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LEASES
 9 Months Ended
Sep. 30, 2025
Leases  
LEASES

NOTE 8 — LEASES

 

On August 1, 2018, the Company signed a lease agreement with Miller Creek Holding LLC, a related party owned by the Controlling Shareholder, to rent the warehouse and office space of total 220,000 square feet for monthly rent of $40,000 used for its operation. The lease expired on July 31, 2021 and was further renewed for another three years and expired on July 31, 2024 with monthly rent of $60,000. On April 29, 2023, the Company signed another lease agreement with Miller Creek Holding LLC, a related party owned by the Controlling Shareholder, to rent the warehouse and office space of total 66,000 square feet for monthly rent of $35,000 used for its operation. The lease expires on April 30, 2026. On May 1, 2024, the Company signed another two lease agreements with Miller Creek Holding LLC, a related party owned by the Controller Shareholder, to rent additional warehouse and office space of 60,000 square feet and 30,000 square feet for monthly rent of $33,000 and $16,500 used for its operation, respectively. The leases will expire on August 31, 2029. The Company also had multiple lease agreements for machinery, office equipment and vehicles. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

Total operating lease expense for the three months ended September 30, 2025 and 2024 amounted to $715,829 and $624,232, respectively. Amortization of operating lease right-of-use assets amounted to $534,753 and $471,350 for the three months ended September 30, 2024 and 2025, respectively.

 

Total operating lease expense for the nine months ended September 30, 2025 and 2024 amounted to $2,149,713 and $1,342,402, respectively. Amortization of operating lease right-of-use assets amounted to $1,570,956 and $1,110,979 for the nine months ended September 30, 2025and 2024, respectively.

 

Total accretion of finance lease liabilities for the three months ended September 30, 2025 and 2024 amounted to $670 and $1,116, respectively. Amortization of finance lease right-of-use assets amounted to $10,380 and $10,379 for the three months ended September 30, 2025 and 2024, respectively.

 

Total accretion of finance lease liabilities for the nine months ended September 30, 2025 and 2024 amounted to $2,349 and $3,672, respectively. Amortization of finance lease right-of-use assets amounted to $30,908 and $31,139 for the nine months ended September 30, 2025 and 2024, respectively.

 

Supplemental balance sheet information related to operating and financing leases was as follows:

 

Operating leases

 

   September 30, 2025   December 31, 2024 
         
Operating lease liabilities - current  $2,034,503   $2,119,894 
Operating lease liabilities - non-current   5,919,867    7,412,693 
Total  $7,954,370   $9,532,587 

 

Financing leases

 

   September 30, 2025   December 31, 2024 
         
Finance lease liabilities - current  $32,991   $43,421 
Finance lease liabilities - non-current   11,638    33,602 
Total  $44,629   $77,023 

 

 

MASSIMO GROUP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 8 — LEASES (continued)

 

The following table includes supplemental cash flow and non-cash information related to leases:

 

   September 30, 2025   December 31, 2024 
Cash paid of amounts included in the measurement of lease liabilities:          
Operating cash flows used in operating leases  $2,149,713   $2,011,837 
Financing cash flows used in finance leases  $34,744   $41,648 
Right-of-use assets obtained in exchange for lease obligations:          
Finance lease liabilities  $-   $- 
Operating lease liabilities  $-   $9,587,851 

 

The weighted average remaining lease terms and discount rates for all of operating lease and finance leases were as follows:

 

   September 30, 2025   December 31, 2024 
Weighted-average remaining lease term (years):          
Finance lease   1.54 years     1.95 years  
Operating leases   3.74 years     4.39 years  
           
Weighted average discount rate:          
Finance leases   5.32%   4.85%
Operating leases   8.58%   8.65%

 

The following is a schedule of maturities of operating and finance lease liabilities as of September 30, 2025:

 

Operating leases

 

Twelve months ending September 30,    
Operating leases    
2026  $2,629,915 
2027   2,343,000 
2028   2,343,000 
2029   2,002,000 
2030 and after   - 
Total future minimum lease payments   9,317,915 
Less: imputed interest   (1,363,545)
Present value of operating lease liabilities  $7,954,370 

 

Finance leases

 

Twelve months ending September30,    
Finance leases    
2026  $34,579 
2027   8,701 
2028   3,624 
Total future minimum lease payments   46,904 
Less: imputed interest   (2,275)
Present value of finance lease liabilities  $44,629 

 

 

MASSIMO GROUP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)