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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 001-11048

Envela Corporation

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Nevada		88-0097334
(STATE OF INCORPORATION)		(I.R.S. EMPLOYER IDENTIFICATION NO.)

1901 Gateway Drive, Suite 100, Irving, Texas 75038

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(972) 587-4049

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Exchange on which Registered

Common Stock, par value $0.01 per share

ELA

NYSE American

NYSE Texas

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2026 the registrant had 25,963,476 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			PAGE

ITEM 1.	FINANCIAL STATEMENTS		4

	CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)		4

	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 (UNAUDITED) AND DECEMBER 31, 2025		5

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)		6

	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)		7

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		8

	NOTE 1 – BASIS OF PRESENTATION		8
	NOTE 2 – PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS		9
	NOTE 3 – ACCOUNTING POLICIES AND ESTIMATES		9
	NOTE 4 – INVENTORIES		16
	NOTE 5 – GOODWILL		16
	NOTE 6 – PROPERTY AND EQUIPMENT, NET		17
	NOTE 7 – INTANGIBLE ASSETS, NET		18
	NOTE 8 – ACCRUED EXPENSES		19
	NOTE 9 – SEGMENT INFORMATION		19
	NOTE 10 – REVENUE		20
	NOTE 11 – LEASES		22
	NOTE 12 – BASIC AND DILUTED AVERAGE SHARES		23
	NOTE 13 – DEBT		24
	NOTE 14 – STOCK-BASED COMPENSATION		25
	NOTE 15 – RELATED PARTY TRANSACTIONS		26
	NOTE 16 – CONTINGENCIES		26

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		27

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		44

ITEM 4.	CONTROLS AND PROCEDURES		44

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS		45

ITEM 1A.	RISK FACTORS		45

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES		45

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		46

ITEM 4.	MINE SAFETY DISCLOSURES		46

Table of Contents


ITEM 5.	OTHER INFORMATION	46

ITEM 6.	EXHIBITS	47

	SIGNATURE	48

	GLOSSARY OF DEFINED TERMS	49

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


		Three Months Ended March 31,
(Unaudited)		2026		2025
Sales		$	98,380,890	$	48,255,829
Cost of goods sold			77,760,474		36,287,805

Gross margin			20,620,416		11,968,024

Expenses:
Selling, general and administrative			8,923,792		8,404,262
Depreciation and amortization			485,963		445,341

Total operating expenses			9,409,755		8,849,603

Operating income			11,210,661		3,118,421

Other income (expense):
Other income			170,344		205,605
Interest expense			(78,772)		(106,321)

Income before income taxes			11,302,233		3,217,705
Income tax expense			(2,462,500)		(724,358)

Net income		$	8,839,733	$	2,493,347

Basic earnings per share:
Net income		$	0.34	$	0.10

Diluted earnings per share:
Net income		$	0.34	$	0.10

Weighted average shares outstanding:
Basic			25,963,476		25,995,645
Diluted			25,963,476		25,995,645

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

Table of Contents

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


		March 31,		December 31,
		2026		2025
Assets		(Unaudited)
Current assets:
Cash and cash equivalents		$	38,615,405	$	18,154,849
Accounts receivable, net of allowance for credit losses of $544,642 and $735,944 as of March 31, 2026 and December 31, 2025, respectively			3,590,145		10,984,191
Inventories			34,011,090		35,065,965
Prepaid expenses			1,145,788		1,239,483
Total current assets			77,362,428		65,444,488

Property and equipment, net			13,852,959		13,584,189
Right-of-use assets from operating leases			9,657,218		9,720,925
Goodwill			3,621,453		3,621,453
Intangible assets, net			3,220,335		3,407,167
Other assets			254,150		244,525

Total assets		$	107,968,543	$	96,022,747

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	3,628,552	$	4,294,443
Notes payable			7,688,363		7,787,468
Operating lease liabilities			2,359,567		1,937,295
Accrued expenses			6,201,656		2,791,003
Other current liabilities			2,106,382		1,871,215
Total current liabilities			21,984,520		18,681,424

Deferred tax liability			84,021		147,381
Notes payable, less current portion			2,108,290		2,137,167
Operating lease liabilities, less current portion			7,891,771		7,996,567

Total liabilities		$	32,068,602	$	28,962,539

Contingencies (Note 16)

Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding			—		—
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,631 shares issued and 25,963,476 shares outstanding as of March 31, 2026; 26,924,631 shares issued and 25,963,476 shares outstanding as of December 31, 2025			269,246		269,246
Treasury stock at cost, 961,155 and 961,155 shares, as of March 31, 2026 and December 31, 2025, respectively			(4,757,731)		(4,757,731)
Additional paid-in capital			40,173,000		40,173,000
Retained earnings			40,215,426		31,375,693

Total stockholders’ equity			75,899,941		67,060,208

Total liabilities and stockholders’ equity		$	107,968,543	$	96,022,747

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

Table of Contents

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Three Months Ended March 31,
(Unaudited)		2026		2025
Operating activities
Net income		$	8,839,733	$	2,493,347
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			485,963		445,341
Provision for credit losses			(188,399)		20,135
Deferred taxes			(63,360)		(16,660)
Non-cash lease expense			766,156		602,730
Changes in operating assets and liabilities:
Accounts receivable			7,582,445		(1,009,842)
Inventories			1,054,875		(418,567)
Prepaid expenses			93,695		97,167
Other assets			(9,625)		(181,785)
Accounts payable			(665,891)		(360,096)
Accrued expenses			3,410,653		(487,784)
Operating leases			(384,973)		(589,025)
Other liabilities			235,167		536,096

