What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-18 compared with 2025-03-26 · 251 added, 103 removed, 165 unchanged (68% of the section changed)

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Refer to Cautionary Note Regarding Forward-Looking Statements on page 4 for further details.

This section includes a discussion of our operations for the years ended December 31, 2024, and December 31, 2023.

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.

This management’s discussion and analysis provides comparisons of material changes in the consolidated financial statements for the years ended December 31, 2025, and December 31, 2024.

The following discussion and analysis also provides information that management believes is relevant to the assessment and understanding of our results of operation, financial condition, liquidity, and capital resources.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S.

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Our estimates are based on our historical experience and various other factors we believe are reasonable under the circumstances, and the results of which form the basis for judgments about the carrying value of assets and liabilities that are not readily determinable from other sources.

Actual results may differ from these judgments and estimates under different assumptions or conditions, and any such differences may be material.

References to fiscal years herein are denoted with the word “Fiscal” and the associated year.

See Note 3 – Accounting Policies and Estimates for further details.

Economic Conditions

and other world economies are currently experiencing high interest rates and high levels of inflation, coupled with commodity price risk, mainly associated with variations in the market price of precious metals and diamonds which have the potential to impact consumer discretionary spending behavior.

Furthermore, adverse macroeconomic conditions can also impact demand for resale technology assets.

As to counterbalance economic cycles that impact market selling prices and/or underlying operating costs we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology.

Impacts of Demand for Safe-Haven Metals

While the current market for safe-haven metals has generally led to stronger premiums within our consumer segment, especially for gold and silver, demand for these metals has created industry-wide backlogs and slowed payments from refiners, which the Company has experienced.

The impact on working capital is having to pay more to procure inventory, and the delayed conversion of accounts receivable from refiners.

While the length of the current cycle and the steps domestic refiners will take to address processing capacity are indeterminate, the Company is closely monitoring its inbound buying practices, cash, inventory levels, and its accounts receivable exposure with its refining customers.

The Company believes it has sufficient liquidity to maintain its current buying practices, yet it can adjust its buying programs to reduce exposure should these conditions materially affect its conversion of accounts receivable.

Impacts of Government Legislation

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

We have evaluated the provisions of the new law and its potential effects on our effective tax rate, results of operations, and financial condition.

OBBBA allows businesses to immediately deduct the full cost of qualifying assets in the year they are placed in service, rather than spreading the deduction over several years, and is effective for property acquired and placed in service after January 19, 2025.

OBBBA also requires businesses to recognize the effects of tax law changes in the period of enactment, such as remeasuring estimated U.S.

deferred tax assets and liabilities.

The Company intends to utilize bonus depreciation, effectively reducing taxable income in the respective tax period and the cash deployed to settle such obligations.

There was no material impact on the effective tax rate, financial condition, results of operations, or cash flows during the period ending December 31, 2025.

In future fiscal periods, the impact of OBBBA is contingent on the continued election of bonus depreciation and the amount of qualifying assets acquired by the Company.

Impacts of High Interest Rates and Inflation

and other global economies are currently experiencing high interest rates and elevated inflation, coupled with commodity price risk, mainly associated with fluctuations in the market prices of precious metals and diamonds, which could affect consumer discretionary spending.

Furthermore, adverse macroeconomic conditions can also impact demand for the resale of personal technology assets.

To counterbalance economic cycles that impact market selling prices and/or underlying operating costs, we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology.

We continuously monitor our inventory positions and associated working capital to respond to market conditions and to meet seasonal business cycles and expansionary plans.

These economic cycles may from time to time require the business to utilize its line of credit or seek additional capital.

These economic cycles may, from time to time, require the business to use its line of credit or seek additional capital.

Impacts of Tariffs

government has recently adopted new approaches to trade policy, announced tariffs on certain foreign goods and certain global tariffs, and signaled the possibility of significant additional tariff increases or tariff expansions.

Specifically, under Section 232 of the Trade Expansion Act of 1962, tariffs were imposed on the importation of aluminum, copper, steel, and certain derivative products, but excluded gold and silver.

The impact of such tariffs and retaliatory tariffs by other countries continues to evolve and requires regular monitoring and evaluation.

The deemed impacts of tariffs on each of our reportable segments are detailed below:

Consumer Segment

The consumer segment does not source inventory from or sell it into international markets, so it is not directly impacted by tariffs.

However, global market uncertainty caused by tariffs can increase commodity costs on safe-haven metals such as gold and silver, which may increase working capital requirements.

The Company mitigates increased working capital requirements by monitoring its inventory position and turnover and by maintaining disciplined buying practices to preserve margins.

Commercial Segment

The commercial segment periodically purchases limited quantities of personal technology assets and replacement parts for resale from international markets.

Tariffs may increase costs for original equipment manufacturers, retailers, and parts distributors and, as a result, may require the Company to pay more for the purchase of personal technology assets for resale and replacement parts, thereby increasing the Company’s required working capital.

The Company mitigates increased working capital requirements by monitoring its inventory position and turnover, maintaining disciplined buying practices, and using optimal domestic or international sales channels to preserve margins.

There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks.

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Consumer Segment

Our consumer segment primarily operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, including pre-owned fine jewelry, diamonds and gemstones, luxury watches, along with secondary market bullion.

We incorporate recycled diamonds and gemstones into our new designs meaning they were previously set and unset, producing a low-carbon and ethical origin product.

We incorporate recycled diamonds and gemstones into our new designs, meaning they were

previously set and unset, producing a low-carbon and ethical origin product.

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

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Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the ITAD industry.

The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products.

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the ITAD and product returns industry.

Separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products.

ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization.

Our product returns business reintroduces products back into the supply chain, creating another opportunity for the asset to be used.

The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability.

We are proud of our role in supporting a circular economy through responsible reuse and recycling of electronic devices.

We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.

Segment Activities

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Our strategy is to expand both organically and through acquisitions.

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 into our existing facilities.

Changes in Disclosure of Results of Operations

The Company previously disaggregated revenue and gross margin by resale and recycle for each segment within the results of operations.

The Company’s revenue and gross margin are now comprised of more diverse revenue and gross margin streams associated with service offerings and as such to continue reporting under the prior disclosure methodology would be less representative of how the business operates.

The Company believes that this change has no material impact on the interpretation of our results of operations.

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.

We believe that providing these non-U.S.

GAAP financial measures adds a meaningful presentation of our operating and financial performance.

See the reconciliation of net income to adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) and Net Cash, in Non-U.S.

GAAP Financial Measures below.

Adjusted EBITDA

Adjusted EBITDA is defined as the sum of net income (loss) of the Company, adjusted for additions (deductions) of interest expense, other (income) expense, income tax expense (benefit), and depreciation and amortization.

Adjusted EBITDA is a key performance measure that management uses to assess our operating performance.

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 net income to Adjusted EBITDA for the years ended December 31, 2024 and 2023:

Year Ended December 31,

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.

We believe that presenting Net Cash is useful to investors as a measure of our liquidity and leverage profile, as cash and cash equivalents can be used, among other things, to repay indebtedness.

The following table depicts the Company’s Net Cash:

debt obligations

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

Results of Operations

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Sales in the consumer segment increased by $62,248,071, or 47.7%, during the year ended December 31, 2025, to $192,717,539, as compared to $130,469,468 during the same period in Fiscal 2024.

The change was primarily attributed to stronger sales of scrap grade precious metals inventory which were more pronounced in the third and fourth quarters of Fiscal 2024, which was offset by softer market conditions for bullion that was most prevalent in the first and second quarters of Fiscal 2024;

which also impacted store performance.

Our sales of scrap grade precious metals were favorably impacted by exceptional inbound material flow from our in-store buying programs.

While Fiscal 2024 produced favorable movements in the spot price of gold it was not sufficient to offset the impact of lower bullion demand.

The change was primarily attributed to higher transaction volumes, which were supported by the upward movement in gold and silver prices throughout the year.

Overall sales benefited from favorable supply flows when compared to the same period in Fiscal 2024.

Commercial Segment

Sales in the commercial segment increased by $4,056,604, or 8.8%, during the year ended December 31, 2024, to $49,906,761, as compared to $45,850,157 during the same period in Fiscal 2023.

The change was primarily attributed to the favorable performance from almost all of our verticals with the most significant being the sale of personal technology assets and sales generated through our ITAD business.

While the sales of electronic scrap grades and associated recoveries were strong through to the third quarter of Fiscal 2024 they dropped off in the fourth quarter resulting in relative parity to Fiscal 2023.

Electronic scrap grade sales were primarily impacted by inbound material flows from a single customer’s shipping schedule in the fourth quarter of Fiscal 2024.

Sales in the commercial segment decreased by $1,602,938, or 3.2%, during the year ended December 31, 2025, to $48,303,823, as compared to $49,906,761 during the same period in Fiscal 2024.

The change was primarily attributed to less revenue from:

ITAD revenue share settlements and personal technology assets sourced from our trade-in programs, which were partially offset by increased service revenue from product returns and secured processing of end-of-life assets, electronic scrap grades and associated recoveries.

Our electronic scrap grades and associated recoveries experienced a strong fourth quarter of Fiscal 2025, which was a key driver of the vertical’s full-year results.

Cost of Goods Sold

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Cost of goods sold in the consumer segment increased by $55,205,691, or 48.2%, during the year ended December 31, 2025, to $169,793,289, as compared to $114,587,598 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned increase in sales attributed to lower margin scrap grade precious metals, which were more pronounced in the third and fourth quarters of Fiscal 2024.

These sales allowed the consumer segment to reduce its inventory position from an intra-year high of $27,866,050 as of September 30, 2024 to $23,973,333 as of December 31, 2024.

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

Cost of goods sold as a percent of sales was 88.1% during the year ended December 31, 2025, as compared to 87.8% during the year ended December 31, 2024.

The change was primarily attributed to the product mix, as the relief of inventory associated with lower margin scrap grade precious metals and bullion was almost fully offset by higher margin luxury goods.

The change was primarily attributed to a greater impact from the recognition of costs associated with wholesale precious metals transactions.

Commercial Segment

Cost of goods sold in the commercial segment increased by $1,630,659, or 8.2%, during the year ended December 31, 2024, to $21,472,844, as compared to $19,842,185 during the same period in Fiscal 2023.

The change was primarily attributed to the relief of inventory associated with lower margin electronic scrap grades and revenue sharing, ITAD settlements, and incrementally from the relief of inventory associated with personal technology assets.

Our ITAD business had a strong fourth quarter in Fiscal 2024 resulting in this vertical having a greater impact on cost of goods sold than was evident through the nine months ended September 30, 2024.

Cost of goods sold in the commercial segment decreased by $4,169,764, or 19.4%, during the year ended December 31, 2025, to $17,303,080, as compared to $21,472,844 during the same period in Fiscal 2024.

The change was primarily attributed to the aforementioned impact of fewer ITAD revenue-share settlements and, incrementally, to the recognition of costs associated with the sale of trade-in-related personal technology assets, which was partially offset by an increase in cost of goods sold from electronic scrap grades and associated recoveries.

Cost of goods sold as a percent of sales was 35.8% during the year ended December 31, 2025, as compared to 43.0% during the year ended December 31, 2024.

The change was primarily attributed to the product mix that was relieved during the fourth quarter of Fiscal 2024 as our costs of goods sold as a percent of sales for the nine months ended September 30, 2024 had been unfavorable to the same period in Fiscal 2023.

In the fourth quarter of 2024 the commercial segment experienced stronger margins on the sale of personal technology assets that moved its cost of goods sold as a percent of sales into a favorable variance for the year ended December 31, 2024.

The change was primarily attributed to favorable margins from our ITAD revenue-share settlements and trade-in-related product mix, despite lower overall sales, while our margins on electronic waste and associated recoveries were in line with the same period in Fiscal 2024.

Year Ended December 31,

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Gross margin in the commercial segment increased by $2,566,826, or 9.0%, during the year ended December 31, 2025, to $31,000,743, as compared to $28,433,917 during the same period in Fiscal 2024.

The net impact of the aforementioned increase in sales of $4,056,604 and increase in cost of goods sold of $1,630,659 resulted in the $2,425,945 increase in gross margin.

The net impact of the aforementioned decrease in sales of $1,602,938 and decrease in cost of goods sold of $4,169,764 resulted in the $2,566,826 increase in gross margin.

Selling, General and Administrative

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% of commercial sales

Selling, general and administrative expense increased by $3,067,455, or 9.7%, during the year ended December 31, 2024, to $34,605,132, as compared to $31,537,677 during the same period in Fiscal 2023.

Selling, general and administrative expenses decreased by $655,659, or 1.9%, during the year ended December 31, 2025, to $33,949,473, as compared to $34,605,132 during the same period in Fiscal 2024.

Consumer Segment

Selling, general and administrative expense in the consumer segment increased by $4,571,130, or 43.0%, during the year ended December 31, 2024, to $15,211,970, as compared to $10,640,840 during the same period in Fiscal 2023.

The change was primarily attributed to incurring operational cost structures from our new Arizona and Texas stores along with travel costs associated with preparing those stores for opening.

However, travel costs consecutively declined in both the third and fourth quarters of Fiscal 2024.

During the year, processes and procedures were developed to create efficiencies in rolling out new stores in geographically dispersed locations that can be utilized in future store openings.

Selling, general and administrative expenses in the consumer segment increased by $242,622, or 1.6%, during the year ended December 31, 2025, to $15,454,592, as compared to $15,211,970 during the same period in Fiscal 2024.

The change was primarily attributed to new store cost structures, partially offset by reductions in store onboarding and new-store marketing costs, as well as select reductions in human capital costs.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $1,503,675, or 7.2%, during the year ended December 31, 2024, to $19,393,162, as compared to $20,896,837 during the same period in Fiscal 2023.

