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What changed in Massimo Group's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Massimo Group's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+258 added−296 removedSource: 10-K (2025-03-26) vs 10-K (2024-04-15)

Top changes in Massimo Group's 2024 10-K

258 paragraphs added · 296 removed · 185 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

67 edited+17 added−35 removed66 unchanged
Biggest changeAccording to Frost & Sullivan, the size of the Pontoon Boat market in the United States in terms of revenue grew at a CAGR of 10.7% from $2.2 billion in 2017 to $3.3 billion in 2021 and is expected to grow further to $6.6 billion in 2026 at a CAGR of 14.9 %. 9 U.S Pontoon Boats Market Size and Forecast (2017 – 2026E) from Frost & Sullivan Massimo Pontoon Boat 10 Motorcycles, GO Karts, Youth Market and Accessories Along with our larger vehicles, we offer a range of gas and electric powered wheeled vehicles for the sports enthusiast.
Biggest changeHowever, since 2023, the U.S. leisure boating industry has faced a decline by approximately 9% to 12%, driven by economic volatility and high interest rates. 10 Massimo Pontoon Boat Motorcycles, GO Karts, Youth Market and Accessories Along with our larger vehicles, we offer a range of gas and electric powered wheeled vehicles for the sports enthusiast.
The most significant insurance policies that we carry include: ● commercial general liability insurance for bodily injury and property damage resulting from operations and our products; ● property insurance covering the replacement value of all real and personal property damage, including damages arising from earthquake, flood damage and business interruption; ● cargo insurance to protect against loss or damage to goods while in transit; ● workers’ compensation coverage in the United States to required statutory limits; 16 ● directors and officers insurance; and ● cyber insurance to mitigate risk exposure by offsetting recovery costs following a cyber-related security breach or similar event.
The most significant insurance policies that we carry include: ● commercial general liability insurance for bodily injury and property damage resulting from operations and our products; ● property insurance covering the replacement value of all real and personal property damage, including damages arising from earthquake, flood damage and business interruption; ● cargo insurance to protect against loss or damage to goods while in transit; ● workers’ compensation coverage in the United States to required statutory limits; ● directors and officers insurance; and ● cyber insurance to mitigate risk exposure by offsetting recovery costs following a cyber-related security breach or similar event.
Furthermore, certain product lines are sold in offsetting seasons, reducing the overall seasonality of our sales and lowering cash flow influx risk. 4 In addition to its appeal to consumers, our broad product portfolio provides a compelling value proposition to our dealers and distributors and allows dealers to reduce seasonality, increase operational efficiency and facilitate inventory management.
Furthermore, certain product lines are sold in offsetting seasons, reducing the overall seasonality of our sales and lowering cash flow influx risk. In addition to its appeal to consumers, our broad product portfolio provides a compelling value proposition to our dealers and distributors and allows dealers to reduce seasonality, increase operational efficiency and facilitate inventory management.
Massimo Go Kart, Mini 125 and Motorcycles We offer a wide range of accessories for all of our vehicles including replacement parts and supplies, along with seasonal equipment such as snowplows and enclosures specially designed for our UTVs. Our outdoor accessories include EV chargers, portable solar panels, electric coolers and power stations.
Massimo Go Kart, Mini 125 and Motorcycles 11 We offer a wide range of accessories for all of our vehicles including replacement parts and supplies, along with seasonal equipment such as snowplows and enclosures specially designed for our UTVs. Our outdoor accessories include EV chargers, portable solar panels, electric coolers and power stations.
David Shan and AISE contributed their membership interests in Massimo Marine and Massimo Motor Sports, which was eighty-five percent (85%) and fifteen percent (15%) respectively, to Massimo Group in exchange for shares of common stock, par value $0.001 (“common stock”) of Massimo Group, the end result being that Mr.
David Shan and AISE contributed their membership interests in Massimo Marine and Massimo Motor Sports, which was eighty-five percent (85%) and fifteen percent (15%) respectively, to Massimo in exchange for shares of common stock, par value $0.001 (“common stock”) of Massimo, the end result being that Mr.
Part of our strategy has been to seek out quality suppliers, some with recognized brands of their own, who can provide reliable, high-quality vehicles with the latest features at good value. Generally, our sales directly to independent dealerships account for the majority of our sales during each fiscal year.
Part of our strategy has been to seek out quality suppliers, some with recognized brands of their own, who can provide reliable, high-quality vehicles with the latest features at good value. 12 Generally, our sales directly to independent dealerships account for the majority of our sales during each fiscal year.
Products We have a diverse product line which includes industrial and recreational UTVs, recreational ATVs, golf carts, motorcycles, Pontoon Boats, juvenile products from go karts to balance bikes, snow equipment and a line of accessories including EV chargers, electric coolers, power stations and portable solar panels.
Products We have a diverse product line which includes industrial and recreational UTVs, recreational ATVs, golf carts, motorcycles, Pontoon Boats, juvenile products from go karts to balance bikes, and tractors, snow equipment and a line of accessories including EV chargers, electric coolers, power stations and portable solar panels.
We seek to differentiate ourselves by offering products with the latest design features and options and by providing superior aftermarket support to our customers and distributors. 15 Pontoon Boats Market The United States Pontoon Boats market is fragmented and there is a significant number of vendors which offer Pontoon Boats across the country.
We seek to differentiate ourselves by offering products with the latest design features and options and by providing superior aftermarket support to our customers and distributors. Pontoon Boats Market The United States Pontoon Boats market is fragmented and there is a significant number of vendors which offer Pontoon Boats across the country.
We believe our current coverage is adequate for our existing business and will continue to evaluate the coverages in the future in line with our expanding sales and product breadth. Insurance We carry various insurance coverage policies to protect against certain risks consistent with the exposures associated with the nature of our operations.
We believe our current coverage is adequate for our existing business and will continue to evaluate the coverages in the future in line with our expanding sales and product breadth. 16 Insurance We carry various insurance coverage policies to protect against certain risks consistent with the exposures associated with the nature of our operations.
The Pontoon Boats market has demonstrated remarkable growth since 2008, when the financial crisis resulted in declines across the boating industry. According to data from Statistical Surveys Inc. (“SSI”), Pontoon Boats, second to personal watercraft, have been a leading segment in the recreational boating industry over the last decade.
The Pontoon Boats market has demonstrated remarkable growth since 2008, when the financial crisis resulted in declines across the boating industry. According to data from Statistical Surveys Inc. (“SSI”), Pontoon Boats, second to personal watercraft, have been a leading segment in the Pontoon Boating industry over the last decade.
More than 60% of the value of our boats are USA sourced, thus limiting our risk for overseas interruption. 13 Substantially all products other than our boats, in particular our ATVs and UTVs, are sourced from select global manufacturers with which we have ongoing relationships.
More than 60% of the value of our boats are USA sourced, thus limiting our risk for overseas interruption. Substantially all products other than our boats, in particular our ATVs and UTVs, are sourced from select global manufacturers with which we have ongoing relationships.
Unlike our competitors, which market their products principally through their affiliated dealers, we also sell our products through well-known retailers such as Lowes, Tractor Supply Co., and other farm and industrial equipment dealers, boat and marine dealers and lawn and garden dealers.
Unlike our competitors, which market their products principally through their affiliated dealers, we also sell our products through well-known retailers such as Lowes, Tractor Supply Co., Farm King, and other farm and industrial equipment dealers, boat and marine dealers and lawn and garden dealers.
In addition to distributing our products, we intend to provide unparalleled customer service which includes over 600 motor vehicles and 5,500 marine third-party service providers across the United States, 24-hour customer support and an approximately 40,000 sq. ft. parts facility which enables us to fulfill most parts orders within 48 hours.
In addition to distributing our products, we aim to provide unparalleled customer service, which includes over 600 motor vehicles and 5,500 marine third-party service providers across the United States, 24-hour customer support and an approximately 40,000 sq. ft. parts facility which enables us to fulfill most parts orders within 48 hours.
We currently have ongoing supply agreements in place with approximately 30 suppliers, two of which are located in the United States and the majority of which are in China. In 2017, we entered into a partnership for engines with Linhai Yamaha Motor Co. which enabled us to increase the performance of our vehicles and offer new products.
We currently have ongoing supply agreements in place with approximately 30 suppliers, two of which are located in the United States, one in Taiwan, and the majority in China. In 2017, we entered into a partnership for engines with Linhai Yamaha Motor Co. which enabled us to increase the performance of our vehicles and offer new products.
The dealerships become our long-term partners and they work with us to promote our brand across their own networks and channels. Presently, we have established partnerships with dealerships who carry our products in approximately 2,800 locations across the United States and with retail stores such as Tractor Supply Co., Lowes and Home Depot.
The dealerships become our long-term partners and they work with us to promote our brand across their own networks and channels. Presently, we have established partnerships with dealerships who carry our products in approximately 2,800 locations across the United States and with retail stores such as Tractor Supply Co., and Lowes.
Item 1. Business. Overview We believe we are a leading company in the Mid-Tier Band of the powersports vehicles and boats industry in the United States, which comprises the All-Terrain Vehicle (“ATV”), Utility-Terrain Vehicle (“UTV”), and pontoon and tritoon boats (“Pontoon Boats”) subsectors (the “Powersports Vehicles and Boats Industry”).
Item 1. Business. Overview We believe we are a leading company in the Mid-Tier Band of the powersports vehicles and boats industry in the United States, which includes the All-Terrain Vehicle (“ATV”), Utility-Terrain Vehicle (“UTV”), and pontoon and tritoon boats (“Pontoon Boats”) subsectors (the “Powersports Vehicles and Boats Industry”).
Our commercial general liability insurance provides us with coverages of $2,000,000 general aggregate limit and $2,000,000 products-completed operations aggregate limit, with a minimal amount of deductible per claim. We also have umbrella liability insurance with coverage of $7,000,000 aggregate on top of general liability insurance and workers’ compensation insurance.
Our commercial general liability insurance provides us with coverages of $2,000,000 general aggregate limit and $2,000,000 products-completed operations aggregate limit, with a minimal amount of deductible per claim. We also have umbrella liability insurance with coverage of $5,000,000 aggregate on top of general liability insurance and workers’ compensation insurance.
We have ongoing relationships with leading manufacturers which enable us to offer our customers reliable leading-edge high-quality products at prices which represent great value. For example, our partnership in 2017 with Linhai Yamaha Motor Co., a supplier located in Shanghai, China, has allowed us to increase our vehicles performance and expand our product lines.
We have ongoing relationships with leading manufacturers which enable us to offer our customers reliable leading-edge high-quality products at prices which represent great value. For example, since 2017 we have partnered with Linhai Yamaha Motor Co., a supplier located in Shanghai, China, which has allowed us to increase our vehicles performance and expand our product lines.
We do not believe that the outcome of any pending product liability litigation will have a material adverse effect on our operations. However, no assurance can be given as to whether any material product liability claims against us will be made in the future.
Product Liability Product liability claims are made against us from time to time. We do not believe that the outcome of any pending product liability litigation will have a material adverse effect on our operations. However, no assurance can be given as to whether any material product liability claims against us will be made in the future.
In addition to higher payload capacities, UTVs usually have more storage room to haul around necessary equipment. 11 Major drivers of the Pontoon Boats industry in the United States include recent increases in disposable income coupled with the rise in watercraft sports activities across multiple states.
In addition to higher payload capacities, UTVs usually have more storage room to haul around necessary equipment. Major drivers of the Pontoon Boats industry in the United States include disposable income coupled with the rise in watercraft sports activities across multiple states.
Multiple Distribution Channels We have established multiple distribution channels for our products, including our own e-commerce platforms, leading marketplace accounts, an extensive network of independent dealers and distributors, and relationships with some of the largest retailers in the United States including Tractor Supply Co., Lowes, Walmart, Costco, Sam’s Club, Home Depot, Orscheln Farm & Home, and more.
Multiple Distribution Channels We have established multiple distribution channels for our products, including our own e-commerce platforms, leading marketplace accounts, an extensive network of independent dealers and distributors, and relationships with some of the largest retailers in the United States, including Tractor Supply Co., Lowes, Walmart, Costco, Sam’s Club, Home Depot, Fleet Farm, Rural King, and more.
We have a significant UTV retail partnership with Tractor Supply Co. through which we generated approximately $47 million and $10 million in revenue in the fiscal years ended December 31, 2023 and 2022, respectively. Our multiple channels for distribution and large dealer network provide multiple avenues through which we can engage and communicate with consumers.
We have a significant UTV retail partnership with Tractor Supply Co. through which we generated approximately $47 million and $73 million in revenue in the fiscal years ended December 31, 2023 and 2024, respectively. Our multiple channels for distribution and large dealer network provide multiple avenues through which we can engage and communicate with consumers.
In the fiscal years ended December 31, 2023 and 2022, the majority of our ATV and UTV sales were gas-powered models.
In the fiscal years ended December 31, 2024 and 2023, the majority of our ATV and UTV sales were gas-powered models.
To reach our target customer, we have established multiple distribution channels for our products, including our own on-line sites, multiple popular e-commerce sites, an extensive network of independent dealers and distributors and relationships with some of the largest retailers in the United States including Tractor Supply Co., Lowes, Walmart, Costco, Sam’s Club, Home Depot, Orscheln Farm & Home, and more.
To reach our target customer, we have established multiple distribution channels for our products, including our own on-line sites, multiple popular e-commerce sites, an extensive network of independent dealers and distributors and relationships with some of the largest retailers in the United States including Tractor Supply Co., Lowes, Walmart, Sam’s Club, and more.
This will also include hiring experienced engineers, product designers, and sales representatives who can help the Company achieve its growth objectives. ● Acquisitions and Consolidation: We will explore potential acquisitions and consolidation opportunities in the Powersports Vehicles and Boats Industry to expand our market share and gain access to new technologies and capabilities.
This will also include hiring experienced engineers, product designers, and sales representatives who can help the Company achieve its growth objectives. ● Acquisitions and Consolidation: We will explore potential acquisitions and consolidation opportunities in the Powersports Vehicles and other related outdoor products industry to expand our market share and gain access to new technologies and capabilities.
David Shan had held one hundred percent (100%) of the issued and outstanding membership interests of Massimo Motor Sports and Massimo Marine. 3 On October 10, 2022, Massimo Group, a Nevada corporation, was formed, whereby Mr. David Shan was the sole stockholder. On June 1, 2023, the Company effectuated an internal reorganization whereby (i) Asian International Securities Exchange Co., Ltd.
