Massimo Group
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
MAMO$0.96-0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-26.
0001641172-25-000763
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001493152-26-013862
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 74 current paragraphs.
39 unchanged; 16 reworded; 19 added; 32 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Total revenues decreased by $37.5 million, or 34.3%, from $109.3 million for the year ended December 31, 2024, to $71.8 million for the year ended December 31, 2025. This moderation in top-line performance reflects management’s disciplined approach to navigating a highly volatile macroeconomic environment while prioritizing long-term brand health over short-term volume dumping. Throughout 2025, persistent inflationary pressures, elevated interest rates, and lingering uncertainties regarding global trade policies significantly dampened retail consumer sentiment for discretionary powersports products. Instead of engaging in aggressive margin-eroding promotions, we elected to strategically tighten our wholesale shipments to assist our major big-box retail partners in right-sizing their inventory levels.
Current report
Revenue from this core segment decreased by $35.1 million, or 33.3%, from $105.6 million for the year ended December 31, 2024 to $70.4 million for the year ended December 31, 2025. This contraction was primarily attributed to a strategic decline in wholesale volumes to our major big-box retail partners, navigating a highly volatile geopolitical and macroeconomic environment.
Current report
Throughout the year, the uncertainty surrounding future tariffs, trade restrictions, and potential trade barriers stemming from U.S. government’s policies—which were further exacerbated in January 2025—made it difficult for these major retail customers to predict costs and plan inventories effectively. Concurrently, ongoing inflationary pressures and the prolonged impact of high interest rates put a severe strain on consumer spending for discretionary, higher-priced recreational vehicles.
Current report
As a result, many big-box retailers adopted a highly conservative approach, significantly reducing their purchase volumes to avoid inventory buildup. Rather than forcing excess inventory into the channel through heavy discounting, Massimo proactively partnered with these retailers to execute a disciplined channel de-stocking initiative. By aligning our shipment cadence with actual retail sell-through rates, we successfully helped our partners right-size their inventory levels. While this disciplined approach temporarily impacted our recognized wholesale revenue, it preserved our premium brand pricing and positioned our distribution network optimally for the rollout of our higher-margin, next-generation 2026 vehicle lineup.
Current report
Revenue from sales of Pontoon Boats decreased by $2.3 million, or 62.6%, from $3.8 million for the year ended December 31, 2024 to $1.4 million for the year ended December 31, 2025. This contraction reflects a severe, industry-wide downturn in the recreational marine sector, driven by prolonged high interest rates and inflationary pressures that disproportionately impacted consumer demand for non-essential, big-ticket goods.
Current report
Furthermore, the macro environment led to significantly tighter credit conditions and rising costs within dealer floorplan financing networks (such as Northpoint), which severely restricted wholesale purchasing power across the industry. Recognizing these mounting risks early, Massimo exercised strict operational discipline. Rather than forcing inventory into a financially constrained wholesale channel, we successfully cleared our existing on-hand inventory while deliberately pausing aggressive wholesale shipments to heavily leveraged dealers. To further insulate our business from these third-party financing vulnerabilities and protect our brand’s premium pricing integrity, we proactively accelerated our strategic transition toward a higher-margin, Direct-to-Consumer (DTC) approach. While this disciplined pivot reduced recognized wholesale revenue in 2025, it successfully mitigated our exposure to industry-wide floorplan financing defaults and established a more profitable, controllable sales trajectory for our Marine division moving forward.
Current report
Cost of revenue and gross profit
Current report
Total cost of revenue decreased by $28.3 million, or 36.9%, from $76.9 million for the year ended December 31, 2024, to $48.3 million for the year ended December 31, 2025. This decrease outpaced our corresponding 34.3% reduction in top-line revenue, reflecting not only the lower overall sales volume but also our relentless execution of operational efficiencies and targeted cost-containment measures across our global supply chains.
Current report
Cost of revenue for our core UTVs, ATVs and e-bikes segment decreased by $26.3 million, or 35.8%, from $73.5 million in 2024 to $47.2 million in 2025. This significant reduction aligns with our strategically recalibrated wholesale shipment volumes. Furthermore, the 35.8% contraction in cost was steeper than the 33.3% decline in segment revenue, driven by management’s proactive optimization of inbound component sourcing and the implementation of stringent lean-manufacturing protocols at our domestic assembly facilities. By negotiating more favorable terms with our overseas suppliers and continuously refining our assembly processes, we effectively mitigated the impact of persistent inflationary pressures on our core vehicle lineup.
Current report
Cost of revenue for our Pontoon Boats segment decreased by $2.0 million, or 63.7%, from $3.4 million in 2024 to $1.1 million in 2025. This sharp decline corresponds closely with the 62.6% reduction in pontoon boat sales volumes, as we deliberately paused aggressive wholesale shipments to navigate the tight floorplan financing environment. In addition to volume-driven cost reductions, we achieved critical efficiencies in our ocean freight and customs duty allocations. By proactively managing the complex logistics and landed costs associated with importing marine products during a period of heightened tariff uncertainty, we successfully protected the unit economics of our pontoon vessels as we pivoted toward a more profitable Direct-to-Consumer (DTC) sales model.
Current report
Our gross profit for the year ended December 31, 2025, was $23.5 million, compared to $32.5 million for the previous year. While absolute gross profit decreased due to the strategic reduction in wholesale volume, our overall gross margin expanded significantly by 280 basis points, from 29.7% in 2024 to 32.7% in 2025. This impressive margin expansion during a period of revenue contraction is a direct result of management’s strategic initiatives.
Current report
UTVs, ATVs and e-bikes: Gross margin for this segment improved from 30.4% to 33.0%. This enhancement was driven by a favorable product mix shift toward our higher-margin models, improved component sourcing, and highly effective management of landed costs (including freight and duties). By capturing efficiencies in our ocean freight and duty allocations, we successfully insulated our margins from global inflationary pressures.
Current report
Pontoon Boats: Despite the challenging marine market, gross margin for Pontoon Boats expanded from 9.3% to 20.1%. This improvement reflects our pivot away from heavily discounted wholesale clearing programs toward our more profitable DTC channels, combined with enhanced material cost controls and optimized inbound shipping logistics.
Current report
Our salaries and benefits were $6.5 million and $6.4 million, representing 39.3% and 39.0% of our total general and administrative expenses in fiscal 2025 and 2024, respectively. The slight decrease in balance was mainly due to increase in one-off salaries compensation paid to an employee as result of employment termination and the decrease of basic salaries and benefits due to the employment termination.
Current report
Our rental expenses increased by $0.9 million, or 38.9%, from $2.4 million for the year ended December 31, 2024, to $3.3 million for the year ended December 31, 2025, representing 21.5% and 14.3% of our total general and administrative expenses in fiscal 2025 and 2024, respectively. This significant increase was primarily driven by the full-year impact of the renewal of our principal warehouse and office facility lease at current, higher market rates, which was executed in the second half of 2024. Additionally, the increase reflects the addition of new facility lease agreements signed during 2024 to expand our operational footprint and optimally support our strategic DTC transition and long-term business growth.
Current report
Professional fees decreased significantly by $0.7 million, or 33.1%, from $2.7 million in 2024 to $1.4 million in 2025. The decrease was primarily attributable to fewer ongoing lawsuits that required legal consulting services in the third quarter of fiscal 2025 when compared with same period in the prior year.
Current report
Our interest expense decreased by $0.05 million or 54.0%, from $0.1 million in fiscal 2024, to $0.05 million in fiscal 2025. The decrease in interest expense was mainly because we did not have any bank loans during this period.
Current report
Other income decreased by $0.9 million, or 81.8%, from $1.1 million for the year ended December 31, 2024, to $0.2 million for the year ended December 31, 2025. This decrease was primarily attributable to the absence of several non-recurring, one-time items that significantly benefited fiscal 2024. Specifically, our higher other income in 2024 was driven by a $0.2 million write-off of a vendor’s accounts payable following a favorable settlement, an approximately $0.7 million write-off of long-outstanding customer deposits or credits, and elevated insurance claim recoveries. The $0.2 million recognized in fiscal 2025 represents a return to a normalized run-rate for miscellaneous incidental income, reflecting a cleaner operating baseline without the impact of prior-year atypical settlements.
Current report
Net cash used in financing activities was approximately $3.6 million in fiscal 2025, compared to net cash generated from financing activities of approximately $3.0 million in fiscal 2024. We made a repayment of shareholder withdrawal of $3.6 million for the year ended December 31, 2025 compared with we had a repayment of related party of $2.3 million and a net proceed from IPO of $4.5 million and a proceed from subscription deposits of $0.9 million.
Removed paragraphs (32)
Previous report
Revenues decreased by $3.8 million, or 3.3%, from $115.0 million in fiscal 2023 to $111.2 million in fiscal 2024. 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. We strategically focused our efforts on large retail stores in the U.S. (the “big box stores”) that offer their own financing plans, while moving away from retailers that have liberal return policies.
Previous report
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. 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. 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. This enhances the efficiency of our capital utilization.
Previous report
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. 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. 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.
Previous report
Gross profit
Previous report
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. 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.
Previous report
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. 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. The decline in gross margin was primarily driven by higher freight costs in fiscal year 2024 compared to the last year.
Previous report
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. 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.
Previous report
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.
Previous report
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. 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.
Previous report
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. The increase was mainly due to a higher general insurance premium year-over-year in line with sales growth, as well as the purchase of directors and officers insurance following our transition to a public company.
Previous report
Our interest expense decreased by $0.4 million or 81.0%, from $0.5 million in fiscal 2023, to $0.1 million in fiscal 2024. The decrease was mainly due to the repayment of all outstanding loans in early fiscal 2024.
Previous report
Other income increased by $1.0 million, or 688.6%, from $0.1 million in fiscal 2023, to $1.1 million in fiscal 2024. The increase was primarily due to the following factors: (i) a $0.2 million write-off of a vendor’s accounts payable balance following a settlement with the vendor and us; (ii) an approximately $0.7 million write-off of long outstanding customer deposit or credit, both of which contributed to higher other income; and (iii) an additional approximately $0.1 million in insurance claims in fiscal 2024 compared to fiscal 2023.
Previous report
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. The increase in net cash provided by financing activities in fiscal 2024 was primarily attributable to net proceed from IPO of $4.8 million and from the common shares subscription of $0.9 million, offset by the repayment of bank loans of $0.3 million and repayment of loan from a related party of $2.4 million. 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.
Previous report
Loan Balance
Previous report
Loan balance consists of the following:
Previous report
Critical Accounting Policies and Estimates
Previous report
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. On an ongoing basis, management evaluates their estimates and assumptions, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases its estimates on historical experience and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements.
Previous report
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.
Previous report
Sales returns
Previous report
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. Return allowances are recorded as a reduction in sales with corresponding sales return liabilities which are included in “accrued return liabilities.” 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.” The factors affecting our sales return liabilities include the number of products currently within the return period, historical and anticipated rates of sales returns claimed on those products, and the estimated amount of returns that may be claimed within this period. If actual results differ from the estimates, revises its estimated sales returns liability accordingly. Each period end, the Company reviews and reassesses the adequacy of its recorded sales returns liabilities and adjusts the amounts as necessary. 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. During the years ended December 31, 2024 and 2023, the Company recorded sales returns of $1,061,694 and $3,355,112 respectively.
Previous report
Warranty
Previous report
We generally provides a one-year limited warranty against defects in materials related to the sale of products. 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. The factors affecting the our warranty include the number of products currently under warranty, historical and anticipated rates of warranty claim on those products, and the estimates of repair and replacement costs to satisfy the our warranty obligation. The anticipated rate of warranty claims is the primary estimate used in determining the warranty liability and is relatively predictable using historical experience of failure rates. The average remaining aggregate warranty period of the products sold is calculated, repair parts are generally already in stock or available at pre-determined prices, and labor rates are generally arranged at pre-established amount with service providers. If actual results differ from the estimates, we revises its estimated warranty liability. 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. During the years ended December 31, 2024 and 2023, the Company recorded warranty expenses of $1,274,037 and $1,924,203, respectively.
Previous report
Allowance for credit loss
Previous report
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. 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 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.
Previous report
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.
Previous report
Inventory provision
Previous report
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. 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. Impairment provision of inventories was $30,000 and $439,900 for the years ended December 31, 2024 and 2023, respectively, included in cost of revenues in the consolidated statement of operations and comprehensive income.
Previous report
Contingencies
Previous report
We may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects and other matters which, in general, are subject to uncertainties and in which the outcome are not predictable. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although we can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on us, we believe that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the our unaudited condensed consolidated financial position or results of operations or liquidity as at December 31, 2024 and 2023, except one litigation discussed below.
Previous report
Litigation
Previous report
On July 8, 2024, the Company received a final judgment from the trial court in the lawsuit filed by Taizhou Nebula Power Co, Ltd. (“Nebula”) on September 15, 2020. The final judgment awarded Nebula $3,334,542 in damages, $1,436,809 in attorneys’ fees and other court costs, and $1,217,610 in interest on balances from September 15, 2020. In connection with this judgment, the Company recorded an additional accrual of $3,645,092 as of December 31, 2024, bringing the total accrual related to this lawsuit to approximately $5,988,961. The Company filed an appeal in August 2024 and its appellant’s brief in January 2025.
Previous report
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.
Reworded paragraphs (16)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. 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. Our financial statements have been prepared in accordance with U.S. GAAP.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this 2025 Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this 2025 Annual Report, particularly in “Risk Factors.” All amounts included herein with respect to the fiscal years ended December 31, 2025 and 2024 are derived from our audited consolidated financial statements included elsewhere in this Report. Our financial statements have been prepared in accordance with U.S. GAAP.
Previous wording
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. After this reorganization, Massimo ultimately owns 100% equity interests of Massimo Motor and Massimo Marine.
Current wording
A Reorganization of the legal structure was completed on June 1, 2023. The Controlling Shareholder transferred his 85% equity interest in Massimo Motor and 85% equity interest in Massimo Marine to Massimo. Together with 15% non-controlling interests, after the reorganization, Massimo ultimately owns 100% equity interests of Massimo Motor and Massimo Marine.
Previous wording
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
Current wording
We currently generate most of our revenues from the sales of UTVs and ATVs, which represented 96.6% and 98.0% of total revenue for the years ended December 31, 2024 and 2025, respectively
Previous wording
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.
Current wording
We also generate revenue from the sales of Pontoon Boats, which represented 3.4% and 2.0% of our revenue for the years ended December 31, 2024 and 2025, respectively.
Previous wording
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.
Current wording
The following table summarizes the results of consolidated statements of operations and comprehensive income for the years ended December 31, 2024 and 2025 in U.S. dollars, and provides information regarding the dollar and percentage increase or (decrease) during such year.
Previous wording
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. 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. 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. 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.
Current wording
Our selling expenses mainly include warranty expense, advertising and promotion expense, shipping and handling fee and merchant service fee. These expenses decreased by $2.4 million, or 24.5%, from $9.8 million in fiscal 2024 to $7.4 million in fiscal 2025, representing 10.3% and 9.0% of our total revenue in fiscal 2025 and fiscal 2024, respectively. The decrease was mainly due to lower shipping and handling fees, which rose from approximately $6.3 million in fiscal 2024 to $4.4 million in fiscal 2025. The decrease in selling expenses was primarily due to a significant reduction in shipping and handling fees. Historically, higher sales volumes of UTVs and ATVs to our big box retail customers drove elevated shipping costs, as we cover the outbound freight for these accounts. Consequently, the strategic reduction in our wholesale shipment volumes to these big box stores during 2025 directly resulted in the substantial decline in our shipping and handling expenses. This decrease was further supported by continued efficiencies in our warranty expenses. The ongoing effectiveness of our enhanced quality control measures and our traveling technician team has allowed us to sustain reduced repair costs and respond to customer requests highly efficiently.
Previous wording
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. 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.
Current wording
Our general and administrative expenses primarily include salaries and benefits, professional fees, office expenses, travel expenses, insurance expenses and depreciation expenses. General and administrative expenses decreased by $1.0 million, or 6.2%, from $16.5 million in fiscal 2024 to $15.5 million in fiscal 2025. The decrease was mainly due to decreased salaries and benefit, insurance expense, professional fees and other general administrative expenses. Our general and administrative expenses represented 21.5% and 15.1% of our total revenue in fiscal 2025 and fiscal 2024, respectively.
Previous wording
During the year ended December 31, 2024, we recorded a one-time impairment of advance to suppliers amounting to approximately $0.8 million. In June 2024, we reached a tentative agreement regarding general settlement terms with one suppler who would pay approximately $0.3 million to resolve the claim. Our advance to suppliers amounting to $1.1 million would be considered irrecoverable. Therefore, we wrote off the advance to suppliers amounting to approximately $0.7 million during the year ended December 31, 2024. The settlement agreement was finalized in August 2024. During the year ended December 31, 2023, we had no impairment of advance to suppliers.
Current wording
During the year ended December 31, 2025, we had no impairment of advance to suppliers. During the year ended December 31, 2024, we recorded a one-time impairment of advance to suppliers amounting to approximately $0.8 million. In June 2024, we reached a tentative agreement regarding general settlement terms with one suppler who would pay approximately $0.3 million to resolve the claim. Our advance to suppliers amounting to $1.1 million would be considered irrecoverable. Therefore, we wrote off the advance to suppliers amounting to approximately $0.7 million during the year ended December 31, 2024. The settlement agreement was finalized in August 2024.
Previous wording
During the year ended December 31, 2024, we recorded a one-time loss of approximate $3.6 million on legal judgment on lawsuit with Nebula. The Final Judgment on July 8, 2024 awarded Nebula $3.3 million in damages, $1.4 million in attorneys’ fees and other court cost and $1.2 million in interest on balances since September 15, 2020. We have recorded an additional accrual of $3.6 million as of December 31, 2024, bringing the total accrual related to this lawsuit to approximately $6.0 million. We have filed the appeal in August 2024 and its appellant’s brief in January 2025.
Current wording
During the year ended December 31, 2025, we did not record any loss on litigation. During the year ended December 31, 2024, we recorded a one-time loss of approximate $3.6 million on legal judgment related to a lawsuit with Nebula. The Final Judgment on July 8, 2024 awarded Nebula $3.3 million in damages, $1.4 million in attorneys’ fees and other court cost and $1.2 million in interest on balances since September 15, 2020. We have recorded an additional accrual of $3.6 million as of December 31, 2024, bringing the total accrual related to this lawsuit to approximately $6.0 million. Massimo filed its appellant’s brief on January 31, 2025. Nebula filed its appellee’s brief on May 1, 2025. Massimo intends to continue vigorously defending the lawsuit and pursuing its appeal. As of the date of this Report, there are no further updates regarding this legal proceeding.
Previous wording
Income before income taxes decreased by $8.3 million, from $12.5 million in fiscal 2023, to approximately $4.2 million in fiscal 2024. 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.
Current wording
Income before income taxes decreased by $0.4 million, from $2.4 million in fiscal 2024, to approximately $2.0 million in fiscal 2025. The decrease was primarily attributable to the fluctuation of gross profits and operating expenses discussed in the foregoing part.
Previous wording
The income tax expense was approximately $1.0 million and $2.1 million in fiscal 2024 and 2023, respectively. We terminated our S Corporation status as of June 1, 2023, in connection with the Reorganization and became a taxable C Corporation. Accordingly, the income tax provision in fiscal 2024 combined both federal income tax of 21% and the state margin tax at Texas as a C Corporation, and the income tax provision for the fiscal 2023 only reflected state margin tax at Texas as a S Corporation for five months and a federal income tax of 21% for the remaining seven month’s operation. Decrease in income tax expense was mainly due to decrease in assessable profit in fiscal 2024.
Current wording
The income tax expense was approximately $0.5 million and $0.7 million in fiscal 2025 and 2024, respectively. Decrease in income tax expense was mainly due to decrease in assessable profit in fiscal 2025.
Previous wording
Net income was $3.2 million and $10.4 million in fiscal 2024 and 2023, 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
Current wording
Net income was $1.5 million and $1.8 million in fiscal 2025 and 2024, respectively. The decrease was primarily due to fluctuation of revenues and gross profit, offset by a decrease in operating expenses as discussed above.
Previous wording
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. The decrease is primarily due to the following:
Current wording
Net cash provided used in operating activities was approximately $0.1 million in fiscal 2025, compared to net cash provided by operating activities of approximately $6.7 million in fiscal 2024, representing a decrease in the net cash provided by operating activities of $6.8 million in fiscal 2025 compared with fiscal 2024. The decrease is primarily due to the following:
Previous wording
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. The increase in net cash used investing activities was primarily attributable to the purchase of property and equipment of $0.4 million, partially offset by a proceed of $0.2 million from sale of property and equipment in fiscal 2024.
Current wording
Net cash used in investing activities was approximately $0.7 million in fiscal 2025, compared to net cash used in investing activities of $0.2 million in fiscal 2024. The increase in net cash used in investing activities was primarily attributable to the purchase of crypto assets of $0.7 million.
Previous wording
As of December 31, 2024, we had cash and cash equivalents of approximately $10.2 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.
Current wording
As of December 31, 2025, we had cash and cash equivalents of approximately $5.7 million. Our current assets were approximately $39.8 million, including approximately $5.3 million accounts receivable, approximately $26.0 million inventory, approximately $0.2 million advance to suppliers and approximately $2.5 million prepayment deposit and other receivables, and our current liabilities were approximately $22.3 million, including $7.7 million accounts payable to suppliers, $6.0 million accrued payment on a legal judgment, $0.6 million contract liabilities, $3.5 million income tax payable, $2.0 million loan from a related party and $2.0 million liabilities from obligations under operating and financing leases, which resulted in a positive working capital of $17.6 million.
Previous wording
Our capital expenditures consist primarily of expenditures for the purchase of fixed assets and equipment leases as a result of our business growth. Our capital expenditures amounted to approximately $387,876 and $134,662 for Fiscal 2024 and 2023, respectively.
Current wording
Our capital expenditures consist primarily of the lease of fixed assets and equipment as a result of our business growth. Our capital expenditures amounted to approximately $65,361 and $387,876 for fiscal 2025 and 2024, respectively.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Management’s Discussion and Analysis of Financial Condition and Results of Operations