Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 22, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Envela Corp | ||
Entity Central Index Key | 0000701719 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 45,132,000 | ||
Entity Common Stock, Shares Outstanding | 26,924,631 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 001-11048 |
Consolidated Income Statements
Consolidated Income Statements - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | ||
Sales | $ 113,922,015 | $ 82,024,497 |
Cost of goods sold | 90,853,052 | 65,768,655 |
Gross margin | 23,068,963 | 16,255,842 |
Expenses: | ||
Selling, General & Administrative Expenses | 15,553,274 | 12,494,510 |
Depreciation and Amortization | 728,626 | 520,298 |
Total cost of revenue | 16,281,900 | 13,014,808 |
Operating income | 6,787,063 | 3,241,034 |
Other income, net | 306,997 | 49,756 |
Interest expense | (620,499) | (414,961) |
Income before income taxes | 6,473,561 | 2,875,829 |
Income tax expense | 89,618 | 95,116 |
Income from operations | 6,383,943 | 2,780,713 |
Net income | $ 6,383,943 | $ 2,780,713 |
Earnings per share: | ||
Basic | $ 0.24 | $ .10 |
Diluted | $ 0.24 | $ .10 |
Weighted average shares outstanding: | ||
Basic | 26,924,631 | 26,924,381 |
Diluted | 26,939,631 | 26,939,631 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 9,218,036 | $ 4,510,660 |
Trade receivables, net of allowances | 2,846,619 | 2,997,743 |
Inventories | 10,006,897 | 9,509,454 |
Current right-of-use assets from operating leases | 1,157,077 | 1,160,658 |
Prepaid expenses | 281,719 | 172,834 |
Total current assets | 23,510,348 | 18,351,349 |
Note receivable | 2,100,000 | 0 |
Property and equipment, net | 6,888,601 | 1,351,039 |
Goodwill | 1,367,109 | 1,367,109 |
Intangible assets, net | 2,992,473 | 3,394,073 |
Long-term operating lease right-of-use assets, less current portion | 3,522,923 | 2,335,040 |
Other long-term assets | 197,638 | 204,784 |
Total assets | 40,579,092 | 27,003,394 |
Current liabilities: | ||
Accounts payable-Trade | 1,510,697 | 1,467,845 |
Notes payable, related party | 307,032 | 1,084,072 |
Notes payable | 1,813,425 | 0 |
Current operating lease liabilities | 1,148,309 | 1,175,109 |
Accrued expenses | 844,324 | 916,509 |
Customer deposits and other liabilities | 428,976 | 165,404 |
Total current liabilities | 6,052,763 | 4,808,939 |
Notes payable, related party, less current portion | 9,052,810 | 8,554,980 |
Notes payable, less current portion | 4,240,658 | 0 |
Long-term operating lease liabilities, less current portion | 3,654,419 | 2,445,301 |
Total liabilities | 23,000,650 | 15,809,220 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,631 shares and 26,924,381 shares issued and outstanding as of December 31, 2019 and 2020 respectively | 269,246 | 269,244 |
Additional paid-in capital | 40,173,000 | 40,172,677 |
Accumulated deficit | (22,863,804) | (29,247,747) |
Total stockholders' equity | 17,578,442 | 11,194,174 |
Total liabilities and stockholders' equity | $ 40,579,092 | $ 27,003,394 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
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 | 26,924,381 |
Common stock, shares outstanding | 26,924,631 | 26,924,381 |
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 Cash Flow Statemen
Consolidated Cash Flow Statements - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operations | ||
Net income | $ 6,383,943 | $ 2,780,713 |
Adjustments to reconcile net income to net cash from (used in) operations: | ||
Depreciation, amortization, and other | 728,626 | 520,298 |
Stock-based compensation to employees, officers and directors | 325 | 0 |
Changes in operating assets and liabilities: | ||
Trade receivables | 151,124 | (1,877,783) |
Inventories | (497,444) | 1,464,843 |
Prepaid expenses | (108,884) | (3,375) |
Other assets | 7,145 | (47,374) |
Accounts payable and accrued expenses | (29,332) | (492,952) |
Accounts payable, related party | 0 | (3,074,021) |
Operating leases | (1,984) | 124,713 |
Customer deposits and other liabilities | 263,572 | 62,110 |
Net cash from (used in) operations | 6,897,091 | (542,828) |
Investing | ||
Investment in note receivable | (2,100,000) | 0 |
Purchase of property and equipment | (5,864,588) | (102,989) |
Purchase of intangible assets | 0 | (60,000) |
Acquisition of Echo Entities, net of cash acquired | 0 | (5,876,516) |
Net cash used in investing | (7,964,588) | (6,039,505) |
Financing | ||
Short-term financing, line of credit | 0 | 150,000 |
Financing for the acquisition of the Echo Entities | 0 | 6,925,979 |
Financing to pay off accounts payable, related party | 0 | 3,074,021 |
Payments on short-term financing, line of credit | 0 | (150,000) |
Payments on notes payable, related party | (279,210) | (360,948) |
Payments on notes payable | (26,117) | 0 |
Proceeds from PPP loan | 1,668,200 | 0 |
Proceeds from notes payable for retail and office buildings | 4,412,000 | 0 |
Net cash from (used in) financing | 5,774,873 | 9,639,052 |
Net change in cash and cash equivalents | 4,707,376 | 3,056,719 |
Cash and cash equivalents, beginning of period | 4,510,660 | 1,453,941 |
Cash and cash equivalents, end of period | 9,218,036 | 4,510,660 |
Cash paid during the period for: | ||
Interest | 620,499 | 390,864 |
Income taxes | $ 59,025 | $ 43,578 |
Consolidated Stockholders' Equi
Consolidated Stockholders' Equity Statements - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 26,924,381 | |||
Beginning balance at Dec. 31, 2018 | $ 269,244 | $ 40,172,677 | $ (29,247,747) | $ 11,194,174 |
Net nncome | 2,780,713 | 2,780,713 | ||
Ending balance, shares at Dec. 31, 2019 | 26,924,381 | |||
Ending balance at Dec. 31, 2019 | $ 269,244 | 40,172,677 | (29,247,747) | 11,194,174 |
Stock issued to employees, officers and directors, shares | 250 | |||
Stock issued to employees, officers and directors | $ 2 | 323 | 325 | |
Net nncome | 6,383,943 | 6,383,943 | ||
Ending balance, shares at Dec. 31, 2020 | 26,924,631 | |||
Ending balance at Dec. 31, 2020 | $ 269,246 | $ 40,173,000 | $ (22,863,804) | $ 17,578,442 |
Accounting Policies and Nature
Accounting Policies and Nature of Operations | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
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 recommerce sector. These activities include being one of the nation's premier authenticated recommerce 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 business segments. Through DGSE, we operate Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands. Through ECHG we operate Echo Environmental, ITAD USA and Teladvance. Envela is a Nevada corporation, headquartered in Irving, Texas. DGSE primarily buys and resells or recycles luxury hard assets like jewelry, diamonds, gemstones, fine watches, rare coins and related collectibles, precious-metal bullion products, gold, silver and other precious-metals. DGSE operates six jewelry stores at both the retail and wholesale levels, throughout the United States via its facilities in Texas and South Carolina. The Company also maintains a presence in the retail market through our web-sites, www.dgse.com and www.cgdeinc.com. ECHG buys electronic components from businesses and other organizations, such as school districts, for end-of-life recycling or to add life to electronic devices by data destruction and refurbishment for reuse. For end-of–life recycling, we sell to downstream recycling companies who further process our material for end users. The electronic devices saved for reuse are cleaned of prior data, refurbished and sold to businesses or organizations wanting to extend the remaining life and value of recycled electronics. Our customers are companies and organizations that are based domestically and internationally. For additional business operations for both DGSE and ECHG, see “Item 1. Business—Operating Segments” in this annual report on Form 10-K. 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. The Company operates the business as two operating and reportable segments under a variety of banners. DGSE includes Charleston Gold & Diamond Exchange and Dallas Gold & Silver Exchange. ECHG includes Echo, ITAD USA and Teladvance. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations. 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 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. The Company considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. The Company 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 May 17, 2022, is pledged as collateral against our $3,500,000 short-term line of credit with Texas Bank and Trust. 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 2020 and Fiscal 2019. 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, 2020 or 2019. We evaluate goodwill 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 note 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 $240,770 and $392,588 for Fiscal 2020 and Fiscal 2019, respectively. ECHG’s advertising costs are expensed as incurred and amounted to $16,311 and $4,809 For Fiscal 2020 and for the period beginning May 20, 2019 through December 31, 2019, 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 to not 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 2020 and 2019, 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 at December 31, 2020 and 2019. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We will 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 $2,528,215 at December 31, 2020 and $2,383,061 as of December 31, 2019. We use a different approach for allowance for doubtful accounts because customers are generally larger and payable terms are farther out. Once we determine that a balance is uncollectable we reserve that balance but still pursue payment. On the rare occasion we determine a balance is uncollectable we will write off the balance against the reserve. As of December 31, 2020 and 2019, we consider the full accounts receivable balance to be fully collectable and feel that a reserve of $0 to be appropriate. As of December 31, 2020 and 2019, there was no allowance for doubtful accounts. A summary of the Allowance for Doubtful Accounts is presented below: December 31, 2020 2019 Beginning Balance $ - $ - Bad debt expense (+) 37,798 - Receivables written off (-) (37,798 ) - Ending Balance $ - $ - Note Receivable ECHG, LLC, entered into an agreement with CExchange, LLC on February 15, 2020, to lend $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements to acquire all of CExchange’s equity interests. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is the leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. This fits well with ECHG’s core business of refurbishing and reusing cell telephones. There is no assurance that the Company will exercise its warrant or call option. Short-Term Financing Envela established a short-term line of credit with Texas Bank and Trust to cover emergency cash needs for $1,000,000 on May 17, 2019. The line of credit was renewed for an additional two years and increased to $3,500,000 on May 17 2020 and expires May 16, 2022. It has a varying interest rate, per annum, based on the Prime Rate. On December 31, 2020, the interest rate was 5% and the balance due on this short-term line of credit was $0. Income Taxes Income taxes are accounted for under the asset and liability method prescribed by Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes. 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 ASC 740. 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. ASC 740 applies 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, 2020 and 2019. 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 2020 and Fiscal 2019, the Company did not incur any federal income tax interest or penalties. Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers 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, 2020 and 2019: For the Years Ended December 31, 2020 December 31, 2019 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 79,790,419 9,215,494 11.5 % $ 60,088,405 $ 7,760,365 12.9 % Recycled 5,870,972 1,154,376 19.7 % 7,431,749 1,157,459 15.6 % Subtotal 85,661,391 10,369,870 12.1 % 67,520,154 8,917,824 13.2 % ECHG Resale 19,395,834 9,504,607 49.0 % 8,722,281 4,692,114 53.8 % Recycled 8,864,790 3,194,486 36.0 % 5,782,062 2,645,904 45.8 % Subtotal 28,260,624 12,699,093 44.9 % 14,504,343 7,338,018 50.6 % $ 113,922,015 $ 23,068,963 20.2 % $ 82,024,497 $ 16,255,842 19.8 % 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. We also recognize revenue 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. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold to a Dallas refiner, who was a related party until May 20, 2019. Since this refiner is located in the Dallas area, we deliver the metal to the refiner. The metal is assayed, price is determined from the assay and payment is made usually within two days. Revenue is recognized from the sale once payment is received. We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days. In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When we exchange merchandise for similar merchandise and there is no monetary component to the exchange, we do not recognize any revenue. 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 we exchange merchandise for similar merchandise and there is a monetary component to the exchange, we recognize revenue to the extent of the monetary assets received and 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 financing company. We recognize the revenue of the sale upon the promise of the financing company to pay. We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency 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. We have established an allowance for estimated returns related to Fiscal 2020 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, 2020 and 2019, our allowance for returns remained the same at approximately $28,000 for both years. 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. Once the price is established and the terms are agreed to and the product is shipped, 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. Ninety percent (90%) of our refining revenue is generated from one refining partner with an international refining facility. This refining partner pays us sixty percent (60%) of an Invoice within five working days upon the receipt of the Ocean Bill of Lading issued by the Ocean Carrier. Our 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 we expect 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 remaining forty percent (40%) due from the original contract. ● Hard drive sales by ECHG are limited to customers who are required to prepay shipments. Once the commodity price is established and agreed upon by both parties, customers send payment in advance. The Company releases the shipment on the same day when payment receipt is confirmed and revenue is recognized on day of shipment. If payment is received on the last day of the month and shipment goes out the following day the payment received is deferred revenue and recognized the following month when the shipment is made. ● ECHG also provides recycling services according to a Scope of Work. 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 our ECHG facility or we can design and perform the recycling service at the client’s facility. The Scope of Work will determine the charges and whether the service will be completed at ECHG or at the client’s facility. Payment terms are also dictated in the Scope of Work. Shipping and Handling Costs Shipping and handling costs amounted to $1,025,215 and $803,015, for 2020 and 2019, respectively. We have 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 our 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 2020 and Fiscal 2019 amounted to $325 and $0 respectively. The following table represents our total compensation cost related to non-vested awards not yet recognized at year end December 31, 2020 and December 31, 2019: Date of grant Employee Price of stock at grant date Number of shares granted unvested December 31, 2020 Unrecognized expense at December 31, 2020 Number of shares granted unvested December 31, 2019 Unrecognized expense at December 31, 2019 January 23, 2014 Robert Burnside $ 2.18 0 - 250 $ 545.00 Total cost unrecognized - $ 545.00 No stock awards remained unexercised as of December 31, 2020 and only 250 unexercised stock awards remained unexercised as of December 31, 2019. 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 our 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 January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Upon adoption, we recognized right-of-use assets of approximately $2.0 million, with corresponding lease liabilities of approximately $2.0 million on the consolidated balance sheets. The right-of-use assets include adjustments for deferred rent liabilities. The adoption did not impact our beginning retained earnings, or our prior year consolidated statements of income and statements of cash flows. 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 (CECL) 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 model for accounts receivable, loans and other financial instruments. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align our credit loss methodology with the new standard. The company is evaluating the financial statement implications of ASU 2016-13. |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | The Company maintains cash balances in financial institutions in excess of federally insured limits. A significant amount of DGSE’s revenue and expenses stem from sales to and purchases from one Dallas refining partner, which relationship constitutes Envela’s single largest source of revenues and expenses. In addition, |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: December 31, December 31, 2020 2019 DGSE Resale $ 8,971,815 $ 8,213,551 Recycle 191,677 401,468 Subtotal 9,163,492 8,615,019 ECHG Resale 557,959 351,958 Recycle 285,446 542,477 Subtotal 843,405 894,435 $ 10,006,897 $ 9,509,454 |
Note Receivable
Note Receivable | 12 Months Ended |
Dec. 31, 2020 | |
Financing Receivable, after Allowance for Credit Loss [Abstract] | |
Note Receivable | ECHG, LLC, which is wholly owned by the Company, entered into an agreement with CExchange, LLC (“CExchange”) on February 15, 2020, pursuant to which it agreed to loan CExchange $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements through which ECHG, LLC may acquire all of CExchange’s equity interests upon the occurrence of certain events and on certain conditions. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is a leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. These services and programs fit well with ECHG’s core business of refurbishing and reusing consumer electronics and IT equipment. Starting with the quarter ending June 30, 2020, CExchange helped DGSE facilitate their bullion on-line sales. There is no assurance that the Company will exercise its warrant or call option to acquire all of CExchange’s equity interests. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consist of the following: December 31, December 31, 2020 2019 DGSE Land $ 720,786 $ 55,000 Buildings and improvements 1,317,906 - Leasehold improvements 1,435,742 1,561,649 Machinery and equipment 1,056,315 1,039,013 Furniture and fixtures 504,430 453,699 Vehicles 22,859 - 5,058,038 3,109,361 Less: accumulated depreciation (2,054,294 ) (1,904,948 ) Sub-Total 3,003,744 1,204,413 ECHG Leasehold improvements 81,149 81,149 Machinery and equipment 220,417 27,497 Furniture and fixtures 93,827 93,827 395,393 202,473 Less: accumulated depreciation (71,058 ) (55,847 ) Sub-Total 324,335 146,626 Envela Land 1,106,664 - Buildings and improvements 2,456,324 - Machinery and equipment 5,407 - 3,568,395 - Less: accumulated depreciation (7,873 ) - Sub-Total 3,560,522 - $ 6,888,601 $ 1,351,039 Depreciation expense was $327,026 and $264,021 for Fiscal 2020 and Fiscal 2019, respectively. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisition | On May 20, 2019, ECHG, a wholly owned subsidiary of the Company, entered into an asset purchase agreement with each of Echo Environmental, LLC and its wholly owned subsidiary ITAD USA, LLC (collectively, the “Echo Legacy Entities”), pursuant to which the Echo Legacy Entities agreed to sell all of their assets and rights and interests thereto (the “Acquired Assets”) for $6,925,979 (the “Echo Transaction”). The Echo Legacy Entities were wholly owned subsidiaries of a former Related Party. John R. Loftus is the Company’s CEO, President and Chairman and owned approximately one-third of the equity interests of the former Related Party prior to the Echo Transaction. The Company also paid a closing fee of $85,756 that was not part of the purchase price allocation. The fee is included in selling, general and administrative expenses. On the same day, Mr. Loftus became the largest beneficial owner of the Company’s stock by purchasing all of the Company’s stock beneficially owned by the former Related Party. As part of the transaction of acquiring the stock from the former Related Party, Mr. Loftus no longer owns an equity interest in that entity. As an interested party, Mr. Loftus was familiar with the operations of the Echo Legacy Entities. In connection with the Echo Transaction, on May 20, 2019, ECHG executed and delivered to Mr. Loftus, a promissory note to which ECHG borrowed from Mr. Loftus $6,925,979, the proceeds of which were used to purchase the Acquired Assets. As part of the Echo Transaction, goodwill was realized of $1,367,109, which is the purchase price less the fair value of the net assets purchased, as shown in the purchase price allocation in the following table. Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year or earlier if events or circumstances indicate the carrying value may be impaired. The Company’s goodwill is related to ECHG only and not the whole Company. The Company has evaluated goodwill based on cash flows for the ECHG segment. For federal income tax purposes, goodwill is amortized and deductible over fifteen years. The purchase price was allocated to the fair value of assets and liabilities acquired as of May 20, 2019: Description Amount Assets Cash $ 1,049,462 Account receivables 1,025,615 Inventories 1,209,203 Prepaids 88,367 Fixed assets 191,208 Right-of-use assets 2,350,781 Intangible Assets 3,356,000 Other assets 88,998 Liabilities Account payables (723,043 ) Accrued liabilities (721,483 ) Operating lease liabilities (2,350,781 ) Other long-term liabilities (5,457 ) Net assets 5,558,870 Goodwill 1,367,109 Total Purchase Price $ 6,925,979 The following pro forma presents the Company's results of the Echo Entities and the Company's results of operations for the twelve months ended December 31, 2019 as if they were combined the entire twelve months: Pro forma Combined For the Twelve Months Ended December 31, 2019 (unaudited) Revenue $ 87,921,642 Income (loss) from continuing operations $ 1,931,558 Net income $ 1,931,558 Basic net income per common share $ 0.07 Diluted net income per common share $ 0.07 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019, are as follows: Year Ended December 31, 2020 2019 Opening balance $ 1,367,109 $ - Additions - 1,367,109 Acquisition adjustment - - Impairment adjustment - - Goodwill $ 1,367,109 $ 1,367,109 Our 2019 acquisition of the assets of the Echo Legacy Entities resulted in the addition to our goodwill balance in 2019. The Company’s goodwill is related to the ECHG segment only and not the whole Company. We evaluate goodwill 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, 2020 and 2019. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets consist of: December 31, December 31, 2020 2019 DGSE Domain names $ 41,352 $ 41,352 Point of sale system 330,000 330,000 371,352 371,352 Less: accumulated amortization (203,502 ) (137,502 ) Subtotal 167,850 233,850 ECHG Trademarks 1,483,000 1,483,000 Customer Contracts 1,873,000 1,873,000 3,356,000 3,356,000 Less: accumulated amortization (531,377 ) (195,777 ) Subtotal 2,824,623 3,160,223 Total $ 2,992,473 $ 3,394,073 Amortization expense was $401,600 and $256,277 for Fiscal 2020 and Fiscal 2019, respectively. The estimated aggregate amortization expense for each of the five succeeding fiscal years follows: DGSE ECHG Total 2021 $ 66,000 $ 335,600 $ 401,600 2022 66,000 335,600 401,600 2023 30,350 335,600 365,950 2024 5,500 335,600 341,100 2025 - 335,600 335,600 Thereafter - 1,146,623 1,146,623 $ 167,850 $ 2,824,623 $ 2,992,473 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses consist of the following: December 31 December 31, 2020 2019 DGSE Accrued Interest $ 10,057 $ 7,374 Professional fees - 125,200 Board member fees 7,500 7,500 Insurance - 30,508 Payroll 155,635 157,148 Property tax 26,435 - Sales tax 180,609 115,451 Other administrative expenses 13,525 - State income tax - 33,907 Subtotal 393,761 477,088 ECHG Accrued Interest 17,086 16,724 Professional fees - 77,900 Payroll 119,327 79,342 Property tax 20,500 - Sales tax - 7,852 Credit card - 22,279 Other accrued expenses 10,574 - State income tax - 27,963 Material & shipping costs (COGS) - 207,361 Subtotal 167,487 439,421 Envela Accrued Interest 7,884 - Payroll 10,745 - Professional fees (1) 142,635 - Other administrative expenses 8,433 - State income tax (1) 113,379 - Subtotal 283,076 - $ 844,324 $ 916,509 (1) State income tax and professional fee accruals have been recorded at the segment level in prior periods. Proceeding forward, we will allocate those expenses at the segment level but accrue the consolidated balances at the corporate level. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-term debt consists of the following: Outstanding Balance December 31, December 31, Current 2020 2019 Interest Rate Maturity DGSE Note payable, related party (1) $ 2,863,715 $ 2,949,545 6.00 % Note payable, Truist Bank (2) 942,652 - 3.65 % July 9, 2030 Note payable, Texas Bank & Trust (3) 491,852 - 3.75 % September 14, 2025 DGSE Sub-Total 4,298,219 2,949,545 ECHG Note payable, related party (1) 6,496,127 6,689,507 6.00 % May 16, 2024 Envela Note payable, Texas Bank & Trust (4) 2,951,379 - 3.25 % November 4, 2025 Note payable (5) 1,668,200 - Envela Sub-Total 4,619,579 - Sub-Total 15,413,925 9,639,052 Current portion 2,120,457 1,084,072 $ 13,293,468 $ 8,554,980 (1) On May 20, 2019, in connection with the Echo Transaction, the Company entered into two loan agreements with John R. Loftus, the Company’s CEO, President and Chairman of the Board. ECHG, LLC executed a 5-year, $6,925,979 note for the Echo Transaction, amortized over 20 years at a 6% annual interest rate. DGSE, LLC executed a 5-year, $3,074,021 note to pay off the accounts payable – related party balance to a former Related Party as of May 20, 2019. That promissory note is also amortized over 20 years at a 6% annual interest rate. On January 1, 2020, revisions were made on the original documents for both DGSE and ECHG notes. Originally, the DGSE note stated that the monthly interest and principal payment due was $41,866 and the ECHG note stated that the monthly interest and principal payment due was $94,327. The revised interest and principal payment due monthly on the note for DGSE is $22,203. The revised interest and principal payment due monthly on the note for ECHG is $49,646. The allocation between short-term and long-term notes payable, related party was revised accordingly starting with the three months ending March 31, 2020. (2) On July 9, 2020, DGSE closed the purchase of a new 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, 10 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 new retail building located at 1106 W. Northwest Highway in Grapevine, Texas for $620,000. The purchase was partly financed through a $496,000, 5 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 November 4, 2020, 1901 Gateway Holdings, LLC, a wholly owned subsidiary of Envela Corporation, closed on the purchase of a new office building located at 1901 Gateway Drive, Irving, Texas for $3.521 million. The building was partially financed through a $2.96 million, 5 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. (5) The Company applied for and received, on April 20, 2020, approximately $1.67 million, 1% interest, federally backed loan intended to pay employees and cover certain rent and utility-related costs during the COVID-19 pandemic (the “Federal Loan”), with Truist Bank (f/k/a BB&T Bank) as lender. The Federal Loan is forgivable to the extent that certain criteria are met. We have applied for the forgiveness of the Federal Loan during the fourth quarter ending December 31, 2020; therefore, we are classifying the loan as short-term. Future scheduled principal payments of our note payables and note payables, related party, as of December 31, 2020 are as follows: Note payable, related party - DGSE Year Ending December 31, Amount 2021 $ 95,129 2022 100,996 2023 107,225 2024 2,560,365 Subtotal $ 2,863,715 Note payable, Truist Bank - DGSE Year Ending December 31, Amount 2021 $ 33,904 2022 35,163 2023 36,468 2024 37,821 2025 39,216 Thereafter 760,080 Subtotal $ 942,652 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2021 $ 17,399 2022 18,053 2023 18,732 2024 19,437 2025 418,231 Subtotal $ 491,852 Note payable, related party - ECHG Year Ending December 31, Amount 2021 $ 211,903 2022 224,973 2023 238,849 2024 5,820,402 Subtotal $ 6,496,127 Note payable, Texas Bank & Trust - Envela Year Ending December 31, Amount 2021 $ 93,922 2022 97,455 2023 101,122 2024 104,926 2025 2,553,954 Subtotal $ 2,951,379 Note payable - Envela Corporation Year Ending December 31, Amount 2021 $ 1,668,200 Subtotal $ 1,668,200 $ 15,413,925 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | We determine our business segments based upon an internal reporting structure. Our financial performance is based on the following segments: DGSE and ECHG. The DGSE segment includes Dallas Gold & Silver Exchange, which has five retail stores in the Dallas/Fort Worth Metroplex, and Charleston Gold & Diamond Exchange, which has one retail store in Charleston, South Carolina. The ECHG segment includes Echo, ITAD USA and Teladvance. These three companies were added during 2019 and are involved in recycling and the reuse of electronic waste. We allocate our corporate costs and expenses, including rental income and expenses relating to our new corporate headquarters, to our business segments. These income and expenses are included in selling, general and administrative expenses, depreciation and amortization, other income, interest expense and income tax expense. Our management team evaluates the operating performance of each segment and makes decisions about the allocation of resources according to each segment profit. The allocations are generally amounts agreed upon by management, which may differ from an arms-length amount. The following table segments the financial results of DGSE and ECHG for Fiscal 2020: Fiscal 2020 DGSE ECHG Consolidated Revenue: Sales $ 85,661,391 $ 28,260,624 $ 113,922,015 Cost of goods sold 75,291,521 15,561,531 90,853,052 Gross profit 10,369,870 12,699,093 23,068,963 Expenses: Selling, general and administrative expenses 6,933,259 8,620,015 15,553,274 Depreciation and amortization 321,833 406,793 728,626 7,255,092 9,026,808 16,281,900 Operating income 3,114,778 3,672,285 6,787,063 Other income: Other income (113,974 ) (193,023 ) (306,997 ) Interest expense 209,295 411,204 620,499 Income before income taxes 3,019,457 3,454,104 6,473,561 Income tax expense 40,283 49,335 89,618 Income from continuing operations $ 2,979,174 $ 3,404,769 $ 6,383,943 |
Basic and Diluted Average Share
Basic and Diluted Average Shares | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Average Shares | A reconciliation of basic and diluted average common shares is as follows: Year Ended December 31, 2020 2019 Basic weighted average shares 26,924,631 26,924,381 Effect of potential dilutive securities 15,000 15,250 Diluted weighted average shares 26,939,631 26,939,631 For the years ended December 31, 2020 and 2019, there were 15,000 and 15,250 Common Stock options, warrants, and Restricted Stock Units (RSUs) unexercised respectively. For the years ended December 31, 2020 and 2019, there were no anti-dilutive shares. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | In January 2014, the Company’s Board granted 112,000 RSUs to its officers and certain key employees. As of December 31, 2020, no RSUs remain unexercised and dilutive. |
Stock Options and Restricted St
Stock Options and Restricted Stock Units | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Restricted Stock Units | On June 21, 2004, our shareholders 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, our shareholders 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, 2020, 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, 2020 2019 Shares Weighted average exercise price Shares Weighted average exercise 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, 2020 is summarized as follows: Options Outstanding and Exercisable Exercise price Number outstanding Weighted average remaining contractual life (Years) Weighted average exercise price Aggregate intrinsic value $ 2.13 10,000 NA (1 ) $ 2.13 $ 32,450 $ 2.25 5,000 NA (1 ) $ 2.25 $ 15,600 15,000 $ 48,050 (1) 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 $5.37 as of December 31, 2020. A summary of the status of our non-vested RSU grants issued under our 2006 Plan is presented below: Year Ended December 31, 2020 2019 Shares Weighted average exercise price Shares Weighted average exercise price Nonvested at beginning or year 250 $ 1.30 250 $ 1.30 Granted - - - - Exercised 250 1.30 - - Forfeited - - - - Outstanding at end of year - $ - 250 $ 1.30 As a result of the expiration of the 2006 Plan, as of December 31, 2019, no further shares could be issued under the 2006 Plan. As of January 1, 2020, the remaining 250 RSU grants have vested and were exercised during Fiscal 2020. A total of 1,100,000 shares remain available for future grants pursuant to the 2016 Plan. During Fiscal 2020 we recognized $325 of stock-based compensation expense compared to $0 in Fiscal 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The income tax provision reconciled to the tax computed at the statutory from continuing operations Federal rate follows: 2020 2019 Tax Expense at Statutory Rate $ 1,364,191 $ 626,468 Valuation Allowance (1,371,195 ) (631,775 ) Non-Deductible Expenses and Other 7,004 5,307 State Taxes, Net of Federal Benefit 89,618 95,116 Income tax expense $ 89,618 $ 95,116 Current $ 89,618 $ 95,116 Total $ 89,618 $ 95,116 Deferred income taxes are comprised of the following at December 31, 2019 and 2018: 2020 2019 Deferred tax assets (liabilities): Inventories $ 22,620 $ 21,495 Stock options and other 6,836 57,019 Contingencies and accruals 28,580 32,154 Property and equipment (256,065 ) (180,300 ) Net operating loss carryforward 6,527,548 7,763,103 Goodwill and intangibles 27,085 34,328 Total deferred tax assets, net 6,356,604 7,727,799 Valuation allowance $ (6,356,604 ) $ (7,727,799 ) Net Deferred tax asset - - As of December 31, 2020, the Company had $2,729,636 of net operating loss carry-forwards, related to the Superior Galleries acquisition which may be available to reduce taxable income in future years, subject to the applicable Internal Revenue Code Section 382 limitations. As of December 31, 2020, the Company had approximately $28,353,926 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 2026 if not utilized. The Company is uncertain of our ability to accurately project income into the future due to the economic conditions caused by the pandemic,therefore, the Company is waiving any adjustment to the current valuation allowance. As of December 31, 2020, the Company determined based on consideration of all available evidence, including but not limited to historical, current and future anticipated financial results as well as applicable IRS limitations and expiration dates related to the Company’s net operating losses, a full valuation allowance should be recorded for its net deferred tax assets. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). We adopted ASC 842 on January 1, 2019, by applying its provisions prospectively. The financial results reported in periods prior to January 1, 2019 are unchanged. Upon adoption, we recognized all of our leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating of finance. Classification is based on certain criteria and we have determined that all of our retail building leases fall into the operating lease category. Our leases are included in our consolidated balance sheet as right-of-use assets along with the current operating lease liabilities and long-term operating lease liabilities. When the provision was first adopted by the Company on January 1, 2019, we recognized $1,994,840 of operating lease right-of-use assets, $446,462 in short-term operating lease liabilities and $1,609,891 in long-term operating lease liabilities on the consolidated balance sheet. The operating lease liabilities were determined based on the present value of the remaining minimum rental payments and the operating lease right-of-use asset was determined based on the value of the lease liabilities, adjusted for deferred rent balances of $61,500, which were previously included in other liabilities. Due to the acquisition, referred in Note 6, we recognized an additional $2,350,781 of operating lease right-of-use assets, $703,523 in short-term operating lease liabilities and $1,647,258 in long-term operating lease liabilities on the consolidated balance sheet. The operating lease liabilities were determined based on the present value of the remaining minimum rental payments and the operating lease right-of-use asset was determined based on the value of the lease liabilities. In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842 requires us to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in the lease agreement, we utilize our incremental borrowing rate. The Company has six operating leases, five in the Dallas/Fort Worth Metroplex and one in Charleston South Carolina. We have two leases expiring during Fiscal year 2021. Our Southlake, Texas location expired July 31, 2020 with no current options. We evaluated the lease in the present location and decided to vacate the property as of July 31, 2020. Our lease on the main flagship store located at 13022 Preston Road, Dallas, Texas will be expiring October 31, 2021, with no current lease options. The Grand Prairie, Texas lease expires June 30, 2022, and has no current lease options. The Charleston, South Carolina lease expires April 30, 2025, and has no current lease options. The Euless, Texas lease expires June 30, 2025 with an option for an additional five (5) year term. On September 9, 2020, we entered into a new lease agreement with the landlord of the Echo Belt Line building starting January 1, 2021, expiring January 31, 2026, with one option period of an additional 60 months. A portion of the Echo Belt Line building was sublet and the rent received was applied against the rental expense for the building. The new Echo Belt Line lease, starting January 1, 2021, will not contain a subletter. The McKenzie ITAD lease expires July 31, 2021 with no current lease options. All six leases are triple net leases that we pay our proportionate amount of common area maintenance, property taxes and property insurance. Leasing costs for Fiscal 2020 and Fiscal 2019 was $1,452,689 and $1,151,619, respectively. These lease costs consist of a combination of minimum lease payments and variable lease costs. As of December 31, 2019, the weighted average remaining lease term and weighted average discount rate for operating leases was 2.81 years and 5.5%, respectively. The Company’s future operating lease obligations that have not yet commenced are immaterial. The cash paid for operating lease liabilities for Fiscal 2020 and Fiscal 2019 was $1,314,285 and $1,809,514, respectively. Future annual minimum lease payments as of December 31, 2020: Operating Leases DGSE 2021 $ 479,161 2022 235,674 2023 212,855 2024 213,885 2025 and thereafter 64,087 Total minimum lease payments 1,205,662 Less imputed interest (110,429 ) DGSE Sub-Total 1,095,233 ECHG 2021 869,209 2022 786,396 2023 808,022 2034 830,244 2025 and thereafter 853,076 Total minimum lease payments 4,146,947 Less imputed interest (439,452 ) Envela Sub-Total 3,707,495 Total 4,802,728 Current portion 1,148,309 $ 3,654,419 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
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 stockholders. 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 stockholders 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. Through a series of transactions beginning in 2010, Elemetal, NTR and Truscott (“Related Entities”) became the largest shareholders of our Common Stock. NTR transferred all of its Common Stock to Eduro Holdings, LLC (“Eduro”) on August 29, 2018. A certain Related Entity has been the Company’s primary refiner and bullion trading partner. From January 1, 2019 through May 20, 2019 a certain Related Entity accounted for 4% of sales and 6% of purchases. Fiscal 2018, these transactions represented 11% of the Company’s sales and 2% of the Company’s purchases. On May 20, 2019, through a series of transactions, the Related Entity sold their shares of the Company to John R. Loftus, The Company’s CEO, President and Chairman of the Board. As of May 20, 2019, they were no longer a Related Entity. On December 9, 2016, the Company and a certain Related Entity closed the transactions contemplated by the Debt Exchange Agreement whereby the Company issued a certain Related Entity 8,536,585 shares of its common stock and a warrant to purchase an additional 1,000,000 shares to be exercised within two years after December 9, 2016, in exchange for the cancellation and forgiveness of $3,500,000 of trade payables owed to a certain Related Entity as a result of bullion-related transactions. The warrant to purchase an additional 1,000,000 shares expired in December 2018 and was not exercised. As of December 31, 2020, the Company was obligated to pay $0 to the certain Related Entity as a trade payable and had a $0 receivable from the certain Related Entity. As of December 31, 2019, the Company was obligated to pay $0 to the certain Related Entity as a trade payable and had a $0 receivable from the certain Related Entity. For the year ended December 31, 2020 and 2019, the Company paid the Related Entities $0 and $61,869, respectively, in interest on the Company’s outstanding payable. Through a series of transactions reported on Schedule 13D on May 24, 2019, Truscott sold their 12,814,727 shares, 47.7% of DGSE Companies Common Stock to John R. Loftus. Mr. Loftus assumed all rights under the existing registration rights agreements. On the same day, Mr. Loftus contributed his 12,814,727 Common Stock shares to N10TR, LLC (“N10TR”) which is wholly owned by Mr. Loftus. Mr. Loftus, by virtue of his relationship with Eduro and N10TR may be deemed to indirectly beneficially own the Common Shares that Eduro and N10TR directly beneficially own. On the same day the Company entered into two (2) loan agreements with John R. Loftus, the Company’s CEO, President and Chairman of the Board. The first note of $6,925,979, pursuant to the Echo Entities purchase agreement, is a 5-year promissory note amortized over 20 years at 6% annual interest rate. As of December 31, 2020 and 2019, ECHG was obligated to pay $6,496,127 and $6,689,507, respectively, to Mr. Loftus as a note payable, related party. The second note of $3,074,021 paid off the accounts payable – related party balance to Elemetal as of May 20, 2019. The promissory note is a 5-year note amortized over 20 years at 6% annual interest rate. As of December 31, 2020 and 2019, DGSE was obligated to pay $2,863,715 and $2,949,545, respectively, to Mr. Loftus as a note payable, related party. Both notes are being serviced by operational cash flow. For the year ended December 31, 2020 and 2019, the Company paid Mr. Loftus $580,957 and $325,749, respectively, in interest on the Company’s outstanding note payables, related party. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
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 2020 and Fiscal 2019 plans. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Subsequent Events | The outbreak of COVID-19, coronavirus pandemic has already adversely affected global economic business conditions. Future sales on products like ours could decline due to increased commodities prices, particularly gold. Although we are continuing to monitor and assess the effects of the coronavirus pandemic, the ultimate impact is highly uncertain and subject to change. The duration of any such impact cannot be predicted, nor can the timing of the development and distribution of an effective vaccine or treatments for COVID-19. |
Accounting Policies and Natur_2
Accounting Policies and Nature of Operations (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Nature of Operations | Envela and its subsidiaries engage in diverse business activities within the recommerce sector. These activities include being one of the nation's premier authenticated recommerce 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 business segments. Through DGSE, we operate Dallas Gold & Silver Exchange, Charleston Gold & Diamond Exchange, and Bullion Express brands. Through ECHG we operate Echo Environmental, ITAD USA and Teladvance. Envela is a Nevada corporation, headquartered in Irving, Texas. DGSE primarily buys and resells or recycles luxury hard assets like jewelry, diamonds, gemstones, fine watches, rare coins and related collectibles, precious-metal bullion products, gold, silver and other precious-metals. DGSE operates six jewelry stores at both the retail and wholesale levels, throughout the United States via its facilities in Texas and South Carolina. The Company also maintains a presence in the retail market through our web-sites, www.dgse.com and www.cgdeinc.com. ECHG buys electronic components from businesses and other organizations, such as school districts, for end-of-life recycling or to add life to electronic devices by data destruction and refurbishment for reuse. For end-of–life recycling, we sell to downstream recycling companies who further process our material for end users. The electronic devices saved for reuse are cleaned of prior data, refurbished and sold to businesses or organizations wanting to extend the remaining life and value of recycled electronics. Our customers are companies and organizations that are based domestically and internationally. For additional business operations for both DGSE and ECHG, see “Item 1. Business—Operating Segments” in this annual report on Form 10-K. 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. The Company operates the business as two operating and reportable segments under a variety of banners. DGSE includes Charleston Gold & Diamond Exchange and Dallas Gold & Silver Exchange. ECHG includes Echo, ITAD USA and Teladvance. |
Reclassifications | Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations. |
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 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. The Company considers factors such as the current spot market price of precious metals and current market demand for the items being purchased. The Company 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 May 17, 2022, is pledged as collateral against our $3,500,000 short-term line of credit with Texas Bank and Trust. |
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 2020 and Fiscal 2019. 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, 2020 or 2019. We evaluate goodwill 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 note 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 $240,770 and $392,588 for Fiscal 2020 and Fiscal 2019, respectively. ECHG’s advertising costs are expensed as incurred and amounted to $16,311 and $4,809 For Fiscal 2020 and for the period beginning May 20, 2019 through December 31, 2019, 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 to not 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 2020 and 2019, 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 at December 31, 2020 and 2019. Once a reserve is established, and an amount is considered to be uncollectable it is to be written off against the reserve. We will 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 $2,528,215 at December 31, 2020 and $2,383,061 as of December 31, 2019. We use a different approach for allowance for doubtful accounts because customers are generally larger and payable terms are farther out. Once we determine that a balance is uncollectable we reserve that balance but still pursue payment. On the rare occasion we determine a balance is uncollectable we will write off the balance against the reserve. As of December 31, 2020 and 2019, we consider the full accounts receivable balance to be fully collectable and feel that a reserve of $0 to be appropriate. As of December 31, 2020 and 2019, there was no allowance for doubtful accounts. A summary of the Allowance for Doubtful Accounts is presented below: December 31, 2020 2019 Beginning Balance $ - $ - Bad debt expense (+) 37,798 - Receivables written off (-) (37,798 ) - Ending Balance $ - $ - |
Note Receivable | ECHG, LLC, entered into an agreement with CExchange, LLC on February 15, 2020, to lend $1,500,000 bearing interest at eight and one-half percent (8.5%) with interest only payments due quarterly. The loan matures on February 20, 2023. The parties also agreed to warrant and call-option agreements to acquire all of CExchange’s equity interests. On November 7, 2020, the Company entered into an amended agreement, whereby, increasing the loan from $1,500,000 to $2,100,000. CExchange is the leader in retail trade-in services, providing in-store and online solutions for most of the major consumer electronics retailers in the United States. CExchange helps retailers provide in-store trade-in programs designed to allow customers to exchange their old technology for cash in minutes. This fits well with ECHG’s core business of refurbishing and reusing cell telephones. There is no assurance that the Company will exercise its warrant or call option. |
Short-Term Financing | Envela established a short-term line of credit with Texas Bank and Trust to cover emergency cash needs for $1,000,000 on May 17, 2019. The line of credit was renewed for an additional two years and increased to $3,500,000 on May 17 2020 and expires May 16, 2022. It has a varying interest rate, per annum, based on the Prime Rate. On December 31, 2020, the interest rate was 5% and the balance due on this short-term line of credit was $0. |
Income Taxes | Income taxes are accounted for under the asset and liability method prescribed by Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes. 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 ASC 740. 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. ASC 740 applies 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, 2020 and 2019. 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 2020 and Fiscal 2019, the Company did not incur any federal income tax interest or penalties. |
Revenue Recognition | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers 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, 2020 and 2019: For the Years Ended December 31, 2020 December 31, 2019 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 79,790,419 9,215,494 11.5 % $ 60,088,405 $ 7,760,365 12.9 % Recycled 5,870,972 1,154,376 19.7 % 7,431,749 1,157,459 15.6 % Subtotal 85,661,391 10,369,870 12.1 % 67,520,154 8,917,824 13.2 % ECHG Resale 19,395,834 9,504,607 49.0 % 8,722,281 4,692,114 53.8 % Recycled 8,864,790 3,194,486 36.0 % 5,782,062 2,645,904 45.8 % Subtotal 28,260,624 12,699,093 44.9 % 14,504,343 7,338,018 50.6 % $ 113,922,015 $ 23,068,963 20.2 % $ 82,024,497 $ 16,255,842 19.8 % 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. We also recognize revenue 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. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Crafted-precious-metal items at the end of their useful lives are sold to a Dallas refiner, who was a related party until May 20, 2019. Since this refiner is located in the Dallas area, we deliver the metal to the refiner. The metal is assayed, price is determined from the assay and payment is made usually within two days. Revenue is recognized from the sale once payment is received. We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days. In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When we exchange merchandise for similar merchandise and there is no monetary component to the exchange, we do not recognize any revenue. 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 we exchange merchandise for similar merchandise and there is a monetary component to the exchange, we recognize revenue to the extent of the monetary assets received and 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 financing company. We recognize the revenue of the sale upon the promise of the financing company to pay. We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency 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. We have established an allowance for estimated returns related to Fiscal 2020 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, 2020 and 2019, our allowance for returns remained the same at approximately $28,000 for both years. 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. Once the price is established and the terms are agreed to and the product is shipped, 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. Ninety percent (90%) of our refining revenue is generated from one refining partner with an international refining facility. This refining partner pays us sixty percent (60%) of an Invoice within five working days upon the receipt of the Ocean Bill of Lading issued by the Ocean Carrier. Our 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 we expect 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 remaining forty percent (40%) due from the original contract. ● Hard drive sales by ECHG are limited to customers who are required to prepay shipments. Once the commodity price is established and agreed upon by both parties, customers send payment in advance. The Company releases the shipment on the same day when payment receipt is confirmed and revenue is recognized on day of shipment. If payment is received on the last day of the month and shipment goes out the following day the payment received is deferred revenue and recognized the following month when the shipment is made. ● ECHG also provides recycling services according to a Scope of Work. 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 our ECHG facility or we can design and perform the recycling service at the client’s facility. The Scope of Work will determine the charges and whether the service will be completed at ECHG or at the client’s facility. Payment terms are also dictated in the Scope of Work. |
Shipping and Handling Costs | Shipping and handling costs amounted to $1,025,215 and $803,015, for 2020 and 2019, respectively. We have 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 our 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 2020 and Fiscal 2019 amounted to $325 and $0 respectively. The following table represents our total compensation cost related to non-vested awards not yet recognized at year end December 31, 2020 and December 31, 2019: Date of grant Employee Price of stock at grant date Number of shares granted unvested December 31, 2020 Unrecognized expense at December 31, 2020 Number of shares granted unvested December 31, 2019 Unrecognized expense at December 31, 2019 January 23, 2014 Robert Burnside $ 2.18 0 - 250 $ 545.00 Total cost unrecognized - $ 545.00 No stock awards remained unexercised as of December 31, 2020 and only 250 unexercised stock awards remained unexercised as of December 31, 2019. |
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 our 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 January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019, are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Upon adoption, we recognized right-of-use assets of approximately $2.0 million, with corresponding lease liabilities of approximately $2.0 million on the consolidated balance sheets. The right-of-use assets include adjustments for deferred rent liabilities. The adoption did not impact our beginning retained earnings, or our prior year consolidated statements of income and statements of cash flows. 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 (CECL) 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 model for accounts receivable, loans and other financial instruments. The standard will be adopted upon the effective date for us beginning January 1, 2023 by using a modified retrospective transition approach to align our credit loss methodology with the new standard. The company is evaluating the financial statement implications of ASU 2016-13. |
Accounting Policies and Natur_3
Accounting Policies and Nature of Operations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Allowance for Doubtful Accounts | December 31, 2020 2019 Beginning Balance $ - $ - Bad debt expense (+) 37,798 - Receivables written off (-) (37,798 ) - Ending Balance $ - $ - |
Schedule of Disaggregation of Revenue | For the Years Ended December 31, 2020 December 31, 2019 Revenues Gross Profit Margin Revenues Gross Profit Margin DGSE Resale $ 79,790,419 9,215,494 11.5 % $ 60,088,405 $ 7,760,365 12.9 % Recycled 5,870,972 1,154,376 19.7 % 7,431,749 1,157,459 15.6 % Subtotal 85,661,391 10,369,870 12.1 % 67,520,154 8,917,824 13.2 % ECHG Resale 19,395,834 9,504,607 49.0 % 8,722,281 4,692,114 53.8 % Recycled 8,864,790 3,194,486 36.0 % 5,782,062 2,645,904 45.8 % Subtotal 28,260,624 12,699,093 44.9 % 14,504,343 7,338,018 50.6 % $ 113,922,015 $ 23,068,963 20.2 % $ 82,024,497 $ 16,255,842 19.8 % |
Schedule of Unrecognized Compensation Cost, Nonvested Awards | Date of grant Employee Price of stock at grant date Number of shares granted unvested December 31, 2020 Unrecognized expense at December 31, 2020 Number of shares granted unvested December 31, 2019 Unrecognized expense at December 31, 2019 January 23, 2014 Robert Burnside $ 2.18 0 - 250 $ 545.00 Total cost unrecognized - $ 545.00 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | December 31, December 31, 2020 2019 DGSE Resale $ 8,971,815 $ 8,213,551 Recycle 191,677 401,468 Subtotal 9,163,492 8,615,019 ECHG Resale 557,959 351,958 Recycle 285,446 542,477 Subtotal 843,405 894,435 $ 10,006,897 $ 9,509,454 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, December 31, 2020 2019 DGSE Land $ 720,786 $ 55,000 Buildings and improvements 1,317,906 - Leasehold improvements 1,435,742 1,561,649 Machinery and equipment 1,056,315 1,039,013 Furniture and fixtures 504,430 453,699 Vehicles 22,859 - 5,058,038 3,109,361 Less: accumulated depreciation (2,054,294 ) (1,904,948 ) Sub-Total 3,003,744 1,204,413 ECHG Leasehold improvements 81,149 81,149 Machinery and equipment 220,417 27,497 Furniture and fixtures 93,827 93,827 395,393 202,473 Less: accumulated depreciation (71,058 ) (55,847 ) Sub-Total 324,335 146,626 Envela Land 1,106,664 - Buildings and improvements 2,456,324 - Machinery and equipment 5,407 - 3,568,395 - Less: accumulated depreciation (7,873 ) - Sub-Total 3,560,522 - $ 6,888,601 $ 1,351,039 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired of Purchase Price | Description Amount Assets Cash $ 1,049,462 Account receivables 1,025,615 Inventories 1,209,203 Prepaids 88,367 Fixed assets 191,208 Right-of-use assets 2,350,781 Intangible Assets 3,356,000 Other assets 88,998 Liabilities Account payables (723,043 ) Accrued liabilities (721,483 ) Operating lease liabilities (2,350,781 ) Other long-term liabilities (5,457 ) Net assets 5,558,870 Goodwill 1,367,109 Total Purchase Price $ 6,925,979 |
Pro Forma Results | Pro forma Combined For the Twelve Months Ended December 31, 2019 (unaudited) Revenue $ 87,921,642 Income (loss) from continuing operations $ 1,931,558 Net income $ 1,931,558 Basic net income per common share $ 0.07 Diluted net income per common share $ 0.07 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Year Ended December 31, 2020 2019 Opening balance $ 1,367,109 $ - Additions - 1,367,109 Acquisition adjustment - - Impairment adjustment - - Goodwill $ 1,367,109 $ 1,367,109 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | December 31, December 31, 2020 2019 DGSE Domain names $ 41,352 $ 41,352 Point of sale system 330,000 330,000 371,352 371,352 Less: accumulated amortization (203,502 ) (137,502 ) Subtotal 167,850 233,850 ECHG Trademarks 1,483,000 1,483,000 Customer Contracts 1,873,000 1,873,000 3,356,000 3,356,000 Less: accumulated amortization (531,377 ) (195,777 ) Subtotal 2,824,623 3,160,223 Total $ 2,992,473 $ 3,394,073 |
Schedule of Estimated Amortization Expense | DGSE ECHG Total 2021 $ 66,000 $ 335,600 $ 401,600 2022 66,000 335,600 401,600 2023 30,350 335,600 365,950 2024 5,500 335,600 341,100 2025 - 335,600 335,600 Thereafter - 1,146,623 1,146,623 $ 167,850 $ 2,824,623 $ 2,992,473 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | December 31 December 31, 2020 2019 DGSE Accrued Interest $ 10,057 $ 7,374 Professional fees - 125,200 Board member fees 7,500 7,500 Insurance - 30,508 Payroll 155,635 157,148 Property tax 26,435 - Sales tax 180,609 115,451 Other administrative expenses 13,525 - State income tax - 33,907 Subtotal 393,761 477,088 ECHG Accrued Interest 17,086 16,724 Professional fees - 77,900 Payroll 119,327 79,342 Property tax 20,500 - Sales tax - 7,852 Credit card - 22,279 Other accrued expenses 10,574 - State income tax - 27,963 Material & shipping costs (COGS) - 207,361 Subtotal 167,487 439,421 Envela Accrued Interest 7,884 - Payroll 10,745 - Professional fees (1) 142,635 - Other administrative expenses 8,433 - State income tax (1) 113,379 - Subtotal 283,076 - $ 844,324 $ 916,509 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Outstanding Balance December 31, December 31, Current 2020 2019 Interest Rate Maturity DGSE Note payable, related party (1) $ 2,863,715 $ 2,949,545 6.00 % Note payable, Truist Bank (2) 942,652 - 3.65 % July 9, 2030 Note payable, Texas Bank & Trust (3) 491,852 - 3.75 % September 14, 2025 DGSE Sub-Total 4,298,219 2,949,545 ECHG Note payable, related party (1) 6,496,127 6,689,507 6.00 % May 16, 2024 Envela Note payable, Texas Bank & Trust (4) 2,951,379 - 3.25 % November 4, 2025 Note payable (5) 1,668,200 - Envela Sub-Total 4,619,579 - Sub-Total 15,413,925 9,639,052 Current portion 2,120,457 1,084,072 $ 13,293,468 $ 8,554,980 |
Schedule of Long-term Debt Maturities of Principal Payments | Note payable, related party - DGSE Year Ending December 31, Amount 2021 $ 95,129 2022 100,996 2023 107,225 2024 2,560,365 Subtotal $ 2,863,715 Note payable, Truist Bank - DGSE Year Ending December 31, Amount 2021 $ 33,904 2022 35,163 2023 36,468 2024 37,821 2025 39,216 Thereafter 760,080 Subtotal $ 942,652 Note payable, Texas Bank & Trust - DGSE Year Ending December 31, Amount 2021 $ 17,399 2022 18,053 2023 18,732 2024 19,437 2025 418,231 Subtotal $ 491,852 Note payable, related party - ECHG Year Ending December 31, Amount 2021 $ 211,903 2022 224,973 2023 238,849 2024 5,820,402 Subtotal $ 6,496,127 Note payable, Texas Bank & Trust - Envela Year Ending December 31, Amount 2021 $ 93,922 2022 97,455 2023 101,122 2024 104,926 2025 2,553,954 Subtotal $ 2,951,379 Note payable - Envela Corporation Year Ending December 31, Amount 2021 $ 1,668,200 Subtotal $ 1,668,200 $ 15,413,925 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | Fiscal 2020 DGSE ECHG Consolidated Revenue: Sales $ 85,661,391 $ 28,260,624 $ 113,922,015 Cost of goods sold 75,291,521 15,561,531 90,853,052 Gross profit 10,369,870 12,699,093 23,068,963 Expenses: Selling, general and administrative expenses 6,933,259 8,620,015 15,553,274 Depreciation and amortization 321,833 406,793 728,626 7,255,092 9,026,808 16,281,900 Operating income 3,114,778 3,672,285 6,787,063 Other income: Other income (113,974 ) (193,023 ) (306,997 ) Interest expense 209,295 411,204 620,499 Income before income taxes 3,019,457 3,454,104 6,473,561 Income tax expense 40,283 49,335 89,618 Income from continuing operations $ 2,979,174 $ 3,404,769 $ 6,383,943 |
Basic and Diluted Average Sha_2
Basic and Diluted Average Shares (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic and Diluted Weighted Average Common Shares | Year Ended December 31, 2020 2019 Basic weighted average shares 26,924,631 26,924,381 Effect of potential dilutive securities 15,000 15,250 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, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | Years Ended December 31, 2020 2019 Shares Weighted average exercise price Shares Weighted average exercise 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 Exercise price Number outstanding Weighted average remaining contractual life (Years) Weighted average exercise price Aggregate intrinsic value $ 2.13 10,000 NA (1 ) $ 2.13 $ 32,450 $ 2.25 5,000 NA (1 ) $ 2.25 $ 15,600 15,000 $ 48,050 |