David Shan had held one hundred percent (100%) of the issued and outstanding membership interests of Massimo Motor Sports and Massimo Marine. 3 On October 10, 2022, Massimo was formed, with Mr. David Shan as the sole stockholder. On June 1, 2023, the Company effectuated an internal reorganization whereby (i) Asian International Securities Exchange Co., Ltd.
Co., Ltd. and Linhai Co., Ltd., all of which are located in China and supplied us with approximately 68% and 66% (by cost) of our products in the fiscal years ended December 31, 2023 and 2022, respectively.
Co., Ltd. and Linhai Co., Ltd., all of which are located in China and supplied us with approximately 79% and 68% (by cost) of our products in the fiscal years ended December 31, 2024 and 2023, respectively.
See “ Risk Factors—Risks Relating to Our Business, Strategy, and Industry—We have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our business and results of operations .” Employees As of March 28, 2024, we had approximately 126 employees, of which approximately 15 were in management and administration, 22 were sales and service personnel, 81 were in manufacturing, 3 were in quality control and 5 were in R&D.
See “ Risk Factors-Risks Relating to Our Business, Strategy, and Industry-We have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our business and results of operations .” 15 Employees As of March 24, 2025, we had approximately 100 employees, of which approximately 10 were in management and administration, 18 were sales and service personnel, 62 were in manufacturing, 5 were in quality control and 5 were in R&D.
State of the Art Facility We are headquartered in a 286,000 sq. ft. facility of which 220,000 sq. ft. is dedicated to Massimo Motor Sports and 66,000 sq. ft. to Massimo Marine.
State of the Art Facility We are headquartered in a 376,000 sq. ft. facility of which 280,000 sq. ft. is dedicated to Massimo Motor Sports and 96,000 sq. ft. to Massimo Marine.
“Top-Tier Band” means the top-tier band of the Powersports Vehicles and Boats Industry, which our management considers to include companies such as Polaris, Bombardier Recreational Products (BRP), Arctic Cat, Honda, and Yamaha with international operations and large market shares. In 2020, we became one of the 15 largest Pontoon Boats manufacturers in Texas.
“Top-Tier Band” means the top-tier band of the Powersports Vehicles and Boats Industry, which our management considers to include companies such as Polaris, Bombardier Recreational Products (BRP), Honda, and Yamaha with international operations and large market shares.
We currently distribute four models of our MSA line of ATVs with base prices ranging from approximately $2,800 to $9,000, and four lines of UTVs with various models including golf carts, at prices ranging from $6,000 to $22,000. We maintain a full line of accessories and replacement parts for all of our ATVs and UTVs.
We currently distribute five models of our line of ATVs with base prices ranging from approximately $,3,999 to $8,999, and four lines of UTVs with various models including golf carts, at prices ranging from $6,499 to $21,999. We maintain a full line of accessories and replacement parts for all of our ATVs and UTVs.
We are headquartered in a 286,000 sq. ft. facility of which 220,000 sq. ft. is dedicated to Massimo Motor Sports LLC (“Massimo Motor Sports”) and 66,000 sq. ft. to Massimo Marine LLC, a division of Brunswick Corporation (“Massimo Marine”).
We are headquartered in a 376,000 sq. ft. facility of which 280,000 sq. ft. is dedicated to Massimo Motor Sports LLC (“Massimo Motor Sports”) and 96,000 sq. ft. to Massimo Marine LLC (“Massimo Marine”).
We have a significant in-store UTV retail partnership with Tractor Supply Co. We manufacture and assemble our products in our Dallas facility and rely upon an international network of strategic global partnerships to supply us with parts and components.
Our products are sold directly by us in the e-commerce marketplace and through a network of dealerships, distributors, and chain stores. We have a significant in-store UTV retail partnership with Tractor Supply Co. We manufacture and assemble our products in our Dallas facility and rely upon an international network of strategic global partnerships to supply us with parts and components.
As we grow, we will continue to rely heavily upon IT systems to maintain our operating efficiency. 14 Intellectual Property We currently hold eight issued patents in the United States that protect certain aspects of our products, design and technologies. Each of our patents has a term of 14 years with the exception of one which has 15 years.
Intellectual Property We currently hold eight issued patents in the United States that protect certain aspects of our products, design and technologies. Each of our patents has a term of 14 years with the exception of one, which has 15 years.
The following strengths have enabled us to achieve our growth to date, and we believe will contribute to our ongoing growth: Diversified and Comprehensive Product Portfolio We have a robust portfolio of products, including UTVs and ATVs, golf carts, motorcycles, scooters, Pontoon Boats, snow equipment and a line of accessories for the outdoor enthusiast including electric coolers, power stations and portable solar panels.
Listing Our common stock began trading on April 2, 2024 on The Nasdaq Capital Market (“Nasdaq”) under the symbol “MAMO.” Competitive Strengths The following strengths have enabled us to achieve our growth to date, and we believe will contribute to our ongoing growth: Diversified and Comprehensive Product Portfolio We have a robust portfolio of products, including UTVs and ATVs, golf carts, motorcycles, scooters, Pontoon Boats, tractors, snow equipment and a line of accessories for the outdoor enthusiast including electric coolers, power stations and portable solar panels.
Strategy Our goal is to enter the Top-Tier Band of the Powersports Vehicles and Boats Industry and increase our market share through the following initiatives: ● Open New Distribution Centers. A portion of the proceeds of the IPO will be used to open new distribution centers in California and the Southeast of the United States.
Strategy Our goal is to enter the Top-Tier Band of the Powersports Vehicles and Boats Industry and increase our market share through the following initiatives: ● Open New Distribution Centers.
Because we are Mercury exclusive, our customers receive a three-year warranty offered by Mercury Marine on everything supplied by Mercury, which includes digital control, hydraulic steering, throttle, steering system, engine, cables, and electrical. Our warranty, along with the Mercury Marine are transferable during the original warranty period and are in line with top level original equipment manufacturers.
Because we are Mercury exclusive, our customers receive a three-year warranty offered by Mercury on everything supplied by Mercury, which includes digital control, hydraulic steering, throttle, steering system, engine, cables, and electrical.
Our limited warranty is void if the vehicle is used as a rental, racing or any modifications are made to the product. Although we employ quality control procedures, a product is sometimes distributed which needs repair or replacement. Historically, product recalls have not had a material effect on our business.
The warranty is non-transferable for the period of coverage if the vehicle is resold. Our limited warranty is void if the vehicle is used as a rental, racing or any modifications are made to the product. Although we employ quality control procedures, a product is sometimes distributed which needs repair or replacement.
We carry full line of parts, accessories and maintenance items across all models in our approximately 40,000 sq. ft. parts facility and strive to fill all parts orders within 48 hours.
We have a dedicated staff of full-time employees including trained technicians to provide online and telephone support to our customers and dealers. We carry full line of parts, accessories and maintenance items across all models in our approximately 40,000 sq. ft. parts facility and strive to fill all parts orders within 48 hours.
We do, however, have programs where we introduce our customers to lenders, such as Northpoint Commercial Finance and Automotive Finance Corporation, who are willing to provide financing for our UTVs, ATVs, golf carts and Pontoon Boats customer. We work with several financing companies to offer competitive loans for prime and subprime buyers.
We do not directly provide financing for the purchase of our products. We do, however, have programs where we introduce our customers to lenders, such as Northpoint Commercial Finance and Automotive Finance Corporation, who are willing to provide financing for our UTVs, ATVs, golf carts and Pontoon Boats customers.
Dedicated Customer Support Team We have over 600 third-party motor sports service providers across the United States, more than 5,500 third-party marine boat dealers to service our Pontoon Boats and a dedicated staff of full-time employees including trained technicians to provide online and telephone support to our customers and dealers.
Many of our manufacturing partners’ facilities are located in China, which has historically enabled them to offer lower cost manufacturing and rapid lead-times for end-market distribution in the United States. 4 Dedicated Customer Support Team We have over 600 third-party motor sports service providers across the United States, more than 5,500 third-party marine boat service centers to service our Pontoon Boats and a dedicated staff of full-time employees including trained technicians to provide online and telephone support to our customers and dealers.
We have also been developing new product lines, such as electric vehicle (“EV”) chargers, electric coolers, power stations, portable solar panels and electric Pontoon Boats, all of which are currently available for sale.
We plan to offer All-Weather options for all UTVs in the future. We have also been developing new product lines, such as electric vehicle (“EV”) chargers and electric Pontoon Boats, all of which are currently available for sale.
To incentivize our dealers and distributors, we bear the first three month of interest, so they pay no interest if our products are sold within 90 days of receipt. We do not directly provide finance for the purchase of our products, including ATVs, UTVs, golf carts, or Pontoon Boats.
Substantially all of our products, including ATVs, UTVs, golf carts and Pontoon Boats are financed under arrangements in which we are paid within a few days of a product’s shipment. To incentivize our dealers and distributors, we bear the first three month of interest, so they pay no interest if our products are sold within 90 days of receipt.
Since 2023, the cost of overseas freights has decreased substantially, though it still exceeds the cost prior to the supply chain crises. We do not currently expect to suspend our production, sales or maintenance of any of our products or experience higher costs due to constrained capacity or materially increased commodity prices or challenges sourcing materials.
We do not currently expect to suspend our production, sales or maintenance of any of our products or experience higher costs due to constrained capacity or materially increased commodity prices or challenges sourcing materials.
Dealers order higher volumes between October to March while retail orders are higher April to September. This gives us an overall balance. While winter months are always slower than summer months, it allows us to maintain cash flow during the winter season. Product Liability Product liability claims are made against us from time to time.
With Pontoon Boats, we are both a distributor and a retailer, which provides some seasonal protection. Dealers order higher volumes between October to March while retail orders are higher April to September. This gives us an overall balance. While winter months are always slower than summer months, it allows us to maintain cash flow during the winter season.
We manufacture, import and distribute a diversified portfolio of products divided into two main lines: (1) UTVs, ATVs, motorcycles, scooters, golf carts and a juvenile line from go karts to balance bikes; and (2) recreational Pontoon Boats. In 2009, we began by distributing electric scooters, our first product.
We manufacture, import and distribute a diversified portfolio of products divided into two main lines: (1) UTVs, ATVs, motorcycles, scooters, golf carts and a juvenile line from go karts to balance bikes and tractors among other products; and (2) recreational Pontoon Boats. In 2024, we released an all-new line of All-Weather UTVs with enclosures, heaters, and AC units.
We have entered into an exclusive arrangement with Mercury Marine, so all of our Pontoon Boats come equipped with a Mercury Marine outboard engine and parts.
Structural components and other materials are sourced locally from a variety of suppliers and electrical components and engines are obtained through an exclusive arrangement with Mercury. We have entered into an exclusive arrangement with Mercury, so all of our Pontoon Boats come equipped with a Mercury outboard engine and parts.
Before entering into a formal partnership with a dealer, we conduct thorough background and credit checks to ensure the prospective partnership is beneficial for us and our customers.
Before entering into a formal partnership with a dealer, we conduct thorough background and credit checks to ensure the prospective partnership is beneficial for us and our customers. To incentive our partners to promote our brands, we implement performance-based incentive programs, which includes the possibility of obtaining additional benefits, such as promotional pricing.
Our facility is adjacent to seven acres for boat storage in Dallas, Texas, which houses a design center, two assembly lines, our parts department, a test track, dyno and over 30 loading docks. Our products are sold directly by us, in the e-commerce marketplace, and through a network of dealerships, distributors, and chain stores.
Our facility is adjacent to seven acres for boat storage in Dallas, Texas, which houses a design center, two manual assembly lines. including an automated vehicle assembly robot line, our parts department, a test track, dyno and over 30 loading docks.
Our partners can get prospective buyers prequalified with no impact to credit scores via quick online applications. We do provide promotional support with these partners to offer prime loan rates as low as 2.99%. We also sell select models direct which are paid in full prior to pick up or shipment.
We work with several financing companies to offer competitive loans for prime and subprime buyers. Our partners can get prospective buyers prequalified with no impact to credit scores via quick online applications. We do provide promotional support with these partners to offer prime loan rates as low as 2.99%.
All of these products are now available for sale. Marketing Our target customers are the growing portion of the United States population participating in outdoor recreational activities, farmers and other industrial users that can benefit from the utility of an ATV or UTV.
Marketing Our target customers are the growing portion of the United States population participating in outdoor recreational activities, farmers and other industrial users that can benefit from the utility of an ATV or UTV. Major market drivers for ATVs are the greater affordability and ease of operation compared to larger more cumbersome vehicles. ATVs are typically less expensive than UTVs.
We provide extensive parts diagrams and service manuals and our trained technicians are available to both distributors and individual customers to assist with diagnosing and solving any problem that may come up.
We provide extensive parts diagrams and service manuals and our trained technicians are available to both distributors and individual customers to assist with diagnosing and solving any problem that may come up. Product Warranties We provide limited warranty coverage for defects in materials and workmanship in our ATVs, UTVs, golf carts, Go-Karts and motorcycles for a period of one year.
Dollar and the legal currency of China (“Chinese RMB”). Research and Development In addition to our own internal research and development (“R&D”), we work closely with our suppliers to design innovative, high-performance products to build strong customer loyalty and sustain our reputation as a leading-edge manufacturer.
For further details please see “ Risk Factors - There is no assurance there will not be disruptions to trade between China and the United States. ” 14 Research and Development In addition to our own internal research and development (“R&D”), we work closely with our suppliers to design innovative, high-performance products to build strong customer loyalty and sustain our reputation as a leading-edge manufacturer.
We have entered into an exclusive arrangement with Mercury Marine, a division of Brunswick corporation (“Mercury Marine” or “Mercury”), so all of our Pontoon Boats come equipped with a Mercury outboard engine and parts. Our Mercury Marine warranty and service program gives our customers access to 5,500 approved service centers in the United States.
Historically, product recalls have not had a material effect on our business. We have entered into an exclusive arrangement with Mercury Marine, a division of Brunswick corporation (“Mercury Marine” or “Mercury”), so all of our Pontoon Boats come equipped with a Mercury outboard engine and parts.
We will continue to follow consumer trends and consult with our suppliers and distributors to identify new products and product upgrades we will offer to customers and distributors. Where possible, such as with our Pontoon Boats, we will upgrade our offerings and add new accessories to increase our profit margins. ● Expand and Diversify our Supplier Base .
Where possible, such as with our Pontoon Boats, we will upgrade our offerings and add new accessories to increase our profit margins. ● Expand into AI Application Robotic Products .
After sale activities intended to maintain a positive relationship include delivery confirmation calls, review requests, warranty registration cards and reminders for scheduled maintenance and maintenance items. We have a dedicated staff of full-time employees including trained technicians to provide online and telephone support to our customers and dealers.
Dedicated Customer Support Team Our marketing effort does not stop when the customer purchases one of our products. After sale activities intended to maintain a positive relationship include delivery confirmation calls, review requests, warranty registration cards and reminders for scheduled maintenance and maintenance items.
David Shan and AISE own eighty-five percent (85%) and fifteen percent (15%) of Massimo Group (the “Reorganization”). Initial Public Offering On April 1, 2024, we consummated our initial public offering (“IPO”) of 1,300,000 shares of common stock.
David Shan and AISE owned eighty-five percent (85%) and fifteen percent (15%) of Massimo (the “Reorganization”) prior to our initial public offering.
In the fall and winter months, we have a heavy push for hunting season in the United States, and we promote our winter accessories including snow blowers, snowplows and enclosures. With Pontoon Boats, we are both a distributor and a retailer, which gives us great seasonal protection.
In the fall and winter months, we have a heavy push for hunting season in the United States, and we promote our winter accessories including snow blowers, snowplows and enclosures, in addition we recently launched the winter series of our T-Boss UTV series with cab enclosure to provide protection from the elements.
Information Technology Our in-house design and logistics personnel rely heavily on IT systems to explore new product offerings, to ensure a smooth workflow, and production quality and control. Our relationships with our customers and distributors rely upon the latest technologies to maintain contact and foster a positive collaborative working relationship.
Our suppliers bear the expense of upfront engineering and design work, recouping the expense out of the amount charged for their products. Information Technology Our in-house design and logistics personnel rely heavily on IT systems to explore new product offerings, to ensure a smooth workflow, and production quality and control.
U.S ATV and UTV Market Size and Forecast (2017 – 2026E) from Frost & Sullivan 7 Massimo MSA 450F ATV Massimo T-Boss 550 UTV 8 Massimo Warrior 1000 Recreational Pontoon Boats Pontoon Boats are flat-deck boats propelled by an outboard motor with two or three floating aluminum tubes supporting the deck.
Nevertheless, we offer electric versions of several of our UTVs, particularly electric golf carts and electric utility carts. 6 Massimo MSA 450F ATV Massimo T-Boss 550 UTV 7 Massimo Warrior 1000 Massimo T-Boss 550L 8 Massimo T-Boss 1000 Massimo GKD 350 All-Terrain Go Kart 9 Massimo MVR 2X and Massimo MVR Cargo Max Electric Golf Carts Recreational Pontoon Boats Pontoon Boats are flat-deck boats propelled by an outboard motor with two or three floating aluminum tubes supporting the deck.
None of our employees are represented by a union, and our relationship with our employees is satisfactory. Competition ATV and UTV Markets The ATV and UTV markets in the United States are very concentrated with a limited number of large well capitalized manufacturers representing more than 80% of the market.
None of our employees are represented by a union, and our relationship with our employees is satisfactory. Competition ATV and UTV Markets The major players in the market include Polaris, Bombardier Recreational Products (BRP), Honda and Yamaha.
In terms of our product offerings, we currently offer both gas-powered and electric-powered boats and maintain a complete line of replacement parts and a broad range of accessories. We also intend to implement a “build a boat” program, where customers can select from a variety of models and add accessories.
We entered the Pontoon Boats market in 2020 when we successfully launched our first series of Pontoon Boats. From inception, we have manufactured our Pontoon Boats in our Dallas facility. In terms of our product offerings, we currently offer both gas-powered and electric-powered boats and maintain a complete line of replacement parts and a broad range of accessories.
Manufacturing and Sourcing We manufacture our Pontoon Boats in our 286,000 sq. ft. facility of which 220,000 sq. ft. is dedicated to Massimo Motor Sports and 66,000 sq. ft. to Massimo Marine. Our facility is adjacent to a seven-acre storage area for boats in Dallas, Texas.
We also sell select models direct which are paid in full prior to pick up or shipment. Manufacturing and Sourcing We manufacture our Pontoon Boats in our 376,000 sq. ft. facility of which 280,000 sq. ft. is dedicated to Massimo Motor Sports and 96,000 sq. ft. to Massimo Marine.
These relationships also enable us to cut costs while maintaining quality standards and plan shipments to control our inventory levels. Many of our manufacturing partners’ facilities are located in China, which enables them to offer lower cost manufacturing and rapid lead-times for end-market distribution in the United States.
These relationships also enable us to cut costs while maintaining quality standards and plan shipments to control our inventory levels.
This space houses a design center, two assembly lines, training rooms, an approximately 40,000 square foot parts department, and over thirty loading docks. Structural components and other materials are sourced locally from a variety of suppliers and electrical components and engines are obtained through an exclusive arrangement with Mercury Marine.
Our facility is adjacent to a seven-acre storage area for boats in Dallas, Texas. This space houses a design center, two assembly lines, training rooms, an approximately 40,000 square foot parts department, and over thirty loading docks.
We plan to expand our product lines by introducing new models of UTVs, ATVs and recreational vehicles that cater to different customer needs and preferences. This will include models with advanced features that will include remote diagnostics capabilities and electric lines of our UTVs.
We have expanded our product lines by introducing new models of UTVs, ATVs and recreational vehicles to meet diverse customer needs and preferences. In 2024, we launched new all-weather UTV models equipped with enclosures and air conditioning, delivering both comfort and performance. We plan to extend these features to all UTV models in the near future.
Financing Arrangements We have arrangements with Northpoint Commercial Finance and Automotive Finance Corporation to provide floor plan financing for our dealers and distributors. Substantially all of our products, including ATVs, UTVs, golf carts and Pontoon Boats are financed under arrangements in which we are paid within a few days of a product’s shipment.
Our warranty, along with the Mercury are transferable during the original warranty period and are in line with top level original equipment manufacturers. 13 Financing Arrangements We have arrangements with Northpoint Commercial Finance and Automotive Finance Corporation to provide floor plan financing for our dealers and distributors.
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Our emphasis on providing the sports enthusiast with powerful, affordable, and reliable products has enabled us to grow annual revenues and net income to in excess of $86 million and $4 million, respectively, in the fiscal year ended December 31, 2022 and in excess of $115 million and $10 million, respectively, in the fiscal year ended December 31, 2023.
Added
On June 11, 2024, we entered into a strategic partnership agreement with Armlogi Holding Corp (“Armlogi”), a U.S.-based warehousing and logistics service provider, to gain access to Armlogi’s warehousing facilities and tailored logistics services for fast order fulfillment of UTVS, ATVs, Go-Karts and Golf Carts.
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Since that time, we have successfully entered the market for motorcycles, UTVs, ATVs, golf carts and Pontoon Boats, as well as a juvenile line from go karts to balance bikes and snow equipment.
Added
Pursuant to the agreement Armlogi will receive containers of our vehicle kits arriving from Asian suppliers at its warehouses in Savannah, GA, Edison, NJ, and Walnut, CA. Massimo will provide vehicle assembly at the warehouses, and Armlogi will supply inventory management, storage services, logistics, and delivery to final order destinations.
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We seek to provide our customers with reliable, high-quality products at great value.
Added
We have also partnered with Armlogi to gain access to its warehousing facilities and tailored logistics services for fast order fulfillment of UTVS, ATVs, Go-Karts and Golf Carts.
Removed
By doing so, we believe we have developed a loyal customer base and achieved annual revenues and net income in excess of $86 million and $4 million, respectively, in the fiscal year ended December 31, 2022, and in excess of $115 million and $10 million, respectively, in the fiscal year ended December 31, 2023.
Added
As of the date of this report we have opened five new distribution centers in California, Georgia, New Jersey, Texas, and Illinois through our partnership with Armlogi This expansion has enhanced our ability to efficiently deliver products, replacement parts, and accessories to customers, distributors, and retailers across the western and eastern United States.
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The shares of common stock were sold at a price of $4.50 per unit, generating gross proceeds to the Company of approximately $5.85 million.
Added
As a result, we have reduced delivery times and associated costs, improved operational efficiency, and enhanced customer satisfaction while strengthening our margins. 5 ● Invest in our Infrastructure . We believe our success greatly depends on our ability to maintain our operating efficiencies. To support this initiative, we implemented an automated robotic assembly line, increasing production efficiency.
Removed
We also granted the underwriters the option, exercisable for 45 days from April 1, 2024, to purchase up to an additional 195,000 shares from our Company at the IPO price less the underwriting discount and commissions to cover over-allotments.
Added
Additionally, we upgraded key components of our information technology (IT) systems, integrating our online sales platform with our enterprise resource planning (ERP) system. We remain committed to further investments in our infrastructure to enhance operational efficiency. ● Expand Our Existing Product Lines .
Removed
Our common stock began trading on April 2, 2024 on The Nasdaq Capital Market (“Nasdaq”) under the symbol “MAMO.” Impact of COVID-19 In December 2019, Coronavirus Disease (“COVID-19”) was first reported to have surfaced in Wuhan, China.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Relating to Our Business, Strategy, and Industry We have a limited operating history on which to judge our performance and assess our prospects for future success. In 2017, we entered the market and began distributing recreational vehicles, including UTVs and ATVs. In 2020, we began to distribute pontoon and tritoon boats and, more recently, we began to distribute accessories.
Biggest changeIn 2017, we entered the market and began distributing recreational vehicles, including UTVs and ATVs. In 2020, we began to distribute pontoon and tritoon boats and, more recently, we began to distribute accessories. Consequently, we have a limited operating history on which to evaluate our prospects and those of our products. We may fail to continue our growth.
Even if we maintain product liability insurance in the future, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Our insurance may not be sufficient.
Even if we maintain product liability insurance in the future, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
Any disruption of these manufacturers to supply us with appropriately priced products on a timely basis could have a material adverse effect on our business. ● Our management team has no experience operating a company with publicly traded shares. ● Economic conditions that impact consumer spending may have a material adverse effect on our business, and our partners’ business. ● We currently maintain all our cash and cash equivalents with three financial institutions. ● We face intense competition in all product lines, including from some competitors that have greater financial and marketing resources. ● Any decline in the social acceptability of our products or any increased restrictions on the access or the use of the Company’s products in certain locations could materially adversely affect our business, results operations, or financial condition. ● Our future expansion plans are subject to uncertainties and risks, and distribution centers we intend to open may not result in increased sales or efficiencies. ● Our limited investment in R&D of new products may adversely affect our ability to enhance existing products and develop and market new products. ● The inability of our dealers and distributors to secure adequate access to capital could materially adversely affect our business. ● We depend upon the successful management of inventory levels, both ours and that of our dealers ● There is no assurance there will not be disruptions to trade between China and the United States. ● We may not be able to successfully maintain our strategy of relying upon offshore manufacturers. ● Supply problems, termination or interruption of supply arrangements or increases in the cost of products could have a material adverse effect on our business. ● The high cost of delivering our recreational boats may limit the geographic market for these products. ● Higher fuel costs can materially adversely affect our business. ● Changes in the credit markets could decrease the ability of consumers to purchase our products and have a material adverse effect on our business. ● We may require additional capital which may not be available. ● Our business depends on the continued contributions made by Mr.
Any disruption of these manufacturers to supply us with appropriately priced products on a timely basis could have a material adverse effect on our business. ● Our management team has no experience operating a company with publicly traded shares. ● Economic conditions that impact consumer spending may have a material adverse effect on our business, and our partners’ business. ● We currently maintain all our cash and cash equivalents with three financial institutions. ● We face intense competition in all product lines, including from some competitors that have greater financial and marketing resources. ● Any decline in the social acceptability of our products or any increased restrictions on the access or the use of the Company’s products in certain locations could materially adversely affect our business, results operations, or financial condition. ● Our future expansion plans are subject to uncertainties and risks, and distribution centers we intend to open may not result in increased sales or efficiencies. ● Our limited investment in R&D of new products may adversely affect our ability to enhance existing products and develop and market new products. ● The inability of our dealers and distributors to secure adequate access to capital could materially adversely affect our business. ● We depend upon the successful management of inventory levels, both ours and that of our dealers ● There is no assurance there will not be disruptions to trade between China and the United States. ● We may not be able to successfully maintain our strategy of relying upon offshore manufacturers. ● Supply problems, termination or interruption of supply arrangements or increases in the cost of products could have a material adverse effect on our business. ● The high cost of delivering our Pontoon Boats may limit the geographic market for these products. ● Higher fuel costs can materially adversely affect our business. ● Changes in the credit markets could decrease the ability of consumers to purchase our products and have a material adverse effect on our business. ● We may require additional capital which may not be available. ● Our business depends on the continued contributions made by Mr.
The cost of delivering a Pontoon Boat is substantial relative to its purchase price. Consequently, many purchasers of our pontoons arrange to pick up their boats at our facility in Dallas and it may be difficult to sell to reach customers located at substantial distances from our facilities.
The cost of delivering a Pontoon Boat is substantial relative to its purchase price. Consequently, many purchasers of our Pontoon Boats arrange to pick up their boats at our facility in Dallas and it may be difficult to sell to reach customers located at substantial distances from our facilities.
In general, retail sales of our products are highest in their particular season of use and in the immediately preceding period. For example, retail sales for ATVs and boats will be highest in winter and spring. Revenues in the first half of the fiscal year have generally been lower than those in the second half.
In general, retail sales of our products are highest in their particular season of use and in the immediately preceding period. For example, retail sales for ATVs and Pontoon Boats will be highest in winter and spring. Revenues in the first half of the fiscal year have generally been lower than those in the second half.
Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration. Massimo Group is a holding company.
Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration. Massimo is a holding company.
A perceived consensus among scientists, legislators and others regarding the impact of increased levels of greenhouse gases, including carbon dioxide, on climate change has led to significant legislative and regulatory efforts to limit greenhouse gas emissions.
A consensus among scientists, legislators and others regarding the impact of increased levels of greenhouse gases, including carbon dioxide, on climate change has led to significant legislative and regulatory efforts to limit greenhouse gas emissions.
His interests may not be aligned with the interests of our other shareholders, and he could prevent or cause a change of control or other transactions. Mr. David Shan owns 77.7% of our outstanding shares. Accordingly, Mr.
His interests may not be aligned with the interests of our other shareholders, and he could prevent or cause a change of control or other transactions. Mr. David Shan owns 77% of our outstanding shares. Accordingly, Mr.
We will invest significant resources to promote our brand names to obtain favorable recognition for us and our products among the public and, in particular, prospective distributors and dealers.
We invest significant resources to promote our brand names to obtain favorable recognition for us and our products among the public and, in particular, prospective distributors and dealers.
This increases the risk of accidental clashes or misunderstandings that could escalate into conflict, which will affect both our China-mainland-based and Taiwan-based suppliers. Our major supplier is a state-owned entity in China. During 2022 and 2023, we purchased a majority of our products from Linhai Powersports, which is a state-owned entity (“SOE”) in China.
This increases the risk of accidental clashes or misunderstandings that could escalate into conflict, which will affect both our China-mainland-based and Taiwan-based suppliers. Our major supplier is a state-owned entity in China . During 2023 and 2024, we purchased a majority of our products from Linhai Powersports, which is a state-owned entity (“SOE”) in China.
Additionally, we are working with our current financial institutions to increase the amount of funds held there that are insured by FDIC Insurance.
We are working with our current financial institutions to increase the amount of funds held there that are insured by FDIC Insurance.
As a result, an increase in the cost of the raw materials, parts, and components our suppliers use in the manufacture of our products could reduce our profitability and have a material adverse effect on our business, results of operations or financial condition. The high cost of delivering our recreational boats may limit the geographic market for these products.
As a result, an increase in the cost of the raw materials, parts, and components our suppliers use in the manufacture of our products could reduce our profitability and have a material adverse effect on our business, results of operations or financial condition. The high cost of delivering our Pontoon Boats may limit the geographic market for these products.
David Shan, our founder and principal shareholder, relocated to the United States from China in 1995. Mr. Shan and the members of our senior management team have never operated a company with shares traded in the public markets and consequently, is not familiar with many of the requirements applicable to a public company with shares listed on Nasdaq.
David Shan, our founder and principal shareholder, relocated to the United States from China in 1995. Mr. Shan and the members of our senior management team have never operated a company with shares traded in the public markets and consequently, are not familiar with many of the requirements applicable to a public company with shares listed on Nasdaq.
We, Massimo Group, are a holding company and our only significant assets are the membership interest and capital stock of our subsidiaries. As a result, we are subject to the risks attributable to our subsidiaries. As a holding company, we conduct substantially all of our business through its subsidiaries, which generate substantially all of our revenues.
Massimo is a holding company and our only significant assets are the membership interest and capital stock of our subsidiaries. As a result, we are subject to the risks attributable to our subsidiaries. As a holding company, we conduct substantially all of our business through its subsidiaries, which generate substantially all of our revenues.
The USDA’s program, The Food Safety Certification for Specialty Crops program provides up to $200 million in assistance for specialty crop producers who incur eligible on-farm food safety program expenses to obtain or renew a food safety certification in calendar years 2022 or 2023.
The USDA’s program, The Food Safety Certification for Specialty Crops program provides up to $200 million in assistance for specialty crop producers who incur eligible on-farm food safety program expenses to obtain or renew a food safety certification in calendar years 2023 or 2024.
The nature of certain of our product lines, including our ATV, UTV, and recreational boat product lines, requires us to purchase or manufacture products well in advance of the time they will be offered for sale.
The nature of certain of our product lines, including our ATV, UTV and Pontoon Boat product lines, requires us to purchase or manufacture products well in advance of the time they will be offered for sale.
We may not be able to justify the cost of compliance in a particular state or locality thus necessitating that we allow our license to expire. ● We have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our business and results of operations. ● Our business could be materially harmed by epidemics, pandemics such as COVID-19 and other public health emergencies. ● Natural disasters, unusually adverse weather, pandemic outbreaks, boycotts, and geo-political events could materially adversely affect our business. ● Our ability, or lack thereof, to attract, recruit, and maintain talented sales representatives may adversely affect our business and our plans to expand our market. ● Our ability, or lack thereof, to establish strategic partnerships and expand our distribution channels may adversely affect our business and our plans. ● Policies of the United States granting farmers incentives may cease. ● There is no existing market for our securities, and we do not know if one will develop. ● The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment. ● We have no current plans to pay cash dividends on our common stock for the foreseeable future. ● Our founder and principal shareholder have substantial influence over our Company. ● We will incur significant increased costs as a result of operating as a public company and will be required to devote substantial time to compliance initiatives. ● Changes to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates may cause us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations. ● As an “emerging growth company” under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders with less information or fewer rights available to stockholders of more mature companies. 20 ● If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline. ● Anti-takeover provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock. ● Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. ● Our Bylaws provide that the Second Judicial District Court of Washoe County of the State of Nevada is the sole and exclusive forum for certain stockholder litigation matters.
We may not be able to justify the cost of compliance in a particular state or locality thus necessitating that we allow our license to expire. ● We have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our business and results of operations. ● Our business could be materially harmed by epidemics, pandemics, or other public health emergencies, boycotts, and geo-political events. ● Our ability, or lack thereof, to attract, recruit, and maintain talented sales representatives may adversely affect our business and our plans to expand our market. ● Our ability, or lack thereof, to establish strategic partnerships and expand our distribution channels may adversely affect our business and our plans. ● Policies of the United States granting farmers incentives may cease. ● There is no existing market for our securities, and we do not know if one will develop. ● The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment. ● We have no current plans to pay cash dividends on our common stock for the foreseeable future. ● Our founder and principal shareholder have substantial influence over our Company. ● We will incur significant increased costs as a result of operating as a public company and will be required to devote substantial time to compliance initiatives. ● Changes to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates may cause us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations. ● As an “emerging growth company” under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders with less information or fewer rights available to stockholders of more mature companies. ● If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline. ● Anti-takeover provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock. ● Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. ● Our Bylaws provide that the Second Judicial District Court of Washoe County of the State of Nevada is the sole and exclusive forum for certain stockholder litigation matters. 20 Risks Relating to Our Business, Strategy, and Industry We have a limited operating history on which to judge our performance and assess our prospects for future success.
We depend on third party suppliers to manufacture many of the products we sell, in particular, ATVs and UTVs, as opposed to our recreational boats which we manufacture in our Dallas facility.
We depend on third party suppliers to manufacture many of the products we sell, in particular, ATVs and UTVs, as opposed to our Pontoon Boats which we manufacture in our Dallas facility.
This may limit our ability to increase sales of our pontoons without opening new manufacturing facilities. Higher fuel costs can materially adversely affect our business, results of operations or financial condition. Higher fuel costs increase the transportation cost both of acquiring our inventory and shipping products to customers.
This may limit our ability to increase sales of our Pontoon Boats without opening new manufacturing facilities. Higher fuel costs can materially adversely affect our business, results of operations or financial condition. Higher fuel costs increase the transportation cost both of acquiring our inventory and shipping products to customers.
Our management and other personnel will need to devote a substantial amount of time to ensure compliance with these requirements and we anticipate that we may need to rely upon outside advisors, counsel, and consultants to ensure compliance with applicable laws and regulations and undertaking various actions, such as implementing new internal controls and procedures.
Our management and other personnel need to devote a substantial amount of time to ensure compliance with these requirements and we often need to rely upon outside advisors, counsel, and consultants to ensure compliance with applicable laws and regulations and undertaking various actions, such as implementing new internal controls and procedures.
Prior to the commencement of trading of our common stock on April 2, 2024, no public market for our common stock existed. Although our common stock is listed on Nasdaq, an active trading market for our common stock may not develop, or if developed, be sustained.
Prior to the commencement of trading of our common stock on Apr 1, 2024, no public market for our common stock existed. Although our common stock is listed on Nasdaq, an active trading market for our common stock may not develop, or if developed, be sustained.
In fiscal year ended December 31, 2023 and 2022, approximately 30 % and 25% of our consumers were farmers, respectively. As a supplier to farmers, we are aware that farmers rely on U.S. governmental programs to fund the purchase of supplies from us and operate their business. For example, the U.S.
In fiscal year ended December 31, 2024 and 2023, approximately 60% and 40% of our consumers were farmers, respectively. As a supplier to farmers, we are aware that farmers rely on U.S. governmental programs to fund the purchase of supplies from us and operate their business. For example, the U.S.
Our results of operations experience substantial fluctuations from quarter to quarter and year to year. A portion of our sales revenue generated from Massimo Marine has seasonable sales pattern. For the fiscal years ended December 31, 2023 and 2022, our revenue generated from the Massimo Marine made up approximately 10.2% and 9.8% of our total revenue, respectively.
Our results of operations experience substantial fluctuations from quarter to quarter and year to year. A portion of our sales revenue generated from Massimo Marine has seasonable sales pattern. For the fiscal years ended December 31, 2024 and 2023, our revenue generated from the Massimo Marine made up approximately 3.4% and 10.2% of our total revenue, respectively.
We anticipate that compliance with these rules and regulations will increase our legal, accounting, and financial compliance costs substantially. If we fail to develop and protect our brand names and reputation, we may not attract and retain new distributors and dealers, or customers, which could adversely affect our revenues and financial performance.
Compliance with these rules and regulations have increased our legal, accounting, and financial compliance costs substantially. If we fail to develop and protect our brand names and reputation, we may not attract and retain new distributors and dealers, or customers, which could adversely affect our revenues and financial performance.
Adverse determinations of material product liability claims made against us could also harm our reputation and cause us to lose customers and could have a material adverse effect on our business, results of operations or financial condition .
Adverse determinations of material product liability claims made against us could also harm our reputation and cause us to lose customers and could have a material adverse effect on our business, results of operations or financial condition . Our insurance may not be sufficient.
Upon becoming a publicly traded company, we are now required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
Approximately 68% of the products we purchased in the fiscal year ended December 31, 2023, based on cost, were purchased from three suppliers in China of which 48% was purchased from a single supplier located in Shanghai, China.
Approximately 79% of the products we purchased in the fiscal year ended December 31, 2024, based on cost, were purchased from three suppliers in China of which 54% was purchased from a single supplier located in Shanghai, China.
Approximately 68% of the products we purchased in the fiscal year ended December 31, 2023, based on cost, were purchased from three suppliers in China of which 48% was purchased from a single supplier located in Shanghai, China.
Approximately 79% of the products we purchased in the fiscal year ended December 31, 2024, based on cost, were purchased from three suppliers in China of which 54% was purchased from a single supplier located in Shanghai, China.
We have supply agreements with approximately 12 suppliers, one of which are based in the U.S. and 11 of which are based in China.
We have supply agreements with approximately 15 suppliers, 2 of which are based in the U.S., 1 of which are based in Taiwan, and 12 of which are based in China.
No assurance can be given that our historical claims record will not change, that material product liability claims will not be made in the future against us, or that claims will not arise in the future in excess of our indemnities and insurance coverage.
We have two material pending litigation cases as of the date of this report. No assurance can be given that our historical claims record will not change, that material product liability claims will not be made in the future against us, or that claims will not arise in the future in excess of our indemnities and insurance coverage.
Summary of Significant Risks Affecting Our Company Our significant risks may be summarized as follows: ● We have a limited operating history on which to judge our performance and assess our prospects for future success. ● Resources devoted to product innovation may not yield new products that achieve commercial success. ● We rely on independent dealers and distributors to manage the retail distribution of many of our products. ● We rely on third parties to manufacture many of the products we sell. 18 ● The majority of the products we purchase are manufactured by in China and their operations are subject to risks associated with business operations in China.
In that event, the trading price of our securities could decline and you could lose all or part of your investment. 18 Summary of Significant Risks Affecting Our Company Our significant risks may be summarized as follows: ● We have a limited operating history on which to judge our performance and assess our prospects for future success. ● We rely on independent dealers and distributors to manage the retail distribution of many of our products. ● We rely on third parties to manufacture many of the products we sell. ● The majority of the products we purchase are manufactured by in China and their operations are subject to risks associated with business operations in China.
David Shan, our Chief Executive Officer and Chairman of the Board of Directors holds approximately 77.7% of the voting power in us (or approximately 77.3% if the underwriters exercise their option to purchase additional shares in full) and, as a result, we are a “controlled company” within the meaning of the Nasdaq listing standards.
David Shan, our Chief Executive Officer and Chairman of the Board of Directors holds approximately 77% of the voting power in us and, as a result, we are a “controlled company” within the meaning of the Nasdaq listing standards.
To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.
We may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.
We rely on freights to ship the products that we purchase from our suppliers based in China to our facility in Dallas, Texas and as such, we may face risks related to overseas freights cost fluctuation. We have supply agreements with approximately 12 suppliers, one of which are based in the U.S. and 11 of which are based in China.
We rely on freights to ship the products that we purchase from our suppliers based in China to our facility in Dallas, Texas and as such, we may face risks related to overseas freights cost fluctuation.
Approximately, 58% of our purchases in the fiscal year ended December 31, 2022 and 63% of our purchases in the fiscal year ended December 31, 2023 were made from two suppliers, and, as of both December 31, 2023 and December 31, 2022, one supplier accounted for more than 30% of the Company’s total accounts payable respectively.
Approximately, 67% of our purchases in the fiscal year ended December 31, 2023 and 74% of our purchases in the fiscal year ended December 31, 2024 were made from two suppliers, and, as of both December 31, 2023 and December 31, 2024, our largest supplier accounted for 41% and 33% of the Company’s total accounts payable respectively.
The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events, such as civil unrest and acts of terrorism, upheavals in U.S.-China relations, or similar disruptions could materially adversely affect our business, results of operations or financial condition.
Our business could be materially and adversely affected by natural disasters or the outbreak of health epidemics, boycotts and geo-political events, such as civil unrest and acts of terrorism, upheavals in U.S.-China relations, or similar disruptions could materially adversely affect our business, results of operations or financial condition..
If any of the following events occur or any additional risks presently unknown to us actually occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline and you could lose all or part of your investment.
If any of the following events occur or any additional risks presently unknown to us actually occur, our business, financial condition and operating results may be materially adversely affected.
We may require additional capital which may not be available. We will require significant expenditures to fund future growth. We intend to fund our growth out of the proceeds of our IPO and internal sources of liquidity or through additional financing from external sources.
We intend to fund our growth out of the proceeds of our IPO and internal sources of liquidity or through additional financing from external sources.
We may not be able to successfully maintain our strategy of relying upon offshore manufacturers. We continually aim to lower operational costs, increase operational efficiencies and lower costs of acquiring inventory.
Ongoing trade tensions and regulatory changes continue to create uncertainty, posing a risk to our business operations and profitability. We may not be able to successfully maintain our strategy of relying upon offshore manufacturers. We continually aim to lower operational costs, increase operational efficiencies and lower costs of acquiring inventory.
Our results of operations are therefore sensitive to changes in overall economic conditions, primarily in North America, that impact consumer spending and particularly discretionary spending.
Our products compete with a variety of other recreational products and activities for consumers’ discretionary income and leisure time. Our results of operations are therefore sensitive to changes in overall economic conditions, primarily in North America, that impact consumer spending and particularly discretionary spending.
In addition, a labor dispute involving some or all our or that of our suppliers, distributors, retailers or employees may harm our reputation, disrupt our operations and reduce our revenues, and resolution of disputes could increase our costs.
