What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-07 · 253 added, 94 removed, 166 unchanged (68% of the section changed)

2 unchanged sentences

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (this “Form 10-Q”), including but not limited to:

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (this “Form 10-Q”), including but not limited to:

(i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items;

8 unchanged sentences

We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events.

This section includes a discussion of our operations for the three months ended March 31, 2025 and 2024.

This section includes a discussion of our operations for the three and six months ended June 30, 2025 and 2024.

The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our financial condition and results of operations.

3 unchanged sentences

Economic Conditions

Impacts of Government Legislation

On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company.

We are currently evaluating the provisions of the new law and the potential effects on our financial position, results of operations, and cash flows.

However, the Company does not expect the new law to have a material impact on the Company’s results of operations, financial condition, or liquidity.

Impacts of High Interest Rates and Inflation

25 unchanged sentences

The Company caters to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry at accessible prices.

Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

Commercial Segment

11 unchanged sentences

Our strategy is to expand both organically and through acquisitions.

Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity into our existing facilities.

The Company has taken considerable steps to bolster its management team and operating systems to position itself for growth.

Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity to our existing facilities.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

% of Sales (1)

4 unchanged sentences

Total operating expenses

Operating income (loss)

Other income (expense):

Interest expense

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

(1) The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations.

Due to rounding, percentages presented may not add up precisely to the totals provided.

The individual segments reported the following for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Sales increased by $9,579,831, or 21.1%, during the three months ended June 30, 2025, to $54,876,833, as compared to $45,297,002 during the same period in Fiscal 2024.

Consumer Segment

Sales in the consumer segment increased by $11,183,730, or 35.0%, during the three months ended June 30, 2025, to $43,173,758, as compared to $31,990,028 during the same period in Fiscal 2024.

The change was primarily attributed to stronger volumes and pricing on our wholesale precious metals transactions.

Our wholesale precious metals transactions were impacted by favorable inbound material flow from our in-store buying programs.

Our retail stores business also achieved favorable sales results.

Commercial Segment

Sales in the commercial segment decreased by $1,603,899, or 12.1%, during the three months ended June 30, 2025, to $11,703,075, as compared to $13,306,974 during the same period in Fiscal 2024.

The change was primarily attributed to the unfavorable performance from our electronic scrap grades and associated recoveries attributable to significant inbound material flow from a single supplier that was present in the same period in Fiscal 2024 and less sales of personal technology assets and from ITAD revenue share settlements during the current period in Fiscal 2025, which were offset by continued growth in our product returns business.

Cost of Goods Sold

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Cost of goods sold increased by $8,581,365, or 25.3%, during the three months ended June 30, 2025, to $42,488,910, as compared to $33,907,545 during the same period in Fiscal 2024.

Consumer Segment

Cost of goods sold in the consumer segment increased by $10,547,073, or 37.7%, during the three months ended June 30, 2025, to $38,515,772, as compared to $27,968,699 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned higher sales volumes and rising gold prices compared to the same period in Fiscal 2024.

Cost of goods sold as a percentage of sales was 89.2% during the three months ended June 30, 2025, as compared to 87.4% during the three months ended June 30, 2024.

The change was primarily attributed to a greater mix of lower margin wholesale precious metals transactions in our overall cost of goods sold and incrementally from product mix at our retail stores.

Commercial Segment

Cost of goods sold in the commercial segment decreased by $1,965,708, or 33.1%, during the three months ended June 30, 2025, to $3,973,138, as compared to $5,938,846 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned lower sales volumes across most of our segment verticals.

Cost of goods sold as a percentage of sales was 33.9% during the three months ended June 30, 2025, as compared to 44.6% during the three months ended June 30, 2024.

The change was primarily attributed to our sales mix during Fiscal 2025 in which we experienced higher overall margins from the sale of personal technology assets and ITAD revenue share settlements coupled with continued growth in revenue from our service-related product returns business, which does not have a cost of goods sold component as the associated inventory remains with the client.

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Gross margin increased by $998,466, or 8.8%, during the three months ended June 30, 2025, to $12,387,923, as compared to $11,389,457 during the same period in Fiscal 2024.

Consumer Segment

Gross margin in the consumer segment increased by $636,657, or 15.8%, during the three months ended June 30, 2025, to $4,657,986, as compared to $4,021,329 during the same period in Fiscal 2024.

The net impact of the aforementioned increase in sales of $11,183,730 and increase in cost of goods sold of $10,547,073 resulted in the $636,657 increase in gross margin.

Commercial Segment

Gross margin in the commercial segment increased by $361,809, or 4.9%, during the three months ended June 30, 2025, to $7,729,937, as compared to $7,368,128 during the same period in Fiscal 2024.

The net impact of the aforementioned decrease in sales of $1,603,899 and decrease in cost of goods sold $1,965,708 resulted in the $361,809 increase in gross margin.

Selling, General and Administrative

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Selling, general and administrative expense decreased by $445,981, or 4.9%, during the three months ended June 30, 2025, to $8,672,067, as compared to $9,118,048 during the same period in Fiscal 2024.

Consumer Segment

Selling, general and administrative expense in the consumer segment decreased by $274,041, or 6.8%, during the three months ended June 30, 2025, to $3,735,427, as compared to $4,009,468 during the same period in Fiscal 2024.

The change was primarily attributed to cost reductions associated with store onboarding that occurred in the same period in Fiscal 2024 along with select reductions in production and non-production human capital costs associated with optimizing our headcount during the current period in Fiscal 2025, which was partially offset by the full cost structures related to our new stores.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $171,940, or 3.4%, during the three months ended June 30, 2025, to $4,936,640, as compared to $5,108,580 during the same period in Fiscal 2024.

The change was primarily attributed to onboarding support services associated with our enterprise resource planning system (“ERP”) that occurred during the same period in Fiscal 2024 as well as a reduction in variable-cost production expenses that scale with sales volumes, which was partially offset by an increase in non-production human capital costs during the current period in Fiscal 2025.

Depreciation and Amortization

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Depreciation and amortization expense increased by $98,144, or 27.1%, during the three months ended June 30, 2025, to $460,411, as compared to $362,267 during the same period in Fiscal 2024.

Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $83,086, or 73.8%, during the three months ended June 30, 2025, to $195,604, as compared to $112,518 during the same period in Fiscal 2024.

The change was primarily attributed to the depreciation of assets placed into service related to our new retail stores.

Commercial Segment

Depreciation and amortization expense in the commercial segment increased by $15,058, or 6.0%, during the three months ended June 30, 2025, to $264,807, as compared to $249,749 during the same period in Fiscal 2024.

There was no material change in depreciation or amortization expense from the same period in Fiscal 2024, and as such, no discussion point.

Other Income (Expense)

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Other income increased by $168,834, or 74.9%, during the three months ended June 30, 2025, to $394,251, as compared to $225,417 during the same period in Fiscal 2024.

Consumer Segment

Other income in the consumer segment increased by $148,155, or 1,851.2%, during the three months ended June 30, 2025, to $156,158, as compared to $8,003 during the same period in Fiscal 2024.

The change was primarily attributed to the receipt of an employee retention credit and incrementally from the earnings on excess cash balances.

The impact of dividend and interest income are referenced below.

Dividend income comprised $8,883 and $0 of other income during the three months ended June 30, 2025 and 2024, respectively.

Interest income comprised $51,038 and $2 of other income during the three months ended June 30, 2025 and 2024, respectively.

Commercial Segment

Other income in the commercial segment increased by $20,679, or 9.5%, during the three months ended June 30, 2025, to $238,093, as compared to $217,414 during the same period in Fiscal 2024.

The change was primarily attributed to the earnings on excess cash balances.

The impact of dividend and interest income are referenced below.

Dividend income comprised $74,702 and $0 other income during the three months ended June 30, 2025 and 2024, respectively.

Interest income comprised $130,427 and $199,960 of other income during the three months ended June 30, 2025 and 2024, respectively.

Interest Expense

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Interest expense decreased by $2,913, or 2.7%, during the three months ended June 30, 2025, to $106,228, as compared to $109,141 during the same period in Fiscal 2024.

Consumer Segment

Interest expense in the consumer segment decreased by $1,704, or 3.1%, during the three months ended June 30, 2025, to $53,993, as compared to $55,697 during the same period in Fiscal 2024.

There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.

Commercial Segment

Interest expense in the commercial segment decreased by $1,209, or 2.3%, during the three months ended June 30, 2025, to $52,235, as compared to $53,444 during the same period in Fiscal 2024.

There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.

Income Tax Expense

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Income tax expense increased by $329,830, or 71.5%, during the three months ended June 30, 2025, to $791,069, as compared to $461,239 during the same period in Fiscal 2024.

Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive.

The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income.

The effective income tax rate was 22.3% and 22.8% for the three months ended June 30, 2025 and 2024, respectively.

Differences between our effective income tax rate and the U.S.

federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Net Income (Loss)

Three Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

NM – Not Meaningful

Net income increased by $1,188,220, or 76%, during the three months ended June 30, 2025, to $2,752,399, as compared to $1,564,179 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.

Consumer Segment

Net income (loss) increased in the consumer segment by $821,329, during the three months ended June 30, 2025, to net income of $643,371, as compared to net loss of $177,958 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.

Commercial Segment

Net income increased in the commercial segment by $366,891, or 21.1%, during the three months ended June 30, 2025, to $2,109,028, as compared to $1,742,137 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.

Earnings Per Share

The following table depicts the Company’s earnings per share:

Three Months Ended June 30,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.05, or 83.3%, during the three months ended June 30, 2025, to $0.11, as compared to $0.06 during the same period in Fiscal 2024.

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table depicts our disaggregated condensed consolidated statements of income for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

% of Sales (1)

Cost of goods sold

Selling, general and administrative

Depreciation and amortization

Total operating expenses

Operating income

4 unchanged sentences

Due to rounding, the percentages presented may not add up precisely to the totals provided.

The individual segments reported the following for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Due to rounding, percentages presented may not add up precisely to the totals provided.

The individual segments reported the following for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Sales increased by $8,398,049, or 21.1%, during the three months ended March 31, 2025, to $48,255,829, as compared to $39,857,780 during the same period in Fiscal 2024.

Sales increased by $17,977,880 or 21.1%, during the six months ended June 30, 2025, to $103,132,662, as compared to $85,154,782 during the same period in Fiscal 2024.

Consumer Segment

Sales in the consumer segment increased by $8,544,587, or 30.3%, during the three months ended March 31, 2025, to $36,770,604, as compared to $28,226,017 during the same period in Fiscal 2024.

The change was primarily attributed to stronger volumes and pricing on scrap grade precious metals transactions and bullion.

Our sales of scrap grade precious metals and bullion were favorably impacted by exceptional inbound material flow from our in-store buying programs, which was sustained from the fourth quarter of Fiscal 2024.

Our online and retail stores business also achieved favorable results.

In the Fiscal 2024 comparative period, we were building an inventory position in preparation for the opening of our new stores, which is now beginning to be relieved in the normal course of operations.

Sales in the consumer segment increased by $19,728,317, or 32.8%, during the six months ended June 30, 2025, to $79,944,362, as compared to $60,216,045 during the same period in Fiscal 2024.

The change was primarily attributed to the stronger volumes and pricing on our wholesale precious metals transactions that has been consistent throughout Fiscal 2025 as well as stronger contributions from our historical and new retail store footprint.

Commercial Segment

Sales in the commercial segment decreased by $146,538, or 1.3%, during the three months ended March 31, 2025, to $11,485,225, as compared to $11,631,763 during the same period in Fiscal 2024.

The change was primarily attributed to lower sales volumes of inventory associated with ITAD settlements and from our trade-in business partners but was almost fully offset by sales of our electronic scrap grades and associated recoveries, and from continued growth in our product returns service business.

Inbound material flows resumed from a key supplier of electronic scrap grades that had reduced shipping during the fourth quarter of Fiscal 2024.

Sales in the commercial segment decreased by $1,750,437, or 7.0%, during the six months ended June 30, 2025, to $23,188,300, as compared to $24,938,737 during the same period in Fiscal 2024.

The change was primarily attributed to less sales of personal technology assets and from ITAD revenue share settlements that occurred throughout Fiscal 2025 and incrementally from lower volumes of our electronic scrap grades and associated recoveries which was most pronounced in our second quarter of Fiscal 2025.

Offsetting these unfavorable variances was the strong performance of our service-related product returns business.

Cost of Goods Sold

Three Months Ended March 31,

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Cost of goods sold increased by $6,750,709, or 22.9%, during the three months ended March 31, 2025, to $36,287,805, as compared to $29,537,096 during the same period in Fiscal 2024.

Cost of goods sold increased by $15,332,074, or 24.2%, during the six months ended June 30, 2025, to $78,776,715, as compared to $63,444,641 during the same period in Fiscal 2024.

Consumer Segment

Cost of goods sold in the consumer segment increased by $7,882,873, or 31.9%, during the three months ended March 31, 2025, to $32,559,701, as compared to $24,676,828 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned volumes and impacts of rising gold prices.

Cost of goods sold as a percentage of sales was 88.5% during the three months ended March 31, 2025, as compared to 87.4% during the three months ended March 31, 2024.

The change was primarily attributed to product mix, as the relief of inventory associated with scrap grade precious metals and bullion improved as a result of selling into a rising gold market during the first quarter of Fiscal 2025.

Cost of goods sold in the consumer segment increased by $18,429,946, or 35.0%, during the six months ended June 30, 2025, to $71,075,473, as compared to $52,645,527 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned higher wholesale precious metals transactions compared to the same period in Fiscal 2024.

Cost of goods sold as a percentage of sales was 88.9% during the six months ended June 30, 2025, as compared to 87.4% during the six months ended June 30, 2024.

The change was primarily attributed to a greater mix of lower margin wholesale precious metals transactions in our overall cost of goods sold and incrementally from product mix at our retail stores.

Commercial Segment

Cost of goods sold in the commercial segment decreased by $1,132,164, or 23.3%, during the three months ended March 31, 2025, to $3,728,104, as compared to $4,860,268 during the same period in Fiscal 2024.

The change was primarily attributed to reduced sales associated with ITAD settlements and from personal technology assets originating from our trade in business.

In comparative terms, our trade in business had greater asset flow from business partners in the first quarter of Fiscal 2024, resulting in stronger outbound sales in that period.

Cost of goods sold as a percentage of sales was 32.5% during the three months ended March 31, 2025, as compared to 41.8% during the three months ended March 31, 2024.

The change was primarily attributed to the settlement of a large high margin ITAD settlement with a recurring customer and from strategic initiatives associated with margin expansion from sales channels associated with personal technology assets, and from a greater mix of revenue from service fees from our product returns business, which has no associated cost of goods sold.

Three Months Ended March 31,

Cost of goods sold in the commercial segment decreased by $3,097,872, or 28.7%, during the six months ended June 30, 2025, to $7,701,242, as compared to $10,799,114 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned lower sales volumes across most of our segment verticals.

Cost of goods sold as a percentage of sales was 33.2% during the six months ended June 30, 2025, as compared to 43.3% during the six months ended June 30, 2024.

The change was primarily attributed to our sales mix during Fiscal 2025 in which we experienced higher overall margins from the sale of personal technology assets and ITAD revenue share

settlements coupled with continued growth in revenue from our service-related product returns business, which does not have a cost of goods sold component as the associated inventory remains with the client.

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Gross margin increased by $1,647,340, or 16.0%, during the three months ended March 31, 2025, to $11,968,024, as compared to $10,320,684 during the same period in Fiscal 2024.

Gross margin increased by $2,645,806, or 12.2%, during the six months ended June 30, 2025, to $24,355,947, as compared to $21,710,141 during the same period in Fiscal 2024.

Consumer Segment

Gross margin in the consumer segment increased by $661,714, or 18.6%, during the three months ended March 31, 2025, to $4,210,903, as compared to $3,549,189 during the same period in Fiscal 2024.

Gross margin in the consumer segment increased by $1,298,371, or 17.2%, during the six months ended June 30, 2025, to $8,868,889, as compared to $7,570,518 during the same period in Fiscal 2024.

