[10-Q] Envela Corporation Quarterly Earnings Report
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the Transition Period From to
Commission File Number
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) |
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(STATE OF INCORPORATION) | (I.R.S. EMPLOYER IDENTIFICATION NO.) |
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |
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(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol |
| Name of Exchange on which Registered |
ELA | NYSE Texas |
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 August 5, 2025 the registrant had
Table of Contents
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION |
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ITEM 1. | FINANCIAL STATEMENTS | 4 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) | 4 | ||
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 | 5 | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) | 6 | ||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) | 7 | ||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (UNAUDITED) | 8 | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 9 | ||
NOTE 1 – BASIS OF PRESENTATION | 9 | ||
NOTE 2 – PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS | 9 | ||
NOTE 3 – ACCOUNTING POLICIES AND ESTIMATES | 10 | ||
NOTE 4 – INVENTORIES | 16 | ||
NOTE 5 – GOODWILL | 16 | ||
NOTE 6 – PROPERTY AND EQUIPMENT, NET | 17 | ||
NOTE 7 – INTANGIBLE ASSETS, NET | 18 | ||
NOTE 8 – ACCRUED EXPENSES | 19 | ||
NOTE 9 – SEGMENT INFORMATION | 19 | ||
NOTE 10 – REVENUE | 22 | ||
NOTE 11 – LEASES | 23 | ||
NOTE 12 – BASIC AND DILUTED AVERAGE SHARES | 24 | ||
NOTE 13 – DEBT | 26 | ||
NOTE 14 – STOCK-BASED COMPENSATION | 28 | ||
NOTE 15 – RELATED PARTY TRANSACTIONS | 28 | ||
NOTE 16 – CONTINGENCIES | 28 | ||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 29 | |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 48 | |
ITEM 4. | CONTROLS AND PROCEDURES | 48 | |
PART II. OTHER INFORMATION | |||
ITEM 1. | LEGAL PROCEEDINGS | 50 | |
ITEM 1A. | RISK FACTORS | 50 | |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES | 50 | |
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ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 50 | |
ITEM 4. | MINE SAFETY DISCLOSURES | 50 | |
ITEM 5. | OTHER INFORMATION | 51 | |
ITEM 6. | EXHIBITS | 52 | |
SIGNATURE | 53 | ||
GLOSSARY OF DEFINED TERMS | 54 |
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PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(Unaudited) |
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Sales | $ | | $ | | $ | | $ | | ||||
Cost of goods sold |
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Gross margin |
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Expenses: |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Operating income |
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Other income (expense): |
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Other income |
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Interest expense |
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Income before income taxes |
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Income tax expense |
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Net income | $ | | $ | | $ | | $ | | ||||
Basic earnings per share: |
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Net income | $ | | $ | | $ | | $ | | ||||
Diluted earnings per share: |
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Net income | $ | | $ | | $ | | $ | | ||||
Weighted average shares outstanding: |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, |
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2025 | 2024 | |||||
Assets | (Unaudited) |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net of allowances |
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Notes receivable |
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Inventories |
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Prepaid expenses |
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Other current assets | | | ||||
Total current assets |
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Property and equipment, net |
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Right-of-use assets from operating leases |
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Goodwill |
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Intangible assets, net |
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Deferred tax asset | | | ||||
Other assets |
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Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Notes payable |
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Operating lease liabilities |
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Accrued expenses |
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Other current liabilities |
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Total current liabilities |
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Notes payable, less current portion |
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Operating lease liabilities, less current portion |
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Total liabilities | $ | | $ | | ||
Contingencies (Note 16) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Treasury stock at cost, |
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Additional paid-in capital |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, | ||||||
(Unaudited) |
| 2025 |
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Operations |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operations: |
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Depreciation and amortization |
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Provision for credit losses |
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Deferred taxes |
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Non-cash lease expense |
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Loss on disposal of equipment | | — | ||||
Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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Prepaid expenses |
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Other assets |
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Accounts payable |
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Accrued expenses |
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Operating leases |
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Other liabilities |
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Net cash provided by operations |
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Investing |
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Purchase of property and equipment |
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Purchase of intangible assets |
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Proceeds from (investment in) notes receivable | | ( | ||||
Proceeds from sales of equipment | | — | ||||
Net cash (used in) investing |
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Financing |
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Payments on notes payable |
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Purchase of treasury stock | ( | ( | ||||
Net cash (used in) financing |
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Net change in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period | $ | | $ | | ||
Supplemental disclosures |
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Cash paid during the period for: |
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Interest | $ | | $ | | ||
Income Taxes | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
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Common Stock | Treasury Stock | Preferred Stock | Paid-in | Retained | Stockholders’ | |||||||||||||||||||
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Three Months Ended June 30, 2024 | ||||||||||||||||||||||||
Balance as of April 1, 2024 | $ | ( | $ | ( | — | $ | — | $ | $ | $ | | |||||||||||||
Net Income |
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Shares repurchased |
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Balance as of June 30, 2024 |
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Common Stock | Treasury Stock | Preferred Stock | Paid-in | Retained | Stockholders’ | |||||||||||||||||||
(Unaudited) | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | |||||||||||||||
Three Months Ended June 30, 2025 |
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Balance as of April 1, 2025 | $ | ( | $ | ( | — | $ | — | $ | $ | $ | | |||||||||||||
Net Income |
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Shares repurchased |
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Balance as of June 30, 2025 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENVELA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
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Common Stock | Treasury Stock | Preferred Stock | Paid-in | Retained | Stockholders’ | |||||||||||||||||||
(Unaudited) | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | |||||||||||||||
Six Months Ended June 30, 2024 |
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Balance as of January 1, 2024 | $ | ( | $ | ( | — | $ | — | $ | $ | $ | | |||||||||||||
Net Income |
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Shares repurchased |
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Balance as of June 30, 2024 |
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Common Stock | Treasury Stock | Preferred Stock | Paid-in | Retained | Stockholders’ | |||||||||||||||||||
(Unaudited) | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | |||||||||||||||
Six Months Ended June 30, 2025 |
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Balance as of January 1, 2025 | $ | ( | $ | ( | — | $ | — | $ | $ | $ | | |||||||||||||
Net Income |
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Shares repurchased |
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Balance as of June 30, 2025 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 — BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements of Envela Corporation, a Nevada corporation, and its subsidiaries (together with its subsidiaries, the “Company” or “Envela”), included herein have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X prescribed by the Securities and Exchange Commission (the “SEC”). Pursuant to the SEC’s rules and regulations, Quarterly Reports do not include all of the information and notes required by U.S. GAAP. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”), necessary for a fair presentation of the unaudited condensed consolidated financial statements for these periods, have been included. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2025 (“Fiscal 2025”). Management suggests these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“Fiscal 2024”) filed with the SEC on March 26, 2025 (“2024 Annual Report”). The Company's operations are located within the contiguous U.S. and its functional and reporting currency is the U.S. Dollar (“$”).
Envela files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other information with the SEC. Such information and amendments to reports previously filed or furnished are available on the Company’s corporate website, www.envela.com, as soon as reasonably practicable after such materials are filed with or furnished to the SEC. The SEC also maintains an internet site at www.sec.gov that contains the Company’s filings.
NOTE 2 — PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS
Throughout this document, Envela Corporation is referred to as “we,” “us,” “our,” “Envela,” or the “Company.”
Principles of Consolidation
Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The Company does not have any variable interest entities requiring consolidation. All intercompany transactions and balances have been eliminated.
Nature of Operations
The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our operating and reportable segments are detailed below:
Consumer Segment
Our consumer segment primarily operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, including pre-owned fine jewelry, diamonds and gemstones, luxury watches, along with secondary market bullion. We incorporate recycled diamonds and gemstones into our new designs meaning they were previously set and unset, producing a low-carbon and ethical origin product. The Company caters to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry at accessible prices. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.
Commercial Segment
Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the Information Technology (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
environmental sustainability. We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.
See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.
See Note 3 – Accounting Policies and Estimates and Note 9 – Segment Information for further details.
NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of and/or potential impairment of goodwill and intangible assets for the reporting units; useful lives of our tangible and intangible assets; allowances for credit losses; the market value of, and demand for, our inventory and the potential outcome of uncertain tax positions that have been recognized on our condensed consolidated financial statements or tax returns. Actual results could differ from those estimates and assumptions.
Revenue Recognition
Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.
Consumer Segment
For the consumer segment, revenue from monetary transactions (i.e., cash and accounts receivable) with wholesale customers is recognized when the merchandise is delivered or at the point of sale for retail customers, and consideration for the transaction has been made either by immediate payment or through a receivable obligation. For e-commerce, revenue is recognized when the customer has fulfilled their obligation to pay or promise to pay, and goods have been shipped.
Revenue on precious metals requiring an assay is recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals.
The Company offers third-party financing for retail customers. Revenue is recognized upon transfer of title, with the promise of the third-party financing company to pay.
Commercial Segment
The commercial segment recognizes revenue at an amount that reflects the consideration to which we expect to be entitled to in exchange for transferring goods or services to the customer.
The commercial segment recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under the guidance of ASC 606, an estimate of the variable consideration that we are expected to be entitled to is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made once the underlying weight and any precious metal spot price movement is resolved, which is usually around six weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract. Historically, these amounts have not been material.
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The commercial segment provides its services according to a Scope of Work (“SOW”). Revenue from our service offerings is recognized upon completion of the SOW at a predetermined amount based on the number of units processed and a preset price per unit or weight measurement.
The commercial segment provides freight arrangement services related to inbound asset or material movements to our facilities. Revenue from freight arrangement services is recognized at settlement with our inbound customers, which occurs when the SOW has been completed. Under the guidance of ASC 606, the Company is deemed to be a principal and as such records freight arrangement services as a component of revenue, and the associated expense is recorded as a component of cost of goods sold.
The commercial segment recognizes revenue on outright sales when the terms and transaction price are agreed to, the product is shipped, and title is transferred.
See Note 10 – Revenue for further details.
Sales Returns and Allowances
Sales are recorded, net of expected returns. In some cases, the consumer and commercial segment’s customers may return a product purchased within 30 days of receipt. Our allowance for estimated returns is based on our review of historical returns experience and reduces our reported revenues accordingly.
As of June 30, 2025, and December 31, 2024, the consumer segment’s allowance for returns was $
As of June 30, 2025, and December 31, 2024, the commercial segment’s allowance for returns was $
Concentrations and Credit Risk
The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to certain domestic precious metals transactions requiring an assay which are of short duration and settled on comparable terms. Overall customer concentrations as a percentage of sales may vary as a result of the mix of product being sold within each comparative period. Individual customer concentrations are also impacted by each customer’s production schedule and as such the Company identifies the most appropriate sales outlet to ensure a timely transaction settlement.
For the six months ended June 30, 2025, two customers aggregated
For the six months ended June 30, 2024, two customers aggregated
The Company believes that no single customer is critical to its business as a result of having diverse revenue streams and the optionality of sales outlets primarily associated with base and precious metals.
Shipping and Handling Costs
Within the consumer and commercial segments, shipping and handling costs are accounted for as fulfillment costs within cost of goods sold.
For the three months ended June 30, 2025 and 2024, the consumer segment’s shipping and handling costs were $
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended June 30, 2025 and 2024, the consumer segment’s shipping and handling costs were $
Advertising Costs
The consumer and commercial segment’s advertising costs are expensed as incurred.
For the three months ended June 30, 2025 and 2024, the consumer segment’s advertising costs were $
For the six months ended June 30, 2025 and 2024, the consumer segment’s advertising costs were $
Leases
We determine if an arrangement is a lease at inception. We do not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs.
In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842, Leases requires us to use the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate. For leases one-year or less the Company has elected not to record lease liabilities and right-of use assets and instead recognize the expense associated with the lease payments using the straight-line basis.
Income Taxes
Income taxes are accounted for under the asset and liability method prescribed by ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Valuation of Deferred Tax Assets
The Company’s deferred tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the condensed consolidated financial statements or the effective tax rate for the three and six months ended June 30, 2025 and 2024.
As of June 30, 2025, the Company had a deferred tax asset of $
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Segment Information
The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. For the periods presented in these condensed consolidated financial statements, the Company’s CODM was identified as the Chief Executive Officer.
The Company allocates its corporate expenses to its operating segments, including selling, general and administrative expenses, depreciation and amortization, other income, interest expense, and income tax expense.
See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.
See Note 2 – Principles of Consolidation and Nature of Operations and Note 9 – Segment Information for further details.
Earnings Per Share
Basic earnings per share of our common stock, par value $
See Note 12 – Basic and Diluted Average Shares for further details.
Stock-Based Compensation
The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for an award of equity instruments, including grants of stock options, based on the fair value of the award at the date of the grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities within the condensed consolidated statement of cash flows.
See Note 14 – Stock-Based Compensation for further details.
Taxes Collected from Customers
The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenue or expenses.
Financial Instruments
The carrying amounts reported in the condensed consolidated balance sheets for cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the notes receivable and notes payable approximate fair value because the underlying instruments have an interest rate that reflects current market rates. None of these instruments are held for trading purposes.
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At times, cash and cash equivalents exceed federally insured limits.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the condensed consolidated balance sheets approximate fair value.
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Accounts Receivable, Net of Allowances
Accounts receivable represent amounts primarily due from customers on products and services. Our allowance for credit losses is primarily determined by an analysis of our accounts receivable aging, using the expected losses methodology. The allowance for credit losses is determined based on the historical experience of collecting past due amounts, based on the degree of their aging. In addition, specific accounts that are considered and expected to be uncollectable are included in the allowance for credit losses. Accounts receivables are considered delinquent when payment has not been made within contract terms. Accounts receivables are written off when all efforts to collect have been exhausted and the potential for recovery is considered remote.
As of June 30, 2025, and December 31, 2024, the consumer segment’s allowance for credit losses was $
As of June 30, 2025, and December 31, 2024, the commercial segment’s allowance for credit losses was $
Inventories
Consumer Segment
The consumer segment states its inventory at the lower of cost and net realizable value. The cost of inventory is an amount equal to that paid for the individual asset or lot of goods. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net-zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. We monitor metals-based commodity markets to assess any adverse impact on the carrying value of our inventory.
Commercial Segment
The commercial segment states its inventory at the lower of cost and net realizable value. The cost of our technology assets is an amount equal to that paid for the individual asset or lot of goods, or, in instances in which we have an obligation to sell the asset before we pay for it, we utilize the retail cost method to estimate its value. The cost of our processed and unprocessed inventory, primarily consisting of base metals and electronic scrap materials, is determined by utilizing the weighted average cost method. We monitor metals-based commodity markets to assess any adverse impact on the carrying value of our inventory.
See Note 4 – Inventories for further details.
Goodwill
Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year, or earlier if events or circumstances indicate the carrying value may be impaired. There were no triggering events identified during the six months ended June 30, 2025, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented.
See Note 5 – Goodwill for further details.
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Property and Equipment, Net
Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets; except for construction in progress which has not yet been placed into service. The following table depicts the estimated useful lives of our property and equipment asset classes:
Automobiles and trucks |
| |
Buildings |
| |
Building improvements |
| Shorter of |
Furniture and fixtures |
| |
Office technology |
| |
Leasehold improvements |
| Shorter of |
Production and material handling equipment |
|
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Expenditures for repairs and maintenance are expensed as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized.
See Note 6 – Property and Equipment, Net for further details.
Intangible Assets, Net
Finite-lived intangible assets are carried at cost less accumulated amortization and are amortized on a straight-line basis over the estimated useful lives of the assets; except for assets under development that have not yet been placed into service. The following table depicts the estimated useful lives of our property and equipment asset classes:
Customer lists |
| |
Domain names |
| |
Enterprise resource planning systems |
| |
Trade names |
|
Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
See Note 7 – Intangible Assets, Net for further details.
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires an entity to disclose additional information about specific expense categories. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption and retrospective application permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.
No other recently issued or effective ASUs had, or are expected to have, a material impact on our financial position and results of operations.
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4 — INVENTORIES
The following table summarizes the details of the Company’s inventories:
June 30, | December 31, | |||||
| 2025 |
| 2024 | |||
Consumer |
|
|
|
| ||
Trade inventories | $ | | $ | | ||
Sub-total |
| |
| | ||
Commercial |
|
|
|
| ||
Trade inventories |
| |
| | ||
Sub-total |
| |
| | ||
$ | | $ | | |||
NOTE 5 — GOODWILL
The following table summarizes the details of the Company’s changes in goodwill:
June 30, | December 31, | |||||
| 2025 |
| 2024 | |||
Consumer |
|
|
|
| ||
Opening balance | $ | — | $ | | ||
Additions (reductions) (1) |
| — |
| ( | ||
Sub-total |
| — |
| — | ||
Commercial |
|
|
|
| ||
Opening balance |
| |
| | ||
Additions (reductions) |
| — |
| — | ||
Sub-total |
| |
| | ||
$ | | $ | | |||
(1) | The decrease in goodwill of $ |
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 6 — PROPERTY AND EQUIPMENT, NET
The following table summarizes the details of the Company’s property and equipment, net:
June 30, | December 31, | |||||
| 2025 |
| 2024 | |||
Consumer |
|
|
|
| ||
Land | $ | | $ | | ||
Building and improvements |
| |
| | ||
Leasehold improvements |
| |
| | ||
Furniture and fixtures |
| |
| | ||
Machinery and equipment |
| |
| | ||
Vehicles |
| |
| | ||
Construction in progress (1) |
| |
| | ||
| |
| | |||
Less: accumulated depreciation |
| ( |
| ( | ||
Sub-total |
| |
| | ||
Commercial |
|
|
|
| ||
Leasehold improvements |
| |
| | ||
Furniture and fixtures |
| |
| | ||
Machinery and equipment |
| |
| | ||
Vehicles |
| |
| | ||
| |
| | |||
Less: accumulated depreciation |
| ( |
| ( | ||
Sub-total |
| |
| | ||
Corporate |
|
|
|
| ||
Land |
| |
| | ||
Building and improvements |
| |
| | ||
Furniture and fixtures |
| |
| — | ||
Machinery and equipment |
| |
| | ||
Construction in progress (1) |
| |
| — | ||
| |
| | |||
Less: accumulated depreciation |
| ( |
| ( | ||
Sub-total |
| |
| | ||
$ | | $ | | |||
| (1) | As of June 30, 2025 and December 31, 2024, these assets are being constructed, have not yet been placed into service, and are not yet depreciable. |
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 7 — INTANGIBLE ASSETS, NET
The following table summarizes the details of the Company’s intangible assets, net:
June 30, | December 31, | |||||
| 2025 |
| 2024 | |||
Consumer |
|
|
|
| ||
Technology | $ | | $ | | ||
Customer lists | | | ||||
Assets under development (1) |
| |
| | ||
| |
| | |||
Less: accumulated amortization |
| ( |
| ( | ||
Sub-total |
| |
| | ||
Commercial |
|
|
|
| ||
Trademarks/tradenames |
| |
| | ||
Customer contracts |
| |
| | ||
Customer relationships |
| |
| | ||
| |
| | |||
Less: accumulated amortization |
| ( |
| ( | ||
Sub-total |
| |
| | ||
Corporate |
|
|
|
| ||
Technology |
| |
| | ||
| |
| | |||
Less: accumulated amortization |
| ( |
| ( | ||
Sub-total |
| |
| | ||
$ | | $ | | |||
| (1) | As of June 30, 2025 and December 31, 2024, these intangible assets are under development, have not yet been placed into service, and are not yet amortizable. |
The following table depicts the Company’s estimated future amortization expense related to intangible assets as of June 30, 2025:
| Consumer |
| Commercial |
| Corporate |
| Total | |||||
2025 |
| |
| |
| |
| | ||||
2026 |
| |
| |
| |
| | ||||
2027 |
| |
| |
| |
| | ||||
2028 |
| |
| |
| |
| | ||||
2029 |
| |
| |
| — |
| | ||||
Thereafter |
| |
| |
| — |
| | ||||
$ | | $ | | $ | | $ | | |||||
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 8 — ACCRUED EXPENSES
The following table summarizes the details of the Company’s accrued expenses:
| June 30, |
| December 31, | |||
2025 | 2024 | |||||
Consumer |
|
|
|
| ||
Accrued interest | $ | | $ | | ||
Payroll |
| |
| | ||
Taxes |
| |
| | ||
Sub-total |
| |
| | ||
Commercial |
|
|
|
| ||
Accrued interest |
| |
| | ||
Payroll |
| |
| | ||
Taxes |
| |
| — | ||
Unvouchered inventory payments |
| |
| | ||
Other |
| |
| | ||
Sub-total |
| |
| | ||
Corporate |
|
|
|
| ||
Accrued interest |
| |
| | ||
Payroll |
| |
| | ||
Taxes |
| |
| | ||
Professional fees |
| |
| | ||
Other |
| |
| | ||
Sub-total |
| |
| | ||
$ | | $ | | |||
NOTE 9 — SEGMENT INFORMATION
The CODM uses operating income to evaluate the performance of the overall business, make investing decisions, and allocate resources. The following table depicts the Company’s segment results of operations, including significant expenses that are regularly reviewed by the CODM, for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, | ||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | |||||||
Sales | $ | | $ | | $ | |
| $ | | $ | | $ | | |||||
Cost of goods sold |
| |
| |
| |
|
| |
| |
| | |||||
Selling, general and administrative |
| |
| |
| |
|
| |
| |
| | |||||
Depreciation and amortization |
| |
| |
| |
|
| |
| |
| | |||||
Operating income | $ | | $ | | $ | |
| $ | ( | $ | | $ | | |||||
19
Table of Contents
ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table depicts the reconciliation of the Company’s segment operating income to income before income taxes for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, | ||||||||||||||||||
2025 | 2024 | |||||||||||||||||
Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | ||||||||
Operating income | $ | | $ | | $ | |
| $ | ( | $ | | $ | | |||||
Other income |
| |
| |
| |
|
| |
| |
| | |||||
Interest expense |
| ( |
| ( |
| ( |
|
| ( |
| ( |
| ( | |||||
Income before income taxes | $ | | $ | | $ | |
| $ | ( | $ | | $ | | |||||
The following table depicts the Company’s segment results of operations, including significant expenses that are regularly reviewed by the CODM, for the six months ended June 30, 2025 and 2024:
Six Months Ended June 30, | ||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | |||||||
Sales | $ | | $ | | $ | |
| $ | | $ | | $ | | |||||
Cost of goods sold |
| |
| |
| |
|
| |
| |
| | |||||
Selling, general and administrative |
| |
| |
| |
|
| |
| |
| | |||||
Depreciation and amortization |
| |
| |
| |
|
| |
| |
| | |||||
Operating income | $ | | $ | | $ | |
| $ | | $ | | $ | | |||||
20
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table depicts the reconciliation of the Company’s segment operating income to income before income taxes for the six months ended June 30, 2025 and 2024:
Six Months Ended June 30, | ||||||||||||||||||
2025 | 2024 | |||||||||||||||||
Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | ||||||||
Operating income | $ | | $ | | $ | |
| $ | | $ | | $ | | |||||
Other income |
| |
| |
| |
|
| |
| |
| | |||||
Interest expense |
| ( |
| ( |
| ( |
|
| ( |
| ( |
| ( | |||||
Income before income taxes | $ | | $ | | $ | |
| $ | ( | $ | | $ | | |||||
Other significant segment items that are regularly reviewed by the CODM are capital expenditures, which the Company defines as any purchases of property and equipment or intangible assets. The following table depicts capital expenditures for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, | ||||||
| 2025 |
| 2024 | |||
Consumer | $ | | $ | | ||
Commercial |
| |
| | ||
Corporate |
| |
| | ||
$ | | $ | | |||
The following table depicts capital expenditures for the six months ended June 30, 2025 and 2024:
Six Months Ended June 30, | ||||||
| 2025 |
| 2024 | |||
Consumer | $ | | $ | | ||
Commercial |
| |
| | ||
Corporate |
| |
| | ||
$ | | $ | | |||
The following table depicts the Company’s total assets:
As of | ||||||
| June 30, 2025 |
| December 31, 2024 | |||
Consumer | $ | | $ | | ||
Commercial |
| |
| | ||
Corporate |
| |
| | ||
$ | | $ | | |||
21
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 10 — REVENUE
The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended June 30, 2025 and 2024:
| Three Months Ended June 30, |
| |||||||||||||||
2025 | 2024 |
| |||||||||||||||
| Sales |
| Gross Margin |
| Margin | Sales |
| Gross Margin |
| Margin | |||||||
Consumer | $ | | $ | |
| % | $ | | $ | |
| % | |||||
Commercial |
| |
| |
| % |
| |
| |
| % | |||||
$ | | $ | |
| % | $ | | $ | |
| % | ||||||
The following table depicts the Company’s disaggregation of total sales and gross margin for the six months ended June 30, 2025 and 2024:
| Six Months Ended June 30, |
| |||||||||||||||
2025 | 2024 |
| |||||||||||||||
| Sales |
| Gross Margin |
| Margin | Sales |
| Gross Margin |
| Margin | |||||||
Consumer | $ | | $ | |
| % | $ | | $ | |
| % | |||||
Commercial |
| |
| |
| % |
| |
| |
| % | |||||
$ | | $ | |
| % | $ | | $ | |
| % | ||||||
The following table lists the opening and closing balances of our contract assets and liabilities:
| Accounts |
| Contract |
| Contract | ||||
Receivable | Assets | Liabilities | |||||||
Consumer |
|
|
|
|
|
| |||
Opening Balance - 1/1/2024 | $ | | $ | — |
| $ | | ||
Closing Balance - 6/30/2024 |
| |
| — |
| | |||
|
|
| |||||||
Commercial |
|
|
|
|
|
|
|
|
|
Opening Balance - 1/1/2024 |
|
| |
|
| — |
|
| — |
Closing Balance - 6/30/2024 |
|
| |
|
| — |
|
| — |
| Accounts |
| Contract |
| Contract | ||||
Receivable | Assets | Liabilities | |||||||
Consumer |
|
|
|
|
|
| |||
Opening Balance - 1/1/2025 |
| $ | |
| $ | — |
| $ | |
Closing Balance - 6/30/2025 |
| |
| — |
| | |||
|
|
| |||||||
Commercial |
|
|
|
|
|
|
|
|
|
Opening Balance - 1/1/2025 |
|
| |
|
| — |
|
| — |
Closing Balance - 6/30/2025 |
|
| |
|
| — |
|
| |
The Company has
22
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 11 — LEASES
The following table depicts the Company’s future minimum lease payments as of June 30, 2025:
| Operating | ||
Leases | |||
Consumer |
|
| |
2025 | $ | | |
2026 |
| | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
Thereafter |
| | |
Total minimum lease payments |
| | |
Less: imputed interest |
| ( | |
Sub-total |
| | |
Commercial |
|
| |
2025 |
| | |
2026 |
| | |
2027 |
| | |
2028 |
| — | |
2029 |
| — | |
Thereafter |
| — | |
Total minimum lease payments |
| | |
Less: imputed interest |
| ( | |
Sub-total |
| | |
Total |
| | |
Less: current portion |
| | |
$ | | ||
All of the Company’s leased facilities as of June 30, 2025, are non-cancellable. The leases are a combination of triple net leases, for which the Company pays its proportionate share of common area maintenance, property taxes, and property insurance, and modified gross leases, for which the Company directly pays for common area maintenance and property insurance. Lease costs are comprised of a combination of minimum lease payments and variable lease costs.
The following table depicts supplemental cash flow information related to operating leases:
Six Months Ended June 30, | ||||||
| 2025 |
| 2024 | |||
Non-cash activities: right-of-use operating lease assets obtained in exchange for new operating lease liabilities | $ | | $ | | ||
23
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table depicts the Company’s leasing costs for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, | ||||||
| 2025 |
| 2024 | |||
Operating lease cost | $ | | $ | | ||
Variable lease cost |
| |
| | ||
Short-term lease cost |
| |
| | ||
$ | | $ | | |||
The following table depicts the Company’s leasing costs for the six months ended June 30, 2025 and 2024:
Six Months Ended June 30, | ||||||
| 2025 |
| 2024 | |||
Operating lease cost | $ | | $ | | ||
Variable lease cost |
| |
| | ||
Short-term lease cost |
| |
| | ||
$ | | $ | | |||
As of June 30, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases were
NOTE 12 — BASIC AND DILUTED AVERAGE SHARES
The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the three months ended June 30, 2025 and 2024:
| Three Months Ended | |||
June 30, | ||||
2025 | 2024 | |||
Basic weighted average shares |
| |
| |
Effect of potential dilutive securities |
| — |
| |
Diluted weighted average shares |
| |
| |
The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the six months ended June 30, 2025 and 2024:
| Six Months Ended | |||
June 30, | ||||
2025 | 2024 | |||
Basic weighted average shares |
| |
| |
Effect of potential dilutive securities |
| — |
| |
Diluted weighted average shares |
| |
| |
For three and six months ended June 30, 2025 and 2024, there were
24
Table of Contents
ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board of Directors (the “Board”), which gave management authorization to purchase up to
On March 27, 2025, the Board unanimously approved the repurchase of an additional
The following table lists the repurchase of Company shares for the three and six months ended June 30, 2025:
| Total Number of |
| Average Price |
| Total Price |
| Shares Available | |||
Fiscal Period | Shares Purchased | Paid per Share | Paid | to Purchase | ||||||
Balance as of January 1, 2025 |
| | $ | | $ | |
| | ||
January 1 - 31, 2025 |
| — |
| — |
| — |
| | ||
February 1 - 28, 2025 |
| — |
| — |
| — |
| | ||
March 1 - 31, 2025 |
| |
| |
| |
| | ||
Balance as of March 31, 2025 |
| | $ | | $ | |
| | ||
April 1 - 30, 2025 |
| — |
| — |
| — |
| | ||
May 1 - 31, 2025 |
| — |
| — |
| — |
| | ||
June 1 - 30, 2025 |
| |
| |
| |
| | ||
Balance as of June 30, 2025 |
| | $ | | $ | |
| | ||
For the three months ended June 30, 2025, the Company repurchased
For the six months ended June 30, 2025, the Company repurchased
25
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 13 — DEBT
The following table summarizes the details of the Company’s long-term debt obligations:
| Outstanding Balance | |||||
| June 30, |
| December 31, | |||
| 2025 | 2024 | ||||
Consumer |
|
|
|
| ||
Note payable, FSB (1) | $ | | $ | | ||
Note payable, Truist Bank (3) |
| |
| | ||
Notes payable, TBT (4,5) |
| |
| | ||
Note payable, Scottsdale Transaction (6) |
| |
| | ||
Sub-total |
| |
| | ||
Commercial |
|
|
|
| ||
Note payable, FSB (2) |
| |
| | ||
Note payable, Avail Transaction (7) |
| — |
| | ||
Sub-total |
| |
| | ||
Corporate |
|
|
|
| ||
Line of credit, FSB (8) |
| — |
| — | ||
Note payable, TBT (9) |
| |
| | ||
Sub-total |
| |
| | ||
Total |
| |
| | ||
Less: current portion |
| ( |
| ( | ||
$ | | $ | | |||
| (1) | On November 23, 2021, the consumer segment entered into a $ |
| (2) | On November 23, 2021, the commercial segment entered into a $ |
| (3) | On July 9, 2020, the consumer segment entered into a $ |
| (4) | On September 14, 2020, the consumer segment entered into a $ |
| (5) | On July 30, 2021, the consumer segment entered into a $ |
| (6) | On September 12, 2024, the consumer segment entered into a $ |
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ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| (7) | On October 29, 2021, the consumer segment entered into a $ |
| (8) | On November 8, 2024, the Company entered into a $ |
| (9) | On November 4, 2020, a wholly owned subsidiary of Envela entered into a $ |
The following table depicts the Company’s future principal payments on long-term debt obligations as of June 30, 2025:
2025 |
| 2026 |
| 2027 |
| 2028 |
| 2029 |
| Thereafter | |||||||
Consumer |
|
|
|
|
|
| |||||||||||
Note payable, FSB (1) | |
| |
| — |
| — |
| — |
| — | ||||||
Note payable, Truist Bank (3) | |
| |
| |
| |
| |
| | ||||||
Notes payable, TBT (4,5) | |
| |
| |
| |
| |
| | ||||||
Note payable, Scottsdale Transaction (6) | |
| |
| — |
| — |
| — |
| — | ||||||
Sub-total | |
| |
| |
| |
| |
| | ||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
| ||||||
Note payable, FSB (2) | |
| |
| — |
| |
| — |
| — | ||||||
Note payable, Avail Transaction (7) | — |
| — |
| |
| — |
| — |
| — | ||||||
Sub-total | |
| |
| — |
| — |
| — |
| — | ||||||
Corporate |
|
|
|
|
|
|
|
|
|
|
| ||||||
Line of Credit, FSB (8) | — |
| — |
| — |
| — |
| — |
| — | ||||||
Note payable, TBT (9) | |
| — |
| — |
| — |
| — |
| — | ||||||
Sub-total | |
| — |
| — |
| — |
| — |
| — | ||||||
$ | | $ | | $ | | $ | | $ | | $ | | ||||||
The Company was in compliance with all of its debt obligation covenants for the three and six months ended June 30, 2025 and 2024.
The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of June 30, 2025:
| Scheduled |
|
|
|
| ||||
Principal | Loan | ||||||||
Scheduled Principal Payments and Maturities by Year |
| Payments |
| Maturities |
| Total | |||
2025 |
| |
| |
| | |||
2026 |
| |
| |
| | |||
2027 |
| |
| — |
| | |||
2028 |
| |
| — |
| | |||
2029 |
| |
| — |
| | |||
Thereafter |
| |
| |
| | |||
$ | | $ | | $ | | ||||
27
Table of Contents
ENVELA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 14 — STOCK-BASED COMPENSATION
On June 25, 2025, our shareholders approved the adoption of the 2025 Equity Incentive Plan (the “2025 Plan”), effective June 25, 2025. The 2025 Plan provides for the grant of up to
The 2025 Plan will remain in effect for a term of
As of June 30, 2025, no awards have been granted under the 2025 Plan. As a result,
NOTE 15 — RELATED PARTY TRANSACTIONS
The Company has a corporate policy governing the identification, review, consideration, and approval or ratification of transactions with related persons. Under this policy, all related party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with the Company’s best interests and the best interests of its shareholders. The Company utilizes a space owned by a related party, for the secure processing and handling of materials before distribution. No consideration is exchanged between the parties, but the Company estimates that, if costs were incurred, they would be immaterial to its condensed consolidated financial statements.
NOTE 16 — CONTINGENCIES
We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, and proceedings, either individually or in the aggregate, will have a material adverse effect on financial position, results of operations, or liquidity. However, the outcomes of any currently pending lawsuits, claims, and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case. There are no loss contingencies subject to reporting for the three and six months ended June 30, 2025 and 2024.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context indicates otherwise for one of our specific operating segments, references to “we,” “us,” “our,” the “Company” and “Envela” refer to the consolidated business operations of Envela Corporation, and all of its direct and indirect subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (this “Form 10-Q”), including but not limited to: (i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate”, “potential,” “continue,” “deploy” or “believe.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 2024 Annual Report and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events.
Introduction
This section includes a discussion of our operations for the three and six months ended June 30, 2025 and 2024. The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with the Company’s 2024 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report.
Critical Accounting Policies and Estimates
There were no material changes to our critical accounting policies and estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s 2024 Annual Report
Economic Conditions
Impacts of Government Legislation
On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. We are currently evaluating the provisions of the new law and the potential effects on our financial position, results of operations, and cash flows. However, the Company does not expect the new law to have a material impact on the Company’s results of operations, financial condition, or liquidity.
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Table of Contents
Impacts of High Interest Rates and Inflation
The U.S. and other world economies are currently experiencing high interest rates and elevated levels of inflation, coupled with commodity price risk, mainly associated with variations in the market price of precious metals and diamonds, which have the potential to impact consumer discretionary spending behavior. Furthermore, adverse macroeconomic conditions can also impact demand for resale technology assets.
To counterbalance economic cycles that impact market selling prices and/or underlying operating costs, we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology.
We continuously monitor our inventory positions and associated working capital to respond to market conditions and to meet seasonal business cycles and expansionary plans. These economic cycles may from time to time require the business to utilize its line of credit or seek additional capital.
Impacts of Tariffs
The U.S. government has recently adopted new approaches to trade policy, and announced tariffs on certain foreign goods, certain global tariffs, and the possibility of significant additional tariff increases or expansions of tariffs. The timing and scope of such tariffs by the U.S. and retaliatory tariffs by other countries in response to such tariffs are currently uncertain. The impacts of tariffs on each of our reportable segments are detailed below:
Consumer Segment
The Company’s consumer segment does not source inventory from or sell it into international markets, so it is not directly impacted by tariffs. However, global market uncertainty caused by tariffs can increase commodity costs on safe-haven metals such as gold and silver, which may increase working capital requirements. The Company mitigates increased working capital requirements by monitoring its inventory position and turnover, and maintaining disciplined buying practices to maintain margin.
Commercial Segment
The Company’s commercial segment periodically purchases limited quantities of personal technology assets for resale and replacement parts from international markets. Tariffs may increase costs for original equipment manufacturers, retailers, and parts distributors and, as a result, may require the Company to pay more for the purchase of personal technology assets for resale and replacement parts, thus increasing the Company’s required working capital requirements. The Company mitigates increased working capital requirements by monitoring its inventory position and turnover, maintaining disciplined buying practices, and using optimal domestic and international sales channels to maintain margins.
There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks.
Our Business
Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the recommerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our reportable segments are detailed below:
Consumer Segment
Our consumer segment primarily operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, including pre-owned fine jewelry, diamonds and gemstones, luxury watches, along with secondary market bullion. We incorporate recycled diamonds and gemstones into our new designs meaning they were previously set and unset, producing a low-carbon and ethical origin product. The Company caters to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry at accessible prices. Our
30
Table of Contents
profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.
Commercial Segment
Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the ITAD industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.
Segment Activities
The Company believes it is well positioned to take advantage of its overall capital structure.
Consumer Segment
Our strategy is to expand the number of locations we operate by opening new locations throughout the U.S. Likewise, we continue to evaluate opportunities related to complementary product and service offerings for our stores and online business.
Commercial Segment
Our strategy is to expand both organically and through acquisitions. The Company has taken considerable steps to bolster its management team and operating systems to position itself for growth. Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity to our existing facilities.
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Table of Contents
Results of Operations
Comparison of the Three Months Ended June 30, 2025 and 2024
The following table depicts our disaggregated condensed consolidated statements of income for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, |
| ||||||||||||||||||||||
2025 | 2024 |
| |||||||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| % of Sales (1) |
| Consumer |
| Commercial |
| Consolidated |
| % of Sales (1) |
| |||||||
Sales | $ | 43,173,758 | $ | 11,703,075 | $ | 54,876,833 |
| 100.0 | % | $ | 31,990,028 | $ | 13,306,974 | $ | 45,297,002 |
| 100.0 | % | |||||
Cost of goods sold |
| 38,515,772 | $ | 3,973,138 |
| 42,488,910 |
| 77.4 | % |
| 27,968,699 |
| 5,938,846 |
| 33,907,545 |
| 74.9 | % | |||||
Gross margin |
| 4,657,986 |
| 7,729,937 |
| 12,387,923 |
| 22.6 | % |
| 4,021,329 |
| 7,368,128 |
| 11,389,457 |
| 25.1 | % | |||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Selling, general and administrative |
| 3,735,427 |
| 4,936,640 |
| 8,672,067 |
| 15.8 | % |
| 4,009,468 |
| 5,108,580 |
| 9,118,048 |
| 20.1 | % | |||||
Depreciation and amortization |
| 195,604 |
| 264,807 |
| 460,411 |
| 0.8 | % |
| 112,518 |
| 249,749 |
| 362,267 |
| 0.8 | % | |||||
Total operating expenses |
| 3,931,031 |
| 5,201,447 |
| 9,132,478 |
| 16.6 | % |
| 4,121,986 |
| 5,358,329 |
| 9,480,315 |
| 20.9 | % | |||||
Operating income (loss) |
| 726,955 |
| 2,528,490 |
| 3,255,445 |
| 5.9 | % |
| (100,657) |
| 2,009,799 |
| 1,909,142 |
| 4.2 | % | |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other income |
| 156,158 |
| 238,093 |
| 394,251 |
| 0.7 | % |
| 8,003 |
| 217,414 |
| 225,417 |
| 0.5 | % | |||||
Interest expense |
| (53,993) |
| (52,235) |
| (106,228) |
| (0.2) | % |
| (55,697) |
| (53,444) |
| (109,141) |
| (0.2) | % | |||||
Income (loss) before income taxes |
| 829,120 |
| 2,714,348 |
| 3,543,468 |
| 6.5 | % |
| (148,351) |
| 2,173,769 |
| 2,025,418 |
| 4.5 | % | |||||
Income tax (expense) benefit |
| (185,749) |
| (605,320) |
| (791,069) |
| (1.4) | % |
| (29,607) | (431,632) |
| (461,239) |
| (1.0) | % | ||||||
Net income (loss) | $ | 643,371 | $ | 2,109,028 | $ | 2,752,399 |
| 5.0 | % | $ | (177,958) | $ | 1,742,137 | $ | 1,564,179 |
| 3.5 | % | |||||
| (1) | The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. |
The individual segments reported the following for the three months ended June 30, 2025 and 2024:
Sales
Three Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | 54,876,833 | $ | 45,297,002 | $ | 9,579,831 |
| 21.1 | % | |||
% of consolidated sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
Consumer | $ | 43,173,758 | $ | 31,990,028 | $ | 11,183,730 |
| 35.0 | % | |||
% of consumer sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
Commercial | $ | 11,703,075 | $ | 13,306,974 | $ | (1,603,899) |
| (12.1) | % | |||
% of commercial sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
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Table of Contents
Consolidated
Sales increased by $9,579,831, or 21.1%, during the three months ended June 30, 2025, to $54,876,833, as compared to $45,297,002 during the same period in Fiscal 2024.
Consumer Segment
Sales in the consumer segment increased by $11,183,730, or 35.0%, during the three months ended June 30, 2025, to $43,173,758, as compared to $31,990,028 during the same period in Fiscal 2024. The change was primarily attributed to stronger volumes and pricing on our wholesale precious metals transactions. Our wholesale precious metals transactions were impacted by favorable inbound material flow from our in-store buying programs. Our retail stores business also achieved favorable sales results.
Commercial Segment
Sales in the commercial segment decreased by $1,603,899, or 12.1%, during the three months ended June 30, 2025, to $11,703,075, as compared to $13,306,974 during the same period in Fiscal 2024. The change was primarily attributed to the unfavorable performance from our electronic scrap grades and associated recoveries attributable to significant inbound material flow from a single supplier that was present in the same period in Fiscal 2024 and less sales of personal technology assets and from ITAD revenue share settlements during the current period in Fiscal 2025, which were offset by continued growth in our product returns business.
Cost of Goods Sold
Three Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | 42,488,910 | $ | 33,907,545 | $ | 8,581,365 |
| 25.3 | % | |||
% of consolidated sales |
| 77.4 | % |
| 74.9 | % |
|
|
|
| ||
Consumer | $ | 38,515,772 | $ | 27,968,699 | $ | 10,547,073 |
| 37.7 | % | |||
% of consumer sales |
| 89.2 | % |
| 87.4 | % |
|
|
|
| ||
Commercial | $ | 3,973,138 | $ | 5,938,846 | $ | (1,965,708) |
| (33.1) | % | |||
% of commercial sales |
| 33.9 | % |
| 44.6 | % |
|
|
|
| ||
Consolidated
Cost of goods sold increased by $8,581,365, or 25.3%, during the three months ended June 30, 2025, to $42,488,910, as compared to $33,907,545 during the same period in Fiscal 2024.
Consumer Segment
Cost of goods sold in the consumer segment increased by $10,547,073, or 37.7%, during the three months ended June 30, 2025, to $38,515,772, as compared to $27,968,699 during the same period in Fiscal 2024. The change was primarily attributed to the aforementioned higher sales volumes and rising gold prices compared to the same period in Fiscal 2024.
Cost of goods sold as a percentage of sales was 89.2% during the three months ended June 30, 2025, as compared to 87.4% during the three months ended June 30, 2024. The change was primarily attributed to a greater mix of lower margin wholesale precious metals transactions in our overall cost of goods sold and incrementally from product mix at our retail stores.
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Table of Contents
Commercial Segment
Cost of goods sold in the commercial segment decreased by $1,965,708, or 33.1%, during the three months ended June 30, 2025, to $3,973,138, as compared to $5,938,846 during the same period in Fiscal 2024. The change was primarily attributed to the aforementioned lower sales volumes across most of our segment verticals.
Cost of goods sold as a percentage of sales was 33.9% during the three months ended June 30, 2025, as compared to 44.6% during the three months ended June 30, 2024. The change was primarily attributed to our sales mix during Fiscal 2025 in which we experienced higher overall margins from the sale of personal technology assets and ITAD revenue share settlements coupled with continued growth in revenue from our service-related product returns business, which does not have a cost of goods sold component as the associated inventory remains with the client.
Gross Margin
Three Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | 12,387,923 | $ | 11,389,457 | $ | 998,466 |
| 8.8 | % | |||
% of consolidated sales |
| 22.6 | % |
| 25.1 | % |
|
|
|
| ||
Consumer | $ | 4,657,986 | $ | 4,021,329 | $ | 636,657 |
| 15.8 | % | |||
% of consumer sales |
| 10.8 | % |
| 12.6 | % |
|
|
|
| ||
Commercial | $ | 7,729,937 | $ | 7,368,128 | $ | 361,809 |
| 4.9 | % | |||
% of commercial sales |
| 66.1 | % |
| 55.4 | % |
|
|
|
| ||
Consolidated
Gross margin increased by $998,466, or 8.8%, during the three months ended June 30, 2025, to $12,387,923, as compared to $11,389,457 during the same period in Fiscal 2024.
Consumer Segment
Gross margin in the consumer segment increased by $636,657, or 15.8%, during the three months ended June 30, 2025, to $4,657,986, as compared to $4,021,329 during the same period in Fiscal 2024. The net impact of the aforementioned increase in sales of $11,183,730 and increase in cost of goods sold of $10,547,073 resulted in the $636,657 increase in gross margin.
Commercial Segment
Gross margin in the commercial segment increased by $361,809, or 4.9%, during the three months ended June 30, 2025, to $7,729,937, as compared to $7,368,128 during the same period in Fiscal 2024. The net impact of the aforementioned decrease in sales of $1,603,899 and decrease in cost of goods sold $1,965,708 resulted in the $361,809 increase in gross margin.
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Table of Contents
Selling, General and Administrative
Three Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | 8,672,067 | $ | 9,118,048 | $ | (445,981) |
| (4.9) | % | |||
% of consolidated sales |
| 15.8 | % |
| 20.1 | % |
|
|
|
| ||
Consumer | $ | 3,735,427 | $ | 4,009,468 | $ | (274,041) |
| (6.8) | % | |||
% of consumer sales |
| 8.7 | % |
| 12.5 | % |
|
|
|
| ||
Commercial | $ | 4,936,640 | $ | 5,108,580 | $ | (171,940) |
| (3.4) | % | |||
% of commercial sales |
| 42.2 | % |
| 38.4 | % |
|
|
|
| ||
Consolidated
Selling, general and administrative expense decreased by $445,981, or 4.9%, during the three months ended June 30, 2025, to $8,672,067, as compared to $9,118,048 during the same period in Fiscal 2024.
Consumer Segment
Selling, general and administrative expense in the consumer segment decreased by $274,041, or 6.8%, during the three months ended June 30, 2025, to $3,735,427, as compared to $4,009,468 during the same period in Fiscal 2024. The change was primarily attributed to cost reductions associated with store onboarding that occurred in the same period in Fiscal 2024 along with select reductions in production and non-production human capital costs associated with optimizing our headcount during the current period in Fiscal 2025, which was partially offset by the full cost structures related to our new stores.
Commercial Segment
Selling, general and administrative expense in the commercial segment decreased by $171,940, or 3.4%, during the three months ended June 30, 2025, to $4,936,640, as compared to $5,108,580 during the same period in Fiscal 2024. The change was primarily attributed to onboarding support services associated with our enterprise resource planning system (“ERP”) that occurred during the same period in Fiscal 2024 as well as a reduction in variable-cost production expenses that scale with sales volumes, which was partially offset by an increase in non-production human capital costs during the current period in Fiscal 2025.
Depreciation and Amortization
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | 460,411 | $ | 362,267 | $ | 98,144 | 27.1 | % | ||||
% of consolidated sales |
| 0.8 | % |
| 0.8 | % |
|
|
|
| ||
|
|
| ||||||||||
Consumer | $ | 195,604 | $ | 112,518 | $ | 83,086 |
| 73.8 | % | |||
% of consumer sales |
| 0.5 | % |
| 0.4 | % |
|
|
|
| ||
|
|
| ||||||||||
Commercial | $ | 264,807 | $ | 249,749 | $ | 15,058 |
| 6.0 | % | |||
% of commercial sales |
| 2.3 | % |
| 1.9 | % |
|
|
|
| ||
Consolidated
Depreciation and amortization expense increased by $98,144, or 27.1%, during the three months ended June 30, 2025, to $460,411, as compared to $362,267 during the same period in Fiscal 2024.
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Consumer Segment
Depreciation and amortization expense in the consumer segment increased by $83,086, or 73.8%, during the three months ended June 30, 2025, to $195,604, as compared to $112,518 during the same period in Fiscal 2024. The change was primarily attributed to the depreciation of assets placed into service related to our new retail stores.
Commercial Segment
Depreciation and amortization expense in the commercial segment increased by $15,058, or 6.0%, during the three months ended June 30, 2025, to $264,807, as compared to $249,749 during the same period in Fiscal 2024. There was no material change in depreciation or amortization expense from the same period in Fiscal 2024, and as such, no discussion point.
Other Income (Expense)
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | 394,251 | $ | 225,417 | $ | 168,834 |
| 74.9 | % | |||
% of consolidated sales |
| 0.7 | % |
| 0.5 | % |
|
|
|
| ||
|
|
| ||||||||||
Consumer | $ | 156,158 | $ | 8,003 | $ | 148,155 |
| 1,851.2 | % | |||
% of consumer sales |
| 0.4 | % |
| 0.0 | % |
|
|
|
| ||
|
|
| ||||||||||
Commercial | $ | 238,093 | $ | 217,414 | $ | 20,679 |
| 9.5 | % | |||
% of commercial sales |
| 2.0 | % |
| 1.6 | % |
|
|
|
| ||
Consolidated
Other income increased by $168,834, or 74.9%, during the three months ended June 30, 2025, to $394,251, as compared to $225,417 during the same period in Fiscal 2024.
Consumer Segment
Other income in the consumer segment increased by $148,155, or 1,851.2%, during the three months ended June 30, 2025, to $156,158, as compared to $8,003 during the same period in Fiscal 2024. The change was primarily attributed to the receipt of an employee retention credit and incrementally from the earnings on excess cash balances. The impact of dividend and interest income are referenced below.
Dividend income comprised $8,883 and $0 of other income during the three months ended June 30, 2025 and 2024, respectively. Interest income comprised $51,038 and $2 of other income during the three months ended June 30, 2025 and 2024, respectively.
Commercial Segment
Other income in the commercial segment increased by $20,679, or 9.5%, during the three months ended June 30, 2025, to $238,093, as compared to $217,414 during the same period in Fiscal 2024. The change was primarily attributed to the earnings on excess cash balances. The impact of dividend and interest income are referenced below.
Dividend income comprised $74,702 and $0 other income during the three months ended June 30, 2025 and 2024, respectively. Interest income comprised $130,427 and $199,960 of other income during the three months ended June 30, 2025 and 2024, respectively.
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Table of Contents
Interest Expense
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | (106,228) | $ | (109,141) | $ | 2,913 |
| (2.7) | % | |||
% of consolidated sales |
| (0.2) | % |
| (0.2) | % |
|
|
|
| ||
|
|
| ||||||||||
Consumer | $ | (53,993) | $ | (55,697) | $ | 1,704 |
| (3.1) | % | |||
% of consumer sales |
| (0.1) | % |
| (0.2) | % |
|
|
|
| ||
|
|
| ||||||||||
Commercial | $ | (52,235) | $ | (53,444) | $ | 1,209 |
| (2.3) | % | |||
% of commercial sales |
| (0.4) | % |
| (0.4) | % |
|
|
|
| ||
Consolidated
Interest expense decreased by $2,913, or 2.7%, during the three months ended June 30, 2025, to $106,228, as compared to $109,141 during the same period in Fiscal 2024.
Consumer Segment
Interest expense in the consumer segment decreased by $1,704, or 3.1%, during the three months ended June 30, 2025, to $53,993, as compared to $55,697 during the same period in Fiscal 2024. There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.
Commercial Segment
Interest expense in the commercial segment decreased by $1,209, or 2.3%, during the three months ended June 30, 2025, to $52,235, as compared to $53,444 during the same period in Fiscal 2024. There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.
Income Tax Expense
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | (791,069) | $ | (461,239) | $ | (329,830) |
| 71.5 | % | |||
% of consolidated sales |
| (1.4) | % |
| (1.0) | % |
|
| ||||
|
|
| ||||||||||
Consumer | $ | (185,749) | $ | (29,607) | $ | (156,142) |
| 527.4 | % | |||
% of consumer sales |
| (0.4) | % |
| (0.1) | % |
|
|
|
| ||
|
|
| ||||||||||
Commercial | $ | (605,320) | $ | (431,632) | $ | (173,688) |
| 40.2 | % | |||
% of commercial sales |
| (5.2) | % |
| (3.2) | % |
|
|
|
| ||
Consolidated
Income tax expense increased by $329,830, or 71.5%, during the three months ended June 30, 2025, to $791,069, as compared to $461,239 during the same period in Fiscal 2024. Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 22.3% and 22.8% for the three months ended June 30, 2025 and 2024, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
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Table of Contents
Net Income (Loss)
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | 2,752,399 | $ | 1,564,179 | $ | 1,188,220 |
| 76.0 | % | |||
% of consolidated sales |
| 5.0 | % |
| 3.5 | % |
|
|
|
| ||
|
|
| ||||||||||
Consumer | $ | 643,371 | $ | (177,958) | $ | 821,329 |
| NM | ||||
% of consumer sales |
| 1.5 | % |
| (0.6) | % |
|
|
|
| ||
|
|
| ||||||||||
Commercial | $ | 2,109,028 | $ | 1,742,137 | $ | 366,891 |
| 21.1 | % | |||
% of commercial sales |
| 18.0 | % |
| 13.1 | % |
|
|
|
| ||
NM – Not Meaningful
Consolidated
Net income increased by $1,188,220, or 76%, during the three months ended June 30, 2025, to $2,752,399, as compared to $1,564,179 during the same period in Fiscal 2024. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.
Consumer Segment
Net income (loss) increased in the consumer segment by $821,329, during the three months ended June 30, 2025, to net income of $643,371, as compared to net loss of $177,958 during the same period in Fiscal 2024. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.
Commercial Segment
Net income increased in the commercial segment by $366,891, or 21.1%, during the three months ended June 30, 2025, to $2,109,028, as compared to $1,742,137 during the same period in Fiscal 2024. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2025 and 2024 for further details.
Earnings Per Share
The following table depicts the Company’s earnings per share:
| Three Months Ended June 30, |
| Change |
| ||||||||
2025 |
| 2024 | Amount |
| % |
| ||||||
| ||||||||||||
Consolidated | $ | 0.11 | $ | 0.06 | $ | 0.05 |
| 83.3 | % | |||
Consolidated
Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.05, or 83.3%, during the three months ended June 30, 2025, to $0.11, as compared to $0.06 during the same period in Fiscal 2024.
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Table of Contents
Comparison of the Six Months Ended June 30, 2025 and 2024
The following table depicts our disaggregated condensed consolidated statements of income for the six months ended June 30, 2025 and 2024:
Six Months Ended June 30, |
| ||||||||||||||||||||||
| 2025 |
| 2024 | ||||||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| % of Sales (1) |
| Consumer |
| Commercial |
| Consolidated |
| % of Sales (1) | ||||||||
Sales | $ | 79,944,362 | $ | 23,188,300 | $ | 103,132,662 |
| 100.0 | % | $ | 60,216,045 | $ | 24,938,737 | $ | 85,154,782 |
| 100.0 | % | |||||
Cost of goods sold |
| 71,075,473 |
| 7,701,242 |
| 78,776,715 |
| 76.4 | % |
| 52,645,527 |
| 10,799,114 |
| 63,444,641 |
| 74.5 | % | |||||
Gross margin |
| 8,868,889 |
| 15,487,058 |
| 24,355,947 |
| 23.6 | % |
| 7,570,518 |
| 14,139,623 |
| 21,710,141 |
| 25.5 | % | |||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Selling, general and administrative |
| 7,623,333 |
| 9,452,996 |
| 17,076,329 |
| 16.6 | % |
| 7,260,958 |
| 9,494,066 |
| 16,755,024 |
| 19.7 | % | |||||
Depreciation and amortization |
| 376,236 |
| 529,516 |
| 905,752 |
| 0.9 | % |
| 206,194 |
| 499,638 |
| 705,832 |
| 0.8 | % | |||||
Total operating expenses |
| 7,999,569 |
| 9,982,512 |
| 17,982,081 |
| 17.5 | % |
| 7,467,152 |
| 9,993,704 |
| 17,460,856 |
| 20.5 | % | |||||
Operating income |
| 869,320 |
| 5,504,546 |
| 6,373,866 |
| 6.1 | % |
| 103,366 |
| 4,145,919 |
| 4,249,285 |
| 5.0 | % | |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other income |
| 157,007 |
| 442,849 |
| 599,856 |
| 0.6 | % |
| 16,008 |
| 447,937 |
| 463,945 |
| 0.5 | % | |||||
Interest expense |
| (108,040) |
| (104,509) |
| (212,549) |
| (0.2) | % |
| (120,098) |
| (109,897) |
| (229,995) |
| (0.3) | % | |||||
Income before income taxes |
| 918,287 |
| 5,842,886 |
| 6,761,173 |
| 6.6 | % |
| (724) |
| 4,483,959 |
| 4,483,235 |
| 5.3 | % | |||||
Income tax expense |
| (205,822) |
| (1,309,605) |
| (1,515,427) |
| (1.5) | % |
| (88,758) |
| (922,759) |
| (1,011,517) |
| (1.2) | % | |||||
Net income | $ | 712,465 | $ | 4,533,281 | $ | 5,245,746 |
| 5.1 | % | $ | (89,482) | $ | 3,561,200 | $ | 3,471,718 |
| 4.1 | % | |||||
| (1) | The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. |
The individual segments reported the following for the six months ended June 30, 2025 and 2024:
Sales
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % | |||||
Consolidated | $ | 103,132,662 | $ | 85,154,782 | $ | 17,977,880 |
| 21.1 | % | |||
% of consolidated sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
Consumer | $ | 79,944,362 | $ | 60,216,045 | $ | 19,728,317 |
| 32.8 | % | |||
% of consumer sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
Commercial | $ | 23,188,300 | $ | 24,938,737 | $ | (1,750,437) |
| (7.0) | % | |||
% of commercial sales |
| 100.0 | % |
| 100.0 | % |
|
|
|
| ||
Consolidated
Sales increased by $17,977,880 or 21.1%, during the six months ended June 30, 2025, to $103,132,662, as compared to $85,154,782 during the same period in Fiscal 2024.
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Table of Contents
Consumer Segment
Sales in the consumer segment increased by $19,728,317, or 32.8%, during the six months ended June 30, 2025, to $79,944,362, as compared to $60,216,045 during the same period in Fiscal 2024. The change was primarily attributed to the stronger volumes and pricing on our wholesale precious metals transactions that has been consistent throughout Fiscal 2025 as well as stronger contributions from our historical and new retail store footprint.
Commercial Segment
Sales in the commercial segment decreased by $1,750,437, or 7.0%, during the six months ended June 30, 2025, to $23,188,300, as compared to $24,938,737 during the same period in Fiscal 2024. The change was primarily attributed to less sales of personal technology assets and from ITAD revenue share settlements that occurred throughout Fiscal 2025 and incrementally from lower volumes of our electronic scrap grades and associated recoveries which was most pronounced in our second quarter of Fiscal 2025. Offsetting these unfavorable variances was the strong performance of our service-related product returns business.
Cost of Goods Sold
| Six Months Ended June 30, |
| Change | |||||||||
| 2025 |
| 2024 |
| Amount |
| % | |||||
Consolidated | $ | 78,776,715 | $ | 63,444,641 | $ | 15,332,074 |
| 24.2 | % | |||
% of consolidated sales |
| 76.4 | % |
| 74.5 | % |
|
|
|
| ||
Consumer | $ | 71,075,473 | $ | 52,645,527 | $ | 18,429,946 |
| 35.0 | % | |||
% of consumer sales |
| 88.9 | % |
| 87.4 | % |
|
|
|
| ||
Commercial | $ | 7,701,242 | $ | 10,799,114 | $ | (3,097,872) |
| (28.7) | % | |||
% of commercial sales |
| 33.2 | % |
| 43.3 | % |
|
|
|
| ||
Consolidated
Cost of goods sold increased by $15,332,074, or 24.2%, during the six months ended June 30, 2025, to $78,776,715, as compared to $63,444,641 during the same period in Fiscal 2024.
Consumer Segment
Cost of goods sold in the consumer segment increased by $18,429,946, or 35.0%, during the six months ended June 30, 2025, to $71,075,473, as compared to $52,645,527 during the same period in Fiscal 2024. The change was primarily attributed to the aforementioned higher wholesale precious metals transactions compared to the same period in Fiscal 2024.
Cost of goods sold as a percentage of sales was 88.9% during the six months ended June 30, 2025, as compared to 87.4% during the six months ended June 30, 2024. The change was primarily attributed to a greater mix of lower margin wholesale precious metals transactions in our overall cost of goods sold and incrementally from product mix at our retail stores.
Commercial Segment
Cost of goods sold in the commercial segment decreased by $3,097,872, or 28.7%, during the six months ended June 30, 2025, to $7,701,242, as compared to $10,799,114 during the same period in Fiscal 2024. The change was primarily attributed to the aforementioned lower sales volumes across most of our segment verticals.
Cost of goods sold as a percentage of sales was 33.2% during the six months ended June 30, 2025, as compared to 43.3% during the six months ended June 30, 2024. The change was primarily attributed to our sales mix during Fiscal 2025 in which we experienced higher overall margins from the sale of personal technology assets and ITAD revenue share
40
Table of Contents
settlements coupled with continued growth in revenue from our service-related product returns business, which does not have a cost of goods sold component as the associated inventory remains with the client.
Gross Margin
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % | |||||
Consolidated | $ | 24,355,947 | $ | 21,710,141 | $ | 2,645,806 |
| 12.2 | % | |||
% of consolidated sales |
| 23.6 | % |
| 25.5 | % |
|
|
|
| ||
Consumer | $ | 8,868,889 | $ | 7,570,518 | $ | 1,298,371 |
| 17.2 | % | |||
% of consumer sales |
| 11.1 | % |
| 12.6 | % |
|
|
|
| ||
Commercial | $ | 15,487,058 | $ | 14,139,623 | $ | 1,347,435 |
| 9.5 | % | |||
% of commercial sales |
| 66.8 | % |
| 56.7 | % |
|
|
|
| ||
Consolidated
Gross margin increased by $2,645,806, or 12.2%, during the six months ended June 30, 2025, to $24,355,947, as compared to $21,710,141 during the same period in Fiscal 2024.
Consumer Segment
Gross margin in the consumer segment increased by $1,298,371, or 17.2%, during the six months ended June 30, 2025, to $8,868,889, as compared to $7,570,518 during the same period in Fiscal 2024. The net impact of the aforementioned increase in sales of $19,728,317 and increase in cost of goods sold of $18,429,946 resulted in the $1,298,371 increase in gross margin.
Commercial Segment
Gross margin in the commercial segment increased by $1,347,435, or 9.5%, during the six months ended June 30, 2025, to $15,487,058, as compared to $14,139,623 during the same period in Fiscal 2024. The net impact of the aforementioned decrease in sales of $1,750,437 and decrease in cost of goods sold of $3,097,872 resulted in the $1,347,435 increase in gross margin.
Selling, General and Administrative
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % | |||||
Consolidated | $ | 17,076,329 | $ | 16,755,024 | $ | 321,305 |
| 1.9 | % | |||
% of consolidated sales |
| 16.6 | % |
| 19.7 | % |
|
|
|
| ||
Consumer | $ | 7,623,333 | $ | 7,260,958 | $ | 362,375 |
| 5.0 | % | |||
% of consumer sales |
| 9.5 | % |
| 12.1 | % |
|
|
|
| ||
Commercial | $ | 9,452,996 | $ | 9,494,066 | $ | (41,070) |
| (0.4) | % | |||
% of commercial sales |
| 40.8 | % |
| 38.1 | % |
|
|
|
| ||
Consolidated
Selling, general and administrative expense increased by $321,305, or 1.9%, during the six months ended June 30, 2025, to $17,076,329, as compared to $16,755,024 during the same period in Fiscal 2024.
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Table of Contents
Consumer Segment
Selling, general and administrative expense in the consumer segment increased by $362,375, or 5.0%, during the six months ended June 30, 2025, to $7,623,333, as compared to $7,260,958 during the same period in Fiscal 2024. The change was primarily attributed to the full cost structures related to our new stores and partially offset by a reduction in costs associated with store onboarding that occurred in the same period in Fiscal 2024 along with select reductions in production human capital costs associated with optimizing our headcount which was more impactful in the second quarter of Fiscal 2025.
Commercial Segment
Selling, general and administrative expense in the commercial segment decreased by $41,070, or 0.4%, during the six months ended June 30, 2025, to $9,452,996, as compared to $9,494,066 during the same period in Fiscal 2024. The business has been able to maintain its cost structure over the same period in Fiscal 2024, and as such, no discussion point.
Depreciation and Amortization
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % | |||||
Consolidated | $ | 905,752 | $ | 705,832 | $ | 199,920 |
| 28.3 | % | |||
% of consolidated sales |
| 0.9 | % |
| 0.8 | % |
|
|
|
| ||
Consumer | $ | 376,236 | $ | 206,194 | $ | 170,042 |
| 82.5 | % | |||
% of consumer sales |
| 0.5 | % |
| 0.3 | % |
|
|
|
| ||
Commercial | $ | 529,516 | $ | 499,638 | $ | 29,878 |
| 6.0 | % | |||
% of commercial sales |
| 2.3 | % |
| 2.0 | % |
|
|
|
| ||
Consolidated
Depreciation and amortization expense increased by $199,920, or 28.3%, during the six months ended June 30, 2025, to $905,752, as compared to $705,832 during the same period in Fiscal 2024.
Consumer Segment
Depreciation and amortization expense in the consumer segment increased by $170,042, or 82.5%, during the six months ended June 30, 2025, to $376,236, as compared to $206,194 during the same period in Fiscal 2024. The change was primarily attributed to the depreciation of assets placed into service related to our new retail stores.
Commercial Segment
Depreciation and amortization expense in the commercial segment increased by $29,878, or 6.0%, during the six months ended June 30, 2025, to $529,516, as compared to $499,638 during the same period in Fiscal 2024. There was no material impact from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point.
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Table of Contents
Other Income (Expense)
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | 599,856 | $ | 463,945 | $ | 135,911 | 29.3 | % | ||||
% of consolidated sales |
| 0.6 | % |
| 0.5 | % |
|
|
|
| ||
Consumer | $ | 157,007 | $ | 16,008 | $ | 140,999 |
| 880.8 | % | |||
% of consumer sales |
| 0.2 | % |
| 0.0 | % |
|
|
|
| ||
Commercial | $ | 442,849 | $ | 447,937 | $ | (5,088) |
| (1.1) | % | |||
% of commercial sales |
| 1.9 | % |
| 1.8 | % |
|
|
|
| ||
Consolidated
Other income increased by $135,911, or 29.3%, during the six months ended June 30, 2025, to $599,856, as compared to $463,945 during the same period in Fiscal 2024.
Consumer Segment
Other income in the consumer segment increased by $140,999, or 880.8%, during the six months ended June 30, 2025, to $157,007, as compared to $16,008 during the same period in Fiscal 2024. The change was primarily attributed to the receipt of an employee retention credit and incrementally from the earnings on excess cash balances. The impact of dividend and interest income is referenced below.
Dividend income comprised $8,883 and $0 of other income during the six months ended June 30, 2025 and 2024, respectively. Interest income comprised $51,038 and $8 of other income during the six months ended June 30, 2025 and 2024, respectively.
Commercial Segment
Other income in the commercial segment decreased by $5,088, or 1.1%, during the six months ended June 30, 2025, to $442,849, as compared to $447,937 during the same period in Fiscal 2024. The change was primarily attributed to a reduction in earned interest rates associated with our interest bearing account and from rental income being present in our first quarter of Fiscal 2024 results. The impact of dividend and interest income is referenced below.
Dividend income comprised $129,567 and $0 of other income during the six months ended June 30, 2025 and 2024, respectively. Interest income comprised $274,758 and $396,522 of other income during the six months ended June 30, 2025 and 2024, respectively.
Interest Expense
Six Months Ended June 30, | Change |
| ||||||||||
| 2025 |
| 2024 |
| Amount |
| % |
| ||||
Consolidated | $ | (212,549) | $ | (229,995) | $ | 17,446 | (7.6) | % | ||||
% of consolidated sales |
| (0.2) | % |
| (0.3) | % |
|
|
|
| ||
Consumer | $ | (108,040) | $ | (120,098) | $ | 12,058 |
| (10.0) | % | |||
% of consumer sales |
| (0.1) | % |
| (0.2) | % |
|
|
|
| ||
Commercial | $ | (104,509) | $ | (109,897) | $ | 5,388 |
| (4.9) | % | |||
% of commercial sales |
| (0.5) | % |
| (0.4) | % |
|
|
|
| ||
43
Table of Contents
Consolidated
Interest expense decreased by $17,446, or 7.6%, during the six months ended June 30, 2025, to $212,549, as compared to $229,995 during the same period in Fiscal 2024.
Consumer Segment
Interest expense in the consumer segment decreased by $12,058, or 10%, during the six months ended June 30, 2025, to $108,040, as compared to $120,098 during the same period in Fiscal 2024. There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.
Commercial Segment
Interest expense in the commercial segment decreased by $5,388, or 4.9%, during the six months ended June 30, 2025, to $104,509, as compared to $109,897 during the same period in Fiscal 2024. There was no material change in debt amortization from the same period in Fiscal 2024, and as such, no discussion point.
Income Tax Expense
Six Months Ended June 30, | Change |
| ||||||||||
2025 | 2024 | Amount | % |
| ||||||||
Consolidated |
| $ | (1,515,427) |
| $ | (1,011,517) |
| $ | (503,910) |
| 49.8 | % |
% of consolidated sales |
| (1.5) | % |
| (1.2) | % |
|
|
|
| ||
Consumer | $ | (205,822) | $ | (88,758) | $ | (117,064) |
| 131.9 | % | |||
% of consumer sales |
| (0.3) | % |
| (0.1) | % |
|
|
|
| ||
Commercial | $ | (1,309,605) | $ | (922,759) | $ | (386,846) |
| 41.9 | % | |||
% of commercial sales |
| (5.6) | % |
| (3.7) | % |
|
|
|
| ||
Consolidated
Income tax expense increased by $503,910, or 49.8%, during the six months ended June 30, 2025, to $1,515,427, as compared to $1,011,517 during the same period in Fiscal 2024. Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 22.4% and 22.6% for the six months ended June 30, 2025 and 2024, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the increase for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
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Net Income (Loss)
Six Months Ended June 30, | Change |
| ||||||||||
2025 | 2024 | Amount | % |
| ||||||||
Consolidated |
| $ | 5,245,746 |
| $ | 3,471,718 |
| $ | 1,774,028 |
| 51.1 | % |
% of consolidated sales |
| 5.1 | % |
| 4.1 | % |
|
|
|
| ||
Consumer | $ | 712,465 | $ | (89,482) | $ | 801,947 |
| NM | ||||
% of consumer sales |
| 0.9 | % |
| (0.1) | % |
|
|
|
| ||
Commercial | $ | 4,533,281 | $ | 3,561,200 | $ | 972,081 |
| 27.3 | % | |||
% of commercial sales |
| 19.5 | % |
| 14.3 | % |
|
|
|
| ||
NM – Not Meaningful
Consolidated
Net income increased by $1,774,028, or 51.1%, during the six months ended June 30, 2025, to $5,245,746, as compared to $3,471,718 during the same period in Fiscal 2024.
Consumer Segment
Net income (loss) increased in the consumer segment by $801,947, during the six months ended June 30, 2025, to net income of $712,465, as compared to net loss of $89,482 during the same period in Fiscal 2024. Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2025 and 2024 for further details.
Commercial Segment
Net income increased in the commercial segment by $972,081, or 27.3%, during the six months ended June 30, 2025, to $4,533,281, as compared to $3,561,200 during the same period in Fiscal 2024. Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2025 and 2024 for further details.
Earnings Per Share
The following table depicts the Company’s earnings per share:
Six Months Ended June 30, | Change |
| ||||||||||
2025 | 2024 | Amount | % |
| ||||||||
Consolidated |
| $ | 0.20 |
| $ | 0.13 |
| $ | 0.07 |
| 53.8 | % |
Consolidated
Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.07, or 53.8%, during the six months ended June 30, 2025, to $0.20, as compared to $0.13 during the same period in Fiscal 2024.
Non-U.S. GAAP Financial Measures
Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our condensed consolidated financial statements prepared in accordance with U.S. GAAP. We believe that providing these non-U.S. GAAP financial measures adds a meaningful presentation of our operating and financial performance. See the reconciliation of net income to adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) and Net Cash, in Non-U.S. GAAP Financial Measures below.
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Adjusted EBITDA
Adjusted EBITDA is defined as the sum of net income (loss) of the Company, adjusted for additions (deductions) of interest expense, other (income) expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA is a key performance measure that management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes.
The following table provides a reconciliation of net income to Adjusted EBITDA for the three months ended June 30, 2025 and 2024:
| Three Months Ended June 30, | |||||||||||||||||
2025 | 2024 | |||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | |||||||
Adjusted EBITDA Reconciliation: |
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) | $ | 643,371 | $ | 2,109,028 | $ | 2,752,399 | $ | (177,958) | $ | 1,742,137 | $ | 1,564,179 | ||||||
Addition (deduction): |
|
|
|
|
|
|
|
|
|
|
| |||||||
Depreciation and amortization |
| 195,604 |
| 264,807 |
| 460,411 |
| 112,518 |
| 249,749 |
| 362,267 | ||||||
Other income |
| (156,158) |
| (238,093) |
| (394,251) |
| (8,003) |
| (217,414) |
| (225,417) | ||||||
Interest expense |
| 53,993 |
| 52,235 |
| 106,228 |
| 55,697 |
| 53,444 |
| 109,141 | ||||||
Income tax expense |
| 185,749 |
| 605,320 |
| 791,069 |
| 29,607 |
| 431,632 |
| 461,239 | ||||||
$ | 922,559 | $ | 2,793,297 | $ | 3,715,856 | $ | 11,861 | $ | 2,259,548 | $ | 2,271,409 | |||||||
The following table provides a reconciliation of net income to Adjusted EBITDA for the six months ended June 30, 2025 and 2024:
| Six Months Ended June 30, | |||||||||||||||||
2025 | 2024 | |||||||||||||||||
| Consumer |
| Commercial |
| Consolidated |
| Consumer |
| Commercial |
| Consolidated | |||||||
Adjusted EBITDA Reconciliation: |
|
|
|
|
|
|
|
|
|
| ||||||||
Net income | $ | 712,465 | $ | 4,533,281 | $ | 5,245,746 | $ | (89,482) | $ | 3,561,200 | $ | 3,471,718 | ||||||
Addition (deduction): |
|
|
|
|
|
|
|
|
|
|
| |||||||
Depreciation and amortization |
| 376,236 |
| 529,516 |
| 905,752 |
| 206,194 |
| 499,638 |
| 705,832 | ||||||
Other income |
| (157,007) |
| (442,849) |
| (599,856) |
| (16,008) |
| (447,937) |
| (463,945) | ||||||
Interest expense |
| 108,040 |
| 104,509 |
| 212,549 |
| 120,098 |
| 109,897 |
| 229,995 | ||||||
Income tax expense |
| 205,822 |
| 1,309,605 |
| 1,515,427 |
| 88,758 |
| 922,759 |
| 1,011,517 | ||||||
$ | 1,245,556 | $ | 6,034,062 | $ | 7,279,618 | $ | 309,560 | $ | 4,645,557 | $ | 4,955,117 | |||||||
Net Cash
Net Cash is defined as the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations. We believe that presenting Net Cash is useful to investors as a measure of our liquidity and leverage profile, as cash and cash equivalents can be used, among other things, to repay indebtedness.
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The following table depicts the Company’s Net Cash:
June 30, | December 31, | |||||
| 2025 |
| 2024 | |||
Total cash | $ | 22,851,869 | $ | 20,609,003 | ||
Less: debt obligations |
| (13,043,286) |
| (13,522,179) | ||
$ | 9,808,583 | $ | 7,086,824 | |||
Liquidity and Capital Resources
The following table summarizes the Company’s condensed consolidated statement of cash flows:
Six Months Ended June 30, | Change |
| ||||||||||
2025 | 2024 | Amount | % |
| ||||||||
Net cash provided by (used in): |
|
|
|
|
|
|
|
| ||||
Operating activities | $ | 3,722,594 | $ | 3,002,262 | $ | 720,332 |
| 24.0 | % | |||
Investing activities |
| (879,509) |
| (1,265,004) | 385,495 |
| (30.5) | % | ||||
Financing activities |
| (600,219) |
| (2,247,110) |
| 1,646,891 |
| (73.3) | % | |||
Net increase (decrease) in cash and cash equivalents | $ | 2,242,866 | $ | (509,852) | $ | 2,752,718 |
| NM | ||||
NM – Not Meaningful
Operating Activities
Cash flows provided by operations increased by $720,332, or 24.0%, during the six months ended June 30, 2025, to $3,722,594, as compared to $3,002,262 during the same period in Fiscal 2024. The increase in cash provided by operations was primarily attributed to an increase in net income, certain non-cash adjustments to reconcile net income to operating cash flow (as detailed in the condensed consolidated statements of cash flows), and the following significant net changes in operating assets and liabilities, from the six months ended June 30, 2024 to the same period during Fiscal 2025:
| ● | Accounts receivable: a $3,496,816 net increase primarily attributed to our commercial segment, due to an increase in accounts receivable in the normal course of operations in Fiscal 2025, offset by significant collections from a services customer in Fiscal 2024. |
| ● | Inventories: a $1,958,081 net decrease primarily attributed to our consumer segment, due to a lesser increase in inventory in Fiscal 2025 than from that incurred in Fiscal 2024 as a result of greater purchases of inventory to support the onboarding of our new stores. |
| ● | Prepaid expenses: a $452,133 net increase primarily attributed to our commercial segment, resulting from incurring costs in Fiscal 2025 to obtain a contract and from a reduction in prepaid freight associated with our ITAD revenue share settlements in Fiscal 2024. |
| ● | Accrued expenses: a $188,591 net decrease primarily attributed to our commercial segment, resulting from a reduction in unvouchered inventory purchases on assets still in evaluation phase in Fiscal 2025, partially offset by a greater reduction in accrued payroll and accrued tax in Fiscal 2024. |
| ● | Other liabilities: a $1,080,275 net increase primarily attributed to our consumer segment, resulting from purchased gift cards that occurred in Fiscal 2025. |
Investing Activities
Cash flows (used in) investing activities decreased by $385,495, or 30.5%, during the six months ended June 30, 2025, to $879,509, as compared to $1,265,004 during the same period in Fiscal 2024. The decrease in cash (used in) investing activities during the six months ended June 30, 2025 was primarily attributed to a reduction in costs spent on our ERP and was partially offset by an increase in new store capital expenditures.
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Financing Activities
Cash flows (used in) financing activities decreased by $1,646,891, or 73.3%, during the six months ended June 30, 2025, to $600,219, as compared to $2,247,110 during the same period in Fiscal 2024. The decrease in cash (used in) financing activities during the six months ended June 30, 2025, was primarily due to a reduction in share buybacks.
Capital Resources
Although the Company has access to a line of credit our primary source of liquidity and capital resources currently consist of cash generated from our operating activities. We do not anticipate the need to fund our operations via the line of credit and we do not have any amounts drawn as of June 30, 2025. We have historically renewed, extended, or replaced short-term debt as it matures, and management believes that we will be able to continue to do so in the near future.
Capital Expenditures
In Fiscal 2025, the Company is focused on optimizing our new store performance, along with the continued focus on growing our Commercial business organically and evaluating opportunities for strategic growth. The Company continuously monitors the deployment of capital and primarily funds capital expenditures through cash flow from operating activities. Where appropriate, the Company may use debt financing on select projects. When this occurs, the Company further evaluates future cash flows of the project to ensure the debt tenure and pay-back period are in alignment, as well as the appropriateness of the rate of return. As of June 30, 2025, the Company had no commitments for capital expenditures.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Because we are a “smaller reporting company,” we are not required to disclose the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance of the foregoing.
We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance of achieving their objectives, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims, lawsuits and pending actions against the Company arising in the normal course of the Company’s business. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flow. Management is also not aware of any legal proceedings contemplated by government agencies of which the outcome is reasonably likely to have a material adverse effect on the Company’s financial condition, results of operations or cash flow.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed under Part I, Item 1A, “Risk Factors” in the Company’s 2024 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
Repurchases
The following lists the repurchase of Company shares for the three months ended June 30, 2025:
| Total Number of |
|
|
|
|
|
| |||
Shares Purchased | Maximum Number | |||||||||
as Part of Publicly | of Shares that May | |||||||||
Announced Plan | Average Price | Total Price | Yet be Purchased | |||||||
Fiscal Period | or Program (1) (2) | Paid Per Share ($) | Paid | Under the Plan (1) | ||||||
Balance as of March 31,2025 |
| 929,430 | $ | 4.92 | $ | 4,571,449 |
| 170,570 | ||
April 1 - 30, 2025 |
| — |
| — |
| — |
| 170,570 | ||
May 1 - 31, 2025 |
| — |
| — |
| — |
| 170,570 | ||
June 1 - 30, 2025 |
| 20,163 |
| 5.89 |
| 118,700 |
| 150,407 | ||
Balance as of June 30, 2025 |
| 949,593 | $ | 4.94 | $ | 4,690,149 |
| 150,407 | ||
| (1) | All shares were purchased in open-market transactions through the stock repurchase program approved by the Board on March 14, 2023, for the repurchase of up to 1.0 million shares of the Common Stock. On March 27, 2025, the Board authorized the repurchase of an additional 100 thousand shares of the Common Stock, bringing the total authorization under the existing program to 1.1 million shares. |
| (2) | The stock repurchase program was publicly announced on May 3, 2023, and expires March 31, 2026. Repurchases under the stock repurchase plan began on May 10, 2023. |
The timing and amount of any common stock repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
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ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
Exhibit |
| Description |
| Filed |
| Incorporated |
| Form |
| Date Filed |
| Exhibit |
3.1 | Amended and Restated Bylaws, dated April 17, 2025 | X | 8-K | April 23, 2025 | 3.1 | |||||||
10.1 | 2025 Equity Incentive Plan of Envela Corporation | X | ||||||||||
31.1 | Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by John R. Loftus | X | ||||||||||
31.2 | Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by John G. DeLuca | X | ||||||||||
32.1 | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John R. Loftus | X | ||||||||||
32.2 | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John G. DeLuca | X | ||||||||||
101.INS | XBRL Instance Document | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Calculation Linkbase Document | X | ||||||||||
101.DEF | XBRL Taxonomy Definition Linkbase Document | X | ||||||||||
101.LAB | XBRL Taxonomy Label Linkbase Document | X | ||||||||||
101.PRE | XBRL Taxonomy Presentation Linkbase Document | X | ||||||||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101) | X |
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SIGNATURE
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.
| ENVELA CORPORATION | ||
(Registrant) | |||
Date: August 6, 2025 | /s/ JOHN G. DELUCA | ||
John G. DeLuca | |||
Chief Financial Officer | |||
G
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GLOSSARY OF DEFINED TERMS
The following definitions apply to terms used in this document:
2024 Annual Report | Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 26, 2025 |
2025 Plan | 2025 Equity Incentive Plan |
Adjusted EBITDA | Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
ASU 2024-03 | ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses |
Avail Transaction | The acquisition of Avail Recovery Solutions, LLC on October 29, 2021 |
Board | Board of Directors |
CODM | Chief Operating Decision Maker |
Common Stock | The Company's common stock, par value $0.01 per share |
Company | Envela Corporation, a Nevada corporation, and its subsidiaries |
Envela | Envela Corporation, a Nevada corporation, and its subsidiaries |
Exchange Act | Securities Exchange Act of 1934 |
Financial Statements | The Related Condensed Consolidated Statements of Income, Stockholders’ Equity, and Cash Flows |
Fiscal 2024 | Fiscal year ended December 31, 2024 |
Fiscal 2025 | Fiscal year ended December 31, 2025 |
Form 10-Q | Form 10-Q for the three and six months ended June 30, 2025 |
FSB | Farmer's State Bank of Oakley, Kansas |
IT | Information Technology |
ITAD | Information Technology Asset Disposition |
ISO | Incentive Stock Options |
NYSE | New York Stock Exchange |
Net Cash | The difference between (i) cash and cash equivalents and (ii) the sum of debt obligations |
Securities Act | Securities Act of 1933 |
Scottsdale Transaction | The acquisition of the assets of a bespoke fabricator of jewelry in Scottsdale, Arizona |
SEC | U.S. Securities and Exchange Commission |
SOW | Scope of Work |
TBT | Texas Bank & Trust |
U.S. | United States |
U.S. Dollar | $ |
U.S. GAAP | United States Generally Accepted Accounting Principles |
54