In addition, a labor dispute involving some or all our or that of our suppliers, distributors, retailers or employees may harm our reputation, disrupt our operations and reduce our revenues, and resolution of disputes could increase our costs. 34 Our business could be materially harmed by epidemics, pandemics, or any other outbreaks and public health emergencies, boycotts, and geo-political events.
These measures, or other economic, political, or social developments in China may affect our China-based suppliers, which may adversely affect our business and operating results. 26 There is no assurance there will not be disruptions to trade between China and the United States In the recent past, the governments of the United States and China have each imposed tariffs on certain products and taken other actions that have had an adverse impact on trade between the two countries.
These measures, or other economic, political, or social developments in China may affect our China-based suppliers, which may adversely affect our business and operating results. 26 There is no assurance there will not be disruptions to trade between China and the United States The U.S.-China trade relationship has become increasingly strained, leading to substantial tariff increases and other trade-related actions that further impact our business.
You should not invest in our Company with the expectation that we will be able to sell the business in order to provide liquidity or a profit for our investors. Our management will have broad discretion in how we use the net proceeds of our IPO and might not use them effectively.
You should not invest in our Company with the expectation that we will be able to sell the business in order to provide liquidity or a profit for our investors. 38 Our founder and principal shareholder has substantial influence over our Company.
Also, higher fuel costs, whether petroleum based or electric, increase the cost of owning and operating many of our products, which can reduce demand for them and so materially adversely affect our business, results of operations or financial condition. 27 Changes in the credit markets could decrease the ability of consumers to purchase our products and have a material adverse effect on our business, results of operations or financial condition .
Also, higher fuel costs, whether petroleum based or electric, increase the cost of owning and operating many of our products, which can reduce demand for them and so materially adversely affect our business, results of operations or financial condition. 27 We may require additional capital which may not be available. We will require significant expenditures to fund future growth.
From 2017 to 2023, we have been subject to over fifty (50) litigation proceedings relating to: accidental fires, defective steering mechanisms, faulty batteries and braking systems, bad engines and other issues of product design and/or manufacturing defect. Some of these proceedings were filed pursuant to the plaintiffs experiencing death, injury or property damage.
These proceedings may negatively affect our reputation, hurt the perception of our products being safe and subject us to damages. From 2017 to 2024, we have been subject to two material pending litigation proceedings relating to: accidental fires, defective steering mechanisms, faulty batteries and braking systems, bad engines and other issues of product design and/or manufacturing defect.
Any deterioration in general economic conditions that further diminishes consumer confidence or discretionary income may further reduce our sales and materially adversely affect our business, results of operations or financial condition. We cannot predict the timing or strength of economic recovery, either worldwide or in the specific markets where we compete.
Such reductions could materially adversely affect our business, results of operations or financial condition. Demand for our products is significantly influenced by weak economic conditions and increased market volatility worldwide. Any deterioration in general economic conditions that diminishes consumer confidence or discretionary income may reduce our sales and materially adversely affect our business, results of operations or financial condition.
We may be forced to cover the costs of certain realized risks which may have a material adverse effect on our business, results of operations or financial condition. 32 An adverse determination in any significant product liability claim could materially adversely affect our business, results of operations or financial condition.
We may be forced to cover the costs of certain realized risks which may have a material adverse effect on our business, results of operations or financial condition. 32 We have been in the past and may be in the future subject to several litigation proceedings relating to defective products that have caused property damage, physical injury and death.
While we have been able to settle the vast majority of these claims, there remains a possibility that these past claims may adversely affect the future ability to sell our products. Distributors, dealers and customers may perceive our products to be unsafe or poorly built and may refuse to carry them in stores or purchase them for personal use.
Some of these proceedings were filed pursuant to the plaintiffs experiencing death, injury or property damage. While we have been able to settle the vast majority of these claims, there remains a possibility that these past claims may adversely affect the future ability to sell our products.
We may be subject to similar litigation proceedings in the future which may result in additional damages and a poor reputation among our distributors, dealers and customers. This could have a material adverse effect on our business, results of operations or financial condition.
Distributors, dealers and customers may perceive our products to be unsafe or poorly built and may refuse to carry them in stores or purchase them for personal use. We may be subject to similar litigation proceedings in the future which may result in additional damages and a poor reputation among our distributors, dealers and customers.
Consequently, we have a limited operating history on which to evaluate our prospects and those of our products. We may fail to continue our growth. You should not consider our historical growth and expansion of our business as indicative of our ability to grow in the future.
You should not consider our historical growth and expansion of our business as indicative of our ability to grow in the future. Economic conditions that impact consumer spending may have a material adverse effect on our business, results of operations or financial condition.
Economic conditions that impact consumer spending may have a material adverse effect on our business, results of operations or financial condition. Our products compete with a variety of other recreational products and activities for consumers’ discretionary income and leisure time.
This could have a material adverse effect on our business, results of operations or financial condition.
Any such disruption may materially impact our business, results of operations or financial condition.
Material adverse effects from diseases could result in numerous known and currently unknown ways including quarantines and lockdowns which impair the abilities of merchants to ship products. Any such disruption may materially impact our business, results of operations or financial condition.
GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; and (iii) strengthening the supervision and controls on our comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.
We have also implemented a series of training programs across departments and enhanced supervision and controls over our comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.
Removed
Such reductions could materially adversely affect our business, results of operations or financial condition. Worldwide economic conditions continue to be challenging as economies recover from the effects of the COVID-19 global pandemic. Demand for our products has been significantly influenced by weak economic conditions and increased market volatility worldwide.
Added
As of the date of this report we have opened five new distribution centers in California, Georgia, New Jersey, Texas, and Illinois through our partnership with Armlogi.
Removed
As a result of the recent inability of certain businesses with accounts at Silicon Valley Bank to gain access to their deposits and the greater focus on the concerns of potential failures of other financial institutions in the future, we are currently diversifying our investments by transferring cash not required for immediate use into short-term treasury bills and also considering transferring a portion of our cash and cash equivalents to other financial institutions in order to reduce the risks associated with maintaining all of our cash and cash equivalents at three financial institutions.
Added
We have supply agreements with approximately 15 suppliers, 2 of which are based in the U.S., 1 of which are based in Taiwan, and 12 of which are based in China.
Removed
We intend to use a portion of the proceeds of our IPO to open new distribution centers in California and the Southeast of the United States.
Added
In 2019, the U.S. imposed a 15% tariff on Chinese imports, later reduced to 7.5% in 2020. However, the temporary exclusion for certain products expired in September 2020, and tariffs have since risen. Most recently, in February 2025, the U.S. introduced a 10% tariff on all imported goods from China, which doubled to 20% in March 2025.
Removed
Resources devoted to product innovation may not yield new products that achieve commercial success.
Added
While we continue exploring ways to mitigate this impact, including potential pricing adjustments, it remains uncertain whether we can pass these costs on to customers or if higher prices will negatively affect sales. Beyond tariffs, both governments have implemented additional measures that have disrupted trade, increased costs, and created uncertainty in supply chains.
Removed
Our ability to develop new and innovative products or identify and acquire new and innovative products from third-party manufacturers, depends on, among other factors, our ability to understand evolving market trends and translate our insights into identifying, and then designing and manufacturing or otherwise obtaining, commercially successful new products.
Added
These actions may limit the availability of certain products from China, further restricting our ability to acquire necessary components at competitive prices. There is no assurance that the U.S. or Chinese governments will not impose additional tariffs or other restrictive measures in the future.
Removed
If we are unable to do so, our relationships with our distributors and dealers and product sales could be harmed significantly. The recreation industry is characterized by rapid and frequent changes in demand for products. Our failure to accurately predict these trends could harm our relationships and cause us to fail to increase our revenues.
Added
Further trade barriers could disrupt our supply chain, increase costs, and limit our ability to source components at competitive prices. If we are unable to offset these rising costs through operational efficiencies or pricing strategies, our margins and overall financial performance may be adversely affected.
Removed
Approximately 66% of the products we purchased in 2022, based on cost, were purchased from three suppliers in China of which 45% was purchased from a single supplier located in Shanghai, China.
Added
As of December 31, 2024, we have identified no material weaknesses related to the Company’s internal control over financial reporting. Over the past year, we have implemented measures to address previously identified material weaknesses in our internal control and have made significant progress in remediating these issues.
Removed
Approximately 66% of the products we purchased in the fiscal year ended December 31, 2022, based on cost, were purchased from three suppliers in China of which 45% was purchased from a single supplier located in Shanghai, China.
Added
To strengthen our financial reporting function, we have hired additional staff and engaged external accounting consultants with expertise in U.S. GAAP and SEC reporting. Additionally, we have integrated and automated our financial reporting system with our ERP system to minimize manual errors.
Removed
There is no assurance that either of these governments will not take similar actions in the future which limit the number of products we may acquire from suppliers based in China or increase the cost of such products. Any such action could limit our sales or decrease our margins, which may adversely affect our business and operating results.
Removed
Changes in economic conditions could result in a deterioration or increased volatility in the credit and lending markets, which could adversely impact the consumers who purchase our products and rely upon financing for such purchases.
Removed
If financing is not available to consumers or dealers on satisfactory terms, it is possible that our business, results of operations or financial condition could be materially adversely affected.
Removed
In addition, concerns regarding the debt ceiling of the United States and budget deficit resulting in the downgrade of the United States government’s credit rating and the impact of additional credit agency downgrades could have a material adverse effect on worldwide economic conditions, the financial markets, and the availability of credit and, consequently, have a material adverse effect on our business, results of operations or financial condition.
Removed
Since the beginning of the COVID-19 pandemic, we have had to adapt health and safety measures throughout our facilities to comply with changing local regulations in connection with the COVID-19 health crisis, resulting in incremental costs.
Removed
The development, manufacture, sale and use of our products exposes us to significant risks associated with product liability claims. If our products are defective or used incorrectly by consumers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against us.
Removed
Changes to our suppliers’ manufacturing processes and the production of new products could result in product quality issues, thereby increasing the risk of litigation and potential liability. Further, we have limited control over the design, manufacture, and assembly, processes because these are undertaken by our suppliers.
Removed
Any losses that we may suffer from any liability claims and the effect that any product liability litigation may have upon the brand image, reputation and marketability of our products could have a material adverse impact on our business, results of operations or financial condition. We have three (3) pending litigation cases as of April 12, 2024.
Removed
We have been in the past and may be in the future subject to several litigation proceedings relating to defective products that have caused property damage, physical injury and death. These proceedings may negatively affect our reputation, hurt the perception of our products being safe and subject us to damages.
Removed
Further, if we enter into a new market with unionized construction companies, or the construction companies in our current markets become unionized, construction and build-out costs for new restaurants in such markets could materially increase. 34 Our business could be materially harmed by epidemics, pandemics such as the COVID-19 pandemic, and other outbreaks and public health emergencies.
Removed
In March 2020, the World Health Organization announced that infections caused by COVID-19 had become a pandemic.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
Biggest changeIn 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition . However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
Our cybersecurity team engages third-party security experts to assist with our processes for assessing, identifying, and managing risks from cybersecurity threat, including, for example, assessment of the maturity of our cybersecurity risk management program, penetration testing, employee awareness testing, phish testing, and incident monitoring and response, including conducting tabletop exercises. 43 Our cybersecurity risk management program is under the direction of IT manager, who has master degree in IT management.
Our cybersecurity team engages third-party security experts to assist with our processes for assessing, identifying, and managing risks from cybersecurity threat, including, for example, assessment of the maturity of our cybersecurity risk management program, penetration testing, employee awareness testing, phish testing, and incident monitoring and response, including conducting tabletop exercises. 43 Our cybersecurity risk management program is under the direction of IT manager, who has a master’s degree in IT management.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeAt those offices is also our 286,000 sq. ft. facility of which 220,000 sq. ft. is dedicated to Massimo Motor Sports and 66,000 sq. ft. to Massimo Marine. Our facility is adjacent to seven acres for boat storage, which houses a design center, two assembly lines, our parts department, a test track, dyno, and over 30 loading docks.
Biggest changeAt those offices is also our 376,000 sq. ft. facility of which 280,000 sq. ft. is dedicated to Massimo Motor Sports and 96,000 sq. ft. to Massimo Marine. Our facility is adjacent to seven acres for boat storage, which houses a design center, two assembly lines, our parts department, a test track, dyno, and over 30 loading docks.
Item 2. Properties. Our executive offices are located at 3101 W Miller Road, Garland, Texas 75041., and our telephone number is (877) 881-6376. The cost for our use of this space is 95,000 per month plus property tax and insurance. We consider our current office space adequate for our current operations.
Item 2. Properties. Our executive offices are located at 3101 W Miller Road, Garland, Texas 75041., and our telephone number is (877) 881-6376. The cost for our use of this space is $230,250 per month plus property tax and insurance. We consider our current office space adequate for our current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+4 added−5 removed4 unchanged
Biggest changeDespite us being one of the ten entities that plaintiff has sued, we have had minimal interactions with Zhejiang. We have not purchased any products from Zheijang, and we intend to file a motion to dismiss for lack of personal jurisdiction and failure to state a claim.
Biggest changeDespite us being one of the ten entities that plaintiff has sued, we have had minimal interactions with Zhejiang. We have not purchased any products from Zheijang. In February 2024, Zhejiang filed a Second Amended Complaint. Massimo filed a demurrer seeking to dismiss the Second Amended Complaint due to Zhejiang’s failure to state a valid claim in March 2024.
(“Zhejiang”) filed suit against us and ten other corporate entities in the Superior Court of the State of California for Orange County. Zhejiang alleges claims of approximately $6,000,000 in damages for products that were allegedly shipped to the United States but not paid for.
Cho International, Inc On September 5, 2023, Zhejiang Qunyinh Vehicle Co., Ltd. (“Zhejiang”) filed suit against us and ten other corporate entities in the Superior Court of the State of California for Orange County. Zhejiang alleges claims of approximately $6,000,000 in damages for products that were allegedly shipped to the United States but not paid for.
Item 3. Legal Proceedings. From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. As of April 15 th , 2024, we are party to three (3) legal proceedings. Taizhou Nebula Power Co. Ltd. v. Massimo Motor Sports, LLC In September 2020, Taizhou Nebula Power Co.
Item 3. Legal Proceedings. From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. As of March 20, 2025, we are party to two (2) material pending legal proceedings. Taizhou Nebula Power Co. Ltd. v. Massimo Motor Sports, LLC In September 2020, Taizhou Nebula Power Co.
Removed
We have filed a counterclaim against Nebula alleging that its sales to other distributors in the United States is in violation of the Distribution Agreement. The case is currently in the fact discovery phase.
Added
A bench trial was conducted in May 2024. On June 6, 2024, the trial court entered its Findings of Fact and Conclusions of Law, which generally found for Nebula on its breach of contract claims and denied Massimo’s counterclaims. After post-trial fees briefing, the trial court entered its Final Judgment on July 8, 2024 (see first audit response letter).
Removed
The court has not yet set a trial date, but we anticipate that the trial will begin in April or May 2024. 44 Massimo Motor Sports, LLC v. Shandong Odes Industry On September 13, 2021, we filed suit against Shandong Odes Industry (“Shandong”) and other defendants in the United States District Court for the Northern District of Texas.
Added
On August 7, 2024, Massimo timely filed a notice of appeal of the Final Judgment. Our Firm was not involved in the trial of this case. Instead, we were retained as appellate counsel after Massimo received the Findings of Fact and Conclusions of Law. Massimo filed its appellant’s brief on January 31, 2025.
Removed
We are pursuing various claims against the defendants, including those based on the infringement of our trademarks, Shandong’s breach of an Exclusive Distribution Agreement by selling ATVs to other distributors in the U.S. and its tortious interference with respect to the employment agreement of a former employee of our company and the misappropriation of trade secrets.
Added
Nebula’s has until April 2, 2025 to file its appellee’s brief. Massimo intends to continue vigorously defending the lawsuit and pursuing its appeal. While Massimo is not opposed to an out-of-court settlement, to date Nebula’s attorneys have had limited interest in discussing settlement. 44 Zhejiang Qunying Vehicle Co., Ltd. v.
Removed
We are seeking injunctive relief and over $40,000,000 in damages. The court recently vacated the November 27, 2023 trial date and said that it would reset the trial date after ruling on the motions for summary judgment. Zhejiang Qunying Vehicle Co., Ltd. v. Cho International, Inc On September 5, 2023, Zhejiang Qunyinh Vehicle Co., Ltd.
Added
In August 2024, the Court denied in part and granted in part Massimo’s demurrer. As a result, Zhejiang still has valid claims against Massimo. The trial is scheduled for March 2026. Massimo intends to vigorously defend the lawsuit.
Removed
In the opinion of our management, these cases, if determined adversely to us, would not individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed3 unchanged
Biggest changeThere has been no material change in the planned use of proceeds from our IPO as described in the Registration Statement on Form S-1/A. (g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 46 Item 6. [Reserved]
Biggest change(f) Use of Proceeds None. (g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
The following table provides information as of December 31, 2023, regarding our common stock that may be issued under the Company’s 2024 Equity Incentive Plan (the “Incentive Plan”).
The following table provides information as of December 31, 2024, regarding our common stock that may be issued under the Company’s 2024 Equity Incentive Plan (the “Incentive Plan”).
Plan category: Number of Securities to be issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) Weighted Average Exercise Price of Outstanding Options (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c) Equity compensation plans approved by stockholders Incentive Plan $ (e) Recent Sales of Unregistered Securities None.
Plan category: Number of Securities to be issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) Weighted Average Exercise Price of Outstanding Options (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c) Equity compensation plans approved by stockholders Incentive Plan - Stock option 350,000 $ 4.04 1,650,000 - Restricted Stock Units 101,000 - 1,549,000 (e) Recent Sales of Unregistered Securities None .
(b) Holders On April 11, 2024, there were 21 holders of record of our shares of common stock. (c) Dividends As of the date of this Report, we have not paid any cash dividends to stockholders.
(b) Holders On March 24, 2025, there were 27 holders of record of our shares of common stock. (c) Dividends As of the date of this Report, we have not paid any cash dividends to stockholders.
Removed
(f) Use of Proceeds from the Initial Public Offering For a description of the use of proceeds generated in our IPO, see the section titled “Use of Proceeds” in our Registration Statement on Form S-1/A, as filed with the SEC on March 1, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+44 added−32 removed24 unchanged
Biggest changeFor the years ended December 31, 2023 2022 Amount As % of Sales Amount As % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Sales $ 115,037,544 100.0 % $ 86,527,534 100.0 % $ 28,510,010 32.9 % Cost of sales 79,126,454 68.8 % 64,323,858 74.3 % 14,802,596 23.0 % Gross profit 35,911,090 31.2 % 22,203,676 25.7 % 13,707,417 61.7 % Operating expenses Selling expenses 9,761,090 8.5 % 8,670,176 10.0 % 1,090,914 12.6 % General and administrative expenses 13,227,106 11.5 % 8,928,493 10.3 % 4,298,613 4 8.1 % Total operating expenses 22,988,196 20.0 % 17,598,669 20.3 % 5,389,527 30.6 % Income from operations 12,922,894 11.2 % 4,605,007 5.3 % 8,317,887 180.6 % Other income (expenses) Other income, net 140,866 0.1 % 384,622 0.4 % (243,756 ) (63.4 )% Interest expense (518,731 ) (0.5 )% (828,016 ) (1.0 )% 309,285 (37.4 )% Total other income/(expenses) (377,865 ) (0.3 )% (443,394 ) (0.5 )% 65,529 (14.8 )% Income before income taxes 12,545,029 10.9 % 4,161,613 4.8 % 8,383,416 201.4 % Provision for income taxes 2,129,804 1.9 % - - 2,129,804 - Net income $ 10,415,225 9.1 % $ 4,161,613 4.8 % $ 6,253,612 150.3 % Revenues.
Biggest changeFor the years ended December 31, 2024 2023 Amount As % of Sales Amount As % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Sales $ 111,209,142 100.0 % $ 115,037,544 100.0 % $ (3,828,402 ) (3.3 )% Cost of sales 76,865,803 69.1 % 79,126,454 68.8 % (2,260,651 ) (2.9 )% Gross profit 34,343,339 30.9 % 35,911,090 31.2 % (1,567,751 ) (4.4 )% Operating expenses Selling expenses 9,804,547 8.8 % 9,761,090 8.5 % 43,457 0.4 % General and administrative expenses 16,610,528 14.9 % 13,227,106 11.5 % 3,383,422 25.6 % Impairment of advance to suppliers 772,780 0.7 % - - 772,780 NA Research and development 343,493 0.3 % - - 343,493 NA Total operating expenses 27,531,348 24.8 % 22,988,196 20.0 % 4,543,152 19.8 % Income from operations 6,811,991 6.1 % 12,922,894 11.2 % (6,110,903 ) (47.3 )% Other income (expenses) Other income, net 1,110,837 1.0 % 140,866 0.1 % 969,971 688.6 % Loss on litigation (3,645,092 ) (3.3 )% - - (3,645,092 ) NA Interest expense (98,667 ) (0.1 )% (518,731 ) (0.5 )% 420,064 (81.0 )% Total other expenses, net (2,632,922 ) (2.4 )% (377,865 ) (0.3 )% (2,255,057 ) 596.8 % Income before income taxes 4,179,069 3.8 % 12,545,029 10.9 % (8,365,960 ) (66.7 )% Provision for income taxes 1,024,862 0.9 % 2,129,804 1.9 % (1,104,942 ) (51.9 )% Net income $ 3,154,207 2.8 % $ 10,415,225 9.1 % $ (7,261,018 ) (69.7 )% Revenue Revenues decreased by $3.8 million, or 3.3%, from $115.0 million in fiscal 2023 to $111.2 million in fiscal 2024.
As a result, an increase in the cost of the raw materials, parts, and components our suppliers use in the manufacture of our products could reduce our profitability and have a material adverse effect on our business, results of operations or financial condition. 48 ● Risk of seasonable sale of Pontoon Boats - A portion of our sales revenue generated from Massimo Marine has a seasonable sales pattern.
As a result, an increase in the cost of the raw materials, parts, and components our suppliers use in the manufacture of our products could reduce our profitability and have a material adverse effect on our business, results of operations or financial condition. ● Risk of seasonable sale of Pontoon Boats - A portion of our sales revenue generated from Massimo Marine has a seasonable sales pattern.
If new sources of financing are required, but are unattractive, insufficient or unavailable, then we could be required to modify our business plans or growth strategy which could have a material adverse effect on our business, results of operations or financial condition. ● Risk of uncertainty in the cost and production level of raw materials - We depend on third party suppliers to manufacture many of the products we sell, in particular, ATVs and UTVs, as opposed to our recreational boats which we manufacture in our Dallas facility.
If new sources of financing are required, but are unattractive, insufficient or unavailable, then we could be required to modify our business plans or growth strategy which could have a material adverse effect on our business, results of operations or financial condition. ● Risk of uncertainty in the cost and production level of raw materials - We depend on third party suppliers to manufacture many of the products we sell, in particular, ATVs and UTVs, as opposed to our Pontoon Boats which we manufacture in our Dallas facility.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in “Risk Factors.” All amounts included herein with respect to the fiscal years ended December 31, 2023 and 2022 are derived from our audited consolidated financial statements included elsewhere in this Report.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in “Risk Factors.” All amounts included herein with respect to the fiscal years ended December 31, 2024 and 2023 are derived from our audited consolidated financial statements included elsewhere in this Report.
Allowance for credit loss The Company considered various factors, including nature, historical collection experience, the age of the accounts receivable balances and the contract assets, credit quality and specific risk characteristics of its customers, current economic conditions, forecasts of future economic conditions, reversion period, and qualitative and quantitative adjustments to develop an estimate of credit losses.
Allowance for credit loss We considered various factors, including nature, historical collection experience, the age of the accounts receivable balances and the contract assets, credit quality and specific risk characteristics of its customers, current economic conditions, forecasts of future economic conditions, reversion period, and qualitative and quantitative adjustments to develop an estimate of credit losses.
However, by December 31, 2023, there was a notable easing in both inflation and freight costs, reflecting an improvement in economic conditions and a stabilization in the supply chain. ● Risk related to inflation – In recent years, our China-based suppliers have increased the cost of their products due to inflation.
However, by December 31, 2024, there was a notable easing in both inflation and freight costs, reflecting an improvement in economic conditions and a stabilization in the supply chain. ● Risk related to inflation - In recent years, our China-based suppliers have increased the cost of their products due to inflation.
For accounts receivable aged less than one year and non-overdue contract assets, the Company uses the loss rate method, which is a combination of historical rate method and adjustment rate method, to estimate the credit loss. For accounts receivable aged over one year and overdue retainage receivable, the Company uses the individual specific valuation method to estimate the credit loss.
For accounts receivable aged less than one year and non-overdue contract assets, we use the loss rate method, which is a combination of historical rate method and adjustment rate method, to estimate the credit loss. For accounts receivable aged over one year and overdue retainage receivable, we use the individual specific valuation method to estimate the credit loss.
The Company has adopted loss rate method to calculate the credit loss and considered the relevant factors of the historical and future conditions of the Company to make reasonable estimation of the risk rate.
We have adopted loss rate method to calculate the credit loss and considered the relevant factors of the historical and future conditions of the Company to make reasonable estimation of the risk rate.
For the year ended December 31, 2023, we purchased approximately 63% of our products from two of these suppliers. Competition for the output of these suppliers is intense.
For the year ended December 31, 2024, we purchased approximately 82% of our products from two of these suppliers. Competition for the output of these suppliers is intense.
While facing uncertainties regarding the size and timing of capital raise, we are confident that we can continue to meet operational needs solely by utilizing cash flows generated from our operating activities.
While facing uncertainties regarding the size and timing of capital raise, we are confident that we can continue to support our operational needs solely by utilizing cash flows generated from our operating activities organically for the next 12 months.
Before and after the Reorganization, the Company, together with its subsidiaries, is effectively controlled by the same Controlling Shareholder, and therefore, the Reorganization is considered as a recapitalization of entities under common control in accordance with ASC 805-50-25.
After this reorganization, Massimo ultimately owns 100% equity interests of Massimo Motor and Massimo Marine. Before and after the Reorganization, the Company, together with its subsidiaries, is effectively controlled by the same Controlling Shareholder, and therefore, the Reorganization is considered as a recapitalization of entities under common control in accordance with ASC 805-50-25.
We are not subject to any externally imposed capital requirements. 53 Working Capital As of December 31, 2023, we had cash and cash equivalents of approximately $0.8 million.
We are not subject to any externally imposed capital requirements. 53 Working Capital As of December 31, 2024, we had cash and cash equivalents of approximately $10.2 million.
We intend to fund our growth out of the proceeds of the IPO and internal sources of liquidity or through additional financing from external sources.
We have funded our growth out of the proceeds of the IPO and internal sources of liquidity or through additional financing from external sources.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenue and expenses during the periods presented.
Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenue and expenses during the periods presented.
(2) On April 19, 2022, the Company’s subsidiary Massimo Marine obtained a $2.0 million pay as sold line of credit from Northpoint Commercial Finance LLC (“Northpoint”) for acquisition, financing and/or refinancing by inventory. This line of credit is also personally guaranteed by Mr. David Shan, the Controlling shareholder, and Massimo Motor Sports, an affiliated company.
This line of credit is pledged by the Company’s accounts receivable, deposit accounts, equipment and inventories. (2) On April 19, 2022, the Company’s subsidiary Massimo Marine obtained a $2.0 million pay as sold line of credit from Northpoint Commercial Finance LLC (“Northpoint”) for acquisition, financing and/or refinancing of inventory. This line of credit is also personally guaranteed by Mr.
Loan Balance December 31, December 31, 2023 2022 Bank loan - Midfirst Bank (1) $ - $ 5,600,000 Other loans - Northpoint (2) 205,440 Other loans – BAC (3) 98,143 - Total $ 303,583 $ 5,600,000 (1) On January 15, 2021, the Company ’ s subsidiary Massimo Motor Sports obtained a line of credit from MidFirst Bank, pursuant to which the Company has the availability to borrow a maximum $4.0 million out of this line of credit for two years at the U.S. prime rate + 0.25%.
Loan Balance Loan balance consists of the following: December 31, 2024 December 31, 2023 Bank loan – Cathay Bank (1)(4) $ - $ - Other loans - Northpoint (2) - 205,440 Other loans – BAC (3) - 98,143 Total $ - $ 303,583 (1) On May 13, 2024, the Company’s subsidiary Massimo Motor Sports obtained a line of credit from Cathay Bank, pursuant to which the Company has the availability to borrow a maximum $15.0 million out of this line of credit for one year at the U.S. prime rate + 0.75%.
As of December 31, 2023 and 2022, the outstanding balance was $205,440 and $nil, respectively. 54 (3) On February 18, 2022, the Company’s subsidiary Massimo Marine obtained a credit facility for Mercury Marine in the amount of $1.75 million from Brunswick Acceptance Company LLC (“BAC”) to finance purchase of inventory. This line of credit is also personally guaranteed by Mr.
David Shan, the controlling Shareholder, and Massimo Motor Sports, an affiliated company. As of December 31, 2024 and 2023, the outstanding balance was $nil and $205,440, respectively. (3) On February 18, 2022, the Company’s subsidiary Massimo Marine obtained a credit facility for Mercury in the amount of $1.75 million from Brunswick Acceptance Company LLC (“BAC”) to finance purchase of inventory.
This increases the risk of accidental clashes or misunderstandings that could escalate into conflict, which will affect both our China-mainland-based and Taiwan-based suppliers. ● Risk of unavailability of additional capital - We will require significant expenditures to fund future growth.
This increases the risk of accidental clashes or misunderstandings that could escalate into conflict, which will affect both our China-mainland-based and Taiwan-based suppliers.
Financing Activities Net cash used in financing activities was approximately $11.0 million in fiscal 2023, compared to net cash used in financing activities was approximately $0.8 million in fiscal 2022.
Financing Activities Net cash provided by financing activities was approximately $3.0 million in fiscal 2024, compared to net cash used in financing activities of approximately $11.0 million in fiscal 2023.
Our current assets were approximately $38.4 million, including approximately $9.6 million accounts receivable, approximately $25.8 million inventory, approximately $1.6 million advance to suppliers and approximately $0.6 million prepayment and other receivables, and our current liabilities were approximately $18.8 million, including $12.7 million accounts payable to supplies, $1.8 million contract liabilities, $2.1 million income tax payable, and $0.9 million liabilities from obligations under operating and financing leases, which resulted in a positive working capital of $19.6 million.
Our current assets were approximately $45.4 million, including approximately $6.6 million accounts receivable, approximately $27.3 million inventory, approximately $0.1 million advance to suppliers and approximately $1.2 million prepayment deposit and other receivables, and our current liabilities were approximately $26.1 million, including $9.6 million accounts payable to suppliers, $6.0 million accrued payment on a legal judgment, $0.4 million contract liabilities, $1.5 million income tax payable, $5.5 million loan from a related party and $2.2 million liabilities from obligations under operating and financing leases, which resulted in a positive working capital of $19.2 million.
Results of Operations For the years ended December 31, 2023 and 2022 The following table summarizes the results of consolidated statements of operations and comprehensive income for the for the years ended December 31, 2023 and 2022 in U.S. dollars, and provides information regarding the dollar and percentage increase or (decrease) during such year.
For the years ended December 31, 2024 and 2023, our revenue generated from Massimo Marine was approximately 3.4% and 10.2% of our total revenue, respectively. 48 Results of Operations For the years ended December 31, 2024 and 2023 The following table summarizes the results of consolidated statements of operations and comprehensive income for the for the years ended December 31, 2024 and 2023 in U.S. dollars, and provides information regarding the dollar and percentage increase or (decrease) during such year.
Contractual Commitments As of December 31, 2023, the Company’s contractual obligations consisted of the following: Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Lease commitment $ 1,752,121 $ 991,094 $ 750,875 $ 10,152 $ – Other loans 303,583 303,583 – – – Total $ 2,055,704 $ 1,294,677 $ 750,875 $ 10,152 $ – Off-balance Sheet Commitments and Arrangements There were no off-balance sheet arrangements for the years ended December 31, 2023 and 2022, that have, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.
Contractual Commitments As of December 31, 2024, the Company’s contractual obligations consisted of the following: Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Lease commitment $ 11,549,277 $ 2,904,205 $ 4,884,371 $ 3,760,701 $ – Off-balance Sheet Commitments and Arrangements There were no off-balance sheet arrangements for the years ended December 31, 2024 and 2023, that have, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.
Also, the Company reviewed any slow-moving or obsoleted items for inventory valuation. As of December 31, 2023 and 2022, the Company had inventory provision of $439,900 and $nil, included in inventories, net in the consolidated balance sheet.
In addition, we assessed all slow-moving or obsolete items for inventory valuation purposes. As of December 31, 2024 and 2023, the Company had inventory provision of $469,900 and $439,900, included in inventories, net in the consolidated balance sheet.
We also generate revenue from the sales of Pontoon Boats, which represented 10.2% and 9.8% of our revenue for the for the years ended December 31, 2023 and 2022, respectively.
We currently generate most of our revenues from the sales of UTVs and ATVs, which represented 96.6% and 89.8% of total revenue for the years ended December 31, 2024 and 2023, respectively We also generate revenue from the sales of Pontoon Boats, which represented 3.4% and 10.2% of our revenue for the years ended December 31, 2024 and 2023, respectively.
Investing Activities Net cash used in investing activities was approximately $0.1 million in fiscal 2023, compared to used in investing activities was approximately $0.2 million in fiscal 2022. The decrease in net cash used in investing activities was primarily attributable to the reduced purchase of property and equipment in the fiscal 2023.
Investing Activities Net cash used in investing activities was approximately $0.2 million in fiscal 2024, compared to net cash used in investing activities of $0.1 million in fiscal 2023.
Our financial statements have been prepared in accordance with U.S. GAAP. Overview of Company Massimo Group is a holding company established on October 10, 2022 under the laws of the State of Nevada.
Our financial statements have been prepared in accordance with U.S. GAAP. Overview of Company Massimo is a holding company established on October 10, 2022 under the laws of the State of Nevada. The Company, through its subsidiaries, is primarily engaged in the manufacturing and sales of a wide selection of farm and ranch tested UTVs, recreational ATVs, and Pontoon Boats.
The increase was primarily attributable to the increase of revenue by $28.5 million and gross profit by $13.7 million, which was partly offset by increase of general and administrative expenses by approximately $4.3 million, as well as other expenses as discussed above. Provision for income taxes The income tax expense was approximately $2.1 million for fiscal 2023.
The decrease was primarily attributable to an increase of $3.4 million in general and administrative expenses, a decrease of $1.6 million decrease in gross profit and an approximately $3.6 million loss on litigation and other expenses as discussed above. Provision for income taxes The income tax expense was approximately $1.0 million and $2.1 million in fiscal 2024 and 2023, respectively.
The maturity date was further extended to January 13, 2024. As of December 31, 2023, the outstanding balance was $nil. This line of credit is also personally guaranteed by Mr. David Shan, the Controlling shareholder, and Miller Creek Holdings LLC, a related party controlled by Mr. David Shan.
On April 18, 2022, this line of credit was further increased to $10.0 million, and on January 3, 2024, the maturity date was renewed to January 3, 2026. This line of credit is guaranteed by the Massimo, and is also personally guaranteed by Mr. David Shan, the controlling shareholder, and Miller Creek Holdings LLC, a related party controlled by Mr.
As of December 31, 2023 and 2022, the Company recorded allowance for credit loss of $0.6 million and $0.4 million in the consolidated balance sheet, respectively. 56 Inventory provision The Company assessed the net realizable value of each item of inventories and compared to the cost on the book, which include the cost of raw materials, freight and duty for raw materials, and adding labor costs and overhead costs for finished goods at end of each reporting period.
Inventory provision We assessed the net realizable value of each item of inventories and compared to the cost on the book, which include the cost of raw materials, freight and duty for raw materials, direct labor costs, and the overhead costs for finished goods at the end of each reporting period.
A Reorganization of the legal structure was completed on June 1, 2023. the Controlling Shareholder transferred his 100% equity interest in Massimo Motor and 100% equity interest in Massimo Marine to Massimo Group. After this reorganization, Massimo Group ultimately owns 100% equity interests of Massimo Motor and Massimo Marine.
Mr. David Shan, the Chairman of the Board and Chief Executive Officer, is the controlling shareholder (the “Controlling Shareholder”) of the Company. A Reorganization of the legal structure was completed on June 1, 2023. the Controlling Shareholder transferred his 100% equity interest in Massimo Motor and 100% equity interest in Massimo Marine to Massimo.
Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements. Management has determined that, while there are no critical accounting estimates, the most significant estimates relate to sales returns, products warranty, allowance for credit loss and inventory provision. Each of these are discussed below.
Management has determined that, while there are no critical accounting estimates, the most significant estimates relate to sales returns, products warranty, allowance for credit loss, inventory provision, and the assessment and disclosure of contingent liabilities due to on-going lawsuit. Each of these are discussed below.
Sales returns The Company provides a refund policy to accept returns from end customer, which varies and depends on the difference products and customers. The estimated sales returns are determined based upon an analysis of historical sales returns. Return allowances are recorded as a reduction in sales with corresponding sales return liabilities which are included in “Accrued return liabilities”.
Sales returns We provide a refund policy to accept returns from end customers, which varies and depends on the different products and customers. The estimated sales returns are determined based upon an analysis of historical sales returns.
It increased by $1.1 million, or 12.6%, from $8.7 million from fiscal 2022 to $9.8 million in fiscal 2023, representing 8.5% and 10.0% of our total revenue in fiscal 2023 and fiscal 2022, respectively.
Our insurance expense increased by $0.7 million or 75.6%, from $1.0 million in fiscal 2023, to $1.7 million in fiscal 2024, representing 10.1% and 7.2% of our total general and administrative expenses in fiscal 2024 and 2023, respectively.
Our freight costs dropped in the fiscal 2023 when compared with last year. Cost of revenue on Pontoon Boats increased by $2.4 million, or 34.3%, from $6.9 million from fiscal 2022 to $9.2 million in fiscal 2023, and gross profit increased by $0.9 million, or 53.4%, from $1.6 million from fiscal 2022 to $2.5 million in fiscal 2023.
Cost of revenue on Pontoon Boats decreased by $5.8 million, or 63.2%, from $9.2 million in fiscal 2023 to $3.4 million in fiscal 2024, and gross profit decreased by $2.1 million, or 85.9%, from $2.5 million in fiscal 2023 to $0.3 million in fiscal 2024.
The estimated cost of returned inventory is recorded as a reduction to cost of sales and an increase of right of return assets which is included in “Inventories”. As of December 31, 2023 and 2022, $283,276 and $556,538 of sales return liabilities associated with estimated product returns were recorded in the consolidated balance sheet, respectively.
As of December 31, 2024 and 2023, $261,588 and $283,276 of sales return liabilities associated with estimated product returns were recorded in the consolidated balance sheet, respectively.
General and administrative expenses increased by $4.3 million, or 4 8.1 %, from $8.9 million from fiscal 2022 to $13.2 million in fiscal 2023. The increase was mainly due to increased salaries and benefits and professional fees. Our general and administrative expenses represented 11.5% and 10.3% of our total revenue in fiscal 2023 and fiscal 2022, respectively.
The increase was mainly due to increased salaries and benefit, insurance expense and rent expense. Our general and administrative expenses represented 14.9% and 11.5% of our total revenue in fiscal 2024 and fiscal 2023, respectively.
Our salaries and benefits increased by $1.0 million or 25.8%, from $4.0 million from fiscal 2022 to $5.0 million in fiscal 2023, representing 38.0% and 44.7% of our total general and administrative expenses in fiscal 2023 and fiscal 2022, respectively.
Our rent expenses increased by $1.2 million or 106.4%, from $1.2 million in fiscal 2023, to $2.4 million in fiscal 2024, representing 14.2% and 8.6% of our total general and administrative expenses for the years ended December 31, 2024 and 2023, respectively.
Net cash provided by operating activities increased $10.3 million during Fiscal 2023 compared with Fiscal 2022, primarily due to the following: : ● Increase in net income by approximately $6.2 million during Fiscal 2023 compared with Fiscal 2022 ● Our net income was adjusted for non-cash items, including written-off of account receivables, non-cash operating lease expense, inventories reserve, deferred tax expense and provision (reversal of allowance) for expected credit loss.
The decrease is primarily due to the following: ● Net income decreased by $7.3 million in fiscal 2024 compared with fiscal 2023. ● Our net income was adjusted for non-cash items, including non-cash operating lease expense, gain (loss) on disposal of fixed asset, impairment of advance to suppliers, amortization of stock-based compensation related to options and RSUs granted, amortization and depreciation, loss on litigation, deferred tax expense (recovery), inventories reserve, write-off of accounts receivable and provision (reversal of allowance) for expected credit loss.
The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected.
We wrote off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected. As of December 31, 2024 and 2023, we recorded allowance for credit loss of $0.5 million and $0.6 million in the consolidated balance sheet, respectively.
The increase in net cash used in financing activities in fiscal 2023 was primarily attributable to net repayment of bank loan of $5.6 million and shareholder withdraw of $5.3 million in fiscal 2023, compared to repayment of shareholder advance of $2.5 million, partly offset by net proceeds from bank loan of $1.6 million in fiscal 2022.
This compares to fiscal 2023, when cash used in financing included, net repayment of bank loan of $5.6 million and shareholder withdraw of $5.3 million.
Increased shipping and handling fee by $0.8 million, from $4.1 million in Fiscal 2022 to $4.9 million in fiscal 2023, as a result of increased sales also contributed to the increase in selling expense. General and administrative expenses Our general and administrative expenses primarily include salaries and benefits, professional fee, office expenses, travel expenses, insurance expenses, and depreciation expenses.
General and administrative expenses Our general and administrative expenses primarily include salaries and benefits, professional fee, office expenses, travel expenses, insurance expenses, and depreciation expenses. General and administrative expenses increased by $3.4 million, or 25.6%, from $13.2 million in fiscal 2023 to $16.6 million in fiscal 2024.
Gross profit margin increased by 6.0%, from 26.4% from fiscal 2022 to 32.4% in fiscal 2023. The increased cost of revenue was in line with the increase in sales. The increase in gross profit margin was mainly due to a significant decline in global container freight since mid-2022.
However, the gross margin decreased by 0.7%, from 32.4% in fiscal 2023 to 31.6% in fiscal 2024. The increase in the cost of revenue was primary due to increased product purchase cost and freight and duty resulting from increased sales.
Our cost and gross profit by revenue types are as follows: For the year ended December 31, 2023 For the year ended December 31, 2022 Category Cost of revenue Gross profit Gross profit % Cost of revenue Gross profit Gross profit % Variance in Cost of revenue Variance in gross profit Variance in gross profit % UTVs, ATVs and electric bikes $ 69,881,055 $ 33,431,783 32.4 $ 57,437,705 $ 20,587,126 26.4 $ 12,443,350 $ 12,844,657 6.0 Pontoon Boats 9,245,399 2,479,307 21.1 6,886,153 1,616,550 19.0 2,359,246 862,757 2.1 Total $ 79,126,454 $ 35, 911,090 31.2 $ 64,323,858 $ 22,203,676 25.7 $ 14,802,596 $ 13,707,414 5.5 50 Cost of revenue on UTVs, ATVs and electric bikes increased by $12.4 million, or 21.7%, from $57.4 million from fiscal 2022 to $69.9 million in fiscal 2023 and gross profit increased by $12.8 million, or 62.4%, from $20.6 million from fiscal 2022 to $33.4 million in fiscal 2023.