The net impact of the aforementioned increase in sales of $19,728,317 and increase in cost of goods sold of $18,429,946 resulted in the $1,298,371 increase in gross margin.

Commercial Segment

Gross margin in the commercial segment increased by $985,626, or 14.6%, during the three months ended March 31, 2025, to $7,757,121, as compared to $6,771,495 during the same period in Fiscal 2024.

The net impact of the aforementioned decrease in sales of $146,538 and decrease in cost of goods sold $1,132,164 resulted in the $985,626 increase in gross margin.

Gross margin in the commercial segment increased by $1,347,435, or 9.5%, during the six months ended June 30, 2025, to $15,487,058, as compared to $14,139,623 during the same period in Fiscal 2024.

The net impact of the aforementioned decrease in sales of $1,750,437 and decrease in cost of goods sold of $3,097,872 resulted in the $1,347,435 increase in gross margin.

Selling, General and Administrative

Three Months Ended March 31,

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Selling, general and administrative expense increased by $767,286, or 10.0%, during the three months ended March 31, 2025, to $8,404,262, as compared to $7,636,976 during the same period in Fiscal 2024.

Selling, general and administrative expense increased by $321,305, or 1.9%, during the six months ended June 30, 2025, to $17,076,329, as compared to $16,755,024 during the same period in Fiscal 2024.

Consumer Segment

Selling, general and administrative expense in the consumer segment increased by $636,416, or 19.6%, during the three months ended March 31, 2025, to $3,887,906, as compared to $3,251,490 during the same period in Fiscal 2024.

The change was primarily attributed to cost structures associated with our new Phoenix and San Antonio stores, but was incrementally offset by the reduction of costs associated with new store openings.

During the first quarter of Fiscal 2024 the business was heavily focused on bringing our Phoenix stores online, resulting in significant costs associated with travel, onboarding employees and training.

Selling, general and administrative expense in the consumer segment increased by $362,375, or 5.0%, during the six months ended June 30, 2025, to $7,623,333, as compared to $7,260,958 during the same period in Fiscal 2024.

The change was primarily attributed to the full cost structures related to our new stores and partially offset by a reduction in costs associated with store onboarding that occurred in the same period in Fiscal 2024 along with select reductions in production human capital costs associated with optimizing our headcount which was more impactful in the second quarter of Fiscal 2025.

Commercial Segment

Selling, general and administrative expense in the commercial segment increased by $130,870, or 3.0%, during the three months ended March 31, 2025, to $4,516,356, as compared to $4,385,486 during the same period in Fiscal 2024.

The change was primarily attributed to human capital costs associated with our services business which were offset by variable-cost production expenses that scale with sales volumes of inventory.

Selling, general and administrative expense in the commercial segment decreased by $41,070, or 0.4%, during the six months ended June 30, 2025, to $9,452,996, as compared to $9,494,066 during the same period in Fiscal 2024.

The business has been able to maintain its cost structure over the same period in Fiscal 2024, and as such, no discussion point.

Depreciation and Amortization

Three Months Ended March 31,

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Depreciation and amortization expense increased by $101,776, or 29.6%, during the three months ended March 31, 2025, to $445,341, as compared to $343,565 during the same period in Fiscal 2024.

Depreciation and amortization expense increased by $199,920, or 28.3%, during the six months ended June 30, 2025, to $905,752, as compared to $705,832 during the same period in Fiscal 2024.

Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $86,956, or 92.8%, during the three months ended March 31, 2025, to $180,632, as compared to $93,676 during the same period in Fiscal 2024.

The change was primarily attributed to the depreciation of assets placed into service related to our new stores.

Depreciation and amortization expense in the consumer segment increased by $170,042, or 82.5%, during the six months ended June 30, 2025, to $376,236, as compared to $206,194 during the same period in Fiscal 2024.

The change was primarily attributed to the depreciation of assets placed into service related to our new retail stores.

Commercial Segment

Depreciation and amortization expense in the commercial segment increased by $14,820, or 5.9%, during the three months ended March 31, 2025, to $264,709, as compared to $249,889 during the same period in Fiscal 2024.

