UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ______ to ______

Commission File Number: 001-42930

Off The Hook YS Inc.

(Exact name of registrant as specified in its charter)

Nevada

33-2636992

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

1701 Jel Wade Drive

Wilmington, NC 28401

(Address of principal executive offices) (Zip code)

(910)-239-9344

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		OTH		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non- accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of May 8, 2026 was 24,355,000 shares.

Off The Hook YS Inc.

Table of Contents

PART I. FINANCIAL INFORMATION	4
Item 1. Financial statements	4
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025	4
Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2026 and 2025	5
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2026 and 2025	6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2026 and 2025	7
Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
PART II. OTHER INFORMATION	30
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Mine Safety Disclosures	30
Item 5. Other Information	30
Item 6. Exhibits	31
SIGNATURES	32

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of the federal securities laws concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, our actual results and the timing of selected events may differ materially. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk factors” in Part II, Item 1A of this Quarterly Report and elsewhere in this Quarterly Report. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

OFF THE HOOK YS INC.

Condensed Consolidated Balance Sheets

As of March 31, 2026 and December 31, 2025

	March 31, 2026			December 31, 2025
	(Unaudited)			(Audited)
Assets
Current Assets
Cash and cash equivalents	$	5,330,457		$	12,428,774
Accounts receivable, net		304,194			269,938
Inventory		46,401,570			26,035,844
Prepaid expense		1,033,713			706,256
Other current assets		355,511			434,584
Total Current Assets		53,425,445			39,875,396

Non-Current Assets
Property, plant and equipment, net		3,573,238			823,231
Other receivable		32,121			27,486
Due from related party		58,994			44,623
Right-of-use assets		6,247,247			6,516,415
Goodwill		570,000			570,000
Intangible assets, net		566,975			560,406
Total Non-Current Assets		11,048,575			8,542,161
Total Assets	$	64,474,020		$	48,417,557

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	1,508,056		$	1,471,198
Accrued liabilities		769,785			790,804
Lease liabilities, current		1,010,473			963,731
Current portion of long-term debt		31,105			32,453
Due to related party		815,088			315,088
Customer deposits		2,054,624			1,210,447
Short-term debt		1,500,000			-
Floor plan notes payable		40,004,232			25,312,694
Other current liabilities		845,140			773,821
Total Current Liabilities		48,538,503			30,870,236

Long-Term Liabilities
Long-term debt, noncurrent		55,966			62,003
Lease liabilities, noncurrent		5,395,207			5,650,165
Total Long-Term Liabilities		5,451,173			5,712,168
Total Liabilities		53,989,676			36,582,404
Stockholders’ Equity
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,320,000 and 24,020,000 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively		24,320			24,020
Additional paid-in capital		20,080,980			17,964,567
Common stock payable		350,000			350,000
Accumulated deficit		(9,970,956	)		(6,503,434	)
Total Stockholders’ Equity		10,484,344			11,835,153
Total Liabilities and Stockholders’ Equity	$	64,474,020		$	48,417,557

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

OFF THE HOOK YS INC.

Condensed Consolidated Statements of Operations

(Unaudited)

For the Three Months Ended March 31, 2026 and 2025


	For the Three Months Ended March 31,
	2026			2025
Revenues	$	29,843,739		$	27,238,782
Cost of revenues		26,675,959			24,562,153
Gross Profit		3,167,780			2,676,629

Operating Expenses:
Depreciation and amortization		158,688			36,373
Selling, general and administrative		1,293,775			423,860
Advertising and marketing		590,893			329,046
Professional services		586,200			54,287
Salaries and wages		3,118,362			855,282
Rent expenses		287,855			157,158
Total Operating Expenses		6,035,773			1,856,006

(Loss) Income from Operations		(2,867,993	)		820,623

Other Income (Expenses):
Interest expense, net		(529,130	)		(545,298	)
Other income		92,633			14,449
Total Other Expenses		(436,497	)		(530,849	)

(Loss) Income Before Income Taxes		(3,304,490	)		289,774
Income tax expenses		163,032			-

Net (Loss) Income	$	(3,467,522	)	$	289,774
Basic and Diluted Net (Loss) Income Per Common Share	$	(0.14	)	$	0.01
Basic and diluted weighted average common share outstanding		24,310,667			20,000,000

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

OFF THE HOOK YS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

For the Three Months Ended March 31, 2026 and 2025


	Common Stock				Additional Paid-in		Common Stock		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Payable		Deficit			Equity
Balance, December 31, 2024		20,000,000	$	20,000	$	2,774,944	$	-	$	(1,827,554	)	$	967,390
Member Distribution		-		-		-		-		(591,906	)		(591,906	)
Net income		-		-		-		-		289,774			289,774
Balance, March 31, 2025, Unaudited		20,000,000	$	20,000	$	2,774,944	$	-	$	(2,129,686	)	$	665,258

Balance, December 31, 2025		24,020,000	$	24,020	$	17,964,567	$	350,000	$	(6,503,434	)	$	11,835,153
Share-based compensation		165,000		165		1,761,448		-		-			1,761,613
Stock issued for professional service		135,000		135		354,965		-		-			355,100
Net (loss)		-		-		-		-		(3,467,522	)		(3,467,522	)
Net income (loss)		-		-		-		-		(3,467,522	)		(3,467,522	)
Balance, March 31, 2026, Unaudited		24,320,000	$	24,320	$	20,080,980	$	350,000	$	(9,970,956	)	$	10,484,344

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

OFF THE HOOK YS INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the Three Months Ended March 31, 2026 and 2025


	For the Three Months Ended March 31,
	2026			2025
Cash Flows from Operating Activities:
Net (loss) income	$	(3,467,522	)	$	289,774
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		158,688			36,373
Non-cash lease expense		60,952			3,359
Stock-based compensation		1,761,613			-
Stock issued for professional fees		355,100			-
Changes in operating assets and liabilities:
Accounts receivable		(34,256	)		(59,331	)
Private label receivable		-			1,169
Other receivable		(4,635	)		(2,543	)
Inventory		(20,365,726	)		(4,077,996	)
Prepaid expense		(327,457	)		(531,336	)
Other current assets		79,073			369,888
Due from related party		(14,371	)		11,313
Accounts payable		36,858			(379,523	)
Accrued liabilities		(21,019	)		(73,799	)
Customer deposits		844,177			(952,973	)
Other current liabilities		71,319			(10,719	)
Net Cash Used in Operating Activities		(20,867,206	)		(5,376,344	)

Cash Flows from Investing Activities:
Capital expenditure for fixed assets		(2,877,050	)		(10,833	)
Acquisition of intangible assets		(38,214	)		-
Net Cash Used in Investing Activities		(2,915,264	)		(10,833	)

Cash Flows from Financing Activities:
Member distribution		-			(591,906	)
Proceeds from short-term loan payable		1,500,000			-
Proceeds from floorplan notes payable		30,566,634			18,623,348
Payment to floor plan notes payable		(15,875,096	)		(14,558,733	)
Payment to long-term debt		(7,385	)		(28,671	)
Proceeds from related-party debt		500,000			9,103
Repayments of related party debts		-			(58,818	)
Net Cash Provided by Financing Activities		16,684,153			3,394,323

Net Change in Cash		(7,098,317	)		(1,992,854	)
Cash and cash equivalents, beginning of period		12,428,774			2,927,126
Cash and Cash Equivalents, End of Period	$	5,330,457		$	934,272

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	736,774		$	525,690
Cash paid for income tax		-			-

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

OFF THE HOOK YS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Off The Hook YS Inc. (“OTH”) was incorporated in Nevada on January 3, 2025 and operates as a holding company with no independent operations. Through its subsidiaries, the Company is engaged in the retail sale, brokerage, and servicing of new and pre-owned boats, yachts, and trailers, and in arranging related financing and insurance products.

The Company conducts its operations through several subsidiaries, including Off The Hook Yacht Sales NC, LLC, OTH Marine Asset Recovery LLC, Azure Funding, LLC, and Autograph Yacht Group Inc.

