10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

_____________________

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

For the quarterly period ended June 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From __________ to __________

Commission File Number 001-11048

_____________________

ENVELA CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

1901 Gateway Drive, Ste 100, Irving, Texas 75038

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 

(972) 587-4049

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE) 

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

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $0.01 per share	ELA	NYSE American

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

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

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

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

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

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

As of August 6, 2024 the registrant had 26,074,390 shares of common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		PAGE NO.
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended June 30, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2024 and 2023 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
SIGNATURES		46

2

PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited)	2024			2023			2024			2023
Sales	$	45,297,002		$	51,095,877		$	85,154,782		$	100,905,409
Cost of goods sold		33,907,545			40,333,830			63,444,641			78,733,460
Gross margin		11,389,457			10,762,047			21,710,141			22,171,949
Expenses:
Selling, general and administrative		9,118,048			8,362,554			16,755,024			16,267,857
Depreciation and amortization		362,267			336,174			705,832			690,525
Total operating expenses		9,480,315			8,698,728			17,460,856			16,958,382
Operating income		1,909,142			2,063,319			4,249,285			5,213,567
Other income (expense):
Other income		225,417			153,652			463,945			364,431
Interest expense		(109,141	)		(114,688	)		(229,995	)		(231,752	)
Income before income taxes		2,025,418			2,102,283			4,483,235			5,346,246
Income tax expense		(461,239	)		(498,574	)		(1,011,517	)		(1,216,220	)
Net income	$	1,564,179		$	1,603,709		$	3,471,718		$	4,130,026
Basic earnings per share:
Net income	$	0.06		$	0.06		$	0.13		$	0.15
Diluted earnings per share:
Net income	$	0.06		$	0.06		$	0.13		$	0.15
Weighted average shares outstanding:
Basic		26,248,554			26,916,648			26,333,796			26,920,618
Diluted		26,263,554			26,931,648			26,348,796			26,935,618

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

3

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	17,344,001		$	17,853,853
Accounts receivable, net of allowances		4,838,224			7,811,159
Notes receivable		2,983			4,700
Inventories		26,779,918			23,146,177
Prepaid expenses		922,908			1,082,425
Total current assets		49,888,034			49,898,314
Property and equipment, net		11,383,884			10,764,224
Right-of-use assets from operating leases		3,988,319			4,189,621
Goodwill		3,921,453			3,921,453
Intangible assets, net		4,435,699			4,499,170
Deferred tax asset		6,715			-
Other assets		224,756			201,447
Total assets	$	73,848,860		$	73,474,229
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	3,094,824		$	3,126,743
Notes payable		1,307,921			1,361,443
Operating lease liabilities		1,939,765			1,807,729
Accrued expenses		1,842,567			2,486,423
Other liabilities		301,670			211,651
Total current liabilities		8,486,747			8,993,989
Deferred tax liability		-			38,668
Notes payable, less current portion		12,998,945			13,572,048
Operating lease liabilities, less current portion		2,203,082			2,560,671
Total liabilities	$	23,688,774		$	25,165,376
Contingencies (Note 16)
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,631 shares issued and 26,155,229 shares outstanding as of June 30, 2024; 26,924,631 shares issued and 26,508,658 shares outstanding as of December 31, 2023		269,246			269,246
Treasury stock at cost, 769,402 and 415,973 shares, as of June 30, 2024 and December 31, 2023, respectively		(3,775,534	)		(2,155,049	)
Additional paid-in capital		40,173,000			40,173,000
Retained earnings		13,493,374			10,021,656
Total stockholders' equity		50,160,086			48,308,853
Total liabilities and stockholders' equity	$	73,848,860		$	73,474,229

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

4

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
(Unaudited)	2024			2023
Operations
Net income	$	3,471,718		$	4,130,026
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		705,832			690,525
Provision for credit losses		240,166			173,196
Deferred taxes		(45,383	)		875,426
Non-cash lease expense		985,996			946,598
Changes in operating assets and liabilities:
Accounts receivable		2,732,769			(78,053	)
Inventories		(3,633,741	)		(2,762,524	)
Prepaid expenses		159,517			75,838
Other assets		(18,609	)		(202,788	)
Accounts payable		(31,919	)		(96,789	)
Accrued expenses		(643,856	)		(121,843	)
Operating leases		(1,010,247	)		(947,070	)
Other liabilities		90,019			65,948
Net cash provided by operations		3,002,262			2,748,490
Investing
Purchase of property and equipment		(965,525	)		(1,300,871	)
Purchase of intangible assets		(296,496	)		-
Investment in notes receivable		(2,983	)		578,250
Net cash (used in) by investing		(1,265,004	)		(722,621	)
Financing
Payments on notes payable		(626,625	)		(620,242	)
Purchase of treasury stock		(1,620,485	)		(194,820	)
Net cash (used in) financing		(2,247,110	)		(815,062	)
Net change in cash and cash equivalents		(509,852	)		1,210,807
Cash and cash equivalents, beginning of period		17,853,853			17,169,969
Cash and cash equivalents, end of period	$	17,344,001		$	18,380,776
Supplemental disclosures
Cash paid during the period for:
Interest	$	284,796		$	233,495
Income taxes	$	1,352,525		$	162,000

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

5

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months ended June 30, 2023 and 2024

															Additional				Total
	Common Stock				Treasury Stock						Preferred Stock				Paid-in		Retained		Stockholders'
(Unaudited)	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance as of April 1, 2023		26,924,631	$	269,246		-		$	-			-	$	-	$	40,173,000	$	5,400,521	$	45,842,767
Net Income		-		-		-			-			-		-		-		1,603,709		1,603,709
Shares repurchased		-		-		(27,421	)		(194,820	)		-		-		-		-		(194,820	)
Balance as of June 30, 2023		26,924,631	$	269,246		(27,421	)	$	(194,820	)		-	$	-	$	40,173,000	$	7,004,230	$	47,251,656

															Additional				Total
	Common Stock				Treasury Stock						Preferred Stock				Paid-in		Retained		Stockholders'
(Unaudited)	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance as of April 1, 2024		26,924,631	$	269,246		(617,313	)	$	(3,060,195	)		-	$	-	$	40,173,000	$	11,929,195	$	49,311,246
Net Income		-		-		-			-			-		-		-		1,564,179		1,564,179
Shares repurchased		-		-		(152,089	)		(715,339	)		-		-		-		-		(715,339	)
Balance as of June 30, 2024		26,924,631	$	269,246		(769,402	)	$	(3,775,534	)		-	$	-	$	40,173,000	$	13,493,374	$	50,160,086

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

6

ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months ended June 30, 2023 and 2024

															Additional				Total
	Common Stock				Treasury Stock						Preferred Stock				Paid-in		Retained		Stockholders'
(Unaudited)	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance as of January 1, 2023		26,924,631	$	269,246		-		$	-			-	$	-	$	40,173,000	$	2,874,204	$	43,316,450
Net Income		-		-		-			-			-		-		-		4,130,026		4,130,026
Shares repurchased		-		-		(27,421	)		(194,820	)		-		-		-		-		(194,820	)
Balance as of June 30, 2023		26,924,631	$	269,246		(27,421	)	$	(194,820	)		-	$	-	$	40,173,000	$	7,004,230	$	47,251,656

															Additional				Total
	Common Stock				Treasury Stock						Preferred Stock				Paid-in		Retained		Stockholders'
(Unaudited)	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance as of January 1, 2024		26,924,631	$	269,246		(415,973	)	$	(2,155,049	)		-	$	-	$	40,173,000	$	10,021,656	$	48,308,853
Net Income		-		-		-			-			-		-		-		3,471,718		3,471,718
Shares repurchased		-		-		(353,429	)		(1,620,485	)		-		-		-		-		(1,620,485	)
Balance as of June 30, 2024		26,924,631	$	269,246		(769,402	)	$	(3,775,534	)		-	$	-	$	40,173,000	$	13,493,374	$	50,160,086

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

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 — BASIS OF PRESENTATION

These unaudited interim condensed consolidated financial statements of Envela Corporation, a Nevada corporation, and its subsidiaries (together with its subsidiaries, the “Company” or “Envela”), included herein have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X prescribed by the Securities and Exchange Commission (the “SEC”). Pursuant to the SEC’s rules and regulations, they do not include all of the information and notes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”), necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results presented for these interim periods are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 (“Fiscal 2024”). Management suggests these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“Fiscal 2023”) filed with the SEC on March 21, 2024 (“2023 Annual Report”).

Envela files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other information with the SEC. Such information and amendments to reports previously filed or furnished are available on the Company’s corporate website, www.envela.com, as soon as reasonably practicable after such materials are filed with or furnished to the SEC. The SEC also maintains an internet site at www.sec.gov that contains the Company’s filings.

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

NOTE 2 — PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

Throughout this document, Envela Corporation is referred to as “we,” “us,” “our,” “Envela,” or the “Company.”

Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela Corporation itself. Our operations are organized into two operating and reportable segments: consumer and commercial, which additionally are the Company’s reporting units.

Consumer Segment

Our consumer segment operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, fine jewelry, watches, and bullion. Our diamonds and gemstones are recycled, meaning they were previously set and then unset to become a new design – allowing for a truly low-carbon, ethical origin. The company focuses on buying and selling pre-owned luxury items, ethically sourced diamonds, gemstones, and precious metals, catering to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the information technology (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The company focuses on offering services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role to support a circular economy through responsible reuse and recycling of electronic devices.

For additional information on the consumer and commercial segments, see “Item 1. Business – How We Organize Our Business” in the Company’s 2023 Annual Report.

The interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

8

NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES

Financial Instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. Notes payable approximate fair value due to the market interest rate charged.

Use of Estimates

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

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Consumer Segment

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

Revenue on precious metals requiring an assay is recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals.

The Company offers the option of third-party financing for customers wishing to borrow money for their purchase. Revenue is recognized from the sale upon transfer of title, with the promise of the third-party financing company to pay.

Commercial Segment

The commercial segment recognizes revenue at an amount that reflects the consideration to which the entities expect to be entitled to in exchange for transferring goods or services to the customer.

The commercial segment recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under the guidance of ASC 606, an estimate of the variable consideration that we are expected to be entitled to is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made once the underlying weight and any precious metal spot price movement is resolved, which is usually around six weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract.

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

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

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

See Note 10 – Revenue for further detail.

9

Sales Returns and Allowances

Sales are recorded, net of expected returns. In some cases, the consumer and commercial segment’s customers may return a product purchased within 30 days of receipt. Our allowance for estimated returns is based on our review of historical returns experience and reduces our reported revenues accordingly.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for returns was $50,281 and $28,402, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for returns was $10,769 and $0, respectively.

Concentrations and Credit Risk

The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to domestic precious metals transactions requiring an assay which are of short duration and settled on comparable terms. Overall customer concentrations as a percentage of sales may vary as a result of the mix of product being sold within each comparative period. Individual customer concentrations are also impacted by each customer’s production schedule and as such the Company identifies the most appropriate sales outlet to ensure a timely transaction settlement.

For the six months ended June 30, 2024, two customers aggregated 21.0% of our sales and represented 0.0% of our accounts receivable balance.

For the six months ended June 30, 2023, three customers aggregated 39.1% of our sales and represented 0.0% of our accounts receivable balance.

The Company believes that no single customer is critical to its business as a result of having diverse revenue streams and the optionality of sales outlets primarily associated with base and precious metals.

Shipping and Handling Costs

Within the consumer and commercial segments, outbound shipping and handling costs are accounted for as fulfillment costs within cost of goods sold.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,350 and $5,237, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $1,194,203 and $1,522,542, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,789 and $5,237, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $2,588,280 and $3,212,483, respectively.

Advertising Costs

The consumer and commercial segment’s advertising costs are expensed as incurred.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $325,079 and $345,052, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $61,882 and $6,686, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $572,982 and $551,127, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $132,977 and $21,239, respectively.

Leases

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

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

10

Income Taxes

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

Valuation of Deferred Tax Assets

The Company’s deferred tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the three and six months ended June 30, 2024, and June 30, 2023.

As of June 30, 2024, the Company had a deferred tax asset of $6,715. As of December 31, 2023, the Company had a deferred tax liability of $38,668. The Company did not have a valuation allowance as of June 30, 2024, or December 31, 2023.

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s financial performance is based on the following segments: consumer and commercial.

The Company allocates its corporate expenses including selling, general and administrative expenses, depreciation and amortization, other income, interest expense, and income tax expense.

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

11

Earnings Per Share

Basic earnings per share of our common stock, par value $0.01 per share (our “Common Stock”), is computed by dividing net earnings available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts requiring the Company to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method.

Stock-Based Compensation

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

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

Taxes Collected from Customers

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

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the condensed consolidated balance sheets approximate fair value.

Accounts Receivable, Net of Allowances

Accounts receivable represent amounts primarily due from customers on products and services. Our allowance for credit losses is primarily determined by an analysis of our accounts receivable aging, using the expected losses methodology. The allowance for credit losses is determined based on historical experience of collecting past due amounts, based on the degree of their aging. In addition, specific accounts that are considered and expected to be uncollectable are included in the allowance for credit losses. Accounts receivables are considered delinquent when payment has not been made within contract terms. Accounts receivables are written off when all efforts to collect have been exhausted and the potential for recovery is considered remote.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for credit losses was $0 and $0, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for credit losses was $429,908 and $260,858, respectively.

Inventories

Consumer Segment

The consumer segment values inventory at the lower of cost or net realizable value. We acquire inventory based on our own internal estimate of the fair value of the items at the time of purchase. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, we monitor these fluctuations for any adverse impact on the carrying value of our inventory.

Commercial Segment

Our inventory primarily includes processed and unprocessed base metals, electronic scrap materials, as well as technology assets being held for resale. The processed and unprocessed base metals and electronic scrap materials are valued utilizing the average cost method. Our technology assets are valued utilizing the retail cost method.

See Note 4 – Inventories for further detail.

12

Goodwill

Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year, or earlier if events or circumstances indicate the carrying value may be impaired. There were no triggering events identified during the six months ended June 30, 2024, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented. There have been no other adjustments to goodwill in any of the periods presented.

See Note 5 – Goodwill for further detail.

Property and Equipment, Net

Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets; except for construction in progress which has not yet been placed into service. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Expenditures for repairs and maintenance are expensed as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized.

See Note 6 – Property and equipment, net for further detail.

Intangible Assets, Net

Finite-lived intangible assets are carried at cost less accumulated amortization and are amortized on a straight-line basis over the estimated useful lives of the assets; except for assets under development that have not yet been placed into service. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

See Note 7 – Intangibles, net for further detail.

Correction of Immaterial Error

The Company’s commercial segment previously reported revenue from freight arrangement services as a component of cost of goods sold. The Company has further evaluated the nature and scope of its service offering and has determined that it meets the definition of a principal in accordance with ASC 606 and as such be reported within revenue.

The following table summarizes the correction of immaterial error:

	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	2023		2023		2023		2023		Total
Sales	$	48,389,040	$	50,303,527	$	36,266,271	$	36,715,250	$	171,674,088
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Sales adjusted		49,809,532		51,095,877		36,876,486		37,481,931		175,263,826
Cost of goods sold		36,979,138		39,541,480		26,531,989		26,964,951		130,017,558
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Cost of goods sold adjusted		38,399,630		40,333,830		27,142,204		27,731,632		133,607,296
Gross margin	$	11,409,902	$	10,762,047	$	9,734,282	$	9,750,299	$	41,656,530

The error had no impact on gross margin, operating income, net income, and basic and diluted earnings per share nor any other financial statement amount. Further these errors had no impact on the consolidated balance sheets, statements of stockholders’ equity, and statements of cash flows. These corrections do not affect any of the metrics used to calculate and evaluate management’s compensation and have no impact on bonuses, commissions, stock-based compensation, or any other employee renumeration. Historical amounts have been corrected and are presented on a comparable basis.

See Note 10 – Revenue for further detail.

Changes in Disclosure

The Company has elected to discontinue reporting the disaggregation of inventory and revenue by resale and recycle. The Company’s business operations continue to evolve and include fee-for-service revenue that does not always correlate to these categories and underlying inventory positions; further, our inventory positions within these disaggregated presentations can vary at any point in time as they are a diverse mix of technology assets, base and precious metals and luxury hard assets. The Company believes that its disclosure of the nature of its operations, the inventory held at each segment and associated risk factors provides a sufficient understanding of its impact on our business.

See Note 4 – Inventories and Note 10 – Revenue, for further detail.

13

Reclassifications

For the Company’s 2023 Annual Report, the presentation of the operations section within its Consolidated Cash Flow Statements was updated to present "non-cash lease expense" as a separate line item, previously included within "changes in operating assets and liabilities – operating leases.” The Company has elected to reclassify $946,598 from operating leases to non-cash lease expense in the Condensed Consolidated Cash Flow Statement for the six months ended June 30, 2023.

See the Condensed Consolidated Statements of Cash Flows for further detail.

For the Company’s 2023 Annual Report, the amount reported for other current assets within the Consolidated Balance Sheets is related entirely to notes receivables. The Company has elected to present notes receivable as its own line item and has reclassified the historical presentation of the aforementioned as of December 31, 2023.

See the Condensed Consolidated Balance Sheets for further detail.

The Company previously did not disclose construction in progress and intangible assets under development. The Company has determined that providing this information further enhances the understanding of the nature of our capital expenditures. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 6 – Property and equipment, net for further detail.

The Company previously reported the development of its enterprise resource planning system within property and equipment, net. The Company has further evaluated the nature of this asset under ASC 350, Intangibles – Goodwill and Other, and has determined that it is a nonmonetary asset without physical substance and was acquired separately from hardware and as such be reported within intangibles, net. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 7 – Intangibles, net for further detail.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the CODM. In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. ASU 2023-07 will be effective for fiscal years beginning January 1, 2024, Form 10-K, and interim periods within fiscal years beginning on January 1, 2025. The standard will be adopted beginning January 1, 2024, for the fiscal year and adopted for the interim periods beginning January 1, 2025, by using a modified retrospective transition approach. The Company does not expect adoption to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 will be effective for fiscal years beginning January 1, 2025. The standard will be adopted beginning January 1, 2025, for the fiscal year on a prospective basis. Early adoption and retrospective application of the amendments are permitted. The Company does not expect adoption to have a material impact on its consolidated financial statements.

No other recently issued or effective ASUs had, or are expected to have, a material impact on the Company’s results of operations, financial condition, or liquidity.

14

NOTE 4 — INVENTORIES

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

	June 30,		December 31,
	2024		2023
Consumer
Trade inventories	$	25,294,422	$	21,905,055
Sub-total		25,294,422		21,905,055
Commercial
Trade inventories		1,485,496		1,241,122
Sub-total		1,485,496		1,241,122
	$	26,779,918	$	23,146,177

NOTE 5 — GOODWILL

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

	June 30,		December 31,
	2024		2023
Consumer
Opening balance	$	300,000	$	-
Additions (reductions) (1)		-		300,000
Sub-total		300,000		300,000
Commercial
Opening balance		3,621,453		3,621,453
Additions (reductions)		-		-
Sub-total		3,621,453		3,621,453
	$	3,921,453	$	3,921,453

(1) The increase in goodwill of $300 thousand for the year ended December 31, 2023, relates to the Company’s acquisition of Steven Kretchmer, Inc. on September 12, 2023 (“Kretchmer Transaction”). The Kretchmer Transaction remains within the measurement period of ASC 805, Business Combinations. The measurement period is the one-year period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination.

15

NOTE 6 — PROPERTY AND EQUIPMENT, NET

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

										Adjusted
	June 30,			December 31,						December 31,
	2024			2023			Reclassification			2023
Consumer
Land	$	1,824,892		$	1,824,892		$	-		$	1,824,892
Building and improvements		4,409,143			4,126,507			(1,443,207	)		2,683,300
Leasehold improvements		1,516,648			1,450,695			-			1,450,695
Furniture and fixtures		987,853			802,058			(101,226	)		700,832
Machinery and equipment		1,276,322			1,224,783			(3,215	)		1,221,568
Vehicles		22,859			22,859			-			22,859
Construction in progress (1)		83,773			-			1,547,648			1,547,648
		10,121,490			9,451,794			-			9,451,794
Less: accumulated depreciation		(3,104,314	)		(2,946,727	)		-			(2,946,727	)
Sub-total		7,017,176			6,505,067			-			6,505,067
Commercial
Leasehold improvements		151,647			151,647			-			151,647
Furniture and fixtures		145,950			145,950			-			145,950
Machinery and equipment		1,250,953			1,142,731			(48,979	)		1,093,752
Vehicles		222,232			222,232			-			222,232
Construction in progress (2)		-			-			48,979			48,979
		1,770,782			1,662,560			-			1,662,560
Less: accumulated depreciation		(965,780	)		(819,389	)		-			(819,389	)
Sub-total		805,002			843,171			-			843,171
Corporate
Land		1,106,664			1,106,664			-			1,106,664
Building and improvements		2,688,523			2,505,716			(3,500	)		2,502,216
Machinery and equipment		28,627			28,627			-			28,627
Enterprise resource planning system (3)		-			191,075			(191,075	)		-
Construction in progress (4)		-			-			3,500			3,500
		3,823,814			3,832,082			(191,075	)		3,641,007
Less: accumulated depreciation		(262,108	)		(225,021	)		-			(225,021	)
Sub-total		3,561,706			3,607,061			(191,075	)		3,415,986
	$	11,383,884		$	10,955,299		$	(191,075	)	$	10,764,224

(1) The reclassification primarily related to the build-out of our Arizona retail stores, which were placed into service in the second quarter of Fiscal 2024. 

(2) The reclassification related to the build-out of production equipment, which was placed into service in the second quarter of Fiscal 2024. 

(3) Reclassified amount to intangibles, net. See Note 7 – Intangible, Net for further details. 

(4) The reclassification related to improvements to our corporate headquarters, which were placed into service in the second quarter of Fiscal 2024. 

16

NOTE 7 — INTANGIBLES, NET

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

									Adjusted
	June 30,			December 31,					December 31,
	2024			2023			Reclassification		2023
Consumer
Technology	$	395,396		$	371,352		$	-	$	371,352
Assets under development (2)		6,084			-			-		-
		401,480			371,352			-		371,352
Less: accumulated amortization		(371,136	)		(365,852	)		-		(365,852	)
Sub-total		30,344			5,500			-		5,500
Commercial
Trademarks/tradenames		2,869,000			2,869,000			-		2,869,000
Customer contracts		1,873,000			1,873,000			-		1,873,000
Customer relationships		1,809,000			1,809,000			-		1,809,000
		6,551,000			6,551,000			-		6,551,000
Less: accumulated amortization		(2,563,129	)		(2,248,405	)		-		(2,248,405	)
Sub-total		3,987,871			4,302,595			-		4,302,595
Corporate
Technology		422,317			-					-
Assets under development (1)(2)		35,125			-			191,075		191,075
		457,442			-			191,075		191,075
Less: accumulated amortization		(39,958	)		-			-		-
Sub-total		417,484			-			191,075		191,075
	$	4,435,699		$	4,308,095		$	191,075	$	4,499,170

(1) The reclassification related to the initial development of our enterprise resource planning system, which was placed into service in the first quarter of Fiscal 2024.

(2) As of June 30, 2024, these intangible assets are under development, have not yet been placed into service and are not yet amortizable.

The following table depicts the Company’s estimated future amortization expense related to intangible assets as of June 30, 2024:

	Consumer		Commercial		Corporate		Total
2024		3,378		327,550		42,483		373,411
2025		4,728		655,100		84,969		744,797
2026		4,728		655,100		84,969		744,797
2027		4,728		655,100		84,969		744,797
2028		4,728		655,100		84,969		744,797
Thereafter		1,970		1,039,921		-		1,041,891
	$	24,260	$	3,987,871	$	382,359	$	4,394,490

17

NOTE 8 — ACCRUED EXPENSES

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

	June 30,		December 31,
	2024		2023
Consumer
Accrued interest	$	14,282	$	11,904
Payroll		148,343		226,435
Taxes		194,072		125,130
Other		24,255		-
Sub-total		380,952		363,469
Commercial
Accrued interest		6,287		7,903
Payroll		199,389		375,663
Taxes		16,735		-
Unvouchered inventory payments		1,053,480		1,041,188
Other		69,106		96,422
Sub-total		1,344,997		1,521,176
Corporate
Accrued interest		6,838		7,227
Payroll		15,982		24,543
Taxes		59,628		404,357
Professional fees		32,920		165,651
Other		1,250		-
Sub-total		116,618		601,778
	$	1,842,567	$	2,486,423

18

NOTE 9 — SEGMENT INFORMATION

The following table depicts the Company’s disaggregated condensed consolidated statements of income for the three months ended June 30, 2024 and 2023:

	Three Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	31,990,028			70.6	%	$	39,641,434			77.6	%
Commercial		13,306,974			29.4	%		11,454,443			22.4	%
Sales		45,297,002			100.0	%		51,095,877			100.0	%
Consumer		27,968,699			61.7	%		35,546,792			69.6	%
Commercial		5,938,846			13.1	%		4,787,038			9.4	%
Cost of goods sold		33,907,545			74.9	%		40,333,830			78.9	%
Gross margin		11,389,457			25.1	%		10,762,047			21.1	%
Expenses:
Consumer		4,009,468			8.9	%		2,472,973			4.8	%
Commercial		5,108,580			11.3	%		5,889,581			11.5	%
Selling, general and administrative		9,118,048			20.2	%		8,362,554			16.4	%
Consumer		112,518			0.2	%		79,408			0.2	%
Commercial		249,749			0.6	%		256,766			0.5	%
Depreciation and amortization		362,267			0.8	%		336,174			0.7	%
Total operating expenses		9,480,315			20.9	%		8,698,728			17.0	%
Operating income		1,909,142			4.2	%		2,063,319			4.0	%
Other income (expense):
Consumer		8,003			0.0	%		23,929			0.0	%
Commercial		217,414			0.5	%		129,723			0.3	%
Other income		225,417			0.5	%		153,652			0.3	%
Consumer		(55,697	)		-0.1	%		(58,209	)		-0.1	%
Commercial		(53,444	)		-0.1	%		(56,479	)		-0.1	%
Interest expense		(109,141	)		-0.2	%		(114,688	)		-0.2	%
Income before income taxes		2,025,418			4.5	%		2,102,283			4.1	%
Consumer		(29,607	)		-0.1	%		(339,672	)		-0.7	%
Commercial		(431,632	)		-1.1	%		(158,902	)		-0.4	%
Income tax expense		(461,239	)		-1.2	%		(498,574	)		-1.1	%
Net income	$	1,564,179			3.5	%	$	1,603,709			3.1	%

(1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

19

The following table depicts the Company’s disaggregated condensed consolidated statements of income for the six months ended June 30, 2024 and 2023:

	Six Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	60,216,045			70.7	%	$	76,345,831			75.7	%
Commercial		24,938,737			29.3	%		24,559,578			24.3	%
Sales		85,154,782			100.0	%		100,905,409			100.0	%
Consumer		52,645,527			61.8	%		68,266,221			67.7	%
Commercial		10,799,114			12.7	%		10,467,239			10.4	%
Cost of goods sold		63,444,641			74.5	%		78,733,460			78.0	%
Gross margin		21,710,141			25.5	%		22,171,949			22.0	%
Expenses:
Consumer		7,260,958			8.5	%		4,868,998			4.8	%
Commercial		9,494,066			11.1	%		11,398,859			11.3	%
Selling, general and administrative		16,755,024			19.7	%		16,267,857			16.1	%
Consumer		206,194			0.2	%		177,542			0.2	%
Commercial		499,638			0.6	%		512,983			0.5	%
Depreciation and amortization		705,832			0.8	%		690,525			0.7	%
Total operating expenses		17,460,856			20.5	%		16,958,382			16.8	%
Operating income		4,249,285			5.0	%		5,213,567			5.2	%
Other income (expense):
Consumer		16,008			0.0	%		47,463			0.0	%
Commercial		447,937			0.5	%		316,968			0.3	%
Other income		463,945			0.5	%		364,431			0.4	%
Consumer		(120,098	)		-0.1	%		(117,827	)		-0.1	%
Commercial		(109,897	)		-0.1	%		(113,925	)		-0.1	%
Interest expense		(229,995	)		-0.3	%		(231,752	)		-0.2	%
Income before income taxes		4,483,235			5.3	%		5,346,246			5.3	%
Consumer		(88,758	)		-0.1	%		(657,513	)		-0.7	%
Commercial		(922,759	)		-1.2	%		(558,707	)		-0.7	%
Income tax expense		(1,011,517	)		-1.3	%		(1,216,220	)		-1.4	%
Net income	$	3,471,718			4.1	%	$	4,130,026			4.1	%

(1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

The following chart depicts the Company’s total assets:

	As of
	June 30, 2024		December 31, 2023
Consumer	$	35,482,326	$	35,839,361
Commercial		33,765,284		33,777,041
Corporate		4,601,250		3,857,827
	$	73,848,860	$	73,474,229

20

NOTE 10 — REVENUE

The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	31,990,028	$	4,021,329		12.6	%	$	39,641,434	$	4,094,642		10.3	%
Commercial		13,306,974		7,368,128		55.4	%		10,662,093		6,667,405		62.5	%
Correction of immaterial error (1)		-		-		-			792,350		-		-
Commercial adjusted		13,306,974		7,368,128		55.4	%		11,454,443		6,667,405		58.2	%
	$	45,297,002	$	11,389,457		25.1	%	$	51,095,877	$	10,762,047		21.1	%

(1) Correction of immaterial error relating to freight arrangement services, see Note 3 – Accounting Policies and Estimates for further detail.

The following table depicts the Company’s disaggregation of total sales and gross margin for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	60,216,045	$	7,570,518		12.6	%	$	76,345,831	$	8,079,610		10.6	%
Commercial		24,938,737		14,139,623		56.7	%		22,346,736		14,092,339		63.1	%
Correction of immaterial error (1)		-		-		-			2,212,842		-		-
Commercial adjusted		24,938,737		14,139,623		56.7	%		24,559,578		14,092,339		57.4	%
	$	85,154,782	$	21,710,141		25.5	%	$	100,905,409	$	22,171,949		22.0	%

(1) Correction of immaterial error relating to freight arrangement services, see Note 3 – Accounting Policies and Estimates for further detail.

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

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2023		839,239		-		196,382
Closing Balance - 6/30/2023		309,234		-		249,179
Commercial
Opening Balance - 1/1/2023		7,110,536		-		-
Closing Balance - 6/30/2023		7,545,398		-		-

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2024		3,411,501		-		58,728
Closing Balance - 6/30/2024		396,415		-		127,226
Commercial
Opening Balance - 1/1/2024		4,399,658		-		-
Closing Balance - 6/30/2024		4,441,809		-		-

The Company has no contract assets, and the only contract liability is customer deposits, which are reported within other liabilities in the Condensed Consolidated Balance Sheets.

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NOTE 11 — LEASES

The following table depicts the Company’s future annual minimum leases payments as of June 30, 2024:

	Operating
	Leases
Consumer
2024	$	344,789
2025		544,944
2026		514,210
2027		209,324
2028		159,210
Thereafter		39,803
Total minimum lease payments		1,812,280
Less imputed interest		(105,001	)
Sub-total		1,707,279
Commercial
2024		699,643
2025		1,321,299
2026		474,320
2027		33,454
2028		-
Thereafter		-
Total minimum lease payments		2,528,716
Less imputed interest		(93,148	)
Sub-total		2,435,568
Total		4,142,847
Current portion		1,939,765
	$	2,203,082

All of the Company’s leased facilities as of June 30, 2024, are non-cancellable. The leases are a combination of triple net leases, for which the Company pays its proportionate share of common area maintenance, property taxes, and property insurance, and modified gross leases, for which the Company directly pays for common area maintenance and property insurance. Leasing costs for the three months ended June 30, 2024 and 2023 were $767,902 and $705,635, respectively, comprised of a combination of minimum lease payments and variable lease costs. Leasing costs for the six months ended June 30, 2024 and 2023 were $1,552,637 and $1,361,885, respectively, comprised of a combination of minimum lease payments and variable lease costs.

As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.5 years and 3.8%. As of June 30, 2023, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.8 years and 4.4%.

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NOTE 12 — BASIC AND DILUTED AVERAGE SHARES

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,248,554		26,916,648
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,263,554		26,931,648

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,333,796		26,920,618
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,348,796		26,935,618

For the three and six months ended June 30, 2024, and 2023, there was a total of 15 thousand common stock options unexercised. For the three and six months ended June 30, 2024, and 2023, there were no anti-dilutive shares.

On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board of Directors (the “Board”), which gave management authorization to purchase up to one million shares of the Company’s stock, at a per-share price not to exceed $9.00, on the open market. The plan expires on March 31, 2026.

The following table lists the repurchase of Company shares for the three and six months ended June 30, 2024:

	Total Number of		Average Price		Total Price		Shares Available
Fiscal Period	Shares Purchased		Paid per Share		Paid		to Purchase
Balance as of January 1, 2024		415,973	$	5.18	$	2,155,049		584,027
January 1 - 31, 2024		59,417		4.52		268,569		524,610
February 1 - 29, 2024		56,343		4.53		255,195		468,267
March 1 - 31, 2024		85,580		4.46		381,382		382,687
Balance as of March 31, 2024		617,313	$	4.96	$	3,060,195		382,687
April 1 - 30, 2024		30,891		4.66		143,840		351,796
May 1 - 31, 2024		37,672		4.65		175,257		314,124
June 1 - 30, 2024		83,526		4.74		396,242		230,598
Balance as of June 30, 2024		769,402	$	4.91	$	3,775,534		230,598

For the three months ended June 30, 2024, the Company repurchased 152,089 shares for $715,339, for an average price of $4.70.

For the six months ended June 30, 2024, the Company repurchased 353,429 shares for $1,620,485, for an average price of $4.58.

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NOTE 13 — DEBT

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

	Outstanding Balance
	June 30,			December 31,
	2024			2023
Consumer
Note payable, FSB (1)	$	2,509,716		$	2,563,108
Note payable, Truist Bank (3)		819,975			838,430
Notes payable, TBT (4,5)		2,023,143			2,064,928
Note payable, Kretchmer Transaction (6)		200,000			200,000
Sub-total		5,552,834			5,666,466
Commercial
Note payable, FSB (2)		5,694,200			5,815,381
Note payable, Avail Transaction (7)		500,000			833,333
Sub-total		6,194,200			6,648,714
Corporate
Line of credit, FSB (8)		-			-
Note payable, TBT (9)		2,559,832			2,618,311
Sub-total		2,559,832			2,618,311
Sub-total		14,306,866			14,933,491
Current portion		(1,307,921	)		(1,361,443	)
	$	12,998,945		$	13,572,048

The following table depicts the Company’s future principal payments on long-term debt obligations as of June 30, 2024:

	2024		2025		2026		2027		2028		Thereafter
Consumer
Note payable, FSB (1)		55,107		112,154		2,342,455		-		-		-
Note payable, Truist Bank (3)		18,800		38,745		40,203		41,716		43,216		637,296
Notes payable, TBT (4,5)		43,419		487,260		71,359		74,081		76,767		1,270,257
Note payable, Kretchmer Transaction (6)		200,000		-		-		-		-		-
Sub-total		317,326		638,159		2,454,017		115,797		119,983		1,907,553
Commercial
Note payable, FSB (2)		125,031		254,466		5,314,702		-		-		-
Note payable, Avail Transaction (7)		333,333		166,667		-		-		-		-
Sub-total		458,364		421,133		5,314,702		-		-		-
Corporate
Line of Credit, FSB (8)		-		-		-		-		-		-
Note payable, TBT (9)		59,442		2,500,390		-		-		-		-
Sub-total		59,442		2,500,390		-		-		-		-
	$	835,132	$	3,559,682	$	7,768,719	$	115,797	$	119,983	$	1,907,553

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

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

(3) On July 9, 2020, the consumer segment entered into a $1.195 million secured amortizing note payable with Truist Bank. The note payable bears interest at 3.65% and matures on July 9, 2030. 

(4) On September 14, 2020, the consumer segment entered into a $620 thousand secured amortizing note payable with Texas Bank & Trust (“TBT”). The note payable bears interest at 3.75% and matures on September 14, 2025. 

(5) On July 30, 2021, the consumer segment entered into a $2.215 million secured amortizing note payable with TBT. The note payable bears interest at 3.75% and matures on July 30, 2031. 

(6) On September 12, 2023, the consumer segment entered into a $300 thousand secured amortizing note payable in relation to the Kretchmer Transaction. The note payable’s imputed interest is 3.10% and matures on October 1, 2025. The consumer segment is restructuring the Kretchmer Transaction and the aforementioned terms and conditions and as such is electing to record the note payable in current liabilities. 

(7) On October 29, 2021, the consumer segment entered into a $4.500 million secured amortizing note payable in relation to the acquisition of Avail Recovery Solutions, LLC on October 29, 2021 (“Avail Transaction"). The note payable’s imputed interest is 3.10% and matures on April 1, 2025. 

(8) On November 23, 2021, the Company entered into a $3.500 million secured line of credit with FSB. The line of credit bears interest at 3.10% and matures on November 15, 2024. This note was previously presented within our commercial segment and is now presented within corporate as the line of credit provides borrowing capacity for all segments. 

(9) On November 4, 2020, a wholly owned subsidiary of Envela entered into a $2.960 million secured amortizing note payable with TBT. The note payable bears interest at 3.25% and matures on November 4, 2025. 

24

The Company was in compliance with all of its debt obligation covenants for the three and six months ended June 30, 2024, and June 30, 2023.

The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of June 30, 2024:

	Scheduled
	Principal		Loan
Scheduled Principal Payments and Maturities by Year:	Payments		Maturities		Total
2024		635,132		200,000		835,132
2025		767,282		2,792,400		3,559,682
2026		457,492		7,311,227		7,768,719
2027		115,797		-		115,797
2028		119,983		-		119,983
Thereafter		291,704		1,615,849		1,907,553
	$	2,387,390	$	11,919,476	$	14,306,866

NOTE 14 — STOCK-BASED COMPENSATION

There was no stock-based compensation expense for the three and six months ended June 30, 2024, and June 30, 2023.

NOTE 15 — RELATED PARTY TRANSACTIONS

The Company has a corporate policy governing the identification, review, consideration, and approval or ratification of transactions with related persons. Under this policy, all related party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with the Company’s best interests and the best interests of its shareholders. There are no related party transactions subject to reporting as of June 30, 2024, and June 30, 2023.

NOTE 16 — CONTINGENCIES

We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, and proceedings, either individually or in the aggregate, will have a material adverse effect on financial position, results of operations, or liquidity. However, the outcomes of any currently pending lawsuits, claims, and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.

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

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (this “Form 10-Q”), including but not limited to: (i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate”, “potential,” “continue,” “deploy” or “believe.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 2023 Annual Report and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events.

Introduction

This section includes a discussion of our operations for the three and six months ended June 30, 2024, and June 30, 2023. The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with the Company’s 2023 Annual Report, the Unaudited Condensed Consolidated Financial Statements, and the related Notes thereto included in Part I, Item 1 of this report.

26

Use of Non-U.S. GAAP Financial Measures

Within this management discussion and analysis, we use supplemental measures of our performance, which are derived from our interim consolidated financial information, but which are not presented in our interim consolidated financial statements prepared in accordance with U.S. GAAP. We believe that providing these non-U.S. GAAP financial measures adds a meaningful presentation of our operating and financial performance. See the reconciliation of net income to adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) and Net Cash, in Non-U.S. GAAP Financial Measures below.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies and estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s 2023 Annual Report.

We believe that the accounting estimates discussed below relate to the more significant areas involving management’s judgments and estimates.

Economic Conditions

The U.S. and other world economies are currently experiencing high interest rates and high levels of inflation, coupled with commodity price risk, mainly associated with variations in the market price of precious metals and diamonds which have the potential to impact consumer discretionary spending behavior. Furthermore, adverse macroeconomic conditions can also impact demand for resale technology assets.

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

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

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

General

Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela Corporation itself. Our operations are organized into two operating and reportable segments: commercial and consumer.

Consumer Segment

Our consumer segment operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, fine jewelry, watches, and bullion. Our diamonds and gemstones are recycled, meaning they were previously set and then unset to become a new design – allowing for a truly low-carbon, ethical origin. The company focuses on buying and selling pre-owned luxury items, ethically sourced diamonds, gemstones, and precious metals, catering to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

27

Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The company focuses on offering services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role to support a circular economy through responsible reuse and recycling of electronic devices.

Segment Activities

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

Consumer Segment

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

Commercial Segment

Our strategy is to expand both organically and through acquisitions. The Company has taken considerable steps to bolster its management team and operating systems to position itself for growth. Our production facilities are capable of managing the expansion of existing relationships and consolidation of acquisition targets within relative proximity to our existing facilities.

Change in Disclosure of Results of Operations

The Company previously disaggregated revenue and gross margin by resale and recycle for each segment within the results of operations. The Company’s revenue and gross margin are now comprised of more diverse revenue and gross margin streams associated with service offerings and as such to continue reporting under the prior disclosure methodology would be less representative of how the business operates. The Company believes that this change has no material impact on the interpretation of our results of operations.

Recent Accounting Pronouncements

See Note 3 - Accounting Policies and Estimates, to these interim condensed consolidated financial statements for recently adopted accounting pronouncements.

Non-U.S. GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a key performance measure that management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies. Adjusted EBITDA is a non-U.S. GAAP measure and should not be considered as an alternative to the presentation of net income or any other measure of financial performance calculated and presented in accordance with U.S. GAAP.

28

The following table provides a reconciliation of net income to Adjusted EBITDA for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended June 30,
	2024									2023
	Consumer			Commercial			Consolidated			Consumer			Commercial			Consolidated
Adjusted EBITDA Reconciliation:
Net Income (Loss)	$	(177,958	)	$	1,742,137		$	1,564,179		$	1,168,309		$	435,400		$	1,603,709
Add (deduct):
Depreciation and amortization		112,518			249,749			362,267			79,408			256,766			336,174
Other income		(8,003	)		(217,414	)		(225,417	)		(23,929	)		(129,723	)		(153,652	)
Interest expense		55,697			53,444			109,141			58,209			56,479			114,688
Income tax expense		29,607			431,632			461,239			339,672			158,902			498,574
Adjusted EBITDA	$	11,861		$	2,259,548		$	2,271,409		$	1,621,669		$	777,824		$	2,399,493

The following table provides a reconciliation of net income to Adjusted EBITDA for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended June 30,
	2024									2023
	Consumer			Commercial			Consolidated			Consumer			Commercial			Consolidated
Adjusted EBITDA Reconciliation:
Net Income (Loss)	$	(89,482	)	$	3,561,200		$	3,471,718		$	2,305,193		$	1,824,833		$	4,130,026
Add (deduct):
Depreciation and amortization		206,194			499,638			705,832			177,542			512,983			690,525
Other income		(16,008	)		(447,937	)		(463,945	)		(47,463	)		(316,968	)		(364,431	)
Interest expense		120,098			109,897			229,995			117,827			113,925			231,752
Income tax expense		88,758			922,759			1,011,517			657,513			558,707			1,216,220
Adjusted EBITDA	$	309,560		$	4,645,557		$	4,955,117		$	3,210,612		$	2,693,480		$	5,904,092

Net Cash

Net Cash is the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations. We believe that presenting net of cash is useful to investors as a measure of our leverage, as cash and cash equivalents can be used, among other things, to repay indebtedness.

The following table depicts the Company’s net cash:

	June 30,			December 31,
	2024			2023
Total cash	$	17,344,001		$	17,853,853
Less: debt obligations		(14,306,866	)		(14,933,491	)
Net cash	$	3,037,135		$	2,920,362

The Company had a net cash position of $3,037,135 as of June 30, 2024, as compared to a net cash position of $2,920,362 as of December 31, 2023.

29

Results of Operations

Comparison of Three Months Ended June 30, 2024 and 2023

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended June 30,
	2024												2023
	Consumer			Commercial			Consolidated			% of Sales (1)			Consumer			Commercial			Consolidated			% of Sales (1)
Sales	$	31,990,028		$	13,306,974		$	45,297,002			100.0	%	$	39,641,434		$	11,454,443		$	51,095,877			100.0	%
Cost of goods sold		27,968,699			5,938,846			33,907,545			74.9	%		35,546,792			4,787,038			40,333,830			78.9	%
Gross margin		4,021,329			7,368,128			11,389,457			25.1	%		4,094,642			6,667,405			10,762,047			21.1	%
Expenses:
Selling, general and administrative		4,009,468			5,108,580			9,118,048			20.1	%		2,472,973			5,889,581			8,362,554			16.4	%
Depreciation and amortization		112,518			249,749			362,267			0.8	%		79,408			256,766			336,174			0.7	%
Total operating expenses		4,121,986			5,358,329			9,480,315			20.9	%		2,552,381			6,146,347			8,698,728			17.0	%
Operating income (loss)		(100,657	)		2,009,799			1,909,142			4.2	%		1,542,261			521,058			2,063,319			4.0	%
Other income (expense):
Other income		8,003			217,414			225,417			0.5	%		23,929			129,723			153,652			0.3	%
Interest expense		(55,697	)		(53,444	)		(109,141	)		-0.2	%		(58,209	)		(56,479	)		(114,688	)		-0.2	%
Income (loss) before income taxes		(148,351	)		2,173,769			2,025,418			4.5	%		1,507,981			594,302			2,102,283			4.1	%
Income tax expense		(29,607	)		(431,632	)		(461,239	)		-1.0	%		(339,672	)		(158,902	)		(498,574	)		-1.0	%
Net income (loss)	$	(177,958	)	$	1,742,137		$	1,564,179			3.5	%	$	1,168,309		$	435,400		$	1,603,709			3.1	%

(1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

30

The individual segments reported the following for the three months ended June 30, 2024 and 2023:

Sales

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	45,297,002		$	51,095,877		$	(5,798,875	)		-11.3	%
% of consolidated sales		100.0	%		100.0	%
Consumer	$	31,990,028		$	39,641,434		$	(7,651,406	)		-19.3	%
% of consumer sales		100.0	%		100.0	%
Commercial	$	13,306,974		$	11,454,443		$	1,852,531			16.2	%
% of commercial sales		100.0	%		100.0	%

Consolidated

Sales decreased by $5,798,875, or 11.3%, during the three months ended June 30, 2024, to $45,297,002, as compared to $51,095,877 during the same period in 2023.

Consumer Segment

Sales in the consumer segment decreased by $7,651,406, or 19.3%, during the three months ended June 30, 2024, to $31,990,028, as compared to $39,641,434 during the same period in 2023. The change was primarily attributed to demand softness for bullion coupled with continued inventory carry associated with our Arizona stores, which opened in the later part of the second quarter of Fiscal 2024.

Commercial Segment

Sales in the commercial segment increased by $1,852,531, or 16.2%, during the three months ended June 30, 2024, to $13,306,974, as compared to $11,454,443 during the same period in 2023. The change was primarily attributed to the continued favorable performance of the sale of personal technology assets along with stronger sales of shredded electronic scrap grades and associated recoveries.

Cost of Goods Sold

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	33,907,545		$	40,333,830		$	(6,426,285	)		-15.9	%
% of consolidated sales		74.9	%		78.9	%
Consumer	$	27,968,699		$	35,546,792		$	(7,578,093	)		-21.3	%
% of consumer sales		87.4	%		89.7	%
Commercial	$	5,938,846		$	4,787,038		$	1,151,808			24.1	%
% of commercial sales		44.6	%		41.8	%

Consolidated

Cost of goods sold decreased by $6,426,285, or 15.9%, during the three months ended June 30, 2024, to $33,907,545, as compared to $40,333,830 during the same period in 2023.

Consumer Segment

Cost of goods sold in the consumer segment decreased by $7,578,093, or 21.3%, during the three months ended June 30, 2024, to $27,968,699, as compared to $35,546,792 during the same period in 2023. The change was primarily attributed to the aforementioned demand softness for bullion and inventory carry. Bullion margins are lower than those associated with hard assets and, as such, the reduction in bullion relieved from inventory had a favorable impact on cost of goods sold as a percentage of sales.

31

Commercial Segment

Cost of goods sold in the commercial segment increased by $1,151,808, or 24.1%, during the three months ended June 30, 2024, to $5,938,846, as compared to $4,787,038 during the same period in 2023. The change was primarily attributed to the recognition of costs on lower margin shredded electronic scrap grades but was partially offset by the recognition of costs on higher margin personal technology assets.

Gross Margin

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	11,389,457		$	10,762,047		$	627,410			5.8	%
% of consolidated sales		25.1	%		21.1	%
Consumer	$	4,021,329		$	4,094,642		$	(73,313	)		-1.8	%
% of consumer sales		12.6	%		10.3	%
Commercial	$	7,368,128		$	6,667,405		$	700,723			10.5	%
% of commercial sales		55.4	%		58.2	%

Consolidated

Gross margin increased by $627,410, or 5.8%, during the three months ended June 30, 2024, to $11,389,457, as compared to $10,762,047 during the same period in 2023.

Consumer Segment

Gross margin in the consumer segment decreased by $73,313, or 1.8%, during the three months ended June 30, 2024, to $4,021,329, as compared to $4,094,642 during the same period in 2023. The net impact of the aforementioned decrease in sales of $7,651,406 and decrease in cost of goods sold of $7,578,093 resulted in the $73,313 decrease in gross margin.

Commercial Segment

Gross margin in the commercial segment increased by $700,723, or 10.5%, during the three months ended June 30, 2024, to $7,368,128, as compared to $6,667,405 during the same period in 2023. The net impact of the aforementioned increase in sales of $1,852,531 and increase in cost of goods sold $1,151,808 resulted in the $700,723 increase in gross margin.

Selling, General and Administrative

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	9,118,048		$	8,362,554		$	755,494			9.0	%
% of consolidated sales		20.1	%		16.4	%
Consumer	$	4,009,468		$	2,472,973		$	1,536,495			62.1	%
% of consumer sales		12.5	%		6.2	%
Commercial	$	5,108,580		$	5,889,581		$	(781,001	)		-13.3	%
% of commercial sales		38.4	%		51.4	%

Consolidated

Selling, general and administrative expense increased by $755,494, or 9.0%, during the three months ended June 30, 2024, to $9,118,048, as compared to $8,362,554 during the same period in 2023. 

32

Consumer Segment

Selling, general and administrative expense in the consumer segment increased by $1,536,495, or 62.1%, during the three months ended June 30, 2024, to $4,009,468, as compared to $2,472,973 during the same period in 2023. The change was primarily attributed to incurring the operational cost structure of two stores in advance of their opening in the later part of the second quarter of Fiscal 2024 along with continued travel costs in relation to training and preparing stores for opening.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $781,001, or 13.3%, during the three months ended June 30, 2024, to $5,108,580, as compared to $5,889,581 during the same period in 2023. The change was primarily attributed to the operational focus on human capital costs and processing efficiencies at our production facilities. Albeit, in the second quarter of Fiscal 2024 we experienced a marginal increase in human capital costs which is related to the aforementioned processing of shredded electronic scrap grades.

Depreciation and Amortization

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	362,267		$	336,174		$	26,093			7.8	%
% of consolidated sales		0.8	%		0.7	%
Consumer	$	112,518		$	79,408		$	33,110			41.7	%
% of consumer sales		0.4	%		0.2	%
Commercial	$	249,749		$	256,766		$	(7,017	)		-2.7	%
% of commercial sales		1.9	%		2.2	%

Consolidated

Depreciation and amortization expense increased by $26,093, or 7.8%, during the three months ended June 30, 2024 to $362,267, as compared to $336,174 during the same period in 2023.

Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $33,110, or 41.7%, during the three months ended June 30, 2024, to $112,518, as compared to $79,408 during the same period in 2023. The change was primarily attributed to assets associated with our Arizona stores being placed into service.

Commercial Segment

Depreciation and amortization expense in the commercial segment decreased by $7,017, or 2.7%, during the three months ended June 30, 2024, to $249,749, as compared to $256,766 during the same period in 2023. There was no material impact from assets capitalized or reaching maturity in each comparative period and as such no discussion point.

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Other Income (Expense)

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	225,417		$	153,652		$	71,765			46.7	%
% of consolidated sales		0.5	%		0.3	%
Consumer	$	8,003		$	23,929		$	(15,926	)		-66.6	%
% of consumer sales		0.0	%		0.1	%
Commercial	$	217,414		$	129,723		$	87,691			67.6	%
% of commercial sales		1.6	%		1.1	%

Consolidated

Other income increased by $71,765, or 46.7%, during the three months ended June 30, 2024, to $225,417, as compared to $153,652 during the same period in 2023.

Consumer Segment

Other income in the consumer segment decreased by $15,926, or 66.6%, during the three months ended June 30, 2024, to $8,003, as compared to $23,929 during the same period in 2023. The change was primarily attributed to higher working capital requirements as the Company is carrying a higher inventory position from the aforementioned launching of our Arizona stores and as such there was less excess cashflow available to sweep into an interest-bearing account.

Interest income comprised $2 and $22,549 of other income during the three months ended June 30, 2024, and June 30, 2023, respectively.

Commercial Segment

Other income in the commercial segment increased by $87,691, or 67.6%, during the three months ended June 30, 2024, to $217,414, as compared to $129,723 during the same period in 2023. The change was primarily attributed to the continued focus on reducing working capital which has increased the excess cashflow available to sweep into an interest-bearing account.

Interest income comprised $199,960 and $94,875 of other income during the three months ended June 30, 2024, and June 30, 2023, respectively.

Interest Expense

	Three Months Ended June 30,						Change
	2024			2023			Amount		%
Consolidated	$	(109,141	)	$	(114,688	)	$	5,547		-4.8	%
% of consolidated sales		-0.2	%		-0.2	%
Consumer	$	(55,697	)	$	(58,209	)	$	2,512		-4.3	%
% of consumer sales		-0.2	%		-0.1	%
Commercial	$	(53,444	)	$	(56,479	)	$	3,035		-5.4	%
% of commercial sales		-0.4	%		-0.5	%

Consolidated

Interest expense decreased by $5,547, or 4.8%, during the three months ended June 30, 2024, to $109,141, as compared to $114,688 during the same period in 2023.

Consumer Segment

Interest expense in the consumer segment decreased by $2,512, or 4.3%, during the three months ended June 30, 2024, to $55,697, as compared to $58,209 during the same period in 2023. There was no material impact from debt additions or amortization in each comparative period and as such no discussion point.

34

Commercial Segment

Interest expense in the commercial segment decreased by $3,035, or 5.4%, during the three months ended June 30, 2024, to $53,444, as compared to $56,479 during the same period in 2023. There was no material impact from amortization in each comparative period and as such no discussion point.

Income Tax Expense

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	(461,239	)	$	(498,574	)	$	37,335			-7.5	%
% of consolidated sales		-1.0	%		-1.0	%
Consumer	$	(29,607	)	$	(339,672	)	$	310,065			-91.3	%
% of consumer sales		-0.1	%		-0.9	%
Commercial	$	(431,632	)	$	(158,902	)	$	(272,730	)		171.6	%
% of commercial sales		-3.2	%		-1.4	%

Consolidated

Income tax expense, for both segments, for the three months ended June 30, 2024, was $461,239, a decrease of $37,335, as compared to income tax expense of $498,574 for the three months ended June 30, 2023. Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 22.8% and 23.7% for the three months ended June 30, 2024 and 2023, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the decrease for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Net Income (Loss)

	Three Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	1,564,179		$	1,603,709		$	(39,530	)		-2.5	%
% of consolidated sales		3.5	%		3.1	%
Consumer	$	(177,958	)	$	1,168,309		$	(1,346,267	)	NM
% of consumer sales		-0.6	%		2.9	%
Commercial	$	1,742,137		$	435,400		$	1,306,737			300.1	%
% of commercial sales		13.1	%		3.8	%

NM – Not Meaningful

Consolidated

Net income decreased by $39,530, or 2.5%, during the three months ended June 30, 2024 to $1,564,179, as compared to $1,603,709 during the same period in 2023. Refer to the aforementioned attributes discussed within the Comparison of Three Months Ended June 30, 2024 and 2023 for further details.

Consumer Segment

Net income (loss) decreased in the consumer segment by $1,346,267, during the three months ended June 30, 2024 to a net loss of $177,958, as compared to net income of $1,168,309 during the same period in 2023. Refer to the aforementioned attributes discussed within the Comparison of Three Months Ended June 30, 2024 and 2023 for further details.

35

Commercial Segment

Net income increased in the commercial segment by $1,306,737, or 300.1%, during the three months ended June 30, 2024 to $1,742,137, as compared to $435,400 during the same period in 2023. Refer to the aforementioned attributes discussed within the Comparison of Three Months Ended June 30, 2024 and 2023 for further details.

Earnings Per Share

The following table depicts the Company’s earnings per share:

	Three Months Ended June 30,				Change
	2024		2023		Amount		%
Consolidated	$	0.06	$	0.06	$	-		0.0	%

Consolidated

Basic and diluted earnings per share attributable to holders of our Common Stock remained at $0.06 during the three months ended June 30, 2024, compared to the same period in 2023.

Comparison of Six Months Ended June 30, 2024 and 2023

The following table depicts our disaggregated condensed consolidated statements of income for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended June 30,
	2024												2023
	Consumer			Commercial			Consolidated			% of Sales (1)			Consumer			Commercial			Consolidated			% of Sales (1)
Sales	$	60,216,045		$	24,938,737		$	85,154,782			100.0	%	$	76,345,831		$	24,559,578		$	100,905,409			100.0	%
Cost of goods sold		52,645,527			10,799,114			63,444,641			74.5	%		68,266,221			10,467,239			78,733,460			78.0	%
Gross margin		7,570,518			14,139,623			21,710,141			25.5	%		8,079,610			14,092,339			22,171,949			22.0	%
Expenses:
Selling, general and administrative		7,260,958			9,494,066			16,755,024			19.7	%		4,868,998			11,398,859			16,267,857			16.1	%
Depreciation and amortization		206,194			499,638			705,832			0.8	%		177,542			512,983			690,525			0.7	%
Total operating expenses		7,467,152			9,993,704			17,460,856			20.5	%		5,046,540			11,911,842			16,958,382			16.8	%
Operating income		103,366			4,145,919			4,249,285			5.0	%		3,033,070			2,180,497			5,213,567			5.2	%
Other income (expense):
Other income		16,008			447,937			463,945			0.5	%		47,463			316,968			364,431			0.4	%
Interest expense		(120,098	)		(109,897	)		(229,995	)		-0.3	%		(117,827	)		(113,925	)		(231,752	)		-0.2	%
Income (loss) before income taxes		(724	)		4,483,959			4,483,235			5.3	%		2,962,706			2,383,540			5,346,246			5.3	%
Income tax expense		(88,758	)		(922,759	)		(1,011,517	)		-1.2	%		(657,513	)		(558,707	)		(1,216,220	)		-1.2	%
Net income (loss)	$	(89,482	)	$	3,561,200		$	3,471,718			4.1	%	$	2,305,193		$	1,824,833		$	4,130,026			4.1	%

 (1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

36

The individual segments reported the following for the six months ended June 30, 2024 and 2023:

Sales

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	85,154,782		$	100,905,409		$	(15,750,627	)		-15.6	%
% of consolidated sales		100.0	%		100.0	%
Consumer	$	60,216,045		$	76,345,831		$	(16,129,786	)		-21.1	%
% of consumer sales		100.0	%		100.0	%
Commercial	$	24,938,737		$	24,559,578		$	379,159			1.5	%
% of commercial sales		100.0	%		100.0	%

Consolidated

Sales decreased by $15,750,627 or 15.6%, during the six months ended June 30, 2024, to $85,154,782, as compared to $100,905,409 during the same period in 2023.

Consumer Segment

Sales in the consumer segment decreased by $16,129,786, or 21.1%, during the six months ended June 30, 2024, to $60,216,045, as compared to $76,345,831 during the same period in 2023. The change was primarily attributed to demand softness for bullion coupled with continued inventory carry associated with our Arizona stores, which opened in the later part of the second quarter of Fiscal 2024.

Commercial Segment

Sales in the commercial segment increased by $379,159, or 1.5%, during the six months ended June 30, 2024, to $24,938,737, as compared to $24,559,578 during the same period in 2023. The change was primarily attributed to the continued favorable performance of the sale of personal technology assets along with stronger sales of shredded electronic scrap grades and associated recoveries.

Cost of Goods Sold

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	63,444,641		$	78,733,460		$	(15,288,819	)		-19.4	%
% of consolidated sales		74.5	%		78.0	%
Consumer	$	52,645,527		$	68,266,221		$	(15,620,694	)		-22.9	%
% of consumer sales		87.4	%		89.4	%
Commercial	$	10,799,114		$	10,467,239		$	331,875			3.2	%
% of commercial sales		43.3	%		42.6	%

Consolidated

Cost of goods sold decreased by $15,288,819, or 19.4%, during the six months ended June 30, 2024, to $63,444,641, as compared to $78,733,460 during the same period in 2023.

Consumer Segment

Cost of goods sold in the consumer segment decreased by $15,620,694, or 22.9%, during the six months ended June 30, 2024, to $52,645,527, as compared to $68,266,221 during the same period in 2023. The change was primarily attributed to the aforementioned demand softness for bullion and inventory carry. Bullion margins are lower than those associated with hard assets and, as such, the reduction in bullion relieved from inventory had a favorable impact on cost of goods sold as a percentage of sales.

37

Commercial Segment

Cost of goods sold in the commercial segment increased by $331,875, or 3.2%, during the six months ended June 30, 2024, to $10,799,114, as compared to $10,467,239 during the same period in 2023. The change was primarily attributed to the recognition of costs on lower margin shredded electronic scrap grades but was partially offset by the recognition of costs on higher margin personal technology assets.

Gross Margin

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	21,710,141		$	22,171,949		$	(461,808	)		-2.1	%
% of consolidated sales		25.5	%		22.0	%
Consumer	$	7,570,518		$	8,079,610		$	(509,092	)		-6.3	%
% of consumer sales		12.6	%		10.6	%
Commercial	$	14,139,623		$	14,092,339		$	47,284			0.3	%
% of commercial sales		56.7	%		57.4	%

Consolidated

Gross margin decreased by $461,808, or 2.1%, during the six months ended June 30, 2024, to $21,710,141, as compared to $22,171,949 during the same period in 2023.

Consumer Segment

Gross margin in the consumer segment decreased by $509,092, or 6.3%, during the six months ended June 30, 2024, to $7,570,518, as compared to $8,079,610 during the same period in 2023. The net impact of the aforementioned decrease in sales of $16,129,786 and decrease in cost of goods sold of $15,620,694 resulted in the $509,092 decrease in gross margin.

Commercial Segment

Gross margin in the commercial segment increased by $47,284, or 0.3%, during the six months ended June 30, 2024, to $14,139,623, as compared to $14,092,339 during the same period in 2023. The net impact of the aforementioned increase in sales of $379,159 and increase in cost of goods sold of $331,875 resulted in the $47,284 increase in gross margin.

Selling, General and Administrative

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	16,755,024		$	16,267,857		$	487,167			3.0	%
% of consolidated sales		19.7	%		16.1	%
Consumer	$	7,260,958		$	4,868,998		$	2,391,960			49.1	%
% of consumer sales		12.1	%		6.4	%
Commercial	$	9,494,066		$	11,398,859		$	(1,904,793	)		-16.7	%
% of commercial sales		38.1	%		46.4	%

Consolidated

Selling, general and administrative expense increased by $487,167, or 3.0%, during the six months ended June 30, 2024, to $16,755,024, as compared to $16,267,857 during the same period in 2023. 

38

Consumer Segment

Selling, general and administrative expense in the consumer segment increased by $2,391,960, or 49.1%, during the six months ended June 30, 2024, to $7,260,958, as compared to $4,868,998 during the same period in 2023. The change was primarily attributed to incurring the operational cost structure of two stores in advance of their opening in the later part of the second quarter of Fiscal 2024 along with continued travel costs in relation to training and preparing the stores for opening.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $1,904,793, or 16.7%, during the six months ended June 30, 2024, to $9,494,066, as compared to $11,398,859 during the same period in 2023. The change was primarily attributed to the operational focus on human capital costs and processing efficiencies at our production facilities. Albeit, in the second quarter of Fiscal 2024 we experienced a marginal increase in human capital costs which is correlative to the aforementioned processing of shredded electronic scrap grades.

Depreciation and Amortization

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	705,832		$	690,525		$	15,307			2.2	%
% of consolidated sales		0.8	%		0.7	%
Consumer	$	206,194		$	177,542		$	28,652			16.1	%
% of consumer sales		0.3	%		0.2	%
Commercial	$	499,638		$	512,983		$	(13,345	)		-2.6	%
% of commercial sales		2.0	%		2.1	%

Consolidated

Depreciation and amortization expense increased by $15,307, or 2.2%, during the six months ended June 30, 2024, to $705,832, as compared to $690,525 during the same period in 2023.

Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $28,652, or 16.1%, during the six months ended June 30, 2024, to $206,194, as compared to $177,542 during the same period in 2023. The change was primarily attributed to assets associated with our Arizona stores being placed into service.

Commercial Segment

Depreciation and amortization expense in the commercial segment decreased by $13,345, or 2.6%, during the six months ended June 30, 2024, to $499,638, as compared to $512,983 during the same period in 2023. There was no material impact from assets capitalized or reaching maturity in each comparative period and as such no discussion point.

39

Other Income (Expense)

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	463,945		$	364,431		$	99,514			27.3	%
% of consolidated sales		0.5	%		0.4	%
Consumer	$	16,008		$	47,463		$	(31,455	)		-66.3	%
% of consumer sales		0.0	%		0.1	%
Commercial	$	447,937		$	316,968		$	130,969			41.3	%
% of commercial sales		1.8	%		1.3	%

Consolidated

Other income increased by $99,514, or 27.3%, during the six months ended June 30, 2024, to $463,945, as compared to $364,431 during the same period in 2023.

Consumer Segment

Other income in the consumer segment decreased by $31,455, or 66.3%, during the six months ended June 30, 2024, to $16,008, as compared to $47,463 during the same period in 2023. The change was primarily attributed to higher working capital requirements as the Company is carrying a higher inventory position from the aforementioned launching of our Arizona stores and as such there was less excess cashflow available to sweep into an interest-bearing account.

Interest income comprised $8 and $44,112 of other income during the six months ended June 30, 2024, and June 30, 2023, respectively.

Commercial Segment

Other income in the commercial segment increased by $130,969, or 41.3%, during the six months ended June 30, 2024, to $447,937, as compared to $316,968 during the same period in 2023. The change was primarily attributed to the continued focus on reducing working capital which has increased the excess cashflow available to sweep into an interest-bearing account.

Interest income comprised $396,522 and $156,252 of other income during the six months ended June 30, 2024, and June 30, 2023, respectively.

Interest Expense

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	(229,995	)	$	(231,752	)	$	1,757			-0.8	%
% of consolidated sales		-0.3	%		-0.2	%
Consumer	$	(120,098	)	$	(117,827	)	$	(2,271	)		1.9	%
% of consumer sales		-0.2	%		-0.2	%
Commercial	$	(109,897	)	$	(113,925	)	$	4,028			-3.5	%
% of commercial sales		-0.4	%		-0.5	%

Consolidated

Interest expense decreased by $1,757, or 0.8%, during the six months ended June 30, 2024, to $229,995, as compared to $231,752 during the same period in 2023.

Consumer Segment

Interest expense in the consumer segment increased by $2,271, or 1.9%, during the six months ended June 30, 2024, to $120,098, as compared to $117,827 during the same period in 2023. There was no material impact from debt additions or amortization in each comparative period and as such no discussion point.

40

Commercial Segment

Interest expense in the commercial segment decreased by $4,028, or 3.5%, during the six months ended June 30, 2024, to $109,897, as compared to $113,925 during the same period in 2023. There was no material impact from amortization in each comparative period and as such no discussion point.

Income Tax Expense

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	(1,011,517	)	$	(1,216,220	)	$	204,703			-16.8	%
% of consolidated sales		-1.2	%		-1.2	%
Consumer	$	(88,758	)	$	(657,513	)	$	568,755			-86.5	%
% of consumer sales		-0.1	%		-0.9	%
Commercial	$	(922,759	)	$	(558,707	)	$	(364,052	)		65.2	%
% of commercial sales		-3.7	%		-2.3	%

Consolidated

Income tax expense, for both segments, for the six months ended June 30, 2024, was $1,011,517, a decrease of $204,703, as compared to income tax expense of $1,216,220 for the six months ended June 30, 2023. Currently, the Company has a deferred tax asset reflecting a future tax benefit that the Company expects to receive. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 22.6% and 22.7% for the six months ended June 30, 2024 and 2023, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the decrease for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Net Income (Loss)

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Consolidated	$	3,471,718		$	4,130,026		$	(658,308	)		-15.9	%
% of consolidated sales		4.1	%		4.1	%
Consumer	$	(89,482	)	$	2,305,193		$	(2,394,675	)	NM
% of consumer sales		-0.1	%		3.0	%
Commercial	$	3,561,200		$	1,824,833		$	1,736,367			95.2	%
% of commercial sales		14.3	%		7.4	%

NM – Not Meaningful

Consolidated

Net income decreased by $658,308, or 15.9%, during the six months ended June 30, 2024 to $3,471,718, as compared to $4,130,026 during the same period in 2023.

Consumer Segment

Net income (loss) decreased in the consumer segment by $2,394,675, during the six months ended June 30, 2024 to a net loss of $89,482, as compared to net income of $2,305,193 during the same period in 2023. Refer to the aforementioned attributes discussed within the Comparison of Six Months Ended June 30, 2024 and 2023 for further details.

41

Commercial Segment

Net income increased in the commercial segment by $1,736,367, or 95.2%, during the six months ended June 30, 2024 to $3,561,200, as compared to $1,824,833 during the same period in 2023. Refer to the aforementioned attributes discussed within the Comparison of Six Months Ended June 30, 2024 and 2023 for further details.

Earnings Per Share

The following table depicts the Company’s earnings per share:

	Six Months Ended June 30,				Change
	2024		2023		Amount			%
Consolidated	$	0.13	$	0.15	$	(0.02	)		-13.3	%

Consolidated

Basic and diluted earnings per share attributable to holders of our Common Stock decreased by $0.02, or 13.3%, during the six months ended June 30, 2024, to $0.13, as compared to $0.15 during the same period in 2023.

Liquidity and Capital Resources

The following table summarizes the Company’s Consolidated Statement of Cashflows:

	Six Months Ended June 30,						Change
	2024			2023			Amount			%
Net cash provided by (used in):
Operating activities	$	3,002,262		$	2,748,490		$	253,772			9.2	%
Investing activities		(1,265,004	)		(722,621	)	$	(542,383	)		75.1	%
Financing activities		(2,247,110	)		(815,062	)		(1,432,048	)		175.7	%
Net increase (decrease) in cash and cash equivalents	$	(509,852	)	$	1,210,807		$	(1,720,659	)	NM

NM – Not Meaningful

Operating Activities

During the six months ended June 30, 2024, cash flows provided by operations totaled $3,002,262, and during the six months ended June 30, 2023, cash flows provided by operations totaled $2,748,490, a change of $253,772. The increase in cash provided by operations for the six months ended June 30, 2024 was primarily attributed to the impacts of a decrease in net income, a decrease in non-cash charges relating to deferred taxes, along with a reduction in accounts receivable associated with the settlement of a large SOW with a recurring customer, an increased inventory position associated with the expansion of the consumer business, and a decrease in accruals primarily associated with payroll.

Investing Activities

During the six months ended June 30, 2024 and 2023, cash flows (used in) investing activities totaled $1,265,004 and $722,621, respectively, a change of $542,383. The increase in cash used in investing activities during the six months ended June 30, 2024, was primarily attributed to the buildout of our Arizona stores, purchase of production assets within our recycling business and continued development of our enterprise resource planning system. The prior comparative period had cash flows (used in) investing activities of $722,621, which primarily consisted of payments received from notes receivable of $578,250, offset by the purchase of property and equipment of $1.3 million.

Financing Activities

During the six months ended June 30, 2024 and 2023, cash flows (used in) financing activities totaled $2,247,110 and $815,062, respectively, a change of $1,432,048. The increase in cash used in financing activities during the six months ended June 30, 2024, was primarily due to our share buyback plan as principal payments on debt were in relative parity.

42

Capital Resources

Although the Company has access to a line of credit our primary source of liquidity and capital resources currently consist of cash generated from our operating activities. We do not anticipate the need to fund our operations via the line of credit and we do not have any amounts drawn as of June 30, 2024. We have historically renewed, extended, or replaced short-term debt as it matures, and management believes that we will be able to continue to do so in the near future.

Capital Expenditures

In Fiscal 2024, the Company is deploying capital for additional growth, maintenance activity and enhancements to our enterprise resource planning system. The Company continuously monitors the deployment of capital and primarily funds capital expenditures through cash flow from operating activities. Where appropriate the Company may use debt financing on select projects. When this occurs, the Company further evaluates future cashflows of the project as to ensure the debt tenure and pay-back period are in alignment as well as the appropriateness of the rate of return.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because we are a “smaller reporting company,” we are not required to disclose the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2024. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance of the foregoing.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance of achieving their objectives, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

43

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are various claims, lawsuits and pending actions against the Company arising in the normal course of the Company's business. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flow. Management is also not aware of any legal proceedings contemplated by government agencies of which the outcome is reasonably likely to have a material adverse effect on the Company's financial condition, results of operations or cash flow.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed under Part I, Item 1A, “Risk Factors” in the Company’s 2023 Annual Report.

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

Repurchases

The following lists the repurchase of Company shares for the three months ended June 30, 2024:

	Total Number of
	Shares Purchased						Maximum Number
	as Part of Publicly						of Shares that May
	Announced Plan		Average Price		Total Price		Yet be Purchased
Fiscal Period	or Program (1) (2)		Paid Per Share ($)		Paid		Under the Plans
Balance as of March 31, 2024		617,313	$	4.96	$	3,060,195		382,687
April 1 - 30, 2024		30,891		4.66		143,840		351,796
May 1 - 31, 2024		37,672		4.65		175,257		314,124
June 1 - 30, 2024		83,526		4.74		396,242		230,598
Balance as of June 30, 2024		769,402	$	4.91	$	3,775,534		230,598

(1) All shares were purchased in open-market transactions through the stock repurchase program approved by the Board on March 14, 2023, for the repurchase of up to one million shares of the Company’s common stock.

(2) The stock repurchase program was publicly announced on May 3, 2023, and expires March 31, 2026. Repurchases under the stock repurchase plan began on May 10, 2023.

The timing and amount of any common stock repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

44

ITEM 6. EXHIBITS

Exhibit Number	Description	Filed Herein	Incorporated by Reference	Form	Date Filed with SEC	Exhibit Number
31.1	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	X
31.2	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 G. DeLuca	X
32.1	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	X
32.2	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John G. DeLuca	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Calculation Linkbase Document	X
101.DEF	XBRL Taxonomy Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Label Linkbase Document	X
101.PRE	XBRL Taxonomy Presentation Linkbase Document	X
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)	X

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENVELA CORPORATION (Registrant)
Date: August 7, 2024	By:	/s/ JOHN R. LOFTUS
		John R. Loftus
		Chief Executive Officer (Principal Executive Officer)
Date: August 7, 2024		/s/ JOHN G. DELUCA
		John G. DeLuca
		Chief Financial Officer (Principal Accounting Officer)

46

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

IMPLEMENTING SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John R. Loftus, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Envela Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2024	By:	/s/ JOHN R. LOFTUS
		John R. Loftus
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

IMPLEMENTING SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John G. DeLuca, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Envela Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 7, 2024	By:	/s/ JOHN G. DELUCA
		John G. DeLuca
		Chief Financial Officer
		(Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

The undersigned, as the Chief Executive Officer of Envela Corporation, certifies, to the best of his knowledge, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which accompanies this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Envela Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose.

Date:  August 7, 2024	By:	/s/ JOHN R. LOFTUS
		John R. Loftus
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

The undersigned, as the Chief Financial Officer of Envela Corporation, certifies, to the best of his knowledge, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which accompanies this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Envela Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose.

Date:  August 7, 2024	By:	/s/ JOHN G. DELUCA
		John G. DeLuca
		Chief Financial Officer (Principal Accounting Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2024	Aug. 06, 2024
Cover [Abstract]
Entity Registrant Name	ENVELA CORPORATION
Entity Central Index Key	0000701719
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2024
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Entity Common Stock Shares Outstanding		26,074,390
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-11048
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	88-0097334
Entity Address Address Line 1	1901 Gateway Drive
Entity Address Address Line 2	Ste 100
Entity Address City Or Town	Irving
Entity Address State Or Province	TX
Entity Address Postal Zip Code	75038
City Area Code	972
Local Phone Number	587-4049
Security 12b Title	Common Stock, par value $0.01 per share
Trading Symbol	ELA
Security Exchange Name	NYSEAMER
Entity Interactive Data Current	Yes

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Sales	$ 45,297,002	$ 51,095,877	$ 85,154,782	$ 100,905,409
Cost of goods sold	33,907,545	40,333,830	63,444,641	78,733,460
Gross margin	11,389,457	10,762,047	21,710,141	22,171,949
Expenses:
Selling, general and administrative	9,118,048	8,362,554	16,755,024	16,267,857
Depreciation and amortization	362,267	336,174	705,832	690,525
Total operating expenses	9,480,315	8,698,728	17,460,856	16,958,382
Operating income	1,909,142	2,063,319	4,249,285	5,213,567
Other income (expense):
Other income	225,417	153,652	463,945	364,431
Interest expense	(109,141)	(114,688)	(229,995)	(231,752)
Income before income taxes	2,025,418	2,102,283	4,483,235	5,346,246
Income tax expense	(461,239)	(498,574)	(1,011,517)	(1,216,220)
Net income	$ 1,564,179	$ 1,603,709	$ 3,471,718	$ 4,130,026
Basic earnings per share:
Net income	$ 0.06	$ 0.06	$ 0.13	$ 0.15
Diluted earnings per share:
Net income	$ 0.06	$ 0.06	$ 0.13	$ 0.15
Weighted average shares outstanding:
Basic	26,248,554	26,916,648	26,333,796	26,920,618
Diluted	26,263,554	26,931,648	26,348,796	26,935,618

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 17,344,001	$ 17,853,853
Accounts receivable, net of allowances	4,838,224	7,811,159
Notes receivable	2,983	4,700
Inventories	26,779,918	23,146,177
Prepaid expenses	922,908	1,082,425
Total current assets	49,888,034	49,898,314
Property and equipment, net	11,383,884	10,764,224
Right-of-use assets from operating leases	3,988,319	4,189,621
Goodwill	3,921,453	3,921,453
Intangible assets, net	4,435,699	4,499,170
Deferred tax asset	6,715	0
Other assets	224,756	201,447
Total assets	73,848,860	73,474,229
Current liabilities:
Accounts payable	3,094,824	3,126,743
Notes payable	1,307,921	1,361,443
Operating lease liabilities	1,939,765	1,807,729
Accrued expenses	1,842,567	2,486,423
Other liabilities	301,670	211,651
Total current liabilities	8,486,747	8,993,989
Deferred tax liability	0	38,668
Notes payable, less current portion	12,998,945	13,572,048
Operating lease liabilities, less current portion	2,203,082	2,560,671
Total liabilities	23,688,774	25,165,376
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,631 shares issued and 26,155,229 shares outstanding as of June 30, 2024; 26,924,631 shares issued and 26,508,658 shares outstanding as of December 31, 2023	269,246	269,246
Treasury stock at cost, 769,402 and 415,973 shares, as of June 30, 2024 and December 31, 2023, respectively	(3,775,534)	(2,155,049)
Additional paid-in capital	40,173,000	40,173,000
Retained earnings	13,493,374	10,021,656
Total stockholders' equity	50,160,086	48,308,853
Total liabilities and stockholders' equity	$ 73,848,860	$ 73,474,229

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
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
Treasury Stock, Shares	769,402	415,973
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	26,924,631
Common Stock, Shares Outstanding	26,155,229	26,508,658

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operations
Net income	$ 3,471,718	$ 4,130,026
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	705,832	690,525
Provision for credit losses	240,166	173,196
Deferred taxes	(45,383)	875,426
Non-cash lease expense	985,996	946,598
Changes in operating assets and liabilities:
Accounts receivable	2,732,769	78,053
Inventories	(3,633,741)	2,762,524
Prepaid expenses	159,517	(75,838)
Other assets	(18,609)	202,788
Accounts payable	(31,919)	(96,789)
Accrued expenses	(643,856)	(121,843)
Operating leases	(1,010,247)	(947,070)
Other liabilities	90,019	65,948
Net cash provided by operations	3,002,262	2,748,490
Investing
Purchase of property and equipment	(965,525)	(1,300,871)
Purchase of intangible assets	(296,496)	0
Investment in notes receivable	(2,983)	(578,250)
Net cash (used in) by investing	(1,265,004)	(722,621)
Financing
Payments on notes payable	(626,625)	(620,242)
Purchase of treasury stock	(1,620,485)	194,820
Net cash (used in) financing	(2,247,110)	(815,062)
Net change in cash and cash equivalents	(509,852)	1,210,807
Cash and cash equivalents, beginning of period	17,853,853	17,169,969
Cash and cash equivalents, end of period	17,344,001	18,380,776
Cash paid during the period for:
Interest	284,796	233,495
Income taxes	$ 1,352,525	$ 162,000

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - USD ($)	Total	Common Stock	Treasury Stock	Preferred Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)
Balance, shares at Dec. 31, 2022		26,924,631
Balance, amount at Dec. 31, 2022	$ 43,316,450	$ 269,246	$ 0	$ 0	$ 40,173,000	$ 2,874,204
Net Income	4,130,026					4,130,026
Shares repurchased, shares			(27,421)
Shares repurchased, amount	(194,820)	$ 0		0
Balance, shares at Jun. 30, 2023		26,924,631	27,421
Balance, amount at Jun. 30, 2023	47,251,656	$ 269,246	$ 194,820	0	40,173,000	7,004,230
Balance, shares at Mar. 31, 2023		26,924,631
Balance, amount at Mar. 31, 2023	45,842,767	$ 269,246	$ 0	0	40,173,000	5,400,521
Net Income	1,603,709					1,603,709
Shares repurchased, shares			(27,421)
Shares repurchased, amount	(194,820)		$ (194,820)
Balance, shares at Jun. 30, 2023		26,924,631	27,421
Balance, amount at Jun. 30, 2023	47,251,656	$ 269,246	$ 194,820	0	40,173,000	7,004,230
Balance, shares at Dec. 31, 2023		26,924,631	415,973
Balance, amount at Dec. 31, 2023	48,308,853	$ 269,246	$ 2,155,049	0	40,173,000
Net Income	$ 3,471,718					3,471,718
Shares repurchased, shares	(353,429)		(353,429)
Shares repurchased, amount	$ (1,620,485)	$ 0	$ (1,620,485)	0
Balance, shares at Jun. 30, 2024		26,924,631	769,402
Balance, amount at Jun. 30, 2024	50,160,086	$ 269,246	$ 3,775,534	0	40,173,000	13,493,374
Balance, shares at Mar. 31, 2024		26,924,631	617,313
Balance, amount at Mar. 31, 2024	49,311,246	$ 269,246	$ 3,060,195	0	40,173,000	11,929,195
Net Income	$ 1,564,179					1,564,179
Shares repurchased, shares	(152,089)		(152,089)
Shares repurchased, amount	$ (715,339)	$ 0	$ (715,339)	0
Balance, shares at Jun. 30, 2024		26,924,631	769,402
Balance, amount at Jun. 30, 2024	$ 50,160,086	$ 269,246	$ 3,775,534	$ 0	$ 40,173,000	$ 13,493,374

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2024

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

These unaudited interim condensed consolidated financial statements of Envela Corporation, a Nevada corporation, and its subsidiaries (together with its subsidiaries, the “Company” or “Envela”), included herein have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X prescribed by the Securities and Exchange Commission (the “SEC”). Pursuant to the SEC’s rules and regulations, they do not include all of the information and notes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”), necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results presented for these interim periods are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 (“Fiscal 2024”). Management suggests these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“Fiscal 2023”) filed with the SEC on March 21, 2024 (“2023 Annual Report”).

Envela files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other information with the SEC. Such information and amendments to reports previously filed or furnished are available on the Company’s corporate website, www.envela.com, as soon as reasonably practicable after such materials are filed with or furnished to the SEC. The SEC also maintains an internet site at www.sec.gov that contains the Company’s filings.

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2024

PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

NOTE 2 — PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

Throughout this document, Envela Corporation is referred to as “we,” “us,” “our,” “Envela,” or the “Company.”

Envela serves as a holding company, conducting its operations via subsidiaries engaged in various businesses and activities within the re-commerce and recycling sectors. The products and services we offer are delivered by our subsidiaries under their distinct brands, rather than directly by Envela Corporation itself. Our operations are organized into two operating and reportable segments: consumer and commercial, which additionally are the Company’s reporting units.

Consumer Segment

Our consumer segment operates in the jewelry industry, specializing in the online and brick-and-mortar sale of authenticated high-end luxury goods, fine jewelry, watches, and bullion. Our diamonds and gemstones are recycled, meaning they were previously set and then unset to become a new design – allowing for a truly low-carbon, ethical origin. The company focuses on buying and selling pre-owned luxury items, ethically sourced diamonds, gemstones, and precious metals, catering to consumers seeking environmentally responsible options for engagement rings, wedding bands, and other fine jewelry. Our profound commitment to extending the lifespan of luxury goods stems from our understanding that well-crafted items have an enduring quality, enabling them to maintain their beauty and value as they are passed from one owner to another.

Commercial Segment

Our commercial segment specializes in the de-manufacturing of end-of-life electronic assets to reclaim commodities and other materials, while also engaging in the information technology (“IT”) asset disposition (“ITAD”) industry. The separated commodities, including metals, plastics, and glass, are sold to downstream processors where they are further processed and reintroduced into new products. ITAD services maximize the residual value of retired IT assets by adhering to a reuse-first philosophy and ensuring equipment is refurbished and re-marketed after data sanitization. The company focuses on offering services that manage the entire lifecycle of technology products to ensure data security, regulatory compliance, and environmental sustainability. We are proud of our role to support a circular economy through responsible reuse and recycling of electronic devices.

For additional information on the consumer and commercial segments, see “Item 1. Business – How We Organize Our Business” in the Company’s 2023 Annual Report.

The interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

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ACCOUNTING POLICIES AND ESTIMATES

6 Months Ended

Jun. 30, 2024

ACCOUNTING POLICIES AND ESTIMATES

ACCOUNTING POLICIES AND ESTIMATES

NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES

Financial Instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. Notes payable approximate fair value due to the market interest rate charged.

Use of Estimates

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

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Consumer Segment

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

Revenue on precious metals requiring an assay is recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals.

The Company offers the option of third-party financing for customers wishing to borrow money for their purchase. Revenue is recognized from the sale upon transfer of title, with the promise of the third-party financing company to pay.

Commercial Segment

The commercial segment recognizes revenue at an amount that reflects the consideration to which the entities expect to be entitled to in exchange for transferring goods or services to the customer.

The commercial segment recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under the guidance of ASC 606, an estimate of the variable consideration that we are expected to be entitled to is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made once the underlying weight and any precious metal spot price movement is resolved, which is usually around six weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract.

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

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

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

See Note 10 – Revenue for further detail.

Sales Returns and Allowances

Sales are recorded, net of expected returns. In some cases, the consumer and commercial segment’s customers may return a product purchased within 30 days of receipt. Our allowance for estimated returns is based on our review of historical returns experience and reduces our reported revenues accordingly.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for returns was $50,281 and $28,402, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for returns was $10,769 and $0, respectively.

Concentrations and Credit Risk

The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to domestic precious metals transactions requiring an assay which are of short duration and settled on comparable terms. Overall customer concentrations as a percentage of sales may vary as a result of the mix of product being sold within each comparative period. Individual customer concentrations are also impacted by each customer’s production schedule and as such the Company identifies the most appropriate sales outlet to ensure a timely transaction settlement.

For the six months ended June 30, 2024, two customers aggregated 21.0% of our sales and represented 0.0% of our accounts receivable balance.

For the six months ended June 30, 2023, three customers aggregated 39.1% of our sales and represented 0.0% of our accounts receivable balance.

The Company believes that no single customer is critical to its business as a result of having diverse revenue streams and the optionality of sales outlets primarily associated with base and precious metals.

Shipping and Handling Costs

Within the consumer and commercial segments, outbound shipping and handling costs are accounted for as fulfillment costs within cost of goods sold.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,350 and $5,237, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $1,194,203 and $1,522,542, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,789 and $5,237, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $2,588,280 and $3,212,483, respectively.

Advertising Costs

The consumer and commercial segment’s advertising costs are expensed as incurred.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $325,079 and $345,052, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $61,882 and $6,686, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $572,982 and $551,127, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $132,977 and $21,239, respectively.

Leases

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

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

Income Taxes

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

Valuation of Deferred Tax Assets

The Company’s deferred tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the three and six months ended June 30, 2024, and June 30, 2023.

As of June 30, 2024, the Company had a deferred tax asset of $6,715. As of December 31, 2023, the Company had a deferred tax liability of $38,668. The Company did not have a valuation allowance as of June 30, 2024, or December 31, 2023.

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s financial performance is based on the following segments: consumer and commercial.

The Company allocates its corporate expenses including selling, general and administrative expenses, depreciation and amortization, other income, interest expense, and income tax expense.

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

Earnings Per Share

Basic earnings per share of our common stock, par value $0.01 per share (our “Common Stock”), is computed by dividing net earnings available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts requiring the Company to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method.

Stock-Based Compensation

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

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

Taxes Collected from Customers

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

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the condensed consolidated balance sheets approximate fair value.

Accounts Receivable, Net of Allowances

Accounts receivable represent amounts primarily due from customers on products and services. Our allowance for credit losses is primarily determined by an analysis of our accounts receivable aging, using the expected losses methodology. The allowance for credit losses is determined based on historical experience of collecting past due amounts, based on the degree of their aging. In addition, specific accounts that are considered and expected to be uncollectable are included in the allowance for credit losses. Accounts receivables are considered delinquent when payment has not been made within contract terms. Accounts receivables are written off when all efforts to collect have been exhausted and the potential for recovery is considered remote.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for credit losses was $0 and $0, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for credit losses was $429,908 and $260,858, respectively.

Inventories

Consumer Segment

The consumer segment values inventory at the lower of cost or net realizable value. We acquire inventory based on our own internal estimate of the fair value of the items at the time of purchase. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, we monitor these fluctuations for any adverse impact on the carrying value of our inventory.

Commercial Segment

Our inventory primarily includes processed and unprocessed base metals, electronic scrap materials, as well as technology assets being held for resale. The processed and unprocessed base metals and electronic scrap materials are valued utilizing the average cost method. Our technology assets are valued utilizing the retail cost method.

See Note 4 – Inventories for further detail.

Goodwill

Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year, or earlier if events or circumstances indicate the carrying value may be impaired. There were no triggering events identified during the six months ended June 30, 2024, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented. There have been no other adjustments to goodwill in any of the periods presented.

See Note 5 – Goodwill for further detail.

Property and Equipment, Net

Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets; except for construction in progress which has not yet been placed into service. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Expenditures for repairs and maintenance are expensed as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized.

See Note 6 – Property and equipment, net for further detail.

Intangible Assets, Net

Finite-lived intangible assets are carried at cost less accumulated amortization and are amortized on a straight-line basis over the estimated useful lives of the assets; except for assets under development that have not yet been placed into service. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

See Note 7 – Intangibles, net for further detail.

Correction of Immaterial Error

The Company’s commercial segment previously reported revenue from freight arrangement services as a component of cost of goods sold. The Company has further evaluated the nature and scope of its service offering and has determined that it meets the definition of a principal in accordance with ASC 606 and as such be reported within revenue.

The following table summarizes the correction of immaterial error:

	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	2023		2023		2023		2023		Total
Sales	$	48,389,040	$	50,303,527	$	36,266,271	$	36,715,250	$	171,674,088
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Sales adjusted		49,809,532		51,095,877		36,876,486		37,481,931		175,263,826
Cost of goods sold		36,979,138		39,541,480		26,531,989		26,964,951		130,017,558
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Cost of goods sold adjusted		38,399,630		40,333,830		27,142,204		27,731,632		133,607,296
Gross margin	$	11,409,902	$	10,762,047	$	9,734,282	$	9,750,299	$	41,656,530

The error had no impact on gross margin, operating income, net income, and basic and diluted earnings per share nor any other financial statement amount. Further these errors had no impact on the consolidated balance sheets, statements of stockholders’ equity, and statements of cash flows. These corrections do not affect any of the metrics used to calculate and evaluate management’s compensation and have no impact on bonuses, commissions, stock-based compensation, or any other employee renumeration. Historical amounts have been corrected and are presented on a comparable basis.

See Note 10 – Revenue for further detail.

Changes in Disclosure

The Company has elected to discontinue reporting the disaggregation of inventory and revenue by resale and recycle. The Company’s business operations continue to evolve and include fee-for-service revenue that does not always correlate to these categories and underlying inventory positions; further, our inventory positions within these disaggregated presentations can vary at any point in time as they are a diverse mix of technology assets, base and precious metals and luxury hard assets. The Company believes that its disclosure of the nature of its operations, the inventory held at each segment and associated risk factors provides a sufficient understanding of its impact on our business.

See Note 4 – Inventories and Note 10 – Revenue, for further detail.

Reclassifications

For the Company’s 2023 Annual Report, the presentation of the operations section within its Consolidated Cash Flow Statements was updated to present "non-cash lease expense" as a separate line item, previously included within "changes in operating assets and liabilities – operating leases.” The Company has elected to reclassify $946,598 from operating leases to non-cash lease expense in the Condensed Consolidated Cash Flow Statement for the six months ended June 30, 2023.

See the Condensed Consolidated Statements of Cash Flows for further detail.

For the Company’s 2023 Annual Report, the amount reported for other current assets within the Consolidated Balance Sheets is related entirely to notes receivables. The Company has elected to present notes receivable as its own line item and has reclassified the historical presentation of the aforementioned as of December 31, 2023.

See the Condensed Consolidated Balance Sheets for further detail.

The Company previously did not disclose construction in progress and intangible assets under development. The Company has determined that providing this information further enhances the understanding of the nature of our capital expenditures. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 6 – Property and equipment, net for further detail.

The Company previously reported the development of its enterprise resource planning system within property and equipment, net. The Company has further evaluated the nature of this asset under ASC 350, Intangibles – Goodwill and Other, and has determined that it is a nonmonetary asset without physical substance and was acquired separately from hardware and as such be reported within intangibles, net. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 7 – Intangibles, net for further detail.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the CODM. In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. ASU 2023-07 will be effective for fiscal years beginning January 1, 2024, Form 10-K, and interim periods within fiscal years beginning on January 1, 2025. The standard will be adopted beginning January 1, 2024, for the fiscal year and adopted for the interim periods beginning January 1, 2025, by using a modified retrospective transition approach. The Company does not expect adoption to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 will be effective for fiscal years beginning January 1, 2025. The standard will be adopted beginning January 1, 2025, for the fiscal year on a prospective basis. Early adoption and retrospective application of the amendments are permitted. The Company does not expect adoption to have a material impact on its consolidated financial statements.

No other recently issued or effective ASUs had, or are expected to have, a material impact on the Company’s results of operations, financial condition, or liquidity.

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INVENTORIES

6 Months Ended

Jun. 30, 2024

INVENTORIES

INVENTORIES

NOTE 4 — INVENTORIES

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

	June 30,		December 31,
	2024		2023
Consumer
Trade inventories	$	25,294,422	$	21,905,055
Sub-total		25,294,422		21,905,055
Commercial
Trade inventories		1,485,496		1,241,122
Sub-total		1,485,496		1,241,122
	$	26,779,918	$	23,146,177

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GOODWILL

6 Months Ended

Jun. 30, 2024

GOODWILL

GOODWILL

NOTE 5 — GOODWILL

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

	June 30,		December 31,
	2024		2023
Consumer
Opening balance	$	300,000	$	-
Additions (reductions) (1)		-		300,000
Sub-total		300,000		300,000
Commercial
Opening balance		3,621,453		3,621,453
Additions (reductions)		-		-
Sub-total		3,621,453		3,621,453
	$	3,921,453	$	3,921,453

(1) The increase in goodwill of $300 thousand for the year ended December 31, 2023, relates to the Company’s acquisition of Steven Kretchmer, Inc. on September 12, 2023 (“Kretchmer Transaction”). The Kretchmer Transaction remains within the measurement period of ASC 805, Business Combinations. The measurement period is the one-year period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination.

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PROPERTY AND EQUIPMENT NET

6 Months Ended

Jun. 30, 2024

PROPERTY AND EQUIPMENT NET

PROPERTY AND EQUIPMENT

NOTE 6 — PROPERTY AND EQUIPMENT, NET

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

										Adjusted
	June 30,			December 31,						December 31,
	2024			2023			Reclassification			2023
Consumer
Land	$	1,824,892		$	1,824,892		$	-		$	1,824,892
Building and improvements		4,409,143			4,126,507			(1,443,207	)		2,683,300
Leasehold improvements		1,516,648			1,450,695			-			1,450,695
Furniture and fixtures		987,853			802,058			(101,226	)		700,832
Machinery and equipment		1,276,322			1,224,783			(3,215	)		1,221,568
Vehicles		22,859			22,859			-			22,859
Construction in progress (1)		83,773			-			1,547,648			1,547,648
		10,121,490			9,451,794			-			9,451,794
Less: accumulated depreciation		(3,104,314	)		(2,946,727	)		-			(2,946,727	)
Sub-total		7,017,176			6,505,067			-			6,505,067
Commercial
Leasehold improvements		151,647			151,647			-			151,647
Furniture and fixtures		145,950			145,950			-			145,950
Machinery and equipment		1,250,953			1,142,731			(48,979	)		1,093,752
Vehicles		222,232			222,232			-			222,232
Construction in progress (2)		-			-			48,979			48,979
		1,770,782			1,662,560			-			1,662,560
Less: accumulated depreciation		(965,780	)		(819,389	)		-			(819,389	)
Sub-total		805,002			843,171			-			843,171
Corporate
Land		1,106,664			1,106,664			-			1,106,664
Building and improvements		2,688,523			2,505,716			(3,500	)		2,502,216
Machinery and equipment		28,627			28,627			-			28,627
Enterprise resource planning system (3)		-			191,075			(191,075	)		-
Construction in progress (4)		-			-			3,500			3,500
		3,823,814			3,832,082			(191,075	)		3,641,007
Less: accumulated depreciation		(262,108	)		(225,021	)		-			(225,021	)
Sub-total		3,561,706			3,607,061			(191,075	)		3,415,986
	$	11,383,884		$	10,955,299		$	(191,075	)	$	10,764,224

(1) The reclassification primarily related to the build-out of our Arizona retail stores, which were placed into service in the second quarter of Fiscal 2024. 

(2) The reclassification related to the build-out of production equipment, which was placed into service in the second quarter of Fiscal 2024. 

(3) Reclassified amount to intangibles, net. See Note 7 – Intangible, Net for further details. 

(4) The reclassification related to improvements to our corporate headquarters, which were placed into service in the second quarter of Fiscal 2024. 

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INTANGIBLES NET

6 Months Ended

Jun. 30, 2024

INTANGIBLES NET

INTANGIBLE NET

NOTE 7 — INTANGIBLES, NET

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

									Adjusted
	June 30,			December 31,					December 31,
	2024			2023			Reclassification		2023
Consumer
Technology	$	395,396		$	371,352		$	-	$	371,352
Assets under development (2)		6,084			-			-		-
		401,480			371,352			-		371,352
Less: accumulated amortization		(371,136	)		(365,852	)		-		(365,852	)
Sub-total		30,344			5,500			-		5,500
Commercial
Trademarks/tradenames		2,869,000			2,869,000			-		2,869,000
Customer contracts		1,873,000			1,873,000			-		1,873,000
Customer relationships		1,809,000			1,809,000			-		1,809,000
		6,551,000			6,551,000			-		6,551,000
Less: accumulated amortization		(2,563,129	)		(2,248,405	)		-		(2,248,405	)
Sub-total		3,987,871			4,302,595			-		4,302,595
Corporate
Technology		422,317			-					-
Assets under development (1)(2)		35,125			-			191,075		191,075
		457,442			-			191,075		191,075
Less: accumulated amortization		(39,958	)		-			-		-
Sub-total		417,484			-			191,075		191,075
	$	4,435,699		$	4,308,095		$	191,075	$	4,499,170

(1) The reclassification related to the initial development of our enterprise resource planning system, which was placed into service in the first quarter of Fiscal 2024.

(2) As of June 30, 2024, these intangible assets are under development, have not yet been placed into service and are not yet amortizable.

The following table depicts the Company’s estimated future amortization expense related to intangible assets as of June 30, 2024:

	Consumer		Commercial		Corporate		Total
2024		3,378		327,550		42,483		373,411
2025		4,728		655,100		84,969		744,797
2026		4,728		655,100		84,969		744,797
2027		4,728		655,100		84,969		744,797
2028		4,728		655,100		84,969		744,797
Thereafter		1,970		1,039,921		-		1,041,891
	$	24,260	$	3,987,871	$	382,359	$	4,394,490

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ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2024

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 8 — ACCRUED EXPENSES

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

	June 30,		December 31,
	2024		2023
Consumer
Accrued interest	$	14,282	$	11,904
Payroll		148,343		226,435
Taxes		194,072		125,130
Other		24,255		-
Sub-total		380,952		363,469
Commercial
Accrued interest		6,287		7,903
Payroll		199,389		375,663
Taxes		16,735		-
Unvouchered inventory payments		1,053,480		1,041,188
Other		69,106		96,422
Sub-total		1,344,997		1,521,176
Corporate
Accrued interest		6,838		7,227
Payroll		15,982		24,543
Taxes		59,628		404,357
Professional fees		32,920		165,651
Other		1,250		-
Sub-total		116,618		601,778
	$	1,842,567	$	2,486,423

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2024

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 9 — SEGMENT INFORMATION

The following table depicts the Company’s disaggregated condensed consolidated statements of income for the three months ended June 30, 2024 and 2023:

	Three Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	31,990,028			70.6	%	$	39,641,434			77.6	%
Commercial		13,306,974			29.4	%		11,454,443			22.4	%
Sales		45,297,002			100.0	%		51,095,877			100.0	%
Consumer		27,968,699			61.7	%		35,546,792			69.6	%
Commercial		5,938,846			13.1	%		4,787,038			9.4	%
Cost of goods sold		33,907,545			74.9	%		40,333,830			78.9	%
Gross margin		11,389,457			25.1	%		10,762,047			21.1	%
Expenses:
Consumer		4,009,468			8.9	%		2,472,973			4.8	%
Commercial		5,108,580			11.3	%		5,889,581			11.5	%
Selling, general and administrative		9,118,048			20.2	%		8,362,554			16.4	%
Consumer		112,518			0.2	%		79,408			0.2	%
Commercial		249,749			0.6	%		256,766			0.5	%
Depreciation and amortization		362,267			0.8	%		336,174			0.7	%
Total operating expenses		9,480,315			20.9	%		8,698,728			17.0	%
Operating income		1,909,142			4.2	%		2,063,319			4.0	%
Other income (expense):
Consumer		8,003			0.0	%		23,929			0.0	%
Commercial		217,414			0.5	%		129,723			0.3	%
Other income		225,417			0.5	%		153,652			0.3	%
Consumer		(55,697	)		-0.1	%		(58,209	)		-0.1	%
Commercial		(53,444	)		-0.1	%		(56,479	)		-0.1	%
Interest expense		(109,141	)		-0.2	%		(114,688	)		-0.2	%
Income before income taxes		2,025,418			4.5	%		2,102,283			4.1	%
Consumer		(29,607	)		-0.1	%		(339,672	)		-0.7	%
Commercial		(431,632	)		-1.1	%		(158,902	)		-0.4	%
Income tax expense		(461,239	)		-1.2	%		(498,574	)		-1.1	%
Net income	$	1,564,179			3.5	%	$	1,603,709			3.1	%

(1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

The following table depicts the Company’s disaggregated condensed consolidated statements of income for the six months ended June 30, 2024 and 2023:

	Six Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	60,216,045			70.7	%	$	76,345,831			75.7	%
Commercial		24,938,737			29.3	%		24,559,578			24.3	%
Sales		85,154,782			100.0	%		100,905,409			100.0	%
Consumer		52,645,527			61.8	%		68,266,221			67.7	%
Commercial		10,799,114			12.7	%		10,467,239			10.4	%
Cost of goods sold		63,444,641			74.5	%		78,733,460			78.0	%
Gross margin		21,710,141			25.5	%		22,171,949			22.0	%
Expenses:
Consumer		7,260,958			8.5	%		4,868,998			4.8	%
Commercial		9,494,066			11.1	%		11,398,859			11.3	%
Selling, general and administrative		16,755,024			19.7	%		16,267,857			16.1	%
Consumer		206,194			0.2	%		177,542			0.2	%
Commercial		499,638			0.6	%		512,983			0.5	%
Depreciation and amortization		705,832			0.8	%		690,525			0.7	%
Total operating expenses		17,460,856			20.5	%		16,958,382			16.8	%
Operating income		4,249,285			5.0	%		5,213,567			5.2	%
Other income (expense):
Consumer		16,008			0.0	%		47,463			0.0	%
Commercial		447,937			0.5	%		316,968			0.3	%
Other income		463,945			0.5	%		364,431			0.4	%
Consumer		(120,098	)		-0.1	%		(117,827	)		-0.1	%
Commercial		(109,897	)		-0.1	%		(113,925	)		-0.1	%
Interest expense		(229,995	)		-0.3	%		(231,752	)		-0.2	%
Income before income taxes		4,483,235			5.3	%		5,346,246			5.3	%
Consumer		(88,758	)		-0.1	%		(657,513	)		-0.7	%
Commercial		(922,759	)		-1.2	%		(558,707	)		-0.7	%
Income tax expense		(1,011,517	)		-1.3	%		(1,216,220	)		-1.4	%
Net income	$	3,471,718			4.1	%	$	4,130,026			4.1	%

(1) The "% of Sales" figures present the proportion of each line item to the total consolidated sales for the respective period, which management believes is relevant to an assessment and understanding of our financial condition and results of operations. Due to rounding, percentages presented may not add up precisely to the totals provided.

The following chart depicts the Company’s total assets:

	As of
	June 30, 2024		December 31, 2023
Consumer	$	35,482,326	$	35,839,361
Commercial		33,765,284		33,777,041
Corporate		4,601,250		3,857,827
	$	73,848,860	$	73,474,229

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REVENUE

6 Months Ended

Jun. 30, 2024

REVENUE

REVENUE

NOTE 10 — REVENUE

The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	31,990,028	$	4,021,329		12.6	%	$	39,641,434	$	4,094,642		10.3	%
Commercial		13,306,974		7,368,128		55.4	%		10,662,093		6,667,405		62.5	%
Correction of immaterial error (1)		-		-		-			792,350		-		-
Commercial adjusted		13,306,974		7,368,128		55.4	%		11,454,443		6,667,405		58.2	%
	$	45,297,002	$	11,389,457		25.1	%	$	51,095,877	$	10,762,047		21.1	%

(1) Correction of immaterial error relating to freight arrangement services, see Note 3 – Accounting Policies and Estimates for further detail.

The following table depicts the Company’s disaggregation of total sales and gross margin for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	60,216,045	$	7,570,518		12.6	%	$	76,345,831	$	8,079,610		10.6	%
Commercial		24,938,737		14,139,623		56.7	%		22,346,736		14,092,339		63.1	%
Correction of immaterial error (1)		-		-		-			2,212,842		-		-
Commercial adjusted		24,938,737		14,139,623		56.7	%		24,559,578		14,092,339		57.4	%
	$	85,154,782	$	21,710,141		25.5	%	$	100,905,409	$	22,171,949		22.0	%

(1) Correction of immaterial error relating to freight arrangement services, see Note 3 – Accounting Policies and Estimates for further detail.

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

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2023		839,239		-		196,382
Closing Balance - 6/30/2023		309,234		-		249,179
Commercial
Opening Balance - 1/1/2023		7,110,536		-		-
Closing Balance - 6/30/2023		7,545,398		-		-

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2024		3,411,501		-		58,728
Closing Balance - 6/30/2024		396,415		-		127,226
Commercial
Opening Balance - 1/1/2024		4,399,658		-		-
Closing Balance - 6/30/2024		4,441,809		-		-

The Company has no contract assets, and the only contract liability is customer deposits, which are reported within other liabilities in the Condensed Consolidated Balance Sheets.

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LEASES

6 Months Ended

Jun. 30, 2024

LEASES

LEASES

NOTE 11 — LEASES

The following table depicts the Company’s future annual minimum leases payments as of June 30, 2024:

	Operating
	Leases
Consumer
2024	$	344,789
2025		544,944
2026		514,210
2027		209,324
2028		159,210
Thereafter		39,803
Total minimum lease payments		1,812,280
Less imputed interest		(105,001	)
Sub-total		1,707,279
Commercial
2024		699,643
2025		1,321,299
2026		474,320
2027		33,454
2028		-
Thereafter		-
Total minimum lease payments		2,528,716
Less imputed interest		(93,148	)
Sub-total		2,435,568
Total		4,142,847
Current portion		1,939,765
	$	2,203,082

All of the Company’s leased facilities as of June 30, 2024, are non-cancellable. The leases are a combination of triple net leases, for which the Company pays its proportionate share of common area maintenance, property taxes, and property insurance, and modified gross leases, for which the Company directly pays for common area maintenance and property insurance. Leasing costs for the three months ended June 30, 2024 and 2023 were $767,902 and $705,635, respectively, comprised of a combination of minimum lease payments and variable lease costs. Leasing costs for the six months ended June 30, 2024 and 2023 were $1,552,637 and $1,361,885, respectively, comprised of a combination of minimum lease payments and variable lease costs.

As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.5 years and 3.8%. As of June 30, 2023, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.8 years and 4.4%.

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BASIC AND DILUTED AVERAGE SHARES

6 Months Ended

Jun. 30, 2024

BASIC AND DILUTED AVERAGE SHARES

BASIC AND DILUTED AVERAGE SHARES

NOTE 12 — BASIC AND DILUTED AVERAGE SHARES

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the three months ended June 30, 2024 and 2023:

	For the Three Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,248,554		26,916,648
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,263,554		26,931,648

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the six months ended June 30, 2024 and 2023:

	For the Six Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,333,796		26,920,618
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,348,796		26,935,618

For the three and six months ended June 30, 2024, and 2023, there was a total of 15 thousand common stock options unexercised. For the three and six months ended June 30, 2024, and 2023, there were no anti-dilutive shares.

On March 14, 2023, a stock repurchase program was unanimously approved by the Company’s Board of Directors (the “Board”), which gave management authorization to purchase up to one million shares of the Company’s stock, at a per-share price not to exceed $9.00, on the open market. The plan expires on March 31, 2026.

The following table lists the repurchase of Company shares for the three and six months ended June 30, 2024:

	Total Number of		Average Price		Total Price		Shares Available
Fiscal Period	Shares Purchased		Paid per Share		Paid		to Purchase
Balance as of January 1, 2024		415,973	$	5.18	$	2,155,049		584,027
January 1 - 31, 2024		59,417		4.52		268,569		524,610
February 1 - 29, 2024		56,343		4.53		255,195		468,267
March 1 - 31, 2024		85,580		4.46		381,382		382,687
Balance as of March 31, 2024		617,313	$	4.96	$	3,060,195		382,687
April 1 - 30, 2024		30,891		4.66		143,840		351,796
May 1 - 31, 2024		37,672		4.65		175,257		314,124
June 1 - 30, 2024		83,526		4.74		396,242		230,598
Balance as of June 30, 2024		769,402	$	4.91	$	3,775,534		230,598

For the three months ended June 30, 2024, the Company repurchased 152,089 shares for $715,339, for an average price of $4.70.

For the six months ended June 30, 2024, the Company repurchased 353,429 shares for $1,620,485, for an average price of $4.58.

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DEBT

6 Months Ended

Jun. 30, 2024

DEBT

DEBT

NOTE 13 — DEBT

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

	Outstanding Balance
	June 30,			December 31,
	2024			2023
Consumer
Note payable, FSB (1)	$	2,509,716		$	2,563,108
Note payable, Truist Bank (3)		819,975			838,430
Notes payable, TBT (4,5)		2,023,143			2,064,928
Note payable, Kretchmer Transaction (6)		200,000			200,000
Sub-total		5,552,834			5,666,466
Commercial
Note payable, FSB (2)		5,694,200			5,815,381
Note payable, Avail Transaction (7)		500,000			833,333
Sub-total		6,194,200			6,648,714
Corporate
Line of credit, FSB (8)		-			-
Note payable, TBT (9)		2,559,832			2,618,311
Sub-total		2,559,832			2,618,311
Sub-total		14,306,866			14,933,491
Current portion		(1,307,921	)		(1,361,443	)
	$	12,998,945		$	13,572,048

The following table depicts the Company’s future principal payments on long-term debt obligations as of June 30, 2024:

	2024		2025		2026		2027		2028		Thereafter
Consumer
Note payable, FSB (1)		55,107		112,154		2,342,455		-		-		-
Note payable, Truist Bank (3)		18,800		38,745		40,203		41,716		43,216		637,296
Notes payable, TBT (4,5)		43,419		487,260		71,359		74,081		76,767		1,270,257
Note payable, Kretchmer Transaction (6)		200,000		-		-		-		-		-
Sub-total		317,326		638,159		2,454,017		115,797		119,983		1,907,553
Commercial
Note payable, FSB (2)		125,031		254,466		5,314,702		-		-		-
Note payable, Avail Transaction (7)		333,333		166,667		-		-		-		-
Sub-total		458,364		421,133		5,314,702		-		-		-
Corporate
Line of Credit, FSB (8)		-		-		-		-		-		-
Note payable, TBT (9)		59,442		2,500,390		-		-		-		-
Sub-total		59,442		2,500,390		-		-		-		-
	$	835,132	$	3,559,682	$	7,768,719	$	115,797	$	119,983	$	1,907,553

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

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

(3) On July 9, 2020, the consumer segment entered into a $1.195 million secured amortizing note payable with Truist Bank. The note payable bears interest at 3.65% and matures on July 9, 2030. 

(4) On September 14, 2020, the consumer segment entered into a $620 thousand secured amortizing note payable with Texas Bank & Trust (“TBT”). The note payable bears interest at 3.75% and matures on September 14, 2025. 

(5) On July 30, 2021, the consumer segment entered into a $2.215 million secured amortizing note payable with TBT. The note payable bears interest at 3.75% and matures on July 30, 2031. 

(6) On September 12, 2023, the consumer segment entered into a $300 thousand secured amortizing note payable in relation to the Kretchmer Transaction. The note payable’s imputed interest is 3.10% and matures on October 1, 2025. The consumer segment is restructuring the Kretchmer Transaction and the aforementioned terms and conditions and as such is electing to record the note payable in current liabilities. 

(7) On October 29, 2021, the consumer segment entered into a $4.500 million secured amortizing note payable in relation to the acquisition of Avail Recovery Solutions, LLC on October 29, 2021 (“Avail Transaction"). The note payable’s imputed interest is 3.10% and matures on April 1, 2025. 

(8) On November 23, 2021, the Company entered into a $3.500 million secured line of credit with FSB. The line of credit bears interest at 3.10% and matures on November 15, 2024. This note was previously presented within our commercial segment and is now presented within corporate as the line of credit provides borrowing capacity for all segments. 

(9) On November 4, 2020, a wholly owned subsidiary of Envela entered into a $2.960 million secured amortizing note payable with TBT. The note payable bears interest at 3.25% and matures on November 4, 2025. 

The Company was in compliance with all of its debt obligation covenants for the three and six months ended June 30, 2024, and June 30, 2023.

The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of June 30, 2024:

	Scheduled
	Principal		Loan
Scheduled Principal Payments and Maturities by Year:	Payments		Maturities		Total
2024		635,132		200,000		835,132
2025		767,282		2,792,400		3,559,682
2026		457,492		7,311,227		7,768,719
2027		115,797		-		115,797
2028		119,983		-		119,983
Thereafter		291,704		1,615,849		1,907,553
	$	2,387,390	$	11,919,476	$	14,306,866

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STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

STOCK BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 14 — STOCK-BASED COMPENSATION

There was no stock-based compensation expense for the three and six months ended June 30, 2024, and June 30, 2023.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 15 — RELATED PARTY TRANSACTIONS

The Company has a corporate policy governing the identification, review, consideration, and approval or ratification of transactions with related persons. Under this policy, all related party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with the Company’s best interests and the best interests of its shareholders. There are no related party transactions subject to reporting as of June 30, 2024, and June 30, 2023.

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CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Contingencies (Note 16)

CONTINGENCIES

NOTE 16 — CONTINGENCIES

We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, and proceedings, either individually or in the aggregate, will have a material adverse effect on financial position, results of operations, or liquidity. However, the outcomes of any currently pending lawsuits, claims, and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.

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ACCOUNTING POLICIES AND ESTIMATES (Policies)

6 Months Ended

Jun. 30, 2024

ACCOUNTING POLICIES AND ESTIMATES

Financial Instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. Notes payable approximate fair value due to the market interest rate charged.

Use of Estimates

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

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue Recognition provides guidance to identify performance obligations for revenue-generating transactions. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Consumer Segment

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

Revenue on precious metals requiring an assay is recognized upon transfer of title, based on the determination of the underlying weight and price of the associated metals.

The Company offers the option of third-party financing for customers wishing to borrow money for their purchase. Revenue is recognized from the sale upon transfer of title, with the promise of the third-party financing company to pay.

Commercial Segment

The commercial segment recognizes revenue at an amount that reflects the consideration to which the entities expect to be entitled to in exchange for transferring goods or services to the customer.

The commercial segment recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied. Under the guidance of ASC 606, an estimate of the variable consideration that we are expected to be entitled to is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made once the underlying weight and any precious metal spot price movement is resolved, which is usually around six weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract.

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

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

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

See Note 10 – Revenue for further detail.

Sales Returns and Allowances

Sales are recorded, net of expected returns. In some cases, the consumer and commercial segment’s customers may return a product purchased within 30 days of receipt. Our allowance for estimated returns is based on our review of historical returns experience and reduces our reported revenues accordingly.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for returns was $50,281 and $28,402, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for returns was $10,769 and $0, respectively.

Concentrations and Credit Risk

The Company is potentially subject to concentrations of counterparty credit risk. The concentrations described herein pertain to domestic precious metals transactions requiring an assay which are of short duration and settled on comparable terms. Overall customer concentrations as a percentage of sales may vary as a result of the mix of product being sold within each comparative period. Individual customer concentrations are also impacted by each customer’s production schedule and as such the Company identifies the most appropriate sales outlet to ensure a timely transaction settlement.

For the six months ended June 30, 2024, two customers aggregated 21.0% of our sales and represented 0.0% of our accounts receivable balance.

For the six months ended June 30, 2023, three customers aggregated 39.1% of our sales and represented 0.0% of our accounts receivable balance.

The Company believes that no single customer is critical to its business as a result of having diverse revenue streams and the optionality of sales outlets primarily associated with base and precious metals.

Shipping and Handling Costs

Within the consumer and commercial segments, outbound shipping and handling costs are accounted for as fulfillment costs within cost of goods sold.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,350 and $5,237, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $1,194,203 and $1,522,542, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s outbound shipping and handling costs were $49,789 and $5,237, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s outbound shipping and handling costs were $2,588,280 and $3,212,483, respectively.

Advertising Costs

The consumer and commercial segment’s advertising costs are expensed as incurred.

For the three months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $325,079 and $345,052, respectively. For the three months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $61,882 and $6,686, respectively.

For the six months ended June 30, 2024, and June 30, 2023, the consumer segment’s advertising costs were $572,982 and $551,127, respectively. For the six months ended June 30, 2024, and June 30, 2023, the commercial segment’s advertising costs were $132,977 and $21,239, respectively.

Leases

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

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

Income Taxes

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

Valuation of Deferred Tax Assets

The Company’s deferred tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the three and six months ended June 30, 2024, and June 30, 2023.

As of June 30, 2024, the Company had a deferred tax asset of $6,715. As of December 31, 2023, the Company had a deferred tax liability of $38,668. The Company did not have a valuation allowance as of June 30, 2024, or December 31, 2023.

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s financial performance is based on the following segments: consumer and commercial.

The Company allocates its corporate expenses including selling, general and administrative expenses, depreciation and amortization, other income, interest expense, and income tax expense.

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

Earnings Per Share

Basic earnings per share of our common stock, par value $0.01 per share (our “Common Stock”), is computed by dividing net earnings available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts requiring the Company to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method.

Stock-Based Compensation

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

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

Taxes Collected from Customers

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

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the condensed consolidated balance sheets approximate fair value.

Accounts Receivable, Net of Allowances

Accounts receivable represent amounts primarily due from customers on products and services. Our allowance for credit losses is primarily determined by an analysis of our accounts receivable aging, using the expected losses methodology. The allowance for credit losses is determined based on historical experience of collecting past due amounts, based on the degree of their aging. In addition, specific accounts that are considered and expected to be uncollectable are included in the allowance for credit losses. Accounts receivables are considered delinquent when payment has not been made within contract terms. Accounts receivables are written off when all efforts to collect have been exhausted and the potential for recovery is considered remote.

As of June 30, 2024, and December 31, 2023, the consumer segment’s allowance for credit losses was $0 and $0, respectively.

As of June 30, 2024, and December 31, 2023, the commercial segment’s allowance for credit losses was $429,908 and $260,858, respectively.

Inventories

Consumer Segment

The consumer segment values inventory at the lower of cost or net realizable value. We acquire inventory based on our own internal estimate of the fair value of the items at the time of purchase. We consider factors such as the current spot market price of precious metals and the current market demand for the items being purchased. Consigned inventory has a net zero balance. The majority of our inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, we monitor these fluctuations for any adverse impact on the carrying value of our inventory.

Commercial Segment

Our inventory primarily includes processed and unprocessed base metals, electronic scrap materials, as well as technology assets being held for resale. The processed and unprocessed base metals and electronic scrap materials are valued utilizing the average cost method. Our technology assets are valued utilizing the retail cost method.

See Note 4 – Inventories for further detail.

Goodwill

Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year, or earlier if events or circumstances indicate the carrying value may be impaired. There were no triggering events identified during the six months ended June 30, 2024, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented. There have been no other adjustments to goodwill in any of the periods presented.

See Note 5 – Goodwill for further detail.

Property and Equipment, Net

Property and equipment are carried at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets; except for construction in progress which has not yet been placed into service. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Expenditures for repairs and maintenance are expensed as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized.

See Note 6 – Property and equipment, net for further detail.

Intangible Assets, Net

Finite-lived intangible assets are carried at cost less accumulated amortization and are amortized on a straight-line basis over the estimated useful lives of the assets; except for assets under development that have not yet been placed into service. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

See Note 7 – Intangibles, net for further detail.

Correction of Immaterial Error

The Company’s commercial segment previously reported revenue from freight arrangement services as a component of cost of goods sold. The Company has further evaluated the nature and scope of its service offering and has determined that it meets the definition of a principal in accordance with ASC 606 and as such be reported within revenue.

The following table summarizes the correction of immaterial error:

	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	2023		2023		2023		2023		Total
Sales	$	48,389,040	$	50,303,527	$	36,266,271	$	36,715,250	$	171,674,088
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Sales adjusted		49,809,532		51,095,877		36,876,486		37,481,931		175,263,826
Cost of goods sold		36,979,138		39,541,480		26,531,989		26,964,951		130,017,558
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Cost of goods sold adjusted		38,399,630		40,333,830		27,142,204		27,731,632		133,607,296
Gross margin	$	11,409,902	$	10,762,047	$	9,734,282	$	9,750,299	$	41,656,530

The error had no impact on gross margin, operating income, net income, and basic and diluted earnings per share nor any other financial statement amount. Further these errors had no impact on the consolidated balance sheets, statements of stockholders’ equity, and statements of cash flows. These corrections do not affect any of the metrics used to calculate and evaluate management’s compensation and have no impact on bonuses, commissions, stock-based compensation, or any other employee renumeration. Historical amounts have been corrected and are presented on a comparable basis.

See Note 10 – Revenue for further detail.

Changes in Disclosure

The Company has elected to discontinue reporting the disaggregation of inventory and revenue by resale and recycle. The Company’s business operations continue to evolve and include fee-for-service revenue that does not always correlate to these categories and underlying inventory positions; further, our inventory positions within these disaggregated presentations can vary at any point in time as they are a diverse mix of technology assets, base and precious metals and luxury hard assets. The Company believes that its disclosure of the nature of its operations, the inventory held at each segment and associated risk factors provides a sufficient understanding of its impact on our business.

See Note 4 – Inventories and Note 10 – Revenue, for further detail.

Reclassifications

For the Company’s 2023 Annual Report, the presentation of the operations section within its Consolidated Cash Flow Statements was updated to present "non-cash lease expense" as a separate line item, previously included within "changes in operating assets and liabilities – operating leases.” The Company has elected to reclassify $946,598 from operating leases to non-cash lease expense in the Condensed Consolidated Cash Flow Statement for the six months ended June 30, 2023.

See the Condensed Consolidated Statements of Cash Flows for further detail.

For the Company’s 2023 Annual Report, the amount reported for other current assets within the Consolidated Balance Sheets is related entirely to notes receivables. The Company has elected to present notes receivable as its own line item and has reclassified the historical presentation of the aforementioned as of December 31, 2023.

See the Condensed Consolidated Balance Sheets for further detail.

The Company previously did not disclose construction in progress and intangible assets under development. The Company has determined that providing this information further enhances the understanding of the nature of our capital expenditures. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 6 – Property and equipment, net for further detail.

The Company previously reported the development of its enterprise resource planning system within property and equipment, net. The Company has further evaluated the nature of this asset under ASC 350, Intangibles – Goodwill and Other, and has determined that it is a nonmonetary asset without physical substance and was acquired separately from hardware and as such be reported within intangibles, net. The Company has elected to reclassify the historical presentation of the aforementioned as of December 31, 2023.

See Note 7 – Intangibles, net for further detail.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the CODM. In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. ASU 2023-07 will be effective for fiscal years beginning January 1, 2024, Form 10-K, and interim periods within fiscal years beginning on January 1, 2025. The standard will be adopted beginning January 1, 2024, for the fiscal year and adopted for the interim periods beginning January 1, 2025, by using a modified retrospective transition approach. The Company does not expect adoption to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 will be effective for fiscal years beginning January 1, 2025. The standard will be adopted beginning January 1, 2025, for the fiscal year on a prospective basis. Early adoption and retrospective application of the amendments are permitted. The Company does not expect adoption to have a material impact on its consolidated financial statements.

No other recently issued or effective ASUs had, or are expected to have, a material impact on the Company’s results of operations, financial condition, or liquidity.

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ACCOUNTING POLICIES AND ESTIMATES (Tables)

6 Months Ended

Jun. 30, 2024

ACCOUNTING POLICIES AND ESTIMATES

Schedule Of Correction of Immaterial Error

	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	2023		2023		2023		2023		Total
Sales	$	48,389,040	$	50,303,527	$	36,266,271	$	36,715,250	$	171,674,088
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Sales adjusted		49,809,532		51,095,877		36,876,486		37,481,931		175,263,826
Cost of goods sold		36,979,138		39,541,480		26,531,989		26,964,951		130,017,558
Correction of immaterial error		1,420,492		792,350		610,215		766,681		3,589,738
Cost of goods sold adjusted		38,399,630		40,333,830		27,142,204		27,731,632		133,607,296
Gross margin	$	11,409,902	$	10,762,047	$	9,734,282	$	9,750,299	$	41,656,530

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2024

INVENTORIES

Schedule Of Inventories

	June 30,		December 31,
	2024		2023
Consumer
Trade inventories	$	25,294,422	$	21,905,055
Sub-total		25,294,422		21,905,055
Commercial
Trade inventories		1,485,496		1,241,122
Sub-total		1,485,496		1,241,122
	$	26,779,918	$	23,146,177

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GOODWILL (Tables)

6 Months Ended

Jun. 30, 2024

GOODWILL

Schedule Of Goodwill

	June 30,		December 31,
	2024		2023
Consumer
Opening balance	$	300,000	$	-
Additions (reductions) (1)		-		300,000
Sub-total		300,000		300,000
Commercial
Opening balance		3,621,453		3,621,453
Additions (reductions)		-		-
Sub-total		3,621,453		3,621,453
	$	3,921,453	$	3,921,453

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PROPERTY AND EQUIPMENT NET (Tables)

6 Months Ended

Jun. 30, 2024

PROPERTY AND EQUIPMENT NET

Schedule Of Property And Equipment

										Adjusted
	June 30,			December 31,						December 31,
	2024			2023			Reclassification			2023
Consumer
Land	$	1,824,892		$	1,824,892		$	-		$	1,824,892
Building and improvements		4,409,143			4,126,507			(1,443,207	)		2,683,300
Leasehold improvements		1,516,648			1,450,695			-			1,450,695
Furniture and fixtures		987,853			802,058			(101,226	)		700,832
Machinery and equipment		1,276,322			1,224,783			(3,215	)		1,221,568
Vehicles		22,859			22,859			-			22,859
Construction in progress (1)		83,773			-			1,547,648			1,547,648
		10,121,490			9,451,794			-			9,451,794
Less: accumulated depreciation		(3,104,314	)		(2,946,727	)		-			(2,946,727	)
Sub-total		7,017,176			6,505,067			-			6,505,067
Commercial
Leasehold improvements		151,647			151,647			-			151,647
Furniture and fixtures		145,950			145,950			-			145,950
Machinery and equipment		1,250,953			1,142,731			(48,979	)		1,093,752
Vehicles		222,232			222,232			-			222,232
Construction in progress (2)		-			-			48,979			48,979
		1,770,782			1,662,560			-			1,662,560
Less: accumulated depreciation		(965,780	)		(819,389	)		-			(819,389	)
Sub-total		805,002			843,171			-			843,171
Corporate
Land		1,106,664			1,106,664			-			1,106,664
Building and improvements		2,688,523			2,505,716			(3,500	)		2,502,216
Machinery and equipment		28,627			28,627			-			28,627
Enterprise resource planning system (3)		-			191,075			(191,075	)		-
Construction in progress (4)		-			-			3,500			3,500
		3,823,814			3,832,082			(191,075	)		3,641,007
Less: accumulated depreciation		(262,108	)		(225,021	)		-			(225,021	)
Sub-total		3,561,706			3,607,061			(191,075	)		3,415,986
	$	11,383,884		$	10,955,299		$	(191,075	)	$	10,764,224

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INTANGIBLES NET (Tables)

6 Months Ended

Jun. 30, 2024

INTANGIBLES NET

Schedule Of Intangible Assets

									Adjusted
	June 30,			December 31,					December 31,
	2024			2023			Reclassification		2023
Consumer
Technology	$	395,396		$	371,352		$	-	$	371,352
Assets under development (2)		6,084			-			-		-
		401,480			371,352			-		371,352
Less: accumulated amortization		(371,136	)		(365,852	)		-		(365,852	)
Sub-total		30,344			5,500			-		5,500
Commercial
Trademarks/tradenames		2,869,000			2,869,000			-		2,869,000
Customer contracts		1,873,000			1,873,000			-		1,873,000
Customer relationships		1,809,000			1,809,000			-		1,809,000
		6,551,000			6,551,000			-		6,551,000
Less: accumulated amortization		(2,563,129	)		(2,248,405	)		-		(2,248,405	)
Sub-total		3,987,871			4,302,595			-		4,302,595
Corporate
Technology		422,317			-					-
Assets under development (1)(2)		35,125			-			191,075		191,075
		457,442			-			191,075		191,075
Less: accumulated amortization		(39,958	)		-			-		-
Sub-total		417,484			-			191,075		191,075
	$	4,435,699		$	4,308,095		$	191,075	$	4,499,170

Schedule Of Estimated Amortization Expense

	Consumer		Commercial		Corporate		Total
2024		3,378		327,550		42,483		373,411
2025		4,728		655,100		84,969		744,797
2026		4,728		655,100		84,969		744,797
2027		4,728		655,100		84,969		744,797
2028		4,728		655,100		84,969		744,797
Thereafter		1,970		1,039,921		-		1,041,891
	$	24,260	$	3,987,871	$	382,359	$	4,394,490

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ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2024

ACCRUED EXPENSES

Schedule Of Accrued Expenses

	June 30,		December 31,
	2024		2023
Consumer
Accrued interest	$	14,282	$	11,904
Payroll		148,343		226,435
Taxes		194,072		125,130
Other		24,255		-
Sub-total		380,952		363,469
Commercial
Accrued interest		6,287		7,903
Payroll		199,389		375,663
Taxes		16,735		-
Unvouchered inventory payments		1,053,480		1,041,188
Other		69,106		96,422
Sub-total		1,344,997		1,521,176
Corporate
Accrued interest		6,838		7,227
Payroll		15,982		24,543
Taxes		59,628		404,357
Professional fees		32,920		165,651
Other		1,250		-
Sub-total		116,618		601,778
	$	1,842,567	$	2,486,423

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2024

SEGMENT INFORMATION

Schedule Of Segment Reporting

	Three Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	31,990,028			70.6	%	$	39,641,434			77.6	%
Commercial		13,306,974			29.4	%		11,454,443			22.4	%
Sales		45,297,002			100.0	%		51,095,877			100.0	%
Consumer		27,968,699			61.7	%		35,546,792			69.6	%
Commercial		5,938,846			13.1	%		4,787,038			9.4	%
Cost of goods sold		33,907,545			74.9	%		40,333,830			78.9	%
Gross margin		11,389,457			25.1	%		10,762,047			21.1	%
Expenses:
Consumer		4,009,468			8.9	%		2,472,973			4.8	%
Commercial		5,108,580			11.3	%		5,889,581			11.5	%
Selling, general and administrative		9,118,048			20.2	%		8,362,554			16.4	%
Consumer		112,518			0.2	%		79,408			0.2	%
Commercial		249,749			0.6	%		256,766			0.5	%
Depreciation and amortization		362,267			0.8	%		336,174			0.7	%
Total operating expenses		9,480,315			20.9	%		8,698,728			17.0	%
Operating income		1,909,142			4.2	%		2,063,319			4.0	%
Other income (expense):
Consumer		8,003			0.0	%		23,929			0.0	%
Commercial		217,414			0.5	%		129,723			0.3	%
Other income		225,417			0.5	%		153,652			0.3	%
Consumer		(55,697	)		-0.1	%		(58,209	)		-0.1	%
Commercial		(53,444	)		-0.1	%		(56,479	)		-0.1	%
Interest expense		(109,141	)		-0.2	%		(114,688	)		-0.2	%
Income before income taxes		2,025,418			4.5	%		2,102,283			4.1	%
Consumer		(29,607	)		-0.1	%		(339,672	)		-0.7	%
Commercial		(431,632	)		-1.1	%		(158,902	)		-0.4	%
Income tax expense		(461,239	)		-1.2	%		(498,574	)		-1.1	%
Net income	$	1,564,179			3.5	%	$	1,603,709			3.1	%

	Six Months Ended June 30,
	2024			% of Sales(1)			2023			% of Sales(1)
Consumer	$	60,216,045			70.7	%	$	76,345,831			75.7	%
Commercial		24,938,737			29.3	%		24,559,578			24.3	%
Sales		85,154,782			100.0	%		100,905,409			100.0	%
Consumer		52,645,527			61.8	%		68,266,221			67.7	%
Commercial		10,799,114			12.7	%		10,467,239			10.4	%
Cost of goods sold		63,444,641			74.5	%		78,733,460			78.0	%
Gross margin		21,710,141			25.5	%		22,171,949			22.0	%
Expenses:
Consumer		7,260,958			8.5	%		4,868,998			4.8	%
Commercial		9,494,066			11.1	%		11,398,859			11.3	%
Selling, general and administrative		16,755,024			19.7	%		16,267,857			16.1	%
Consumer		206,194			0.2	%		177,542			0.2	%
Commercial		499,638			0.6	%		512,983			0.5	%
Depreciation and amortization		705,832			0.8	%		690,525			0.7	%
Total operating expenses		17,460,856			20.5	%		16,958,382			16.8	%
Operating income		4,249,285			5.0	%		5,213,567			5.2	%
Other income (expense):
Consumer		16,008			0.0	%		47,463			0.0	%
Commercial		447,937			0.5	%		316,968			0.3	%
Other income		463,945			0.5	%		364,431			0.4	%
Consumer		(120,098	)		-0.1	%		(117,827	)		-0.1	%
Commercial		(109,897	)		-0.1	%		(113,925	)		-0.1	%
Interest expense		(229,995	)		-0.3	%		(231,752	)		-0.2	%
Income before income taxes		4,483,235			5.3	%		5,346,246			5.3	%
Consumer		(88,758	)		-0.1	%		(657,513	)		-0.7	%
Commercial		(922,759	)		-1.2	%		(558,707	)		-0.7	%
Income tax expense		(1,011,517	)		-1.3	%		(1,216,220	)		-1.4	%
Net income	$	3,471,718			4.1	%	$	4,130,026			4.1	%

Schedule Of Segment Reporting total assets

	As of
	June 30, 2024		December 31, 2023
Consumer	$	35,482,326	$	35,839,361
Commercial		33,765,284		33,777,041
Corporate		4,601,250		3,857,827
	$	73,848,860	$	73,474,229

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REVENUE (Tables)

6 Months Ended

Jun. 30, 2024

REVENUE

Schedule of disaggregation Of total revenue listed by sales category and segment

	For the Three Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	31,990,028	$	4,021,329		12.6	%	$	39,641,434	$	4,094,642		10.3	%
Commercial		13,306,974		7,368,128		55.4	%		10,662,093		6,667,405		62.5	%
Correction of immaterial error (1)		-		-		-			792,350		-		-
Commercial adjusted		13,306,974		7,368,128		55.4	%		11,454,443		6,667,405		58.2	%
	$	45,297,002	$	11,389,457		25.1	%	$	51,095,877	$	10,762,047		21.1	%

	For the Six Months Ended June 30,
	2024							2023
	Sales		Gross Margin		Margin			Sales		Gross Margin		Margin
Consumer	$	60,216,045	$	7,570,518		12.6	%	$	76,345,831	$	8,079,610		10.6	%
Commercial		24,938,737		14,139,623		56.7	%		22,346,736		14,092,339		63.1	%
Correction of immaterial error (1)		-		-		-			2,212,842		-		-
Commercial adjusted		24,938,737		14,139,623		56.7	%		24,559,578		14,092,339		57.4	%
	$	85,154,782	$	21,710,141		25.5	%	$	100,905,409	$	22,171,949		22.0	%

Schedule of opening and closing balances of our contract assets and liabilities

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2023		839,239		-		196,382
Closing Balance - 6/30/2023		309,234		-		249,179
Commercial
Opening Balance - 1/1/2023		7,110,536		-		-
Closing Balance - 6/30/2023		7,545,398		-		-

	Accounts		Contract		Contract
	Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2024		3,411,501		-		58,728
Closing Balance - 6/30/2024		396,415		-		127,226
Commercial
Opening Balance - 1/1/2024		4,399,658		-		-
Closing Balance - 6/30/2024		4,441,809		-		-

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LEASES (Tables)

6 Months Ended

Jun. 30, 2024

LEASES

Schedule Of Future Annual Minimum Lease Payments

	Operating
	Leases
Consumer
2024	$	344,789
2025		544,944
2026		514,210
2027		209,324
2028		159,210
Thereafter		39,803
Total minimum lease payments		1,812,280
Less imputed interest		(105,001	)
Sub-total		1,707,279
Commercial
2024		699,643
2025		1,321,299
2026		474,320
2027		33,454
2028		-
Thereafter		-
Total minimum lease payments		2,528,716
Less imputed interest		(93,148	)
Sub-total		2,435,568
Total		4,142,847
Current portion		1,939,765
	$	2,203,082

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BASIC AND DILUTED AVERAGE SHARES (Tables)

6 Months Ended

Jun. 30, 2024

BASIC AND DILUTED AVERAGE SHARES

Schedule Of Reconciliation Of Basic And Diluted Weighted Average Common Shares

	For the Three Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,248,554		26,916,648
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,263,554		26,931,648

	For the Six Months Ended
	June 30,
	2024		2023
Basic weighted average shares		26,333,796		26,920,618
Effect of potential dilutive securities		15,000		15,000
Diluted weighted average shares		26,348,796		26,935,618

Schedule Of repurchase of shares

	Total Number of		Average Price		Total Price		Shares Available
Fiscal Period	Shares Purchased		Paid per Share		Paid		to Purchase
Balance as of January 1, 2024		415,973	$	5.18	$	2,155,049		584,027
January 1 - 31, 2024		59,417		4.52		268,569		524,610
February 1 - 29, 2024		56,343		4.53		255,195		468,267
March 1 - 31, 2024		85,580		4.46		381,382		382,687
Balance as of March 31, 2024		617,313	$	4.96	$	3,060,195		382,687
April 1 - 30, 2024		30,891		4.66		143,840		351,796
May 1 - 31, 2024		37,672		4.65		175,257		314,124
June 1 - 30, 2024		83,526		4.74		396,242		230,598
Balance as of June 30, 2024		769,402	$	4.91	$	3,775,534		230,598

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DEBT (Tables)

6 Months Ended

Jun. 30, 2024

DEBT

Schedule Of Long-term Debt

	Outstanding Balance
	June 30,			December 31,
	2024			2023
Consumer
Note payable, FSB (1)	$	2,509,716		$	2,563,108
Note payable, Truist Bank (3)		819,975			838,430
Notes payable, TBT (4,5)		2,023,143			2,064,928
Note payable, Kretchmer Transaction (6)		200,000			200,000
Sub-total		5,552,834			5,666,466
Commercial
Note payable, FSB (2)		5,694,200			5,815,381
Note payable, Avail Transaction (7)		500,000			833,333
Sub-total		6,194,200			6,648,714
Corporate
Line of credit, FSB (8)		-			-
Note payable, TBT (9)		2,559,832			2,618,311
Sub-total		2,559,832			2,618,311
Sub-total		14,306,866			14,933,491
Current portion		(1,307,921	)		(1,361,443	)
	$	12,998,945		$	13,572,048

Schedule of Future Payments of Notes Payable, Related Party

	2024		2025		2026		2027		2028		Thereafter
Consumer
Note payable, FSB (1)		55,107		112,154		2,342,455		-		-		-
Note payable, Truist Bank (3)		18,800		38,745		40,203		41,716		43,216		637,296
Notes payable, TBT (4,5)		43,419		487,260		71,359		74,081		76,767		1,270,257
Note payable, Kretchmer Transaction (6)		200,000		-		-		-		-		-
Sub-total		317,326		638,159		2,454,017		115,797		119,983		1,907,553
Commercial
Note payable, FSB (2)		125,031		254,466		5,314,702		-		-		-
Note payable, Avail Transaction (7)		333,333		166,667		-		-		-		-
Sub-total		458,364		421,133		5,314,702		-		-		-
Corporate
Line of Credit, FSB (8)		-		-		-		-		-		-
Note payable, TBT (9)		59,442		2,500,390		-		-		-		-
Sub-total		59,442		2,500,390		-		-		-		-
	$	835,132	$	3,559,682	$	7,768,719	$	115,797	$	119,983	$	1,907,553

Schedule of maturities of long-term debt of Principal Payments

	Scheduled
	Principal		Loan
Scheduled Principal Payments and Maturities by Year:	Payments		Maturities		Total
2024		635,132		200,000		835,132
2025		767,282		2,792,400		3,559,682
2026		457,492		7,311,227		7,768,719
2027		115,797		-		115,797
2028		119,983		-		119,983
Thereafter		291,704		1,615,849		1,907,553
	$	2,387,390	$	11,919,476	$	14,306,866

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ACCOUNTING POLICIES AND ESTIMATES (Details) - USD ($)	3 Months Ended			6 Months Ended		9 Months Ended	12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Sep. 30, 2023	Dec. 31, 2023
Sales	$ 45,297,002	$ 51,095,877		$ 85,154,782	$ 100,905,409
Cost of goods sold	$ 33,907,545	$ 40,333,830		63,444,641	78,733,460
Error Correction Other [Member]
Sales			$ 48,389,040		50,303,527	$ 36,266,271	$ 36,715,250
Correction of immaterial error sales			1,420,492		792,350	610,215	766,681
Sales adjusted			49,809,532		51,095,877	36,876,486	37,481,931
Cost of goods sold			36,979,138		39,541,480	26,531,989	26,964,951
Correction of immaterial error cost of good sold			1,420,492		792,350	610,215	766,681
Cost of goods sold adjusted			38,399,630		40,333,830	27,142,204	27,731,632
Gross margin			$ 11,409,902		$ 10,762,047	$ 9,734,282	$ 9,750,299
Error Correction Other Total [Member]
Sales				171,674,088
Correction of immaterial error sales				3,589,738
Sales adjusted				175,263,826
Cost of goods sold				130,017,558
Correction of immaterial error cost of good sold				3,589,738
Cost of goods sold adjusted				133,607,296
Gross margin				$ 41,656,530

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ACCOUNTING POLICIES AND ESTIMATES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Lease expenses			$ 946,598
Deferred tax liability	$ 0		0		$ 38,668
Deferred tax assets	$ 6,715		$ 6,715
Basic earnings per share of common stock, par value	$ 0.01		$ 0.01		$ 0.01
Concentrations and credit risk	25.10%	21.10%	25.50%	22.00%
Consumer [Member]
Advertising costs	$ 325,079	$ 345,052	$ 572,982	$ 551,127
Allowance for returns	50,281		50,281		$ 28,402
Allowance for credit losses	$ 0		$ 0		0
Concentrations and credit risk	12.60%	10.30%	12.60%	10.60%
Shipping and handling costs	$ 49,350	$ 5,237	$ 49,789	$ 5,237
Commercial [Member]
Advertising costs	61,882	$ 6,686	132,977	$ 21,239
Allowance for returns	10,769		10,769		0
Allowance for credit losses	$ 429,908		$ 429,908		$ 260,858
Concentrations and credit risk	55.40%	62.50%	56.70%	63.10%
Shipping and handling costs	$ 1,194,203	$ 1,522,542	$ 2,588,280	$ 3,212,483
Customer Concentration Risk Member | Two Customers [Member] | Accounts Receivable [Member]
Concentrations and credit risk			0.00%
Customer Concentration Risk Member | Two Customers [Member] | Revenue From Contract With Customer Member
Concentrations and credit risk			21.00%	39.10%
Customer Concentration Risk Member | Three Customers [Member] | Accounts Receivable [Member]
Concentrations and credit risk				0.00%

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INVENTORIES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Inventories	$ 26,779,918	$ 23,146,177
Consumer [Member]
Trade inventories	25,294,422	21,905,055
Sub-total	25,294,422	21,905,055
Commercial [Member]
Trade inventories	1,485,496	1,241,122
Sub-total	$ 1,485,496	$ 1,241,122

XML

GOODWILL (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Goodwill	$ 3,921,453
Total Goodwill	3,921,453	$ 3,921,453
Consumer [Member]
Goodwill	300,000	0
Additions (reductions)	0	300,000
Total Goodwill	300,000	300,000
Commercial [Member]
Goodwill	3,621,453	3,621,453
Additions (reductions)	0	0
Total Goodwill	$ 3,621,453	$ 3,621,453

XML

GOODWILL (Details Narrative) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
GOODWILL
Goodwill	$ 300

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PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Total property and equipment	$ 11,383,884	$ 10,955,299
Adjusted property, plant and equipment		10,764,224
Total property and equipment	11,383,884	10,764,224
Reclassification property, plant and equipment	(191,075)
Consumer [Member] | Resale
Adjusted property, plant and equipment		9,451,794
Total property and equipment	7,017,176	6,505,067
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	10,121,490	9,451,794
Less: accumulated depreciation	(3,104,314)	(2,946,727)
Less: Adjusted accumulated depreciation		(2,946,727)
Total adjusted property, plant and equipment		6,505,067
Less: Reclassification accumulated depreciation	0
Total reclassification property, plant and equipment	0
ECHG [Member] | Leasehold Improvements
Adjusted property, plant and equipment		151,647
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	151,647	151,647
ECHG [Member] | Machinery and Equipment
Adjusted property, plant and equipment		1,093,752
Reclassification property, plant and equipment	(48,979)
Property, plant and equipment, gross, total	1,250,953	1,142,731
ECHG [Member] | Vehicle [Member]
Adjusted property, plant and equipment		222,232
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	222,232	222,232
ECHG [Member] | Construction In Progress [Member]
Adjusted property, plant and equipment		48,979
Reclassification property, plant and equipment	48,979
Property, plant and equipment, gross, total	0	0
ECHG [Member] | Note Payable Farmers State Bank
Adjusted property, plant and equipment		1,662,560
Total property and equipment	805,002	843,171
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	1,770,782	1,662,560
Less: accumulated depreciation	(965,780)	(819,389)
Less: Adjusted accumulated depreciation		(819,389)
Total adjusted property, plant and equipment		843,171
Less: Reclassification accumulated depreciation	0
Total reclassification property, plant and equipment	0
Envela
Adjusted property, plant and equipment		3,641,007
Total property and equipment	3,561,706	3,607,061
Reclassification property, plant and equipment	(191,075)
Property, plant and equipment, gross, total	3,823,814	3,832,082
Less: accumulated depreciation	(262,108)	(225,021)
Less: Adjusted accumulated depreciation		(225,021)
Total adjusted property, plant and equipment		3,415,986
Less: Reclassification accumulated depreciation	0
Total reclassification property, plant and equipment	(191,075)
Envela | Building and Improvements
Adjusted property, plant and equipment		2,502,216
Reclassification property, plant and equipment	(3,500)
Property, plant and equipment, gross, total	2,688,523	2,505,716
Envela | Machinery and Equipment
Adjusted property, plant and equipment		28,627
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	28,627	28,627
Envela | Enterprise Resource Planning System [Member]
Adjusted property, plant and equipment		0
Reclassification property, plant and equipment	(191,075)
Property, plant and equipment, gross, total	0	191,075
Envela | Construction In Progress [Member]
Adjusted property, plant and equipment		3,500
Reclassification property, plant and equipment	3,500
Property, plant and equipment, gross, total	0	0
Envela | Land
Adjusted property, plant and equipment		1,106,664
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	1,106,664	1,106,664
DGSE [Member] | Building and Improvements
Adjusted property, plant and equipment		2,683,300
Reclassification property, plant and equipment	(1,443,207)
Property, plant and equipment, gross, total	4,409,143	4,126,507
DGSE [Member] | Leasehold Improvements
Adjusted property, plant and equipment		1,450,695
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	1,516,648	1,450,695
DGSE [Member] | Machinery and Equipment
Adjusted property, plant and equipment		1,221,568
Reclassification property, plant and equipment	(3,215)
Property, plant and equipment, gross, total	1,276,322	1,224,783
DGSE [Member] | Furniture And Fixtures
Adjusted property, plant and equipment		700,832
Reclassification property, plant and equipment	(101,226)
Property, plant and equipment, gross, total	987,853	802,058
DGSE [Member] | Vehicles
Adjusted property, plant and equipment		22,859
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	22,859	22,859
DGSE [Member] | Construction In Progress [Member]
Adjusted property, plant and equipment		1,547,648
Reclassification property, plant and equipment	1,547,648
Property, plant and equipment, gross, total	83,773	0
DGSE [Member] | Land
Adjusted property, plant and equipment		1,824,892
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	1,824,892	1,824,892
ECHG [Member] | Furniture And Fixtures
Adjusted property, plant and equipment		145,950
Reclassification property, plant and equipment	0
Property, plant and equipment, gross, total	$ 145,950	$ 145,950

XML

INTANGIBLES, NET (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Total intangibles	$ 4,394,490
Total intangibles	4,435,699	$ 4,308,095
Reclassification total	191,075
Accumulated amortization adjusted amount total		4,499,170
Corporate [Member]
Total intangibles	382,359
Total intangibles	417,484	0
Intangible assets, gross	457,442	0
Reclassification intangible assets	191,075
Less accumulated amortization reclassification	0
Reclassification total	191,075
Adjusted intangibles asset		191,075
Less accumulated amortization adjusted amount		0
Accumulated amortization adjusted amount total		191,075
Less: accumulated amortization	39,958	0
Corporate [Member] | Assets under development
Intangible assets, gross	35,125	0
Reclassification intangible assets	191,075
Adjusted intangibles asset		191,075
Corporate [Member] | Technology [Member]
Intangible assets, gross	422,317	0
Reclassification intangible assets	0
Adjusted intangibles asset		0
Consumer [Member]
Total intangibles	30,344	5,500
Total intangibles	24,260
Intangible assets, gross	401,480	371,352
Reclassification intangible assets	0
Less accumulated amortization reclassification	0
Reclassification total	0
Adjusted intangibles asset		371,352
Less accumulated amortization adjusted amount		(365,852)
Accumulated amortization adjusted amount total		5,500
Less: accumulated amortization	371,136	365,852
Consumer [Member] | Assets under development
Intangible assets, gross	6,084	0
Reclassification intangible assets	0
Adjusted intangibles asset		0
Consumer [Member] | Technology [Member]
Intangible assets, gross	395,396	371,352
Reclassification intangible assets	0
Adjusted intangibles asset		371,352
Commercial [Member]
Total intangibles	3,987,871	4,302,595
Intangible assets, gross	6,551,000	6,551,000
Reclassification intangible assets	0
Less accumulated amortization reclassification	0
Reclassification total	0
Adjusted intangibles asset		6,551,000
Less accumulated amortization adjusted amount		(2,248,405)
Accumulated amortization adjusted amount total		4,302,595
Less: accumulated amortization	2,563,129	2,248,405
Commercial [Member] | Trademarks tradenames [Member]
Intangible assets, gross	2,869,000	2,869,000
Reclassification intangible assets	0
Adjusted intangibles asset		2,869,000
Commercial [Member] | Customer contracts [Member]
Intangible assets, gross	1,873,000	1,873,000
Reclassification intangible assets	0
Adjusted intangibles asset		1,873,000
Commercial [Member] | Customer relationships [Member]
Intangible assets, gross	1,809,000	1,809,000
Reclassification intangible assets	$ 0
Adjusted intangibles asset		$ 1,809,000

XML

INTANGIBLES, NET (Details 1) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
2024	$ 373,411
2025	744,797
2026	744,797
2027	744,797
2028	744,797
Thereafter	1,041,891
Total	4,394,490
Corporate [Member]
2024	42,483
2025	84,969
2026	84,969
2027	84,969
2028	84,969
Thereafter	0
Total	382,359
Consumer [Member]
2024	3,378
2025	4,728
2026	4,728
2027	4,728
2028	4,728
Thereafter	1,970
Total	24,260
Commercial [Member]
2024	327,550
2025	655,100
2026	655,100
2027	655,100
2028	655,100
Thereafter	1,039,921
Total	$ 3,987,871	$ 4,302,595

XML

ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Accrued Expenses	$ 1,842,567	$ 2,486,423
Corporate [Member]
Accrued Expenses	116,618	601,778
Accrued Interest	6,838	7,227
Payroll	15,982	24,543
Tax	59,628	404,357
Other	1,250	0
Professional Fees	32,920	165,651
Consumer [Member]
Accrued Expenses	380,952	363,469
Accrued Interest	14,282	11,904
Payroll	148,343	226,435
Tax	194,072	125,130
Other	24,255	0
Commercial [Member]
Accrued Expenses	1,344,997	1,521,176
Accrued Interest	6,287	7,903
Payroll	199,389	375,663
Tax	16,735	0
Other	69,106	96,422
Unvouchered Payables - Inventory/COGS	$ 1,053,480	$ 1,041,188

XML

SEGMENT INFORMATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Sales	$ 45,297,002	$ 51,095,877	$ 85,154,782	$ 100,905,409
Sales revenue percent	100.00%	100.00%	100.00%	100.00%
Cost of goods sold percent	74.90%	78.90%	74.50%	78.00%
Gross margin percent	25.10%	21.10%	25.50%	22.00%
Selling, general and administrative percent	20.20%	16.40%	19.70%	16.10%
Depreciation and amortization percent	0.80%	0.70%	0.80%	0.70%
Total operating expenses percent	20.90%	17.00%	20.50%	16.80%
Operating income percent	4.20%	4.00%	5.00%	5.20%
Other income percent	0.50%	0.30%	0.50%	0.40%
Interest expense percent	(0.20%)	(0.20%)	(0.30%)	(0.20%)
Income before income taxes percent	4.50%	4.10%	5.30%	5.30%
Income tax expense percent	(1.20%)	(1.10%)	(1.30%)	(1.40%)
Net income percent	3.50%	3.10%	4.10%	4.10%
Cost of goods sold	$ 33,907,545	$ 40,333,830	$ 63,444,641	$ 78,733,460
Gross profit	11,389,457	10,762,047	21,710,141	22,171,949
Selling, general and administrative	9,118,048	8,362,554	16,755,024	16,267,857
Depreciation and amortization	362,267	336,174	705,832	690,525
Total operating expenses	9,480,315	8,698,728	17,460,856	16,958,382
Operating income	1,909,142	2,063,319	4,249,285	5,213,567
Other income	225,417	153,652	463,945	364,431
Interest expense	(109,141)	(114,688)	(229,995)	(231,752)
Other income expense	225,417	153,652	463,945	364,431
Income before income taxes	2,025,418	2,102,283	4,483,235	5,346,246
Income tax expense (benefit)	(461,239)	(498,574)	(1,011,517)	(1,216,220)
Net income	1,564,179	1,603,709	3,471,718	4,130,026
Consumer [Member]
Sales	$ 31,990,028	$ 39,641,434	$ 60,216,045	$ 76,345,831
Sales revenue percent	70.60%	77.60%	70.70%	75.70%
Cost of goods sold percent	61.70%	69.60%	61.80%	67.70%
Selling, general and administrative percent	8.90%	4.80%	8.50%	4.80%
Depreciation and amortization percent	0.20%	0.20%	0.20%	0.20%
Other income percent	0.00%	0.00%	0.00%	0.00%
Interest expense percent	(0.10%)	(0.10%)	(0.10%)	(0.10%)
Income tax expense percent	(0.10%)	(0.70%)	(0.10%)	(0.70%)
Cost of goods sold	$ 27,968,699	$ 35,546,792	$ 52,645,527	$ 68,266,221
Gross profit	4,021,329	4,094,642	7,570,518	8,079,610
Selling, general and administrative	4,009,468	2,472,973	7,260,958	4,868,998
Depreciation and amortization	112,518	79,408	206,194	177,542
Other income	8,003	23,929	16,008	47,463
Interest expense	(55,697)	(58,209)	(120,098)	(117,827)
Income tax expense (benefit)	(29,607)	(339,672)	(88,758)	(657,513)
Commercial [Member]
Sales	$ 13,306,974	$ 11,454,443	$ 24,938,737	$ 24,559,578
Sales revenue percent	29.40%	22.40%	29.30%	24.30%
Cost of goods sold percent	13.10%	9.40%	12.70%	10.40%
Selling, general and administrative percent	11.30%	11.50%	11.10%	11.30%
Depreciation and amortization percent	0.60%	0.50%	0.60%	0.50%
Other income percent	0.50%	0.30%	0.50%	0.30%
Interest expense percent	(0.10%)	(0.10%)	(0.10%)	(0.10%)
Income tax expense percent	(1.10%)	(0.40%)	(1.20%)	(0.70%)
Cost of goods sold	$ 5,938,846	$ 4,787,038	$ 10,799,114	$ 10,467,239
Gross profit	7,368,128	6,667,405	14,139,623	14,092,339
Selling, general and administrative	5,108,580	5,889,581	9,494,066	11,398,859
Depreciation and amortization	249,749	256,766	499,638	512,983
Other income	217,414	129,723	447,937	316,968
Interest expense	(53,444)	(56,479)	(109,897)	(113,925)
Income tax expense (benefit)	$ (431,632)	$ (158,902)	$ (922,759)	$ (558,707)

XML

SEGMENT INFORMATION (Details 1) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Total assets	$ 73,848,860	$ 73,474,229
Corporate [Member]
Total assets	4,601,250	3,857,827
Consumer [Member]
Total assets	35,482,326	35,839,361
Commercial [Member]
Total assets	$ 33,765,284	$ 33,777,041

XML

REVENUE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues	$ 45,297,002	$ 51,095,877	$ 85,154,782	$ 100,905,409
Gross margin	$ 11,389,457	$ 10,762,047	$ 21,710,141	$ 22,171,949
Margin	25.10%	21.10%	25.50%	22.00%
Consumer [Member]
Revenues	$ 31,990,028	$ 39,641,434	$ 60,216,045	$ 76,345,831
Gross margin	$ 4,021,329	$ 4,094,642	$ 7,570,518	$ 8,079,610
Margin	12.60%	10.30%	12.60%	10.60%
Commercial [Member]
Revenues	$ 13,306,974	$ 10,662,093	$ 24,938,737	$ 22,346,736
Gross margin	$ 7,368,128	$ 6,667,405	$ 14,139,623	$ 14,092,339
Margin	55.40%	62.50%	56.70%	63.10%
Correction of Immaterial Error [Member]
Revenues	$ 0	$ 792,350	$ 0	$ 2,212,842
Gross margin	$ 0	$ 0	$ 0	$ 0
Margin	0.00%	0.00%	0.00%	0.00%
Commercial Adjusted [Member]
Revenues	$ 13,306,974	$ 11,454,443	$ 24,938,737	$ 24,559,578
Gross margin	$ 7,368,128	$ 6,667,405	$ 14,139,623	$ 14,092,339
Margin	55.40%	58.20%	56.70%	57.40%

XML

REVENUE (Details 1) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Total Account Receivable	$ 0	$ 0
Consumer [Member]
Accounts Receivable beginning	3,411,501	839,239
Accounts Receivable ending	396,415	309,234
ContractLiabilities beginning	58,728	196,382
ContractLiabilities ending	127,226	249,179
Contract Assets beginning	0	0
Contract Assets ending	0	0
Commercial [Member]
Accounts Receivable beginning	4,399,658	7,110,536
Accounts Receivable ending	4,441,809	7,545,398
ContractLiabilities beginning	0	0
ContractLiabilities ending	0	0
Contract Assets beginning	0	0
Contract Assets ending	$ 0	$ 0

XML

LEASES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current portion	$ 1,939,765	$ 1,807,729
Operating lease liabilities, less current portion	2,203,082
Total	4,142,847
Consumer [Member]
2024	344,789
2025	544,944
2026	514,210
2027	209,324
2028	159,210
Thereafter	39,803
Total minimum lease payments	1,812,280
Less imputed interest	(105,001)
Consumer Sub-Total	1,707,279
Commercial [Member]
2024	699,643
2025	1,321,299
2026	474,320
2027	33,454
2028	0
Thereafter	0
Total minimum lease payments	2,528,716
Less imputed interest	(93,148)
Commercial Sub-Total	$ 2,435,568

XML

LEASES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
LEASES
Total Lease cost	$ 767,902	$ 705,635	$ 1,552,637	$ 1,361,885
Weighted average discount rate	3.80%	4.40%	3.80%	4.40%
Weighted average remaining lease term			2 years 6 months	2 years 9 months 18 days

XML

BASIC AND DILUTED AVERAGE SHARES (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
BASIC AND DILUTED AVERAGE SHARES
Basic weighted average shares	26,248,554	26,916,648	26,333,796	26,920,618
Effect of potential dilutive securities	15,000	15,000	15,000	15,000
Diluted weighted average shares	26,263,554	26,931,648	26,348,796	26,935,618

XML

BASIC AND DILUTED AVERAGE SHARES (Details 1) - USD ($)	3 Months Ended
	Jun. 30, 2024	Mar. 31, 2024
Total number of shares purchased Ending Balance	769,402	617,313
Average price paid per share Beginning Balance	$ 4.96	$ 5.18
Average price paid per share Ending Balance	$ 4.91	$ 4.96
Total purchase price Beginning Balance	$ 3,060,195	$ 2,155,049
Total purchase price Ending Balance	$ 3,775,534	$ 3,060,195
Share available to purchase under plan Beginning Balance	382,687	584,027
Share available to purchase under plan Ending Balance	230,598	382,687
Total number of shares purchased Beginning Balance	617,313	415,973
January 1 - 31, 2024
Total number of shares purchased		59,417
Average price paid per share		$ 4.52
Total purchase price		$ 268,569
Share available to purchase under plan		524,610
February 1 - 29, 2024
Total number of shares purchased		56,343
Average price paid per share		$ 4.53
Total purchase price		$ 255,195
Share available to purchase under plan		468,267
March 1 - 31, 2024
Total number of shares purchased		85,580
Average price paid per share		$ 4.46
Total purchase price		$ 381,382
Share available to purchase under plan		382,687
April 1 - 30, 2024
Total number of shares purchased	30,891
Average price paid per share	$ 4.66
Total purchase price	$ 143,840
Share available to purchase under plan	351,796
May 1 - 31, 2024
Total number of shares purchased	37,672
Average price paid per share	$ 4.65
Total purchase price	$ 175,257
Share available to purchase under plan	314,124
June 1 - 30, 2024
Total number of shares purchased	83,526
Average price paid per share	$ 4.74
Total purchase price	$ 396,242
Share available to purchase under plan	230,598

XML

BASIC AND DILUTED AVERAGE SHARES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Number of shares purchased	152,089		353,429
Average price per share	$ 4.70		$ 4.58
Purchase price amount	$ 715,339		$ 1,620,485
Effect Of Potential Dilutive Securities	15,000	15,000	15,000	15,000
Board of Directors [Member]
Shares per-shares price	$ 9.00		$ 9.00
Shares purcharse	1,000,000		1,000,000

XML

DEBT (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Subtotal	$ 14,306,866
Corporate [Member]
Subtotal	14,306,866	$ 14,933,491
Sub-total	2,559,832	2,618,311
Corporate [Member] | Current Portion [Member]
Subtotal	1,307,921	1,361,443
Corporate [Member] | Line of credit [Member]
Subtotal	0	0
Corporate Net [Member]
Subtotal	12,998,945	13,572,048
Consumer [Member]
Subtotal	5,552,834	5,666,466
Consumer [Member] | Note Payable Farmers State Bank
Subtotal	2,509,716	2,563,108
Consumer [Member] | Note Payable Truist Bank
Subtotal	819,975	838,430
Consumer [Member] | Note Payable Texas Bank And Trust
Subtotal	2,023,143	2,064,928
Consumer [Member] | Note Payable Texas Bank And Trust 1
Subtotal	2,559,832	2,618,311
Commercial [Member]
Subtotal	6,194,200	6,648,714
Commercial [Member] | Avail Transaction Note
Subtotal	500,000	833,333
Commercial [Member] | Note Payable Farmers State Bank
Subtotal	5,694,200	5,815,381
Note payable, Kretchmer [Member] | Note Payable Truist Bank
Subtotal	$ 200,000	$ 200,000

XML

DEBT (Details 1)	Jun. 30, 2024 USD ($)
2024	$ 835,132
2025	3,559,682
2026	7,768,719
2027	115,797
2028	119,983
Thereafter	1,907,553
Corporate [Member]
2024	59,442
2025	2,500,390
Corporate [Member] | Note Payable Texas Bank And Trust [Member]
2024	59,442
2025	2,500,390
Consumer [Member]
2024	317,326
2025	638,159
2026	2,454,017
2027	115,797
2028	119,983
Thereafter	1,907,553
Commercial [Member]
2024	458,364
2025	421,133
2026	5,314,702
CONSUMER SEGMENT [Member] | Note Payable Texas Bank And Trust [Member]
2024	43,419
2025	487,260
2026	71,359
2027	74,081
2028	76,767
Thereafter	1,270,257
CONSUMER SEGMENT [Member] | Note Payable Truist Bank
2024	18,800
2025	38,745
2026	40,203
2027	41,716
2028	43,216
Thereafter	637,296
CONSUMER SEGMENT [Member] | Note Payable Farmers State Bank
2024	55,107
2025	112,154
2026	2,342,455
2027	0
2028	0
Thereafter	0
Kretchmer [Member] | Note Payable Texas Bank And Trust [Member]
2025	200,000
2026	0
COMMERCIAL SEGMENT [Member] | Note Payable Farmers State Bank
2024	125,031
2025	254,466
2026	5,314,702
2027	0
COMMERCIAL SEGMENT [Member] | Note Payable Avail Transaction Member
2024	333,333
2025	166,667
2026	$ 0

XML

DEBT (Details 2)	Jun. 30, 2024 USD ($)
2024	$ 835,132
2025	3,559,682
2026	7,768,719
2027	115,797
2028	119,983
Thereafter	1,907,553
Subtotal	14,306,866
Scheduled Principal payment
2024	635,132
2025	767,282
2026	457,492
2027	115,797
2028	119,983
Thereafter	291,704
Subtotal	2,387,390
Loan Maturities
2024	200,000
2025	2,792,400
2026	7,311,227
2027	0
2028	0
Thereafter	1,615,849
Subtotal	$ 11,919,476

XML

DEBT (Details Narrative) - USD ($) $ in Thousands		1 Months Ended
	Sep. 12, 2023	Nov. 23, 2021	Oct. 29, 2021	Jul. 30, 2021	Nov. 04, 2020	Sep. 14, 2020	Jul. 09, 2020
Note Payable Farmers State Bank 1 [Member]
Annual interest rate		3.10%
Accounts payable - related party balance		$ 2,781
Note Payable Farmers State Bank
Annual interest rate		3.10%
Accounts payable - related party balance		$ 6,309
Line of credit		$ 3,500
Line of credit interest rate		3.10%
NWH Holdings LLC [Member]
Annual interest rate						3.75%
Purchase new retail building						$ 620
Gaylord Holdings [Member]
Annual interest rate				3.75%
Purchase new retail building				$ 2,215
Gateway Holdings [Member]
Annual interest rate					3.25%
Purchase corporate office building					$ 2,960
DGSE [Member]
Annual interest rate							3.65%
Purchase new retail building							$ 1,195
ECHG [Member]
Asset purchase agreement description			the consumer segment entered into a $4.500 million secured amortizing note payable in relation to the acquisition of Avail Recovery Solutions, LLC on October 29, 2021 (“Avail Transaction"). The note payable’s imputed interest is 3.10% and matures on April 1, 2025
Kretchmer [Member]
Asset purchase agreement description	the consumer segment entered into a $300 thousand secured amortizing note payable in relation to the Kretchmer Transaction. The note payable’s imputed interest is 3.10% and matures on October 1, 2025