Net cash provided by operating activities			21,156,439		1,131,057

Investing activities
Purchase of property and equipment			(567,901)		(384,444)
Purchase of intangible assets			—		(543)
Proceeds from notes receivable			—		2,000

Net cash (used in) investing activities			(567,901)		(382,987)

Financing activities
Payments on notes payable			(127,982)		(326,182)
Purchase of treasury stock			—		(2,626)

Net cash (used in) financing activities			(127,982)		(328,808)

Net change in cash and cash equivalents			20,460,556		419,262
Cash and cash equivalents, beginning of period			18,154,849		20,609,003

Cash and cash equivalents, end of period		$	38,615,405	$	21,028,265

Supplemental disclosures
Cash paid during the period for:
Interest		$	79,271	$	111,195
Income Taxes		$	241	$	—

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

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 March 31, 2025

Balance as of January 1, 2025		26,924,631		$	269,246		(928,930)		$	(4,568,823)		—		$	—		$	40,173,000		$	16,778,715		$	52,652,138

Net Income		—			—		—			—		—			—			—			2,493,347			2,493,347

Shares repurchased		—			—		(500)			(2,626)		—			—			—			—			(2,626)

Balance as of March 31, 2025		26,924,631		$	269,246		(929,430)		$	(4,571,449)		—		$	—		$	40,173,000		$	19,272,062		$	55,142,859

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 March 31, 2026

Balance as of January 1, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

31,375,693

67,060,208

Net Income

—

8,839,733

Balance as of March 31, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

40,215,426

75,899,941

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

Table of Contents

ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 — BASIS OF PRESENTATION

Presentation of Financial Results

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 United States Generally Accepted Accounting Principles (“U.S. GAAP”) 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 months ended March 31, 2026, are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2026 (“Fiscal 2026”). Management suggests that these unaudited interim 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, 2025 (“Fiscal 2025”) filed with the SEC on March 18, 2026 (“2025 Annual Report”).

The Company’s operations are located within the contiguous United States of America ("U.S”) and its functional and reporting currency is the U.S. Dollar (“$”).

Percentages in tables have been rounded and accordingly may not add up to 100%. Certain financial data may have been rounded. As a result of such rounding, the totals of data presented in this document may vary slightly from the actual arithmetical totals of such data.

Throughout this Form 10-Q, financial data has been prepared in accordance with U.S. GAAP. Envela also provides certain additional non-U.S. GAAP measures and performance metrics to provide increased insight into the underlying or relative performance of the business. An explanation of each non-U.S. GAAP measure and performance metric used is provided in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Presentation of Financial Reporting Periods

As denoted herein, fiscal years are denoted with the word “Fiscal” and the associated year.

As denoted herein, the first, second, third, or fourth quarters refer to the three-month periods ended March 31, June 30, September 30, and December 31 for each respective Fiscal year.

References

Unless expressly indicated or the context requires otherwise, the terms “Envela®,” “company,” “we,” "us,” and “our” in this document refer to Envela Corporation, a Nevada corporation, and, where appropriate, its subsidiaries, operating and reportable segments, or brands.

Solely for convenience, our trademarks and tradenames may appear in this Form 10-Q without the ® or ™ symbol.

Due to the nature of the recommerce and recycling industry which is heavily predicated on the inbound sourcing of assets and commodities, we define the entity or person in which we procure or consign assets from, provide disposition or product return services to as “business partners” and those that we sell assets or commodities to through our stores, online or wholesale channels or provide certain repair services to as our “customers.”

Available Information

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

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are filed with or furnished to the SEC. The SEC maintains an internet site at www.sec.gov that contains the Company’s filings.

NOTE 2 — PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

Principles of Consolidation

Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the recommerce and recycling sectors. The Company has no variable interest entities that require consolidation. All intercompany transactions and balances have been eliminated.

Nature of Operations

The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our reportable segments are detailed below:

Consumer Segment

Our consumer segment primarily operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, including pre-owned fine jewelry, diamonds and gemstones, luxury watches, and secondary market bullion. We incorporate recycled diamonds and gemstones into new designs, meaning they were previously set and unset, producing a low-carbon and ethical origin product. The Company caters to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry at accessible prices. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the Information Technology (“IT”) asset disposition (“ITAD”) and product returns industry. Separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. Our product returns business reintroduces products back into the supply chain, creating another opportunity for the asset to be used. The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.

See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

See Note 3 – Accounting Policies and Estimates and Note 9 – Segment Information for further details.

NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of and/or potential impairment of goodwill and intangible assets for the reporting units; useful lives of our tangible and intangible assets; allowances for credit losses; the market value of, and demand for, our inventory and the potential outcome of uncertain tax positions that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from those estimates and assumptions.

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Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, provides guidance on identifying performance obligations in revenue-generating transactions. The Company applies a five step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract; and (v) recognizing revenue when the corresponding performance obligation is satisfied.

Consumer Segment

For the consumer segment, revenue from monetary transactions (e.g., cash and accounts receivable) with wholesale customers is recognized when the merchandise is delivered or at the point of sale for retail customers, and consideration for the transaction has been made either by immediate payment or through a receivable obligation. For e-commerce, revenue is recognized when the customer has fulfilled their obligation to pay or promise to pay, and goods have been shipped.

Revenue on precious metals transactions that require an assay (i.e., compositional analysis of metal content) are recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals.

The Company offers third-party financing for retail customers. Revenue is recognized upon transfer of title, with the promise of the third-party financing company to pay.

Commercial Segment

The commercial segment recognizes revenue from refining when our inventory arrives at the destination port, and the performance obligation is satisfied by transferring control of the goods identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under ASC 606, an estimate of the variable consideration to which we are entitled is included in the transaction price, based on the estimated weight and the current spot price of the metal. An adjustment to revenue is made once the underlying weight and any metal spot price movements are resolved, which usually takes around six weeks. Any adjustment arising from the resolution of the underlying uncertainty is netted against the settlement due under the original contract. Historically, these amounts have not been material.

The commercial segment also provides recycling and product returns services according to a Scope of Work (“SOW”). Revenue from recycling and product returns services are recognized upon completion of the SOW at a predetermined amount based on the number of units processed and a preset price per unit or weight measurement.

The commercial segment provides freight arrangement services for inbound asset or material movements to our facilities. Revenue from freight arrangement services is recognized upon settlement with our business partners, which occurs when the SOW is completed. Under the guidance of ASC 606, the Company is deemed to be a principal and, as such, records freight arrangement services as a component of revenue, and the associated expense is recorded as a component of cost of goods sold.

The commercial segment recognizes revenue on outright sales when terms and transaction price are agreed to, the product is shipped, and the title is transferred.

See Note 10 – Revenue for further details.

Sales Returns and Allowances

Sales are recorded, net of expected returns. In certain instances, 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.

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As of March 31, 2026, and December 31, 2025, the consumer segment’s allowance for returns was $12,532 and $18,190, respectively.

As of March 31, 2026, and December 31, 2025, the commercial segment’s allowance for returns was $54,560 and $42,339, respectively.

Concentrations and Credit Risk

The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to certain domestic precious metals transactions that require an assay prior to transaction settlement and are of short duration. Overall customer concentrations, as a percentage of sales, may vary due to the product mix sold in each comparative period. Individual customer concentrations are also affected by each customer’s production schedule; accordingly, the Company identifies the most appropriate sales outlet to ensure timely settlement of transactions.

For the three months ended March 31, 2026, two customers accounted for 49.7% of our sales and represented 0.0% of our accounts receivable balance.

For the three months ended March 31, 2025, two customers accounted for 51.3% of our sales and represented 0.0% of our accounts receivable balance.

The Company believes that no single customer is critical to its business, given its diverse revenue streams and the optionality of its sales outlets, which are primarily associated with base and precious metals.

Categorization of Costs and Allocation of Corporate Overhead

Critical to understanding the nature of our operations and presentation of our results of operations is the categorization of costs and allocation of corporate overhead.

Detailed below are the categorization of costs associated with cost of goods sold and selling, general and administrative expenses:

Cost of Goods Sold

Cost of goods sold includes the cost of commodities, harvested components from technology, and merchandise sold, as well as inbound and outbound freight costs.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses include facility costs, asset and commodity processing costs, processing and store-level personnel costs, and waste disposal costs. Selling, general, and administrative expenses also include personnel costs for sourcing business partner relationships and outbound sales, as well as support and corporate overhead costs associated with accounting and finance, legal, risk management, compliance, information systems, logistics, marketing, and any third-party service providers.

The Company allocates its corporate overhead to its operating segments, which includes selling, general and administrative expenses, along with depreciation and amortization, other income, interest expense, and income tax expense.

See Note 2 – Principles of Consolidation and Nature of Operations for further details.

See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

Shipping and Handling Costs

Within the consumer and commercial segments, inbound and outbound freight costs are a component of cost of goods sold. Shipping and handling costs are accounted for as fulfillment costs.

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For the three months ended March 31, 2026 and 2025, the consumer segment’s shipping and handling costs were $41,214 and $16,686, respectively.

For the three months ended March 31, 2026 and 2025, the commercial segment’s shipping and handling costs were $691,400 and $991,324, respectively.

Advertising Costs

Advertising costs for the consumer and commercial segments are expensed as incurred.

For the three months ended March 31, 2026 and 2025, the consumer segment’s advertising costs were $162,252 and $280,163, respectively.

For the three months ended March 31, 2026 and 2025, the commercial segment’s advertising costs were $82,213 and $81,135, respectively.

Leases

We determine if an arrangement is a lease at inception. We do not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless we are reasonably certain of renewal at inception or upon a triggering event.

In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842, Leases, requires us to use the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term, in an amount equal to the lease payments, in a similar economic environment. If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate. For leases of one year or less, the Company has elected not to record lease liabilities and right-of-use assets and instead recognizes the expense associated with lease payments on a straight-line basis.

See Note 11 – Leases for further details.

Store Pre-Opening Costs

The Company may incur significant costs associated with new store openings, including, but not limited to, advertising, employee recruitment, licenses, permits, supplies, training, travel, and general store readiness, and these costs are expensed as incurred.

Income Taxes

Income taxes are accounted for under the asset and liability method prescribed by ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Valuation of Deferred Tax Assets

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 months ended March 31, 2026 and 2025.

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As of March 31, 2026, the Company had a deferred tax liability of $84,021. As of December 31, 2025, the Company had a deferred tax liability of $147,381. The Company did not have a valuation allowance as of March 31, 2026, or December 31, 2025.

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. For the periods presented in these condensed consolidated financial statements, the Company’s CODM was identified as the Chief Executive Officer.

See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

See Note 2 – Principles of Consolidation and Nature of Operations and Note 9 – Segment Information for further details.

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 our Common Stock by the weighted average number of shares of Common Stock outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted-average number of shares is increased by the dilutive effect of stock options and warrants outstanding, determined using the treasury stock method.

See Note 12 – Basic and Diluted Average Shares for further details.

Stock-Based Compensation

The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for an award of equity instruments, including grants of stock options, based on the fair value of the award at the date of the grant. In addition, to the extent that the Company receives an excess tax benefit upon the exercise of an award, such benefit is reflected in cash flow from financing activities within the condensed consolidated statement of cash flows.

See Note 14 – Stock-Based Compensation for further details.

Taxes Collected from Customers

The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and releases such liability upon remittance to the taxing authority, without affecting revenues or expenses.

Financial Instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the notes receivable and notes payable approximate fair value because the underlying instruments bear interest at rates that reflect current market rates. None of these instruments are held for trading purposes.

Financial instruments that may subject the Company to concentrations of credit risk include cash and cash equivalents, as well as accounts receivable. At times, cash and cash equivalents may exceed federally insured limits.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

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 historical experience in collecting past-due amounts, the degree of their aging, and current economic factors impacting balances. In addition, specific accounts that are considered and expected to be uncollectible are included in the allowance for credit losses. Accounts receivable are considered delinquent when payment is not made within the contract terms. Accounts receivable are written off when all efforts to collect have been exhausted, and the potential for recovery is considered remote.

As of March 31, 2026, and December 31, 2025, the consumer segment’s allowance for credit losses was $0 and $0, respectively.

As of March 31, 2026, and December 31, 2025, the commercial segment’s allowance for credit losses was $544,642 and $735,944, respectively.

Inventories

Consumer Segment

The consumer segment states its inventory at the lower of cost and net realizable value. The cost of inventory is the amount paid for an individual asset or lot of goods. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net-zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. We monitor metals-based commodity markets to assess any adverse impact on the carrying value of our inventory.

Commercial Segment

The commercial segment states its inventory at the lower of cost and net realizable value. The cost of our technology assets equals the amount paid for the individual asset or lot of goods, or, in instances where we have an obligation to sell the asset before we pay for it, we use the retail cost method to estimate its value. Inherent in the retail cost method are certain management judgments and estimates that may affect the ending inventory valuation of such assets and the gross profit recognized at the time of sale. We believe that our estimates, used in applying the retail cost method to value such assets, reasonably reflect their cost. The cost of our processed and unprocessed inventory, primarily consisting of base metals and electronic scrap with grades containing precious metals, is determined using the weighted-average cost method. We monitor metals-based commodity markets to assess any adverse impact on the carrying value of our inventory.

See Note 4 – Inventories for further details.

Goodwill

Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year, or earlier if events or circumstances indicate the carrying value may be impaired. There were no triggering events identified during the three months ended March 31, 2026, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented.

See Note 5 – Goodwill for further details.

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Property and Equipment, Net

Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets, except for construction in progress, which has not yet been placed into service. The following table depicts the estimated useful lives of our property and equipment asset classes:


Land		Indefinite
Vehicles		5 to 7 years
Buildings		39 years
Building improvements		Shorter of 15 years or the remaining useful life
Furniture and fixtures		5 to 7 years
Machinery and equipment		3 to 10 years
Leasehold improvements		Shorter of 15 years or the remaining lease term

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Expenditures for repairs and maintenance are expensed as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized.

See Note 6 – Property and Equipment, Net for further details.

Intangible Assets, Net

Finite-lived intangible assets are carried at cost less accumulated amortization and are amortized on a straight-line basis over the estimated useful lives of the assets, except for assets under development that have not yet been placed into service. The following table depicts the estimated useful lives of our property and equipment asset classes:


Customer lists, relationships, and contracts		10 years
Technology ⁽¹⁾		5 years
Trademarks/tradenames		10 years

(1)	Technology consists of domain names, software assets, and enterprise resource planning systems.

Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

See Note 7 – Intangible Assets, Net for further details.

New Accounting Standards Pronouncements

In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires an entity to disclose additional information about specific expense categories. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption and retrospective application permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 updates the accounting for internal-use software by replacing former stage-based rules with a principles-based framework. Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding, and it is probable that the project will be completed and the software will be used to perform the intended function. ASU 2025-06 also supersedes website development cost guidance, moving it to ASC 350-40. The guidance is effective for annual and interim periods beginning after December 15, 2027, with early adoption and prospective, retrospective or a modified transition application permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

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In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is intended to improve the navigability of guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendments also provide guidance on which disclosures should be included in interim reporting periods. The guidance is effective for annual and interim periods beginning after December 15, 2027, with early adoption and prospective or retrospective application permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 addresses stakeholder suggestions regarding the ASC and makes other incremental improvements to U.S. GAAP. The update represents changes to the codification that clarify, correct errors, or make other improvements to a variety of topics that are intended to make it easier to understand and apply. The guidance is effective for annual and interim periods beginning December 15, 2026, with early adoption and prospective or retrospective application permitted. For amendments to Topic 260: Earnings Per Share, shall be applied retrospectively. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

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 — INVENTORIES

The following table summarizes the details of the Company’s inventories:


		March 31,			December 31,
		2026			2025
Consumer
Trade inventories		$	31,599,737		$	32,814,426

Sub-total			31,599,737			32,814,426

Commercial
Trade inventories			2,411,353			2,251,539

Sub-total			2,411,353			2,251,539

		$	34,011,090		$	35,065,965

NOTE 5 — GOODWILL

The following table summarizes the details of the Company’s changes in goodwill:


		March 31,			December 31,
		2026			2025
Consumer
Opening balance		$	—		$	—
Additions (reductions)			—			—

Sub-total			—			—

Commercial
Opening balance			3,621,453			3,621,453
Additions (reductions)			—			—

Sub-total			3,621,453			3,621,453

		$	3,621,453		$	3,621,453

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NOTE 6 — PROPERTY AND EQUIPMENT, NET

The following table summarizes the details of the Company’s property and equipment, net:



	March 31,		December 31,
	2026		2025
Consumer
Land	$	1,824,892	$	1,824,892
Building and improvements		6,209,412		6,139,182
Leasehold improvements		2,019,993		2,019,993
Furniture and fixtures		1,500,280		1,488,500
Machinery and equipment		1,693,308		1,693,308
Vehicles		53,318		53,318
Construction in progress ⁽¹⁾		192,791		65,561
		13,493,994		13,284,754
Less: accumulated depreciation		(4,083,088)		(3,882,909)

Sub-total		9,410,906		9,401,845

Commercial
Leasehold improvements		153,292		160,850
Furniture and fixtures		74,811		74,811
Machinery and equipment		1,397,238		1,389,680
Vehicles		195,227		206,556
		1,820,568		1,831,897
Less: accumulated depreciation		(1,419,268)		(1,356,836)

Sub-total		401,300		475,061

Corporate
Land		1,106,664		1,106,664
Building and improvements		2,749,983		2,749,983
Furniture and fixtures		90,234		84,877
Machinery and equipment		64,290		64,290
Construction in progress ⁽¹⁾		446,006		92,702
		4,457,177		4,098,516
Less: accumulated depreciation		(416,424)		(391,233)

Sub-total		4,040,753		3,707,283

	$	13,852,959	$	13,584,189

(1)	As of March 31, 2026 and December 31, 2025, these assets have not yet been placed into service and are not yet depreciable.

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NOTE 7 — INTANGIBLE ASSETS, NET

The following table summarizes the details of the Company’s intangible assets, net:


	March 31,		December 31,
	2026		2025
Consumer
Technology	$	409,896	$	409,896
Customer lists		13,000		13,000
Trademarks/tradenames		3,924		3,924
		426,820		426,820
Less: accumulated amortization		(391,351)		(389,025)

Sub-total		35,469		37,795

Commercial
Trademarks/tradenames		2,869,000		2,869,000
Customer contracts		1,873,000		1,873,000
Customer relationships		1,809,000		1,809,000
		6,551,000		6,551,000
Less: accumulated amortization		(3,664,678)		(3,507,313)

Sub-total		2,886,322		3,043,687

Corporate
Technology		512,636		512,636
		512,636		512,636
Less: accumulated amortization		(214,092)		(186,951)

Sub-total		298,544		325,685

	$	3,220,335	$	3,407,167

The following table depicts the Company’s estimated future amortization expense related to intangible assets as of March 31, 2026:


		Consumer			Commercial			Corporate			Total

2026			6,984			629,448			81,421			717,853
2027			9,312			629,448			108,562			747,322
2028			8,445			629,448			108,561			746,454
2029			3,657			446,212			—			449,869
2030			1,684			254,628			—			256,312
Thereafter			5,387			297,138			—			302,525

		$	35,469		$	2,886,322		$	298,544		$	3,220,335

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NOTE 8 — ACCRUED EXPENSES

The following table summarizes the details of the Company’s accrued expenses:


		March 31,		December 31,
		2026		2025
Consumer
Accrued interest		$	5,629	$	5,594
Payroll			220,830		169,602
Taxes			162,864		162,689

Sub-total			389,323		337,885

Commercial
Accrued interest			6,688		7,222
Payroll			216,896		109,172
Unvouchered inventory payments			1,164,858		959,340
Taxes			8,239		—
Other			2,400		21,168

Sub-total			1,399,081		1,096,902

Corporate
Payroll			540,625		10,788
Professional fees			89,053		67,560
Taxes			3,767,790		1,258,645
Other			15,784		19,223

Sub-total			4,413,252		1,356,216

		$	6,201,656	$	2,791,003

NOTE 9 — SEGMENT INFORMATION

The CODM uses operating income to evaluate overall business performance, make investment decisions, and allocate resources. The following table depicts the Company’s segment results of operations, including significant expenses that are regularly reviewed by the CODM, for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Sales	$	81,793,522		$	16,587,368		$	98,380,890	$	36,770,604	$	11,485,225	$	48,255,829
Cost of goods sold		72,092,889			5,667,585			77,760,474		32,559,701		3,728,104		36,287,805
Selling, general and administrative		4,054,875			4,868,917			8,923,792		3,887,906		4,516,356		8,404,262
Depreciation and amortization		215,100			270,863			485,963		180,632		264,709		445,341

Operating income	$	5,430,658		$	5,780,003		$	11,210,661	$	142,365	$	2,976,056	$	3,118,421

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the reconciliation of the Company’s segment operating income to income before income taxes for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Operating income	$	5,430,658		$	5,780,003		$	11,210,661	$	142,365	$	2,976,056	$	3,118,421
Other income		93,181			77,163			170,344		849		204,756		205,605
Interest expense		(38,385)			(40,387)			(78,772)		(54,047)		(52,274)		(106,321)

Income before income taxes	$	5,485,454		$	5,816,779		$	11,302,233	$	89,167	$	3,128,538	$	3,217,705

Other significant segment items regularly reviewed by the CODM include capital expenditures, which the Company defines as purchases of property and equipment or intangible assets. The following table depicts capital expenditures for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026			2025

Consumer		$	209,240		$	268,953
Commercial			—			—
Corporate			358,661			116,034

		$	567,901		$	384,987

The following table depicts the Company’s total assets:


		As of
		March 31, 2026			December 31, 2025

Consumer		$	50,789,367		$	56,313,243
Commercial			20,848,172			20,272,552
Corporate			36,331,004			19,436,952

		$	107,968,543		$	96,022,747

NOTE 10 — REVENUE

The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026								2025
		Sales			Gross Margin			Margin		Sales		Gross Margin		Margin

Consumer		$	81,793,522		$	9,700,633		11.9	%	$	36,770,604	$	4,210,903	11.5	%

Commercial			16,587,368			10,919,783		65.8	%		11,485,225		7,757,121	67.5	%

		$	98,380,890		$	20,620,416		21.0	%	$	48,255,829	$	11,968,024	24.8	%

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table lists the opening and closing balances of our contract assets and liabilities:


			Accounts		Contract		Contract
			Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2025		$	738,132		—		435,508
Closing Balance - 3/31/2025			734,362		—		974,185

Commercial
Opening Balance - 1/1/2025			3,646,106		—		—
Closing Balance - 3/31/2025			4,639,583		—		—


			Accounts		Contract		Contract
			Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2026		$	8,404,300		—		1,840,637
Closing Balance - 3/31/2026			887,121		—		2,035,779

Commercial
Opening Balance - 1/1/2026			2,579,891		—		30,579
Closing Balance - 3/31/2026			2,703,024		—		70,603

The Company has no contract assets, and the contract liabilities are customer deposits, store credit, and gift cards, which are reported within other liabilities in the condensed consolidated balance sheets.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 — LEASES

The following table depicts the Company’s future minimum lease payments as of March 31, 2026:


		Operating
		Leases
Consumer
2026		$	882,063
2027			961,983
2028			728,302
2029			610,411
2030			281,919
Thereafter			33,076

Total minimum lease payments			3,497,754
Less: imputed interest			(282,562)

Sub-total			3,215,192

Commercial
2026			1,278,127
2027			1,512,428
2028			1,535,763
2029			1,578,575
2030			1,596,986
Thereafter			550,062

Total minimum lease payments			8,051,941
Less: imputed interest			(1,015,795)

Sub-total			7,036,146

Total			10,251,338

Less: current portion			2,359,567

		$	7,891,771

All of the Company’s leased facilities as of March 31, 2026, are non-cancellable. The leases are a combination of triple-net leases, under which the Company pays its proportionate share of common area maintenance, property taxes, and property insurance, and modified-gross leases, under which the Company pays for common area maintenance and property insurance.

The following table depicts supplemental cash flow information related to operating leases:

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the Company’s leasing costs for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer			Commercial			Consolidated

Operating lease cost		$	298,519		$	467,638		$	766,157	$	263,065		$	339,428		$	602,493
Variable lease cost			62,796			154,635			217,431		59,659			145,922			205,581
Short-term lease cost			1,771			89,586			91,357		30,999			39,263			70,262

		$	363,086		$	711,859		$	1,074,945	$	353,723		$	524,613		$	878,336

As of March 31, 2026, the weighted average remaining lease term and weighted average discount rate for operating leases were 4.4 years and 5.1%. As of March 31, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases were 3.2 years and 4.0%.

NOTE 12 — BASIC AND DILUTED AVERAGE SHARES

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the three months ended March 31, 2026 and 2025:


		Three Months Ended
		March 31,
		2026	2025

Basic weighted average shares		25,963,476	25,995,645
Effect of potential dilutive securities		—	—

Diluted weighted average shares		25,963,476	25,995,645

For three months ended March 31, 2026 and 2025, there were no Common Stock options unexercised. For the three months ended March 31, 2026 and 2025, there were no anti-dilutive shares.

On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board, which gave management authorization to purchase up to 1.0 million shares of the Company’s Common Stock, at a per-share price not to exceed $9.00, on the open market.

On March 27, 2025, the Board unanimously approved the repurchase of an additional 100 thousand shares of the Common Stock, bringing the total authorization under the existing repurchase program to 1.1 million shares.

The stock repurchase program expires on March 31, 2028.

The following table lists the repurchase of Company shares for the three months ended March 31, 2026:


		Total Number of		Average Price			Total Price			Shares Available
Fiscal Period		Shares Purchased		Paid per Share			Paid			to Purchase
Balance as of January 1, 2026		961,155		$	4.95		$	4,757,731		138,845

January 1 - 31, 2026		—			—			—		138,845
February 1 - 28, 2026		—			—			—		138,845
March 1 - 31, 2026		—			—			—		138,845

Balance as of March 31, 2026		961,155		$	4.95		$	4,757,731		138,845

For the three months ended March 31, 2026, the Company had no share repurchases.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 — DEBT

The following table summarizes the details of the Company’s long-term debt obligations:


		Outstanding Balance
		March 31,		December 31,
		2026		2025
Consumer
Note payable, FSB ⁽¹⁾		$	2,313,856	$	2,342,485
Note payable, Truist Bank ⁽³⁾			752,424		762,430
Notes payable, TBT ⁽⁴⁾			1,468,088		1,486,229
Note payable, Scottsdale Transaction ⁽⁵⁾			12,500		18,750

Sub-total			4,546,868		4,609,894

Commercial
Note payable, FSB ⁽²⁾			5,249,785		5,314,741

Sub-total			5,249,785		5,314,741

Corporate
Line of credit, FSB ⁽⁶⁾			—		—

Sub-total			—		—

Total			9,796,653		9,924,635

Less: current portion			(7,688,363)		(7,787,468)

		$	2,108,290	$	2,137,167

(1)	On November 23, 2021, the consumer segment entered into a $2.781 million secured amortizing note payable with Farmer’s State Bank of Oakley, Kansas (“FSB”). The note payable bears interest at 3.10% and matures on November 15, 2026.

(2)	On November 23, 2021, the commercial segment entered into a $6.309 million secured amortizing note payable with FSB. The note payable bears interest at 3.10% and matures on November 15, 2026.

(3)	On July 9, 2020, the consumer segment entered into a $956 thousand secured amortizing note payable with Truist Bank. The note payable bears interest at 3.65% and matures on July 9, 2030.

(4)	On July 30, 2021, the consumer segment entered into a $1.772 million secured amortizing note payable with Texas Bank and Trust (“TBT”). The note payable bears interest at 3.75% and matures on July 30, 2031.

(5)

On September 12, 2024, the consumer segment entered into a $50 thousand secured amortizing note payable in relation to the Scottsdale Transaction. The repayment of the note payable shall begin upon the fulfillment of certain terms and conditions under the asset purchase agreement entered into on September 12, 2024. The note payable’s imputed interest is 3.10% and matures on September 30, 2026.

(6)	On November 8, 2024, the Company entered into a $3.800 million secured line of credit with FSB. The line of credit bears interest at our rate of deposit +1.00% with a floor of 3.10% and matures on November 23, 2027.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the Company’s future principal payments on long-term debt obligations as of March 31, 2026:


	2026			2027			2028			2029			2030			Thereafter
Consumer
Note payable, FSB ⁽¹⁾		2,313,856			-			-			-			-			-
Note payable, Truist Bank ⁽³⁾		30,197			41,716			43,216			44,913			592,381			-
Notes payable, TBT ⁽⁴⁾		53,156			74,325			77,019			80,099			83,154			1,100,336
Note payable, Scottsdale Transaction ⁽⁵⁾		12,500			-			-			-			-			-

Sub-total		2,409,709			116,041			120,235			125,012			675,535			1,100,336

Commercial
Note payable, FSB ⁽²⁾		5,249,785			—			—			—			—			—

Sub-total		5,249,785			—			—			—			—			—

Corporate
Line of credit, FSB ⁽⁶⁾		—			—			—			—			—			—

Sub-total		—			—			—			—			—			—

	$	7,659,494		$	116,041		$	120,235		$	125,012		$	675,535		$	1,100,336

The Company was in compliance with all of its debt obligation covenants for the three months ended March 31, 2026 and 2025.

The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of March 31, 2026:


		Scheduled
		Principal			Loan
Scheduled Principal Payments and Maturities by Year		Payments			Maturities			Total

2026			348,183			7,311,311			7,659,494
2027			116,041			—			116,041
2028			120,235			—			120,235
2029			125,012			—			125,012
2030			110,183			565,352			675,535
Thereafter			65,531			1,034,805			1,100,336

		$	885,185		$	8,911,468		$	9,796,653

NOTE 14 — STOCK-BASED COMPENSATION

On June 25, 2025, our shareholders approved the adoption of the 2025 Equity Incentive Plan (the "2025 Plan”), effective June 25, 2025. The 2025 Plan provides for the grant of up to 1.1 million shares of Common Stock pursuant to awards granted under the plan.

The 2025 Plan will remain in effect for a term of 10 years from the effective date, unless sooner terminated by the Board of Directors.

As of March 31, 2026, no awards have been granted under the 2025 Plan. No stock-based compensation expense was recognized for the three months ended March 31, 2026 and 2025.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 15 — RELATED PARTY TRANSACTIONS

The Company has a corporate policy governing the identification, review, consideration, and approval or ratification of transactions with related persons. Under this policy, all related party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with the Company’s best interests and the best interests of its shareholders. The Company utilizes a space owned by a related party for the secure processing and handling of materials before distribution. No consideration is exchanged between the parties, but the Company estimates that, if costs were incurred, they would be immaterial to its condensed consolidated financial statements.

NOTE 16 — CONTINGENCIES

We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, or proceedings, whether individually or in the aggregate, will have a material adverse effect on our 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 months ended March 31, 2026 and 2025.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context indicates otherwise for one of our specific operating segments, references to “we,” “us,” “our,” the “Company,” and “Envela” refer to the consolidated business operations of Envela Corporation, and all of its direct and indirect subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (this “Form 10-Q”), including but not limited to: (i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “should,” “could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “goal,” “seek,” “ensure,” “potential,” “opportunity,” “intend,” “predict,” “committed,” “likely,” “continue,” “strive,” “aim,” “scheduled,” “focused on,” “long-term,” “future,” “over time,” “ongoing,” “uncertain,” “moving forward,” or “subject to.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking and based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 2025 Annual Report and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development, and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including, without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events.

Introduction

This section includes a discussion of our operations for the three months ended March 31, 2026 and 2025. The following discussion and analysis provide information that management believes is relevant to assessing and understanding our financial condition, liquidity, and results of operations. The discussion should be read in conjunction with the Company’s 2025 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies and estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s 2025 Annual Report.

Economic Conditions

Impacts of Demand for Safe-Haven Metals

While the current market for safe-haven metals has generally led to stronger premiums within our consumer segment, especially for gold and silver, demand for these metals has created industry-wide backlogs and slowed payments from refiners, which the Company has experienced. The impact on working capital is having to pay more to procure inventory, and the delayed conversion of accounts receivable from refiners. While the length of the current cycle and the steps

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domestic refiners will take to address processing capacity are indeterminate, the Company is closely monitoring its inbound buying practices, cash, inventory levels, and its accounts receivable exposure with its refining customers. The Company believes it has sufficient liquidity to maintain its current buying practices, yet it can adjust its buying programs to reduce exposure should these conditions materially affect its conversion of accounts receivable.

Impacts of Government Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. We have evaluated the provisions of the new law and its potential effects on our effective tax rate, results of operations, and financial condition. OBBBA allows businesses to immediately deduct the full cost of qualifying assets in the year they are placed in service, rather than spreading the deduction over several years, and is effective for property acquired and placed in service after January 19, 2025. OBBBA also requires businesses to recognize the effects of tax law changes in the period of enactment, such as remeasuring estimated U.S. deferred tax assets and liabilities. The Company intends to utilize bonus depreciation, effectively reducing taxable income in the respective tax period and the cash deployed to settle such obligations. There was no material impact on the effective tax rate, financial condition, results of operations, or cash flows during the quarter ended March 31, 2026. In future fiscal periods, the impact of OBBBA is contingent on the continued election of bonus depreciation and the amount of qualifying assets acquired by the Company.

Impacts of Increases in Interest Rates and Inflation

Rising interest rates and inflation, coupled with commodity price risk, mainly associated with fluctuations in the market prices of precious metals and diamonds, could affect consumer discretionary spending. Furthermore, adverse macroeconomic conditions can also impact demand for the resale of personal technology assets.

To counterbalance economic cycles that impact market selling prices and/or underlying operating costs, we adjust the inbound purchase price of commodity-based products, luxury hard assets, and resale technology.

We continuously monitor our inventory positions and associated working capital to respond to market conditions and to meet seasonal business cycles and expansionary plans. These economic cycles may, from time to time, require the business to use its line of credit or seek additional capital.

Impacts of Tariffs

The U.S. government has recently adopted new approaches to trade policy, announced tariffs on certain foreign goods and certain global tariffs, and signaled the possibility of significant additional tariff increases or tariff expansions. Specifically, under Section 232 of the Trade Expansion Act of 1962, tariffs were imposed on the importation of aluminum, copper, steel, and certain derivative products, but excluded gold and silver. The impact of such tariffs and retaliatory tariffs by other countries continues to evolve and requires regular monitoring and evaluation. The deemed impacts of tariffs on each of our reportable segments are detailed below:

Consumer Segment

The consumer segment does not source inventory from or sell it into international markets, so it is not directly impacted by tariffs. However, global market uncertainty caused by tariffs can increase commodity costs on safe-haven metals such as gold and silver, which may increase working capital requirements. The Company mitigates increased working capital requirements by monitoring its inventory position and turnover and by maintaining disciplined buying practices to preserve margins.

Commercial Segment

The commercial segment periodically purchases limited quantities of personal technology assets and replacement parts for resale from international markets. Tariffs may increase costs for original equipment manufacturers, retailers, and parts distributors and, as a result, may require the Company to pay more for the purchase of personal technology assets for resale and replacement parts, thereby increasing the Company’s required working capital. The Company mitigates increased working capital requirements by monitoring its inventory position and turnover, maintaining disciplined buying practices, and using optimal domestic or international sales channels to preserve margins.

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There can be no assurance that the measures we have adopted will be successful in mitigating the aforementioned risks.

Our Business

Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the recommerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela itself. Significant business activities within our reportable segments are detailed below:

Consumer Segment

Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the ITAD and product returns industry. Separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. Our product returns business reintroduces products back into the supply chain, creating another opportunity for the asset to be used. The Company offers services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role in supporting a circular economy through the responsible reuse and recycling of electronic devices.

Segment Activities

The Company believes it is well-positioned to take advantage of its overall capital structure.

Consumer Segment

Our strategy is to expand the number of locations we operate by opening new locations throughout the U.S. Likewise, we continue to evaluate opportunities related to complementary product and service offerings for our stores and online business.

Commercial Segment

Our strategy is to expand both organically and through acquisitions. Our processing facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative geographic proximity into our existing facilities.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended March 31, 2026 and 2025:

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Three Months Ended March 31,

Non-cash activities: right-of-use operating lease assets obtained in exchange for new operating lease liabilities

323,973

Envela Corp 10-Q