What changed in this filing

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Item 9A. Controls and Procedures

2025-03-26 compared with 2024-03-21 · 105 added, 91 removed, 54 unchanged (78% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

As required by rule 13a-15(b) and Rule 15d-15(b) under the Exchange Ace, our management, with the participation of our principal executive officer and 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 December 31, 2023.

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 December 31, 2023, the Company’s principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to be provide the reasonable assurance of the foregoing.

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, with the participation of our principal executive officer and 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 December 31, 2024.

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 a low for timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, the Company’s principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to provide the reasonable assurance of the foregoing.

We believe however, that any controls and procedures, 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.

10 unchanged sentences

During the fiscal year ended December 31, 2024, no changes occurred that the Company’s management believes have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

OTHER INFORMATION

The Company released its earnings with a press release issued March 20, 2024, a copy of which is attached hereto as exhibit 99.1.

OTHER I N F O RMATION

On March 25, 2025, the Company and Eduro Holdings, LLC entered into an Amended and Restated Registration Rights Agreement (the “A&R Agreement”) providing for, among other things, demand and piggyback registration rights with respect to shares of the Company’s common stock held by Eduro (the “Registrable Securities”).

The Company had previously entered into certain registration rights agreements (the “Prior Agreements”) with certain of the Company’s stockholders (the “Previous Stockholders”) with respect to the Registrable Securities.

The Previous Stockholders subsequently transferred the Registrable Securities and their rights under the Prior Agreements to Eduro.

The A&R Agreement amends, restates, and supersedes the Prior Agreements in all respects.

The foregoing description of the A&R Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Agreement, which is filed as Exhibit 10.1 to this Annual Report on Form 10-K and is hereby incorporated by reference into this Item 9B.

On March 25, 2025, the Board of the Company adopted an updated form of indemnification agreement (the "Indemnification Agreement") between the Company and its directors and officers.

Each Indemnification Agreement with a current director or officer will replace the prior indemnification agreement between the Company and such director or officer, if such director or officer was a party to a prior indemnification agreement with the Company.

Each Indemnification Agreement provides, among other things, and subject to the procedures set forth in the Indemnification Agreement:

(i) that the Company will indemnify the director or officer party to the agreement (the “Indemnitee”) to the fullest extent permitted by law in the event the Indemnitee is or is threatened to be made a party to or with a participant in an action, suit or proceeding by reason of the fact that the Indemnitee is or was serving as one of the Company’s officers or directors;

(ii) that the Company will advance expenses incurred by the Indemnitee in any such proceeding, including but not limited to reasonable attorney’s fees, to the Indemnitee in advance of the final disposition of the proceeding;

(iii) that the rights of the Indemnitee under the Indemnification Agreement are in addition to any other rights the Indemnitee may have under any applicable law, the Company’s Articles of Incorporation, Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise;

and (iv) for certain exclusions from the Company’s obligations under the agreement.

The foregoing description of the Indemnification Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Indemnification Agreement, which is filed as Exhibit 10.2 to this Annual Report on Form 10-K and is hereby incorporated by reference into this Item 9B.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Envela Corporation and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Envela Corporation and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Whitley Penn LLP

We have served as the Company’s auditor since 2012.

Dallas, Texas

March 21, 2024

Items 10, 11, 12, 13, 14

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

8 unchanged sentences

Information with respect to this Item will be included in our definitive Proxy Statement with respect to our 2024 Annual Meeting, which we intend to file with the SEC no later than 120 days after the end of the fiscal year covered by this annual report on Form 10-K.

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

Documents filed as part of this report

Index to Financial Statements

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

The information required by this Item pursuant to Item 601 of Regulation S-K is set forth on the financial statement index and exhibit index that follows the signature page of this report.

Index to Exhibits

Index to Financial Statements

Consolidated Income Statements

Consolidated Balance Sheets

Consolidated Cash Flow Statements

Consolidated Stockholders’ Equity Statements

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 726 )

Date Filed with SEC

Exhibit Number

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report:

(1) Financial Statements

The financial statements filed as part of this Annual Report are listed on the Index to Item 8.

Financial Statements and Supplementary Data on page 37.

(2) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted or are contained in the applicable financial statements or the notes thereto.

The following exhibits are filed as part of this Annual Report on Form10-K or are incorporated herein by reference.

Amended and Restated By-laws, dated March 23, 2021

5 unchanged sentences

March 16, 2022

Registration Rights Agreement, dated September 12, 2011, by and between DGSE Companies, Inc.

and certain shareholders

September 16, 2011

Registration Rights Agreement, dated September 12, 2011, by and between DGSE Companies, Inc.

and NTR Metals, LLC

September 16, 2011

Option Grant Agreement, dated October 25, 2011, by and between DGSE Companies, Inc.

and NTR Metals, LLC

October 28, 2011

Form of Indemnification Agreement between DGSE Companies, Inc.

and each Officer and director of DGSE

February 12, 2016

Registration Rights Agreement by and among DGSE Companies, Inc., Elemetal, LLC, and NTR Metals, LLC dated as of December 9, 2016

December 9, 2016

Purchase agreement, dated September 14, 2020, for the Irving, Texas office building purchased by Envela Corporation

October 5, 2020

Revised note payable, related party, dated January 1, 2020, between DGSE, LLC and John R.

October 5, 2020

Revised note payable, related party, dated January 1, 2020, between ECHG, LLC and John R.

October 5, 2020

Purchase Agreement Dated May 6, 2021, for The Frisco, Texas location, by and between DGSE, LLC and KMTHT Holding, LLC

August 4, 2021

Amended and Restated Registration Rights Agreement, dated March 25, 2025, by and between Envela Corporation and Eduro Holdings, LLC

Form of Indemnification Agreement between E nvela Corporation and each Officer and director of Envela Corporation

Business Conduct & Ethics Policy

Subsidiaries of the Registrant

March 16, 2023

Consent of Whitley Penn LLP

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.

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 Bret A.

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.

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.

Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John R.

Certification pursuant to 18 U.S.C.

Section 1350 as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 by Bret A.

Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John G.

Clawback Policy

2023 Earnings Press Release

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Calculation Linkbase Document

XBRL Taxonomy Definition Linkbase Document

XBRL Taxonomy Label Linkbase Document

XBRL Taxonomy Presentation Linkbase Document

March 21, 2024

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Calculation Linkbase Document

Inline XBRL Taxonomy Definition Linkbase Document

Inline XBRL Taxonomy Label Linkbase Document

Inline XBRL Taxonomy Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)

FORM 10-K SUMMARY

2 unchanged sentences

March 26, 2025

Chairman of the Board,

Chief Executive Officer, President

Chairman of the Board, Chief Executive Officer and President

(Principal Executive Officer)

1 unchanged sentence

March 26, 2025

Chairman of the Board,

Chief Executive Officer, President

Chairman of the Board, Chief Executive Officer and President

(Principal Executive Officer)

March 26, 2025

Chief Financial Officer

Chief Financial Officer, Secretary and Treasurer

(Principal Accounting Officer)

4 unchanged sentences

March 26, 2025

/s/ ALLISON M.

March 21, 2024

GLOSSARY OF CERTAIN DEFINED TERMS

The following definitions apply to terms used in this documents:

2004 Stock Option Plan

2016 Equity Incentive Plan

A&R Agreement

March 25, 2025 Amended and Restated Registration Rights Agreement

Adjusted EBITDA

Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization

Artificial Intelligence

Anti-Money Laundering

Accounting Standards Codification

Accounting Standards Update

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures

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 of Directors

Coronavirus Aid, Relief, and Economic Security Act

Chief Operating Decision Maker

Envela Corporate and Subsidiaries

Committee of Sponsoring Organizations of the Treadway Commission

Defined Contribution 401(k) Plan

Dodd-Frank Act

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Eduro Holdings, LLC

Employee Retention Tax Credit

Environmental, Social, and Governance

New York Stock Exchange American

Securities Exchange Act of 1934

Financial Statements

The Related Consolidated Statements of Income, Stockholders’ Equity, and Cash Flows

Form 10 K for the fiscal year ended December 31, 2024

Farmer's State Bank of Oakley, Kansas

Internal Revenue Service

Indemnification Agreement

March 25, 2025 indemnification agreement between Envela Corporation and its directors and officers

The directos and officers subject to the Indemnification Agreement

Information Technology

Information Technology Asset Disposition

Lost Time Injury Frequency Rate ([Number of Lost Time Injuries in the Reporting Period x 200,000]/(Total Hours Worked in the Reporting Period)

1 metric ton equals 2,204.62 pounds

New York Stock Exchange

The difference between (i) cash and cash equivalents and (ii) the sum of debt obligations

Public Company Accounting Oversight Board

Previous Stockholders

Stockholders that were party to the Prior Agreements

Prior Agreements

The three separate registration rights agreements, two of which being dated as of September 12, 2011, and the third being dated as of June 20, 2016

Registrable Securities

Shares of the Company’s common stock held by Eduro Holdings, LLC

Securities Act

Securities Act of 1933

Scottsdale Transaction

September 12, 2024 purchase agreement relating to the acquisition of the assets of a bespoke fabricator of jewelry in Scottsdale, Arizona

Securities and Exchange Commission

Scope of Work

Texas Bank & Trust

Total Recordable Injury Frequency Rate ([Number of Injuries in the Reporting Period x 200,000]/(Total Hours Worked in the Reporting Period)

United States

United States Generally Accepted Accounting Principles

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures