WINA 10-Q

Winmark Corp (WINA)

10-Q 2026-07-15 For: 2026-06-27

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Added on July 15, 2026

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Minnesota		41-1622691
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, no par value per share	WINA	Nasdaq Global Market


		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	CONSOLIDATED CONDENSED BALANCE SHEETS June 27, 2026 and December 27, 2025	3

	CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Three Months Ended June 27, 2026 and June 28, 2025 Six Months Ended June 27, 2026 and June 28, 2025	4

	CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) Three Months Ended June 27, 2026 and June 28, 2025 Six Months Ended June 27, 2026 and June 28, 2025	5

	CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Six Months Ended June 27, 2026 and June 28, 2025	6

	NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II.	OTHER INFORMATION	17

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

	SIGNATURES	20


		June 27, 2026			December 27, 2025
ASSETS
Current Assets:
Cash and cash equivalents		$	25,834,500		$	10,295,700
Restricted cash			150,000			165,000
Receivables, less allowance for credit losses of $500 and $500			1,843,400			1,483,500
Income tax receivable			436,800			463,600
Inventories			656,900			362,500
Prepaid expenses			1,846,100			1,325,700
Total current assets			30,767,700			14,096,000
Property and equipment, net			1,086,300			1,219,000
Operating lease right of use asset			1,577,700			1,761,500
Intangible assets, net			2,109,300			2,286,300
Capitalized software			2,210,300			—
Goodwill			607,500			607,500
Other assets			526,600			506,400
Deferred income taxes			4,304,800			4,407,400
		$	43,190,200		$	24,884,100

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		$	2,113,100		$	1,673,900
Accrued liabilities			4,422,500			2,324,800
Deferred revenue			1,669,100			1,667,300
Total current liabilities			8,204,700			5,666,000
Long-term Liabilities:
Line of credit/Term loan			30,000,000			30,000,000
Notes payable, net of unamortized debt issuance costs of $29,800 and $39,000			29,970,200			29,961,000
Deferred revenue			8,417,400			8,350,100
Operating lease liabilities			2,054,800			2,414,200
Other liabilities			2,165,800			2,175,200
Total long-term liabilities			72,608,200			72,900,500
Shareholders’ Equity (Deficit):
Common stock, no par value, 10,000,000 shares authorized, 3,587,079 and 3,571,861 shares issued and outstanding			23,110,400			19,612,800
Retained earnings (accumulated deficit)			(60,733,100)			(73,295,200)
Total shareholders' equity (deficit)			(37,622,700)			(53,682,400)
		$	43,190,200		$	24,884,100


		Three Months Ended						Six Months Ended
		June 27, 2026			June 28, 2025			June 27, 2026			June 28, 2025
Revenue:
Royalties		$	20,117,000		$	18,662,100		$	39,379,800		$	36,436,700
Leasing income			—			46,600			—			2,354,500
Merchandise sales			859,300			803,600			1,513,200			1,744,900
Franchise fees			419,500			338,400			762,400			670,400
Other			570,200			566,100			1,160,300			1,129,900
Total revenue			21,966,000			20,416,800			42,815,700			42,336,400
Cost of merchandise sold			818,500			766,500			1,437,000			1,654,800
Selling, general and administrative expenses			7,506,400			6,589,200			15,376,000			14,024,000
Income from operations			13,641,100			13,061,100			26,002,700			26,657,600
Interest expense			(609,800)			(609,800)			(1,223,700)			(1,223,600)
Interest and other income			155,600			254,600			274,400			404,400
Income before income taxes			13,186,900			12,705,900			25,053,400			25,838,400
Provision for income taxes			(2,792,100)			(2,104,700)			(5,403,800)			(5,280,800)
Net income		$	10,394,800		$	10,601,200		$	19,649,600		$	20,557,600
Earnings per share - basic		$	2.90		$	3.00		$	5.49		$	5.81
Earnings per share - diluted		$	2.81		$	2.89		$	5.31		$	5.60
Weighted average shares outstanding - basic			3,582,087			3,539,437			3,577,169			3,539,042
Weighted average shares outstanding - diluted			3,696,010			3,673,135			3,701,516			3,673,039


							Retained
							Earnings
		Common Stock					(Accumulated
		Shares		Amount			Deficit)			Total
BALANCE, December 27, 2025		3,571,861		$	19,612,800		$	(73,295,200)		$	(53,682,400)
Stock options exercised		5,810			1,033,900			—			1,033,900
Compensation expense relating to stock options		—			614,100			—			614,100
Cash dividends ($0.96 per share)		—			—			(3,429,000)			(3,429,000)
Comprehensive income (Net income)		—			—			9,254,700			9,254,700
BALANCE, March 28, 2026		3,577,671			21,260,800			(67,469,500)			(46,208,700)
Stock options exercised		9,408			1,235,400			—			1,235,400
Compensation expense relating to stock options		—			614,200			—			614,200
Cash dividends ($1.02 per share)		—			—			(3,658,400)			(3,658,400)
Comprehensive income (Net income)		—			—			10,394,800			10,394,800
BALANCE, June 27, 2026		3,587,079			23,110,400			(60,733,100)			(37,622,700)


Contract Liabilities expected to be recognized in	Amount
2026	$	786,800
2027		1,581,400
2028		1,412,000
2029		1,263,600
2030		1,150,000
Thereafter		3,892,700
	$	10,086,500


Amortization expected to be expensed in	Amount
2026	$	177,000
2027		354,000
2028		354,000
2029		354,000
2030		354,000
Thereafter		516,300
	$	2,109,300


Operating Lease Liabilities expected to be recognized in		Amount
2026		$	417,900
2027			851,100
2028			874,600
2029			898,600
2030			—
Thereafter			—
Total lease payments			3,042,200
Less imputed interest			(278,400)
Present value of lease liabilities		$	2,763,800


										AVAILABLE
		TOTAL						TOTAL		FOR		COMPLETED
		12/27/2025		OPENED		CLOSED		6/27/2026		RENEWAL		RENEWALS		% RENEWED
Plato’s Closet		526		6		(2)		530		17		17		100	%
Once Upon A Child		441		7		(3)		445		21		21		100	%
Play It Again Sports		309		5		(2)		312		8		8		100	%
Style Encore		67		—		(1)		66		1		1		100	%
Music Go Round		35		1		—		36		3		3		100	%
Total Franchised Stores		1,378		19		(8)		1,389		50		50		100	%


							Total Number of		Maximum Number
							Shares Purchased as		of Shares that may
		Total Number of		Average Price			Part of a Publicly		yet be Purchased
Period		Shares Purchased		Paid Per Share			Announced Plan(1)		Under the Plan

March 29, 2026 to May 2, 2026		—		$	—		—		70,656
May 3, 2026 to May 30, 2026		—		$	—		—		70,656
May 31, 2026 to June 27, 2026		—		$	—		—		70,656

3.1		Articles of Incorporation, as amended (Exhibit 3.1)(1)

3.2		By-laws, as amended and restated to date (Exhibit 3.2)(2)

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T: Financial statements from the Quarterly Report on Form 10-Q of Winmark Corporation and Subsidiaries for the quarter ended June 27, 2026, formatted in Inline XBRL: (i) Consolidated Condensed Balance Sheets, (ii) Consolidated Condensed Statements of Operations, (iii) Consolidated Condensed Statements of Shareholders’ Equity (Deficit), (iv) Consolidated Condensed Statements of Cash Flows, and (v) Notes to Consolidated Condensed Financial Statements.
104		The cover page from the Quarterly Report on Form 10-Q of Winmark Corporation and Subsidiaries for the quarter ended June 27, 2026, formatted in Inline XBRL (contained in Exhibit 101).

		WINMARK CORPORATION


Date: July 15, 2026	By:	/s/ Brett D. Heffes
		Brett D. Heffes Chair of the Board and Chief Executive Officer (principal executive officer)


Date: July 15, 2026	By:	/s/ Anthony D. Ishaug
		Anthony D. Ishaug Chief Financial Officer and Treasurer (principal financial and accounting officer)


		Six Months Ended
		June 27, 2026			June 28, 2025
OPERATING ACTIVITIES:
Net income		$	19,649,600		$	20,557,600
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			187,600			196,300
Amortization of intangible assets			177,000			177,000
Compensation expense related to stock options			1,228,300			1,065,600
Deferred income taxes			102,600			86,400
Operating lease right of use asset amortization			183,800			166,400
Tax benefits on exercised stock options			742,800			971,200
Change in operating assets and liabilities:
Receivables			(359,900)			(371,500)
Income tax receivable/payable			(716,000)			(1,341,400)
Inventories			(294,400)			35,500
Prepaid expenses			(520,400)			472,500
Other assets			(20,200)			(14,300)
Accounts payable			439,200			(371,700)
Accrued and other liabilities			1,737,900			2,178,000
Deferred revenue			69,200			315,700
Net cash provided by operating activities			22,607,100			24,123,300
INVESTING ACTIVITIES:
Capitalized software			(2,210,300)			—
Purchase of property and equipment			(54,900)			(105,900)
Net cash used for investing activities			(2,265,200)			(105,900)
FINANCING ACTIVITIES:
Repurchases of common stock			—			(2,418,700)
Proceeds from exercises of stock options			2,269,300			1,586,300
Dividends paid			(7,087,400)			(6,584,600)
Net cash used for financing activities			(4,818,100)			(7,417,000)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			15,523,800			16,600,400
Cash, cash equivalents and restricted cash, beginning of period			10,460,700			12,329,800
Cash, cash equivalents and restricted cash, end of period		$	25,984,500		$	28,930,200
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	1,207,800		$	1,207,800
Cash paid for income taxes		$	5,253,000		$	5,368,500

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Condensed Balance Sheets to the total of the same amounts shown above:
		Six Months Ended


		June 27, 2026			June 28, 2025
Balance at beginning of period		$	10,017,400		$	9,687,300
Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period			1,013,700			1,078,200
Fees earned that were included in the balance at the beginning of the period			(944,600)			(762,500)
Balance at end of period		$	10,086,500		$	10,003,000


							Weighted Average
							Remaining
		Number of		Weighted Average			Contractual Life
		Shares		Exercise Price			(years)			Intrinsic Value
Outstanding, December 27, 2025		315,002		$	238.30
Granted		32,868			377.89
Exercised		(15,218)			149.12
Forfeited		(1,671)			358.52
Outstanding, June 27, 2026		330,981		$	255.65		5.77		$	54,435,200
Exercisable, June 27, 2026		238,613		$	207.37		4.53		$	50,344,300


		Six Months Ended			Six Months Ended
		June 27, 2026			June 28, 2025
Risk free interest rate			4.26	%		4.10	%
Expected life (years)			6.7			6.0
Expected volatility			28.78	%		30.14	%
Dividend yield			3.06	%		2.51	%
Option fair value		$	97.36		$	117.14