, selling, and wholesaling of yachts and boats. Founded in 2012 by Jason Ruegg, OTH has grown into one of the largest marine wholesaler in the industry, recognized for its innovation, expertise, and expansive operations. Over the past decade, we believe OTH has become a nationally recognized leader in the marine industry, earning numerous accolades. The company has been named one of the 500 fastest-growing companies in the United States by Inc. 500 and is consistently ranked as a Top 100 Dealer in the USA by Boating Industry, a magazine for boating professionals. Today, OTH generates over $119 million in annual boat and yacht sales, operating across eight locations with a team of 70 sales representatives who transact on more than 400 vessels each year. The company’s success is built on a commitment to excellence, emphasizing the hiring of highly skilled professionals who embody integrity and a passion for the boating industry. By prioritizing relationship-building and ensuring client satisfaction, we believe OTH has established itself as a trusted leader in the market.

Corporate Structure and Background

In connection with our initial public offering, we reorganized our corporate structure as follows:

1. Holders of equity interests (the “OTH Owners”) in the entities listed below (the “OTH Companies” and each an “OTH Company”) undertook a restructuring of their ownership interests in the OTH Companies by consolidating such companies under the Company, whereby upon completion of the consolidation, the OTH Owners collectively owned 100% of the issued and outstanding shares of common stock of the Company, and each of the OTH Companies became a wholly owned subsidiary of the Company:

• Off the Hook Yacht Sales NC, LLC, a North Carolina limited liability company;
• Azure Funding, LLC, a North Carolina limited liability company; and
• OTH Simon Marine YF LLC, a North Carolina limited liability company.

2. Pursuant to the Amended and Restated Agreement for the Purchase and Sale of Capital Stock dated October 31, 2025 (the “Amended SPA”), the OTH Owners, in the aggregate, sold and transferred to Off The Hook Acquisition Corp, a Florida corporation (the “OTH FL”), such number of shares of common stock of the Company representing 25% of the issued and outstanding shares of the Company (the “Transferred Securities”) for the consideration of $3 million paid by OTH FL directly to the OTH Owners (not the Company). The shares held by OTH FL were subject to a 180-day lock-up period, commencing on November 14, 2025 (the IPO closing date), as stipulated by the lock-up agreements.

3. After the consummation of the consolidation of the OTH Companies and the transaction contemplated under the Amended SPA, but before the closing of this offering, the OTH Owners collectively held 75% of the issued and outstanding shares of the Company, and OTH FL held the remaining 25% of the issued and outstanding shares of the Company.

Our Products and Services

OTH offers a comprehensive range of products and services designed to meet the needs of buyers, sellers, and industry partners across the marine sector. Through its integrated business model, OTH provides a seamless experience for customers, leveraging its expertise in yacht and boat sales, financing, servicing, and asset recovery.

1. Yacht & Boat Sales

OTH specializes in the buying and selling yachts and boats, offering a diverse selection of pre-owned vessels across various price points and categories through OTH. Customers can choose from a curated inventory of sportfish, center consoles, motor yachts, and high-performance boats. The company’s ability to acquire boats at competitive prices allows it to pass value on to buyers while providing sellers with a fast, hassle-free transaction.

2. New Boat Sales

In addition to the pre-owned market, OTH is expanding into new boat sales, offering customers access to premier boat brands through dealership partnerships. This expansion enhances OTH’s ability to serve a broader clientele while strengthening relationships with top manufacturers.

3. WeBuyBoats.com – Instant Boat Offers

OTH owns and operates WeBuyBoats.com, a fast and efficient platform designed to provide boat owners with immediate cash offers. This service simplifies the selling process, allowing customers to liquidate their boats quickly without the hassle of traditional listings or lengthy negotiations. By utilizing proprietary valuation tools and market data, OTH ensures fair and competitive offers.

4. Financing Solutions – Azure Funding

Through Azure Funding, an indirect wholly owned subsidiary of OTH, OTH provides a range of financing options for recreational boat buyers. Whether customers need traditional boat loans, short-term lending, or alternative financing solutions, Azure Funding offers tailored options to meet their needs. Additionally, OTH provides financing services to industry partners, including dealerships and brokerages.

Azure Funding partners with a range of financial institutions to provide recreational loan transactions. These institutions include both national and specialized lenders.

Azure Funding’s conventional loan brokerage process begins when a lead is sourced through dealerships, direct borrower inquiries, or broader marketing efforts. Borrowers submit a loan application online and are promptly paired with a dedicated loan officer. The loan officer works closely with Azure Funding’s in-house processing team to collect and review all supporting documentation - including income verification, identification, and collateral details. Azure then matches the borrower with the most suitable lender(s) from its partner network, based on credit profile, loan terms, and underwriting criteria. Once a lender approves the application, the loan is finalized and funded by the selected institution. Azure facilitates the transaction through closing and communicates directly with both borrower and lender throughout the process.

Azure Funding operates in a competitive market for recreational financing services. Azure Funding competes with a range of institutions, including banks, credit unions, specialty recreational lenders, and other loan brokers. Competition is generally based on factors such as approval speed, borrower experience, rate structures, and dealer relationships. Azure Funding maintains a competitive position by partnering with many of the banks that actively participate in recreational lending, and by leveraging strong dealership relationships, including OTHYS, to source and support borrower activity.

Azure Funding’s customers are primarily individual buyers seeking financing for new or pre-owned recreational assets. Most borrowers fall within conventional credit parameters and are purchasing these assets for personal, non-commercial use. Loan amounts and credit profiles vary, but the majority of customers are middle- to upper-income individuals financing premium recreational vessels.

5. Servicing & Maintenance – OTH Yacht Services

OTH offers comprehensive marine servicing and maintenance through OTH Yacht Services, a service center owned and operated by OTH, ensuring that every vessel remains in peak condition. Services include routine maintenance, repairs, detailing, and mechanical inspections, providing customers with a one-stop solution for their boating needs.

6. Asset Recovery & Repossession – Marine Asset Recovery (“MAR”)

Through Marine Asset Recovery, a marine asset recovery unit owned and operated by OTH, assists financial institutions and lenders with boat repossessions and asset recovery services. This division specializes in reclaiming and reselling marine assets efficiently, feeding recovered boats back into OTH’s inventory for resale. This seamless process maximizes value for all parties involved.

7. Warranties & After-Sale Services

To further enhance the customer experience, OTH is developing a warranty sales program that will offer buyers additional coverage and peace of mind. These warranties will provide protection against unexpected repair costs, ensuring long-term satisfaction and confidence in each purchase.

Delivering Value Across the Marine Industry

With its diverse portfolio of products and services, OTH stands as a one-stop solution for the boating community. Whether buying, selling, financing, servicing, or storing a vessel, customers can rely on OTH’s expertise and industry-leading customer service. By continuously expanding its offerings and enhancing operational efficiency, OTH remains at the forefront of the marine industry, delivering unmatched value to its clients and partners.

Our Suppliers & Industry Partnerships

We work with a diverse network of suppliers, manufacturers, and industry partners to ensure a steady inventory of high-quality yachts and boats. These relationships allow OTH to maintain a competitive edge, offering customers a wide selection of vessels at the best possible prices while ensuring access to premium parts, servicing, and financing solutions.

1. Boat & Yacht Manufacturers

OTH sources boats from a variety of leading manufacturers and OEMs (Original Equipment Manufacturers), ensuring a diverse inventory that includes sportfish, center consoles, motor yachts, and high-performance vessels. Strong relationships with manufacturers enable OTH to secure exclusive deals on new and pre-owned boats, giving customers access to high-demand brands at competitive prices.

2. Dealer & Broker Partnerships

As part of its wholesale and brokerage operations, OTH collaborates with dealers, independent brokers, and marine resellers across the industry. These partnerships help facilitate inventory movement, ensuring that OTH can quickly source boats for customers while offering an efficient resale channel for sellers. By working with a nationwide network of industry professionals, OTH maximizes inventory turnover and enhances market liquidity.

For example, pursuant to the Authorized Dealer Agreements with Yellowfin, dated May 5, 2025, Off the Hook Yacht Sales NC, LLC is the exclusive dealer of Yellowfin from Miami to Islamorada and North Carolina. Under the agreements, Yellowfin grants Off the Hook Yacht Sales NC, LLC the exclusive right to promote and sale its products within the designated market area and may offer a floor plan payment option for certain products. The initial term of the agreement is one year, automatically renewing for successive one-year periods unless otherwise terminated.

3. Floorplan & Lending Institutions

OTH works closely with floorplan lenders and financial institutions to support boat acquisitions and financing operations. By leveraging strong relationships with financing partners, OTH is able to expand inventory access while providing buyers with tailored financing solutions. Azure Funding, the company’s in-house financing arm, also maintains partnerships with major lenders, ensuring competitive loan offerings for customers.

4. Marine Servicing & Parts Suppliers

To support OTH, the company partners with leading marine servicing and parts suppliers, ensuring access to OEM parts, aftermarket components, and repair services. These relationships enable OTH to maintain its servicing capabilities, offering customers a reliable solution for maintenance, upgrades, and repairs.

5. Auction & Asset Recovery Partners

OTH collaborates with lenders, financial institutions, and repossession agencies through its Marine Asset Recovery division, helping recover and resell marine assets efficiently. These partnerships allow OTH to source inventory from repossessions, providing a steady supply of boats for resale while assisting financial partners in managing defaulted assets.

6. Marinas & Storage Facilities

As part of its expansion into marina acquisitions, OTH is developing partnerships with marina operators, dry storage facilities, and docking service providers. These partnerships ensure that customers have access to convenient storage and service options, further enhancing the post-sale experience.

Our Sales Network

OTH partners with dealers through wholesale purchases, direct sales, trade-in programs, and financing options. Dealers within the network may qualify for floorplan financing programs that provide liquidity for inventory purchases, trade-in and resale programs to help customers upgrade to newer models, access to distressed and repossessed inventory through Marine Asset Recovery, and marketing and lead generation support through OTH’s proprietary CRM and data analytics platform. OTH’s nationwide dealer network benefits from fast inventory turnover, high-quality wholesale sourcing, and a seamless resale process, making it a preferred partner in the marine industry.

OTH utilizes data-driven insights and market analysis to monitor dealer performance and identify opportunities for growth. The company consistently evaluates its distribution network to enhance regional coverage, strengthen dealer relationships, and optimize sales volume. Through market intelligence and demand forecasting, OTH ensures that inventory is strategically allocated to the right markets, maximizing efficiency and profitability.

Unlike traditional manufacturers with rigid dealership contracts, OTH maintains flexible wholesale arrangements that allow dealers to purchase inventory based on market demand. Dealers are not contractually required to purchase a set number of boats but instead work with OTH to acquire and sell inventory based on real-time market conditions. This agile approach helps avoid excess inventory while ensuring a steady flow of boats into the market.

We remain committed to strengthening its dealer relationships through continuous expansion into new markets, exclusive access to high-value inventory through its acquisition channels, enhanced technology integration for better dealer operations and lead management, and strategic partnerships with financial institutions to provide seamless financing solutions. By maintaining a strong and dynamic dealer network, OTH continues to be a leader in the wholesale and retail boat sales industry, offering unmatched access, efficiency, and profitability for its dealer partners.

Floorplan Financing

We utilize floorplan financing to support our inventory acquisition strategy, enabling the company to purchase and hold a diverse range of boats and yachts while maintaining liquidity. Floor plan financing is a short-term inventory loan provided by third-party lenders that allows OTH to finance boat purchases without tying up significant working capital. This financing structure enables OTH to acquire boats at scale, ensuring a steady inventory supply to meet market demand.

The Company’s current floorplan financing has a capacity of up to $60 million, which will enable OTH to pursue larger inventory acquisitions and strategic expansion. We believe this increased capacity is a key catalyst for unlocking the next phase of scalable growth and market leadership. The floorplan includes a personal guarantee by our President, Jason Ruegg, but only in very remote circumstances.

Through established partnerships with leading floorplan financing providers, OTH can efficiently manage its inventory and optimize sales cycles. When boats are purchased using floor plan financing, the floor plan lender advances the purchase funds directly, allowing OTH to acquire and hold boats until they are resold. Upon sale, the loan is repaid, and capital is freed up to acquire new inventory, ensuring a continuous and profitable turnover of assets.

By leveraging floor plan financing, we maximize operational efficiency, expands inventory capacity, and ensures a steady pipeline of high-quality boats for resale. The company remains committed to strategic financing partnerships that support growth while maintaining financial flexibility and risk management.

Strengthening the Marine Industry Through Strategic Partnerships

OTH’s supplier and partner relationships are integral to its ability to offer a seamless, full-service experience to customers. By working with manufacturers, dealers, lenders, servicing providers, and asset recovery specialists, OTH ensures that its inventory remains strong, diverse, and competitively priced. These partnerships not only fuel business growth but also position OTH as a leader in the marine industry, capable of adapting to market trends and delivering value to buyers and sellers alike.

Our Market Opportunity

The marine industry presents a significant and expanding market opportunity for OTH. We operate in the pre-owned yacht and boat sales market, with a growing presence in new boat sales, brokerage, financing, servicing, and asset recovery. OTH’s addressable market includes a wide range of boat categories, including center consoles, sportfish yachts, motor yachts, high-performance boats, and luxury vessels.

The U.S. recreational boating industry continues to experience strong growth, with annual sales of boats, marine products, and services totaling approximately $56.7 billion in 2022, according to the National Marine Manufacturers Association (NMMA). In recent years, pre-owned boat sales have consistently outpaced new boat sales, reflecting a shift in consumer preferences toward high-quality used boats at more competitive price points. We believe that this trend positions OTH as a key player in the growing secondary market.

1. National Marine Manufacturers Association (NMMA) 2024 Pre-Owned Boat Market Sales Trends Report: This report indicates that in 2024, pre-owned boat sales accounted for 78.3% of total boat sales, totaling 858,798 units.

2. NMMA 2024 U.S. Statistical Abstract: Powerboat Sales Trends Report: According to this report, new powerboat unit sales declined by 4.9% in 2024, totaling 168,000 units.

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In 2024, the recreational boat industry experienced a notable softening, with new powerboat retail unit sales declining by 9.1% year-over-year to approximately 231,576 units. This slowdown was driven by macroeconomic pressures, including high interest rates and cautious consumer spending, which dampened demand for big-ticket discretionary items such as boats. Additionally, the median age of current boat owners in the U.S. reached 60 years by the end of 2024, with more owners in their 70s than in their 40s, indicating an aging customer base.

Despite the overall decline, certain segments, such as freshwater fishing boats, remained stable, with sales expected to remain flat compared to 2023. Looking ahead, the industry anticipates a return to growth in 2025, driven by innovative new products, changes in U.S. economic policies, and consistent consumer demand for on-water experiences.

These figures demonstrate that pre-owned boat sales have consistently represented a significant majority of the market, reflecting a shift in consumer preferences toward high-quality used boats at more competitive price points.

Additionally, the NMMA reported that total U.S. recreational boating sales, including boats, marine products, and services, exceeded $50 billion in recent years. We believe OTH is well-positioned to capitalize on these trends as demand for competitively priced, high-quality used boats remains strong.

1. U.S. Recreational Boating Industry Annual Sales

According to the National Marine Manufacturers Association (NMMA), the recreational boating industry is a significant contributor to the U.S. economy. In 2022, the NMMA reported that annual U.S. sales of boats, marine products, and services totaled $59.3 billion, marking a 4.4% increase from 2021. This growth underscores the industry’s robust performance and its role in the broader outdoor recreation economy.

2. Pre-Owned Boat Unit Sales Outpacing New Boat Sales

According to the National Marine Manufacturers Association (NMMA), pre-owned boat sales in 2021 reached approximately 1.15 million units, marking a 9.2% increase over 2020. The total market value of these pre-owned boats was $13.6 billion, reflecting a 4.6% increase from the previous year. This growth underscores the continued consumer preference for high-quality used boats at more competitive price points.

In contrast, new boat sales for the same period were 305,734 units, totaling $20.8 billion. This represents a 4.1% decrease in units sold compared to 2020, yet the dollar value increased by 3.8%, indicating a rise in average unit prices.

Several market trends are driving expansion in OTH’s addressable market, including:

• Increased demand for pre-owned boats: The rising cost of new boats and supply chain constraints have fueled higher demand for pre-owned inventory, benefiting OTH’s wholesale and resale model.
• Growth in center console and offshore fishing boats: The center console segment has become one of the fastest-growing categories in the boating industry, as more buyers seek versatile, multi-purpose boats suited for both fishing and recreation.
• Rising participation in recreational boating: The post-pandemic surge in outdoor activities has led to record-high participation in recreational boating, with new buyers entering the market at unprecedented rates. This shift has expanded the customer base for both entry-level and high-end vessels.
• Technological advancements driving resale demand: Innovations in marine technology, such as improved fuel efficiency, onboard automation, and digital navigation systems, have shortened product cycles and increased the resale value of late-model boats, strengthening the pre-owned sales market.
• Shifting demographics and lifestyle preferences: Younger generations are increasingly entering the boating market, driving demand for affordable, high-quality used boats. Additionally, high-net-worth buyers are investing in larger, luxury yachts as part of a growing trend in high-end leisure experiences.
• Financial accessibility and alternative lending solutions: The expansion of boat financing and alternative lending options, including hard money loans through Azure Funding, has made boat ownership more accessible to a wider audience, further expanding OTH’s potential customer base.
• Expansion of online sales and digital marketplaces: The shift toward digital transactions and online boat sales platforms has created new opportunities for OTH to capture market share through WeBuyBoats.com, its brokerage network, and auction platform initiatives.

With a vertically integrated business model that spans wholesale, retail, financing, servicing, and repossession, OTH believes that it is uniquely positioned to capitalize on these trends and expand its footprint in the growing marine industry. As demand for pre-owned and new boats continues to rise, OTH stands at the forefront of this market opportunity, leveraging its expertise, nationwide network, and operational scale to drive sustained growth

Industry Overview

In the United States, there are approximately 11.96 million registered recreational vessels, with 11.1 million being mechanically propelled, according to the U.S. Coast Guard’s 2023 data. The global recreational boating market was valued at USD 30.95 billion in 2024 and is projected to grow at a CAGR of 3.40%, reaching USD 43.24 billion by 2034, according to Insurance Journal.

Within the boating market, segments such as outboard motorboats and electric boats are experiencing notable growth. Our products are designed to cater to both these segments, and our planned electric powertrains will be utilized in boats across these categories.

The marine industry continues to experience steady growth, driven by increased participation in recreational boating, evolving consumer preferences, and expanding financing options. In North America, over 100 million people go boating annually, with nearly 12 million recreational vessels registered in the United States alone, according to the U.S. Coast Guard. The global recreational boating market is projected to surpass $65 billion by 2026, fueled by strong demand for both new and pre-owned boats, as well as growth in financing and service-related offerings.

The Pre-Owned Boat Market & Wholesale Growth

While new boat sales capture significant attention, the pre-owned boat market represents a major segment of the industry, with transactions often outpacing new sales. The affordability and availability of late-model, well-maintained used boats make this segment highly attractive to consumers. Additionally, wholesale transactions and dealer-to-dealer sales have increased, creating new opportunities for businesses specializing in quick-turn inventory acquisition, trade-ins, and repossession resales.

Luxury & Performance Yacht Demand

The high-end yacht market continues to expand, driven by strong economic conditions, rising wealth, and increased interest in premium leisure experiences. Buyers in this segment demand high-performance center consoles, sportfish yachts, and motor yachts, creating a thriving resale market for well-maintained luxury vessels. Additionally, the rise of yacht chartering and shared ownership programs has influenced the demand for specific yacht types, further shaping the resale landscape.

Financing & Accessibility in the Boating Industry

With more consumers turning to financing to fund boat purchases, we believe the availability of flexible loan options, floorplan financing for dealerships, and alternative lending solutions has played a critical role in industry growth. Lenders and financial institutions are increasingly active in marine financing, supporting buyers across all price points. Companies that offer in-house financing solutions, like OTH through Azure Funding, are well-positioned to capture additional revenue streams while simplifying the buying process for consumers.

Key Trends Driving Industry Growth

• Increased recreational boating participation – Boating has become an increasingly popular lifestyle activity, with first-time boat buyers making up a growing percentage of overall sales.
• Rising disposable income & improved standard of living – The demand for both new and pre-owned boats has been fueled by economic growth and increased discretionary spending.
• Shift toward larger, more powerful boats – Consumers are moving toward high-performance vessels, particularly in the center console, offshore fishing, and luxury yacht segments.
• Growing secondary market & trade-in volume – More boat owners are trading in vessels for newer models, increasing the availability of pre-owned inventory.
• Technology advancements – Innovations in fuel efficiency, onboard automation, and propulsion systems have increased consumer interest in late-model used boats and alternative power options.
• Expansion of financing & lending solutions – Greater access to marine loans, hard money lending, and flexible financing options has made boat ownership more accessible.
• Increased focus on digital sales platforms – The rise of online boat sales, auction platforms, and digital marketplaces has transformed how boats are bought and sold, increasing transparency and transaction speed.

1. Increased Recreational Boating Participation

Between 2020 and 2022, the U.S. experienced a significant influx of new boaters and first-time boat buyers, as Americans turned to the water for leisure and well-being. NMMA

2. Rising Disposable Income & Improved Standard of Living

Recreational boating is not exclusive to high-income individuals; in fact, 61% of boat owners have an annual household income of $100,000 or less, indicating that boating is accessible to a broad demographic. NMMA

3. Shift Toward Larger, More Powerful Boats

Consumer preferences have shifted toward larger, high-performance vessels, particularly in the center console and offshore fishing segments. Innovations in these categories have led to boats with features traditionally found on much larger designs. NMMA

4. Growing Secondary Market & Trade-In Volume

The pre-owned boat market remains robust, with detailed data available in the NMMA’s U.S. Recreational Boating Statistical Abstract, which covers trends in the retail and pre-owned markets.

5. Technology Advancements

Over the past two decades, the recreational boating industry has achieved a more than 90% reduction in emissions and a 40% increase in fuel efficiency, reflecting significant technological advancements.

6. Expansion of Financing & Lending Solutions Mnbv

The availability of flexible loan options and alternative lending solutions has played a critical role in industry growth, making boat ownership more accessible across various price points.

7. Increased Focus on Digital Sales Platforms

The rise of online boat sales and digital marketplaces has transformed how boats are bought and sold, increasing transparency and transaction speed.

Our Business Strategy

We are executing a dynamic growth strategy focused on capital expansion, operational scaling, and an integrated business model that maximizes profitability across multiple revenue streams.

The Company’s current floorplan financing has a capacity of up to $60 million, which will enable OTH to pursue larger inventory acquisitions and strategic expansion. We believe this increased capacity is a key catalyst for unlocking the next phase of scalable growth and market leadership. The floorplan includes a personal guarantee by our President, Jason Ruegg, but only in very remote circumstances. .

1. Purchase Discounted Boats to Wholesale

A fundamental pillar of our strategy is leveraging shifts in supply and demand to acquire boats at discounted rates. Many new boat dealerships are overstocked and lack floorplan capital, forcing them to turn away used boat trade-ins and manufacturer offers, creating an opportunity for OTH to purchase inventory at below-market prices. Increasing purchasing power will allow OTH to turn inventory four to five times annually while maintaining high profit margins.

2. Capital Expansion & Floorplan Growth

By expanding floorplan financing from $$25 million in 2025 to a current capacity of $60 million, OTH expects to have the liquidity to hold inventory longer, eliminating premature liquidations and allowing for more strategic acquisitions. This increase in capital is intended to remove prior constraints tied to personal risk tolerance and provide the flexibility needed to secure high-value boats at optimal pricing.

3. Scaling OTHYS & WeBuyBoats.com

We believe that OTH and WeBuyBoats.com are positioned to become the “Carvana “ of the used boat industry, offering a seamless, hassle-free experience for customers looking to sell their boats. Webuyboats is a website owned by OTH. Proprietary software will streamline transactions by matching buyers with sellers, while an integrated auction platform will provide additional liquidity for customers and aged inventory. These innovations will increase efficiency, improve customer experience, and drive higher transaction volumes.

4. Strengthen Market Position with Dealership Acquisitions

Strategic acquisitions of underperforming dealerships will further expand OTH’s market presence. By acquiring struggling dealerships at discounted valuations, OTH can integrate them into its synergistic business model and position them for long-term success. This will enable us to scale operations while improving dealership profitability.

5. Invest in Marina Acquisitions to Enhance Operations

Acquiring marinas in key locations will strengthen OTH’s infrastructure by consolidating operations, reducing storage and docking costs, and creating exclusive service hubs for customers. These marinas will serve as strategic assets, offering additional revenue streams through leasing, storage, and premium service options, further reinforcing OTH’s market dominance.