The change was primarily attributed to the operational focus on human capital costs and processing efficiencies at our production facilities during Fiscal 2024.

Albeit, we did experience some intra-year increases in human capital costs associated with overall higher processing volumes and associated with a new retail returns client, the spend correlated to an increase in gross margin.

Selling, general and administrative expenses in the commercial segment decreased by $898,281, or 4.6%, during the year ended December 31, 2025, to $18,494,881, as compared to $19,393,162 during the same period in Fiscal 2024.

The change was primarily attributed to a reduction in variable-cost processing-related expenses, of which human-capital costs were a significant component, along with a reduction in lease costs and facility-related costs from the closure of our Arizona ITAD facility, which occurred in the latter part of the second quarter of Fiscal 2025.

We began diverting inbound asset flow before closure, and we fully absorbed the asset flow from the former Arizona ITAD facility into our Texas ITAD facility in the third quarter of Fiscal 2025.

Depreciation and Amortization

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Depreciation and amortization expense in the consumer segment increased by $267,456, or 51%, during the year ended December 31, 2025, to $791,966, as compared to $524,510 during the same period in Fiscal 2024.

The change was primarily attributed to our Arizona and Texas stores that were placed into service as well as the depreciation and amortization expense related to the assets acquired in the Scottsdale Transaction.

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 decreased by $9,573, or 0.9%, during the year ended December 31, 2024, to $1,027,264, as compared to $1,036,837 during the same period in Fiscal 2023.

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

Depreciation and amortization expense in the commercial segment increased by $47,359, or 4.6%, during the year ended December 31, 2025, to $1,074,623, as compared to $1,027,264 during the same period in Fiscal 2024.

There was no material impact from assets being capitalized or reaching maturity in each comparative period;

as such, there was no discussion point.

Other Income (Expense)

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% of commercial sales

Other income increased by $309,900, or 42.6%, during the year ended December 31, 2024, to $1,037,682, as compared to $727,782 during the same period in Fiscal 2023.

Other income decreased by $16,753, or 1.6%, during the year ended December 31, 2025, to $1,020,929, as compared to $1,037,682 during the same period in Fiscal 2024.

Consumer Segment

Other income in the consumer segment increased by $247,734, or 236.9%, during the year ended December 31, 2025, to $352,295, as compared to $104,561 during the same period in Fiscal 2024.

The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to the Company’s corporate headquarters, and the Employee Retention Tax Credit (“ERTC”), and to the consumer segment’s higher working capital requirements from the aforementioned launching of our Arizona and Texas stores which has decreased the excess cash flow available to sweep into an interest-bearing account.

The impact on interest income is referenced below.

The change was primarily attributable to the proportionate share of earned dividend and interest income.

Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level.

This resulted in the segment receiving a higher allocation of earned income on excess cash balances.

The segment also received an employee retention credit in Fiscal 2025, while Fiscal 2024 included the proportionate share of income from a settlement for repairs related to our corporate headquarters.

The impact of dividend and interest income is referenced below.

Dividend income comprised $90,710 and $0 of other income during the years ended December 31, 2025, and December 31, 2024, respectively.

Interest income comprised $165,105 and $2,304 of other income during the years ended December 31, 2025, and December 31, 2024, respectively.

In aggregate, cash balances were higher in Fiscal 2025, resulting in greater overall dividend and interest income for the Company.

Commercial Segment

Other income in the commercial segment increased by $289,145, or 44.9%, during the year ended December 31, 2024, to $933,121, as compared to $643,976 during the same period in Fiscal 2023.

The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to the Company’s corporate headquarters, the ERTC, and to the continued focus on reducing working capital which has increased the excess cash flow available to sweep into an interest-bearing account.

The impact on interest income is referenced below.

Other income in the commercial segment decreased by $264,487, or 28.3%, during the year ended December 31, 2025, to $668,634, as compared to $933,121 during the same period in Fiscal 2024.

The change was primarily attributable to the proportionate share of dividend and interest income.

Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level.

This resulted in lower segment allocation of earned income on excess cash balances.

Further, the same period in Fiscal 2024 included the proportionate share of income from a settlement for repairs related to our corporate headquarters.

The impact of dividend and interest income is referenced below.

Dividend income comprised $213,773 and $39,156 of other income during the years ended December 31, 2025, and December 31, 2024, respectively.

Interest income comprised $391,806 and $753,315 of other income during the years ended December 31, 2025, and December 31, 2024, respectively.

In aggregate, cash balances were higher in Fiscal 2025, resulting in greater overall dividend and interest income for the Company.

Interest Expense

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Consumer Segment

Interest expense in the consumer segment increased by $36,399, or 18.9%, during the year ended December 31, 2024, to $228,792, as compared to $192,393 during the same period in Fiscal 2023.

The change was primarily attributed to the impact of the allocation of corporate interest expense.

Interest expense in the consumer segment decreased by $24,189, or 10.6%, during the year ended December 31, 2025, to $204,603, as compared to $228,792 during the same period in Fiscal 2024.

The change was primarily attributed to a loan

pay-off on a retail location that occurred in the third quarter of Fiscal 2025 and to a reduced allocation of interest expense as we paid off our loan on our corporate headquarters in the fourth quarter of Fiscal 2025.

Commercial Segment

Interest expense in the commercial segment decreased by $16,552, or 7.6%, during the year ended December 31, 2025, to $202,039, as compared to $218,591 during the same period in Fiscal 2024.

The change was primarily attributed to the impact of the allocation of corporate interest expense.

The change was primarily attributable to the reduced allocation of interest expense as we paid off our loan on our corporate headquarters in the fourth quarter of Fiscal 2025.

Income Tax Expense

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Income tax expense, for both segments, for the year ended December 31, 2025, was $4,126,240, an increase of $2,134,119, as compared to income tax expense of $1,992,121 for the year ended December 31, 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.

Currently, the Company has a deferred tax liability reflecting a future obligation to pay taxes.

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

The effective income tax rate was 22.0% and 22.8% for the years ended December 31, 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 year ended December 31, 2024, compared to the year ended December 31, 2023.

federal statutory rate are the result of state taxes and non-deductible expenses, as was the case for the decrease for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Year Ended December 31,

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% of commercial sales

Net income decreased by $390,393, or 5.5%, during the year ended December 31, 2024 to $6,757,059, as compared to $7,147,452 during the same period in Fiscal 2023.

Refer to the aforementioned attributes discussed within the Comparison of Years Ended December 31, 2024 and 2023 for further details.

Net income increased by $7,839,919, or 116%, during the year ended December 31, 2025 to $14,596,978, as compared to $6,757,059 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of the Years Ended December 31, 2025 and 2024 for further details.

Consumer Segment

Net income decreased in the consumer segment by $3,630,406, or 99.6%, during the year ended December 31, 2024 to $16,341, as compared to $3,646,747 during the same period in Fiscal 2023.

Net income increased in the consumer segment by $5,317,621, or 32,541.6%, during the year ended December 31, 2025 to $5,333,962, as compared to $16,341 during the same period in Fiscal 2024.

Refer to the aforementioned attributes discussed within the Comparison of Years Ended December 31, 2025 and 2024 for further details.

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Year Ended December 31,

Basic and diluted earnings per share attributable to holders of our Common Stock decreased by $0.01, or 3.7%, during the year ended December 31, 2024 to $0.26, as compared to $0.27 during the same period in Fiscal 2023.

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.30, or 115.4%, during the year ended December 31, 2025 to $0.56, as compared to $0.26 during the same period in Fiscal 2024.

GAAP Financial Measures

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

When evaluated in conjunction with U.S.

GAAP financial measures, the Company believes that these non-U.S.

GAAP financial measures add meaningful insight into our results of operations, financial condition, liquidity, and ability to meet financial obligations.

These non-U.S.

GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with U.S.

Each of these non-U.S.

GAAP financial measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparing performance among different companies.

We have included the definitions of our non-U.S.

GAAP financial measures and reconciliations to the most comparable U.S.

GAAP financial measures in the following tables below.

Adjusted EBITDA and Adjusted EBITDAR

Adjusted EBITDA is defined as the sum of (i) net income (loss) of the Company, adjusted for additions (deductions) of (ii) interest expense, (iii) other (income) expense, (iv) income tax expense (benefit), and (v) depreciation and amortization.

Management considers Adjusted EBITDA to be a key financial measure to assess our overall operating performance.

Adjusted EBITDAR is defined as (i) Adjusted EBITDA plus (ii) minimum fixed rent expense for properties occupied under operating leases.

Management considers Adjusted EBITDAR to be a key financial measure to assess our overall operating performance, excluding the impact of variability in leasing methods and capital structures.

These measures are also inputs into the Company’s leverage ratios.

The Company’s Adjusted EBITDA and Adjusted EBITDAR are considered non-U.S.

GAAP financial measures and are not calculated in accordance with, or preferable to, “net income” or other financial measures of operating performance calculated in accordance with U.S.

The following table provides a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDAR for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Adjusted EBITDA Reconciliation:

Addition (deduction):

Depreciation and amortization

Interest expense

Income tax expense

Adjusted EBITDAR Reconciliation:

Adjusted EBITDA

Rent expense (1)

(1) The table below depicts the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable U.S.

GAAP financial measure for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Total lease costs, per ASC 842

variable lease cost

short-term lease cost

Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Leverage Ratios

The Company’s Debt to Adjusted EBITDA Leverage Ratio is defined as the Company’s (i) Debt Obligations divided by (ii) Adjusted EBITDA.

Debt Obligations are defined as the sum of amounts outstanding under notes payable balances.

The Company’s Net Debt to Adjusted EBITDA Leverage Ratio is defined as the Company’s (i) Net Debt Obligations divided by (ii) Adjusted EBITDA.

Net Debt Obligations are defined as the difference between the Company’s (i) Debt Obligations and (ii) Total Cash.

Management considers these financial measures to be helpful in understanding the Company’s ability to service Debt Obligations, excluding, and including the impact of Total Cash available to service such obligations.

The Company’s Debt to Adjusted Leverage Ratio and Net Debt to Adjusted EBITDA Leverage Ratio are considered non-U.S.

GAAP financial measures and are not calculated in accordance with, or preferable to, other financial measures utilized to assess our ability to service “notes payable” in accordance with U.S.

The Company considers the Debt to Net Income Leverage Ratio, defined as (i) Debt Obligations divided by (ii) net income, to be the representative financial measure of our ability to service “notes payable” utilizing U.S.

GAAP-derived financial statement balances and is incorporated into the presentation below.

The following table reconciles components of the Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage Ratio for the years ended December 31, 2025 and 2024:

Debt Obligations

Net Debt Obligations

Adjusted EBITDA

Leverage Ratios

Debt to Net Income Leverage:

(a) divided by (c)

Debt to Adjusted EBITDA Leverage:

(a) divided by (d)

Net Debt to Adjusted EBITDA Leverage:

(b) divided by (d)

Adjusted Debt to Adjusted EBITDAR Leverage and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratios

The Company’s Adjusted Debt to Adjusted EBITDAR Leverage Ratio is defined as the Company’s (i) Adjusted Debt Obligations divided by (ii) Adjusted EBITDAR.

Adjusted Debt Obligations are defined as the sum of the Company’s (i) Debt Obligations and (ii) operating lease liabilities.

The Company’s Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio is defined as the Company’s (i) Adjusted Net Debt Obligations divided by (ii) Adjusted EBITDAR.

Adjusted Net Debt Obligations are defined as the difference between the Company’s (i) Adjusted Debt Obligations and (ii) Total Cash.

Management considers these financial measures to be helpful in understanding the Company’s ability to service debt and operating lease obligations, excluding and including the impact of Total Cash available to service such obligations.

The Company’s Adjusted Debt to Adjusted EBITDAR Leverage Ratio and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio are considered non-U.S.

GAAP financial measures and are not calculated in accordance with, or preferable to, other financial measures utilized to assess our ability to service “notes payable” and “operating lease liabilities” in accordance with U.S.

The Company considers the Adjusted Debt to Net Income Leverage Ratio, defined as the sum of (i) Debt Obligations and (ii) operating lease liabilities divided by (iii) net income, to be the representative financial measure of our ability to service “notes payable” and “operating leases” utilizing U.S.

GAAP derived financial statement balances and is incorporated into the presentation below.

The following table reconciles components of the Adjusted Debt to Adjusted EBITDAR Leverage Ratio and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio for the years ended December 31, 2025 and 2024:

Debt Obligations

Operating lease liabilities

Adjusted Debt Obligations

Adjusted Net Debt Obligations

Adjusted EBITDAR

Adjusted Leverage Ratios

Adjusted Debt to Net Income Leverage:

(a) divided by (c)

Adjusted Debt to Adjusted EBITDAR Leverage:

(a) divided by (d)

Adjusted Net Debt to Adjusted EBITDAR Leverage:

(b) divided by (d)

Net Cash is defined as the difference between the Company’s (i) cash and cash equivalents (“Total Cash”) and (ii) Debt Obligations.

Management considers this financial measure to be helpful in understanding the Company’s liquidity.

The Company’s Net Cash is considered a non-U.S.

GAAP financial measure and is not calculated in accordance with, or preferable to, “cash and cash equivalents” and amounts outstanding under “notes payable” balances or other financial measures of liquidity calculated in accordance with U.S.

The following table reconciles Net Cash to its comparable U.S.

GAAP financial measures:

Debt Obligations

Free Cash Flow

Free Cash Flow is defined as the difference between the Company’s (i) net cash provided by operations (“Operating Cash Flow”) and (ii) Capital Expenditures.

