What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-02 · 165 added, 121 removed, 431 unchanged (40% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

$ 134,958,838

$ 135,252,502

Cost of goods sold

12 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

27 unchanged sentences

60,000,000 shares authorized;

26,924,631 shares issued and

26,897,210 shares outstanding as of June 30, 2023;

26,924,631 shares issued and outstanding as of

December 31, 2022

Treasury stock at cost, 27,421 and 0 shares, as of June 30, 2023 and December 31, 2022, respectively

26,924,631 shares issued and 26,700,000 shares outstanding as of September 30, 2023;

26,924,631 shares issued and outstanding as of December 31, 2022

Treasury stock at cost, 224,631 and 0 shares, as of September 30, 2023 and December 31, 2022, respectively

( 1,318,351 )

Additional paid-in capital

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Adjustments to reconcile net income to net cash provided by operations:

6 unchanged sentences

( 4,295,072 )

( 4,014,627 )

Prepaid expenses

( 1,213,187 )

Intangible assets

Accounts payable and accrued expenses

2 unchanged sentences

Net cash provided by operations

Investment in note receivable

Purchase of property and equipment

( 1,563,612 )

Investment in note receivable

Acquisition of Steven Kretchmer, Inc.

Adjustment to the purchase price of the Avail Transaction

Net cash used in investing

( 1,285,362 )

Payments on notes payable

Purchase of treasury stock

( 1,318,351 )

Proceeds from note payable, Steven Kretchmer, Inc.

Payments on line of credit

2 unchanged sentences

( 2,049,209 )

( 2,450,347 )

Net change in cash and cash equivalents

3 unchanged sentences

Cash paid during the period for:

Non cash activities

Adjustment to the Avail Transaction purchase price allocation

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months ended June 30, 2022 and 2023

For the Three Months ended September 30, 2022 and 2023

Treasury Stock

Preferred Stock

Additional Paid-in

Total Stockholders'

Balances at April 1, 2022

Stockholders'

Balances at July 1, 2022

$ ( 6,319,846 )

Balances at June 30, 2022

Balances at September 30, 2022

$ ( 3,002,137 )

1 unchanged sentence

Preferred Stock

Additional Paid-in

Total Stockholders'

Balances at April 1, 2023

Stockholders'

Balances at July 1, 2023

$ ( 194,820 )

Shares repurchased

( 1,123,531 )

Balances at June 30, 2023

( 1,123,531 )

Balances at September 30, 2023

$ ( 1,318,351 )

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months ended June 30, 2022 and 2023

For the Nine Months ended September 30, 2022 and 2023

Treasury Stock

Preferred Stock

Additional Paid-in

Total Stockholders'

Stockholders'

Balances at January 1, 2022

$ ( 12,814,929 )

Balances at June 30, 2022

Balances at September 30, 2022

$ ( 3,002,137 )

1 unchanged sentence

Preferred Stock

Additional Paid-in

Total Stockholders'

Stockholders'

Balances at January 1, 2023

1 unchanged sentence

( 1,318,351 )

Balances at June 30, 2023

( 1,318,351 )

Balances at September 30, 2023

$ ( 1,318,351 )

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

12 unchanged sentences

Starting January 1, 2023, expenses previously classified as other expenses related to the Company’s corporate campus overhead have been included in selling, general, and administrative expenses.

Since the presentation of these expenses changed January 1, 2023, management believes the presentation of the 2022 corporate campus overhead should be reclassified to selling, general, and administrative expense for comparison purposes for the three and six months ended June 30, 2022.

The preparation of interim condensed consolidated financial statements in conformity with U.S.

8 unchanged sentences

Envela operates primarily via two operating and reportable segments.

Our consumer segment, formerly known as the DGSE segment, operates DGSE, LLC (“DGSE”), Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands.

Our consumer segment, formerly known as the DGSE segment, operates DGSE, LLC (“DGSE”), Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, Steven Kretchmer, Inc.

(“Kretchmer”) and Bullion Express brands.

Our commercial segment, formerly known as the ECHG segment, operates ECHG, LLC (“ECHG”), Echo Environmental Holdings, LLC (“Echo”), ITAD USA Holdings, LLC (“ITAD USA”), Teladvance, LLC (“Teladvance”), CEX Holdings, LLC (“CEX”) and Avail Recovery Solutions, LLC (“Avail”).

Envela is a Nevada corporation, headquartered in Irving, Texas.

On September 12, 2023, the Company purchased all of the issued and outstanding stock of Steven Kretchmer, Inc., an Arizona corporation for 300,000 (the “Kretchmer Transaction”).

Based on the terms of the purchase, the Company has concluded the Kretchmer Transaction represents a business combination pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, or ASC 805.

The Kretchmer Transaction will be incorporated into the consumer segment.

See Note 3 for additional information.

Our consumer segment primarily buys and resells or recycles luxury hard assets like jewelry, diamonds, gemstones, fine watches, rare coins and related collectibles, precious-metal bullion products, gold, silver and other precious-metals.

We operate seven jewelry stores at both the retail and wholesale levels throughout the United States via its facilities in Texas, South Carolina and Arizona.

The Company purchased a new retail building in Arizona, but has yet to open.

We currently operate seven jewelry stores at both the retail and wholesale levels throughout the United States via its facilities in Texas and South Carolina.

The Company purchased a new retail building in Arizona, but has not commenced operations as of September 30, 2023.

The consumer segment is continuing to promote and build the Bullion Express brand into a leading on-line seller of bullion.

Buying and selling items for their precious-metals content is a major method by which we are marketed.

Buying and selling items for their precious-metals content is a major method by which we are marketing our brands.

The consumer segment also offers jewelry repair services, custom-made jewelry and consignment items, and maintains relationships with refiners for precious-metal items that are not retained for resale.

We also maintain a presence in retail markets through websites, www.dgse.com , www.cgdeinc.com and www.bullionexpress.com .

We also maintain a presence in retail markets through websites, www.dgse.com , www.cgdeinc.com , www.stevenkretchmer.com and www.bullionexpress.com .

Our commercial segment primarily buys electronic components from business and other organizations, such as school districts, for end-of-life recycling and resell, or to add life to electronic devices by data destruction and refurbishment for reuse.

We also recycle and resale electronics at the retail level.

We also recycle and resell electronics at the retail level.

We focus on end-of-life electronics recycling and sustainability, and ITAD USA provides IT equipment disposition, including compliance and data sanitization services.

16 unchanged sentences

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.

The Company’s goodwill is related to the commercial segment only and not the entire Company.

The commercial segment has its own, separate financial information to perform goodwill impairment testing.

As a result of the current market and economic conditions related to surging inflation and the war between Ukraine and Russia, in accordance with step 1 of the guidelines set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 350-20-35-3A, management concluded there were no impairments of goodwill that resulted from those triggering events for the three and six months ended June 30, 2023.

Management will continue to evaluate goodwill for the commercial segment.

For tax purposes, goodwill is amortized and deductible over fifteen years.

Goodwill was allocated in connection with three acquisitions of the assets now held by Echo on May 20, 2019 (the “Echo Transaction”), of the assets now held by Teladvance on June 9, 2021 (the “CExchange Transaction”) and of the assets now held by Avail on October 29, 2021 (the “Avail Transaction”).

The Company’s goodwill is related to both of Envela’s segments.

See Note 5 – Goodwill, for the further allocation of goodwill.

Both segments have their own, separate financial information to perform goodwill impairment testing.

As a result of the current market and economic conditions related to surging inflation and the wars in Eastern Europe and the Middle East, in accordance with step 1 of the guidelines set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 350-20-35-3A, management concluded there were no impairments of goodwill that resulted from those triggering events for the three and nine months ended September 30, 2023.

Management will continue to evaluate goodwill for the commercial and consumer segments.

For tax purposes, goodwill generated from asset purchases is amortized and deductible over fifteen years.

Goodwill generated from the Kretchmer transaction classified as a stock purchase, is not deductable for tax purposes.

