Envela Corp 10-Q

ITEM 1: FINANCIAL STATEMENTS ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, (Unaudited) 2024 2023 2024 2023 Sales ​ $ 46,899,559 ​ $ 36,876,486 ​ $ 132,054,341 ​ $ 137,781,895 Cost of goods sold ​ 35,435,320 ​ 27,142,204 ​ 98,879,961 ​ 105,875,664 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 11,464,239 ​ 9,734,282 ​ 33,174,380 ​ 31,906,231 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ Selling, general and administrative ​ 9,028,988 ​ 7,446,380 ​ 25,784,012 ​ 23,714,237 Depreciation and amortization ​ 414,779 ​ 337,713 ​ 1,120,611 ​ 1,028,238 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 9,443,767 ​ 7,784,093 ​ 26,904,623 ​ 24,742,475 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ 2,020,472 ​ 1,950,189 ​ 6,269,757 ​ 7,163,756 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ Other income ​ 340,351 ​ 192,437 ​ 804,296 ​ 556,868 Interest expense ​ ( 106,139 ) ​ ( 117,166 ) ​ ( 336,134 ) ​ ( 348,918 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 2,254,684 ​ 2,025,460 ​ 6,737,919 ​ 7,371,706 Income tax expense ​ ( 569,645 ) ​ ( 317,967 ) ​ ( 1,581,162 ) ​ ( 1,534,187 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,685,039 ​ $ 1,707,493 ​ $ 5,156,757 ​ $ 5,837,519 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share: ​ ​ ​ ​ Net income ​ $ 0.06 ​ $ 0.06 ​ $ 0.20 ​ $ 0.22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share: ​ ​ ​ ​ Net income ​ $ 0.06 ​ $ 0.06 ​ $ 0.20 ​ $ 0.22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ Basic ​ 26,061,748 ​ 26,809,778 ​ 26,242,452 ​ 26,884,221 Diluted ​ 26,076,748 ​ 26,824,778 ​ 26,257,452 ​ 26,899,221 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2024 ​ 2023 Assets ​ (Unaudited) ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 17,752,199 ​ $ 17,853,853 Accounts receivable, net of allowances ​ 3,881,479 ​ 7,811,159 Notes receivable ​ 3,000 ​ 4,700 Inventories ​ 29,073,234 ​ 23,146,177 Prepaid expenses ​ 750,412 ​ 1,082,425 Other current assets ​ ​ 75,590 ​ ​ — Total current assets ​ 51,535,914 ​ 49,898,314 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 13,266,943 ​ 10,764,224 Right-of-use assets from operating leases ​ 4,448,956 ​ 4,189,621 Goodwill ​ 3,621,453 ​ 3,921,453 Intangible assets, net ​ 4,283,558 ​ 4,499,170 Other assets ​ 234,744 ​ 201,447 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 77,391,568 ​ $ 73,474,229 ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders’ equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 2,591,213 ​ $ 3,126,743 Notes payable ​ 971,603 ​ 1,361,443 Operating lease liabilities ​ 2,020,122 ​ 1,807,729 Accrued expenses ​ 2,315,745 ​ 2,486,423 Other current liabilities ​ 2,924,060 ​ 211,651 Total current liabilities ​ 10,822,743 ​ 8,993,989 ​ ​ ​ ​ ​ ​ ​ Deferred tax liability ​ 34,187 ​ 38,668 Notes payable, less current portion ​ 12,870,182 ​ 13,572,048 Operating lease liabilities, less current portion ​ 2,547,841 ​ 2,560,671 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ $ 26,274,953 ​ $ 25,165,376 ​ ​ ​ ​ ​ ​ ​ Contingencies (Note 17) ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 26,008,034 shares outstanding as of September 30, 2024; 26,924,631 shares issued and 26,508,658 shares outstanding as of December 31, 2023 ​ 269,246 ​ 269,246 Treasury stock at cost, 916,597 and 415,973 shares, as of September 30, 2024 and December 31, 2023, respectively ​ ( 4,504,044 ) ​ ( 2,155,049 ) Additional paid-in capital ​ 40,173,000 ​ 40,173,000 Retained earnings ​ 15,178,413 ​ 10,021,656 ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 51,116,615 ​ 48,308,853 ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 77,391,568 ​ $ 73,474,229 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, (Unaudited) 2024 2023 Operations ​ ​ ​ ​ Net income ​ $ 5,156,757 ​ $ 5,837,519 Adjustments to reconcile net income to net cash provided by operations: ​ ​ Depreciation and amortization ​ 1,120,611 ​ 1,028,238 Provision for credit losses ​ 260,898 ​ 400,493 Deferred taxes ​ ( 4,481 ) ​ 1,385,651 Non-cash lease expense ​ 1,525,870 ​ 1,418,928 Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ 3,668,782 ​ ( 1,385,580 ) Inventories ​ ( 5,927,057 ) ​ ( 4,295,072 ) Prepaid expenses ​ 332,013 ​ 165,863 Other assets ​ ( 104,188 ) ​ ( 55,600 ) Accounts payable ​ ( 535,530 ) ​ 162,899 Accrued expenses ​ ( 170,678 ) ​ ( 56,828 ) Operating leases ​ ( 1,585,642 ) ​ ( 1,420,605 ) Other liabilities ​ 2,712,409 ​ 284,085 ​ ​ ​ ​ ​ ​ ​ Net cash provided by operations ​ 6,449,764 ​ 3,469,991 ​ ​ ​ ​ ​ ​ ​ Investing ​ ​ Purchase of property and equipment ​ ( 2,955,024 ) ​ ( 1,563,612 ) Purchase of intangible assets ​ ( 302,693 ) ​ — Investment in notes receivable ​ ​ ( 3,000 ) ​ ​ 578,250 Acquisition, Kretchmer Transaction ​ — ​ ( 100,000 ) ​ ​ ​ ​ ​ ​ ​ Net cash (used in) investing ​ ( 3,260,717 ) ​ ( 1,085,362 ) ​ ​ ​ ​ ​ ​ ​ Financing ​ ​ Payments on notes payable ​ ( 941,706 ) ​ ( 930,858 ) Purchase of treasury stock ​ ​ ( 2,348,995 ) ​ ​ ( 1,318,351 ) ​ ​ ​ ​ ​ ​ ​ Net cash (used in) financing ​ ( 3,290,701 ) ​ ( 2,249,209 ) ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ ( 101,654 ) ​ 135,420 Cash and cash equivalents, beginning of period ​ 17,853,853 ​ 17,169,969 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents, end of period ​ $ 17,752,199 ​ $ 17,305,389 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ Cash paid during the period for: ​ ​ Interest ​ $ 385,285 ​ $ 349,747 Income taxes ​ $ 1,862,525 ​ $ 196,165 ​ ​ ​ ​ ​ ​ ​ Noncash investing and financing activities ​ ​ ​ ​ ​ ​ Kretchmer Transaction measurement period adjustment, addition to intangible assets, reduction to goodwill ​ ​ 27,500 ​ ​ — Kretchmer Transaction measurement period adjustment, addition to property and equipment, reduction to goodwill ​ ​ 122,500 ​ ​ — Kretchmer Transaction measurement period adjustment, reduction to notes payable, reduction to goodwill ​ ​ 150,000 ​ ​ — Kretchmer Transaction, addition to notes payable, addition to goodwill ​ ​ — ​ ​ 200,000 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) Shares Amount Shares Amount Shares Amount Capital Earnings Equity Three Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 1, 2023 ​ 26,924,631 ​ $ 269,246 ​ ( 27,421 ) ​ $ ( 194,820 ) ​ — ​ $ — ​ $ 40,173,000 ​ $ 7,004,230 ​ $ 47,251,656 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income — ​ — — ​ — — ​ — ​ — ​ 1,707,493 ​ 1,707,493 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 197,210 ) ​ ( 1,123,531 ) — ​ — ​ — ​ — ​ ( 1,123,531 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2023 26,924,631 ​ $ 269,246 ( 224,631 ) ​ $ ( 1,318,351 ) — ​ $ — ​ $ 40,173,000 ​ $ 8,711,723 ​ $ 47,835,618 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Three Months Ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 1, 2024 ​ 26,924,631 ​ $ 269,246 ​ ( 769,402 ) ​ $ ( 3,775,534 ) ​ — ​ $ — ​ $ 40,173,000 ​ $ 13,493,374 ​ $ 50,160,086 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income — ​ — — ​ — — ​ — ​ — ​ 1,685,039 ​ 1,685,039 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 147,195 ) ​ ( 728,510 ) — ​ — ​ — ​ — ​ ( 728,510 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2024 26,924,631 ​ $ 269,246 ( 916,597 ) ​ $ ( 4,504,044 ) — ​ $ — ​ $ 40,173,000 ​ $ 15,178,413 ​ $ 51,116,615 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents ENVELA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Nine Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1, 2023 ​ 26,924,631 ​ $ 269,246 ​ — ​ $ — ​ — ​ $ — ​ $ 40,173,000 ​ $ 2,874,204 ​ $ 43,316,450 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income — ​ — — ​ — — ​ — ​ — ​ 5,837,519 ​ 5,837,519 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 224,631 ) ​ ( 1,318,351 ) — ​ — ​ — ​ — ​ ( 1,318,351 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2023 26,924,631 ​ $ 269,246 ( 224,631 ) ​ $ ( 1,318,351 ) — ​ $ — ​ $ 40,173,000 ​ $ 8,711,723 ​ $ 47,835,618 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ Total ​ ​ Common Stock ​ Treasury Stock ​ Preferred Stock ​ Paid-in ​ Retained ​ Stockholders’ (Unaudited) ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Earnings ​ Equity Nine Months Ended September 30, 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 — ​ — — ​ — — ​ — ​ — ​ 5,156,757 ​ 5,156,757 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares repurchased — ​ — ( 500,624 ) ​ ( 2,348,995 ) — ​ — ​ — ​ — ​ ( 2,348,995 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of September 30, 2024 26,924,631 ​ $ 269,246 ( 916,597 ) ​ $ ( 4,504,044 ) — ​ $ — ​ $ 40,173,000 ​ $ 15,178,413 ​ $ 51,116,615 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 — BASIS OF PRESENTATION These unaudited interim condensed consolidated financial statements of Envela Corporation, a Nevada corporation, and its subsidiaries (together with its subsidiaries, the “Company” or “Envela”), included herein have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X prescribed by the Securities and Exchange Commission (the “SEC”). Pursuant to the SEC’s rules and regulations, Quarterly Reports do not include all of the information and notes required by U.S. GAAP. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”), necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2024 (“Fiscal 2024”). Management suggests these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“Fiscal 2023”) filed with the SEC on March 21, 2024 (“2023 Annual Report”). The Company does not have any variable interest entities requiring consolidation. The Company’s operations are located within the contiguous U.S. and its functional and reporting currency is the U.S. dollar. All intercompany transactions and balances have been eliminated. 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.” Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Our operations are organized into two operating and reporting segments: consumer and commercial, which additionally are the Company’s reporting units. Consumer Segment Our consumer segment operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, fine jewelry, watches, and bullion. Our diamonds and gemstones are recycled, meaning they were previously set and then unset to become a new design – allowing for a truly low-carbon, ethical origin. The company focuses on buying and selling pre-owned luxury items, ethically sourced diamonds, gemstones, and precious metals, catering to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another. Commercial Segment Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the information technology (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The company 9 Table of Contents focuses on offering services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role to support a circular economy through responsible reuse and recycling of electronic devices. NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES Financial Instruments The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. Notes payable approximate fair value due to the market interest rate charged. Use of Estimates The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of and/or potential impairment of goodwill and intangible assets for the reporting units; useful lives of our tangible and intangible assets; allowances for credit losses; the market value of, and demand for, our inventory and the potential outcome of uncertain tax positions that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from those estimates and assumptions. Revenue Recognition Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. Consumer Segment For the consumer segment, revenue from monetary transactions (i.e., cash and accounts receivable) with wholesale customers is recognized when the merchandise is delivered or at the point of sale for retail customers, and consideration for the transaction has been made either by immediate payment or through a receivable obligation. For e-commerce, revenue is recognized when the customer has fulfilled their obligation to pay or promise to pay and goods have been shipped. Revenue on precious metals requiring an assay is recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals. The Company offers third-party financing for retail customers. Revenue is recognized upon transfer of title, with the promise of the third-party financing company to pay. Commercial Segment The commercial segment recognizes revenue at an amount that reflects the consideration to which we expect to be entitled to in exchange for transferring goods or services to the customer. The commercial segment recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under the guidance of ASC 606, an estimate of the variable consideration that we are expected to be entitled to is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made once 10 Table of Contents the underlying weight and any precious metal spot price movement is resolved, which is usually around six weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract. 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 asset or material movements to our facilities. Revenue from freight arrangement services is recognized at settlement with our inbound customers which occurs when the SOW has been completed. Under the guidance of ASC 606, the Company is deemed to be a principal and as such records freight arrangement services as a component of revenue, and the associated expense is recorded as a component of cost of goods sold. The commercial segment recognizes revenue on outright sales when terms and transaction price are agreed to, product is shipped, and title is transferred. See Note 10 – Revenue for further details. Sales Returns and Allowances Sales are recorded, net of expected returns. In some cases, the consumer and commercial segment’s customers may return a product purchased within 30 days of receipt. Our allowance for estimated returns is based on our review of historical returns experience and reduces our reported revenues accordingly. As of September 30, 2024, and December 31, 2023, the consumer segment’s allowance for returns was $ 69,372 and $ 28,402 , respectively. As of September 30, 2024, and December 31, 2023, the commercial segment’s allowance for returns was $ 55,501 and $ 0 , respectively. Concentrations and Credit Risk The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to certain domestic precious metals transactions requiring an assay which are of short duration and settled on comparable terms. Overall customer concentrations as a percentage of sales may vary as a result of the mix of product 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 nine months ended September 30, 2024, two customers aggregated 40.0 % of our sales and represented 0.0 % of our accounts receivable balance. For the nine months ended September 30, 2023, three customers aggregated 38.5 % of our sales and represented 0.0 % of our accounts receivable balance. The Company believes that no single customer is critical to its business as a result of having diverse revenue streams and the optionality of sales outlets primarily associated with base and precious metals. Shipping and Handling Costs Within the consumer and commercial segments, outbound shipping and handling costs are accounted for as fulfillment costs within cost of goods sold. For the three months ended September 30, 2024 and 2023, the consumer segment’s outbound shipping and handling costs were $ 17,223 and $ 3,846 , respectively. For the three months ended September 30, 2024 and 2023, the commercial segment’s outbound shipping and handling costs were $ 1,128,553 and $ 1,096,423 , respectively. 11 Table of Contents For the nine months ended September 30, 2024 and 2023, the consumer segment’s outbound shipping and handling costs were $ 67,013 and $ 9,083 , respectively. For the nine months ended September 30, 2024 and 2023, the commercial segment’s outbound shipping and handling costs were $ 3,716,832 and $ 4,308,906 , respectively. Advertising Costs The consumer and commercial segment’s advertising costs are expensed as incurred. For the three months ended September 30, 2024 and 2023, the consumer segment’s advertising costs were $ 357,151 and $ 162,713 , respectively. For the three months ended September 30, 2024 and 2023, the commercial segment’s advertising costs were $ 59,714 and $ 10,803 , respectively. For the nine months ended September 30, 2024 and 2023, the consumer segment’s advertising costs were $ 930,132 and $ 713,840 , respectively. For the nine months ended September 30, 2024 and 2023, the commercial segment’s advertising costs were $ 192,691 and $ 32,042 , respectively. Leases We determine if an arrangement is a lease at inception. We do not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842, Leases requires us to use the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate. For leases one-year or less the Company has elected not to record lease liabilities and right-of use assets and instead recognize the expense associated with the lease payments using the straight-line basis. Income Taxes Income taxes are accounted for under the asset and liability method prescribed by ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation of Deferred Tax Assets The Company’s deferred tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the three and nine months ended September 30, 2024 and 2023. The Company did no t have a deferred tax asset as of September 30, 2024, or December 31, 2023, and as such, there was no valuation allowance. As of September 30, 2024, the Company had a deferred tax liability of $ 34,187 . As of December 31, 2023, the Company had a deferred tax liability of $ 38,668 . 12 Table of Contents 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. The Company allocates its corporate expenses to its operating segments, including selling, general and administrative expenses, depreciation and amortization, other income, interest expense, and income tax expense. See Note 2 – Principles of Consolidation and Nature of Operations for further details. Earnings Per Share Basic earnings per share of our common stock, par value $ 0.01 per share (our “Common Stock”), is computed by dividing net earnings available to holders of the Company’s 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 requiring the Company 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. 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 15 – Stock-Based Compensation for further details. Taxes Collected from Customers The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenue or expenses. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the condensed consolidated balance sheets approximate fair value. Accounts Receivable, Net of Allowances Accounts receivable represent 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 the 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. As of September 30, 2024, and December 31, 2023, the consumer segment’s allowance for credit losses was $ 0 and $ 0 , respectively. As of September 30, 2024, and December 31, 2023, the commercial segment’s allowance for credit losses was $ 415,593 and $ 260,858 , respectively. 13 Table of Contents Inventories Consumer Segment The consumer segment values inventory at the lower of cost or net realizable value. We acquire inventory based on our own internal estimate of the fair value of the items at the time of purchase. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, we monitor these fluctuations for any adverse impact on the carrying value of our inventory. Commercial Segment Our inventory primarily includes processed and unprocessed base metals, electronic scrap materials, as well as technology assets being held for resale. The processed and unprocessed base metals and electronic scrap materials are valued utilizing the average cost method. Our technology assets are valued utilizing the retail cost method. See Note 5 – 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 nine months ended September 30, 2024, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented. See Note 6 – Goodwill for further details. Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets; except for construction in progress which has not yet been placed into service. 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 7 – 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 which have not yet been placed into service. 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 8 – 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. 14 Table of Contents The following table summarizes the correction of immaterial error: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ ​ ​ ​ 2023 2023 2023 2023 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 48,389,040 ​ $ 50,303,527 ​ $ 36,266,271 ​ $ 36,715,250 ​ $ 171,674,088 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Correction of immaterial error ​ 1,420,492 ​ 792,350 ​ 610,215 ​ 766,681 ​ 3,589,738 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales adjusted ​ 49,809,532 ​ 51,095,877 ​ 36,876,486 ​ 37,481,931 ​ 175,263,826 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 36,979,138 ​ 39,541,480 ​ 26,531,989 ​ 26,964,951 ​ 130,017,558 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Correction of immaterial error ​ 1,420,492 ​ 792,350 ​ 610,215 ​ 766,681 ​ 3,589,738 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold adjusted ​ 38,399,630 ​ 40,333,830 ​ 27,142,204 ​ 27,731,632 ​ 133,607,296 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ $ 11,409,902 ​ $ 10,762,047 ​ $ 9,734,282 ​ $ 9,750,299 ​ $ 41,656,530 ​ 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 renumeration. 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 the reporting of disaggregated 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 type of 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 presentation of the operations section within its consolidated statements of cash flows was updated to present “non-cash lease expense” as a separate line item, previously included within “changes in operating assets and liabilities – operating leases.” The Company has elected to reclassify $ 1,418,928 from operating leases to non-cash lease expense in the condensed consolidated statements of cash flows for the nine months ended September 30, 2023. See the condensed consolidated statements of cash flows for further details. The Company has elected to reclassify $ 200 thousand in noncash activities associated with the acquisition of Steven Kretchmer, Inc. which were presented in the Company’s Form 10-Q for the quarterly period ended September 30, 2023, as an investing cash outflow of $ 300 thousand for “Acquisition of Steven Kretchmer, Inc.,” and a financing cash inflow of $ 200 thousand for “Proceeds from note payable, Steven Kretchmer, Inc. acquisition.” The investing outflow for the 15 Table of Contents acquisition of Steven Kretchmer, Inc. was $ 100 thousand. The reclassification had no impact on gross margin, operating income, net income, and basic and diluted earnings per share nor any other financial statement amount. See the condensed consolidated statements of cash flows and Note 4 – Changes in Business for further details. 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 condensed 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. See Note 8 – Intangible Assets, Net for further details. Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the CODM. In addition, ASU 2023-07 will require 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. ASU 2023-07 will be effective for fiscal years beginning January 1, 2024, Form 10-K, and interim periods within fiscal years beginning on January 1, 2025. The standard will be adopted beginning January 1, 2024, for the fiscal year and adopted for the interim periods beginning January 1, 2025, by using a modified retrospective transition approach. The Company does not expect adoption to have a material impact on its consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 will be effective for fiscal years beginning January 1, 2025. The standard will be adopted beginning January 1, 2025, for the fiscal year on a prospective basis. Early adoption and retrospective application of the amendments are permitted. The Company does not expect adoption to have a material impact on its 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. NOTE 4 — CHANGES IN BUSINESS On September 12, 2024, the consumer segment entered into a purchase agreement relating to the acquisition of the assets of Steven Kretchmer, Inc. (the “Kretchmer Transaction”), which amended, restated, and replaced the original terms and conditions of the stock purchase agreement entered into on September 12, 2023. The Kretchmer Transaction qualified as a business combination for accounting purposes, which involves the application of the acquisition method described in ASC 805, Business Combinations. The new asset purchase agreement was entered into by Steven Kretchmer, LLC a 100 % owned subsidiary of the Company. Along with a change in the nature of the acquisition, the purchase price was amended 16 Table of Contents from $ 300 thousand to $ 150 thousand. The purchase consideration transferred for the Kretchmer Transaction was $ 100 thousand in cash, paid on September 12, 2023, and the remaining $ 50 thousand through a note payable obligation. See Note 14 – Debt for further details. The primary purpose of the Kretchmer 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 Kretchmer Transaction have been reflected in the Company’s consolidated financial statements from the initial date of acquisition. The Kretchmer Transaction was not material to the Company’s consolidated financial statements, and therefore, pro forma operating results and other disclosures for the Kretchmer Transaction are not presented except as referenced below. As part of the Kretchmer Transaction, on September 12, 2023 the consumer segment recorded goodwill of $ 300 thousand as part of the initial purchase price allocation. During the three months ended September 30, 2024, with the finalization of the terms of the Kretchmer 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. As of September 30, 2024, the accounting for the Kretchmer Transaction is complete. 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 Kretchmer Transaction: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ ​ ​ Property and equipment, net ​ $ 127,000 Intangible assets, net ​ 23,000 ​ ​ ​ ​ ​ ​ $ 150,000 ​ The impacts of the measurement period adjustments to the Kretchmer Transaction as it pertains to the condensed consolidated statements of income were to depreciation and amortization expense, and are immaterial to the financial statements. ​ ​ 17 Table of Contents NOTE 5 — INVENTORIES The following table summarizes the details of the Company’s inventories: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Consumer ​ ​ Trade inventories ​ $ 27,866,050 ​ $ 21,905,055 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 27,866,050 ​ 21,905,055 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Trade inventories ​ 1,207,184 ​ 1,241,122 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,207,184 ​ 1,241,122 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 29,073,234 ​ $ 23,146,177 ​ ​ NOTE 6 — GOODWILL The following table summarizes the details of the Company’s changes in goodwill: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Consumer ​ ​ Opening balance ​ $ 300,000 ​ $ — Additions (reductions) (1) ​ ( 300,000 ) ​ 300,000 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ — ​ 300,000 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Opening balance ​ 3,621,453 ​ 3,621,453 Additions (reductions) ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,621,453 ​ 3,621,453 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 3,621,453 ​ $ 3,921,453 (1) The decrease in goodwill of $ 300 thousand for the nine months ended September 30, 2024, related to measurement period adjustments pertaining to the Kretchmer Transaction. 18 Table of Contents NOTE 7 — PROPERTY AND EQUIPMENT, NET The following table summarizes the details of the Company’s property and equipment, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted ​ ​ September 30, ​ December 31, ​ ​ ​ ​ December 31, ​ 2024 2023 Reclassification 2023 Consumer ​ ​ ​ ​ Land ​ $ 1,824,892 ​ $ 1,824,892 ​ $ — ​ $ 1,824,892 Building and improvements ​ 5,981,222 ​ 4,126,507 ​ ( 1,443,207 ) ​ 2,683,300 Leasehold improvements ​ 1,514,780 ​ 1,450,695 ​ — ​ 1,450,695 Furniture and fixtures ​ 935,414 ​ 802,058 ​ ( 101,226 ) ​ 700,832 Machinery and equipment ​ 1,454,304 ​ 1,224,783 ​ ( 3,215 ) ​ 1,221,568 Vehicles ​ 22,859 ​ 22,859 ​ — ​ 22,859 Construction in progress (1) ​ 500,018 ​ — ​ 1,547,648 ​ 1,547,648 ​ ​ 12,233,489 ​ 9,451,794 ​ — ​ 9,451,794 Less: accumulated depreciation ​ ( 3,238,534 ) ​ ( 2,946,727 ) ​ — ​ ( 2,946,727 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 8,994,955 ​ 6,505,067 ​ — ​ 6,505,067 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Leasehold improvements ​ 151,647 ​ 151,647 ​ — ​ 151,647 Furniture and fixtures ​ 145,950 ​ 145,950 ​ — ​ 145,950 Machinery and equipment ​ 1,179,366 ​ 1,142,731 ​ ( 48,979 ) ​ 1,093,752 Vehicles ​ 222,232 ​ 222,232 ​ — ​ 222,232 Construction in progress (2) ​ - ​ — ​ 48,979 ​ 48,979 ​ ​ 1,699,195 ​ 1,662,560 ​ — ​ 1,662,560 Less: accumulated depreciation ​ ( 968,891 ) ​ ( 819,389 ) ​ — ​ ( 819,389 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 730,304 ​ 843,171 ​ — ​ 843,171 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Land ​ 1,106,664 ​ 1,106,664 ​ — ​ 1,106,664 Building and improvements ​ 2,688,523 ​ 2,505,716 ​ ( 3,500 ) ​ 2,502,216 Machinery and equipment ​ 28,627 ​ 28,627 ​ — ​ 28,627 Enterprise resource planning system (3) ​ — ​ 191,075 ​ ( 191,075 ) ​ — Construction in progress (4) ​ — ​ — ​ 3,500 ​ 3,500 ​ ​ 3,823,814 ​ 3,832,082 ​ ( 191,075 ) ​ 3,641,007 Less: accumulated depreciation ​ ( 282,130 ) ​ ( 225,021 ) ​ — ​ ( 225,021 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,541,684 ​ 3,607,061 ​ ( 191,075 ) ​ 3,415,986 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 13,266,943 ​ $ 10,955,299 ​ $ ( 191,075 ) ​ $ 10,764,224 (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 . 19 Table of Contents NOTE 8 — INTANGIBLE ASSETS, NET The following table summarizes the details of the Company’s intangible assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted ​ ​ September 30, ​ December 31, ​ ​ ​ ​ December 31, ​ 2024 2023 Reclassification 2023 Consumer ​ ​ ​ ​ Technology ​ $ 409,896 ​ $ 371,352 ​ $ — ​ $ 371,352 Customer lists ​ ​ 13,000 ​ ​ — ​ ​ — ​ ​ — Assets under development (2) ​ 7,551 ​ — ​ — ​ — ​ ​ 430,447 ​ 371,352 ​ — ​ 371,352 Less: accumulated amortization ​ ( 377,562 ) ​ ( 365,852 ) ​ — ​ ( 365,852 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 52,885 ​ 5,500 ​ — ​ 5,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ Trademarks/tradenames ​ 2,869,000 ​ 2,869,000 ​ — ​ 2,869,000 Customer contracts ​ 1,873,000 ​ 1,873,000 ​ — ​ 1,873,000 Customer relationships ​ 1,809,000 ​ 1,809,000 ​ — ​ 1,809,000 ​ ​ 6,551,000 ​ 6,551,000 ​ — ​ 6,551,000 Less: accumulated amortization ​ ( 2,720,491 ) ​ ( 2,248,405 ) ​ — ​ ( 2,248,405 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 3,830,509 ​ 4,302,595 ​ — ​ 4,302,595 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ Technology ​ 439,473 ​ — ​ ​ ​ — Assets under development (1)(2) ​ 22,700 ​ — ​ 191,075 ​ 191,075 ​ ​ 462,173 ​ — ​ 191,075 ​ 191,075 Less: accumulated amortization ​ ( 62,009 ) ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 400,164 ​ — ​ 191,075 ​ 191,075 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,283,558 ​ $ 4,308,095 ​ $ 191,075 ​ $ 4,499,170 (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 September 30, 2024, these intangible assets are under development and have not yet been placed into service and are not yet amortizable. The following table depicts the Company’s estimated future amortization expense related to intangible assets as of September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer Commercial Corporate Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 3,606 ​ 157,362 ​ 22,204 ​ 183,172 2025 ​ 8,928 ​ 629,448 ​ 88,815 ​ 727,191 2026 ​ 8,928 ​ 629,448 ​ 88,815 ​ 727,191 2027 ​ 8,928 ​ 629,448 ​ 88,815 ​ 727,191 2028 ​ 8,050 ​ 629,448 ​ 88,815 ​ 726,313 Thereafter ​ 6,894 ​ 1,155,355 ​ — ​ 1,162,249 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 45,334 ​ $ 3,830,509 ​ $ 377,464 ​ $ 4,253,307 ​ ​ 20 Table of Contents NOTE 9 — ACCRUED EXPENSES The following table summarizes the details of the Company’s accrued expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2024 ​ 2023 Consumer ​ ​ Accrued interest ​ $ 8,302 ​ $ 11,904 Payroll ​ 161,579 ​ 226,435 Taxes ​ 260,051 ​ 125,130 Other ​ 24,271 ​ — ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 454,203 ​ 363,469 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Accrued interest ​ 6,697 ​ 7,903 Payroll ​ 236,239 ​ 375,663 Taxes ​ 8,554 ​ — Unvouchered inventory payments ​ 1,337,673 ​ 1,041,188 Other ​ 14,520 ​ 96,422 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 1,603,683 ​ 1,521,176 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Accrued interest ​ 6,759 ​ 7,227 Payroll ​ 19,237 ​ 24,543 Taxes ​ 134,672 ​ 404,357 Professional fees ​ 82,404 ​ 165,651 Other ​ 14,787 ​ — ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 257,859 ​ 601,778 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,315,745 ​ $ 2,486,423 ​ ​ 21 Table of Contents NOTE 10 — SEGMENT INFORMATION The following table depicts the Company’s disaggregated condensed consolidated statements of income for the three months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ 2024 % of Sales (1) 2023 % of Sales (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 33,756,600 ​ 72.0 % $ 26,881,202 ​ 72.9 % Commercial ​ 13,142,959 28.0 % ​ 9,995,284 27.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ 46,899,559 100.0 % ​ 36,876,486 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ 29,840,285 63.6 % ​ 23,291,939 63.2 % Commercial ​ 5,595,035 11.9 % ​ 3,850,265 10.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold ​ 35,435,320 75.6 % ​ 27,142,204 73.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 11,464,239 24.4 % ​ 9,734,282 26.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ 3,925,981 8.4 % ​ 2,588,628 7.0 % Commercial ​ 5,103,007 10.9 % ​ 4,857,752 13.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 9,028,988 19.3 % ​ 7,446,380 20.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ 150,657 0.3 % ​ 75,842 0.2 % Commercial ​ 264,122 0.6 % ​ 261,871 0.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 414,779 0.9 % ​ 337,713 0.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 9,443,767 20.1 % ​ 7,784,093 21.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ 2,020,472 4.3 % ​ 1,950,189 5.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ 62,502 0.1 % ​ 22,851 0.1 % Commercial ​ 277,849 0.6 % ​ 169,586 0.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 340,351 0.7 % ​ 192,437 0.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ( 51,486 ) ( 0.1 ) % ​ ( 59,631 ) ( 0.2 ) % Commercial ​ ( 54,653 ) ( 0.1 ) % ​ ( 57,535 ) ( 0.2 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ( 106,139 ) ( 0.2 ) % ​ ( 117,166 ) ( 0.3 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 2,254,684 4.8 % ​ 2,025,460 5.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax (expense) benefit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ 122,464 0.3 % ​ ( 120,637 ) ( 0.3 ) % Commercial ​ ( 692,109 ) ( 1.5 ) % ​ ( 197,330 ) ( 0.5 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ( 569,645 ) ( 1.2 ) % ​ ( 317,967 ) ( 0.9 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,685,039 3.6 % $ 1,707,493 4.6 % 22 Table of Contents (1) The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. The following table depicts the Company’s disaggregated condensed consolidated statements of income for the nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2024 % of Sales (1) 2023 % of Sales (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 93,972,645 ​ 71.2 % $ 103,227,033 ​ 74.9 % Commercial ​ ​ 38,081,696 28.8 % ​ 34,554,862 25.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ ​ 132,054,341 100.0 % ​ 137,781,895 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ 82,485,812 62.5 % ​ 91,558,160 66.5 % Commercial ​ ​ 16,394,149 12.4 % ​ 14,317,504 10.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold ​ ​ 98,879,961 74.9 % ​ 105,875,664 76.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ ​ 33,174,380 25.1 % ​ 31,906,231 23.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ 11,186,939 8.5 % ​ 7,457,628 5.4 % Commercial ​ ​ 14,597,073 11.1 % ​ 16,256,609 11.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 25,784,012 19.5 % ​ 23,714,237 17.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ 356,851 0.3 % ​ 253,385 0.2 % Commercial ​ ​ 763,760 0.6 % ​ 774,853 0.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 1,120,611 0.8 % ​ 1,028,238 0.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ ​ 26,904,623 20.4 % ​ 24,742,475 18.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ ​ 6,269,757 4.7 % ​ 7,163,756 5.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ 78,510 0.1 % ​ 70,315 0.1 % Commercial ​ ​ 725,786 0.5 % ​ 486,553 0.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ ​ 804,296 0.6 % ​ 556,868 0.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ( 171,584 ) ( 0.1 ) % ​ ( 177,458 ) ( 0.1 ) % Commercial ​ ​ ( 164,550 ) ( 0.1 ) % ​ ( 171,460 ) ( 0.1 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ ( 336,134 ) ( 0.3 ) % ​ ( 348,918 ) ( 0.3 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ ​ 6,737,919 5.1 % ​ 7,371,706 5.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax (expense) benefit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ 33,706 0.0 % ​ ( 778,150 ) ( 0.6 ) % Commercial ​ ​ ( 1,614,868 ) ( 1.2 ) % ​ ( 756,037 ) ( 0.5 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ ( 1,581,162 ) ( 1.2 ) % ​ ( 1,534,187 ) ( 1.1 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 5,156,757 3.9 % $ 5,837,519 4.2 % 23 Table of Contents (1) The “% of Sales” figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided. The following table depicts the Company’s total assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 41,453,365 ​ $ 35,839,361 Commercial ​ 31,049,489 ​ 33,777,041 Corporate ​ 4,888,714 ​ 3,857,827 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 77,391,568 ​ $ 73,474,229 ​ ​ NOTE 11 — REVENUE The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended September 30, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2024 ​ 2023 ​ Sales Gross Margin Margin ​ Sales Gross Margin Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 33,756,600 ​ $ 3,916,315 11.6 % $ 26,881,202 ​ $ 3,589,263 13.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ 13,142,959 ​ 7,547,924 65.5 % 9,385,069 ​ 6,145,019 65.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Correction of immaterial error (1) ​ — ​ — — ​ 610,215 ​ — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial adjusted ​ 13,142,959 ​ 7,547,924 57.4 % 9,995,284 ​ 6,145,019 61.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 46,899,559 ​ $ 11,464,239 24.4 % $ 36,876,486 ​ $ 9,734,282 26.4 % (1) Correction of immaterial error relating to revenue from freight arrangement services, see Note 3 – Accounting Policies and Estimates for further details. The following table depicts the Company’s disaggregation of total sales and gross margin for the nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2024 ​ 2023 ​ Sales Gross Margin Margin ​ Sales Gross Margin Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ $ 93,972,645 ​ $ 11,486,833 12.2 % $ 103,227,033 ​ $ 11,668,873 11.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ 38,081,696 ​ 21,687,547 57.0 % 31,731,805 ​ 20,237,358 63.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Correction of immaterial error (1) ​ — ​ ​ — ​ — ​ 2,823,057 ​ — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial adjusted ​ 38,081,696 ​ 21,687,547 57.0 % 34,554,862 ​ 20,237,358 58.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 132,054,341 ​ $ 33,174,380 25.1 % $ 137,781,895 ​ $ 31,906,231 23.2 % (1) Correction of immaterial error relating to revenue from freight arrangement services, see Note 3 – Accounting Policies and Estimates for further details. 24 Table of Contents The following table lists the opening and closing balances of our contract assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts ​ Contract ​ Contract ​ ​ ​ Receivable ​ ​ Assets ​ ​ Liabilities Consumer ​ ​ ​ Opening Balance - 1/1/2023 ​ $ 839,239 ​ $ — $ 282,481 Closing Balance - 9/30/2023 ​ 406,959 ​ — ​ 516,567 ​ ​ ​ ​ ​ ​ ​ Commercial Opening Balance - 1/1/2023 7,110,536 — — Closing Balance - 9/30/2023 8,527,903 — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts ​ Contract ​ Contract ​ ​ ​ Receivable ​ ​ Assets ​ ​ Liabilities Consumer ​ ​ ​ Opening Balance - 1/1/2024 $ 3,411,501 $ — $ 185,348 Closing Balance - 9/30/2024 ​ 366,612 ​ — ​ 2,921,982 ​ ​ ​ ​ ​ ​ ​ Commercial Opening Balance - 1/1/2024 4,399,658 — — Closing Balance - 9/30/2024 3,514,867 — — ​ The Company has no contract assets, and the contract liabilities are customer deposits and gift cards, which are reported within other liabilities in the condensed consolidated balance sheets. 25 Table of Contents NOTE 12 — LEASES The following table depicts the Company’s future minimum lease payments as of September 30, 2024: ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases Consumer ​ 2024 ​ $ 189,715 2025 ​ 756,159 2026 ​ 745,690 2027 ​ 440,662 2028 ​ 279,090 Thereafter ​ 209,632 ​ ​ ​ ​ Total minimum lease payments ​ 2,620,948 Less: imputed interest ​ ( 161,050 ) ​ ​ ​ ​ Sub-total ​ 2,459,898 ​ ​ ​ ​ Commercial ​ 2024 ​ 349,822 2025 ​ 1,321,299 2026 ​ 474,320 2027 ​ 33,454 2028 ​ — Thereafter ​ — ​ ​ ​ ​ Total minimum lease payments ​ 2,178,894 Less: imputed interest ​ ( 70,829 ) ​ ​ ​ ​ Sub-total ​ 2,108,065 ​ ​ ​ ​ Total ​ 4,567,963 ​ ​ ​ ​ Less: current portion ​ 2,020,122 ​ ​ ​ ​ ​ ​ $ 2,547,841 ​ All of the Company’s leased facilities as of September 30, 2024, 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. Lease costs for the three months ended September 30, 2024 and 2023 were $ 846,602 and $ 686,354 , respectively. Lease costs for the nine months ended September 30, 2024 and 2023 were $ 2,399,239 and $ 2,048,238 , respectively. As of September 30, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.8 years and 3.7 %. As of September 30, 2023, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.3 years and 4.4 %. 26 Table of Contents NOTE 13 — BASIC AND DILUTED AVERAGE SHARES The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the three months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ Basic weighted average shares 26,061,748 26,809,778 Effect of potential dilutive securities 15,000 15,000 ​ ​ ​ ​ ​ Diluted weighted average shares 26,076,748 26,824,778 ​ The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ Basic weighted average shares 26,242,452 26,884,221 Effect of potential dilutive securities 15,000 15,000 ​ ​ ​ ​ ​ Diluted weighted average shares 26,257,452 26,899,221 ​ For three and nine months ended September 30, 2024 and 2023, there was a total of 15 thousand common stock options unexercised. For the three and nine months ended September 30, 2024 and 2023, there were no anti-dilutive shares. On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board of Directors (the “Board”), which gave management authorization to purchase up to one million shares of the Company’s stock, at a per-share price not to exceed $ 9.00 , on the open market. The plan expires on March 31, 2026. 27 Table of Contents The following table lists the repurchase of Company shares for the three and nine months ended September 30, 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 ​ For the three months ended September 30, 2024, the Company repurchased 147,195 shares for $ 728,510 , for an average price of $ 4.95 . For the nine months ended September 30, 2024, the Company repurchased 500,624 shares for $ 2,348,995 , for an average price of $ 4.69 . 28 Table of Contents NOTE 14 — DEBT The following table summarizes the details of the Company’s long-term debt obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding Balance ​ September 30, December 31, ​ 2024 ​ 2023 Consumer ​ ​ Note payable, FSB (1) ​ $ 2,483,853 ​ $ 2,563,108 Note payable, Truist Bank (3) ​ 810,659 ​ 838,430 Notes payable, TBT (4,5) ​ 2,001,435 ​ 2,064,928 Note payable, Kretchmer Transaction (6) ​ 50,000 ​ 200,000 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,345,947 ​ 5,666,466 ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ Note payable, FSB (2) ​ 5,632,161 ​ 5,815,381 Note payable, Avail Transaction (7) ​ 333,333 ​ 833,333 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 5,965,494 ​ 6,648,714 ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ Line of credit, FSB (8) ​ — ​ — Note payable, TBT (9) ​ 2,530,344 ​ 2,618,311 ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 2,530,344 ​ 2,618,311 ​ ​ ​ ​ ​ ​ ​ Total ​ 13,841,785 ​ 14,933,491 ​ ​ ​ ​ ​ ​ ​ Less: current portion ​ ( 971,603 ) ​ ( 1,361,443 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 12,870,182 ​ $ 13,572,048 ​ 29 Table of Contents The following table depicts the Company’s future principal payments on long-term debt obligations as of September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2025 2026 2027 2028 Thereafter Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note payable, FSB (1) ​ 29,235 ​ 112,154 ​ 2,342,464 ​ — ​ — ​ — Note payable, Truist Bank (3) ​ 9,485 ​ 38,745 ​ 40,203 ​ 41,716 ​ 43,216 ​ 637,294 Notes payable, TBT (4,5) ​ 21,705 ​ 487,261 ​ 71,359 ​ 74,081 ​ 76,767 ​ 1,270,262 Note payable, Kretchmer Transaction (6) ​ 6,250 ​ 25,000 ​ 18,750 ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 66,675 ​ 663,160 ​ 2,472,776 ​ 115,797 ​ 119,983 ​ 1,907,556 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ Note payable, FSB (2) ​ 62,990 ​ 254,466 ​ 5,314,705 ​ — ​ — ​ — Note payable, Avail Transaction (7) ​ 166,666 ​ 166,667 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 229,656 ​ 421,133 ​ 5,314,705 ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate ​ ​ ​ ​ ​ ​ Line of Credit, FSB (8) ​ — ​ — ​ — ​ — ​ — ​ — Note payable, TBT (9) ​ 29,953 ​ 2,500,391 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sub-total ​ 29,953 ​ 2,500,391 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 326,284 ​ $ 3,584,684 ​ $ 7,787,481 ​ $ 115,797 ​ $ 119,983 ​ $ 1,907,556 (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 $ 9 56 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 $ 4 96 thousand secured amortizing note payable with Texas Bank & Trust (“TBT”). The note payable bears interest at 3.75 % and matures on September 14, 2025. (5) On July 30, 2021, the consumer segment entered into a $ 1.772 million secured amortizing note payable with TBT. The note payable bears interest at 3.75 % and matures on July 30, 2031. (6) On September 12, 2024, the consumer segment entered into a $ 50 thousand secured amortizing note payable in relation to the Kretchmer Transaction. The repayment of the note payable shall begin upon the fulfillment of certain terms and conditions under the new asset purchase agreement entered into on September 12, 2024. The note payable’s imputed interest is 3.10 % and matures on September 30, 2026. (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. (8) On November 23, 2021, the Company entered into a $ 3.500 million secured line of credit with FSB. The line of credit bears interest at 3.10 % and matures on November 23, 2024. 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. See Note 18 – Subsequent Events for further details. 30 Table of Contents (9) On November 4, 2020, a wholly owned subsidiary of Envela entered into a $ 2.960 million secured amortizing note payable with TBT. The note payable bears interest at 3.25 % and matures on November 3, 2025. The Company was in compliance with all of its debt obligation covenants for the three and nine months ended September 30, 2024 and 2023. The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Scheduled ​ ​ ​ ​ Principal ​ Loan ​ ​ ​ Scheduled Principal Payments and Maturities by Year Payments Maturities Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 326,284 ​ — ​ 326,284 2025 ​ 792,282 ​ 2,792,402 ​ 3,584,684 2026 ​ 476,241 ​ 7,311,240 ​ 7,787,481 2027 ​ 115,797 ​ — ​ 115,797 2028 ​ 119,983 ​ — ​ 119,983 Thereafter ​ 297,332 ​ 1,610,224 ​ 1,907,556 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,127,919 ​ $ 11,713,866 ​ $ 13,841,785 ​ ​ NOTE 15 — STOCK-BASED COMPENSATION There was no stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023. NOTE 16 — 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. There are no related party transactions subject to reporting for the three and nine months ended September 30, 2024 and 2023. NOTE 17 — CONTINGENCIES We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, and proceedings, either individually or in the aggregate, will have a material adverse effect on financial position, results of operations, or liquidity. However, the outcomes of any currently pending lawsuits, claims, and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case. There are no loss contingencies subject to reporting for the three and nine months ended September 30, 2024 and 2023. ​ NOTE 18 — SUBSEQUENT EVENTS On October 30, 2024, the Company received a commitment from FSB to renew its line of credit. The renewal increases our line of credit from $ 3.500 million to $ 3.800 million, extends the maturity to November 23, 2027 with borrowings bearing interest at our rate of deposit plus 1.0 %. The Company intends to renew its line of the credit with FSB. ​ ​ ​ ​ 31 Table of Contents