Management considers this financial measure to be helpful in understanding the amount of Free Cash Flow that the Company can utilize to meet its financing needs.

The Company’s Free Cash Flow is considered a non-U.S.

GAAP financial measure and is not calculated in accordance with, or preferable to, “net cash provided by operations” or other financial measures of cash flow available to meet financing needs calculated in accordance with U.S.

The following table reconciles Free Cash Flow to the comparable U.S.

GAAP financial measures for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Operating Cash Flow

Capital Expenditures

Performance Metrics

In addition to non-U.S.

GAAP financial measures, management utilizes certain performance metrics to assess its operations.

A key performance metric that is calculated consistently across our reportable segments is the Inventory Turnover Ratio.

As a purveyor of recommerce assets and recycling-grade base and precious metals, our ability to acquire inventory with appropriate margin, turn over our inventory, and redeploy sale proceeds is critical to our success.

Appropriate inventory turns also reduce our exposure to changing consumer preferences and commodity market volatility.

The Company defines its Inventory Turnover Ratio as (i) cost of goods sold less shipping and handling costs divided by (ii) Average Inventory.

The Company excludes shipping and handling costs in the definition of Inventory Turnover.

The Company defines Average Inventory as the mean value of the Company’s inventory over a specific period, calculated by (i) adding the beginning inventory and ending inventory for that period and (ii) dividing by two.

When evaluated in conjunction with our consolidated financial statements, the Company believes that these performance metrics provide meaningful insight into our results of operations, financial condition, and ability to meet financial obligations.

These performance metrics should not be considered a substitute for, nor superior to, our financial results.

These performance metrics are not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparing performance among different companies.

The following table reconciles the components of Inventory Turnover for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Cost of goods sold

shipping and handling costs

Cost of goods sold less shipping and handling costs

Beginning inventory

Ending inventory

Average Inventory:

(d) plus (e) divided by 2

Inventory Turnover Ratio

Inventory Turnover:

Liquidity and Capital Resources

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Financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Operating Activities

Cash flows provided by operations increased by $4,347,932, or 74.4%, during the year ended December 31, 2024, to $10,190,640, as compared to $5,842,708 during the same period in Fiscal 2023.

The increase in cash provided by operations for the year ended December 31, 2024, was primarily attributed to the impacts of a decrease in net income, an increase in depreciation and amortization, a decrease in non-cash charges relating to deferred taxes, an increase in non-cash lease expense, a decrease accounts receivable associated with the settlement of a large SOW with a recurring customer, an increased inventory position associated with the expansion of the consumer business, an increase in accrued expenses primarily associated with our payroll accrual and unvouchered payments related to estimated settlement liabilities for inbound ITAD customers, and an increase in other liabilities associated with customer deposits and gift cards.

Cash flows provided by operations decreased by $7,609,846, or 74.7%, during the year ended December 31, 2025, to $2,580,794, as compared to $10,190,640 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 consolidated statements of cash flows), and the following significant net changes in cash associated with operating assets and liabilities:

● Accounts receivable:

a $10,109,701 net increase primarily attributed to our consumer segment, resulting from an increase in wholesale precious metals transactions awaiting payment.

● Inventories:

a $6,801,094 net increase primarily attributed to our consumer segment, resulting from rising inventory costs, which were most significant in Fiscal 2025.

● Prepaid expenses:

a $573,502 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.

● Other assets:

an $89,880 net decrease primarily attributed to our consumer segment, resulting from an increase in lease deposits that predominantly occurred in Fiscal 2024 and from the reversal of a federal income tax asset within our corporate segment in Fiscal 2025.

Lease deposits were greater in Fiscal 2024 due to the store expansions.

● Accounts payable:

a $1,066,086 net increase primarily attributed to normal course operations throughout the Company.

● Accrued expenses:

a $1,153,260 net decrease primarily attributed to our commercial segment, resulting from a decrease in unvouchered inventory payment in Fiscal 2025 and an increase in unvouchered inventory payments in Fiscal 2024.

This change was partially offset by an increase in accrued tax liability within our corporate segment that occurred in Fiscal 2025.

● Operating leases:

a $304,521 net decrease primarily attributed to our commercial segment, resulting from an increase in lease costs from the new store footprint, which was incrementally offset by the closure of our ITAD Arizona facility in Fiscal 2025.

● Other liabilities:

a $1,172,096 net increase primarily attributed to our consumer segment, resulting from an increase in customer gift cards.

Investing Activities

Cash flows (used in) investing activities increased by $2,000,543, or 113.7%, during the year ended December 31, 2024, to $3,760,404, as compared to $1,759,861 during the same period in Fiscal 2023.

The increase in cash (used in) investing activities during the year ended December 31, 2024, was primarily attributed to the purchase of property and equipment, including real estate associated with one of our Arizona stores, the build-out of our Arizona and Texas stores, the purchase of production assets within our commercial recycling business, and the continued development of intangible assets associated with our enterprise resource planning system.

Cash flows (used in) investing activities decreased by $2,511,908, or 66.8%, during the year ended December 31, 2025, to $1,248,496, as compared to $3,760,404 during the same period in Fiscal 2024.

The decrease in cash (used in) investing activities during the year ended December 31, 2025, was primarily impacted by more significant capital being deployed on ERP development, new store buildouts, and an associated real estate purchase for one of our Arizona locations in the same period in Fiscal 2024.

Fiscal 2025 expenditures have primarily been related to improvements to our corporate headquarters and new stores.

Financing Activities

Cash flows (used in) financing activities increased by $111,366, or 3.0%, during the year ended December 31, 2025, to $3,786,452, as compared to $3,675,086 during the same period in Fiscal 2024.

The increase in cash (used in) financing activities during the year ended December 31, 2024, was primarily due to our share buyback plan as principal payments on debt were in relative parity.

The increase in cash (used in) financing activities during the year ended December 31, 2025, was primarily attributed to a greater use of cash in the repayment of two notes payable in Fiscal 2025, while cash utilized in Fiscal 2024 was primarily attributed to share buybacks, which were substantially less in Fiscal 2025.

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 December 31, 2024.

We do not anticipate needing to fund our operations through the use of our line of credit, and we have no amounts drawn as of December 31, 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.

1 unchanged sentence

We regularly identify growth opportunities and business optimizations that require capital deployment.

The Company continuously monitors its deployment of capital and primarily funds capital expenditures through cash flow from operating activities.

The Company continuously monitors its capital deployment and primarily funds capital expenditures with cash flow from operating activities.

Where appropriate, the Company may use debt financing on select projects.

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.

When this occurs, the Company further evaluates the project's future cash flows to ensure the debt tenure and payback period are aligned, as well as the appropriateness of the rate of return.

Consumer Segment

In Fiscal 2024, the consumer segment primarily expended capital in relation to store expansion.

In Fiscal 2025, we will look to optimize the performance of our new retail stores along with identifying new market opportunities.

The Company believes it has the liquidity and capital resources to fund capital outlays of the aforementioned.

In Fiscal 2025, the consumer segment primarily expended capital on store expansion, albeit to a lesser degree, as only 1 store was opened during the year.

In Fiscal 2024, the consumer segment primarily expended capital on the opening of 5 stores.

The Company believes it has the liquidity and capital resources to fund future capital outlays associated with maintaining its asset base and strategic initiatives.

Commercial Segment

In Fiscal 2024, the commercial segment primarily expended capital in relation to production assets and was the primary beneficiary of our capital spend associated with our enterprise resource planning system.

In Fiscal 2025, we will look to identify opportunities for growth of service offerings, evaluate expansion, and maintain our production assets.

The Company believes it has the liquidity and capital resources to fund capital outlays of the aforementioned.

In Fiscal 2025, the commercial segment primarily expended capital on facility-related items.

In Fiscal 2024, the commercial segment primarily expended capital on processing assets and was the primary beneficiary of our ERP system capital spend.

The Company believes it has the liquidity and capital resources to fund future capital outlays to maintain its asset base and pursue strategic initiatives.

Contractual Obligations

3 unchanged sentences

Operating leases (3)

(1) Notes payable includes the principal amount of borrowings outstanding under the Company’s debt facilities.

(1) Notes payable include the principal amount of borrowings outstanding under the Company’s debt facilities.

(2) Interest payments on notes payable are based on interest rates in effect as of December 31, 2025.

As contractual interest rates and the amount of notes payable outstanding in variable in certain cases, actual cash payments may differ from the amounts provided.

As contractual interest rates and the amount of notes payable outstanding vary in certain cases, actual cash payments may differ from the amounts provided.

(3) Operating lease payments reflect those embedded in the measurement of our operating lease liabilities and thus include lease payments for the remaining non-cancellable period of the lease together with periods covered by renewal (or termination) options which we are reasonably certain to exercise (or not exercise).

These operating lease payments do not include certain tax, insurance, and maintenance costs, which are also required contractual obligations under some of our operating leases, but are generally not fixed and can fluctuate year to year.

These operating lease payments do not include certain taxes, insurance, and maintenance costs, which are also required contractual obligations under some of our operating leases, but are generally not fixed and can fluctuate year to year.

Off-Balance Sheet Arrangements

3 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis