Envela Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context indicates otherwise for one of our specific operating segments, references to “we,” “us,” “our,” the “Company,” and “Envela” refer to the consolidated business operations of Envela Corporation, and all of its direct and indirect subsidiaries. Forward-Looking Statements ​ This Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (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; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “should,” “could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “goal,” “seek,” “ensure,” “potential,” “opportunity,” “intend,” “predict,” “committed,” “likely,” “continue,” “strive,” “aim,” “scheduled,” “focused on,” “long-term,” “future,” “over time,” “ongoing,” “uncertain,” “moving forward,” or “subject to.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking and based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 2025 Annual Report and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development, and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. 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. Introduction ​ This section includes a discussion of our operations for the three months ended March 31, 2026 and 2025. The following discussion and analysis provide information that management believes is relevant to assessing and understanding our financial condition, liquidity, and results of operations. The discussion should be read in conjunction with the Company’s 2025 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report. ​ Critical Accounting Policies and Estimates ​ There were no material changes to our critical accounting policies and estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s 2025 Annual Report. Economic Conditions ​ 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 27 Table of Contents 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 quarter ended March 31, 2026. 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 Increases in Interest Rates and Inflation ​ Rising interest rates and inflation, coupled with commodity price risk, mainly associated with fluctuations in the market prices of precious metals and diamonds, 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 use its line of credit or seek additional capital. ​ Impacts of Tariffs ​ The U.S. 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. 28 Table of Contents ​ There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks. ​ Our Business ​ Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the recommerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our reportable segments are detailed below: ​ 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, and secondary market bullion. We incorporate recycled diamonds and gemstones into 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. 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. ​ 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 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 the responsible reuse and recycling of electronic devices. ​ Segment Activities ​ The Company believes it is well-positioned to take advantage of its overall capital structure. ​ Consumer Segment ​ Our strategy is to expand the number of locations we operate by opening new locations throughout the U.S. Likewise, we continue to evaluate opportunities related to complementary product and service offerings for our stores and online business. ​ Commercial Segment ​ Our strategy is to expand both organically and through acquisitions. 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 ​ Comparison of the Three Months Ended March 31, 2026 and 2025 ​ The following table depicts our disaggregated condensed consolidated statements of income for the three months ended March 31, 2026 and 2025: ​ 29 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2026 ​ 2025 ​ ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ % of Sales (1) ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ % of Sales (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 81,793,522 ​ $ 16,587,368 ​ $ 98,380,890 100.0 % $ 36,770,604 ​ $ 11,485,225 ​ $ 48,255,829 100.0 % Cost of goods sold ​ 72,092,889 ​ ​ 5,667,585 ​ 77,760,474 79.0 % 32,559,701 ​ 3,728,104 ​ 36,287,805 75.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 9,700,633 ​ 10,919,783 ​ 20,620,416 21.0 % 4,210,903 ​ 7,757,121 ​ 11,968,024 24.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 4,054,875 ​ 4,868,917 ​ 8,923,792 9.1 % 3,887,906 ​ 4,516,356 ​ 8,404,262 17.4 % Depreciation and amortization ​ 215,100 ​ 270,863 ​ 485,963 0.5 % 180,632 ​ 264,709 ​ 445,341 0.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 4,269,975 ​ 5,139,780 ​ 9,409,755 9.6 % 4,068,538 ​ 4,781,065 ​ 8,849,603 18.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ 5,430,658 ​ 5,780,003 ​ 11,210,661 11.4 % 142,365 ​ 2,976,056 ​ 3,118,421 6.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 93,181 ​ 77,163 ​ 170,344 0.2 % 849 ​ 204,756 ​ 205,605 0.4 % Interest expense ​ (38,385) ​ (40,387) ​ (78,772) (0.1) % (54,047) ​ (52,274) ​ (106,321) (0.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 5,485,454 ​ 5,816,779 ​ 11,302,233 11.5 % 89,167 ​ 3,128,538 ​ 3,217,705 6.7 % Income tax expense ​ (1,195,156) ​ (1,267,344) ​ (2,462,500) (2.5) % (20,073) ​ ​ (704,285) ​ (724,358) (1.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 4,290,298 ​ $ 4,549,435 ​ $ 8,839,733 9.0 % $ 69,094 ​ $ 2,424,253 ​ $ 2,493,347 5.2 % (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. The individual segments reported the following for the three months ended March 31, 2026 and 2025: ​ Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Change ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 98,380,890 ​ $ 48,255,829 ​ $ 50,125,061 103.9 % % of consolidated sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 81,793,522 ​ $ 36,770,604 ​ $ 45,022,918 122.4 % % of consumer sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 16,587,368 ​ $ 11,485,225 ​ $ 5,102,143 44.4 % % of commercial sales ​ 100.0 % 100.0 % ​ ​ ​ ​ Consolidated ​ Sales increased by $50,125,061, or 103.9%, during the three months ended March 31, 2026, to $98,380,890, as compared to $48,255,829 during the same period in Fiscal 2025. ​ Consumer Segment ​ Sales in the consumer segment increased by $45,022,918, or 122.4%, during the three months ended March 31, 2026, to $81,793,522, as compared to $36,770,604 during the same period in Fiscal 2025. The change was primarily attributed to strong performance across both our retail stores and wholesale verticals, supported by upward movements in gold and silver prices compared with the same period in Fiscal 2025. ​ 30 Table of Contents Commercial Segment ​ Sales in the commercial segment increased by $5,102,143, or 44.4%, during the three months ended March 31, 2026, to $16,587,368, as compared to $11,485,225 during the same period in Fiscal 2025. The change was primarily driven by improved pricing in certain product categories sourced from our ITAD vertical, reflecting current demand conditions and industry supply dynamics, which may not persist. ​ Cost of Goods Sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Change ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 77,760,474 ​ $ 36,287,805 ​ $ 41,472,669 114.3 % % of consolidated sales ​ 79.0 % 75.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 72,092,889 ​ $ 32,559,701 ​ $ 39,533,188 121.4 % % of consumer sales ​ 88.1 % 88.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 5,667,585 ​ $ 3,728,104 ​ $ 1,939,481 52.0 % % of commercial sales ​ 34.2 % 32.5 % ​ ​ ​ ​ Consolidated ​ Cost of goods sold increased by $41,472,669, or 114.3%, during the three months ended March 31, 2026, to $77,760,474, as compared to $36,287,805 during the same period in Fiscal 2025. ​ Consumer Segment ​ Cost of goods sold in the consumer segment increased by $39,533,188, or 121.4%, during the three months ended March 31, 2026, to $72,092,889, as compared to $32,559,701 during the same period in Fiscal 2025. The change was primarily attributed to higher sales volumes across our retail stores and wholesale verticals, which were also impacted by the upward movement in gold and silver prices. ​ Cost of goods sold as a percentage of sales was 88.1% during the three months ended March 31, 2026, as compared to 88.5% during the three months ended March 31, 2025. The change was primarily attributed to product mix, as our margins associated with wholesale scrap-grade precious metals and bullion were stronger in comparison to the same period in Fiscal 2025. ​ Commercial Segment ​ Cost of goods sold in the commercial segment increased by $1,939,481, or 52.0%, during the three months ended March 31, 2026, to $5,667,585, as compared to $3,728,104 during the same period in Fiscal 2025. The change was primarily the aforementioned impact of our ITAD revenue-share settlements and parity in performance across our other commercial segment verticals. ​ Cost of goods sold as a percentage of sales was 34.2% during the three months ended March 31, 2026, as compared to 32.5% during the three months ended March 31, 2025. The change was primarily attributed to product mix. In the same period in Fiscal 2025, we settled a large, high-margin ITAD revenue-share transaction and experienced a higher percentage of service-based revenue. ​ ​ 31 Table of Contents Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Change ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 20,620,416 ​ $ 11,968,024 ​ $ 8,652,392 72.3 % % of consolidated sales ​ 21.0 % 24.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 9,700,633 ​ $ 4,210,903 ​ $ 5,489,730 130.4 % % of consumer sales ​ 11.9 % 11.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 10,919,783 ​ $ 7,757,121 ​ $ 3,162,662 40.8 % % of commercial sales ​ 65.8 % 67.5 % ​ ​ ​ ​ Consolidated ​ Gross margin increased by $8,652,392, or 72.3%, during the three months ended March 31, 2026, to $20,620,416, as compared to $11,968,024 during the same period in Fiscal 2025. ​ Consumer Segment ​ Gross margin in the consumer segment increased by $5,489,730, or 130.4%, during the three months ended March 31, 2026, to $9,700,633, as compared to $4,210,903 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $45,022,918 and increase in cost of goods sold of $39,533,188 resulted in the $5,489,730 increase in gross margin. ​ Commercial Segment ​ Gross margin in the commercial segment increased by $3,162,662, or 40.8%, during the three months ended March 31, 2026, to $10,919,783, as compared to $7,757,121 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $5,102,143 and increase in cost of goods sold $1,939,481 resulted in the $3,162,662 increase in gross margin. ​ Selling, General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Change ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 8,923,792 ​ $ 8,404,262 ​ $ 519,530 6.2 % % of consolidated sales ​ 9.1 % 17.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 4,054,875 ​ $ 3,887,906 ​ $ 166,969 4.3 % % of consumer sales ​ 5.0 % 10.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 4,868,917 ​ $ 4,516,356 ​ $ 352,561 7.8 % % of commercial sales ​ 29.4 % 39.3 % ​ ​ ​ ​ Consolidated ​ Selling, general and administrative expense increased by $519,530, or 6.2%, during the three months ended March 31, 2026, to $8,923,792, as compared to $8,404,262 during the same period in Fiscal 2025. ​ Consumer Segment ​ Selling, general and administrative expense in the consumer segment increased by $166,969, or 4.3%, during the three months ended March 31, 2026, to $4,054,875, as compared to $3,887,906 during the same period in Fiscal 2025. The change was primarily attributed to an increase in insurance costs, costs related to a new store that opened in the second 32 Table of Contents quarter of Fiscal 2025 that were not present in the first quarter of Fiscal 2025 results, and variable-processing costs associated with supplies, and an increase in merchant services fees associated with higher transaction volumes. ​ Commercial Segment ​ Selling, general and administrative expense in the commercial segment increased by $352,561, or 7.8%, during the three months ended March 31, 2026, to $4,868,917, as compared to $4,516,356 during the same period in Fiscal 2025. The change was primarily attributed to an increase in lease expense associated with lease renewal terms, an increase in variable-processing costs associated with supplies, and an increase in merchant services and online sales fees associated with higher transaction volumes. ​ Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 485,963 ​ $ 445,341 ​ $ 40,622 ​ 9.1 % % of consolidated sales ​ 0.5 % 0.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 215,100 ​ $ 180,632 ​ $ 34,468 19.1 % % of consumer sales ​ 0.3 % 0.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 270,863 ​ $ 264,709 ​ $ 6,154 2.3 % % of commercial sales ​ 1.6 % 2.3 % ​ ​ ​ ​ Consolidated ​ Depreciation and amortization expense increased by $40,622, or 9.1%, during the three months ended March 31, 2026, to $485,963, as compared to $445,341 during the same period in Fiscal 2025. ​ Consumer Segment ​ Depreciation and amortization expense in the consumer segment increased by $34,468, or 19.1%, during the three months ended March 31, 2026, to $215,100, as compared to $180,632 during the same period in Fiscal 2025. The change was primarily attributed to the depreciation of assets associated with a new store that came online in the second quarter of Fiscal 2025, which was not present in the first quarter of Fiscal 2025 results. Commercial Segment ​ Depreciation and amortization expense in the commercial segment increased by $6,154, or 2.3%, during the three months ended March 31, 2026, to $270,863, as compared to $264,709 during the same period in Fiscal 2025. There was no material impact from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point. ​ Other Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 170,344 ​ $ 205,605 ​ $ (35,261) (17.1) % % of consolidated sales ​ 0.2 % 0.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 93,181 ​ $ 849 ​ $ 92,332 10,875.4 % % of consumer sales ​ 0.1 % 0.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 77,163 ​ $ 204,756 ​ $ (127,593) (62.3) % % of commercial sales ​ 0.5 % 1.8 % ​ ​ ​ ​ 33 Table of Contents Consolidated ​ Other income decreased by $35,261, or 17.1%, during the three months ended March 31, 2026, to $170,344, as compared to $205,605 during the same period in Fiscal 2025. ​ Consumer Segment ​ Other income in the consumer segment increased by $92,332, or 10,875.4%, during the three months ended March 31, 2026, to $93,181, as compared to $849 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the quarter, there was greater utilization of cash for working capital, with our earned interest rate also being at a lower rate, which contributed to the unfavorable change at the consolidated level. The impact of dividend and interest income is referenced below. ​ Dividend income comprised $37,048 and $0 of other income during the three months ended March 31, 2026 and 2025, respectively. Interest income comprised $55,740 and $0 of other income during the three months ended March 31, 2026 and 2025, respectively. ​ Commercial Segment ​ Other income in the commercial segment decreased by $127,593, or 62.3%, during the three months ended March 31, 2026, to $77,163, as compared to $204,756 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the quarter, there was greater utilization of cash for working capital, and our earned interest rate was also lower, which contributed to the unfavorable change at the consolidated level. The impact of dividend and interest income is referenced below. ​ Dividend income comprised $43,149 and $54,864 during the three months ended March 31, 2026 and 2025, respectively. Interest income comprised $21,084 and $144,331 of other income during the three months ended March 31, 2026 and 2025, respectively. ​ Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ (78,772) ​ $ (106,321) ​ $ 27,549 (25.9) % % of consolidated sales ​ (0.1) % (0.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (38,385) ​ $ (54,047) ​ $ 15,662 (29.0) % % of consumer sales ​ 0.0 % (0.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (40,387) ​ $ (52,274) ​ $ 11,887 (22.7) % % of commercial sales ​ (0.2) % (0.5) % ​ ​ ​ ​ Consolidated ​ Interest expense decreased by $27,549, or 25.9%, during the three months ended March 31, 2026, to $78,772, as compared to $106,321 during the same period in Fiscal 2025. ​ Consumer Segment ​ Interest expense in the consumer segment decreased by $15,662, or 29.0%, during the three months ended March 31, 2026, to $38,385, as compared to $54,047 during the same period in Fiscal 2025. The change was attributed to debt amortization. ​ 34 Table of Contents Commercial Segment ​ Interest expense in the commercial segment decreased by $11,887, or 22.7%, during the three months ended March 31, 2026, to $40,387, as compared to $52,274 during the same period in Fiscal 2025. The change was attributed to debt amortization. ​ Income Tax Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ (2,462,500) ​ $ (724,358) ​ $ (1,738,142) 240.0 % % of consolidated sales ​ (2.5) % (1.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (1,195,156) ​ $ (20,073) ​ $ (1,175,083) 5,854.0 % % of consumer sales ​ (1.5) % (0.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (1,267,344) ​ $ (704,285) ​ $ (563,059) 79.9 % % of commercial sales ​ (7.6) % (6.1) % ​ ​ ​ ​ Consolidated ​ Income tax expense increased by $1,738,142, or 240.0%, during the three months ended March 31, 2026, to $2,462,500, as compared to $724,358 during the same period in Fiscal 2025. The Company has a deferred tax liability reflecting a future obligation to pay taxes. 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 21.8% and 22.5% for the three months ended March 31, 2026 and 2025, 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 case for the Company for the decrease for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. ​ Net Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 8,839,733 ​ $ 2,493,347 ​ $ 6,346,386 254.5 % % of consolidated sales ​ 9.0 % 5.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 4,290,298 ​ $ 69,094 ​ $ 4,221,204 6,109.4 % % of consumer sales ​ 5.2 % 0.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 4,549,435 ​ $ 2,424,253 ​ $ 2,125,182 87.7 % % of commercial sales ​ 27.4 % 21.1 % ​ ​ ​ ​ Consolidated ​ Net income increased by $6,346,386, or 254.5%, during the three months ended March 31, 2026, to $8,839,733, as compared to $2,493,347 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2026 and 2025 for further details. ​ Consumer Segment ​ Net income increased in the consumer segment by $4,221,204, or 6,109.4%, during the three months ended March 31, 2026, to $4,290,298, as compared to $69,094 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2026 and 2025 for further details. ​ ​ 35 Table of Contents Commercial Segment ​ Net income increased in the commercial segment by $2,125,182, or 87.7%, during the three months ended March 31, 2026, to $4,549,435, as compared to $2,424,253 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended March 31, 2026 and 2025 for further details. ​ Earnings Per Share ​ The following table depicts the Company’s earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ Change ​ ​ 2026 ​ ​ ​ 2025 ​ Amount ​ ​ ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 0.34 ​ $ 0.10 ​ $ 0.24 240.0 % ​ Consolidated ​ Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.24, or 240.0%, during the three months ended March 31, 2026 to $0.34, as compared to $0.10 same period in Fiscal 2025. ​ Non-U.S. 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. GAAP. 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. GAAP. 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. GAAP. ​ ​ 36 Table of Contents The following table provides a reconciliation of the Company’s net income to Adjusted EBITDA and Adjusted EBITDAR for the three months ended March 31, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2026 ​ 2025 ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated Adjusted EBITDA Reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 4,290,298 ​ $ 4,549,435 ​ $ 8,839,733 ​ $ 69,094 ​ $ 2,424,253 ​ $ 2,493,347 Addition (deduction): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 215,100 ​ 270,863 ​ 485,963 ​ 180,632 ​ 264,709 ​ 445,341 Other income ​ (93,181) ​ (77,163) ​ (170,344) ​ (849) ​ (204,756) ​ (205,605) Interest expense ​ 38,385 ​ 40,387 ​ 78,772 ​ 54,047 ​ 52,274 ​ 106,321 Income tax expense ​ 1,195,156 ​ 1,267,344 ​ 2,462,500 ​ 20,073 ​ 704,285 ​ 724,358 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,645,758 ​ $ 6,050,866 ​ $ 11,696,624 ​ $ 322,997 ​ $ 3,240,765 ​ $ 3,563,762 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDAR Reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ $ 5,645,758 ​ $ 6,050,866 ​ $ 11,696,624 ​ $ 322,997 ​ $ 3,240,765 ​ $ 3,563,762 Addition : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rent expense (1) ​ 298,519 ​ 467,638 ​ 766,157 ​ 263,065 ​ 339,428 ​ 602,493 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,944,277 ​ $ 6,518,504 ​ $ 12,462,781 ​ $ 586,062 ​ $ 3,580,193 ​ $ 4,166,255 (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 three months ended March 31, 2026 and 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2026 ​ 2025 ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease costs, per ASC 842 ​ $ 363,086 ​ $ 711,859 ​ $ 1,074,945 ​ $ 353,723 ​ $ 524,613 ​ $ 878,336 Less: variable lease cost ​ (62,796) ​ (154,635) ​ (217,431) ​ (59,659) ​ (145,922) ​ (205,581) Less: short-term lease cost ​ (1,771) ​ (89,586) ​ (91,357) ​ (30,999) ​ (39,263) ​ (70,262) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 298,519 ​ $ 467,638 ​ $ 766,157 ​ $ 263,065 ​ $ 339,428 ​ $ 602,493 ​ ​ 37 Table of Contents The following table provides a reconciliation of the Company’s net income to Adjusted EBITDA and Adjusted EBITDAR for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 Adjusted EBITDA Reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,752,399 ​ $ 3,356,920 ​ $ 5,994,312 ​ $ 8,839,733 ​ $ 20,943,364 ​ $ 14,596,978 Addition (deduction): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 460,411 ​ 472,524 ​ 488,313 ​ 485,963 ​ 1,907,211 ​ 1,866,589 Other income ​ (394,251) ​ (233,642) ​ (187,431) ​ (170,344) ​ (985,668) ​ (1,020,929) Interest expense ​ 106,228 ​ 105,757 ​ 88,336 ​ 78,772 ​ 379,093 ​ 406,642 Income tax expense ​ 791,069 ​ 972,493 ​ 1,638,320 ​ 2,462,500 ​ 5,864,382 ​ 4,126,240 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,715,856 ​ $ 4,674,052 ​ $ 8,021,850 ​ $ 11,696,624 ​ $ 28,108,382 ​ $ 19,975,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDAR Reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ $ 3,715,856 ​ $ 4,674,052 ​ $ 8,021,850 ​ $ 11,696,624 ​ $ 28,108,382 ​ $ 19,975,520 Addition : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rent expense (1) ​ 605,553 ​ 630,586 ​ 727,648 ​ 766,157 ​ 2,729,944 ​ 2,566,280 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,321,409 ​ $ 5,304,638 ​ $ 8,749,498 ​ $ 12,462,781 ​ $ 30,838,326 ​ $ 22,541,800 (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 trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 Total lease costs, per ASC 842 ​ $ 605,553 ​ $ 630,586 ​ $ 727,648 ​ $ 766,157 ​ $ 2,729,944 ​ $ 2,566,280 Less: variable lease cost ​ 215,083 ​ 103,682 ​ 196,266 ​ 217,431 ​ 732,462 ​ 720,612 Less: short-term lease cost ​ 31,191 ​ 37,456 ​ 43,502 ​ 91,357 ​ 203,506 ​ 182,411 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 851,827 ​ $ 771,724 ​ $ 967,416 ​ $ 1,074,945 ​ $ 3,665,912 ​ $ 3,469,303 ​ 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. GAAP. 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. ​ 38 Table of Contents The following table reconciles components of the Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage Ratio for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ Debt Obligations (a) $ 9,796,653 ​ $ 9,924,635 ​ Total Cash ​ (38,615,405) ​ (18,154,849) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Debt Obligations (b) $ (28,818,752) ​ $ (8,230,214) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (1) (c) $ 20,943,364 ​ $ 14,596,978 ​ Adjusted EBITDA (1) (d) $ 28,108,382 ​ $ 19,975,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ Leverage Ratios ​ ​ ​ ​ ​ ​ ​ Debt to Net Income Leverage: (a) divided by (c) ​ ​ 0.47 x ​ 0.68 x ​ ​ ​ ​ ​ ​ ​ ​ Debt to Adjusted EBITDA Leverage: (a) divided by (d) ​ ​ 0.35 x ​ 0.50 x Net Debt to Adjusted EBITDA Leverage: (b) divided by (d) ​ ​ (1.03) x ​ (0.41) x (1) The presentation of net income and Adjusted EBITDA for March 31, 2026, represents the total amount of net income and Adjusted EBITDA for the trailing four quarters ended March 31, 2026. ​ 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. GAAP. 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. ​ ​ 39 Table of Contents 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 trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ Debt Obligations ​ $ 9,796,653 ​ $ 9,924,635 ​ Operating lease liabilities ​ 10,251,338 ​ 9,933,862 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Debt Obligations (a) $ 20,047,991 ​ $ 19,858,497 ​ Total Cash ​ ​ (38,615,405) ​ ​ (18,154,849) ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Net Debt Obligations (b) $ (18,567,414) ​ $ 1,703,648 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (1) (c) $ 20,943,364 ​ $ 14,596,978 ​ Adjusted EBITDAR (1) (d) $ 30,838,326 ​ $ 22,541,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Leverage Ratios ​ ​ ​ ​ ​ ​ ​ Adjusted Debt to Net Income Leverage: (a) divided by (c) ​ ​ 0.96 x ​ 1.36 x ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Debt to Adjusted EBITDAR Leverage: (a) divided by (d) ​ ​ 0.65 x ​ 0.88 x Adjusted Net Debt to Adjusted EBITDAR Leverage: (b) divided by (d) ​ ​ (0.60) x ​ 0.08 x (1) The presentation of net income and Adjusted EBITDAR for March 31, 2026, represents the total amount of net income and Adjusted EBITDAR for the trailing four quarters ended March 31, 2026. ​ Net Cash ​ 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 to its comparable U.S. GAAP financial measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ December 31, ​ ​ ​ ​ 2026 ​ 2025 ​ ​ ​ ​ ​ ​ ​ Total Cash ​ $ 38,615,405 ​ $ 18,154,849 Less: Debt Obligations ​ (9,796,653) ​ (9,924,635) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 28,818,752 ​ $ 8,230,214 ​ 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. GAAP. ​ ​ 40 Table of Contents The following table reconciles Free Cash Flow to the comparable U.S. GAAP financial measures for the three months ended March 31, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ Operating Cash Flow ​ $ 21,156,439 ​ $ 1,131,057 Capital Expenditures ​ (567,901) ​ ​ (384,987) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 20,588,538 ​ $ 746,070 ​ The following table reconciled Free Cash Flow to the comparable U.S. GAAP financial measures for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Cash Flow ​ $ 2,591,537 ​ $ 2,403,744 ​ $ 4,064,302 ​ $ 21,156,439 ​ $ 30,216,022 ​ $ 2,580,794 Capital Expenditures ​ (497,172) ​ (205,963) ​ (2,670,282) ​ (567,901) ​ (3,941,318) ​ (1,251,146) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,094,365 ​ $ 2,197,781 ​ $ 1,394,020 ​ $ 20,588,538 ​ $ 26,274,704 ​ $ 1,329,648 ​ 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. ​ ​ 41 Table of Contents The following table reconciles the components of the Company’s Inventory Turnover for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold (a) $ 42,488,911 ​ $ 44,321,480 ​ $ 63,998,172 ​ $ 77,760,474 ​ $ 228,569,037 ​ $ 187,096,369 ​ Less: shipping and handling costs (b) (940,397) ​ (1,000,737) ​ (1,023,888) ​ (732,614) ​ (3,697,636) ​ (3,973,033) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (c) $ 41,548,514 ​ $ 43,320,743 ​ $ 62,974,284 ​ $ 77,027,860 ​ $ 224,871,401 ​ $ 183,123,336 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning inventory (d) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 26,124,092 ​ $ 25,705,524 ​ Ending inventory (e) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 34,011,090 ​ ​ 35,065,965 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Inventory: (d) plus (e) divided by 2 (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 30,067,591 ​ $ 30,385,745 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover: (c) divided by (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7.48 x ​ 6.03 x ​ The following table reconciles the components of the Consumer and Commercial segment’s Inventory Turnover for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025: ​ Consumer Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold (a) $ 38,515,773 ​ $ 39,866,966 ​ $ 58,850,849 ​ $ 72,092,889 ​ $ 209,326,477 ​ $ 169,793,289 ​ Less: shipping and handling costs (b) (13,914) ​ (12,819) ​ (24,889) ​ (41,214) ​ (92,836) ​ (68,309) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (c) $ 38,501,859 ​ $ 39,854,147 ​ $ 58,825,960 ​ $ 72,051,675 ​ $ 209,233,641 ​ $ 169,724,980 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning inventory (d) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 24,776,023 ​ $ 23,973,333 ​ Ending inventory (e) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 31,599,737 ​ ​ 32,814,426 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Inventory: (d) plus (e) divided by 2 (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 28,187,880 ​ $ 28,393,880 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover: (c) divided by (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7.42 x ​ 5.98 x ​ ​ 42 Table of Contents Commercial Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Trailing Four Quarters Ended ​ Year Ended ​ ​ ​ ​ June 30, September 30, ​ December 31, ​ March 31, March 31, ​ December 31, ​ ​ 2025 2025 ​ 2025 ​ 2026 2026 ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold (a) $ 3,973,138 ​ $ 4,454,514 ​ $ 5,147,323 ​ $ 5,667,585 ​ $ 19,242,560 ​ $ 17,303,080 ​ Less: shipping and handling costs (b) (926,483) ​ (987,918) ​ (998,999) ​ (691,400) ​ (3,604,800) ​ (3,904,724) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (c) $ 3,046,655 ​ $ 3,466,596 ​ $ 4,148,324 ​ $ 4,976,185 ​ $ 15,637,760 ​ $ 13,398,356 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning inventory (d) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,348,069 ​ $ 1,732,191 ​ Ending inventory (e) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,411,353 ​ ​ 2,251,539 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Inventory: (d) plus (e) divided by 2 (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,879,711 ​ $ 1,991,865 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory Turnover: (c) divided by (f) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8.32 x ​ 6.73 x ​ Liquidity and Capital Resources ​ The following table summarizes the Company’s condensed consolidated statement of cash flows for the three months ended March 31, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Change ​ ​ 2026 ​ 2025 ​ Amount ​ % Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 21,156,439 ​ $ 1,131,057 ​ $ 20,025,382 1,770.5 % Investing activities ​ (567,901) ​ (382,987) ​ ​ (184,914) 48.3 % Financing activities ​ (127,982) ​ (328,808) ​ 200,826 (61.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase in cash and cash equivalents ​ $ 20,460,556 ​ $ 419,262 ​ $ 20,041,294 4,780.1 % ​ Operating Activities ​ Cash flows provided by operations increased by $20,025,382, or 1,770.5%, during the three months ended March 31, 2026, to $21,156,439, as compared to $1,131,057 during the same period in Fiscal 2025. 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: ● Accounts receivable: a $8,592,287 net decrease primarily attributed to the conversion of accounts receivable to cash in relation to a refining customer within our consumer segment that occurred in the first quarter of Fiscal 2026. ● Inventories: a $1,473,442 net decrease primarily attributed to a reduction in inventory within our consumer segment in the first quarter of Fiscal 2026. ● Prepaid expenses: a $3,472 net increase primarily attributed to commercial segment prepaids resulting from increases in costs of certain service providers, along with inclusion of amortization related to the cost to obtain a contract, which began in the second quarter of Fiscal 2025. ● Other assets: a $172,160 net decrease primarily attributed to an earnest money deposit within our commercial segment that was subsequently returned in the second quarter of Fiscal 2025. ● Accounts payable: a $305,795 net decrease primarily attributed to a greater reduction in accounts payable in the normal with the consumer segment in the first quarter of Fiscal 2026. 43 Table of Contents ● Accrued expenses: a $3,898,437 net increase primarily attributed to our income tax accruals at the corporate level. ● Operating leases: a $204,052 net increase primarily attributed to entering a new lease within our consumer segment in the first quarter of Fiscal 2026 and a lease extension that occurred within our commercial segment in the third quarter of Fiscal 2025. ● Other liabilities: a $300,929 net decrease primarily attributed to our consumer segment, in which there was a lesser increase in customer gift cards during the first quarter of Fiscal 2026. ​ Investing Activities ​ Cash flows (used in) investing activities increased by $184,914, or 48.3%, during the three months ended March 31, 2026, to $567,901, as compared to $382,987 during the same period in Fiscal 2025. The increase in cash (used in) investing activities was primarily attributed to maintenance-related capital improvements to our corporate head office and in relation to the build-out of a new store within our consumer segment. ​ Financing Activities ​ Cash flows (used in) financing activities decreased by $200,826, or 61.1%, during the three months ended March 31, 2026, to $127,982, as compared to $328,808 during the same period in Fiscal 2025. The decrease in cash (used in) financing activities was primarily attributed to normal course debt repayment. ​ 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 needing to fund our operations through the line of credit, and we have no amounts drawn as of March 31, 2026 . 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. ​ Capital Expenditures ​ The Company continuously monitors capital deployment and primarily funds capital expenditures with cash flow from operating activities. Where appropriate, the Company may use debt financing on select capital projects. When this occurs, the Company further evaluates the project's future cash flows to ensure that the debt tenure and payback period are aligned and that the rate of return is appropriate. As of March 31, 2026, 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Because we are a “smaller reporting company,” we are not required to disclose the information required by this item.