Effective February 10, 2026, the Boat Center’s business operations were transferred to OTH. On February 10, 2026, OTH Simon Marine YF, LLC (“Boat Center”) was liquidated and is no longer part of the Company’s operating structure.

On March 26, 2026, the Company entered into an Equity Interest Purchase Agreement to acquire Bellhart Marine Group, LLC, along with its affiliated entities Bellhart Marine Services, LLC, Specialized Mechanical Services, LLC, and Specialized Mechanical Services, Inc. (collectively, “Bellhart”), a marine service, refit, and mechanical services platform. Pursuant to the agreement, the Company agreed to acquire 100% of the equity interests of Bellhart for aggregate consideration of approximately $0.8 million in cash, plus the assumption or refinancing of certain indebtedness and other obligations, subject to customary closing adjustments. The transaction remains subject to customary closing conditions, including completion of due diligence procedures, receipt of required third-party approvals and consents, and satisfaction of other customary closing conditions.

There have been no other material changes to the Company’s business or organizational structure from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Basis of Presentation and Significant Accounting Policies

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included. All intercompany balances and transactions have been eliminated in consolidation. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any other interim period or for any other future year.

There have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which opted out of utilizing the emerging growth company reduced reporting requirements difficult.

Recent Accounting Pronouncements Recently Adopted

In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this ASU on December 31, 2025 and no material impact is observed to the financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2025, for emerging growth companies, with early adoption permitted. The amendments should be applied prospectively however, retrospective application is also permitted. We adopted this ASU on January 1, 2026, no material impact is observed to the financial statements.

NOTE 2. INVENTORY

Inventories consisted of the following:

SCHEDULE OF INVENTORIES

	March 31, 2026		December 31, 2025
New boats	$	5,416,814	$	3,395,451
Used boats		40,906,679		22,602,275
Trailers		78,077		38,118
Total	$	46,401,570	$	26,035,844

NOTE 3. PROPERTY, PLANT AND EQUIPMENT

Property and equipment, net consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

	March 31, 2026			December 31, 2025
Leasehold improvement	$	1,384,631		$	1,041,170
Buildings		2,516,547			63,600
Furniture and Fixtures		218,003			217,342
Equipment		189,015			189,015
Vehicles		229,964			149,983
Property, plant and equipment, gross		4,538,160			1,661,110
Less: accumulated depreciation		(964,922	)		(837,879	)
Property, plant and equipment, net	$	3,573,238		$	823,231

During the three months ended March 31, 2026 and 2025, the Company incurred depreciation expense of $0.1 million and $0.05 million, respectively.

NOTE 4. GOODWILL

Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business acquisition that are not individually identified and separately recognized.

On July 22, 2022, the Company acquired 100% of the outstanding shares of Boat Center, Inc. for total consideration of approximately $0.6 million. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. The Company did not recognize any separately identifiable intangible assets as the amounts were not material.

NOTE 5. INTANGIBLE ASSETS

On April 25, 2025, the Company entered into a Stock Purchase Agreement with the shareholders of Boats and Buyers, Inc. (the “Acquiree”), pursuant to which the Company acquired 100% of the issued and outstanding shares of the Acquiree, including all related websites (including www.boatscollective.com) and intellectual property assets. The total consideration for the acquisition was approximately $0.6 million, consisting of $0.2 million in cash and 100,000 shares of the Company’s common stock valued at $3.50 per share. Included in the purchase price was a gross-up for the tax component of approximately $0.1 million.

The transaction has been accounted for as an asset acquisition. Substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, specifically, website and related intellectual property. Accordingly, the purchase price was allocated to intangible assets and an intangible asset of approximately $0.6 million was recognized.

The common stock consideration related to this acquisition has not been issued as of March 31, 2026 and was recorded as a Common Stock Payable on the consolidated balance sheet.

SCHEDULE OF INTANGIBLE ASSETS

	Estimated Useful Life (years)	March 31, 2026			December 31, 2025
Website and intellectual property	5	$	632,911		$	632,911
Software⁽¹⁾			60,646			22,432
Accumulated amortization			(126,582	)		(94,937	)
Net book value		$	566,975		$	560,406

⁽¹⁾

Software has not yet been placed in service and therefore is not subject to amortization

Amortization expense related to the Company’s intangible assets was immaterial for the three months ended March 31, 2026 and 2025. Estimated future amortization expense for the intangible assets is as follows:

Calendar Year	Amount
2026	$	187,229
2027		126,582
2028		126,582
2029		126,582
Total Intangible Asset Amortization	$	566,975

NOTE 6. ACCOUNTS PAYABLE

Accounts payable consisted of the following as of March 31, 2026 and December 31, 2025:

SCHEDULE OF ACCOUNTS PAYABLE

	March 31, 2026		December 31, 2025
Accounts Payable	$	886,666	$	912,821
Credit Card Payable		621,390		558,377
Total	$	1,508,056	$	1,471,198

NOTE 7. NOTES PAYABLE – FLOOR PLAN

The Company has a floor plan agreement with Red Oak Inventory Finance (“the Lender”), which has a stated borrowing capacity of $60.0 million for new and used marine inventory. From time to time, total borrowings may exceed stated limits due to the timing of floor plan draws for inventory shipments. The agreement is collateralized by new and used boat inventory.

Borrowings bear interest at Secured Overnight Financing Rate (“SOFR”) plus a margin that varies based on whether the inventory is new or used and the length of time the inventory is held. The maximum interest rates for inventory held beyond 541 days are SOFR plus 8.85% for new inventory and SOFR plus 9.10% for used inventory.

Outstanding borrowings under the agreement were $40.0 million and $25.3 million as of March 31, 2026 and December 31, 2025, respectively.

NOTE 8. LONG-TERM LOAN PAYABLE

SCHEDULE OF LONG-TERM LOAN PAYABLES

	March 31, 2026		December 31, 2025
Total loan payables	$	8,194	$	9,174
Payable to Wells Fargo bearing interest at 3.99%. Requires monthly principal and interest payment. The original loan amount was $26,666 with a term of 84 months beginning November 21, 2021.	$	8,194	$	9,174
Payable to GMC Financial, secured by a Company vehicle. Monthly payments of principal and interest totaling $425 are due on the 19th of each month. Interest accrues at a rate of 3.09% annually. Loan matures in November 2026.		-		1,348
Payable to Land Rover Financial Group, secured by a Company vehicle. Monthly interest payments are due at the beginning of each month. Interest accrues at a rate of 8.59% annually. Loan matures in July 2029.		78,877		83,934
Total Long-Term Debt	$	87,071	$	94,456

Maturity of long-term debt is as follows:

As of March 31:	Amount
2027	$	31,105
2028		31,105
2029 and thereafter		24,861
Total	$	87,071

NOTE 9. LEASES

The balances for operating leases where the Company is the lessee are presented within the condensed balance sheets as follows:

Operating Leases	March 31, 2026		December 31, 2025
Right of use-assets	$	6,247,247	$	6,516,415

Lease liability-current		1,010,473		963,731
Lease liability-non-current		5,395,207		5,650,165
Total Operating Lease Liabilities	$	6,405,680	$	6,613,896

Weighted average remaining lease term (in years)		6.99		7.19
Weighted average discount rate (%)		6.50		6.50

The components of lease expenses for the three months ended March 31, 2026 and 2025 were as follows:

	2026		2025
	For the Three Months Ended March 31,
	2026		2025
Operating lease cost	$	284,571	$	107,931
Cost of other leases with period less than one year and variable lease costs		3,284		49,227
Lease expenses	$	287,855	$	157,158

The components of lease expenses for the three months ended March 31, 2026 and 2025 were approximately $0.3 million and $0.2 million, respectively.

Supplemental cash flow information related to leases for the three months ended March 31, 2026 and 2025 were as follows:

Cash Paid for Amounts Included in the Measurement of Lease Liabilities:	2026		2025
	For the Three Months Ended March 31,
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:	2026		2025
Operating cash flows from operating leases	$	287,855	$	157,158

As of March 31, 2026, the maturities of operating lease liabilities (excluding short-term lease) are as follows:

For the Three Months Ended March 31, 2026	Operating Lease
2027	$	1,064,941
2028		1,038,438
2029		1,059,931
2030		864,937
2031		677,006
2032 and thereafter		1,898,666
Total Lease Payments		6,603,919
Less: imputed interest		(198,239	)
Present Value of Lease Liabilities	$	6,405,680
Less: current portion		(1,010,473	)
Lease Obligations, Noncurrent	$	5,395,207

NOTE 10. REVENUE

Net revenue by category:

SCHEDULE OF NET REVENUE

	2026		2025
	For the Three Months Ended March 31,
	2026		2025
Pre-owned boat sales	$	27,788,672	$	21,058,418
New boats sales		1,283,557		5,518,110
Finance income		334,444		606,225
Service, parts & other sales		437,066		56,029
Total Consolidated Revenue	$	29,843,739	$	27,238,782

As of March 31, 2026 and 2025, trade-in boats recorded as inventory totaled $5.1 million and $3.7 million, respectively. For the three months ended March 31, 2026 and 2025, the Company recognized $1.3 million and $1.2 million, respectively, in revenue from the sale of trade-in boats.

Customer deposits are recorded as deferred revenue and recognized as revenue upon transfer of control to the customer, generally upon delivery or acceptance.

Of the customer deposits recorded as of December 31, 2025 and 2024, $1.2 million and $2.4 million, respectively, were recognized as revenue during the three months ended March 31, 2026 and 2025, respectively. Additional deposits received during the three months ended March 31, 2026 and 2025 were recognized as revenue in the respective periods received.

The movement in customer deposits is as follows:

	March 31, 2026			December 31, 2025
Balance at Beginning of Period	$	1,210,447		$	2,350,219
Decrease due to revenue recognized during the period		(29,922,298	)		(61,972,660	)
Increase from customer deposits received in advance of performance obligations		30,766,475			61,081,388
Refunds to customers		-			(248,500	)
Balance at End of Period	$	2,054,624		$	1,210,447

NOTE 11. RELATED PARTIES TRANSACTIONS

The principal related parties with which the Company had transactions for the three months ended March 31, 2026, and 2025 are as follows:

SCHEDULE OF RELATED PARTIES

Amounts Due To Related Parties

	March 31, 2026		December 31, 2025
Tom Ruegg ⁽²⁾	$	315,088	$	315,088
Jason Ruegg ⁽¹⁾		250,000		-
Andrew Simmons ⁽¹⁾		250,000		-
Total	$	815,088	$	315,088
Amounts due to related parties	$	815,088	$	315,088

	⁽¹⁾	The Company entered two substantially similar Boat Inventory Investment Agreements with Jason Ruegg and Andrew Simmons (the “Investor”), respectively. Under the agreement, the Investor advances funds solely to purchase a specified boat (the “Boat”) as inventory for resale. Upon sale of the Boat, the Investor is repaid the investment amount plus a fixed return of 6.5% of annual percentage yield of the investment amount.
	⁽²⁾	This operating loan was obtained from Mr. Tom Ruegg on February 3, 2023, with a principal amount of $500,000 and a fixed annual interest rate of 7.00%. Interest is accrued and will be paid together with the principal upon repayment. The loan will mature on July 1, 2027.

Amounts Due From Related Parties

Amounts due from related parties consisted of the following for the periods indicated:

	March 31, 2026		December 31, 2025
OTH Equipment	$	9,245	$	9,245
OTH Realty II, LLC		40,492		25,920
OTH Sloop Point LLC		7,651		9,458
Jason Ruegg		1,231		-
Lewis Landing LLC		375		-
Total	$	58,994	$	44,623
Amounts due from related parties	$	58,994	$	44,623

Member Distribution

Prior to the Company’s initial public offering (“IPO”), the Company made distributions to members of $0.6 million during the three months ended March 31, 2025. Following the IPO, the Company has not declared or paid any dividends.

NOTE 12. INCOME TAXES

OTHYS, Boat Center, and Azure, each limited liability companies since inception, were taxed as partnerships for U.S. federal and applicable state income tax purposes. Accordingly, taxable income or loss was passed through to the respective members, and no provision for income taxes was recorded at the entity level.

OTH incorporated on January 3, 2025 and is taxed as C corporation under the Code. AYG was incorporated in the State of Florida on August 8, 2025 and is taxed as C corporation under the Code. Income tax liability as of March 31, 2026 was $0.2 million. Income tax liability for December 31, 2025 was immaterial. OTH and AYG are subject to U.S. federal and state income tax in certain jurisdictions.

The Company is an Emerging Growth Company and has elected to use the extended transition period for complying with new or revised accounting standards. The Company adopted ASU 2023-09, effective January 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements for the interim period.

On July 4th, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to: permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions. The Company does not expect the Tax Reform Act of 2025 to have a material impact on its effective tax rate for the fiscal year ended December 31, 2026.

The income tax provision for the three months ended March 31, 2026 and 2025 consisted of the following:

SCHEDULE OF INCOME TAX PROVISION

	As of March 31, 2026		As of December 31, 2025
Entity Level State Income Tax on LLC Income	$	163,988	$	956
Income tax payable		163,988		956

	For the Three Months Ended March 31, 2026		For the Three Months Ended March 31, 2025
Current	$		$
Federal		-		-
State		163,032		-
Total Current Income Tax Provision		163,032		-
Deferred
Federal		-		-
State		-		-
Total deferred taxes		-		-
Total Provision for Income Taxes	$	163,032	$	-

The tax effect of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases that give rise to deferred tax assets and liabilities is as follows:

SCHEDULE OF DEFERRED TAX ASSETS

	March 31, 2026			December 31, 2025
Deferred Tax Assets:	$			$
Stock based compensation		2,243,629			242,535
Operating lease, right-of-use assets		78,980			-
Interest deduction limitation		-			10,678
Net operating loss carryforward		-			310,414
Accruals and reserves		-			1,163
Operating lease liabilities		-			1,710,130
Other assets		-			58,631
Less: valuation allowance		(1,830,331	)		(509,525	)
Total Deferred Tax Assets	$	492,278		$	1,824,026
Deferred Tax Liabilities:
Interest deduction limitation		(12,117	)		-
Net operating loss carryforward		(358,082	)		-
Depreciation and allowance		(60,984	)		-
Operating lease liabilities		(61,095	)		-
Goodwill and identifiable intangible assets		-			(139,102	)
Operating lease, right-of-use assets		-			(1,684,924	)
Total Deferred Tax Liabilities	$	(492,278	)	$	(1,824,026	)
Net Deferred Tax Asset (Liability)	$	-		$	-

In connection with the Company’s 2025 incorporation and related acquisition/accounting, the Company recorded deferred tax liabilities associated with purchase accounting adjustments (primarily identifiable intangible assets). These deferred tax liabilities were recorded as part of acquisition accounting and did not affect the current-year income tax provision.

The Company’s effective tax rates for the three months ended March 31, 2026 and March 31, 2025 were (33.5)% and 0.0% respectively. The effective tax rate for the three months ended March 31, 2026 and 2025 varied from the United States statutory rate primarily due to valuation allowance activity.

Net operating losses and tax credit carryforwards as of March 31, 2026 were as follows:

	Amount		Expiration Year
	As of March 31, 2026
	Amount		Expiration Year
Net operating losses, federal	$	1,220,368	Do not expire
Net operating losses, state		1,238,366	Various, starting in 15 years
Tax credits, federal		-	-
Tax credits, state		-	-

Pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), annual use of the Company’s net operating losses (“NOLs”) and research and development (“R&D”) credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not undergone an analysis to determine whether this limitation would apply to the utilization of the NOL carryforward. However, as the federal NOLs do not expire, the Company does not believe that any potential limitations to federal or state NOLs, or federal credit carryforwards, if applicable, would be material to the financial statements.

Uncertain Tax Positions

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2026 and December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income taxes for the three months ended March 31, 2026 and 2025.

As of March 31, 2026, there were no active taxing authority examinations in any of the Company’s major tax jurisdictions.

