ENVELA CORPORATION_June 30, 2026

Six Months Ended June 30,

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

323,973

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2026

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

For the Transition Period From to

Commission File Number 001-11048

ENVELA CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


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

1901 Gateway Drive, Suite 100, Irving, Texas 75038

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(972) 587-4049

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

Title of Each Class

Trading Symbol

Name of Exchange on which Registered

Common Stock, par value $0.01 per share

ELA

NYSE American

NYSE Texas

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

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

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


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

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

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

As of August 4, 2026 the registrant had 25,963,476 shares of common stock outstanding.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			PAGE

ITEM 1.	FINANCIAL STATEMENTS		4

	CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)		4

	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2026 (UNAUDITED) AND DECEMBER 31, 2025		5

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)		6

	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)		7

	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)		8

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		9

	NOTE 1 – BASIS OF PRESENTATION		9
	NOTE 2 – PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS		10
	NOTE 3 – ACCOUNTING POLICIES AND ESTIMATES		10
	NOTE 4 – INVENTORIES		18
	NOTE 5 – GOODWILL		18
	NOTE 6 – PROPERTY AND EQUIPMENT, NET		19
	NOTE 7 – INTANGIBLE ASSETS, NET		20
	NOTE 8 – ACCRUED EXPENSES		21
	NOTE 9 – SEGMENT INFORMATION		21
	NOTE 10 – REVENUE		24
	NOTE 11 – LEASES		25
	NOTE 12 – BASIC AND DILUTED AVERAGE SHARES		26
	NOTE 13 – DEBT		27
	NOTE 14 – STOCK-BASED COMPENSATION		28
	NOTE 15 – RELATED PARTY TRANSACTIONS		29
	NOTE 16 – CONTINGENCIES		29

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		30

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		57

ITEM 4.	CONTROLS AND PROCEDURES		58

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS		58

ITEM 1A.	RISK FACTORS		58

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES		59

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ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	60

ITEM 4.	MINE SAFETY DISCLOSURES	60

ITEM 5.	OTHER INFORMATION	60

ITEM 6.	EXHIBITS	61

	SIGNATURE	62

	GLOSSARY OF DEFINED TERMS	63

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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)		2026		2025			2026		2025
Sales		$	56,774,641	$	54,876,833		$	155,155,531	$	103,132,662
Cost of goods sold			43,396,809		42,488,910			121,157,283		78,776,715

Gross margin			13,377,832		12,387,923			33,998,248		24,355,947

Expenses:
Selling, general and administrative			7,778,113		8,672,067			16,701,905		17,076,329
Depreciation and amortization			497,263		460,411			983,226		905,752

Total operating expenses			8,275,376		9,132,478			17,685,131		17,982,081

Operating income			5,102,456		3,255,445			16,313,117		6,373,866

Other income (expense):
Other income			324,363		394,251			494,707		599,856
Interest expense			(78,647)		(106,228)			(157,419)		(212,549)

Income before income taxes			5,348,172		3,543,468			16,650,405		6,761,173
Income tax expense			(1,173,986)		(791,069)			(3,636,486)		(1,515,427)

Net income		$	4,174,186	$	2,752,399		$	13,013,919	$	5,245,746

Basic earnings per share:
Net income		$	0.16	$	0.11		$	0.50	$	0.20

Diluted earnings per share:
Net income		$	0.16	$	0.11		$	0.50	$	0.20

Weighted average shares outstanding:
Basic			25,963,476		25,991,979			25,963,476		25,993,802
Diluted			25,963,476		25,991,979			25,963,476		25,993,802

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

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ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


		June 30,		December 31,
		2026		2025
Assets		(Unaudited)
Current assets:
Cash and cash equivalents		$	43,441,856	$	18,154,849
Accounts receivable, net of allowance for credit losses of $527,645 and $735,944 as of June 30, 2026 and December 31, 2025, respectively			3,197,115		10,984,191
Inventories			29,821,724		35,065,965
Prepaid expenses			953,860		1,239,483
Other current assets			162,500		—
Total current assets			77,577,055		65,444,488

Property and equipment, net			14,505,314		13,584,189
Right-of-use assets from operating leases			9,014,354		9,720,925
Goodwill			3,621,453		3,621,453
Intangible assets, net			3,033,499		3,407,167
Other assets			251,486		244,525

Total assets		$	108,003,161	$	96,022,747

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	2,614,563	$	4,294,443
Notes payable			7,589,297		7,787,468
Operating lease liabilities			2,352,798		1,937,295
Accrued expenses			5,422,852		2,791,003
Other current liabilities			314,565		1,871,215
Total current liabilities			18,294,075		18,681,424

Deferred tax liability			178,796		147,381
Notes payable, less current portion			2,079,426		2,137,167
Operating lease liabilities, less current portion			7,376,737		7,996,567

Total liabilities			27,929,034		28,962,539

Contingencies (Note 16)

Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding			—		—
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,631 shares issued and 25,963,476 shares outstanding as of June 30, 2026; 26,924,631 shares issued and 25,963,476 shares outstanding as of December 31, 2025			269,246		269,246
Treasury stock at cost, 961,155 and 961,155 shares, as of June 30, 2026 and December 31, 2025, respectively			(4,757,731)		(4,757,731)
Additional paid-in capital			40,173,000		40,173,000
Retained earnings			44,389,612		31,375,693

Total stockholders’ equity			80,074,127		67,060,208

Total liabilities and stockholders’ equity		$	108,003,161	$	96,022,747

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

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ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Six Months Ended June 30,
(Unaudited)		2026		2025
Operating activities
Net income		$	13,013,919	$	5,245,746
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			983,226		905,752
Provision for credit losses			(205,396)		82,366
Deferred taxes			31,415		(41,332)
Non-cash lease expense			1,537,772		1,208,522
Loss on disposal of equipment			—		5,491
Changes in operating assets and liabilities:
Accounts receivable			7,992,472		(764,047)
Inventories			5,244,241		(1,675,660)
Prepaid expenses			285,623		(292,616)
Other assets			(169,461)		(96,649)
Accounts payable			(1,679,880)		(19,076)
Accrued expenses			2,631,849		(832,447)
Operating leases			(1,035,528)		(1,173,750)
Other liabilities			(1,556,650)		1,170,294

Net cash provided by operating activities			27,073,602		3,722,594

Investing activities
Purchase of property and equipment			(1,530,683)		(831,529)
Purchase of intangible assets			—		(50,630)
Proceeds from notes receivable			—		2,000
Proceeds from sales of equipment			—		650

Net cash (used in) investing activities			(1,530,683)		(879,509)

Financing activities
Payments on notes payable			(255,912)		(478,893)
Purchase of treasury stock			—		(121,326)

Net cash (used in) financing activities			(255,912)		(600,219)

Net change in cash and cash equivalents			25,287,007		2,242,866
Cash and cash equivalents, beginning of period			18,154,849		20,609,003

Cash and cash equivalents, end of period		$	43,441,856	$	22,851,869

Supplemental disclosures
Cash paid during the period for:
Interest		$	158,594	$	218,685
Income Taxes		$	1,708,791	$	1,732,100

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

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ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


										Additional				Total
	Common Stock			Treasury Stock			Preferred Stock			Paid-in		Retained		Stockholders’
(Unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Three Months Ended June 30, 2025

Balance as of April 1, 2025	26,924,631	$	269,246	(929,430)	$	(4,571,449)	—	$	—	$	40,173,000	$	19,272,062	$	55,142,859

Net Income	—		—	—		—	—		—		—		2,752,399		2,752,399

Shares repurchased	—		—	(20,163)		(118,700)	—		—		—		—		(118,700)

Balance as of June 30, 2025	26,924,631	$	269,246	(949,593)	$	(4,690,149)	—	$	—	$	40,173,000	$	22,024,461	$	57,776,558

 

Additional

Total

Common Stock

Treasury Stock

Preferred Stock

Paid-in

Retained

Stockholders’

(Unaudited)

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Earnings

Equity

Three Months Ended June 30, 2026

Balance as of April 1, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

40,215,426

75,899,941

Net Income

—

4,174,186

Balance as of June 30, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

44,389,612

80,074,127

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

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ENVELA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


										Additional				Total
	Common Stock			Treasury Stock			Preferred Stock			Paid-in		Retained		Stockholders’
(Unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Six Months Ended June 30, 2025

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

Net Income	—		—	—		—	—		—		—		5,245,746		5,245,746

Shares repurchased	—		—	(20,663)		(121,326)	—		—		—		—		(121,326)

Balance as of June 30, 2025	26,924,631	$	269,246	(949,593)	$	(4,690,149)	—	$	—	$	40,173,000	$	22,024,461	$	57,776,558

 

Additional

Total

Common Stock

Treasury Stock

Preferred Stock

Paid-in

Retained

Stockholders’

(Unaudited)

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Earnings

Equity

Six Months Ended June 30, 2026

Balance as of January 1, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

31,375,693

67,060,208

Net Income

—

13,013,919

Balance as of June 30, 2026

26,924,631

269,246

(961,155)

(4,757,731)

—

40,173,000

44,389,612

80,074,127

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

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ENVELA CORPORATION AND SUBSIDIARIES

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 United States Generally Accepted Accounting Principles (“U.S. GAAP”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X prescribed by the Securities and Exchange Commission (the “SEC”). Pursuant to the SEC’s rules and regulations, Quarterly Reports do not include all of the information and notes required by U.S. GAAP. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”), necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2026 (“Fiscal 2026”). Management suggests these unaudited interim condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“Fiscal 2025”) filed with the SEC on March 18, 2026 (“2025 Annual Report”).

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

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

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

Presentation of Financial Reporting Periods

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

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

References

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

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

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

Available Information

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 — PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

Principles of Consolidation

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

Nature of Operations

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

Consumer Segment

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

Commercial Segment

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

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

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

NOTE 3 — ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenue Recognition

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

Consumer Segment

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

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

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

Commercial Segment

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

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

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

See Note 10 – Revenue for further details.

Sales Returns and Allowances

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of June 30, 2026, and December 31, 2025, the consumer segment’s allowance for returns was $11,463 and $18,190, respectively.

As of June 30, 2026, and December 31, 2025, the commercial segment’s allowance for returns was $54,831 and $42,339, respectively.

Concentrations and Credit Risk

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

For the six months ended June 30, 2026, two customers aggregated 50.8% of our sales and represented 0.0% of our accounts receivable balance.

For the six months ended June 30, 2025, two customers aggregated 50.3% of our sales and represented 19.1% of our accounts receivable balance.

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

Categorization of Costs and Allocation of Corporate Overhead

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

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

Cost of Goods Sold

Cost of goods sold includes the cost of commodities, harvested components from technology, and merchandise sold, including authenticated high-end luxury goods, secondary-market bullion, and re-marketed technology assets, as well as inbound and outbound freight costs.

Selling, General and Administrative Expense

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

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

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

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Shipping and Handling Costs

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

For the three months ended June 30, 2026 and 2025, the consumer segment’s shipping and handling costs were $5,900 and $13,914, respectively. For the three months ended June 30, 2026 and 2025, the commercial segment’s shipping and handling costs were $906,493 and $926,483, respectively.

For the six months ended June 30, 2026 and 2025, the consumer segment’s shipping and handling costs were $47,114 and $30,600, respectively. For the six months ended June 30, 2026 and 2025, the commercial segment’s shipping and handling costs were $1,597,893 and $1,917,808, respectively.

Advertising Costs

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

For the three months ended June 30, 2026 and 2025, the consumer segment’s advertising costs were $91,967 and $290,278, respectively. For the three months ended June 30, 2026 and 2025, the commercial segment’s advertising costs were $46,202 and $124,874, respectively.

For the six months ended June 30, 2026 and 2025, the consumer segment’s advertising costs were $254,219 and $570,440, respectively. For the six months ended June 30, 2026 and 2025, the commercial segment’s advertising costs were $128,415 and $206,008, respectively.

Leases

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

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

See Note 11 – Leases for further details.

Income Taxes

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Valuation of Deferred Tax Assets

The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the likelihood that the benefit of the deferred tax assets will be realized and the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. We have not taken a tax position that, if challenged, would have a material effect on the condensed consolidated financial statements or the effective tax rate for the three and six months ended June 30, 2026 and 2025.

As of June 30, 2026, the Company had a deferred tax liability of $178,796. As of December 31, 2025, the Company had a deferred tax liability of $147,381. The Company did not have a valuation allowance as of June 30, 2026, or December 31, 2025.

Segment Information

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

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

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

Earnings Per Share

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

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

Stock-Based Compensation

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

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

Taxes Collected from Customers

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Financial Instruments

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

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

Cash and Cash Equivalents

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

Accounts Receivable, Net of Allowances

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

As of June 30, 2026, and December 31, 2025, the consumer segment’s allowance for credit losses was $0 and $0, respectively.

As of June 30, 2026, and December 31, 2025, the commercial segment’s allowance for credit losses was $527,645 and $735,944, respectively.

Inventories

Consumer Segment

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

Commercial Segment

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

See Note 4 – Inventories for further details.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2026, requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented.

See Note 5 – Goodwill for further details.

Property and Equipment, Net

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


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

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

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

Intangible Assets, Net

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


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

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

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recent Accounting Pronouncements

New Accounting Standards Pronouncements

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

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

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

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

No other recently issued or effective ASUs had, or are expected to have, a material impact on our financial position and results of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 — INVENTORIES

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


		June 30,			December 31,
		2026			2025
Consumer
Trade inventories		$	27,483,645		$	32,814,426

Sub-total			27,483,645			32,814,426

Commercial
Trade inventories			2,338,079			2,251,539

Sub-total			2,338,079			2,251,539

		$	29,821,724		$	35,065,965

NOTE 5 — GOODWILL

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


		June 30,			December 31,
		2026			2025
Consumer
Opening balance		$	—		$	—
Additions (reductions)			—			—

Sub-total			—			—

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

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 — PROPERTY AND EQUIPMENT, NET

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



	June 30,		December 31,
	2026		2025
Consumer
Land	$	1,824,892	$	1,824,892
Building and improvements		6,209,412		6,139,182
Leasehold improvements		2,143,310		2,019,993
Furniture and fixtures		1,640,125		1,488,500
Machinery and equipment		1,749,826		1,693,308
Vehicles		53,318		53,318
Construction in progress ⁽¹⁾		34,438		65,561
		13,655,321		13,284,754
Less: accumulated depreciation		(4,293,622)		(3,882,909)

Sub-total		9,361,699		9,401,845

Commercial
Leasehold improvements		153,292		160,850
Furniture and fixtures		74,811		74,811
Machinery and equipment		1,412,085		1,389,680
Vehicles		195,227		206,556
		1,835,415		1,831,897
Less: accumulated depreciation		(1,485,805)		(1,356,836)

Sub-total		349,610		475,061

Corporate
Land		1,106,664		1,106,664
Building and improvements		3,813,044		2,749,983
Furniture and fixtures		91,408		84,877
Machinery and equipment		64,290		64,290
Construction in progress ⁽¹⁾		168,379		92,702
		5,243,785		4,098,516
Less: accumulated depreciation		(449,780)		(391,233)

Sub-total		4,794,005		3,707,283

	$	14,505,314	$	13,584,189

(1)	As of June 30, 2026 and December 31, 2025, these assets are being constructed, have not yet been placed into service, and are not yet depreciable.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 — INTANGIBLE ASSETS, NET

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



	June 30,		December 31,
	2026		2025
Consumer
Technology	$	409,896	$	409,896
Customer lists		13,000		13,000
Trademarks and tradenames		3,924		3,924
		426,820		426,820
Less: accumulated amortization		(393,681)		(389,025)

Sub-total		33,139		37,795

Commercial
Trademarks and tradenames		2,869,000		2,869,000
Customer contracts		1,873,000		1,873,000
Customer relationships		1,809,000		1,809,000
		6,551,000		6,551,000
Less: accumulated amortization		(3,822,043)		(3,507,313)

Sub-total		2,728,957		3,043,687

Corporate
Technology		512,636		512,636
		512,636		512,636
Less: accumulated amortization		(241,233)		(186,951)

Sub-total		271,403		325,685

	$	3,033,499	$	3,407,167

The following table depicts the Company’s estimated future amortization expense related to intangible assets as of June 30, 2026:


		Consumer			Commercial			Corporate			Total

2026		$	4,656			314,724			54,280		$	373,660
2027			9,312			629,448			108,562			747,322
2028			8,443			629,448			108,561			746,452
2029			3,657			539,916			—			543,573
2030			1,684			254,628			—			256,312
Thereafter			5,387			360,793			—			366,180

		$	33,139		$	2,728,957		$	271,403		$	3,033,499

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 — ACCRUED EXPENSES

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


		June 30,		December 31,
		2026		2025
Consumer
Accrued interest		$	5,037	$	5,594
Payroll			363,199		169,602
Taxes			254,074		162,689

Sub-total			622,310		337,885

Commercial
Accrued interest			6,605		7,222
Payroll			352,602		109,172
Unvouchered inventory payments			846,898		959,340
Taxes			16,479		—
Other			51,756		21,168

Sub-total			1,274,340		1,096,902

Corporate
Payroll			261,459		10,788
Professional fees			81,285		67,560
Taxes			3,156,469		1,258,645
Other			26,989		19,223

Sub-total			3,526,202		1,356,216

		$	5,422,852	$	2,791,003

NOTE 9 — SEGMENT INFORMATION

The CODM uses operating income to evaluate overall business performance, make investment decisions, and allocate resources. The following table depicts the Company’s segment results of operations, including significant expenses that are regularly reviewed by the CODM, for the three months ended June 30, 2026 and 2025:


	Three Months Ended June 30,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Sales	$	44,729,129		$	12,045,512		$	56,774,641	$	43,173,758	$	11,703,075	$	54,876,833
Cost of goods sold		39,204,853			4,191,956			43,396,809		38,515,772		3,973,138		42,488,910
Selling, general and administrative		3,453,499			4,324,614			7,778,113		3,735,427		4,936,640		8,672,067
Depreciation and amortization		234,065			263,198			497,263		195,604		264,807		460,411

Operating income	$	1,836,712		$	3,265,744		$	5,102,456	$	726,955	$	2,528,490	$	3,255,445

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the reconciliation of the Company’s segment operating income to income before income taxes for the three months ended June 30, 2026 and 2025:


	Three Months Ended June 30,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Operating income	$	1,836,712		$	3,265,744		$	5,102,456	$	726,955	$	2,528,490	$	3,255,445
Other income		164,464			159,899			324,363		156,158		238,093		394,251
Interest expense		(38,327)			(40,320)			(78,647)		(53,993)		(52,235)		(106,228)

Income before income taxes	$	1,962,849		$	3,385,323		$	5,348,172	$	829,120	$	2,714,348	$	3,543,468

The following table depicts the Company’s segment results of operations, including significant expenses that are regularly reviewed by the CODM, for the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Sales	$	126,522,651		$	28,632,880		$	155,155,531	$	79,944,362	$	23,188,300	$	103,132,662
Cost of goods sold		111,297,742			9,859,541			121,157,283		71,075,473		7,701,242		78,776,715
Selling, general and administrative		7,508,374			9,193,531			16,701,905		7,623,333		9,452,996		17,076,329
Depreciation and amortization		449,165			534,061			983,226		376,236		529,516		905,752

Operating income	$	7,267,370		$	9,045,747		$	16,313,117	$	869,320	$	5,504,546	$	6,373,866

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the reconciliation of the Company’s segment operating income to income before income taxes for the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30,
	2026								2025
	Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated

Operating income	$	7,267,370		$	9,045,747		$	16,313,117	$	869,320	$	5,504,546	$	6,373,866
Other income		257,645			237,062			494,707		157,007		442,849		599,856
Interest expense		(76,712)			(80,707)			(157,419)		(108,040)		(104,509)		(212,549)

Income before income taxes	$	7,448,303		$	9,202,102		$	16,650,405	$	918,287	$	5,842,886	$	6,761,173

Other significant segment items that are regularly reviewed by the CODM are Capital Expenditures, which the Company defines as any purchases of property and equipment or intangible assets. The following table depicts Capital Expenditures for the three months ended June 30, 2026 and 2025:


		Three Months Ended June 30,
		2026			2025

Consumer		$	161,328		$	291,521
Commercial			14,847			52,271
Corporate			786,607			153,380

		$	962,782		$	497,172

The following table depicts Capital Expenditures for the six months ended June 30, 2026 and 2025:


		Six Months Ended June 30,
		2026			2025

Consumer		$	370,568		$	560,474
Commercial			14,847			52,271
Corporate			1,145,268			269,414

		$	1,530,683		$	882,159

The following table depicts the Company’s total assets:


		As of
		June 30, 2026			December 31, 2025

Consumer		$	47,592,679		$	56,313,243
Commercial			18,655,947			20,272,552
Corporate			41,754,535			19,436,952

		$	108,003,161		$	96,022,747

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10 — REVENUE

The following table depicts the Company’s disaggregation of total sales and gross margin for the three months ended June 30, 2026 and 2025:


		Three Months Ended June 30,
		2026								2025
		Sales			Gross Margin			Margin		Sales		Gross Margin		Margin

Consumer		$	44,729,129		$	5,524,276		12.4	%	$	43,173,758	$	4,657,986	10.8	%

Commercial			12,045,512			7,853,556		65.2	%		11,703,075		7,729,937	66.1	%

		$	56,774,641		$	13,377,832		23.6	%	$	54,876,833	$	12,387,923	22.6	%

The following table depicts the Company’s disaggregation of total sales and gross margin for the six months ended June 30, 2026 and 2025:


		Six Months Ended June 30,
		2026								2025
		Sales			Gross Margin			Margin		Sales		Gross Margin		Margin

Consumer		$	126,522,651		$	15,224,909		12.0	%	$	79,944,362	$	8,868,889	11.1	%

Commercial			28,632,880			18,773,339		65.6	%		23,188,300		15,487,058	66.8	%

		$	155,155,531		$	33,998,248		21.9	%	$	103,132,662	$	24,355,947	23.6	%

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


			Accounts		Contract		Contract
			Receivable		Assets		Liabilities
Consumer
Opening Balance - 1/1/2025		$	738,132		—		435,508
Closing Balance - 6/30/2025			1,395,486		—		1,601,699

Commercial
Opening Balance - 1/1/2025			3,646,106		—		—
Closing Balance - 6/30/2025			3,670,433		—		3,623


			Accounts			Contract			Contract
			Receivable			Assets			Liabilities
Consumer
Opening Balance - 1/1/2026		$	8,404,299		$	—		$	1,840,637
Closing Balance - 6/30/2026			863,155			—			305,499

Commercial
Opening Balance - 1/1/2026			2,579,891			—			30,579
Closing Balance - 6/30/2026			2,333,960			—			9,066

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 — LEASES

The following table depicts the Company’s future minimum lease payments as of June 30, 2026:


		Operating
		Leases
Consumer
2026		$	586,694
2027			961,983
2028			728,302
2029			610,411
2030			281,919
Thereafter			33,076

Total minimum lease payments			3,202,385
Less: imputed interest			(247,350)

Sub-total			2,955,035

Commercial
2026			922,941
2027			1,512,428
2028			1,535,763
2029			1,578,575
2030			1,596,986
Thereafter			550,062

Total minimum lease payments			7,696,756
Less: imputed interest			(922,256)

Sub-total			6,774,500

Total			9,729,535

Less: current portion			2,352,798

		$	7,376,737

All of the Company’s leased facilities as of June 30, 2026, are non-cancellable. The leases are a combination of triple-net leases, under which the Company pays its proportionate share of common area maintenance, property taxes, and property insurance, and modified-gross leases, under which the Company pays for common area maintenance and property insurance.

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the Company’s leasing costs for the three months ended June 30, 2026 and 2025:


		Three Months Ended June 30,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer			Commercial			Consolidated

Operating lease cost		$	304,481		$	467,134		$	771,615	$	281,099		$	324,454		$	605,553
Variable lease cost			65,536			151,371			216,907		58,209			156,874			215,083
Short-term lease cost			1,566			7,131			8,697		—			31,191			31,191

		$	371,583		$	625,636		$	997,219	$	339,308		$	512,519		$	851,827

The following table depicts the Company’s leasing costs for the six months ended June 30, 2026 and 2025:


		Six Months Ended June 30,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer			Commercial			Consolidated

Operating lease cost		$	603,000		$	934,772		$	1,537,772	$	544,164		$	663,882		$	1,208,046
Variable lease cost			128,332			306,006			434,338		117,868			302,796			420,664
Short-term lease cost			3,337			96,717			100,054		30,999			70,454			101,453

		$	734,669		$	1,337,495		$	2,072,164	$	693,031		$	1,037,132		$	1,730,163

As of June 30, 2026, the weighted average remaining lease term and weighted average discount rate for operating leases were 4.2 years and 5.2%. As of June 30, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases were 2.8 years and 4.2%.

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, 2026 and 2025:


		Three Months Ended
		June 30,
		2026	2025

Basic weighted average shares		25,963,476	25,991,979
Effect of potential dilutive securities		—	—

Diluted weighted average shares		25,963,476	25,991,979

The following table is a reconciliation of the Company’s basic and diluted weighted average common shares for the six months ended June 30, 2026 and 2025:


		Six Months Ended
		June 30,
		2026	2025

Basic weighted average shares		25,963,476	25,993,802
Effect of potential dilutive securities		—	—

Diluted weighted average shares		25,963,476	25,993,802

For three and six months ended June 30, 2026 and 2025, there were no Common Stock options unexercised. For the three and six months ended June 30, 2026 and 2025, there were no anti-dilutive shares.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 — DEBT

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


		Outstanding Balance
		June 30,		December 31,
		2026		2025
Consumer
Note payable, FSB ⁽¹⁾		$	2,284,999	$	2,342,485
Note payable, Truist Bank ⁽³⁾			742,477		762,430
Notes payable, TBT ⁽⁴⁾			1,450,686		1,486,229
Note payable, Scottsdale Transaction ⁽⁵⁾			6,250		18,750

Sub-total			4,484,412		4,609,894

Commercial
Note payable, FSB ⁽²⁾			5,184,311		5,314,741

Sub-total			5,184,311		5,314,741

Corporate
Line of credit, FSB ⁽⁶⁾			—		—

Sub-total			—		—

Total			9,668,723		9,924,635

Less: current portion			(7,589,297)		(7,787,468)

		$	2,079,426	$	2,137,167

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

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

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

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

(5)

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

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

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table depicts the Company’s future principal payments on long-term debt obligations as of June 30, 2026:


	2026			2027			2028			2029			2030			Thereafter
Consumer
Note payable, FSB ⁽¹⁾	$	2,284,999		$	—		$	—		$	—		$	—		$	—
Note payable, Truist Bank ⁽³⁾		20,251			41,716			43,216			44,913			592,381			—
Notes payable, TBT ⁽⁴⁾		35,757			74,325			77,019			80,099			83,155			1,100,331
Note payable, Scottsdale Transaction ⁽⁵⁾		6,250			—			—			—			—			—

Sub-total		2,347,257			116,041			120,235			125,012			675,536			1,100,331

Commercial
Note payable, FSB ⁽²⁾		5,184,311			—			—			—			—			—

Sub-total		5,184,311			—			—			—			—			—

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

Sub-total		—			—			—			—			—			—

	$	7,531,568		$	116,041		$	120,235		$	125,012		$	675,536		$	1,100,331

The Company was in compliance with all of its debt obligation covenants for the three and six months ended June 30, 2026 and 2025.

The following table depicts the Company’s future scheduled aggregate principal payments and maturities as of June 30, 2026:


		Scheduled
		Principal			Loan
Scheduled Principal Payments and Maturities by Year		Payments			Maturities			Total
2026		$	220,256		$	7,311,312		$	7,531,568
2027			116,041			—			116,041
2028			120,235			—			120,235
2029			125,012			—			125,012
2030			110,184			565,352			675,536
Thereafter			65,531			1,034,800			1,100,331

		$	757,259		$	8,911,464		$	9,668,723

NOTE 14 — STOCK-BASED COMPENSATION

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

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

As of June 30, 2026 and 2025, no awards have been granted under the 2025 Plan. No stock-based compensation expense was recognized for the three and six months ended June 30, 2026 and 2025.

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ENVELA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 15 — RELATED PARTY TRANSACTIONS

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

NOTE 16 — CONTINGENCIES

We review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims, or proceedings, whether individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity. However, the outcomes of any currently pending lawsuits, claims, and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case. There are no loss contingencies subject to reporting for the three and six months ended June 30, 2026 and 2025.

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

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (this “Form 10-Q”), including but not limited to: (i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “should,” “could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “goal,” “seek,” “ensure,” “potential,” “opportunity,” “intend,” “predict,” “committed,” “likely,” “continue,” “strive,” “aim,” “scheduled,” “focused on,” “long-term,” “future,” “over time,” “ongoing,” “uncertain,” “moving forward,” or “subject to.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking and based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our control, and, in many cases, we cannot predict all 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 2025Annual 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, 2026 and 2025. The following discussion and analysis provide information that management believes is relevant to assessing and understanding our financial condition, liquidity, and results of operations. The discussion should be read in conjunction with the Company’s 2025 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report.

Critical Accounting Policies and Estimates

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

Economic Conditions

Impacts of Demand for Safe-Haven Metals

Precious metals prices reached record levels in late January 2026 and declined meaningfully during the second quarter of Fiscal 2026, while remaining above average levels for the comparable prior-year period. Sustained declines in precious metal prices may reduce customer selling activity and affect inbound inventory sourcing, while elevated prices may subdue retail jewelry demand. While the current market for safe-haven metals has generally led to stronger premiums within our

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consumer segment, especially for gold and silver, demand for these metals has created industry-wide backlogs and slowed payments from refiners, which the Company has experienced. The impact on working capital is having to pay more to procure inventory, and the delayed conversion of accounts receivable from refiners. While the length of the current cycle and the steps domestic refiners will take to address processing capacity are indeterminate, the Company is closely monitoring its inbound buying practices, cash, inventory levels, and its accounts receivable exposure with its refining customers. The Company believes it has sufficient liquidity to maintain its current buying practices, yet it can adjust its buying programs to reduce exposure should these conditions materially affect its ability to convert accounts receivable. During the six months ended June 30, 2026, the Company collected the outstanding accounts receivable from a refining customer as of December 31, 2025, reducing the working capital impact of these conditions as of the date of this report.

Impacts of Government Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. We have evaluated the provisions of the new law and its potential effects on our effective tax rate, results of operations, and financial condition. OBBBA allows businesses to immediately deduct the full cost of qualifying assets in the year they are placed in service, rather than spreading the deduction over several years, and is effective for property acquired and placed in service after January 19, 2025. OBBBA also requires businesses to recognize the effects of tax law changes in the period of enactment, such as remeasuring estimated U.S. deferred tax assets and liabilities. The Company intends to utilize bonus depreciation, effectively reducing taxable income in the respective tax period and the cash deployed to settle such obligations. There was no material impact on the effective tax rate, financial condition, results of operations, or cash flows during three and six months ended June 30, 2026. In future fiscal periods, the impact of OBBBA is contingent on the continued election of bonus depreciation and the amount of qualifying assets acquired by the Company.

Impacts of Increases in Interest Rates and Inflation

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

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

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

Impacts of Tariffs

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

Consumer Segment

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

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Commercial Segment

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

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

Our Business

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

Consumer Segment

Commercial Segment

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

Segment Activities

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

Consumer Segment

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

Commercial Segment

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

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Results of Operations

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended June 30, 2026 and 2025:


		Three Months Ended June 30,
		2026											2025
		Consumer			Commercial			Consolidated			% of Sales⁽¹⁾		Consumer			Commercial			Consolidated			% of Sales⁽¹⁾

Sales		$	44,729,129		$	12,045,512		$	56,774,641		100.0	%	$	43,173,758		$	11,703,075		$	54,876,833		100.0	%
Cost of goods sold			39,204,853		$	4,191,956			43,396,809		76.4	%		38,515,772			3,973,138			42,488,910		77.4	%

Gross margin			5,524,276			7,853,556			13,377,832		23.6	%		4,657,986			7,729,937			12,387,923		22.6	%

Expenses:
Selling, general and administrative			3,453,499			4,324,614			7,778,113		13.7	%		3,735,427			4,936,640			8,672,067		15.8	%
Depreciation and amortization			234,065			263,198			497,263		0.9	%		195,604			264,807			460,411		0.8	%

Total operating expenses			3,687,564			4,587,812			8,275,376		14.6	%		3,931,031			5,201,447			9,132,478		16.6	%

Operating income			1,836,712			3,265,744			5,102,456		9.0	%		726,955			2,528,490			3,255,445		5.9	%

Other income (expense):
Other income			164,464			159,899			324,363		0.6	%		156,158			238,093			394,251		0.7	%
Interest expense			(38,327)			(40,320)			(78,647)		(0.1)	%		(53,993)			(52,235)			(106,228)		(0.2)	%

Income before income taxes			1,962,849			3,385,323			5,348,172		9.4	%		829,120			2,714,348			3,543,468		6.5	%
Income tax (expense) benefit			(449,106)			(724,880)			(1,173,986)		(2.1)	%		(185,749)			(605,320)			(791,069)		(1.4)	%

Net income		$	1,513,743		$	2,660,443		$	4,174,186		7.4	%	$	643,371		$	2,109,028		$	2,752,399		5.0	%

(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.

The individual segments reported the following for the three months ended June 30, 2026 and 2025:

Sales


		Three Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	56,774,641		$	54,876,833		$	1,897,808		3.5	%
% of consolidated sales			100.0	%		100.0	%

Consumer		$	44,729,129		$	43,173,758		$	1,555,371		3.6	%
% of consumer sales			100.0	%		100.0	%

Commercial		$	12,045,512		$	11,703,075		$	342,437		2.9	%
% of commercial sales			100.0	%		100.0	%

Consolidated

Sales increased by $1,897,808, or 3.5%, during the three months ended June 30, 2026, to $56,774,641, as compared to $54,876,833 during the same period in Fiscal 2025.

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Consumer Segment

Sales in the consumer segment increased by $1,555,371, or 3.6%, during the three months ended June 30, 2026, to $44,729,129, as compared to $43,173,758 during the same period in Fiscal 2025. The change was primarily attributed to the performance within our wholesale vertical. Sales in the first quarter of Fiscal 2026 benefited from exceptionally elevated precious metals prices, which drove unusually high customer selling activity and wholesale volumes. As gold and silver prices declined during the second quarter of Fiscal 2026 from their late-January peaks, customer selling activity moderated toward more typical levels. Our results were supported by stronger buying volumes at our retail stores, and we experienced more favorable pricing than in the same period in Fiscal 2025.

Commercial Segment

Sales in the commercial segment increased by $342,437, or 2.9%, during the three months ended June 30, 2026, to $12,045,512, as compared to $11,703,075 during the same period in Fiscal 2025. The change was primarily attributed to the continued strong demand for re-marketed technology assets and components during the quarter. Pricing in certain categories within our ITAD vertical remained higher than in the same period in Fiscal 2025, although these pricing benefits moderated from the first quarter of Fiscal 2026. Results were further supported by the favorable performance of our trade-in vertical and harvested component sales within our electronic waste vertical. The component cost environment supporting this demand has also led certain enterprises to extend hardware replacement cycles, which may constrain the near-term inbound supply of retired technology assets available for acquisition.

Cost of Goods Sold


		Three Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	43,396,809		$	42,488,910		$	907,899		2.1	%
% of consolidated sales			76.4	%		77.4	%

Consumer		$	39,204,853		$	38,515,772		$	689,081		1.8	%
% of consumer sales			87.6	%		89.2	%

Commercial		$	4,191,956		$	3,973,138		$	218,818		5.5	%
% of commercial sales			34.8	%		33.9	%

Consolidated

Cost of goods sold increased by $907,899, or 2.1%, during the three months ended June 30, 2026, to $43,396,809, as compared to $42,488,910 during the same period in Fiscal 2025.

Consumer Segment

Cost of goods sold in the consumer segment increased by $689,081, or 1.8%, during the three months ended June 30, 2026, to $39,204,853, as compared to $38,515,772 during the same period in Fiscal 2025. The change was primarily attributed to higher sales volumes within our wholesale vertical, which was also impacted by the upward movement in gold and silver prices over the same period in Fiscal 2025.

Cost of goods sold as a percentage of sales in the consumer segment was 87.6% during the three months ended June 30, 2026, as compared to 89.2% during the same period in Fiscal 2025. The change was primarily attributed to a favorable shift in product mix.

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Commercial Segment

Cost of goods sold in the commercial segment increased by $218,818, or 5.5%, during the three months ended June 30, 2026, to $4,191,956, as compared to $3,973,138 during the same period in Fiscal 2025. The change was primarily attributed to the aforementioned impact of our ITAD and trade-in verticals, along with costs associated with harvested components within our electronic waste vertical.

Cost of goods sold as a percentage of sales in the commercial segment was 34.8% during the three months ended June 30, 2026, as compared to 33.9% during the same period in Fiscal 2025. The change was primarily attributed to product mix, in which we incurred lower margins related to certain personal technology assets within our asset disposition verticals and from harvested components within our electronic waste vertical.

Gross Margin


		Three Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	13,377,832		$	12,387,923		$	989,909	8.0	%
% of consolidated sales			23.6	%		22.6	%

Consumer		$	5,524,276		$	4,657,986		$	866,290	18.6	%
% of consumer sales			12.4	%		10.8	%

Commercial		$	7,853,556		$	7,729,937		$	123,619	1.6	%
% of commercial sales			65.2	%		66.1	%

Consolidated

Gross margin increased by $989,909, or 8.0%, during the three months ended June 30, 2026, to $13,377,832, as compared to $12,387,923 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $1,897,808 and an increase in cost of goods sold of $907,899 resulted in the $989,909 increase in gross margin.

Gross margin as a percentage of sales was 23.6% during the three months ended June 30, 2026, as compared to 22.6% during the same period in Fiscal 2025.

Consumer Segment

Gross margin in the consumer segment increased by $866,290, or 18.6%, during the three months ended June 30, 2026, to $5,524,276, as compared to $4,657,986 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $1,555,371 and an increase in cost of goods sold of $689,081 resulted in the $866,290 increase in gross margin.

Gross margin as a percentage of sales in the consumer segment was 12.4% during the three months ended June 30, 2026, as compared to 10.8% during the same period in Fiscal 2025.

Commercial Segment

Gross margin in the commercial segment increased by $123,619, or 1.6%, during the three months ended June 30, 2026, to $7,853,556, as compared to $7,729,937 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $342,437 and an increase in cost of goods sold of $218,818 resulted in the $123,619 increase in gross margin.

Gross margin as a percentage of sales in the commercial segment was 65.2% during the three months ended June 30, 2026, as compared to 66.1% during the same period in Fiscal 2025.

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Selling, General and Administrative Expense


		Three Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	7,778,113		$	8,672,067		$	(893,954)		(10.3)	%
% of consolidated sales			13.7	%		15.8	%

Consumer		$	3,453,499		$	3,735,427		$	(281,928)		(7.5)	%
% of consumer sales			7.7	%		8.7	%

Commercial		$	4,324,614		$	4,936,640		$	(612,026)		(12.4)	%
% of commercial sales			35.9	%		42.2	%

Consolidated

Selling, general and administrative expense decreased by $893,954, or 10.3%, during the three months ended June 30, 2026, to $7,778,113, as compared to $8,672,067 during the same period in Fiscal 2025.

Consumer Segment

Selling, general and administrative expense in the consumer segment decreased by $281,928, or 7.5%, during the three months ended June 30, 2026, to $3,453,499, as compared to $3,735,427 during the same period in Fiscal 2025. The change was primarily attributed to lower human capital costs and the timing and nature of certain marketing programs.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $612,026, or 12.4%, during the three months ended June 30, 2026, to $4,324,614, as compared to $4,936,640 during the same period in Fiscal 2025. The change was primarily attributed to variable-cost production expenses, including human capital costs resulting from lower overall processing volumes in our electronic scrap vertical, as well as the incremental impact of the closure of the Arizona ITAD facility, which did not occur until the latter part of the second quarter of Fiscal 2025.

Depreciation and Amortization Expense


		Three Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	497,263		$	460,411		$	36,852	8.0	%
% of consolidated sales			0.9	%		0.8	%

Consumer		$	234,065		$	195,604		$	38,461	19.7	%
% of consumer sales			0.5	%		0.5	%

Commercial		$	263,198		$	264,807		$	(1,609)	(0.6)	%
% of commercial sales			2.2	%		2.3	%

Consolidated

Depreciation and amortization expense increased by $36,852, or 8.0%, during the three months ended June 30, 2026, to $497,263, as compared to $460,411 during the same period in Fiscal 2025.

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Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $38,461, or 19.7%, during the three months ended June 30, 2026, to $234,065, as compared to $195,604 during the same period in Fiscal 2025. The change was primarily attributed to a new store that came online during the second quarter of 2026 and in the latter half of the second quarter of 2025, hence not having a full quarter of comparative depreciation expense, along with the incremental impact of allocated depreciation expense from our corporate head office improvements becoming more significant.

Commercial Segment

Depreciation and amortization expense in the commercial segment decreased by $1,609, or 0.6%, during the three months ended June 30, 2026, to $263,198, as compared to $264,807 during the same period in Fiscal 2025. There was no material impact from the allocation of depreciation expense or from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point.

Other Income (Expense)


		Three Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	324,363		$	394,251		$	(69,888)	(17.7)	%
% of consolidated sales			0.6	%		0.7	%

Consumer		$	164,464		$	156,158		$	8,306	5.3	%
% of consumer sales			0.4	%		0.4	%

Commercial		$	159,899		$	238,093		$	(78,194)	(32.8)	%
% of commercial sales			1.3	%		2.0	%

Consolidated

Other income decreased by $69,888, or 17.7%, during the three months ended June 30, 2026, to $324,363, as compared to $394,251 during the same period in Fiscal 2025.

Consumer Segment

Other income in the consumer segment increased by $8,306, or 5.3%, during the three months ended June 30, 2026, to $164,464, as compared to $156,158 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the second quarter of Fiscal 2026, lower working capital cash requirements and higher excess cash balances resulted in increased consolidated cash returns despite lower earned interest rates. In allocation, this compared favorably to the same period in Fiscal 2025, which included an employee retention credit.

The impact of dividend and interest income is referenced below.

Dividend income comprised $53,762 and $8,883 of other income during the three months ended June 30, 2026 and 2025, respectively. Interest income comprised $110,691 and $51,038 of other income during the three months ended June 30, 2026 and 2025, respectively.

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Commercial Segment

Other income in the commercial segment decreased by $78,194, or 32.8%, during the three months ended June 30, 2026, to $159,899, as compared to $238,093 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the second quarter of Fiscal 2026, lower working capital cash usage and higher excess cash balances increased cash returns despite lower earned interest rates. However, the allocated impact was unfavorable compared to the same period in Fiscal 2025, when excess cash balances were aggregated at the segment level.

The impact of dividend and interest income is referenced below.

Dividend income comprised $60,827 and $74,702 of other income during the three months ended June 30, 2026 and 2025, respectively. Interest income comprised $90,762 and $130,427 of other income during the three months ended June 30, 2026 and 2025, respectively.

Interest Expense


		Three Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	(78,647)		$	(106,228)		$	27,581	(26.0)	%
% of consolidated sales			(0.1)	%		(0.2)	%

Consumer		$	(38,327)		$	(53,993)		$	15,666	(29.0)	%
% of consumer sales			(0.1)	%		(0.1)	%

Commercial		$	(40,320)		$	(52,235)		$	11,915	(22.8)	%
% of commercial sales			(0.3)	%		(0.4)	%

Consolidated

Interest expense decreased by $27,581, or 26.0%, during the three months ended June 30, 2026, to $78,647, as compared to $106,228 during the same period in Fiscal 2025.

Consumer Segment

Interest expense in the consumer segment decreased by $15,666, or 29.0%, during the three months ended June 30, 2026, to $38,327, as compared to $53,993 during the same period in Fiscal 2025. The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025 and from segment debt that matured in the third quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

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Commercial Segment

Interest expense in the commercial segment decreased by $11,915, or 22.8%, during the three months ended June 30, 2026, to $40,320, as compared to $52,235 during the same period in Fiscal 2025. The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

Income Tax (Expense) Benefit


	Three Months Ended June 30,						Change
	2026			2025			Amount		%

Consolidated	$	(1,173,986)		$	(791,069)		$	(382,917)	48.4	%
% of consolidated sales		(2.1)	%		(1.4)	%

Consumer	$	(449,106)		$	(185,749)		$	(263,357)	141.8	%
% of consumer sales		(1.0)	%		(0.4)	%

Commercial	$	(724,880)		$	(605,320)		$	(119,560)	19.8	%
% of commercial sales		(6.0)	%		(5.2)	%

NM – Not Meaningful

Consolidated

Income tax expense increased by $382,917, or 48.4%, during the three months ended June 30, 2026, to $1,173,986, as compared to $791,069 during the same period in Fiscal 2025. Currently, the Company has a deferred tax liability reflecting a future obligation to pay taxes. 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 22.0% and 22.3% for the three months ended June 30, 2026 and 2025, 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, 2026 and 2025.

Net Income (Loss)


		Three Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	4,174,186		$	2,752,399		$	1,421,787	51.7	%
% of consolidated sales			7.4	%		5.0	%

Consumer		$	1,513,743		$	643,371		$	870,372	135.3	%
% of consumer sales			3.4	%		1.5	%

Commercial		$	2,660,443		$	2,109,028		$	551,415	26.1	%
% of commercial sales			22.1	%		18.0	%

NM – Not Meaningful

Consolidated

Net income increased by $1,421,787, or 51.7%, during the three months ended June 30, 2026, to $4,174,186, as compared to $2,752,399 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2026 and 2025 for further details.

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Consumer Segment

Net income increased in the consumer segment by $870,372, during the three months ended June 30, 2026, to $1,513,743, as compared to $643,371 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2026 and 2025 for further details.

Commercial Segment

Net income increased in the commercial segment by $551,415, or 26.1%, during the three months ended June 30, 2026, to $2,660,443, as compared to $2,109,028 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended June 30, 2026 and 2025 for further details.

Earnings Per Share

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


		Three Months Ended June 30,				Change
		2026		2025		Amount		%

Consolidated		$	0.16	$	0.11	$	0.05	45.5	%

Consolidated

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.05, or 45.5%, during the three months ended June 30, 2026, to $0.16, as compared to $0.11 during the same period in Fiscal 2025.

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Comparison of the Six Months Ended June 30, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30,
	2026										2025
	Consumer			Commercial			Consolidated		% of Sales ⁽¹⁾		Consumer		Commercial		Consolidated		% of Sales ⁽¹⁾

Sales	$	126,522,651		$	28,632,880		$	155,155,531	100.0	%	$	79,944,362	$	23,188,300	$	103,132,662	100.0	%
Cost of goods sold		111,297,742			9,859,541			121,157,283	78.1	%		71,075,473		7,701,242		78,776,715	76.4	%

Gross margin		15,224,909			18,773,339			33,998,248	21.9	%		8,868,889		15,487,058		24,355,947	23.6	%

Expenses:
Selling, general and administrative		7,508,374			9,193,531			16,701,905	10.8	%		7,623,333		9,452,996		17,076,329	16.6	%
Depreciation and amortization		449,165			534,061			983,226	0.6	%		376,236		529,516		905,752	0.9	%

Total operating expenses		7,957,539			9,727,592			17,685,131	11.4	%		7,999,569		9,982,512		17,982,081	17.4	%

Operating income		7,267,370			9,045,747			16,313,117	10.5	%		869,320		5,504,546		6,373,866	6.2	%

Other income (expense):
Other income		257,645			237,062			494,707	0.3	%		157,007		442,849		599,856	0.6	%
Interest expense		(76,712)			(80,707)			(157,419)	(0.1)	%		(108,040)		(104,509)		(212,549)	(0.2)	%

Income before income taxes		7,448,303			9,202,102			16,650,405	10.7	%		918,287		5,842,886		6,761,173	6.6	%
Income tax (expense) benefit		(1,644,262)			(1,992,224)			(3,636,486)	(2.3)	%		(205,822)		(1,309,605)		(1,515,427)	(1.5)	%

Net income	$	5,804,041		$	7,209,878		$	13,013,919	8.4	%	$	712,465	$	4,533,281	$	5,245,746	5.1	%

(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.

The individual segments reported the following for the six months ended June 30, 2026 and 2025:

Sales


		Six Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	155,155,531		$	103,132,662		$	52,022,869		50.4	%
% of consolidated sales			100.0	%		100.0	%

Consumer		$	126,522,651		$	79,944,362		$	46,578,289		58.3	%
% of consumer sales			100.0	%		100.0	%

Commercial		$	28,632,880		$	23,188,300		$	5,444,580		23.5	%
% of commercial sales			100.0	%		100.0	%

Consolidated

Sales increased by $52,022,869 or 50.4%, during the six months ended June 30, 2026, to $155,155,531, as compared to $103,132,662 during the same period in Fiscal 2025.

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Consumer Segment

Sales in the consumer segment increased by $46,578,289, or 58.3%, during the six months ended June 30, 2026, to $126,522,651, as compared to $79,944,362 during the same period in Fiscal 2025. The change was primarily attributed to strong performance within our wholesale and retail verticals, which were most pronounced in the first quarter of Fiscal 2026, supported by higher gold and silver prices compared to the same period of Fiscal 2025. As precious metals prices declined during the second quarter of Fiscal 2026 from their late-January peaks, customer selling activity moderated toward more typical levels.

Commercial Segment

Sales in the commercial segment increased by $5,444,580, or 23.5%, during the six months ended June 30, 2026, to $28,632,880, as compared to $23,188,300 during the same period in Fiscal 2025. The change was primarily attributed to the strong demand for re-marketed technology assets and components throughout the period. Pricing in certain categories within our ITAD vertical remained higher than in the same period in Fiscal 2025, although these pricing benefits moderated from the first quarter of Fiscal 2026, and results were further supported by the favorable performance of our trade-in vertical and harvested component sales within our electronic waste vertical.

Cost of Goods Sold


		Six Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	121,157,283		$	78,776,715		$	42,380,568		53.8	%
% of consolidated sales			78.1	%		76.4	%

Consumer		$	111,297,742		$	71,075,473		$	40,222,269		56.6	%
% of consumer sales			88.0	%		88.9	%

Commercial		$	9,859,541		$	7,701,242		$	2,158,299		28.0	%
% of commercial sales			34.4	%		33.2	%

Consolidated

Cost of goods sold increased by $42,380,568, or 53.8%, during the six months ended June 30, 2026, to $121,157,283, as compared to $78,776,715 during the same period in Fiscal 2025.

Consumer Segment

Cost of goods sold in the consumer segment increased by $40,222,269, or 56.6%, during the six months ended June 30, 2026, to $111,297,742, as compared to $71,075,473 during the same period in Fiscal 2025. The change was primarily attributed to higher sales volumes within our wholesale vertical, which was also impacted by the upward movement in gold and silver prices over the same period in Fiscal 2025.

Cost of goods sold as a percentage of sales in the consumer segment was 88.0% during the six months ended June 30, 2026, as compared to 88.9% during the same period in Fiscal 2025. The change was primarily attributed to stronger margins within our wholesale vertical.

Commercial Segment

Cost of goods sold in the commercial segment increased by $2,158,299, or 28.0%, during the six months ended June 30, 2026, to $9,859,541, as compared to $7,701,242 during the same period in Fiscal 2025. The change was primarily attributed to the aforementioned impact of our ITAD and trade-in verticals, along with costs associated with harvested components within our electronic waste vertical.

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Cost of goods sold as a percentage of sales in the commercial segment was 34.4% during the six months ended June 30, 2026, as compared to 33.2% during the same period in Fiscal 2025. The change was primarily attributed to product mix, in which we incurred lower margins related to certain personal technology assets within our disposition verticals and from harvested components within our electronic waste vertical.

Gross Margin


		Six Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	33,998,248		$	24,355,947		$	9,642,301		39.6	%
% of consolidated sales			21.9	%		23.6	%

Consumer		$	15,224,909		$	8,868,889		$	6,356,020		71.7	%
% of consumer sales			12.0	%		11.1	%

Commercial		$	18,773,339		$	15,487,058		$	3,286,281		21.2	%
% of commercial sales			65.6	%		66.8	%

Consolidated

Gross margin increased by $9,642,301, or 39.6%, during the six months ended June 30, 2026, to $33,998,248, as compared to $24,355,947 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $52,022,869 and an increase in cost of goods sold of $42,380,568 resulted in the $9,642,301 increase in gross margin.

Gross margin as a percentage of sales was 21.9% during the six months ended June 30, 2026, as compared to 23.6% during the same period in Fiscal 2025.

Consumer Segment

Gross margin in the consumer segment increased by $6,356,020, or 71.7%, during the six months ended June 30, 2026, to $15,224,909, as compared to $8,868,889 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $46,578,289 and an increase in cost of goods sold of $40,222,269 resulted in the $6,356,020 increase in gross margin.

Gross margin as a percentage of sales in the consumer segment was 12.0% during the six months ended June 30, 2026, as compared to 11.1% during the same period in Fiscal 2025.

Commercial Segment

Gross margin in the commercial segment increased by $3,286,281, or 21.2%, during the six months ended June 30, 2026, to $18,773,339, as compared to $15,487,058 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $5,444,580 and an increase in cost of goods sold of $2,158,299 resulted in the $3,286,281 increase in gross margin.

Gross margin as a percentage of sales in the commercial segment was 65.6% during the six months ended June 30, 2026, as compared to 66.8% during the same period in Fiscal 2025.

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Selling, General and Administrative Expense


		Six Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	16,701,905		$	17,076,329		$	(374,424)		(2.2)	%
% of consolidated sales			10.8	%		16.6	%

Consumer		$	7,508,374		$	7,623,333		$	(114,959)		(1.5)	%
% of consumer sales			5.9	%		9.5	%

Commercial		$	9,193,531		$	9,452,996		$	(259,465)		(2.7)	%
% of commercial sales			32.1	%		40.8	%

Consolidated

Selling, general and administrative expense decreased by $374,424, or 2.2%, during the six months ended June 30, 2026, to $16,701,905, as compared to $17,076,329 during the same period in Fiscal 2025.

Consumer Segment

Selling, general and administrative expense in the consumer segment decreased by $114,959, or 1.5%, during the six months ended June 30, 2026, to $7,508,374, as compared to $7,623,333 during the same period in Fiscal 2025. The change was primarily attributed to reduced human capital costs, the nature and timing of certain marketing programs, along with reduced travel costs.

Commercial Segment

Selling, general and administrative expense in the commercial segment decreased by $259,465, or 2.7%, during the six months ended June 30, 2026, to $9,193,531, as compared to $9,452,996 during the same period in Fiscal 2025. The change was primarily attributed to variable-cost production expenses resulting from lower volumes in our electronic scrap vertical, as well as from the impact of the Arizona ITAD facility, which did not occur until the latter part of the second quarter of Fiscal 2025.

Depreciation and Amortization Expense


		Six Months Ended June 30,						Change
		2026			2025			Amount			%

Consolidated		$	983,226		$	905,752		$	77,474		8.6	%
% of consolidated sales			0.6	%		0.9	%

Consumer		$	449,165		$	376,236		$	72,929		19.4	%
% of consumer sales			0.4	%		0.5	%

Commercial		$	534,061		$	529,516		$	4,545		0.9	%
% of commercial sales			1.9	%		2.3	%

Consolidated

Depreciation and amortization expense increased by $77,474, or 8.6%, during the six months ended June 30, 2026, to $983,226, as compared to $905,752 during the same period in Fiscal 2025.

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Consumer Segment

Depreciation and amortization expense in the consumer segment increased by $72,929, or 19.4%, during the six months ended June 30, 2026, to $449,165, as compared to $376,236 during the same period in Fiscal 2025. The increase was primarily attributable to new stores that became operational during the second quarter of 2026 and in the latter half of the second quarter of 2025, and therefore did not have a full year of comparative year-to-date depreciation expense. The increase was also driven by the more significant impact of depreciation expense allocated from corporate head office improvements.

Commercial Segment

Depreciation and amortization expense in the commercial segment increased by $4,545, or 0.9%, during the six months ended June 30, 2026, to $534,061, as compared to $529,516 during the same period in Fiscal 2025. There was no material impact from the impact of allocated corporate depreciation expense or from assets capitalized or reaching maturity in each comparative period, and as such, no discussion point.

Other Income (Expense)


		Six Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	494,707		$	599,856		$	(105,149)	(17.5)	%
% of consolidated sales			0.3	%		0.6	%

Consumer		$	257,645		$	157,007		$	100,638	64.1	%
% of consumer sales			0.2	%		0.2	%

Commercial		$	237,062		$	442,849		$	(205,787)	(46.5)	%
% of commercial sales			0.8	%		1.9	%

Consolidated

Other income decreased by $105,149, or 17.5%, during the six months ended June 30, 2026, to $494,707, as compared to $599,856 during the same period in Fiscal 2025.

Consumer Segment

Other income in the consumer segment increased by $100,638, or 64.1%, during the six months ended June 30, 2026, to $257,645, as compared to $157,007 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the Fiscal 2026 period, lower working capital cash requirements and higher excess cash balances resulted in increased consolidated cash returns despite lower earned interest rates. In allocation, this compared favorably to the Fiscal 2025 period, which included an employee retention credit. The impact of dividend and interest income is referenced below.

Dividend income comprised $90,810 and $8,883 of other income during the six months ended June 30, 2026 and 2025, respectively. Interest income comprised $166,431 and $51,038 of other income during the six months ended June 30, 2026 and 2025, respectively.

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Commercial Segment

Other income in the commercial segment decreased by $205,787, or 46.5%, during the six months ended June 30, 2026, to $237,062, as compared to $442,849 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level.

Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the Fiscal 2026 period, lower working capital cash usage and higher excess cash balances increased cash returns despite lower earned interest rates. However, the allocated impact was unfavorable compared to the Fiscal 2025 period, when excess cash balances were aggregated at the segment level. The impact of dividend and interest income is referenced below.

Dividend income comprised $103,976 and $129,567 of other income during the six months ended June 30, 2026 and 2025, respectively. Interest income comprised $111,846 and $274,758 of other income during the six months ended June 30, 2026 and 2025, respectively.

Interest Expense


		Six Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	(157,419)		$	(212,549)		$	55,130	(25.9)	%
% of consolidated sales			(0.1)	%		(0.2)	%

Consumer		$	(76,712)		$	(108,040)		$	31,328	(29.0)	%
% of consumer sales			(0.1)	%		(0.1)	%

Commercial		$	(80,707)		$	(104,509)		$	23,802	(22.8)	%
% of commercial sales			(0.3)	%		(0.5)	%

Consolidated

Interest expense decreased by $55,130, or 25.9%, during the six months ended June 30, 2026, to $157,419, as compared to $212,549 during the same period in Fiscal 2025.

Consumer Segment

Interest expense in the consumer segment decreased by $31,328, or 29.0%, during the six months ended June 30, 2026, to $76,712, as compared to $108,040 during the same period in Fiscal 2025. The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the fourth quarter of the Fiscal 2025 period, along with segment debt that matured in the third quarter of the Fiscal 2025 period, resulting in less interest expense in the Fiscal 2026 period.

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Commercial Segment

Interest expense in the commercial segment decreased by $23,802, or 22.8%, during the six months ended June 30, 2026, to $80,707, as compared to $104,509 during the same period in Fiscal 2025. The change was attributed to debt amortization and allocated interest expense from corporate debt that matured in the Fiscal 2025 period, resulting in less interest expense in the second quarter of Fiscal 2026.

Income Tax (Expense) Benefit


		Six Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	(3,636,486)		$	(1,515,427)		$	(2,121,059)	140.0	%
% of consolidated sales			(2.3)	%		(1.5)	%

Consumer		$	(1,644,262)		$	(205,822)		$	(1,438,440)	698.9	%
% of consumer sales			(1.3)	%		(0.3)	%

Commercial		$	(1,992,224)		$	(1,309,605)		$	(682,619)	52.1	%
% of commercial sales			(7.0)	%		(5.6)	%

NM – Not Meaningful

Consolidated

Income tax expense increased by $2,121,059, or 140.0%, during the six months ended June 30, 2026, to $3,636,486, as compared to $1,515,427 during the same period in Fiscal 2025. Currently, the Company has a deferred tax liability reflecting a future obligation to pay taxes. The Company is subject to a federal tax rate of approximately 21.0% on net income, in addition to state and local taxes. The effective income tax rate was 21.8% and 22.4% for the six months ended June 30, 2026 and 2025, 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 case for the Company for the decrease for the six months ended June 30, 2026, and 2025.

Net Income


		Six Months Ended June 30,						Change
		2026			2025			Amount		%

Consolidated		$	13,013,919		$	5,245,746		$	7,768,173	148.1	%
% of consolidated sales			8.4	%		5.1	%

Consumer		$	5,804,041		$	712,465		$	5,091,576	714.6	%
% of consumer sales			4.6	%		0.9	%

Commercial		$	7,209,878		$	4,533,281		$	2,676,597	59.0	%
% of commercial sales			25.2	%		19.5	%

NM – Not Meaningful

Consolidated

Net income increased by $7,768,173, or 148.1%, during the six months ended June 30, 2026, to $13,013,919, as compared to $5,245,746 during the same period in Fiscal 2025.

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Consumer Segment

Net income increased in the consumer segment by $5,091,576, during the six months ended June 30, 2026, to net income of $5,804,041, as compared to net income of $712,465 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2026 and 2025 for further details.

Commercial Segment

Net income increased in the commercial segment by $2,676,597, or 59.0%, during the six months ended June 30, 2026, to $7,209,878, as compared to $4,533,281 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Six Months Ended June 30, 2026 and 2025 for further details.

Earnings Per Share

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


		Six Months Ended June 30,				Change
		2026		2025		Amount		%

Consolidated		$	0.50	$	0.20	$	0.30	150.0	%

Consolidated

Basic and diluted earnings per share attributable to holders of our Common Stock increased by $0.30, or 150.0%, during the six months ended June 30, 2026, to $0.50, as compared to $0.20 during the same period in Fiscal 2025.

Non-U.S. GAAP Financial Measures

Within this management discussion and analysis, we use supplemental measures of our financial performance, which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with U.S. GAAP. When evaluated in conjunction with U.S. GAAP financial measures, the Company believes that these non-U.S. GAAP financial measures add meaningful insight into our financial position, results of operations, liquidity, and ability to meet financial obligations.

These non-U.S. GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with U.S. GAAP. Each of these non-U.S. GAAP financial measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparing performance among different companies. The Company also presents certain non-U.S. GAAP financial measures and its nearest financial measure utilizing U.S. GAAP for the trailing four quarters period ended June 30, 2026. Management considers the trailing four quarters period ended June 30, 2026, to be helpful in understanding historical financial results, trends, the calculation of leverage ratios, and free cash flow. The non-U.S. GAAP and U.S. GAAP financial measures for the trailing four quarters period ended June 30, 2026, are compared against the most recent fiscal period ended December 31, 2025, which is the nearest twelve-month reporting period under U.S. GAAP. These financial measure comparisons, along with comparisons utilizing three- and six-month periods for non-U.S. GAAP and its nearest financial measure utilizing U.S. GAAP may differ materially from those reported for the fiscal period ended December 31, 2025.

We have included the definitions of our non-U.S. GAAP financial measures and reconciliations to the most comparable U.S. GAAP financial measures in the following tables below.

Adjusted EBITDA and Adjusted EBITDAR

Adjusted EBITDA is defined as the sum of (i) net income (loss) of the Company, adjusted for additions (deductions) of (ii) interest expense, (iii) other (income) expense, (iv) income tax expense (benefit), and (v) depreciation and amortization. Management considers Adjusted EBITDA to be a key financial measure to assess our overall operating performance.

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Adjusted EBITDAR is defined as (i) Adjusted EBITDA plus (ii) minimum fixed rent expense for properties occupied under operating leases. Management considers Adjusted EBITDAR to be a key financial measure to assess our overall operating performance, excluding the impact of variability in leasing methods and capital structures.

These measures are also inputs into the Company’s leverage ratios.

The Company’s Adjusted EBITDA and Adjusted EBITDAR are considered non-U.S. GAAP financial measures and are not calculated in accordance with, or preferable to, “net income” or other financial measures of operating performance calculated in accordance with U.S. GAAP.

The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S. GAAP financial measure for the three months ended June 30, 2026 and 2025:


		Three Months Ended June 30,
		2026									2025
		Consumer			Commercial			Consolidated			Consumer			Commercial			Consolidated
Adjusted EBITDA Reconciliation:
Net income		$	1,513,743		$	2,660,443		$	4,174,186		$	643,371		$	2,109,028		$	2,752,399
Addition (deduction):
Depreciation and amortization			234,065			263,198			497,263			195,604			264,807			460,411
Other income			(164,464)			(159,899)			(324,363)			(156,158)			(238,093)			(394,251)
Interest expense			38,327			40,320			78,647			53,993			52,235			106,228
Income tax expense			449,106			724,880			1,173,986			185,749			605,320			791,069

		$	2,070,777		$	3,528,942		$	5,599,719		$	922,559		$	2,793,297		$	3,715,856

Adjusted EBITDAR Reconciliation:
Adjusted EBITDA		$	2,070,777		$	3,528,942		$	5,599,719		$	922,559		$	2,793,297		$	3,715,856
Addition:
Rent expense ⁽¹⁾			304,481			467,134			771,615			281,099			324,454			605,553

		$	2,375,258		$	3,996,076		$	6,371,334		$	1,203,658		$	3,117,751		$	4,321,409

(1)

The table below depicts the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable U.S. GAAP financial measure for the three months ended June 30, 2026 and June 30, 2025:


		Three Months Ended June 30,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer			Commercial			Consolidated

Total lease costs, per ASC 842		$	371,583		$	625,636		$	997,219	$	339,308		$	512,519		$	851,827
Less: variable lease cost			(65,536)			(151,371)			(216,907)		(58,209)			(156,874)			(215,083)
Less: short-term lease cost			(1,566)			(7,131)			(8,697)		—			(31,191)			(31,191)

		$	304,481		$	467,134		$	771,615	$	281,099		$	324,454		$	605,553

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The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S. GAAP financial measure for the six months ended June 30, 2026 and 2025:


		Six Months Ended June 30,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer		Commercial		Consolidated
Adjusted EBITDA Reconciliation:
Net income		$	5,804,041		$	7,209,878		$	13,013,919	$	712,465	$	4,533,281	$	5,245,746
Addition (deduction):
Depreciation and amortization			449,165			534,061			983,226		376,236		529,516		905,752
Other income			(257,645)			(237,062)			(494,707)		(157,007)		(442,849)		(599,856)
Interest expense			76,712			80,707			157,419		108,040		104,509		212,549
Income tax expense			1,644,262			1,992,224			3,636,486		205,822		1,309,605		1,515,427

		$	7,716,535		$	9,579,808		$	17,296,343	$	1,245,556	$	6,034,062	$	7,279,618

Adjusted EBITDAR Reconciliation:
Adjusted EBITDA		$	7,716,535		$	9,579,808		$	17,296,343	$	1,245,556	$	6,034,062	$	7,279,618
Addition:
Rent expense ⁽¹⁾			603,000			934,772			1,537,772		544,164		663,882		1,208,046

		$	8,319,535		$	10,514,580		$	18,834,115	$	1,789,720	$	6,697,944	$	8,487,664

(1)	The table below depicts the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable U.S. GAAP financial measure for the six months ended June 30, 2026 and 2025:


		Six Months Ended June 30,
		2026								2025
		Consumer			Commercial			Consolidated		Consumer			Commercial			Consolidated

Total lease costs, per ASC 842		$	734,669		$	1,337,495		$	2,072,164	$	693,031		$	1,037,132		$	1,730,163
Less: variable lease cost			(128,332)			(306,006)			(434,338)		(117,868)			(302,796)			(420,664)
Less: short-term lease cost			(3,337)			(96,717)			(100,054)		(30,999)			(70,454)			(101,453)

		$	603,000		$	934,772		$	1,537,772	$	544,164		$	663,882		$	1,208,046

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The following table reconciles Adjusted EBITDA and Adjusted EBITDAR to the most comparable U.S. GAAP financial measure for the trailing four quarters ended June 30, 2026:

Three Months Ended

Trailing Four Quarters Ended

Year Ended

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Adjusted EBITDA Reconciliation:

Net income

3,356,920

5,994,312

8,839,733

4,174,186

22,365,151

14,596,978

Addition (deduction):

Depreciation and amortization

472,524

488,313

485,963

497,263

1,944,063

1,866,589

Other income

(233,642)

(187,431)

(170,344)

(324,363)

(915,780)

(1,020,929)

Interest expense

105,757

88,336

78,772

78,647

351,512

406,642

Income tax expense

972,493

1,638,320

2,462,500

1,173,986

6,247,299

4,126,240

4,674,052

8,021,850

11,696,624

5,599,719

29,992,245

19,975,520

Adjusted EBITDAR Reconciliation:

Adjusted EBITDA

4,674,052

8,021,850

11,696,624

5,599,719

29,992,245

19,975,520

Addition:

Rent expense ⁽¹⁾

630,586

727,648

766,157

771,615

2,896,006

2,566,280

5,304,638

8,749,498

12,462,781

6,371,334

32,888,251

22,541,800

(1)	The table below depicts the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable U.S. GAAP financial measure for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

Trailing Four Quarters Ended

Year Ended

 

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Total lease costs, per ASC 842

771,724

967,416

1,074,945

997,219

3,811,304

3,469,303

Less: variable lease cost

(103,682)

(196,266)

(217,431)

(216,907)

(734,286)

(720,612)

Less: short-term lease cost

(37,456)

(43,502)

(91,357)

(8,697)

(181,012)

(182,411)

630,586

727,648

766,157

771,615

2,896,006

2,566,280

Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Leverage Ratios

The Company’s Debt to Adjusted EBITDA Leverage Ratio is defined as the Company’s (i) Debt Obligations divided by (ii) Adjusted EBITDA. Debt Obligations are defined as the sum of amounts outstanding under notes payable balances.

The Company’s Net Debt to Adjusted EBITDA Leverage Ratio is defined as the Company’s (i) Net Debt Obligations divided by (ii) Adjusted EBITDA. Net Debt Obligations are defined as the difference between the Company’s (i) Debt Obligations and (ii) Total Cash.

Management considers these financial measures to be helpful in understanding the Company’s ability to service Debt Obligations, excluding, and including the impact of Total Cash available to service such obligations.

The Company’s Debt to Adjusted Leverage Ratio and Net Debt to Adjusted EBITDA Leverage Ratio are considered non-U.S. GAAP financial measures and are not calculated in accordance with, or preferable to, other financial measures utilized to assess our ability to service “notes payable” in accordance with U.S. GAAP. The Company considers the Debt to Net Income Leverage Ratio, defined as (i) Debt Obligations divided by (ii) net income, to be the representative financial measure of our ability to service “notes payable” utilizing U.S. GAAP-derived financial statement balances and is incorporated into the presentation below.

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The following table reconciles components of the Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage Ratio for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:


		June 30,			December 31,
		2026			2025

Debt Obligations	(a)	$	9,668,723		$	9,924,635
Total Cash			(43,441,856)			(18,154,849)

Net Debt Obligations	(b)	$	(33,773,133)		$	(8,230,214)

Net income ⁽¹⁾	(c)	$	22,365,151		$	14,596,978
Adjusted EBITDA ⁽¹⁾	(d)	$	29,992,245		$	19,975,520

Leverage Ratios
Debt to Net Income Leverage: (a) divided by (c)			0.43	x		0.68	x

Debt to Adjusted EBITDA Leverage: (a) divided by (d)			0.32	x		0.50	x
Net Debt to Adjusted EBITDA Leverage: (b) divided by (d)			(1.13)	x		(0.41)	x

(1)	The presentation of net income and Adjusted EBITDA for June 30, 2026, represents the total amount of net income and Adjusted EBITDA for the trailing four quarters ended June 30, 2026.

Adjusted Debt to Adjusted EBITDAR Leverage and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratios

The Company’s Adjusted Debt to Adjusted EBITDAR Leverage Ratio is defined as the Company’s (i) Adjusted Debt Obligations divided by (ii) Adjusted EBITDAR. Adjusted Debt Obligations are defined as the sum of the Company’s (i) Debt Obligations and (ii) operating lease liabilities.

The Company’s Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio is defined as the Company’s (i) Adjusted Net Debt Obligations divided by (ii) Adjusted EBITDAR. Adjusted Net Debt Obligations are defined as the difference between the Company’s (i) Adjusted Debt Obligations and (ii) Total Cash.

Management considers these financial measures to be helpful in understanding the Company’s ability to service debt and operating lease obligations, excluding and including the impact of Total Cash available to service such obligations.

The Company’s Adjusted Debt to Adjusted EBITDAR Leverage Ratio and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio are considered non-U.S. GAAP financial measures and are not calculated in accordance with, or preferable to, other financial measures utilized to assess our ability to service “notes payable” and “operating lease liabilities” in accordance with U.S. GAAP. The Company considers the Adjusted Debt to Net Income Leverage Ratio, defined as the sum of (i) Debt Obligations and (ii) operating lease liabilities divided by (iii) net income, to be the representative financial measure of our ability to service “notes payable” and “operating leases” utilizing U.S. GAAP-derived financial statement balances and is incorporated into the presentation below.

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The following table reconciles components of the Adjusted Debt to Adjusted EBITDAR Leverage Ratio and Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:


		June 30,			December 31,
		2026			2025

Debt Obligations		$	9,668,723		$	9,924,635
Operating lease liabilities			9,729,535			9,933,862

Adjusted Debt Obligations	(a)	$	19,398,258		$	19,858,497
Total Cash			(43,441,856)			(18,154,849)

Adjusted Net Debt Obligations	(b)	$	(24,043,598)		$	1,703,648

Net income ⁽¹⁾	(c)	$	22,365,151		$	14,596,978
Adjusted EBITDAR ⁽¹⁾	(d)	$	32,888,251		$	22,541,800

Adjusted Leverage Ratios
Adjusted Debt to Net Income Leverage: (a) divided by (c)			0.87	x		1.36	x

Adjusted Debt to Adjusted EBITDAR Leverage: (a) divided by (d)			0.59	x		0.88	x
Adjusted Net Debt to Adjusted EBITDAR Leverage: (b) divided by (d)			(0.73)	x		0.08	x

(1)	The presentation of net income and Adjusted EBITDAR for June 30, 2026, represents the total amount of net income and Adjusted EBITDAR for the trailing four quarters ended June 30, 2026.

Net Cash

Net Cash is defined as the difference between the Company’s (i) cash and cash equivalents (“Total Cash”) and (ii) Debt Obligations. Management considers this financial measure to be helpful in understanding the Company’s liquidity.

The Company’s Net Cash is considered a non-U.S. GAAP financial measure and is not calculated in accordance with, or preferable to, “cash and cash equivalents” and amounts outstanding under “notes payable” balances or other financial measures of liquidity calculated in accordance with U.S. GAAP.

The following table reconciles Net Cash to its comparable U.S. GAAP financial measures:


		June 30,		December 31,
		2026		2025

Total Cash		$	43,441,856	$	18,154,849
Less: Debt Obligations			(9,668,723)		(9,924,635)

		$	33,773,133	$	8,230,214

Free Cash Flow

Free Cash Flow is defined as the difference between the Company’s (i) net cash provided by operations (“Operating Cash Flow”) and (ii) Capital Expenditures.

Management considers this financial measure to be helpful in understanding the amount of Free Cash Flow that the Company can utilize to meet its financing needs.

The Company’s Free Cash Flow is considered a non-U.S. GAAP financial measure and is not calculated in accordance with, or preferable to, “net cash provided by operations” or other financial measures of cash flow available to meet financing needs calculated in accordance with U.S. GAAP.

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The following table reconciles Free Cash Flow to the comparable U.S. GAAP financial measures for the three months ended June 30, 2026 and June 30, 2025:


		Three Months Ended June 30,
		2026			2025

Operating Cash Flow		$	5,917,163		$	2,591,537
Capital Expenditures			(962,782)			(497,172)

		$	4,954,381		$	2,094,365

The following table reconciles Free Cash Flow to the comparable U.S. GAAP financial measures for the six months ended June 30, 2026:


		Six Months Ended June 30,
		2026			2025

Operating Cash Flow		$	27,073,602		$	3,722,594
Capital Expenditures			(1,530,683)			(882,159)

		$	25,542,919		$	2,840,435

The following table reconciles Free Cash Flow to the comparable U.S. GAAP financial measures for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

Trailing Four Quarters Ended

Year Ended

 

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Operating Cash Flow

2,403,744

(3,545,544)

21,156,439

5,917,163

25,931,802

2,580,794

Capital Expenditures

(205,963)

(163,024)

(567,901)

(962,782)

(1,899,670)

(1,149,884)

2,197,781

(3,708,568)

20,588,538

4,954,381

24,032,132

1,430,910

Performance Metrics

In addition to non-U.S. GAAP financial measures, management utilizes certain performance metrics to assess its operations. A key performance metric that is calculated consistently across our reportable segments is the Inventory Turnover Ratio. As a purveyor of recommerce assets and recycling-grade base and precious metals, our ability to acquire inventory with appropriate margin, turn over our inventory, and redeploy sale proceeds is critical to our success. Appropriate inventory turns also reduce our exposure to changing consumer preferences and commodity market volatility.

The Company defines its Inventory Turnover Ratio as (i) cost of goods sold less shipping and handling costs divided by (ii) Average Inventory. The Company excludes shipping and handling costs in the definition of Inventory Turnover.

The Company defines Average Inventory as the mean value of the Company’s inventory over a specific period, calculated by (i) adding the beginning inventory and ending inventory for that period and (ii) dividing by two. When evaluated in conjunction with our consolidated financial statements, the Company believes that these performance metrics provide meaningful insight into our results of operations, financial condition, and ability to meet financial obligations.

These performance metrics should not be considered a substitute for, nor superior to, our financial results. These performance metrics are not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparing performance among different companies.

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Consolidated

The following table reconciles the components of the Company’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

Trailing Four Quarters Ended

Year Ended

 

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Cost of goods sold

(a)

44,321,480

63,998,172

77,760,473

43,396,809

229,476,934

187,096,369

Less: shipping and handling costs

(b)

(1,000,737)

(1,023,888)

(732,614)

(912,393)

(3,669,632)

(3,973,033)

(c)

43,320,743

62,974,284

77,027,859

42,484,416

225,807,302

183,123,336

Beginning inventory

(d)

27,381,184

25,705,524

Ending inventory

(e)

29,821,724

35,065,965

Average Inventory: (d) plus (e) divided by 2

(f)

28,601,454

30,385,745

Inventory Turnover Ratio

Inventory Turnover: (c) divided by (f)

7.89

6.03

Consumer Segment

The following table reconciles the components of the consumer segment’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025:

Three Months Ended

Trailing Four Quarters Ended

Year Ended

 

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Cost of goods sold

(a)

39,866,966

58,850,849

72,092,888

39,204,853

210,015,556

169,793,289

Less: shipping and handling costs

(b)

(12,819)

(24,889)

(41,214)

(5,900)

(84,822)

(68,309)

(c)

39,854,147

58,825,960

72,051,674

39,198,953

209,930,734

169,724,980

Beginning inventory

(d)

25,221,844

23,973,333

Ending inventory

(e)

27,483,645

32,814,426

Average Inventory: (d) plus (e) divided by 2

(f)

26,352,745

28,393,880

Inventory Turnover Ratio

Inventory Turnover: (c) divided by (f)

7.97

5.98

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Commercial Segment

The following table reconciles the components of the commercial segment’s Inventory Turnover for the trailing four quarters ended June 30, 2026 and for the year ended December 31, 2025

Three Months Ended

Trailing Four Quarters Ended

Year Ended

 

September 30,

December 31,

March 31,

June 30,

December 31,

2025

2026

2025

Cost of goods sold

(a)

4,454,514

5,147,323

5,667,585

4,191,956

19,461,378

17,303,080

Less: shipping and handling costs

(b)

(987,918)

(998,999)

(691,400)

(906,493)

(3,584,810)

(3,904,724)

(c)

3,466,596

4,148,324

4,976,185

3,285,463

15,876,568

13,398,356

Beginning inventory

(d)

2,159,340

1,732,191

Ending inventory

(e)

2,338,079

2,251,539

Average Inventory: (d) plus (e) divided by 2

(f)

2,248,710

1,991,865

Inventory Turnover Ratio

Inventory Turnover: (c) divided by (f)

7.06

6.73

Liquidity and Capital Resources

The following table summarizes the Company’s condensed consolidated statement of cash flows:


	Six Months Ended June 30,				Change
	2026		2025		Amount		%
Net cash provided by (used in):
Operating activities	$	27,073,602	$	3,722,594	$	23,351,008	627.3	%
Investing activities		(1,530,683)		(879,509)		(651,174)	74.0	%
Financing activities		(255,912)		(600,219)		344,307	(57.4)	%

Net increase in cash and cash equivalents	$	25,287,007	$	2,242,866	$	23,044,141	1027.4	%

Operating Activities

Cash flows provided by operations increased by $23,351,008, or 627.3%, during the six months ended June 30, 2026, to $27,073,602, as compared to $3,722,594 during the same period in Fiscal 2025. The increase in cash provided by operations was primarily attributed to an increase in net income, certain non-cash adjustments to reconcile net income to operating cash flow (as detailed in the condensed consolidated statements of cash flows), and the following significant net changes in cash associated with operating assets and liabilities:

●

Accounts receivable: a $8,756,519 net decrease primarily attributed to the conversion of accounts receivable to cash in relation to a refining customer within our consumer segment that occurred in Fiscal 2026.

●

Inventories: a $6,919,901 net decrease primarily attributed to a reduction in inventory within our consumer segment that occurred in Fiscal 2026.

●

Prepaid expenses: a $578,239 net decrease primarily attributed to amortization, along with a reduction in prepaid freight associated with open ITAD lot settlements within our commercial segment during Fiscal 2026.

●

Other assets: a $72,812 net increase primarily attributed to an earnest money deposit that occurred in Fiscal 2026.

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●

Accounts payable: a $1,660,804 net decrease primarily attributed to a greater reduction in accounts payable within the normal course of operations within the consumer segment in Fiscal 2026.

●

Accrued expenses: a $3,464,296 net increase primarily attributed to our income tax accruals at the corporate level in Fiscal 2026.

●

Operating leases: a $138,222 net increase primarily attributed to entering into a new lease within the consumer segment in Fiscal 2026 and a lease extension that occurred within our commercial segment in the third quarter of Fiscal 2025.

●

Other liabilities: a $2,726,944 net decrease primarily attributed to a significant reduction in gift card balances in the normal course of operations.

A substantial portion of the increase in cash flows provided by operations reflects the conversion of working capital during the period, principally the collection of accounts receivable from a refining customer outstanding at December 31, 2025, and the reduction of consumer segment inventories. The Company does not expect working capital conversion of a similar magnitude to recur in future periods.

Investing Activities

Cash flows (used in) investing activities increased by $651,174, or 74.0%, during the six months ended June 30, 2026, to $1,530,683, as compared to $879,509 during the same period in Fiscal 2025. The increase in cash (used in) investing activities during the six months ended June 30, 2026, was primarily attributed to maintenance-related capital improvements to our corporate head office and the build-out of a new store within our consumer segment.

Financing Activities

Cash flows (used in) financing activities decreased by $344,307, or 57.4%, during the six months ended June 30, 2026, to $255,912, as compared to $600,219 during the same period in Fiscal 2025. The decrease in cash (used in) financing activities during the six months ended June 30, 2026, was primarily attributed to debt repayments, which were less in Fiscal 2026 as a result of debt maturities that occurred in the third and fourth quarters of Fiscal 2025.

Capital Resources

Although the Company has access to a line of credit, our primary source of liquidity and capital resources currently consists 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, 2026. 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

The Company continuously monitors capital deployment and primarily funds capital expenditures with cash flow from operating activities. Where appropriate, the Company may use debt financing on select capital projects. When this occurs, the Company further evaluates the project's future cash flows to ensure that the debt tenure and payback period are aligned and that the rate of return is appropriate. As of June 30, 2026, the Company had no commitments for capital expenditures.

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.

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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, 2026. 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, 2026, our principal executive officer and principal accounting and 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.

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 2025 Annual Report.

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

Repurchases

The following lists the repurchases of Company shares for three and six months ended June 30, 2026:


		Total Number of
		Shares Purchased							Maximum Number
		as Part of Publicly							of Shares Yet to be
		Announced Plan		Average Price		Total Price			to be Purchased
Fiscal Period		or Program ^(1),(2)		Paid per Share ($) ⁽³⁾		Paid			Under the Plan ⁽¹⁾
Balance as of January 1, 2026		961,155		$	4.95	$	4,757,731		138,845

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

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

April 1 - 30, 2026		—			—		—		138,845
May 1 - 31, 2026		—			—		—		138,845
June 1 - 30, 2026		—			—		—		138,845

Balance as of June 30, 2026		961,155		$	4.95	$	4,757,731		138,845

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

(2)	The stock repurchase program was publicly announced on May 3, 2023, and expires March 31, 2028. Repurchases under the stock repurchase plan began on May 10, 2023.

(3)	The Board authorized the Company to repurchase shares at a per-share price not to exceed $9.00, on the open market.

The following lists the repurchases of Company shares for three and six months ended June 30, 2025:


		Total Number of
		Shares Purchased							Maximum Number
		as Part of Publicly							of Shares Yet to be
		Announced Plan		Average Price		Total Price			to be Purchased
Fiscal Period		or Program ^(1),(2)		Paid per Share ($) ⁽³⁾		Paid			Under the Plan ⁽¹⁾
Balance as of January 1, 2025		928,930		$	4.92	$	4,568,823		71,070

January 1 - 31, 2025		—			—		—		71,070
February 1 - 28, 2025		—			—		—		71,070
March 1 - 31, 2025		500			5.25		2,626		170,570

Balance as of March 31, 2025		929,430		$	4.92	$	4,571,449		170,570

April 1 - 30, 2025		—			—		—		170,570
May 1 - 31, 2025		—			—		—		170,570
June 1 - 30, 2025		20,163			5.89		118,700		150,407

Balance as of June 30, 2025		949,593		$	4.94	$	4,690,149		150,407

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The timing and amount of any common stock repurchased under the program depends 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

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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

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

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

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

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Calculation Linkbase Document

101.DEF

XBRL Taxonomy Definition Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)

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SIGNATURE

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 5, 2026			/s/ JOHN G. DELUCA
			John G. DeLuca
			Chief Financial Officer (Principal Accounting and Financial Officer)

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GLOSSARY OF DEFINED TERMS

The following definitions apply to terms used in this document:


2025 Annual Report	Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 18, 2026
2025 Plan	2025 Equity Incentive Plan
Adjusted Debt Obligations	Adjusted Debt Obligations represents (i) Debt Obligations plus (ii) operating lease liabilities per the Balance Sheet.
Adjusted Debt to Adjusted EBITDAR Leverage Ratio	The Adjusted Debt to Adjusted EBITDAR Leverage Ratio is a non-U.S. GAAP measure and represents (i) Adjusted Debt Obligations divided by (ii) Adjusted EBITDAR.
Adjusted Debt to Net Income Leverage Ratio	The Adjusted Debt to Net Income Leverage Ratio is a non-U.S. GAAP measure and represents the sum of (i) Debt Obligations and operating lease liabilities (ii) divided by (iii) Adjusted EBITDAR.
Adjusted EBITDA	Adjusted EBITDA is a non-U.S. GAAP measure and is defined as Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization and equals (i) net income (loss) of the Company, adjusted for additions (deductions) of (ii) interest expense, (iii) other (income) expense, (iv) income tax expense (benefit), and (v) depreciation and amortization.
Adjusted EBITDAR	Adjusted EBITDAR is a non-U.S. GAAP measure and equals (i) Adjusted EBITDA plus (ii) minimum fixed rent expense for properties occupied under operating leases.
Adjusted Net Debt Obligations	Adjusted Net Debt Obligations is a non-U.S. GAAP measure and represents the difference between (i) Adjusted Debt Obligations per the Balance Sheet and (ii) Total Cash.
Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio	The Adjusted Net Debt to Adjusted EBITDAR Leverage Ratio is a non-U.S. GAAP measure and represents (i) Adjusted Net Debt Obligations divided by (ii) Adjusted EBITDAR.
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
ASU 2024-03	Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
ASU 2025-06	Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
ASU 2025-11	Interim Reporting (Topic 270): Narrow-Scope Improvements
ASU 2025-12	Codification Improvements
Average Inventory	Average inventory is the mean value of the Company’s inventory over a specific period, calculated by (i) adding the beginning inventory and ending inventory for that period and (ii) dividing by two.
Board	Board of Directors
Business Partner	A Business Partner is defined as an entity or person from whom we procure or consign assets and provide disposition or product return services to.
Capital Expenditures	Capital Expenditures represent the purchase of (i) property and equipment, and (ii) intangible assets.
CODM	Chief Operating Decision Maker
Common Stock	The Company's common stock, par value $0.01 per share
Company	Envela Corporation, a Nevada corporation, and its subsidiaries
Customers	A Customer is an individual or entity to whom we have sold assets or commodities or provided certain repair services.
Debt Obligations	Debt Obligations represents the sum of amounts outstanding under notes payable balances per the Balance Sheet.
Debt to Adjusted EBITDA Leverage Ratio	The Debt to Adjusted EBITDA Leverage Ratio is a non-U.S. GAAP measure and represents (i) Debt Obligations divided by (ii) Adjusted EBITDA.
Debt to Net Income Leverage Ratio	The Debt to Net Income Leverage Ratio represents the leverage ratio of the Company utilizing the following U.S. GAAP measures: (i) Debt Obligations divided by (ii) Net Income.
Envela	Envela Corporation, a Nevada corporation, and its subsidiaries
Exchange Act	Securities Exchange Act of 1934
Financial Statements	The Related Condensed Consolidated Statements of Income, Stockholders’ Equity, and Cash Flows

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Fiscal 2025	Fiscal year ended December 31, 2025
Form 10-K	Form 10-K for the fiscal year ended December 31, 2025
Form 10-Q	Form 10Q for the three and six months ended June 30, 2026
Free Cash Flow	Free Cash Flow is a non-U.S. GAAP measure and represents the difference between the Company’s (i) Operating Cash Flow and (ii) Capital Expenditures.
FSB	Farmer's State Bank of Oakley, Kansas
Inventory Turnover Ratio	The Inventory Turnover Ratio represents the (i) cost of goods sold less shipping and handling costs divided by (ii) Average Inventory.
IT	Information Technology
ITAD	Information Technology Asset Disposition
Net Cash	Net Cash is the difference between (i) cash and cash equivalents and (ii) the sum of debt obligations
Net Debt Obligations	Net Debt Obligations is a non-U.S. GAAP measure and represents the difference between (i) Debt Obligations per the Balance Sheet and (ii) Total Cash.
Net Debt to Adjusted EBITDA Leverage Ratio	The Net Debt to Adjusted EBITDA Leverage Ratio is a non-U.S. GAAP measure that represents (i) Net Debt Obligations divided by (ii) Adjusted EBITDA.
NM	Not Meaningful
NYSE	New York Stock Exchange
OBBBA	One Big Beautiful Bill Act
Operating Cash Flow	Operating Cash Flow measures the amount of cash generated from normal business operations during a specific period and is referred to as net cash provided by operations in the Statement of Cash Flows.
Rent Expense	Minimum fixed rent expense for properties occupied under operating leases
Scottsdale Transaction	September 12, 2024 purchase agreement relating to the acquisition of the assets of a bespoke fabricator of jewelry in Scottsdale, Arizona
SEC	U.S. Securities and Exchange Commission
SOW	Scope of Work
TBT	Texas Bank and Trust
Total Cash	Total Cash represents cash and cash equivalents per the Balance Sheet.
Trailing Four Quarters	The Trailing Four Quarters ended period is defined as the cumulative total amount of the most recent four consecutive fiscal quarters of financial results for the respective reported balance.
U.S.	United States of America
U.S. Dollar	$
U.S. GAAP	United States Generally Accepted Accounting Principles