Envela Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 726 ) 49 ​ ​ CONSOLIDATED STATEMENTS OF INCOME 50 ​ ​ CONSOLIDATED BALANCE SHEETS 51 ​ ​ CONSOLIDATED STATEMENTS OF CASH FLOWS 52 ​ ​ CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 53 ​ ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 54 ​ ​ ​ NOTE 1. BASIS OF PRESENTATION 54 NOTE 2. PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS 54 NOTE 3. ACCOUNTING POLICIES AND ESTIMATES 55 NOTE 4. INVENTORIES 63 NOTE 5. GOODWILL 63 NOTE 6. PROPERTY AND EQUIPMENT, NET 64 NOTE 7. INTANGIBLE ASSETS, NET 65 NOTE 8. ACCRUED EXPENSES 66 NOTE 9. SEGMENT INFORMATION 67 NOTE 10. REVENUE 68 NOTE 11. LEASES 69 NOTE 12. BASIC AND DILUTED AVERAGE SHARES 70 NOTE 13. DEBT 73 NOTE 14. STOCK-BASED COMPENSATION 75 NOTE 15. RELATED PARTY TRANSACTIONS 75 NOTE 16. CONTINGENCIES 75 NOTE 17. INCOME TAXES 76 NOTE 18. DEFINED CONTRIBUTION PLANS 77 ​ ​ ​ ​ 48 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Board of Directors and Stockholders of Envela Corporation and Subsidiaries ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Envela Corporation and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matters ​ Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. ​ /s/ Whitley Penn LLP ​ We have served as the Company’s auditor since 2012. ​ Dallas, Texas March 18, 2026 ​ 49 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Sales ​ $ 241,021,362 ​ $ 180,376,229 Cost of goods sold ​ 187,096,369 ​ 136,060,442 ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 53,924,993 ​ 44,315,787 ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ Selling, general and administrative ​ 33,949,473 ​ 34,605,132 Depreciation and amortization ​ 1,866,589 ​ 1,551,774 ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 35,816,062 ​ 36,156,906 ​ ​ ​ ​ ​ ​ ​ Operating income ​ 18,108,931 ​ 8,158,881 ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ Other income ​ 1,020,929 ​ 1,037,682 Interest expense ​ ( 406,642 ) ​ ( 447,383 ) ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 18,723,218 ​ 8,749,180 Income tax expense ​ ( 4,126,240 ) ​ ( 1,992,121 ) ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 14,596,978 ​ $ 6,757,059 ​ ​ ​ ​ ​ ​ ​ Basic earnings per share: ​ ​ ​ ​ Net income ​ $ 0.56 ​ $ 0.26 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share: ​ ​ ​ ​ Net income ​ $ 0.56 ​ $ 0.26 ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ Basic ​ 25,979,353 ​ 26,180,801 Diluted ​ 25,979,353 ​ 26,180,801 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 50 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 18,154,849 ​ $ 20,609,003 ​ Accounts receivable, net of allowance for credit losses of $735,944 and $433,159 as of December 31, 2025 and December 31, 2024, respectively ​ 10,984,191 ​ 4,384,238 ​ Notes receivable ​ — ​ 2,000 ​ Inventories ​ 35,065,965 ​ 25,705,524 ​ Prepaid expenses ​ 1,239,483 ​ 874,203 ​ Other current assets ​ ​ — ​ ​ 28,839 ​ Total current assets ​ 65,444,488 ​ 51,603,807 ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 13,584,189 ​ 13,515,162 ​ Right-of-use assets from operating leases ​ 9,720,925 ​ 4,741,326 ​ Goodwill ​ 3,621,453 ​ 3,621,453 ​ Intangible assets, net ​ 3,407,167 ​ 4,097,778 ​ Deferred tax asset ​ ​ — ​ ​ 49,526 ​ Other assets ​ 244,525 ​ 241,437 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 96,022,747 ​ $ 77,870,489 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders’ equity ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 4,294,443 ​ $ 3,177,550 ​ Notes payable ​ 7,787,468 ​ 3,591,351 ​ Operating lease liabilities ​ 1,937,295 ​ 2,078,505 ​ Accrued expenses ​ 2,791,003 ​ 3,215,343 ​ Other current liabilities ​ 1,871,215 ​ 455,385 ​ Total current liabilities ​ 18,681,424 ​ 12,518,134 ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liability ​ 147,381 ​ — ​ Notes payable, less current portion ​ 2,137,167 ​ 9,930,828 ​ Operating lease liabilities, less current portion ​ 7,996,567 ​ 2,769,389 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ ​ 28,962,539 ​ ​ 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 25,963,476 shares outstanding as of December 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, 961,155 and 928,930 shares, as of December 31, 2025 and December 31, 2024, respectively ​ ( 4,757,731 ) ​ ( 4,568,823 ) ​ Additional paid-in capital ​ 40,173,000 ​ 40,173,000 ​ Retained earnings ​ 31,375,693 ​ 16,778,715 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 67,060,208 ​ 52,652,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 96,022,747 ​ $ 77,870,489 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 51 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Operations ​ ​ ​ ​ ​ ​ Net income ​ $ 14,596,978 ​ $ 6,757,059 Adjustments to reconcile net income to net cash provided by operations: ​ ​ ​ ​ Depreciation and amortization ​ 1,866,589 ​ 1,551,774 Provision for credit losses ​ 317,680 ​ 234,853 Deferred taxes ​ 196,907 ​ ( 88,194 ) Non-cash lease expense ​ 2,566,279 ​ 2,083,178 Loss on disposal of equipment ​ ​ 5,491 ​ ​ 7,084 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 6,917,633 ) ​ 3,192,068 Inventories ​ ( 9,360,441 ) ​ ( 2,559,347 ) Prepaid expenses ​ ( 365,280 ) ​ 208,222 Other assets ​ 25,751 ​ ( 64,129 ) Accounts payable ​ 1,116,893 ​ 50,807 Accrued expenses ​ ( 424,340 ) ​ 728,920 Operating leases ​ ( 2,459,910 ) ​ ( 2,155,389 ) Other liabilities ​ 1,415,830 ​ 243,734 ​ ​ ​ ​ ​ ​ ​ Net cash provided by operations ​ 2,580,794 ​ 10,190,640 ​ ​ ​ ​ ​ ​ ​ Investing ​ ​ ​ ​ Purchase of property and equipment ​ ( 1,200,515 ) ​ ( 3,459,506 ) Purchase of intangible assets ​ ( 50,631 ) ​ ( 298,898 ) Proceeds from (investment in) notes receivable ​ ​ 2,000 ​ ​ ( 2,000 ) Proceeds from the sale of equipment ​ ​ 650 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Net cash (used in) investing ​ ( 1,248,496 ) ​ ( 3,760,404 ) ​ ​ ​ ​ ​ ​ ​ Financing ​ ​ ​ ​ Payments on notes payable ​ ( 3,597,544 ) ​ ( 1,261,312 ) Purchase of treasury stock ​ ​ ( 188,908 ) ​ ​ ( 2,413,774 ) ​ ​ ​ ​ ​ ​ ​ Net cash (used in) financing ​ ( 3,786,452 ) ​ ( 3,675,086 ) ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ ( 2,454,154 ) ​ 2,755,150 Cash and cash equivalents, beginning of period ​ 20,609,003 ​ 17,853,853 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents, end of period ​ $ 18,154,849 ​ $ 20,609,003 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ Interest ​ $ 419,571 ​ $ 449,032 Income Taxes ​ $ 2,834,505 ​ $ 2,270,708 ​ ​ ​ ​ ​ ​ ​ Supplemental noncash investing and financing activities ​ ​ ​ ​ ​ ​ Scottsdale Transaction measurement period adjustment, addition to intangible assets, reduction to goodwill ​ ​ — ​ ​ 27,500 Scottsdale Transaction measurement period adjustment, addition to property and equipment, reduction to goodwill ​ ​ — ​ ​ 122,500 Scottsdale Transaction measurement period adjustment, reduction to notes payable, reduction to goodwill ​ ​ — ​ ​ 150,000 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 52 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Year Ended December 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 — ​ — — ​ — — ​ — ​ — ​ 6,757,059 ​ 6,757,059 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 512,957 ) ​ ( 2,413,774 ) — ​ — ​ — ​ — ​ ( 2,413,774 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2024 26,924,631 ​ $ 269,246 ( 928,930 ) ​ $ ( 4,568,823 ) — ​ $ — ​ $ 40,173,000 ​ $ 16,778,715 ​ $ 52,652,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Year Ended December 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 — ​ — — ​ — — ​ — ​ — ​ 14,596,978 ​ 14,596,978 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 32,225 ) ​ ( 188,908 ) — ​ — ​ — ​ — ​ ( 188,908 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2025 26,924,631 ​ $ 269,246 ( 961,155 ) ​ $ ( 4,757,731 ) — ​ $ — ​ $ 40,173,000 ​ $ 31,375,693 ​ $ 67,060,208 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 53 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 1 — BASIS OF PRESENTATION ​ 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 (“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. 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 has no variable interest entities that require 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, and 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 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 the responsible reuse and recycling of electronic devices. ​ See Item 7. 