Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 14, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | ENVELA CORPORATION | ||
Entity Central Index Key | 0000701719 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 26,924,631 | ||
Entity Public Float | $ 53,683,000 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-11048 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 88-0097334 | ||
Entity Address Address Line 1 | 1901 GATEWAY DRIVE | ||
Entity Address Address Line 2 | STE 100 | ||
Entity Address City Or Town | IRVING | ||
Entity Address State Or Province | TX | ||
Entity Address Postal Zip Code | 75038 | ||
City Area Code | 972 | ||
Icfr Auditor Attestation Flag | true | ||
Auditor Name | Whitley Penn LLP | ||
Auditor Firm Id | 726 | ||
Local Phone Number | 587-4049 | ||
Security 12b Title | COMMON STOCK, par value $0.01 per share | ||
Trading Symbol | ELA | ||
Security Exchange Name | NYSEAMER | ||
Entity Interactive Data Current | Yes | ||
Auditor Location | Dallas, Texas |
CONSOLIDATED INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENTS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | ||
Sales | $ 182,685,854 | $ 140,966,078 |
Cost of goods sold | 137,858,768 | 109,744,919 |
Gross margin | 44,827,086 | 31,221,159 |
Expenses: | ||
Selling, General & Administrative Expenses | 29,430,723 | 20,798,095 |
Depreciation and Amortization | 1,451,834 | 926,095 |
Total cost of revenue | 30,882,557 | 21,724,190 |
Operating income | 13,944,529 | 9,496,969 |
Other income from loan forgiveness | 0 | 1,668,200 |
Other income (expense), net | 918,691 | (299,435) |
Interest expense | 483,693 | 704,051 |
Income before income taxes | 14,379,527 | 10,161,683 |
Income tax expense (benefit) | (1,309,606) | 112,808 |
Net income | $ 15,689,133 | $ 10,048,875 |
Earnings per share: | ||
Earnings per share:Basic | $ 0.58 | $ 0.37 |
Earnings per share:Diluted | $ 0.58 | $ 0.37 |
Weighted average shares outstanding: | ||
Basic | 26,924,631 | 26,924,631 |
Diluted | 26,939,631 | 26,939,631 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 17,169,969 | $ 10,138,148 |
Trade receivables, net of allowances | 7,949,775 | 7,166,533 |
Notes receivable, net of allowance | 578,250 | 0 |
Inventories | 18,755,785 | 14,048,436 |
Deferred tax asset | 1,488,258 | 0 |
Current right-of-use assets from operating leases | 1,683,060 | 1,604,736 |
Prepaid expenses | 1,231,817 | 439,038 |
Other current assets | 35,113 | 969,624 |
Total current assets | 48,892,027 | 34,366,515 |
Property and equipment, net | 9,393,802 | 9,806,188 |
Goodwill | 3,621,453 | 6,140,465 |
Intangible assets, net | 4,993,545 | 3,024,245 |
Operating lease right-of-use assets, less current portion | 4,189,621 | 5,692,141 |
Other assets, less current portion | 186,761 | 237,761 |
Total assets | 71,277,209 | 59,267,315 |
Current liabilities: | ||
Accounts payable-trade | 3,358,881 | 2,488,396 |
Line of credit | 0 | 1,700,000 |
Notes payable | 1,250,702 | 1,065,794 |
Current operating lease liabilities | 1,686,997 | 1,573,824 |
Accrued expenses | 2,286,594 | 1,789,366 |
Customer deposits and other liabilities | 282,482 | 1,179,224 |
Total current liabilities | 8,865,656 | 9,796,604 |
Notes payable, less current portion | 14,726,703 | 15,970,337 |
Operating lease liabilities, less current portion | 4,368,400 | 5,873,057 |
Total liabilities | 27,960,759 | 31,639,998 |
Stockholders equity: | ||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding | 269,246 | 269,246 |
Additional paid-in capital | 40,173,000 | 40,173,000 |
Retained earnings (accumulated deficit) | 2,874,204 | (12,814,929) |
Total stockholders equity | 43,316,450 | 27,627,317 |
Total liabilities and stockholders equity | $ 71,277,209 | $ 59,267,315 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 26,924,631 | 26,924,631 |
Common stock, shares outstanding | 26,924,631 | 26,924,631 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STOCKHOLDERS EQUIT
CONSOLIDATED STOCKHOLDERS EQUITY STATEMENTS - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2020 | 26,924,631 | |||
Balance, amount at Dec. 31, 2020 | $ 17,578,442 | $ 269,246 | $ 40,173,000 | $ (22,863,804) |
Net income | 10,048,875 | $ 0 | 0 | 10,048,875 |
Balance, shares at Dec. 31, 2021 | 26,924,631 | |||
Balance, amount at Dec. 31, 2021 | 27,627,317 | $ 269,246 | 40,173,000 | (12,814,929) |
Net income | 15,689,133 | $ 0 | 0 | 15,689,133 |
Balance, shares at Dec. 31, 2022 | 26,924,631 | |||
Balance, amount at Dec. 31, 2022 | $ 43,316,450 | $ 269,246 | $ 40,173,000 | $ 2,874,204 |
CONSOLIDATED CASH FLOW STATEMEN
CONSOLIDATED CASH FLOW STATEMENTS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operations | ||
Net income | $ 15,689,133 | $ 10,048,875 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation, amortization, and other | 1,451,834 | 926,095 |
Bad debt expense | 120,554 | 83,003 |
Other income from forgiveness of Federal Loan | 0 | (1,668,200) |
Income tax valuation allowance reduction | (1,488,258) | 0 |
Write-off (reserve reduction) of notes receivable and accrued interest receivable | (838,647) | 887,821 |
Changes in operating assets and liabilities: | ||
Trade receivables | (903,796) | (3,969,701) |
Inventories | (4,707,349) | (3,554,802) |
Prepaid expenses | (792,778) | (60,996) |
Other assets | 985,509 | (1,024,234) |
Accounts payable and accrued expenses | 1,367,713 | 752,379 |
Operating leases | 32,712 | 27,275 |
Customer deposits and other liabilities | (896,742) | 357,548 |
Net cash provided by operations | 10,019,885 | 2,805,063 |
Investing | ||
Investment in note receivable | 0 | (300,000) |
Payments from note receivable | 260,397 | 61,353 |
Purchase of property and equipment | (272,748) | (3,138,715) |
Acquisition of Avail Recovery Solutions' assets, net of cash acquired | 0 | (1,511,130) |
Additional cash payment for Avail Recovery Solutions' assets | (216,988) | 0 |
Acquisition of Cexchange assets, net of cash acquired | 0 | 13,136 |
Net cash used in investing | (229,339) | (4,875,356) |
Financing | ||
Payments on notes payable, related party | 0 | (268,793) |
Payments on notes payable | (1,058,725) | (212,802) |
Proceeds from line of credit | 0 | 1,700,000 |
Payments on line of credit | (1,700,000) | 0 |
Proceeds from notes payable for retail and office buildings | 0 | 1,772,000 |
Net cash provided by (used in) financing | (2,758,725) | 2,990,405 |
Net change in cash and cash equivalents | 7,031,821 | 920,112 |
Cash and cash equivalents, beginning of period | 10,138,148 | 9,218,036 |
Cash and cash equivalents, end of period | 17,169,969 | 10,138,148 |
Supplemental Disclosures | ||
Interest | 491,828 | 688,391 |
Income taxes | 133,000 | 86,000 |
Non-cash activities: | ||
Transfer Avail goodwill to intangibles | 2,736,000 | 0 |
Acquisition of Cexchange assets and liabilities through forgiveness of debt | 0 | 1,555,892 |
Notes payable, related party refinanced directly by Farmers State Bank | $ 0 | $ 9,091,049 |
ACCOUNTING POLICIES AND NATURE
ACCOUNTING POLICIES AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTING POLICIES AND NATURE OF OPERATIONS | |
ACCOUNTING POLICIES AND NATURE OF OPERATIONS | NOTE 1 — ACCOUNTING POLICIES AND NATURE OF OPERATIONS A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows. References to fiscal years below are denoted with the word “Fiscal” and the associated year. Principles of Consolidation and Nature of Operations Envela and its subsidiaries engage in diverse business activities within the re-commerce sector. These activities include being one of the nation’s premier authenticated re-commerce retailers of luxury hard assets; providing end-of-life asset recycling; offering data destruction and IT asset management; and providing products, services, and solutions to industrial and commercial companies. Envela operates primarily via two segments. Its commercial-services segment is led by subsidiary ECHG, and its direct-to-consumer segment is led by subsidiary DGSE. Envela reports its revenue and operating expenses based on these two operating segments. We also include segment information in the notes to our financial statements. Envela is a Nevada corporation, headquartered in Irving, Texas. Envela primarily makes a resale marketplace for previously-owned products via its two business segments, a direct-to-consumer business (DGSE) and a commercial services business (ECHG). Our direct-to-consumer portfolio primarily operates multiple brick-and-mortar and online marketplaces. Where our commercial services portfolio offers custom re-commerce solutions to meet the needs of diverse clients, including Fortune 500 companies. For additional business operations for both DGSE and ECHG, see Note 10 – Segment Information.. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the consolidated balance sheets approximate fair value. Inventories DGSE’s inventory is valued at the lower of cost or net realizable value (“NRV”). The Company acquires a majority of its inventory from individual customers, including pre-owned jewelry, watches, bullion, rare coins and collectibles. The Company acquires these items based on its own internal estimate of the fair market value of the items at the time of purchase. DGSE considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. DGSE supplements these purchases from individual customers with inventory purchased from wholesale vendors. These wholesale purchases of new merchandise can take the form of full asset purchases, or consigned inventory. Consigned inventory is accounted for on the Company’s consolidated balance sheet with a fully offsetting contra account so that consigned inventory has a net zero balance. The majority of the Company’s inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, these fluctuations could have either a positive or negative impact on the value of the Company’s inventory and could positively or negatively impact the profitability of the Company. The Company regularly monitors these fluctuations to evaluate any necessary impairment to its inventory. ECHG’s inventory principally includes processed and unprocessed electronic scrap materials. The value of the material is derived from recycling the precious and other scrap metals included in the scrap. The processed and unprocessed materials are carried at the lower of the average cost of the material during the month of purchase or NRV. The in-transit material is carried at lower of cost or market using the retail method. Under the retail method the valuation of the inventory at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of the inventory. The inventory listed in Note 3, and for the time period until November 15, 2026, is pledged as collateral against the $3,500,000 FSB line of credit and the FSB notes with DGSE and ECHG. For the FSB notes, see Note 9 – Long-Term Debt. Property and Equipment Property and equipment are stated at cost. Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. There were no impairments recorded during Fiscal 2022 and Fiscal 2021. Expenditures for maintenance and repairs are charged against income as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized. When assets are sold or retired, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded to current operating income. Impairment of Long-Lived Assets, Amortized Intangible Assets and Goodwill The Company performs impairment evaluations of its long-lived assets, including property, equipment, and intangible assets with finite lives whenever business conditions or events indicate that those assets may be impaired. When the estimated future undiscounted cash flows to be generated by the assets are less than the carrying value of the long-lived assets, the assets are written down to fair market value and a charge is recorded to current operations. Based on the Company’s evaluations, no impairment was required as of December 31, 2022 or 2021. Goodwill is evaluated for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Evaluations for possible impairment are based upon a comparison of the estimated fair value of the reporting segment to which the goodwill has been assigned, versus the sum of the carrying value of the assets and liabilities of that segment including the assigned goodwill value. Goodwill is tested at the segment level and is the only intangible asset with an indefinite life on the balance sheet. Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the notes receivable and notes payable approximate fair value because the underlying instruments have an interest rate that reflects current market rates. None of these instruments are held for trading purposes. Advertising Costs DGSE’s advertising costs are expensed as incurred and amounted to $723,889 and $406,775 for Fiscal 2022 and Fiscal 2021, respectively. ECHG’s advertising costs are expensed as incurred and amounted to $49,977 and $52,617 For Fiscal 2022 and Fiscal 2021, respectively. Accounts Receivable Given the generally low level of accounts receivable for DGSE, the Company uses a simplified approach to calculate a general bad debt reserve. An allowance is calculated for each aging “bucket,” based on the risk profile of that bucket. For example, based on our historical experience, we have chosen not to place any reserve on amounts that are less than 60 days past due. From there the reserve amount escalates: 10% reserve on amounts over 60 but less than 90 days past due, 25% on amounts over 90 but less than 120 past due, and 75% on amounts over 120 days past due. The account receivables past 120 days past due are reviewed quarterly and if they are deemed uncollectable will be written off against the reserve. For Fiscal 2022 and 2021, besides the normal timing to clear credit cards and financing collections, DGSE’s accounts receivable balance consisted of wholesale dealers that are current, therefore no reserve was established as of December 31, 2022 and 2021. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We revisit the reserve periodically, but no less than annually, with the same analytical approach in order to determine if the reserve needs to be increased or decreased, based on the risk profile of open accounts receivable at that point. ECHG has a more sizable accounts receivable balance of $7,110,535 at December 31, 2022 and $6,661,042 as of December 31, 2021. Collectability of accounts receivable are viewed on an ongoing basis which includes historical payment rates. Upon evaluating the trade receivables balance for historical payment rates, we follow the simplified approach allowance methodology, as mentioned above. We reserved $51,735 for Fiscal 2022 and $1,583 for Fiscal 2021. A summary of the Allowance for Doubtful Accounts is presented below: December 31, 2022 2021 Beginning Balance $ 1,583 $ - Bad debt expense (+) 120,554 83,003 Receivables written off (-) (70,403 ) (81,420 ) Ending Balance $ 51,734 $ 1,583 Notes Receivable ECHG holds two notes receivable from CExchange as of December 31, 2022 and 2021. During Fiscal 2021, management learned the two notes may not have been recoverable. Management reserved the full amount of the outstanding and unpaid notes receivable of $900,000 and wrote-off the outstanding and unpaid accrued interest associated with the notes receivable of $49,174. The notes receivable of $900,000 and $49,174 of accrued interest receivable were charged to other expense during Fiscal 2021. Subsequent to reserving the note of $900,000 during Fiscal 2021, a partial payment was received of $61,353, reducing the amount of the reserve to $838,647, as of December 31, 2021. On October 25, 2022, ECHG received $260,397 of the reserved $838,647 notes receivable. Upon receipt of the partial payment, management believed, from the information available, that the remaining and unpaid notes receivable of $578,250, would probably be received in full. The reserve was reduced to $0, recording $838,647 as other income, thereby restoring the balance of the notes receivable, net to $578,250, as of December 31, 2022. The full payment of the remaining $578,250 was received on January 17, 2023. Interest receivable was written off against the reserve in Fiscal 2021. See Note 18 – Subsequent Events for interest received. Short-Term Financing On November 23, 2021, the Company secured a 36 month line of credit from FSB for $3,500,000 at 3.1% annual interest rate with a maturity date of November 23, 2024. As of December 31, 2022, and December 31, 2021, the line of credit had a principal and outstanding balance of $0 and $1,700,000, respectively, with accrued and unpaid interest balance of $0 as of December 31, 2022 and $6,005 as of December 31, 2021. Income Taxes Income taxes are accounted for under the asset and liability method prescribed by U.S. GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not such assets will be realized. The Company accounts for its position in tax uncertainties in accordance with U.S. GAAP. The guidance establishes standards for accounting for uncertainty in income taxes. The guidance provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. U.S. GAAP requires a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the years ended December 31, 2022 and 2021. The Company currently believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained upon audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. The Company recognizes accrued interest and penalties resulting from audits by tax authorities in the provision for income taxes in the consolidated statements of operations. During Fiscal 2022 and Fiscal 2021, the Company did not incur any federal income tax interest or penalties. Revenue Recognition Accounting Standards Codification (“ASC 606”) provides guidance to identify performance obligations for revenue-generating transactions. The initial step is to identify the contract with a customer created with the sales invoice or a repair ticket. Secondly, to identify the performance obligations in the contract as we promise to deliver the purchased item or promised repairs in return for payment or future payment as a receivable. The third step is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. The final step in the guidance is to recognize revenue as each performance obligation is satisfied. The following disaggregation of total revenue is listed by sales category and segment for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 December 31, 2021 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 122,468,154 14,240,795 11.6 % $ 89,146,783 11,022,162 12.4 % Recycled 8,639,279 1,993,644 23.1 % 7,572,476 1,586,000 20.9 % Subtotal 131,107,433 16,234,439 12.4 % 96,719,259 12,608,162 13.0 % ECHG Resale 39,747,631 22,119,853 55.7 % 32,540,366 14,570,092 44.8 % Recycled 11,830,790 6,472,794 54.7 % 11,706,453 4,042,905 34.5 % Subtotal 51,578,421 28,592,647 55.4 % 44,246,819 18,612,997 42.1 % $ 182,685,854 $ 44,827,086 24.5 % $ 140,966,078 $ 31,221,159 22.1 % For DGSE, revenue for monetary transactions (i.e., cash and receivables) with dealers and the retail public are recognized when the merchandise is delivered, and payment has been made either by immediate payment or through a receivable obligation at one of our over-the-counter retail stores. Revenue is recognized upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. Shipping and handling costs are accounted for as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold for its precious metal contained. The metal is assayed to determine the precious metal content, a price is agreed upon and payment is made usually within two days. Revenue is recognized from the sale once the performance obligation is satisfied. In limited circumstances, merchandise is exchanged for similar merchandise and/or monetary consideration with both dealers and retail customers, for which revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When merchandise is exchanged for similar merchandise and there is no monetary component to the exchange, there is no revenue recognized. Instead, the basis of the merchandise relinquished becomes the basis of the merchandise received, less any indicated impairment of value of the merchandise relinquished. When merchandise is exchanged for similar merchandise and there is a monetary component to the exchange, revenue is recognized to the extent of the monetary assets received that determines the cost of sale based on the ratio of monetary assets received to monetary and non-monetary assets received multiplied by the cost of the assets surrendered. The Company offers the option of third-party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the finance company. Revenue is recognized from the sale upon the promise of the financing company to pay. DGSE’s return policy covers retail transactions. In some cases, customers may return a product purchased within 30 days of the receipt of the items for a full refund. Also, in some cases customers may cancel the sale within 30 days of making a commitment to purchase the items. Additionally, a customer may return an item for full refund if they can demonstrate that the item is not authentic, or there was an error in the description of the piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. DGSE has established an allowance for estimated returns related to Fiscal 2022 sales, which is based on our review of historical returns experience and reduces our reported revenues and cost of sales accordingly. As of December 31, 2022 and 2021, our allowance for returns remained the same at approximately $28,000 for both years. A significant amount of revenue (17.9%) stems from sales to one precious metals partner, which relationship constitutes Envela’s single largest source of revenues for Fiscal 2022. However, the Company believes that the products it sells is marketable to numerous sources at competitive prices. ECHG has several revenue streams and recognize revenue according to ASC 606 at an amount that reflects the consideration to which the entities expect to be entitled in exchange for transferring goods or services to the customer. The revenue streams are as follows; Outright sales are recorded when product is shipped and title transferred. Once the price is established and the terms are agreed to and the product is shipped and title is transferred, the revenue is recognized. ECHG has fulfilled its performance obligation with an agreed upon transaction price, payment terms and shipping the product. ECHG recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied, as stated in the first sentence. Under the guidance of ASC 606, an estimate of the variable consideration that are expected to be entitled is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made in the period once the underlying weight and any precious metal spot price movement is resolved, which is usually around six (6) weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract. ECHG also provides recycling services according to a Scope of Work (“SOW”). Services are recognized based on the number of units processed by a preset price per unit. Activity reports are produced weekly with the counts and revenue is recognized based on the billing from the weekly reports. Recycling services can be conducted at the ECHG facility, or the recycling services can be performed at the client’s facility. The SOW will determine the charges and whether the service will be completed at the ECHG facility or at the client’s facility. Payment terms are also dictated in the SOW. Shipping and Handling Costs Shipping and handling costs amounted to $3,193,742 and $1,367,944, for 2022 and 2021, respectively. Management has determined that shipping and handling costs should be included in cost of goods sold since inventory is what is shipped to and from store locations or to and from vendors. Taxes Collected from Customers The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses. Earnings Per Share Basic earnings per share of Common Stock is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method. Stock-Based Compensation The Company accounts for stock-based compensation by measuring the cost of the employee services received in exchange for an award of equity instruments, including grants of stock options, based on the fair value of the award at the date of grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statement of cash flows. Stock-based compensation expense for Fiscal 2022 and Fiscal 2021 amounted to $0 for both years. There were 15,000 stock options that remained unexercised as of December 31, 2022 and 2021. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of and/or potential impairment of goodwill and intangible assets for the reporting units; useful lives of our tangible and intangible assets; allowances for doubtful accounts; valuation allowance; the market value of, and demand for, our inventory and the potential outcome of uncertain tax positions that have been recognized on our consolidated financial statements or tax returns. Actual results and outcomes may differ from management’s estimates and assumptions. New Accounting Pronouncements In June 2016, the FASB issued a new credit loss accounting standard ASU 2016-13. The new accounting standard introduces the current expected credit losses methodology for estimating allowances for credit losses which will be based on expected losses rather than incurred losses. We will be required to use a forward-looking expected credit loss methodology for accounts receivable, loans and other financial instruments, requiring immediate recognition of management’s estimates of current expected credit losses. The Company completed its review of its methodology based on expected losses and determined that there was no impact to its consolidated financial statements, results of operations or liquidity. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align the Company’s credit loss methodology with the new standard. Management is evaluating the financial statement implications of ASU 2016-13. No other recently issued or effective ASU’s had, or are expected to have, a material impact on the Company’s results of operations, financial condition or liquidity. |
CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2022 | |
CONCENTRATION OF CREDIT RISK | |
CONCENTRATION OF CREDIT RISK | NOTE 2 — CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At times, such amounts exceed federally-insured limits. A significant amount of revenue (17.9%) stems from sales to one precious metals partner, which relationship constitutes Envela’s single largest source of revenues for Fiscal 2022. However, the Company believes that the products it sells is marketable to numerous sources at competitive prices. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES | |
INVENTORIES | NOTE 3 — INVENTORIES Inventories consist of the following: December 31, December 31, 2022 2021 DGSE Resale $ 16,462,749 $ 10,422,072 Recycle 46,697 11,995 Subtotal 16,509,446 10,434,067 ECHG Resale 1,858,519 3,350,159 Recycle 387,820 264,210 Subtotal 2,246,339 3,614,369 $ 18,755,785 $ 14,048,436 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4 — PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, December 31, 2022 2021 DGSE Land $ 1,640,219 $ 1,640,220 Buildings and improvements 2,798,975 2,764,529 Leasehold improvements 1,450,695 1,450,695 Machinery and equipment 1,078,595 1,056,315 Furniture and fixtures 603,944 526,250 Vehicles 22,859 22,859 7,595,287 7,460,868 Less: accumulated depreciation (2,651,832 ) (2,343,923 ) Sub-Total 4,943,455 5,116,945 ECHG Leasehold improvements 151,647 135,491 Machinery and equipment 1,180,636 1,109,306 Furniture and fixtures 145,950 145,950 1,478,233 1,390,747 Less: accumulated depreciation (515,673 ) (212,147 ) Sub-Total 962,560 1,178,600 Envela Land 1,106,664 1,106,664 Buildings and improvements 2,502,216 2,456,324 Machinery and equipment 28,627 23,676 3,637,507 3,586,664 Less: accumulated depreciation (149,720 ) (76,021 ) Sub-Total 3,487,787 3,510,643 $ 9,393,802 $ 9,806,188 Depreciation expense was $685,134 and $498,866 for Fiscal 2022 and Fiscal 2021, respectively. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 5 — ACQUISITIONS On June 9, 2021, ECHG, entered into the CExchange Transaction, pursuant to which the seller agreed to sell the assets and certain liabilities of CExchange for ECHG’s cancellation and forgiveness of $1,500,000 of the outstanding principal amount under the loan agreement between ECHG and CExchange originally dated February 15, 2020 and accrued and unpaid interest thereunder of $55,892. The remaining $900,000, which represents two notes of $600,000 and $300,000, principal owed to ECHG by CExchange is not a part of the purchase price listed below and was expected to be repaid with any accrued and unpaid interest during the third or fourth fiscal quarters of 2021. We subsequently performed impairment evaluations on the remaining $900,000 principal owed after management learned that it is more likely than not that the $900,000 may not be recoverable. Management concluded that ECHG should reserve the full amount of the outstanding and unpaid notes receivable of $900,000 and wrote-off the outstanding and unpaid accrued interest associated with the notes receivable totaling $49,174. Subsequent to the reserve established for the notes receivable, the Company received $61,353 as partial payment against the notes receivable. This payment was used to reduce the notes receivable reserved amount to $838,647. Management still believed that it was more likely than not that the remaining balance was uncollectable. The remaining notes receivable of $838,647 and $49,174 of accrued interest receivable were charged to other expense during Fiscal 2021. On October 25, 2022, ECHG received $260,397 of the reserved $838,647 notes receivable. Upon receipt of the partial payment, management believed the remaining and unpaid notes receivable of $578,250 would probably be received in full. The reserve was reduced to $0, recording $838,647 as other income, thereby restoring the balance of the notes receivable, net to $578,250, as of December 31, 2022. The full payment of the remaining $578,250 was received on January 17, 2023. Interest receivable was written off against the reserve in Fiscal 2021. See Note 18 – Subsequent Events for interest received. As part of the CExchange Transaction, goodwill was originally recorded as $1,891,477, which is the purchase price less the approximate fair value of the net assets and liabilities purchased. Adjustments were made to the acquiring assets and liabilities of the CExchange Transaction through management evaluation and a third-party valuation. The Company’s goodwill is related to the ECHG segment. ECHG has its own separate financial information to perform goodwill impairment testing. The Company will evaluate goodwill based on cash flows for the ECHG segment. For tax purposes, goodwill is amortized and deductible over fifteen (15) years. The purchase price allocation of the CExchange Transaction is as follows: Description Amount Assets Cash $ 13,136 Account receivables 93,970 Prepaids 2,594 Deposits 21,419 Intangible assets, trademarks/tradenames 114,000 Intangible assets, customer relationships 345,000 Fixed assets - net 30,697 Liabilities Account payables (345,057 ) Accrued liabilities (1,939 ) Net assets 273,820 Goodwill 1,282,072 Total Purchase Price $ 1,555,892 On October 29, 2021, ECHG entered into the Avail Transaction to purchase all of the assets, liabilities and rights and interests for $4,500,000. The purchase was facilitated by an initial payment of $2,500,000 at closing, with the remaining $2,000,000 represented by the installment note (the “Avail Installment Note”) made by ECHG to the seller to be paid out by 12 quarterly payments starting April 1, 2022, of $166,667 each. See Note 9 to our consolidated financial statements for more information on this loan. The Avail Installment Note for the Avail transaction does not bear interest, but imputed interest rate was determined to be 3.1%. As part of the Avail Transaction, goodwill was preliminarily recorded as $3,491,284, which was the purchase price less the approximate fair value of the net assets and liabilities purchased. On May 31, 2022, an additional cash payment of $216,988 was made due to certain conditions being met concerning the cash balance upon a certain date. The additional cash payment was not part of the Avail Installment Note of $2,000,000 from the initial closing of the Avail Transaction. The additional cash payment increased goodwill and the purchase price amount by $216,988, thereby increasing goodwill for the Avail Transaction to $3,708,273. On September 30, 2022, management identified $2,736,000 of intangibles as part of the Avail Transaction not initially included in the fair value of Avail’s net assets. The intangibles identified of $2,736,000, decreases goodwill by $2,736,000 to $972,272, as shown in the purchase price allocation table below. The Avail Transaction was initially recorded as preliminary, but with the third-party valuation complete, the purchase price allocation below is considered final. The Company’s goodwill is related to the ECHG segment. ECHG has its own separate financial information to perform goodwill impairment testing. The Company will evaluate goodwill based on cash flows for the ECHG segment. For tax purposes, goodwill is amortized and deductible over 15 years. The purchase price allocation of the Avail Transaction is as follows: Initial Final Description Allocation Allocation Assets Cash $ 988,870 $ 988,870 Account receivables 395,144 395,144 Inventories 486,736 486,736 Prepaid expenses 93,727 93,727 Intangible assets - Trademarks/Tradenames - 1,272,000 Intangible assets - Customer Relationships - 1,464,000 Fixed assets - net 247,038 247,038 Right-of-use assets 609,511 609,511 Other assets 13,268 13,268 Liabilities Account payables (562,778 ) (562,778 ) Accrued liabilities (653,289 ) (653,289 ) Operating lease liabilities (609,511 ) (609,511 ) Net assets 1,008,716 3,744,716 Goodwill 3,491,284 972,272 Total Purchase Price $ 4,500,000 $ 4,716,988 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
GOODWILL | NOTE 6 — GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021, are as follows: Year Ended December 31, 2022 2021 Opening balance $ 6,140,465 $ 1,367,109 Additions (reductions) (1) (2,519,012 ) 4,773,356 $ 3,621,453 $ 6,140,465 (1) Additions for Fiscal 2021 totaling $4,773,356 is a combination of the CExchange Transaction on June 9, 2021 of $1,282,072 and the Avail Transaction’s preliminary purchase price allocation on October 29, 2021, of $3,491,284. The reduction in goodwill of $2,519,012 for Fiscal 2022, is a combination of an additional cash payment made on May 31, 2022 of $216,988, which increased goodwill for the Avail Transaction, offset by the reduction of goodwill related to the Avail Transaction by management identifying $2,736,000 of intangible assets that were not initially included in the fair value of Avail’s net assets, reducing goodwill and increasing intangible assets. The Company’s goodwill is related to the ECHG segment. Goodwill is evaluated for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Based on the Company’s evaluations, no impairment was required as of December 31, 2022 and 2021. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
INTANGIBLE ASSETS | NOTE 7 — INTANGIBLE ASSETS Intangible assets consist of: December 31, December 31, 2022 2021 DGSE Domain names $ 41,352 $ 41,352 Point of sale system 330,000 330,000 371,352 371,352 Less: accumulated amortization (335,502 ) (269,502 ) Subtotal 35,850 101,850 ECHG Trademarks (1) 1,483,000 1,483,000 Customer Contracts (1) 1,873,000 1,873,000 Trademarks/Tradenames (2) 114,000 114,000 Customer Relationships (2) 345,000 345,000 Trademarks/Tradenames (3) 1,272,000 - Customer Relationships (3) 1,464,000 - 6,551,000 3,815,000 Less: accumulated amortization (1,593,305 ) (892,605 ) Subtotal 4,957,695 2,922,395 Total $ 4,993,545 $ 3,024,245 (1) Intangibles relate to the asset purchase agreement of the Echo Legacy Entities on May 20, 2019. (2) Intangibles relate to the CExchange Transaction on June 9, 2021. (3) Intangibles relate to the Avail Transaction on October 29, 2021. Amortization expense was $766,700 and $427,228 for Fiscal years 2022 and 2021, respectively. The estimated aggregate amortization expense for each of the five succeeding fiscal years follows: DGSE ECHG Total 2023 30,350 655,100 685,450 2024 5,500 655,100 660,600 2025 - 655,100 655,100 2026 - 655,100 655,100 2027 - 655,100 655,100 Thereafter - 1,682,195 1,682,195 $ 35,850 $ 4,957,695 $ 4,993,545 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 8 – ACCRUED EXPENSES Accrued expenses consist of the following: December 31 December 31 2022 2021 DGSE Accrued Interest $ 11,624 $ 12,627 Payroll 146,817 131,325 Property tax 115,222 88,046 Sales tax 153,039 150,070 Other administrative expenses 424 - Subtotal 427,126 382,068 ECHG Accrued Interest 8,228 14,547 Payroll 336,226 334,431 Other accrued expenses 7,392 51,506 Unvouchered payables - inventory 803,649 461,481 Material & shipping costs (COGS) 229,159 78,647 Subtotal 1,384,654 940,612 Envela Accrued Interest 7,543 8,355 Payroll 25,179 25,175 Professional fees 199,508 220,101 Property tax 87,275 84,920 Other administrative expenses - 18,453 State income tax 155,309 109,682 Subtotal 474,814 466,686 $ 2,286,594 $ 1,789,366 |
LONGTERM DEBT
LONGTERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
LONGTERM DEBT | |
LONG-TERM DEBT | NOTE 9 — LONG-TERM DEBT Long-term debt consists of the following: Outstanding Balance December 31, December 31, Current 2022 2021 Interest Rate Maturity DGSE Note payable, FSB (1) $ 2,668,527 $ 2,770,729 3.10 % November 15, 2026 Note payable, Truist Bank (2) 874,418 909,073 3.65 % July 9, 2030 Note payable, Texas Bank & Trust (3) 456,187 474,009 3.75 % September 14, 2025 Note payable, Texas Bank & Trust (4) 1,691,020 1,752,446 3.75 % July 30, 2031 DGSE Sub-Total 5,690,152 5,906,257 ECHG Note payable, FSB (1) 6,054,565 6,286,459 3.10 % November 15, 2026 Line of Credit (5) - 1,700,000 3.10 % November 15, 2024 Avail Transaction note payable (6) 1,500,000 2,000,000 0.00 % April 1, 2025 ECHG Sub-Total 7,554,565 9,986,459 Envela Note payable, Texas Bank & Trust (7) 2,732,688 2,843,415 3.25 % November 4, 2025 Sub-Total 15,977,405 18,736,131 Current portion 1,250,702 2,765,794 $ 14,726,703 $ 15,970,337 (1) On November 23, 2021, FSB refinanced prior related party notes held by DGSE and ECHG. The ECHG note was refinanced with a remaining and outstanding balance of $6,309,962, is a five-year promissory note amortized over 20 years at 3.1% annual interest rate. The note has monthly principal and interest payments of $35,292. The DGSE note was refinanced with a remaining and outstanding balance of $2,781,087, is a five-year promissory note amortized over 20 years at 3.1% annual interest rate. The note has monthly principal and interest payments of $15,555. (2) On July 9, 2020, DGSE closed the purchase of a retail building located at 610 E. Round Grove Road in Lewisville, Texas for $1.195 million. The purchase was partly financed through a $956,000, ten-year loan, bearing an annual interest rate of 3.65%, amortized over 20 years, payable to Truist Bank (f/k/a BB&T Bank). The note has monthly interest and principal payments of $5,645. (3) On September 14, 2020, 1106 NWH Holdings, LLC, a wholly owned subsidiary of DGSE, closed on the purchase of a retail building located at 1106 W. Northwest Highway in Grapevine, Texas for $620,000. The purchase was partly financed through a $496,000, five-year loan, bearing an annual interest rate of 3.75%, amortized over 20 years, payable to Texas Bank & Trust. The note has monthly interest and principal payments of $2,941. (4) On July 30, 2021, 9166 Gaylord Holdings, LLC, a wholly owned subsidiary of DGSE, closed the purchase of a new retail building located at 9166 Gaylord Parkway in Frisco, Texas for $2,215,500. The purchase was partly financed through a $1,772,000, five-year loan (the “TB&T Frisco Loan”), bearing an annual interest rate of 3.75%, amortized over 20 years, payable to Texas Bank and Trust. The note has monthly interest and principal payments of $10,509. (5) On November 23, 2021, the Company secured a 36-month line of credit from FSB for $3,500,000 at 3.1% annual interest rate. A line of credit of up to $3,500,000 with Texas Bank and Trust was immediately closed with a $0 outstanding balance. (6) On October 29, 2021, ECHG entered into the Avail Transaction to purchase all of the assets, liabilities and rights and interests of Avail AZ, for $4.5 million. The purchase was facilitated by an initial payment of $2.5 million at closing, and the remaining $2.0 million to be paid out by 12 quarterly payments starting April 1, 2022, of $166,667 each. The Installment note payable for the Avail Transaction imputed at 3.1% (7) On November 4, 2020, 1901 Gateway Holdings, LLC, a wholly owned subsidiary of Envela Corporation, closed on the purchase of its new corporate office building located at 1901 Gateway Drive, Irving, Texas for $3.521 million. The building was partially financed through a $2.96 million, five-year loan, bearing an interest rate of 3.25%, amortized over 20 years, payable to Texas Bank & Trust. The note has monthly interest and principal payments of $16,792. Future scheduled principal payments of our note payables and note payables, related party, as of December 31, 2022 are as follows: Note payable, Farmers State Bank - DGSE Year Ending December 31, Amount 2023 $ 105,428 2024 108,743 2025 112,162 2026 2,342,194 Subtotal $ 2,668,527 Note payable, Truist Bank - DGSE Year Ending December 31, Amount 2023 $ 35,988 2024 37,342 2025 38,748 2026 40,206 2027 42,081 Thereafter 680,053 Subtotal $ 874,418 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2023 $ 18,503 2024 19,209 2025 418,475 Subtotal $ 456,187 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2023 $ 72,226 2024 74,608 2025 77,070 2026 79,360 2027 81,366 Thereafter 1,306,390 Subtotal $ 1,691,020 Note payable, Farmers Bank - ECHG Year Ending December 31, Amount 2023 $ 239,204 2024 246,725 2025 254,483 2026 5,314,153 Subtotal $ 6,054,565 Note payable - Justin and Tami Tinkle Year Ending December 31, Amount 2023 $ 666,667 2024 666,667 2025 166,666 Subtotal $ 1,500,000 Note payable, Texas Bank & Trust - Envela Year Ending December 31, Amount 2023 $ 112,686 2024 116,476 2025 2,503,526 Subtotal $ 2,732,688 $ 15,977,405 Future scheduled aggregate amount of principal payments and maturities of our notes payable as of December 31, 2022 are as follows: Scheduled Principal Loan Scheduled Principal Payments and Maturities by Year: Payments Maturities Total 2023 $ 1,250,702 $ - $ 1,250,702 2024 1,269,770 - 1,269,770 2025 482,463 3,088,668 3,571,131 2026 119,566 7,656,346 7,775,912 2027 123,447 - 123,447 2028 and thereafter 430,774 1,555,669 1,986,443 Total $ 3,676,722 $ 12,300,683 $ 15,977,405 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 10 — SEGMENT INFORMATION We determine our business segments based upon an internal reporting structure. The financial results are based on the following segments: DGSE and ECHG. The DGSE segment includes Dallas Gold & Silver Exchange, which has six retail stores in DFW, and Charleston Gold & Diamond Exchange, which has one retail store in Mt. Pleasant, South Carolina. The ECHG segment includes Echo, ITAD USA, CEX, Teladvance and Avail. These five companies are involved in recycling and the reuse of electronic waste. The Company’s corporate costs and expenses are allocated to the business segments. The corporate building’s expenses are included in selling, general and administrative expenses since the building is part of the Company’s operations. Depreciation and amortization, other income from rental income, interest expense and income tax expense are also allocated to the Company’s business segments. Management evaluates the operating performance of each segment and makes decisions about the allocation of resources to each segment. The allocations are generally amounts agreed upon by management, which may differ from an arms-length transaction. The following table segments the financial results of DGSE and ECHG for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 December 31, 2021 DGSE ECHG Consolidated DGSE ECHG Consolidated Revenue: Sales $ 131,107,433 $ 51,578,421 $ 182,685,854 $ 96,719,259 $ 44,246,819 $ 140,966,078 Cost of goods sold 114,872,994 22,985,774 137,858,768 84,111,097 25,633,822 109,744,919 Gross profit 16,234,439 28,592,647 44,827,086 12,608,162 18,612,997 31,221,159 Expenses: Selling, general and administrative expenses 8,762,432 20,668,291 29,430,723 7,628,377 13,169,718 20,798,095 Depreciation and amortization 410,759 1,041,075 1,451,834 389,703 536,392 926,095 9,173,191 21,709,366 30,882,557 8,018,080 13,706,110 21,724,190 Operating income 7,061,248 6,883,281 13,944,529 4,590,082 4,906,887 9,496,969 Other income/expense : Other income from loan forgiveness - - - 675,210 992,990 1,668,200 Other income (expense) 61,686 857,005 918,691 238,585 (538,020 ) (299,435 ) Interest expense 244,202 239,491 483,693 288,236 415,815 704,051 Income before income taxes 6,878,732 7,500,795 14,379,527 5,215,641 4,946,042 10,161,683 Income tax expense (benefit) (1,426,697 ) 117,091 (1,309,606 ) 45,124 67,684 112,808 Income from continuing operations $ 8,305,429 $ 7,383,704 $ 15,689,133 $ 5,170,517 $ 4,878,358 $ 10,048,875 |
BASIC AND DILUTED AVERAGE SHARE
BASIC AND DILUTED AVERAGE SHARES | 12 Months Ended |
Dec. 31, 2022 | |
BASIC AND DILUTED AVERAGE SHARES | |
BASIC AND DILUTED AVERAGE SHARES | NOTE 11 — BASIC AND DILUTED AVERAGE SHARES A reconciliation of basic and diluted average common shares is as follows: Year Ended December 31, 2022 2021 Basic weighted average shares 26,924,631 26,924,631 Effect of potential dilutive securities 15,000 15,000 Diluted weighted average shares 26,939,631 26,939,631 For the years ended December 31, 2022 and 2021, there were 15,000 Common Stock options, warrants, and Restricted Stock Units (RSUs) unexercised. For the years ended December 31, 2022 and 2021, there were no anti-dilutive shares. |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Dec. 31, 2022 | |
COMMON STOCK | |
COMMON STOCK | NOTE 12 — COMMON STOCK In January 2014, the Company’s Board granted 112,000 RSUs to its officers and certain key employees. As of December 31, 2022, no RSUs remain unexercised. |
STOCK OPTIONS AND RESTRICTED ST
STOCK OPTIONS AND RESTRICTED STOCK UNITS | 12 Months Ended |
Dec. 31, 2022 | |
STOCK OPTIONS AND RESTRICTED STOCK UNITS | |
STOCK OPTIONS AND RESTRICTED STOCK UNITS | NOTE 13 — STOCK OPTIONS AND RESTRICTED STOCK UNITS On June 21, 2004, our Stockholders approved the adoption of the 2004 Employee Stock Option Plan (the “2004 Employee Stock Option Plan”) that provided for incentive stock options and nonqualified stock options to be granted to key employee and certain directors. Each option vested on either January 1, 2004 or immediately upon issuance thereafter. The exercise price of each option issued pursuant to the 2004 Plan is equal to the market value of our Common Stock on the date of grant, as determined by the closing bid price for our Common Stock on the Exchange on the date of grant or, if no trading occurred on the date of grant, on the last day prior to the date of grant on which our securities were listed and traded on the Exchange. Of the options issued under the 2004 Employee Stock Option Plan, 15,000 remain outstanding. Options issued pursuant to the 2004 Employee Stock Option Plan have no expiration date. The Company previously determined there will be no additional grants under the 2004 Employee Stock Option Plan. On December 7, 2016, Stockholders of the Company approved the adoption of the 2016 Equity Incentive Plan (the “2016 Plan”), which reserved 1,100,000 shares for issuance pursuant to awards issued thereunder. As of December 31, 2022, no awards had been made under the 2016 Plan. The following table summarizes the activity in common shares subject to options and warrants: Years Ended December 31, 2022 2021 Weighted Weighted average exercise average exercise Shares price Shares price Outstanding at beginning or year 15,000 $ 2.17 15,000 $ 2.17 Granted - - - - Exercised - - - - Forfeited - - - - Outstanding at end of year 15,000 $ 2.17 15,000 $ 2.17 Options exercisable at end of year 15,000 $ 2.17 15,000 $ 2.17 The 15,000 options exercisable at the end of the year are potential dilutive shares. Information about stock options outstanding at December 31, 2022 is summarized as follows: Options Outstanding and Exercisable Weighted average remaining Weighted Aggregate Number contractual life average intrinsic Exercise price outstanding (Years) exercise price value $ 2.13 10,000 NA (1) $ 2.13 $ 31,300 $ 2.25 5,000 NA (1) $ 2.25 $ 15,050 15,000 $ 46,350 Options currently issued pursuant to the Company’s 2004 Employee Stock Option Plans have no expiration date. The aggregate intrinsic values in the above table were based on the closing price of our Common Stock of $5.26 as of December 31, 2022. During Fiscal years 2022 and 2021, there was $0 recognized in stock-based compensation expense. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14 — INCOME TAXES The income tax provision reconciled to the tax computed at the statutory from continuing operations Federal rate follows: 2022 2021 Tax Expense at Statutory Rate $ 3,019,701 $ 2,133,953 Valuation Allowance (4,513,493 ) (1,787,132 ) Non-Deductible Expenses and Other 5,534 3,501 PPP Loan Forgiveness - (350,322 ) State Taxes, Net of Federal Benefit 178,652 112,808 Income tax expense (benefit) $ (1,309,606 ) $ 112,808 Current $ 178,652 $ 112,808 Deferred benefit (1,488,258 ) - Total $ (1,309,606 ) $ 112,808 Deferred income taxes are comprised of the following at December 31, 2022 and 2021: 2022 2021 Deferred tax assets (liabilities): Inventories $ 46,557 $ 39,433 Stock options and other 6,836 6,836 Contingencies and accruals 57,822 224,240 Property and equipment (442,012 ) (297,984 ) Net operating loss carryforward 1,727,126 4,500,023 Goodwill and intangibles 91,929 40,945 Total deferred tax assets, net 1,488,258 4,513,493 Valuation allowance - (4,513,493 ) Net Deferred tax asset $ 1,488,258 $ - A valuation allowance of $4,513,493 was recorded against the net deferred tax asset balance as of December 31, 2021. For the year ended December 31, 2022 a release of the valuation allowance of $4,513,493 is recorded. Management considers both positive and negative evidence that could effect the future realization of deferred tax assets. As of December 31, 2022, in part due to 3 years of cumulative pretax income, management has determined that there is sufficient evidence to conclude it is more likely than not that net deferred taxes of $1,488,258 are realizable and therefore reduced the valuation allowance accordingly. As of December 31, 2022, the Company had approximately $8,224,409 of net operating loss carry-forwards related to Superior Galleries’ post acquisition operating losses and other operating losses incurred by the Company’s other operations. These carry-forwards will expire starting in 2034 if not utilized. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE 15 — LEASES The Company has nine operating leases, five in DFW, two in Mount Pleasant, South Carolina and two in Chandler, Arizona. ECHG has two leases in Chandler, Arizona and two leases in DFW, with a total of approximately 246,000 square feet under lease. DGSE has two leases in Charleston, South Carolina and three leases in DFW, with a total of approximately 26,000 square feet under lease. All nine leases are triple net leases that pay their proportionate amount of common area maintenance, property taxes and property insurance. Leasing costs for Fiscal 2022 and Fiscal 2021 was $2,597,528 and $2,109,104, respectively. These lease costs consist of a combination of minimum lease payments and variable lease costs. As of December 31, 2022, the weighted average remaining lease term and weighted average discount rate for operating leases was 3.29 years and 4.4%, respectively. The Company’s future operating lease obligations that have not yet commenced are immaterial. The cash paid for operating lease liabilities for Fiscal 2022 and Fiscal 2021 was $2,564,815 and $2,300,630, respectively. Future annual minimum lease payments as of December 31, 2022: Operating Leases DGSE 2023 541,984 2024 552,414 2025 412,269 2026 355,000 2027 and thereafter 50,114 Total minimum lease payments 1,911,781 Less imputed interest (146,921 ) DGSE Sub-Total 1,764,860 ECHG 2023 1,357,381 2024 1,396,129 2025 1,321,297 2026 474,326 2027 and thereafter 33,454 Total minimum lease payments 4,582,587 Less imputed interest (292,050 ) ECHG Sub-Total 4,290,537 Total 6,055,397 Current portion 1,686,997 $ 4,368,400 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 16 — RELATED-PARTY TRANSACTIONS The Company has a corporate policy governing the identification, review, consideration and approval or ratification of transactions with related persons, as that term is defined in the Instructions to Item 404(a) of Regulation S-K, promulgated under the Securities Act (“Related Party”). Under this policy, all Related Party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with the Company’s best interests and the best interests of its shareholders. Among other factors, the Company’s Board considers the size and duration of the transaction, the nature and interest of the of the Related Party in the transaction, whether the transaction may involve a conflict of interest and if the transaction is on terms that are at least as favorable to the Company as would be available in a comparable transaction with an unaffiliated third party. Envela’s Board reviews all Related Party transactions at least annually to determine if it is in the Board’s best interests and the best interests of the Company’s shareholders to continue, modify, or terminate any of the Related Party transactions. Envela’s Related Person Transaction Policy is available for review in its entirety under the “Investors” menu of the Company’s corporate relations website at www.envela.com. |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2022 | |
DEFINED CONTRIBUTION PLAN | |
DEFINED CONTRIBUTION PLAN | NOTE 17 — DEFINED CONTRIBUTION PLAN The Company sponsors a defined contribution 401(k) plan that is subject to the provisions of the Employee Retirement Income Security Act of 1974. The plan covers substantially all employees who have completed one month of service. Participants can contribute up to 15% of their annual salary subject to Internal Revenue Service limitations. The Company matched 10% of the employee’s contribution up to 6% of the employee’s salary for the Fiscal 2022 and Fiscal 2021 plans. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 — SUBSEQUENT EVENTS On January 17, 2023, the remaining balance of the notes receivable from the CExchange Transaction, of $578,250, was received. With the receipt of these funds, an additional amount of $94,115 was received, representing interest receivable on the notes. Interest receivable was written off against the reserve in Fiscal 2021. Since the interest receivable was written-off against the reserve in Fiscal 2021, they are to be recognized when they are received. Therefore, the additional interest received of $94,115 will be recognized in Fiscal 2023. |
Accounting Policies and Natur_2
Accounting Policies and Nature of Operations (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies and Nature of Operations (Policies) | |
Income Taxes | Income taxes are accounted for under the asset and liability method prescribed by U.S. GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not such assets will be realized. The Company accounts for its position in tax uncertainties in accordance with U.S. GAAP. The guidance establishes standards for accounting for uncertainty in income taxes. The guidance provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. U.S. GAAP requires a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the years ended December 31, 2022 and 2021. The Company currently believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained upon audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions. The Company recognizes accrued interest and penalties resulting from audits by tax authorities in the provision for income taxes in the consolidated statements of operations. During Fiscal 2022 and Fiscal 2021, the Company did not incur any federal income tax interest or penalties. |
Principles of Consolidation and Nature of Operations | Envela and its subsidiaries engage in diverse business activities within the re-commerce sector. These activities include being one of the nation’s premier authenticated re-commerce retailers of luxury hard assets; providing end-of-life asset recycling; offering data destruction and IT asset management; and providing products, services, and solutions to industrial and commercial companies. Envela operates primarily via two segments. Its commercial-services segment is led by subsidiary ECHG, and its direct-to-consumer segment is led by subsidiary DGSE. Envela reports its revenue and operating expenses based on these two operating segments. We also include segment information in the notes to our financial statements. Envela is a Nevada corporation, headquartered in Irving, Texas. Envela primarily makes a resale marketplace for previously-owned products via its two business segments, a direct-to-consumer business (DGSE) and a commercial services business (ECHG). Our direct-to-consumer portfolio primarily operates multiple brick-and-mortar and online marketplaces. Where our commercial services portfolio offers custom re-commerce solutions to meet the needs of diverse clients, including Fortune 500 companies. For additional business operations for both DGSE and ECHG, see Note 10 – Segment Information.. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated. |
Cash and Cash Equivalents | The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The carrying amounts reported in the consolidated balance sheets approximate fair value. |
Inventories | DGSE’s inventory is valued at the lower of cost or net realizable value (“NRV”). The Company acquires a majority of its inventory from individual customers, including pre-owned jewelry, watches, bullion, rare coins and collectibles. The Company acquires these items based on its own internal estimate of the fair market value of the items at the time of purchase. DGSE considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. DGSE supplements these purchases from individual customers with inventory purchased from wholesale vendors. These wholesale purchases of new merchandise can take the form of full asset purchases, or consigned inventory. Consigned inventory is accounted for on the Company’s consolidated balance sheet with a fully offsetting contra account so that consigned inventory has a net zero balance. The majority of the Company’s inventory has some component of its value that is based on the spot market price of precious metals. Because the overall market value for precious metals regularly fluctuates, these fluctuations could have either a positive or negative impact on the value of the Company’s inventory and could positively or negatively impact the profitability of the Company. The Company regularly monitors these fluctuations to evaluate any necessary impairment to its inventory. ECHG’s inventory principally includes processed and unprocessed electronic scrap materials. The value of the material is derived from recycling the precious and other scrap metals included in the scrap. The processed and unprocessed materials are carried at the lower of the average cost of the material during the month of purchase or NRV. The in-transit material is carried at lower of cost or market using the retail method. Under the retail method the valuation of the inventory at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of the inventory. The inventory listed in Note 3, and for the time period until November 15, 2026, is pledged as collateral against the $3,500,000 FSB line of credit and the FSB notes with DGSE and ECHG. For the FSB notes, see Note 9 – Long-Term Debt. |
Property and Equipment | Property and equipment are stated at cost. Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. There were no impairments recorded during Fiscal 2022 and Fiscal 2021. Expenditures for maintenance and repairs are charged against income as incurred; betterments that increase the value or materially extend the life of the related assets are capitalized. When assets are sold or retired, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded to current operating income. |
Impairment of Long-Lived Assets, Amortized Intangible Assets and Goodwill | The Company performs impairment evaluations of its long-lived assets, including property, equipment, and intangible assets with finite lives whenever business conditions or events indicate that those assets may be impaired. When the estimated future undiscounted cash flows to be generated by the assets are less than the carrying value of the long-lived assets, the assets are written down to fair market value and a charge is recorded to current operations. Based on the Company’s evaluations, no impairment was required as of December 31, 2022 or 2021. Goodwill is evaluated for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. Evaluations for possible impairment are based upon a comparison of the estimated fair value of the reporting segment to which the goodwill has been assigned, versus the sum of the carrying value of the assets and liabilities of that segment including the assigned goodwill value. Goodwill is tested at the segment level and is the only intangible asset with an indefinite life on the balance sheet. |
Financial Instruments | The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for the notes receivable and notes payable approximate fair value because the underlying instruments have an interest rate that reflects current market rates. None of these instruments are held for trading purposes. |
Advertising Costs | DGSE’s advertising costs are expensed as incurred and amounted to $723,889 and $406,775 for Fiscal 2022 and Fiscal 2021, respectively. ECHG’s advertising costs are expensed as incurred and amounted to $49,977 and $52,617 For Fiscal 2022 and Fiscal 2021, respectively. |
Accounts Receivable | Given the generally low level of accounts receivable for DGSE, the Company uses a simplified approach to calculate a general bad debt reserve. An allowance is calculated for each aging “bucket,” based on the risk profile of that bucket. For example, based on our historical experience, we have chosen not to place any reserve on amounts that are less than 60 days past due. From there the reserve amount escalates: 10% reserve on amounts over 60 but less than 90 days past due, 25% on amounts over 90 but less than 120 past due, and 75% on amounts over 120 days past due. The account receivables past 120 days past due are reviewed quarterly and if they are deemed uncollectable will be written off against the reserve. For Fiscal 2022 and 2021, besides the normal timing to clear credit cards and financing collections, DGSE’s accounts receivable balance consisted of wholesale dealers that are current, therefore no reserve was established as of December 31, 2022 and 2021. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We revisit the reserve periodically, but no less than annually, with the same analytical approach in order to determine if the reserve needs to be increased or decreased, based on the risk profile of open accounts receivable at that point. ECHG has a more sizable accounts receivable balance of $7,110,535 at December 31, 2022 and $6,661,042 as of December 31, 2021. Collectability of accounts receivable are viewed on an ongoing basis which includes historical payment rates. Upon evaluating the trade receivables balance for historical payment rates, we follow the simplified approach allowance methodology, as mentioned above. We reserved $51,735 for Fiscal 2022 and $1,583 for Fiscal 2021. A summary of the Allowance for Doubtful Accounts is presented below: December 31, 2022 2021 Beginning Balance $ 1,583 $ - Bad debt expense (+) 120,554 83,003 Receivables written off (-) (70,403 ) (81,420 ) Ending Balance $ 51,734 $ 1,583 |
Note Receivable | ECHG holds two notes receivable from CExchange as of December 31, 2022 and 2021. During Fiscal 2021, management learned the two notes may not have been recoverable. Management reserved the full amount of the outstanding and unpaid notes receivable of $900,000 and wrote-off the outstanding and unpaid accrued interest associated with the notes receivable of $49,174. The notes receivable of $900,000 and $49,174 of accrued interest receivable were charged to other expense during Fiscal 2021. Subsequent to reserving the note of $900,000 during Fiscal 2021, a partial payment was received of $61,353, reducing the amount of the reserve to $838,647, as of December 31, 2021. On October 25, 2022, ECHG received $260,397 of the reserved $838,647 notes receivable. Upon receipt of the partial payment, management believed, from the information available, that the remaining and unpaid notes receivable of $578,250, would probably be received in full. The reserve was reduced to $0, recording $838,647 as other income, thereby restoring the balance of the notes receivable, net to $578,250, as of December 31, 2022. The full payment of the remaining $578,250 was received on January 17, 2023. Interest receivable was written off against the reserve in Fiscal 2021. See Note 18 – Subsequent Events for interest received. |
Short-Term Financing | On November 23, 2021, the Company secured a 36 month line of credit from FSB for $3,500,000 at 3.1% annual interest rate with a maturity date of November 23, 2024. As of December 31, 2022, and December 31, 2021, the line of credit had a principal and outstanding balance of $0 and $1,700,000, respectively, with accrued and unpaid interest balance of $0 as of December 31, 2022 and $6,005 as of December 31, 2021. |
Revenue Recognition | Accounting Standards Codification (“ASC 606”) provides guidance to identify performance obligations for revenue-generating transactions. The initial step is to identify the contract with a customer created with the sales invoice or a repair ticket. Secondly, to identify the performance obligations in the contract as we promise to deliver the purchased item or promised repairs in return for payment or future payment as a receivable. The third step is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. The final step in the guidance is to recognize revenue as each performance obligation is satisfied. The following disaggregation of total revenue is listed by sales category and segment for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 December 31, 2021 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 122,468,154 14,240,795 11.6 % $ 89,146,783 11,022,162 12.4 % Recycled 8,639,279 1,993,644 23.1 % 7,572,476 1,586,000 20.9 % Subtotal 131,107,433 16,234,439 12.4 % 96,719,259 12,608,162 13.0 % ECHG Resale 39,747,631 22,119,853 55.7 % 32,540,366 14,570,092 44.8 % Recycled 11,830,790 6,472,794 54.7 % 11,706,453 4,042,905 34.5 % Subtotal 51,578,421 28,592,647 55.4 % 44,246,819 18,612,997 42.1 % $ 182,685,854 $ 44,827,086 24.5 % $ 140,966,078 $ 31,221,159 22.1 % For DGSE, revenue for monetary transactions (i.e., cash and receivables) with dealers and the retail public are recognized when the merchandise is delivered, and payment has been made either by immediate payment or through a receivable obligation at one of our over-the-counter retail stores. Revenue is recognized upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. Shipping and handling costs are accounted for as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold for its precious metal contained. The metal is assayed to determine the precious metal content, a price is agreed upon and payment is made usually within two days. Revenue is recognized from the sale once the performance obligation is satisfied. In limited circumstances, merchandise is exchanged for similar merchandise and/or monetary consideration with both dealers and retail customers, for which revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When merchandise is exchanged for similar merchandise and there is no monetary component to the exchange, there is no revenue recognized. Instead, the basis of the merchandise relinquished becomes the basis of the merchandise received, less any indicated impairment of value of the merchandise relinquished. When merchandise is exchanged for similar merchandise and there is a monetary component to the exchange, revenue is recognized to the extent of the monetary assets received that determines the cost of sale based on the ratio of monetary assets received to monetary and non-monetary assets received multiplied by the cost of the assets surrendered. The Company offers the option of third-party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the finance company. Revenue is recognized from the sale upon the promise of the financing company to pay. DGSE’s return policy covers retail transactions. In some cases, customers may return a product purchased within 30 days of the receipt of the items for a full refund. Also, in some cases customers may cancel the sale within 30 days of making a commitment to purchase the items. Additionally, a customer may return an item for full refund if they can demonstrate that the item is not authentic, or there was an error in the description of the piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. DGSE has established an allowance for estimated returns related to Fiscal 2022 sales, which is based on our review of historical returns experience and reduces our reported revenues and cost of sales accordingly. As of December 31, 2022 and 2021, our allowance for returns remained the same at approximately $28,000 for both years. A significant amount of revenue (17.9%) stems from sales to one precious metals partner, which relationship constitutes Envela’s single largest source of revenues for Fiscal 2022. However, the Company believes that the products it sells is marketable to numerous sources at competitive prices. ECHG has several revenue streams and recognize revenue according to ASC 606 at an amount that reflects the consideration to which the entities expect to be entitled in exchange for transferring goods or services to the customer. The revenue streams are as follows; Outright sales are recorded when product is shipped and title transferred. Once the price is established and the terms are agreed to and the product is shipped and title is transferred, the revenue is recognized. ECHG has fulfilled its performance obligation with an agreed upon transaction price, payment terms and shipping the product. ECHG recognizes refining revenue when our inventory arrives at the destination port and the performance obligation is satisfied by transferring the control of the promised goods that are identified in the customer contract. The initial invoice is recognized in full when our performance obligation is satisfied, as stated in the first sentence. Under the guidance of ASC 606, an estimate of the variable consideration that are expected to be entitled is included in the transaction price stated at the current precious metal spot price and weight of the precious metal. An adjustment to revenue is made in the period once the underlying weight and any precious metal spot price movement is resolved, which is usually around six (6) weeks. Any adjustment from the resolution of the underlying uncertainty is netted with the settlement due from the original contract. ECHG also provides recycling services according to a Scope of Work (“SOW”). Services are recognized based on the number of units processed by a preset price per unit. Activity reports are produced weekly with the counts and revenue is recognized based on the billing from the weekly reports. Recycling services can be conducted at the ECHG facility, or the recycling services can be performed at the client’s facility. The SOW will determine the charges and whether the service will be completed at the ECHG facility or at the client’s facility. Payment terms are also dictated in the SOW. |
