What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 332 added, 125 removed, 320 unchanged (59% of the section changed)

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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:

This Quarterly Report on Form 10-Q for the quarter ended June 30, 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;

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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.

Many of these risks and uncertainties are beyond our control, and, in many cases, we cannot predict all 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.

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

This section includes a discussion of our operations for the three months ended March 31, 2026 and 2025.

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

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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.

Precious metals prices reached record levels in late January 2026 and declined meaningfully during the second quarter of Fiscal 2026, while remaining above average levels for the comparable prior-year period.

Sustained declines in precious metal prices may reduce customer selling activity and affect inbound inventory sourcing, while elevated prices may subdue retail jewelry demand.

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.

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.

During the six months ended June 30, 2026, the Company collected the outstanding accounts receivable from a refining customer as of December 31, 2025, reducing the working capital impact of these conditions as of the date of this report.

Impacts of Government Legislation

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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.

There was no material impact on the effective tax rate, financial condition, results of operations, or cash flows during three and six months ended June 30, 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.

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Consumer Segment

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

The consumer segment does not source inventory from or sell 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.

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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.

We incorporate recycled diamonds and gemstones into new designs, meaning they were previously set and unset, resulting in a low-carbon, ethically sourced 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.

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

Commercial Segment

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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:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

% of Sales (1)

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Income before income taxes

Income tax expense

Income tax (expense) benefit

(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:

Three Months Ended March 31,

The individual segments reported the following for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

Sales increased by $1,897,808, or 3.5%, during the three months ended June 30, 2026, to $56,774,641, as compared to $54,876,833 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.

Sales in the consumer segment increased by $1,555,371, or 3.6%, during the three months ended June 30, 2026, to $44,729,129, as compared to $43,173,758 during the same period in Fiscal 2025.

The change was primarily attributed to the performance within our wholesale vertical.

Sales in the first quarter of Fiscal 2026 benefited from exceptionally elevated precious metals prices, which drove unusually high customer selling activity and wholesale volumes.

As gold and silver prices declined during the second quarter of Fiscal 2026 from their late-January peaks, customer selling activity moderated toward more typical levels.

Our results were supported by stronger buying volumes at our retail stores, and we experienced more favorable pricing than in the same period in Fiscal 2025.

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.

Sales in the commercial segment increased by $342,437, or 2.9%, during the three months ended June 30, 2026, to $12,045,512, as compared to $11,703,075 during the same period in Fiscal 2025.

The change was primarily attributed to the continued strong demand for re-marketed technology assets and components during the quarter.

Pricing in certain categories within our ITAD vertical remained higher than in the same period in Fiscal 2025, although these pricing benefits moderated from the first quarter of Fiscal 2026.

Results were further supported by the favorable performance of our trade-in vertical and harvested component sales within our electronic waste vertical.

The component cost environment supporting this demand has also led certain enterprises to extend hardware replacement cycles, which may constrain the near-term inbound supply of retired technology assets available for acquisition.

Cost of Goods Sold

Three Months Ended March 31,

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

Cost of goods sold increased by $907,899, or 2.1%, during the three months ended June 30, 2026, to $43,396,809, as compared to $42,488,910 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.

Cost of goods sold in the consumer segment increased by $689,081, or 1.8%, during the three months ended June 30, 2026, to $39,204,853, as compared to $38,515,772 during the same period in Fiscal 2025.

The change was primarily attributed to higher sales volumes within our wholesale vertical, which was also impacted by the upward movement in gold and silver prices over the same period in Fiscal 2025.

Cost of goods sold as a percentage of sales in the consumer segment was 87.6% during the three months ended June 30, 2026, as compared to 89.2% during the same period in Fiscal 2025.

The change was primarily attributed to a favorable shift in product mix.

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.

Three Months Ended March 31,

Cost of goods sold in the commercial segment increased by $218,818, or 5.5%, during the three months ended June 30, 2026, to $4,191,956, as compared to $3,973,138 during the same period in Fiscal 2025.

The change was primarily attributed to the aforementioned impact of our ITAD and trade-in verticals, along with costs associated with harvested components within our electronic waste vertical.

Cost of goods sold as a percentage of sales in the commercial segment was 34.8% during the three months ended June 30, 2026, as compared to 33.9% during the same period in Fiscal 2025.

The change was primarily attributed to product mix, in which we incurred lower margins related to certain personal technology assets within our asset disposition verticals and from harvested components within our electronic waste vertical.

Three Months Ended June 30,

% of consolidated sales

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% of commercial sales

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.

Gross margin increased by $989,909, or 8.0%, during the three months ended June 30, 2026, to $13,377,832, as compared to $12,387,923 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $1,897,808 and an increase in cost of goods sold of $907,899 resulted in the $989,909 increase in gross margin.

Gross margin as a percentage of sales was 23.6% during the three months ended June 30, 2026, as compared to 22.6% 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.

Gross margin in the consumer segment increased by $866,290, or 18.6%, during the three months ended June 30, 2026, to $5,524,276, as compared to $4,657,986 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $1,555,371 and an increase in cost of goods sold of $689,081 resulted in the $866,290 increase in gross margin.

Gross margin as a percentage of sales in the consumer segment was 12.4% during the three months ended June 30, 2026, as compared to 10.8% during the same period in Fiscal 2025.

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,

Gross margin in the commercial segment increased by $123,619, or 1.6%, during the three months ended June 30, 2026, to $7,853,556, as compared to $7,729,937 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $342,437 and an increase in cost of goods sold of $218,818 resulted in the $123,619 increase in gross margin.

Gross margin as a percentage of sales in the commercial segment was 65.2% during the three months ended June 30, 2026, as compared to 66.1% during the same period in Fiscal 2025.

Selling, General and Administrative Expense

Three Months Ended June 30,

% of consolidated sales

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% of commercial sales

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.

Selling, general and administrative expense decreased by $893,954, or 10.3%, during the three months ended June 30, 2026, to $7,778,113, as compared to $8,672,067 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

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.

Selling, general and administrative expense in the consumer segment decreased by $281,928, or 7.5%, during the three months ended June 30, 2026, to $3,453,499, as compared to $3,735,427 during the same period in Fiscal 2025.

The change was primarily attributed to lower human capital costs and the timing and nature of certain marketing programs.

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,

Selling, general and administrative expense in the commercial segment decreased by $612,026, or 12.4%, during the three months ended June 30, 2026, to $4,324,614, as compared to $4,936,640 during the same period in Fiscal 2025.

The change was primarily attributed to variable-cost production expenses, including human capital costs resulting from lower overall processing volumes in our electronic scrap vertical, as well as the incremental impact of the closure of the Arizona ITAD facility, which did not occur until the latter part of the second quarter of Fiscal 2025.

Depreciation and Amortization Expense

Three Months Ended June 30,

% of consolidated sales

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% of commercial sales

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.

Depreciation and amortization expense increased by $36,852, or 8.0%, during the three months ended June 30, 2026, to $497,263, as compared to $460,411 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.

Depreciation and amortization expense in the consumer segment increased by $38,461, or 19.7%, during the three months ended June 30, 2026, to $234,065, as compared to $195,604 during the same period in Fiscal 2025.

The change was primarily attributed to a new store that came online during the second quarter of 2026 and in the latter half of the second quarter of 2025, hence not having a full quarter of comparative depreciation expense, along with the incremental impact of allocated depreciation expense from our corporate head office improvements becoming more significant.

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.

Three Months Ended March 31,

Depreciation and amortization expense in the commercial segment decreased by $1,609, or 0.6%, during the three months ended June 30, 2026, to $263,198, as compared to $264,807 during the same period in Fiscal 2025.

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

Other Income (Expense)

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

Other income decreased by $69,888, or 17.7%, during the three months ended June 30, 2026, to $324,363, as compared to $394,251 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.

Other income in the consumer segment increased by $8,306, or 5.3%, during the three months ended June 30, 2026, to $164,464, as compared to $156,158 during the same period in Fiscal 2025.

The change was primarily attributed to the proportional share of dividend and interest income.

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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.

During the second quarter of Fiscal 2026, lower working capital cash requirements and higher excess cash balances resulted in increased consolidated cash returns despite lower earned interest rates.

In allocation, this compared favorably to the same period in Fiscal 2025, which included an employee retention credit.

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.

Dividend income comprised $53,762 and $8,883 of other income during the three months ended June 30, 2026 and 2025, respectively.

Interest income comprised $110,691 and $51,038 of other income during the three months ended June 30, 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.

Other income in the commercial segment decreased by $78,194, or 32.8%, during the three months ended June 30, 2026, to $159,899, as compared to $238,093 during the same period in Fiscal 2025.

The change was primarily attributed to the proportional share of dividend and interest income.

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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.

During the second quarter of Fiscal 2026, lower working capital cash usage and higher excess cash balances increased cash returns despite lower earned interest rates.

However, the allocated impact was unfavorable compared to the same period in Fiscal 2025, when excess cash balances were aggregated at the segment 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.

Dividend income comprised $60,827 and $74,702 of other income during the three months ended June 30, 2026 and 2025, respectively.

Interest income comprised $90,762 and $130,427 of other income during the three months ended June 30, 2026 and 2025, respectively.

Interest Expense

Three Months Ended March 31,

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

Interest expense decreased by $27,581, or 26.0%, during the three months ended June 30, 2026, to $78,647, as compared to $106,228 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.

Interest expense in the consumer segment decreased by $15,666, or 29.0%, during the three months ended June 30, 2026, to $38,327, as compared to $53,993 during the same period in Fiscal 2025.

The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025 and from segment debt that matured in the third quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

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,

Interest expense in the commercial segment decreased by $11,915, or 22.8%, during the three months ended June 30, 2026, to $40,320, as compared to $52,235 during the same period in Fiscal 2025.

The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

Income Tax (Expense) Benefit

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

NM – Not Meaningful

Income tax expense increased by $382,917, or 48.4%, during the three months ended June 30, 2026, to $1,173,986, as compared to $791,069 during the same period in Fiscal 2025.

Currently, 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.

The effective income tax rate was 22.0% and 22.3% for the three months ended June 30, 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.

Three Months Ended March 31,

federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the decrease for the three months ended June 30, 2026 and 2025.

Net Income (Loss)

Three Months Ended June 30,

% of consolidated sales

1 unchanged sentence

% of commercial sales

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.

NM – Not Meaningful

Net income increased by $1,421,787, or 51.7%, during the three months ended June 30, 2026, to $4,174,186, as compared to $2,752,399 during the same period in Fiscal 2025.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 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.

Net income increased in the consumer segment by $870,372, during the three months ended June 30, 2026, to $1,513,743, as compared to $643,371 during the same period in Fiscal 2025.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2026 and 2025 for further details.

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.

Net income increased in the commercial segment by $551,415, or 26.1%, during the three months ended June 30, 2026, to $2,660,443, as compared to $2,109,028 during the same period in Fiscal 2025.

Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2026 and 2025 for further details.

Earnings Per Share

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

Three Months Ended March 31,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.24, or 240.0%, during the three months ended March 31, 2026 to $0.34, as compared to $0.10 same period in Fiscal 2025.

Three Months Ended June 30,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.05, or 45.5%, during the three months ended June 30, 2026, to $0.16, as compared to $0.11 during the same period in Fiscal 2025.

Comparison of the Six Months Ended June 30, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

% of Sales (1)

Cost of goods sold

Selling, general and administrative

Depreciation and amortization

Total operating expenses

Operating income

Other income (expense):

Interest expense

Income before income taxes

Income tax (expense) benefit

The individual segments reported the following for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Sales increased by $52,022,869 or 50.4%, during the six months ended June 30, 2026, to $155,155,531, as compared to $103,132,662 during the same period in Fiscal 2025.

Consumer Segment

Sales in the consumer segment increased by $46,578,289, or 58.3%, during the six months ended June 30, 2026, to $126,522,651, as compared to $79,944,362 during the same period in Fiscal 2025.

The change was primarily attributed to strong performance within our wholesale and retail verticals, which were most pronounced in the first quarter of Fiscal 2026, supported by higher gold and silver prices compared to the same period of Fiscal 2025.

As precious metals prices declined during the second quarter of Fiscal 2026 from their late-January peaks, customer selling activity moderated toward more typical levels.

Commercial Segment

Sales in the commercial segment increased by $5,444,580, or 23.5%, during the six months ended June 30, 2026, to $28,632,880, as compared to $23,188,300 during the same period in Fiscal 2025.

The change was primarily attributed to the strong demand for re-marketed technology assets and components throughout the period.

Pricing in certain categories within our ITAD vertical remained higher than in the same period in Fiscal 2025, although these pricing benefits moderated from the first quarter of Fiscal 2026, and results were further supported by the favorable performance of our trade-in vertical and harvested component sales within our electronic waste vertical.

Cost of Goods Sold

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Cost of goods sold increased by $42,380,568, or 53.8%, during the six months ended June 30, 2026, to $121,157,283, as compared to $78,776,715 during the same period in Fiscal 2025.

Consumer Segment

Cost of goods sold in the consumer segment increased by $40,222,269, or 56.6%, during the six months ended June 30, 2026, to $111,297,742, as compared to $71,075,473 during the same period in Fiscal 2025.

Cost of goods sold as a percentage of sales in the consumer segment was 88.0% during the six months ended June 30, 2026, as compared to 88.9% during the same period in Fiscal 2025.

The change was primarily attributed to stronger margins within our wholesale vertical.

Commercial Segment

Cost of goods sold in the commercial segment increased by $2,158,299, or 28.0%, during the six months ended June 30, 2026, to $9,859,541, as compared to $7,701,242 during the same period in Fiscal 2025.

The change was primarily attributed to the aforementioned impact of our ITAD and trade-in verticals, along with costs associated with harvested components within our electronic waste vertical.

Cost of goods sold as a percentage of sales in the commercial segment was 34.4% during the six months ended June 30, 2026, as compared to 33.2% during the same period in Fiscal 2025.

The change was primarily attributed to product mix, in which we incurred lower margins related to certain personal technology assets within our disposition verticals and from harvested components within our electronic waste vertical.

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Gross margin increased by $9,642,301, or 39.6%, during the six months ended June 30, 2026, to $33,998,248, as compared to $24,355,947 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $52,022,869 and an increase in cost of goods sold of $42,380,568 resulted in the $9,642,301 increase in gross margin.

Gross margin as a percentage of sales was 21.9% during the six months ended June 30, 2026, as compared to 23.6% during the same period in Fiscal 2025.

Consumer Segment

Gross margin in the consumer segment increased by $6,356,020, or 71.7%, during the six months ended June 30, 2026, to $15,224,909, as compared to $8,868,889 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $46,578,289 and an increase in cost of goods sold of $40,222,269 resulted in the $6,356,020 increase in gross margin.

Gross margin as a percentage of sales in the consumer segment was 12.0% during the six months ended June 30, 2026, as compared to 11.1% during the same period in Fiscal 2025.

Commercial Segment

Gross margin in the commercial segment increased by $3,286,281, or 21.2%, during the six months ended June 30, 2026, to $18,773,339, as compared to $15,487,058 during the same period in Fiscal 2025.

The net impact of the aforementioned increase in sales of $5,444,580 and an increase in cost of goods sold of $2,158,299 resulted in the $3,286,281 increase in gross margin.

Gross margin as a percentage of sales in the commercial segment was 65.6% during the six months ended June 30, 2026, as compared to 66.8% during the same period in Fiscal 2025.

Selling, General and Administrative Expense

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Selling, general and administrative expense decreased by $374,424, or 2.2%, during the six months ended June 30, 2026, to $16,701,905, as compared to $17,076,329 during the same period in Fiscal 2025.

Consumer Segment

Selling, general and administrative expense in the consumer segment decreased by $114,959, or 1.5%, during the six months ended June 30, 2026, to $7,508,374, as compared to $7,623,333 during the same period in Fiscal 2025.

The change was primarily attributed to reduced human capital costs, the nature and timing of certain marketing programs, along with reduced travel costs.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $259,465, or 2.7%, during the six months ended June 30, 2026, to $9,193,531, as compared to $9,452,996 during the same period in Fiscal 2025.

The change was primarily attributed to variable-cost production expenses resulting from lower volumes in our electronic scrap vertical, as well as from the impact of the Arizona ITAD facility, which did not occur until the latter part of the second quarter of Fiscal 2025.

Depreciation and Amortization Expense

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Depreciation and amortization expense increased by $77,474, or 8.6%, during the six months ended June 30, 2026, to $983,226, as compared to $905,752 during the same period in Fiscal 2025.

Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $72,929, or 19.4%, during the six months ended June 30, 2026, to $449,165, as compared to $376,236 during the same period in Fiscal 2025.

The increase was primarily attributable to new stores that became operational during the second quarter of 2026 and in the latter half of the second quarter of 2025, and therefore did not have a full year of comparative year-to-date depreciation expense.

The increase was also driven by the more significant impact of depreciation expense allocated from corporate head office improvements.

Commercial Segment

Depreciation and amortization expense in the commercial segment increased by $4,545, or 0.9%, during the six months ended June 30, 2026, to $534,061, as compared to $529,516 during the same period in Fiscal 2025.

There was no material impact from the impact of allocated corporate depreciation expense or from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point.

Other Income (Expense)

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Other income decreased by $105,149, or 17.5%, during the six months ended June 30, 2026, to $494,707, as compared to $599,856 during the same period in Fiscal 2025.

Consumer Segment

Other income in the consumer segment increased by $100,638, or 64.1%, during the six months ended June 30, 2026, to $257,645, as compared to $157,007 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 Fiscal 2026 period, lower working capital cash requirements and higher excess cash balances resulted in increased consolidated cash returns despite lower earned interest rates.

In allocation, this compared favorably to the Fiscal 2025 period, which included an employee retention credit.

The impact of dividend and interest income is referenced below.

Dividend income comprised $90,810 and $8,883 of other income during the six months ended June 30, 2026 and 2025, respectively.

Interest income comprised $166,431 and $51,038 of other income during the six months ended June 30, 2026 and 2025, respectively.

Commercial Segment

Other income in the commercial segment decreased by $205,787, or 46.5%, during the six months ended June 30, 2026, to $237,062, as compared to $442,849 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 Fiscal 2026 period, lower working capital cash usage and higher excess cash balances increased cash returns despite lower earned interest rates.

However, the allocated impact was unfavorable compared to the Fiscal 2025 period, when excess cash balances were aggregated at the segment level.

The impact of dividend and interest income is referenced below.

Dividend income comprised $103,976 and $129,567 of other income during the six months ended June 30, 2026 and 2025, respectively.

Interest income comprised $111,846 and $274,758 of other income during the six months ended June 30, 2026 and 2025, respectively.

Interest Expense

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

Interest expense decreased by $55,130, or 25.9%, during the six months ended June 30, 2026, to $157,419, as compared to $212,549 during the same period in Fiscal 2025.

Consumer Segment

Interest expense in the consumer segment decreased by $31,328, or 29.0%, during the six months ended June 30, 2026, to $76,712, as compared to $108,040 during the same period in Fiscal 2025.

The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of the Fiscal 2025 period, along with segment debt that matured in the third quarter of the Fiscal 2025 period, resulting in less interest expense in the Fiscal 2026 period.

Commercial Segment

Interest expense in the commercial segment decreased by $23,802, or 22.8%, during the six months ended June 30, 2026, to $80,707, as compared to $104,509 during the same period in Fiscal 2025.

The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the Fiscal 2025 period, resulting in less interest expense in the second quarter of Fiscal 2026.

Income Tax (Expense) Benefit

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

NM – Not Meaningful

Income tax expense increased by $2,121,059, or 140.0%, during the six months ended June 30, 2026, to $3,636,486, as compared to $1,515,427 during the same period in Fiscal 2025.

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 21.8% and 22.4% for the six months ended June 30, 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 six months ended June 30, 2026, and 2025.

Six Months Ended June 30,

% of consolidated sales

% of consumer sales

% of commercial sales

NM – Not Meaningful

Net income increased by $7,768,173, or 148.1%, during the six months ended June 30, 2026, to $13,013,919, as compared to $5,245,746 during the same period in Fiscal 2025.

Consumer Segment

Net income increased in the consumer segment by $5,091,576, during the six months ended June 30, 2026, to net income of $5,804,041, as compared to net income of $712,465 during the same period in Fiscal 2025.

Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2026 and 2025 for further details.

Commercial Segment

Net income increased in the commercial segment by $2,676,597, or 59.0%, during the six months ended June 30, 2026, to $7,209,878, as compared to $4,533,281 during the same period in Fiscal 2025.

Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2026 and 2025 for further details.

Earnings Per Share

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

Six Months Ended June 30,

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.30, or 150.0%, during the six months ended June 30, 2026, to $0.50, as compared to $0.20 during the same period in Fiscal 2025.

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.

Within this management discussion and analysis, we use supplemental measures of our financial 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.

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.

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

These non-U.S.

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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.

The Company also presents certain non-U.S.

GAAP financial measures and its nearest financial measure utilizing U.S.

GAAP for the trailing four quarters period ended June 30, 2026.

Management considers the trailing four quarters period ended June 30, 2026, to be helpful in understanding historical financial results, trends, the calculation of leverage ratios, and free cash flow.

GAAP and U.S.

GAAP financial measures for the trailing four quarters period ended June 30, 2026, are compared against the most recent fiscal period ended December 31, 2025, which is the nearest twelve-month reporting period under U.S.

These financial measure comparisons, along with comparisons utilizing three- and six-month periods for non-U.S.

GAAP and its nearest financial measure utilizing U.S.

GAAP may differ materially from those reported for the fiscal period ended December 31, 2025.

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

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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 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,

The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S.

GAAP financial measure for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Adjusted EBITDA Reconciliation:

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(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,

GAAP financial measure for the three months ended June 30, 2026 and June 30, 2025:

Three Months Ended June 30,

Total lease costs, per ASC 842

1 unchanged sentence

short-term lease cost

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:

The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S.

GAAP financial measure for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

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 six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Total lease costs, per ASC 842

variable lease cost

short-term lease cost

The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S.

GAAP financial measure for the trailing four quarters ended June 30, 2026:

Three Months Ended

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(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:

GAAP financial measure for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

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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 trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025:

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 June 30, 2026 and for the year ended December 31, 2025:

Debt Obligations

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(b) divided by (d)

(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.

(1) The presentation of net income and Adjusted EBITDA for June 30, 2026, represents the total amount of net income and Adjusted EBITDA for the trailing four quarters ended June 30, 2026.

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

8 unchanged sentences

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 trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025:

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 June 30, 2026 and for the year ended December 31, 2025:

Debt Obligations

11 unchanged sentences

(b) divided by (d)

(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 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.

(1) The presentation of net income and Adjusted EBITDAR for June 30, 2026, represents the total amount of net income and Adjusted EBITDAR for the trailing four quarters ended June 30, 2026.

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:

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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,

GAAP financial measures for the three months ended June 30, 2026 and June 30, 2025:

Three Months Ended June 30,

Operating Cash Flow

Capital Expenditures

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:

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

GAAP financial measures for the six months ended June 30, 2026:

Six Months Ended June 30,

Operating Cash Flow

Capital Expenditures

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

GAAP financial measures for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

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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 the Company’s Inventory Turnover for the trailing four quarters ended March 31, 2026 and for the year ended December 31, 2025:

The following table reconciles the components of the Company’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

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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

The following table reconciles the components of the consumer segment’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

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Commercial Segment

The following table reconciles the components of the commercial segment’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025

Three Months Ended

11 unchanged sentences

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,

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

Six Months Ended June 30,

Net cash provided by (used in):

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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:

Cash flows provided by operations increased by $23,351,008, or 627.3%, during the six months ended June 30, 2026, to $27,073,602, as compared to $3,722,594 during the same period in Fiscal 2025.

● 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.

a $8,756,519 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 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.

a $6,919,901 net decrease primarily attributed to a reduction in inventory within our consumer segment that occurred in 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.

a $578,239 net decrease primarily attributed to amortization, along with a reduction in prepaid freight associated with open ITAD lot settlements within our commercial segment during Fiscal 2026.

● 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.

a $72,812 net increase primarily attributed to an earnest money deposit that occurred in Fiscal 2026.

● 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.

a $1,660,804 net decrease primarily attributed to a greater reduction in accounts payable within the normal course of operations within the consumer segment in Fiscal 2026.

● Accrued expenses:

a $3,898,437 net increase primarily attributed to our income tax accruals at the corporate level.

a $3,464,296 net increase primarily attributed to our income tax accruals at the corporate level in Fiscal 2026.

● 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.

a $138,222 net increase primarily attributed to entering into a new lease within the consumer segment in 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.

a $2,726,944 net decrease primarily attributed to a significant reduction in gift card balances in the normal course of operations.

A substantial portion of the increase in cash flows provided by operations reflects the conversion of working capital during the period, principally the collection of accounts receivable from a refining customer outstanding at December 31, 2025, and the reduction of consumer segment inventories.

The Company does not expect working capital conversion of a similar magnitude to recur in future periods.

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.

Cash flows (used in) investing activities increased by $651,174, or 74.0%, during the six months ended June 30, 2026, to $1,530,683, as compared to $879,509 during the same period in Fiscal 2025.

The increase in cash (used in) investing activities during the six months ended June 30, 2026, was primarily attributed to maintenance-related capital improvements to our corporate head office and 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.

Cash flows (used in) financing activities decreased by $344,307, or 57.4%, during the six months ended June 30, 2026, to $255,912, as compared to $600,219 during the same period in Fiscal 2025.

The decrease in cash (used in) financing activities during the six months ended June 30, 2026, was primarily attributed to debt repayments, which were less in Fiscal 2026 as a result of debt maturities that occurred in the third and fourth quarters of 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 needing to fund our operations through the line of credit, and we have no amounts drawn as of March 31, 2026 .

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

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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.

As of June 30, 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.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis