Item 2. Management’s Discussion and Analysis
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 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; 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 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. 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 2025Annual 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 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. 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
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
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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 ability to convert accounts receivable. 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
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 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.
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 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.
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Commercial Segment
The commercial segment periodically purchases limited quantities of personal technology assets and replacement parts for resale from international markets. Tariffs may increase costs for original equipment manufacturers, retailers, and parts distributors and, as a result, may require the Company to pay more for the purchase of personal technology assets for resale and replacement parts, thereby increasing the Company’s required working capital. The Company mitigates increased working capital requirements by monitoring its inventory position and turnover, maintaining disciplined buying practices, and using optimal domestic or international sales channels to preserve margins.
There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks.
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, 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 possess enduring quality, enabling them to maintain their beauty and value as they pass 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.
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Results of Operations
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,
2026
2025
Consumer
Commercial
Consolidated
% of Sales (1)
Consumer
Commercial
Consolidated
% of Sales (1)
Sales
$
44,729,129
$
12,045,512
$
56,774,641
100.0
%
$
43,173,758
$
11,703,075
$
54,876,833
100.0
%
Cost of goods sold
39,204,853
$
4,191,956
43,396,809
76.4
%
38,515,772
3,973,138
42,488,910
77.4
%
Gross margin
5,524,276
7,853,556
13,377,832
23.6
%
4,657,986
7,729,937
12,387,923
22.6
%
Expenses:
Selling, general and administrative
3,453,499
4,324,614
7,778,113
13.7
%
3,735,427
4,936,640
8,672,067
15.8
%
Depreciation and amortization
234,065
263,198
497,263
0.9
%
195,604
264,807
460,411
0.8
%
Total operating expenses
3,687,564
4,587,812
8,275,376
14.6
%
3,931,031
5,201,447
9,132,478
16.6
%
Operating income
1,836,712
3,265,744
5,102,456
9.0
%
726,955
2,528,490
3,255,445
5.9
%
Other income (expense):
Other income
164,464
159,899
324,363
0.6
%
156,158
238,093
394,251
0.7
%
Interest expense
(38,327)
(40,320)
(78,647)
(0.1)
%
(53,993)
(52,235)
(106,228)
(0.2)
%
Income before income taxes
1,962,849
3,385,323
5,348,172
9.4
%
829,120
2,714,348
3,543,468
6.5
%
Income tax (expense) benefit
(449,106)
(724,880)
(1,173,986)
(2.1)
%
(185,749)
(605,320)
(791,069)
(1.4)
%
Net income
$
1,513,743
$
2,660,443
$
4,174,186
7.4
%
$
643,371
$
2,109,028
$
2,752,399
5.0
%
(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 June 30, 2026 and 2025:
Sales
Three Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
56,774,641
$
54,876,833
$
1,897,808
3.5
%
% of consolidated sales
100.0
%
100.0
%
Consumer
$
44,729,129
$
43,173,758
$
1,555,371
3.6
%
% of consumer sales
100.0
%
100.0
%
Commercial
$
12,045,512
$
11,703,075
$
342,437
2.9
%
% of commercial sales
100.0
%
100.0
%
Consolidated
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.
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Consumer Segment
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 $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 June 30,
Change
2026
2025
Amount
%
Consolidated
$
43,396,809
$
42,488,910
$
907,899
2.1
%
% of consolidated sales
76.4
%
77.4
%
Consumer
$
39,204,853
$
38,515,772
$
689,081
1.8
%
% of consumer sales
87.6
%
89.2
%
Commercial
$
4,191,956
$
3,973,138
$
218,818
5.5
%
% of commercial sales
34.8
%
33.9
%
Consolidated
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 $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.
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Commercial Segment
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.
Gross Margin
Three Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
13,377,832
$
12,387,923
$
989,909
8.0
%
% of consolidated sales
23.6
%
22.6
%
Consumer
$
5,524,276
$
4,657,986
$
866,290
18.6
%
% of consumer sales
12.4
%
10.8
%
Commercial
$
7,853,556
$
7,729,937
$
123,619
1.6
%
% of commercial sales
65.2
%
66.1
%
Consolidated
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 $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 $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.
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Selling, General and Administrative Expense
Three Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
7,778,113
$
8,672,067
$
(893,954)
(10.3)
%
% of consolidated sales
13.7
%
15.8
%
Consumer
$
3,453,499
$
3,735,427
$
(281,928)
(7.5)
%
% of consumer sales
7.7
%
8.7
%
Commercial
$
4,324,614
$
4,936,640
$
(612,026)
(12.4)
%
% of commercial sales
35.9
%
42.2
%
Consolidated
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 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 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,
Change
2026
2025
Amount
%
Consolidated
$
497,263
$
460,411
$
36,852
8.0
%
% of consolidated sales
0.9
%
0.8
%
Consumer
$
234,065
$
195,604
$
38,461
19.7
%
% of consumer sales
0.5
%
0.5
%
Commercial
$
263,198
$
264,807
$
(1,609)
(0.6)
%
% of commercial sales
2.2
%
2.3
%
Consolidated
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.
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Consumer Segment
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 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,
Change
2026
2025
Amount
%
Consolidated
$
324,363
$
394,251
$
(69,888)
(17.7)
%
% of consolidated sales
0.6
%
0.7
%
Consumer
$
164,464
$
156,158
$
8,306
5.3
%
% of consumer sales
0.4
%
0.4
%
Commercial
$
159,899
$
238,093
$
(78,194)
(32.8)
%
% of commercial sales
1.3
%
2.0
%
Consolidated
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 $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. 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 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 $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.
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Commercial Segment
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. 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 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 $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 June 30,
Change
2026
2025
Amount
%
Consolidated
$
(78,647)
$
(106,228)
$
27,581
(26.0)
%
% of consolidated sales
(0.1)
%
(0.2)
%
Consumer
$
(38,327)
$
(53,993)
$
15,666
(29.0)
%
% of consumer sales
(0.1)
%
(0.1)
%
Commercial
$
(40,320)
$
(52,235)
$
11,915
(22.8)
%
% of commercial sales
(0.3)
%
(0.4)
%
Consolidated
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 $15,666, 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.
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Commercial Segment
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,
Change
2026
2025
Amount
%
Consolidated
$
(1,173,986)
$
(791,069)
$
(382,917)
48.4
%
% of consolidated sales
(2.1)
%
(1.4)
%
Consumer
$
(449,106)
$
(185,749)
$
(263,357)
141.8
%
% of consumer sales
(1.0)
%
(0.4)
%
Commercial
$
(724,880)
$
(605,320)
$
(119,560)
19.8
%
% of commercial sales
(6.0)
%
(5.2)
%
NM – Not Meaningful
Consolidated
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 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 Company’s case for the decrease for the three months ended June 30, 2026 and 2025.
Net Income (Loss)
Three Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
4,174,186
$
2,752,399
$
1,421,787
51.7
%
% of consolidated sales
7.4
%
5.0
%
Consumer
$
1,513,743
$
643,371
$
870,372
135.3
%
% of consumer sales
3.4
%
1.5
%
Commercial
$
2,660,443
$
2,109,028
$
551,415
26.1
%
% of commercial sales
22.1
%
18.0
%
NM – Not Meaningful
Consolidated
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.
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Table of Contents
Consumer Segment
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 $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 June 30,
Change
2026
2025
Amount
%
Consolidated
$
0.16
$
0.11
$
0.05
45.5
%
Consolidated
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.
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Table of Contents
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,
2026
2025
Consumer
Commercial
Consolidated
% of Sales (1)
Consumer
Commercial
Consolidated
% of Sales (1)
Sales
$
126,522,651
$
28,632,880
$
155,155,531
100.0
%
$
79,944,362
$
23,188,300
$
103,132,662
100.0
%
Cost of goods sold
111,297,742
9,859,541
121,157,283
78.1
%
71,075,473
7,701,242
78,776,715
76.4
%
Gross margin
15,224,909
18,773,339
33,998,248
21.9
%
8,868,889
15,487,058
24,355,947
23.6
%
Expenses:
Selling, general and administrative
7,508,374
9,193,531
16,701,905
10.8
%
7,623,333
9,452,996
17,076,329
16.6
%
Depreciation and amortization
449,165
534,061
983,226
0.6
%
376,236
529,516
905,752
0.9
%
Total operating expenses
7,957,539
9,727,592
17,685,131
11.4
%
7,999,569
9,982,512
17,982,081
17.4
%
Operating income
7,267,370
9,045,747
16,313,117
10.5
%
869,320
5,504,546
6,373,866
6.2
%
Other income (expense):
Other income
257,645
237,062
494,707
0.3
%
157,007
442,849
599,856
0.6
%
Interest expense
(76,712)
(80,707)
(157,419)
(0.1)
%
(108,040)
(104,509)
(212,549)
(0.2)
%
Income before income taxes
7,448,303
9,202,102
16,650,405
10.7
%
918,287
5,842,886
6,761,173
6.6
%
Income tax (expense) benefit
(1,644,262)
(1,992,224)
(3,636,486)
(2.3)
%
(205,822)
(1,309,605)
(1,515,427)
(1.5)
%
Net income
$
5,804,041
$
7,209,878
$
13,013,919
8.4
%
$
712,465
$
4,533,281
$
5,245,746
5.1
%
(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 six months ended June 30, 2026 and 2025:
Sales
Six Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
155,155,531
$
103,132,662
$
52,022,869
50.4
%
% of consolidated sales
100.0
%
100.0
%
Consumer
$
126,522,651
$
79,944,362
$
46,578,289
58.3
%
% of consumer sales
100.0
%
100.0
%
Commercial
$
28,632,880
$
23,188,300
$
5,444,580
23.5
%
% of commercial sales
100.0
%
100.0
%
Consolidated
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.
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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,
Change
2026
2025
Amount
%
Consolidated
$
121,157,283
$
78,776,715
$
42,380,568
53.8
%
% of consolidated sales
78.1
%
76.4
%
Consumer
$
111,297,742
$
71,075,473
$
40,222,269
56.6
%
% of consumer sales
88.0
%
88.9
%
Commercial
$
9,859,541
$
7,701,242
$
2,158,299
28.0
%
% of commercial sales
34.4
%
33.2
%
Consolidated
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. 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 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.
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Table of Contents
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.
Gross Margin
Six Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
33,998,248
$
24,355,947
$
9,642,301
39.6
%
% of consolidated sales
21.9
%
23.6
%
Consumer
$
15,224,909
$
8,868,889
$
6,356,020
71.7
%
% of consumer sales
12.0
%
11.1
%
Commercial
$
18,773,339
$
15,487,058
$
3,286,281
21.2
%
% of commercial sales
65.6
%
66.8
%
Consolidated
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.
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Table of Contents
Selling, General and Administrative Expense
Six Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
16,701,905
$
17,076,329
$
(374,424)
(2.2)
%
% of consolidated sales
10.8
%
16.6
%
Consumer
$
7,508,374
$
7,623,333
$
(114,959)
(1.5)
%
% of consumer sales
5.9
%
9.5
%
Commercial
$
9,193,531
$
9,452,996
$
(259,465)
(2.7)
%
% of commercial sales
32.1
%
40.8
%
Consolidated
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,
Change
2026
2025
Amount
%
Consolidated
$
983,226
$
905,752
$
77,474
8.6
%
% of consolidated sales
0.6
%
0.9
%
Consumer
$
449,165
$
376,236
$
72,929
19.4
%
% of consumer sales
0.4
%
0.5
%
Commercial
$
534,061
$
529,516
$
4,545
0.9
%
% of commercial sales
1.9
%
2.3
%
Consolidated
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.
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Table of Contents
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,
Change
2026
2025
Amount
%
Consolidated
$
494,707
$
599,856
$
(105,149)
(17.5)
%
% of consolidated sales
0.3
%
0.6
%
Consumer
$
257,645
$
157,007
$
100,638
64.1
%
% of consumer sales
0.2
%
0.2
%
Commercial
$
237,062
$
442,849
$
(205,787)
(46.5)
%
% of commercial sales
0.8
%
1.9
%
Consolidated
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.
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Table of Contents
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.
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,
Change
2026
2025
Amount
%
Consolidated
$
(157,419)
$
(212,549)
$
55,130
(25.9)
%
% of consolidated sales
(0.1)
%
(0.2)
%
Consumer
$
(76,712)
$
(108,040)
$
31,328
(29.0)
%
% of consumer sales
(0.1)
%
(0.1)
%
Commercial
$
(80,707)
$
(104,509)
$
23,802
(22.8)
%
% of commercial sales
(0.3)
%
(0.5)
%
Consolidated
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.
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Table of Contents
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,
Change
2026
2025
Amount
%
Consolidated
$
(3,636,486)
$
(1,515,427)
$
(2,121,059)
140.0
%
% of consolidated sales
(2.3)
%
(1.5)
%
Consumer
$
(1,644,262)
$
(205,822)
$
(1,438,440)
698.9
%
% of consumer sales
(1.3)
%
(0.3)
%
Commercial
$
(1,992,224)
$
(1,309,605)
$
(682,619)
52.1
%
% of commercial sales
(7.0)
%
(5.6)
%
NM – Not Meaningful
Consolidated
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.
Net Income
Six Months Ended June 30,
Change
2026
2025
Amount
%
Consolidated
$
13,013,919
$
5,245,746
$
7,768,173
148.1
%
% of consolidated sales
8.4
%
5.1
%
Consumer
$
5,804,041
$
712,465
$
5,091,576
714.6
%
% of consumer sales
4.6
%
0.9
%
Commercial
$
7,209,878
$
4,533,281
$
2,676,597
59.0
%
% of commercial sales
25.2
%
19.5
%
NM – Not Meaningful
Consolidated
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.
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Table of Contents
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,
Change
2026
2025
Amount
%
Consolidated
$
0.50
$
0.20
$
0.30
150.0
%
Consolidated
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.
Non-U.S. GAAP Financial Measures
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. 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 financial position, results of operations, 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. 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. The non-U.S. 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. GAAP. 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. 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.
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Table of Contents
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.
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,
2026
2025
Consumer
Commercial
Consolidated
Consumer
Commercial
Consolidated
Adjusted EBITDA Reconciliation:
Net income
$
1,513,743
$
2,660,443
$
4,174,186
$
643,371
$
2,109,028
$
2,752,399
Addition (deduction):
Depreciation and amortization
234,065
263,198
497,263
195,604
264,807
460,411
Other income
(164,464)
(159,899)
(324,363)
(156,158)
(238,093)
(394,251)
Interest expense
38,327
40,320
78,647
53,993
52,235
106,228
Income tax expense
449,106
724,880
1,173,986
185,749
605,320
791,069
$
2,070,777
$
3,528,942
$
5,599,719
$
922,559
$
2,793,297
$
3,715,856
Adjusted EBITDAR Reconciliation:
Adjusted EBITDA
$
2,070,777
$
3,528,942
$
5,599,719
$
922,559
$
2,793,297
$
3,715,856
Addition:
Rent expense (1)
304,481
467,134
771,615
281,099
324,454
605,553
$
2,375,258
$
3,996,076
$
6,371,334
$
1,203,658
$
3,117,751
$
4,321,409
(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 June 30, 2026 and June 30, 2025:
Three Months Ended June 30,
2026
2025
Consumer
Commercial
Consolidated
Consumer
Commercial
Consolidated
Total lease costs, per ASC 842
$
371,583
$
625,636
$
997,219
$
339,308
$
512,519
$
851,827
Less: variable lease cost
(65,536)
(151,371)
(216,907)
(58,209)
(156,874)
(215,083)
Less: short-term lease cost
(1,566)
(7,131)
(8,697)
—
(31,191)
(31,191)
$
304,481
$
467,134
$
771,615
$
281,099
$
324,454
$
605,553
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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,
2026
2025
Consumer
Commercial
Consolidated
Consumer
Commercial
Consolidated
Adjusted EBITDA Reconciliation:
Net income
$
5,804,041
$
7,209,878
$
13,013,919
$
712,465
$
4,533,281
$
5,245,746
Addition (deduction):
Depreciation and amortization
449,165
534,061
983,226
376,236
529,516
905,752
Other income
(257,645)
(237,062)
(494,707)
(157,007)
(442,849)
(599,856)
Interest expense
76,712
80,707
157,419
108,040
104,509
212,549
Income tax expense
1,644,262
1,992,224
3,636,486
205,822
1,309,605
1,515,427
$
7,716,535
$
9,579,808
$
17,296,343
$
1,245,556
$
6,034,062
$
7,279,618
Adjusted EBITDAR Reconciliation:
Adjusted EBITDA
$
7,716,535
$
9,579,808
$
17,296,343
$
1,245,556
$
6,034,062
$
7,279,618
Addition:
Rent expense (1)
603,000
934,772
1,537,772
544,164
663,882
1,208,046
$
8,319,535
$
10,514,580
$
18,834,115
$
1,789,720
$
6,697,944
$
8,487,664
(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,
2026
2025
Consumer
Commercial
Consolidated
Consumer
Commercial
Consolidated
Total lease costs, per ASC 842
$
734,669
$
1,337,495
$
2,072,164
$
693,031
$
1,037,132
$
1,730,163
Less: variable lease cost
(128,332)
(306,006)
(434,338)
(117,868)
(302,796)
(420,664)
Less: short-term lease cost
(3,337)
(96,717)
(100,054)
(30,999)
(70,454)
(101,453)
$
603,000
$
934,772
$
1,537,772
$
544,164
$
663,882
$
1,208,046
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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
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Adjusted EBITDA Reconciliation:
Net income
$
3,356,920
$
5,994,312
$
8,839,733
$
4,174,186
$
22,365,151
$
14,596,978
Addition (deduction):
Depreciation and amortization
472,524
488,313
485,963
497,263
1,944,063
1,866,589
Other income
(233,642)
(187,431)
(170,344)
(324,363)
(915,780)
(1,020,929)
Interest expense
105,757
88,336
78,772
78,647
351,512
406,642
Income tax expense
972,493
1,638,320
2,462,500
1,173,986
6,247,299
4,126,240
$
4,674,052
$
8,021,850
$
11,696,624
$
5,599,719
$
29,992,245
$
19,975,520
Adjusted EBITDAR Reconciliation:
Adjusted EBITDA
$
4,674,052
$
8,021,850
$
11,696,624
$
5,599,719
$
29,992,245
$
19,975,520
Addition:
Rent expense (1)
630,586
727,648
766,157
771,615
2,896,006
2,566,280
$
5,304,638
$
8,749,498
$
12,462,781
$
6,371,334
$
32,888,251
$
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 June 30, 2026 and for the year ended December 31, 2025:
Three Months Ended
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Total lease costs, per ASC 842
$
771,724
$
967,416
$
1,074,945
$
997,219
$
3,811,304
$
3,469,303
Less: variable lease cost
(103,682)
(196,266)
(217,431)
(216,907)
(734,286)
(720,612)
Less: short-term lease cost
(37,456)
(43,502)
(91,357)
(8,697)
(181,012)
(182,411)
$
630,586
$
727,648
$
766,157
$
771,615
$
2,896,006
$
2,566,280
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.
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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:
June 30,
December 31,
2026
2025
Debt Obligations
(a)
$
9,668,723
$
9,924,635
Total Cash
(43,441,856)
(18,154,849)
Net Debt Obligations
(b)
$
(33,773,133)
$
(8,230,214)
Net income (1)
(c)
$
22,365,151
$
14,596,978
Adjusted EBITDA (1)
(d)
$
29,992,245
$
19,975,520
Leverage Ratios
Debt to Net Income Leverage: (a) divided by (c)
0.43
x
0.68
x
Debt to Adjusted EBITDA Leverage: (a) divided by (d)
0.32
x
0.50
x
Net Debt to Adjusted EBITDA Leverage: (b) divided by (d)
(1.13)
x
(0.41)
x
(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
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.
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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:
June 30,
December 31,
2026
2025
Debt Obligations
$
9,668,723
$
9,924,635
Operating lease liabilities
9,729,535
9,933,862
Adjusted Debt Obligations
(a)
$
19,398,258
$
19,858,497
Total Cash
(43,441,856)
(18,154,849)
Adjusted Net Debt Obligations
(b)
$
(24,043,598)
$
1,703,648
Net income (1)
(c)
$
22,365,151
$
14,596,978
Adjusted EBITDAR (1)
(d)
$
32,888,251
$
22,541,800
Adjusted Leverage Ratios
Adjusted Debt to Net Income Leverage: (a) divided by (c)
0.87
x
1.36
x
Adjusted Debt to Adjusted EBITDAR Leverage: (a) divided by (d)
0.59
x
0.88
x
Adjusted Net Debt to Adjusted EBITDAR Leverage: (b) divided by (d)
(0.73)
x
0.08
x
(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
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. GAAP.
The following table reconciles Net Cash to its comparable U.S. GAAP financial measures:
June 30,
December 31,
2026
2025
Total Cash
$
43,441,856
$
18,154,849
Less: Debt Obligations
(9,668,723)
(9,924,635)
$
33,773,133
$
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.
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The following table reconciles Free Cash Flow to the comparable U.S. GAAP financial measures for the three months ended June 30, 2026 and June 30, 2025:
Three Months Ended June 30,
2026
2025
Operating Cash Flow
$
5,917,163
$
2,591,537
Capital Expenditures
(962,782)
(497,172)
$
4,954,381
$
2,094,365
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,
2026
2025
Operating Cash Flow
$
27,073,602
$
3,722,594
Capital Expenditures
(1,530,683)
(882,159)
$
25,542,919
$
2,840,435
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
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Operating Cash Flow
$
2,403,744
$
(3,545,544)
$
21,156,439
$
5,917,163
$
25,931,802
$
2,580,794
Capital Expenditures
(205,963)
(163,024)
(567,901)
(962,782)
(1,899,670)
(1,149,884)
$
2,197,781
$
(3,708,568)
$
20,588,538
$
4,954,381
$
24,032,132
$
1,430,910
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.
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Consolidated
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
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Cost of goods sold
(a)
$
44,321,480
$
63,998,172
$
77,760,473
$
43,396,809
$
229,476,934
$
187,096,369
Less: shipping and handling costs
(b)
(1,000,737)
(1,023,888)
(732,614)
(912,393)
(3,669,632)
(3,973,033)
(c)
$
43,320,743
$
62,974,284
$
77,027,859
$
42,484,416
$
225,807,302
$
183,123,336
Beginning inventory
(d)
$
27,381,184
$
25,705,524
Ending inventory
(e)
29,821,724
35,065,965
Average Inventory: (d) plus (e) divided by 2
(f)
$
28,601,454
$
30,385,745
Inventory Turnover Ratio
Inventory Turnover: (c) divided by (f)
7.89
x
6.03
x
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
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Cost of goods sold
(a)
$
39,866,966
$
58,850,849
$
72,092,888
$
39,204,853
$
210,015,556
$
169,793,289
Less: shipping and handling costs
(b)
(12,819)
(24,889)
(41,214)
(5,900)
(84,822)
(68,309)
(c)
$
39,854,147
$
58,825,960
$
72,051,674
$
39,198,953
$
209,930,734
$
169,724,980
Beginning inventory
(d)
$
25,221,844
$
23,973,333
Ending inventory
(e)
27,483,645
32,814,426
Average Inventory: (d) plus (e) divided by 2
(f)
$
26,352,745
$
28,393,880
Inventory Turnover Ratio
Inventory Turnover: (c) divided by (f)
7.97
x
5.98
x
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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
Trailing Four Quarters Ended
Year Ended
September 30,
December 31,
March 31,
June 30,
June 30,
December 31,
2025
2025
2026
2026
2026
2025
Cost of goods sold
(a)
$
4,454,514
$
5,147,323
$
5,667,585
$
4,191,956
$
19,461,378
$
17,303,080
Less: shipping and handling costs
(b)
(987,918)
(998,999)
(691,400)
(906,493)
(3,584,810)
(3,904,724)
(c)
$
3,466,596
$
4,148,324
$
4,976,185
$
3,285,463
$
15,876,568
$
13,398,356
Beginning inventory
(d)
$
2,159,340
$
1,732,191
Ending inventory
(e)
2,338,079
2,251,539
Average Inventory: (d) plus (e) divided by 2
(f)
$
2,248,710
$
1,991,865
Inventory Turnover Ratio
Inventory Turnover: (c) divided by (f)
7.06
x
6.73
x
Liquidity and Capital Resources
The following table summarizes the Company’s condensed consolidated statement of cash flows:
Six Months Ended June 30,
Change
2026
2025
Amount
%
Net cash provided by (used in):
Operating activities
$
27,073,602
$
3,722,594
$
23,351,008
627.3
%
Investing activities
(1,530,683)
(879,509)
(651,174)
74.0
%
Financing activities
(255,912)
(600,219)
344,307
(57.4)
%
Net increase in cash and cash equivalents
$
25,287,007
$
2,242,866
$
23,044,141
1027.4
%
Operating Activities
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. 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 cash associated with operating assets and liabilities:
● Accounts receivable: 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 $6,919,901 net decrease primarily attributed to a reduction in inventory within our consumer segment that occurred in Fiscal 2026.
● Prepaid expenses: 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 $72,812 net increase primarily attributed to an earnest money deposit that occurred in Fiscal 2026.
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● Accounts payable: 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 $3,464,296 net increase primarily attributed to our income tax accruals at the corporate level in Fiscal 2026.
● Operating leases: 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 $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 $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 $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 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.
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 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 is 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.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.