6. Integrated Ecosystem & Revenue Diversification

The expansion of OTH’s ecosystem will generate multiple revenue streams from each boat transaction, including financing, warranties, and hard money lending. Marine Asset Recovery (MAR) will handle repossessions for defaulted loans, seamlessly reintegrating repossessed inventory into OTH’s sales channels. This closed-loop system is designed to ensure profitability at every stage of the transaction cycle, creating an advantage that traditional banks and independent dealerships cannot replicate.

7. Advance Technology with Enhanced CRM & Data Analytics

Investments in OTH’s proprietary CRM system will optimize sales processes, enhance decision-making, and improve overall operational efficiency. By leveraging data-driven insights, the Company can refine inventory management, improve customer targeting, and maximize return on investment. Automation and predictive analytics will further streamline workflow, creating a more agile and scalable business model.

8. Expand Financing Capabilities with Hard Money Lending

As traditional banks tighten lending criteria, demand for alternative financing solutions continues to grow. Azure Funding’s hard money lending program will expand to capitalize on this trend, providing flexible financing options to both retail customers and industry partners. This initiative will strengthen OTH’s ability to serve a broader range of clients while generating additional high-margin revenue.

9. Scale Repossession and Asset Recovery Infrastructure

Expanding Marine Asset Recovery will enable OTH to handle a significantly higher volume of repossessions, with the capacity to process hundreds of recovered vessels per month. These repossessed boats will be stored, serviced, and ultimately resold through OTH’s established channels, maximizing asset recovery values while reinforcing the company’s competitive position.

10. Expand Nationwide Broker Network and Physical Locations

Scaling operations to 100 brokers and wholesalers by the end of 2026 will drive inventory turnover and significantly increase brokerage sales. In addition, expanding the physical footprint with new locations in high-demand regions will enhance accessibility for customers and further solidify OTH’s presence in key markets. This will fuel wholesale, and our finance arm Azure Funding provides boat loans to customers which in turn fuels wholesale. The Company currently has no arrangements to acquire any other entities, expect those publicly disclosed in 8-K filings.

11. Strengthen Brand and Marketing Presence

Increasing marketing efforts will play a crucial role in expanding OTH’s customer base. A combination of enhanced digital marketing, lead generation, and traditional advertising will drive brand awareness and lead conversion. Strengthening the Company’s online presence and platform capabilities will further attract high-value buyers and sellers, reinforcing OTH’s position as a premier yacht and boat dealership.

12. Increase New Boat Sales Through Strategic Acquisitions

Acquiring a new boat dealership generating $65–75MM annually will establish OTH as a major player in the new boat sales market. This acquisition will expand relationships with manufacturers, allowing OTH to diversify its inventory while tapping into an additional high-margin revenue stream. We currently do not have any definitive agreements in place.

13. Launch New High-Margin Services

The introduction of warranty sales and auction services will create new revenue opportunities while enhancing customer retention. These offerings will provide additional financial security for buyers while enabling OTH to monetize inventory through multiple sales channels. By adding these services, OTH will further differentiate itself from competitors and strengthen its comprehensive service model.

OTH launched a premium yacht brokerage division in the third quarter of 2025 which is focused exclusively on the high-end segment of the market. This new division features luxury yacht inventory, and has experienced brokers specializing in premium transactions, and select partnerships with prestigious boat brands. By establishing a dedicated platform for high-value clients, OTH intends to expand its market reach, capture higher-margin sales, and further elevate its brand positioning within the marine industry.

In parallel, we plan to integrate a full suite of support services into the platform, including shipping and logistics coordination, in-house financing through Azure Funding, and optional documentation and escrow services for buyers utilizing Azure. Additionally, the platform will offer advertising opportunities for marine-related service providers—such as insurance agents, surveyors, and transport specialists—creating a comprehensive ecosystem for boat buyers and sellers. We believe this end-to-end infrastructure will provide unmatched convenience and transparency, while positioning OTH as the leading digital marketplace in the marine industry.

14. Marina Division

Our marina division intends to make strategic marina purchases across the country, which will give our entities “free” locations to work from. We believe we can build out this model across the USA by contracting boat yards based on their current income, and then getting them permitted for 3-4 boat high dry stack facilities. This turns into passive income for the business, and would give our brokers locations to work out of and facilities for repairs, maintenance and showcase of inventory.

This is very different from our competitors’ model where they have very expensive brick and mortar locations that depend almost solely on boat sales to pay the mortgage. Our marinas will have 12-20% cap rates without our boat sales which we believe will make them very good investments for the Company, which will also help fuel boat sales due to there being a captive audience of customers at each location.

Patents and Licenses

We do not currently have any patents that have been issued and have one patent application pending related to our CRM inventory control system. We do not rely on any licenses from third parties at this time. There can be no assurance that the pending patent will be issued and even if issued that it will protect our intellectual property rights.

Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we intend to rely on a combination of trade secrets, including know-how, employee and third-party non-disclosure agreements, copyright laws, trademarks and other contractual rights to establish and protect our proprietary rights in our technology.

Competition

The yacht and boat sales industry is highly competitive, with numerous players operating across different segments, including wholesale, retail, brokerage, and financing. OTH competes with independent dealerships, large national marine retailers, manufacturers with direct sales models, and online marketplaces. The competitive landscape is shaped by factors such as brand reputation, pricing, product availability, financing options, and customer service.

OTH competes with both large-scale dealerships and smaller independent brokers. Many large competitors have significant financial and marketing resources, allowing them to operate extensive dealership networks and maintain sizable inventories. Meanwhile, smaller boutique dealers and independent brokers offer highly personalized services and localized market knowledge, competing for the same pool of buyers and sellers. Direct-to-consumer sales from boat manufacturers are also increasing, as some brands bypass traditional dealerships and sell new boats directly to customers.

Beyond industry-specific competition, OTH also competes for discretionary consumer spending. Boats and yachts are luxury items, meaning they compete with other high-end purchases such as vacation homes, automobiles, and other recreational activities. During periods of economic uncertainty, consumers may postpone or forgo large discretionary purchases, which can impact overall demand in the boating industry.

Despite these competitive pressures, OTH holds a strong advantage through its vertically integrated business model, which includes wholesale, retail, financing, servicing, and repossession services. Unlike traditional dealerships that rely solely on boat sales, OTH maximizes revenue opportunities through multiple streams, including Azure Funding (financing), OTH Yacht Services (servicing), and Marine Asset Recovery (repossession and resale). Additionally, OTH’s nationwide broker network and WeBuyBoats.com platform enable the company to source inventory efficiently, move boats quickly, and serve a broader market than traditional dealerships.

As OTH continues to expand, competition will remain a factor in its growth strategy. However, with a strong brand reputation, operational efficiency, and an innovative approach to boat sales and financing, OTH is well-positioned to maintain a leading role in the marine industry.

Environmental, Safety and Regulatory Matters

OTH operates within the marine industry, which is subject to various environmental, safety, and regulatory requirements at both the federal and state levels. As a company engaged in the buying, selling, financing, and servicing of boats and yachts, OTH prioritizes compliance with environmental laws and best practices while supporting initiatives that contribute to the sustainability of the boating industry.

1. Environmental Impact & Compliance

The marine industry is increasingly focused on reducing environmental impact, particularly in areas such as emissions, fuel efficiency, and responsible waste disposal. OTH ensures that all vessels it sells comply with applicable U.S. Coast Guard (USCG) safety standards, Environmental Protection Agency (EPA) regulations, and state marine conservation laws. Additionally, as emissions regulations evolve, OTH continues to work with manufacturers that produce fuel-efficient and lower-emission engines to align with sustainability trends in boating.

2. Marine Conservation & Sustainability Initiatives

As part of its commitment to marine conservation, OTH supports industry-wide efforts to promote clean waterways, responsible boating, and eco-friendly vessel maintenance. The company recognizes the importance of sustainable practices in boat servicing and disposal, ensuring that its OTH Yacht Services division follows proper procedures for fluid disposal, hull cleaning, and material recycling to minimize environmental impact.

3. Compliance with Emission & Safety Standards

Vessels sold by OTH must comply with federal and state regulations governing emissions, safety, and construction standards. The EPA has implemented regulations requiring marine propulsion engines to meet specific emissions standards, and OTH ensures that all boats in its inventory are equipped with compliant engines provided by third-party manufacturers. In addition, the company adheres to standards set by the National Marine Manufacturers Association (NMMA), ensuring that boats meet industry safety and quality certifications.

4. Responsible Asset Recovery & Recycling

Through its Marine Asset Recovery (MAR) division, OTH is actively involved in repossession, refurbishment, and resale of vessels, helping extend the lifecycle of boats that may otherwise go unused or be improperly discarded. This approach supports responsible asset management while reducing unnecessary waste in the industry.

5. Regulatory Oversight & Industry Compliance

The company operates in a highly regulated market, with oversight from agencies such as the U.S. Coast Guard (USCG), Environmental Protection Agency (EPA), and state boating regulatory bodies. OTH ensures full compliance with these regulations and proactively adapts to any changes in environmental or safety laws.

6. Commitment to a Sustainable Future

OTH recognizes the growing importance of environmental responsibility in the marine industry and remains committed to adopting sustainable practices where possible. As the industry moves toward more fuel-efficient engines, eco-friendly maintenance practices, and responsible asset management, OTH will continue to align with these efforts while maintaining compliance with all relevant environmental and regulatory standards.

Company Employees

We believe we maintain excellent relations with our employees. As of December 31, 2025, we employed 40 people as full-time employees. None of our employees are represented by a labor union and since our founding in 2012, we have never experienced a labor-related work stoppage.

Facilities

Our corporate headquarters are located at 1701 Jel Wade Dr, Wilmington NC, 28401. The lease for our headquarters was entered into on September 4, 2024, consists of approximately 7,000 sq ft, and the term of the lease is through March 31, 2030, with an average annual rent of approximately $216,000.

OTH has entered into a lease agreement with Las Olas SMI, LLC, dated May 1, 2025, for approximately 1,125 square feet of office space in Fort Lauderdale, Florida, with a lease term of 60 months. The annual rent is $84,225 for the first year, with an annual increase equal to the greater of 3% or the increase in the Consumer Price Index for each subsequent lease year.

OTH has entered into a sublease agreement with Index Management Services, LLC, dated March 13, 2025, for approximately 1,000 square feet of office space in Jupiter, Florida. The lease will continue on a month to month basis until terminated, with the monthly rent of $5,000.

OTH has entered into a lease agreement with Port 32 Tampa, LLC, dated March 18, 2025, for approximately 1,500 square feet of office space in Tampa, FL. The term of the lease is two years, beginning April 1, 2025, with an annual rent of $37,500 for the first year and $39,000 for the second year.

OTH has entered into a commercial lease agreement with Jel Wade Industrial, LLC, dated August 21, 2024, for approximately 11 acres office and yard space in Wilmington, NC. The lease commenced on September 4, 2024 and will end on August 31, 2029, with an annual rent of $216,000 .

OTH has entered into a commercial lease agreement with Christopher Floyd, dated June 23, 2025, for approximately 6,000 square feet of office and warehouse space and access to an outdoor yard space in Wilmington, NC. The lease commenced on July 1, 2025 and will end on June 30, 2030, with an annual rent of 156,000.

OTH has entered into a commercial lease agreement with Jemal’s Yacht Haven LLC, dated September 12, 2025, for approximately 1.46 acres of office space and outdoor storage in Kent Island, Maryland. The lease commenced on December 1, 2025 and will end on December 31, 2030, with annual rent of $120,000 with escalation clauses for subsequent years.

The Company also maintains office space in Miami for $7,982.27 a month. In addition, the Company rent slips at the Greenwich Cove Marina, RI for an average of around $1,000 per month during the summer months.

The Company also utilizes virtual offices in Pensacola, FL and Lake Winnipesaukee, NH, which do not involve any physical premises, lease agreements, or rent obligations.

Legal Proceedings

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any material litigation or legal proceedings. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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 $2.6 million Yellowfin 54 yacht that had sustained damage during a manufacturer-authorized seatrial prior to delivery. The defendants—Yellowfin Yachts, Off The Hook Yacht Sales, broker Corey Simon, and Warbird Marine Holdings—deny all wrongdoing, maintaining that the grounding was a routine, low-speed “soft grounding” during testing, that any cosmetic damage was promptly repaired, and that the vessel was delivered in seaworthy condition following multiple post-repair inspections and sea trials. The parties plan to actively defend themselves against this claim.

Republic Bank & Trust Company v. Azure Funding LLC

Republic Bank & Trust Company filed a lawsuit against Azure Funding, LLC in the U.S. District Court for the Western District of Kentucky, seeking approximately $1.9 million in damages related to three marine loans that went into default. Azure denies all allegations of wrongdoing and specifically asserts that it had no knowledge of any fraud or misrepresentation, acted in good faith, and relied on information provided by the borrowers and third parties. Azure plans to actively defend itself against this lawsuit.

Reistad Employment Matter

In March 2026, three former employees filed a civil action against the Company in the Southern District of Florida. The complaint asserts a breach of employment agreements and the Stock Purchase Agreement. The plaintiffs seek lost compensation, severance benefits, and the issuance of 100,000 shares of the Company’s common stock. The Company recognized an obligation to issue 100,000 shares of common stock pursuant to the April 2025 Stock Purchase Agreement, and that obligation is reflected in the Company’s financial statements.

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 intends to vigorously defend against these claims. The outcome of litigation is inherently uncertain, and a reasonably possible loss, if any, cannot be estimated and therefore no accrual has been recorded for these claims.

Executive Officers

The following table sets forth certain information with respect to our executive officers

Executive Officers

Jason Ruegg, Founder, President and Chairman of the Board - Jason Ruegg combines over 12 years of experience in senior management within the marine industry following an entrepreneurial career that began during college. Previously, he had been involved in multiple ventures within the recreational boating sector, holding positions including Founder, President, and Chairman. Since 2012, Mr. Ruegg has served as Founder and President of Off the Hook Yachts, a national leader in the wholesale and retail pre-owned yacht market. Under his leadership, the company has completed nearly 10,000 transactions and acquired close to $1 billion in used boats and yachts. Jason has also developed proprietary software to oversee valuations of 10,000+ boats annually. Off the Hook Yachts has been repeatedly recognized, including being named to the Inc. 500 list of America’s Fastest-Growing Companies, consistently ranked among Boating Industry’s Top 100 Dealers, and has completed over 5,000 transactions. In addition to leading core operations, Mr. Ruegg founded Azure Funding, a marine finance company, which has grown to over $100 million in annual loans, and has acquired multiple marinas, shipyards, and dry-stack facilities. Mr. Ruegg is also currently a director of Off the Hook YS Inc., a vertically integrated marine retail and finance platform.

Brian S. John, Chief Executive Officer - Brian S. John combines over 25 years of experience in financial consulting, capital markets, and senior executive leadership, following a career as an investor and advisor to global emerging growth companies. Previously, he had been involved in numerous companies in the financial consulting and consumer products industries, holding positions including Chief Executive Officer, Chairman, and board member. From 2018 through 2023, Mr. John was the Chief Executive Officer of Jupiter Wellness, Inc., a consumer health and wellness company that he took public on NASDAQ in November 2020. In 2021, as CEO of Jupiter Wellness, he acquired SRM Entertainment, which began trading on NASDAQ in August 2023. From 2021 to 2023, he also served as CEO of Jupiter Wellness Acquisition Corp (NASDAQ: JWAC), now known as CJET. Mr. John is the founder of Caro Partners, LLC, a financial consulting firm specializing in advising emerging growth companies and has worked with hundreds of companies across dozens of countries. He is also currently the Chairman of the Board for Caring Brands, Inc., a consumer brand development company. Mr. John served on the board of directors of The Learning Center at the Els Center of Excellence, a school for children with autism in Jupiter, Florida, from 2015 through 2023.

Chad Corbin, Chief Financial Officer – Chad Corbin combines over 22 years of experience in financial and operational senior management following a career that began at Ferguson Enterprises. Previously, he had been involved in multiple companies within the financial and manufacturing industries, holding positions including Chief Financial Officer, Controller, General Manager, and Operations Manager. From 2000 through 2008, Mr. Corbin was the Credit Manager and later the Operations Manager for Ferguson Enterprises’ Jacksonville, FL branch. From 2008 to 2017, he served as Controller and subsequently as Chief Financial Officer and General Manager of Filmwerks International, a company specializing in event production and technical solutions. During his nine-year tenure, he was responsible for overseeing financial operations, maintaining the company’s banking relationships, overseeing two large competitor acquisitions. Following Filmwerks, from 2017 to 2024, Mr. Corbin worked as a Financial/ Operational consultant for several small companies. Two of his larger contracts were with Audioengine and Manufacturing Methods. Audioengine, a leading innovator in high-end audio equipment, he managed accounting, fulfilment, production, and sales support functions. Manufacturing Methods, he served has their CFO, where he was responsible for financial and human resources decisions across three companies, maintaining compliance with GAAP standards.

Investing in our common stock involves risks. Before making any investment decision, you should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K, including our financial statements and related notes, the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and under the “Special Note Regarding Forward-Looking Statements.” Our business, financial condition, results of operations or prospects could be materially and adversely affected if any of these risks occur. It is not possible to predict or identify all such factors; our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.

Summary of Key Risks

1. Risks Relating to Our Business

Our business, and its success, relies heavily on relationships with its customers, financing partners, manufacturers and employees to meet its financial targets. We depend on the ability to retract, build relationships with, and retain customers in order to sell our products and grow our business. We rely on the ability to finance our inventory through floorplan financing and the interest rates for which we receive that financing can have an impact on our margins. Our manufacturers exercise control over our business and the loss of a key manufacturing partner could have a negative impact on our business.

2. Risks Related to the Industry and Competition

The industry that we compete in is highly seasonal and can sometimes be volatile. If the Company is unable to acquire inventory, or the cost to acquire, or sell that inventory, the Company could be subject to a curtailment of sales, or a decrease in inventory available to produce revenue. There are macroeconomic conditions that play an important role in our industry such as fuel prices and insurance.

3. Risks Related to Regulatory and Compliance Challenges

Our business is susceptible to standard regulatory, security, and compliance risks primarily as a result of operating an online business, and operating in a competitive industry.

4. Risks Related to Intellectual Property

We do not have patents or formal copyright registrations on all of our intellectual property and therefore could be forced to defend infringement claims which could be time-consuming and could incur substantial costs to the business. Further, while we do have confidentiality agreements with our employees, they may not adequately prevent the disclosure of trade secrets, or may cost the company substantial costs to protect our confidentiality agreements.

Risks Related to Our Business

Fluctuating interest rates may adversely impact OTH’s ability to procure financing.

Many boat purchases are financed through loans, making interest rate movements a key factor in affordability to our customers. Rising interest rates increase borrowing costs for customers, potentially reducing demand for financed purchases. Additionally, changes in bank lending standards and credit availability could impact OTH’s financing operations through Azure Funding, affecting loan approvals and customer affordability.

Improper handling of inventory could cause overstocking or inventory shortages.

Managing inventory is critical to our business model. Holding excess inventory can tie up capital and increase carrying costs, while inadequate liquidity may limit the ability to take advantage of high-value acquisitions. OTH actively monitors market conditions to balance inventory levels, optimize turnover, and maintain financial flexibility. However, if demand fluctuates unexpectedly, there is a risk of overstocking or inventory shortages which can negatively impact our revenue and margins.

Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations.

We depend on our manufacturers for the sale of new boats. Sales of new boats from our two brands represents 12% and 11% of total revenue for the fiscal years ended December 2025 and 2024, respectively. Any adverse change in reputation, product development efforts, technological advancement, manufacturing capabilities, supply chain and third-party suppliers and financial condition of our manufacturers and their respective brands, would have a substantial adverse impact on our business. Any difficulties encountered by our manufacturers resulting from economic, financial, or other factors could also adversely affect the quality and amount of new boats and products that they are able to supply to us and the services and support they provide to us.

Additionally, any interruption or discontinuance of the operations of our manufacturers, including due to, supply chain disruptions or shortages or bankruptcy or insolvency, could also cause us to experience shortfalls, disruptions, or delays with respect to new boats and inventory. During the course of the pandemic, a number of our manufacturers faced inventory shortages due to a combination of these facts as well as high demand. We also enter into renewable annual dealer agreements with manufacturers, and there is no guarantee that we will be able to renew such dealer agreements in the future. We may not be able to easily replace the loss of certain manufacturers or brands, including at the necessary quantity, quality or price, and the loss of certain manufacturers or brands may therefore have an adverse material effect on our business, results of operations and financial condition.

Boat manufacturers exercise control over our business.

We depend on our dealer agreements, which generally provide for renewable, one-year terms. Through dealer agreements, boat manufacturers exercise control over their dealers, restrict them to specified locations and retain approval rights over changes in management and ownership, among other things. The continuation of our dealer agreements with most manufacturers depends upon, among other things, our achieving stated performance goals for customer satisfaction ratings and market share penetration in the market served by the applicable marine retailer. Failure to meet performance goals and other conditions set forth in any existing or new dealer agreement could have various consequences, including the following:

• the termination or nonrenewal of the dealer agreement;
• the imposition of additional conditions in subsequent dealer agreements;

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• limitations on boat inventory allocations;
• reductions in reimbursement rates for warranty work performed by the dealer;
• loss of certain manufacturer-to-dealer incentives;
• denial of approval of future acquisitions; or
• the loss of exclusive rights to sell in the geographic territory.

These events could have a material adverse effect on our product availability, competitive position and financial performance.

The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins.

We rely on manufacturers’ programs that provide incentives for dealers to purchase and sell particular boat makes and models or for consumers to buy particular boat makes or models. Any eliminations, reductions, limitations or other changes relating to rebate or incentive programs that have the effect of reducing the benefits we receive, whether relating to the ability of manufacturers to pay or our ability to qualify for such incentive programs, could increase the effective cost of our boat purchases, reduce our margins and competitive position and have a material adverse effect on our financial performance.

We depend on our ability to attract and retain customers.

Our future success depends in large part upon our ability to attract and retain customers for our boat sales, repair and maintenance services, parts and accessories and finance & insurance products. The extent to which we achieve growth in our customer base and retain existing customers materially influences our profitability. Any number of factors could affect our ability to grow and maintain our customer base. These factors include consumer preferences, the frequency with which customers utilize our products, repair and maintenance services and finance & insurance products, general economic conditions, our ability to maintain our dealership locations, weather conditions, the availability of alternative services, protection plans, products and resources, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of our brands. Any significant decline in our customer base, or the usage of our services, protection plans or products by our customers could have a material adverse effect on our business, financial condition and results of operations.

We depend on income from financing, insurance and extended service contracts.

A portion of our income results from referral fees derived from the placement or marketing of various finance & insurance products, consisting of customer financing, insurance products and extended service contracts, the most significant component of which is the participation and other fees resulting from our sale of customer financing contracts.

The availability of financing for our boat purchasers and the level of participation and other fees we receive in connection with such financing depend on the particular agreement between us and the lender and the current interest rate environment. Lenders may impose terms in their boat financing arrangements with us that may be unfavorable to us or our customers, resulting in reduced demand for our customer financing programs and lower participation and other fees. Laws or regulations may be enacted nationally or locally which could result in fees from lenders being eliminated or reduced, materially impacting our operating results. If customer financing becomes more difficult to secure, it may adversely impact our business.

Changes, including the lengthening of manufacturer warranties, may reduce our ability to offer and sell extended service contracts which may have a material adverse impact on our ability to sell finance and insurance products. Moreover, these products are subject to complex federal and state laws and regulations. There can be no assurance that regulatory authorities in the jurisdictions in which these products are offered will not seek to regulate or restrict these products. Failure to comply with applicable laws and regulations could result in fines or other penalties including orders by state regulators to discontinue sales of the warranty products in one or more jurisdictions. Such a result could materially and adversely affect our business, results of operations and financial condition.

Although boat dealers are generally excluded from regulatory oversight under the Dodd-Frank Wall Street Reform and Consumer Protection Act, future changes in law could lead to additional, indirect regulation of boat dealers through its regulation of other financial institutions which provide such financing to our customers.

If interest rates rise, the fees we receive in connection with the financing may be limited or reduced as customers become more interest rate sensitive and the spreads that we are able to charge are compressed. The reduction of profit margins on sales of finance & insurance products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins.

Our operations are dependent upon key personnel and team members.

Our success depends, in large part, upon our ability to attract, train, and retain qualified team members and executive officers, as well as the continuing efforts and abilities of team members and executive officers. Although we have employment agreements with certain of our executive officers and management succession plans, we cannot ensure that these or other executive personnel and team members will remain with us, or that our succession planning will adequately mitigate the risk associated with key personnel transitions. Expanding our operations may require us to add additional executive personnel and team members in the future. As a result of our decentralized operating strategy, we also rely on the management teams of our marine retailers. In addition, we likely will depend on the senior management of any significant businesses we acquire in the future. The loss of the services of one or more key employees before we are able to attract and retain qualified replacement personnel could adversely affect our business. Additionally, our ability to manage our personnel costs and operating expenses is subject to external factors such as unemployment levels, prevailing wage rates, healthcare and other benefit costs, changing demographics and our reputation and relevance within the labor markets where we are located. Increases in the prevailing wage rates due to competitive market pressures or other factors could increase our personnel costs and operating expenses and have a material adverse effect on our business.

Customer trust and reputation are crucial in the yacht sales industry.

Customer trust and reputation are crucial in the yacht sales industry. Negative customer experiences, disputes over financing terms, warranty claims, or poor service execution could harm the OTH brand. The Company prioritizes transparency, high service standards, and long-term customer relationships to mitigate reputational risks.

If we cannot dispose of pre-owned boats acquired through our trade-in or direct purchase processes at prices that allow us to recover its costs, our profitability will be adversely affected.

The resale values of any pre-owned boats that we acquire through trade-ins or direct purchase may be lower than our estimates, which are based on expected retail sales prices. If the resale value of the pre-owned boats we acquire is lower than our estimates and/or we are not able to resell them timely or at all, it could have a material adverse effect on our business, results of operations and financial condition.

Additionally, certain pre-owned boats or other vehicles that we acquire through trade-ins may fail to meet our retail quality standards. Instead, we sell these units through a wholesale process. If the prices that we receive for our pre-owned boats sold in this process are not sufficient to cover the prices paid or credit given at trade-in for such pre-owned boats, it could have a material adverse effect on our business, results of operations and financial condition.

We rely on Floorplan Financing

OTH relies heavily on floorplan financing arrangements to acquire, hold, and sell inventory across its wholesale, brokerage, and new boat sales operations. These credit facilities allow us to fund the purchase of boats before they are sold to end customers, and are essential to maintaining a broad and competitive selection of inventory.

OTH currently has total floorplan financing of up to $60 million, of which only $25.3 million was utilized as of December 31, 2025 under our existing arrangement with Red Oak Inventory Finance (“Red Oak”). While we are currently under the financing cap, in order to meet our financial objectives we will continue to rely more and more on this financing option and it may restrict our ability to make opportunistic acquisitions. The cap also limits our ability to pursue new or larger transactions that require greater floorplan availability.

Any disruption to our access to floorplan financing—whether due to changes in lender underwriting criteria, rising interest rates, reductions in credit limits, or a tightening of capital markets—could materially impair our ability to stock sufficient inventory. This, in turn, may reduce sales volume, limit customer choice, and negatively affect our revenue and profitability.

As interest rates rise, the cost of carrying inventory through floorplan facilities also increases, which can compress margins or force changes to our pricing strategy. Additionally, if lenders impose more restrictive terms, require increased collateral, or reintroduce or increase personal guarantees, it may limit our ability to scale or capitalize on opportunistic bulk purchases.

Risks Related to Our Industry and Competition

The yacht and boat sales industry is highly sensitive to macroeconomic conditions and may experience severe fluctuations.

The yacht and boat sales industry is highly sensitive to macroeconomic conditions, including GDP growth, interest rates, consumer confidence, and discretionary spending. During economic downturns, consumers may postpone or forego luxury purchases like yachts and boats, which could result in lower sales and reduced profit margins. Similarly, fluctuations in financial markets, employment levels, and inflation rates may influence consumer behavior and financing availability. Higher interest rates or tightened credit markets could reduce the affordability of boat purchases, especially for discretionary or financed transactions, leading to lower overall demand for new and pre-owned vessels. Similarly, rising inflation or economic uncertainty may lead consumers to delay or reduce spending on high-ticket leisure items such as boats.

Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets.

Our business, along with the broader retail marine industry, is highly seasonal. Sales activity for both new and pre-owned boats generally peak during the spring and summer months, particularly in northern markets where boating is limited to warmer seasons. Conversely, sales tend to slow significantly during the fall and winter months, especially in colder climates. This seasonal variation affects not only transaction volume but also inventory turnover, revenue recognition, and cash flow.

Geographic markets experience seasonality differently. For example, southern coastal markets such as Florida and parts of the Gulf Coast often maintain year-round boating activity and sales, while northern regions such as the Northeast or Great Lakes are subject to more pronounced seasonal slowdowns. As we continue to expand our footprint nationally, we may experience increased variability in our operational and financial performance due to regional differences in seasonality.

This seasonality can impact our ability to forecast revenue and plan inventory purchases, staffing levels, and marketing expenditures. Additionally, seasonal fluctuations may become more pronounced during periods of economic uncertainty or adverse weather conditions, which could further reduce consumer activity and discretionary spending during peak sales windows.

We face intense competition.

We operate in a highly competitive and fragmented environment. In addition to facing competition generally from recreational businesses seeking to attract consumers’ leisure time and discretionary spending dollars, the recreational boat industry itself is highly fragmented, resulting in intense competition for customers, quality products, boat show space and suitable dealership locations. We rely to a certain extent on boat shows to generate sales. Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows, could have a material adverse effect on our business, financial condition and results of operations.

The yacht and boat sales industry is highly competitive, with OTH competing against large national dealerships, independent brokers, online marketplaces, and manufacturers selling directly to consumers. Some competitors have greater financial resources, larger inventories, or extensive marketing budgets, which could impact our market share.

Additionally, online sales platforms have transformed the industry, increasing competition from digital marketplaces. To remain competitive, OTH continuously invests in technology, customer service, and digital marketing strategies. However, our inability to compete effectively with existing or potential competitors could have a material adverse effect on our business, financial condition and results of operations.

Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

We are increasing our efforts to grow our distribution, repair and maintenance services, parts and accessories, and financing and insurance businesses to better serve our customers and thereby increasing revenue and improving profitability as a result of these comparatively higher margin businesses. These efforts are designed to increase our revenue and reduce our dependence on the sale of new and pre-owned boats. In addition, we are pursuing strategic acquisitions to capitalize upon the consolidation opportunities in the highly fragmented recreational boat dealer industry by acquiring additional marine retailers and related operations and improving their performance and profitability through the implementation of our operating strategies. These business initiatives have required, and will continue to require, us to add personnel, invest capital, enter businesses or geographic regions in which we do not have extensive experience and encounter substantial competition. As a result, our strategies to enhance our performance may not be successful and we may increase our expenses or write off or impair such investments if not successful.

Demand in the powerboat industry is highly volatile.

Volatility of demand in the powerboat industry, especially for recreational powerboats and electric powerboats, may materially and adversely affect our business, prospects, operating results and financial condition. The markets in which we will be competing have been subject to considerable volatility in demand in recent periods. Demand for recreational powerboat and electric powerboat sales depends to a large extent on general, economic and social conditions in a given market. Historically, sales of recreational powerboats decrease during economic downturns. We have fewer financial resources than more established powerboat manufacturers to withstand adverse changes in the market and disruptions in demand.

General economic conditions, particularly in the U.S., affect our industry, demand for our products and our business, and results of operations.

Demand for premium boat brands has been significantly influenced by weak economic conditions, low consumer confidence, high unemployment, and increased market volatility worldwide, especially in the U.S. In times of economic uncertainty and contraction, consumers tend to have less discretionary income and tend to defer or avoid expenditures for discretionary items, such as our products. Sales of our products are highly sensitive to personal discretionary spending levels. Our business is cyclical in nature and its success is impacted by economic conditions, the overall level of consumer confidence and discretionary income levels. Any substantial deterioration in general economic conditions that diminishes consumer confidence or discretionary income may reduce our sales and materially adversely affect our business, financial condition and results of operations. We cannot predict the duration or strength of an economic recovery, either in the U.S. or in the specific markets where we sell our products. Corporate restructurings, layoffs, declines in the value of investments and residential real estate, higher gas prices, higher interest rates, and increases in federal and state taxation may each materially adversely affect our business, financial condition, and results of operations.

Consumers often finance purchases of our products. Although consumer credit markets have improved, consumer credit market conditions continue to influence demand, especially for boats, and may continue to do so. There continue to be fewer lenders, tighter underwriting and loan approval criteria, and greater down payment requirements than in the past. If credit conditions worsen, and adversely affect the ability of consumers to finance potential purchases at acceptable terms and interest rates, it could result in a decrease in the sales of our products.

Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect the levels of boat purchases.

Demand for our products can be adversely affected by competition from other activities that occupy consumers’ time, including other forms of recreation as well as religious, cultural and community activities. In addition, real or perceived human health or safety risks from engaging in outdoor activities generally or boating activities specifically could deter consumers from purchasing our products. Local environmental conditions in the areas in which we operate dealerships could also adversely affect the levels of boat purchases, including adverse weather conditions or natural disasters. Changing trends and attitudes toward large discretionary purchases on the part of younger consumers in particular, who may prefer to share or borrow a boat rather than incur the expense of ownership, may impact our future sales. Further, as a seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other recreational activities and consumer purchases. In addition, perceived hassles of boat ownership and customer service and customer education throughout the retail boat industry, which has traditionally been perceived to be relatively poor, represent impediments to boat purchases. We may attempt to shift the focus or product mix in response to changing consumer sentiments, but there is no guarantee that we will be successful.

Policy changes affecting international trade could adversely impact the demand for our products and our competitive position.

Changes in government policies on foreign trade and investment can affect the demand for our products and services, impact the competitive position of our products and services or prevent us from being able to sell products and services in certain countries. The implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, economic sanctions, anti-boycott laws, exchange controls or new barriers to entry could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the Trump Administration has announced tariffs on certain imports from Canada, Mexico and the EU, among others, that could affect the demand for our products. Such tariffs and any retaliatory tariffs (including those announced by China, Canada and Mexico in March 2025) may put upwards pressure on prices in other jurisdictions from which we purchase product components, which could reduce our ability to offer competitive pricing to potential customers. We cannot predict what changes to trade policy will be made by the Trump Administration, the U.S. Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business or the global economy. Changes in U.S. trade policy, or threat of such changes, have resulted and could again result in reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to export our products or import products or product components from countries where we currently purchase products or product components or sell products or services. Such changes, or threatened changes, to trade policy or in laws and policies governing foreign trade, and any resulting negative sentiments towards the United States as a result of such changes, could materially and adversely affect our business, financial condition, results of operations and liquidity.

We face substantial supplier and inventory acquisition risks.

OTH sources boats from private sellers, dealers, repossession auctions, and trade-ins. Disruptions in any of these supply channels, such as manufacturer production delays, trade-in slowdowns, or lender policy changes affecting repossessions, could impact our ability to maintain an optimal inventory. Pricing volatility or limited availability in certain boat categories could also affect profit margins.

In addition, we rely on certain exclusive dealer agreements to source boats from specific manufacturers. For example, Off the Hook Yacht Sales NC, LLC is the exclusive dealer for Yellowfin Yachts LLC (“Yellowfin”) in North Carolina. This dealer agreement is renewed on a year-to-year basis and may be terminated by the manufacturer at any time. If this agreement is not renewed or is terminated, we could lose access to key products, which would have a material adverse effect on our business, results of operations, and financial condition.

We face marine asset and repossession risks

Our Marine Asset Recovery (MAR) division provides a valuable inventory source through the acquisition and resale of repossessed boats. However, changes in lender policies, consumer protection laws, or state and federal regulations could limit our ability to access or efficiently process these assets.

Repossession practices vary by jurisdiction and may involve complex legal procedures, delays, or disputes. Legal challenges from borrowers or increased regulatory scrutiny could lead to higher costs, reputational risk, or operational slowdowns. Additionally, a shift in lender behavior, such as retaining repossessions in-house, could reduce the volume of available inventory. While MAR remains an important part of our supply chain, it is subject to legal and regulatory risks that could impact its future performance.

Manufacturer recall campaigns could adversely affect our business.

Manufacturer recall campaigns could adversely affect our new and pre-owned boat sales or customer residual trade-in valuations, could cause us to temporarily remove boats from our inventory, could force us to incur increased costs and could expose us to litigation and adverse publicity related to the sale of recalled boats, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance.

Climatic events in the areas where we operate have caused, and future climatic events may cause, disruptions and in some cases delays or suspensions in our operations that adversely impacted our business. For example, the physical effects of unseasonably wet weather, drought conditions, extended periods of below freezing weather, tropical storms, hurricanes, flooding, or other natural disasters have forced and may in the future force boating areas to close or render boating dangerous. This has resulted in and, in the future, could result in reduced customer demand for our products and services. One or more of these climatic events has in the past and may in the future result in physical damage to, or closure of, one or more of our facilities, and disruption or reduction in the availability of products. Concerns regarding global changes in climate could also adversely affect the levels of boat purchases.

In addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, damage to or inadvertent releases from fueling stations, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes such as Hurricane Helene, and Hurricane Milton in 2024. Such disruptions in our supply chain could damage our on-site inventory at our locations, result in remedial liability or administrative penalties, or cause serious limitations or delays in the operations of our locations. We maintain hurricane and casualty insurance, subject to deductibles, but such coverage may become significantly more expensive or impossible to procure in the future. Our planning for normal climatic variation, insurance programs and emergency recovery plans may inadequately mitigate the effects of such climatic conditions, and not all such effects can be predicted, eliminated, mitigated, or insured against. Accordingly, while we traditionally maintain property and casualty insurance coverage for damage caused by climatic events such as severe weather or other natural disasters, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a result thereof or that we will be able to procure coverage on commercially reasonable terms for such events in the future.

Increases in fuel prices may adversely affect our business.

All of the recreational boats we sell are powered by gasoline or diesel engines. Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating results. Increases in fuel prices may negatively impact boat sales. The price of or tax on fuels may significantly increase in the future, adversely affecting our business.

The availability of boat insurance is critical to our success.

The availability of boat insurance is critical to our success. The ability of our customers to secure reasonably affordable boat insurance that meets the requirements of lenders financing their purchases is essential to closing transactions in both our retail and wholesale channels. Historically, such insurance has been readily accessible and competitively priced.

However, as a severe storm approaches land, particularly in coastal regions, insurers often impose temporary underwriting moratoriums, halting the issuance of new policies. This can delay or derail transactions that are pending funding or delivery, particularly in peak sales periods. In addition, increased storm activity and broader climate-related risks have led to higher insurance premiums and more restrictive underwriting in certain markets, which may impact customers’ purchasing decisions or disqualify some buyers from obtaining financing.

If the cost or availability of boat insurance were to deteriorate significantly, either regionally or industry-wide, it could materially reduce the demand for boats and adversely impact our sales volume, financing operations through Azure Funding, and overall business performance.

We face expansion and acquisition risks

OTH’s growth strategy includes acquiring dealerships, expanding its broker network, and investing in marina properties. While these initiatives support long-term expansion, they also introduce risks related to:

• Integration of acquired businesses and teams
• Unexpected costs or operational inefficiencies
• Challenges in scaling systems, logistics, and customer service

To manage these risks, OTH conducts thorough due diligence and phased growth strategies to ensure successful expansion.

Risks Related to Regulatory & Compliance Challenges

Environmental and other regulatory issues impact our operations from time to time.

Our operations are subject to stringent federal, state and local laws and regulations governing such matters as finance & insurance, consumer protection, consumer privacy, escheatment, anti-money laundering, releases, discharges and emissions or other releases into the environment and environmental protection, human health and safety, and employment practices, including wage and hour and anti-discrimination legal requirements. These laws and regulations affect many aspects of our operations, such as requiring the acquisition and renewal of permits, licenses and other governmental approvals to conduct regulated activities, including the retail sale of recreational boats, restricting the manner in which we use, handle, store, recycle, transport and dispose of discarded substances and wastes, responding to and performing investigatory, remedial and corrective actions with respect to any discharges and emissions or other release of regulated substances, requiring capital and operating expenditures to construct, maintain and upgrade pollution control and containment equipment and facilities, imposing specific human health and safety criteria addressing worker protection, and imposing liabilities for failure to comply with applicable environmental or other legal requirements, pollution incidents or inappropriate payment or treatment of our workers with respect to our operations. The failure to satisfy those and other legal requirements could have a material adverse effect on our business, financial condition, and results of operations. In addition, failure to comply with those and other legal requirements, or with U.S. trade sanctions, the U.S. Foreign Corrupt Practices Act and other applicable laws or regulations could result in the assessment of damages, the imposition of sanctions including monetary penalties, changes to our processes, or a delay, suspension or cessation of our operations, as well as damage to our image and reputation, all of which could have a material adverse effect on our business, results of operations and financial condition.

Numerous governmental agencies, including OSHA, the EPA and similar federal agencies as well as analogous state and local agencies regulate and maintain enforcement authority over the operation of our locations, repair facilities, and other operations, with respect to matters such as consumer protection, human safety and environmental protection, including any contamination of or releases into ambient air, surficial and subsurface soils, surface water and groundwater. Marine engine manufacturers are subject to emissions standards imposed under the CAA, and the EPA has enacted a number of legal requirements imposing more stringent emissions standards for two-cycle, gasoline outboard marine engines. It is possible that regulatory bodies such as the EPA may impose more stringent emissions standards in the future for marine engines, including with respect to recreational use. Any increased costs of those manufacturers producing engines resulting from current or future EPA standards could be passed on to dealers in the retail recreational boat industry, such as ourselves, or could result in the inability of, or potential unforeseen delays by, these manufacturers to manufacture and make timely delivery of recreational boats to such dealers, which developments could have a material adverse effect on our business, results of operations and financial condition. Moreover, we cannot guarantee that would be able to pass any such increased costs on to our customers, and such increased costs could deter customer interest and otherwise adversely affect boating sales.

As with companies in the marine retail industry generally, and parts and service operations in particular, our business involves the use, handling, storage, transportation and contracting for recycling or disposal of waste materials, including hazardous or toxic substances and wastes as well as environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline, and diesel fuels. Laws and regulations regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities. Additionally, certain of our locations and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products. Storage tanks in the United States are generally subject to financial responsibility requirements and testing, containment, upgrading and removal requirements under the RCRA, and its state law counterparts, as well as federal, state and local legal standards relating to investigation and remediation of contaminated soils, surface water and groundwater resulting from leaking tanks and associated inground lifts. We also may be subject to civil liability to third parties for remediation costs or other damages if our owned or operated tanks leak or leakage migrates onto the property of others.

We are subject to regulation by federal, state, and local authorities establishing investigatory, remedial, human health and environmental quality standards and imposing liability related thereto, which liabilities may include sanctions, including monetary penalties for violations of those standards. Certain of our locations and/or repair facility properties have been operated in the past by third parties whose use, handling and disposal of petroleum-based products or wastes were not under our control. Given the strict liability nature of environmental laws, we may be liable for the remediation of such past releases notwithstanding that our operations did not cause or contribute to the contamination.

We also are subject to laws, ordinances, and regulations governing investigation and remediation of contamination at facilities we operate or to which we send hazardous or toxic substances or wastes for treatment, recycling, or disposal. In particular, CERCLA, also known as the Superfund law, and analogous state laws, impose strict joint and several liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur.

A majority of states have adopted Superfund laws comparable to and, in some cases, more stringent than CERCLA. If we were to be found to be a responsible party under CERCLA or a similar state statute, we could be held liable for all investigative and remedial costs associated with addressing such contamination as well as for natural resource damages. In addition, claims alleging personal injury or property damage may be brought against us as a result of alleged exposure to hazardous substances resulting from our operations. Moreover, certain of our locations are located on waterways that are subject to federal laws, including the Clean Water Act and the OPA, as well as analogous state laws regulating navigable waters, oil pollution (including prevention and cleanup of the same), adverse impacts to fish and wildlife, and other matters. For example, under the OPA, owners and operators of vessels and onshore facilities may be subject to liability for removal costs and damages arising from an oil spill in waters of the United States.

We could be required to conduct remediation in the future in accordance with applicable state and federal standards in the cleanup of petroleum hydrocarbons or other substances or wastes released on, under or from properties owned or leased by us, including some of our properties that were previously used as gasoline service stations. For example, we are performing soil and groundwater monitoring activities as required by applicable state and federal standards. We may also be required in the future to remove USTs, ASTs and inground lifts containing petroleum-based products and hazardous or toxic substances or wastes should they represent a risk of release or threatened release into the environment. Historically, our costs of compliance with these investigatory, remedial and monitoring requirements have not had a material adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business, results of operation and financial condition. We also may have additional storage tank liability insurance and other insurance coverage with respect to pollution-related liabilities where available, but such coverages may be insufficient to address such liabilities. Environmental laws and regulations are comprehensive and subject to frequent change. Compliance with amended, new, or more stringent laws or regulations, more strict interpretations of existing laws, or the future discovery of environmental conditions may require additional expenditures by us, and such expenditures may be material.

Additionally, certain states have imposed legal requirements or are considering the imposition of such requirements that would obligate buyers and/or operators of recreational boats to obtain a license in order to operate such boats. These requirements could discourage potential buyers of recreational boats, thereby limiting future sales and adversely affecting our business, financial condition, and results of operations.

Furthermore, the Patient Protection and Affordable Care Act increased our annual employee health care costs that we fund, and significantly increased our cost of compliance and compliance risk related to offering health care benefits.

Moreover, adverse changes in labor policy could lead to increased unionization efforts, which could lead to higher labor costs, disrupt our locations operations, and adversely affect our business, results of operations and financial condition.

We have established online marketplaces and a failure in such online operations, security breaches and cybersecurity risks could disrupt our business and lead to reduced sales and growth prospects and reputational damage.

Consumers are increasingly embracing shopping online and through mobile commerce applications. However, consumer preferences and e-commerce buying trends could change, and we may be vulnerable to additional risks and uncertainties associated with online sales, including rapid changes in technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns, changes in state tax regimes and government regulation of internet activities. Online marketplaces may also increase our access to sensitive, confidential or personal data or information that is subject to data privacy and information security laws and regulations. Our failure to successfully respond to these risks and uncertainties could reduce our online sales, increase our costs, diminish our growth prospects, damage our brands, and subject us to regulatory fines or investigations, which could negatively impact our operations and stock price. In addition, there is no guarantee that we will be able to successfully expand our online platforms. Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage. If we are unable to expand our online platforms, our growth plans could suffer, and the price of our Common Stock could decline.

As OTH expands its digital platforms, CRM system, and financing operations, protecting sensitive customer and transaction data becomes increasingly critical. A cyberattack, data breach, or system failure could disrupt operations and lead to financial losses, regulatory scrutiny, or reputational harm. We believe OTH invests in strong cybersecurity measures and risk management protocols to safeguard its technology infrastructure.

We may be exposed to lawsuits from time to time, which could affect us adversely.

As a company operating in boat sales, financing, and repossession, OTH may be exposed to potential lawsuits, contract disputes, and regulatory enforcement actions. Legal matters related to consumer protection, financing terms, repossession practices, or employment issues could arise. While we believe that the company maintains strong legal compliance measures to minimize exposure, such exposure to litigation could affect our reputation adversely and come with costly compliance costs.

Risks Related to Intellectual Property

A significant portion of our intellectual property is not protected through patents or formal copyright registration. As a result, we do not have the full benefit of patent or copyright laws to prevent others from replicating our products, product candidates, and brands.

OTH utilizes proprietary sales processes, technology, and customer data management tools to optimize operations. However, there is no guarantee that competitors won’t attempt to replicate certain strategies. While OTH does not rely on patents, maintaining trade secrets and operational know-how is essential to protecting its competitive advantage.

We have not protected our intellectual property rights through patents or formal copyright registration, and . There can be no assurance that any patent will issue or if issued that the patent will protect our intellectual property. As a result, we may not be able to protect our intellectual property and trade secrets or prevent others from independently developing substantially equivalent proprietary information and techniques or from otherwise gaining access to our intellectual property or trade secrets. In such an instance, our competitors could produce products that are nearly identical to ours resulting in us selling less products or generating less revenue from our sales.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

We have recently begun to use confidentiality agreements with our collaborators, employees, consultants, outside collaborators and other advisors to protect our proprietary technology and processes. We intend to use such agreements in the future, but these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We may need to defend ourselves against patent, copyright or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

The status of the protection of our intellectual property is unsettled as we do not have any issued patents, registered trademarks or registered copyrights for most of our intellectual property and other than one patent application, we have not applied for the same. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights. If we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.

We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition, and operations.

It is possible that competitors or other third parties may attempt to unlawfully copy, obtain or otherwise use our trade names, trademarks, patents, or other intellectual property or proprietary information without our consent. We take commercially reasonable measures designed to identify and protect our intellectual property. However, monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken may not be sufficient to effectively prevent third parties from infringing, misappropriating, diluting or otherwise violating our intellectual property rights. From time to time, we may be compelled to protect our intellectual property, which may involve litigation. Such litigation may be time-consuming and expensive and could result in the impairment or loss of the intellectual property involved. There is no guarantee that the steps we take to protect our intellectual property, including litigation, when necessary, will be successful.

We cannot assure that our intellectual property rights will be effectively utilized, maintained, or, if necessary, successfully enforced against third parties. There is a risk that we will not be able to obtain and perfect our own intellectual property rights, or, where appropriate, license from others intellectual property rights. Our intellectual property rights, and any additional rights we may obtain in the future, may be invalidated, circumvented or challenged, and the legal costs necessary to protect our intellectual property rights could be significant. Our failure to obtain registered intellectual property rights, or maintain or successfully assert intellectual property rights could harm our competitive position and could have a material adverse effect on our financial condition, results of operations and cash flows.

We may also be subject to infringement, misappropriation, dilution, or other violation complaints from others asserting our use of intellectual property rights owned or alleged to be owned by third parties. Litigation related to such claims, whether or not meritorious, may result in injunctions against us or the payment of damages. Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert our resources and require significant expenditures. Any of the foregoing could prevent us from competing effectively and could have a material adverse effect on our business, operations, and financial condition.

Risk Management and Strategy

We regularly assess risks from cybersecurity threats, monitor our information systems for potential vulnerabilities, and review our cybersecurity policies, processes, and practices. To help protect our information systems from cybersecurity threats, we use a suite of security and business continuity tools and employ knowledgeable resources internally to implement and monitor these risks. The tools that we use are designed to help us proactively identify, monitor, investigate and resolve security incidents in a timely manner. Our cybersecurity is managed through the following important categories:

• Infrastructure & Hosting: We utilize a layered cybersecurity approach designed to protect our systems, applications, and data. Our applications are hosted on secure cloud infrastructure and are protected by network-level security controls, restricted access configurations, encryption, and firewall protections. Our database environments are not publicly accessible, and we maintain regular automated backups and system updates to support business continuity and data protection.
• Network and Perimeter Security: We employ third-party network and perimeter security services to help protect our applications and infrastructure from cybersecurity threats. These services provide traffic filtering, distributed denial-of-service mitigation, web application firewall protection, bot detection, encryption, and secure domain name system management. These controls are designed to help identify and block malicious traffic and common web-based attack vectors before they reach our systems, thereby enhancing the security, availability, and integrity of our applications and data.

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• Access Controls and Authentication: Our CRM has role-based access controls built into the system where users are assigned specific roles that restrict their data and functionality. These roles are based on the minimum amount of access they require as part of their company function. We have a built-in authentication system with automatic timeouts for inactive users.
• Encryption and Data Protection: We endeavor to use appropriate encryption methods to protect sensitive data. This includes the encryption of customer data, financial information, and other confidential data. All traffic is encrypted via SSL/TLS certificates and no unencrypted access is permitted.

The above cybersecurity risk management processes are integrated into the Company’s overall enterprise risk management program. Cybersecurity risks are understood to be significant business risks, and as such, are considered an important component of our enterprise-wide risk management approach.

As of the date of this report we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, financial condition, results of operations or cash flows. We acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur. See “Risk Factors” for additional information about the risks to our business associated with a breach or compromise of our information or operational technology systems.

Governance

Our Board oversees our risk management process, including as it pertains to cybersecurity risks, directly and through its committees. The Audit and Governance Committee of the board oversees our risk management program, which focuses on the most significant risks we face. Meetings of the Audit and Governance Committee include discussions of specific risk areas throughout the year. The Board considers cybersecurity to be a vital aspect of corporate governance.

Our corporate headquarters are located at 1701 Jel Wade Dr, Wilmington NC, 28401. The Company leases the following locations:

We believe that our facilities are adequate for our current operations.

We are involved in various legal proceedings and such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between the affected parties and other actions. Management performs an analysis of the probability and potential size of the loss and accrues a liability and/or discloses the necessary information as appropriate. Management does not believe that it is reasonably probable that the pending litigation, disputes or claims will have a material adverse effect on its financial condition, results of operations or cash flows. The outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on the Company’s financial condition, liquidity or 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 Annual 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, specialize in navigating the pre-owned regional markets while maintaining a client-focused approach. By leveraging its nationwide broker network, advanced 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 company owned websites, Boatsandbuyers.com and Webuyboats.com provide boat auction and lead generation services.Www.webuyboats.com, our proprietary lead-generation platform, 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. Www.boatsandbuyers.com is an auction platform that allows people to access a national audience of potential boat buyers and create seven-day auctions on a no-reserve or fair reserve listing and sell the boat without negotiating or commissions. It allows buyers to create alerts for boats they are looking for and instantly make an offer without negotiating.

Looking ahead, our strong market presence and forward-thinking approach, our company stands ready to lead the way in shaping the future of the pre-owned boating in 2026 and beyond.

Corporate Structure and Background

OTH is a company established in Nevada. It is a holding company established on January 3, 2025 with no business operation. OTH and all the subsidiaries are collectively referred to as the “Company”. The Company is one of the largest marine wholesalers in the United States. OTH, through its subsidiaries, Off The Hook Yacht Sales NC, LLC and Boat Center sell yachts and boats to the public. Azure is a recreational loan broker and lender, focused on providing financing services to individuals for marine, aviation and recreational vehicle purchases. The Company engages primarily in the retail sales, brokerage, and service of new and pre-owned boats, yachts and trailers, and offers maintenance, slip and storage accommodation in certain locations. The Company also arranges related boat financing, insurance, and extended service contracts for customers with Azure or third-party lenders and insurance companies.

In connection with our initial public offering, we reorganized our corporate structure as follows:

1. Holders of equity interests in the entities listed below agreed to undertake a restructuring of their ownership interests in the OTH Companies by consolidating such companies under the Company, whereby upon completion of the consolidation, the OTH Owners collectively own 100% of the issued and outstanding shares of common stock of the Company, and each of the OTH Companies will be a wholly owned subsidiary of the Company:

• Off the Hook Yacht Sales NC, LLC, a North Carolina limited liability company;
• Azure Funding, LLC, a North Carolina limited liability company; and
• OTH Simon Marine YF LLC, a North Carolina limited liability company.

2. Pursuant to the Amended and Restated Agreement for the Purchase and Sale of Capital Stock dated July 3, 2025 (the “Amended SPA”), the OTH Owners will, in the aggregate, sale and transfer to Off The Hook Acquisition Corp, a Florida corporation (the “OTH FL”), such number of shares of common stock of the Company representing 25% of the issued and outstanding shares of the Company (the “Transferred Securities”) for the consideration of $3 million payable by OTH FL directly to the OTH Owners (not the Company) as follows:

• $600,000 paid in cash as a non-refundable deposit upon the execution of the Amended SPA; and
• The balance of $2.4 million shall be payable at the closing under the Amended SPA, which shall occur upon, among other things, the Company’s registration statement on form S-1 being declared effective by the Securities and Exchange Commission.
• The Transferred Securities will not be registered in this offering and will be locked up pursuant to lock-up agreements for 180 days following the closing of this offering.

3. After the consummation of the consolidation of the OTH Companies and the transaction contemplated under the Amended SPA, but before the closing of this offering, the OTH Owners will collectively hold 75% of the issued and outstanding shares of the Company, and OTH FL will hold the remaining 25% of the issued and outstanding shares of the Company.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

Revenue

Overall, revenue increased by $20.9 million, or 21.1%, to $119.9 million for the year ended December 31, 2025, from $99.0 million for the year ended December 31, 2024. The revenue growth is mainly driven by a higher floor plan limit, which enabled us to sustain greater utilization throughout the year. Average monthly utilization increased by $10.2 million, or 78%, to $23.4 million for 2025. 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 new and pre-owned boats sold.

New Boat Sales

New boat sales increased by $3.5 million, or 32.0%, to $14.5 million for the year ended December 31, 2025 from $11.0 million for the year ended December 31, 2024. For the year ended December 31, 2025, we sold 21 new units compared to approximately 17 units for the fiscal year ended December 31, 2024, an increase partially attributable to increased marketing efforts and more focused sales efforts on those new boat brands.

Pre-owned Boat Sales

Pre-owned boat sales increased by $16.9 million, or 20.0%, to $101.7 million for the year ended December 31, 2025 from $84.8 million for the year ended December 31, 2024. For the year ended December 31, 2025, we sold approximately 426 pre-owned units compared to approximately 321 pre-owned units for the year ended December 31, 2024. Average price per for our inventory pre-owned boat sale transaction was $449,420 (240 units) for the year ended December 31, 2025 and $509,694 (192) for the year ended December 31, 2024. 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 $0.4 million, or 12.8%, to $2.6 million for the year ended December 31, 2025 from $3.0 million for the year ended December 31, 2024. 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. Additionally, even though some 2025 marine loan rates eased compared with 2023–2024, they remain higher than historical averages. Over 85% of these loans come from non-OTH brokers and dealers reflecting an opportunity for OTH to increase the attachment rate of Azure with our boat sales and thereby growing the business internally.

Gross Profit

Gross profit increased by $2.7 million, or 30.6%, to $11.5 million for the year ended December 31, 2025, compared to $8.8 million for the year ended December 31, 2024. Our gross profit as a percentage of sales increased modestly. This can be attributed to management’s efforts to monitor overhead and direct expenses associated with our inventory consistently. Moreover, our margin improvements are attributable to our purchasing team’s skillful buying decisions regarding our used boat inventory.

New Boat Gross Profit

New boat gross profit increased by $0.1 million or 15.6%, to $0.8 million for the year ended December 31, 2025, compared to $0.7 million for the year ended December 31, 2024. This increase was primarily due to an increase in overall new boat sales. 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 5.6 % for the year ended December 31, 2025, compared to 6.4% for the year ended December 31, 2024. 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 $2.1 million, or 32.1%, to $8.4 million for the year ended December 31, 2025, compared to $6.3 million for the year ended December 31, 2024. This modest increase occurred despite a softening, which resulted in downward pressure on pricing and the need to move certain inventory at reduced margins in order to maintain turnover and liquidity. In several cases, boats were sold at or near breakeven to avoid aging inventory and to reduce floorplan interest expenses.

Pre-owned boat gross profit as a percentage of pre-owned boat revenue was 8.2% in 2025 and 7.5% in 2024. 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.

In the year ended December 31, 2025, we observed a shift toward more competitively priced wholesale and trade-in deals, which tend to yield lower gross margins compared to brokerage transactions. Additionally, broader industry pressures, including rising inventory levels and greater price sensitivity among buyers, contributed to the margin pressure we experienced in this segment.

Finance Income – Azure

Finance gross profit decreased by $0.2 million, or 12.1%, to $1.5 million for the year ended December 31, 2025 from $1.7 million for the year ended December 31, 2024. 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 rent, insurance, utilities, and other customary operating expenses. SG&A increased $0.7 million, or 38.6%, to $2.4 million for the year ended December 31, 2025 compared to $1.8 million for the year ended December 31, 2024. The increase was mainly due to additional rents for new leases signed in 2025, and indirect marketing associated with increases in sales efforts and software expenses, in line with business expansion plans for 2025.

Depreciation and Amortization

Depreciation and amortization expense increased $56,000, or 21.8%, to $311,000 for the year ended December 31, 2025 compared to $255,000 for the year ended December 31, 2024. The increase was primarily attributable to an increase in our asset base throughout the year.

Salaries and Wages

Salaries and wages expense increased $3.1 million or 114.7%, to $5.8 million for the year ended December 31, 2025 compared to $2.7 million for the year ended December 31, 2024. 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 year ended December 31, 2025. These equity awards have a number of vesting conditions including service based and performance-based requirements and vest between one and five years.

Advertising and Marketing

Advertising and marketing expense increased $0.7 million, or 137.6%, to $1.2 million for the year ended December 31, 2025 compared to $0.5 million for the year ended December 31, 2024. The increase is due to expanding market share and enhancing corporate brand awareness. The cost increases were consistent with our established marketing strategy to support the company’s planned public offering and the associated expansion of our sales organization.

Interest Expense – Floor Plan

Interest expense – floor plan increased $0.8 million, or 68.2%, to $1.9 million for the year ended December 31, 2025 compared to $1.1 million for the year ended December 31, 2024. In 2025, the Company incurred higher interest expenses due to the increase in our floorplan credit limit and our utilization of that line of credit. Average monthly utilization increased by $10.2 million, or 78%, to $23.4 million for 2025.

Interest Expense – Other

The decrease in interest expense – other of $0.14 million, or 30.5%, to $0.33 million for the year ended December 31, 2025 compared to $0.47 million for the year ended December 31, 2024, which is mainly caused by the repayment made in 2025 and less interest expenses were booked.

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.

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.

Year Ended December 31, 2025, Compared to Year Ended December 31, 2024

Adjusted EBITDA was $0.8 million for the year ended December 31, 2025 compared to $1.2 million for the year ended December 31, 2024. 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 provides selected financial data about us as of December 31, 2025 and 2024.

As of December 31, 2025, we had sufficient assets to meet ongoing expenses or debts that may accumulate. As of December 31, 2025, we had $12.4 million in cash, total current assets were $39.9 million, total assets were $48.4 million, and our total liabilities were $36.2 million. Current liabilities were comprised primarily of floor plan notes payable of $25.3 million, accounts payable and accrued liabilities of $1.9 million, customer deposit of $1.2 million, and the current portion of operating lease liabilities of $1.0 million. As of December 31, 2024, we had $2.9 million in cash, total current assets were $28.9 million, total assets were $31.6 million, and our total liabilities were $30.7 million.

Our working capital increased by $9.8 million from $(0.4) million as of December 31, 2024, as compared to $9.4 million as of December 31, 2025, primarily due to the increase in our cash as a result of the initial public offering in November 2025 which generated $13.4 million of cash to the Company. The increase was partially offset by a net decrease in working capital of $1.3 million between the increase of inventory of $3.4 million and the increase in floorplan notes payable of $4.7 million.

Income Tax Benefit

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, OTH Companies together with the Company are subject to U.S. federal income tax and state income taxes in jurisdictions where it conducts business. Income tax benefit in 2025 was $131,955.

Cash Flow Changes Between the Year Ended December 31, 2025 and 2024

The following table summarizes our cash flows for the periods indicated:

Cash Flow from Operating Activities

For the year ended December 31, 2025, net cash flows used in operating activities totaled $0.7 million compared to a use of $7.1 million during the year ended December 31, 2024. The improvement in cash used for operating activities was primarily attributable to a moderate increase in inventory of $3.4 million as compared to 2024. There was also a decrease in customer deposits of $1.1 million with corresponding inflows of cash from a reduction of prepaid expenses of $1.7 million and an increase in other current liabilities of $0.7 million.

Net cash used in operating activities amounted to $7.1 million for the year ended December 31, 2024, mainly derived from an increase in inventory of $10.0 million offset by an decrease in private label receivables of $1.4 million and an increase in accounts payable of $0.7 million.

Cash Flows from Investing Activities

For the year ended December 31, 2025, net cash used in investing activities totaled $0.7 million, representing an increase of $0.7 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 $10.9 million for the year ended December 31, 2025, mainly derived from the proceeds from the successful initial public offering of $13.4 million. This was offset by a net payment to the line of credit of $2.8 million.

Net cash provided by financing activities amounted to $8.4 million for the year ended December 31, 2024, mainly derived from the contribution from members and proceeds from floorplan notes, mainly offset by payment to short-term loans and payments to floor plan notes payables.

Commitments and Commercial Commitments

The following table sets forth a summary of our material contractual obligations and commercial commitments as of December 31, 2025:

(1) Estimates of future floor plan notes payable payments have been excluded from the tabular presentation, as the amounts due are contingent upon the outstanding balances and variable interest rates. For details regarding borrowing availability, interest rates, and terms related to our floor plan notes payable, refer to Note 10 of the Notes to Consolidated Financial Statements.

(2) The amounts included in long-term debt refer to future cash principal payments. Refer to Note 12 of the Notes to Consolidated Financial Statements for disclosure of borrowing availability, interest rates, and terms of our long-term debt.

(3) Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes.

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 December 31, 2025 and December 31, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this Annual Report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Revenue Recognition

The majority of our revenue is from contracts with customers for the sale of boats, yachts, and trailers. We recognize revenue from boat, yacht, and trailer sales upon transfer of control of the boat, yacht, or trailer to the customer, which is generally upon acceptance of the boat, yacht, and trailer by the customer and the satisfaction of our performance obligations. The transaction price is determined with the customer at the time of sale.

Boat, yacht, and trailer sales transactions often include both cash and non-cash consideration. Cash consideration is paid directly by the Company’s customers or by third-party financial institutions financing the Company’s customer transactions. Non-cash consideration is in the form of trade-in used boats. The Company assigns a value to trade-in assets by estimating a future selling price, which the Company estimates based on relevant internal and third-party data, less a gross profit amount to be realized at the time the trade-in asset is sold and an estimate of any reconditioning work required to ready the asset for sale. Both cash and noncash consideration may be received prior to or after the Company’s performance obligation is satisfied. Any consideration received prior to the satisfaction of the Company’s performance obligation is recognized as deferred revenue. Revenue recognized associated with trade-ins solely relates to end-user boat purchasers and not to boat manufactures or other wholesalers. As of December 31, 2025, the Company held trade-in boats recorded as inventory with a total value of $17.9 million. For the year ended December 31, 2025, the Company recognized $9.7 million in revenue from the sale of trade-in boats. As of December 31, 2024, the Company held trade-in boats recorded as inventory with a total value of $10.2 million. For the year ended December 31, 2024, the Company recognized $10.6 million in revenue from the sale of trade-in boats.

Revenue is recognized from the sale of products and commissions earned on new and pre-owned boats (including used, brokerage, consignment and wholesale) when ownership is transferred to the customer, which is generally upon acceptance or delivery to the customer. At the time of acceptance or delivery, the customer is able to direct the use of, and obtain substantially all of the benefits at such time.

Principal versus Agent Considerations:

We evaluate whether we are acting as a principal or an agent in each type of revenue transaction by assessing whether we control the specified goods or services before they are transferred to the customer, in accordance with ASC 606. We are the principal for sales of new, pre-owned, consignment, and wholesale boats, because we control the boat or yacht before transfer to the customer, bear the inventory risk, and have discretion in establishing prices. Accordingly, revenue from these transactions is recognized at the gross sales price.

For brokerage transactions, we act solely as an agent in arranging the sale of a boat between a seller and a buyer. In these transactions, we do not control the boat prior to transfer and do not bear the inventory risk. Therefore, we recognize revenue from brokerage transactions on a net basis, representing only the commission or fee earned. The transfer of control of the boat in brokerage transactions occurs directly between the seller and the buyer, and we do not obtain control at any point in the transaction.

We recognize customer deposits as revenue at the time of acceptance and the transfer of control to the customers. Total customer deposits of $2.4 million recorded as of December 31, 2024, were recognized in revenue during the fiscal year ended December 31, 2025. Total customer deposits of $2.7 million recorded as of December 31, 2023, were recognized in revenue during year ended December 31, 2024.

We recognize deferred revenue from service operations, maintenance and slip and storage services over time on a straight-line basis over the term of the contract as our performance obligations are met.

Revenue from arranging financing, insurance and extended warranty contracts to customers through various third-party financial institutions and insurance companies is recognized when the related boats are sold. We are acting as an agent in the transaction; therefore, the commissions are recorded on a net basis. Subject to our agreements and in the event of early cancellation, prepayment or default of such loans or insurance contracts by the customer, we may be assessed a chargeback for a portion of the commission paid by the third-party financial institutions and insurance companies. We reserve for these chargebacks based on our historical experience with repayments or defaults. Chargebacks were not material to the consolidated financial statements for the year ended December 31, 2025.

We also finance our customers’ boat and yacht purchases. Interest income is recognized in profit or loss as it is incurred, based on the time for alienation of right to use capital and effective interest rates. Interest income includes the amortization of any discount or premium or differences between the initial carrying amount of an interest-bearing asset and its amount at maturity calculated using the effective interest rate. The interest-bearing assets related to these financing arrangements are recorded within ‘private label receivables’ in Note 4 of the Notes to Consolidated Financial Statements. The income should be recognized when the Company’s performance obligation in the contract is fulfilled, which refers the revenue is recognized when the customer obtains the control right of relevant goods or services. To obtain the right of control over related goods or services means to be able to dominate the use of such goods or the provision of such services and obtain almost all economic benefits therefrom.

Net revenue by category:

Inventory, net

Inventories primarily consist of new and pre-owned boats, including yachts, that are held for sale in the ordinary course of business. These inventories are acquired through two primary channels: (i) direct purchases from manufacturers, direct owners and vendors, and (ii) trade-ins from customers as part of boat sales transactions. The inventory acquired through trade-ins is initially measured and recognized based on the estimated future selling price of the boat, less a gross profit amount to be realized when the trade-in asset is sold and an estimate of any reconditioning work required to ready the asset for sale.

Inventories are stated at the lower of cost or net realizable value. The cost of the new and pre-owned boat inventory is determined using the specific identification method. In assessing lower of cost or net realizable value, the Company considers the aging of the boats, historical sales of a brand and current market conditions. Parts and accessories are determined using methods which vary by subsidiary and include both the average cost method and first-in, first-out (“FIFO”). As of December 31, 2025, and December 31, 2024, the amount of parts and accessories was immaterial.

Goodwill

We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”). For business combinations, the excess of the purchase price over the estimated fair value of net assets acquired in a business combination is recorded as goodwill. In accordance with ASC 350, we test goodwill impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our annual impairment test is performed during the third fiscal quarter. If the carrying amount of a reporting unit’s goodwill exceeds its fair value, we recognize an impairment loss in accordance with ASC 350. Based upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our reporting units are less than their carrying values. As a result, we were not required to perform a quantitative goodwill impairment test.

The qualitative assessment requires us to make judgments and assumptions regarding macroeconomic and industry conditions, our financial performance, and other factors. We do not believe there is a reasonable likelihood that there will be a change in the judgments and assumptions used in our qualitative assessment which would result in a material effect on our operating results.

Impairment of Long-Lived Assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will affect the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful life. For the periods presented, we have not recorded any material impairment.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

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. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the adoption of this guidance whether or not a material impact on the Company’s consolidated financial statements.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the scope and requirements for interim financial statement disclosures under U.S. GAAP. The amendments create a comprehensive list of required interim disclosures and introduce a disclosure principle requiring entities to disclose, in interim periods, any event or change since the previous year-end that has a material effect on the entity. ASU 2025-11 is effective for interim reporting periods within annual periods beginning after December 15, 2027, for public business entities, and after December 15, 2028, for all other entities. Early adoption is permitted. The amendments may be applied prospectively or retrospectively to any or all prior interim periods presented. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements.

Recently adopted accounting pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this ASU retrospectively on December 31, 2024. Refer to Note 19, Segment Reporting and Information about Geographic Areas for the inclusion of the new required disclosures.

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. We adopted this ASU on December 31, 2025, no material impact is observed to the financial statements.

Internal Control Over Financial Reporting

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 in accordance with U.S. GAAP. Under standards established by the Public Company Accounting Oversight Board, or PCAOB, a deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or personnel, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. The PCAOB defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis.

In connection with the preparation of our financial statements and our IPO process, management identified material weaknesses in our internal control over financial reporting, primarily attributable to limited accounting staffing and the absence of appropriate segregation of duties inherent in a pre-IPO, early-stage company. We are actively working to remediate these material weaknesses. Our remediation plan includes utilizing a portion of the proceeds from our initial public offering to expand our finance and accounting department to facilitate proper segregation of duties and appropriate review of internally prepared financial statements, and to engage outside consultants with expertise in SEC reporting and public company compliance.

Emerging Growth Company

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to avail ourselves of the extended transition period for complying with new or revised financial accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding equity securities held by non-affiliates; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years; or (iv) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering.

As a smaller reporting company, we are not required to provide disclosures regarding quantitative and qualitative market risk.

Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are required to be designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based upon this evaluation, and in light of the material weaknesses in internal control over financial reporting described below, Our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2025 were not effective at the reasonable assurance level.

Changes in Internal Controls

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

This Annual Report on Form 10-K does not include a management report on the effectiveness of internal control over financial reporting pursuant to Item 308(a) of Regulation S-K. As permitted by SEC rules applicable to issuers that have been subject to the requirements of Section 13(a) or 15(d) of the Exchange Act for a period of less than 12 months prior to the end of the fiscal year covered by this annual report, management has elected to omit such assessment for the fiscal year ended December 31, 2025.

As noted above and in Item 6, the Company has identified material weaknesses in its internal control over financial reporting. Management is actively implementing a remediation plan and expects to provide a full assessment of the effectiveness of its internal control over financial reporting in its Annual Report on Form 10-K for the fiscal year ending December 31, 2026.

Attestation Report of the Registered Public Accounting Firm

Because we are an “emerging growth company” under the JOBS act, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting for so as long as we are an emerging growth company.