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Item 9A. Controls and Procedures

2026-03-18 compared with 2025-03-26 · 88 added, 43 removed, 116 unchanged (53% of the section changed)

11 unchanged sentences

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013).

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on its assessments, management has concluded that, as of December 31, 2025, the internal control over financial reporting is effective.

3 unchanged sentences

OTHER I N F O RMATION

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

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

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

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

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

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

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

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

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

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

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

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

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

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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(2) Financial Statement Schedules

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

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

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

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

Amended and Restated By-laws, dated April 17, 2025

April 23, 2025

Certificate of Amendment to Articles of Incorporation, Dated December 12, 2019

December 16, 2019

Specimen Common Stock Certificate

February 26, 2007

Specimen Common Stock Certificate, 2025 Update

Description of Capital Stock

1 unchanged sentence

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

March 26, 2025

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

March 26, 2025

Form of Stock Option Award Agreement

August 13, 2025

Envela Corporation 2025 Equity Plan

August 13, 2025

Business Conduct & Ethics Policy

March 26, 2025

Subsidiaries of the Registrant

28 unchanged sentences

(Principal Accounting Officer)

/s/ RICHARD D.

March 18, 2026

2 unchanged sentences

March 18, 2026

/s/ RICHARD D.

March 18, 2026

GLOSSARY OF CERTAIN DEFINED TERMS

The following definitions apply to terms used in this documents:

2004 Stock Option Plan

The following definitions apply to terms used in this document:

2025 Equity Incentive Plan

A&R Agreement

March 25, 2025 Amended and Restated Registration Rights Agreement

Adjusted Debt Obligations

Adjusted Debt Obligations represents (i) Debt Obligations plus (ii) operating lease liabilities per the Balance Sheet.

Adjusted Debt to Adjusted EBITDAR Leverage Ratio

The Adjusted Debt to Adjusted EBITDAR Leverage Ratio is a non-U.S.

GAAP measure and represents (i) Adjusted Debt Obligations divided by (ii) Adjusted EBITDAR.

Adjusted Debt to Net Income Leverage Ratio

The Adjusted Debt to Net Income Leverage Ratio is a non-U.S.

GAAP measure and represents the sum of (i) Debt Obligations and operating lease liabilities (ii) divided by (iii) Adjusted EBITDAR.

Adjusted EBITDA

Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization

Adjusted EBITDA is a non-U.S.

GAAP measure and is defined as Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization and equals (i) net income (loss) of the Company, adjusted for additions (deductions) of (ii) interest expense, (iii) other (income) expense, (iv) income tax expense (benefit), and (v) depreciation and amortization.

Adjusted EBITDAR

Adjusted EBITDAR is a non-U.S.

GAAP measure and equals (i) Adjusted EBITDA plus (ii) minimum fixed rent expense for properties occupied under operating leases.

Adjusted Net Debt Obligations

Adjusted Net Debt Obligations is a non-U.S.

GAAP measure and represents the difference between (i) Adjusted Debt Obligations per the Balance Sheet and (ii) Total Cash.

Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio

The Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio is a non-U.S.

GAAP measure and represents (i) Adjusted Net Debt Obligations divided by (ii) Adjusted EBITDAR.

Artificial Intelligence

2 unchanged sentences

Accounting Standards Update

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

Improvements to Reportable Segment Disclosures

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

Improvement to Income Tax Disclosures

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets

Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software

Avail Transaction

The acquisition of Avail Recovery Solutions, LLC on October 29, 2021

Average Inventory

Average inventory is the mean value of the Company’s inventory over a specific period, calculated by (i) adding the beginning inventory and ending inventory for that period and (ii) dividing by two.

Board of Directors

Coronavirus Aid, Relief, and Economic Security Act

Business Partner

A Business Partner is defined as an entity or person from whom we procure or consign assets and provide disposition or product return services to.

Capital Expenditures

Capital Expenditures represent the purchase of (i) property and equipment, and (ii) intangible assets.

Chief Operating Decision Maker

Envela Corporate and Subsidiaries

Committee of Sponsoring Organizations of the Treadway Commission

The Company's common stock, par value $0.01 per share

Envela Corporation, a Nevada corporation, and its subsidiaries

A Customer is an individual or entity to whom we have sold assets or commodities or provided certain repair services.

Defined Contribution 401(k) Plan

Debt Obligations

Debt Obligations represents the sum of amounts outstanding under notes payable balances per the Balance Sheet.

Debt to Adjusted EBITDA Leverage Ratio

The Debt to Adjusted EBITDA Leverage Ratio is a non-U.S.

GAAP measure and represents (i) Debt Obligations divided by (ii) Adjusted EBITDA.

Debt to Net Income Leverage Ratio

The Debt to Net Income Leverage Ratio represents the leverage ratio of the Company utilizing the following U.S.

GAAP measures:

(i) Debt Obligations divided by (ii) Net Income.

Dodd-Frank Act

1 unchanged sentence

Eduro Holdings, LLC

Envela Corporation, a Nevada corporation, and its subsidiaries

Employee Retention Tax Credit

Environmental, Social, and Governance

New York Stock Exchange American

Securities Exchange Act of 1934

1 unchanged sentence

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

Fiscal year ended December 31, 2024

Fiscal year ended December 31, 2025

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

Form 10-Q for the three and nine months ended September 30, 2025

Free Cash Flow

Free Cash Flow is a non-U.S.

GAAP measure and represents the difference between the Company’s (i) Operating Cash Flow and (ii) Capital Expenditures.

Farmer's State Bank of Oakley, Kansas

Internal Revenue Service

Holiday Months

The collective one-month periods ended November 30 and December 31 of the respective fiscal year.

Indemnification Agreement

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

The directos and officers subject to the Indemnification Agreement

The directors and officers subject to the Indemnification Agreement

Inventory Turnover Ratio

The Inventory Turnover Ratio represents the (i) cost of goods sold less shipping and handling costs divided by (ii) Average Inventory.

Internal Revenue Service

Incentive Stock Options

Information Technology

2 unchanged sentences

1 metric ton equals 2,204.62 pounds

Net Cash is the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations

Net Debt Obligations

Net Debt Obligations is a non-U.S.

GAAP measure and represents the difference between (i) Debt Obligations per the Balance Sheet and (ii) Total Cash.

Net Debt to Adjusted EBITDA Leverage Ratio

The Net Debt to Adjusted EBITDA Leverage Ratio is a non-U.S.

GAAP measure that represents (i) Net Debt Obligations divided by (ii) Adjusted EBITDA.

Not Meaningful

New York Stock Exchange

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

One Big Beautiful Bill Act

Operating Cash Flow

Operating Cash Flow measures the amount of cash generated from normal business operations during a specific period and is referred to as net cash provided by operations in the Statement of Cash Flows.

Public Company Accounting Oversight Board

Previous Stockholders

Stockholders that were party to the Prior Agreements

Prior Agreements

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

Registrable Securities

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

Securities Act

Securities Act of 1933

Payment Card Industry Data Security Standards

Minimum fixed rent expense for properties occupied under operating leases

Scottsdale Transaction

1 unchanged sentence

Securities and Exchange Commission

Stock Keeping Units

Scope of Work

Texas Bank & Trust

Total Cash represents cash and cash equivalents per the Balance Sheet.

Trailing Four Quarters

The Trailing Four Quarters ended period is defined as the cumulative total amount of the most recent four consecutive fiscal quarters of financial results for the respective reported balance.

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

2 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 9A. Controls and Procedures