Goodwill was allocated in connection with three commercial segment acquisitions of assets, and one acquisition made by the consumer segment.

The acquisitions by the commercial segment consist of the assets now held by Echo on May 20, 2019 (the “Echo Transaction”), of the assets now held by Teladvance on June 9, 2021 (the “CExchange Transaction”) and of the assets now held by Avail on October 29, 2021 (the “Avail Transaction”).

The preliminary goodwill associated with the Avail Transaction was $ 3,491,285 , which was the initial purchase price less the approximate fair value of the net assets purchased.

3 unchanged sentences

The separation of intangibles reduced the Avail Transaction goodwill to $ 972,272 .

As part of the Kretchmer Transaction, the consumer segment recorded goodwill of $ 300,000 as part of the initial purchase price allocation, which has not been finalized.

There have been no other adjustments or impairment charges to goodwill.

As of June 30, 2023 and December 31, 2022, goodwill as reported in the condensed consolidated balance sheets was $ 3,621,453 .

As of September 30, 2023, and December 31, 2022, goodwill as reported in the condensed consolidated balance sheets were $ 3,921,453 and $ 3,621,453 , respectively.

Reclassifications

10 unchanged sentences

There were no effects of this standard on our financial position, results of operations or cash flows.

There were no other new accounting standards that had a material impact on the Company’s consolidated financial statements during the three and six-month period ended June 30, 2023.

There were no other new accounting standards or pronouncements that were issued but not yet effective as of June 30, 2023 that the Company expects to have a material impact on its consolidated financial statements.

There were no other new accounting standards that had a material impact on the Company’s consolidated financial statements during the three and nine-month periods ended September 30, 2023.

There were no other new accounting standards or pronouncements that were issued but not yet effective as of September 30, 2023 that the Company expects to have a material impact on its consolidated financial statements.

NOTE 4 — INVENTORIES

A summary of inventories is as follows:

September 30,

NOTE 5 — GOODWILL

The change in goodwill is as follows:

September 30,

Opening balance

Reductions (1)

Additions/(Reductions) (1)

( 2,519,012 )

(1) The reduction in goodwill of $ 2,519,012 for fiscal 2022, is a combination of an additional cash payment made on May 31, 2022 of $ 216,988 , increasing goodwill for the Avail Transaction, offset by the effect of identifying $ 2,736,000 of intangible assets that was not initially included in the fair value of Avail’s net assets, reducing goodwill and increasing intangible assets.

The increase in goodwill of $ 300,000 , for the three and nine months ended September 30, 2023, is the addition from the Kretchmer Transaction.

Goodwill was initially recorded at $ 300,000 , and adjustments will be made once assets and liabilities are evaluated and quantified.

There have been no other adjustments or impairment charges to goodwill for the three and nine months ended September 30, 2023.

NOTE 6 — PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

September 30,

Building and improvements

10 unchanged sentences

Building and improvements

Computer software

Machinery and equipment

accumulated depreciation

On May 4, 2023, DGSE closed the purchase of a new retail building located at 6030 North 19 th Avenue in Phoenix, Arizona for $ 1,231,150 .

On May 4, 2023, the consumer segment closed the purchase of a new retail building located at 6030 North 19 th Avenue in Phoenix, Arizona for $ 1,231,150 .

During the three months ended September 30, 2023, $ 184,673 of the purchase price, was allocated to the land.

The purchase was paid through operating cash flow without the use of borrowed funds.

The building will begin to be depreciated once it is put into use.

As of September 30, 2023, the building has not been placed into service.

Once the new location is placed into service, the building will begin to be depreciated.

NOTE 7 — INTANGIBLE ASSETS

Intangible assets consist of the following:

September 30,

Point of sale system

12 unchanged sentences

(3) Intangibles relate to the Avail Transaction on October 29, 2021.

The following table outlines the estimated future amortization expense related to intangible assets held as of June 30, 2023:

2023 (excluding the six months ending June 30, 2023)

The following table outlines the estimated future amortization expense related to intangible assets held as of September 30, 2023:

2023 (excluding the nine months ending September 30, 2023)

NOTE 8— ACCRUED EXPENSES

Accrued expenses consist of the following:

September 30,

Accrued interest

Property taxes

Other administrative expenses

Other administrative expenss

Accrued interest

11 unchanged sentences

consumer and commercial.

The consumer segment includes Dallas Gold & Silver Exchange, which has six operating retail stores in the Dallas/Fort Worth Metroplex (“DFW”), one retail location in Phoenix, Arizona, as stated in a footnote to Note 6 – Property and Equipment, that has not yet opened, and Charleston Gold & Diamond Exchange, which has one retail store in Mt.

Pleasant, South Carolina.

The consumer segment includes Dallas Gold & Silver Exchange, which has six operating retail stores in the Dallas/Fort Worth Metroplex (“DFW”), one retail location in Mt.

Pleasant, South Carolina and one location in Phoenix, Arizona, as stated in a footnote to Note 6 – Property and Equipment, which has not yet been placed in service.

Kretchmer has one retail location in Scottsdale, Arizona.

The consumer segment also operates the on-line Bullion Express brand.

5 unchanged sentences

Allocation amounts are generally agreed upon by management and may differ from arms-length allocations.

The following separates the consumer and the commercial financial results of operations for the three months ended June 30, 2023 and 2022:

For The Three Months Ended June 30,

The following separates the consumer and the commercial financial results of operations for the three months ended September 30, 2023 and 2022:

For The Three Months Ended September 30,

Cost of goods sold

8 unchanged sentences

(1) Starting January 1, 2023, expenses previously classified as other expenses related to the Company’s corporate campus overhead have been included in selling, general, and administrative expenses.

The following separates the consumer and the commercial financial results of operations for the six months ended June 30, 2023 and 2022:

For The Six Months Ended June 30,

No other presentation changes have been made to prior periods.

The following separates the consumer and the commercial financial results of operations for the nine months ended September 30, 2023 and 2022:

For The Nine Months Ended September 30,

$ 103,227,033

$ 134,958,838

$ 135,252,502

Cost of goods sold

8 unchanged sentences

No other presentation changes have been made to prior periods.

NOTE 10 — REVENUE RECOGNITION

1 unchanged sentence

The initial step is to identify the contract with a customer created with the sales invoice or a repair ticket.

Secondly, to identify the performance obligations in the contract as we promise to deliver the purchased item or promised repairs in return for payment or future payment as a receivable.

The second step is to identify the performance obligations in the contract as we promise to deliver the purchased item or promised repairs in return for payment or future payment as a receivable.

The third step is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price.

1 unchanged sentence

The final step in the guidance is to recognize revenue as each performance obligation is satisfied.

The following disaggregation of total revenue is listed by sales category and segment for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

The following disaggregation of total revenue is listed by sales category and segment for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

The following disaggregation of total revenue is listed by sales category and segment for the three months ended September 30, 2023 and 2022:

Three Months Ended September 30,

The following disaggregation of total revenue is listed by sales category and segment for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

$ 134,958,838

$ 135,252,502

For the consumer segment, revenue for monetary transactions (i.e., cash and receivables) with wholesale dealers and the retail public are recognized when the merchandise is delivered, and payment has been made either by immediate payment or through a receivable obligation at one of our over-the-counter retail stores.

18 unchanged sentences

The consumer segment has established an allowance for estimated returns based on our review of historical returns experience and reduces our reported revenues and cost of sales accordingly.

For the three and six months ended June 30, 2023 and 2022, the allowance for returns remained the same at approximately $ 28,000 .

For the three and nine months ended September 30, 2023 and 2022, the allowance for returns remained the same at approximately $ 28,000 .

A significant amount of revenue stems from sales to two precious metal refining and bullion partners.

One partner constitutes 24.5% and 28.9% of the revenues for the three and six months ended June 30, 2023, respectively.

The second partner constitutes 23.7% and 10.4%, of the revenues for the three and six months ended June 30, 2023, respectively.

However, the Company believes that the products it sells is marketable to numerous sources at competitive prices.

The commercial segment has several revenue streams and recognize revenue according to ASC 606 at an amount that reflects the consideration to which the entities expect to be entitled in exchange for transferring goods or services to the customer.

One partner constitutes 27.2 % and 25.3 % of the revenues for the three and nine months ended September 30, 2023, respectively.

The second partner constitutes 11 % and 9.9 % of the revenues for the three and nine months ended September 30, 2023, respectively.

However, the Company believes that the products it sells are marketable to numerous sources at competitive prices.

The commercial segment has several revenue streams and recognizes revenue according to ASC 606 at an amount that reflects the consideration to which the entities expect to be entitled in exchange for transferring goods or services to the customer.

The revenue streams are as follows:

2 unchanged sentences

The commercial segment has fulfilled its performance obligation with an agreed upon transaction price, payment terms and shipping the product.

We recognize 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.

We recognize refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring 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, as stated in the first sentence.

Under the guidance of ASC 606, an estimate of the variable consideration that are expected to be entitled is included in the transaction price stated at the current precious metal spot price and weight of the precious metal.

Under the guidance of ASC 606, an estimate of the variable consideration that is expected to be entitled 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 in the period once the underlying weight and any precious metal spot price movement is resolved, which is usually around six (6) weeks.

3 unchanged sentences

Activity reports are produced weekly with the counts and revenue is recognized based on the billing from the weekly reports.

Recycling services can be conducted at our facility, or the recycling services can be performed at the client’s facility.

Recycling services can be conducted at our facility, or they can be performed at the client’s facility.

The SOW will determine the charges and whether the service will be completed at our facility or at the client’s facility.

11 unchanged sentences

Trade receivables are considered delinquent when payment has not been made within contract terms.

The consumer segment had no allowance for doubtful accounts balance as of June 30, 2023 and December 31, 2022.

Some of commercial segment’s customers are on payment terms, and although low risk, occasionally the need may arise to record an allowance for receivables that are deemed high risk using the new expected loss methodology.

The commercial segment’s allowance for doubtful accounts, as of June 30, 2023 and December 31, 2022 was $ 186,288 and $ 51,734 , respectively.

The increase in allowance for doubtful accounts ending June 30, 2023, as compared to December 31, 2022 is primarily due to the commercial segment and the new forward looking methodology of estimating future expected losses.

The consumer segment had no allowance for doubtful accounts balance as of September 30, 2023 and December 31, 2022.

Some of the commercial segment’s customers are on payment terms, and although low risk, occasionally the need may arise to record an allowance for receivables that are deemed high risk using the new expected loss methodology.

The commercial segment’s allowance for doubtful accounts, as of September 30, 2023 and December 31, 2022 was $ 207,462 and $ 51,734 , respectively.

The increase in allowance for doubtful accounts ending September 30, 2023, as compared to December 31, 2022 is primarily due to the new forward looking methodology of estimating future expected losses.

Income Taxes :

4 unchanged sentences

A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not such assets will be realized.

During fiscal 2022, management determined that it was more likely than not the tax asset would be reduced by future taxable income, therefore, the remaining valuation allowance at December 31, 2022, was released.

As of June 30, 2023, we had a deferred tax asset of $ 612,832 with $ 0 offsetting valuation allowance.

During fiscal 2022, management determined that it was more likely than not that the deferred tax assets could be utilized in the future.

As of September 30, 2023, the Company had a deferred tax asset of $ 102,607 with $ 0 offsetting valuation allowance.

As of December 31, 2022, the Company had a deferred tax asset of $ 1,488,258 with an offsetting valuation allowance of $ 0 .

5 unchanged sentences

First, we must determine whether any amount of the tax benefit may be recognized.

Second, we determine how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition.) We have not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate for the three and six months ended June 30, 2023 and 2022.

NOTE 11 — LEASES

2 unchanged sentences

If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate.

The Company has nine operating leases as of June 30, 2023—five in DFW, two in Mt.

For leases one-year or shorter, lessees can elect 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.

The Company has nine operating leases as of September 30, 2023—five in DFW, two in Mt.

