NEVADA
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88-0097334
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(STATE OF
INCORPORATION)
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(I.R.S. EMPLOYER
IDENTIFICATION NO.)
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Securities
registered pursuant to Section 12(b) of the
Act:
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Title of each
class
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Trading
Symbol
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Name of exchange
on which registered
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COMMON STOCK, par value $0.01
per share
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ELA
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NYSE
American
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Securities
registered pursuant to Section 12(g) of the Act: NONE
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Large accelerated
filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth
company ☐
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62
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63
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Location
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State
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Use
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Rent/Own
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SquareFootage
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Comments
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Irving
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TX
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Envela
Corporation
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Own
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72,552
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Purchased November 4,
2020.
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Lewisville
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TX
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Dallas Gold &
Silver
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Own
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3,000
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Purchased July 9,
2020.
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Grapevine
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TX
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Dallas Gold &
Silver
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Own
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3,412
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Purchased September 14,
2020.
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Grand
Prairie
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TX
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Dallas Gold &
Silver
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Rent
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2,000
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Euless
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TX
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Dallas Gold &
Silver
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Rent
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4,400
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Dallas
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TX
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Dallas Gold &
Silver
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Rent
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15,120
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Mount
Pleasant
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SC
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Charleston Gold &
Diamond
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Rent
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4,782
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Carrollton
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TX
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Echo Environmental
Holdings, LLC
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Rent
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166,000
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Carrollton
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TX
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ITAD USA Holdings,
LLC
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Rent
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38,338
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Plan
Category
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Column (a):
Number of securities to be issued upon
exercise of outstanding options, warrants and
rights
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Column (b):
Weighted-average exercise price of outstanding
options, warrants and rights
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Column (c):
Number of securities remaining available for
future issuance under equity compensation plans (excluding
securities reflected in column (a))
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Equity compensation plans approved by security
holders
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15,000(1)
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2.17
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1,100,000(2)
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Equity compensation plans not approved by
security holders
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N/A
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N/A
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N/A
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Total
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15,000
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2.17
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1,100,000
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For the Years
Ended
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|||||
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December 31,
2020
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December 31,
2019
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Revenues
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Gross
Profit
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Margin
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Revenues
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Gross Profit
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Margin
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DGSE
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Resale
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$79,790,419
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9,215,494
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11.5%
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$60,088,405
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$7,760,365
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12.9%
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Recycled
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5,870,972
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1,154,376
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19.7%
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7,431,749
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1,157,459
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15.6%
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Subtotal
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85,661,391
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10,369,870
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12.1%
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67,520,154
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8,917,824
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13.2%
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ECHG
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Resale
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19,395,834
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9,504,607
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49.0%
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8,722,281
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4,692,114
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53.8%
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Recycled
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8,864,790
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3,194,486
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36.0%
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5,782,062
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2,645,904
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45.8%
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Subtotal
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28,260,624
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12,699,093
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44.9%
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14,504,343
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7,338,018
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50.6%
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$113,922,015
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$23,068,963
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20.2%
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$82,024,497
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$16,255,842
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19.8%
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Operating
Leases
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Total
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2021
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2022
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2023
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2024
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Thereafter
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DGSE
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$1,205,662
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$479,161
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$235,674
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$212,855
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$213,885
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$64,087
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Echo
Entities
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4,217,873
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869,209
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786,396
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808,022
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830,244
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924,002
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Total
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$5,423,535
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$1,348,370
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$1,022,070
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$1,020,877
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$1,044,129
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$988,089
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Year Ended December 31,
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2020
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2019
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Revenue:
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Sales
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$113,922,015
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$82,024,497
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Cost
of goods sold
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90,853,052
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65,768,655
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Gross
margin
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23,068,963
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16,255,842
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Expenses:
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Selling,
General & Administrative Expenses
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15,553,274
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12,494,510
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Depreciation
and Amortization
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728,626
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520,298
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Total
cost of revenue
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16,281,900
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13,014,808
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Operating
income
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6,787,063
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3,241,034
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Other
income, net
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306,997
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49,756
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Interest
expense
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(620,499)
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(414,961)
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Income
before income taxes
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6,473,561
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2,875,829
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Income
tax expense
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89,618
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95,116
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Net
income
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$6,383,943
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$2,780,713
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Earnings
per share:
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Basic
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$0.24
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$0.10
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Diluted
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$0.24
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$0.10
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Weighted
average shares outstanding:
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Basic
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26,924,631
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26,924,381
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Diluted
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26,939,631
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26,939,631
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December
31,
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2020
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2019
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Assets
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Current
assets:
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Cash and
cash equivalents
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$9,218,036
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$4,510,660
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Trade
receivables, net of allowances
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2,846,619
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2,997,743
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Inventories
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10,006,897
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9,509,454
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Current
right-of-use assets from operating leases
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1,157,077
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1,160,658
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Prepaid
expenses
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281,719
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172,834
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Total current
assets
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23,510,348
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18,351,349
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Note
receivable
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2,100,000
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-
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Property and equipment,
net
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6,888,601
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1,351,039
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Goodwill
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1,367,109
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1,367,109
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Intangible assets,
net
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2,992,473
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3,394,073
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Long-term operating lease
right-of-use assets, less current portion
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3,522,923
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2,335,040
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Other long-term
assets
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197,638
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204,784
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Total
assets
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$40,579,092
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$27,003,394
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Liabilities
and stockholders’ equity
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Current
liabilities:
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Accounts
payable-trade
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$1,510,697
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$1,467,845
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Notes
payable, related party
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307,032
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1,084,072
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Notes
payable
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1,813,425
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-
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Current
operating lease liabilities
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1,148,309
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1,175,109
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Accrued
expenses
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844,324
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916,509
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Customer
deposits and other liabilities
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428,976
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165,404
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Total current
liabilities
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6,052,763
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4,808,939
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Notes payable, related
party, less current portion
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9,052,810
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8,554,980
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Notes payable, less current
portion
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4,240,658
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-
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Long-term operating lease
liabilities, less current portion
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3,654,419
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2,445,301
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Total
liabilities
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23,000,650
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15,809,220
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Commitments and
contingencies
|
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Stockholders’
equity:
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Common
stock, $0.01 par value; 60,000,000 shares
authorized;
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26,924,631
shares and 26,924,381 shares issued and
outstanding
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as
of December 31, 2019 and 2020 respectively; Preferred stock,
$0.01
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par
value; 5,000,000 shares authorized; 0 shares issued and
outstanding
|
269,246
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269,244
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Additional
paid-in capital
|
40,173,000
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40,172,677
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Accumulated
deficit
|
(22,863,804)
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(29,247,747)
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Total stockholders’
equity
|
17,578,442
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11,194,174
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Total liabilities and
stockholders’ equity
|
$40,579,092
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$27,003,394
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Year
Ended December 31,
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2020
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2019
|
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Operations
|
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Net
income
|
$6,383,943
|
$2,780,713
|
Adjustments to reconcile
net income to net cash from (used in)
operations:
|
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Depreciation,
amortization, and other
|
728,626
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520,298
|
Stock
based compensation to employees, officers and
directors
|
325
|
-
|
Changes
in operating assets and liabilities:
|
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|
Trade
receivables
|
151,124
|
(1,877,783)
|
Inventories
|
(497,444)
|
1,464,843
|
Prepaid
expenses
|
(108,884)
|
(3,375)
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Other
assets
|
7,145
|
(47,374)
|
Accounts
payable and accrued expenses
|
(29,332)
|
(492,952)
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Accounts
payable, related party
|
-
|
(3,074,021)
|
Operating
leases
|
(1,984)
|
124,713
|
Customer
deposits and other liabilities
|
263,572
|
62,110
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Net
cash provided by (used in) operations
|
$6,897,091
|
$(542,828)
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Investing
|
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Investment in note
receivable
|
(2,100,000)
|
-
|
Purchase of property and
equipment
|
(5,864,588)
|
(102,989)
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Purchase of intangible
assets
|
-
|
(60,000)
|
Acquisition of Echo
Entities, net of cash acquired
|
-
|
(5,876,516)
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Net
cash used in investing
|
(7,964,588)
|
(6,039,505)
|
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Financing
|
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Short-term financing, line
of credit
|
-
|
150,000
|
Financing for the
acquisition of the Echo Entities
|
-
|
6,925,979
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Financing to pay off
accounts payable, related party
|
-
|
3,074,021
|
Payments on short-term
financing, line of credit
|
-
|
(150,000)
|
Payments on notes payable,
related party
|
(279,210)
|
(360,948)
|
Payments on notes
payable
|
(26,117)
|
-
|
Proceeds from PPP
loan
|
1,668,200
|
-
|
Proceeds from notes payable
for retail and office buildings
|
4,412,000
|
-
|
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|
Net
cash provided by financing
|
5,774,873
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9,639,052
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Net change in cash and cash
equivalents
|
4,707,376
|
3,056,719
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Cash and cash equivalents,
beginning of period
|
4,510,660
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1,453,941
|
|
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Cash and cash equivalents,
end of period
|
$9,218,036
|
$4,510,660
|
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Supplemental
Disclosures
|
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Cash paid
during the period for:
|
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Interest
|
$620,499
|
$390,864
|
Income
taxes
|
$59,025
|
$43,578
|
|
Common Stock
|
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Shares
|
Amount
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Total Stockholders' Equity
|
Balance at December 31,
2018
|
26,924,381
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$269,244
|
$40,172,677
|
$(32,028,460)
|
$8,413,461
|
|
|
|
|
|
|
Net
income
|
-
|
-
|
-
|
2,780,713
|
2,780,713
|
|
|
|
|
|
|
Balance at December 31,
2019
|
26,924,381
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$269,244
|
$40,172,677
|
$(29,247,747)
|
$11,194,174
|
|
|
|
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|
Stock issued to employees,
officers and directors
|
250
|
2
|
323
|
-
|
325
|
|
|
|
|
|
|
Net
income
|
-
|
-
|
-
|
6,383,943
|
6,383,943
|
|
|
|
|
|
|
Balance at December 31,
2020
|
26,924,631
|
$269,246
|
$40,173,000
|
$(22,863,804)
|
$17,578,442
|
|
December
31,
|
|
|
2020
|
2019
|
|
|
|
Beginning
Balance
|
$-
|
$-
|
Bad debt expense
(+)
|
37,798
|
-
|
Receivables written off
(-)
|
(37,798)
|
-
|
Ending
Balance
|
$-
|
$-
|
|
For the Years
Ended
|
|||||
|
December 31,
2020
|
December 31,
2019
|
||||
|
Revenues
|
Gross
Profit
|
Margin
|
Revenues
|
Gross Profit
|
Margin
|
DGSE
|
|
|
|
|
|
|
Resale
|
$79,790,419
|
9,215,494
|
11.5%
|
$60,088,405
|
$7,760,365
|
12.9%
|
Recycled
|
5,870,972
|
1,154,376
|
19.7%
|
7,431,749
|
1,157,459
|
15.6%
|
|
|
|
|
|
|
|
Subtotal
|
85,661,391
|
10,369,870
|
12.1%
|
67,520,154
|
8,917,824
|
13.2%
|
|
|
|
|
|
|
|
ECHG
|
|
|
|
|
|
|
Resale
|
19,395,834
|
9,504,607
|
49.0%
|
8,722,281
|
4,692,114
|
53.8%
|
Recycled
|
8,864,790
|
3,194,486
|
36.0%
|
5,782,062
|
2,645,904
|
45.8%
|
|
|
|
|
|
|
|
Subtotal
|
28,260,624
|
12,699,093
|
44.9%
|
14,504,343
|
7,338,018
|
50.6%
|
|
|
|
|
|
|
|
|
$113,922,015
|
$23,068,963
|
20.2%
|
$82,024,497
|
$16,255,842
|
19.8%
|
Date of
grant
|
Employee
|
Price of stock at grant
date
|
Number of shares granted
unvested December 31, 2020
|
Unrecognized expense at
December 31, 2020
|
Number of shares granted
unvested December 31, 2019
|
Unrecognized expense at
December 31, 2019
|
|
|
|
|
|
|
|
January 23,
2014
|
Robert
Burnside
|
$2.18
|
0
|
-
|
250
|
$545.00
|
|
|
|
|
|
|
|
Total cost
unrecognized
|
|
|
|
-
|
|
$545.00
|
|
December
31,
|
December
31,
|
|
2020
|
2019
|
DGSE
|
|
|
Resale
|
$8,971,815
|
$8,213,551
|
Recycle
|
191,677
|
401,468
|
|
|
|
Subtotal
|
9,163,492
|
8,615,019
|
|
|
|
ECHG
|
|
|
Resale
|
557,959
|
351,958
|
Recycle
|
285,446
|
542,477
|
|
|
|
Subtotal
|
843,405
|
894,435
|
|
|
|
|
$10,006,897
|
$9,509,454
|
|
December
31,
|
December
31,
|
|
2020
|
2019
|
DGSE
|
|
|
Land
|
$720,786
|
$55,000
|
Buildings and
improvements
|
1,317,906
|
-
|
Leasehold
improvements
|
1,435,742
|
1,561,649
|
Machinery and
equipment
|
1,056,315
|
1,039,013
|
Furniture and
fixtures
|
504,430
|
453,699
|
Vehicles
|
22,859
|
-
|
|
5,058,038
|
3,109,361
|
Less: accumulated
depreciation
|
(2,054,294)
|
(1,904,948)
|
|
|
|
Sub-Total
|
3,003,744
|
1,204,413
|
|
|
|
ECHG
|
|
|
Leasehold
improvements
|
81,149
|
81,149
|
Machinery and
equipment
|
220,417
|
27,497
|
Furniture and
fixtures
|
93,827
|
93,827
|
|
395,393
|
202,473
|
Less: accumulated
depreciation
|
(71,058)
|
(55,847)
|
|
|
|
Sub-Total
|
324,335
|
146,626
|
|
|
|
Envela
|
|
|
Land
|
1,106,664
|
-
|
Buildings and
improvements
|
2,456,324
|
-
|
Machinery and
equipment
|
5,407
|
-
|
|
3,568,395
|
-
|
Less: accumulated
depreciation
|
(7,873)
|
-
|
|
|
|
Sub-Total
|
3,560,522
|
-
|
|
|
|
|
$6,888,601
|
$1,351,039
|
Description
|
Amount
|
|
|
Assets
|
|
Cash
|
$1,049,462
|
Account
receivables
|
1,025,615
|
Inventories
|
1,209,203
|
Prepaids
|
88,367
|
Fixed
assets
|
191,208
|
Right-of-use
assets
|
2,350,781
|
Intangible
Assets
|
3,356,000
|
Other
assets
|
88,998
|
|
|
Liabilities
|
|
Account
payables
|
(723,043)
|
Accrued
liabilities
|
(721,483)
|
Operating lease
liabilities
|
(2,350,781)
|
Other long-term
liabilities
|
(5,457)
|
|
|
Net
assets
|
5,558,870
|
|
|
Goodwill
|
1,367,109
|
|
|
Total
Purchase Price
|
$6,925,979
|
|
Pro forma Combined
|
|
For the Twelve Months Ended
|
|
December 31, 2019
|
|
(unaudited)
|
|
|
Revenue
|
$87,921,642
|
|
|
Income
(loss) from continuing operations
|
$1,931,558
|
|
|
Net
income
|
$1,931,558
|
|
|
Basic
net income per common share
|
$0.07
|
|
|
Diluted
net income per common share
|
$0.07
|
|
Year Ended December
31,
|
|
|
2020
|
2019
|
|
|
|
Opening
balance
|
$1,367,109
|
$-
|
Additions
|
-
|
1,367,109
|
Acquisition
adjustment
|
-
|
-
|
Impairment
adjustment
|
-
|
-
|
|
|
|
Goodwill
|
$1,367,109
|
$1,367,109
|
|
December
31,
|
December
31,
|
|
2020
|
2019
|
DGSE
|
|
|
Domain
names
|
$41,352
|
$41,352
|
Point of sale
system
|
330,000
|
330,000
|
|
371,352
|
371,352
|
Less: accumulated
amortization
|
(203,502)
|
(137,502)
|
|
|
|
Subtotal
|
167,850
|
233,850
|
|
|
|
ECHG
|
|
|
Trademarks
|
1,483,000
|
1,483,000
|
Customer
Contracts
|
1,873,000
|
1,873,000
|
|
3,356,000
|
3,356,000
|
Less: accumulated
amortization
|
(531,377)
|
(195,777)
|
|
|
|
Subtotal
|
2,824,623
|
3,160,223
|
|
|
|
Total
|
$2,992,473
|
$3,394,073
|
|
DGSE
|
ECHG
|
Total
|
|
|
|
|
2021
|
$66,000
|
$335,600
|
$401,600
|
2022
|
66,000
|
335,600
|
401,600
|
2023
|
30,350
|
335,600
|
365,950
|
2024
|
5,500
|
335,600
|
341,100
|
2025
|
-
|
335,600
|
335,600
|
Thereafter
|
-
|
1,146,623
|
1,146,623
|
|
|
|
|
|
$167,850
|
$2,824,623
|
$2,992,473
|
|
December
31
|
December
31,
|
|
2020
|
2019
|
DGSE
|
|
|
Accrued
Interest
|
$10,057
|
$7,374
|
Professional
fees
|
-
|
125,200
|
Board member
fees
|
7,500
|
7,500
|
Insurance
|
-
|
30,508
|
Payroll
|
155,635
|
157,148
|
Property
tax
|
26,435
|
-
|
Sales
tax
|
180,609
|
115,451
|
Other
administrative expenses
|
13,525
|
-
|
State income
tax
|
-
|
33,907
|
|
|
|
Subtotal
|
393,761
|
477,088
|
|
|
|
ECHG
|
|
|
Accrued
Interest
|
17,086
|
16,724
|
Professional
fees
|
-
|
77,900
|
Payroll
|
119,327
|
79,342
|
Property
tax
|
20,500
|
-
|
Sales
tax
|
-
|
7,852
|
Credit
card
|
-
|
22,279
|
Other accrued
expenses
|
10,574
|
-
|
State income
tax
|
-
|
27,963
|
Material &
shipping costs (COGS)
|
-
|
207,361
|
|
|
|
Subtotal
|
167,487
|
439,421
|
|
|
|
Envela
|
|
|
Accrued
Interest
|
7,884
|
-
|
Payroll
|
10,745
|
-
|
Professional
fees (1)
|
142,635
|
-
|
Other
