UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2026

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 001-41038

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2026, there were a total of 18,639,589 shares of the registrant’s common stock outstanding.

STRAN & COMPANY, INC.

Quarterly Report on Form 10-Q

Period Ended June 30, 2026

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

STRAN & COMPANY, INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

three and six months ended June 30, 2026 and 2025

(in thousands, except share and per share amounts)

(unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

three and six months ended June 30, 2026 and 2025

(in thousands)

(unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

three and six months ended June 30, 2026 and 2025

(in thousands, except share amounts)

(unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

six months ended June 30, 2026 and 2025

(in thousands)

(unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

six months ended June 30, 2026 and 2025

(CONTINUED)

(in thousands)

(unaudited)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our,” and the “Company” are to Stran & Company, Inc., a Nevada corporation, and its consolidated subsidiaries; references to “Stran” or “Stran & Company, Inc.” are to Stran & Company, Inc., a Nevada corporation; references to “Stran Loyalty Solutions” or “SLS” are to Stran Loyalty Solutions, LLC, a Nevada limited liability company and a wholly-owned subsidiary of Stran & Company, Inc.; and references to “Gander Group Louisiana” are to Gander Group Louisiana, LLC, a Louisiana limited liability company, a wholly owned subsidiary of Stran Loyalty Solutions. References to “Stran segment” are to the unconsolidated operations of Stran & Company, Inc. References to “SLS segment” are to the operations of Stran Loyalty Solutions consolidated with the operations of Gander Group Louisiana. The Company’s reportable segments are further described in Note K to the financial statements accompanying this Quarterly Report on Form 10-Q.

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A. “Risk Factors” included in our Annual Reports on Form 10-K filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Overview

We are an outsourced marketing solutions provider that sells branded products to customers. We purchase products and branding through various third-party manufacturers and decorators and resell the finished goods to customers.

In addition to selling branded products, we offer clients custom sourcing capabilities; a flexible and customizable e-commerce solution for promoting branded merchandise and other promotional products, managing promotional loyalty and incentives, print collateral, and event assets, order and inventory management, and designing and hosting online retail popup shops, fixed public retail online stores, and online business-to-business service offerings; creative and merchandising services; warehousing/fulfillment and distribution; print-on-demand; kitting; point of sale displays; and loyalty and incentive programs.

We earn the majority of our revenue from the sale of unique, quality promotional products for a wide variety of industries primarily to support marketing efforts. We also derive revenues from service fees from loyalty programs, event management, print services, fulfillment services, and technology services.

The majority of our revenue is derived from program business, although only a small percentage of our customers are considered programmatic. For the three and six months ended June 30, 2026 program clients accounted for 81.3% and 83.3% of total revenue, respectively. For the three and six months ended June 30, 2025, program clients accounted for 80.2% and 81.8% of total revenue, respectively. Fewer than 350 of our more than 2,000 active customers are considered to be program clients. Our active customers are any organizations, businesses, or divisions of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that have bought from other organizations for which Stran acts as an established sub-contractor. We define transactional customers as customers that place an order with us and do not have an agreement with us covering ongoing branding requirements. We define program clients as clients that have a contractual obligation for specific ongoing branding needs. Program offerings include ongoing inventory, use of technology platform, warehousing, creative services, and additional client support. Those program customers are geared towards longer-lasting relationships, which we believe will help secure recurring revenue well into the future.

We have historically imported many of the goods or components used in our promotional products business from China in particular and to some extent from other countries. Since February 2025 and as of the date of this report, the United States has implemented and repeatedly amended additional country-specific tariffs on goods imported from other countries, with significant changes affecting imports from China. In May 2025, the United States temporarily reduced previously-imposed additional “reciprocal” and fentanyl-related tariffs at a combined rate of 145% on most goods imported from China to a combined rate of 30%, and in August 2025 extended this temporary combined rate on Chinese imports until November 10, 2025. In November 2025, these tariffs were further reduced to a combined rate of approximately 20%. For low-value items of Chinese or Hong Kong origin valued at or below $800 and moving via the international postal stream, duty-free treatment ended May 2, 2025. Since May 14, 2025, such postal shipments have generally been subject to either a 54% ad valorem duty or a $100 per-item postal fee. Separately, the United States eliminated duty-free de minimis treatment for imports from all other countries effective August 29, 2025. In addition, the United States has introduced and adjusted reciprocal tariff rates on imports from numerous trading partners. Since August 7, 2025, additional “reciprocal” tariff rates applicable to most goods from covered countries vary by country between approximately 10% and 41%, with many commonly in the 15%-40% range after later adjustments and exemptions. These additional country-specific tariffs were effected alongside a general increase in separate U.S. tariffs against imports based on product type or sector, as well as, in certain cases, country of origin, in some cases modified by exemptions or other adjustments.

On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.) that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs, invalidating both the reciprocal tariffs and the fentanyl-related tariffs on Chinese imports described above as well as all other tariffs imposed under IEEPA. In response, the President immediately issued an executive order terminating the IEEPA tariff orders, and U.S. Customs and Border Protection (“CBP”) halted collection of IEEPA-based duties effective 12:00 a.m. on February 24, 2026.

Also on February 20, 2026, invoking Section 122 of the Trade Act of 1974, President Trump imposed a temporary 10% global import surcharge on most imports effective February 24, 2026, for a maximum statutory period of 150 days. The President separately announced via social media an intention to increase this surcharge to 15%; however, no proclamation implementing that increase was ever issued, and the controlling Federal Register notice and CBP’s duty collection remained at 10% throughout the period the surcharge was in effect. On May 7, 2026, the U.S. Court of International Trade held, in a divided 2–1 decision, that the Section 122 surcharge was unlawful, although relief under that decision was limited to the plaintiffs in that litigation rather than extended to all importers. Separately, because Section 122 authority is capped at 150 days absent an extension by Congress, and no such extension occurred, the surcharge expired by its own terms as of July 24, 2026. Following the Supreme Court’s decision, the administration also indicated it would pursue Section 301 investigations targeting numerous U.S. trading partners as a longer-term replacement for the invalidated IEEPA tariffs.

Effective July 24, 2026, the Section 122 global surcharge described above was replaced by new tariffs of 10% or 12.5% imposed under Section 301 of the Trade Act of 1974 on imports from 60 trading partners representing approximately 99% of U.S. imports. The Office of the U.S. Trade Representative (“USTR”) initiated the underlying Section 301 investigation on March 12, 2026, and determined on June 2, 2026, that the investigated economies had failed to impose, or had failed effectively to enforce, prohibitions on the importation of goods produced with forced labor. Economies that had adopted and were enforcing such prohibitions – or that the USTR determined had made satisfactory commitments to adopt and enforce them – became subject to the 10% rate, while the remaining economies, including China, became subject to the 12.5% rate. These duties took effect immediately upon the expiration of the Section 122 surcharge and remain subject to various product- and country-specific exemptions, including for certain raw materials, products whose coverage would cause economy-wide disruption, goods not producible in sufficient quantities domestically, civil aircraft-related articles, certain pharmaceutical products, and a limited in-transit exception for goods loaded before July 24, 2026, and entered for consumption before July 28, 2026.

As a result of the above tariffs and tariff amendments and the ongoing uncertainties as to tariff refunds and future tariff rates, we have had to increase prices for certain products, and may be required to raise those prices further, which may result in the loss of customers. If prices cannot be increased, it may result in a negative impact on our gross margin. We have also attempted to shift away from Chinese suppliers in particular, and other foreign suppliers in general, and may seek to increase this shift due to U.S. tariffs or other aspects of U.S. trade policy, in an effort to reduce the effect of tariff increases on our product prices. However, due to the limited availability of competitive pricing from suppliers whose goods are not currently subject to tariffs or that are subject to relatively lower tariffs, and the possibility that some of the current or planned additional U.S. tariffs may increase, decrease, or become subject to exceptions or suspensions, with little or no prior notice, our ability to cost-effectively mitigate some of the effects of current and future scheduled U.S. tariffs may be significantly limited. These trends and uncertainties may result in additional costs and disruption to our operations, which may have a significant negative effect on the Company’s sales and gross margins in future periods. As a result, investors should not assume that any trends reflected in our past results that relate to periods preceding the increases in applicable U.S. tariffs since February 2025, including those that may be indicated below for the six months ended June 30, 2026, may be expected to continue to occur in future periods.

During the three and six months ended June 30, 2026, global crude oil and refined product markets were impacted by heightened geopolitical tensions in the Middle East, including the ongoing conflict involving Iran, Israel, and the United States. These developments have not had a direct material impact on our results. However, we are exposed to volatility in energy and oil markets, which could impact manufacturing, transportation, and packaging costs. Maritime restrictions in the Strait of Hormuz will continue to influence this risk. Significant increases in fuel, utilities, and petroleum-based inputs may materially increase our cost of goods sold and logistics expenses, and these increases may not be fully offset through pricing actions, which could adversely impact our margins and operating results.

Our sales for the three and six months ended June 30, 2026 increased 2.4% and 5.4%, respectively, compared to the same periods in 2025, due to higher spending from existing clients as well as business from new customers.

As of June 30, 2026, we had approximately $56.9 million of total assets with approximately $31.5 million of total stockholders’ equity.

Emerging Growth Company and Smaller Reporting Company

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur (subject to certain exceptional circumstances) if the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, after we cease to qualify as an emerging growth company, certain of the exemptions and accommodations available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including as to: (i) the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (ii) scaled executive compensation disclosures; (iii) presenting three years of audited financial statements; and (iv) compliance with certain greenhouse gas emissions disclosure and related third-party assurance requirements.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Results of Operations

Comparison of Three Months Ended June 30, 2026 and 2025

The following table sets forth key components of our results of operations during the three months ended June 30, 2026 and 2025 both in dollars and as a percentage of our revenues.

Sales

Sales consist primarily of the selling price of the merchandise, service or outbound shipping and handling charges, less discounts, coupons redeemed, returns and credits. Sales by segment and in total were as follows (in thousands):

Our total sales increased 2.4% to approximately $33.4 million for the three months ended June 30, 2026, from approximately $32.6 million for the three months ended June 30, 2025. Sales by our Stran segment increased to approximately $23.3 million for the three months ended June 30, 2026 from approximately $21.8 million for the three months ended June 30, 2025. Sales by our SLS segment decreased to approximately $10.1 million for the three months ended June 30, 2026 from approximately $10.8 million for the three months ended June 30, 2025. For the Stran segment, the increase in sales was primarily due to higher spending from existing clients as well as business from new customers. For the SLS segment, the decrease in sales was primarily attributable to a decline in sales from existing customers.

Cost of Sales

Cost of sales by segment and in total were as follows (in thousands):

Our total cost of sales increased 2.8% to approximately $23.3 million for the three months ended June 30, 2026, from approximately $22.7 million for the three months ended June 30, 2025. As a percentage of sales, total cost of sales increased to 70.0% for the three months ended June 30, 2026 from 69.7% for the three months ended June 30, 2025. Cost of sales by our Stran segment increased to approximately $15.7 million for the three months ended June 30, 2026 from approximately $14.2 million for the three months ended June 30, 2025. Cost of sales by our SLS segment decreased to approximately $7.6 million for the three months ended June 30, 2026 from approximately $8.5 million for the three months ended June 30, 2025. The increase in the dollar amount of total cost of sales was primarily due to the increase in sales of 2.4% from period to period. For the Stran segment, the increase was primarily due to the increase in sales described above. For the SLS segment, the decrease was primarily attributable to effective cost management and lower tariffs.

Gross Profit

Gross profit by segment and in total were as follows (in thousands):

Gross profit consists of sales less total cost of sales. Our total gross profit increased 1.6 % to approximately $10.0 million, or 30.0% of sales, for the three months ended June 30, 2026, from approximately $9.9 million, or 30.3% of sales, for the three months ended June 30, 2025. Gross profit of our Stran segment was approximately $7.6 million for each of the three months ended June 30, 2026 and the three months ended June 30, 2025. Gross profit of our SLS segment increased to approximately $2.5 million for the three months ended June 30, 2026 from approximately $2.3 million for the three months ended June 30, 2025. The increase in the dollar amount of total gross profit was primarily attributable to customer mix and effective cost management. For the Stran segment, the decrease in the dollar amount of gross profit was due to customer mix. For the SLS segment, the increase in the dollar amount of gross profit was primarily attributable to improved customer mix, effective cost management, and lower tariffs.

Gross profit margin is defined as gross profit as a percentage of sales. The decrease in total gross profit margin to 30.0% for the three months ended June 30, 2026 from 30.3% for the three months ended June 30, 2025 was primarily due to a shift in our customer mix and margin contribution. The gross profit margin for the Stran segment decreased to 32.5% for the three months ended June 30, 2026 from 34.9% for the three months ended June 30, 2025 due to customer mix. The gross profit margin for the SLS segment increased to 24.3% for the three months ended June 30, 2026 from 21.0% for the three months ended June 30, 2025 due to improved customer mix and effective cost management.

The gross profit and gross profit margin for the remainder of 2026 will be largely dependent on revenue levels.

Operating Expenses

Operating expenses by segment and in total were as follows (in thousands):

Operating expenses consist of general and administrative expenses. Our total operating expenses increased 4.9% to approximately $9.9 million for the three months ended June 30, 2026, from approximately $9.5 million for the three months ended June 30, 2025. Operating expenses of our Stran segment increased to approximately $6.9 million for the three months ended June 30, 2026 from approximately $6.5 million for the three months ended June 30, 2025. Operating expenses of our SLS segment decreased to approximately $2.0 million for the three months ended June 30, 2026 from approximately $2.1 million for the three months ended June 30, 2025. As a percentage of sales, total operating expenses increased to 29.8% for the three months ended June 30, 2026, from 29.1% for the three months ended June 30, 2025. As a percentage of sales, operating expenses of our Stran segment decreased to 29.8% for the three months ended June 30, 2026 from 30.0% for the three months ended June 30, 2025. As a percentage of sales, operating expenses of our SLS segment increased to 19.9% for the three months ended June 30, 2026 from 19.0% for the three months ended June 30, 2025. For the Stran segment, the increase in the dollar amount of operating expenses was primarily due to higher sales-related costs, and our investment in STRAN Digital Solutions to provide enhanced functionality and offerings to scale client programs. For the SLS segment, the decrease in the dollar amount of operating expenses was primarily attributable to a small reduction in headcount and lower sales-related costs. Operating expenses for “Other” consists of unallocated corporate costs, including salaries for our corporate officers, audit-related fees, board of director compensation, and other stock-related charges. Such costs increased by approximately $0.1 million to approximately $1.0 million for the three months ended June 30, 2026, from approximately $0.9 million for the three months ended June 30, 2025. The increase was primarily due to higher legal and accounting expenses.

Other Income

Other income consists of other income (expense), interest income, and realized gain on investments. Our other income, net was approximately $165 thousand for the three months ended June 30, 2026, compared to other income, net of approximately $285 thousand for the three months ended June 30, 2025. This change was primarily related to cost recoveries in 2025 for estimated shipping charges that did not reoccur in 2026. Our interest income was approximately $67 thousand for the three months ended June 30, 2026, compared to approximately $77 thousand for the three months ended June 30, 2025. This decrease was primarily attributable to lower average program deposit balances compared to the same period in the prior year, offset by slightly higher interest rates. Our realized gain on investments was $10 thousand for the three months ended June 30, 2026, compared to $0 for the three months ended June 30, 2025, since no investments were sold during the three months ended June 30, 2025.

Income Tax Provision

Income tax provision reflects statutory tax rates in the jurisdictions in which we operate adjusted for permanent book/tax differences.

Income tax provision for the three months ended June 30, 2026 was approximately $19 thousand compared to an income tax expense of approximately $114 thousand for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 was 5.9%, based on income before income taxes of approximately $0.3 million. The effective tax rate for the three months ended June 30, 2025 was 15.1%, based on income before income taxes of approximately $0.8 million.

The change in the effective tax rate from the comparison of 2026 and 2025 as noted above primarily relates to our estimated earnings and the Company’s position that its deferred tax assets require a full valuation allowance.

Net Income

Our net income for the three months ended June 30, 2026 was approximately $0.3 million, compared to net income of approximately $0.6 million for the three months ended June 30, 2025. This change was primarily due to an increase in operating expenses offset by an increase in gross profit for the reasons described above.

Comparison of Six Months Ended June 30, 2026 and 2025

The following table sets forth key components of our results of operations during the six months ended June 30, 2026 and 2025 both in dollars and as a percentage of our sales.