What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-18 compared with 2025-03-26 · 231 added, 190 removed, 517 unchanged (45% of the section changed)

9 unchanged sentences

ACCOUNTING POLICIES AND ESTIMATES

CHANGES IN BUSINESS

PROPERTY AND EQUIPMENT, NET

56 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowances

Accounts receivable, net of allowance for credit losses of $735,944 and $433,159 as of December 31, 2025 and December 31, 2024, respectively

Notes receivable

48 unchanged sentences

( 9,360,441 )

( 2,559,347 )

Prepaid expenses

10 unchanged sentences

Purchase of intangible assets

Investment in notes receivable

Acquisition, Scottsdale Transaction

Proceeds from (investment in) notes receivable

Proceeds from the sale of equipment

Net cash (used in) investing

6 unchanged sentences

( 2,413,774 )

( 2,155,049 )

Net cash (used in) financing

2 unchanged sentences

Net change in cash and cash equivalents

( 2,454,154 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures

Supplemental cash flow information

Cash paid during the period for:

Noncash investing and financing activities

Supplemental noncash investing and financing activities

Scottsdale Transaction measurement period adjustment, addition to intangible assets, reduction to goodwill

1 unchanged sentence

Scottsdale Transaction measurement period adjustment, reduction to notes payable, reduction to goodwill

Scottsdale Transaction, addition to notes payable, addition to goodwill

The accompanying notes are an integral part of these consolidated financial statements.

6 unchanged sentences

Balance as of January 1, 2024

( 2,155,049 )

Shares repurchased

10 unchanged sentences

Shares repurchased

( 2,413,774 )

Balance as of December 31, 2025

1 unchanged sentence

The accompanying notes are an integral part of these consolidated financial statements.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

The consolidated financial statements include the accounts of Envela and its wholly owned subsidiaries.

The accounting for the accompanying consolidated financial statements has been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S.

GAAP”) and, in the opinion of management, reflects all adjustments necessary to state fairly the Company’s financial position, results of operations, stockholders’ equity, and cash flows for the periods presented.

The Company’s operations are located within the contiguous U.S.

and its functional and reporting currency is the U.S.

Dollar (“$”).

The accounting for the accompanying consolidated financial statements has been prepared in accordance with United States (“U.S”) Generally Accepted Accounting Principles (“U.S.

GAAP”) and, in the opinion of management, reflects all adjustments necessary to fairly state the Company’s results of operations, financial position, stockholders’ equity, and cash flows for the periods presented.

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.

5 unchanged sentences

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.

The Company has no variable interest entities that require consolidation.

All intercompany transactions and balances have been eliminated.

3 unchanged sentences

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.

2 unchanged sentences

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.

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 and product returns industry.

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.

Our product returns business reintroduces products back into the supply chain, creating another opportunity for the asset to be used.

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 responsible reuse and recycling of electronic devices.

See Note 10 – Segment Information for further details.

We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.

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.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES

10 unchanged sentences

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions.

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, provides guidance on identifying performance obligations in 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.

(i) identifying the contract with a customer;

(ii) identifying the performance obligations in the contract;

(iii) determining the transaction price;

(iv) allocating the transaction price to the performance obligations in the contract;

and (v) recognizing revenue when the corresponding performance obligation is satisfied.

Consumer Segment

5 unchanged sentences

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 commercial segment recognizes revenue from refining when our inventory arrives at the destination port, and the performance obligation is satisfied by transferring control of the goods 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.

Under ASC 606, an estimate of the variable consideration to which we are entitled is included in the transaction price, based on the estimated weight and the current spot price of the metal.

An adjustment to revenue is made once the underlying weight and any metal spot price movements are resolved, which usually takes around six weeks.

Any adjustment arising from the resolution of the underlying uncertainty is netted against the settlement due under the original contract.

Historically, these amounts have not been material.

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.

The commercial segment also provides recycling and product returns services according to a Scope of Work (“SOW”).

Revenue from recycling and product returns services are 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.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The commercial segment provides freight arrangement services for inbound asset or material movements to our facilities.

Revenue from freight arrangement services is recognized upon settlement with our business partners, which occurs when the SOW is 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.

3 unchanged sentences

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.

In some cases, customers in the consumer and commercial segments 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.

3 unchanged sentences

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 that are 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 year ended December 31, 2024, one customer aggregated 30.1 % of our sales and represented 6.8 % of our accounts receivable balance.

The concentrations described herein pertain to certain domestic precious metals transactions that require an assay and are of short duration and settled on comparable terms.

Overall customer concentrations, as a percentage of sales, may vary due to the product mix sold in each comparative period.

Individual customer concentrations are also affected by each customer’s production schedule;

accordingly, the Company identifies the most appropriate sales outlet to ensure timely transaction settlement.

For the year ended December 31, 2025, two customers aggregated 54.9 % of our sales and represented 68.3 % of our accounts receivable balance.

These customers were attributed to our consumer segment.

For the year ended December 31, 2024, one customer aggregated 30.8 % of our sales and represented 6.8 % 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.

These customers were attributed to our consumer segment.

The Company believes that no single customer is critical to its business, given its diverse revenue streams and the optionality of its sales outlets, which are primarily associated with base and precious metals.

Categorization of Costs and Allocation of Corporate Overhead

Critical to understanding the nature of our operations and presentation of our results of operations is the categorization of costs and allocation of corporate overhead.

Detailed below are the categorization of costs associated with cost of goods sold and selling, general and administrative expenses:

Cost of Goods Sold

Cost of goods sold includes the cost of commodities, harvested components from technology, and merchandise sold, as well as the costs of inbound and outbound freight.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Selling, General and Administrative Expenses

Selling, general, and administrative expenses include facility costs, asset and commodity processing costs, processing and store-level personnel costs, and waste disposal costs.

Selling, general, and administrative expenses also include personnel costs for sourcing business partner relationships and outbound sales, as well as support and corporate overhead costs associated with accounting and finance, legal, risk management, compliance, information systems, logistics, marketing, and any third-party service providers.

The Company allocates its corporate overhead to its operating segments, which includes selling, general and administrative expenses, along with depreciation and amortization, other income, interest expense, and income tax expense.

See Note 2 – Principles of Consolidation and Nature of Operations for further details.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

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.

Within the consumer and commercial segments, inbound and outbound freight costs are a component of cost of goods sold.

Shipping and handling costs are accounted for as fulfillment costs.

For the years ended December 31, 2025, and December 31, 2024, the consumer segment’s shipping and handling costs were $ 68,309 and $ 95,765 , respectively.

1 unchanged sentence

Advertising Costs

The consumer and commercial segment’s advertising costs are expensed as incurred.

Advertising costs for the consumer and commercial segments are expensed as incurred.

For the years ended December 31, 2025, and December 31, 2024, the consumer segment’s advertising costs were $ 1,121,334 and $ 1,309,013 , respectively.

3 unchanged sentences

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.

however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we are reasonably certain of renewing the lease at inception or upon a triggering event.

In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement.

1 unchanged sentence

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.

For leases of one year or less, the Company has elected not to record lease liabilities and right-of-use assets and instead recognizes the expense associated with lease payments on a straight-line basis.

See Note 11 – Leases for further details.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Store Pre-Opening Costs

The Company may incur significant costs associated with new store openings, including, but not limited to, advertising, employee recruitment, licenses, permits, supplies, training, travel, and general store readiness, and these costs are expensed as incurred.

Income taxes are accounted for under the asset and liability method prescribed by ASC 740, Income Taxes.

1 unchanged sentence

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.

The Company believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained upon audit or the final resolution would not have a material effect on the consolidated financial statements.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company believes that its significant filing positions are highly certain, and that all its other significant income tax filing positions and deductions would be sustained upon audit, or that any final resolution would not have a material effect on the consolidated financial statements.

Therefore, the Company has not established any significant reserves for uncertain tax positions.

The Company recognizes accrued interest and penalties resulting from audits by tax authorities in the provision for income taxes in the consolidated statements of income.

During Fiscal 2024 and Fiscal 2023, the Company did not incur any federal income tax interest or penalties.

See Note 17 – Income Taxes for further details.

4 unchanged sentences

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 years ended December 31, 2025, and December 31, 2024.

As of December 31, 2024, the Company had a deferred tax asset of $ 49,526 .

As of December 31, 2025, the Company had a deferred tax liability of $ 147,381 .

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 December 31, 2025, or December 31, 2024.

2 unchanged sentences

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.

As of December 31, 2024, 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.

For the periods presented in these consolidated financial statements, the Company’s CODM was identified as the Chief Executive Officer.

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.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

Basic earnings per share of Common Stock is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of common shares outstanding for the reporting period.

Basic earnings per share of our Common Stock, is computed by dividing net earnings available to holders of the 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.

7 unchanged sentences

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.

The Company records the amounts collected as a current liability and releases such liability upon remittance to the taxing authority, without affecting revenues or expenses.

Financial Instruments

The carrying amounts reported in the 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.

The carrying amounts reported for the notes receivable and notes payable approximate fair value because the underlying instruments bear interest at rates that reflect 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.

Financial instruments that may subject the Company to concentration of credit risk include cash and cash equivalents, as well as 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 Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

The carrying amounts reported in the consolidated balance sheets approximate fair value.

Accounts Receivable, Net of Allowances

Accounts receivable represent amounts primarily due from customers on products and services.

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 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.

The allowance for credit losses is determined based on historical experience in collecting past-due amounts, the degree of their aging, and current economic factors impacting balances.

In addition, specific accounts that are considered and expected to be uncollectible are included in the allowance for credit losses.

Accounts receivable are considered delinquent when payment is not made within the contract terms.

Accounts receivable are written off when all efforts to collect have been exhausted, and the potential for recovery is considered remote.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2025, and December 31, 2024, the consumer segment’s allowance for credit losses was $ 0 and $ 0 , respectively.

7 unchanged sentences

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.

The cost of inventory is the amount paid for an 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.

4 unchanged sentences

The commercial segment states its inventory at the lower of cost and net realizable value.

The cost of our technology assets is determined utilizing the retail cost method.

The cost of our processed and unprocessed inventory, primarily consisteing of base metals and electronic scrap materials, is determined utilizing the weighted average cost method.

The cost of our technology assets equals the amount paid for the individual asset or lot of goods, or, in instances where we have an obligation to sell the asset before we pay for it, we use the retail cost method to estimate its value.

Inherent in the retail cost method are certain management judgments and estimates that may affect the ending inventory valuation of such assets and the gross profit recognized at the time of sale.

We believe that our estimates, used in applying the retail cost method to value such assets, reasonably reflect their cost.

The cost of our processed and unprocessed inventory, primarily consisting of base metals and electronic scrap with grades containing precious metals, is determined using 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 is not amortized but is 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 year ended December 31, 2024, and the Company did not record a goodwill impairment charge in any of the periods presented.

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 years ended December 31, 2025 and 2024, and the Company did not record a goodwill impairment charge in any of the periods presented.

See Note 5 – Goodwill for further details.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Building improvements

1 unchanged sentence

Furniture and fixtures

Office technology

Machinery and equipment

3 to 10 years

Leasehold improvements

Shorter of 15 years or 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.

3 unchanged sentences

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.

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

Enterprise resource planning systems

Customer lists, relationships, and contracts

Technology (1)

Trademarks/tradenames

(1) Technology consists of domain names, software assets, and enterprise resource planning systems.

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.

Correction of Immaterial Error

The Company’s commercial segment previously reported revenue from freight arrangement services as a component of cost of goods sold.

The Company has further evaluated the nature and scope of its service offering and has determined that it meets the definition of a principal in accordance with ASC 606 and, as such, be reported within revenue.

The following table summarizes the correction of immaterial error:

Three Months Ended

September 30,

Correction of immaterial error

Sales adjusted

Cost of goods sold

Correction of immaterial error

Cost of goods sold adjusted

The error had no impact on gross margin, operating income, net income, and basic and diluted earnings per share nor any other financial statement amount.

Further, these errors had no impact on the consolidated balance sheets, statements of stockholders’ equity, and statements of cash flows.

These corrections do not affect any of the metrics used to calculate and evaluate management’s compensation and have no impact on bonuses, commissions, stock-based compensation, or any other employee remuneration.

Historical amounts have been corrected and are presented on a comparable basis.

See Note 11 – Revenue for further details.

Changes in Disclosure

The Company has elected to discontinue reporting the disaggregation of inventory and revenue by resale and recycle.

The Company’s business operations continue to evolve and include fee-for-service revenue that does not always correlate to these categories and underlying inventory positions;

further, our inventory positions within these disaggregated presentations can vary at any point in time as they are a diverse mix of technology assets, base and precious metals and luxury hard assets.

The Company believes that its disclosure of the nature of its operations, the inventory held at each segment and associated risk factors provides a sufficient understanding of its impact on our business.

See Note 5 – Inventories and Note 11 – Revenue for further details.

Reclassifications

For the Company’s 2023 Annual Report, the amount reported for other current assets within the Consolidated Balance Sheets is related entirely to notes receivables.

The Company has elected to present notes receivable as its own line item and has reclassified the historical presentation of the aforementioned as of December 31, 2023.

See the Consolidated Balance Sheets for further details.

The Company previously did not disclose construction in progress and intangible assets under development.

The Company has determined that providing this information further enhances the understanding of the nature of our capital expenditures.

The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 7 – Property and Equipment, Net for further details.

The Company previously reported the development of its enterprise resource planning system within property and equipment, net.

The Company has further evaluated the nature of this asset under ASC 350, Intangibles – Goodwill and Other, and has determined that it is a nonmonetary asset without physical substance and was acquired separately from hardware and as such be reported within intangible assets, net.

The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

Cash expenditures for the enterprise resource planning system have been reclassified to “Purchases of intangible assets” within the Consolidated Statements of Cash Flows.

See Note 8 – Intangible Assets, Net for further details.

New Accounting Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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.

1 unchanged sentence

The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”).

ASU 2025-06 updates the accounting for internal-use software by replacing former stage-based rules with a principles-based framework.

Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding, and it is probable that the project will be completed and the software will be used to perform the intended function.

ASU 2025-06 also supersedes website development cost guidance, moving it to ASC 350-40.

The guidance is effective for annual and interim periods beginning after December 15, 2027, with early adoption and prospective, retrospective or

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

a modified transition application permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements ("ASU 2025-11").

ASU 2025-11 is intended to improve the navigability of guidance in ASC 270, Interim Reporting, and clarify when it applies.

The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods.

The guidance is effective for annual and interim periods beginning after December 15, 2027, with early adoption and prospective or retrospective application permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements ("ASU 2025-12").

ASU 2025-12 addresses suggestions received from stakeholders regarding the ASC and makes other incremental improvements to U.S.

The update represents changes to the codification that clarify, correct errors in, or make other improvements to a variety of topics that are intended to make it easier to understand and apply.

The guidance is effective for annual and interim periods beginning December 15, 2026, with early adoption and prospective or retrospective application permitted.

For amendments to Topic 260:

Earnings Per Share, shall be applied retrospectively.

The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

Recently Adopted Accounting Standards

11 unchanged sentences

As ASU 2023-09 applies to income tax disclosures, the adoption did not have a material impact on the Company’s consolidated financial statements.

No other recently issued or effective ASU’s had, or are expected to have, a material impact on the Company’s results of operations, financial condition, or liquidity.

NOTE 4 — CHANGES IN BUSINESS

The Scottsdale Transaction qualified as a business combination for accounting purposes, which involves the application of the acquisition method described in ASC 805, Business Combinations.

The asset purchase agreement was entered into by a wholly-owned subsidiary of the Company.

The purchase price was $ 150 thousand.

The total purchase consideration transferred for the Scottsdale Transaction was $ 100 thousand in cash and a $ 50 thousand note payable obligation.

See Note 14 – Debt for further details.

The primary purpose of the Scottsdale Transaction was to broaden customer offerings with a complimentary brand and provide another outlet for the reuse of ethically sourced precious metals and gemstones in the manufacturing of new products.

The results of operations relating to the Scottsdale Transaction have been reflected in the Company’s consolidated financial statements from the initial date of acquisition.

The Scottsdale Transaction was not material to the Company’s consolidated financial statements, and therefore, pro forma operating results and other disclosures for the Scottsdale Transaction are not presented except as referenced below.

As part of the Scottsdale Transaction, on September 12, 2023 the consumer segment recorded goodwill of $ 300 thousand as part of the initial purchase price allocation.

During the year ended December 31, 2024, with the finalization of the terms of the Scottsdale Transaction, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in a $ 300 thousand decrease to goodwill, a $ 150 thousand decrease due to the amendment of the purchase price, and a $ 150 thousand decrease due to the recognition of the assets acquired as part of the acquisition.

See Note 6 – Goodwill for further details.

In accordance with ASC 805, Business Combinations, the table presented below represents the final allocation of purchase price consideration.

The following table summarizes the fair values that were allocated to the Scottsdale Transaction:

Property and equipment, net

Intangible assets, net

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers.

The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets.

The guidance is effective for annual and interim periods beginning after December 15, 2025, with early adoption and prospective application permitted.

The Company adopted the practical expedient guidance effective January 1, 2025.

As ASU 2025-05 applies to credit losses for accounts receivable and contract assets, the adoption did not have a material impact on the Company’s consolidated financial statements.

No other recently issued or effective ASUs had, or are expected to have, a material impact on our financial position and results of operations.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 — INVENTORIES

8 unchanged sentences

Additions (reductions)

(1) The decrease in goodwill of $ 300 thousand for the year ended December 31, 2024, relates to the Company’s finalization of the allocation of fair values to assets acquired in the Scottsdale Transaction.

(2) The increase in goodwill of $ 300 thousand for the year ended December 31, 2023, relates to the Company’s acquisition of Scottsdale Transaction.

(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”).

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — PROPERTY AND EQUIPMENT, NET

The following table summarizes the details of the Company’s property and equipment, net:

Reclassification

Building and improvements

( 1,443,207 )

Buildings and improvements

Leasehold improvements

5 unchanged sentences

( 3,287,437 )

( 2,946,727 )

Leasehold improvements

1 unchanged sentence

Machinery and equipment

Construction in progress (2)(5)

accumulated depreciation

( 1,356,836 )

Building and improvements

( 1,112,694 )

Buildings and improvements

Furniture and fixtures

Machinery and equipment

Enterprise resource planning system (3)

Construction in progress (1)

accumulated depreciation

(1) The reclassification primarily related to the build-out of our Arizona retail stores, which were placed into service in the second quarter of Fiscal 2024.

(2) The reclassification related to the build-out of production equipment, which was placed into service in the second quarter of Fiscal 2024.

(3) Reclassified amount to Intangible Assets, Net.

See Note 8 – Intangible Assets, Net for further details.

(4) The reclassification related to improvements to our corporate headquarters, which were placed into service in the second quarter of Fiscal 2024.

(5) As of December 31, 2024 and December 31, 2023, these assets are being constructed, have not yet been placed into service and are not yet depreciable.

(1) As of December 31, 2025 and December 31, 2024, these assets have not yet been placed into service and are not yet depreciable.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 — INTANGIBLE ASSETS, NET

The following table summarizes the details of the Company’s intangible assets, net:

Reclassification

Customer lists

Trademarks/tradenames

Assets under development (1)

6 unchanged sentences

( 2,877,855 )

( 2,248,405 )

Assets under development (1)(2)

accumulated amortization

(1) The reclassification related to the initial development of our enterprise resource planning system, which was placed into service in the first quarter of Fiscal 2024.

(2) As of December 31, 2024 and December 31, 2023, these intangible assets are under development, have not yet been placed into service and are not yet amortizable.

(1) As of December 31, 2025 and December 31, 2024, these assets 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 December 31, 2025:

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — ACCRUED EXPENSES

5 unchanged sentences

Professional fees

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — SEGMENT INFORMATION

14 unchanged sentences

Year Ended December 31,

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table depicts the Company’s total assets:

4 unchanged sentences

Year Ended December 31,

Correction of immaterial error (1)

Commercial adjusted

(1) Correction of immaterial error relating to freight arrangement services, see Note 3 – Accounting Policies and Estimates for further details.

The following table lists the opening and closing balances of our contract assets and liabilities:

7 unchanged sentences

Closing Balance - 12/31/2025

The Company has no contract assets, and the only contract liabilities are customer deposits and gift cards, which are reported within other liabilities in the consolidated balance sheets.

The Company has no contract assets, and the contract liabilities are customer deposits, store credit, and gift cards, which are reported within other current liabilities in the consolidated balance sheets.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 — LEASES

4 unchanged sentences

imputed interest

( 1,098,266 )

current portion

All of the Company’s leased facilities, as of December 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 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:

Year Ended December 31,

December 31, 2024

December 31, 2023

Non-cash activities:

right-of-use operating lease assets obtained in exchange for new operating lease liabilities

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table depicts the Company’s leasing costs for the years ended December 31, 2025 and 2024:

Year Ended December 31,

December 31, 2024

December 31, 2023

Operating lease cost

8 unchanged sentences

Diluted weighted average shares

For the year ended December 31, 2024, there were no Common Stock options unexercised.

For the year ended December 31, 2023, there was a total of 15 thousand Common Stock options unexercised.

For the years ended December 31, 2025 and 2024, there were no Common Stock options unexercised.

For the years ended December 31, 2025, and 2024, there were no anti-dilutive shares, nor warrants outstanding.

On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board, which gave management authorization to purchase up to one million shares of the Company’s Common Stock, at a per-share price not to exceed $ 9.00 , on the open market.

On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board, which gave management authorization to purchase up to 1.0 million shares of the Company’s 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 thousand shares of the Common Stock, bringing the total authorization under the existing repurchase program to 1.1 million shares.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table lists the repurchase of Company shares for the year ended December 31, 2025:

23 unchanged sentences

For the year ended December 31, 2025, the Company repurchased 32,225 shares for $ 188,908 , for an average price of $ 5.86 .

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table lists the repurchase of Company shares for the year ended December 31, 2024:

Total Number of

Average Price

Shares Available

Fiscal Period

Shares Purchased

Paid per Share

Balance as of January 1, 2024

January 1 - 31, 2024

February 1 - 29, 2024

March 1 - 31, 2024

Balance as of March 31, 2024

April 1 - 30, 2024

May 1 - 31, 2024

June 1 - 30, 2024

Balance as of June 30, 2024

July 1 - 31, 2024

August 1 - 31, 2024

September 1 - 30, 2024

Balance as of September 30, 2024

October 1 - 31, 2024

November 1 - 30, 2024

December 1 - 31, 2024

Balance as of December 31, 2024

For the year ended December 31, 2024, the Company repurchased 512,957 shares for $ 2,413,774 , for an average price of $ 4.71 .

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 — DEBT

12 unchanged sentences

( 3,591,351 )

The following table depicts the Company’s future principal payments on long-term debt obligations as of December 31, 2024:

Note payable, FSB (1)

Note payable, Truist Bank (3)

Notes payable, TBT (4,5)

Note payable, Scottsdale Transaction (6)

Note payable, FSB (2)

Note payable, Avail Transaction (7)

Line of Credit, FSB (8)

Note payable, TBT (9)

(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”).

5 unchanged sentences

(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.

The note payable incurred interest at 3.75 % and matured on September 14, 2025.

(5) On July 30, 2021, the consumer segment entered into a $ 1.772 million secured amortizing note payable with TBT.

3 unchanged sentences

The note payable’s imputed interest is 3.10 % and matures on September 30, 2026.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 matures on January 1, 2025.

The note payable’s imputed interest was 3.10 % and matured 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.

This note was

previously presented within our commercial segment and is now presented within corporate as the line of credit provides borrowing capacity for all segments.

(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 4, 2025.

The note payable incurred interest at 3.25 % , matured, and was paid off on November 3, 2025.

The following table depicts the Company’s future principal payments on long-term debt obligations as of December 31, 2025:

Note payable, FSB (1)

Note payable, Truist Bank (3)

Notes payable, TBT (4,5)

Note payable, Scottsdale Transaction (6)

Note payable, FSB (2)

Note payable, Avail Transaction (7)

Line of Credit, FSB (8)

Note payable, TBT (9)

Refer to (1) through (9) below the previous table for descriptions of the Company’s Debt Obligations.

The Company was in compliance with all of its debt obligation covenants for the years ended December 31, 2025, and December 31, 2024.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of December 31, 2025:

1 unchanged sentence

NOTE 14 — STOCK-BASED COMPENSATION

On June 21, 2004, our shareholders approved the adoption of the 2004 Stock Option Plan (the “2004 Plan”), which reserved 1,700,000 shares of our Common Stock for issuance upon exercise of options to purchase our Common Stock.

Prior to 2012, the Company granted options to purchase an aggregate of 1,459,634 shares of our Common Stock under the 2004 Plan to certain of our officers, directors, key employees, and other individuals who provided us with goods and services.

As of December 31, 2024, of the options issued under the 2004 Plan, 845,634 had been exercised, 614,000 had expired, and zero (0) remain outstanding.

Since no further issuances can be made under the 2004 Plan and no options remain outstanding, the 2004 Plan has been formally terminated.

On December 7, 2016, stockholders of the Company approved the adoption of the 2016 Equity Incentive Plan (the “2016 Plan”), which reserved 1,100,000 shares for issuance pursuant to awards issued thereunder.

As of December 31, 2024, no awards had been made under the 2016 Plan.

The 2016 plan was never utilized and no equity awards were made, the 2016 Plan has been formally terminated.

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 1.1 million shares of Common Stock pursuant to awards granted under the plan.

The 2025 Plan will remain in effect for a term of 10 years from the effective date, unless sooner terminated by the Board of Directors.

As of December 31, 2025, no awards have been granted under the 2025 Plan.

In the 2024 comparative period, there was no stock-based compensation activity under any prior plans.

As a result, no stock-based compensation expense was recognized for the years ended December 31, 2025 and 2024.

NOTE 15 — RELATED PARTY TRANSACTIONS

5 unchanged sentences

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.

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.

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 our results of operations, financial position, 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 years ended December 31, 2025 and 2024.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — INCOME TAXES

6 unchanged sentences

State and local taxes, net of federal income tax effect (1)

Foreign derived intangible income

Nontaxable or nondeductible items

(1) State taxes, net of federal benefit are predominately due to activity in Texas as the majority of business activity of the Company is from that state.

(1) State taxes, net of federal benefit, are predominantly due to activity in Texas, as the majority of the business activity of the Company is from that state.

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes income taxes paid, net of any refunds received for the years ended December 31, 2025 and 2024:

State and local

The following table summarizes income taxes paid, net of any refunds received, disaggregated by individual jurisdictions in which income taxes paid, net of refunds received is equal to or greater than five percent of total income taxes paid, for the years ended December 31, 2024 and 2023:

(1) Taxes paid to the state of Arizona exceeded the five percent threshold for the year ended December 31, 2023, but not for the year ended December 31, 2024.

The following chart provides detail of the significant temporary differences giving rise to deferred tax assets and liabilities:

The following table summarizes income taxes paid, net of any refunds received, disaggregated by individual jurisdictions in which income taxes paid, net of refunds received, are equal to or greater than five percent of total income taxes paid, for the years ended December 31, 2025 and 2024:

(1) Taxes paid to the state of Texas and Arizona exceeded the five percent threshold for the year ended December 31, 2024, but not for the year ended December 31, 2025.

The following chart provides details of the significant temporary differences giving rise to deferred tax assets and liabilities:

December 31, 2025

11 unchanged sentences

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 8. Financial Statements and Supplementary Data