[Cover Page Information](index=1&type=section&id=Cover%20Page%20Information) This section provides key filing details for Massimo Group's Form 10-Q, including its Nasdaq listing, filer status, and outstanding common shares - Massimo Group filed its Form 10-Q for the quarterly period ended June 30, 2025[1](index=1&type=chunk) - The company's common stock trades on The Nasdaq Stock Market LLC under the symbol **MAMO**[3](index=3&type=chunk) - As of August 11, 2025, there were **41,640,950** shares of the Company's common stock issued and outstanding[5](index=5&type=chunk) Filer Status | Filer Status | | | :--- | :--- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to significant risks and uncertainties, with no obligation to update them - The report contains forward-looking statements subject to substantial risks and uncertainties, including future results, financial position, business strategy, and plans[10](index=10&type=chunk) - Key risks include limited operating history, reliance on independent dealers and Chinese manufacturers, economic conditions impacting consumer spending, intense competition, and potential need for additional capital[10](index=10&type=chunk) - The company does not guarantee future results and undertakes no duty to update forward-looking statements after the report date, except as required by law[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Massimo Group for the periods ended June 30, 2025 and 2024, and as of December 31, 2024. It includes the balance sheets, statements of operations and comprehensive income (loss), statements of changes in shareholders' equity, statements of cash flows, and detailed notes to these financial statements, providing a comprehensive view of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030,%202025%20(unaudited)%20and%20December%2031,%202024%20(audited)) This section presents the company's financial position, detailing changes in assets, liabilities, and equity between June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | ASSETS | June 30, 2025 (unaudited) | December 31, 2024 (restated) | | :--- | :--- | :--- | | **CURRENT ASSETS** | | | | Cash and cash equivalents | $2.44 million | $10.21 million | | Accounts receivable, net | $8.13 million | $4.83 million | | Inventories, net | $23.41 million | $27.26 million | | Total current assets | $35.28 million | $43.62 million | | **NON-CURRENT ASSETS** | | | | Total non-current assets | $10.66 million | $11.27 million | | **TOTAL ASSETS** | $45.94 million | $54.89 million | | **LIABILITIES AND EQUITY** | | | | **CURRENT LIABILITIES** | | | | Accounts payable | $6.24 million | $9.57 million | | Due to a shareholder | $2.53 million | $5.55 million | | Total current liabilities | $19.39 million | $25.74 million | | **NON-CURRENT LIABILITIES** | | | | Total non-current liabilities | $6.39 million | $7.45 million | | **TOTAL LIABILITIES** | $25.78 million | $33.19 million | | **EQUITY** | | | | Total equity | $20.16 million | $21.70 million | | **TOTAL LIABILITIES AND EQUITY** | $45.94 million | $54.89 million | - Total assets decreased by **$8.95 million (16.3%)** from $54.89 million at December 31, 2024, to $45.94 million at June 30, 2025[18](index=18&type=chunk) - Cash and cash equivalents significantly decreased by **$7.77 million (76.1%)** from $10.21 million to $2.44 million[18](index=18&type=chunk) - Total liabilities decreased by **$7.4 million (22.3%)** from $33.19 million to $25.78 million, primarily due to a reduction in accounts payable and amounts due to a shareholder[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024%20(unaudited)) This section outlines the company's financial performance, including revenues, costs, operating expenses, and net income or loss for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $18.92 million | $35.40 million | | Cost of revenues | $12.05 million | $23.90 million | | Gross profit | $6.87 million | $11.50 million | | Total operating expenses | $6.72 million | $7.93 million | | Income from operations | $0.14 million | $3.56 million | | Net income and comprehensive income | $0.08 million | $2.82 million | | Earnings per Share – basic | $0.00 | $0.07 | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $33.82 million | $65.55 million | | Cost of revenues | $22.73 million | $43.60 million | | Gross profit | $11.09 million | $21.95 million | | Total operating expenses | $13.66 million | $14.41 million | | Income from operations | $(2.56) million | $7.54 million | | Net income and comprehensive income | $(2.01) million | $6.00 million | | Earnings per Share – basic | $(0.05) | $0.15 | - For the three months ended June 30, 2025, revenues decreased by **46.6% YoY**, and net income decreased by **97.2% YoY**[20](index=20&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - For the six months ended June 30, 2025, revenues decreased by **48.4% YoY**, and the company reported a net loss of **$2.01 million** compared to a net income of $6.00 million in the prior year[20](index=20&type=chunk)[181](index=181&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024%20(unaudited)) This section details the changes in shareholders' equity, including common shares, additional paid-in capital, and retained earnings, for the six months ended June 30, 2025 and 2024 Changes in Shareholders' Equity (June 30, 2025 vs. June 30, 2024) | Equity Component | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Common Shares (Amount) | $41,640 | $41,322 | | Additional Paid-in Capital | $7.08 million | $5.39 million | | Retained Earnings | $13.04 million | $19.28 million | | Total Equity | $20.16 million | $24.72 million | - Total equity decreased from **$24.72 million** at June 30, 2024, to **$20.16 million** at June 30, 2025, primarily due to a decrease in retained earnings[22](index=22&type=chunk) - Additional paid-in capital increased due to stock-based compensation and amortization of share-based compensation related to RSU grants[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20months%20Ended%20June%2030,%202025%20and%202024%20(unaudited)) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4.73) million | $(7.11) million | | Net cash used in investing activities | $- | $(0.18) million | | Net cash provided by (used in) financing activities | $(3.04) million | $7.80 million | | Net increase (decrease) in cash and cash equivalents | $(7.77) million | $0.51 million | | Cash and cash equivalents, end of the period | $2.44 million | $1.28 million | - Net cash used in operating activities decreased by **$2.38 million**, from $7.11 million in 2024 to $4.73 million in 2025[24](index=24&type=chunk)[205](index=205&type=chunk) - Net cash used in financing activities was **$3.04 million** in 2025, a significant change from $7.80 million provided in 2024, primarily due to repayment of shareholder loans[24](index=24&type=chunk)[208](index=208&type=chunk) - Cash and cash equivalents at the end of the period decreased by **$7.77 million** to $2.44 million in 2025, compared to an increase of $0.51 million to $1.28 million in 2024[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, specific accounts, and contingencies [NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION](index=12&type=section&id=NOTE%201%20%E2%80%94%20ORGANIZATION%20AND%20BUSINESS%20DESCRIPTION) This note describes Massimo Group's formation, business activities in UTVs, ATVs, and Pontoon Boats, and its IPO and controlling shareholder - Massimo Group, a Nevada holding company established October 10, 2022, manufactures and sells UTVs, ATVs, and Pontoon Boats through its subsidiaries Massimo Motor Sports, LLC and Massimo Marine, LLC[26](index=26&type=chunk)[29](index=29&type=chunk) - The company completed an IPO on April 4, 2024, listing common shares on Nasdaq under 'MAMO', raising approximately **$5.85 million** gross proceeds[26](index=26&type=chunk) - Mr. David Shan, Chairman and CEO, is the controlling shareholder, owning **77.2% equity interest** as of June 30, 2025[26](index=26&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's accounting principles, revenue recognition, segment reporting, and significant concentrations of credit and market risks - Financial statements are prepared in conformity with U.S. GAAP, with all intercompany balances and transactions eliminated in consolidation[31](index=31&type=chunk) - Revenue is primarily generated from sales of UTVs, ATVs, e-bikes, and Pontoon Boats, recognized when control is transferred to customers upon goods delivery and acceptance[45](index=45&type=chunk) - The company identifies two reportable segments based on product type (UTVs, ATVs, e-bikes and Pontoon Boats) for resource allocation and performance assessment[64](index=64&type=chunk) - Significant concentrations of credit risk exist with cash and cash equivalents, accounts receivable, and other receivables. One customer accounted for **66% of total revenues** for the six months ended June 30, 2025, and **77% of total accounts receivable** as of June 30, 2025[65](index=65&type=chunk)[70](index=70&type=chunk) - The company is exposed to foreign exchange risk due to raw material imports from China, interest rate risk from leases and borrowings, and liquidity risk, though it does not use derivative financial instruments for hedging[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) [NOTE 3 — ACCOUNTS RECEIVABLE, NET](index=22&type=section&id=NOTE%203%20%E2%80%94%20ACCOUNTS%20RECEIVABLE,%20NET) This note details the composition and changes in net accounts receivable, including the allowance for credit loss and pledged balances Accounts Receivable, Net | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable – third parties | $8.49 million | $5.21 million | | Less: allowance for credit loss | $(0.36) million | $(0.38) million | | Accounts receivable, net | $8.13 million | $4.83 million | - Net accounts receivable increased by **$3.30 million (68.3%)** from $4.83 million at December 31, 2024, to $8.13 million at June 30, 2025[80](index=80&type=chunk) - The allowance for credit loss decreased by **$25,465** for the six months ended June 30, 2025, reflecting a reversal of allowance[81](index=81&type=chunk)[82](index=82&type=chunk) - Accounts receivable balances as of June 30, 2025, and December 31, 2024, are pledged for the company's line of credit facility at Cathay Bank[82](index=82&type=chunk) [NOTE 4 — INVENTORIES](index=22&type=section&id=NOTE%204%20%E2%80%94%20INVENTORIES) This note provides a breakdown of inventories, net, including products, parts, and in-transit items, and details changes and pledges Inventories, Net | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Products | $13.65 million | $18.00 million | | Parts and accessories | $1.75 million | $1.11 million | | Inventories in transit | $4.93 million | $4.86 million | | Freight and duty | $3.55 million | $3.75 million | | Less: inventory allowance | $(0.47) million | $(0.47) million | | Inventories, net | $23.41 million | $27.26 million | - Net inventories decreased by **$3.85 million (14.1%)** from $27.26 million at December 31, 2024, to $23.41 million at June 30, 2025[83](index=83&type=chunk) - No impairment provision of inventories was recorded for the three and six months ended June 30, 2025 and 2024[83](index=83&type=chunk)[84](index=84&type=chunk) - Partial inventories of **$18.73 million** (June 30, 2025) and **$21.61 million** (December 31, 2024) were pledged for the company's line of credit facility at Cathay Bank[85](index=85&type=chunk) [NOTE 5 — ADVANCE TO SUPPLIERS](index=24&type=section&id=NOTE%205%20%E2%80%94%20ADVANCE%20TO%20SUPPLIERS) This note explains the changes in advance to suppliers, net, including an impairment loss allowance due to an irrecoverable prepayment Advance to Suppliers, Net | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Advance to suppliers | $0.34 million | $0.87 million | | Less: impairment loss allowance due to irrecoverable prepayment | $- | $(0.77) million | | Advance to suppliers, net | $0.34 million | $99,076 | - Advance to suppliers, net, increased by **$242,702** from $99,076 at December 31, 2024, to $0.34 million at June 30, 2025[87](index=87&type=chunk) - In June 2024, the company wrote off **$0.77 million** of advance to suppliers due to a settlement agreement with a supplier, reducing the advance from $1.09 million to $0.31 million[88](index=88&type=chunk) [NOTE 6 — PREPAID AND CURRENT ASSETS](index=24&type=section&id=NOTE%206%20%E2%80%94%20PREPAID%20AND%20CURRENT%20ASSETS) This note details the components of prepaid and other current assets, including prepayments and other receivables, and their changes Prepaid and Other Current Assets | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayment | $0.81 million | $1.10 million | | Other receivables | $141,519 | $124,049 | | Total | $0.95 million | $1.22 million | - Total prepaid and other current assets decreased by **$266,460 (21.8%)** from $1.22 million at December 31, 2024, to $0.95 million at June 30, 2025[89](index=89&type=chunk) [NOTE 7 — PROPERTY AND EQUIPMENT, NET](index=24&type=section&id=NOTE%207%20%E2%80%94%20PROPERTY%20AND%20EQUIPMENT,%20NET) This note presents the net property and equipment, detailing cost, accumulated depreciation, and changes over the period Property and Equipment, Net | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Subtotal (cost) | $1.09 million | $1.09 million | | Less: accumulated depreciation and amortization | $(0.62) million | $(0.55) million | | Property and equipment, net | $0.47 million | $0.53 million | - Net property and equipment decreased by **$67,005 (12.6%)** from $532,259 at December 31, 2024, to $0.47 million at June 30, 2025[90](index=90&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$67,005**, consistent with $66,984 in the prior year[90](index=90&type=chunk) - No impairment loss was recorded for property and equipment for the three and six months ended June 30, 2025 and 2024[92](index=92&type=chunk) [NOTE 8 — LEASES](index=25&type=section&id=NOTE%208%20%E2%80%94%20LEASES) This note describes the company's lease agreements, including operating and finance leases, and their associated liabilities and expenses - The company has multiple lease agreements, primarily for warehouse and office space with a related party (Miller Creek Holding LLC, controlled by David Shan), and for machinery, office equipment, and vehicles[93](index=93&type=chunk) - Total operating lease expense for the six months ended June 30, 2025, was **$1.43 million**, an increase from $0.72 million in the prior year[95](index=95&type=chunk) - The weighted-average remaining lease term for operating leases is **3.95 years** (June 30, 2025) and for finance leases is **1.56 years**[100](index=100&type=chunk) Operating and Finance Lease Liabilities (June 30, 2025 vs. December 31, 2024) | Lease Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease liabilities - current | $2.12 million | $2.12 million | | Operating lease liabilities - non-current | $6.37 million | $7.41 million | | **Total Operating Lease Liabilities** | **$8.49 million** | **$9.53 million** | | Finance lease liabilities - current | $39,652 | $43,421 | | Finance lease liabilities - non-current | $15,889 | $33,602 | | **Total Finance Lease Liabilities** | **$55,541** | **$77,023** | [NOTE 9 — RETURN LIABILITIES](index=27&type=section&id=NOTE%209%20%E2%80%94RETURN%20LIABILITIES) This note details the accrued return liabilities, including actual recognized product returns and accruals for future returns Accrued Return Liabilities | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Balance as of beginning | $261,588 | $283,276 | | Actual recognized products return | $(1.49) million | $(1.06) million | | Accruals for product return liabilities | $1.20 million | $1.04 million | | Ending balance | $31,645 | $261,588 | - Accrued return liabilities decreased significantly from **$261,588** at December 31, 2024, to **$31,645** at June 30, 2025[102](index=102&type=chunk) - For the six months ended June 30, 2025, accruals for product return liabilities were **$1.20 million**, compared to $1.04 million in the prior year[102](index=102&type=chunk) [NOTE 10 — WARRANTY LIABILITIES](index=27&type=section&id=NOTE%2010%20%E2%80%94%20WARRANTY%20LIABILITIES) This note outlines the accrued warranty liabilities, including claims paid and accruals for product warranties Accrued Warranty Liabilities | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Balance as of beginning | $503,553 | $619,113 | | Cost of warranty claims | $(0.33) million | $(1.27) million | | Accruals for product warranty | $125,419 | $1.16 million | | Ending balance | $301,645 | $503,553 | - Accrued warranty liabilities decreased from **$503,553** at December 31, 2024, to **$301,645** at June 30, 2025[103](index=103&type=chunk) - For the six months ended June 30, 2025, accruals for product warranty were **$125,419**, a significant decrease from $1.16 million in the prior year, reflecting improvements in quality control and customer service[103](index=103&type=chunk)[170](index=170&type=chunk)[193](index=193&type=chunk) [NOTE 11 — OTHER PAYABLE, ACCRUED EXPENSE AND OTHER CURRENT LIABILITY](index=27&type=section&id=NOTE%2011%20%E2%80%94%20OTHER%20PAYABLE,%20ACCRUED%20EXPENSE%20AND%20OTHER%20CURRENT%20LIABILITY) This note details other payable, accrued expenses, and other current liabilities, primarily including an accrual for litigation Other Payable, Accrued Expense and Other Current Liabilities | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Credit card liabilities | $- | $13,792 | | Sales Tax payable | $25,976 | $27,129 | | Other current liabilities | $103,650 | $- | | Payroll liabilities | $29,078 | $139,311 | | Accrual on litigation (a) | $6.03 million | $5.99 million | | Total | $6.19 million | $6.17 million | - Total other payable, accrued expense, and other current liabilities remained stable at **$6.19 million** at June 30, 2025, compared to $6.17 million at December 31, 2024[104](index=104&type=chunk) - The balance mainly includes a **$6.03 million** accrual for litigation in connection with Nebula[104](index=104&type=chunk) [NOTE 12 — RELATED PARTY TRANSACTIONS](index=28&type=section&id=NOTE%2012%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) This note describes transactions and balances with related parties, including loans from the controlling shareholder and guarantees - Related parties include David Shan (Controlling Shareholder), Miller Creek Holdings LLC (controlled by David Shan), and Vessel Technology Inc. (controlled by David Shan)[106](index=106&type=chunk) - The company made repayments totaling **$3.02 million** towards the loan from Mr. David Shan during the six months ended June 30, 2025[107](index=107&type=chunk) - Mr. David Shan and Massimo Group provide an unlimited guarantee to the Company's bank borrowings[108](index=108&type=chunk) Due to Shareholder (David Shan) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loan from David Shan, opening balance | $5.55 million | $7.92 million | | Repayment | $(3.02) million | $(2.37) million | | Loan from David Shan, ending balance | $2.53 million | $5.55 million | | Current | $2.53 million | $5.55 million | [NOTE 13 — TAXES](index=29&type=section&id=NOTE%2013%20%E2%80%94%20TAXES) This note details the company's income tax provision, effective tax rates, and deferred tax recovery for the reporting periods - Massimo Motor and Massimo Marine are subject to a statutory income tax rate of **21%**[110](index=110&type=chunk) - The company's effective tax rate for the six months ended June 30, 2025, was **22.42%**, compared to 22.23% in 2024[111](index=111&type=chunk) - For the six months ended June 30, 2025, the company recognized a deferred income tax recovery of **$0.5 million** due to a net loss position and temporary differences[202](index=202&type=chunk) Income Tax Provision (Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Income tax provision – current | $8,998 | $2.01 million | | Income tax (recovery) - deferred | $(0.52) million | $(0.30) million | | Income tax provision | $(0.51) million | $1.71 million | [NOTE 14 — SHAREHOLDERS' EQUITY](index=30&type=section&id=NOTE%2014%20%E2%80%94%20SHAREHOLDERS'%20EQUITY) This note outlines changes in shareholders' equity, including common shares outstanding, the impact of the IPO, and representative's warrants - As of June 30, 2025, **41,640,950** common shares were issued and outstanding, compared to 41,539,950 at December 31, 2024[115](index=115&type=chunk) - The company closed its IPO on April 4, 2024, issuing **1,300,000 shares** at $4.50 per share, generating approximately **$5.0 million** net proceeds[117](index=117&type=chunk) - The company issued Representative's Warrants to purchase **87,100 shares** of common stock, exercisable at $5.63 per share, with a fair value of **$0.22 million** recorded as a direct IPO cost[119](index=119&type=chunk)[120](index=120&type=chunk) [NOTE 15 — EARNINGS (LOSS) PER SHARE](index=31&type=section&id=NOTE%2015%20%E2%80%94%20EARNINGS%20(LOSS)%20PER%20SHARE) This note presents the calculation of basic and diluted earnings or loss per share, considering net income/loss and weighted average shares Earnings Per Share (Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net income attributable to the Company | $(2.01) million | $6.00 million | | Weighted average number of common shares outstanding – basic | 41,566,110 | 40,629,807 | | Dilutive securities – unvested RSU | - | 63,614 | | Weighted average number of common shares outstanding – diluted | 41,566,110 | 40,693,421 | | Earnings per share – basic | $(0.05) | $0.15 | | Earnings per share – diluted | $(0.05) | $0.15 | - For the six months ended June 30, 2025, the company reported a diluted loss per share of **$(0.05)**, compared to diluted earnings per share of $0.15 in the prior year[126](index=126&type=chunk) - Potential common shares were excluded from diluted EPS calculation for the six months ended June 30, 2025, due to the net loss position, making their inclusion anti-dilutive[123](index=123&type=chunk) [NOTE 16 — EMPLOYEE STOCK PLANS](index=33&type=section&id=NOTE%2016%20%E2%80%94%20EMPLOYEE%20STOCK%20PLANS) This note details the company's equity incentive plan, stock-based compensation expense, and outstanding stock options and RSUs - The company's 2024 Equity Incentive Plan authorizes awards of stock options and RSUs to employees and directors[127](index=127&type=chunk) - Stock-based compensation expense for RSUs was **$307,379** for the six months ended June 30, 2025, compared to $170,321 in the prior year[128](index=128&type=chunk) - Options to purchase **350,000 common shares** were granted to the CEO and two other executives in May 2024, with exercise prices of $4.268 (ISO) and $4.00 (NSO)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - As of June 30, 2025, **175,000 options** were exercisable, and the total unrecognized compensation cost related to outstanding stock options was **$121,460**, to be recognized over 0.89 years[134](index=134&type=chunk) [NOTE 17 — COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=NOTE%2017%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) This note describes the company's legal proceedings and other contingencies, assessing their potential financial impact - The company is involved in legal proceedings, including a lawsuit by Taizhou Nebula Power Co. Ltd. for **$2.34 million** for products shipped from 2017-2019, where the trial court generally found for Nebula in June 2024, and Massimo is appealing[136](index=136&type=chunk) - Another lawsuit by Zhejiang Qunying Vehicle Co., Ltd. alleges **$6.0 million** in damages for unpaid products; the company denies purchasing from Zhejiang and considers a negative outcome remote[137](index=137&type=chunk) - The company believes that any ultimate liability from these proceedings will not have a material adverse effect on its financial position or results of operations, except for the two discussed[135](index=135&type=chunk) [NOTE 18 — SEGMENT REPORTING](index=36&type=section&id=NOTE%2018%20%E2%80%94%20SEGMENT%20REPORTING) This note provides financial information by reportable segments, detailing revenue contributions from UTVs, ATVs, e-bikes, and Pontoon Boats - The company operates and manages its business as two reportable segments: UTVs, ATVs, and e-bikes, and Pontoon Boats[139](index=139&type=chunk) - For the six months ended June 30, 2025, UTVs, ATVs, and e-bikes accounted for **97.7% of total revenue**, while Pontoon Boats accounted for **2.3%**[146](index=146&type=chunk)[147](index=147&type=chunk) Revenue by Product Categories (Six Months Ended June 30) | Product Category | 2025 | 2024 | | :--- | :--- | :--- | | UTVs, ATVs and e-bikes | $33.03 million | $62.93 million | | Pontoon Boats | $0.79 million | $2.63 million | | Total | $33.82 million | $65.55 million | [NOTE 19 — SUBSEQUENT EVENTS](index=36&type=section&id=NOTE%2019%20%E2%80%94%20SUBSEQUENT%20EVENTS) This note confirms the evaluation of events after the reporting period, with no material subsequent events requiring disclosure - The company evaluated all events and transactions after June 30, 2025, up to the financial statement issuance date, and found no material subsequent events requiring disclosure[141](index=141&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition and operational performance for the three and six months ended June 30, 2025, compared to the same periods in 2024. It discusses key factors affecting results, detailed analysis of revenues, expenses, and net income, as well as cash flows, liquidity, capital resources, and critical accounting policies. The company experienced significant revenue and net income declines due to economic contraction, reduced consumer spending, and tariff uncertainties [Overview of Company](index=37&type=section&id=Overview%20of%20Company) This section provides an overview of Massimo Group's business, legal structure, and primary revenue-generating product categories - Massimo Group, a Nevada holding company, manufactures and sells UTVs, ATVs, and Pontoon Boats through its subsidiaries[143](index=143&type=chunk) - The company's legal structure was reorganized on June 1, 2023, consolidating Massimo Motor Sports and Massimo Marine under Massimo Group, controlled by David Shan[144](index=144&type=chunk)[145](index=145&type=chunk) - UTVs and ATVs are the primary revenue drivers, accounting for **97.7% of total revenue** for the six months ended June 30, 2025[146](index=146&type=chunk) [Trends and Key Factors that Affect Operating Results](index=37&type=section&id=Trends%20and%20Key%20Factors%20that%20Affect%20Operating%20Results) This section discusses key trends and factors, including competition, economic conditions, tariffs, and capital availability, affecting the company's operating results - The company faces intense competition in the powersports vehicles and boats industry, with competitors having greater financial and marketing resources[148](index=148&type=chunk) - Significant risks include economic and policy changes in China (where most products are imported from), unavailability of additional capital for growth, and uncertainty in raw material costs[150](index=150&type=chunk) - Recent U.S. tariff policies, including increased tariffs on Chinese imports (up to **145%** by April 9, 2025, then reduced to **30%** during a 90-day truce), have created significant uncertainty, impacting costs, supply chains, and customer ordering behavior[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Inflationary pressures and high interest rates have reduced consumer spending on discretionary goods, affecting sales of UTVs, ATVs, and Pontoon Boats[150](index=150&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing revenues, costs, and profitability for the three and six months ended June 30, 2025 and 2024 [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=40&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030,%202024) This section compares the company's financial performance for the three months ended June 30, 2025, against the same period in 2024, highlighting key changes in revenues and profitability Key Financials (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $18.92 million | $35.40 million | $(16.49) million | (46.6)% | | Gross profit | $6.87 million | $11.50 million | $(4.63) million | (40.3)% | | Gross profit margin | 36.3% | 32.5% | 3.8% | 11.7% | | Total operating expenses | $6.72 million | $7.93 million | $(1.21) million | (15.3)% | | Income from operations | $0.14 million | $3.56 million | $(3.42) million | (96.0)% | | Net income | $0.08 million | $2.82 million | $(2.74) million | (97.2)% | - Revenue decreased by **$16.49 million (46.6%)** due to U.S. economic contraction, reduced consumer spending, and uncertainty from new tariffs, which led to reduced order sizes from major big-box customers[157](index=157&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - Gross profit decreased by **$4.63 million (40.3%)**, but gross profit margin increased to **36.3%** from 32.5%, mainly due to a recovery in sales in June[165](index=165&type=chunk) - Selling expenses decreased by **$0.9 million (30.4%)**, primarily due to a **$0.5 million** reduction in warranty expenses, reflecting improved quality control and customer service[170](index=170&type=chunk) - Net income decreased by **97.2%** to **$0.08 million**, primarily driven by decreased revenues and gross profit, partially offset by lower operating expenses[180](index=180&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=45&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030,%202024) This section compares the company's financial performance for the six months ended June 30, 2025, against the same period in 2024, detailing significant declines in revenue and net income Key Financials (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales | $33.82 million | $65.55 million | $(31.74) million | (48.4)% | | Gross profit | $11.09 million | $21.95 million | $(10.86) million | (49.5)% | | Gross profit margin | 32.8% | 33.5% | (0.7)% | (2.1)% | | Total operating expenses | $13.66 million | $14.41 million | $(0.76) million | (5.3)% | | Income from operations | $(2.56) million | $7.54 million | $(10.10) million | (134.0)% | | Net income | $(2.01) million | $6.00 million | $(8.01) million | (133.5)% | - Revenue decreased by **$31.74 million (48.4%)** due to U.S. economic contraction, reduced consumer spending, and uncertainty from tariffs, leading to reduced orders from big-box customers[182](index=182&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Net loss was **$2.01 million**, a significant decline from net income of $6.00 million in the prior year, primarily due to decreased revenues and gross profit[203](index=203&type=chunk) - Pontoon Boat sales decreased by **$0.8 million (30.7%)** due to an industry-wide downturn, high interest rates, inflation, and high rejection rates from floorplan financing providers[188](index=188&type=chunk) - Selling expenses decreased by **$1.3 million (24.2%)**, driven by a **$0.7 million** reduction in warranty expenses due to improved quality control and a traveling technician team[193](index=193&type=chunk) [Cash Flows](index=49&type=section&id=Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 [Operating Activities](index=49&type=section&id=Operating%20Activities) This section details net cash flows from operating activities, explaining changes driven by net income/loss and non-cash adjustments Net Cash (Used in) Provided by Operating Activities (Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4.73) million | $(7.11) million | - Net cash used in operating activities decreased by **$2.38 million**, from $7.11 million in 2024 to $4.73 million in 2025, primarily due to a net loss of $2.0 million in 2025 compared to a net income of $6.0 million in 2024[205](index=205&type=chunk) - Non-cash items adjusted for net income were approximately **$1.0 million** during the six months ended June 30, 2025, compared to approximately $1.6 million during the same period in 2024[206](index=206&type=chunk) - Inventory increased by approximately **$3.8 million** during the six months ended June 30, 2025[214](index=214&type=chunk) [Investing Activities](index=51&type=section&id=Investing%20Activities) This section outlines net cash flows from investing activities, primarily related to fixed deposits and capital expenditures Net Cash Used in Investing Activities (Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in investing activities | $- | $(0.18) million | - Net cash used in investing activities was **nil** for the six months ended June 30, 2025, compared to $0.18 million used in the prior year[207](index=207&type=chunk) - In 2025, the company made and then received proceeds from a **$3.0 million** fixed deposit, resulting in no net cash flow from investing[207](index=207&type=chunk) [Financing Activities](index=51&type=section&id=Financing%20Activities) This section describes net cash flows from financing activities, including shareholder loan repayments and proceeds from bank loans and IPO Net Cash Provided by (Used in) Financing Activities (Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) financing activities | $(3.04) million | $7.80 million | - Net cash used in financing activities was **$3.04 million** in 2025, a significant change from $7.80 million provided in 2024[208](index=208&type=chunk) - The primary use of cash in 2025 was a **$3.0 million** repayment of shareholder withdrawal[208](index=208&type=chunk) - In 2024, financing activities included **$2.7 million** from bank loans and **$4.5 million** net proceeds from the IPO[208](index=208&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet short-term and long-term obligations, its capital management strategy, and working capital position [Overview](index=51&type=section&id=Overview) This section outlines the company's capital management strategy, focusing on operational capacity, stakeholder benefits, and return on investment - The company's capital management strategy focuses on preserving operational capacity, providing stakeholder benefits, and ensuring adequate return on investment[209](index=209&type=chunk) - The capital structure is adjusted based on economic environment and asset risks, and the company is not subject to externally imposed capital requirements[210](index=210&type=chunk) [Working Capital](index=51&type=section&id=Working%20Capital) This section details the company's working capital position, including cash, receivables, inventory, and current liabilities, and future capital needs - As of June 30, 2025, the company had a positive working capital of **$15.9 million**[211](index=211&type=chunk) - Accounts receivable increased from $4.8 million at December 31, 2024, to **$8.1 million** at June 30, 2025, due to sales recovery in June[212](index=212&type=chunk) - The company expects to meet operational needs through cash flow from operating activities but may seek additional capital by issuing shares[213](index=213&type=chunk) Working Capital Components (June 30, 2025) | Component | Amount | | :--- | :--- | | Cash and cash equivalents | $2.4 million | | Accounts receivable | $8.2 million | | Inventory | $23.4 million | | Total current assets | $35.3 million | | Total current liabilities | $19.4 million | [Capital Expenditures](index=52&type=section&id=Capital%20Expenditures) This section reports on capital expenditures, primarily for fixed assets and equipment leases, and their changes year-over-year - Capital expenditures were **nil** for the six months ended June 30, 2025, compared to **$0.34 million** in the prior year[215](index=215&type=chunk) - Capital expenditures primarily consist of purchases of fixed assets and equipment leases, driven by business growth[215](index=215&type=chunk) [Contractual Commitments](index=52&type=section&id=Contractual%20Commitments) This section outlines the company's contractual obligations, specifically lease commitments, and their payment schedule - Total lease commitments as of June 30, 2025, amounted to **$10.09 million**, with **$2.80 million** due within one year[216](index=216&type=chunk) Contractual Obligations (as of June 30, 2025) | Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Lease commitment | $10.09 million | $2.80 million | $4.70 million | $2.59 million | $- | [Off-balance Sheet Commitments and Arrangements](index=52&type=section&id=Off-balance%20Sheet%20Commitments%20and%20Arrangements) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial condition or results of operations - There were no off-balance sheet arrangements for the six months ended June 30, 2025 and 2024, that had a material effect on financial condition or results of operations[217](index=217&type=chunk) [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the company's critical accounting policies and estimates, which involve significant judgment and impact financial reporting [Sales returns](index=52&type=section&id=Sales%20returns) This section details the accounting policy and estimated liability for sales returns based on historical data - Sales return liabilities were **$31,645** as of June 30, 2025, based on historical sales returns[220](index=220&type=chunk) [Warranty](index=52&type=section&id=Warranty) This section describes the accounting policy and estimated liability for product warranties based on historical experience and repair costs - Product warranty liabilities were **$301,645** as of June 30, 2025, estimated based on historical experience and repair costs[221](index=221&type=chunk) [Allowance for credit loss](index=53&type=section&id=Allowance%20for%20credit%20loss) This section explains the accounting policy and estimated allowance for credit losses on accounts receivable - Allowance for credit loss was **$0.4 million** as of June 30, 2025, determined using a loss rate method considering customer financial condition and economic forecasts[223](index=223&type=chunk) [Inventory provision](index=53&type=section&id=Inventory%20provision) This section details the accounting policy and provision for inventory, valued at the lower of cost or net realizable value - Inventory provision was **$469,900** as of June 30, 2025, based on the lower of cost or net realizable value, with no impairment recorded for the period[224](index=224&type=chunk) [Contingencies](index=53&type=section&id=Contingencies) This section outlines the accounting policy for contingencies, assessing probable and estimable losses from legal proceedings - The company assesses contingencies for probable and estimable losses, believing current legal proceedings will not have a material adverse effect on its financial position or results, except for the two discussed in Note 17[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Massimo Group is not required to provide quantitative and qualitative disclosures about market risk in this report - The company is exempt from providing quantitative and qualitative disclosures about market risk as it is a smaller reporting company[226](index=226&type=chunk) [Item 4. Controls and Procedures.](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section details the evaluation of the company's disclosure controls and procedures, identifying a material weakness related to ineffective controls over information and communication and period-end financial disclosure and reporting processes. Management is actively implementing remediation plans, including new approval procedures, additional monitoring controls, and improved communication between departments, but these weaknesses are not yet considered remediated [Evaluation of Disclosure Controls and Procedures](index=53&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, identifying a material weakness as of June 30, 2025 - Management identified a **material weakness** in disclosure controls and procedures as of June 30, 2025[229](index=229&type=chunk) - The material weakness is related to ineffective controls over information and communication and period-end financial disclosure and reporting processes, including internal and external communication gaps and lack of effective controls over accurate accounting and financial reporting[229](index=229&type=chunk) [Remediated Material Weaknesses](index=54&type=section&id=Remediated%20Material%20Weaknesses) This section outlines management's remediation plans for identified material weaknesses in disclosure controls and procedures - Management is developing and implementing remediation plans, including new approval procedures for product offerings, additional monitoring controls for revenue streams, and improved communication between sales and accounting departments[230](index=230&type=chunk)[232](index=232&type=chunk) - These material weaknesses will not be considered remediated until the controls operate effectively for a sufficient period and are tested[230](index=230&type=chunk) [Changes in Internal Control over Financial Reporting](index=54&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any changes in internal control over financial reporting during the quarter ended June 30, 2025 - Other than the material weaknesses discussed, there have been no changes to internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[231](index=231&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits, providing additional disclosures [Item 1. Legal Proceedings.](index=55&type=section&id=Item%201.%20Legal%20Proceedings.) This section details the company's ongoing legal proceedings, including a breach of contract lawsuit by Taizhou Nebula Power Co. Ltd. for $2.34 million, which the company is appealing after an unfavorable trial court judgment. It also mentions a $6.0 million damages claim by Zhejiang Qunying Vehicle Co., Ltd., which the company intends to vigorously defend, denying any product purchases from them. The company acknowledges past litigation but does not believe it will have a material adverse effect on current operations - Taizhou Nebula Power Co. Ltd. sued the company for **$2.34 million** for products shipped from 2017-2019; the trial court found for Nebula in June 2024, and Massimo is appealing[234](index=234&type=chunk) - Zhejiang Qunying Vehicle Co., Ltd. filed a **$6.0 million** damages claim, alleging unpaid products; the company denies purchasing from Zhejiang and plans to vigorously defend the lawsuit, with trial scheduled for March 2026[235](index=235&type=chunk) - The company has been subject to over fifty past legal proceedings, but does not believe they will have a material adverse effect on its business, operating results, financial condition, or cash flows[236](index=236&type=chunk) [Item 1A. Risk Factors.](index=55&type=section&id=Item%201A.%20Risk%20Factors.) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. It reiterates that any of these factors could significantly impact the company's operations or financial condition - No material changes to risk factors have occurred since the Annual Report on Form 10-K for fiscal year ended December 31, 2024[237](index=237&type=chunk) - Existing risk factors could still result in a significant or material adverse effect on the company's results of operations or financial condition[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section reports that there were no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities during the reporting period[238](index=238&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[239](index=239&type=chunk) [Item 4. Mine Safety Disclosures.](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[240](index=240&type=chunk) [Item 5. Other Information.](index=55&type=section&id=Item%205.%20Other%20Information.) This section states that no directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarterly period ended June 30, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[241](index=241&type=chunk) [Item 6. Exhibits.](index=56&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the Form 10-Q report, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[244](index=244&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension Documents are filed as Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, and 104[244](index=244&type=chunk) [Signatures](index=57&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer, David Shan, and Chief Financial Officer, Yunhao Chen, certifying the filing of the report on August 14, 2025 - The report was signed by David Shan, Chief Executive Officer, and Yunhao Chen, Chief Financial Officer, on August 14, 2025[247](index=247&type=chunk)

Company Expansion - Massimo Motor has obtained licensing to launch sales in Oregon and Arkansas, adding over 100 new retail locations [1][2] - The expansion is expected to significantly boost sales during the holiday season based on initial stocking and re-order trends [2] - CEO David Shan emphasized that this expansion strengthens retail presence and positions the company for sustained growth [2][3] Operational Enhancements - Massimo has made strategic enhancements to its global sourcing and logistics model, including expanded factory partnerships in Vietnam [2] - These improvements have led to reduced lead times, improved product flow, and increased operational flexibility [2] - The company is well-positioned to meet market needs during the peak sales cycle in Q3 and Q4 [3]

Core Viewpoint - Massimo Group is expanding its production capabilities by partnering with a manufacturing facility in Vietnam to enhance supply-chain diversification, cost efficiency, and quality control while introducing a new six-seater golf cart model to the U.S. market [1][2][3] Company Expansion - The company will begin taking deliveries of feature-rich six-seater golf carts from Vietnam, with shipments expected to arrive in the U.S. soon [1] - This expansion is part of a broader global production realignment aimed at insulating the company from disruptions and enhancing its ability to scale efficiently [6] Product Details - The new Massimo MVR4X Six-Seater golf cart features a 48V 5KW AC motor, a driving range of 60 km, and a comfortable suspension system [3] - The cart is designed for safety and durability, with a rust-resistant steel chassis, advanced braking systems, and passenger comfort features [3][4] Strategic Benefits - The partnership with Vietnam is expected to streamline logistics, reduce freight variability, and improve lead times, thereby strengthening inventory flexibility [2][8] - Enhanced quality control through closer collaboration with the manufacturing partner is anticipated to improve product consistency [8] Market Positioning - The new golf cart model is positioned to compete with industry leaders by delivering premium performance, comfort, and durability, catering to both recreational and lifestyle applications [4][8] - The strategic move is designed to strengthen Massimo's competitive advantage in a growing market segment [8]

Core Insights - Massimo Group is transitioning to a nearshoring manufacturing model to address global supply chain volatility and tariff pressures [1][2] - The initiative aims to reduce shipping risks, improve lead times, and enhance quality assurance and inventory management [2][3] - This strategic move is expected to improve gross margins, enhance working capital efficiency, and protect shareholder value [2][3] Manufacturing Strategy - The company is diversifying its manufacturing footprint beyond East Asia to establish production capabilities closer to North American markets [1][2] - New manufacturing locations will be developed in regions with skilled labor, favorable trade agreements, and alignment with U.S. quality standards [3] Operational Goals - By relocating production closer to end markets, Massimo aims to reduce reliance on long-haul container shipping and global ports [6] - The company seeks to improve fulfillment velocity across its dealer network and elevate ESG performance by reducing its carbon footprint [6] - There is an emphasis on accelerating the rollout of modular vehicle platforms and smart system integration [6] Market Positioning - The initiative positions Massimo to meet the growing demand for next-generation electric and climate-controlled powersports vehicles, including advanced UTVs and ATVs [3][4] - This transformation reflects a broader commitment to sustainable growth, innovation leadership, and strategic adaptability amid shifting global dynamics [4]

PART I. FINANCIAL INFORMATION This section details the company's unaudited financial statements, management's analysis, and internal controls [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Massimo Group's unaudited Q1 2025 financial statements, showing decreased assets, revenue decline, and a net loss [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$46.4 million** by March 31, 2025, driven by reduced cash and liabilities, leading to lower equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $844 | $10,210 | | Inventories, net | $24,386 | $27,259 | | Total current assets | $35,096 | $43,623 | | **Total Assets** | **$46,350** | **$54,890** | | **Liabilities & Equity** | | | | Accounts payable | $5,729 | $9,572 | | Loan from a related party | $2,530 | $5,547 | | Total current liabilities | $19,564 | $25,739 | | **Total Liabilities** | **$26,448** | **$33,185** | | **Total Equity** | **$19,902** | **$21,704** | [Condensed Consolidated Statement of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) Q1 2025 revenues declined **50.6%** to **$14.9 million**, resulting in a **$2.1 million** net loss compared to prior year's net income Q1 2025 vs Q1 2024 Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $14,902 | $30,152 | | Gross Profit | $4,225 | $10,451 | | Total Operating Expenses | $6,931 | $6,480 | | (Loss) Income from Operations | ($2,706) | $3,972 | | Net (Loss) Income | ($2,089) | $3,181 | | (Loss) Earnings per Share | ($0.05) | $0.08 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by **$9.4 million** in Q1 2025 due to increased cash usage in operations, investing, and financing activities Cash Flow Summary for the Three Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,339) | ($637) | | Net cash (used in) provided by investing activities | ($3,000) | $24 | | Net cash (used in) provided by financing activities | ($3,027) | $55 | | **Net decrease in cash and cash equivalents** | **($9,366)** | **($559)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, IPO impact, revenue recognition, significant customer concentration, related party transactions, and legal contingencies - The company completed its IPO on April 4, 2024, raising approximately **$5.0 million** in net proceeds[27](index=27&type=chunk)[115](index=115&type=chunk) - Revenue is disaggregated into two main product categories: 'UTVs, ATVs and e-bikes' and 'Pontoon Boats'[52](index=52&type=chunk) - Significant customer concentration exists, with one customer representing **64%** of total revenues for the three months ended March 31, 2025[71](index=71&type=chunk) - The company has two ongoing significant legal proceedings: one with Taizhou Nebula Power Co. Ltd. regarding a **$2.3 million** claim, and another with Zhejiang Qunying Vehicle Co., Ltd. for an alleged **$6.0 million** in damages[132](index=132&type=chunk)[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 2025's **50.6%** revenue decline, gross margin contraction, net loss, and liquidity challenges, citing economic factors and trade tensions [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q1 2025 revenues dropped **50.6%** to **$14.9 million** due to reduced orders, leading to a gross margin contraction and pre-tax loss Revenue by Category (in millions) | Revenue Category | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | UTVs, ATVs and e-bikes | $15.4 | $28.7 | (46.2)% | | Pontoon Boats | $0.5 | $1.5 | (64.7)% | | **Total Revenue** | **$14.9** | **$30.2** | **(50.6)%** | - The decrease in revenue was primarily due to the contraction of the U.S. economy, reduced consumer spending, and uncertainty surrounding tariffs causing major big-box customers to reduce their orders[153](index=153&type=chunk) - Gross margin decreased from **34.7%** to **28.4%**, mainly due to an increase in freight absorbed in cost of sales[160](index=160&type=chunk) - General and administrative expenses increased by **2.7%** due to higher salaries, insurance, and professional fees related to being a public company[166](index=166&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital was **$15.5 million**, but cash significantly decreased to **$0.8 million** due to operational and financing outflows - Working capital was **$15.5 million** as of March 31, 2025, with current assets of **$35.1 million** and current liabilities of **$19.6 million**[181](index=181&type=chunk) - Net cash used in financing activities was approximately **$3.0 million** in Q1 2025, primarily due to a repayment of a shareholder loan[178](index=178&type=chunk) - Management is confident it can support operational needs for the next 12 months by utilizing cash flows generated from operating activities[182](index=182&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting estimates include sales returns, warranty provisions, credit losses, inventory obsolescence, and contingent liabilities - Key accounting estimates include sales returns, product warranty, allowance for credit loss, inventory provision, and contingent liabilities[188](index=188&type=chunk) Key Liability & Provision Balances (as of March 31, 2025) | Account | Balance | | :--- | :--- | | Sales Return Liabilities | $99,605 | | Warranty Liabilities | $386,798 | | Allowance for Credit Loss | ~$0.4 million | | Inventory Provision | $469,900 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exempt from market risk disclosures as it qualifies as a smaller reporting company - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[196](index=196&type=chunk) [Item 4. Controls and Procedures.](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management identified a material weakness in disclosure controls and procedures, with remediation plans underway to enhance financial reporting processes - Management concluded that a material weakness existed in disclosure controls and procedures as of the end of the period[199](index=199&type=chunk) - The material weakness is related to ineffective controls over information and communication, and period-end financial disclosure and reporting processes[199](index=199&type=chunk) - Remediation plans are in process, focusing on implementing new approval procedures, additional monitoring controls, and improving communication between sales and accounting departments[200](index=200&type=chunk)[203](index=203&type=chunk) PART II. OTHER INFORMATION This section provides details on legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures [Item 1. Legal Proceedings.](index=47&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in two significant lawsuits, including a **$2.3 million** claim under appeal and a **$6.0 million** claim scheduled for trial - Taizhou Nebula Power Co. Ltd. v. Massimo Motor Sports, LLC: Nebula claims **$2.34 million** for products shipped from 2017-2019. A judgment was entered for Nebula, and Massimo is appealing[205](index=205&type=chunk) - Zhejiang Qunying Vehicle Co., Ltd. v. Cho International, Inc: Zhejiang claims approximately **$6.0 million** in damages. The trial is scheduled for March 2026, and Massimo intends to vigorously defend the lawsuit[206](index=206&type=chunk) [Item 1A. Risk Factors.](index=47&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to risk factors have occurred since the last Annual Report on Form 10-K/A filing - No material changes to risk factors have occurred since the last Annual Report on Form 10-K/A was filed[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reported no unregistered sales of equity securities during the period - None[210](index=210&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reported no defaults upon senior securities - None[211](index=211&type=chunk) [Item 4. Mine Safety Disclosures.](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[212](index=212&type=chunk) [Item 5. Other Information.](index=47&type=section&id=Item%205.%20Other%20Information.) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[213](index=213&type=chunk) [Item 6. Exhibits.](index=49&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with Form 10-Q, including officer certifications and Inline XBRL data files

Company Overview - Massimo Group (NASDAQ: MAMO) is a manufacturer and distributor of powersports vehicles and pontoon boats, founded in 2009. The company offers a range of utility UTVs, recreational ATVs, and minibikes, and has a dedicated division for manufacturing pontoon and Tritoon boats since 2020 [7] - The company is also developing electric versions of UTVs, golf carts, and pontoon boats, which are currently available for sale [7] Leadership and Expertise - Dr. Yunhao Chen, the Chief Financial Officer of Massimo, has extensive experience, having led another Nasdaq-listed company through its IPO process and raised over $80 million. She holds a Ph.D. in accounting and an MBA in finance, and has served on the boards of several public companies [5] Event Participation - Dr. Chen will participate in a panel discussion titled "Small Cap Playbook: Entering and Advancing in the Public Market Arena" at the SEC's 44th Annual Government-Business Forum on Small Business Capital Formation on April 10, 2025 [2][3] - The forum will focus on capital raising policies affecting small businesses and will include discussions with SEC Commissioners and thought leaders from the small business ecosystem [4]

Massimo Group Fiscal Year 2024 Financial Results [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Massimo Group achieved a 4.0% revenue increase in core powersports to $107.5 million, with $19.2 million working capital and $9.4 million net cash increase, alongside operational advancements and AI robotic product expansion Financial Highlights (USD) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | UTVs, ATVs, E-bikes Revenue | $107.5 million | $103.3 million | +$4.1M (+4.0%) | | Working Capital (as of Dec 31) | $19.2 million | N/A | N/A | | Net Increase in Cash | $9.4 million | N/A | N/A | - The revenue growth was primarily driven by expanding product sales into large U.S. retail stores and a strategic shift in the company's sales approach[2](index=2&type=chunk) - Operational highlights for the year include: - Relocating MVR Golf Cart production to its Garland, Texas facility - Installing a new robotic assembly line to boost efficiency and quality control - Expanding the nationwide distribution network to six strategic centers[3](index=3&type=chunk) - The company announced plans to expand into AI Application Robotic Products, partnering with manufacturers to distribute AI-powered companions and utility assistants[3](index=3&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements for FY2024 show total assets increased to $56.7 million, but overall revenue slightly decreased to $111.2 million, leading to a net income drop to $3.15 million due to higher expenses and a litigation loss [Consolidated Balance Sheets](index=2&type=section&id=MASSIMO%20GROUP%20AND%20SUBSIDIARIES%20CONSOLIDATED%20BALANCE%20SHEETS) As of December 31, 2024, total assets grew to $56.7 million from $41.9 million in 2023, driven by a significant increase in cash and cash equivalents to $10.2 million, while total liabilities rose to $33.6 million and total equity increased to $23.1 million Consolidated Balance Sheet Items (USD) | Balance Sheet Items | 2024 | 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $10,210,084 | $765,814 | | Total current assets | $45,385,846 | $38,360,008 | | Total Assets | $56,691,756 | $41,943,479 | | **Liabilities & Equity** | | | | Total current liabilities | $26,148,843 | $18,827,655 | | Total Liabilities | $33,595,138 | $27,455,673 | | Total Equity | $23,096,618 | $14,487,806 | [Consolidated Statement of Operations](index=3&type=section&id=MASSIMO%20GROUP%20AND%20SUBSIDIARIES%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) For the fiscal year 2024, total revenues decreased slightly to $111.2 million from $115.0 million in 2023, with a significant increase in operating expenses leading to a sharp decline in net income to $3.15 million and EPS falling to $0.08 Consolidated Income Statement Items (USD) | Income Statement Items | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $111,209,142 | $115,037,544 | | Gross profit | $34,343,339 | $35,911,090 | | Income from operations | $6,811,991 | $12,922,894 | | Net income | $3,154,207 | $10,415,225 | | Earnings per Share (basic) | $0.08 | $0.26 | - Operating expenses increased to **$27.5 million** from **$23.0 million**, driven by higher General and Administrative costs, a new **$0.77 million** impairment charge, and a **$3.6 million** loss on litigation[6](index=6&type=chunk) [Consolidated Statements of Cash Flows](index=4&type=section&id=MASSIMO%20GROUP%20AND%20SUBSIDIARIES%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company generated $6.7 million in net cash from operating activities in 2024, with financing activities providing $3.0 million, resulting in a net cash increase of $9.4 million and ending with a cash balance of $10.2 million Consolidated Cash Flow Items (USD) | Cash Flow Items | 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** | **$9,444,270** | **($182,157)** | | **Cash and cash equivalents, end of year** | **$10,210,084** | **$765,814** | - Financing activities in 2024 were significantly impacted by **$5.04 million** in net proceeds from the company's initial public offering[8](index=8&type=chunk) [Company Information](index=6&type=section&id=About%20Massimo%20Group%20and%20Forward-Looking%20Statements) Massimo Group, founded in 2009 and headquartered in Garland, Texas, manufactures and distributes powersports vehicles and pontoon boats, while also developing electric versions of its products, with the report including standard forward-looking statements - Massimo Group manufactures and distributes a range of powersports vehicles (UTVs, ATVs) and pontoon boats, and is developing electric versions of UTVs, golf carts, and boats[10](index=10&type=chunk) - The report contains forward-looking statements regarding future operations, financial results, and business plans, which are subject to risks and uncertainties and are not guarantees of future performance[11](index=11&type=chunk)

Revenue Performance - Total revenue decreased by $3.8 million, or 3.3%, from $115.0 million in fiscal 2023 to $111.2 million in fiscal 2024[244]. - Revenue from UTVs, ATVs, and e-bikes increased by $4.1 million, or 4.0%, from $103.3 million in fiscal 2023 to $107.5 million in fiscal 2024, representing 96.6% of total revenue in 2024[247]. - 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, representing 3.4% of total revenue in 2024[248]. Profitability - Gross profit decreased by $1.6 million, or 4.4%, from $35.9 million in fiscal 2023 to $34.3 million in fiscal 2024, with a gross margin of 30.9% in 2024[249]. - Income from operations decreased by $6.1 million, or 47.3%, from $12.92 million in fiscal 2023 to $6.81 million in fiscal 2024[242]. - Net income decreased by $7.26 million, or 69.7%, from $10.42 million in fiscal 2023 to $3.15 million in fiscal 2024[242]. Operating Expenses - Operating expenses increased by $4.5 million, or 19.8%, from $22.99 million in fiscal 2023 to $27.53 million in fiscal 2024[242]. - 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, representing 14.9% of total revenue[254]. Cash Flow and Financing - Net cash provided by operating activities was approximately $6.7 million in fiscal 2024, a decrease of $4.2 million compared to fiscal 2023[265]. - Net cash provided by financing activities was approximately $3.0 million in fiscal 2024, compared to net cash used of approximately $11.0 million in fiscal 2023, primarily due to net proceeds from IPO[266]. - As of December 31, 2024, the company had cash and cash equivalents of approximately $10.2 million and positive working capital of $19.2 million[270]. Legal and Other Liabilities - The company recorded a one-time loss of approximately $3.6 million on legal judgment related to a lawsuit, bringing total accrual related to this lawsuit to approximately $6.0 million[259]. - The company recorded an additional accrual of $3,645,092 related to a lawsuit, bringing the total accrual to approximately $5,988,961 as of December 31, 2024[287]. - Warranty liabilities decreased from $619,113 in 2023 to $503,553 in 2024, with warranty expenses of $1,274,037 in 2024 compared to $1,924,203 in 2023[282]. Inventory and Provisions - Inventory provision increased slightly from $439,900 in 2023 to $469,900 in 2024, with impairment provision of $30,000 in 2024 compared to $439,900 in 2023[285]. - The allowance for credit loss was recorded at $0.5 million for 2024, down from $0.6 million in 2023[284]. - Sales return liabilities were recorded at $261,588 for 2024, down from $283,276 in 2023, with sales returns of $1,061,694 and $3,355,112 for the respective years[281]. Business Strategy and Risks - The company expanded its distribution network through large retail stores in the U.S., focusing on in-store sales to enhance market penetration[244]. - The company is facing risks from intense competition, economic changes in China, and fluctuations in raw material costs, which could adversely affect its financial condition[240][241]. - The company has initiated research and development expenses amounting to $343,493 in fiscal 2024, reflecting a focus on innovation[242]. Capital Expenditures - Capital expenditures for Fiscal 2024 amounted to approximately $387,876, a substantial increase from $134,662 in 2023, reflecting business growth[276]. - The company's lease commitments total $11,549,277, with $2,904,205 due within one year[277]. Other Income - Other income increased by $1.0 million, or 688.6%, from $0.1 million in fiscal 2023 to $1.1 million in fiscal 2024, primarily due to write-offs and additional insurance claims[261]. Debt and Loans - As of December 31, 2024, the total loan balance was $0, compared to $303,583 in 2023, indicating a significant reduction in outstanding loans[272][275]. - There were no off-balance sheet arrangements that could materially affect the financial condition or results of operations for the years ended December 31, 2024 and 2023[278].

Core Viewpoint - Massimo Motor is actively engaging with retail partners through participation in industry events to enhance relationships and gain insights into customer preferences and market trends [1][2][4]. Company Engagement - Massimo Motor participated in the Rural King Vendor Summit and is attending the Tractor Supply Company & PetSense ASM and Partner Trade Show, which are critical for collaboration with retail partners [1][2]. - The company emphasizes the importance of listening and learning from retail partners to refine product offerings and meet customer expectations [2][3]. Market Positioning - The shared customer base between Massimo, Rural King, and Tractor Supply focuses on practicality, value, and high-quality equipment, reinforcing Massimo's commitment to serving farmers, ranchers, and outdoor enthusiasts [3][4]. - Massimo's proactive approach to market expansion and strategic growth is highlighted by strengthening partnerships with established retail leaders, ensuring competitive and accessible products [4]. Product Focus - Massimo Motor specializes in manufacturing UTVs, ATVs, and outdoor equipment, aiming to deliver high-performance, durable, and affordable solutions tailored for rural communities and outdoor enthusiasts [5].

Company Overview - Massimo Group (NASDAQ: MAMO) is transitioning the production of its MVR Golf Cart series to its facility in Garland, Texas, to enhance quality control and strengthen its position in the U.S. market [1] - The company manufactures and distributes powersports vehicles and pontoon boats, with a focus on high-quality and innovative designs [5] Industry Context - U.S. trade regulators have taken action against unfair practices in the low-speed personal transportation vehicle market, imposing countervailing duties and antidumping tariffs ranging from 149% to 500% on certain foreign manufacturers [2] - This regulatory environment has prompted Massimo to shift production domestically, addressing trade challenges while maintaining high manufacturing standards [3] Strategic Initiatives - By relocating production to the U.S., Massimo aims to reinforce its supply chain and enhance quality assurance, positioning itself competitively in the market [4] - The company is also exploring strategic partnerships in Vietnam to diversify its supply chain and mitigate potential cost increases from tariffs affecting imports from China [3]