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. 54 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES Use of Estimates The preparation of 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 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: (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 For the consumer segment, revenue from monetary transactions (e.g., 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 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 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 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. 55 Table of Contents 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. The commercial segment recognizes revenue on outright sales when terms and transaction price are agreed to, the product is shipped, and the title is transferred. See Note 10 – Revenue for further details. Sales Returns and Allowances Sales are recorded, net of expected returns. 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. As of December 31, 2025, and December 31, 2024, the consumer segment’s allowance for returns was $ 18,190 and $ 11,942 , respectively. As of December 31, 2025, and December 31, 2024, the commercial segment’s allowance for returns was $ 42,339 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 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. 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. 56 Table of Contents 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. ​ See Item 7. 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, 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. For the years ended December 31, 2025, and December 31, 2024, the commercial segment’s shipping and handling costs were $ 3,904,724 and $ 4,840,381 , respectively. Advertising Costs 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. For the years ended December 31, 2025, and December 31, 2024, the commercial segment’s advertising costs were $ 419,028 and $ 281,814 , 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 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. 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 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. ​ 57 Table of Contents 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 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 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. See Note 17 – Income Taxes for further details. 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 years ended December 31, 2025, and December 31, 2024. 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. See Note 17 – Income Taxes for further details. 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 consolidated financial statements, the Company’s CODM was identified as the Chief Executive Officer. See Item 7. 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. 58 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Earnings Per Share 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. 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 exercise of an award, such benefit is reflected as cash flow from financing activities in the 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 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 bear interest at rates that reflect current market rates. None of these instruments are held for trading purposes. 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 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 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 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. 59 Table of Contents 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. As of December 31, 2025, and December 31, 2024, the commercial segment’s allowance for credit losses was $ 735,944 and $ 433,159 , respectively. A summary of the allowance for credit losses is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ Beginning Balance ​ $ 433,159 ​ $ 260,858 Provision for credit losses (+) ​ 317,680 ​ 234,853 Receivables written off (-) ​ ( 14,895 ) ​ ( 62,552 ) ​ ​ ​ ​ ​ ​ ​ Ending Balance ​ $ 735,944 ​ $ 433,159 ​ Inventories Consumer Segment The consumer segment states its inventory at the lower of cost and net realizable value. 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. 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 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 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. 60 Table of Contents 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. The following table depicts the estimated useful lives of our property and equipment asset classes: ​ ​ ​ ​ Land ​ ​ ​ Indefinite Vehicles ​ ​ ​ 5 to 7 years Buildings 39 years Building improvements Shorter of 15 years or remaining useful life Furniture and fixtures 5 to 7 years Machinery and equipment 3 to 10 years Leasehold improvements Shorter of 15 years or remaining lease term ​ 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. 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, relationships, and contracts ​ ​ ​ 10 years Technology (1) 5 years Trademarks/tradenames 10 years (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. New Accounting Standards 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. 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 61 Table of Contents 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. GAAP. 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 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of segment expenses that are significant and regularly provided to the CODM. In addition, ASU 2023-07 requires the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Retrospective application to all prior periods presented in the financial statements is required. The Company adopted this guidance effective January 1, 2024. As ASU 2023-07 applies to reportable segment disclosures, the adoption did not have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”), which updates income tax disclosures related to the effective income tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The guidance is effective for annual periods beginning after December 15, 2024, and may be applied prospectively or retrospectively, with early adoption permitted. The Company adopted this guidance with retrospective application, effective January 1, 2024. As ASU 2023-09 applies to income tax disclosures, the adoption did not have a material impact on the Company’s consolidated financial statements. 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. ​ ​ 62 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 4 — INVENTORIES The following table summarizes the details of the Company’s inventories: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Consumer ​ ​ ​ ​ Trade inventories ​ $ 32,814,426 ​ $ 23,973,333 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 32,814,426 ​ 23,973,333 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Trade inventories ​ 2,251,539 ​ 1,732,191 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 2,251,539 ​ 1,732,191 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 35,065,965 ​ $ 25,705,524 ​ ​ ​ ​ NOTE 5 — GOODWILL The following table summarizes the details of the Company’s changes in goodwill: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 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”). ​ 63 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Consumer ​ ​ ​ ​ Land ​ $ 1,824,892 ​ $ 1,824,892 Buildings and improvements ​ 6,139,182 ​ 6,078,606 Leasehold improvements ​ 2,019,993 ​ 1,736,193 Furniture and fixtures ​ 1,488,500 ​ 1,203,540 Machinery and equipment ​ 1,693,308 ​ 1,570,704 Vehicles ​ 53,318 ​ 53,318 Construction in progress (1) ​ 65,561 ​ 135,856 ​ ​ 13,284,754 ​ 12,603,109 Less: accumulated depreciation ​ ( 3,882,909 ) ​ ( 3,287,437 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 9,401,845 ​ 9,315,672 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Leasehold improvements ​ 160,850 ​ 172,391 Furniture and fixtures ​ 74,811 ​ 74,811 Machinery and equipment ​ 1,389,680 ​ 1,336,427 Vehicles ​ 206,556 ​ 206,556 ​ ​ 1,831,897 ​ 1,790,185 Less: accumulated depreciation ​ ( 1,356,836 ) ​ ( 1,112,694 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 475,061 ​ 677,491 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Land ​ 1,106,664 ​ 1,106,664 Buildings and improvements ​ 2,749,983 ​ 2,688,523 Furniture and fixtures ​ 84,877 ​ — Machinery and equipment ​ 64,290 ​ 28,627 Construction in progress (1) ​ 92,702 ​ — ​ ​ 4,098,516 ​ 3,823,814 Less: accumulated depreciation ​ ( 391,233 ) ​ ( 301,815 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,707,283 ​ 3,521,999 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 13,584,189 ​ $ 13,515,162 (1) As of December 31, 2025 and December 31, 2024, these assets have not yet been placed into service and are not yet depreciable. ​ 64 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Consumer ​ ​ ​ ​ Technology ​ $ 409,896 ​ $ 409,896 Customer lists ​ ​ 13,000 ​ ​ 13,000 Trademarks/tradenames ​ ​ 3,924 ​ ​ — Assets under development (1) ​ — ​ 3,381 ​ ​ 426,820 ​ 426,277 Less: accumulated amortization ​ ( 389,025 ) ​ ( 379,980 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 37,795 ​ 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 ​ ( 3,507,313 ) ​ ( 2,877,855 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,043,687 ​ 3,673,145 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Technology ​ 512,636 ​ 462,548 ​ ​ 512,636 ​ 462,548 Less: accumulated amortization ​ ( 186,951 ) ​ ( 84,212 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 325,685 ​ 378,336 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,407,167 ​ $ 4,097,778 (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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Corporate ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 $ 9,320 $ 629,448 $ 108,562 $ 747,330 2027 ​ 9,320 ​ 629,448 ​ 108,562 ​ 747,330 2028 ​ 8,452 ​ 629,448 ​ 108,561 ​ 746,461 2029 ​ 3,665 ​ 539,919 ​ — ​ 543,584 2030 ​ 1,692 ​ 254,628 ​ — ​ 256,320 Thereafter ​ 5,346 ​ 360,796 ​ — ​ 366,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 37,795 ​ $ 3,043,687 ​ $ 325,685 ​ $ 3,407,167 ​ ​ 65 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 8 — ACCRUED EXPENSES The following table summarizes the details of the Company’s accrued expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ 2025 ​ 2024 Consumer ​ ​ ​ ​ Accrued interest ​ $ 5,594 ​ $ 11,276 Payroll ​ 169,602 ​ 361,829 Taxes ​ 162,689 ​ 133,008 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 337,885 ​ 506,113 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Accrued interest ​ 7,222 ​ 7,568 Payroll ​ 109,172 ​ 457,722 Unvouchered inventory payments ​ 959,340 ​ 1,915,567 Other ​ 21,168 ​ 26,334 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,096,902 ​ 2,407,191 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Accrued interest ​ — ​ 6,902 Payroll ​ 10,788 ​ 38,205 Professional fees ​ 67,560 ​ 81,973 Taxes ​ 1,258,645 ​ 153,479 Other ​ 19,223 ​ 21,480 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,356,216 ​ 302,039 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,791,003 ​ $ 3,215,343 ​ ​ 66 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 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 years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ 2024 ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 192,717,539 ​ $ 48,303,823 ​ $ 241,021,362 $ 130,469,468 ​ $ 49,906,761 ​ $ 180,376,229 Cost of goods sold ​ 169,793,289 ​ 17,303,080 ​ 187,096,369 114,587,598 ​ 21,472,844 ​ 136,060,442 Selling, general and administrative ​ 15,454,592 ​ 18,494,881 ​ 33,949,473 15,211,970 ​ 19,393,162 ​ 34,605,132 Depreciation and amortization ​ 791,966 ​ 1,074,623 ​ 1,866,589 524,510 ​ 1,027,264 ​ 1,551,774 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 6,677,692 ​ $ 11,431,239 ​ $ 18,108,931 $ 145,390 ​ $ 8,013,491 ​ $ 8,158,881 ​ The following table depicts a reconciliation from segment operating income to income before income taxes for the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2024 ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 6,677,692 ​ $ 11,431,239 ​ $ 18,108,931 $ 145,390 ​ $ 8,013,491 ​ $ 8,158,881 Other income ​ 352,295 ​ 668,634 ​ 1,020,929 104,561 ​ 933,121 ​ 1,037,682 Interest expense ​ ( 204,603 ) ​ ( 202,039 ) ​ ( 406,642 ) ( 228,792 ) ​ ( 218,591 ) ​ ( 447,383 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ $ 6,825,384 ​ $ 11,897,834 ​ $ 18,723,218 $ 21,159 ​ $ 8,728,021 ​ $ 8,749,180 ​ 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 years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 820,906 ​ $ 3,159,705 Commercial ​ 84,792 ​ 144,419 Corporate ​ 345,448 ​ 454,280 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,251,146 ​ $ 3,758,404 67 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ The following table depicts the Company’s total assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 56,313,243 ​ $ 40,454,328 Commercial ​ 20,272,552 ​ 33,068,887 Corporate ​ 19,436,952 ​ 4,347,274 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 96,022,747 ​ $ 77,870,489 ​ ​ NOTE 10 — REVENUE The following table depicts the Company’s disaggregation of total sales and gross margin for the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ Sales ​ ​ ​ Gross Margin ​ ​ ​ Margin ​ Sales ​ ​ ​ Gross Margin ​ ​ ​ Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 192,717,539 ​ $ 22,924,250 11.9 % $ 130,469,468 ​ $ 15,881,870 12.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ 48,303,823 ​ 31,000,743 64.2 % 49,906,761 ​ 28,433,917 57.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 241,021,362 ​ $ 53,924,993 22.4 % $ 180,376,229 ​ $ 44,315,787 24.6 % ​ ​ 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 - 12/31/2024 ​ 738,132 ​ — ​ 455,385 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ Opening Balance - 1/1/2024 4,399,658 — — Closing Balance - 12/31/2024 3,646,106 — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts ​ ​ ​ ​ Contract ​ ​ ​ ​ Contract ​ ​ ​ Receivable ​ ​ Assets ​ ​ Liabilities Consumer ​ ​ ​ ​ ​ ​ Opening Balance - 1/1/2025 $ 738,132 $ — $ 455,385 Closing Balance - 12/31/2025 ​ 8,404,300 ​ — ​ 1,840,636 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ Opening Balance - 1/1/2025 3,646,106 — — Closing Balance - 12/31/2025 2,579,891 — 30,579 ​ 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. ​ 68 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 11 — LEASES The following table depicts the Company’s future annual minimum leases payments as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases Consumer ​ ​ 2026 ​ $ 1,130,777 2027 ​ 887,803 2028 ​ 652,641 2029 ​ 533,234 2030 ​ 203,190 Thereafter ​ - ​ ​ ​ ​ Total minimum lease payments ​ 3,407,645 Less: imputed interest ​ ( 268,790 ) ​ ​ ​ ​ Sub-total ​ 3,138,855 ​ ​ ​ ​ Commercial ​ ​ 2026 ​ 1,280,989 2027 ​ 1,453,169 2028 ​ 1,476,504 2029 ​ 1,535,564 2030 ​ 1,596,986 Thereafter ​ 550,061 ​ ​ ​ ​ Total minimum lease payments ​ 7,893,273 Less: imputed interest ​ ( 1,098,266 ) ​ ​ ​ ​ Sub-total ​ 6,795,007 ​ ​ ​ ​ Total ​ 9,933,862 ​ ​ ​ ​ Less: current portion ​ 1,937,295 ​ ​ ​ ​ ​ ​ $ 7,996,567 ​ 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. 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, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ Non-cash activities: right-of-use operating lease assets obtained in exchange for new operating lease liabilities ​ $ 7,235,358 ​ $ 2,341,024 ​ ​ ​ ​ ​ ​ ​ ​ 69 Table of Contents 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, ​ ​ ​ ​ 2025 ​ 2024 ​ ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ Consumer ​ ​ ​ Commercial ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease cost ​ $ 1,117,351 ​ $ 1,448,929 ​ $ 2,566,280 ​ $ 747,356 ​ $ 1,357,709 ​ $ 2,105,065 Variable lease cost ​ 242,983 ​ ​ 477,629 ​ 720,612 ​ 217,362 ​ ​ 590,599 ​ 807,961 Short-term lease cost ​ ​ 32,153 ​ ​ 150,258 ​ ​ 182,411 ​ ​ 167,550 ​ ​ 179,877 ​ ​ 347,427 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,392,487 ​ $ 2,076,816 ​ $ 3,469,303 ​ $ 1,132,268 ​ $ 2,128,185 ​ $ 3,260,453 ​ As of December 31, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases were 4.6 years and 5.1 %. As of December 31, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases were 3.0 years and 3.9 %. ​ 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 years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ ​ Basic weighted average shares 25,979,353 26,180,801 Effect of potential dilutive securities — — ​ ​ ​ ​ ​ ​ Diluted weighted average shares 25,979,353 26,180,801 ​ 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 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. 70 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 - 28, 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 1 - 30, 2025 — ​ — ​ — 170,570 May 1 - 31, 2025 — ​ — ​ — — June 1 - 30, 2025 20,163 ​ 5.89 ​ 118,700 150,407 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2025 949,593 ​ $ 4.94 ​ $ 4,690,149 150,407 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 1 - 31, 2025 8,134 ​ 5.93 ​ 48,218 142,273 August 1 - 31, 2025 3,428 ​ 5.65 ​ 19,364 138,845 September 1 - 30, 2025 — ​ — ​ — 138,845 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2025 961,155 ​ $ 4.95 ​ $ 4,757,731 138,845 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 - 31, 2025 — ​ — ​ — 138,845 November 1 - 30, 2025 — ​ — ​ — 138,845 December 1 - 31, 2025 — ​ — ​ — 138,845 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2025 961,155 ​ $ 4.95 ​ $ 4,757,731 138,845 ​ For the year ended December 31, 2025, the Company repurchased 32,225 shares for $ 188,908 , for an average price of $ 5.86 . ​ 71 Table of Contents 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 ​ ​ ​ Total Price ​ ​ ​ Shares Available Fiscal Period ​ Shares Purchased ​ Paid per Share ​ Paid ​ to Purchase Balance as of January 1, 2024 415,973 ​ $ 5.18 ​ $ 2,155,049 584,027 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 1 - 31, 2024 59,417 ​ 4.52 ​ 268,569 524,610 February 1 - 29, 2024 56,343 ​ 4.53 ​ 255,195 468,267 March 1 - 31, 2024 85,580 ​ 4.46 ​ 381,382 382,687 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2024 617,313 ​ $ 4.96 ​ $ 3,060,195 382,687 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 1 - 30, 2024 30,891 ​ 4.66 ​ 143,840 351,796 May 1 - 31, 2024 37,672 ​ 4.65 ​ 175,257 314,124 June 1 - 30, 2024 83,526 ​ 4.74 ​ 396,242 230,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2024 769,402 ​ $ 4.91 ​ $ 3,775,534 230,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 1 - 31, 2024 75,326 ​ 4.87 ​ 367,144 155,272 August 1 - 31, 2024 51,353 ​ 4.98 ​ 255,633 103,919 September 1 - 30, 2024 20,516 ​ 5.15 ​ 105,733 83,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2024 916,597 ​ $ 4.91 ​ $ 4,504,044 83,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 - 31, 2024 11,787 ​ 5.25 ​ 61,905 71,616 November 1 - 30, 2024 546 ​ 5.26 ​ 2,874 71,070 December 1 - 31, 2024 — ​ — ​ — 71,070 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2024 928,930 ​ $ 4.92 ​ $ 4,568,823 71,070 ​ For the year ended December 31, 2024, the Company repurchased 512,957 shares for $ 2,413,774 , for an average price of $ 4.71 . ​ 72 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 13 — DEBT The following table summarizes the details of the Company’s long-term debt obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding Balance ​ December 31, ​ ​ ​ December 31, ​ 2025 ​ 2024 Consumer ​ ​ ​ ​ Note payable, FSB (1) ​ $ 2,342,485 ​ $ 2,455,043 Note payable, Truist Bank (3) ​ 762,430 ​ 801,175 Notes payable, TBT (4,5) ​ 1,486,229 ​ 1,979,730 Note payable, Scottsdale Transaction (6) ​ 18,750 ​ 50,000 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 4,609,894 ​ 5,285,948 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Note payable, FSB (2) ​ 5,314,741 ​ 5,569,171 Note payable, Avail Transaction (7) ​ — ​ 166,667 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,314,741 ​ 5,735,838 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Line of credit, FSB (8) ​ — ​ — Note payable, TBT (9) ​ — ​ 2,500,393 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ — ​ 2,500,393 ​ ​ ​ ​ ​ ​ ​ Total ​ 9,924,635 ​ 13,522,179 ​ ​ ​ ​ ​ ​ ​ Less: current portion ​ ( 7,787,468 ) ​ ( 3,591,351 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,137,167 ​ $ 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 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. 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. 73 Table of Contents 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 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. (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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2027 ​ ​ ​ 2028 ​ ​ ​ 2029 ​ ​ ​ 2030 ​ ​ ​ Thereafter Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note payable, FSB (1) $ 2,342,485 ​ $ — $ — $ — $ — $ — Note payable, Truist Bank (3) ​ 40,203 ​ 41,716 ​ 43,216 ​ 44,913 ​ 592,381 ​ — Notes payable, TBT (4,5) ​ 71,289 ​ 74,324 ​ 77,018 ​ 80,098 ​ 83,154 ​ 1,100,347 Note payable, Scottsdale Transaction (6) ​ 18,750 ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 2,472,727 ​ 116,040 ​ 120,234 ​ 125,011 ​ 675,535 ​ 1,100,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note payable, FSB (2) ​ 5,314,741 ​ — ​ — ​ — ​ — ​ — Note payable, Avail Transaction (7) ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,314,741 ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Line of Credit, FSB (8) ​ — ​ — ​ — ​ — ​ — ​ — Note payable, TBT (9) ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 7,787,468 ​ $ 116,040 ​ $ 120,234 ​ $ 125,011 ​ $ 675,535 ​ $ 1,100,347 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. 74 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Scheduled ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal ​ Loan ​ ​ ​ Scheduled Principal Payments and Maturities by Year Payments ​ ​ ​ Maturities ​ ​ ​ Total 2026 $ 476,170 $ 7,311,298 $ 7,787,468 2027 ​ 116,040 ​ — ​ 116,040 2028 ​ 120,234 ​ — ​ 120,234 2029 ​ 125,011 ​ — ​ 125,011 2030 ​ 110,183 ​ 565,352 ​ 675,535 Thereafter ​ 65,531 ​ 1,034,816 ​ 1,100,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,013,169 ​ $ 8,911,466 ​ $ 9,924,635 ​ ​ NOTE 14 — STOCK-BASED COMPENSATION 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 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 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 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. ​ 75 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 17 — INCOME TAXES The Company’s income from continuing operations before income tax expense for Fiscal 2025 and Fiscal 2024 was $ 18,723,218 and $ 8,749,180 , respectively, and was derived entirely from domestic operations. The following table summarizes the components of income tax expense, disaggregated by current and deferred, and by federal and state: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Current ​ ​ ​ ​ ​ ​ Federal ​ $ 3,648,001 ​ $ 1,888,771 State and local ​ ​ 281,332 ​ ​ 191,544 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ ​ 3,929,333 ​ ​ 2,080,315 ​ ​ ​ ​ ​ ​ ​ Deferred ​ ​ ​ ​ ​ ​ Federal ​ $ 196,907 ​ $ ( 88,194 ) ​ ​ ​ ​ ​ ​ ​ Sub-total ​ ​ 196,907 ​ ​ ( 88,194 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,126,240 ​ $ 1,992,121 ​ The following table provides a reconciliation of the Company’s federal tax rate to its effective tax rate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Income tax expense at the federal tax rate ​ $ 3,931,876 ​ 21.0 % $ 1,837,328 ​ 21.0 % State and local taxes, net of federal income tax effect (1) ​ ​ 222,253 ​ 1.2 % ​ 151,320 ​ 1.7 % Foreign derived intangible income ​ ​ ( 44,231 ) ​ ( 0.2 ) % ​ — ​ 0.0 % Nontaxable or nondeductible items ​ ​ 9,648 ​ 0.1 % ​ 8,415 ​ 0.1 % Other ​ ​ 6,694 ​ 0.0 % ​ ( 4,942 ) ​ ( 0.1 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,126,240 ​ 22.0 % $ 1,992,121 ​ 22.8 % (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. 76 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 2,570,000 ​ $ 2,090,000 State and local ​ ​ 264,505 ​ ​ 180,708 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,834,505 ​ $ 2,270,708 ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 2,570,000 ​ $ 2,090,000 Texas (1) ​ ​ — ​ ​ 123,000 Arizona (1) ​ ​ — ​ ​ 30,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,570,000 ​ $ 2,243,000 (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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Deferred Tax Asset (Liability) ​ ​ ​ ​ ​ ​ Inventories ​ $ 19,878 ​ $ 57,015 Contingencies and accruals ​ ​ 167,259 ​ ​ 128,673 Property and equipment ​ ​ ( 386,007 ) ​ ​ ( 146,109 ) Goodwill and intangibles ​ ​ 4,148 ​ ​ 3,111 Other ​ ​ 47,341 ​ ​ 6,836 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ ( 147,381 ) ​ $ 49,526 ​ No valuation allowance was recorded against the net deferred tax asset (liability) balance as of December 31, 2025 and December 31, 2024. ​ NOTE 18 — DEFINED CONTRIBUTION PLANS The Company sponsors a defined contribution 401(k) plan (“DCP”). Employee contributions under the DCP are fully vested, with employer matching contributions being subject to a service vesting schedule. In Fiscal 2025 and 2024, the Company contributed $ 49,633 and $ 13,472 to the DCP, respectively. ​ 77 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​