OTH Swings to Q3 Loss Amid Soaring Expenses, Despite Revenue Growth

TL;DR

**OTH's Q3 loss and ballooning expenses make it a risky bet, despite revenue growth; steer clear until they rein in costs.**

AI Summary

OFF THE HOOK YS INC. (OTH) reported a net loss of $66,666 for the three months ended September 30, 2025, a significant decline from a net income of $960,468 in the same period of 2024. For the nine months ended September 30, 2025, net income decreased to $776,949 from $1,672,474 in the prior year. Revenues for the nine-month period increased to $82,592,188 from $69,225,871, but this was offset by a substantial rise in operating expenses, which grew to $6,129,712 from $4,324,175. Key increases in expenses include salaries and wages, up to $3,113,964 from $2,148,143, and selling, general and administrative expenses, which rose to $1,441,248 from $1,053,275. The company also saw a significant increase in interest expense, net, to $1,616,872 for the nine months ended September 30, 2025, compared to $1,205,638 in the prior year. Total liabilities increased to $33,224,418 as of September 30, 2025, from $30,668,350 at December 31, 2024, driven largely by an increase in floor plan notes payable to $23,478,756 from $20,595,517. The company also acquired Boats and Buyers, Inc. in April 2025 for $150,000 cash and 100,000 shares of common stock, and incorporated Autograph Yacht Group Inc. in August 2025.

Why It Matters

OTH's shift to a net loss in Q3 2025 and a significant drop in nine-month net income, despite revenue growth, signals potential operational inefficiencies or aggressive expansion costs that could concern investors. The substantial increase in operating expenses, particularly salaries and wages and SG&A, suggests rising overheads that are eroding profitability. For employees, this could indicate a period of growth and hiring, but also potential pressure if profitability doesn't improve. Customers might see continued expansion of services with the acquisition of Boats and Buyers and the incorporation of Autograph Yacht Group, potentially increasing market competition in the luxury yacht brokerage space. The rising interest expense and floor plan notes payable highlight increased leverage, which could be a red flag for the broader market and competitors in the marine sales and financing sector.

Risk Assessment

Risk Level: high — The company reported a net loss of $66,666 for the three months ended September 30, 2025, a sharp decline from a $960,468 net income in the prior year. Furthermore, retained earnings show a significant deficit of ($3,405,479) as of September 30, 2025, worsening from ($1,827,554) at December 31, 2024, indicating persistent unprofitability and erosion of equity.

Analyst Insight

Investors should exercise extreme caution and consider divesting or avoiding OTH shares. The company's inability to translate revenue growth into profit, coupled with increasing debt and a growing retained earnings deficit, suggests fundamental operational challenges that need to be addressed before any investment is considered.

Financial Highlights

debt To Equity

N/A

revenue

$82,592,188

operating Margin

N/A

total Assets

N/A

total Debt

$33,224,418

net Income

-$66,666

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+19.3%

Key Numbers

• $66,666 — Net loss for Q3 2025 (Significant decline from $960,468 net income in Q3 2024)
• $776,949 — Net income for nine months ended Sept 30, 2025 (Decreased from $1,672,474 in the prior year)
• $82,592,188 — Revenues for nine months ended Sept 30, 2025 (Increased from $69,225,871 in the prior year)
• $6,129,712 — Total operating expenses for nine months ended Sept 30, 2025 (Increased from $4,324,175 in the prior year)
• $3,113,964 — Salaries and wages for nine months ended Sept 30, 2025 (Increased from $2,148,143 in the prior year)
• $1,616,872 — Interest expense, net for nine months ended Sept 30, 2025 (Increased from $1,205,638 in the prior year)
• $33,224,418 — Total liabilities as of Sept 30, 2025 (Increased from $30,668,350 at Dec 31, 2024)
• $23,478,756 — Floor plan notes payable as of Sept 30, 2025 (Increased from $20,595,517 at Dec 31, 2024)
• ($3,405,479) — Retained earnings deficit as of Sept 30, 2025 (Worsened from ($1,827,554) at Dec 31, 2024)
• $150,000 — Cash consideration for Boats and Buyers acquisition (Part of total purchase consideration in April 2025)

Key Players & Entities

• OFF THE HOOK YS INC. (company) — registrant
• Jason Ruegg (person) — controlling shareholder of OTH and its subsidiaries
• Boats and Buyers, Inc. (company) — acquired by OTH in April 2025
• Autograph Yacht Group Inc. (company) — wholly owned subsidiary incorporated by OTH in August 2025
• Jeffrey Matthew Reistad (person) — seller in Boats and Buyers acquisition
• Ahren Reistad (person) — seller in Boats and Buyers acquisition
• Ethan Reistad (person) — seller in Boats and Buyers acquisition
• SEC (regulator) — Securities and Exchange Commission
• NYSE (regulator) — exchange where OTH common stock is registered
• Katie Ruegg (person) — 10% owner of Azure Funding, LLC

FAQ

Risk Factors

• Deteriorating Profitability and Increasing Debt [high — financial]: The company reported a net loss of $66,666 for Q3 2025, a stark contrast to the $960,468 net income in Q3 2024. For the nine months, net income fell to $776,949 from $1,672,474, despite a revenue increase to $82,592,188. This decline is driven by a substantial rise in operating expenses, up to $6,129,712 from $4,324,175, with salaries and wages increasing significantly to $3,113,964. Furthermore, interest expense, net, rose to $1,616,872, contributing to the financial strain.
• Rising Liabilities and Dependence on Floor Plan Financing [high — financial]: Total liabilities increased to $33,224,418 as of September 30, 2025, from $30,668,350 at December 31, 2024. A key driver of this increase is the rise in floor plan notes payable to $23,478,756 from $20,595,517. This heightened reliance on floor plan financing, often used for inventory, indicates potential liquidity pressures and increased financial risk.
• Integration Risks from Acquisitions [medium — operational]: The company acquired Boats and Buyers, Inc. in April 2025 for $150,000 cash and 100,000 shares, and incorporated Autograph Yacht Group Inc. in August 2025. Integrating these new entities presents operational challenges, potential cost overruns, and risks to achieving projected synergies, which could negatively impact financial performance.
• Growing Retained Earnings Deficit [high — financial]: The company's retained earnings deficit has worsened significantly, increasing to ($3,405,479) as of September 30, 2025, from ($1,827,554) at December 31, 2024. This indicates a cumulative history of losses exceeding profits, raising concerns about the company's long-term financial health and ability to generate sustainable profits.
• Emerging Growth Company Status and Reduced Disclosure [low — regulatory]: As an 'emerging growth company,' OTH benefits from exemptions from certain reporting requirements, including auditor attestation for Section 404 of Sarbanes-Oxley and reduced executive compensation disclosures. While this lowers compliance costs, it may make comparisons with other public companies difficult and potentially reduce transparency for investors.

Industry Context

The marine industry, particularly the yacht sector, is often characterized by high-value transactions, cyclical demand influenced by economic conditions, and significant financing requirements for inventory. Companies like OTH operate in a competitive landscape where brand reputation, product offerings, and efficient inventory management are crucial for success. The current economic climate may impact consumer discretionary spending on luxury goods like yachts.

Regulatory Implications

As an emerging growth company, OTH benefits from reduced regulatory compliance burdens under the JOBS Act. However, it must still adhere to general securities laws and accounting principles. The company's increasing debt levels and potential for future financial distress could attract increased scrutiny from regulators and investors regarding its financial stability and disclosures.

What Investors Should Do

1. Monitor expense control measures closely.
2. Analyze the impact of acquisitions on profitability.
3. Evaluate the sustainability of the current debt structure.
4. Assess the long-term viability given the growing retained earnings deficit.

Key Dates

• 2025-04-01: Acquisition of Boats and Buyers, Inc. — Expansion of business operations through acquisition, involving $150,000 cash and 100,000 shares, potentially impacting future revenue and expenses.
• 2025-08-01: Incorporation of Autograph Yacht Group Inc. — Further business expansion and diversification, indicating strategic growth initiatives that may require significant investment and management attention.
• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a net loss of $66,666 and increased liabilities, highlighting recent financial performance trends.
• 2025-09-30: Nine months ended September 30, 2025 — Year-to-date financial results show increased revenue but decreased net income and higher operating expenses, indicating profitability challenges.

Glossary

Emerging Growth Company

A company that has total annual gross revenues of less than $1.235 billion (as of 2019) and is permitted to take advantage of certain exemptions from compliance with specific financial disclosure requirements. (OTH is an emerging growth company, which affects its reporting obligations and the comparability of its financial statements.)

Floor plan notes payable

Short-term financing used by dealers to purchase inventory, typically secured by the inventory itself. The debt is repaid when the inventory is sold. (A significant portion of OTH's liabilities consists of floor plan notes payable, indicating reliance on this type of financing for inventory management.)

Retained earnings deficit

Occurs when a company has accumulated more losses than profits over its lifetime, resulting in a negative balance in the retained earnings account. (OTH has a growing retained earnings deficit, signaling a history of unrecovered losses and potential long-term financial weakness.)

Sarbanes-Oxley Act (SOX)

A federal law that mandates certain practices in financial reporting and corporate governance. (As an emerging growth company, OTH is exempt from certain SOX requirements, such as auditor attestation on internal controls.)

Year-Over-Year Comparison

Compared to the prior year, OFF THE HOOK YS INC. has experienced a significant downturn in profitability, shifting from a net income of $960,468 in Q3 2024 to a net loss of $66,666 in Q3 2025. While revenues for the nine-month period increased by approximately 19.3% to $82,592,188, this growth was outpaced by a substantial rise in operating expenses, which grew by over 41% to $6,129,712. This widening expense base, coupled with increased interest expenses, has led to a decrease in net income for the nine-month period and a net loss for the quarter. Total liabilities have also increased, driven by higher floor plan notes payable, indicating a more leveraged financial position.

Key Financial Figures

• $0.001 — ch registered Common Stock, par value $0.001 per share OTH NYSE Indicate by ch

Filing Documents

• form10-q.htm (10-Q) — 1142KB
• ex31-1.htm (EX-31.1) — 19KB
• ex31-2.htm (EX-31.2) — 19KB
• ex32-1.htm (EX-32.1) — 10KB
• 0001493152-25-027783.txt ( ) — 6381KB
• oth-20250930.xsd (EX-101.SCH) — 55KB
• oth-20250930_cal.xml (EX-101.CAL) — 80KB
• oth-20250930_def.xml (EX-101.DEF) — 190KB
• oth-20250930_lab.xml (EX-101.LAB) — 356KB
• oth-20250930_pre.xml (EX-101.PRE) — 311KB
• form10-q_htm.xml (XML) — 1007KB

Management's discussion and analysis of financial condition and results of operations

Item 2. Management's discussion and analysis of financial condition and results of operations 30

Quantitative and qualitative disclosures about market risk

Item 3. Quantitative and qualitative disclosures about market risk 36

Controls and procedures

Item 4. Controls and procedures 37

OTHER INFORMATION

PART II. OTHER INFORMATION 38

Legal proceedings

Item 1. Legal proceedings 38

Risk factors

Item 1A. Risk factors 38

Unregistered sales of equity securities and use of proceeds

Item 2. Unregistered sales of equity securities and use of proceeds 38

Defaults upon senior securities

Item 3. Defaults upon senior securities 38

Mine safety disclosures

Item 4. Mine safety disclosures 38

Other information

Item 5. Other information 38

Exhibits

Item 6. Exhibits 38

SIGNATURES

SIGNATURES 39 3 OFF THE HOOK YS INC. AND AFFILIATES Consolidated Balance Sheets As of September, 2025 and December 31, 2024 September 30, 2025 December 31, 2024 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,267,564 $ 2,927,126 Accounts receivable, net 244,400 104,317 Inventory 24,015,983 22,593,422 Prepaid expense 2,281,347 2,388,782 Private label receivable - 4,942 Other current assets 368,117 840,401 TOTAL CURRENT ASSETS 29,177,411 28,858,990 NON-CURRENT ASSETS Property, plant and equipment, net 498,156 461,709 Other receivable 43,366 42,192 Private label receivable - 185,550 Due from related party - 11,313 Right-of-use assets 1,868,839 1,505,986 Goodwill 570,000 570,000 Intangible assets, net 456,111 - TOTAL NON-CURRENT ASSETS 3,436,472 2,776,750 TOTAL ASSETS $ 32,613,883 $ 31,635,740 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 627,237 $ 962,725 Accrued liabilities 519,204 507,284 Lease liabilities, current 491,945 382,731 Line of credit 2,842,682 2,833,400 Current portion of long-term debt 219,321 137,468 Due to related party 1,322,015 1,422,540 Customer deposit 1,690,533 2,350,219 Floor plan notes payable 23,478,756 20,595,517 Other current liabilities 213,631 110,547 Contingent liabilities 350,000 - TOTAL CURRENT LIABILITIES 31,755,324 29,302,431 LONG-TERM LIABILITIES Long-term debt, noncurrent 67,924 229,295 Lease liabilities, noncurrent 1,401,170 1,136,624 TOTAL LONG-TERM LIABILITIES 1,469,094 1,365,919 TOTAL LIABILITIES 33,224,418 30,668,350 MEMBERS' DEFICIT Common stock, with $ 0.001 par value, 100,000,000 number of common stocks authorized, 20,000,000 shares of common stocks issued and outstanding as of September 30, 2025 and December 31, 2024, respectively. * 20,000 20,000 Additional paid-in capital 2,774,944 2,774,944 Retained earn

financial statements and related notes included in the Company's Registration Statement on Form S-1 for the year ended

financial statements and related notes included in the Company's Registration Statement on Form S-1 for the year ended December 31, 2024 (the "Annual Report"). 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 rev

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