ELA 10-K & 10-Q changes, risk factors and insider trading

An inability to attract new customers, turn existing customers into repeat customers, maintain relationships with significant clientsbusiness partners, or renew contracts with them on favorable terms.

The success ofWithin our commercial segment’ssegment, the business primarily depends on maintaining relationships and contractual arrangements with significantmajor clients.business partners. If our key clientsbusiness partners terminate important businesstransactional arrangements with us or renew contracts on terms less favorable to us, there could be a material adverse effect on our financial condition and results of operations.

RiskRisks Factors RelatingRelated to Commodity Volatility, Changing Economic ConditionsConditions, and Seasonality

Bullion, crafted precious metals, and other precious metal products are purchased and sold based on current market pricing. Bullion and precious metal-laden inventories are subject to market-value changes created by their underlying commodity markets. Several national and international factors are beyond management’s control but may affect margins, customer demand, and transactional volumes. These factors includeinclude, but are not limited to, the policies of the U.S. Federal Reserve, inflation rates, global economic uncertainty, refining capacity, and governmental and private mint supply. The Company seeks to reduce its exposure to market volatility through disciplined inventory management procedures. As circumstances permit, the Company may use financial derivative instruments to minimize the impact of market volatility. If commodity markets underlying our bullionbullion- or precious metal-ladenprecious-metal-laden inventory are misjudged, or if our inventory management or hedging strategies are unsuccessful, our business could suffer material adverse consequences.

While jewelry manufacturing is a major driver of demandgold for gold,demand, management believes that the cost of gold iscosts are predominantly driven by investment transactions, which may result in significant changescost in cost.fluctuations. The Company’s cost of merchandise and potential earnings may be adversely impactedaffected by investment-marketinvestment considerationsmarket factors that cause thegold price of goldprices to significantly increaserise or decrease.fall significantly.

A significant portion of the consumer segment’s profitprofits is generated fromby buying and selling pre-owned fine jewelry orand other precious metal-laden products. Significant price fluctuations in precious metals, especially downward, could have a severe impact on this part of our business, as people are less likely to sell these products to the Company if they believe their merchandise is being undervalued,undervalued or if they believe the value is uncertain.

Historically, jewelry retailers have been able, over time,able to increase prices over time to reflect changes in commodity costs. However, in general, particularly sharp increases in commodity costs may result in a time lag before increased commodity coststhey are fully reflected in retail prices. There is no certainty that such price increases will be sustainable, so downward pressure on gross margin and earnings may occur. Moreover, any sustained increases in thecommodity cost of commoditiescosts could resultrequire in the needus to fund theinventory purchase of inventorypurchases at higher valuesprices or to make changes inadjust the merchandise available,we offer, which could have a material adverse effect on our financial condition and results of operations.

Adverse economic conditions in the U.S. or in other key markets where we sell into, andmay resultingresult in declines in consumer confidence and spending.

ConsumerThe consumer wholesale and retail jewelry business is seasonal, with sales traditionally greater during certain holiday seasons.seasonal.

The consumer segment’s retail jewelry sales are seasonal by nature. The periods around Valentine’s Day,Day and Mother’s Day, and Christmasthe Holiday Months leading up to Christmas, are typically the main seasons for jewelry sales. Sales are traditionally greater during significant holidays that occur in early spring, late fall, and winter. The amountamounts of sales and operating income generated during these seasonsperiods dependsdepend upon theon general economic conditions and other factors beyond our control. Given the timing of the seasonality,corresponding season, inclement weather can at times pose a substantial barrier to consumer retail activity and mayadversely have an unfavorable impact onaffect store traffic. If inclement weather conditions were to occur during suchthese holidaypeak seasons,sales periods, they could have a material adverse effect on our financial condition and results of operations.

RiskRisks Factors RelatingRelated to Competition

Intense competition across all markets for Envela’sour products and services.

The markets in which Envela operates are highly competitive, and the Company competes with numerous other companies, several of which are larger and have significantly greater financial, distribution, advertising, and marketing resources. A significant portion of Envela’s products are evaluated by consumers based on the attractiveness of brands, assortment of products, and price competitiveness. Significant increasesIncreases in these competitive influences could adversely affect our operations throughby a decrease inreducing the number and total value of sales transactions.

Many competitors attract customers with their reputation and industry connections. Additionally, companies may decide to enter our markets to compete with us,us whichand may have greater name recognition and greater financial and marketing resources than Envela. If these new companies are successful in entering our markets, or if customers choose to go to other established competitors, there could be fewer buyers or sellers, andwhich could have a material adverse effect on our financial condition and results of operations.

Jewelry and watch retailing isare highly fragmented and competitive. The consumer segment competes for jewelry and watch sales primarily against specialty jewelers and other retailers that sell jewelry and watches, including department stores, internetonline retail,retailers, and recommerce platforms. Participants in the jewelry and watch category compete for a share of customers’ disposable income with other consumer sectors such as electronics, clothing, furniture, travel, and restaurants. The competition for consumer discretionary spending is particularly relevant to gift giving, and somewhat to bridal jewelry (e.g.e.g., engagement, wedding, and anniversary).

Consumers are increasingly shopping for jewelry or starting their jewelry-buying experience online, which makesmaking it easier for them to compare prices with other jewelry retailers. If our consumer brands do not offer the same or similarequivalent items at the lowestcompetitive prices, consumers may purchase their jewelry from competitors, which could have a material adverse effect on our financial condition and results of operations.

RiskRisks Factors RelatingRelated to Demand

A decrease in demandDemand for the Company’sour products and services may decrease, and thethere failurecan ofbe no assurances that the Company will be able to adapt to such decreases.

Although the Company actively manages its product and service offerings to ensure that such offerings meet the needs and preferences of its customer base and business partners, the demand for a particular product or service may decrease due to a variety of factors, including many that the Company may not be able to control, anticipate or respond to promptly, such as the availability and pricing of competing products or technology, changes in our customers’ financial conditionscondition as a result of changes in unemployment levels, declines in consumer spending habits related to general economic conditions, inflation, weather events, public health and safety issues, fuel prices, interest rates, government-sponsored economic stimulus programs, social welfare or benefit programs, real or perceived loss of consumer confidence or regulatory restrictions that increase or reduce customer access to particular products.

Should the Company fail to adapt to a significant changechanges in its customers’business partners’ or customers' demand for, or regular access to, its products,products theand Company’sservices, our revenue could decrease significantly.significantly with a commensurate impact on our financial condition. Even if the Company makes adaptations, its customersbusiness partners or merchantscustomers may resist or reject productsservices or servicesproducts whose adaptations make them less attractive or less available. In any event, the effect of any productchange in services or service changeproducts on the results of the Company’s business may not be fully ascertainable until the change has been in effect for some time.

Consumer demand for the Company’s products can affect inventory levels. If consumer demand is lower than expected, inventory levels can rise, causing a strain onstraining operating cash flow. If inventory cannot be sold through our retail outlets or wholesale channels, write-downs or write-offs to earnings could be necessary. Conversely, if consumer demand is higher than expected, insufficient inventory levels could resultlead into unfulfilled orders, lossrevenue of revenue,loss, and anadverse unfavorable impactimpacts on customer relationships. In particular, volatilityVolatility and uncertainty related toin macroeconomic factors also make it more difficult to forecast consumer demand in variousacross markets. Failure to properly judge consumer demand and properlyeffectively manage inventory could have a material adverse effect on profitabilitythe results of operations and liquidity.financial condition.

RiskRisks Factors SpecificRelated to the Luxury Hard Asset Market

Adapting toChanging consumer buying preferences toward lab-grown diamonds.

While the Company regularly assesses consumer buying preferences to provide our customers with an array of attractive buying options, consumers have become more accepting of lab-grown diamonds asdue a result ofto their price point andpoint, trends toward sustainabilitysustainability, and greater understanding sourceof their origin. Although we offer lab-grown diamond collections, these arecollections at lower price points, whichthis may have a material adverse effect on our financial condition and results of operation.operations.

Consumer acceptance of near-perfect counterfeit products.products may result in increased competition.

Technology has evolved to the point where manufacturers can produce near-perfect counterfeits of luxury retail brands. While our business model is value-driven, consumer acceptance of near-perfect counterfeit goods may result in increasedincrease competition againstin the luxury recommerce market, which maycould have a material adverse effect on our financial condition and results of operation.operations.

The proliferation of near-perfect counterfeit products.products may erode consumer confidence.

While the company employs a team of authentication experts to ensure transactional confidence in both the buying and selling process,processes, the continued proliferation of near-perfect counterfeit goods may erode consumer confidence in the luxury recommerce market, which maycould have a material adverse effect on our financial condition and results of operation.operations.

RiskRisks Factors RelatingRelated to Corporate Structure and Governance

N10TR, LLC (“N10TR”) is the Company’s largest shareholder, owning 12,814,727 shares of Common Stock, representing 49.3% of the total outstanding shares of Common Stock, as of December 31, 2024.2025. Eduro Holdings, LLC (“Eduro”) owns 6,365,460 shares of Common Stock, representing 24.5% of the total outstanding shares of Common Stock, as of December 31, 2024.2025. Both N10TR and Eduro are under the common control of John R. Loftus, the Company’s CEO, President, and Chairman of the Board. Consequently, Mr. Loftus is in a position to significantly influence any matters that are brought to a vote of the shareholders, including, but not limited to, the election of members of the Company’s board and any action requiring the approval of shareholders, including any amendments to the governing documents, mergersmergers, or sales of all or substantially all of the CompanyCompany’s assets. This concentration of ownership may also may delay, defer, or even prevent a change in control of the Company and may make somecertain transactions more difficult or impossible without the support of Mr. Loftus. These transactions might include proxy contests, tender offers, mergers, or other purchases of Common Stock that could allow shareholders to realize a premium over the then-prevailing market price for shares of Common Stock.price.

Because we qualify as a "“controlled company"” under the corporate governance rules for New York Stock Exchange (“NYSE”) American-listed companies, we are not required to have a majority of our Board of Directors (the “Board”) be independent, nor are we required to have a compensation committee or an independent nominating function. In the future, we could elect not to have a majority of our Board be independentindependent, or not to have a compensation committee or an independent nominating function. Accordingly, should the interests of our controlling stockholder differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for NYSE American-listedAmerican and NYSE Texas-listed companies. Our status as a controlled company could make our Common Stock less attractive to some investors or otherwise harm our stock price.

The Company is,is and will be,be subject to new and existing corporate-governancecorporate andgovernance, internal-controlinternal demandscontrol, and reporting requirements.

Governments, including agencies at the national,federal, state, and local levels, may seek to enforce or impose new laws, regulatory restrictions, or licensing requirements. They may also interpret or enforce existing requirements in new ways that could restrict the Company’s ability to continue its current methods of operation or to expand operations, impose significant additional compliance costs, and couldmay have a material adverse effect on the Company’s financial condition and results of operations. In 2014, the Company agreed to a series of corporate governance reforms with the SEC. Additionally, the Company faces corporate-governance requirements under the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the ”“Dodd-Frank Act”), as well as new rules and regulations subsequently adopted by the SEC, the Public Company Accounting Oversight BoardBoard, and the NYSE American (theand “Exchange”).NYSE Texas. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. If the Company does not comply with the corporate governance reforms, the Company could face enforcement actions by the SEC or other governmental or regulatory bodies, as well as shareholder lawsuits, all of which could have a material adverse effect on our financial positioncondition and results of operations.

RiskRisks Factors RelatingRelated to Compliance

The Company is subject to the provisions of the USA PATRIOT Act, which requires certain businesses to maintain an AML compliance program. The Company’s AML compliance program is isolated to our retail buying program within our consumer segment, as opposed to the Company as a whole. We do not buy from international sourcessources, nor are our sales subject to AML compliance. Failure to comply with applicable AML regulations could result in regulatory enforcement actions, fines, reputational harm, or other adverse consequences impactingthat could impact our financial positioncondition and results of operations.

In August 2012, the SEC, pursuant to the Dodd-Frank Act, issued final rules that require annual disclosure and reporting on the source and use of certain minerals, including gold, from the Democratic Republic of Congo and adjoining countries. The gold supply chain is complex, and while management believes that the rules only cover less than 1% of annual worldwide gold production based upon current estimates, the final rules require certain jewelry retailers and manufacturers that file with the SEC to exercise reasonable due diligence in determining the country of origin of the statutorily designated minerals that are used in kinds of products the Company sells. Jewelry retailers or manufacturers whothat meet certain criteria were required to file certain reports with the SEC beginning in May 2014, disclosing their due diligence measures related to the country of origin, the results of those activities, and related determinations. In conjunction with legal counsel, we have determined that we do not have sufficient control over the manufacturing of any of our products to be included in the group of companies required to provide conflict-mineralsconflict-mineral disclosure and reporting.

If the Company’s sourcing processes should change, or if thereit is a determinationdetermined that the Company’s current practices should be covered by the conflict-minerals reporting and disclosure guidelines, theresignificant additional measures would be a need to implement significant additional measuresrequired to comply with these rules. Management cannot be certain of the costs that might be associated with such regulatory compliance. The final rules also cover tungsten, which is containedpresent in a small portionnumber of items that we sell. Other minerals, such as diamonds, could be added to those currently covered by these rules. The Company may incur reputational risks with customers and other shareholders if, due to the complexity of the global supply chain, management is unable to sufficiently verify the origin of the relevant metals. Also, if the responses offrom parts of the Company’s supply chain to verification requests were adverse, it could harm our ability to obtain merchandise and add toincrease compliance costs. In addition, Envela partners with refiners for a portion of its sales. These refiners are subject to increasingly stringent governmental regulationregulations ingoverning their refining operations, and aany change or increase in such regulations in the United StatesU.S. or abroad could have a material adverse effect on our financial positioncondition and results of operations.

Certain aspects of our business, namely our electronics recycling business within our consumercommercial segmentsegment, are subject to greater regulation and compliance at federal, state, and local levels.environmental regulations and compliance requirements. Increased requirements for licensing and permitting may require changes in our business service delivery,delivery models, capital expenditures, and compliance programs. While we acknowledge our commitment to our communities and stewardship of our properties, operating processes, and outcomes, increased regulation and compliance could have a material adverse effect on our financial positioncondition and results of operations.

The methodologies and standards for tracking and reporting on ESG matters are relatively new, haveremain not been standardized,unstandardized, and continue to evolve. As a result, our ESG-related disclosures may not necessarily be calculated in the same manner as, or be comparable toto, similarly titled measures presented by us in other contexts, or by other companiescompanies, or by third-party estimates. If our ESG-related disclosures areare, or are perceived by government authorities, investors, or other stakeholders to bebe, inadequate, inaccurate, or non-compliant with applicable standards or regulations, or if we discover material inaccuracies therein, our reputation could be negatively impacted, and we could be exposed to litigation and other regulatory actions.

The Company is regularly monitoringmonitors developments pertaining to the judicial review, to ensure it has adequately assessed its strategy and capital requirements related to compliance.

U.S. governmental regulation and environmental, healthhealth, and safety requirements may adversely affect our business.

Our operations are subject to federal, statestate, and local environmental, healthhealth, and safety laws applicable to the reclamation of commodities from electronic waste. We are required to obtain environmental permits and approvals for some of our operations and must expendspend time and resources to ensure compliance with those permits and approvals.compliance. As noted above, we cannot guarantee the timely receipt of required permits or renewalstheir ofrenewals, or that such permitsprocesses inwill a timely manner orproceed without unforeseen limitations on our operations. We are also subject to environmental, transportation, and health and safety laws that govern the management of electronic waste and the reclamation of usefulusable goods therefrom.from it. Such regulations tend to become more restrictive over time, and it is possible that new regulations willmay be passedenacted that require material changes to our operations or could otherwise result in a material adverse effect on our financial position.condition and results of operations.

The Company’s websites or portals may be vulnerable to security breaches and similar threats, which could result in liability for damages and harm to the Company’s reputation.

Despite the implementation of network security measures, Company websites areor portals may be vulnerable to computer viruses, break-ins, and similarother disruptive problemsissues caused by internet users. These occurrences could result in liability for damages,damages and could damage the Company’s reputation could suffer.reputation. Circumvention of security measures may result in the misappropriation of business partner and/or customer information or other confidential information, or attacks may render our websites inoperable or compromised with false information. Any such security breach could lead to interruptions, delays, and cessation of service to customers or business partners and could have a material adverse effect on our reputation, financial position,condition, and results of operations.

A failure of theour information systems could prevent the Company from effectively managing and controlling operations and serving our business partners and customers.

The Company relies on information systems to manage and operate our businesses. These include our communications systems, website,websites, portals, point-of-sale application, enterprise resource planning system, and other supportingunderlying operating systems. Any disruption in the availability of our information systems could adversely affect the Company’s ability to service business partners and customers and could have a material adverse effect on our reputation, financial position,condition, and results of operations.

The following discussion of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information included in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimatesestimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the section titled “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

This section includes amanagement’s discussion and analysis provides comparisons of ourmaterial operationschanges in the consolidated financial statements for the years ended December 31, 2024,2025, and December 31, 2023.2024. The following discussion and analysis providealso provides information that management believes is relevant to anthe assessment and understanding of our financial condition and results of operations.operation, financial condition, liquidity, and capital resources.

Our discussion and analysis of our financial condition and results of operations isare based on our financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).GAAP. The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated,generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, and the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparentdeterminable from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditionsconditions, and any such differences may be material. References to fiscal years herein are denoted with the word “Fiscal” and the associated year.

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

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

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

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

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

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

Changes in Disclosure of Results of Operations

WithinIn this management discussion and analysis, we use supplemental measures of our performance,financial which areperformance derived from our consolidated financial information,information but whichthat are not presented in our consolidated financial statements prepared in accordance with U.S. GAAP. WeWhen believeevaluated in conjunction with U.S. GAAP financial measures, the Company believes that providing these non-U.S. GAAP financial measures adds aadd meaningful presentationinsight into our results of ouroperations, operatingfinancial condition, liquidity, and financial performance. See the reconciliation of net incomeability to adjustedmeet earningsfinancial before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) and Net Cash, in Non-U.S. GAAP Financial Measures below.obligations.

Adjusted EBITDA and Adjusted EBITDAR

Adjusted EBITDA is defined as the sum of (i) net income (loss) of the Company, adjusted for additions (deductions) of (ii) interest expense, (iii) other (income) expense, (iv) income tax expense (benefit), and (v) depreciation and amortization. Management considers Adjusted EBITDA isto be a key performancefinancial measure that management uses to assess our overall operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our strategies and for planning purposes.

This Quarterly Report on Form 10-Q for the quarter ended MarchJune 31,30, 2026 (this “Form 10-Q”), including but not limited to: (i) the section of this Form 10-Q entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” (ii) information concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items; and (iii) our strategies, plans and objectives, together with other statements that are not historical facts, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “should,” “could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “goal,” “seek,” “ensure,” “potential,” “opportunity,” “intend,” “predict,” “committed,” “likely,” “continue,” “strive,” “aim,” “scheduled,” “focused on,” “long-term,” “future,” “over time,” “ongoing,” “uncertain,” “moving forward,” or “subject to.” We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information provided herein are forward-looking and based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our ability to control, and, in many cases, we cannot predict all of the risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking statements, and readers should not regard those statements as a representation by us or any other person that the results expressed in the statements will be achieved. Important risk factors that could cause results or events to differ from current expectations are described under the section entitled “Risk Factors” in the Company’s 20252025Annual Annual ReportReport, and any material updates are described under the section of this Form 10-Q entitled “Risk Factors” and elsewhere in this Form 10-Q. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development, and results of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date thereon, including, without limitation, changes in our business strategy or planned capital expenditures, or store growth plans, or to reflect the occurrence of unanticipated events.

This section includes a discussion of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025. The following discussion and analysis provide information that management believes is relevant to assessing and understanding our financial condition, liquidity, and results of operations. The discussion should be read in conjunction with the Company’s 2025 Annual Report, the unaudited condensed consolidated financial statements, and the related Notes thereto included in Part I, Item 1 of this report.

Precious metals prices reached record levels in late January 2026 and declined meaningfully during the second quarter of Fiscal 2026, while remaining above average levels for the comparable prior-year period. Sustained declines in precious metal prices may reduce customer selling activity and affect inbound inventory sourcing, while elevated prices may subdue retail jewelry demand. While the current market for safe-haven metals has generally led to stronger premiums within our consumer segment, especially for gold and silver, demand for these metals has created industry-wide backlogs and slowed payments from refiners, which the Company has experienced. The impact on working capital is having to pay more to procure inventory, and the delayed conversion of accounts receivable from refiners. While the length of the current cycle and the steps domestic refiners will take to address processing capacity are indeterminate, the Company is closely monitoring its inbound buying practices, cash, inventory levels, and its accounts receivable exposure with its refining customers. The Company believes it has sufficient liquidity to maintain its current buying practices, yet it can adjust its buying programs to reduce exposure should these conditions materially affect its conversionability ofto convert accounts receivable. During the six months ended June 30, 2026, the Company collected the outstanding accounts receivable from a refining customer as of December 31, 2025, reducing the working capital impact of these conditions as of the date of this report.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. We have evaluated the provisions of the new law and its potential effects on our effective tax rate, results of operations, and financial condition. OBBBA allows businesses to immediately deduct the full cost of qualifying assets in the year they are placed in service, rather than spreading the deduction over several years, and is effective for property acquired and placed in service after January 19, 2025. OBBBA also requires businesses to recognize the effects of tax law changes in the period of enactment, such as remeasuring estimated U.S. deferred tax assets and liabilities. The Company intends to utilize bonus depreciation, effectively reducing taxable income in the respective tax period and the cash deployed to settle such obligations. There was no material impact on the effective tax rate, financial condition, results of operations, or cash flows during thethree quarterand six months ended MarchJune 31,30, 2026. In future fiscal periods, the impact of OBBBA is contingent on the continued election of bonus depreciation and the amount of qualifying assets acquired by the Company.

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

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

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

The following table depicts our disaggregated condensed consolidated statements of income for the three months ended MarchJune 31,30, 2026 and 2025:

The individual segments reported the following for the three months ended MarchJune 31,30, 2026 and 2025:

Sales increased by $50,125,061,$1,897,808, or 103.9%,3.5%, during the three months ended MarchJune 31,30, 2026, to $98,380,890,$56,774,641, as compared to $48,255,829$54,876,833 during the same period in Fiscal 2025.

Sales in the consumer segment increased by $45,022,918,$1,555,371, or 122.4%,3.6%, during the three months ended MarchJune 31,30, 2026, to $81,793,522,$44,729,129, as compared to $36,770,604$43,173,758 during the same period in Fiscal 2025. The change was primarily attributed to strongthe performance across bothwithin our retailwholesale storesvertical. Sales in the first quarter of Fiscal 2026 benefited from exceptionally elevated precious metals prices, which drove unusually high customer selling activity and wholesale verticals,volumes. supported by upward movements inAs gold and silver prices compareddeclined withduring the second quarter of Fiscal 2026 from their late-January peaks, customer selling activity moderated toward more typical levels. Our results were supported by stronger buying volumes at our retail stores, and we experienced more favorable pricing than in the same period in Fiscal 2025.

Cost of goods sold increased by $41,472,669,$907,899, or 114.3%,2.1%, during the three months ended MarchJune 31,30, 2026, to $77,760,474,$43,396,809, as compared to $36,287,805$42,488,910 during the same period in Fiscal 2025.

Cost of goods sold in the consumer segment increased by $39,533,188,$689,081, or 121.4%,1.8%, during the three months ended MarchJune 31,30, 2026, to $72,092,889,$39,204,853, as compared to $32,559,701$38,515,772 during the same period in Fiscal 2025. The change was primarily attributed to higher sales volumes acrosswithin our retail stores and wholesale verticals,vertical, which werewas also impacted by the upward movement in gold and silver prices.prices over the same period in Fiscal 2025.

Cost of goods sold as a percentage of sales in the commercialconsumer segment increasedwas by $1,939,481, or 52.0%,87.6% during the three months ended MarchJune 31,30, 2026, to $5,667,585, as compared to $3,728,10489.2% during the same period in Fiscal 2025. The change was primarily theattributed aforementionedto impacta offavorable our ITAD revenue-share settlements and parityshift in performanceproduct across our other commercial segment verticals.mix.

DepreciationCost andof amortizationgoods expensesold in the consumercommercial segment increased by $34,468,$218,818, or 19.1%,5.5%, during the three months ended MarchJune 31,30, 2026, to $215,100,$4,191,956, as compared to $180,632$3,973,138 during the same period in Fiscal 2025. The change was primarily attributed to the depreciationaforementioned impact of assetsour ITAD and trade-in verticals, along with costs associated with aharvested newcomponents storewithin thatour cameelectronic onlinewaste in the second quarter of Fiscal 2025, which was not present in the first quarter of Fiscal 2025 results.vertical.

DepreciationCost andof amortizationgoods expensesold as a percentage of sales in the commercial segment increasedwas by $6,154, or 2.3%,34.8% during the three months ended MarchJune 31,30, 2026, to $270,863, as compared to $264,70933.9% during the same period in Fiscal 2025. ThereThe change was noprimarily materialattributed impactto product mix, in which we incurred lower margins related to certain personal technology assets within our asset disposition verticals and from assetsharvested capitalizedcomponents orwithin reachingour maturityelectronic inwaste each comparative period, and as such, no discussion point.vertical.

OtherGross incomemargin decreasedincreased by $35,261,$989,909, or 17.1%,8.0%, during the three months ended MarchJune 31,30, 2026, to $170,344,$13,377,832, as compared to $205,605$12,387,923 during the same period in Fiscal 2025. The net impact of the aforementioned increase in sales of $1,897,808 and an increase in cost of goods sold of $907,899 resulted in the $989,909 increase in gross margin.

Other income in the consumer segment increased by $92,332,$8,306, or 10,875.4%,5.3%, during the three months ended MarchJune 31,30, 2026, to $93,181,$164,464, as compared to $849$156,158 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the quarter,second there was greater utilizationquarter of cashFiscal for2026, lower working capital,capital withcash ourrequirements and higher excess cash balances resulted in increased consolidated cash returns despite lower earned interest raterates. alsoIn beingallocation, atthis acompared lower rate, which contributedfavorably to the unfavorablesame changeperiod atin theFiscal consolidated2025, level.which Theincluded impactan ofemployee dividendretention and interest income is referenced below.credit.

Dividend income comprised $37,048$53,762 and $0$8,883 of other income during the three months ended MarchJune 31,30, 2026 and 2025, respectively. Interest income comprised $55,740$110,691 and $0$51,038 of other income during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Other income in the commercial segment decreased by $127,593,$78,194, or 62.3%,32.8%, during the three months ended MarchJune 31,30, 2026, to $77,163,$159,899, as compared to $204,756$238,093 during the same period in Fiscal 2025. The change was primarily attributed to the proportional share of dividend and interest income. In the third quarter of Fiscal 2025, the Company began aggregating excess cash at the corporate level. Excess cash balances are now aggregated at the corporate level to optimize earnings, rather than being held at the segment level. During the quarter,second there was greater utilizationquarter of cashFiscal for2026, lower working capital,capital cash usage and ourhigher excess cash balances increased cash returns despite lower earned interest raterates. However, the allocated impact was alsounfavorable lower, which contributedcompared to the unfavorablesame changeperiod in Fiscal 2025, when excess cash balances were aggregated at the consolidatedsegment level. The impact of dividend and interest income is referenced below.

Dividend income comprised $43,149$60,827 and $54,864 during the three months ended March 31, 2026 and 2025, respectively. Interest income comprised $21,084 and $144,331$74,702 of other income during the three months ended MarchJune 31,30, 2026 and 2025, respectively. Interest income comprised $90,762 and $130,427 of other income during the three months ended June 30, 2026 and 2025, respectively.

Interest expense decreased by $27,549,$27,581, or 25.9%,26.0%, during the three months ended MarchJune 31,30, 2026, to $78,772,$78,647, as compared to $106,321$106,228 during the same period in Fiscal 2025.

Interest expense in the consumer segment decreased by $15,662,$15,666, or 29.0%, during the three months ended MarchJune 31,30, 2026, to $38,385,$38,327, as compared to $54,047$53,993 during the same period in Fiscal 2025. The change was attributed to debt amortization.amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025 and from segment debt that matured in the third quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

Interest expense in the commercial segment decreased by $11,887,$11,915, or 22.7%,22.8%, during the three months ended MarchJune 31,30, 2026, to $40,387,$40,320, as compared to $52,274$52,235 during the same period in Fiscal 2025. The change was attributed to debt amortization.amortization and allocated interest expense from corporate debt that matured in the fourth quarter of Fiscal 2025, resulting in less interest expense in the second quarter of Fiscal 2026.

Income Tax (Expense) Benefit

Income tax expense increased by $1,738,142,$382,917, or 240.0%,48.4%, during the three months ended MarchJune 31,30, 2026, to $2,462,500,$1,173,986, as compared to $724,358$791,069 during the same period in Fiscal 2025. TheCurrently, the Company has a deferred tax liability reflecting a future obligation to pay taxes. The Company has a federal tax rate of approximately 21.0%, in addition to other state and local taxes, on net income. The effective income tax rate was 21.8%22.0% and 22.5%22.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the result of state taxes and non-deductible expenses, as was the Company’s case for the Company for the decrease for the three months ended MarchJune 31,30, 2026,2026 compared to the three months ended March 31,and 2025.

Net Income (Loss)

Net income increased by $6,346,386,$1,421,787, or 254.5%,51.7%, during the three months ended MarchJune 31,30, 2026, to $8,839,733,$4,174,186, as compared to $2,493,347$2,752,399 during the same period in Fiscal 2025. Refer to the aforementioned attributes discussed within the Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025 for further details.