Surging Q3 lifts EACO (ticker: EACO) with 22% 9M revenue growth

Rhea-AI Filing Summary

EACO Corporation reported strong growth for the quarter ended May 31, 2026. Net sales rose to $142.4M from $111.4M a year earlier, a 27.8% increase, while gross profit climbed to $44.4M and gross margin improved to 31.2%.

Quarterly net income attributable to common shareholders increased to $13.5M, with basic EPS of $2.79 versus $1.95 last year. For the first nine months, revenue reached $371.1M and net income $32.6M. Cash from operations was $4.5M, below the prior-year $9.4M, largely due to higher inventory, receivables, and estimated tax payments. EACO ended the period with $0.8M in cash, $33.2M in marketable securities, and an undrawn $20M credit line. Management continues to report a material weakness in internal control over financial reporting related to the closing process and is implementing remediation measures, including new software for lease accounting and reconciliations.

Positive

• Strong top- and bottom-line growth: Q3 2026 net sales increased 27.8% to $142.4M, gross margin improved to 31.2%, and quarterly basic EPS rose to $2.79 from $1.95, reflecting operating leverage from higher volumes and improved vendor relationships.

Negative

• Ongoing material weakness in internal controls: Management reports a continuing material weakness over the financial statement closing process, including manual journal entries, lease accounting, reconciliations, and disclosure accumulation, indicating elevated risk around financial reporting quality until remediation is completed and tested.

Insights

Equity analyst

EACO delivered strong revenue and earnings growth but must fix its control weakness.

EACO posted robust operating momentum. Q3 net sales grew 27.8% to $142.4M, and gross margin expanded to 31.2%, lifting quarterly net income attributable to common shareholders to $13.5M and basic EPS to $2.79. Nine-month revenue reached $371.1M with net income of $32.6M, supported by a larger sales force and better vendor terms.

Despite higher profits, cash from operations fell to $4.5M from $9.4M, as EACO invested in inventory, prepaid estimated taxes, and carried higher receivables. The balance sheet remains solid with $33.2M in marketable securities and an undrawn $20M credit line, alongside modest term debt of $4.1M.

A key governance issue is the ongoing material weakness in internal control over financial reporting tied to the financial close process, including lease accounting and reconciliations. Management has adopted new third-party lease software and plans broader system enhancements, but effectiveness will be assessed in future reporting periods.

Key Figures

Q3 2026 Net Sales: $142.4M Q3 2026 Gross Margin: 31.2% Q3 2026 Basic EPS: $2.79/share +5 more

8 metrics

Q3 2026 Net Sales $142.4M Three months ended May 31, 2026 vs $111.4M in 2025

Q3 2026 Gross Margin 31.2% Up from 30.6% in the prior-year quarter

Q3 2026 Basic EPS $2.79/share Net income attributable to common shareholders, Q3 2026 vs $1.95

Nine-month Net Sales $371.1M Nine months ended May 31, 2026 vs $305.5M in 2025

Nine-month Net Income to Common $32.6M Nine months ended May 31, 2026 vs $23.1M

Operating Cash Flow $4.5M Cash provided by operating activities, nine months 2026 vs $9.4M

Marketable Securities $33.2M Trading securities balance as of May 31, 2026

Total Assets $268.1M Consolidated balance sheet as of May 31, 2026

Key Terms

right-of-use assets, incremental borrowing rate, material weakness, effective tax rate, +2 more

6 terms

right-of-use assets financial

"As of May 31, 2026, the Company had ROU assets of approximately $9,029,000"

Right-of-use assets are the rights a company gains to use a physical space or equipment under a lease agreement. They are recorded as assets on the company's balance sheet, reflecting the value of future benefits from the leased item. For investors, these assets provide a clearer picture of a company's obligations and resources related to leasing arrangements, helping to assess its financial health and operational commitments.

incremental borrowing rate financial

"the Company uses an incremental borrowing rate based on our line of credit variable interest rate"

material weakness financial

"Management concluded that there was a material weakness in the Company’s internal control over financial reporting"

A material weakness is a significant flaw in the systems and checks a company uses to ensure its financial reports are accurate, meaning errors or fraud could happen and not be caught. For investors it matters because it raises the risk that reported results are unreliable—similar to finding a hole in a ship’s hull—potentially leading to corrected financials, regulatory action, reduced trust, and negative effects on stock value and borrowing costs.

effective tax rate financial

"resulting in an effective tax rate of 25.5% and 24.9%, respectively"

The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.

marketable securities, trading financial

"The Company invests in marketable trading securities, which include long and short positions in equity securities"

line of credit financial

"The Company has a $20,000,000 line of credit with Citizens Business Bank"

A line of credit is a flexible borrowing arrangement that lets a company draw money up to a preset limit, repay it, and borrow again as needed—similar to a business credit card or an emergency tap on a savings account. It matters to investors because it shows how a firm manages short-term cash needs and growth funding without taking a single large loan; access, cost, and attached conditions can affect liquidity, interest expenses and financial risk.

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FAQ

How did EACO (EACO) perform financially in Q3 2026?

EACO delivered much higher results in Q3 2026. Net sales rose to $142.4 million from $111.4 million, and gross margin improved to 31.2%. Net income attributable to common shareholders reached $13.5 million, with basic earnings per share increasing to $2.79 from $1.95.

What were EACO (EACO) results for the nine months ended May 31, 2026?

For the nine months, EACO generated $371.1 million in net sales and $32.6 million in net income attributable to common shareholders. Gross profit reached $115.0 million, reflecting stronger demand, expanded sales headcount, and better vendor relationships compared with the prior-year period.

What is EACO’s (EACO) liquidity and debt position as of May 31, 2026?

EACO held $758,000 in cash and cash equivalents and $33.2 million in marketable trading securities. It had a $20 million revolving credit line with zero outstanding and a term loan balance of $4.1 million, supported by total assets of $268.1 million and shareholders’ equity of $188.5 million.

Why did EACO’s (EACO) operating cash flow decline despite higher earnings?

Operating cash flow fell to $4.5 million from $9.4 million even as earnings grew. The decline mainly reflected higher inventory purchases, increased trade receivables tied to stronger sales, and larger prepaid expenses from estimated income tax payments, including $12.2 million of current-year estimated taxes.

Does EACO (EACO) report any issues with internal controls in this 10-Q?

Yes. Management concluded disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting. The weakness involves the closing process, manual journal entries, lease accounting, reconciliations, and disclosure accumulation, and remediation efforts with new software are underway.

How is EACO (EACO) growing its business operationally?

EACO is expanding through its Bisco distribution business. It increased sales personnel and management from 443 to 491 employees year over year, operates 51 sales offices and seven distribution centers, and is leveraging improved vendor relationships and higher inventory availability, especially serving aerospace and defense customers.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended May 31, 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: 000-14311

EACO CORPORATION

(Exact name of registrant as specified in its charter)

​

Florida	59-2597349
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

​

5065 East Hunter Avenue

Anaheim, California 92807

(Address of Principal Executive Offices)

(714) 876-2490

(Registrant’s Telephone Number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value

(Title of Class)

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 (§ 232.405 of this chapter) 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.

​

	​		​		​
Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒
Smaller reporting company	☒	Emerging growth company	☐		​

​

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 July  9, 2026, 4,861,590 shares of the registrant’s common stock were outstanding.

​

​

​

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for share and per share information)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Nine Months Ended

​

​

​

May 31,

​

May 31,

​

​

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Net sales

​

$

142,350

​

$

111,410

​

$

371,139

​

$

305,462

​

Cost of sales

​

97,904

​

77,337

​

256,111

​

214,100

​

Gross margin

​

44,446

​

34,073

​

115,028

​

91,362

​

Operating expenses:

​

​

​

​

​

​

​

​

​

Selling, general and administrative expenses

​

26,445

​

21,627

​

71,730

​

60,979

​

Income from operations

​

18,001

​

12,446

​

43,298

​

30,383

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net gain (loss) on trading securities

​

251

​

277

​

710

​

761

​

Interest and other (expense)

​

​

(47)

​

​

(46)

​

​

(130)

​

​

(143)

​

Other income (expense), net

​

204

​

231

​

580

​

618

​

Income before income taxes

​

18,205

​

12,677

​

43,878

​

31,001

​

Provision for income taxes

​

4,640

​

3,162

​

11,196

​

7,835

​

Net income

​

13,565

​

9,515

​

32,682

​

23,166

​

Cumulative preferred stock dividend

​

(19)

​

(19)

​

(57)

​

(57)

​

Net income attributable to common shareholders

​

$

13,546

​

$

9,496

​

$

32,625

​

$

23,109

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per common share

​

$

2.79

​

$

1.95

​

$

6.71

​

$

4.75

​

Diluted earnings per common share

​

$

2.77

​

$

1.94

​

$

6.67

​

$

4.73

​

Basic weighted average common shares outstanding

​

4,861,590

​

​

4,861,590

​

4,861,590

​

​

4,861,590

​

Diluted weighted average common shares outstanding

​

​

4,901,590

​

​

4,901,590

​

​

4,901,590

​

​

4,901,590

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

2

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Nine Months Ended

​

​

​

May 31,

​

May 31,

​

​

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Net income

​

$

13,565

​

$

9,515

​

$

32,682

​

$

23,166

​

Other comprehensive income, net of tax

​

​

​

​

​

​

​

​

​

​

​

​

​

Foreign currency translation gain (loss)

​

​

(55)

​

​

132

​

​

3

​

​

(7)

​

Total comprehensive income

​

$

13,510

​

$

9,647

​

$

32,685

​

$

23,159

​

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

3

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​	May 31,		​	August 31,		​
​	​ ​ ​	2026		​ ​ ​	2025*		​ ​ ​
ASSETS		​	​		​	​
Current Assets:		​	​		​	​
Cash and cash equivalents	​	$	758	​	$	728	​
Restricted cash	​		10	​	​	10	​
Trade accounts receivable, net	​		72,173	​	​	65,863	​
Inventory, net	​		94,846	​	​	83,980	​
Marketable securities, trading	​		33,235	​	​	30,375	​
Prepaid expenses and other current assets	​		19,185	​	​	5,009	​
Total current assets	​		220,207	​	​	185,965	​
Non-current Assets:	​		​	​	​	​	​
Property, equipment and leasehold improvements, net	​	​	35,943	​	​	34,670	​
Operating lease right-of-use assets	​	​	9,029	​	​	6,814	​
Other assets, net	​	​	2,910	​	​	2,704	​
Total assets	​	$	268,089	​	$	230,153	​
LIABILITIES AND SHAREHOLDERS’ EQUITY	​		​	​		​	​
Current Liabilities:	​	​	​	​	​	​	​
Trade accounts payable	​	$	36,093	​	$	33,179	​
Accrued expenses and other current liabilities	​	​	29,886	​	​	29,762	​
Current portion of long-term debt	​		4,113	​		135	​
Current portion of operating lease liabilities	​	​	3,502	​	​	2,843	​
Total current liabilities	​		73,594	​		65,919	​
Non-current Liabilities:	​		​	​	​	​	​
Long-term debt	​	​	—	​	​	4,079	​
Operating lease liabilities	​	​	6,017	​	​	4,305	​
Total liabilities	​		79,611	​		74,303	​
Commitments and Contingencies (Note 8)	​		​	​		​	​
Shareholders’ Equity:	​		​	​	​	​	​
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding (liquidation value $900)	​	​	1	​	​	1	​
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding	​		49	​		49	​
Additional paid-in capital	​	​	12,378	​	​	12,378	​
Accumulated other comprehensive income	​		77	​		74	​
Retained earnings	​		175,973	​		143,348	​
Total shareholders’ equity	​		188,478	​		155,850	​
Total liabilities and shareholders’ equity	​	$	268,089	​	$	230,153	​

* Derived from the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended August 31, 2025 filed with the U.S. Securities and Exchange Commission on November 20, 2025.

See accompanying notes to unaudited condensed consolidated financial statements.

​

4

EACO Corporation and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Equity

(in thousands, except share information)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

Convertible

​

​

​

​

​

​

Additional

​

Other

​

​

​

​

Total

​

​

Preferred Stock

​

Common Stock

​

Paid-in

​

Comprehensive

​

Accumulated

​

Shareholders’

​

​ ​ ​

Shares

​ ​ ​

Amount

​ ​ ​

Shares

​ ​ ​

Amount

​ ​ ​

Capital

​ ​ ​

Income

​ ​ ​

Earnings

​ ​ ​

Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three and Nine Months Ended May 31, 2026

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, August 31, 2025

36,000

​

$

1

​

4,861,590

​

$

49

​

$

12,378

​

$

74

​

$

143,348

​

$

155,850

Preferred dividends

—

​

​

—

​

—

​

​

—

​

​

—

​

—

​

(19)

​

(19)

Foreign translation loss

—

​

​

—

​

—

​

​

—

​

​

—

​

(8)

​

—

​

(8)

Net income

—

​

​

—

​

—

​

​

—

​

​

—

​

—

​

9,320

​

9,320

Balance, November 30, 2025

​

36,000

​

​

1

​

4,861,590

​

​

49

​

​

12,378

​

​

66

​

​

152,649

​

​

165,143

Preferred dividends

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(19)

​

​

(19)

Foreign translation gain

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

66

​

​

—

​

​

66

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

9,797

​

​

9,797

Balance, February 28, 2026

​

36,000

​

​

1

​

4,861,590

​

​

49

​

​

12,378

​

​

132

​

​

162,427

​

​

174,987

Preferred dividends

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(19)

​

​

(19)

Foreign translation loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(55)

​

​

—

​

​

(55)

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

13,565

​

​

13,565

Balance, May 31, 2026

​

36,000

​

$

1

​

4,861,590

​

$

49

​

$

12,378

​

$

77

​

$

175,973

​

$

188,478

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three and Nine Months Ended May 31, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, August 31, 2024

36,000

​

$

1

​

4,861,590

​

$

49

​

$

12,378

​

$

73

​

$

111,130

​

$

123,631

Preferred dividends

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(19)

​

​

(19)

Foreign translation loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(35)

​

​

—

​

​

(35)

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

6,888

​

​

6,888

Balance, November 30, 2024

​

36,000

​

​

1

​

4,861,590

​

​

49

​

​

12,378

​

​

38

​

​

117,999

​

​

130,465

Preferred dividends

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(19)

​

​

(19)

Foreign translation loss

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(104)

​

​

—

​

​

(104)

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

6,763

​

​

6,763

Balance, February 28, 2025

​

36,000

​

​

1

​

4,861,590

​

​

49

​

​

12,378

​

​

(66)

​

​

124,743

​

​

137,105

Preferred dividends

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(19)

​

​

(19)

Foreign translation gain

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

132

​

​

—

​

​

132

Net income

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

9,515

​

​

9,515

Balance, May 31, 2025

​

36,000

​

$

1

​

4,861,590

​

$

49

​

$

12,378

​

$

66

​

$

134,239

​

$

146,733

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

5

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​	Nine Months Ended					​
​	​	May 31,					​
​	​ ​ ​	2026		​ ​ ​	2025		​ ​ ​
Operating activities:		​	​		​	​
Net income	​	$	32,682	​	$	23,166	​
Adjustments to reconcile net income to net cash provided by operating activities:	​		​	​		​	​
Depreciation and amortization	​		1,315	​		1,268	​
Allowance for credit losses	​		472	​		203	​
Deferred tax provision	​	​	(60)	​	​	(18)	​
Unrealized loss (gain) on trading securities	​		27	​		(205)	​
Increase (decrease) in cash flow from change in:	​		​	​		​	​
Trade accounts receivable	​		(6,782)	​		(4,781)	​
Inventory	​		(10,866)	​		(13,178)	​
Prepaid expenses and other assets	​		(14,322)	​		27	​
Operating lease right-of-use assets	​		(2,215)	​		774	​
Trade accounts payable	​		1,786	​		6,268	​
Accrued expenses and other current liabilities	​		124	​		(3,416)	​
Operating lease liabilities	​	​	2,371	​	​	(704)	​
Net cash provided by operating activities	​		4,532	​		9,404	​
Investing activities:	​		​	​		​	​
Additions to property, equipment, and leasehold improvements	​	​	(2,588)	​	​	(575)	​
Purchase of marketable securities, trading	​	​	(24,614)	​	​	(16,184)	​
Sale of marketable securities, trading	​	​	21,727	​	​	9,074	​
Net cash provided by investing activities	​	​	(5,475)	​	​	(7,685)	​
Financing activities:	​	​	​	​	​	​	​
Borrowing on revolving credit facility	​	​	—	​	​	491	​
Preferred stock dividend	​	​	(57)	​	​	(57)	​
Repayments on long-term debt	​	​	(101)	​	​	(96)	​
Bank overdraft	​		1,128	​		4,377	​
Net cash provided by financing activities	​		970	​		4,715	​
Effect of foreign currency exchange rate changes on cash and cash equivalents	​		3	​		(7)	​
Net increase in cash, cash equivalents, and restricted cash	​		30	​		6,427	​
Cash, cash equivalents, and restricted cash - beginning of period	​	​	738	​	​	853	​
Cash, cash equivalents, and restricted cash - end of period	​	$	768	​	$	7,280	​
Supplemental disclosures of cash flow information:	​		​	​		​	​
Cash paid for interest	​	$	130	​	$	143	​
Cash paid for income taxes	​	$	23,493	​	$	9,213	​
Reconciliation of cash, cash equivalents, and restricted cash:	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	758	​	$	7,270	​
Restricted cash	​	$	10	​	$	10	​
Total cash, cash equivalents, and restricted cash	​	$	768	​	$	7,280	​

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

6

EACO CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2026

Note 1.    Organization and Basis of Presentation

EACO Corporation (“EACO”), incorporated in Florida in September 1985, is a holding company, primarily comprised of its wholly-owned subsidiary, Bisco Industries, Inc. (“Bisco”) and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited. Substantially all of EACO’s operations are conducted through Bisco and Bisco Industries Limited. Bisco was incorporated in Illinois in 1974 and is a distributor of electronic components and fasteners with 51 sales offices and seven distribution centers located throughout the United States and Canada and one sales office located in each of the Philippines and Mexico. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace and defense, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries.

Note 2.    Significant Accounting Policies and Significant Recent Accounting Pronouncements

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for credit losses, provision for slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets, if any. Actual results could differ from those estimates.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included.

Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations for presentation of interim financial information. Therefore, the condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2025 (“fiscal 2025”). The condensed consolidated balance sheet as of August 31, 2025 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2025. Operating results for the three and nine months ended May 31, 2026 are not necessarily indicative of the results that may be expected for future quarterly periods or the entire fiscal year.

Principles of Consolidation

The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (all of which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company regularly uses its excess cash from operating activities to purchase short- term investments. The Company may liquidate these investments time to time when cash is needed to cover operating or extraordinary expenses.

7

Allowance for Credit Losses

We maintain an allowance for credit losses for estimated losses on our trade receivables, resulting from the inability of our customers to make payments for products sold. The allowance for credit losses is based on a variety of factors, including credit reviews, historical experience, length of time receivables are due, current economic trends and changes in customer payment behavior. We also record specific provisions for individual accounts when we become aware of a customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. The allowance for credit losses was $453,000 and $366,000 at May 31, 2026 and August 31, 2025, respectively.

Inventories, net

Inventories consist primarily of electronic fasteners and components and are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are adjusted for slow moving or obsolete items, which was approximately $2,065,000 and $1,975,000 at May 31, 2026 and August 31, 2025, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company.

Marketable Securities, Trading

The Company invests in marketable trading securities, which include long and short positions in equity securities. Securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Realized gains and losses on investment transactions are recognized as incurred in the consolidated statements of operations. Net unrealized gains and losses are reported in the consolidated statements of operations and represent the change in the market value of investment holdings during the period.

Property, Equipment, and Leasehold Improvements

Property, equipment, and leasehold improvements are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization expense is determined using the straight-line method over the estimated useful lives of the assets. The depreciable life for buildings is thirty-five years and five to seven years for furniture, fixtures and equipment. Leasehold improvements are amortized over the estimated useful life of the asset or the remaining lease term, whichever is less. Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or disposition of the asset, the cost and accumulated depreciation or amortization are removed from the accounts and any gains or losses are reflected in earnings.  Accumulated depreciation and amortization were $18,228,000 and $16,905,000 as of May 31, 2026 and August 31, 2025, respectively. For the three months ended May 31, 2026 and 2025, depreciation and amortization expense was $445,000 and $425,000, respectively. For the nine months ended May 31, 2026 and 2025, depreciation and amortization expense was $1,315,000 and $1,268,000, respectively.

Impairment of Long-Lived Assets

The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value.

Income Taxes

Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance.

The Company provides for tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations.

8

Revenue Recognition

The Company derives its revenue primarily from product sales. Revenue recognition is determined through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, performance obligations are satisfied.

The Company’s contract with the customer is executed with a customer purchase order and performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products, which the Company’s standard terms and conditions are shipping point, to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products as stated on the Company’s invoice to the customer. Revenue is recognized net of returns and any taxes collected from customers. The Company generally offers industry standard contractual terms in its terms and conditions stated on its invoices and on the Company website.

Freight revenues associated with product sales are recognized at point of shipment and when the criteria discussed above have been met. Freight revenues represented less than 1% of total revenues for the three and nine months ended May 31, 2026 and 2025.

Operating Leases

The Company determines if a contractual arrangement contains a lease, for accounting purposes, at contract inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, the current portion of operating lease liabilities, and the operating lease liabilities in the accompanying consolidated balance sheets.

The ROU assets represent the Company’s right to control the use of a leased asset for the contractual term, and lease liabilities represent the related obligation to make lease payments arising from the contractual arrangement. Operating lease ROU assets and lease liabilities are recognized at the contract commencement date based on the present value of lease payments over the contractual term. The operating lease ROU assets also include any prepaid lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the contractual term.

Many of the Company’s leases include both lease components (such as fixed payment amounts including rent, taxes, and insurance costs) and non-lease components (such as common-area or other maintenance costs) which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

Many leases include one or more options to renew the contract. Therefore, renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain to be exercised. The Company regularly evaluates the renewal options each reporting period and when they are reasonably certain to be exercised, management will include the lease renewal period in our contractual term when estimating the ROU assets and related liabilities.

Since most of the Company’s leases do not provide an implicit rate, as defined by GAAP, the Company uses an incremental borrowing rate based on our line of credit variable interest rate that is set at the bank prime index rate in order to determine the present value of the lease payments. The Company applies a portfolio approach for determining the incremental borrowing rate. As of May 31, 2026, the Company had ROU assets of approximately $9,029,000 and lease liabilities of approximately $9,519,000   recorded in the consolidated balance sheet. As of August 31, 2025, the Company had ROU assets of approximately $6,814,000 and lease liabilities of approximately $7,148,000 recorded in the consolidated balance sheet.

Earnings Per Common Share

Basic earnings per common share for each of the three and nine months ended May 31, 2026 and 2025 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive common shares represent 40,000 common shares issuable upon conversion of 36,000 shares of Series A convertible preferred stock, which were outstanding at each of May 31, 2026 and 2025.

Foreign Currency Translation and Transactions

Assets and liabilities recorded in functional currencies other than the U.S. dollar (specifically, Canadian dollars used to record the assets and liabilities for Bisco Industries limited) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars to U.S. dollars on May 31, 2026 and 2025 was $0.72 and $0.73, respectively. The resulting balance sheet translation

9

adjustments are charged or credited directly to accumulated other comprehensive income (loss). Revenue and expenses are transacted at the average exchange rates for each of the three and nine months ended May 31, 2026 and 2025. The average exchange rates for the nine months ended May 31, 2026 and 2025 were $0.72 and $0.71, respectively. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure.

Segment Reporting

The Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures as of the fiscal year ended August 31, 2025 and a retroactive implementation to the fiscal year ended August 31, 2024 (“fiscal 2024”). This ASU enhances entities’ disclosures about operating segments, products and services, geographic areas and major customers.  The Company’s sole reportable segment is the industrial distribution business conducted through Bisco Industries and its Canadian subsidiary. The Company’s revenues are primarily comprised of product sales of electronic components, cable components, and a large variety of fasteners and hardware.

The Company’s Chief Operating Decision Maker (“CODM”), Don Wagner, President and Chief Operating Officer of Bisco Industries, Inc., reviews the Company’s consolidated results and allocates resources at the enterprise level. The Company’s operations are conducted through its wholly-owned industrial distribution business, which operates across 51 sales offices and seven distribution centers and one sales office in each of the Philippines and Mexico. Although the business is conducted across multiple sales offices and distribution centers, management concluded that the nature of the operations, the economic environment, and the way resources are managed and how performance is evaluated, support a single-segment determination.  The CODM reviews consolidated results to assess performance and allocate resources. Accordingly, the accompanying consolidated financial statements reflect the results of the single operating segment.  Management considered the guidance in Accounting Standards Codification (“ASC  ”) 280-10-50-4 and determined that the single reportable segment is managed on a consolidated basis.  Because the CODM manages the business as a single integrated unit, management has identified one operating segment and one reportable segment in accordance with ASC 280.

Concentrations

Net sales to customers outside the United States were approximately 13.4% and 11.0% of revenues for the three months ended May 31, 2026 and 2025, respectively, and related accounts receivable for international customers were approximately 12.8% and 10.0% of total accounts receivable as of May 31, 2026 and 2025, respectively. Sales to customers in Canada accounted for approximately 26.0% and 23.0% of such international sales for the three months ended May 31, 2026 and 2025, respectively. Sales to customers located within Asia accounted for approximately 36.8% and 41.0% of such international sales for the three months ended May 31, 2026 and 2025, respectively. Sales to customers located within other countries accounted for approximately 37.2% and 36.0% of such international sales for the three months ended May 31, 2026 and 2025, respectively.

Net sales to customers outside the United States were approximately 13.3% and 11.0% of revenues for the nine months ended May 31, 2026 and 2025, respectively.  The accounts receivable for international customers were approximately 12.8% and 10.0% of total accounts receivable as of May 31, 2026 and 2025, respectively. Sales to customers in Canada accounted for approximately 27.7% and 25.0% of such international sales for the nine months ended May 31, 2026 and 2025, respectively. Sales to customers located within Asia accounted for approximately 39.1% and 41.0% of such international sales for the nine months ended May 31, 2026 and 2025, respectively. Sales to customers located within other countries accounted for approximately 33.1% and 33.0% of such international sales for the nine months ended May 31, 2026 and 2025, respectively.

No single customer accounted for more than 10% of revenues for either of the three and nine months ended May 31, 2026 and 2025. In addition, no single customer’s receivable balance accounted for more than 10% of the Company’s customer receivables as of either May 31, 2026 or 2025.

Significant Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which is intended to enhance transparency into the nature and function of expenses. The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization and depletion. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Upon adoption, ASU 2024-03 should be applied on a prospective basis while retrospective application is permitted. We are currently evaluating the impact ASU 2024-03 will have on our consolidated financial statements and related disclosures.

10

In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which is intended to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU requires that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, this ASU requires entities to disclose additional information about income taxes paid, as well as additional disclosures of pretax income and income tax expense, and to remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Upon adoption, ASU 2023-09 should be applied on a prospective basis while retrospective application is permitted. We are currently evaluating the impact ASU 2023-09 will have on our consolidated financial statements and related disclosures.

Other recently issued accounting pronouncements are not expected to have a material impact on the Company’s consolidated financial statements.

​

Note 3.    Accrued Liabilities

The Company’s accrued liabilities as of May 31, 2026 and August 31, 2025 are summarized as follows (in thousands):

​

​	​	​	​	​	​	​
​	​ ​ ​	May 31,		​ ​ ​	August 31,
​	​	2026		​	2025
Accrued expenses and other current liabilities:		​	​		​	​
​	​	​	​	​	​	​
Accrued accounts payable	​	$	10,508	​	$	11,011
Accrued compensation and payroll	​		8,678	​		10,938
Accrued taxes	​		10,700	​		7,813
Total accrued expenses and other current liabilities	​	$	29,886	​	$	29,762

​

Note 4.    Debt

The Company has a $20,000,000 line of credit with Citizens Business Bank (the “Bank”) under a Business Loan Agreement dated as of April 12, 2024 (as amended from time to time, the “2024 Business Loan Agreement”). On February 15, 2026, the Company executed a Change in Terms Agreement (the “Amendment”) with the Bank to modify terms of the 2024 Business Loan Agreement. The Amendment (i) extended the expiration date of the line of credit under the Business Loan Agreement to February 15, 2028; (ii) provided that the interest rate under the revolving line of credit will not be less than 4.0% per annum or more than the maximum rate allowed by applicable law; and (iii) modified certain financial reporting covenants referenced in the 2024 Business Loan Agreement. Except as expressly modified, the terms of the existing indebtedness remain in full force and effect.

Borrowings on the line of credit with the Bank are secured by substantially all of the assets of the Company and its subsidiaries. The amount outstanding under this line of credit as of each of May 31, 2026 and August 31, 2025 was zero. The line of credit contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of each of May 31, 2026 and August 31, 2025, the Company was in compliance with all such covenants. The line of credit is primarily utilized for vendor payments if sufficient cash is unavailable. When balances are present on the line of credit, it is paid down daily with excess cash in our main deposit bank account.

The Company also entered into a loan agreement with the Bank on July 12, 2019 to borrow up to $5,000,000 (the “Construction Loan”) for the primary purpose of financing tenant improvements at the Company’s corporate headquarters in Anaheim, California (the “Hunter Property”). The Construction Loan was a line of credit evidenced by a Promissory Note in the original principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Loan provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan would convert to a term loan with a fixed interest rate of 4.6%, which is entitled to a .25% rate discount if a demand deposit account is held with the Bank. On July 15, 2020, the amount drawn on the Construction Loan and converted to a term loan (the “Term Loan”) was $4,807,000. Interest on the Term Loan is payable monthly. The interest rate was 4.35% at each of May 31, 2026 and August 31, 2025. Concurrent with the execution of this Term Loan, Bisco entered into a commercial security agreement, dated July 12, 2019, with the Bank, pursuant to which Bisco granted the Bank a security interest in substantially all of Bisco’s personal property to secure Bisco’s obligations under the Term Loan. The outstanding balance of the Term

11

Loan at May 31, 2026 and August 31, 2025 was $4,113,000 and $4,214,000, respectively. The Term Loan’s future principal due until maturity by fiscal year is as follows:

​

​	​	​	​
Fiscal Year	​ ​ ​	Principal Amount Due
2026	​	$	34,000
2027	​	​	4,079,000
Total	​	$	4,113,000

The Company has also entered into a business loan agreement (and related $100,000 promissory note) with the Bank in order to obtain a $100,000 letter of credit as security for the Company’s worker’s compensation requirements.

​

Note 5.     Leases

The Company leases its facilities and automobiles under operating lease agreements (one distribution facility, located in Glendale Heights, IL, is leased from the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”), which is the grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder).

Our operating lease agreements expire on various dates through March 2033 and require minimum rental payments ranging from $1,000 to $46,000 per month. Certain of the leases contain options for renewal under varying terms.

​

​	​	​	​	​	​	​	​
​	​ ​ ​	May 31,		​ ​ ​	August 31,
​	​	2026		​	2025
Operating lease assets:	​	​	​	​	​	​	​
Right-of-use assets	​	$	9,029,000	​	$	6,814,000	​
​	​	​	​	​	​	​	​
Operating lease liabilities:	​	​	​	​	​	​	​
Current lease liabilities	​	$	3,502,000	​	$	2,843,000	​
Long-term lease liabilities	​	$	6,017,000	​	$	4,305,000	​
​	​	​	​	​	​	​	​
Weighted average remaining lease terms	​	​	3.3 years	​	​	2.8 years	​
Incremental borrowing rate		​	7.3	%	​	7.2	%

The discount rate used on the operating ROU assets represented the Company’s incremental borrowing rate at lease inception.

Minimum future rental payments under operating leases are as follows:

​

​	​	​	​
Years Ending:	​ ​ ​	​ ​ ​	​
2026 (remaining three months)	​	$	1,070,000
2027	​		3,906,000
2028	​		2,681,000
2029	​		1,822,000
2030	​	​	910,000
2031	​	​	368,000
Thereafter	​		184,000
Future minimum lease payments	​	$	10,941,000
Less interest	​	​	(1,422,000)
Present value of minimum lease payments	​	$	9,519,000

Operating lease costs under these leases were approximately $1,055,000 and $857,000 for the three months ended May 31, 2026 and 2025, respectively.  Operating lease costs under these leases were approximately $3,085,000 and $2,508,000 for the nine months ended May 31, 2026 and 2025, respectively. Cash paid for amounts included in the measurement of lease liabilities were approximately $1,049,000 and $1,056,000 for the three months ended May 31, 2026 and 2025, respectively. Cash paid for amounts included in the measurement of lease liabilities were approximately $2,926,000 and $2,494,000 for the nine months ended May 31, 2026 and 2025, respectively.

​

12

Note 6.    Related Party Transactions

The Company leases its Chicago area sales office and distribution center located in Glendale Heights, Illinois under an operating lease agreement (the “Glendale Lease”) from the Trust, which is the grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board, and majority shareholder. The Glendale Lease is a ten-year triple net lease with an initial monthly rental rate of $22,600, which is subject to annual rent increases of approximately 2.5% as set forth in the Glendale Lease. During the three months ended May 31, 2026 and 2025, the Company incurred expense related to the Glendale Lease of approximately $83,000 and $80,000, respectively. During the nine months ended May 31, 2026 and 2025, the Company incurred expense related to the Glendale Lease of approximately $248,000 and $241,000, respectively.

​

Note 7.    Income Taxes

During the three months ended May 31, 2026 and 2025, the Company recorded an income tax provision of $4,640,000 and $3,162,000, respectively, resulting in an effective tax rate of 25.5% and 24.9%, respectively. The provision for income taxes increased by $1,478,000 in the three months period ended May 31, 2026 over the prior year period due to higher pre-tax income in the current period.

During the nine months ended May 31, 2026 and 2025, the Company recorded an income tax provision of $11,196,000 and $7,835,000, respectively, resulting in an effective tax rate of 25.5% and 25.3%, respectively. The provision for income taxes increased by $3,361,000 in the nine months period ended May 31, 2026 over the prior year period due to higher pre-tax income in the current period.

The current period effective tax rate differs from the statutory rate of 21% primarily due to the state tax rates and permanent book tax differences.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For each of the three and nine months ended May 31, 2026 and 2025, the Company did not have a liability for any unrecognized tax benefit. The Company has elected to classify interest and penalties as a component of its income tax provision. For each of the three and nine months ended May 31, 2026 and 2025, the Company did not have a liability for penalties or interest. The Company does not expect any changes to its unrecognized tax benefit for the next three  months   that would materially impact its consolidated financial statements.

​

Note 8.    Commitments and Contingencies

From time to time, the Company may be subject to legal proceedings and claims which arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject the Company to damages or equitable remedies, and divert management and key personnel from core business operations.

In January 2023, a class action lawsuit was filed with the Los Angeles County Superior Court against Bisco, alleging wage and hour violations and related claims. The class action covers a class of former and current employees of Bisco who were employed between January 13, 2019 and August 23, 2024. In March 2023, Plaintiff filed a First Amended Complaint that added claims under the California Private Attorneys General Act (“PAGA”). Both parties requested to stay the litigation pending mediation, which mediation occurred in April 2024. As a result of the mediation, the parties agreed in principle to settle this matter for approximately $7,500,000 which settlement amount, inclusive of payroll taxes, was increased to $7,795,000 in May 2025. In July 2025, the court approved the settlement.  In anticipation of this settlement, the Company accrued $7,390,000 and $285,000 in fiscal 2024 and fiscal 2023, respectively, and an additional $120,000 was accrued in fiscal 2025 to cover the remaining settlement expense. The Company made the full settlement payment in September 2025.

​

Note 9.    Subsequent Events

Management has evaluated events subsequent to May 31, 2026, through the date that these unaudited condensed consolidated financial statements are filed with the SEC, for transactions and other events which may require adjustment of and/or disclosure in such financial statements.

​

​

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements can be identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “should,” “will” and similar words or expressions. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profits and capital needs. These statements are based on our current expectations, estimates, projections, and the impact of certain accounting pronouncements, and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those projected or estimated, including, but not limited to the impact of adverse economic conditions, competitive pressures, the pricing and availability of our products, the impact of products offered by our competitors, unexpected costs and losses from operations or investments, increases in costs and overhead, our ability to maintain an effective system of internal controls over financial reporting, potential losses from trading in securities, our ability to retain key personnel and hire additional qualified personnel, our ability to open additional sales offices and maintain good relationships with suppliers, the willingness of lenders to extend financing commitments and the availability of capital resources, as well as the uncertainty related to international tariffs and the impact of the continuing international conflicts and the other risks set forth in “Risk Factors” in Part II, Item 1A of this Quarterly Report or identified from time to time in our other filings with the SEC and in public announcements. You should not place undue reliance on these forward-looking statements that speak only as of the date hereof or the date of any other filing with the SEC, as applicable. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statement for any reason, including to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of forward-looking statements in this Quarterly Report should not be regarded as a representation by management or any other person that the objectives or plans of the Company will be achieved.

Overview

The condensed consolidated financial statements comprise the accounts of EACO and its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited.

EACO is a holding company primarily comprised of its wholly-owned subsidiary, Bisco. Bisco is a distributor of electronic components and fasteners with 51 sales offices and seven distribution centers located throughout the United States and Canada and one sales office located in each the Philippines and Mexico. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of its financial condition and results of operations are based upon its condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

Within the context of these critical accounting policies, management is not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. There have been no changes to the Company’s critical accounting policies for the three months ended May 31, 2026.

Revenue Recognition

We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation.

The Company’s performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products, which are at shipping point pursuant to the Company’s standard terms and conditions, to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of returns and any taxes collected from customers. We offer industry standard contractual terms in our sales orders.

14

Inventory

The Company’s inventory provisions are based upon management’s review of inventories on-hand over the inventory’s expected future utilization and length of time held by the Company. The Company’s methodology for estimating these adjustments to the cost basis is evaluated for factors that could require changes to the cost basis including significant changes in product demand, market conditions, condition of the inventory or net realizable value. If business or economic conditions change, management’s estimates and assumptions may be adjusted as deemed appropriate.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds such asset’s estimated fair value.

Results of Operations

Comparison of the Three Months Ended May 31, 2026 and 2025

Net Sales and Gross Profit ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

​ ​ ​

May 31,

​

$

​

%

​

​

​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​

Net sales

​

$

142,350

​

$

111,410

​

$

30,940

​

27.8

%

Cost of sales

​

​

97,904

​

​

77,337

​

​

20,567

​

26.6

%

Gross profit

​

$

44,446

​

$

34,073

​

$

10,373

​

30.4

%

Gross profit as a percent of net sales

​

31.2

%

30.6

%

​

​

0.6

%

​

Net sales consist primarily of sales of component parts and fasteners, but also include, to a lesser extent, kitting charges and special-order fees, as well as freight charged to customers.

The increase in revenues in the three months ended May 31, 2026 (“Q3 2026”) as compared to the three months ended May 31, 2025 (“Q3 2025”) was largely due to increased sales of our products as a result of the expansion of our sales force and increasing demand from customers. We increased the number of sales personnel and sales management by 48 employees in the current period, from 443 sales employees in Q3 2025 to 491 sales employees in Q3 2026. We believe that increasing sales headcount enables us to sell more products to existing customers and provides additional resources to find new customers. Revenues and gross profit for Q3 2026 also increased as compared to Q3 2025 due to the development of better relationships with vendors and customers, and higher inventory stock readily available to meet customer demand in the current period, particularly in the aerospace and defense industries.  Gross profit as a percent of net sales has increased 0.6%, primarily due to the development of better relationships with our customers and vendors and high demand for products the Company has in stock. Better relationship with our vendors have enabled the Company to get better pricing for its products and access to products that are restricted to authorized distributors.

Selling, General and Administrative Expenses ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

​

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​

Selling, general and administrative expenses

​

$

26,445

​

$

21,627

​

$

4,818

​

22.3

%

Percent of net sales

​

18.6

%

19.4

%

​

​

(0.8)

%

​

Selling, general and administrative expense (“SG&A”) consists primarily of payroll and related expenses for the Company’s sales and administrative staff, professional fees including accounting, legal and technology costs and expenses, and sales and marketing costs. SG&A in Q3 2026 increased from Q3 2025 primarily due to higher employee payroll and benefit expenses due to increased total employee headcount, which increased from 632 employees in Q3 2025 to 684 employees in Q3 2026.  The increase in SG&A was also attributed to higher bonus expenses and annual bonus accruals related to record sales and income for the Company in the current period.

15

Other Income (Expense), Net ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

Other income (expense):

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​ ​ ​

Realized gain on sales of marketable trading securities

​

$

260

​

$

172

​

$

88

​

51.2

%

Unrealized (loss) gain on marketable trading securities

​

​

(9)

​

​

105

​

​

(114)

​

(108.6)

%

Interest and other (expense)

​

​

(47)

​

​

(46)

​

​

(1)

​

2.2

​

Other income (expense), net

​

$

204

​

$

231

​

$

(27)

​

(11.7)

%

Other income (expense), net as a percent of revenues

​

0.1

%

0.2

%

​

​

(0.1)

%

​

Other income (expense), net, primarily consists of income or loss on trading in short-term marketable equity securities of publicly- held corporations and interest related to the Company’s debt obligations. The Company’s investment strategy consists of both long and short positions, as well as utilizing options designed to improve returns. During Q3 2026, the Company recognized a net gain on trading securities of $251,000 as compared to a net gain of $277,000 in Q3 2025.  The net trading securities change when comparing Q3 2026 and Q3 2025 was primarily due to the timing of sales and purchases and general market climate for short and long positions during the applicable period.

Interest and other (expense), net, decreased in the current period compared to the same period in the prior year, which was primarily due to interest expense from borrowings on the Company’s line of credit being slightly higher in the current year period.

Income Tax Provision ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

​

​

2026

​ ​ ​

2025

​ ​ ​

​

Change

​ ​ ​

Change

​ ​ ​

Income tax provision

​ ​ ​

$

4,640

​ ​ ​

$

3,162

​ ​ ​

$

1,478

​ ​ ​

46.7

%

Percent of pre-tax income

​

25.5

%

24.9

%

​

​

0.6

%

​

The provision for income taxes increased by $1,478,000 in Q3 2026 over the same prior year period. This increase was primarily due to higher income in the current quarter as compared to the prior year period. The income tax provision as a percent of pre-tax income increased from 24.9% at Q3 2025 to 25.5% at Q3 2026, which was primarily due to the state tax rate mix and permanent book tax differences.

Comparison of the Nine Months Ended May 31, 2026 and 2025

Net Sales and Gross Profit ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended

​

​

​

​

​

​

​

​ ​ ​

May 31,

​

$

​

%

​

​

​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​

Net sales

​

$

371,139

​

$

305,462

​

$

65,677

​

21.5

%

Cost of sales

​

​

256,111

​

​

214,100

​

​

42,011

​

19.6

%

Gross profit

​

$

115,028

​

$

91,362

​

$

23,666

​

25.9

%

Gross profit as a percent of net sales

​

31.0

%

29.9

%

​

​

1.1

%

​

The increase in revenues in the nine months ended May 31, 2026 as compared to the nine months ended May 31, 2025 was largely due to the expansion of our sales force headcount. The increase in revenues was also due to the development of better relationships with vendors and customers, and higher inventory stock readily available to meet customer demand in the current period.  Gross profit as a percent of net sales has increased 1.1% in the current period, primarily due to the development of better relationships with our customers and vendors.

16

Selling, General and Administrative Expenses ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

​

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​

Selling, general and administrative expenses

​

$

71,730

​

$

60,979

​

$

10,751

​

17.6

%

Percent of net sales

​

19.3

%

20.0

%

​

​

(0.7)

%

SG&A in the nine months ended May 31, 2026 increased from the same period in the prior year primarily due to higher employee payroll and benefit expenses and due to increased total employee headcount in the current period. SG&A also increased in the current period when compared to the same period in the prior year due to increased bonus expense and accrued annual bonuses due to higher revenues and income in the current period.

Other Income (Expense), Net ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

Other income (expense) :

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​ ​ ​

Realized gain on sales of marketable trading securities

​

$

737

​

$

556

​

$

181

​

32.6

%

Unrealized (loss) gain on marketable trading securities

​

​

(27)

​

​

205

​

​

(232)

​

(113.2)

%

Interest and other (expense)

​

​

(130)

​

​

(143)

​

​

13

​

(9.1)

​

Other income (expense), net

​

$

580

​

$

618

​

$

(38)

​

(6.1)

%

Other income (expense) , net as a percent of revenues

​

0.0

%

0.0

%

​

​

0.0

%

During the nine months ended May 31, 2026, the Company recognized a net gain on trading securities of $710,000 as compared to a net gain of $761,000 in the same period in the prior year. The increase in the realized gain on marketable trading securities in the current period over the prior period was primarily due to a larger amount invested in treasury bond ETFs during the current period.  The change in the unrealized (loss) gain on marketable securities in the current and prior periods was primarily due to timing of purchases and general market climate for short and long positions at the end of the applicable periods.

Interest and other (expense), net, decreased in the current period compared to the same period in the prior year, which was primarily due to interest expense from borrowings on the line of credit being slightly higher in the prior year period and having a higher interest rate of 6.75% compared to 6.00% in the current period.

​

Income Tax Provision ($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended

​

​

​

​

​

​

​

​

May 31,

​

$

​

%

​

​

​

2026

​ ​ ​

2025

​ ​ ​

Change

​ ​ ​

Change

​ ​ ​

Income tax provision

​ ​ ​

$

11,196

​ ​ ​

$

7,835

​ ​ ​

$

3,361

​ ​ ​

42.9

%

Percent of pre-tax income

​

25.5

%

25.3

%

​

​

0.2

%

The provision for income taxes increased by $3,361,000 in the nine months ended May 31, 2026 when compared to the same period in the prior year. This increase was primarily due to higher income in the current period as compared to the prior year period. The income tax provision as a percent of pre-tax income remained consistent at 25.5% and 25.3% for the nine months ended May 31, 2026 and May 31, 2025, respectively.

17

Liquidity and Capital Resources

As of May 31, 2026 and August 31, 2025, the Company held approximately $758,000 and $728,000 of unrestricted cash and cash equivalents, respectively. The Company also held $33,235,000 and $30,375,000 of marketable securities at May 31, 2026 and August 31, 2025, respectively, which could be liquidated, if necessary.

The Company currently has an available $20,000,000 line of credit with the Bank pursuant to the 2024 Business Loan Agreement. The Company entered into the Amendment on February 15, 2026 with the Bank, which extended the maturity date of the line of credit from February 15, 2026 to February 15, 2028. The line of credit has a variable interest rate set at the bank prime index rate, provided that in no event would such interest rate be less than 4.0% per annum. Borrowings are secured by substantially all of the assets of the Company and its subsidiaries. The 2024 Business Loan Agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of each of May 31, 2026 and August 31, 2025, the Company was in compliance with all such covenants. The outstanding balance of the line of credit as of each of May 31, 2026 and August 31, 2025 was zero.

Cash Flows from Operating Activities

Cash provided by operating activities was $4,532,000 for the nine months ended May 31, 2026 as compared with cash provided by operating activities of $9,404,000 for the nine months ended May 31, 2025. Cash provided by operating activities in the current period was due to net income of $32,682,000 in the nine months ended May 31, 2026 . Cash provided by operating activities was adversely impacted by increases in inventory, prepaid expenses, and accounts receivable . The increase in inventory was primarily due to purchases of our main line inventory and expected customer demand of products. The increase in prepaid expenses is due to quarterly payments of estimated income taxes for the current fiscal year  .  As of Q3 2026, the Company has paid $12,191,000 in estimated taxes related to the current fiscal year.  The increase in accounts receivable is primarily due to the increased revenues in the current period.  

The prior period cash provided by operating activities was primarily due to net income in the prior year period and an increase in trade accounts payable.  Cash provided by operating activities in the prior year period was adversely impacted by increases in inventory and trade accounts receivable.

Cash Flows from Investing Activities

Cash used in investing activities was $5,475,000 for the nine months ended May 31, 2026 as compared with cash used in investing activities of $7,685,000 for the nine months ended May 31, 2025. Cash used in investing activities in the current period was primarily due to the purchase of marketable securities and leasehold improvements in the current period.  Purchase of marketable securities were made to invest the Company’s excess cash in the period. The Company expects to make marketable security purchases during the remainder of the fiscal year 2026 using its excess cash provided by operating activities.  Purchase of leasehold improvements were made for our corporate headquarters campus expansion of the Hunter Property.

Cash Flows from Financing Activities

Cash provided by financing activities for the nine months ended May 31, 2026 was $970,000 as compared with cash provided by financing activities of $4,715,000 for the nine months ended May 31, 2025. The cash provided by financing activities for the current period was primarily due to the net increase in bank overdraft in the current period, which represents outstanding checks in excess of cash due to the nightly sweep feature of the cash account to the line of credit with the Bank. The cash provided by financing activities for the prior period was primarily due to an increase in the bank overdraft balance. The Company expects to see increases in the bank overdraft due to increased purchases of inventory due to projected sales growth and timing of cash being moved to marketable securities.

Contractual Financial Obligations

In addition to using cash flow generated from operations, the Company finances its operations through borrowings under its line of credit. These financial obligations are recorded in accordance with accounting rules applicable to the underlying transactions, with the result being that amounts owed under debt agreements and finance leases are recorded as liabilities on the consolidated balance sheets while lease obligations recorded as operating leases are disclosed in the notes to the consolidated financial statements and management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 10-K for the year ended August 31, 2025 as filed with the SEC on November 20, 2025.

​

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

18

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of May 31, 2026, pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of May 31, 2026 because of the material weakness in internal control over financial reporting discussed below.

Notwithstanding the material weakness in internal control over financial reporting described below, our management has concluded that our consolidated financial statements included in this Quarterly Report were fairly stated in all material respects in accordance with GAAP.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management concluded that there was a material weakness in the Company’s internal control over financial reporting as of August 31, 2025, related to the Company’s internal controls over the financial statement closing process, including manual journal entries recorded in the preparation of the financial statements in the closing process, including lease accounting and reconciliations, and accumulation of information for disclosure in the preparation of the consolidated financial statements.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and/or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Remediation Plan

We are in the process of developing and implementing a plan for the remediation of the material weakness. Management has implemented and adopted a third-party software to improve the capture, accounting for, and reporting of leases. We plan to continue to enhance controls over reconciliations by implementing improved accounting software that should aid in reconciliations and monitoring of general ledger accounts. We plan to continue to assess the effectiveness of our remediation efforts in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures.

We are committed to maintaining a strong control environment throughout the Company. Although we believe that the above efforts have improved our internal control over financial reporting, we plan to continue to assess, implement and enhance our remediation efforts until the material weakness identified above is remediated.

Changes in Internal Control over Financial Reporting

Except as disclosed above, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the period ended May 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

​

19

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to legal proceedings and claims which arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject us to damages or equitable remedies, and divert our management and key personnel from our business operations. We currently are not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial position or cash flows.

​

Item 1A. Risk Factors

Item 1A of Part I of our Annual Report on Form 10-K for the year ended August 31, 2025, filed with the SEC on November 20, 2025, contain risk factors identified by the Company. There have been no material changes to the risk factors we previously disclosed in our filings with the SEC. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.

​

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.   Other Information

None.

​

20

Item 6.   Exhibits

​

​

No.	​ ​ ​	Exhibit
​	​	​
​	​	​
31.1*	​	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	​	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	​	Inline XBRL Instance Document
101.SCH	​	Inline XBRL Taxonomy Extension Schema Document
101.CAL	​	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	​	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	​	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	​	Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104	​	Cover Page Interactive Data File (formatted as Inline XBRL)
​	​	​

​

​

​

21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​	EACO CORPORATION
​	(Registrant)
​	​
Date: July 9, 2026	/s/ Glen Ceiley
​	Glen Ceiley
​	Chief Executive Officer
​	(Principal Executive Officer & Principal Financial Officer)
​	​
​	/s/ Michael Narikawa
​	Michael Narikawa
​	Controller and Chief Financial Executive
​	(Principal Accounting Officer)

​

​

​

22