Depreciation and amortization expense in the commercial segment increased by $29,878, or 6.0%, during the six months ended June 30, 2025, to $529,516, as compared to $499,638 during the same period in Fiscal 2024.

There was no material impact from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point.

Three Months Ended March 31,

Other Income (Expense)

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Other income decreased by $32,923, or 13.8%, during the three months ended March 31, 2025, to $205,605, as compared to $238,528 during the same period in Fiscal 2024.

Other income increased by $135,911, or 29.3%, during the six months ended June 30, 2025, to $599,856, as compared to $463,945 during the same period in Fiscal 2024.

Consumer Segment

Other income in the consumer segment decreased by $7,156, or 89.4%, during the three months ended March 31, 2025, to $849, as compared to $8,005 during the same period in Fiscal 2024.

The change was primarily attributed to rental income being present in our first quarter Fiscal 2024 results.

Interest income comprised $0 and $6 of other income during the three months ended March 31, 2025 and 2024, respectively.

Other income in the consumer segment increased by $140,999, or 880.8%, during the six months ended June 30, 2025, to $157,007, as compared to $16,008 during the same period in Fiscal 2024.

The change was primarily attributed to the receipt of an employee retention credit and incrementally from the earnings on excess cash balances.

The impact of dividend and interest income is referenced below.

Dividend income comprised $8,883 and $0 of other income during the six months ended June 30, 2025 and 2024, respectively.

Interest income comprised $51,038 and $8 of other income during the six months ended June 30, 2025 and 2024, respectively.

Commercial Segment

Other income in the commercial segment decreased by $25,767, or 11.2%, during the three months ended March 31, 2025, to $204,756, as compared to $230,523 during the same period in Fiscal 2024.

The change was primarily attributed to a reduction in earned interest rates associated with our interest bearing account and from rental income being present in our first quarter Fiscal 2024 results.

Interest income comprised $144,331 and $196,562 of other income during the three months ended March 31, 2025 and 2024, respectively.

Other income in the commercial segment decreased by $5,088, or 1.1%, during the six months ended June 30, 2025, to $442,849, as compared to $447,937 during the same period in Fiscal 2024.

The change was primarily attributed to a reduction in earned interest rates associated with our interest bearing account and from rental income being present in our first quarter of Fiscal 2024 results.

The impact of dividend and interest income is referenced below.

Dividend income comprised $129,567 and $0 of other income during the six months ended June 30, 2025 and 2024, respectively.

Interest income comprised $274,758 and $396,522 of other income during the six months ended June 30, 2025 and 2024, respectively.

Interest Expense

Three Months Ended March 31,

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Interest expense decreased by $14,533, or 12.0%, during the three months ended March 31, 2025, to $106,321, as compared to $120,854 during the same period in Fiscal 2024.

Interest expense decreased by $17,446, or 7.6%, during the six months ended June 30, 2025, to $212,549, as compared to $229,995 during the same period in Fiscal 2024.

Consumer Segment

Interest expense in the consumer segment decreased by $10,354, or 16.1%, during the three months ended March 31, 2025, to $54,047, as compared to $64,401 during the same period in Fiscal 2024.

There was no material impact from debt additions or amortization in each comparative period and as such no discussion point.

Interest expense in the consumer segment decreased by $12,058, or 10%, during the six months ended June 30, 2025, to $108,040, as compared to $120,098 during the same period in Fiscal 2024.

There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.

Commercial Segment

Interest expense in the commercial segment decreased by $4,179, or 7.4%, during the three months ended March 31, 2025, to $52,274, as compared to $56,453 during the same period in Fiscal 2024.

There was no material impact from debt additions or amortization in each comparative period and as such no discussion point.

Interest expense in the commercial segment decreased by $5,388, or 4.9%, during the six months ended June 30, 2025, to $104,509, as compared to $109,897 during the same period in Fiscal 2024.

There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.

Income Tax Expense

Three Months Ended March 31,

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Income tax expense increased by $174,080, or 31.6%, during the three months ended March 31, 2025, to $724,358, as compared to $550,278 during the same period in Fiscal 2024.

Income tax expense increased by $503,910, or 49.8%, during the six months ended June 30, 2025, to $1,515,427, as compared to $1,011,517 during the same period in Fiscal 2024.

Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive.

The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income.

The effective income tax rate was 22.5% and 22.4% for the three months ended March 31, 2025 and 2024, respectively.

The effective income tax rate was 22.4% and 22.6% for the six months ended June 30, 2025 and 2024, respectively.

Differences between our effective income tax rate and the U.S.

federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Three Months Ended March 31,

federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Net Income (Loss)

Six Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

Net income increased by $585,808, or 30.7%, during the three months ended March 31, 2025, to $2,493,347, as compared to $1,907,539 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2025 and 2024 for further details.

NM – Not Meaningful

Net income increased by $1,774,028, or 51.1%, during the six months ended June 30, 2025, to $5,245,746, as compared to $3,471,718 during the same period in Fiscal 2024.

Consumer Segment

Net income decreased in the consumer segment by $19,382, or 21.9%, during the three months ended March 31, 2025, to $69,094, as compared to $88,476 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2025 and 2024 for further details.

Net income (loss) increased in the consumer segment by $801,947, during the six months ended June 30, 2025, to net income of $712,465, as compared to net loss of $89,482 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2025 and 2024 for further details.

Commercial Segment

Net income increased in the commercial segment by $605,190, or 33.3%, during the three months ended March 31, 2025, to $2,424,253, as compared to $1,819,063 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2025 and 2024 for further details.

Net income increased in the commercial segment by $972,081, or 27.3%, during the six months ended June 30, 2025, to $4,533,281, as compared to $3,561,200 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2025 and 2024 for further details.

Earnings Per Share

The following table depicts the Company’s earnings per share:

Three Months Ended March 31,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.03, or 42.9%, during the three months ended March 31, 2024, to $0.10, as compared to $0.07 same period in Fiscal 2024.

Six Months Ended June 30,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.07, or 53.8%, during the six months ended June 30, 2025, to $0.20, as compared to $0.13 during the same period in Fiscal 2024.

GAAP Financial Measures

Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with U.S.

Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our condensed consolidated financial statements prepared in accordance with U.S.

We believe that providing these non-U.S.

6 unchanged sentences

Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes.

The following table provides a reconciliation of the Company’s net income to Adjusted EBITDA for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following table provides a reconciliation of net income to Adjusted EBITDA for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Adjusted EBITDA Reconciliation:

Net income (loss)

Addition (deduction):

2 unchanged sentences

Income tax expense

The following table provides a reconciliation of net income to Adjusted EBITDA for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Adjusted EBITDA Reconciliation:

Addition (deduction):

Depreciation and amortization

Interest expense

Income tax expense

Net Cash is defined as the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations.

4 unchanged sentences

The following table summarizes the Company’s condensed consolidated statement of cash flows:

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by (used in):

2 unchanged sentences

Financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

NM – Not Meaningful

Operating Activities

Cash flows provided by operations decreased by $2,660,664, or 70.2%, during the three months ended March 31, 2025, to $1,131,057, as compared to $3,791,721 during the same period in Fiscal 2024.

The decrease in cash provided by operations was primarily attributed to an increase in net income, certain non-cash adjustments to reconcile net income to operating cash flow (as detailed in the condensed consolidated statements of cash flows), and the following significant net changes in operating assets and liabilities, from the three months ended March 31, 2024 to the same period during Fiscal 2025:

Cash flows provided by operations increased by $720,332, or 24.0%, during the six months ended June 30, 2025, to $3,722,594, as compared to $3,002,262 during the same period in Fiscal 2024.

The increase in cash provided by operations was primarily attributed to an increase in net income, certain non-cash adjustments to reconcile net income to operating cash flow (as detailed in the condensed consolidated statements of cash flows), and the following significant net changes in operating assets and liabilities, from the six months ended June 30, 2024 to the same period during Fiscal 2025:

● Accounts receivable:

a $4,178,078 net decrease primarily attributed to our commercial segment, resulting from an increase in accounts receivable in the normal course of operations in the first quarter of Fiscal 2025 and from significant collections from a services customer that occurred in the first quarter of Fiscal 2024.

a $3,496,816 net increase primarily attributed to our commercial segment, due to an increase in accounts receivable in the normal course of operations in Fiscal 2025, offset by significant collections from a services customer in Fiscal 2024.

● Inventories:

a $2,057,692 net increase primarily attributed to our consumer segment from the stabilization of inventory purchases in the first quarter of Fiscal 2025, as our consumer segment was purchasing inventory for our new stores in the first quarter of Fiscal 2024.

● Accounts payable:

a $981,156 net decrease primarily attributed to our consumer segment, albeit in the normal course of operations.

a $1,958,081 net decrease primarily attributed to our consumer segment, due to a lesser increase in inventory in Fiscal 2025 than from that incurred in Fiscal 2024 as a result of greater purchases of inventory to support the onboarding of our new stores.

● Prepaid expenses:

a $452,133 net increase primarily attributed to our commercial segment, resulting from incurring costs in Fiscal 2025 to obtain a contract and from a reduction in prepaid freight associated with our ITAD revenue share settlements in Fiscal 2024.

● Accrued expenses:

a $377,022 net decrease primarily attributed to our commercial segment, resulting from a reduction in unvouchered inventory payments from the settlement of a large ITAD transaction in the first quarter of Fiscal 2025.

a $188,591 net decrease primarily attributed to our commercial segment, resulting from a reduction in unvouchered inventory purchases on assets still in evaluation phase in Fiscal 2025, partially offset by a greater reduction in accrued payroll and accrued tax in Fiscal 2024.

● Other liabilities:

a $1,080,275 net increase primarily attributed to our consumer segment, resulting from purchased gift cards that occurred in Fiscal 2025.

Investing Activities

Cash flows (used in) investing activities decreased by $261,805, or 40.6%, during the three months ended March 31, 2025, to $382,987, as compared to $644,792 during the same period in Fiscal 2024.

The decrease in cash (used in) investing activities was primarily attributed to reduced spending associated with our enterprise resource planning system and from less spending on new store build-outs in the first quarter of Fiscal 2025.

Cash flows (used in) investing activities decreased by $385,495, or 30.5%, during the six months ended June 30, 2025, to $879,509, as compared to $1,265,004 during the same period in Fiscal 2024.

The decrease in cash (used in) investing activities during the six months ended June 30, 2025 was primarily attributed to a reduction in costs spent on our ERP and was partially offset by an increase in new store capital expenditures.

Financing Activities

Cash flows (used in) financing activities decreased by $888,107, or 73.0%, during the three months ended March 31, 2025, to $328,808, as compared to $1,216,915 during the same period in Fiscal 2024.

The decrease in cash (used in) financing activities was primarily reduced share buybacks in the first quarter of Fiscal 2025, as principal payments on debt were in relative parity.

Cash flows (used in) financing activities decreased by $1,646,891, or 73.3%, during the six months ended June 30, 2025, to $600,219, as compared to $2,247,110 during the same period in Fiscal 2024.

The decrease in cash (used in) financing activities during the six months ended June 30, 2025, was primarily due to a reduction in share buybacks.

Capital Resources

Although the Company has access to a line of credit, our primary source of liquidity and capital resources currently consists of cash generated from our operating activities.

We do not anticipate the need to fund our operations via the line of credit, and we do not have any amounts drawn as of March 31, 2025 .

Although the Company has access to a line of credit our primary source of liquidity and capital resources currently consist of cash generated from our operating activities.

We do not anticipate the need to fund our operations via the line of credit and we do not have any amounts drawn as of June 30, 2025 .

We have historically renewed, extended, or replaced short-term debt as it matures, and management believes that we will be able to continue to do so in the near future.

4 unchanged sentences

When this occurs, the Company further evaluates future cash flows of the project to ensure the debt tenure and pay-back period are in alignment, as well as the appropriateness of the rate of return.

As of March 31, 2025, the Company had no commitments for capital expenditures.

As of June 30, 2025, the Company had no commitments for capital expenditures.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to our stockholders.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis