Envela Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context indicates otherwise for one of our specific operating segments, references to “we,” “us,” “our,” the “Company” and “Envela” refer to the consolidated business operations of Envela Corporation, and all of its direct and indirect subsidiaries. Forward-Looking Statements This Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (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,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate”, “potential,” “continue,” “deploy” or “believe.” 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 based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 2023 Annual Report and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events. Introduction This section includes a discussion of our operations for the three and nine months ended September 30, 2024 and 2023. The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with the Company’s 2023 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report. Use of Non-U.S. GAAP Financial Measures Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our interim condensed consolidated financial information, but which are not presented in our interim condensed consolidated financial statements prepared in accordance with U.S. GAAP. We believe that providing these non-GAAP financial measures adds a meaningful presentation of our operating and financial performance, liquidity, and leverage. Our non-GAAP financial measures should be considered in addition to, but not as a substitute for, the most directly comparable GAAP measures. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. See Non-U.S. GAAP Financial Measures for further details. 32 Table of Contents 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 2023 Annual Report. Economic Conditions The U.S. and other world economies are currently experiencing high interest rates and high levels of inflation, coupled with commodity price risk, mainly associated with the market price of precious metals and diamonds which have the potential to impact consumer discretionary spending behavior. Furthermore, adverse macroeconomic conditions can also impact demand for resale technology assets. As to counterbalance economic cycles that impact market selling prices and/or underlying operating costs we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology. We continuously monitor our inventory positions and associated working capital to respond to market conditions and to meet seasonal business cycles and expansionary plans. These economic cycles may from time to time require the business to utilize its line of credit or seek additional capital. There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks. General Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Our operations are organized into two operating and reportable segments: commercial and consumer. Consumer Segment Our consumer segment operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, fine jewelry, watches, and bullion. Our diamonds and gemstones are recycled, meaning they were previously set and then unset to become a new design – allowing for a truly low-carbon, ethical origin. The company focuses on buying and selling pre-owned luxury items, ethically sourced diamonds, gemstones, and precious metals, catering to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another. Commercial Segment Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. 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. The company focuses on offering services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role to support a circular economy through responsible reuse and recycling of electronic devices. Segment Activities The Company believes it is well positioned to take advantage of its overall capital structure. 33 Table of Contents 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. The Company has taken considerable steps to bolster its management team and operating systems to position itself for growth. Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity to our existing facilities. Change in Disclosure of Results of Operations The Company previously disaggregated revenue and gross margin by resale and recycle for each segment within the results of operations. The Company’s revenue and gross margin are now comprised of more diverse revenue and gross margin streams associated with service offerings and as such to continue reporting under the prior disclosure methodology would be less representative of how the business operates. The Company believes that this change has no material impact on the interpretation of our results of operations. Recent Accounting Pronouncements See Note 3 - Accounting Policies and Estimates for further details. Non-U.S. GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA is defined as the sum of net income (loss) of the Company, adjusted for additions (deductions) of interest expense, other (income) expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA is a key performance measure that management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes. The following table provides a reconciliation of net income to Adjusted EBITDA for the three months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2024 ​ 2023 ​ Consumer Commercial Consolidated Consumer Commercial Consolidated Adjusted EBITDA Reconciliation: ​ ​ ​ ​ ​ Net income (loss) ​ $ (26,843) ​ $ 1,711,882 ​ $ 1,685,039 ​ $ 767,376 ​ $ 940,117 ​ $ 1,707,493 Addition (deduction): ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 150,657 ​ 264,122 ​ 414,779 ​ 75,842 ​ 261,871 ​ 337,713 Other income ​ (62,502) ​ (277,849) ​ (340,351) ​ (22,851) ​ (169,586) ​ (192,437) Interest expense ​ 51,486 ​ 54,653 ​ 106,139 ​ 59,631 ​ 57,535 ​ 117,166 Income tax expense (benefit) ​ (122,464) ​ 692,109 ​ 569,645 ​ 120,637 ​ 197,330 ​ 317,967 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (9,666) ​ $ 2,444,917 ​ $ 2,435,251 ​ $ 1,000,635 ​ $ 1,287,267 ​ $ 2,287,902 ​ 34 Table of Contents The following table provides a reconciliation of net income to Adjusted EBITDA for the nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2024 ​ 2023 ​ Consumer Commercial Consolidated Consumer Commercial Consolidated Adjusted EBITDA Reconciliation: ​ ​ ​ ​ ​ Net income (loss) ​ $ (116,325) ​ $ 5,273,082 ​ $ 5,156,757 ​ $ 3,072,567 ​ $ 2,764,952 ​ $ 5,837,519 Addition (deduction): ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 356,851 ​ 763,760 ​ 1,120,611 ​ 253,385 ​ 774,853 ​ 1,028,238 Other income ​ (78,510) ​ (725,786) ​ (804,296) ​ (70,315) ​ (486,553) ​ (556,868) Interest expense ​ 171,584 ​ 164,550 ​ 336,134 ​ 177,458 ​ 171,460 ​ 348,918 Income tax expense (benefit) ​ (33,706) ​ 1,614,868 ​ 1,581,162 ​ 778,150 ​ 756,037 ​ 1,534,187 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 299,894 ​ $ 7,090,474 ​ $ 7,390,368 ​ $ 4,211,245 ​ $ 3,980,749 ​ $ 8,191,994 ​ Net Cash Net Cash is defined as the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations. We believe that presenting Net Cash is useful to investors as a measure of our liquidity and leverage profile, as cash and cash equivalents can be used, among other things, to repay indebtedness. The following table depicts the Company’s Net Cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Total cash ​ $ 17,752,199 ​ $ 17,853,853 Less: debt obligations ​ (13,841,785) ​ (14,933,491) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,910,414 ​ $ 2,920,362 ​ 35 Table of Contents Results of Operations Comparison of the Three Months Ended September 30, 2024 and 2023 The following table depicts our disaggregated condensed consolidated statements of income for the three months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2024 ​ 2023 ​ Consumer Commercial Consolidated % of Sales (1) Consumer Commercial Consolidated % of Sales (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 33,756,600 ​ $ 13,142,959 ​ $ 46,899,559 100.0 % $ 26,881,202 ​ $ 9,995,284 ​ $ 36,876,486 100.0 % Cost of goods sold ​ 29,840,285 ​ $ 5,595,035 ​ 35,435,320 75.6 % 23,291,939 ​ 3,850,265 ​ 27,142,204 73.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 3,916,315 ​ 7,547,924 ​ 11,464,239 24.4 % 3,589,263 ​ 6,145,019 ​ 9,734,282 26.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 3,925,981 ​ 5,103,007 ​ 9,028,988 19.3 % 2,588,628 ​ 4,857,752 ​ 7,446,380 20.2 % Depreciation and amortization ​ 150,657 ​ 264,122 ​ 414,779 0.9 % 75,842 ​ 261,871 ​ 337,713 0.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 4,076,638 ​ 5,367,129 ​ 9,443,767 20.1 % 2,664,470 ​ 5,119,623 ​ 7,784,093 21.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income (loss) ​ (160,323) ​ 2,180,795 ​ 2,020,472 4.3 % 924,793 ​ 1,025,396 ​ 1,950,189 5.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ Other income ​ 62,502 ​ 277,849 ​ 340,351 0.7 % 22,851 ​ 169,586 ​ 192,437 0.5 % Interest expense ​ (51,486) ​ (54,653) ​ (106,139) (0.2) % (59,631) ​ (57,535) ​ (117,166) (0.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes ​ (149,307) ​ 2,403,991 ​ 2,254,684 4.8 % 888,013 ​ 1,137,447 ​ 2,025,460 5.5 % Income tax (expense) benefit ​ 122,464 ​ (692,109) ​ (569,645) (1.2) % (120,637) ​ ​ (197,330) ​ (317,967) (0.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ (26,843) ​ $ 1,711,882 ​ $ 1,685,039 3.6 % $ 767,376 ​ $ 940,117 ​ $ 1,707,493 4.6 % ​ (1) The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. The individual segments reported the following for the three months ended September 30, 2024 and 2023: Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 46,899,559 ​ $ 36,876,486 ​ $ 10,023,073 27.2 % % of consolidated sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 33,756,600 ​ $ 26,881,202 ​ $ 6,875,398 25.6 % % of consumer sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 13,142,959 ​ $ 9,995,284 ​ $ 3,147,675 31.5 % % of commercial sales ​ 100.0 % 100.0 % ​ ​ Consolidated Sales increased by $10,023,073, or 27.2%, during the three months ended September 30, 2024, to $46,899,559, as compared to $36,876,486 during the same period in Fiscal 2023. 36 Table of Contents Consumer Segment Sales in the consumer segment increased by $6,875,398, or 25.6%, during the three months ended September 30, 2024, to $33,756,600, as compared to $26,881,202 during the same period in Fiscal 2023. The change was primarily attributed to an increase in revenue from our wholesale channel and incrementally from our stores and online business. Underlying the aforementioned results was the impact from historically high gold and silver prices. Albeit, the third quarter of Fiscal 2024 was favorable to the comparative period the consumer segment has also built inventory as to ensure our new Arizona and Texas stores were adequately stocked. Our Arizona stores were operating for the entire third quarter of Fiscal 2024, while one of our Texas stores soft opened in the later part of the third quarter of Fiscal 2024 and the other opened early in the fourth quarter of Fiscal 2024. It is anticipated that as our new stores ramp up our inventory position should normalize, and inventory will return to being relieved in the normal course of operations. Commercial Segment Sales in the commercial segment increased by $3,147,675, or 31.5%, during the three months ended September 30, 2024, to $13,142,959, as compared to $9,995,284 during the same period in Fiscal 2023. The change was primarily attributed to the strong performance of our ITAD business and incrementally from the sale of personal technology assets and shredded electronic scrap grades and associated recoveries. Our ITAD business was impacted by strong inbound volumes from a new client that we were able to recognize sales on during third quarter of Fiscal 2024. Cost of Goods Sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 35,435,320 ​ $ 27,142,204 ​ $ 8,293,116 30.6 % % of consolidated sales ​ 75.6 % 73.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 29,840,285 ​ $ 23,291,939 ​ $ 6,548,346 28.1 % % of consumer sales ​ 88.4 % 86.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 5,595,035 ​ $ 3,850,265 ​ $ 1,744,770 45.3 % % of commercial sales ​ 42.6 % 38.5 % ​ ​ Consolidated Cost of goods sold increased by $8,293,116, or 30.6%, during the three months ended September 30, 2024, to $35,435,320, as compared to $27,142,204 during the same period in Fiscal 2023. Consumer Segment Cost of goods sold in the consumer segment increased by $6,548,346, or 28.1%, during the three months ended September 30, 2024, to $29,840,285, as compared to $23,291,939 during the same period in Fiscal 2023. The change was primarily attributed to the relief of inventory on the lower margin scrap grade precious metals which were sold through our wholesale channel. The greater mix of lower margin scrap grade precious metals being relieved from inventory resulted in the higher cost of goods sold as a percent of sales. Commercial Segment Cost of goods sold in the commercial segment increased by $1,744,770, or 45.3%, during the three months ended September 30, 2024, to $5,595,035, as compared to $3,850,265 during the same period in Fiscal 2023. The change was primarily attributed to ITAD revenue sharing settlements and incrementally from the relief of inventory and settlements associated with lower margin shredded electronic scrap grades and from the relief of inventory associated with personal technology assets. The greater mix of lower margin shredded electronic scrap grades resulted in the higher cost of goods sold as a percent of sales. 37 Table of Contents Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 11,464,239 ​ $ 9,734,282 ​ $ 1,729,957 17.8 % % of consolidated sales ​ 24.4 % 26.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 3,916,315 ​ $ 3,589,263 ​ $ 327,052 9.1 % % of consumer sales ​ 11.6 % 13.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 7,547,924 ​ $ 6,145,019 ​ $ 1,402,905 22.8 % % of commercial sales ​ 57.4 % 61.5 % ​ ​ Consolidated Gross margin increased by $1,729,957, or 17.8%, during the three months ended September 30, 2024, to $11,464,239, as compared to $9,734,282 during the same period in Fiscal 2023. Consumer Segment Gross margin in the consumer segment increased by $327,052, or 9.1%, during the three months ended September 30, 2024, to $3,916,315, as compared to $3,589,263 during the same period in Fiscal 2023. The net impact of the aforementioned increase in sales of $6,875,398 and increase in cost of goods sold of $6,548,346 resulted in the $327,052 increase in gross margin. Commercial Segment Gross margin in the commercial segment increased by $1,402,905, or 22.8%, during the three months ended September 30, 2024, to $7,547,924, as compared to $6,145,019 during the same period in Fiscal 2023. The net impact of the aforementioned increase in sales of $3,147,675 and increase in cost of goods sold $1,744,770 resulted in the $1,402,905 increase in gross margin. Selling, General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 9,028,988 ​ $ 7,446,380 ​ $ 1,582,608 21.3 % % of consolidated sales ​ 19.3 % 20.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 3,925,981 ​ $ 2,588,628 ​ $ 1,337,353 51.7 % % of consumer sales ​ 11.6 % 9.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 5,103,007 ​ $ 4,857,752 ​ $ 245,255 5.0 % % of commercial sales ​ 38.8 % 48.6 % ​ ​ Consolidated Selling, general and administrative expense increased by $1,582,608, or 21.3%, during the three months ended September 30, 2024, to $9,028,988, as compared to $7,446,380 during the same period in Fiscal 2023. Consumer Segment Selling, general and administrative expense in the consumer segment increased by $1,337,353, or 51.7%, during the three months ended September 30, 2024, to $3,925,981, as compared to $2,588,628 during the same period in Fiscal 2023. The 38 Table of Contents change was primarily attributed to incurring operational cost structures from our new Arizona and Texas stores along with travel costs associated with preparing the new Texas stores for opening. Commercial Segment Selling, general and administrative expense in the commercial segment increased by $245,255, or 5.0%, during the three months ended September 30, 2024, to $5,103,007, as compared to $4,857,752 during the same period in Fiscal 2023. The change was primarily attributed to a marginal increase in labor costs associated with a new service-based client along with labor costs from increased processing volumes of shredded electronic scrap grades. In addition, the cost of supplies increased on higher processing and shipping volumes. Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 414,779 ​ $ 337,713 ​ $ 77,066 ​ 22.8 % % of consolidated sales ​ 0.9 % 0.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 150,657 ​ $ 75,842 ​ $ 74,815 98.6 % % of consumer sales ​ 0.4 % 0.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 264,122 ​ $ 261,871 ​ $ 2,251 0.9 % % of commercial sales ​ 2.0 % 2.6 % ​ ​ Consolidated Depreciation and amortization expense increased by $77,066, or 22.8%, during the three months ended September 30, 2024, to $414,779, as compared to $337,713 during the same period in Fiscal 2023. Consumer Segment Depreciation and amortization expense in the consumer segment increased by $74,815, or 98.6%, during the three months ended September 30, 2024, to $150,657, as compared to $75,842 during the same period in Fiscal 2023. The change was primarily attributed to our Arizona stores that were placed into service in the later part of the second quarter of Fiscal 2024 along with one of our new Texas stores that went into service in the later part of the third quarter of Fiscal 2024 as well as from the depreciation and amortization expense related to the assets acquired in the Kretchmer Transaction. 39 Table of Contents Commercial Segment Depreciation and amortization expense in the commercial segment increased by $2,251, or 0.9%, during the three months ended September 30, 2024, to $264,122, as compared to $261,871 during the same period in Fiscal 2023. There was no material impact from assets capitalized or reaching maturity in each comparative period and as such no discussion point. Other Income (Expense) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 340,351 ​ $ 192,437 ​ $ 147,914 76.9 % % of consolidated sales ​ 0.7 % 0.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 62,502 ​ $ 22,851 ​ $ 39,651 173.5 % % of consumer sales ​ 0.2 % 0.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 277,849 ​ $ 169,586 ​ $ 108,263 63.8 % % of commercial sales ​ 2.1 % 1.7 % ​ ​ ​ Consolidated Other income increased by $147,914, or 76.9%, during the three months ended September 30, 2024, to $340,351, as compared to $192,437 during the same period in Fiscal 2023. Consumer Segment Other income in the consumer segment increased by $39,651, or 173.5%, during the three months ended September 30, 2024, to $62,502, as compared to $22,851 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to our corporate headquarters and to the consumer segment’s higher working capital requirements from the aforementioned launching of our Arizona and Texas stores which has decreased the excess cash flow available to sweep into an interest-bearing account. The impact on interest income is referenced below. Interest income comprised $2 and $21,741 of other income during the three months ended September 30, 2024 and 2023, respectively. Commercial Segment Other income in the commercial segment increased by $108,263, or 63.8%, during the three months ended September 30, 2024, to $277,849, as compared to $169,586 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to our Company’s corporate headquarters and to the continued focus on reducing working capital which has increased the excess cash flow available to sweep into an interest bearing account. The impact on interest income is referenced below. Interest income comprised $203,251 and $140,274 of other income during the three months ended September 30, 2024 and 2023, respectively. 40 Table of Contents Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ (106,139) ​ $ (117,166) ​ $ 11,027 (9.4) % % of consolidated sales ​ (0.2) % (0.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (51,486) ​ $ (59,631) ​ $ 8,145 (13.7) % % of consumer sales ​ (0.2) % (0.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (54,653) ​ $ (57,535) ​ $ 2,882 (5.0) % % of commercial sales ​ (0.4) % (0.6) % ​ ​ Consolidated Interest expense decreased by $11,027, or 9.4%, during the three months ended September 30, 2024, to $106,139, as compared to $117,166 during the same period in Fiscal 2023. Consumer Segment Interest expense in the consumer segment decreased by $8,145, or 13.7%, during the three months ended September 30, 2024, to $51,486, as compared to $59,631 during the same period in Fiscal 2023. There was no material impact from debt additions or amortization in each comparative period and as such no discussion point. Commercial Segment Interest expense in the commercial segment decreased by $2,882, or 5.0%, during the three months ended September 30, 2024, to $54,653, as compared to $57,535 during the same period in Fiscal 2023. There was no material impact from amortization in each comparative period and as such no discussion point. Income Tax (Expense) Benefit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ (569,645) ​ $ (317,967) ​ $ (251,678) 79.2 % % of consolidated sales ​ (1.2) % (0.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 122,464 ​ $ (120,637) ​ $ 243,101 NM ​ % of consumer sales ​ 0.4 % (0.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (692,109) ​ $ (197,330) ​ $ (494,779) 250.7 % % of commercial sales ​ (5.3) % (2.0) % ​ ​ NM – Not Meaningful Consolidated Income tax expense increased by $251,678, or 79.2%, during the three months ended September 30, 2024, to $569,645, as compared to $317,967 during the same period in Fiscal 2023. 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 25.3% and 18.6% for the three months ended September 30, 2024 and 2023, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. 41 Table of Contents Net Income (Loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 1,685,039 ​ $ 1,707,493 ​ $ (22,454) (1.3) % % of consolidated sales ​ 3.6 % 4.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (26,843) ​ $ 767,376 ​ $ (794,219) NM ​ % of consumer sales ​ (0.1) % 2.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 1,711,882 ​ $ 940,117 ​ $ 771,765 82.1 % % of commercial sales ​ 13.0 % 9.4 % ​ ​ NM – Not Meaningful Consolidated Net income decreased by $22,454, or 1.3%, during the three months ended September 30, 2024, to $1,685,039, as compared to $1,707,493 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended September 30, 2024 and 2023 for further details. Consumer Segment Net income (loss) decreased in the consumer segment by $794,219, during the three months ended September 30, 2024, to a net loss of $26,843, as compared to net income of $767,376 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended September 30, 2024 and 2023 for further details. Commercial Segment Net income increased in the commercial segment by $771,765, or 82.1%, during the three months ended September 30, 2024, to $1,711,882, as compared to $940,117 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended September 30, 2024 and 2023 for further details. Earnings Per Share The following table depicts the Company’s earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Change ​ ​ 2024 2023 ​ Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 0.06 ​ $ 0.06 ​ $ — 0.0 % ​ Consolidated Basic and diluted earnings per share attributable to holders of our Common Stock remained at $0.06 during the three months ended September 30, 2024, as compared to the same period in Fiscal 2023. ​ ​ 42 Table of Contents Comparison of the Nine Months Ended September 30, 2024 and 2023 The following table depicts our disaggregated condensed consolidated statements of income for the nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2024 2023 ​ ​ Consumer Commercial Consolidated % of Sales (1) Consumer Commercial Consolidated % of Sales (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 93,972,645 ​ $ 38,081,696 ​ $ 132,054,341 100.0 % $ 103,227,033 ​ $ 34,554,862 ​ $ 137,781,895 100.0 % Cost of goods sold ​ 82,485,812 ​ 16,394,149 ​ 98,879,961 74.9 % 91,558,160 ​ 14,317,504 ​ 105,875,664 76.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 11,486,833 ​ 21,687,547 ​ 33,174,380 25.1 % 11,668,873 ​ 20,237,358 ​ 31,906,231 23.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 11,186,939 ​ 14,597,073 ​ 25,784,012 19.5 % 7,457,628 ​ 16,256,609 ​ 23,714,237 17.2 % Depreciation and amortization ​ 356,851 ​ 763,760 ​ 1,120,611 0.8 % 253,385 ​ 774,853 ​ 1,028,238 0.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 11,543,790 ​ 15,360,833 ​ 26,904,623 20.3 % 7,711,013 ​ 17,031,462 ​ 24,742,475 18.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ (56,957) ​ 6,326,714 ​ 6,269,757 4.8 % 3,957,860 ​ 3,205,896 ​ 7,163,756 5.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ Other income ​ 78,510 ​ 725,786 ​ 804,296 0.6 % 70,315 ​ 486,553 ​ 556,868 0.4 % Interest expense ​ (171,584) ​ (164,550) ​ (336,134) (0.3) % (177,458) ​ (171,460) ​ (348,918) (0.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes ​ (150,031) ​ 6,887,950 ​ 6,737,919 5.1 % 3,850,717 ​ 3,520,989 ​ 7,371,706 5.4 % Income tax (expense) benefit ​ 33,706 ​ (1,614,868) ​ (1,581,162) (1.2) % (778,150) ​ (756,037) ​ (1,534,187) (1.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ (116,325) ​ $ 5,273,082 ​ $ 5,156,757 3.9 % $ 3,072,567 ​ $ 2,764,952 ​ $ 5,837,519 4.2 % ​ (1) The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. The individual segments reported the following for the nine months ended September 30, 2024 and 2023: Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 132,054,341 ​ $ 137,781,895 ​ $ (5,727,554) (4.2) % % of consolidated sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 93,972,645 ​ $ 103,227,033 ​ $ (9,254,388) (9.0) % % of consumer sales ​ 100.0 % 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 38,081,696 ​ $ 34,554,862 ​ $ 3,526,834 10.2 % % of commercial sales ​ 100.0 % 100.0 % ​ ​ Consolidated Sales decreased by $5,727,554 or 4.2%, during the nine months ended September 30, 2024, to $132,054,341, as compared to $137,781,895 during the same period in Fiscal 2023. 43 Table of Contents Consumer Segment Sales in the consumer segment decreased by $9,254,388, or 9%, during the nine months ended September 30, 2024, to $93,972,645, as compared to $103,227,033 during the same period in Fiscal 2023. The change was primarily attributed to softness in the demand for bullion, tempered by the impact from historically high gold and silver prices, coupled with continued inventory carry associated with our Arizona and Texas stores which was incrementally offset in the third quarter of Fiscal 2024 by the relief of lower margin scrap grade precious metals inventory through our wholesale channel. Commercial Segment Sales in the commercial segment increased by $3,526,834, or 10.2%, during the nine months ended September 30, 2024, to $38,081,696, as compared to $34,554,862 during the same period in Fiscal 2023. The change was primarily attributed to continued favorable performance of the sale of personal technology assets, shredded electronic scrap grades and associated recoveries as well as from stronger growth in our ITAD business which was more pronounced in the third quarter of Fiscal 2024. We also experienced growth in our retail returns service business which is small but growing portion of our diversified revenue streams. Cost of Goods Sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, Change ​ ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 98,879,961 ​ $ 105,875,664 ​ $ (6,995,703) (6.6) % % of consolidated sales ​ 74.9 % 76.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 82,485,812 ​ $ 91,558,160 ​ $ (9,072,348) (9.9) % % of consumer sales ​ 87.8 % 88.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 16,394,149 ​ $ 14,317,504 ​ $ 2,076,645 14.5 % % of commercial sales ​ 43.0 % 41.4 % ​ ​ Consolidated Cost of goods sold decreased by $6,995,703, or 6.6%, during the nine months ended September 30, 2024, to $98,879,961, as compared to $105,875,664 during the same period in Fiscal 2023. Consumer Segment Cost of goods sold in the consumer segment decreased by $9,072,348, or 9.9%, during the nine months ended September 30, 2024, to $82,485,812, as compared to $91,558,160 during the same period in Fiscal 2023. The change was primarily attributed to the aforementioned softness in the demand for bullion and continued inventory carry which resulted in less inventory costs to be recognized. In terms of cost of goods sold as a percent of sales it was primarily impacted by a greater mix of higher margin retail inventory being relieved during the first and second quarter of Fiscal 2024 and was tempered by lower margin scrap grade precious metals being relieved in the third quarter of Fiscal 2024. Commercial Segment Cost of goods sold in the commercial segment increased by $2,076,645, or 14.5%, during the nine months ended September 30, 2024, to $16,394,149, as compared to $14,317,504 during the same period in Fiscal 2023. The change was primarily attributed to the relief of inventory related to personal technology assets and lower margin shredded electronic scrap grades and associated revenue sharing and incrementally from ITAD settlements. ITAD settlements were more pronounced in the third quarter of Fiscal 2024. The greater mix of the sale of personal technology assets and lower margin shredded electronic scrap grades and associated settlements resulted in a higher cost of goods sold as a percent of sales. 44 Table of Contents Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 33,174,380 ​ $ 31,906,231 ​ $ 1,268,149 4.0 % % of consolidated sales ​ 25.1 % 23.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 11,486,833 ​ $ 11,668,873 ​ $ (182,040) (1.6) % % of consumer sales ​ 12.2 % 11.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 21,687,547 ​ $ 20,237,358 ​ $ 1,450,189 7.2 % % of commercial sales ​ 57.0 % 58.6 % ​ ​ Consolidated Gross margin increased by $1,268,149, or 4.0%, during the nine months ended September 30, 2024, to $33,174,380, as compared to $31,906,231 during the same period in Fiscal 2023. Consumer Segment Gross margin in the consumer segment decreased by $182,040, or 1.6%, during the nine months ended September 30, 2024, to $11,486,833, as compared to $11,668,873 during the same period in Fiscal 2023. The net impact of the aforementioned decrease in sales of $9,254,388 and decrease in cost of goods sold of $9,072,348 resulted in the $182,040 decrease in gross margin. Commercial Segment Gross margin in the commercial segment increased by $1,450,189, or 7.2%, during the nine months ended September 30, 2024, to $21,687,547, as compared to $20,237,358 during the same period in Fiscal 2023. The net impact of the aforementioned increase in sales of $3,526,834 and increase in cost of goods sold of $2,076,645 resulted in the $1,450,189 increase in gross margin. Selling, General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 25,784,012 ​ $ 23,714,237 ​ $ 2,069,775 8.7 % % of consolidated sales ​ 19.5 % 17.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 11,186,939 ​ $ 7,457,628 ​ $ 3,729,311 50.0 % % of consumer sales ​ 11.9 % 7.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 14,597,073 ​ $ 16,256,609 ​ $ (1,659,536) (10.2) % % of commercial sales ​ 38.3 % 47.0 % ​ ​ Consolidated Selling, general and administrative expense increased by $2,069,775, or 8.7%, during the nine months ended September 30, 2024, to $25,784,012, as compared to $23,714,237 during the same period in Fiscal 2023. Consumer Segment Selling, general and administrative expense in the consumer segment increased by $3,729,311, or 50.0%, during the nine months ended September 30, 2024, to $11,186,939, as compared to $7,457,628 during the same period in Fiscal 2023. The change was primarily attributed to incurring operational cost structures from our new Arizona and Texas stores along with 45 Table of Contents travel costs associated with preparing the new Arizona and Texas stores for opening. Albeit, in the third quarter of Fiscal 2024 travel costs began to subside due to Arizona stores becoming fully operational and reduced travel associated with the opening of Texas based stores which are in relative geographic proximity to our headquarters. Commercial Segment Selling, general and administrative expense in the commercial segment decreased by $1,659,536, or 10.2%, during the nine months ended September 30, 2024, to $14,597,073, as compared to $16,256,609 during the same period in Fiscal 2023. The change was primarily attributed to the operational focus on human capital costs and processing efficiencies at our production facilities, however, the commercial segment has experienced a recent incremental increase in select human capital costs associated with a new retail returns client and from processing higher volumes of shredded electronic scrap grades. Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 1,120,611 ​ $ 1,028,238 ​ $ 92,373 9.0 % % of consolidated sales ​ 0.8 % 0.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 356,851 ​ $ 253,385 ​ $ 103,466 40.8 % % of consumer sales ​ 0.4 % 0.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 763,760 ​ $ 774,853 ​ $ (11,093) (1.4) % % of commercial sales ​ 2.0 % 2.2 % ​ ​ Consolidated Depreciation and amortization expense increased by $92,373, or 9.0%, during the nine months ended September 30, 2024, to $1,120,611, as compared to $1,028,238 during the same period in Fiscal 2023. Consumer Segment Depreciation and amortization expense in the consumer segment increased by $103,466, or 40.8%, during the nine months ended September 30, 2024, to $356,851, as compared to $253,385 during the same period in Fiscal 2023. The change was primarily attributed to our Arizona stores that were placed into service in the second quarter of Fiscal 2024 along with one of our new Texas stores that went into service in the third quarter of Fiscal 2024 as well as the depreciation and amortization expense related to the assets acquired in the Kretchmer Transaction. Commercial Segment Depreciation and amortization expense in the commercial segment decreased by $11,093, or 1.4%, during the nine months ended September 30, 2024, to $763,760, as compared to $774,853 during the same period in Fiscal 2023. There was no material impact from assets capitalized or reaching maturity in each comparative period and as such no discussion point. 46 Table of Contents Other Income (Expense) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 804,296 ​ $ 556,868 ​ $ 247,428 ​ 44.4 % % of consolidated sales ​ 0.6 % 0.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 78,510 ​ $ 70,315 ​ $ 8,195 11.7 % % of consumer sales ​ 0.1 % 0.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 725,786 ​ $ 486,553 ​ $ 239,233 49.2 % % of commercial sales ​ 1.9 % 1.4 % ​ ​ Consolidated Other income increased by $247,428, or 44.4%, during the nine months ended September 30, 2024, to $804,296, as compared to $556,868 during the same period in Fiscal 2023. Consumer Segment Other income in the consumer segment increased by $8,195, or 11.7%, during the nine months ended September 30, 2024, to $78,510, as compared to $70,315 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to our corporate headquarters and to the consumer segment’s higher working capital requirements from the aforementioned launching of our Arizona and Texas stores which has decreased the excess cash flow available to sweep into an interest-bearing account. The impact on interest income is referenced below. Interest income comprised $10 and $65,853 of other income during the nine months ended September 30, 2024 and 2023, respectively. Commercial Segment Other income in the commercial segment increased by $239,233, or 49.2%, during the nine months ended September 30, 2024, to $725,786, as compared to $486,553 during the same period in Fiscal 2023. The change was primarily attributed to the proportional allocation of the proceeds from a settlement related to repairs to our Company’s corporate headquarters and to the continued focus on reducing working capital which has increased the excess cash flow available to sweep into an interest bearing account. The impact on interest income is referenced below. Interest income comprised $599,774 and $296,526 of other income during the nine months ended September 30, 2024 and 2023, respectively. Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ 2024 2023 Amount % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ (336,134) ​ $ (348,918) ​ $ 12,784 ​ (3.7) % % of consolidated sales ​ (0.3) % (0.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (171,584) ​ $ (177,458) ​ $ 5,874 (3.3) % % of consumer sales ​ (0.2) % (0.2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (164,550) ​ $ (171,460) ​ $ 6,910 (4.0) % % of commercial sales ​ (0.4) % (0.5) % ​ ​ 47 Table of Contents Consolidated Interest expense decreased by $12,784, or 3.7%, during the nine months ended September 30, 2024, to $336,134, as compared to $348,918 during the same period in Fiscal 2023. Consumer Segment Interest expense in the consumer segment decreased by $5,874, or 3.3%, during the nine months ended September 30, 2024, to $171,584, as compared to $177,458 during the same period in Fiscal 2023. There was no material impact from debt additions or amortization in each comparative period and as such no discussion point. Commercial Segment Interest expense in the commercial segment decreased by $6,910, or 4.0%, during the nine months ended September 30, 2024, to $164,550, as compared to $171,460 during the same period in Fiscal 2023. There was no material impact from amortization in each comparative period and as such no discussion point. Income Tax (Expense) Benefit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ ​ 2024 ​ 2023 ​ Amount ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated $ (1,581,162) $ (1,534,187) $ (46,975) 3.1 % % of consolidated sales ​ (1.2) % (1.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 33,706 ​ $ (778,150) ​ $ 811,856 NM ​ % of consumer sales ​ 0.0 % (0.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ (1,614,868) ​ $ (756,037) ​ $ (858,831) 113.6 % % of commercial sales ​ (4.2) % (2.2) % ​ ​ NM – Not Meaningful Consolidated Income tax expense increased by $46,975, or 3.1%, during the nine months ended September 30, 2024, to $1,581,162, as compared to $1,534,187 during the same period in Fiscal 2023. 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 23.5% and 20.8% for the nine months ended September 30, 2024 and 2023, 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 increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. ​ 48 Table of Contents Net Income (Loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ ​ 2024 ​ 2023 ​ Amount ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated $ 5,156,757 $ 5,837,519 $ (680,762) (11.7) % % of consolidated sales ​ 3.9 % 4.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ (116,325) ​ $ 3,072,567 ​ $ (3,188,892) NM ​ % of consumer sales ​ (0.1) % 3.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 5,273,082 ​ $ 2,764,952 ​ $ 2,508,130 90.7 % % of commercial sales ​ 13.8 % 8.0 % ​ ​ NM – Not Meaningful Consolidated Net income decreased by $680,762, or 11.7%, during the nine months ended September 30, 2024, to $5,156,757, as compared to $5,837,519 during the same period in Fiscal 2023. Consumer Segment Net income (loss) decreased in the consumer segment by $3,188,892, during the nine months ended September 30, 2024, to a net loss of $116,325, as compared to net income of $3,072,567 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of the Nine Months Ended September 30, 2024 and 2023 for further details. Commercial Segment Net income increased in the commercial segment by $2,508,130, or 90.7%, during the nine months ended September 30, 2024, to $5,273,082, as compared to $2,764,952 during the same period in Fiscal 2023. Refer to the aforementioned attributes discussed within the Comparison of the Nine Months Ended September 30, 2024 and 2023 for further details. Earnings Per Share The following table depicts the Company’s earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ ​ 2024 ​ 2023 ​ Amount ​ % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated $ 0.20 $ 0.22 $ (0.02) (9.1) % ​ Consolidated Basic and diluted earnings per share attributable to holders of our Common Stock decreased by $0.02, or 9.1%, during the nine months ended September 30, 2024, to $0.20, as compared to $0.22 during the same period in Fiscal 2023. 49 Table of Contents Liquidity and Capital Resources The following table summarizes the Company’s condensed consolidated statement of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ Change ​ ​ 2024 ​ 2023 ​ Amount ​ % Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ 6,449,764 ​ $ 3,469,991 ​ $ 2,979,773 85.9 % Investing activities ​ (3,260,717) ​ (1,085,362) ​ ​ (2,175,355) 200.4 % Financing activities ​ (3,290,701) ​ (2,249,209) ​ (1,041,492) 46.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ $ (101,654) ​ $ 135,420 ​ $ (237,074) NM ​ ​ NM – Not Meaningful Operating Activities Cash flows provided by operations increased by $2,979,773, or 85.9%, during the nine months ended September 30, 2024, to $6,449,764, as compared to $3,469,991 during the same period in Fiscal 2023. The increase in cash provided by operations for the nine months ended September 30, 2024 was primarily attributed to the impacts of a decrease in net income, a decrease in non-cash charges relating to deferred taxes, along with a reduction in accounts receivable associated with the settlement of a large SOW with a recurring customer, an increased inventory position associated with the expansion of the consumer business, and an increase in other liabilities associated with customer deposits and gift cards. Investing Activities Cash flows (used in) investing activities increased by $2,175,355, or 200.4%, during the nine months ended September 30, 2024, to $3,260,717, as compared to $1,085,362 during the same period in Fiscal 2023. The increase in cash (used in) investing activities during the nine months ended September 30, 2024 was primarily attributed to the purchase of property and equipment, including real estate associated with one of our Arizona stores, the build-out of our Arizona and Texas stores, the purchase of production assets within our commercial recycling business, and the continued development of intangible assets associated with our enterprise resource planning system, and no net cash inflows from investments in notes receivable. Financing Activities Cash flows (used in) financing activities increased by $1,041,492, or 46.3%, during the nine months ended September 30, 2024, to $3,290,701, as compared to $2,249,209 during the same period in Fiscal 2023. The increase in cash (used in) financing activities during the nine months ended September 30, 2024, was primarily due to our share buyback plan as principal payments on debt were in relative parity. Capital Resources Although the Company has access to a line of credit our primary source of liquidity and capital resources currently consist of cash generated from our operating activities. We do not anticipate the need to fund our operations via the line of credit and we do not have any amounts drawn as of September 30, 2024 . 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 In Fiscal 2024, the Company is deploying capital for additional growth, maintenance activity and enhancements to our enterprise resource planning system. The Company continuously monitors the deployment of capital and primarily funds capital expenditures through cash flow from operating activities. Where appropriate the Company may use debt financing on select projects. When this occurs, the Company further evaluates future cash flows of the project as to ensure the debt tenure and pay-back period are in alignment as well as the appropriateness of the rate of return. 50 Table of Contents 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.