administrative expenses
|
8,433
|
-
|
State income
tax (1)
|
113,379
|
-
|
|
|
|
Subtotal
|
283,076
|
-
|
|
|
|
|
$844,324
|
$916,509
|
|
Outstanding
Balance
|
|
|
|
|
December
31,
|
December
31,
|
Current
|
|
|
2020
|
2019
|
Interest
Rate
|
Maturity
|
DGSE
|
|
|
|
|
Note payable, related party
(1)
|
$2,863,715
|
$2,949,545
|
6.00%
|
|
Note payable, Truist Bank
(2)
|
942,652
|
-
|
3.65%
|
July 9, 2030
|
Note payable, Texas Bank
& Trust (3)
|
491,852
|
-
|
3.75%
|
September 14,
2025
|
|
|
|
|
|
DGSE
Sub-Total
|
4,298,219
|
2,949,545
|
|
|
|
|
|
|
|
ECHG
|
|
|
|
|
Note payable, related party
(1)
|
6,496,127
|
6,689,507
|
6.00%
|
May 16, 2024
|
|
|
|
|
|
Envela
|
|
|
|
|
Note payable, Texas Bank
& Trust (4)
|
2,951,379
|
-
|
3.25%
|
November 4, 2025
|
Note payable
(5)
|
1,668,200
|
-
|
|
|
|
|
|
|
|
Envela
Sub-Total
|
4,619,579
|
-
|
|
|
|
|
|
|
|
Sub-Total
|
15,413,925
|
9,639,052
|
|
|
|
|
|
|
|
Current
portion
|
2,120,457
|
1,084,072
|
|
|
|
|
|
|
|
|
$13,293,468
|
$8,554,980
|
|
|
Note
payable, related party - DGSE
|
|
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$95,129
|
2022
|
100,996
|
2023
|
107,225
|
2024
|
2,560,365
|
|
|
Subtotal
|
$2,863,715
|
Note
payable, Truist Bank - DGSE
|
|
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$33,904
|
2022
|
35,163
|
2023
|
36,468
|
2024
|
37,821
|
2025
|
39,216
|
Thereafter
|
760,080
|
|
|
Subtotal
|
$942,652
|
Note
payable, Texas Bank & Trust - DGSE
|
|
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$17,399
|
2022
|
18,053
|
2023
|
18,732
|
2024
|
19,437
|
2025
|
418,231
|
|
|
Subtotal
|
$491,852
|
Note
payable, related party - ECHG
|
|
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$211,903
|
2022
|
224,973
|
2023
|
238,849
|
2024
|
5,820,402
|
|
|
Subtotal
|
$6,496,127
|
Note
payable, Texas Bank & Trust - Envela
|
|
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$93,922
|
2022
|
97,455
|
2023
|
101,122
|
2024
|
104,926
|
2025
|
2,553,954
|
|
|
Subtotal
|
$2,951,379
|
Note payable - Envela Corporation
|
|
Year Ending December
31,
|
Amount
|
|
|
2021
|
$1,668,200
|
|
|
Subtotal
|
$1,668,200
|
|
|
|
$15,413,925
|
|
Fiscal 2020
|
||
|
DGSE
|
ECHG
|
Consolidated
|
|
|
|
|
Revenue:
|
|
|
|
Sales
|
$85,661,391
|
$28,260,624
|
$113,922,015
|
Cost of goods
sold
|
75,291,521
|
15,561,531
|
90,853,052
|
|
|
|
|
Gross
profit
|
10,369,870
|
12,699,093
|
23,068,963
|
|
|
|
|
Expenses:
|
|
|
|
Selling, general and
administrative expenses
|
6,933,259
|
8,620,015
|
15,553,274
|
Depreciation and
amortization
|
321,833
|
406,793
|
728,626
|
|
|
|
|
|
7,255,092
|
9,026,808
|
16,281,900
|
|
|
|
|
Operating
income
|
3,114,778
|
3,672,285
|
6,787,063
|
|
|
|
|
Other
income:
|
|
|
|
Other
income
|
(113,974)
|
(193,023)
|
(306,997)
|
Interest
expense
|
209,295
|
411,204
|
620,499
|
|
|
|
|
Income before income
taxes
|
3,019,457
|
3,454,104
|
6,473,561
|
|
|
|
|
Income tax
expense
|
40,283
|
49,335
|
89,618
|
|
|
|
|
Income
from continuing operations
|
$2,979,174
|
$3,404,769
|
$6,383,943
|
|
|
|
|
|
Year Ended December
31,
|
|
|
2020
|
2019
|
|
|
|
Basic weighted average
shares
|
26,924,631
|
26,924,381
|
Effect of potential
dilutive securities
|
15,000
|
15,250
|
Diluted weighted average
shares
|
26,939,631
|
26,939,631
|
|
Years Ended December
31,
|
|||
|
2020
|
2019
|
||
|
Shares
|
Weighted average exercise
price
|
Shares
|
Weighted average exercise
price
|
|
|
|
|
|
Outstanding at beginning or
year
|
15,000
|
$2.17
|
15,000
|
$2.17
|
Granted
|
-
|
-
|
-
|
-
|
Exercised
|
-
|
-
|
-
|
-
|
Forfeited
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Outstanding at end of
year
|
15,000
|
$2.17
|
15,000
|
$2.17
|
|
|
|
|
|
Options exercisable at end
of year
|
15,000
|
$2.17
|
15,000
|
$2.17
|
|
|
|
|
|
|
Options Outstanding and
Exercisable
|
||||
|
|
|
|
|
|
Exercise
price
|
Number outstanding
|
Weighted average remaining contractual life
(Years)
|
|
Weighted average exercise
price
|
Aggregate intrinsic
value
|
$2.13
|
10,000
|
NA
|
(1)
|
$2.13
|
$32,450
|
$2.25
|
5,000
|
NA
|
(1)
|
$2.25
|
$15,600
|
|
|
|
|
|
|
|
15,000
|
|
|
|
$48,050
|
|
Year Ended December 31,
|
|||
|
2020
|
2019
|
||
|
Shares
|
Weighted average exercise
price
|
Shares
|
Weighted average exercise
price
|
|
|
|
|
|
Nonvested at beginning or
year
|
250
|
$1.30
|
250
|
$1.30
|
Granted
|
-
|
-
|
-
|
-
|
Exercised
|
250
|
1.30
|
-
|
-
|
Forfeited
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Outstanding at end of
year
|
-
|
$-
|
250
|
$1.30
|
|
2020
|
2019
|
|
|
|
Tax Expense at
Statutory Rate
|
$1,364,191
|
$626,468
|
Valuation
Allowance
|
(1,371,195)
|
(631,775)
|
Non-Deductible
Expenses and Other
|
7,004
|
5,307
|
State Taxes, Net of
Federal Benefit
|
89,618
|
95,116
|
Income tax
expense
|
$89,618
|
$95,116
|
|
|
|
Current
|
$89,618
|
$95,116
|
Total
|
$89,618
|
$95,116
|
|
2020
|
2019
|
Deferred
tax assets (liabilities):
|
|
|
Inventories
|
$22,620
|
$21,495
|
Stock
options and other
|
6,836
|
57,019
|
Contingencies
and accruals
|
28,580
|
32,154
|
Property
and equipment
|
(256,065)
|
(180,300)
|
Net
operating loss carryforward
|
6,527,548
|
7,763,103
|
Goodwill
and intangibles
|
27,085
|
34,328
|
Total
deferred tax assets, net
|
6,356,604
|
7,727,799
|
|
|
|
Valuation
allowance
|
$(6,356,604)
|
$(7,727,799)
|
Net
Deferred tax asset
|
-
|
-
|
|
Operating
|
|
Leases
|
DGSE
|
|
2021
|
$479,161
|
2022
|
235,674
|
2023
|
212,855
|
2024
|
213,885
|
2025
and thereafter
|
64,087
|
|
|
Total
minimum lease payments
|
1,205,662
|
Less
imputed interest
|
(110,429)
|
|
|
DGSE
Sub-Total
|
1,095,233
|
|
|
ECHG
|
|
2021
|
869,209
|
2022
|
786,396
|
2023
|
808,022
|
2034
|
830,244
|
2025
and thereafter
|
853,076
|
|
|
Total
minimum lease payments
|
4,146,947
|
Less
imputed interest
|
(439,452)
|
|
|
Envela
Sub-Total
|
3,707,495
|
|
|
Total
|
4,802,728
|
|
|
Current
portion
|
1,148,309
|
|
|
|
$3,654,419
|
Index to Financial
Statements
|
Page
|
|
|
29
|
|
|
|
30
|
|
|
|
31
|
|
|
|
32
|
|
|
|
33
|
|
|
|
55
|
Exhibit
Number
|
|
Description
|
|
Filed
Herein
|
|
Incorporated by
Reference
|
|
Form
|
|
Date Filed with
SEC
|
|
Exhibit
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.10
|
|
|
|
|
X
|
|
8-A12G
|
|
June 23, 1999
|
|
3.7
|
|
3.11
|
|
|
|
|
X
|
|
8-K
|
|
September 11,
2015
|
|
3.1
|
|
3.12
|
|
|
|
|
X
|
|
8-K
|
|
October 9, 2015
|
|
3.1
|
|
3.13
|
|
|
|
|
X
|
|
8-K
|
|
December 16, 2019
|
|
3.1
|
|
4.1
|
|
|
|
|
X
|
|
S-4
|
|
February 26, 2007
|
|
4.1
|
|
10.1
|
|
|
|
|
X
|
|
8-K
|
|
September 16,
2011
|
|
10.5
|
|
10.2
|
|
|
|
|
X
|
|
8-K
|
|
September 16,
2011
|
|
10.7
|
|
10.3
|
|
|
|
|
X
|
|
8-K
|
|
October 28, 2011
|
|
10.2
|
|
10.4
|
|
|
|
|
X
|
|
8-K
|
|
February 12, 2016
|
|
10.1
|
|
10.5
|
|
Registration Rights
Agreement by and among DGSE Companies, Inc., Elemetal, LLC, and NTR
Metals, LLC dated as of December 9, 2016
|
|
|
|
X
|
|
8-K
|
|
December 9, 2016
|
|
10.1
|
10.6
|
|
Purchase agreement,
dated September 14, 2020, for the Irving, Texas office building
purchased by Envela Corporation
|
|
|
|
X
|
|
10-Q
|
|
October 5, 2020
|
|
10.3
|
10.7
|
|
Revised note
payable, related party, dated January 1, 2020, between DGSE, LLC
and John R. Loftus
|
|
|
|
X
|
|
10-Q
|
|
October 5, 2020
|
|
10.4
|
10.8
|
|
Revised note
payable, related party, dated January 1, 2020, between ECHG, LLC
and John R. Loftus
|
|
|
|
X
|
|
10-Q
|
|
October 5, 2020
|
|
10.5
|
14.1
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X
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10-K/A
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2012
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14.1
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21.1
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X
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10-K
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March 27, 2014
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21.1
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X
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Certification pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934 implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by John R.
Loftus
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X
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Certification pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934 implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by Bret A.
Pedersen
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X
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Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 by John R. Loftus
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X
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Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 by Bret A. Pedersen
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X
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101.INS
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XBRL Instance
Document
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X
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101.SCH
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XBRL Taxonomy
Extension Schema Document
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X
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101.CAL
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XBRL Taxonomy
Calculation Linkbase Document
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X
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101.DEF
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XBRL Taxonomy
Definition Linkbase Document
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X
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101.LAB
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XBRL Taxonomy Label
Linkbase Document
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X
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101.PRE
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XBRL Taxonomy
Presentation Linkbase Document
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X
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By:
/s/ John R. Loftus
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Dated: March 23,
2021
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John R.
Loftus
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Chairman of the Board,
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Chief Executive Officer,
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President
(Principal Executive
Officer)
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By:
/s/ John R. Loftus
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Dated: March 23,
2021
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John R.
Loftus
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Chairman of the Board,
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Chief Executive Officer,
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President
(Principal Executive
Officer)
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By:
/s/ Bret A.
Pedersen
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Dated: March 23,
2021
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Bret A. Pedersen
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Chief Financial Officer
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(Principal Accounting
Officer)
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By:
/s/ Joel S. Friedman
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Dated: March 23,
2021
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Joel S. Friedman
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Director |
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By: /s/ Alexandra C. Griffin |
Dated: March 23,
2021
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Alexandra C. Griffin
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Director |
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By:
/s/ Jim R. Ruth
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Dated: March 23,
2021
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Jim R. Ruth |
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Director |
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By:
/s/ Allison M. DeStefano
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Dated: March 23,
2021
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Allison M. DeStefano |
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Director |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Mar. 22, 2021 |
Jun. 30, 2020 |
|
Cover [Abstract] | |||
Entity Registrant Name | Envela Corp | ||
Entity Central Index Key | 0000701719 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 45,132,000 | ||
Entity Common Stock, Shares Outstanding | 26,924,631 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 001-11048 |
Consolidated Income Statements - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Revenue: | ||
Sales | $ 113,922,015 | $ 82,024,497 |
Cost of goods sold | 90,853,052 | 65,768,655 |
Gross margin | 23,068,963 | 16,255,842 |
Expenses: | ||
Selling, General & Administrative Expenses | 15,553,274 | 12,494,510 |
Depreciation and Amortization | 728,626 | 520,298 |
Total cost of revenue | 16,281,900 | 13,014,808 |
Operating income | 6,787,063 | 3,241,034 |
Other income, net | 306,997 | 49,756 |
Interest expense | (620,499) | (414,961) |
Income before income taxes | 6,473,561 | 2,875,829 |
Income tax expense | 89,618 | 95,116 |
Income from operations | 6,383,943 | 2,780,713 |
Net income | $ 6,383,943 | $ 2,780,713 |
Earnings per share: | ||
Basic | $ 0.24 | $ .10 |
Diluted | $ 0.24 | $ .10 |
Weighted average shares outstanding: | ||
Basic | 26,924,631 | 26,924,381 |
Diluted | 26,939,631 | 26,939,631 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 26,924,631 | 26,924,381 |
Common stock, shares outstanding | 26,924,631 | 26,924,381 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Stockholders' Equity Statements - USD ($) |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total |
---|---|---|---|---|
Beginning balance, shares at Dec. 31, 2018 | 26,924,381 | |||
Beginning balance at Dec. 31, 2018 | $ 269,244 | $ 40,172,677 | $ (29,247,747) | $ 11,194,174 |
Net nncome | 2,780,713 | 2,780,713 | ||
Ending balance, shares at Dec. 31, 2019 | 26,924,381 | |||
Ending balance at Dec. 31, 2019 | $ 269,244 | 40,172,677 | (29,247,747) | 11,194,174 |
Stock issued to employees, officers and directors, shares | 250 | |||
Stock issued to employees, officers and directors | $ 2 | 323 | 325 | |
Net nncome | 6,383,943 | 6,383,943 | ||
Ending balance, shares at Dec. 31, 2020 | 26,924,631 | |||
Ending balance at Dec. 31, 2020 | $ 269,246 | $ 40,173,000 | $ (22,863,804) | $ 17,578,442 |
Accounting Policies and Nature of Operations |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies and Nature of Operations | A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows. References to fiscal years below are denoted with the word “Fiscal” and the associated year.
Principles of Consolidation and Nature of Operations
Envela and its subsidiaries engage in diverse business activities within the recommerce sector. These activities include being one of the nation's premier authenticated recommerce retailers of luxury hard assets; providing end-of-life asset recycling; offering data destruction and IT asset management; and providing products, services and solutions to industrial and commercial companies. Envela operates primarily via two business segments. Through DGSE, we operate Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands. Through ECHG we operate Echo Environmental, ITAD USA and Teladvance. Envela is a Nevada corporation, headquartered in Irving, Texas.
DGSE 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. DGSE operates six jewelry stores at both the retail and wholesale levels, throughout the United States via its facilities in Texas and South Carolina. The Company also maintains a presence in the retail market through our web-sites, www.dgse.com and www.cgdeinc.com.
ECHG buys electronic components from businesses and other organizations, such as school districts, for end-of-life recycling or to add life to electronic devices by data destruction and refurbishment for reuse. For end-of–life recycling, we sell to downstream recycling companies who further process our material for end users. The electronic devices saved for reuse are cleaned of prior data, refurbished and sold to businesses or organizations wanting to extend the remaining life and value of recycled electronics. Our customers are companies and organizations that are based domestically and internationally.
For additional business operations for both DGSE and ECHG, see “Item 1. Business—Operating Segments” in this annual report on Form 10-K.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated.
The Company operates the business as two operating and reportable segments under a variety of banners. DGSE includes Charleston Gold & Diamond Exchange and Dallas Gold & Silver Exchange. ECHG includes Echo, ITAD USA and Teladvance.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the consolidated balance sheets approximate fair value.
Inventories
DGSE’s inventory is valued at the lower of cost or NRV. The Company acquires a majority of its inventory from individual customers, including pre-owned jewelry, watches, bullion, rare coins and collectibles. The Company acquires these items based on its own internal estimate of the fair market value of the items at the time of purchase. The Company considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. The Company supplements these purchases from individual customers with inventory purchased from wholesale vendors. These wholesale purchases of new merchandise can take the form of full asset purchases, or consigned inventory. Consigned inventory is accounted for on the Company’s consolidated balance sheet with a fully offsetting contra account so that consigned inventory has a net zero balance. The majority of the Company’s inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, these fluctuations could have either a positive or negative impact on the value of the Company’s inventory and could positively or negatively impact the profitability of the Company. The Company regularly monitors these fluctuations to evaluate any necessary impairment to its inventory.
ECHG’s inventory principally includes processed and unprocessed electronic scrap materials. The value of the material is derived from recycling the precious and other scrap metals included in the scrap. The processed and unprocessed materials are carried at the lower of the average cost of the material during the month of purchase or NRV. The in-transit material is carried at lower of cost or market using the retail method. Under the retail method the valuation of the inventory at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of the inventory.
The inventory listed in Note 3, and for the time period until May 17, 2022, is pledged as collateral against our $3,500,000 short-term line of credit with Texas Bank and Trust.
Property and Equipment
Property and equipment are stated at cost. Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property. 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. If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. There were no impairments recorded during Fiscal 2020 and Fiscal 2019.
Expenditures for maintenance and repairs are charged against income as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized. When assets are sold or retired, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded to current operating income.
Impairment of Long-Lived Assets, Amortized Intangible Assets and Goodwill
The Company performs impairment evaluations of its long-lived assets, including property, equipment, and intangible assets with finite lives whenever business conditions or events indicate that those assets may be impaired. When the estimated future undiscounted cash flows to be generated by the assets are less than the carrying value of the long-lived assets, the assets are written down to fair market value and a charge is recorded to current operations. Based on the Company’s evaluations no impairment was required as of December 31, 2020 or 2019.
We evaluate goodwill for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Evaluations for possible impairment are based upon a comparison of the estimated fair value of the reporting segment to which the goodwill has been assigned, versus the sum of the carrying value of the assets and liabilities of that segment including the assigned goodwill value. Goodwill is tested at the segment level and is the only intangible asset with an indefinite life on the balance sheet.
Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the note receivable and notes payable approximate fair value because the underlying instruments have an interest rate that reflects current market rates. None of these instruments are held for trading purposes.
Advertising Costs
DGSE’s advertising costs are expensed as incurred and amounted to $240,770 and $392,588 for Fiscal 2020 and Fiscal 2019, respectively.
ECHG’s advertising costs are expensed as incurred and amounted to $16,311 and $4,809 For Fiscal 2020 and for the period beginning May 20, 2019 through December 31, 2019, respectively.
Accounts Receivable
Given the generally low level of accounts receivable for DGSE, the Company uses a simplified approach to calculate a general bad debt reserve. An allowance is calculated for each aging “bucket,” based on the risk profile of that bucket. For example, based on our historical experience, we have chosen to not place any reserve on amounts that are less than 60 days past due. From there the reserve amount escalates: 10% reserve on amounts over 60 but less than 90 days past due, 25% on amounts over 90 but less than 120 past due, and 75% on amounts over 120 days past due. The account receivables past 120 days past due are reviewed quarterly and if they are deemed uncollectable will be written off against the reserve.
For Fiscal 2020 and 2019, besides the normal timing to clear credit cards and financing collections, DGSE’s accounts receivable balance consisted of wholesale dealers that are current, therefore no reserve was established at December 31, 2020 and 2019. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We will revisit the reserve periodically, but no less than annually, with the same analytical approach in order to determine if the reserve needs to be increased or decreased, based on the risk profile of open accounts receivable at that point.
ECHG has a more sizable accounts receivable balance of $2,528,215 at December 31, 2020 and $2,383,061 as of December 31, 2019. We use a different approach for allowance for doubtful accounts because customers are generally larger and payable terms are farther out. Once we determine that a balance is uncollectable we reserve that balance but still pursue payment. On the rare occasion we determine a balance is uncollectable we will write off the balance against the reserve. As of December 31, 2020 and 2019, we consider the full accounts receivable balance to be fully collectable and feel that a reserve of $0 to be appropriate.
As of December 31, 2020 and 2019, there was no allowance for doubtful accounts.
A summary of the Allowance for Doubtful Accounts is presented below:
Note Receivable
ECHG, LLC, entered into an agreement with CExchange, LLC on February 15, 2020, to lend $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements to acquire all of CExchange’s equity interests. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is the leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. This fits well with ECHG’s core business of refurbishing and reusing cell telephones. There is no assurance that the Company will exercise its warrant or call option.
Short-Term Financing
Envela established a short-term line of credit with Texas Bank and Trust to cover emergency cash needs for $1,000,000 on May 17, 2019. The line of credit was renewed for an additional two years and increased to $3,500,000 on May 17 2020 and expires May 16, 2022. It has a varying interest rate, per annum, based on the Prime Rate. On December 31, 2020, the interest rate was 5% and the balance due on this short-term line of credit was $0.
Income Taxes
Income taxes are accounted for under the asset and liability method prescribed by Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the 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 apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 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.
The Company accounts for its position in tax uncertainties in accordance with ASC 740. The guidance establishes standards for accounting for uncertainty in income taxes. The guidance provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the years ended December 31, 2020 and 2019.
The Company currently believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained upon audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. The Company recognizes accrued interest and penalties resulting from audits by tax authorities in the provision for income taxes in the consolidated statements of operations. During Fiscal 2020 and Fiscal 2019, the Company did not incur any federal income tax interest or penalties.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgements and changes in judgements and assets recognized from cost incurred to obtain or fulfill a contract.
ASC 606 provides guidance to identify performance obligations for revenue-generating transactions. 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 third step is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. 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 years ended December 31, 2020 and 2019:
For DGSE, revenue for monetary transactions (i.e., cash and receivables) with 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. We also recognize revenue upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold to a Dallas refiner, who was a related party until May 20, 2019. Since this refiner is located in the Dallas area, we deliver the metal to the refiner. The metal is assayed, price is determined from the assay and payment is made usually within two days. Revenue is recognized from the sale once payment is received.
We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days.
In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When we exchange merchandise for similar merchandise and there is no monetary component to the exchange, we do not recognize any revenue. Instead, the basis of the merchandise relinquished becomes the basis of the merchandise received, less any indicated impairment of value of the merchandise relinquished. When we exchange merchandise for similar merchandise and there is a monetary component to the exchange, we recognize revenue to the extent of the monetary assets received and determines the cost of sale based on the ratio of monetary assets received to monetary and non-monetary assets received multiplied by the cost of the assets surrendered.
The Company offers the option of third party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the financing company. We recognize the revenue of the sale upon the promise of the financing company to pay.
We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. We have established an allowance for estimated returns related to Fiscal 2020 sales, which is based on our review of historical returns experience, and reduces our reported revenues and cost of sales accordingly. As of December 31, 2020 and 2019, our allowance for returns remained the same at approximately $28,000 for both years.
ECHG 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. The revenue streams are as follows;
Shipping and Handling Costs
Shipping and handling costs amounted to $1,025,215 and $803,015, for 2020 and 2019, respectively. We have determined that shipping and handling costs should be included in cost of goods sold since inventory is what is shipped to and from store locations or to and from vendors.
Taxes Collected from Customers
The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses.
Earnings Per Share
Basic earnings per share of our Common Stock is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of common shares 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.
Stock-Based Compensation
The Company accounts for stock-based compensation by measuring the cost of the 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 grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statement of cash flows. Stock-based compensation expense for Fiscal 2020 and Fiscal 2019 amounted to $325 and $0 respectively.
The following table represents our total compensation cost related to non-vested awards not yet recognized at year end December 31, 2020 and December 31, 2019:
No stock awards remained unexercised as of December 31, 2020 and only 250 unexercised stock awards remained unexercised as of December 31, 2019.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price 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 our reporting units; useful lives of our tangible and intangible assets; allowances for doubtful accounts; valuation allowance; 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 and outcomes may differ from management’s estimates and assumptions.
New Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment changes to be based on the first step in today’s two-step impairment test, thus eliminating step two from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this pronouncement on January 1, 2020. The adoption did not have an impact on the Company’s consolidated financial statements.
On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Upon adoption, we recognized right-of-use assets of approximately $2.0 million, with corresponding lease liabilities of approximately $2.0 million on the consolidated balance sheets. The right-of-use assets include adjustments for deferred rent liabilities. The adoption did not impact our beginning retained earnings, or our prior year consolidated statements of income and statements of cash flows.
In June 2016, the FASB issued a new credit loss accounting standard ASU 2016-13. The new accounting standard introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses which will be based on expected losses rather than incurred losses. We will be required to use a forward-looking expected credit loss model for accounts receivable, loans and other financial instruments. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align our credit loss methodology with the new standard. The company is evaluating the financial statement implications of ASU 2016-13.
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Concentration of Credit Risk |
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Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | The Company maintains cash balances in financial institutions in excess of federally insured limits.
A significant amount of DGSE’s revenue and expenses stem from sales to and purchases from one Dallas refining partner, which relationship constitutes Envela’s single largest source of revenues and expenses. In addition, a significant amount of ECHG’s refining revenue comes from one refining partner with an international refining facility. Any adverse break in either relationship could reduce the flow of refining materials and revenue. While the pandemic continues to be a global threat, any potential interruptions in travel and business disruptions with respect to us, our customers or our supply chain could adversely affect our sales, costs and liquidity position, possibly to a significant degree. The effects of the coronavirus pandemic on our business, the ultimate impact remains uncertain and subject to change. The duration of any such impact cannot be predicted.
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Inventories |
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Inventories | Inventories consist of the following:
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Note Receivable |
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Dec. 31, 2020 | |
Financing Receivable, after Allowance for Credit Loss [Abstract] | |
Note Receivable | ECHG, LLC, which is wholly owned by the Company, entered into an agreement with CExchange, LLC (“CExchange”) on February 15, 2020, pursuant to which it agreed to loan CExchange $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements through which ECHG, LLC may acquire all of CExchange’s equity interests upon the occurrence of certain events and on certain conditions. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is a leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. These services and programs fit well with ECHG’s core business of refurbishing and reusing consumer electronics and IT equipment. Starting with the quarter ending June 30, 2020, CExchange helped DGSE facilitate their bullion on-line sales. There is no assurance that the Company will exercise its warrant or call option to acquire all of CExchange’s equity interests. |
Property and Equipment |
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Property and Equipment | Property and equipment consist of the following:
Depreciation expense was $327,026 and $264,021 for Fiscal 2020 and Fiscal 2019, respectively.
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Acquisition |
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Acquisition | On May 20, 2019, ECHG, a wholly owned subsidiary of the Company, entered into an asset purchase agreement with each of Echo Environmental, LLC and its wholly owned subsidiary ITAD USA, LLC (collectively, the “Echo Legacy Entities”), pursuant to which the Echo Legacy Entities agreed to sell all of their assets and rights and interests thereto (the “Acquired Assets”) for $6,925,979 (the “Echo Transaction”). The Echo Legacy Entities were wholly owned subsidiaries of a former Related Party. John R. Loftus is the Company’s CEO, President and Chairman and owned approximately one-third of the equity interests of the former Related Party prior to the Echo Transaction. The Company also paid a closing fee of $85,756 that was not part of the purchase price allocation. The fee is included in selling, general and administrative expenses.
On the same day, Mr. Loftus became the largest beneficial owner of the Company’s stock by purchasing all of the Company’s stock beneficially owned by the former Related Party. As part of the transaction of acquiring the stock from the former Related Party, Mr. Loftus no longer owns an equity interest in that entity. As an interested party, Mr. Loftus was familiar with the operations of the Echo Legacy Entities.
In connection with the Echo Transaction, on May 20, 2019, ECHG executed and delivered to Mr. Loftus, a promissory note to which ECHG borrowed from Mr. Loftus $6,925,979, the proceeds of which were used to purchase the Acquired Assets.
As part of the Echo Transaction, goodwill was realized of $1,367,109, which is the purchase price less the fair value of the net assets purchased, as shown in the purchase price allocation in the following table. 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 ECHG only and not the whole Company. The Company has evaluated goodwill based on cash flows for the ECHG segment. For federal income tax purposes, goodwill is amortized and deductible over fifteen years.
The purchase price was allocated to the fair value of assets and liabilities acquired as of May 20, 2019:
The following pro forma presents the Company's results of the Echo Entities and the Company's results of operations for the twelve months ended December 31, 2019 as if they were combined the entire twelve months:
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019, are as follows:
Our 2019 acquisition of the assets of the Echo Legacy Entities resulted in the addition to our goodwill balance in 2019. The Company’s goodwill is related to the ECHG segment only and not the whole Company. We evaluate goodwill for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Based on the Company’s evaluations, no impairment was required as of December 31, 2020 and 2019.
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Intangible Assets |
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Intangible Assets | Intangible assets consist of:
Amortization expense was $401,600 and $256,277 for Fiscal 2020 and Fiscal 2019, respectively.
The estimated aggregate amortization expense for each of the five succeeding fiscal years follows:
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Accrued Expenses | Accrued expenses consist of the following:
(1) State income tax and professional fee accruals have been recorded at the segment level in prior periods. Proceeding forward, we will allocate those expenses at the segment level but accrue the consolidated balances at the corporate level.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-term debt consists of the following:
(1) On May 20, 2019, in connection with the Echo Transaction, the Company entered into two loan agreements with John R. Loftus, the Company’s CEO, President and Chairman of the Board. ECHG, LLC executed a 5-year, $6,925,979 note for the Echo Transaction, amortized over 20 years at a 6% annual interest rate. DGSE, LLC executed a 5-year, $3,074,021 note to pay off the accounts payable – related party balance to a former Related Party as of May 20, 2019. That promissory note is also amortized over 20 years at a 6% annual interest rate. On January 1, 2020, revisions were made on the original documents for both DGSE and ECHG notes. Originally, the DGSE note stated that the monthly interest and principal payment due was $41,866 and the ECHG note stated that the monthly interest and principal payment due was $94,327. The revised interest and principal payment due monthly on the note for DGSE is $22,203. The revised interest and principal payment due monthly on the note for ECHG is $49,646. The allocation between short-term and long-term notes payable, related party was revised accordingly starting with the three months ending March 31, 2020.
(2) On July 9, 2020, DGSE closed the purchase of a new retail building located at 610 E. Round Grove Road in Lewisville, Texas for $1.195 million. The purchase was partly financed through a $956,000, 10 year loan, bearing an annual interest rate of 3.65%, amortized over 20 years, payable to Truist Bank (f/k/a BB&T Bank). The note has monthly interest and principal payments of $5,645.
(3) On September 14, 2020, 1106 NWH Holdings, LLC, a wholly owned subsidiary of DGSE, closed on the purchase of a new retail building located at 1106 W. Northwest Highway in Grapevine, Texas for $620,000. The purchase was partly financed through a $496,000, 5 year loan, bearing an annual interest rate of 3.75%, amortized over 20 years, payable to Texas Bank & Trust. The note has monthly interest and principal payments of $2,941.
(4) On November 4, 2020, 1901 Gateway Holdings, LLC, a wholly owned subsidiary of Envela Corporation, closed on the purchase of a new office building located at 1901 Gateway Drive, Irving, Texas for $3.521 million. The building was partially financed through a $2.96 million, 5 year loan, bearing an interest rate of 3.25%, amortized over 20 years, payable to Texas Bank & Trust. The note has monthly interest and principal payments of $16,792.
(5) The Company applied for and received, on April 20, 2020, approximately $1.67 million, 1% interest, federally backed loan intended to pay employees and cover certain rent and utility-related costs during the COVID-19 pandemic (the “Federal Loan”), with Truist Bank (f/k/a BB&T Bank) as lender. The Federal Loan is forgivable to the extent that certain criteria are met. We have applied for the forgiveness of the Federal Loan during the fourth quarter ending December 31, 2020; therefore, we are classifying the loan as short-term.
Future scheduled principal payments of our note payables and note payables, related party, as of December 31, 2020 are as follows:
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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | We determine our business segments based upon an internal reporting structure. Our financial performance is based on the following segments: DGSE and ECHG.
The DGSE segment includes Dallas Gold & Silver Exchange, which has five retail stores in the Dallas/Fort Worth Metroplex, and Charleston Gold & Diamond Exchange, which has one retail store in Charleston, South Carolina.
The ECHG segment includes Echo, ITAD USA and Teladvance. These three companies were added during 2019 and are involved in recycling and the reuse of electronic waste.
We allocate our corporate costs and expenses, including rental income and expenses relating to our new corporate headquarters, to our business segments. These income and expenses are included in selling, general and administrative expenses, depreciation and amortization, other income, interest expense and income tax expense. Our management team evaluates the operating performance of each segment and makes decisions about the allocation of resources according to each segment profit. The allocations are generally amounts agreed upon by management, which may differ from an arms-length amount.
The following table segments the financial results of DGSE and ECHG for Fiscal 2020:
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Basic and Diluted Average Shares |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Average Shares | A reconciliation of basic and diluted average common shares is as follows:
For the years ended December 31, 2020 and 2019, there were 15,000 and 15,250 Common Stock options, warrants, and Restricted Stock Units (RSUs) unexercised respectively. For the years ended December 31, 2020 and 2019, there were no anti-dilutive shares.
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Common Stock |
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Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | In January 2014, the Company’s Board granted 112,000 RSUs to its officers and certain key employees. As of December 31, 2020, no RSUs remain unexercised and dilutive. |
Stock Options and Restricted Stock Units |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options and Restricted Stock Units | On June 21, 2004, our shareholders approved the adoption of the 2004 Employee Stock Option Plan (the “2004 Employee Stock Option Plan”) that provided for incentive stock options and nonqualified stock options to be granted to key employee and certain directors. Each option vested on either January 1, 2004 or immediately upon issuance thereafter. The exercise price of each option issued pursuant to the 2004 Plan is equal to the market value of our Common Stock on the date of grant, as determined by the closing bid price for our Common Stock on the Exchange on the date of grant or, if no trading occurred on the date of grant, on the last day prior to the date of grant on which our securities were listed and traded on the Exchange. Of the options issued under the 2004 Employee Stock Option Plan, 15,000 remain outstanding. Options issued pursuant to the 2004 Employee Stock Option Plan have no expiration date. The Company previously determined there will be no additional grants under the 2004 Employee Stock Option Plan.
On December 7, 2016, our shareholders approved the adoption of the 2016 Equity Incentive Plan (the “2016 Plan”), which reserved 1,100,000 shares for issuance pursuant to awards issued thereunder. As of December 31, 2020, no awards had been made under the 2016 Plan.
The following table summarizes the activity in common shares subject to options and warrants:
The 15,000 options exercisable at the end of the year are potential dilutive shares.
Information about stock options outstanding at December 31, 2020 is summarized as follows:
The aggregate intrinsic values in the above table were based on the closing price of our Common Stock of $5.37 as of December 31, 2020.
A summary of the status of our non-vested RSU grants issued under our 2006 Plan is presented below:
As a result of the expiration of the 2006 Plan, as of December 31, 2019, no further shares could be issued under the 2006 Plan. As of January 1, 2020, the remaining 250 RSU grants have vested and were exercised during Fiscal 2020. A total of 1,100,000 shares remain available for future grants pursuant to the 2016 Plan.
During Fiscal 2020 we recognized $325 of stock-based compensation expense compared to $0 in Fiscal 2019.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | The income tax provision reconciled to the tax computed at the statutory from continuing operations Federal rate follows:
Deferred income taxes are comprised of the following at December 31, 2019 and 2018:
As of December 31, 2020, the Company had $2,729,636 of net operating loss carry-forwards, related to the Superior Galleries acquisition which may be available to reduce taxable income in future years, subject to the applicable Internal Revenue Code Section 382 limitations. As of December 31, 2020, the Company had approximately $28,353,926 of net operating loss carry-forwards related to Superior Galleries’ post acquisition operating losses and other operating losses incurred by the Company’s other operations. These carry-forwards will expire, starting in 2026 if not utilized.
The Company is uncertain of our ability to accurately project income into the future due to the economic conditions caused by the pandemic,therefore, the Company is waiving any adjustment to the current valuation allowance.
As of December 31, 2020, the Company determined based on consideration of all available evidence, including but not limited to historical, current and future anticipated financial results as well as applicable IRS limitations and expiration dates related to the Company’s net operating losses, a full valuation allowance should be recorded for its net deferred tax assets.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). We adopted ASC 842 on January 1, 2019, by applying its provisions prospectively. The financial results reported in periods prior to January 1, 2019 are unchanged. Upon adoption, we recognized all of our leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating of finance. Classification is based on certain criteria and we have determined that all of our retail building leases fall into the operating lease category. Our leases are included in our consolidated balance sheet as right-of-use assets along with the current operating lease liabilities and long-term operating lease liabilities.
When the provision was first adopted by the Company on January 1, 2019, we recognized $1,994,840 of operating lease right-of-use assets, $446,462 in short-term operating lease liabilities and $1,609,891 in long-term operating lease liabilities on the consolidated balance sheet. The operating lease liabilities were determined based on the present value of the remaining minimum rental payments and the operating lease right-of-use asset was determined based on the value of the lease liabilities, adjusted for deferred rent balances of $61,500, which were previously included in other liabilities.
Due to the acquisition, referred in Note 6, we recognized an additional $2,350,781 of operating lease right-of-use assets, $703,523 in short-term operating lease liabilities and $1,647,258 in long-term operating lease liabilities on the consolidated balance sheet. The operating lease liabilities were determined based on the present value of the remaining minimum rental payments and the operating lease right-of-use asset was determined based on the value of the lease liabilities.
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 requires us to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in the lease agreement, we utilize our incremental borrowing rate.
The Company has six operating leases, five in the Dallas/Fort Worth Metroplex and one in Charleston South Carolina. We have two leases expiring during Fiscal year 2021. Our Southlake, Texas location expired July 31, 2020 with no current options. We evaluated the lease in the present location and decided to vacate the property as of July 31, 2020. Our lease on the main flagship store located at 13022 Preston Road, Dallas, Texas will be expiring October 31, 2021, with no current lease options. The Grand Prairie, Texas lease expires June 30, 2022, and has no current lease options. The Charleston, South Carolina lease expires April 30, 2025, and has no current lease options. The Euless, Texas lease expires June 30, 2025 with an option for an additional five (5) year term. On September 9, 2020, we entered into a new lease agreement with the landlord of the Echo Belt Line building starting January 1, 2021, expiring January 31, 2026, with one option period of an additional 60 months. A portion of the Echo Belt Line building was sublet and the rent received was applied against the rental expense for the building. The new Echo Belt Line lease, starting January 1, 2021, will not contain a subletter. The McKenzie ITAD lease expires July 31, 2021 with no current lease options. All six leases are triple net leases that we pay our proportionate amount of common area maintenance, property taxes and property insurance. Leasing costs for Fiscal 2020 and Fiscal 2019 was $1,452,689 and $1,151,619, respectively. These lease costs consist of a combination of minimum lease payments and variable lease costs.
As of December 31, 2019, the weighted average remaining lease term and weighted average discount rate for operating leases was 2.81 years and 5.5%, respectively. The Company’s future operating lease obligations that have not yet commenced are immaterial. The cash paid for operating lease liabilities for Fiscal 2020 and Fiscal 2019 was $1,314,285 and $1,809,514, respectively.
Future annual minimum lease payments as of December 31, 2020:
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Related Party Transactions |
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Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | The Company has a corporate policy governing the identification, review, consideration and approval or ratification of transactions with related persons, as that term is defined in the Instructions to Item 404(a) of Regulation S-K, promulgated under the Securities Act (“Related Party”). 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 stockholders. Among other factors, the Company’s Board considers the size and duration of the transaction, the nature and interest of the of the Related Party in the transaction, whether the transaction may involve a conflict of interest and if the transaction is on terms that are at least as favorable to the Company as would be available in a comparable transaction with an unaffiliated third party. Envela’s Board reviews all Related Party transactions at least annually to determine if it is in the Board’s best interests and the best interests of the Company’s stockholders to continue, modify, or terminate any of the Related Party transactions. Envela’s Related Person Transaction Policy is available for review in its entirety under the “Investors” menu of the Company’s corporate relations website at www.envela.com.
Through a series of transactions beginning in 2010, Elemetal, NTR and Truscott (“Related Entities”) became the largest shareholders of our Common Stock. NTR transferred all of its Common Stock to Eduro Holdings, LLC (“Eduro”) on August 29, 2018. A certain Related Entity has been the Company’s primary refiner and bullion trading partner. From January 1, 2019 through May 20, 2019 a certain Related Entity accounted for 4% of sales and 6% of purchases. Fiscal 2018, these transactions represented 11% of the Company’s sales and 2% of the Company’s purchases. On May 20, 2019, through a series of transactions, the Related Entity sold their shares of the Company to John R. Loftus, The Company’s CEO, President and Chairman of the Board. As of May 20, 2019, they were no longer a Related Entity. On December 9, 2016, the Company and a certain Related Entity closed the transactions contemplated by the Debt Exchange Agreement whereby the Company issued a certain Related Entity 8,536,585 shares of its common stock and a warrant to purchase an additional 1,000,000 shares to be exercised within two years after December 9, 2016, in exchange for the cancellation and forgiveness of $3,500,000 of trade payables owed to a certain Related Entity as a result of bullion-related transactions. The warrant to purchase an additional 1,000,000 shares expired in December 2018 and was not exercised. As of December 31, 2020, the Company was obligated to pay $0 to the certain Related Entity as a trade payable and had a $0 receivable from the certain Related Entity. As of December 31, 2019, the Company was obligated to pay $0 to the certain Related Entity as a trade payable and had a $0 receivable from the certain Related Entity. For the year ended December 31, 2020 and 2019, the Company paid the Related Entities $0 and $61,869, respectively, in interest on the Company’s outstanding payable.
Through a series of transactions reported on Schedule 13D on May 24, 2019, Truscott sold their 12,814,727 shares, 47.7% of DGSE Companies Common Stock to John R. Loftus. Mr. Loftus assumed all rights under the existing registration rights agreements. On the same day, Mr. Loftus contributed his 12,814,727 Common Stock shares to N10TR, LLC (“N10TR”) which is wholly owned by Mr. Loftus. Mr. Loftus, by virtue of his relationship with Eduro and N10TR may be deemed to indirectly beneficially own the Common Shares that Eduro and N10TR directly beneficially own. On the same day the Company entered into two (2) loan agreements with John R. Loftus, the Company’s CEO, President and Chairman of the Board. The first note of $6,925,979, pursuant to the Echo Entities purchase agreement, is a 5-year promissory note amortized over 20 years at 6% annual interest rate. As of December 31, 2020 and 2019, ECHG was obligated to pay $6,496,127 and $6,689,507, respectively, to Mr. Loftus as a note payable, related party. The second note of $3,074,021 paid off the accounts payable – related party balance to Elemetal as of May 20, 2019. The promissory note is a 5-year note amortized over 20 years at 6% annual interest rate. As of December 31, 2020 and 2019, DGSE was obligated to pay $2,863,715 and $2,949,545, respectively, to Mr. Loftus as a note payable, related party. Both notes are being serviced by operational cash flow. For the year ended December 31, 2020 and 2019, the Company paid Mr. Loftus $580,957 and $325,749, respectively, in interest on the Company’s outstanding note payables, related party.
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Defined Contribution Plan |
12 Months Ended |
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Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | The Company sponsors a defined contribution 401(k) plan that is subject to the provisions of the Employee Retirement Income Security Act of 1974. The plan covers substantially all employees who have completed one month of service. Participants can contribute up to 15% of their annual salary subject to Internal Revenue Service limitations. The Company matched 10% of the employee’s contribution up to 6% of the employee’s salary for the Fiscal 2020 and Fiscal 2019 plans.
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Subsequent Events | The outbreak of COVID-19, coronavirus pandemic has already adversely affected global economic business conditions. Future sales on products like ours could decline due to increased commodities prices, particularly gold. Although we are continuing to monitor and assess the effects of the coronavirus pandemic, the ultimate impact is highly uncertain and subject to change. The duration of any such impact cannot be predicted, nor can the timing of the development and distribution of an effective vaccine or treatments for COVID-19.
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Accounting Policies and Nature of Operations (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation and Nature of Operations | Envela and its subsidiaries engage in diverse business activities within the recommerce sector. These activities include being one of the nation's premier authenticated recommerce retailers of luxury hard assets; providing end-of-life asset recycling; offering data destruction and IT asset management; and providing products, services and solutions to industrial and commercial companies. Envela operates primarily via two business segments. Through DGSE, we operate Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands. Through ECHG we operate Echo Environmental, ITAD USA and Teladvance. Envela is a Nevada corporation, headquartered in Irving, Texas.
DGSE 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. DGSE operates six jewelry stores at both the retail and wholesale levels, throughout the United States via its facilities in Texas and South Carolina. The Company also maintains a presence in the retail market through our web-sites, www.dgse.com and www.cgdeinc.com.
ECHG buys electronic components from businesses and other organizations, such as school districts, for end-of-life recycling or to add life to electronic devices by data destruction and refurbishment for reuse. For end-of–life recycling, we sell to downstream recycling companies who further process our material for end users. The electronic devices saved for reuse are cleaned of prior data, refurbished and sold to businesses or organizations wanting to extend the remaining life and value of recycled electronics. Our customers are companies and organizations that are based domestically and internationally.
For additional business operations for both DGSE and ECHG, see “Item 1. Business—Operating Segments” in this annual report on Form 10-K.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated.
The Company operates the business as two operating and reportable segments under a variety of banners. DGSE includes Charleston Gold & Diamond Exchange and Dallas Gold & Silver Exchange. ECHG includes Echo, ITAD USA and Teladvance.
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Reclassifications | Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations.
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Cash and Cash Equivalents | The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the consolidated balance sheets approximate fair value.
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Inventories | DGSE’s inventory is valued at the lower of cost or NRV. The Company acquires a majority of its inventory from individual customers, including pre-owned jewelry, watches, bullion, rare coins and collectibles. The Company acquires these items based on its own internal estimate of the fair market value of the items at the time of purchase. The Company considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. The Company supplements these purchases from individual customers with inventory purchased from wholesale vendors. These wholesale purchases of new merchandise can take the form of full asset purchases, or consigned inventory. Consigned inventory is accounted for on the Company’s consolidated balance sheet with a fully offsetting contra account so that consigned inventory has a net zero balance. The majority of the Company’s inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, these fluctuations could have either a positive or negative impact on the value of the Company’s inventory and could positively or negatively impact the profitability of the Company. The Company regularly monitors these fluctuations to evaluate any necessary impairment to its inventory.
ECHG’s inventory principally includes processed and unprocessed electronic scrap materials. The value of the material is derived from recycling the precious and other scrap metals included in the scrap. The processed and unprocessed materials are carried at the lower of the average cost of the material during the month of purchase or NRV. The in-transit material is carried at lower of cost or market using the retail method. Under the retail method the valuation of the inventory at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of the inventory.
The inventory listed in Note 3, and for the time period until May 17, 2022, is pledged as collateral against our $3,500,000 short-term line of credit with Texas Bank and Trust.
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Property and Equipment | Property and equipment are stated at cost. Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property. 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. If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. There were no impairments recorded during Fiscal 2020 and Fiscal 2019.
Expenditures for maintenance and repairs are charged against income as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized. When assets are sold or retired, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded to current operating income.
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Impairment of Long-Lived Assets, Amortized Intangible Assets and Goodwill | The Company performs impairment evaluations of its long-lived assets, including property, equipment, and intangible assets with finite lives whenever business conditions or events indicate that those assets may be impaired. When the estimated future undiscounted cash flows to be generated by the assets are less than the carrying value of the long-lived assets, the assets are written down to fair market value and a charge is recorded to current operations. Based on the Company’s evaluations no impairment was required as of December 31, 2020 or 2019.
We evaluate goodwill for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Evaluations for possible impairment are based upon a comparison of the estimated fair value of the reporting segment to which the goodwill has been assigned, versus the sum of the carrying value of the assets and liabilities of that segment including the assigned goodwill value. Goodwill is tested at the segment level and is the only intangible asset with an indefinite life on the balance sheet.
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Financial Instruments | The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the note receivable and notes payable approximate fair value because the underlying instruments have an interest rate that reflects current market rates. None of these instruments are held for trading purposes.
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Advertising Costs | DGSE’s advertising costs are expensed as incurred and amounted to $240,770 and $392,588 for Fiscal 2020 and Fiscal 2019, respectively.
ECHG’s advertising costs are expensed as incurred and amounted to $16,311 and $4,809 For Fiscal 2020 and for the period beginning May 20, 2019 through December 31, 2019, respectively.
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Accounts Receivable | Given the generally low level of accounts receivable for DGSE, the Company uses a simplified approach to calculate a general bad debt reserve. An allowance is calculated for each aging “bucket,” based on the risk profile of that bucket. For example, based on our historical experience, we have chosen to not place any reserve on amounts that are less than 60 days past due. From there the reserve amount escalates: 10% reserve on amounts over 60 but less than 90 days past due, 25% on amounts over 90 but less than 120 past due, and 75% on amounts over 120 days past due. The account receivables past 120 days past due are reviewed quarterly and if they are deemed uncollectable will be written off against the reserve.
For Fiscal 2020 and 2019, besides the normal timing to clear credit cards and financing collections, DGSE’s accounts receivable balance consisted of wholesale dealers that are current, therefore no reserve was established at December 31, 2020 and 2019. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We will revisit the reserve periodically, but no less than annually, with the same analytical approach in order to determine if the reserve needs to be increased or decreased, based on the risk profile of open accounts receivable at that point.
ECHG has a more sizable accounts receivable balance of $2,528,215 at December 31, 2020 and $2,383,061 as of December 31, 2019. We use a different approach for allowance for doubtful accounts because customers are generally larger and payable terms are farther out. Once we determine that a balance is uncollectable we reserve that balance but still pursue payment. On the rare occasion we determine a balance is uncollectable we will write off the balance against the reserve. As of December 31, 2020 and 2019, we consider the full accounts receivable balance to be fully collectable and feel that a reserve of $0 to be appropriate.
As of December 31, 2020 and 2019, there was no allowance for doubtful accounts.
A summary of the Allowance for Doubtful Accounts is presented below:
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Note Receivable | ECHG, LLC, entered into an agreement with CExchange, LLC on February 15, 2020, to lend $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements to acquire all of CExchange’s equity interests. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is the leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. This fits well with ECHG’s core business of refurbishing and reusing cell telephones. There is no assurance that the Company will exercise its warrant or call option.
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Short-Term Financing | Envela established a short-term line of credit with Texas Bank and Trust to cover emergency cash needs for $1,000,000 on May 17, 2019. The line of credit was renewed for an additional two years and increased to $3,500,000 on May 17 2020 and expires May 16, 2022. It has a varying interest rate, per annum, based on the Prime Rate. On December 31, 2020, the interest rate was 5% and the balance due on this short-term line of credit was $0.
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Income Taxes | Income taxes are accounted for under the asset and liability method prescribed by Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the 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 apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 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.
The Company accounts for its position in tax uncertainties in accordance with ASC 740. The guidance establishes standards for accounting for uncertainty in income taxes. The guidance provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the years ended December 31, 2020 and 2019.
The Company currently believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained upon audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. The Company recognizes accrued interest and penalties resulting from audits by tax authorities in the provision for income taxes in the consolidated statements of operations. During Fiscal 2020 and Fiscal 2019, the Company did not incur any federal income tax interest or penalties.
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Revenue Recognition | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgements and changes in judgements and assets recognized from cost incurred to obtain or fulfill a contract.
ASC 606 provides guidance to identify performance obligations for revenue-generating transactions. 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 third step is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. 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 years ended December 31, 2020 and 2019:
For DGSE, revenue for monetary transactions (i.e., cash and receivables) with 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. We also recognize revenue upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold to a Dallas refiner, who was a related party until May 20, 2019. Since this refiner is located in the Dallas area, we deliver the metal to the refiner. The metal is assayed, price is determined from the assay and payment is made usually within two days. Revenue is recognized from the sale once payment is received.
We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days.
In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When we exchange merchandise for similar merchandise and there is no monetary component to the exchange, we do not recognize any revenue. Instead, the basis of the merchandise relinquished becomes the basis of the merchandise received, less any indicated impairment of value of the merchandise relinquished. When we exchange merchandise for similar merchandise and there is a monetary component to the exchange, we recognize revenue to the extent of the monetary assets received and determines the cost of sale based on the ratio of monetary assets received to monetary and non-monetary assets received multiplied by the cost of the assets surrendered.
The Company offers the option of third party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the financing company. We recognize the revenue of the sale upon the promise of the financing company to pay.
We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. We have established an allowance for estimated returns related to Fiscal 2020 sales, which is based on our review of historical returns experience, and reduces our reported revenues and cost of sales accordingly. As of December 31, 2020 and 2019, our allowance for returns remained the same at approximately $28,000 for both years.
ECHG 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. The revenue streams are as follows;
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Shipping and Handling Costs | Shipping and handling costs amounted to $1,025,215 and $803,015, for 2020 and 2019, respectively. We have determined that shipping and handling costs should be included in cost of goods sold since inventory is what is shipped to and from store locations or to and from vendors.
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Taxes Collected from Customers | The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses.
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Earnings Per Share | Basic earnings per share of our Common Stock is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of common shares 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.
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Stock-based Compensation | The Company accounts for stock-based compensation by measuring the cost of the 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 grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statement of cash flows. Stock-based compensation expense for Fiscal 2020 and Fiscal 2019 amounted to $325 and $0 respectively.
The following table represents our total compensation cost related to non-vested awards not yet recognized at year end December 31, 2020 and December 31, 2019:
No stock awards remained unexercised as of December 31, 2020 and only 250 unexercised stock awards remained unexercised as of December 31, 2019.
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Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price 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 our reporting units; useful lives of our tangible and intangible assets; allowances for doubtful accounts; valuation allowance; 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 and outcomes may differ from management’s estimates and assumptions.
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New Accounting Pronouncements | In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment changes to be based on the first step in today’s two-step impairment test, thus eliminating step two from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this pronouncement on January 1, 2020. The adoption did not have an impact on the Company’s consolidated financial statements.
On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Upon adoption, we recognized right-of-use assets of approximately $2.0 million, with corresponding lease liabilities of approximately $2.0 million on the consolidated balance sheets. The right-of-use assets include adjustments for deferred rent liabilities. The adoption did not impact our beginning retained earnings, or our prior year consolidated statements of income and statements of cash flows.
In June 2016, the FASB issued a new credit loss accounting standard ASU 2016-13. The new accounting standard introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses which will be based on expected losses rather than incurred losses. We will be required to use a forward-looking expected credit loss model for accounts receivable, loans and other financial instruments. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align our credit loss methodology with the new standard. The company is evaluating the financial statement implications of ASU 2016-13.
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Accounting Policies and Nature of Operations (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Allowance for Doubtful Accounts |
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Schedule of Disaggregation of Revenue |
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Schedule of Unrecognized Compensation Cost, Nonvested Awards |
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories |
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment |
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Acquisition (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired of Purchase Price |
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Pro Forma Results |
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill |
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets |
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Schedule of Estimated Amortization Expense |
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Accrued Expenses (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses |
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Long-Term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt |
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Schedule of Long-term Debt Maturities of Principal Payments |
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Segment Information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting |
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Basic and Diluted Average Shares (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Basic and Diluted Weighted Average Common Shares |
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Stock Options and Restricted Stock Units (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity |
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Schedule of Stock Options Outstanding |
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Schedule of Unvested Restricted Stock Units Roll Forward |
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) |
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Schedule of Deferred Tax Assets |
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Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Annual Minimum Lease Payments |
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Accounting Policies and Nature of Operations (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Accounting Policies [Abstract] | ||
Beginning balance | $ 0 | $ 0 |
Bad debt expense | 37,798 | 0 |
Receivables written off | (37,798) | 0 |
Ending balance | $ 0 | $ 0 |
Accounting Policies and Nature of Operations (Details 1) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Revenues | $ 113,922,015 | $ 82,024,497 |
Gross Profit | $ 23,068,963 | $ 16,255,842 |
Margin | 20.20% | 19.80% |
DGSE | Recycled | ||
Revenues | $ 79,790,419 | $ 7,431,749 |
Gross Profit | $ 9,215,494 | $ 1,157,459 |
Margin | 11.50% | 15.60% |
DGSE | Resale | ||
Revenues | $ 5,870,972 | $ 60,088,405 |
Gross Profit | $ 1,154,376 | $ 7,760,365 |
Margin | 19.70% | 12.90% |
DGSE | Subtotal | ||
Revenues | $ 85,661,391 | $ 67,520,154 |
Gross Profit | $ 10,369,870 | $ 8,917,824 |
Margin | 12.10% | 13.20% |
ECHG | ||
Revenues | $ 28,260,624 | |
Gross Profit | 12,699,093 | |
ECHG | Recycled | ||
Revenues | 8,864,790 | $ 5,782,062 |
Gross Profit | $ 3,194,486 | $ 2,645,904 |
Margin | 36.00% | 45.80% |
ECHG | Resale | ||
Revenues | $ 19,395,834 | $ 8,722,281 |
Gross Profit | $ 9,504,607 | $ 4,692,114 |
Margin | 49.00% | 53.80% |
ECHG | Subtotal | ||
Revenues | $ 28,260,624 | $ 14,504,343 |
Gross Profit | $ 12,699,093 | $ 7,338,018 |
Margin | 44.90% | 50.60% |
Accounting Policies and Nature of Operations (Details 2) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Number of shares, granted unvested | 0 | 0 |
Unrecognized expense | $ 0 | $ 545 |
Robert Burnside | January 23, 2014 | ||
Price of stock at grant date | $ 2.18 | $ 2.18 |
Number of shares, granted unvested | 0 | 250 |
Unrecognized expense | $ 0 | $ 545 |
Accounting Policies and Nature of Operations (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Accounts receivable | $ 2,846,619 | $ 2,997,743 |
Sales returns and allowances, goods, total | 28,000 | 28,000 |
Shipping and Handling Costs | 1,025,215 | 803,015 |
Share-based compensation | $ 325 | $ 0 |
Number of unexercised stock awards | 0 | 250 |
ECHG | ||
Advertising expense | $ 16,311 | $ 4,809 |
Accounts receivable | 2,528,215 | 2,383,061 |
DGSE | ||
Advertising expense | $ 240,770 | $ 392,588 |
Inventories (Details) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventories | $ 10,006,897 | $ 9,509,454 |
ECHG | ||
Inventories | 843,405 | 894,435 |
Resale | ECHG | ||
Inventories | 557,959 | 351,958 |
Recycle | ECHG | ||
Inventories | 285,446 | 542,477 |
DGSE | ||
Inventories | 9,163,492 | 8,615,019 |
DGSE | Resale | ||
Inventories | 8,971,815 | 8,213,551 |
DGSE | Recycle | ||
Inventories | $ 191,677 | $ 401,468 |
Property and Equipment (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 327,026 | $ 264,021 |
Acquisition (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Business Combinations [Abstract] | |||
Cash | $ 1,049,462 | ||
Account receivables | 1,025,615 | ||
Inventories | 1,209,203 | ||
Prepaids | 88,367 | ||
Fixed assets | 191,208 | ||
Right-of-use assets | 2,350,781 | ||
Intangible Assets | 3,356,000 | ||
Other assets | 88,998 | ||
Account payables | (723,043) | ||
Accrued liabilities | (721,483) | ||
Operating lease liabilities | (2,350,781) | ||
Other long-term liabilities | (5,457) | ||
Net assets | 5,558,870 | ||
Goodwill | 1,367,109 | $ 1,367,109 | $ 0 |
Purchase Price | $ 6,925,979 |
Acquisition (Details 1) |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
$ / shares
| |
Business Combinations [Abstract] | |
Revenue | $ 87,921,642 |
Income (loss) from continuing operations | 1,931,558 |
Net income | $ 1,931,558 |
Basic net income per common share | $ / shares | $ 0.07 |
Diluted net income per common share | $ / shares | $ 0.07 |
Goodwill (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Opening balance | $ 1,367,109 | $ 0 |
Additions | 0 | 1,367,109 |
Acquisition adjustment | 0 | 0 |
Impairment adjustment | 0 | 0 |
Goodwill | $ 1,367,109 | $ 1,367,109 |
Intangible Assets (Details) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Total intangibles | $ 2,992,473 | $ 3,394,073 |
ECHG | ||
Intangible assets, gross | 3,356,000 | 3,356,000 |
Less: accumulated amortization | (531,377) | (195,777) |
Total intangibles | 2,824,623 | 3,160,223 |
Trademarks | ECHG | ||
Intangible assets, gross | 1,483,000 | 1,483,000 |
Customer Contracts | ECHG | ||
Intangible assets, gross | 1,873,000 | 1,873,000 |
DGSE | ||
Intangible assets, gross | 371,352 | 371,352 |
Less: accumulated amortization | (203,502) | (137,502) |
Total intangibles | 167,850 | 233,850 |
DGSE | Domain Names | ||
Intangible assets, gross | 41,352 | 41,352 |
DGSE | Point of Sale System | ||
Intangible assets, gross | $ 330,000 | $ 330,000 |
Intangible Assets (Details 1) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
2021 | $ 401,600 | |
2022 | 401,600 | |
2023 | 365,950 | |
2024 | 341,100 | |
2025 | 335,600 | |
Thereafter | 1,146,623 | |
Total | 2,992,473 | $ 3,394,073 |
ECHG | ||
2021 | 335,600 | |
2022 | 335,600 | |
2023 | 335,600 | |
2024 | 335,600 | |
2025 | 335,600 | |
Thereafter | 1,146,623 | |
Total | 2,824,623 | 3,160,223 |
DGSE | ||
2021 | 66,000 | |
2022 | 66,000 | |
2023 | 30,350 | |
2024 | 5,500 | |
2025 | 0 | |
Thereafter | 0 | |
Total | $ 167,850 | $ 233,850 |
Intangible Assets (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 401,600 | $ 256,277 |
Long-Term Debt (Details) - USD ($) |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
||||||||||||
Note payable, related party | $ 1,668,200 | [1] | $ 0 | ||||||||||
Note payable | 4,619,579 | 0 | |||||||||||
Subtotal | 15,413,925 | 0 | |||||||||||
Current portion | 2,120,457 | 1,084,072 | |||||||||||
Noncurrent portion | 13,293,468 | 8,554,980 | |||||||||||
Texas Bank and Trust | |||||||||||||
Note payable, related party | 2,951,379 | [2] | 0 | ||||||||||
Subtotal | $ 2,951,379 | ||||||||||||
Interest rate | 3.25% | ||||||||||||
Maturity | Nov. 04, 2025 | ||||||||||||
DGSE | |||||||||||||
Note payable, related party | $ 4,298,219 | 2,949,545 | |||||||||||
DGSE | Related Party | |||||||||||||
Note payable, related party | $ 2,863,715 | [3] | 2,949,545 | ||||||||||
Interest rate | 6.00% | ||||||||||||
DGSE | Truist Bank | |||||||||||||
Note payable, related party | $ 942,652 | [4] | 0 | ||||||||||
Subtotal | $ 942,652 | ||||||||||||
Interest rate | 3.65% | ||||||||||||
Maturity | Jul. 09, 2030 | ||||||||||||
DGSE | Texas Bank and Trust | |||||||||||||
Note payable, related party | $ 491,852 | [5] | 0 | ||||||||||
Subtotal | $ 491,852 | ||||||||||||
Interest rate | 3.75% | ||||||||||||
Maturity | Sep. 14, 2025 | ||||||||||||
ECHG | |||||||||||||
Note payable, related party | $ 6,496,127 | [3] | $ 6,689,507 | ||||||||||
Subtotal | $ 6,496,127 | ||||||||||||
Interest rate | 6.00% | ||||||||||||
Maturity | May 16, 2024 | ||||||||||||
|
Long-Term Debt (Details 1) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Total | $ 15,413,925 | $ 0 |
ECHG | ||
2021 | 211,903 | |
2022 | 224,973 | |
2023 | 238,849 | |
2024 | 5,820,402 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 6,496,127 | |
Texas Bank and Trust | ||
2021 | 93,922 | |
2022 | 97,455 | |
2023 | 101,122 | |
2024 | 104,926 | |
2025 | 2,553,954 | |
Thereafter | 0 | |
Total | 2,951,379 | |
Envela | ||
2021 | 1,668,200 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 1,668,200 | |
DGSE | ||
2021 | 95,129 | |
2022 | 100,996 | |
2023 | 107,225 | |
2024 | 2,560,365 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 2,863,715 | |
DGSE | Truist Bank | ||
2021 | 33,904 | |
2022 | 35,163 | |
2023 | 36,468 | |
2024 | 37,821 | |
2025 | 39,216 | |
Thereafter | 760,080 | |
Total | 942,652 | |
DGSE | Texas Bank and Trust | ||
2021 | 17,399 | |
2022 | 18,053 | |
2023 | 18,732 | |
2024 | 19,437 | |
2025 | 418,231 | |
Thereafter | 0 | |
Total | $ 491,852 |
Basic and Diluted Average Shares (Details) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Earnings Per Share [Abstract] | ||
Basic weighted average shares | 26,924,631 | 26,924,381 |
Effect of potential dilutive securities | 15,000 | 15,250 |
Diluted weighted average shares | 26,939,631 | 26,939,631 |
Basic and Diluted Average Shares (Details Narrative) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share | 15,000 | 15,250 |
Stock Options and Restricted Stock Units (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Share-based Payment Arrangement [Abstract] | ||
Shares, Outstanding at beginning of year | 15,000 | 15,000 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 0 | 0 |
Shares, Forfeited | 0 | 0 |
Shares, Outstanding at end of year | 15,000 | 15,000 |
Shares, Options exercisable at end of year | 15,000 | 15,000 |
Weighted average exercise price, Outstanding at beginning of year | $ 2.17 | $ 2.17 |
Weighted average exercise price, Granted | 0.00 | .00 |
Weighted average exercise price, Exercised | 0.00 | .00 |
Weighted average exercise price, Forfeited | 0.00 | .00 |
Weighted average exercise price, Outstanding at end of year | 2.17 | 2.17 |
Weighted average exercise price, Options exercisable at end of year | $ 2.17 | $ 2.17 |
Stock Options and Restricted Stock Units (Details 1) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|||
Number outstanding | 15,000 | ||||
Weighted average exercise price | $ 2.17 | $ 2.17 | $ 2.17 | ||
Aggregate Intrinsic Value | $ 48,050 | ||||
Range One | |||||
Exercise price | $ 2.13 | ||||
Number outstanding | 10,000 | ||||
Weighted average remaining contractual life (years) | [1] | 0 years | |||
Weighted average exercise price | $ 2.13 | ||||
Aggregate Intrinsic Value | $ 32,450 | ||||
Range Two | |||||
Exercise price | $ 2.25 | ||||
Number outstanding | 5,000 | ||||
Weighted average remaining contractual life (years) | [1] | 0 years | |||
Weighted average exercise price | $ 2.25 | ||||
Aggregate Intrinsic Value | $ 15,600 | ||||
|
Stock Options and Restricted Stock Units (Details 2) - Restricted Stock Units (RSUs) [Member] - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Shares, Nonvested at beginning of year | 250 | 250 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 250 | 0 |
Shares, Forfeited | 0 | 0 |
Shares, Nonvested at end of year | 0 | 250 |
Weighted average exercise price, Nonvested at beginning of year | $ 1.30 | $ 1.30 |
Weighted average exercise price, Granted | .00 | .00 |
Weighted average exercise price, Exercised | 1.30 | .00 |
Weighted average exercise price, Forfeited | .00 | .00 |
Weighted average exercise price, Nonvested at end of year | $ .00 | $ 1.30 |
Stock Options and Restricted Stock Units (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 325 | $ 0 |
Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Tax Expense at Statutory Rate | $ 1,364,191 | $ 626,468 |
Valuation Allowance | (1,371,195) | (631,775) |
Non-Deductible Expenses and Other | 7,004 | 5,307 |
State Taxes, Net of Federal Benefit | 89,618 | 95,116 |
Income tax expense | 89,618 | 95,116 |
Current | 89,618 | 95,116 |
Total | $ 89,618 | $ 95,116 |
Income Taxes (Details 1) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Inventories | $ 22,620 | $ 21,495 |
Stock options and other | 6,836 | 57,019 |
Contingencies and accruals | 28,580 | 32,154 |
Property and equipment | (256,065) | (180,300) |
Net operating loss carryforward | 6,527,548 | 7,763,103 |
Goodwill and intangibles | 27,085 | 34,328 |
Total deferred tax assets, net | 6,356,604 | 7,727,799 |
Valuation allowance | (6,356,604) | (7,727,799) |
Net Deferred tax asset | $ 0 | $ 0 |
Income Taxes (Details Narrative) |
Dec. 31, 2020
USD ($)
|
---|---|
Operating loss carryforwards, net | $ 2,729,636 |
Superior Galleries | |
Operating loss carryforwards, net | $ 28,353,926 |
Leases (Details) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Total | $ 4,802,728 | |
Current portion | 1,148,309 | $ 1,175,109 |
Long term portion | 3,654,419 | $ 2,445,301 |
ECHG | ||
2021 | 869,209 | |
2022 | 786,396 | |
2023 | 808,022 | |
2024 | 830,244 | |
2025 and thereafter | 853,076 | |
Total minimum lease payments | 4,146,947 | |
Less imputed interest | (439,452) | |
Subtotal | 3,707,495 | |
DGSE | ||
2021 | 479,161 | |
2022 | 235,674 | |
2023 | 212,855 | |
2024 | 213,885 | |
2025 and thereafter | 64,087 | |
Total minimum lease payments | 1,205,662 | |
Less imputed interest | (110,429) | |
Subtotal | $ 1,095,233 |
Leases (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Lease cost | $ 1,452,689 | $ 1,151,619 |
Weighted average remaining lease term | 2 years 9 months 22 days | |
Weighted average discount rate | 5.50% | |
Operating lease expenses | $ 1,314,285 | $ 1,089,514 |
Related Party Transactions (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Payment to related parties | $ 279,210 | $ 360,948 |
Related Entities | ||
Payment to related parties | 0 | 61,869 |
John Loftus | ||
Payment to related parties | 580,957 | 325,749 |
John Loftus | DGSE | ||
Accounts payable related party | 2,863,715 | 2,949,545 |
John Loftus | ECHG | ||
Accounts payable related party | $ 6,496,127 | $ 6,689,507 |
Defined Contribution Plan (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Retirement Benefits [Abstract] | ||
Defined contribution plan, maximum annual contributions per employee, percent | 15.00% | 15.00% |
Defined contribution plan, contribution by employer | 10.00% | 10.00% |
Defined contribution plan, matching contribution percent of employee | 6.00% | 6.00% |
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