Shipping and Handling Costs | Shipping and handling costs amounted to $3,193,742 and $1,367,944, for 2022 and 2021, respectively. Management has determined that shipping and handling costs should be included in cost of goods sold since inventory is what is shipped to and from store locations or to and from vendors. |
Taxes Collected from Customers | The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses. |
Earnings Per Share | Basic earnings per share of Common Stock is computed by dividing net earnings available to holders of our Common Stock by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants outstanding determined using the treasury stock method. |
Stock-based Compensation | The Company accounts for stock-based compensation by measuring the cost of the employee services received in exchange for an award of equity instruments, including grants of stock options, based on the fair value of the award at the date of grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statement of cash flows. Stock-based compensation expense for Fiscal 2022 and Fiscal 2021 amounted to $0 for both years. There were 15,000 stock options that remained unexercised as of December 31, 2022 and 2021. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of and/or potential impairment of goodwill and intangible assets for the reporting units; useful lives of our tangible and intangible assets; allowances for doubtful accounts; valuation allowance; the market value of, and demand for, our inventory and the potential outcome of uncertain tax positions that have been recognized on our consolidated financial statements or tax returns. Actual results and outcomes may differ from management’s estimates and assumptions. |
New Accounting Pronouncements | In June 2016, the FASB issued a new credit loss accounting standard ASU 2016-13. The new accounting standard introduces the current expected credit losses methodology for estimating allowances for credit losses which will be based on expected losses rather than incurred losses. We will be required to use a forward-looking expected credit loss methodology for accounts receivable, loans and other financial instruments, requiring immediate recognition of management’s estimates of current expected credit losses. The Company completed its review of its methodology based on expected losses and determined that there was no impact to its consolidated financial statements, results of operations or liquidity. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align the Company’s credit loss methodology with the new standard. Management is evaluating the financial statement implications of ASU 2016-13. No other recently issued or effective ASU’s had, or are expected to have, a material impact on the Company’s results of operations, financial condition or liquidity. |
Accounting Policies and Natur_3
Accounting Policies and Nature of Operations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies and Nature of Operations (Policies) | |
Summary of Allowance for Doubtful Accounts | December 31, 2022 2021 Beginning Balance $ 1,583 $ - Bad debt expense (+) 120,554 83,003 Receivables written off (-) (70,403 ) (81,420 ) Ending Balance $ 51,734 $ 1,583 |
Schedule of Disaggregation of Revenue | For the Years Ended December 31, 2022 December 31, 2021 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 122,468,154 14,240,795 11.6 % $ 89,146,783 11,022,162 12.4 % Recycled 8,639,279 1,993,644 23.1 % 7,572,476 1,586,000 20.9 % Subtotal 131,107,433 16,234,439 12.4 % 96,719,259 12,608,162 13.0 % ECHG Resale 39,747,631 22,119,853 55.7 % 32,540,366 14,570,092 44.8 % Recycled 11,830,790 6,472,794 54.7 % 11,706,453 4,042,905 34.5 % Subtotal 51,578,421 28,592,647 55.4 % 44,246,819 18,612,997 42.1 % $ 182,685,854 $ 44,827,086 24.5 % $ 140,966,078 $ 31,221,159 22.1 % |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES | |
Schedule of Inventories | December 31, December 31, 2022 2021 DGSE Resale $ 16,462,749 $ 10,422,072 Recycle 46,697 11,995 Subtotal 16,509,446 10,434,067 ECHG Resale 1,858,519 3,350,159 Recycle 387,820 264,210 Subtotal 2,246,339 3,614,369 $ 18,755,785 $ 14,048,436 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment | December 31, December 31, 2022 2021 DGSE Land $ 1,640,219 $ 1,640,220 Buildings and improvements 2,798,975 2,764,529 Leasehold improvements 1,450,695 1,450,695 Machinery and equipment 1,078,595 1,056,315 Furniture and fixtures 603,944 526,250 Vehicles 22,859 22,859 7,595,287 7,460,868 Less: accumulated depreciation (2,651,832 ) (2,343,923 ) Sub-Total 4,943,455 5,116,945 ECHG Leasehold improvements 151,647 135,491 Machinery and equipment 1,180,636 1,109,306 Furniture and fixtures 145,950 145,950 1,478,233 1,390,747 Less: accumulated depreciation (515,673 ) (212,147 ) Sub-Total 962,560 1,178,600 Envela Land 1,106,664 1,106,664 Buildings and improvements 2,502,216 2,456,324 Machinery and equipment 28,627 23,676 3,637,507 3,586,664 Less: accumulated depreciation (149,720 ) (76,021 ) Sub-Total 3,487,787 3,510,643 $ 9,393,802 $ 9,806,188 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Acquisition (Tables) | |
Schedule of Assets Acquired of Purchase Price | Description Amount Assets Cash $ 13,136 Account receivables 93,970 Prepaids 2,594 Deposits 21,419 Intangible assets, trademarks/tradenames 114,000 Intangible assets, customer relationships 345,000 Fixed assets - net 30,697 Liabilities Account payables (345,057 ) Accrued liabilities (1,939 ) Net assets 273,820 Goodwill 1,282,072 Total Purchase Price $ 1,555,892 |
Schedule of purchase price allocation of the Avail Transaction | Initial Final Description Allocation Allocation Assets Cash $ 988,870 $ 988,870 Account receivables 395,144 395,144 Inventories 486,736 486,736 Prepaid expenses 93,727 93,727 Intangible assets - Trademarks/Tradenames - 1,272,000 Intangible assets - Customer Relationships - 1,464,000 Fixed assets - net 247,038 247,038 Right-of-use assets 609,511 609,511 Other assets 13,268 13,268 Liabilities Account payables (562,778 ) (562,778 ) Accrued liabilities (653,289 ) (653,289 ) Operating lease liabilities (609,511 ) (609,511 ) Net assets 1,008,716 3,744,716 Goodwill 3,491,284 972,272 Total Purchase Price $ 4,500,000 $ 4,716,988 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
Schedule of Goodwill | Year Ended December 31, 2022 2021 Opening balance $ 6,140,465 $ 1,367,109 Additions (reductions) (1) (2,519,012 ) 4,773,356 $ 3,621,453 $ 6,140,465 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL | |
Schedule of Intangible Assets | December 31, December 31, 2022 2021 DGSE Domain names $ 41,352 $ 41,352 Point of sale system 330,000 330,000 371,352 371,352 Less: accumulated amortization (335,502 ) (269,502 ) Subtotal 35,850 101,850 ECHG Trademarks (1) 1,483,000 1,483,000 Customer Contracts (1) 1,873,000 1,873,000 Trademarks/Tradenames (2) 114,000 114,000 Customer Relationships (2) 345,000 345,000 Trademarks/Tradenames (3) 1,272,000 - Customer Relationships (3) 1,464,000 - 6,551,000 3,815,000 Less: accumulated amortization (1,593,305 ) (892,605 ) Subtotal 4,957,695 2,922,395 Total $ 4,993,545 $ 3,024,245 |
Schedule of Estimated Amortization Expense | DGSE ECHG Total 2023 30,350 655,100 685,450 2024 5,500 655,100 660,600 2025 - 655,100 655,100 2026 - 655,100 655,100 2027 - 655,100 655,100 Thereafter - 1,682,195 1,682,195 $ 35,850 $ 4,957,695 $ 4,993,545 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of Accrued Expenses | December 31 December 31 2022 2021 DGSE Accrued Interest $ 11,624 $ 12,627 Payroll 146,817 131,325 Property tax 115,222 88,046 Sales tax 153,039 150,070 Other administrative expenses 424 - Subtotal 427,126 382,068 ECHG Accrued Interest 8,228 14,547 Payroll 336,226 334,431 Other accrued expenses 7,392 51,506 Unvouchered payables - inventory 803,649 461,481 Material & shipping costs (COGS) 229,159 78,647 Subtotal 1,384,654 940,612 Envela Accrued Interest 7,543 8,355 Payroll 25,179 25,175 Professional fees 199,508 220,101 Property tax 87,275 84,920 Other administrative expenses - 18,453 State income tax 155,309 109,682 Subtotal 474,814 466,686 $ 2,286,594 $ 1,789,366 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LONGTERM DEBT | |
Schedule of Long-Term Debt | Outstanding Balance December 31, December 31, Current 2022 2021 Interest Rate Maturity DGSE Note payable, FSB (1) $ 2,668,527 $ 2,770,729 3.10 % November 15, 2026 Note payable, Truist Bank (2) 874,418 909,073 3.65 % July 9, 2030 Note payable, Texas Bank & Trust (3) 456,187 474,009 3.75 % September 14, 2025 Note payable, Texas Bank & Trust (4) 1,691,020 1,752,446 3.75 % July 30, 2031 DGSE Sub-Total 5,690,152 5,906,257 ECHG Note payable, FSB (1) 6,054,565 6,286,459 3.10 % November 15, 2026 Line of Credit (5) - 1,700,000 3.10 % November 15, 2024 Avail Transaction note payable (6) 1,500,000 2,000,000 0.00 % April 1, 2025 ECHG Sub-Total 7,554,565 9,986,459 Envela Note payable, Texas Bank & Trust (7) 2,732,688 2,843,415 3.25 % November 4, 2025 Sub-Total 15,977,405 18,736,131 Current portion 1,250,702 2,765,794 $ 14,726,703 $ 15,970,337 |
Schedule of future payments of notes payable related party | Note payable, Farmers State Bank - DGSE Year Ending December 31, Amount 2023 $ 105,428 2024 108,743 2025 112,162 2026 2,342,194 Subtotal $ 2,668,527 Note payable, Truist Bank - DGSE Year Ending December 31, Amount 2023 $ 35,988 2024 37,342 2025 38,748 2026 40,206 2027 42,081 Thereafter 680,053 Subtotal $ 874,418 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2023 $ 18,503 2024 19,209 2025 418,475 Subtotal $ 456,187 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2023 $ 72,226 2024 74,608 2025 77,070 2026 79,360 2027 81,366 Thereafter 1,306,390 Subtotal $ 1,691,020 Note payable, Farmers Bank - ECHG Year Ending December 31, Amount 2023 $ 239,204 2024 246,725 2025 254,483 2026 5,314,153 Subtotal $ 6,054,565 Note payable - Justin and Tami Tinkle Year Ending December 31, Amount 2023 $ 666,667 2024 666,667 2025 166,666 Subtotal $ 1,500,000 Note payable, Texas Bank & Trust - Envela Year Ending December 31, Amount 2023 $ 112,686 2024 116,476 2025 2,503,526 Subtotal $ 2,732,688 $ 15,977,405 |
Schedule of Long-term Debt Maturities of Principal Payments | Scheduled Principal Loan Scheduled Principal Payments and Maturities by Year: Payments Maturities Total 2023 $ 1,250,702 $ - $ 1,250,702 2024 1,269,770 - 1,269,770 2025 482,463 3,088,668 3,571,131 2026 119,566 7,656,346 7,775,912 2027 123,447 - 123,447 2028 and thereafter 430,774 1,555,669 1,986,443 Total $ 3,676,722 $ 12,300,683 $ 15,977,405 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT INFORMATION | |
Schedule of Segment Reporting | For the Years Ended December 31, 2022 December 31, 2021 DGSE ECHG Consolidated DGSE ECHG Consolidated Revenue: Sales $ 131,107,433 $ 51,578,421 $ 182,685,854 $ 96,719,259 $ 44,246,819 $ 140,966,078 Cost of goods sold 114,872,994 22,985,774 137,858,768 84,111,097 25,633,822 109,744,919 Gross profit 16,234,439 28,592,647 44,827,086 12,608,162 18,612,997 31,221,159 Expenses: Selling, general and administrative expenses 8,762,432 20,668,291 29,430,723 7,628,377 13,169,718 20,798,095 Depreciation and amortization 410,759 1,041,075 1,451,834 389,703 536,392 926,095 9,173,191 21,709,366 30,882,557 8,018,080 13,706,110 21,724,190 Operating income 7,061,248 6,883,281 13,944,529 4,590,082 4,906,887 9,496,969 Other income/expense : Other income from loan forgiveness - - - 675,210 992,990 1,668,200 Other income (expense) 61,686 857,005 918,691 238,585 (538,020 ) (299,435 ) Interest expense 244,202 239,491 483,693 288,236 415,815 704,051 Income before income taxes 6,878,732 7,500,795 14,379,527 5,215,641 4,946,042 10,161,683 Income tax expense (benefit) (1,426,697 ) 117,091 (1,309,606 ) 45,124 67,684 112,808 Income from continuing operations $ 8,305,429 $ 7,383,704 $ 15,689,133 $ 5,170,517 $ 4,878,358 $ 10,048,875 |
Basic and Diluted Average Sha_2
Basic and Diluted Average Shares (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BASIC AND DILUTED AVERAGE SHARES | |
Schedule of Reconciliation of Basic and Diluted Weighted Average Common Shares | Year Ended December 31, 2022 2021 Basic weighted average shares 26,924,631 26,924,631 Effect of potential dilutive securities 15,000 15,000 Diluted weighted average shares 26,939,631 26,939,631 |
Stock Options and Restricted _2
Stock Options and Restricted Stock Units (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock Options and Restricted Stock Units (Tables) | |
Schedule of Share-based Compensation, Stock Options, Activity | Years Ended December 31, 2022 2021 Weighted Weighted average exercise average exercise Shares price Shares price Outstanding at beginning or year 15,000 $ 2.17 15,000 $ 2.17 Granted - - - - Exercised - - - - Forfeited - - - - Outstanding at end of year 15,000 $ 2.17 15,000 $ 2.17 Options exercisable at end of year 15,000 $ 2.17 15,000 $ 2.17 |
Schedule of Stock Options Outstanding | Options Outstanding and Exercisable Weighted average remaining Weighted Aggregate Number contractual life average intrinsic Exercise price outstanding (Years) exercise price value $ 2.13 10,000 NA (1) $ 2.13 $ 31,300 $ 2.25 5,000 NA (1) $ 2.25 $ 15,050 15,000 $ 46,350 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of Components of Income Tax Expense (Benefit) | 2022 2021 Tax Expense at Statutory Rate $ 3,019,701 $ 2,133,953 Valuation Allowance (4,513,493 ) (1,787,132 ) Non-Deductible Expenses and Other 5,534 3,501 PPP Loan Forgiveness - (350,322 ) State Taxes, Net of Federal Benefit 178,652 112,808 Income tax expense (benefit) $ (1,309,606 ) $ 112,808 Current $ 178,652 $ 112,808 Deferred benefit (1,488,258 ) - Total $ (1,309,606 ) $ 112,808 |
Schedule of Deferred Tax Assets | 2022 2021 Deferred tax assets (liabilities): Inventories $ 46,557 $ 39,433 Stock options and other 6,836 6,836 Contingencies and accruals 57,822 224,240 Property and equipment (442,012 ) (297,984 ) Net operating loss carryforward 1,727,126 4,500,023 Goodwill and intangibles 91,929 40,945 Total deferred tax assets, net 1,488,258 4,513,493 Valuation allowance - (4,513,493 ) Net Deferred tax asset $ 1,488,258 $ - |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of Future Annual Minimum Lease Payments | Operating Leases DGSE 2023 541,984 2024 552,414 2025 412,269 2026 355,000 2027 and thereafter 50,114 Total minimum lease payments 1,911,781 Less imputed interest (146,921 ) DGSE Sub-Total 1,764,860 ECHG 2023 1,357,381 2024 1,396,129 2025 1,321,297 2026 474,326 2027 and thereafter 33,454 Total minimum lease payments 4,582,587 Less imputed interest (292,050 ) ECHG Sub-Total 4,290,537 Total 6,055,397 Current portion 1,686,997 $ 4,368,400 |
Accounting Policies and Natur_4
Accounting Policies and Nature of Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies and Nature of Operations (Policies) | ||
Begining balance | $ 1,583 | $ 0 |
Bad debt expense | 120,554 | 83,003 |
Receivables written off | (70,403) | (81,420) |
Ending balance | $ 51,734 | $ 1,583 |
Accounting Policies and Natur_5
Accounting Policies and Nature of Operations (Details 1 ) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | $ 182,685,854 | $ 140,966,078 |
Gross margin | 44,827,086 | 31,221,159 |
DGSE [Member] | Resale [Member] | ||
Revenues | 122,468,154 | 89,146,783 |
Gross margin | $ 14,240,795 | $ 11,022,162 |
Margin | 11.60% | 12.40% |
DGSE [Member] | Recycled | ||
Revenues | $ 8,639,279 | $ 7,572,476 |
Gross margin | $ 1,993,644 | $ 1,586,000 |
Margin | 23.10% | 20.90% |
DGSE [Member] | Subtotal [Member] | ||
Revenues | $ 131,107,433 | $ 96,719,259 |
Gross margin | $ 16,234,439 | $ 12,608,162 |
Margin | 12.40% | 13% |
ECHG [Member] [Member] [Member] | ||
Revenues | $ 51,578,421 | $ 44,246,819 |
Gross margin | $ 28,592,647 | $ 18,612,997 |
Margin | 24.50% | 22.10% |
ECHG [Member] [Member] [Member] | Resale [Member] | ||
Revenues | $ 39,747,631 | $ 32,540,366 |
Gross margin | $ 22,119,853 | $ 14,570,092 |
Margin | 55.70% | 44.80% |
ECHG [Member] [Member] [Member] | Recycled | ||
Revenues | $ 11,830,790 | $ 11,706,453 |
Gross margin | $ 6,472,794 | $ 4,042,905 |
Margin | 54.70% | 34.50% |
ECHG [Member] [Member] [Member] | Subtotal [Member] | ||
Revenues | $ 51,578,421 | $ 44,246,819 |
Gross margin | $ 28,592,647 | $ 18,612,997 |
Margin | 55.40% | 42.10% |
Accounting Policies and Natur_6
Accounting Policies and Nature of Operations (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 17, 2023 | |
Allowance for Doubtful Accounts | $ 70,403 | $ 81,420 | ||
Outstanding and unpaid notes receivable | (903,796) | (3,969,701) | ||
Stock-based compensation expense | 0 | 0 | ||
ECHG [Member] | ||||
Advertising costs | 49,977 | 52,617 | ||
Outstanding balance | 0 | 1,700,000 | ||
General bad debt reserve | $ 51,735 | 1,583 | ||
Accounts Receivable description | we have chosen not to place any reserve on amounts that are less than 60 days past due. From there the reserve amount escalates: 10% reserve on amounts over 60 but less than 90 days past due, 25% on amounts over 90 but less than 120 past due, and 75% on amounts over 120 days past due. The account receivables past 120 days past due are reviewed quarterly and if they are deemed uncollectable will be written off against the reserve. | |||
Accounts receivable | $ 7,110,535 | 6,661,042 | ||
Allowance for Doubtful Accounts | 0 | |||
Reserved Amount | 51,734 | 0 | ||
Unpaid notes receivable | 578,250 | $ 578,250 | ||
Amount of the reserve | $ 838,647 | 838,647 | ||
Accrued and unpaid interest | 6,005 | 0 | ||
Outstanding and unpaid notes receivable | 900,000 | |||
Accrued interest | 838,647 | 49,174 | ||
Reserving the note | 900,000 | |||
Notes received | 61,353 | |||
Notes receivable | 49,174 | |||
Other expense | $ 838,647 | |||
Short-Term Financing description | the Company secured a 36 month line of credit from FSB for $3,500,000 at 3.1% annual interest rate with a maturity date of November 23, 2024 | |||
Shipping and handling costs | $ 3,193,742 | 1,367,944 | ||
Stock-based compensation expense | $ 0 | $ 0 | ||
Stock options that remained unexercised | 15,000 | 15,000 | ||
DGSE [Member] | ||||
Advertising costs | $ 723,889 | $ 406,775 | ||
Allowance for returns | $ 28,000 | 28,000 | $ 28,000 | |
Kansas | ||||
Line of credit | $ 3,500,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories | $ 18,755,785 | $ 14,048,436 |
DGSE [Member] | Recycle | ||
Inventories | 46,697 | 11,995 |
DGSE [Member] | Resale | Subtotal [Member] | ||
Inventories | 16,509,446 | 10,434,067 |
DGSE [Member] | Resale | ||
Inventories | 16,462,749 | 10,422,072 |
ECHG [Member] | Recycle | ||
Inventories | 387,820 | 264,210 |
ECHG [Member] | Recycle | Subtotal | ||
Inventories | 2,246,339 | 3,614,369 |
ECHG [Member] | Resale | ||
Inventories | $ 1,858,519 | $ 3,350,159 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total property and equipment | $ 9,393,802 | $ 9,806,188 |
DGSE [Member] | Building and Improvements | ||
Property, plant and equipment, gross, total | 2,798,975 | 2,764,529 |
DGSE [Member] | Leasehold Improvements | ||
Property, plant and equipment, gross, total | 1,450,695 | 1,450,695 |
DGSE [Member] | Machinery and Equipment | ||
Property, plant and equipment, gross, total | 1,078,595 | 1,056,315 |
DGSE [Member] | Furniture And Fixtures | ||
Property, plant and equipment, gross, total | 603,944 | 526,250 |
DGSE [Member] | Vehicles | ||
Property, plant and equipment, gross, total | 22,859 | 22,859 |
DGSE [Member] | Land | ||
Property, plant and equipment, gross, total | 1,640,219 | 1,640,220 |
ECHG [Member] | Leasehold Improvements | ||
Property, plant and equipment, gross, total | 151,647 | 135,491 |
ECHG [Member] | Machinery and Equipment | ||
Property, plant and equipment, gross, total | 1,180,636 | 1,109,306 |
Envela | ||
Total property and equipment | 3,487,787 | 3,510,643 |
Property, plant and equipment, gross, total | 3,637,507 | 3,586,664 |
Less: accumulated depreciation | (149,720) | (76,021) |
Envela | Building and Improvements | ||
Property, plant and equipment, gross, total | 2,502,216 | 2,456,324 |
Envela | Machinery and Equipment | ||
Property, plant and equipment, gross, total | 28,627 | 23,676 |
Envela | Land | ||
Property, plant and equipment, gross, total | 1,106,664 | 1,106,664 |
ECHG [Member] | Furniture And Fixtures | ||
Property, plant and equipment, gross, total | 145,950 | 145,950 |
Note Payable Farmers State Bank | DGSE [Member] | ||
Total property and equipment | 4,943,455 | 5,116,945 |
Property, plant and equipment, gross, total | 7,595,287 | 7,460,868 |
Less: accumulated depreciation | (2,651,832) | (2,343,923) |
Note Payable Farmers State Bank | ECHG [Member] | ||
Total property and equipment | 962,560 | 1,178,600 |
Property, plant and equipment, gross, total | 1,478,233 | 1,390,747 |
Less: accumulated depreciation | $ (515,673) | $ (212,147) |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 685,134 | $ 498,866 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 3,621,453 | $ 6,140,465 | $ 1,367,109 | $ 1,367,109 | $ 0 |
CExchange Purchase Agreement [Member] | |||||
Account receivables | 93,970 | ||||
Prepaids | 2,594 | ||||
Deposits | 21,419 | ||||
Fixed assets - net | 30,697 | ||||
Account payables | (345,057) | ||||
Accrued liabilities | (1,939) | ||||
Net assets | 273,820 | ||||
Goodwill | 1,282,072 | ||||
Total Purchase Price | 1,555,892 | ||||
Cash | 13,136 | ||||
CExchange Purchase Agreement [Member] | Customer Relationships [Member] | |||||
Intangible assets | 345,000 | ||||
CExchange Purchase Agreement [Member] | Trademarks And Trade Names [Member] | |||||
Intangible assets | $ 114,000 |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 3,621,453 | $ 6,140,465 | $ 1,367,109 | $ 1,367,109 | $ 0 |
Initial Allocation Member | |||||
Cash | 988,870 | ||||
Account receivables | 395,144 | ||||
Inventory | 486,736 | ||||
Prepaid expenses | 93,727 | ||||
Fixed assets - net | 247,038 | ||||
Right-of-use assets | 609,511 | ||||
Other assets | 13,268 | ||||
Account payables | (562,778) | ||||
Accrued liabilities | (653,289) | ||||
Operating lease liabilities | (609,511) | ||||
Net assets | 1,008,716 | ||||
Goodwill | 3,491,284 | ||||
Total Purchase Price | 4,500,000 | ||||
Initial Allocation Member | Customer Relationships Member | |||||
Intangible assets | 0 | ||||
Initial Allocation Member | Trademarks And Trade Names Member | |||||
Intangible assets | 0 | ||||
Final Allocation Member | |||||
Cash | 988,870 | ||||
Account receivables | 395,144 | ||||
Inventory | 486,736 | ||||
Prepaid expenses | 93,727 | ||||
Fixed assets - net | 247,038 | ||||
Right-of-use assets | 609,511 | ||||
Other assets | 13,268 | ||||
Account payables | (562,778) | ||||
Accrued liabilities | (653,289) | ||||
Operating lease liabilities | (609,511) | ||||
Net assets | 3,744,716 | ||||
Goodwill | 972,272 | ||||
Total Purchase Price | 4,716,988 | ||||
Final Allocation Member | Customer Relationships Member | |||||
Intangible assets | 1,464,000 | ||||
Final Allocation Member | Trademarks And Trade Names Member | |||||
Intangible assets | $ 1,272,000 |
ACQUISITION (Details 2)
ACQUISITION (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net income | $ 15,689,133 | $ 10,048,875 |
Consolidated Statement Of Income [Member] | ||
Revenue | 182,685,854 | 147,367,485 |
Income from continuing operation | 14,379,527 | 10,781,431 |
Net income | $ 15,689,133 | $ 10,663,906 |
Basic net income per common share | $ 0.58 | $ 0.40 |
Diluted net income per common share | $ 0.58 | $ 0.40 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Jun. 09, 2021 | Jan. 17, 2023 | May 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 29, 2021 | Dec. 31, 2020 | |
Note receivable | $ 578,250 | $ 0 | $ 2,100,000 | ||||
Forgiveness of loan amount | 0 | $ 1,668,200 | |||||
Goodwill | $ 3,491,284 | ||||||
CExchange Purchase Agreement [Member] | |||||||
Forgiveness of loan amount | $ 1,500,000 | ||||||
Accrued interest receivable | 49,174 | ||||||
Accrued and unpaid interest | $ 55,892 | 2,000,000 | |||||
Acquisition description | The remaining $900,000, which represents two notes of $600,000 and $300,000, principal owed to ECHG by CExchange is not a part of the purchase price listed below and was expected to be repaid with any accrued and unpaid interest during the third or fourth fiscal quarters of 2021 | ||||||
Liabilities and rights and interests | 4,500,000 | ||||||
Initial payment | 2,500,000 | ||||||
Payments | $ 166,667 | ||||||
Payments received | $ 578,250 | ||||||
Imputed interest rate | 3.10% | ||||||
Remaining notes receivable | $ 838,647 | ||||||
Goodwill | $ 1,891,477 | ||||||
Useful life | 15 years | ||||||
Outstanding and unpaid notes receivable | $ 900,000 | ||||||
Description related to goodwill | On May 31, 2022, an additional cash payment of $216,988 was made due to certain conditions being met concerning the cash balance upon a certain date. The additional cash payment was not part of the Avail Installment Note of $2,000,000 from the initial closing of the Avail Transaction. The additional cash payment increased goodwill and the purchase price amount by $216,988, thereby increasing goodwill for the Avail Transaction to $3,708,273. On September 30, 2022, management identified $2,736,000 of intangibles as part of the Avail Transaction not initially included in the fair value of Avail’s net assets. The intangibles identified of $2,736,000, decreases goodwill by $2,736,000 to $972,272, |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL | ||
Goodwill | $ 6,140,465 | $ 1,367,109 |
Additions (reductions) | (2,519,012) | 4,773,356 |
Total Goodwill | $ 3,621,453 | $ 6,140,465 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 09, 2021 | Oct. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | May 31, 2022 | |
GOODWILL | |||||
Additions | $ 4,773,356 | ||||
Exchange transaction | $ 1,282,072 | ||||
Preliminary purchase price | $ 3,491,284 | ||||
Reduction of goodwill | $ 2,519,012 | ||||
Additional cash payment | $ 40,173,000 | 40,173,000 | $ 216,988 | ||
Intangible assets | $ 2,736,000 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total intangibles | $ 4,993,545 | $ 3,024,245 |
Point of Sale System | DGSE | ||
Intangible assets, gross | 330,000 | 330,000 |
ECHG [Member] | ||
Total intangibles | 4,957,695 | 2,922,395 |
Intangible assets, gross | 6,551,000 | 3,815,000 |
Less: accumulated amortization | (1,593,305) | (892,605) |
ECHG [Member] | Trademarks | ||
Intangible assets, gross | 1,483,000 | 1,483,000 |
ECHG [Member] | Trademarks/Tradenames [Member] | ||
Intangible assets, gross | 114,000 | 114,000 |
ECHG [Member] | Trademarks/Tradenames [Member] | ||
Intangible assets, gross | 1,272,000 | 0 |
ECHG [Member] | Customer Contracts | ||
Intangible assets, gross | 1,873,000 | 1,873,000 |
ECHG [Member] | Customer Relationships Member | ||
Intangible assets, gross | 345,000 | 345,000 |
ECHG [Member] | Customer Relationships [Member] | ||
Intangible assets, gross | 1,464,000 | 0 |
DGSE [Member] | ||
Total intangibles | 35,850 | 101,850 |
Intangible assets, gross | 371,352 | 371,352 |
Less: accumulated amortization | (335,502) | (269,502) |
DGSE [Member] | Domain Names | ||
Intangible assets, gross | $ 41,352 | $ 41,352 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
2023 | $ 685,450 | |
2024 | 660,600 | |
2025 | 655,100 | |
2026 | 655,100 | |
2027 | 655,100 | |
Thereafter | 1,682,195 | |
Total | 4,993,545 | $ 3,024,245 |
ECHG [Member] | ||
2023 | 655,100 | |
2024 | 655,100 | |
2025 | 655,100 | |
2026 | 655,100 | |
2027 | 655,100 | |
Thereafter | 1,682,195 | |
Total | 4,957,695 | $ 2,922,395 |
DGSE [Member] | ||
2023 | 30,350 | |
2024 | 5,500 | |
2025 | 0 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total | $ 35,850 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL | ||
Amortization expense | $ 766,700 | $ 427,228 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total accrued expenses | $ 2,286,594 | $ 1,789,366 |
ECHG [Member] | ||
Total accrued expenses | 1,384,654 | 940,612 |
Accrued Interest | 8,228 | 14,547 |
Payroll | 336,226 | 334,431 |
Other accrued expenses | 7,392 | 51,506 |
Unvouchered payables - inventory | 803,649 | 461,481 |
Material & shipping costs (COGS) | 229,159 | 78,647 |
Envela | ||
Total accrued expenses | 474,814 | 466,686 |
Accrued Interest | 7,543 | 8,355 |
Payroll | 25,179 | 25,175 |
Professional fees | 199,508 | 220,101 |
Property tax | 87,275 | 84,920 |
Other administrative expense | 0 | 18,453 |
State income tax | 155,309 | 109,682 |
DGSE [Member] | ||
Total accrued expenses | 427,126 | 382,068 |
Accrued Interest | 11,624 | 12,627 |
Payroll | 146,817 | 131,325 |
Property tax | 115,222 | 88,046 |
Other administrative expense | 424 | 0 |
Sales tax | $ 153,039 | $ 150,070 |
LongTerm Debt (Details)
LongTerm Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Subtotal | $ 15,977,405 | $ 15,970,337 |
Avail Transaction Note | ||
Note payable, related party | $ 1,500,000 | 2,000,000 |
Interest rate | 0% | |
Maturity | Apr. 01, 2025 | |
Texas Bank and Trust | ||
Subtotal | $ 1,691,020 | 1,752,446 |
Revolving Line Of Credit | ||
Subtotal | $ 0 | 1,700,000 |
Interest rate | 3.10% | |
Maturity | Nov. 15, 2024 | |
ECHG [Member] | ||
Subtotal | $ 7,554,565 | 9,986,459 |
ECHG [Member] | Note Payable Farmers State Bank | ||
Subtotal | 6,054,565 | 6,286,459 |
Note payable, related party | $ 0 | |
Interest rate | 3.10% | |
Maturity | Nov. 15, 2026 | |
DGSE [Member] | ||
Subtotal | $ 5,690,152 | 5,906,257 |
DGSE [Member] | Note Payable Farmers State Bank | ||
Subtotal | $ 2,668,527 | 2,770,729 |
Interest rate | 3.10% | |
Maturity | Nov. 15, 2026 | |
DGSE [Member] | Note Payable Truist Bank | ||
Subtotal | $ 874,418 | 909,073 |
Interest rate | 3.65% | |
Maturity | Jul. 09, 2030 | |
DGSE [Member] | Note Payable Texas Bank And Trust | ||
Subtotal | $ 456,187 | 474,009 |
Interest rate | 3.75% | |
Maturity | Sep. 14, 2025 | |
DGSE [Member] | Note Payable Texas Bank And Trust 1 | ||
Note payable, related party | $ 1,691,020 | 1,752,446 |
Interest rate | 3.75% | |
Maturity | Jul. 30, 2031 | |
Envela | ||
Subtotal | $ 2,732,688 | 18,736,131 |
Current portion | 1,250,702 | 2,765,794 |
Note payable, related party | $ 2,732,688 | $ 2,843,415 |
Interest rate | 3.25% | |
Maturity | Nov. 04, 2025 |
LongTerm Debt (Details 1)
LongTerm Debt (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Subtotal | $ 15,977,405 | $ 15,970,337 |
2023 | 1,250,702 | |
2024 | 1,269,770 | |
2025 | 3,571,131 | |
2026 | 7,775,912 | |
2027 | 123,447 | |
Thereafter | 1,986,443 | |
Justin And Tami Tinkle | ||
Subtotal | 1,500,000 | |
2023 | 666,667 | |
2024 | 666,667 | |
2025 | 166,666 | |
Texas Bank and Trust | ||
Subtotal | 1,691,020 | 1,752,446 |
2023 | 72,226 | |
2024 | 74,608 | |
2025 | 77,070 | |
2026 | 79,360 | |
2027 | 81,366 | |
2027 thereafter | 1,306,390 | |
Envela | ||
Subtotal | 2,732,688 | 18,736,131 |
2023 | 112,686 | |
2024 | 116,476 | |
2025 | 2,503,526 | |
DGSE [Member] | ||
Subtotal | 5,690,152 | 5,906,257 |
DGSE [Member] | Note Payable Farmers State Bank | ||
Subtotal | 2,668,527 | 2,770,729 |
2023 | 105,428 | |
2024 | 108,743 | |
2025 | 112,162 | |
2026 | 2,342,194 | |
DGSE [Member] | Note Payable Truist Bank | ||
Subtotal | 874,418 | 909,073 |
2023 | 35,988 | |
2024 | 37,342 | |
2025 | 38,748 | |
2026 | 40,206 | |
2027 | 42,081 | |
Thereafter | 680,053 | |
DGSE [Member] | Note Payable Texas Bank And Trust | ||
Subtotal | 456,187 | 474,009 |
2023 | 18,503 | |
2024 | 19,209 | |
2025 | 418,475 | |
ECHG [Member] | ||
Subtotal | 7,554,565 | 9,986,459 |
ECHG [Member] | Note Payable Farmers State Bank | ||
Subtotal | 6,054,565 | $ 6,286,459 |
2023 | 239,204 | |
2024 | 246,725 | |
2025 | 254,483 | |
2026 | $ 5,314,153 |
LONGTERM DEBT (Details 2)
LONGTERM DEBT (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
2023 | $ 1,250,702 | |
2024 | 1,269,770 | |
2025 | 3,571,131 | |
2026 | 7,775,912 | |
2027 | 123,447 | |
2028 Thereafter | 1,986,443 | |
Subtotal | 15,977,405 | $ 15,970,337 |
Loan Maturities | ||
2023 | 0 | |
2024 | 0 | |
2025 | 3,088,668 | |
2026 | 7,656,346 | |
2027 | 0 | |
2028 Thereafter | 1,555,669 | |
Subtotal | 12,300,683 | |
Scheduled Principal payment | ||
2023 | 1,250,702 | |
2024 | 1,269,770 | |
2025 | 482,463 | |
2026 | 119,566 | |
2027 | 123,447 | |
2028 Thereafter | 430,774 | |
Subtotal | $ 3,676,722 |
LONGTERM DEBT (Details Narrativ
LONGTERM DEBT (Details Narrative) - USD ($) | 1 Months Ended | ||||||||
Nov. 04, 2020 | Sep. 14, 2020 | Jul. 09, 2020 | Nov. 23, 2021 | Oct. 29, 2021 | Jul. 30, 2021 | May 20, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | |
Purchase partly financed | $ 956,000 | ||||||||
New retail building | $ 1,195,000 | ||||||||
Annual interest rate | 3.65% | ||||||||
Monthly interest payments | $ 5,645 | ||||||||
Loan period | 10 years | ||||||||
Amortized period | 20 years | ||||||||
Line of credit | $ 0 | $ 1,700,000 | |||||||
Note Payable Farmers State Bank | |||||||||
Annual interest rate | 3.10% | ||||||||
Monthly interest payments | $ 35,292 | ||||||||
Loan period | 5 years | ||||||||
Amortized period | 20 years | ||||||||
Accounts payable - related party balance | $ 6,309,962 | ||||||||
Line of credit | $ 3,500,000 | ||||||||
Line of credit interest rate | 3.10% | ||||||||
Outstanding balance | $ 0 | ||||||||
Note Payable Farmers State Bank 1 [Member] | |||||||||
Annual interest rate | 3.10% | ||||||||
Monthly interest payments | $ 15,555 | ||||||||
Loan period | 5 years | ||||||||
Amortized period | 20 years | ||||||||
Accounts payable - related party balance | $ 2,781,087 | ||||||||
NWH Holdings LLC [Member] | |||||||||
Purchase partly financed | $ 496,000 | ||||||||
Annual interest rate | 3.75% | ||||||||
Monthly interest payments | $ 2,941 | ||||||||
Loan period | 5 years | ||||||||
Amortized period | 20 years | ||||||||
Purchase new retail building | $ 620,000 | ||||||||
Gaylord Holdings [Member] | |||||||||
Purchase partly financed | $ 1,772,000,000,000 | ||||||||
Annual interest rate | 3.75% | ||||||||
Monthly interest payments | $ 10,509 | ||||||||
Amortized period | 20 years | ||||||||
Purchase new retail building | $ 2,215,500 | ||||||||
Gateway Holdings [Member] | |||||||||
Purchase partly financed | $ 2,960 | ||||||||
Annual interest rate | 3.25% | ||||||||
Monthly interest payments | $ 16,792 | ||||||||
Loan period | 5 years | ||||||||
Amortized period | 20 years | ||||||||
Purchase corporate office building | $ 3,521 | ||||||||
ECHG [Member] | |||||||||
Purchased assets and liabilities | $ 450,000 | ||||||||
Asset purchase agreement description | The purchase was facilitated by an initial payment of $2.5 million at closing, and the remaining $2.0 million to be paid out by 12 quarterly payments starting April 1, 2022, of $166,667 each. The Installment note payable for the Avail Transaction imputed at 3.1% | ||||||||
DGSE [Member] | |||||||||
Purchase partly financed | $ 956,000 | ||||||||
Annual interest rate | 3.65% | 0.06% | |||||||
Monthly interest payments | $ 5,645 | $ 49,646 | |||||||
Loan period | 10 years | 5 years | |||||||
Amortized period | 20 years | 20 years | |||||||
Purchase new retail building | $ 1,195 | ||||||||
Accounts payable - related party balance | $ 3,074,021 | ||||||||
Revised monthly interest payment due | $ 22,203 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Sales | $ 182,685,854 | $ 140,966,078 |
Cost of goods sold | 137,858,768 | 109,744,919 |
Gross profit | 44,827,086 | 31,221,159 |
Gross margin | 44,827,086 | 31,221,159 |
Selling, general and administrative expenses | 29,430,723 | 20,798,095 |
Depreciation and amortization | 1,451,834 | 926,095 |
Total cost of revenue | 30,882,557 | 21,724,190 |
Operating income | 13,944,529 | 9,496,969 |
Other income (expense) | 918,691 | (299,435) |
Interest expense | 483,693 | 704,051 |
Income before income taxes | 14,379,527 | 10,161,683 |
Income tax expense | (1,309,606) | 112,808 |
Net income | 15,689,133 | 10,048,875 |
Net income | 15,689,133 | 10,048,875 |
Gain on loan forgiveness | 0 | 1,668,200 |
ECHG [Member] | ||
Sales | 51,578,421 | 44,246,819 |
Cost of goods sold | 22,985,774 | 25,633,822 |
Gross profit | 28,592,647 | 18,612,997 |
Gross margin | 28,592,647 | 18,612,997 |
Selling, general and administrative expenses | 20,668,291 | 13,169,718 |
Depreciation and amortization | 1,041,075 | 536,392 |
Total cost of revenue | 21,709,366 | 13,706,110 |
Operating income | 6,883,281 | 4,906,887 |
Other income (expense) | 857,005 | (538,020) |
Interest expense | 239,491 | 415,815 |
Income before income taxes | 7,500,795 | 4,946,042 |
Income tax expense | 117,091 | 67,684 |
Net income | 7,383,704 | 4,878,358 |
Net income | 7,383,704 | 4,878,358 |
Gain on loan forgiveness | 0 | 992,990 |
DGSE [Member] | ||
Sales | 131,107,433 | 96,719,259 |
Cost of goods sold | 114,872,994 | 84,111,097 |
Gross profit | 16,234,439 | 12,608,162 |
Gross margin | 16,234,439 | 12,608,162 |
Selling, general and administrative expenses | 8,762,432 | 7,628,377 |
Depreciation and amortization | 410,759 | 389,703 |
Total cost of revenue | 9,173,191 | 8,018,080 |
Operating income | 7,061,248 | 4,590,082 |
Other income (expense) | 61,686 | 238,585 |
Interest expense | 244,202 | 288,236 |
Income before income taxes | 6,878,732 | 5,215,641 |
Income tax expense | (1,426,697) | 45,124 |
Net income | 8,305,429 | 5,170,517 |
Net income | 8,305,429 | 5,170,517 |
Gain on loan forgiveness | $ 0 | $ 675,210 |
BASIC AND DILUTED AVERAGE SHA_3
BASIC AND DILUTED AVERAGE SHARES (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
BASIC AND DILUTED AVERAGE SHARES | ||
Basic weighted average shares | 26,924,631 | 26,924,631 |
Effect of potential dilutive securities | 15,000 | 15,000 |
Diluted weighted average shares | 26,939,631 | 26,939,631 |
BASIC AND DILUTED AVERAGE SHA_4
BASIC AND DILUTED AVERAGE SHARES (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
BASIC AND DILUTED AVERAGE SHARES | ||
Effect of potential dilutive securities | 15,000 | 15,000 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) | 1 Months Ended |
Jan. 31, 2014 shares | |
COMMON STOCK | |
RSU granted | 112,000 |
Stock Options and Restricted _3
Stock Options and Restricted Stock Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Options and Restricted Stock Units (Tables) | ||
Shares, Outstanding at beg of year | 15,000 | 15,000 |
Shares, Outstanding at end of year | 15,000 | 15,000 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 0 | 0 |
Shares, Forfeited | 0 | 0 |
Shares, Options exercisable at end of year | 15,000 | 15,000 |
Weighted average exercise price, Outstanding at end of year | $ 2.17 | $ 2.17 |
Weighted average exercise price, Outstanding at beg of year | 2.17 | 2.17 |
Weighted average exercise price, Granted | 0 | 0 |
Weighted average exercise price, Exercised | 0 | 0 |
Weighted average exercise price, Forfeited | 0 | 0 |
Weighted average exercise price, Options exercisable at end of year | $ 2.17 | $ 2.17 |
Stock Options and Restricted _4
Stock Options and Restricted Stock Units (Details 1) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2018 | |
Number outstanding | 15,000 | |||
Aggregate Intrinsic Value | $ 46,350 | |||
Weighted average exercise price, Outstanding at beginning of year | $ 2.17 | $ 2.17 | $ 2.17 | $ 2.17 |
Range One | ||||
Number outstanding | 10,000 | |||
Aggregate Intrinsic Value | $ 31,300 | |||
Exercise price | $ 2.13 | |||
Weighted average remaining contractual life (years) | 0 years | |||
Weighted average exercise price, Outstanding at beginning of year | $ 2.13 | |||
Range Two | ||||
Number outstanding | 5,000 | |||
Aggregate Intrinsic Value | $ 15,050 | |||
Exercise price | $ 2.25 | |||
Weighted average remaining contractual life (years) | 0 years | |||
Weighted average exercise price, Outstanding at beginning of year | $ 2.25 |
Stock Options and Restricted _5
Stock Options and Restricted Stock Units (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 07, 2016 | Jun. 21, 2004 | |
Stock Options and Restricted Stock Units (Tables) | ||||
Common stock price | $ 5.26 | |||
Employee Stock Option Plan | $ 15,000 | |||
Reserved shares for issuance | $ 1,100,000 | |||
Potential dilutive shares | $ 15,000 | |||
Stock-based compensation expense | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Tax Expense at Statutory Rate | $ 3,019,701 | $ 2,133,953 |
Valuation Allowance | (4,513,493) | (1,787,132) |
Non-Deductible Expenses and Other | 5,534 | 3,501 |
PPP loan forgiveness | 0 | (350,322) |
State Taxes, Net of Federal Benefit | 178,652 | 112,808 |
Income tax expense (benefit) | (1,309,606) | 112,808 |
Current | 178,652 | 112,808 |
Deferred benefit | (1,488,258) | 0 |
Total | $ (1,309,606) | $ 112,808 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Inventories | $ 46,557 | $ 39,433 |
Stock options and other | 6,836 | 6,836 |
Contingencies and accruals | 57,822 | 224,240 |
Property and equipment | (442,012) | (297,984) |
Net operating loss carryforward | 1,727,126 | 4,500,023 |
Goodwill and intangibles | 91,929 | 40,945 |
Total deferred tax assets, net | 1,488,258 | 4,513,493 |
Valuation allowance | 0 | (4,513,493) |
Net Deferred tax asset | $ 1,488,258 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Valuation allowance | $ 4,513,493 | |
Net realization | $ 4,513,493 | |
Net deferred taxes | 1,488,258 | |
Operating loss carryforwards, net | $ 8,224,409 |
Leases (Details)
Leases (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current portion | $ 1,686,997 | $ 1,573,824 |
Total lease liability | 4,368,400 | |
2027 and thereafter | 50,114 | |
ECHG [Member] | ||
Total | 4,290,537 | |
Operating Lease Liability total | 6,055,397 | |
2024 | 1,396,129 | |
2025 | 1,321,297 | |
2026 | 474,326 | |
2027 and thereafter | 33,454 | |
2023 | 1,357,381 | |
Total minimum lease payments | 4,582,587 | |
Less imputed interest | (292,050) | |
DGSE [Member] | ||
Total | 1,764,860 | |
2024 | 552,414 | |
2025 | 412,269 | |
2026 | 355,000 | |
2023 | 541,984 | |
Total minimum lease payments | 1,911,781 | |
Less imputed interest | $ (146,921) |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Lease cost | $ 2,597,528 | $ 2,109,104 |
Cash paid | $ 2,564,815 | $ 2,300,630 |
weighted average discount rate | 4.40% |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
Defined Contribution Plan (Details Narrative) | |
Defined contribution plan, maximum annual contributions per employee, percent | 15% |
Defined contribution plan, contribution by employer | 10% |
Defined contribution plan, matching contribution percent of employee | 6% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event Member | Jan. 17, 2023 USD ($) |
Note receivable | $ 578,250 |
Interest receivables | $ 94,115 |