Envela Corp 10-Q

ITEM 1: FINANCIAL STATEMENTS ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Unaudited) 2025 2024 Sales ​ $ 48,255,829 ​ $ 39,857,780 Cost of goods sold ​ 36,287,805 ​ 29,537,096 ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 11,968,024 ​ 10,320,684 ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ Selling, general and administrative ​ 8,404,262 ​ 7,636,976 Depreciation and amortization ​ 445,341 ​ 343,565 ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 8,849,603 ​ 7,980,541 ​ ​ ​ ​ ​ ​ ​ Operating income ​ 3,118,421 ​ 2,340,143 ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ Other income ​ 205,605 ​ 238,528 Interest expense ​ ( 106,321 ) ​ ( 120,854 ) ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 3,217,705 ​ 2,457,817 Income tax expense ​ ( 724,358 ) ​ ( 550,278 ) ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,493,347 ​ $ 1,907,539 ​ ​ ​ ​ ​ ​ ​ Basic earnings per share: ​ ​ Net income ​ $ 0.10 ​ $ 0.07 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share: ​ ​ Net income ​ $ 0.10 ​ $ 0.07 ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ Basic ​ 25,995,645 ​ 26,419,039 Diluted ​ 25,995,645 ​ 26,434,039 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2025 ​ 2024 ​ Assets ​ (Unaudited) ​ ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 21,028,265 ​ $ 20,609,003 ​ Accounts receivable, net of allowances ​ 5,373,945 ​ 4,384,238 ​ Notes receivable ​ — ​ 2,000 ​ Inventories ​ 26,124,091 ​ 25,705,524 ​ Prepaid expenses ​ 777,036 ​ 874,203 ​ Other current assets ​ ​ 200,000 ​ ​ 28,839 ​ Total current assets ​ 53,503,337 ​ 51,603,807 ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 13,637,504 ​ 13,515,162 ​ Right-of-use assets from operating leases ​ 4,668,703 ​ 4,741,326 ​ Goodwill ​ 3,621,453 ​ 3,621,453 ​ Intangible assets, net ​ 3,915,083 ​ 4,097,778 ​ Deferred tax asset ​ ​ 66,186 ​ ​ 49,526 ​ Other assets ​ 252,061 ​ 241,437 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 79,664,327 ​ $ 77,870,489 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders’ equity ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 2,817,454 ​ $ 3,177,550 ​ Notes payable ​ 3,399,409 ​ 3,591,351 ​ Operating lease liabilities ​ 1,931,810 ​ 2,078,505 ​ Accrued expenses ​ 2,727,559 ​ 3,215,343 ​ Other current liabilities ​ 991,481 ​ 455,385 ​ Total current liabilities ​ 11,867,713 ​ 12,518,134 ​ ​ ​ ​ ​ ​ ​ ​ ​ Notes payable, less current portion ​ 9,796,588 ​ 9,930,828 ​ Operating lease liabilities, less current portion ​ 2,857,167 ​ 2,769,389 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ $ 24,521,468 ​ $ 25,218,351 ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingencies (Note 16) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ Preferred stock, $ 0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding ​ — ​ — ​ Common stock, $ 0.01 par value; 60,000,000 shares authorized; 26,924,631 shares issued and 25,995,201 shares outstanding as of March 31, 2025; 26,924,631 shares issued and 25,995,701 shares outstanding as of December 31, 2024 ​ 269,246 ​ 269,246 ​ Treasury stock at cost, 929,430 and 928,930 shares, as of March 31, 2025 and December 31, 2024, respectively ​ ( 4,571,449 ) ​ ( 4,568,823 ) ​ Additional paid-in capital ​ 40,173,000 ​ 40,173,000 ​ Retained earnings ​ 19,272,062 ​ 16,778,715 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 55,142,859 ​ 52,652,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 79,664,327 ​ $ 77,870,489 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Unaudited) 2025 2024 Operations ​ ​ ​ ​ Net income ​ $ 2,493,347 ​ $ 1,907,539 Adjustments to reconcile net income to net cash provided by operations: ​ ​ Depreciation and amortization ​ 445,341 ​ 343,565 Provision for credit losses ​ 20,135 ​ 45,869 Deferred taxes ​ ( 16,660 ) ​ ( 17,491 ) Non-cash lease expense ​ 602,730 ​ 462,882 Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 1,009,842 ) ​ 3,168,236 Inventories ​ ( 418,567 ) ​ ( 2,476,259 ) Prepaid expenses ​ 97,167 ​ ( 214,242 ) Other assets ​ ( 181,785 ) ​ 4,700 Accounts payable ​ ( 360,096 ) ​ 621,060 Accrued expenses ​ ( 487,784 ) ​ ( 110,762 ) Operating leases ​ ( 589,025 ) ​ ( 473,535 ) Other liabilities ​ 536,096 ​ 530,159 ​ ​ ​ ​ ​ ​ ​ Net cash provided by operations ​ 1,131,057 ​ 3,791,721 ​ ​ ​ ​ ​ ​ ​ Investing ​ ​ Purchase of property and equipment ​ ( 384,444 ) ​ ( 448,242 ) Purchase of intangible assets ​ ( 543 ) ​ ( 193,167 ) Proceeds from (investment in) notes receivable ​ ​ 2,000 ​ ​ ( 3,383 ) ​ ​ ​ ​ ​ ​ ​ Net cash (used in) investing ​ ( 382,987 ) ​ ( 644,792 ) ​ ​ ​ ​ ​ ​ ​ Financing ​ ​ Payments on notes payable ​ ( 326,182 ) ​ ( 311,769 ) Purchase of treasury stock ​ ​ ( 2,626 ) ​ ​ ( 905,146 ) ​ ​ ​ ​ ​ ​ ​ Net cash (used in) financing ​ ( 328,808 ) ​ ( 1,216,915 ) ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ 419,262 ​ 1,930,014 Cash and cash equivalents, beginning of period ​ 20,609,003 ​ 17,853,853 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents, end of period ​ $ 21,028,265 ​ $ 19,783,867 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ Cash paid during the period for: ​ ​ Interest ​ $ 111,195 ​ $ 178,674 Income Taxes ​ $ — ​ $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) Shares Amount Shares Amount Shares Amount Capital Earnings Equity Three Months Ended March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1, 2024 ​ 26,924,631 ​ $ 269,246 ​ ( 415,973 ) ​ $ ( 2,155,049 ) ​ — ​ $ — ​ $ 40,173,000 ​ $ 10,021,656 ​ $ 48,308,853 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 1,907,539 ​ ​ 1,907,539 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ ​ — ​ ( 201,340 ) ​ ​ ( 905,146 ) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 905,146 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2024 26,924,631 ​ $ 269,246 ( 617,313 ) ​ $ ( 3,060,195 ) — ​ $ — ​ $ 40,173,000 ​ $ 11,929,195 ​ $ 49,311,246 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Three Months Ended March 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1, 2025 ​ 26,924,631 ​ $ 269,246 ​ ( 928,930 ) ​ $ ( 4,568,823 ) ​ - ​ $ - ​ $ 40,173,000 ​ $ 16,778,715 ​ $ 52,652,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income - ​ - - ​ - - ​ - ​ - ​ 2,493,347 ​ 2,493,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased - ​ - ( 500 ) ​ ( 2,626 ) - ​ - ​ - ​ - ​ ( 2,626 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2025 26,924,631 ​ $ 269,246 ( 929,430 ) ​ $ ( 4,571,449 ) - ​ $ - ​ $ 40,173,000 ​ $ 19,272,062 ​ $ 55,142,859 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ NOTE 1 — BASIS OF PRESENTATION ​ These unaudited interim 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 United States Generally Accepted Accounting Principles (“U.S. GAAP”) 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 consolidated financial statements for these interim periods, have been included. The results of operations for the three months ended March 31, 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 recommerce 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 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 8 Table of Contents 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 unaudited condensed consolidated 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 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 respective precious metal. An adjustment to revenue is made once the underlying weight and any precious metal spot price movement are 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. 9 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ The commercial segment also provides recycling services according to a Scope of Work (“SOW”). Revenue from recycling services 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 assets 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 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 certain instances, 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 March 31, 2025, and December 31, 2024, the consumer segment’s allowance for returns was $ 8,929 and $ 11,942 , respectively. As of March 31, 2025, and December 31, 2024, the commercial segment’s allowance for returns was $ 53,458 and $ 48,569 , respectively. 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 products 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 three months ended March 31, 2025, two customers accounted for 51.3 % of our sales and represented 0.0 % of our accounts receivable balance. For the three months ended March 31, 2024, one customer accounted for 34.1 % of our sales and represented 0.0 % of our accounts receivable balance. 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 March 31, 2025 and 2024, the consumer segment’s shipping and handling costs were $ 16,686 and $ 439 , respectively. For the three months ended March 31, 2025 and 2024, the commercial segment’s shipping and handling costs were $ 991,324 and $ 1,394,077 , respectively. 10 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ Advertising Costs The consumer and commercial segment’s advertising costs are expensed as incurred. For the three months ended March 31, 2025 and 2024, the consumer segment’s advertising costs were $ 279,246 and $ 247,903 , respectively. For the three months ended March 31, 2025 and 2024, the commercial segment’s advertising costs were $ 80,218 and $ 71,095 , respectively. 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 consolidated financial statements or the effective tax rate for the three months ended March 31, 2025 and 2024. As of March 31, 2025, the Company had a deferred tax asset of $ 66,186 . As of December 31, 2024, the Company had a deferred tax asset of $ 49,526 . The Company did no t have a valuation allowance as of March 31, 2025, or December 31, 2024. 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. 11 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ ​ 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 $ 0.01 per share (our “Common Stock”) is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of shares of Common Stock outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method. 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 the exercise of an award, such benefit is reflected in 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 revenues 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. Accounts Receivable, Net of Allowances Accounts receivable represents 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 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 12 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ 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 March 31, 2025, and December 31, 2024, the consumer segment’s allowance for credit losses was $ 0 and $ 0 , respectively. As of March 31, 2025, and December 31, 2024, the commercial segment’s allowance for credit losses was $ 454,491 and $ 433,159 , respectively. Inventories Consumer Segment The consumer segment states its inventory at the lower of cost and net realizable value. We cost our inventory based on our own internal estimate of the fair value of the items at the time of purchase. 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 determined by utilizing the retail cost method. 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 three months ended March 31, 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. 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 5 to 7 years Buildings 39 years Building improvements Shorter of 15 years or the remaining useful life Furniture and fixtures 5 to 7 years Office technology 3 to 7 years Leasehold improvements Shorter of 15 years or the remaining lease term Production and material handling equipment 5 to 10 years ​ 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. 13 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ 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 10 years Domain names 5 years Enterprise resource planning systems 5 years Trade names 10 years ​ 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. New Accounting Standards 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. ​ ​ ​ NOTE 4 — INVENTORIES The following table summarizes the details of the Company’s inventories: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2025 2024 Consumer ​ ​ Trade inventories ​ $ 24,776,022 ​ $ 23,973,333 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 24,776,022 ​ 23,973,333 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Trade inventories ​ 1,348,069 ​ 1,732,191 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,348,069 ​ 1,732,191 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 26,124,091 ​ $ 25,705,524 ​ ​ 14 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ NOTE 5 — GOODWILL The following table summarizes the details of the Company’s changes in goodwill: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2025 2024 Consumer ​ ​ Opening balance ​ $ — ​ $ 300,000 Additions (reductions) (1) ​ ​ ​ ( 300,000 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Opening balance ​ 3,621,453 ​ 3,621,453 Additions (reductions) ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,621,453 ​ 3,621,453 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,621,453 ​ $ 3,621,453 (1) The decrease in goodwill of $ 300 thousand for the year ended December 31, 2024, related to measurement period adjustments pertaining to the acquisition of the assets of a bespoke fabricator of jewelry in Scottsdale, Arizona (the “Scottsdale Transaction”). 15 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2025 2024 Consumer ​ ​ Land ​ $ 1,824,892 ​ $ 1,824,892 Building and improvements ​ 6,114,344 ​ 6,078,606 Leasehold improvements ​ 1,849,082 ​ 1,736,193 Furniture and fixtures ​ 1,257,268 ​ 1,203,540 Machinery and equipment ​ 1,493,298 ​ 1,570,704 Vehicles ​ 53,318 ​ 53,318 Construction in progress (1) ​ 136,579 ​ 135,856 ​ ​ 12,728,781 ​ 12,603,109 Less: accumulated depreciation ​ ( 3,312,711 ) ​ ( 3,287,437 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 9,416,070 ​ 9,315,672 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Leasehold improvements ​ 172,391 ​ 172,391 Furniture and fixtures ​ 74,811 ​ 74,811 Machinery and equipment ​ 1,336,427 ​ 1,336,427 Vehicles ​ 206,556 ​ 206,556 ​ ​ 1,790,185 ​ 1,790,185 Less: accumulated depreciation ​ ( 1,186,004 ) ​ ( 1,112,694 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 604,181 ​ 677,491 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Land ​ 1,106,664 ​ 1,106,664 Building and improvements ​ 2,704,111 ​ 2,688,523 Machinery and equipment ​ 49,200 ​ 28,627 Construction in progress (1) ​ 79,872 ​ — ​ ​ 3,939,847 ​ 3,823,814 Less: accumulated depreciation ​ ( 322,594 ) ​ ( 301,815 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,617,253 ​ 3,521,999 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 13,637,504 ​ $ 13,515,162 (1) As of March 31, 2025 and December 31, 2024, these assets are being constructed, have not yet been placed into service and are not yet depreciable. 16 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2025 2024 Consumer ​ ​ Technology ​ $ 409,896 ​ $ 409,896 Customer lists ​ ​ 13,000 ​ ​ 13,000 Assets under development (1) ​ 3,924 ​ 3,381 ​ ​ 426,820 ​ 426,277 Less: accumulated amortization ​ ( 382,209 ) ​ ( 379,980 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 44,611 ​ 46,297 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Trademarks/tradenames ​ 2,869,000 ​ 2,869,000 Customer contracts ​ 1,873,000 ​ 1,873,000 Customer relationships ​ 1,809,000 ​ 1,809,000 ​ ​ 6,551,000 ​ 6,551,000 Less: accumulated amortization ​ ( 3,035,218 ) ​ ( 2,877,855 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,515,782 ​ 3,673,145 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Technology ​ 462,548 ​ 462,548 ​ ​ 462,548 ​ 462,548 Less: accumulated amortization ​ ( 107,858 ) ​ ( 84,212 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 354,690 ​ 378,336 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,915,083 ​ $ 4,097,778 (1) As of March 31, 2025 and December 31, 2024, these intangible assets are under development and 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 March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer Commercial Corporate Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 6,696 ​ 472,086 ​ 70,938 ​ 549,720 2026 ​ 8,928 ​ 629,448 ​ 94,584 ​ 732,960 2027 ​ 8,928 ​ 629,448 ​ 94,584 ​ 732,960 2028 ​ 8,054 ​ 629,448 ​ 94,584 ​ 732,086 2029 ​ 3,273 ​ 539,923 ​ — ​ 543,196 Thereafter ​ 4,808 ​ 615,429 ​ — ​ 620,237 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 40,687 ​ $ 3,515,782 ​ $ 354,690 ​ $ 3,911,159 ​ ​ 17 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2025 ​ 2024 Consumer ​ ​ Accrued interest ​ $ 6,353 ​ $ 11,276 Payroll ​ 202,594 ​ 361,829 Taxes ​ 116,354 ​ 133,008 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 325,301 ​ 506,113 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Accrued interest ​ 7,482 ​ 7,568 Payroll ​ 227,911 ​ 457,722 Taxes ​ 8,846 ​ — Unvouchered inventory payments ​ 1,090,484 ​ 1,915,567 Other ​ 12,958 ​ 26,334 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,347,681 ​ 2,407,191 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Accrued interest ​ 7,037 ​ 6,902 Payroll ​ 15,509 ​ 38,205 Taxes ​ 888,259 ​ 153,479 Professional fees ​ 84,631 ​ 81,973 Other ​ 59,141 ​ 21,480 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,054,577 ​ 302,039 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,727,559 ​ $ 3,215,343 ​ ​ 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 March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2025 ​ 2024 ​ Consumer Commercial Consolidated Consumer Commercial Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 36,770,604 ​ $ 11,485,225 ​ $ 48,255,829 $ 28,226,017 ​ $ 11,631,763 ​ $ 39,857,780 Cost of goods sold ​ 32,559,701 ​ 3,728,104 ​ 36,287,805 24,676,828 ​ 4,860,268 ​ 29,537,096 Selling, general and administrative ​ 3,887,906 ​ 4,516,356 ​ 8,404,262 3,251,490 ​ 4,385,486 ​ 7,636,976 Depreciation and amortization ​ 180,632 ​ 264,709 ​ 445,341 93,676 ​ 249,889 ​ 343,565 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 142,365 ​ $ 2,976,056 ​ $ 3,118,421 $ 204,023 ​ $ 2,136,120 ​ $ 2,340,143 ​ 18 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 March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2025 ​ 2024 ​ ​ Consumer Commercial Consolidated Consumer Commercial Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 142,365 ​ $ 2,976,056 ​ $ 3,118,421 $ 204,023 ​ $ 2,136,120 ​ $ 2,340,143 Other income ​ 849 ​ 204,756 ​ 205,605 8,005 ​ 230,523 ​ 238,528 Interest expense ​ ( 54,047 ) ​ ( 52,274 ) ​ ( 106,321 ) ( 64,401 ) ​ ( 56,453 ) ​ ( 120,854 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ $ 89,167 ​ $ 3,128,538 ​ $ 3,217,705 $ 147,627 ​ $ 2,310,190 ​ $ 2,457,817 ​ 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 March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2025 2024 ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 268,953 ​ $ 217,179 Commercial ​ — ​ 49,443 Corporate ​ 116,034 ​ 374,787 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 384,987 ​ $ 641,409 ​ The following table depicts the Company’s total assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ March 31, 2025 December 31, 2024 ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 41,000,003 ​ $ 40,454,328 Commercial ​ 33,647,370 ​ 33,068,887 Corporate ​ 5,016,954 ​ 4,347,274 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 79,664,327 ​ $ 77,870,489 ​ ​ NOTE 10 — REVENUE The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2025 ​ 2024 ​ Sales Gross Margin Margin ​ Sales Gross Margin Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 36,770,604 ​ $ 4,210,903 11.5 % $ 28,226,017 ​ $ 3,549,189 12.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ 11,485,225 ​ 7,757,121 67.5 % 11,631,763 ​ 6,771,495 58.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 48,255,829 ​ $ 11,968,024 24.8 % $ 39,857,780 ​ $ 10,320,684 25.9 % ​ 19 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ 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 ​ $ 3,411,501 ​ $ — $ 185,348 Closing Balance - 3/31/2024 ​ 244,914 ​ — ​ 715,455 ​ ​ ​ ​ ​ ​ ​ Commercial Opening Balance - 1/1/2024 4,399,658 — — Closing Balance - 3/31/2024 4,352,140 — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts ​ Contract ​ Contract ​ ​ ​ Receivable ​ ​ Assets ​ ​ Liabilities Consumer ​ ​ ​ Opening Balance - 1/1/2025 $ 738,132 $ — $ 435,508 Closing Balance - 3/31/2025 ​ 734,362 ​ — ​ 974,185 ​ ​ ​ ​ ​ ​ ​ Commercial Opening Balance - 1/1/2025 3,646,106 — — Closing Balance - 3/31/2025 4,639,583 — — ​ The Company has no contract assets, and the contract liabilities are customer deposits and gift cards, which are reported within other liabilities in the condensed consolidated balance sheets. 20 Table of Contents 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 March 31, 2025: ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases Consumer ​ 2025 ​ $ 690,735 2026 ​ 1,076,141 2027 ​ 777,803 2028 ​ 542,641 2029 ​ 423,234 Thereafter ​ 148,191 ​ ​ ​ ​ Total minimum lease payments ​ 3,658,745 Less: imputed interest ​ ( 305,067 ) ​ ​ ​ ​ Sub-total ​ 3,353,678 ​ ​ ​ ​ Commercial ​ 2025 ​ 963,456 2026 ​ 474,320 2027 ​ 33,453 2028 ​ — 2029 ​ — Thereafter ​ — ​ ​ ​ ​ Total minimum lease payments ​ 1,471,229 Less: imputed interest ​ ( 35,930 ) ​ ​ ​ ​ Sub-total ​ 1,435,299 ​ ​ ​ ​ Total ​ 4,788,977 ​ ​ ​ ​ Less: current portion ​ 1,931,810 ​ ​ ​ ​ ​ ​ $ 2,857,167 ​ All of the Company’s leased facilities as of March 31, 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. The following table depicts supplemental cash flow information related to operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2025 2024 ​ ​ ​ ​ ​ ​ ​ Non-cash activities: right-of-use operating lease assets obtained in exchange for new operating lease liabilities ​ $ 472,720 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ 21 Table of Contents 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 March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2025 2024 ​ ​ ​ ​ ​ ​ ​ Operating lease cost ​ $ 602,493 ​ $ 473,534 Variable lease cost ​ 205,581 ​ 214,851 Short-term lease cost ​ 70,262 ​ 96,350 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 878,336 ​ $ 784,735 ​ As of March 31, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases were 3.2 years and 4.0 %. As of March 31, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.3 years and 4.3 %. 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 March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ Basic weighted average shares 25,995,645 26,419,039 Effect of potential dilutive securities — 15,000 ​ ​ ​ ​ ​ Diluted weighted average shares 25,995,645 26,434,039 ​ For three months ended March 31, 2025 and 2024, there were 0 and 15 thousand Common Stock options unexercised, respectively. For the three months ended March 31, 2025 and 2024, there were no anti-dilutive shares. 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 one million shares of the Common Stock, at a per-share price not to exceed $ 9.00 , on the open market. The plan expires on March 31, 2026. On March 27, 2025, the Board unanimously approved the repurchase of an additional 100,000 shares of the Common Stock, bringing the total authorization under the existing repurchase program to 1,100,000 shares. The following table lists the repurchase of Company shares for the three months ended March 31, 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 928,930 ​ $ 4.92 ​ $ 4,568,823 71,070 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 1 - 31, 2025 — ​ — ​ — 71,070 February 1 - 29, 2025 — ​ — ​ — 71,070 March 1 - 31, 2025 500 ​ 5.25 ​ 2,626 170,570 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2025 929,430 ​ $ 4.92 ​ $ 4,571,449 170,570 ​ For the three months ended March 31, 2025, the Company repurchased 500 shares for $ 2,626 , for an average price of $ 5.25 . 22 Table of Contents 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 ​ March 31, December 31, ​ 2025 ​ 2024 Consumer ​ ​ Note payable, FSB (1) ​ $ 2,427,076 ​ $ 2,455,043 Note payable, Truist Bank (3) ​ 791,523 ​ 801,175 Notes payable, TBT (4,5) ​ 1,951,917 ​ 1,979,730 Note payable, Scottsdale Transaction (6) ​ 50,000 ​ 50,000 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,220,516 ​ 5,285,948 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Note payable, FSB (2) ​ 5,505,712 ​ 5,569,171 Note payable, Avail Transaction (7) ​ — ​ 166,667 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,505,712 ​ 5,735,838 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Line of credit, FSB (8) ​ — ​ — Note payable, TBT (9) ​ 2,469,769 ​ 2,500,393 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 2,469,769 ​ 2,500,393 ​ ​ ​ ​ ​ ​ ​ Total ​ 13,195,997 ​ 13,522,179 ​ ​ ​ ​ ​ ​ ​ Less: current portion ​ ( 3,399,409 ) ​ ( 3,591,351 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 9,796,588 ​ $ 9,930,828 (1) On November 23, 2021, the consumer segment entered into a $ 2.781 million secured amortizing note payable with Farmer’s State Bank of Oakley, Kansas (“FSB”). The note payable bears interest at 3.10 % and matures on November 15, 2026. (2) On November 23, 2021, the commercial segment entered into a $ 6.309 million secured amortizing note payable with FSB. The note payable bears interest at 3.10 % and matures on November 15, 2026. (3) On July 9, 2020, the consumer segment entered into a $ 956 thousand secured amortizing note payable with Truist Bank. The note payable bears interest at 3.65 % and matures on July 9, 2030. (4) On September 14, 2020, the consumer segment entered into a $ 496 thousand secured amortizing note payable with Texas Bank & Trust (“TBT”). The note payable bears interest at 3.75 % and matures on September 14, 2025. (5) On July 30, 2021, the consumer segment entered into a $ 1.772 million secured amortizing note payable with TBT. The note payable bears interest at 3.75 % and matures on July 30, 2031. (6) On September 12, 2024, the consumer segment entered into a $ 50 thousand secured amortizing note payable in relation to the Scottsdale Transaction. The repayment of the note payable shall begin upon the fulfillment of certain terms and conditions under the asset purchase agreement entered into on September 12, 2024. The note payable’s imputed interest is 3.10 % and matures on September 30, 2026. 23 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ (7) On October 29, 2021, the consumer segment entered into a $ 2.000 million secured amortizing note payable in relation to the acquisition of Avail Recovery Solutions, LLC on October 29, 2021 (“Avail Transaction”). The note payable’s imputed interest is 3.10 % and matured and was paid in full on January 1, 2025. (8) On November 8, 2024, the Company entered into a $ 3.800 million secured line of credit with FSB. The line of credit bears interest at our rate of deposit + 1.00 % with a floor of 3.10 % and matures on November 23, 2027. (9) On November 4, 2020, a wholly owned subsidiary of Envela entered into a $ 2.960 million secured amortizing note payable with TBT. The note payable bears interest at 3.25 % and matures on November 3, 2025. The following table depicts the Company’s future principal payments on long-term debt obligations as of March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 2028 2029 Thereafter Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note payable, FSB (1) ​ 84,595 ​ 2,342,480 ​ — ​ — ​ — ​ — Note payable, Truist Bank (3) ​ 29,093 ​ 40,203 ​ 41,716 ​ 43,216 ​ 44,913 ​ 592,381 Notes payable, TBT (4,5) ​ 465,364 ​ 71,592 ​ 74,324 ​ 77,018 ​ 80,097 ​ 1,183,524 Note payable, Scottsdale Transaction (6) ​ 37,250 ​ 12,750 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 616,302 ​ 2,467,025 ​ 116,040 ​ 120,234 ​ 125,010 ​ 1,775,905 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ Note payable, FSB (2) ​ 191,007 ​ 5,314,705 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 191,007 ​ 5,314,705 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ ​ ​ Line of credit, FSB (8) ​ — ​ — ​ — ​ — ​ — ​ — Note payable, TBT (9) ​ 2,469,769 ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 2,469,769 ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,277,078 ​ $ 7,781,730 ​ $ 116,040 ​ $ 120,234 ​ $ 125,010 ​ $ 1,775,905 ​ The Company was in compliance with all of its debt obligation covenants for the three months ended March 31, 2025 and 2024. The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Scheduled ​ ​ ​ ​ Principal ​ Loan ​ ​ ​ Scheduled Principal Payments and Maturities by Year Payments Maturities Total 2025 ​ 484,878 ​ 2,792,200 ​ 3,277,078 2026 ​ 470,473 ​ 7,311,257 ​ 7,781,730 2027 ​ 116,040 ​ — ​ 116,040 2028 ​ 120,234 ​ — ​ 120,234 2029 ​ 125,010 ​ — ​ 125,010 Thereafter ​ 175,712 ​ 1,600,193 ​ 1,775,905 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,492,347 ​ $ 11,703,650 ​ $ 13,195,997 ​ ​ NOTE 14 — STOCK-BASED COMPENSATION There was no stock-based compensation expense for the three months ended March 31, 2025 and 2024. 24 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ 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 months ended March 31, 2025 and 2024. ​ ​ ​ ​ ​ 25 Table of Contents