What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-09-03 compared with 2026-06-08 · 66 added, 35 removed, 79 unchanged (56% of the section changed)

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We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.

Results of Operations for the Three Months Ended April 30, 2026 and 2025

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the three months ended April 30, 2026 and 2025 (in thousands):

Results of Operations for the Three Months Ended July 31, 2026 and 2025

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the three months ended July 31, 2026 and 2025 (in thousands):

For the Three Months Ended

April 30, 2026 April 30, 2025

July 31, 2026 July 31, 2025

Net sales $ 54,582 $ 35,203

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Operating Expenses 10,085 7,071

Other Expenses, net (30) (61)

Other Income (expense), net 312 (55)

Income Tax Expense (739) (368)

Net Income $ 2,565 $ 1,277

For the three months ended April 30, 2026 and 2025, the Company reported net income of approximately $2.1 million and $1.2 million, respectively.

The change in net income between the three months ended April 30, 2026 and 2025 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 50%, to $52.8 million, during the three months ended April 30, 2026, from $35.3 million during the three months ended April 30, 2025.

The increase in sales is primarily due to increased velocities of existing items driven by new marketing and trade programs, new customers, and new products associated with product innovation initiatives and the acquisistion of the Crown 1 business in the September 2025.

For the three months ended July 31, 2026 and 2025, the Company reported net income of approximately $2.6 million and $1.3 million, respectively.

The change in net income between the three months ended July 31, 2026 and 2025 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 55%, to $54.6 million, during the three months ended July 31, 2026, from $35.2 million during the three months ended July 31, 2025.

The increase in sales is primarily due to increased velocities of existing items driven by new marketing and trade programs, the introduction of new products into existing customers, new customers, and the acquisition of the Crown 1 business in September 2025.

Costs of sales:

Costs of sales increased by approximately 55%, to $40.3 million, or 76% of Net Sales, during the three months ended April 30, 2026, from $26.1 million, or 74% of Net Sales, during the three months ended April 30, 2025.

The increase in cost of sales is due to higher sales, partially offset by increased operational efficiencies resulting from increased overhead, labor and procurement efficiencies.

Costs of sales increased by approximately 57%, to $41.5 million, or 76% of Net Sales, during the three months ended July 31, 2026, from $26.4 million, or 75% of Net Sales, during the three months ended July 31, 2025.

The increase in costs of sales is due to higher sales, partially offset by increased operational efficiencies resulting from increased overhead, labor and procurement efficiencies.

Gross Profit Margin:

The gross profit margin was 24% and 26% of Net Sales for the three months ended April 30, 2026 and 2025, respectively.

The year-over-year margin rate change was primarily driven by increased labor and overhead associated with new product launches.

The gross profit margin was 24% and 25% of Net Sales for the three months ended July 31, 2026 and 2025, respectively.

The year-over-year margin rate change was primarily driven by increased labor and overhead associated with new product launches, as well as increased promotional activity to support new customers and new product introductions.

Operating Expenses:

Operating expenses increased approximately $2.2 million during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

Operating expenses increased approximately $3.0 million during the three months ended July 31, 2026, as compared to the three months ended July 31, 2025.

The change in total operating expenses are primarily attributable to the following:

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $1.3 million, primarily related to new hires and variable compensation arrangements;

• Commission and royalty expenses increased by approximately $0.7 million due to increased sales.

• Freight-related expenses increased by approximately $0.6 million mainly due to increased sales;

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $0.6 million mainly due to additional employees associated with the acquisition of the Crown 1 business and variable compensation arrangements;

• Other operating expenses increased by approximately $0.3 million due to additional software and EDI-related expenses, travel, and office expenses;

• Insurance-related expenses increased by approximately $0.2 million, primarily due to the growth of the Company;

• Professional fees increased by approximately $0.2 million, primarily due to the growth of the Company;

• Professional fees decreased by approximately $0.1 million, primarily due to lower corporate activity.

Other Income, net:

Other income, net increased by approximately $367 thousand, to $312 thousand, for the three months ended July 31, 2026, as compared to an expense of $55 thousand for the three months ended July 31, 2025.

The increase is primarily due to higher interest income, which is due to a higher average cash balance in the current year period .

Results of Operations for the Six Months Ended July 31, 2026 and 2025

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the six months ended July 31, 2026 and 2025 (in thousands):

For the Six Months Ended

July 31, 2026 July 31, 2025

Net Sales $ 107,348 $ 70,458

Costs of Sales 81,844 52,503

Gross Profit 25,504 17,955

Operating Expenses 19,848 14,677

Other Income (expense), net 282 (116)

Income Tax Expense (1,316) (648)

Net Income $ 4,622 $ 2,514

For the six months ended July 31, 2026 and 2025, the Company reported net income of approximately $4.6 million and $2.5 million, respectively.

The change in net income between the six months ended July 31, 2026 and 2025 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 52%, to $107.3 million, during the six months ended July 31, 2026, from $70.5 million during the six months ended July 31, 2025.

The increase in sales is primarily due to volume gains, which were driven by new products sold into existing customers, successful trade and marketing promotions, which drove velocity acceleration of existing products, and initial entry into new customers, as well as the acquisition of the Crown 1 business in September 2025.

Costs of sales:

Costs of sales increased by approximately 56%, to $81.8 million, or 76% of Net Sales, during the six months ended July 31, 2026, from $52.5 million, or 75% of Net Sales, during the six months ended July 31, 2025.

The increase in costs of sales is due to higher sales volume, partially offset by increased operational efficiencies driven by increased overhead, labor, and procurement efficiencies.

Gross Profit Margin:

The gross profit margin was 24% and 25% for the six months ended July 31, 2026 and 2025, respectively.

The year-over-year margin rate change was driven by increased promotional activity to support new customers and new product introductions as well as increased commodity costs, partially offset by overhead, labor and procurement efficiencies.

Operating Expenses:

Operating expenses increased approximately $5.2 million during the six months ended July 31, 2026, as compared to the six months ended July 31, 2025.

The change in total operating expenses is primarily attributable to the following:

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $2.0 million, primarily related to new hires and variable compensation arrangements;

• Freight-related expenses increased by approximately $1.3 million primarily due to increased sales;

• Commission and royalty expenses increased by approximately $0.9 million due to increased sales;

Other Expenses, net:

Other expenses, net decreased by approximately $31 thousand, to $30 thousand, for the three months ended April 30, 2026, as compared to $61 thousand for the three months ended April 30, 2025.

The decrease is primarily due to higher interest income, which is due to a higher average cash balance in the current year period .

• Other operating expenses increased by approximately $641 thousand due to additional travel, IT, and office expenses;

• Insurance-related expenses increased by approximately $399 thousand, primarily due to the growth of the Company;

• Advertising expenses decreased by approximately $172 thousand due to new marketing strategies and increased investment in trade promotions.

Other Income, net:

Other income, net increased by approximately $398 thousand, to $282 thousand, for the six months ended July 31, 2026, as compared to an expense of $116 thousand for the six months ended July 31, 2025.

The increase is primarily due to higher interest income, which is due to a higher cash and cash equivalents balance .

Liquidity and Capital Resources

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Working Capital

The following table summarizes total current assets, liabilities and working capital at April 30, 2026 compared to January 31, 2026 (in thousands):

April 30, 2026 January 31, 2026 Change

The following table summarizes total current assets, liabilities and working capital at July 31, 2026 compared to January 31, 2026 (in thousands):

July 31, 2026 January 31, 2026 Change

Current Assets $ 163,816 $ 45,081 $ 118,735

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Working Capital $ 140,179 $ 24,310 $ 115,869

As of April 30, 2026, we had working capital of approximately $27.8 million as compared to working capital of approximately $24.3 million as of January 31, 2026.

The increase in working capital is primarily attributable to an increase of cash and cash equivalents of app roximately $4.5 million, partially offset by a decrease in inventory of approximately $0.6 million and a decrease in prepaid expenses of approximately $0.3 million.

The following table summarizes the key components of our cash flows for the three months ended April 30, 2026 and 2025 (in thousands);

For the Three Months Ended April 30,

As of July 31, 2026, we had working capital of approximately $140.2 million as compared to working capital of approximately $24.3 million as of January 31, 2026.

The increase in working capital is primarily attributable to an increase of cash and cash equivalents of app roximately $118.7 million, which was primarily driven by the July 2026 capital raise and cash flows generated from operations.

The following table summarizes the key components of our cash flows for the six months ended July 31, 2026 and 2025 (in thousands);

For the Six Months Ended July 31,

Net Cash Provided by Operating Activities $ 11,896 $ 4,334

Net Cash Used in Investing Activities (1,089) (1,053)

Net Cash Used in Financing Activities (372) (605)

Net Cash Provided by (Used in) Financing Activities 107,859 (1,047)

Net Increase in Cash 118,666 2,234

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Operating activities

Net cash provided by operating activities for the three months ended April 30, 2026 was approximately $5.0 million, which consisted of net income of approximately $2.1 million, non-cash expenses of approximately $2.3 million, and a net positive change in operating assets and liabilities of approximately $0.6 million.

Net cash provided by operating activities for the three months ended April 30, 2025 was approximately $6.0 million, which consisted of net income of approximately $1.2 million, non-cash expenses of approximately $1.3 million, and a net positive change in operating assets and liabilities of approximately $3.5 million.

Net cash provided by operating activities for the six months ended July 31, 2026 was approximately $11.9 million, which consisted of net income of approximately $4.6 million, non-cash expenses of approximately $5.3 million, and a net positive change in operating assets and liabilities of approximately $1.9 million.

Net cash provided by operating activities for the six months ended July 31, 2025 was approximately $4.3 million, which consisted of net income of approximately $2.5 million, non-cash expenses of approximately $2.9 million, and a net negative change in operating assets and liabilities of approximately $1.0 million.

Investing activities

Net cash used in investing activities for the three months ended April 30, 2026 was approximately $0.2 million and consisted of purchases of fixed assets.

Net cash used in investing activities for the three months ended April 30, 2025 was approximately $0.5 million, and consisted of purchases of fixed assets.

Net cash used in investing activities for the six months ended July 31, 2026 was approximately $1.1 million and consisted of purchases of fixed assets.

Net cash used in investing activities for the six months ended July 31, 2025 was approximately $1.1 million and consisted of purchases of fixed assets.

Financing activities

Net cash used in financing activities for the three months ended April 30, 2026 was approximately $0.4 million and consisted of $0.3 million of payments on the Crown Note and approximately $0.1 million payments on finance leases.

Net cash used in financing activities for the three months ended April 30, 2025 was approximately $0.6 million and consisted of approximately $0.5 million of payments of debt and approximately $0.1 million payments on finance leases.

Net cash provided by financing activities for the six months ended July 31, 2026 was approximately $107.9 million and primarily consisted of proceeds from the sale of common stock of approximately $108.6 million, net of offering expenses.

Net cash used in financing activities for the six months ended July 31, 2025 was approximately $1.0 million and consisted of approximately $0.9 million of payments of debt and approximately $0.2 million of payments on finance leases.

Credit Facility & Indebtedness

As of April 30, 2026, we had no borrowings outstanding under the revolving line of credit available under our Credit Agreement and approximately $5.3 million outstanding under our Crown Note with M&T.

As of July 31, 2026, we had no borrowings outstanding under the revolving line of credit available under our Credit Agreement and approximately $5.0 million outstanding under our Crown Note with M&T.

The Crown Note ha s a maturity date of October 1, 2030.

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Liquidity and Capital Requirements Outlook

Although the expected revenue growth and control of expenses leads management to believe that it is probable that the Company’s cash resources will be sufficient to meet its cash requirements through at least the next twelve months, based on current and projected levels of operations, the Company may require additional funding to finance growth or achieve its strategic objectives.

Although the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources will be sufficient to meet its cash requirements through at least the next twelve months, based on current and projected levels of operations, the Company may require additional funding to finance growth or achieve its strategic objectives.

If such financing is required, there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

In the event funding is not available on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative basis, but there is no guarantee it will be able to do so.

Recent Accounting Pronouncements

See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s condensed consolidated financial position, earnings, cash flows or disclosures.

Critical Accounting Estimates

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis