Envela Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures 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. Management’s Annual Report on Internal Control Over Financial Reporting Our management has the responsibility for establishing and maintaining adequate internal control over financial reporting and for our assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act, with respect to us as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officer and effected by the Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles that achieve certain specified controls over the records of business transactions. Because of its inherent limitations, internal control over financial reporting only provides reasonable assurance with respect to financial statement presentation and preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). Based on its assessments, management has concluded that, as of December 31, 2024, the internal control over financial reporting is effective. The Company is not required to provide an attestation report of our registered public accounting firm pursuant to rules promulgated by the SEC. Changes in Internal Control Over Financial Reporting 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. ​ 67 Table of Contents ITEM 9B. 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. ​ ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. ​ 68 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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. ITEM 11. EXECUTIVE COMPENSATION 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. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 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. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 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. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 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. ​ 69 Table of Contents PART IV ITEM 15. 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. (3) Exhibits The following exhibits are filed as part of this Annual Report on Form10-K or are incorporated herein by reference. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exhibit Number Description Filed Herein Incorporated by Reference Form Date Filed with SEC Exhibit Number 3.1 ​ Amended and Restated By-laws, dated March 23, 2021 ​ ​ ​ X ​ 10-Q ​ May 5, 2021 ​ 3.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3.2 ​ Certificate of Amendment to Articles of Incorporation, Dated December 12, 2019 ​ ​ ​ X ​ 8-K ​ December 16, 2019 ​ 3.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4.1 ​ Specimen Common Stock Certificate ​ ​ ​ X ​ S-4 ​ February 26, 2007 ​ 4.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4.2 ​ Description of Capital Stock ​ ​ ​ X ​ 10-K ​ March 16, 2022 ​ 4.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.1 ​ Amended and Restated Registration Rights Agreement, dated March 25, 2025, by and between Envela Corporation and Eduro Holdings, LLC ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.2 ​ Form of Indemnification Agreement between E nvela Corporation and each Officer and director of Envela Corporation ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 14.1 ​ Business Conduct & Ethics Policy ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21.1 ​ Subsidiaries of the Registrant ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 23.1 ​ Consent of Whitley Penn LLP ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 70 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exhibit Number Description Filed Herein Incorporated by Reference Form Date Filed with SEC Exhibit Number 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 97.1 ​ Clawback Policy ​ ​ ​ X ​ 10-K ​ March 21, 2024 ​ 97.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.INS ​ Inline XBRL Instance Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.SCH ​ Inline XBRL Taxonomy Extension Schema Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.CAL ​ Inline XBRL Taxonomy Calculation Linkbase Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.DEF ​ Inline XBRL Taxonomy Definition Linkbase Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.LAB ​ Inline XBRL Taxonomy Label Linkbase Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.PRE ​ Inline XBRL Taxonomy Presentation Linkbase Document ​ X ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 104* ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ITEM 16. FORM 10-K SUMMARY None. ​ 71 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) ​ ​ ​ ​ ​ By: /s/ JOHN R. LOFTUS ​ Dated: March 26, 2025 ​ John R. Loftus ​ ​ ​ Chairman of the Board, Chief Executive Officer and President ​ ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ ​ ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. ​ ​ ​ ​ ​ By: /s/ JOHN R. LOFTUS ​ Dated: March 26, 2025 ​ John R. Loftus ​ ​ ​ Chairman of the Board, Chief Executive Officer and President ​ ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ By: /s/ JOHN G. DELUCA ​ Dated: March 26, 2025 ​ John G. DeLuca ​ ​ ​ Chief Financial Officer, Secretary and Treasurer ​ ​ (Principal Accounting Officer) ​ ​ ​ ​ ​ ​ By: /s/ RICHARD D. SCHEPP ​ Dated: March 26, 2025 ​ Richard D. Schepp ​ ​ ​ Director ​ ​ ​ ​ ​ ​ By: /s/ ALEXANDRA C. GRIFFIN ​ Dated: March 26, 2025 ​ Alexandra C. Griffin ​ ​ ​ Director ​ ​ ​ ​ ​ ​ By: /s/ JIM R. RUTH ​ Dated: March 26, 2025 ​ Jim R. Ruth ​ ​ ​ Director ​ ​ ​ ​ ​ 72 Table of Contents ​ GLOSSARY OF CERTAIN DEFINED TERMS ​ The following definitions apply to terms used in this documents: ​ ​ 2004 Plan 2004 Stock Option Plan 2016 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 AI Artificial Intelligence AML Anti-Money Laundering ASC Accounting Standards Codification ASU Accounting Standards Update ASU 2023-07 ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ASU 2023-09 ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures 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 CARES Act Coronavirus Aid, Relief, and Economic Security Act CODM Chief Operating Decision Maker Company Envela Corporate and Subsidiaries COSO Committee of Sponsoring Organizations of the Treadway Commission DCP Defined Contribution 401(k) Plan Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Eduro Eduro Holdings, LLC ERTC Employee Retention Tax Credit ESG Environmental, Social, and Governance Exchange New York Stock Exchange American Exchange Act Securities Exchange Act of 1934 Financial Statements The Related Consolidated Statements of Income, Stockholders’ Equity, and Cash Flows Form 10-K Form 10 K for the fiscal year ended December 31, 2024 FSB Farmer's State Bank of Oakley, Kansas IRS Internal Revenue Service Indemnification Agreement March 25, 2025 indemnification agreement between Envela Corporation and its directors and officers Indemnitee The directos and officers subject to the Indemnification Agreement IT Information Technology ITAD Information Technology Asset Disposition LTIFR Lost Time Injury Frequency Rate ([Number of Lost Time Injuries in the Reporting Period x 200,000]/(Total Hours Worked in the Reporting Period) Metric ton 1 metric ton equals 2,204.62 pounds NYSE New York Stock Exchange N10TR N10TR, LLC Net Cash The difference between (i) cash and cash equivalents and (ii) the sum of debt obligations PCAOB 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 SEC U.S. Securities and Exchange Commission SOW Scope of Work 73 Table of Contents TBT Texas Bank & Trust TRIFR Total Recordable Injury Frequency Rate ([Number of Injuries in the Reporting Period x 200,000]/(Total Hours Worked in the Reporting Period) U.S. United States U.S. Dollar $ U.S. GAAP United States Generally Accepted Accounting Principles ​ ​ ​ ​ 74