Schedule of Unvested Restricted Stock Units Roll Forward | Year Ended December 31, 2020 2019 Shares Weighted average exercise price Shares Weighted average exercise price Nonvested at beginning or year 250 $ 1.30 250 $ 1.30 Granted - - - - Exercised 250 1.30 - - Forfeited - - - - Outstanding at end of year - $ - 250 $ 1.30 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | 2020 2019 Tax Expense at Statutory Rate $ 1,364,191 $ 626,468 Valuation Allowance (1,371,195 ) (631,775 ) Non-Deductible Expenses and Other 7,004 5,307 State Taxes, Net of Federal Benefit 89,618 95,116 Income tax expense $ 89,618 $ 95,116 Current $ 89,618 $ 95,116 Total $ 89,618 $ 95,116 |
Schedule of Deferred Tax Assets | 2020 2019 Deferred tax assets (liabilities): Inventories $ 22,620 $ 21,495 Stock options and other 6,836 57,019 Contingencies and accruals 28,580 32,154 Property and equipment (256,065 ) (180,300 ) Net operating loss carryforward 6,527,548 7,763,103 Goodwill and intangibles 27,085 34,328 Total deferred tax assets, net 6,356,604 7,727,799 Valuation allowance $ (6,356,604 ) $ (7,727,799 ) Net Deferred tax asset - - |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Future Annual Minimum Lease Payments | Operating Leases DGSE 2021 $ 479,161 2022 235,674 2023 212,855 2024 213,885 2025 and thereafter 64,087 Total minimum lease payments 1,205,662 Less imputed interest (110,429 ) DGSE Sub-Total 1,095,233 ECHG 2021 869,209 2022 786,396 2023 808,022 2034 830,244 2025 and thereafter 853,076 Total minimum lease payments 4,146,947 Less imputed interest (439,452 ) Envela Sub-Total 3,707,495 Total 4,802,728 Current portion 1,148,309 $ 3,654,419 |
Accounting Policies and Natur_4
Accounting Policies and Nature of Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 0 | $ 0 |
Bad debt expense | 37,798 | 0 |
Receivables written off | (37,798) | 0 |
Ending balance | $ 0 | $ 0 |
Accounting Policies and Natur_5
Accounting Policies and Nature of Operations (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 113,922,015 | $ 82,024,497 |
Gross Profit | $ 23,068,963 | $ 16,255,842 |
Margin | 20.20% | 19.80% |
DGSE | Recycled | ||
Revenues | $ 79,790,419 | $ 7,431,749 |
Gross Profit | $ 9,215,494 | $ 1,157,459 |
Margin | 11.50% | 15.60% |
DGSE | Resale | ||
Revenues | $ 5,870,972 | $ 60,088,405 |
Gross Profit | $ 1,154,376 | $ 7,760,365 |
Margin | 19.70% | 12.90% |
DGSE | Subtotal | ||
Revenues | $ 85,661,391 | $ 67,520,154 |
Gross Profit | $ 10,369,870 | $ 8,917,824 |
Margin | 12.10% | 13.20% |
ECHG | ||
Revenues | $ 28,260,624 | |
Gross Profit | 12,699,093 | |
ECHG | Recycled | ||
Revenues | 8,864,790 | $ 5,782,062 |
Gross Profit | $ 3,194,486 | $ 2,645,904 |
Margin | 36.00% | 45.80% |
ECHG | Resale | ||
Revenues | $ 19,395,834 | $ 8,722,281 |
Gross Profit | $ 9,504,607 | $ 4,692,114 |
Margin | 49.00% | 53.80% |
ECHG | Subtotal | ||
Revenues | $ 28,260,624 | $ 14,504,343 |
Gross Profit | $ 12,699,093 | $ 7,338,018 |
Margin | 44.90% | 50.60% |
Accounting Policies and Natur_6
Accounting Policies and Nature of Operations (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of shares, granted unvested | 0 | 0 |
Unrecognized expense | $ 0 | $ 545 |
Robert Burnside | January 23, 2014 | ||
Price of stock at grant date | $ 2.18 | $ 2.18 |
Number of shares, granted unvested | 0 | 250 |
Unrecognized expense | $ 0 | $ 545 |
Accounting Policies and Natur_7
Accounting Policies and Nature of Operations (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounts receivable | $ 2,846,619 | $ 2,997,743 |
Sales returns and allowances, goods, total | 28,000 | 28,000 |
Shipping and Handling Costs | 1,025,215 | 803,015 |
Share-based compensation | $ 325 | $ 0 |
Number of unexercised stock awards | 0 | 250 |
ECHG | ||
Advertising expense | $ 16,311 | $ 4,809 |
Accounts receivable | 2,528,215 | 2,383,061 |
DGSE | ||
Advertising expense | $ 240,770 | $ 392,588 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Inventories | $ 10,006,897 | $ 9,509,454 |
ECHG | ||
Inventories | 843,405 | 894,435 |
Resale | ECHG | ||
Inventories | 557,959 | 351,958 |
Recycle | ECHG | ||
Inventories | 285,446 | 542,477 |
DGSE | ||
Inventories | 9,163,492 | 8,615,019 |
DGSE | Resale | ||
Inventories | 8,971,815 | 8,213,551 |
DGSE | Recycle | ||
Inventories | $ 191,677 | $ 401,468 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property, plant and equipment, gross, total | $ 3,568,395 | $ 0 |
Less: accumulated depreciation | (7,873) | 0 |
Total property and equipment | 6,888,601 | 1,351,039 |
ECHG | ||
Property, plant and equipment, gross, total | 395,393 | 202,473 |
Less: accumulated depreciation | (71,058) | (55,847) |
Total property and equipment | 324,335 | 146,626 |
Land | ||
Property, plant and equipment, gross, total | 1,106,664 | 0 |
Building and Improvements | ||
Property, plant and equipment, gross, total | 2,456,324 | 0 |
Leasehold Improvements | ECHG | ||
Property, plant and equipment, gross, total | 81,149 | 81,149 |
Machinery and Equipment | ||
Property, plant and equipment, gross, total | 5,407 | 0 |
Machinery and Equipment | ECHG | ||
Property, plant and equipment, gross, total | 220,417 | 27,497 |
Vehicles | ECHG | ||
Property, plant and equipment, gross, total | 93,827 | 93,827 |
DGSE | ||
Property, plant and equipment, gross, total | 5,058,038 | 3,109,361 |
Less: accumulated depreciation | (2,054,294) | (1,904,948) |
Total property and equipment | 3,003,744 | 1,204,413 |
DGSE | Land | ||
Property, plant and equipment, gross, total | 720,786 | 55,000 |
DGSE | Building and Improvements | ||
Property, plant and equipment, gross, total | 1,317,906 | 0 |
DGSE | Leasehold Improvements | ||
Property, plant and equipment, gross, total | 1,435,742 | 1,561,649 |
DGSE | Machinery and Equipment | ||
Property, plant and equipment, gross, total | 1,056,315 | 1,039,013 |
DGSE | Furniture and Fixtures | ||
Property, plant and equipment, gross, total | 504,430 | 453,699 |
DGSE | Vehicles | ||
Property, plant and equipment, gross, total | $ 22,859 | $ 0 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 327,026 | $ 264,021 |
Acquisition (Details)
Acquisition (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | |||
Cash | $ 1,049,462 | ||
Account receivables | 1,025,615 | ||
Inventories | 1,209,203 | ||
Prepaids | 88,367 | ||
Fixed assets | 191,208 | ||
Right-of-use assets | 2,350,781 | ||
Intangible Assets | 3,356,000 | ||
Other assets | 88,998 | ||
Account payables | (723,043) | ||
Accrued liabilities | (721,483) | ||
Operating lease liabilities | (2,350,781) | ||
Other long-term liabilities | (5,457) | ||
Net assets | 5,558,870 | ||
Goodwill | 1,367,109 | $ 1,367,109 | $ 0 |
Purchase Price | $ 6,925,979 |
Acquisition (Details 1)
Acquisition (Details 1) | 12 Months Ended |
Dec. 31, 2020USD ($)$ / shares | |
Business Combinations [Abstract] | |
Revenue | $ 87,921,642 |
Income (loss) from continuing operations | 1,931,558 |
Net income | $ 1,931,558 |
Basic net income per common share | $ / shares | $ 0.07 |
Diluted net income per common share | $ / shares | $ 0.07 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Opening balance | $ 1,367,109 | $ 0 |
Additions | 0 | 1,367,109 |
Acquisition adjustment | 0 | 0 |
Impairment adjustment | 0 | 0 |
Goodwill | $ 1,367,109 | $ 1,367,109 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total intangibles | $ 2,992,473 | $ 3,394,073 |
ECHG | ||
Intangible assets, gross | 3,356,000 | 3,356,000 |
Less: accumulated amortization | (531,377) | (195,777) |
Total intangibles | 2,824,623 | 3,160,223 |
Trademarks | ECHG | ||
Intangible assets, gross | 1,483,000 | 1,483,000 |
Customer Contracts | ECHG | ||
Intangible assets, gross | 1,873,000 | 1,873,000 |
DGSE | ||
Intangible assets, gross | 371,352 | 371,352 |
Less: accumulated amortization | (203,502) | (137,502) |
Total intangibles | 167,850 | 233,850 |
DGSE | Domain Names | ||
Intangible assets, gross | 41,352 | 41,352 |
DGSE | Point of Sale System | ||
Intangible assets, gross | $ 330,000 | $ 330,000 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
2021 | $ 401,600 | |
2022 | 401,600 | |
2023 | 365,950 | |
2024 | 341,100 | |
2025 | 335,600 | |
Thereafter | 1,146,623 | |
Total | 2,992,473 | $ 3,394,073 |
ECHG | ||
2021 | 335,600 | |
2022 | 335,600 | |
2023 | 335,600 | |
2024 | 335,600 | |
2025 | 335,600 | |
Thereafter | 1,146,623 | |
Total | 2,824,623 | 3,160,223 |
DGSE | ||
2021 | 66,000 | |
2022 | 66,000 | |
2023 | 30,350 | |
2024 | 5,500 | |
2025 | 0 | |
Thereafter | 0 | |
Total | $ 167,850 | $ 233,850 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 401,600 | $ 256,277 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Interest | $ 7,884 | $ 0 |
Professional fees | 142,635 | 0 |
Board member fees | 0 | 0 |
Insurance | 0 | 0 |
Payroll | 10,745 | 0 |
Property tax | 0 | 0 |
Sales tax | 0 | 0 |
Other administrative expense | 8,433 | 0 |
State income tax | 113,379 | 0 |
Credit card | 0 | 0 |
Other accrued expenses | 0 | 0 |
Material & shipping costs (COGS) | 0 | 0 |
Total accrued expenses | 844,324 | 916,509 |
ECHG | ||
Accrued Interest | 17,086 | 16,724 |
Professional fees | 0 | 77,900 |
Board member fees | 0 | 0 |
Insurance | 0 | 0 |
Payroll | 119,327 | 79,342 |
Property tax | 20,500 | 0 |
Sales tax | 0 | 7,852 |
Other administrative expense | 0 | 0 |
State income tax | 0 | 27,963 |
Credit card | 0 | 22,279 |
Other accrued expenses | 10,574 | 0 |
Material & shipping costs (COGS) | 0 | 207,361 |
Total accrued expenses | 167,487 | 439,421 |
DGSE | ||
Accrued Interest | 10,057 | 7,374 |
Professional fees | 0 | 125,200 |
Board member fees | 7,500 | 7,500 |
Insurance | 0 | 30,508 |
Payroll | 155,635 | 157,148 |
Property tax | 26,435 | 0 |
Sales tax | 180,609 | 115,451 |
Other administrative expense | 13,525 | 0 |
State income tax | 0 | 33,907 |
Credit card | 0 | 0 |
Other accrued expenses | 0 | 0 |
Material & shipping costs (COGS) | 0 | 0 |
Total accrued expenses | $ 393,761 | $ 477,088 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Note payable, related party | $ 1,668,200 | [1] | $ 0 |
Note payable | 4,619,579 | 0 | |
Subtotal | 15,413,925 | 0 | |
Current portion | 2,120,457 | 1,084,072 | |
Noncurrent portion | 13,293,468 | 8,554,980 | |
Texas Bank and Trust | |||
Note payable, related party | 2,951,379 | [2] | 0 |
Subtotal | $ 2,951,379 | ||
Interest rate | 3.25% | ||
Maturity | Nov. 4, 2025 | ||
DGSE | |||
Note payable, related party | $ 4,298,219 | 2,949,545 | |
DGSE | Related Party | |||
Note payable, related party | $ 2,863,715 | [3] | 2,949,545 |
Interest rate | 6.00% | ||
DGSE | Truist Bank | |||
Note payable, related party | $ 942,652 | [4] | 0 |
Subtotal | $ 942,652 | ||
Interest rate | 3.65% | ||
Maturity | Jul. 9, 2030 | ||
DGSE | Texas Bank and Trust | |||
Note payable, related party | $ 491,852 | [5] | 0 |
Subtotal | $ 491,852 | ||
Interest rate | 3.75% | ||
Maturity | Sep. 14, 2025 | ||
ECHG | |||
Note payable, related party | $ 6,496,127 | [3] | $ 6,689,507 |
Subtotal | $ 6,496,127 | ||
Interest rate | 6.00% | ||
Maturity | May 16, 2024 | ||
[1] | The Company applied for and received, on April 20, 2020, approximately $1.67 million, 1% interest, federally backed loan intended to pay employees and cover certain rent and utility-related costs during the COVID-19 pandemic (the Federal Loan), with Truist Bank (BB&T Bank) as lender. The Federal Loan is forgivable to the extent that certain criteria are met. We have applied for the forgiveness of the Federal Loan during the fourth quarter ending December 31, 2020; therefore, we are classifying the loan as short-term. | ||
[2] | On November 4, 2020, 1901 Gateway Holdings, LLC, a wholly owned subsidiary of Envela Corporation, closed on the purchase of a new office building located at 1901 Gateway Drive, Irving, Texas for $3.521 million. The building was partially financed through a $2.96 million, 5 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. | ||
[3] | On May 20, 2019, in connection with the Echo Transaction, the Company entered into two loan agreements with John R. Loftus, the Companys CEO, President and Chairman of the Board. ECHG, LLC executed a 5-year, $6,925,979 note for the Echo Transaction, amortized over 20 years at a 6% annual interest rate. DGSE, LLC executed a 5-year, $3,074,021 note to pay off the accounts payable related party balance to a former Related Party as of May 20, 2019. That promissory note is also amortized over 20 years at a 6% annual interest rate. On January 1, 2020, revisions were made on the original documents for both DGSE and ECHG notes. Originally, the DGSE note stated that the monthly interest and principal payment due was $41,866 and the ECHG note stated that the monthly interest and principal payment due was $94,327. The revised interest and principal payment due monthly on the note for DGSE is $22,203. The revised interest and principal payment due monthly on the note for ECHG is $49,646. The allocation between short-term and long-term notes payable, related party was revised accordingly starting with the three months ending March 31, 2020. | ||
[4] | On July 9, 2020, DGSE closed the purchase of a new 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, 10 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. | ||
[5] | On September 14, 2020, 1106 NWH Holdings, LLC, a wholly owned subsidiary of DGSE, closed on the purchase of a new retail building located at 1106 W. Northwest Highway in Grapevine, Texas for $620,000. The purchase was partly financed through a $496,000, 5 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 $2,941. |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total | $ 15,413,925 | $ 0 |
ECHG | ||
2021 | 211,903 | |
2022 | 224,973 | |
2023 | 238,849 | |
2024 | 5,820,402 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 6,496,127 | |
Texas Bank and Trust | ||
2021 | 93,922 | |
2022 | 97,455 | |
2023 | 101,122 | |
2024 | 104,926 | |
2025 | 2,553,954 | |
Thereafter | 0 | |
Total | 2,951,379 | |
Envela | ||
2021 | 1,668,200 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 1,668,200 | |
DGSE | ||
2021 | 95,129 | |
2022 | 100,996 | |
2023 | 107,225 | |
2024 | 2,560,365 | |
2025 | 0 | |
Thereafter | 0 | |
Total | 2,863,715 | |
DGSE | Truist Bank | ||
2021 | 33,904 | |
2022 | 35,163 | |
2023 | 36,468 | |
2024 | 37,821 | |
2025 | 39,216 | |
Thereafter | 760,080 | |
Total | 942,652 | |
DGSE | Texas Bank and Trust | ||
2021 | 17,399 | |
2022 | 18,053 | |
2023 | 18,732 | |
2024 | 19,437 | |
2025 | 418,231 | |
Thereafter | 0 | |
Total | $ 491,852 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Sales | $ 113,922,015 | $ 82,024,497 |
Cost of goods sold | 90,853,052 | 65,768,655 |
Gross profit | 23,068,963 | 16,255,842 |
Selling, general and administrative expenses | 15,553,274 | 12,494,510 |
Depreciation and amortization | 728,626 | 520,298 |
Total expenses | 16,281,900 | 13,014,808 |
Operating income | 6,787,063 | 3,241,034 |
Other (income) expense, net | (306,997) | (49,756) |
Interest expense | 620,499 | 414,961 |
Income before income taxes | 6,473,561 | 2,875,829 |
Income tax expense | 89,618 | 95,116 |
Income from continuing operations | 6,383,943 | $ 2,780,713 |
ECHG | ||
Sales | 28,260,624 | |
Cost of goods sold | 15,561,531 | |
Gross profit | 12,699,093 | |
Selling, general and administrative expenses | 8,620,015 | |
Depreciation and amortization | 406,793 | |
Total expenses | 9,026,808 | |
Operating income | 3,672,285 | |
Other (income) expense, net | (193,023) | |
Interest expense | 411,204 | |
Income before income taxes | 3,454,104 | |
Income tax expense | 49,335 | |
Income from continuing operations | 3,404,769 | |
DGSE | ||
Sales | 85,661,391 | |
Cost of goods sold | 75,291,521 | |
Gross profit | 10,369,870 | |
Selling, general and administrative expenses | 6,933,259 | |
Depreciation and amortization | 321,833 | |
Total expenses | 7,255,092 | |
Operating income | 3,114,778 | |
Other (income) expense, net | (113,974) | |
Interest expense | 209,295 | |
Income before income taxes | 3,019,457 | |
Income tax expense | 40,283 | |
Income from continuing operations | $ 2,979,174 |
Basic and Diluted Average Sha_3
Basic and Diluted Average Shares (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares | 26,924,631 | 26,924,381 |
Effect of potential dilutive securities | 15,000 | 15,250 |
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, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share | 15,000 | 15,250 |
Stock Options and Restricted _3
Stock Options and Restricted Stock Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Shares, Outstanding at beginning of year | 15,000 | 15,000 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 0 | 0 |
Shares, Forfeited | 0 | 0 |
Shares, Outstanding at end of year | 15,000 | 15,000 |
Shares, Options exercisable at end of year | 15,000 | 15,000 |
Weighted average exercise price, Outstanding at beginning of year | $ 2.17 | $ 2.17 |
Weighted average exercise price, Granted | 0 | .00 |
Weighted average exercise price, Exercised | 0 | .00 |
Weighted average exercise price, Forfeited | 0 | .00 |
Weighted average exercise price, Outstanding at end of year | 2.17 | 2.17 |
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, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Number outstanding | 15,000 | |||
Weighted average exercise price | $ 2.17 | $ 2.17 | $ 2.17 | |
Aggregate Intrinsic Value | $ 48,050 | |||
Range One | ||||
Exercise price | $ 2.13 | |||
Number outstanding | 10,000 | |||
Weighted average remaining contractual life (years) | [1] | 0 years | ||
Weighted average exercise price | $ 2.13 | |||
Aggregate Intrinsic Value | $ 32,450 | |||
Range Two | ||||
Exercise price | $ 2.25 | |||
Number outstanding | 5,000 | |||
Weighted average remaining contractual life (years) | [1] | 0 years | ||
Weighted average exercise price | $ 2.25 | |||
Aggregate Intrinsic Value | $ 15,600 | |||
[1] | Options currently issued pursuant to the Company's 2004 Employee Stock Option Plans have no expiration date. |
Stock Options and Restricted _5
Stock Options and Restricted Stock Units (Details 2) - Restricted Stock Units (RSUs) [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Shares, Nonvested at beginning of year | 250 | 250 |
Shares, Granted | 0 | 0 |
Shares, Exercised | 250 | 0 |
Shares, Forfeited | 0 | 0 |
Shares, Nonvested at end of year | 0 | 250 |
Weighted average exercise price, Nonvested at beginning of year | $ 1.30 | $ 1.30 |
Weighted average exercise price, Granted | .00 | .00 |
Weighted average exercise price, Exercised | 1.30 | .00 |
Weighted average exercise price, Forfeited | .00 | .00 |
Weighted average exercise price, Nonvested at end of year | $ .00 | $ 1.30 |
Stock Options and Restricted _6
Stock Options and Restricted Stock Units (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 325 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Tax Expense at Statutory Rate | $ 1,364,191 | $ 626,468 |
Valuation Allowance | (1,371,195) | (631,775) |
Non-Deductible Expenses and Other | 7,004 | 5,307 |
State Taxes, Net of Federal Benefit | 89,618 | 95,116 |
Income tax expense | 89,618 | 95,116 |
Current | 89,618 | 95,116 |
Total | $ 89,618 | $ 95,116 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Inventories | $ 22,620 | $ 21,495 |
Stock options and other | 6,836 | 57,019 |
Contingencies and accruals | 28,580 | 32,154 |
Property and equipment | (256,065) | (180,300) |
Net operating loss carryforward | 6,527,548 | 7,763,103 |
Goodwill and intangibles | 27,085 | 34,328 |
Total deferred tax assets, net | 6,356,604 | 7,727,799 |
Valuation allowance | (6,356,604) | (7,727,799) |
Net Deferred tax asset | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Dec. 31, 2020USD ($) |
Operating loss carryforwards, net | $ 2,729,636 |
Superior Galleries | |
Operating loss carryforwards, net | $ 28,353,926 |
Leases (Details)
Leases (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total | $ 4,802,728 | |
Current portion | 1,148,309 | $ 1,175,109 |
Long term portion | 3,654,419 | $ 2,445,301 |
ECHG | ||
2021 | 869,209 | |
2022 | 786,396 | |
2023 | 808,022 | |
2024 | 830,244 | |
2025 and thereafter | 853,076 | |
Total minimum lease payments | 4,146,947 | |
Less imputed interest | (439,452) | |
Subtotal | 3,707,495 | |
DGSE | ||
2021 | 479,161 | |
2022 | 235,674 | |
2023 | 212,855 | |
2024 | 213,885 | |
2025 and thereafter | 64,087 | |
Total minimum lease payments | 1,205,662 | |
Less imputed interest | (110,429) | |
Subtotal | $ 1,095,233 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Lease cost | $ 1,452,689 | $ 1,151,619 |
Weighted average remaining lease term | 2 years 9 months 22 days | |
Weighted average discount rate | 5.50% | |
Operating lease expenses | $ 1,314,285 | $ 1,089,514 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Payment to related parties | $ 279,210 | $ 360,948 |
Related Entities | ||
Payment to related parties | 0 | 61,869 |
John Loftus | ||
Payment to related parties | 580,957 | 325,749 |
John Loftus | DGSE | ||
Accounts payable related party | 2,863,715 | 2,949,545 |
John Loftus | ECHG | ||
Accounts payable related party | $ 6,496,127 | $ 6,689,507 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Defined contribution plan, maximum annual contributions per employee, percent | 15.00% | 15.00% |
Defined contribution plan, contribution by employer | 10.00% | 10.00% |
Defined contribution plan, matching contribution percent of employee | 6.00% | 6.00% |