Pleasant, South Carolina and two in Chandler, Arizona.

8 unchanged sentences

Belt Line Road, in Carrollton, Texas, expiring January 31, 2026, with an option to extend the lease an additional five years:

2) the lease for the Teladvance location, which also houses ITAD USA and CEX, on Realty Road in Carrollton, Texas expiring January 31, 2027, with no additional renewal options;

2) the lease for the Teladvance location, which also houses ITAD USA and CEX, on Realty Road in Carrollton, Texas expires January 31, 2027, with no additional renewal options;

and 3) the two leases for the Avail location in Chandler, Arizona expiring on May 31, 2025, with no additional renewal options.

All of the Company’s nine leases as of June 30, 2023 are triple net, for which it pays its proportionate share of common area maintenance, property taxes and property insurance.

Leasing costs for the three months ended June 30, 2023 and 2022 were $ 705,365 and $ 659,860 respectively, comprised of a combination of minimum lease payments and variable lease costs.

Leasing costs for the six months ended June 30, 2023 and 2022 were $ 1,361,885 and $ 1,282,723 , respectively, comprised of a combination of minimum lease payments and variable lease costs.

As of June 30, 2023, the weighted average remaining lease term and weighted average discount rate for operating leases was 2.8 years and 4.4 %, respectively.

For the three months ended June 30, 2023 and 2022, the Company’s cash paid for operating lease liabilities was $ 706,372 and $ 650,606 respectively.

For the six months ended June 30, 2023 and 2022, the Company’s cash paid for operating lease liabilities was $ 1,362,892 and $ 1,266,703 , respectively.

Future annual minimum lease payments as of June 30, 2023:

2023 (excluding the six months ending June 30, 2023)

All of the Company’s nine leases as of September 30, 2023 are triple net, for which it pays its proportionate share of common area maintenance, property taxes and property insurance.

Leasing costs for the three months ended September 30, 2023 and 2022 were $ 686,354 and $ 655,669 respectively, comprised of a combination of minimum lease payments and variable lease costs.

Leasing costs for the nine months ended September 30, 2023 and 2022 were $ 2,048,238 and $ 1,938,392 , respectively, comprised of a combination of minimum lease payments and variable lease costs.

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 %, respectively.

For the three months ended September 30, 2023 and 2022, the Company’s cash paid for operating lease liabilities was $ 680,019 and $ 654,471 respectively.

For the nine months ended September 30, 2023 and 2022, the Company’s cash paid for operating lease liabilities was $ 2,042,911 and $ 1,934,791 , respectively.

Future annual minimum lease payments as of September 30, 2023:

2023 (excluding the nine months ending September 30, 2023)

2027 and thereafter

2 unchanged sentences

Consumer Sub-Total

2023 (excluding the six months ending June 30, 2023)

2023 (excluding the nine months ending September 30, 2023)

2027 and thereafter

4 unchanged sentences

NOTE 12 — BASIC AND DILUTED AVERAGE SHARES

A reconciliation of basic and diluted weighted average common shares for the three months ended June 30, 2023 and 2022 is as follows:

A reconciliation of basic and diluted weighted average common shares for the three months ended September 30, 2023 and 2022 is as follows:

For the Three Months Ended

September 30,

Basic weighted average shares

1 unchanged sentence

Diluted weighted average shares

For the three months ended June 30, 2023 and 2022, there was a total of 15,000 common stock options, warrants, and Restricted Stock Units (RSUs) unexercised.

For the three months ended June 30, 2023 and 2022, there were no anti-dilutive shares.

A reconciliation of basic and diluted weighted average common shares for the six months ended June 30, 2023 and 2022 is as follows:

For the Six Months Ended

For the three months ended September 30, 2023 and 2022, there was a total of 15,000 common stock options, warrants, and Restricted Stock Units (RSUs) unexercised.

For the three months ended September 30, 2023 and 2022, there were no anti-dilutive shares.

A reconciliation of basic and diluted weighted average common shares for the nine months ended September 30, 2023 and 2022 is as follows:

For the Nine Months Ended

September 30,

Basic weighted average shares

1 unchanged sentence

Diluted weighted average shares

For the six months ended June 30, 2023 and 2022, there was a total of 15,000 common stock options, warrants, and Restricted Stock Units (RSUs) unexercised.

For the six months ended June 30, 2023 and 2022, 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”), that gave management authorization to purchase up to one million ( 1,000,000 ) shares of the Company’s stock, of a per-share price not to exceed $ 9 , on the open market.

For the nine months ended September 30, 2023 and 2022, there was a total of 15,000 common stock options, warrants, and Restricted Stock Units (RSUs) unexercised.

For the nine months ended September 30, 2023 and 2022, 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”), that gave management authorization to purchase up to one million ( 1,000,000 ) shares of the Company’s stock, at a per-share price not to exceed $ 9 , on the open market.

The plan expires on March 31, 2026.

The following lists the repurchase of Company shares for the three and six months ended June 30, 2023:

The following lists the repurchase of Company shares as of September 30, 2023:

Shares available

1 unchanged sentence

Average Price

to purchase under

Fiscal Period

1 unchanged sentence

Paid per Share

Total $ Purchase

April 1 - 30, 2023

under the plan

Beginning Balance

May 1 - 31, 2023

June 1 - 30, 2023

July 1 - 31, 2023

August 1 - 31, 2023

September 1 - 30, 2023

NOTE 13 — LONG-TERM DEBT

1 unchanged sentence

Outstanding Balance

September 30,

Interest Rate

6 unchanged sentences

July 30, 2031

Note payable, Kretchmer (5)

October 1, 2025

Consumer Sub-Total

10 unchanged sentences

(1) On November 23, 2021, Farmers State Bank of Oakley, Kansas (“FSB”) refinanced prior related party notes held by the consumer segment and the commercial segment.

The commercial segment note was refinanced with a remaining and outstanding balance of $ 6,309,962 , is a five-year promissory note amortized over 20 years at 3.1 % annual interest rate.

The commercial segment note was refinanced with a remaining and outstanding balance of $ 6,309,962 .

The note is a five-year promissory note amortized over 20 years at 3.1 % annual interest rate.

The note has monthly principal and interest payments of $ 35,292 .

12 unchanged sentences

The note has monthly interest and principal payments of $ 10,509 .

(5) On September 12, 2023, the consumer segment entered into the Kretchmer Transaction to purchase all of the issued and outstanding common stock for $ 300,000 .

The purchase was facilitated by an initial payment of $100,000 at closing, and the remaining $200,000 to be paid out by 8 quarterly payments starting January 1, 2024, of $25,000 each.

The installment note payable for the Kretchmer Transaction is imputed at 3.1% .

(6) On November 23, 2021, the Company secured a 36-month line of credit from FSB for $ 3,500,000 at 3.1 % annual interest rate.

As of June 30, 2023 and December 31, 2022, the outstanding balance of the line of credit was $ 0 .

As of September 30, 2023 and December 31, 2022, the outstanding balance of the line of credit was $ 0 .

(7) On October 29, 2021, the commercial segment entered into the Avail Transaction to purchase all of the assets, liabilities and rights and interests of Avail AZ, for $ 4.5 million.

The purchase was facilitated by an initial payment of $2.5 million at closing, and the remaining $2.0 million to be paid out by 12 quarterly payments starting April 1, 2022, of $166,667 each.

The Installment note payable for the Avail Transaction imputed at 3.1%

The installment note payable for the Avail Transaction is imputed at 3.1%

(8) On November 4, 2020, 1901 Gateway Holdings, LLC, a wholly owned subsidiary of Envela Corporation, closed on the purchase of its corporate office building located at 1901 Gateway Drive, Irving, Texas for $ 3.521 million.

1 unchanged sentence

The note has monthly interest and principal payments of $ 16,792 .

Future scheduled principal payments of our notes payable as of June 30, 2023 are as follows:

CONSUMER SEGMENT

Note payable, Farmers State Bank

Year Ending December 31,