Financial Analysis

NOTE 19. COMMITMENTS AND CONTINGENCIES Commitments As of September 30, 2025 and December 31, 2024, the Company did not have any significant capital and other commitments. Contingencies Contingent Liability Share Repurchase Obligation In connection with the acquisition of Boats and Buyers, Inc. (see Note 7), the Company issued 100,000 shares of its common stock to the Sellers. Pursuant to the Stock Purchase Agreement, if the Company does not complete its initial public offering by November 30, 2025, the Sellers have the right to require the Company to repurchase all 100,000 shares at a price of $ 3.50 per share. As of September 30, 2025, a contingent liability of $ 350,000 has been recorded in connection with this repurchase right. 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. The Company purchases substantially all of its new boats from Nortec and Yellowfin at the prevailing prices charged by the boat manufacturer to all franchise dealers. The Companys sales volume could be adversely impacted by Nortecs to supply it with an adequate supply of popular models due to unforeseen circumstances or as a result of an unfavorable allocation of boats by the manufacturer. The Companys facilities a …

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NOTE 8. DEFERRED COMPENSATION PLAN During 2021, the Company established a nonqualified deferred compensation plan under Section 409(a) of the Internal Revenue Code for eligible senior staff of the Company, to which the Company makes contributions. Benefits are earned over a 15-year cliff vesting period, which the Company ratably recognizes as expense over the vesting period. During the year ended December 31, 2021, the Company contributed $ 100,000 to the Plan, which is recorded in other assets in the accompanying combined and consolidated balance sheets for the years ended December 31, 2024 and 2023, net of accumulated vested earnings of $ 13,333 and $ 13,333 . Assets designated for this plan consist of mutual funds and exchange traded funds. The plan was cancelled in March 2024. During 2021, the Company purchased company owned life insurance contracts on certain employees that are key members of the management team and are important to the success of the Company. These policies had a death benefit of $ 4,590,214 with the Company as the sole beneficiary and a cash value of life insurance of $ 12,390 as of December 31, 2023. The cash value of the company owned life insurance policy is shown in other asses in the accompanying combined and consolidated balance sheets, and the gain (loss) on cash value is shown in other income in the accompanying combined and consolidated income statements. The plan was cancelled in March 2024.

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NOTE 10. NOTES PAYABLE FLOOR PLAN The Company has a floor plan agreement with Red Oak Inventory Finance (the Lender), which has a stated total limit of $ 25,000,000 for new and used marine inventory. From time to time, total borrowings exceed stated limits due to the timing of floor plan draws for inventory shipments. These agreements are collateralized by new and used boat inventory. The agreement bears interest at a rate of SOFR plus basis points depending on whether a boat is new or used and the term period for held inventory. The maximum interest rates for new and used marine inventory held longer than 541 days or 541 days, respectively, is SOFR plus 8.85% or LIBOR plus 9.10%. The floor plan amounts outstanding at September 30, 2025 and December 31, 2024, respectively, were $ 23,478,756 and $ 20,444,604 . The Company has a floor plan agreement with LAVICTOIRE Finance (the Lender), which has a stated total limit of $ 3,250,000 . The advances under this agreement are subject to the lenders discretion and are limited to 70 % of the lower wholesale price of each item based on approved valuation sources. The agreement is collateralized by used boat inventory, with the lender retaining a security interest until repayment. The agreement bears interest at a rate of 1 Month CME Term SOFR plus 4.75%, with a minimum floor rate of 4.75% per annum. Principal repayment is required on the earlier of 360 days from the advance date or the sale of the financed inventory. The floor plan amo …

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Net revenue by category: SCHEDULE OF NET REVENUE For the nine months ended September 30, 2025 2024 Pre-owned Boat Sales 68,560,931 59,071,383 New Boats Sales 11,561,882 7,671,174 Finance Income 1,858,754 2,164,555 Service, Parts & Other Sales 610,621 318,759 Total Combined and Consolidated Revenue 82,592,188 69,225,871

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NOTE 16. INCOME TAXES OTHYS (a Limited liability company (LLC) since inception), Boat Center (an LLC since inception) and Azure (an LLC since inception) had elected to be taxed as a partnership under the provisions of the Internal Revenue Code (the Code). Under this Code, OTHYS, Boat Center and Azure does not pay federal corporate income taxes on its taxable income. Instead, the member is liable for individual federal income taxes on the Operating Entitys taxable income. Therefore, no provision or liability for federal income taxes has been included in the accompanying financial statements. OTH incorporated on January 3, 2025 and taxed as C corporation under the Code. AYG was incorporated in the State of Florida on August 8, 2025 and taxed as C corporation under the Code. There was no income tax liability as of September 30, 2025 and December 31, 2024. OTH and AYG are subject to both U.S. federal and state income tax in certain jurisdictions. The income tax provision for the nine months ended September 30, 2025 and 2024 consisted of the following: SCHEDULE OF INCOME TAX PROVISION For the nine months ended September 30, 2025 For the nine months ended September 30, 2024 Computed Expected Income Taxes 21,682 203,094 Non C-Corporation (Income) (21,682 ) (203,094 ) Entity Level State Income Tax on LLC Income - - Computed Expected Income Taxes - - Deferred tax assets have been fully reserved by a valuation allowance since it is more likely than not that such tax benefits will not b …

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NOTE 13. LEASE The balances for the operating leases where the Company is the lessee are presented within the balance sheets as follows: SCHEDULE OF BALANCES FOR THE OPERATING LEASES As of As of Operating leases September 30, 2025 December 31, 2024 Right of use-assets $ 1,868,839 $ 1,505,986 Lease liability-current 491,945 382,731 Lease liability-non-current 1,401,170 1,136,624 Total operating lease liabilities $ 1,893,115 $ 1,519,355 Weighted average remaining lease term (in years) 4.29 4.25 Weighted average discount rate (%) 6.50 % 6.50 % The components of lease expenses for the nine months ended September 30, 2025 and 2024 were as follows: SCHEDULE OF COMPONENTS OF LEASE EXPENSES For the nine months ended September 30, 2025 2024 Operating lease cost $ 376,365 $ 157,447 Cost of other leases with period less than one year and variable lease costs 219,885 156,067 Lease expenses $ 596,250 $ 313,514 The components of lease expenses for the nine months ended September 30, 2025 and 2024 were operating lease cost of $ 376,365 and $ 157,447 , respectively. Supplemental cash flow information related to leases for the nine months ended September 30, 2025 and 2024 were as follows: SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES For the nine months ended September 30, Cash paid for amounts included in the measurement of lease liabilities: 2025 2024 Operating cash flows from operating leases $ 596,250 $ 313,514 Supplemental noncash information: Right-of-use assets obtained in excha …

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NOTE 12. LOAN PAYABLES SCHEDULE OF LOAN PAYABLES September 30, 2025 December 31, 2024 Total loan payables 185,500 244,000 Payable to Northpoint Commercial Finance LLC. bearing interest on the outstanding principal amount of the Working Capital Loan at a rate equal to the Benchmark Rate plus six percent ( 5.50 %) per annum. The total advance is $ 400,000 which was deposited to the Company in December 2022. The Company will pay principal on the Working Capital Loan in 36 monthly payments of $ 6,500 each on the 15th of each such month. On the 15th day of the 37th calendar month, the outstanding principal amount shall be due and payable-in-full. 185,500 244,000 Payable to Wells Fargo bearing interest at 3.99 %. Requires monthly principal and interest payment. The original loan amount is $ 26,666 with terms of 84 months starting from November 21, 2021. 10,144 12,997 Payable to GMC Financial, secured by a Company vehicle. Monthly payments of principal and interest totalling $ 425 are due on the 19th of each month. Interest accrues at a rate of 3.09 % annually. Loan matures in November 2026. 2,716 6,685 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 . 88,885 103,081 Total loan payables 287,245 366,763 Current portion of loan payables (219,321 ) (137,468 ) Non-current loan payables $ 67,924 $ 229,295 The future principal amou …

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Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted 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 combined and 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 combined and consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our combined and consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU. In November 2024, the FASB issued ASU No. 2024-04, DebtDebt 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. Th …

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NOTE 15. RELATED PARTIES TRANSACTIONS The principal related parties with which the Company had transactions for the nine months ended September 30, 2025 and the years ended December 31, 2024 presented are as follows: a) Related Parties Name Relationship with the Company Tom Ruegg Family of the Shareholder Dan Ruegg and Diane Ruegg Family of the Shareholder Ruegg Capital Group Affiliates of the Company OTH Service NC, LLC Affiliates of the Company SCHEDULE OF RELATED PARTIES b) Amounts due to related parties September 30, 2025 December 31, 2024 Dan Ruegg and Diane Ruegg (1) 1,050,677 1,054,179 Tom Ruegg (2) 271,338 358,992 Ruegg Capital Group (3) - 9,369 Total $ 1,322,015 $ 1,422,540 Amounts due to related parties $ 1,322,015 $ 1,422,540 (1) This loan was jointly provided by Mr. Dan Ruegg and his spouse, Mrs. Diane Ruegg to support the Companys daily operational needs. Pursuant to the agreement, Dan and Diane Ruegg agreed to loan the Company up to $ 1 million as an investment in Off the Hook Yacht Sales NC, LLC. The loan is unsecured, bears interest at an annual rate of 7.00 %, and has no maturity date. (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 . (3) The Company borrowed funds from related parties for working capital purpose. The interest rate is …

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NOTE 14. CUSTOMER DEPOSITS We recognize customer deposits as revenue at the time of acceptance and the transfer of control to the customers. Total customer deposits of $ 2,350,219 recorded as of December 31, 2024 were recognized in revenue during the nine months ended September 30, 2025. Total customer deposits of $ 2,676,435 recorded as of December 31, 2023 were recognized in revenue during the fiscal year ended December 31, 2024. The movement in customer deposits is as follows: SCHEDULE OF MOVEMENT IN CUSTOMER DEPOSITS September 30, 2025 December 31, 2024 Balance at beginning period $ 2,350,219 2,676,435 Decrease in contract liabilities as a result of recognizing revenue during the year was included in the contract liabilities at the beginning of the year (19,743,800 ) (17,771,105 ) Increase in contract liabilities as a result of billings in advance of performance obligation under contracts 19,313,614 17,444,889 Refunded to the customers (238,500 ) - Balance at the end of the period $ 1,690,533 2,350,219

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NOTE 18. SEGMENT INFORMATION The company operates primarily in two distinct business segments: Dealerships and Financial Services. Dealerships: Specializing in the buying, selling, and wholesaling of yachts and boats. Having a boat dealership created to run Yellow Fin sales in Miami. Financial Services: A recreational loan broker and lender providing financing solutions for individuals, dealerships, and brokerages. The Companys segment profit or loss is measured using gross profit, which is the primary performance metric utilized by management to evaluate the financial results of each reportable segment and to make decisions regarding resource allocation. Although gross profit is reviewed by management for operational analysis, operating income (loss) is the primary measure used by the CODM for segment performance assessment and resource allocation. For segment reporting purposes, gross profit is calculated as the difference between segment revenue and the direct costs associated with specific projects or contracts. These direct costs include materials, labor, subcontractors, and other project-specific expenses directly attributable to the construction activities of each segment. The financial performance of each segment is regularly reviewed with operational leaders in charge of these segments, the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and others. The CODM of the Company is Jason Ruegg, CEO. The Companys segment disclosures are presented in accorda …

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NOTE 17. SHAREHOLDERS EQUITY Common stock On January 3, 2025, Off the Hook YS Inc. was incorporated in Neveda and became the holding company pursuant to the Reorganization described in Note 1. The total authorized shares of common stock were 100,000,000 shares, each common stock is entitled to one vote. Each common stock has $ 0.001 par value. As of September 30, 2025 and December 31, 2024, the Company had 20,000,000 shares of common stock issued and outstanding. 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 September 30, 2025, and December 31, 2024. Member Distribution The Companys member distribution for the nine months ended September 30, 2025 and 2024, was $ 2,354,874 and $ 835,111 , respectively. …

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NOTE 20. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the combined and consolidated financial statements are available to be issued. Other than the material subsequent events disclosed above in the notes to financial statements, no other material subsequent events that required recognition or additional disclosure in the combined and consolidated financial statements are presented. Shareholder Transaction Amended SPA On July 3rd, 2025, the shareholders of Off The Hook YS Inc. (the OTH Owners) entered into an Amended and Restated Agreement for the Purchase and Sale of Capital Stock (the Amended SPA) with Off The Hook Acquisition Corp., a Florida corporation (OTH FL). Pursuant to the Amended SPA, the OTH Owners agreed to sell and transfer to OTH FL 25 % of the issued and outstanding common stock of Off The Hook YS Inc. (the Transferred Securities) for total consideration of $ 3.0 million, payable as follows: $ 600,000 in cash as a non-refundable deposit upon the execution of the Amended SPA; and $ 2.4 million payable at the closing, which is conditioned upon, among other things, the effectiveness of the Companys registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission. 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 coll …

SubsequentEventsTextBlock · excerpt; the full note is in the filing