Envela Corp (ELA) Business

ITEM 1. BUSINESS

OVERVIEW

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Envela is a leading provider of recommerce and recycling services at the forefront of the circular economy. Motivated by building long-lasting relationships rooted in trust and transparency, Envela’s brands address a broad range of sustainability and value-driven initiatives that impact consumers and businesses alike. Our core business lines focus on extending product lifespans by buying and selling goods in the secondary market. The Company is primarily comprised of two key operating and reportable segments: consumer and commercial. The consumer segment focuses on selling authenticated luxury goods, including pre-owned and repurposed fine jewelry, diamonds, gemstones, luxury watches, and secondary-market bullion. At the same time, the commercial segment provides solutions for ITAD and product returns, as well as the de-manufacturing of end-of-life electronic assets, the reclamation of base and precious metals, and other saleable materials. Envela’s subsidiaries are trusted partners for those seeking responsible value in the disposition or acquisition of technology, metals, and luxury hard assets, with each reportable segment contributing to decarbonization and value creation in its own unique way.

Consumer Segment

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Our consumer segment is a retail organization that operates several brands specializing in the buying and selling of pre-owned luxury hard assets. Our ability to understand new market trends while also paying homage to the past with vintage pieces makes us the destination of choice for customers seeking sustainable, value-driven purchases of some of the world’s most iconic brands. Our team of experts provides a straightforward process for buying and selling items, along with guidance that helps ensure customers feel informed and confident in their decisions. We also offer our customers a unique buying experience, as our jewelry designers introduce sustainably sourced diamonds and gemstones into the manufacturing process, resulting in a diverse assortment of modern designs at achievable price points. The division was formed through the consolidation of multiple retail merchants, with its roots tracing back more than half a century to the founding of its earliest predecessor in 1972.

The Company has long been associated with precious metals, trading silver since 1972 and gold since the repeal of the U.S. law limiting gold ownership in 1974. Our connection to minting bullion began in the late 1970s. Today, this rich history continues, as the Company remains a leading provider of sustainable precious-metals products.

Commercial Segment

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Our commercial segment operates in multiple sustainability verticals focused on the responsible disposition of end-of-life technology assets. Our electronics recycling business was originally founded in 2009 to meet the demand for responsible electronic waste disposal. We focus on adhering to regulations and industry standards to ensure proper de-manufacturing and recycling of electronic devices. Our approach prioritizes reclaiming and reusing materials, preventing them from ending up in landfills. Our ITAD business, tracing its origins back to its earliest predecessor in 2007, is dedicated to unlocking the value of consumer electronics within the circular economy. We specialize in assisting businesses with the end-of-life management of their IT assets, including data destruction, asset refurbishment, and remarketing. Our commercial segment also provides detailed asset disposition data, enabling our business partners to address their sustainability goals and responsibilities to internal and external stakeholders. We also provide product return services to retailers and global electronics manufacturers.

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BUSINESS DEVELOPMENTS

Since our founding in 1965, we have consistently evolved, adapting to market changes, while our commitment to sustainability has been at the core of our brand’s success. Fiscal 2025 was our diamond jubilee, marking 60 years of continuous operations and delivering value to stakeholders. While we look forward to the journey ahead, we remain grounded in our core principles of providing best-in-class service, upholding our sustainability principles, and evolving our business models to exceed the expectations of our discerning customers. Detailed below are significant business developments that impacted the fiscal years ending December 31, 2025 and 2024:

Consumer Segment

In Fiscal 2025, we continued our expansion by adding 1 store, marking the culmination of our initiative to open 7 stores. During the year, we focused on optimizing the performance of our new stores while also maintaining strong engagement with business partners and customers throughout our business verticals and strategically planning for further growth opportunities.

In Fiscal 2024, we rapidly expanded our brick-and-mortar footprint by opening 5 stores under our Four Nines brand, which also features Bijoux Exchange™, an in-store buying platform. Our Bijoux Exchange brand is an in-store buying platform predicated on the store-within-a-store concept. Personnel are dedicated to working with our business partners who are seeking to monetize their luxury hard assets due to changes in style, damage, financial need, or life events.

Commercial Segment

In Fiscal 2025, we experienced the full impact of greater diversification from business lines that required the outright procurement of technology to those involving fee-for-service, which strengthened our margins. We also continued with our disciplined approach to cost containment.

In Fiscal 2024, we completed our corporate-wide enterprise resource planning (“ERP”) system implementation, which enhanced reporting capabilities and business intelligence platforms, with a primary focus on our commercial segment. The fourth quarter saw an uptick in our fee-for-service relationships, a trend that carried into Fiscal 2025. These fee-for-service relationships allow our business partners to outsource the management of testing and packaging of items for resale while maintaining custody of their inventory.

MARKET

Each of the Company’s reportable segments faces unique market conditions that affect its operations. These competitive conditions may adversely affect the Company’s financial condition, results of operations, and its ability to expand and execute its business strategy.

Consumer Segment

Opportunity

Detailed below are the key underlying market dynamics that drive our product and service offerings, engagement strategies, and interactions in these markets:

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Fine Jewelry

Underpinning the fine jewelry market are changing consumer preferences. Consumers are being drawn to sustainability-driven brands whose digital and brick-and-mortar buying experiences are fully aligned. We believe our brands offer a compelling buying option for consumers seeking exceptional value and sustainably driven luxury hard assets. We continue to seek opportunities to further build out our omnichannel marketing capabilities to enhance our buying and selling capabilities. We are passionate about our store aesthetics and providing a luxury retail store experience. Our stores are ideally located, secure, staffed with product and authentication experts, and provide access to the world’s most iconic

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brands. Our primary interaction in the fine jewelry market centers on our in-store buying and selling experience, which provides an opportunity for business partners and customers to interact with product specialists to either value an asset for sale to us or find a piece that fits their style at their intended price point.

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Gold and Silver Bullion

The gold and silver bullion markets are driven by macroeconomic forces, geopolitical factors, and shifting investment paradigms that drive investors into safe-haven metals. While institutional investors drive large-scale transactions, retail investors participate through smaller-denomination transactions. Silver also provides a unique demand thesis as it is also utilized in industrial applications. Its demand in industrial applications is being driven by battery energy storage, AI-driven data centers, and electric vehicles. Our primary interaction in the bullion market is twofold: we provide feedstock to refiners via unset fine jewelry and through the buying and selling of secondary market bullion. Our bullion products are marketed through our stores and via our online platform.

Luxury Watches

The luxury watch market is driven by a continued rise in wealth, collectability, craftsmanship, and investment interest. Further, demand and pricing within the secondary market for luxury watches can be driven by limited availability. Our primary interaction in the luxury watch market revolves around our in-store buying and selling experience.

Competition

We operate in highly competitive markets in which our customers have significant choices and decision points regarding price, store location, merchandise quality, assortment and presentation, customer service, and promotional activity. Our customers seek to maximize the value of their purchases and fully evaluate the aforementioned considerations. Many online and brick-and-mortar retailers are of significant size with substantial resources. We compete to buy and sell pre-owned luxury hard assets such as fine jewelry, luxury watches, diamonds and gemstones, and bullion against established retailers, auction houses, secondary-market online platforms, and other resale marketplaces. Our sales of outright precious metals to refiners and of diamonds and gemstones to wholesalers take place at near-spot market values and, as such, are not subject to peer competition but are affected by macroeconomic conditions in their respective markets. All our products are sourced domestically.

Differentiation

We believe that we differentiate ourselves from other purveyors through our product authentication process, price competitiveness, efforts to educate buyers and sellers to ensure they are confident in their decision-making process, and by offering an array of well-crafted inventory. We know that transactions within our consumer segment are often tied to life events, milestones, and celebrations, and we seek to exceed expectations through exceptional customer service and value creation.

Commercial Segment

Opportunity

Detailed below are the key underlying market dynamics that drive our product and service offerings, engagement strategies, and interactions in these markets:

Electronic Waste and Personal Technology Assets

The proliferation of electronics in our everyday lives provides ample feedstock for all our verticals. Further, the continued evolution of technology with new series launches contributes to the favorable market trends in which we operate. Within our verticals, we interact with both businesses and individuals, and we have revenue exposure from the sale of secondary technology, services (e.g., logistics, responsible disposition, and product returns), and base- and precious-metal-laden electronic waste. Our products and services are predicated on ensuring that our business partners and customers derive

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value from their transactions with us, while upholding our commitment to trust, transparency, and responsible disposition of personal technology assets and electronic waste streams. Along with other valuable commodities, our electronic waste streams provide exposure to gold, along with silver, copper, and aluminum, which are listed in the United States Geological Survey’s 2025 list of critical minerals.

Product Returns

Within our service lines, our product returns business offers our business partners the opportunity to remain in custody of assets while we manage the process of testing and readying the asset for reintroduction into the marketplace. The product returns market is driven by higher return rates in online commerce and by our business partners' need for greater support in managing the associated process. Product returns also provide our business partners with greater control over the secondary-market sales of their assets. Our primary interaction in the product returns market is as an outsourced service provider.

Competition

Our competition is primarily in the inbound procurement of IT assets and commodities; however, we also face competition in the sale of IT assets to consumers. We compete for inbound products against large, diversified recyclers as well as other ITAD-specific companies. Our outright sales of IT assets are primarily marketed through online channels, where our customers can compare like goods across a range of purveyors, with select IT assets also sold wholesale into international markets. Our sales of base- and precious-metal-laden materials are priced near spot market values and, as such, are not subject to peer competition but are inherently affected by macroeconomic conditions. The commercial segment’s business is also subject to both multi-year and spot transactions, with multi-year contracts potentially subject to cancellation on short notice.

Differentiation

We believe we differentiate ourselves from other solution providers by offering a full suite of ITAD, trade-in, electronic waste, and product returns services. Further, we are a technology-enabled, compliance-driven business that provides transparency throughout the processing and disposition of assets. Our services are designed to provide comprehensive end-to-end support by managing all aspects of the service delivery model. We can also deliver services throughout the U.S. and internationally, via our relationships with third-party providers.

CYCLICALITY AND SEASONALITY

Each of the Company’s reportable segments has aspects of cyclicality stemming from macroeconomic conditions, consumer behavior, and commodity markets, as well as seasonality within a given fiscal year.

Consumer Segment

The consumer segment business experiences seasonality, with the Holiday Months typically experiencing the highest volumes of the year. However, seasonality is less pronounced than at traditional luxury goods retailers, as our business is underpinned by our wholesale precious metals and bullion business, which is driven by perceptions of global economic trends. Sales in the Holiday Months can be tempered by weather patterns, as our consumer-segment business model is heavily dependent on in-store sales activity.

Commercial Segment

The commercial segment experiences seasonality, with the First Quarter months of January and February typically being the highest-volume months of the year, as a result of our trade-in and product-returns business partners destocking following the Holiday Months.

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ENVIRONMENTAL AND SOCIAL IMPACT

We aspire to operate our business with a positive environmental and social impact while ensuring we create value for our shareholders and other stakeholders. We are an environmentally conscious business, as we extend the useful life of technology and luxury hard assets and reduce mills' and refiners' reliance on sourcing materials from extractive industries.

Community

We aim to serve and strengthen the communities we operate in by repurposing dormant infrastructure, creating jobs, increasing the tax base, and selling sustainably sourced products.

Energy Supply and Resource Consumption

We continue to evaluate opportunities within our store operations, processing, and supply chains for opportunities to reduce our environmental footprint.

In Fiscal 2025 and 2024, our consumption of electricity, natural gas, and water represented 0.2% and 0.3% of sales, respectively.

Sustainability

Sustainability is deeply rooted in our corporate strategy and instilled in our company values, as a business partner, employer, community member, and value creator for shareholders.

Consumer Segment

Unlike a traditional retail jewelry business, recommerce requires curating an inventory, which is crucial to attracting and retaining customers, and sourcing a diverse inventory takes time and strategy. Due to our size, we can source most of our products through our in-store buying programs, which also ensures they are sustainably sourced, except in instances where a new setting or repair is needed. Specific to our retail store footprint, we aim to refurbish existing buildings rather than pursue ground-up construction, which requires new building materials and land consumption. Our recent expansionary efforts have focused on acquiring or leasing former retail bank buildings, which not only offer excellent security infrastructure but are also situated in ideal geographic locations.

In Fiscal 2025 and 2024, the consumer segment sold 3.3 and 2.2 metric tons of refining-grade precious metals destined for new products, respectively.

Commercial Segment

We source products through various strategies, including trade-in programs, returns, buybacks, closeouts, and individuals and companies transitioning technologies. We extend the useful lives of IT assets, divert plastic and base-metal waste streams into recycled commodities, and provide precious metal-laden material for refining. As part of our sustainability service offering, we provide traceability of dispositions and ensure we have maximized the recovery of base and precious metals and have taken all steps to reintroduce technology assets back into the marketplace.

In Fiscal 2025 and 2024, the commercial segment sold 921,480 and 1,267,632 individual units of secondary electronics and components, respectively, thereby extending their useful life.

In Fiscal 2025 and 2024, the commercial segment sold 9,158.5 and 12,837.7 metric tons of electronic scrap containing base and precious metals, as well as other saleable materials, destined for new products, respectively.

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HUMAN CAPITAL RESOURCES

We are part of a diverse global community, and we aim to reflect that diversity within our team and values. We believe inclusiveness fosters a collaborative culture that allows for differing perspectives, which fuels our ability to innovate as we work to create a more sustainable future.

Employees

Our management policy is to keep employees informed of material decisions that affect them, encourage employee suggestions, and implement them whenever practicable. We are committed to providing equal employment opportunities regardless of race, color, ancestry, religion, sex, national origin, sexual orientation, age, citizenship, marital status, disability, or gender identity or expression. We sometimes rely on independent contractors and temporary personnel to supplement our workforce, primarily in our commercial segment processing facilities. None of our employees are represented by a labor union or covered by a collective bargaining agreement.

In Fiscal 2025 and 2024, we employed 276 and 309 persons, respectively.

Ethics and Compliance

At every level of our Company, we work to create a culture that inspires trust among our employees, with our customers, and in the communities we serve. We empower employees to raise issues and concerns about compliance with our code of conduct, policies, and applicable laws through confidential, third-party reporting channels. We also believe that ethics and compliance enable us to be a business partner of choice, as we are entrusted to substantiate value and authenticity in our consumer segment, while our commercial segment ensures that technology assets are responsibly disposed of or reintroduced into the marketplace in accordance with our clients’ protocols and applicable laws.

Safety

We work to continuously improve all aspects of our safety performance programs. Our approach to safety is proactive and focuses on active leadership, engagement, risk and hazard identification, training, and verifying controls associated with operating equipment and material handling processes are being adhered to. We also track safety performance using industry-standard metrics. Two key safety performance indicators we monitor are the total recordable injury frequency rate (“TRIFR”) and the total lost time injury frequency rate (“LTIFR”).

The following chart depicts our TRIFR and LTIFR for the past 5 fiscal years:

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GOVERNMENT REGULATIONS

We use our best efforts to ensure compliance with federal, state, and local laws and regulations, including, but not limited to, those pertaining to the sale of products, environmental matters, consumer protection, consumer privacy, data protection, waste disposal, truth in advertising, labor and employment, employee wages and benefits, health and safety, building and occupancy codes, metal theft, financial reporting and disclosure, public accommodations, and AML laws. The laws and regulations to which we are subject include requirements to obtain permits, approvals, licenses, or other governmental authorizations to engage in new business or maintain our existing operations. If we violate any of these laws or regulations, we may be subject to civil or potentially criminal prosecution, which may result in fines, penalties, or the cessation of business activities. As a result of business expansion and ever-changing regulatory environments, the past amounts

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expended to maintain compliance may not be indicative of future requirements. We continually monitor the status of laws and regulations and their potential impact on our financial condition and results of operations.

Refer to Item 1A. Risk Factors for further details.

CORPORATE INFORMATION

We were incorporated in Nevada in September 1965. Our Common Stock is currently listed on the NYSE American and NYSE Texas under the symbol “ELA.” Our principal executive offices are located at 1901 Gateway Drive, Irving, Texas 75038, and our telephone number is (972) 587-4049.

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AVAILABLE INFORMATION

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, the “Exchange Act”), are filed with the SEC. We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with the SEC. Such reports and other information filed by us with the SEC are available free of charge on our website at www.envela.com when such reports are available on the SEC's website.

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We use our website to disclose material non-public information and to comply with our disclosure obligations under Regulation FD. The SEC maintains a website at www.sec.gov that contains reports, proxies, and other information regarding issuers that file electronically with the SEC.

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The contents of websites referred to within are not incorporated into this filing. Our references to the URLs of these websites are intended only as inactive textual references.

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