Our cost and gross profit by revenue types are as follows: For the year ended December 31, 2024 For the year ended December 31, 2023 Category Cost of revenue Gross profit Gross margin (%) Cost of revenue Gross profit Gross margin (%) Variance in Cost of revenue Variance in gross profit Variance in gross margin (%) UTVs, ATVs and e-bikes $ 73,463,577 $ 33,994,974 31.6 $ 69,881,055 $ 33,431,783 32.4 $ 3,582,522 $ 563,191 (0.7 ) Pontoon Boats 3,402,226 348,365 9.3 9,245,399 2,479,307 21.1 (5,843,173 ) (2,130,942 ) (11.9 ) Total $ 76,865,803 $ 34,343,339 30.9 $ 79,126,454 $ 35,911,090 31.2 $ (2,260,651 ) $ (1,567,751 ) (0.3 ) 50 Cost of revenue on UTVs, ATVs and electric bikes increased by $3.6 million, or 5.1%, from $69.9 million in fiscal 2023 to $73.5 million in fiscal 2024 and gross profit increased by $0.6 million, or 1.7%, from $33.4 million in fiscal 2023 to $34.0 million in fiscal 2024.
Gross profit margin increased by 2.1%, from 19.0% from fiscal 2022 to 21.1% in fiscal 2023. Selling expenses Our selling expenses mainly include warranty expense, advertising and promotion expense, shipping and handling fee and merchant service fee.
Selling expenses Our selling expenses mainly consist of warranty expense, advertising and promotion expense, interest expense, and shipping and handling fee. These expenses increased by $0.1 million, or 0.4%, from $$9.7 million in fiscal 2023 to $9.8 million in fiscal 2024, representing 8.8% and 8.5% of our total revenue in fiscal 2024 and fiscal 2023.
Cash Flows For the Years Ended December 31, 2023 and 2022 The following table sets forth summary of our cash flows for the periods indicated: Years Ended December 31, 2023 2022 Net cash provided by operating activities $ 10,912,592 $ 621,293 Net cash used in investing activities (121,162 ) (197,802 ) Net cash used in financing activities (10,973,587 ) (764,374 ) Net decreased in cash and cash equivalents (182,157 ) (340,883 ) Cash and cash equivalents, beginning of the year 947,971 1,288,854 Cash and cash equivalents, end of the year $ 765,814 $ 947,971 52 Operating Activities Net cash provided by operating activities was approximately $10.9 million and $0.6 million in Fiscal 2023 and 2022, respectively.
The decrease was primarily due to decreased revenues and gross profit, offset by an increase in general and administrative expenses and a loss on litigation, as discussed above Cash Flows For the Years Ended December 31, 2024 and 2023 The following table sets forth summary of our cash flows for the periods indicated: Years ended December 31, 2024 2023 Net cash provided by operating activities $ 6,672,278 $ 10,905,544 Net cash used in investing activities (225,875 ) (121,162 ) Net cash provided by (used in) financing activities 2,997,867 (10,966,539 ) Net increase (decrease) in cash and cash equivalents 9,444,270 (182,157 ) Cash and cash equivalents, beginning of the year 765,814 947,971 Cash and cash equivalents, end of the year $ 10,210,084 $ 765,814 52 Operating Activities Net cash provided by operating activities was approximately $6.7 million in fiscal 2024, compared to net cash provided by operating activities of approximately $10.9 million in fiscal 2023, representing a decrease in the net cash provided by operating activities of $4.2 million in fiscal 2024 compared with fiscal 2023.
While our significant accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements, we believe that there were no critical accounting policies
The Company filed an appeal in August 2024 and its appellant’s brief in January 2025. Although our significant accounting policies are elaborated upon in Note 2 – Summary of Significant Accounting Policies in our consolidated financial statements, we maintain that there were no critical accounting policies.
Interest expenses Our interest expense decreased by $0.3 million or 37.4%, from $0.8 million from fiscal 2022 to $0.5 million in fiscal 2023.
Income before income taxes Income before income taxes decreased by $8.3 million, from $12.5 million in fiscal 2023, to approximately $4.2 million in fiscal 2024.
An increase in demand and steady supply boosted our revenue in fiscal 2023 when compared with last year. 49 Revenue by Type For the years ended December 31, 2023 2022 Revenue category Revenue % of total Revenue Revenue % of total Revenue Amount Increase (Decrease) Percentage Increase (Decrease) UTVs, ATVs and electric bikes $ 103,312,838 89.8 % $ 78,024,831 90.2 % $ 25,288,007 32.4 % Pontoon Boats 11,724,706 10.2 % 8,502,703 9.8 % 3,222,003 37.9 % Total $ 115,037,544 100.0 % $ 86,527,534 100.0 % $ 28,510,010 32.9 % Revenue from sales of UTVs, ATVs and electric bikes Revenue from sales of UTVs, ATVs and electric bikes increased by $25.3 million, or 32.4%, from $78.0 million from fiscal 2022 to $103.3 million in fiscal 2023.
(the “big box stores”) that offer their own financing plans, while moving away from retailers that have liberal return policies. 49 Revenue by Type For the years ended December 31, 2024 2023 Revenue category Revenue % of total Revenue Revenue % of total Revenue Amount Increase (Decrease) Percentage Increase (Decrease) UTVs, ATVs and e-bikes $ 107,458,551 96.6 % $ 103,312,838 89.8 % $ 4,145,713 4.0 % Pontoon Boats 3,750,591 3.4 % 11,724,706 10.2 % (7,974,115 ) (68.0 )% Total $ 111,209,142 100.0 % $ 115,037,544 100.0 % $ (3,828,402 ) (3.3 )% Revenue from sales of UTVs, ATVs and e-bikes Revenue from sales of UTVs, ATVs and electric bikes increased by $4.1 million, or 4.0%, from $103.3 million in fiscal 2023 to $107.5 million in fiscal 2024.
Products warranty The Company generally provides a one-year limited warranty against defects in materials related to the sale of products. The Company considers the warranty as an assurance type warranty since the warranty provides the customer the assurance that the product complies with agreed-upon specifications.
We considers the warranty as an assurance type warranty since the warranty provides the customers the assurance that the product complies with agreed-upon specifications. Estimated future warranty obligations are included in cost of product sales in the period in which the related revenue is recognized.
Gross profit Our gross profit increased by $13.7 million, or 61.7%, from $22.2 million from fiscal 2022 to $35.9 million in fiscal 2023. Gross profit margin was 31.2% in fiscal 2023, as compared with 25.7% in fiscal 2022.
Gross margin was 30.9% in fiscal 2024, as compared with 31.2% in fiscal 2023. Our gross margin in fiscal 2024 remained constant when compared with fiscal 2023.
The Company estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors. As of December 31, 2023 and 2022, $619,113 and $260,531 of Products warranty were recorded in the consolidated balance sheet, respectively.
Each quarter, we reevaluates its estimates and assess the adequacy of its recorded warranty liabilities and adjust the amounts as necessary. As of December 31, 2024 and 2023, $503,553 and $619,113 of product warranty were recorded in the consolidated balance sheet, respectively.
The increase of 5.5% in the gross profit margin was primarily attributable to higher net sales partly due to decreased return, as well as the lower cost of sales due to reduced freight costs in the fiscal 2023 as compared with last year.
The decline in gross margin was primarily driven by higher freight costs in fiscal year 2024 compared to the last year.
Revenue from sales of Pontoon Boats Revenue from sales of Pontoon Boats increased by $3.2 million, or 37.9%, from $8.5 million from fiscal 2022 to $11.7 million in fiscal 2023. The increase in revenue was primarily attributable to strong demand in the Pontoon Boat market after stock supply returned to normal levels after the COVID-19 pandemic.
This enhances the efficiency of our capital utilization. Revenue from sales of Pontoon Boats Revenue from sales of Pontoon Boats decreased by $7.9 million, or 68.0%, from $11.7 million in fiscal 2023 to $3.8 million in fiscal 2024.
Net income We had net income of $10.4 million and $4.2 million in fiscal 2023 and 2022, respectively. The increase was primarily attributable to the increased revenues and gross as discussed above.
Decrease in income tax expense was mainly due to decrease in assessable profit in fiscal 2024. Net income Net income was $3.2 million and $10.4 million in fiscal 2024 and 2023, respectively.
Removed
The Company, through its subsidiaries, is primarily engaged in the manufacturing and sales of a wide selection of farm and ranch tested UTVs, recreational ATVs, and Pontoon Boats. Mr. David Shan, the Chairman of the Board and Chief Executive Officer, is the controlling shareholder (the “Controlling Shareholder”) of the Company.
Added
Additionally, both U.S. and Chinese governments have imposed tariffs on certain products and taken other actions that have had an adverse impact on trade between the two countries. ● Risk of unavailability of additional capital - We will require significant expenditures to fund future growth.
Removed
Massimo Group currently generates most of its revenues from the sales of UTVs and ATVs, which represent 89.8% and 90.2% of total revenue for the years ended December 31, 2023 and 2022, respectively.
Added
The decrease in revenue was primarily due to combined effects of rising demand in the U.S. ATV and UTV market and our modified sales strategy, offset by the decrease in revenue from sales of Pontoon Boats. In 2024, we continued expanding our distribution network through various retailers to enhance market penetration.
Removed
For the years ended December 31, 2023 and 2022, our revenue generated from Massimo Marine was approximately 10.2% and 9.8% of our total revenue, respectively.
Added
We strategically focused our efforts on large retail stores in the U.S.
Removed
Revenues increased by $28.5 million, or 32.9%, from $86.5 million from fiscal 2022 to $115.0 million in fiscal 2023. The increase in revenue was principally due to increased demand in the electric bike and fishing boat market. In 2022, shutdown of cities in China from April to June significantly affected our suppliers.
Added
The increase in revenue was primarily attributed to the expansion into more big box stores. This surge is consistent with the increasing ranch/farm-work utilization of UTVs across the 1.89 million farms in the U.S. with an average size of 464 acres and the new customer’s rural lifestyle focus.
Removed
We were completely out of stock for two out of the twelve months of 2022. The recovery of the electric bike and fishing boat markets was related to the reduction of impacts felt from the COVID-19 pandemic on manufacturing and the supply chain since 2022.
Added
The increase in sales is also due to a shift in our sales strategy, focusing mostly on in-store sales to this retail chain store customer, which generally involve larger volumes and no returns. In addition, sales to this new customer consist of high-turnover inventory products that are of high quality and have a strong customer reputation.
Removed
The increase was primarily due to higher sales volume in fiscal 2023 compared with that in fiscal 2022. The increase in revenue was attributable to a decrease in sales return.
Added
The decrease was primarily driven by an industry-wide downturn caused by high interest rates and inflation, which are impacting the consumption of non-essential goods. In addition, the fact that the dealers have experienced high rejection rates at the floorplan financing providers such as Northpoint has directly affected the inventory level the dealers maintain and therefore our sales in this category.
Removed
Starting from 2023, we strategically reduced the sales return rate by changing customer type and adjusting our customer composition with different return policies, for instance, we are gradually shifting sales from big box with liberal return policies such as Costco, to big box with no or limited return p olicies such as Tractor Supply Co.
Added
This trend aligns with broader industry challenges. The ongoing economic uncertainty in the U.S. has further reduced discretionary spending on luxury boats, negatively affecting sales of high-end models such as our yacht. Gross profit Our gross profit decreased by $1.6 million, or 4.4%, from $35.9 million in fiscal 2023 to $34.3 million in fiscal 2024.
Removed
Our sales volume increased from 174 boats in fiscal 2022 to 247 boats in fiscal 2023. In 2022, the shutdown of cities in China for two months affected our sales in fiscal 2022. Additionally, we put more resources on advertising and promotion of our Massimo Marine brand, which boosted our sales fiscal 2023 when compared to last year.
Added
Decrease in cost of revenue was mainly due to decrease in products cost and freight and duty cost, resulting from decreased sales. Gross margin decreased by 11.9%, from 21.1% in fiscal 2023 to 9.3% in fiscal 2024, which was driven by significant decrease in sales.
Removed
Approximately $2.1 million in warranty expenses were recognized for fiscal 2023, increased by $0.7 million from $1.4 million in Fiscal 2022 as a result of increase in sales.
Added
The increase was mainly due to higher shipping and handling fees, which rose from approximately $4.9 million in fiscal 2023 to $6.3 million in fiscal 2024.
Removed
The significant increase was mainly due to the Company recruiting more back-office employees in customer service, administrative department and IT department to support the growth of business.
Added
The increase in shipping and handling fees was primarily due to higher sales of UTVs and ATVs to big box stores, as we covered the shipping costs for those customers and charge higher prices to offset these shipping costs.
Removed
Our professional fee increased by $1.2 million or 82.9%, from $1.4 million from fiscal 2022 to $2.6 million in fiscal 2023, representing 20.0% and 16.2% of our total general and administrative expenses in fiscal 2023 and fiscal 2022, respectively. The increase was mainly due to legal fees arising from ongoing lawsuits.
Added
The increase was partly offset by a reduction in warranty expense of approximately $1.0 million, due to enhanced quality control and customer service. The introduction of a traveling technician team has allowed us to respond to customer requests more efficiently, reducing repair costs.
Removed
The decrease in interest expense was mainly because we lowered the loan balance during the year in light of increasing interest rate and repaid all the loan balance in November 2023. 51 Other income, net Our other income was $0.1 million in fiscal 2023, as compared with other income of $0.4 million in fiscal 2022, decreased by $0.3 million, or 63.4%.
Added
Our salaries and benefits were $6.4 million and $5.0 million, representing 38.7% and 38.0% of our total general and administrative expenses in fiscal 2024 and 2023, respectively. The increase was primarily due to $0.5 million severance package following an employment termination and a $1.1 million stock-based compensation expenses recognized for RSUs and stock option grants.
Removed
The decrease was primarily due to lower insurance claims. We received income from insurance claims of $33,042 and $200,000 in fiscal 2023 and 2022, respectively. Income before income taxes We had income before income taxes of approximately $12.5 million and $4.2 million in Fiscal 2023 and 2022, respectively.
Added
Our rent expense increased because we had two new lease agreements and renewed one in fiscal 2024 while one new lease agreement in fiscal 2023. We also had monthly rent increment upon renewing the lease agreement. Our property taxes included in the rent expenses also increased by $0.4 million in fiscal 2024, compared to prior year.

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