Envela Corp 10-K

ITEM 2. PROPERTIES We lease and own various properties across three markets in which DGSE and ECHG currently operate. Nine leased and owned properties are in the DFW Metroplex, one in Charleston, South Carolina and one in Chandler, Arizona, a suburb of Phoenix. The leases have a wide variety of terms, rents and expiration dates. See Note 16 to our consolidated financial statements for more information regarding our leases. DGSE purchased two stand-alone retail buildings in Lewisville, Texas and Grapevine, Texas, both suburbs of Dallas, during fiscal year 2020, and DGSE purchased one stand-alone retail building in Frisco, Texas, also a suburb of Dallas, in Fiscal year 2021. DGSE closed the Southlake, Texas retail location during fiscal year 2020 due to an expiring lease. ECHG was assigned two leases through the assets purchased from the CExchange Transaction and the Avail Transaction. During Fiscal 2020, the Company purchased an office building for Envela’s headquarters in Irving, Texas. For a majority of Fiscal 2021, the Company had a third party tenant. The tenant decided not to renew and currently Envela is looking to lease a portion of the corporate headquarters to other corporate tenants. The Lewisville, Grapevine, Frisco and Irving locations were purchased using long-term financing. For more information on this financing, see Note 10 to our consolidated financial statements. We are constantly evaluating each of our locations in terms of profitability, effectiveness and fit with long-term strategy. Our principal corporate offices are located at 1901 Gateway Drive, Suite 100, Irving, Texas 75038. We consider whether to renew or renegotiate our leases based on a variety of factors, including whether current lease options are available. On September 9, 2020, we entered into a new lease for Echo’s Carrollton warehouse location, the initial term for the new lease began January 1, 2021 and will expire on January 31, 2026. The new lease omits provisions in the previous lease requiring a sublet of a portion of the warehouse to a third party and provides us an optional extension of an additional 60 months. On August 24, 2021, we entered into a new lease for DGSE’s Dallas Flagship location, the initial term for which began October 1, 2021, and will expire January 31, 2027. The new lease offers one renewal extension for an additional 60 months at market rate upon exercising the option. ITAD’s Carrollton warehouse lease expired on July 31, 2021, and was not renewed. A new ECHG warehouse lease was assigned to CEX in connection with the CExchange Transaction on June 9, 2021. ITAD moved its operations to the building with Teladvance when ITAD’s lease expired on July 31, 2021. Teladvance’s new assigned lease was set to expire December 31, 2021, but on October 31, 2021, we entered into an amended lease for Teladvance’s new Carrollton warehouse location. The amended lease began January 1, 2022 and will expire January 31, 2027. A new ECHG warehouse lease was assigned to Avail DE in connection with the Avail Transaction. The new assigned warehouse lease expires on May 31, 2025. We continue to evaluate options with respect to renegotiating leases or moving operations conducted at or centrally routed to these locations. 17 Table of Contents PART I Item 2, 3, 4 The following table provides a summary of all materially significant locations out of which we and our subsidiaries operate as of December 31, 2021: Square Location State Use Rent/Own Footage Comments Irving TX Envela Corporation Own 72,552 Lewisville TX Dallas Gold & Silver Own 3,000 Grapevine TX Dallas Gold & Silver Own 3,412 Grand Prairie TX Dallas Gold & Silver Rent 2,000 Euless TX Dallas Gold & Silver Rent 4,400 Dallas TX Dallas Gold & Silver Rent 15,120 Frisco TX Dallas Gold & Silver Own 4,948 Purchased July 30, 2021. Mount Pleasant SC Charleston Gold & Diamond Rent 4,782 Carrollton TX Echo Environmental Holdings, LLC Rent 1,66,000 Carrollton TX Teladvance Rent 58,180 Lease assigned due to the Cexchange Transaction. Chandler AZ Avail Recovery Solutions Rent 21,704 Lease assigned due to the Avail Transaction. In our opinion, these properties have been well maintained, are in good operating condition and contain all necessary equipment and facilities for their intended purposes.