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While the OBBBA did not have a significant impact on the Company’s total tax provision as of December 2025, the Company is still evaluating the Company’s position on the elective provisions of the law and the potential impacts of those elections on the condensed consolidated financial statements.

For the three months ended March 31, 2026, there was no cash paid for federal or state taxes.

NOTE 13. STOCKHOLDERS’ EQUITY

Common Stock

On January 3, 2025, Off The Hook YS Inc. was incorporated in Nevada and became the holding company pursuant to a reorganization. The total authorized shares of common stock were 100,000,000 shares, and each common stock is entitled to one vote.

Each share of common stock has a par value of $0.001. As of March 31, 2026 and December 31, 2025, the Company had 24,320,000 and 24,020,000 shares of common stock issued and outstanding, respectively.

Preferred Stock

The Company authorized 100,000 shares of blank check preferred stock in one or more series or classes and to designate the rights, preferences and privileges of each series or class, which may be greater than the rights of our Common Stock. There are no shares of preferred stock designated or outstanding as of March 31, 2026 and 2025.

Additional Paid-in Capital

During the three months ended March 31, 2025, the Company did not receive any member contributions.

On November 14, 2025, the Company completed its initial public offering (“IPO”) of 3,750,000 shares of common stock, par value $0.001 per share, at a public offering price of $4.00 per share, resulting in net proceeds of approximately $13.4 million, after deducted underwriting discounts and offering expenses. Following the IPO, member contributions are no longer applicable.

Member Distribution

Prior to the Company’s IPO, the Company made distributions to members of $0.6 million during the three months ended March 31, 2025. Following the IPO, the Company has not declared or paid any dividends.

Common Stock Payable

On April 25, 2025, The Company committed 100,000 shares of common stock with a fair value of $3.50 per share in connection with the purchase of an intangible asset. These shares have not been issued and therefore remain as a Common Stock Payable in Stockholders’ Equity.

NOTE 14. STOCK COMPENSATION

Equity Incentive Plan

On April 29, 2025, the Company’s Board of Directors and stockholders approved the 2025 Equity Incentive Plan (the “2025 Plan”). The Compensation Committee of the Board of Directors has the authority to administer the 2025 Plan and to determine the recipients and terms of awards granted thereunder. The 2025 Plan provides for the issuance of up to 4,000,000 shares of the Company’s common stock to employees, directors, and consultants.

Restricted Stock Unit

Following the Company’s initial public offering on November 14, 2025, the Company granted restricted stock units (“RSUs”) to employees and contractors under the 2025 Plan. The vesting terms of these awards range from immediate vesting to five years, and more than 50% of the awards include performance-based conditions. The fair value of RSUs is determined based on the Company’s stock price on the grant date.

During the three months ended March 31, 2026, the Company recognized $1.8 million of stock-based compensation expense related to RSUs. No stock-based compensation expense was recognized during the three months ended March 31, 2025.

A summary of RSU activity is as follows:

	Total RSUs Issued			Total Fair Market Value of RSUs Issued as Compensation ⁽¹⁾
RSUs Granted but Not Vested at January 1, 2026		3,311,500		$	10,711,755
RSUs granted		166,100			364,673
RSUs forfeited		(15,000	)		(50,550	)
RSUs vested and released		(135,000	)		(430,857	)
RSUs Granted but Not Vested at March 31, 2026		3,327,600		$	10,595,021

⁽¹⁾	Aggregate grant-date fair value determined using the closing market price of the Company’s common stock on the grant date.

The Company had no restricted stock units outstanding and no restricted stock unit activity during the three months ended March 31, 2025, as the Company’s 2025 Equity Incentive Plan had not yet been adopted.

As of March 31, 2026, 470,000 RSUs had vested. Of these, 435,000 RSUs had been settled through the issuance of shares of common stock, including 165,000 shares issued during the three months ended March 31, 2026. The remaining 35,000 vested RSUs had not yet been settled as of March 31, 2026.

Stock Options

During the three months ended March 31, 2026, the Company granted 10,000 stock options, all of which vested immediately. The fair value of these options was determined using the Black-Scholes option pricing model, and the related compensation expense was recognized in full on the grant date. The impact of these options was not material to the Company’s condensed consolidated financial statements.

Equity Issued for Services

During the three months ended March 31, 2026, the Company entered into multiple consulting and service arrangements with third-party providers. As consideration for services, the Company issued shares of its common stock upon execution of the respective agreements. These shares were not subject to vesting conditions and were deemed fully earned upon issuance.

The Company measured these awards at the grant-date fair value of its common stock. As the awards were not subject to substantive future service requirements, the total fair value of the equity consideration was recognized as share-based compensation expense on the respective grant dates.

During the three months ended March 31, 2026, the Company issued an aggregate of 135,000 shares to nonemployees for services, resulting in total share-based compensation expense for the period of $0.4 million.

NOTE 15. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025:

SCHEDULE OF EARNINGS PER SHARE

	2026			2025
	For the Three Months Ended March 31,
	2026			2025
Net (loss) income attributable to the Company	$	(3,467,522	)	$	289,774
Weighted average number of shares *		24,310,667			20,000,000
(Loss) earnings per share - Basic and Diluted	$	(0.14	)	$	0.01

*		Due to the anti-dilutive effect, the computation of basic and diluted earnings per share did not include the shares underlying the exercise of RSUs as the Company had a net loss for the three months ended March 31,2026.

*		For the three months ended March 31, 2026, 100,000 shares of common stock issuable in connection with the acquisition of Boats and Buyers, Inc. (see Note 5. Intangible Assets) have been included in the computation of basic earnings (loss) per share, as all necessary conditions for issuance have been satisfied.

NOTE 16. SEGMENT INFORMATION

The Company operates primarily in two distinct business segments: Dealerships and Financial Services.

Dealerships: Specializing in the buying, selling, servicing and wholesaling of yachts and boats.

Financial Services: A recreational loan broker and lender providing financing solutions for individuals, dealerships, and brokerages.

The Company’s segments are evaluated based on operating income (loss), which is the primary measure used by the chief operating decision maker (“CODM”) to assess performance and allocate resources. The CODM is the Company’s President and Founder.

Gross profit, defined as revenue less direct costs, is also reviewed for operational purposes.

Segment information is as follows:

SCHEDULE OF SEGMENT INFORMATION

	Dealerships			Financial Services			Consolidated
	For the Three Months Ended March 31, 2026
	Dealerships			Financial Services			Consolidated
Revenues	$	29,509,295		$	334,444		$	29,843,739
Cost of revenues		26,538,699			137,260			26,675,959
Gross profit		2,970,596			197,184			3,167,780
Operating Expenses
Depreciation and amortization		158,631			57			158,688
Selling, general and administrative		1,250,008			43,767			1,293,775
Advertising and marketing		583,008			7,885			590,893
Professional services		586,200			-			586,200
Salaries and wages		2,904,991			213,371			3,118,362
Rent expenses		287,224			631			287,855
Total operating expenses		5,770,062			265,711			6,035,773
Other Income (Expenses)
Interest expense, net		(529,130	)		-			(529,130	)
Other income		91,070			1,563			92,633
Total Other (Expense) Income		(438,060	)		1,563			(436,497	)
Income tax expenses		159,728		$	3,304			163,032
Net Loss	$	(3,397,254	)		(70,268	)	$	(3,467,522	)

	Dealerships			Financial Services			Consolidated
	For the Three Months Ended March 31, 2025
	Dealerships			Financial Services			Consolidated
Revenues	$	26,632,557		$	606,225		$	27,238,782
Cost of revenues		24,307,136			255,017			24,562,153
Gross profit		2,325,421			351,208			2,676,629
Operating Expenses
Depreciation and amortization		36,316			57			36,373
Selling, general and administrative		385,324			38,536			423,860
Advertising and marketing		298,641			30,405			329,046
Professional services		54,143			144			54,287
Salaries and wages		605,459			249,823			855,282
Rent expenses		136,091			21,067			157,158
Total Operating Expenses		1,515,974			340,032			1,856,006
Other income (expenses)
Interest expense, net		(542,507	)		(2,791	)

SEC Form 10-Q filed by Off The Hook YS Inc.