Eaco Corp 10-Q for FY2025 Q3
Eaco Corp (EACO)
About this 10-Q
Eaco Corp filed this 10-Q on July 11, 2025, covering the quarter ended May 31, 2025 (FY2025 Q3).
Headline figures
Quarter ended May 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $111.41M
- up 15.9% from $96.12M a year earlier
- Net income
- $9.52M
- up 703.6% from net income of $1.18M a year earlier
- Diluted EPS
- $1.94
- up 708.3% from $0.24 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
(
(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:
(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.
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).
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 | ☐ | ☒ | |
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
As of July 10, 2025,
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, | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Net sales | | $ | | | $ | | | $ | | | $ | |
Cost of sales |
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Gross margin |
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Operating expenses: |
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Selling, general and administrative expenses |
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Impairment on termination of lease | | | | | | | | | | | | |
Income from operations |
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Other income (expense): |
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Net gain (loss) on trading securities |
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| ( | |
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| ( |
Interest and other (expense) | | | ( | | | ( | | | ( | | | ( |
Other income (expense), net |
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| ( | |
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| ( |
Income before income taxes |
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Provision for income taxes |
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Net income |
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Cumulative preferred stock dividend |
| | ( | |
| ( | |
| ( | |
| ( |
Net income attributable to common shareholders | | $ | | | $ | | | $ | | | $ | |
Basic earnings per share | | $ | | | $ | | | $ | | | $ | |
Diluted earnings per share | | $ | | | $ | | | $ | | | $ | |
Basic weighted average common shares outstanding |
| | | | | | | | | | | |
Diluted weighted average common shares outstanding | | | | | | | | | | | | |
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, | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Net income | | $ | | | $ | | | $ | | | $ | |
Other comprehensive gain (loss), net of tax: | | | | | | | | | | | | |
Foreign translation gain (loss) | | | | | | | | | ( | | | ( |
Total comprehensive income | | $ | | | $ | | | $ | | | $ | |
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, | ||
|
| 2025 |
| 2024* | ||
ASSETS |
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Current Assets: |
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Cash and cash equivalents | | $ | | | $ | |
Restricted cash | |
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Trade accounts receivable, net | |
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Inventory, net | |
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Marketable securities, trading | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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Non-current Assets: | |
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Property, equipment and leasehold improvements, net | | | | | | |
Operating lease right-of-use assets | | | | | | |
Other assets, net | | | | | | |
Total assets | | $ | | | $ | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | |
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Current Liabilities: | | | | | | |
Trade accounts payable | | $ | | | $ | |
Accrued expenses and other current liabilities | | | | | | |
Current portion of long-term debt | |
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Current portion of operating lease liabilities | | | | | | |
Total current liabilities | |
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Non-current Liabilities: | |
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Line of credit | | | | | | — |
Long-term debt | | | | | | |
Operating lease liabilities | | | | | | |
Total liabilities | |
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Commitments and Contingencies Note 8 | |
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Shareholders’ Equity: | |
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Convertible preferred stock, $ | | | | | | |
Common stock, $ | |
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Additional paid-in capital | | | | | | |
Accumulated other comprehensive income | |
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Retained earnings | |
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Total shareholders’ equity | |
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Total liabilities and shareholders’ equity | | $ | | | $ | |
* |
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, 2025 | | | | | | | | | | | | | | | | | | | | | | |
Balance, August 31, 2024 |
| | | $ | | | | | $ | | | $ | | | $ | | | $ | | | $ | |
Preferred dividends |
| — | | | — | | — | | | — | | | — | |
| — | |
| ( | |
| ( |
Foreign translation loss |
| — | | | — | | — | | | — | | | — | |
| ( | |
| — | |
| ( |
Net income |
| — | | | — | | — | | | — | | | — | |
| — | |
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Balance, November 30, 2024 | | | | $ | | | | | $ | | | $ | | | $ | | | $ | | | $ | |
Preferred dividends | | — | | | — | | — | | | — | | | — | | | — | | | ( | | | ( |
Foreign translation loss | | — | | | — | | — | | | — | | | — | | | ( | | | — | | | ( |
Net income | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Balance, February 28, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Preferred dividends | | — | | | — | | — | | | — | | | — | | | — | | | ( | | | ( |
Foreign translation gain | | — | | | — | | — | | | — | | | — | | | | | | — | | | |
Net income | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Balance, May 31, 2025 | | | | $ | | | | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | | | | | | |
For the three and nine months ended May 31, 2024 | | | | | | | | | | | | | | | | | | | | | | |
Balance, August 31, 2023 |
| | | $ | | | | | $ | | | $ | | | $ | | | $ | | | $ | |
Preferred dividends | | — | | | — | | — | | | — | | | — | | | — | | | ( | | | ( |
Foreign translation loss | | — | | | — | | — | | | — | | | — | | | ( | | | — | | | ( |
Net income | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Balance, November 30, 2023 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Preferred dividends | | — | | | — | | — | | | — | | | — | | | — | | | ( | | | ( |
Foreign translation gain | | — | | | — | | — | | | — | | | — | | | | | | — | | | |
Net income | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Balance, February 29, 2024 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Preferred dividends | | — | | | — | | — | | | — | | | — | | | — | | | ( | | | ( |
Foreign translation gain | | — | | | — | | — | | | — | | | — | | | | | | — | | | |
Net income | | — | | | — | | — | | | — | | | — | | | — | | | | | | |
Balance, May 31, 2024 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
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, | ||||
|
| 2025 |
| 2024 | ||
Operating activities: |
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|
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Net income | | $ | | | $ | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
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Depreciation and amortization | |
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Bad debt expense | |
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Deferred tax provision | | | ( | | | |
Net unrealized (gain) loss on trading securities | |
| ( | |
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Impairment on termination of lease | | | | | | |
Increase (decrease) in cash flow from change in: | |
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Trade accounts receivable | |
| ( | |
| ( |
Inventory | |
| ( | |
| ( |
Prepaid expenses and other assets | |
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Operating lease right-of-use assets | |
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Trade accounts payable | |
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Accrued expenses and other current liabilities | |
| ( | |
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Operating lease liabilities | | | ( | | | ( |
Net cash provided by operating activities | |
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Investing activities: | |
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Purchase of property, equipment, and leasehold improvements | | | ( | | | ( |
Net (purchases) sales of marketable securities, trading | | | ( | | | |
Net cash used in investing activities | | | ( | | | ( |
Financing activities: | | | | | | |
Borrowings on revolving credit facility | | | | | | — |
Repayments on long-term debt | | | ( | | | ( |
Preferred stock dividend | |
| ( | |
| ( |
Bank overdraft | | | | | | |
Net cash provided by financing activities | |
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Effect of foreign currency exchange rate changes on cash and cash equivalents | |
| ( | |
| ( |
Net increase (decrease) in cash, cash equivalents, and restricted cash | |
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| ( |
Cash, cash equivalents, and restricted cash - beginning of period | | | | | | |
Cash, cash equivalents, and restricted cash - end of period | | $ | | | $ | |
Supplemental disclosures of cash flow information: | |
| | |
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Cash paid for interest | | $ | | | $ | |
Cash paid for income taxes | | $ | | | $ | |
See accompanying notes to unaudited condensed consolidated financial statements.
6
EACO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2025
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
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, 2024 (“fiscal 2024”). The condensed consolidated balance sheet as of August 31, 2024 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2024. Operating results for the three and nine months ended May 31, 2025 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.
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 $
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 $
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
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.
On October 20, 2023, the Company completed the purchase of its corporate headquarters located at 5065 East Hunter Avenue in Anaheim, California (the “Hunter Property”) from the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”) for $
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.
8
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.
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 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 have represented less than
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 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 (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, 2025, the Company had right of use assets of approximately $
9
Earnings Per Common Share
Basic earnings per common share for each of the three and nine months ended May 31, 2025 and 2024 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
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, 2025 and 2024 was $
Concentrations
Net sales to customers outside the United States were approximately
Net sales to customers outside the United States were approximately
No single customer accounted for more than 10% of revenues for either of the three months and nine months ended May 31, 2025 and 2024. In addition, no single customer’s receivable balance accounted for more than 10% of the Company’s customer receivables as of either May 31, 2025 or August 31, 2024.
Note 3. Accrued Liabilities
The Company’s accrued liabilities as of May 31, 2025 and August 31, 2024 are summarized as follows (in thousands):
|
| May 31, |
| August 31, | ||
| | 2025 | | 2024 | ||
Accrued expenses and other current liabilities: |
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|
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|
| | | | | | |
Accrued accounts payable | | $ | | | $ | |
Accrued compensation and payroll | |
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Accrued taxes | |
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Total Accrued expenses and other current liabilities | | $ | | | $ | |
10
Note 4. Debt
The Company has a $
The line of credit has a variable interest rate set at the bank prime index rate, but provided that in no event would such interest rate be less than
The Company also entered into a loan agreement with the Bank on July 12, 2019 to borrow up to $
Fiscal Year |
| Principal Amount Due | |
2025 | | $ | |
2026 | |
| |
2027 | |
| |
Total | | $ | |
The Company has also entered into a business loan agreement (and related $
Note 5. Leases
The Company leases its facilities and automobiles under operating lease agreements (
On October 20, 2023, the Company completed the purchase of the Hunter Property, which was leased by the Company, from the Trust for a purchase price of $
|
| May 31, |
| August 31, |
| ||
| | 2025 | | 2024 |
| ||
Operating lease assets: | | | | | | | |
Right-of-use assets | | $ | | | $ | | |
| | | | | | | |
Operating lease liabilities: | | | | | | | |
Current lease liabilities | | $ | | | $ | | |
Long-term lease liabilities | | $ | | | $ | | |
| | | | | | | |
Weighted average remaining lease terms | | | | | | ||
Incremental borrowing rate |
| | | % | | | % |
The discount rate used on the operating ROU assets represented the Company’s incremental borrowing rate at lease inception.
11
Minimum future rental payments under operating leases are as follows:
Years Ending: |
|
| |
2025 (remaining three months) | | $ | |
2026 | |
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2027 | |
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2028 | |
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2029 | |
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Thereafter | |
| |
Future minimum lease payments | | $ | |
Less interest | |
| ( |
Present value of minimum lease payments | | $ | |
Operating lease costs under these leases were approximately $
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
On July 26, 2019, the Company entered into a Commercial Lease Agreement with the Trust (the “Hunter Lease”), for the lease of the Hunter Property, which houses the Company’s corporate headquarters. The Company completed its move to the headquarters located at the Hunter Property in March 2020. The term of the Hunter Lease commenced on September 2, 2019 and ended on October 20, 2023, and had an initial monthly rental rate of $
On October 5, 2023, the Company entered into a Standard Purchase Agreement and Escrow Instructions (the “Purchase Agreement”) to purchase the Hunter Property for a purchase price of $
Note 7. Income Taxes
During the nine months ended May 31, 2025 and 2024, the Company recorded an income tax provision of and , respectively, resulting in an effective tax rate of
During the three months ended May 31, 2025 and 2024, the Company recorded an income tax provision of and $
The current period effective tax rate differs from the statutory rate of
12
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, 2025 and 2024, the Company did
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 the present time. 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 commenced in April 2024. As a result of the mediation, the parties agreed in principle to settle this matter for approximately $
Note 9. Subsequent Events
Management has evaluated events subsequent to May 31, 2025, 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 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, unexpected costs and losses from operations or investments, increases in costs and overhead, impact of tariffs and international trade conflicts, 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 good relationships with suppliers, the willingness of lenders to extend financing commitments and the availability of capital resources, and the other risks set forth in “Risk Factors” in Part II, Item 1A of this 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 the Philippines. 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, 2025.
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.
On October 20, 2023, the Company completed the purchase of the Hunter Property from the Trust for $31,000,000 in cash. An appraisal, conducted in September 2023 by an independent third party, valued the Hunter Property at $31,000,000, which was inclusive of tenant improvements previously purchased and recorded by the Company. Upon completion of the Hunter Property purchase and the termination of the Hunter Lease during the first quarter of fiscal 2024, the Company recorded an asset impairment of $3,900,000, which was the net book carrying value of the tenant improvements on the date the building was acquired.
Results of Operations
Comparison of the Three Months Ended May 31, 2025 and 2024
Net Sales and Gross Profit ($ in thousands)
| | Three Months Ended | | | | | | | ||||
|
| May 31, | | $ | | % | | |||||
| | 2025 |
| 2024 |
| Change |
| Change | | |||
Net sales | | $ | 111,410 | | $ | 96,121 | | $ | 15,289 | | 15.9 | % |
Cost of sales | | | 77,337 | | | 68,193 | | | 9,144 | | 13.4 | % |
Gross profit | | $ | 34,073 | | $ | 27,928 | | $ | 6,145 | | 22.0 | % |
Gross profit as a percent of net sales | |
| 30.6 | % |
| 29.1 | % |
| | | 1.5 | % |
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, 2025 (“Q3 2025”) as compared to the three months ended May 31, 2024 (“Q3 2024”) was largely due to increased sales of our products as a result of the expansion of our sales force. We increased the number of sales personnel by 36 employees, from 399 sales employees in Q3 2024 to 435 sales employees in Q3 2025. We believe that increasing sales headcount leads to the addition of new customers and enables us to sell more products to existing customers. Revenues and gross profit for Q3 2025 also increased as compared to Q3 2024 due to developing better relationships with vendors and customers, and the Company having higher inventory stock readily available in the current period.
Selling, General and Administrative Expenses ($ in thousands)
| | Three Months Ended | | | | | | | ||||
| | May 31, | | $ | | % | | |||||
|
| 2025 |
| 2024 |
| Change |
| Change | | |||
Selling, general and administrative expenses | | $ | 21,627 | | $ | 26,314 | | $ | (4,687) | | (17.8) | % |
Percent of net sales | |
| 19.4 | % |
| 27.4 | % |
| | | (8.0) | % |
15
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 2025 decreased from Q3 2024 primarily due to a legal expense accrual in the amount of approximately $7,150,000 related to a pending class action lawsuit that the Company expects to settle. See Note 8 of the Notes to Consolidated Financial Statements of this Report for further explanation. SG&A in Q3 2025 also had higher employee salary expenses due to increased total employee headcount, which increased from 584 employees in Q3 2024 to 632 employees in Q3 2025.
Other Income (Expense), Net ($ in thousands)
| | Three Months Ended | | | | | | | ||||
| | May 31, | | $ | | % | | |||||
|
| 2025 |
| 2024 |
| Change |
| Change |
| |||
Other income (expense): |
|
| |
| | |
| | |
| | |
Net gain (loss) on trading securities | | $ | 277 | | $ | (24) | | $ | 301 | | 1,254.2 | % |
Interest and other expense, net | | | (46) | | | (44) | | | (2) | | (4.5) | % |
Other income (expense), net | | $ | 231 | | $ | (68) | | $ | 299 | | 439.7 | % |
Percent of net sales | |
| 0.2 | % |
| 0.1 | % |
| | | 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 2025, the Company recognized a net gain on trading securities of $277,000 as compared to a net loss of $24,000 in Q3 2024. The net trading securities gain in Q3 2025 and loss in Q3 2024 was primarily due to timing of sales and purchases and general market climate for short and long positions during the applicable period.
Interest and other expense, net, increased in Q3 2025 compared to Q3 2024, which was primarily due to interest expense from borrowings on the line of credit being slightly higher during Q3 2025 compared to Q3 2024.
Income Tax Provision ($ in thousands)
| | Three Months Ended | | | | | | | ||||
| | May 31, | | $ | | % | | |||||
| | 2025 |
| 2024 |
| Change |
| Change |
| |||
Income tax provision |
| $ | 3,162 |
| $ | 362 |
| $ | 2,800 |
| 773.5 | % |
Percent of pre-tax income | |
| 24.9 | % |
| 23.4 | % |
| | | 1.5 | % |
The provision for income taxes increased by $2,800,000 in Q3 2025 over the same prior year period. This increase was primarily due to higher income in the current quarter as compared to the prior year period. The income tax provision as a percent of pre-tax income increased from 23.4% at Q3 2024 to 24.9% at Q3 2025, which was primarily due to the state tax rate mix and permanent book tax differences.
Comparison of the Nine Months Ended May 31, 2025 and 2024
Net Sales and Gross Profit ($ in thousands)
| | Nine Months Ended | | | | | |
| ||||
| | May 31, | | | | | |
| ||||
| | 2025 | | 2024 | | $ Change | | % Change |
| |||
Net sales |
| $ | 305,462 |
| $ | 259,711 |
| $ | 45,751 |
| 17.6 | % |
Cost of sales | |
| 214,100 | |
| 183,184 | |
| 30,916 |
| 16.9 | % |
Gross profit | | $ | 91,362 | | $ | 76,527 | | $ | 14,835 |
| 19.4 | % |
Percent of net sales | |
| 29.9 | % |
| 29.5 | % |
|
|
| 0.4 | % |
The increase in revenues and gross margins as a percent of revenues in the nine months ended May 31, 2025 as compared to the nine months ended May 31, 2024 was largely due to a larger amount of inventory available and increased sales employee headcount in the current period.
16
Selling, General and Administrative Expenses ($ in thousands)
| | Nine Months Ended | | | | | |
| ||||
|
| 2025 |
| 2024 |
| $ Change |
| % Change |
| |||
Operating expense: |
| | |
| | |
| | |
| | |
Selling, general and administrative expenses | | $ | 60,979 | | $ | 61,129 | | $ | (150) |
| (0.2) | % |
Impairment on termination of lease | |
| — | |
| 3,906 | |
| (3,906) |
| (100.0) | % |
Operating expenses | | $ | 60,979 | | $ | 65,035 | |
| (4,056) |
| (6.2) | % |
Percent of net sales | |
| 20.0 | % |
| 25.0 | % |
| | | (5.0) | % |
SG&A in the nine months ended May 31, 2025 decreased from the same period in the prior year primarily due to a legal expense accrual of approximately $7,390,000 in legal expenses accrued in the period related to a pending class action lawsuit that the Company expects to settle. See Note 8 of the Notes to Consolidated Financial Statements of this Report for further explanation. Further, during the first quarter of fiscal year 2024, the Company recognized an impairment loss of $3,900,000 due to the purchase of the Hunter Property and termination of the Hunter Lease. The losses in the previously year were partially offset by an increase of employee headcount in the current period compared to the same period in the prior year. Operating expenses as a percent of revenue in the current period decreased from the prior year period primarily due to the impairment loss and legal settlement accrual in the prior year.
Other Income (Expense), Net ($ in thousands)
| | Nine Months Ended | | | | | |
| ||||
| | May 31, | | | | | |
| ||||
| | 2025 | | 2024 | | $ Change | | % Change |
| |||
Other income (expense): |
| |
|
| |
|
| |
|
|
| |
Net gain (loss)on trading securities | | $ | 761 | | $ | (45) | | $ | 806 |
| 1,791.1 | % |
Interest and other expense, net | |
| (143) | |
| (128) | |
| (15) |
| (11.7) | % |
Other income (expense), net | | $ | 618 | | $ | (173) | | $ | 791 |
| 457.2 | % |
Percent of net sales | |
| 0.2 | % |
| (0.1) | % |
|
|
| 0.3 | % |
During the nine months ended May 31, 2025, the Company recognized a net gain on trading securities of $761,000 as compared to a net loss of $45,000 in the same period in the prior year. The net trading securities losses and gains, as applicable, in the nine months ended May 31, 2025 and 2024 were primarily due to timing of sales and purchases of investment securities and general market climate for long positions during the applicable period. Further, current year period, there was a higher amount of cash invested than in the prior period, which produced higher dividends in the current period.
Interest and other expense, net, increased during the nine months ended May 31, 2025 compared to the same period in the prior year, which was primarily due to interest expense from carrying a higher balance on the line of credit in the current period compared to the same period in the prior year.
Income Tax Provision ($ in thousands)
| | Nine Months Ended | | | | | |
| ||||
| | May 31, | | | | | |
| ||||
| | 2025 | | 2024 | | $ Change | | % Change |
| |||
Income tax provision |
| $ | 7,835 |
| $ | 2,858 |
| $ | 4,977 |
| 174.1 | % |
Percent of pre-tax income | |
| 25.3 | % |
| 25.2 | % |
|
|
| 0.1 | % |
The provision for income taxes increased by $4,977,000 for the nine months ended May 31, 2025 when compared to the prior year period. This increase was primarily due to higher taxable income in the current nine months period as compared to the prior year period.
Liquidity and Capital Resources
As of May 31, 2025 and August 31, 2024, the Company held approximately $7,270,000 and $843,000 of unrestricted cash and cash equivalents, respectively. The Company also held $22,100,000 and $14,700,000 of marketable securities at May 31, 2025 and August 31, 2024, respectively, which could be liquidated, if necessary.
The Company currently has an available $20,000,000 line of credit with the Bank. The Company entered into a Change in Terms Agreement dated April 12, 2024 with the Bank, which increased the principal loan amount under the line of credit to $20,000,000 and extended the maturity date of the line of credit from July 5, 2024 to February 15, 2026. 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 3.5% per annum. Borrowings are secured by
17
substantially all of the assets of the Company and its subsidiaries. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of each of May 31, 2025 and August 31, 2024, the Company was in compliance with all such covenants. The outstanding balance of the line of credit as of each of May 31, 2025 and August 31, 2024 was $491,000 and zero, respectively.
In April 2024, the Company engaged in a mediation concerning a pending class action lawsuit and reached an agreement in principle to settle the lawsuit for approximately $7,500,000, which settlement amount was increased to $7,683,000 in May 2025. In July 2025, the court approved the settlement. Pursuant to the settlement agreement, as amended, the aggregate settlement payment (less the $154,000 that has already been paid) is expected to be paid by the Company within the next few months after the final order is issued in the litigation. At that time, the Company will also pay the Company’s share of the employment taxes related to the portion of the settlement amount that is payable to the Company’s employees. The Company accrued $7,390,000 and $285,000 in fiscal 2024 and fiscal 2023, respectively, in anticipation of this settlement. The Company expects to use existing cash and cash equivalents, and cash generated from operations to fund this settlement payment.
Cash Flows from Operating Activities
Cash provided by operating activities was $9,404,000 for the nine months ended May 31, 2025 as compared with cash provided by operating activities of $4,393,000 for the nine months ended May 31, 2024. Cash provided by operating activities in the current period was primarily due to net income earned in the period. Cash provided by operating activities was adversely impacted to some extent by increases in inventory purchases and trade accounts receivables. Increases in accounts receivables were primarily due to our sales growth within the current period. The primary driver of increased inventory purchases in the current period was due to growth in our sales backorders and restocking authorized lines to meet projected customer demand. The Company expects to see increases in our accounts receivables and inventory for the remainder of the fiscal year and in the following fiscal year due to our budgeted revenue growth. The prior period cash provided by operating activities was primarily due to the net income in that period and an increase in trade accounts payable and a decrease in operating lease right-of-use assets.
Cash Flows from Investing Activities
Cash used in investing activities was $7,685,000 for the nine months ended May 31, 2025 as compared with cash used in investing activities of $15,061,000 for the nine months ended May 31, 2024. Cash used in investing activities in the current period was primarily due to the purchase of marketable securities that is funded by the Company’s excess cash in the period. The Company expects to see a decrease in marketable securities in the next few months for the cash payout of the class action settlement for approximately $7,683,000, see Note 8. Prior period cash used in investing activities was primarily due to the purchase of the Hunter Property in October 2023, partially offset by net sales of marketable securities.
Cash Flows from Financing Activities
Cash provided by financing activities for the nine months ended May 31, 2025 was $4,715,000 as compared with cash provided by financing activities of $2,915,000 for the nine months ended May 31, 2024. The cash provided by financing activities for the current period is 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 used in financing activities for the prior period is primarily due to an increase in the bank overdraft balance. The Company expects to continue to see increases in the bank overdraft due to increased purchasing of inventory and professional services due to projected sales growth.
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, 2024 as filed with the SEC on November 29, 2024.
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, 2025, 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, 2025 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 on Form 10-Q 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, 2024, 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 related to the Company’s lease accounts, and certain inventory and accrued liability accounts.
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 detailed plan for remediation of the material weakness, including establishing additional levels of review and approval. The Company has hired a third-party accounting consultant and has recently hired an assistant controller to aid the implementation of additional levels of review and approval. Further, the Company is developing and implementing system enhancements that should aid in the remediation of the material weakness.
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 will 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, 2025 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. Please see Note 8 of the Notes to Consolidated Financial Statements of this Report for disclosure regarding a lawsuit to for which we have entered into a settlement agreement, which agreement has obtained court approval and is pending class notification and acceptance.
Item 1A. Risk Factors
Item 1A of Part I of our Annual Report on Form 10-K for the year ended August 31, 2024, filed with the SEC on November 29, 2024, and the Quarterly Report on Form 10-Q for the quarter ended November 30, 2024, contain risk factors identified by the Company. Except as noted below, 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
20
Item 6. Exhibits
No. |
| Exhibit |
31.1* | | |
32.1* | | |
101.INS | | XBRL Instance Document |
101.SCH | | XBRL Taxonomy Extension Schema Document |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
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 11, 2025 | /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
Exhibit 31.1
Certification
I, Glen Ceiley, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of EACO Corporation (the “registrant”). |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 11, 2025 |
| /S/ GLEN CEILEY |
| | Glen Ceiley |
| | Chief Executive Officer |
| | (Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
(PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the accompanying Quarterly Report on Form 10-Q of EACO Corporation (the “Company”) on Form 10-Q for the quarter ended May 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Glen Ceiley, the Chief Executive Officer (Principal Executive Officer) and Principal Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: July 11, 2025 |
| /S/ GLEN CEILEY |
| | Glen Ceiley |
| | Chief Executive Officer |
| | (Principal Executive Officer and Principal Financial Officer) |