CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOW~~OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020

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

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

Note 2.Business Activity

The primary business of Wilhelmina is fashion model management. These business operations are headquartered in New York City. The Company’s predecessor was founded in 1967 by Wilhelmina Cooper, a renowned fashion model, and became one of the oldest, best known and largest fashion model management companies in the world. Since its founding, Wilhelmina has grown to include operations located in Los Angeles, Miami, ~~Chicago~~ and London, as well as a network of licensees in various local markets in the U.S. and ~~several international markets.~~internationally. Wilhelmina provides traditional, full-service fashion model and talent management services, specializing in the representation and management of models, entertainers, ~~artists,~~ athletes and other talent, to various clients, including retailers, designers, advertising agencies, print and electronic media and catalog companies.

Note 3.New Accounting Standards

~~Note 3. New~~In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting ~~Standards~~for Income Taxes”. ASU 2019-12 removes specific exceptions to the general principles in Topic 740 in order to reduce the complexity of its application. ASU 2019-12 also improves consistency and simplifies existing guidance by clarifying and amending certain specific areas of Topic 740. The guidance was effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted and is to be adopted prospectively, modified retrospectively or retrospectively depending on the associated exception. The Company examined all of the exceptions and have determined none are currently applicable. The Company adopted this standard in the first quarter of 2021, and it did not have a material impact on the Company’s consolidated financial statements and related disclosures.

~~Accounting Standard Update (“ASU”) 2015-17, Income Taxes~~ In October 2020, the FASB issued ASU No.2020- ~~Balance Sheet Classification~~10 “Codification Improvements.” The new accounting rules improve the consistency of ~~Deferred Taxes, requires deferred tax assets and liabilities to be netted and classified as non-current~~the Codification by including all disclosure guidance in the ~~consolidated balance sheet. Wilhelmina retrospectively adopted~~appropriate Disclosure Section (Section 50) that had only been included in the Other Presentation Matters Section (Section 45) of the Codification. Additionally, the new rules also clarify guidance across various topics including defined benefit plans, foreign currency transactions, and interest expense. The standard was effective for the Company in the first quarter of 2021. The adoption of the new accounting ~~standard~~rules did not have a material impact on ~~January 1, 2017. The impact~~the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU No.2020-04 “Reference Rate Reform (Topic 848): Facilitation of the ~~change resulted in~~Effects of Reference Rate Reform on Financial Reporting”, which provides optional expedients and exceptions for applying GAAP principles to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. This guidance was effective beginning on March 12, 2020, and can be adopted on a prospective basis no later than December 31, 2022, with early adoption permitted. The Company’s revolving line of credit includes interest based on prime rate, not LIBOR, and the ~~netting~~adoption of ~~deferred tax assets and liabilities and classification of all deferred taxes as non-current.~~

this standard is not expected to have a material impact on the Company’s consolidated financial statements.

Note 4.Foreign Currency Translation

The functional currency of ~~London~~our subsidiary in the United Kingdom is the British Pound. Assets and liabilities are translated into U.S. dollars at the exchange rates in effect at each balance sheet ~~date, revenues and expenses~~date. Results of operations are translated atusing the weighted average ~~monthly~~ exchange rates ~~and resulting~~during reporting periods. Related translation ~~gains or losses~~adjustments are accumulated in ~~other comprehensive income as~~ a separate component of ~~shareholders’ equity.~~
stockholder’s equity and transaction gains and losses are recognized in the consolidated statements of operations and comprehensive income (loss) when realized.

Note 5.  ~~Line of Credit~~Debt

The Company has a credit agreement with Amegy Bank ~~providing~~which originally provided a $4.0 million revolving line of credit and up to a $3.0 million term loan which could be drawn through October 24, 2016.Amounts outstanding under the term loan reduced the availability under the revolving line of credit. The revolving line of credit is subject to a borrowing base derived from 80% of eligible accounts receivable (as defined) and the Company’s minimum net worth ~~covenant of $20.0 million.~~covenant. The revolving line of credit bears interest at prime plus ~~0.5%~~0.50% payable monthly. ~~As of September 30, 2017, the~~The Company previously had a $0.2 million irrevocable standby letter of credit outstanding under the revolving line of credit which terminated June 9, 2021, and had 0 letters of credit outstanding at June 30, 2021. The Company had additional borrowing capacity of ~~$1.5 million.~~ $2.4 million at June 30, 2021. The revolving line of credit expires on October 24, ~~2018.~~2022.

On August 16, 2016, the Company drew $2.7 million of the term loan and used the proceeds to fund the purchase of shares of its common ~~stock.~~stock in a private transaction. The term loan ~~bears~~bore interest at 4.5% per annum and iswas payable in monthly payments of interest only until November, 2016, followed by 47 equal monthly payments of principal and interest computed on a ~~60-month~~60-month amortization ~~schedule and a~~schedule. A final $0.6 million payment of principal and interest ~~due~~was paid on October ~~24,~~28, 2020.

On ~~May 4, 2017,~~ July 16, 2018, the Company ~~entered into a Seventh Amendment to Credit Agreement~~amended its credit agreement with Amegy Bank ~~reducing~~to provide for an additional term loan of up to $1.0 million that could be drawn by the ~~Company’s fixed charge coverage ratio~~Company through ~~December 31, 2017. The Company obtained a waiver from Amegy Bank~~July 12, 2019, for the purpose of repurchases of its ~~failure~~common stock. The additional term loan is evidenced by a promissory note bearing interest at 5.15% per annum and was payable in monthly installments of interest only through July 12, 2019. Thereafter, the note is payable in monthly installments sufficient to ~~satisfy~~fully amortize the ~~fixed coverage ratio for~~outstanding principal balance in 60 months with the quarter ended June 30, 2017. On August 1, 2017, the Company entered into an Eighth Amendment to Credit Agreement with Amegy Bank eliminating the requirement to test the fixed charge coverage ratio for the quarter ended September 30, 2017.balance of principal and accrued interest due on July 12, 2023.

~~The~~Amounts outstanding under the additional term loan reduce the availability under the Company’s revolving line of credit with Amegy ~~expired by its terms on October 24, 2017.~~Bank. On ~~November 8, 2017,~~ August 1, 2018, the Company drew $0.7 million of the additional term loan and used the proceeds to fund the purchase of 100,000 shares of its common stock in a private transaction. On December 12, 2018, the Company drew $0.3 million of the additional term loan and used the proceeds to partially fund a purchase of 50,000 shares of its common stock in a private transaction. As of June 30, 2021, a total of $0.6 million was outstanding on the term loan.
Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy ~~extended~~Bank has limited access to additional financing. Net losses in recent periods have also impacted compliance with the ~~revolving~~financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional financing. On March 26, 2020, the Company entered into a Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”) with Amegy Bank. The Thirteenth Amendment amended the minimum net worth covenant to require the Company to maintain tangible net worth (as defined therein) of $4.0 million, determined on a quarterly basis. Under the Thirteenth Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy the previously required $20.0 million minimum net worth covenant as of December 31, 2019. On May 12, 2020, the Company entered into a Fourteenth Amendment to Credit Agreement (the “Fourteenth Amendment”) with Amegy Bank. The Fourteenth Amendment amended the line of credit to reduce the maximum borrowing capacity to $3.0 million. Under the Fourteenth Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy both the minimum fixed charge coverage ratio through March 31, 2020 and minimum tangible net worth as of March 31, 2020. The Company obtained waivers from Amegy Bank of its failures to satisfy the fixed charge coverage ratio, the minimum tangible net worth, and the borrowing base for the quarters ended June 30, 2020 and September 30, 2020. On November 10, 2020, the Company entered into a Fifteenth Amendment to Credit Agreement (the “Fifteenth Amendment”) with Amegy Bank. The Fifteenth Amendment waived the minimum tangible net worth covenant until December 31, 2021, after which a minimum tangible net worth of $1.5 million will be required. The Fifteenth Amendment also revised the calculation of the fixed charge coverage ratio such that it was tested at December 31, 2020 based on ~~substantially~~ the ~~same terms for one year until October 24, 2018.~~
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~~Note 6.  Commitments~~preceding six month period, tested at March 31, 2021 based on the preceding nine month period, and ~~Contingencies~~tested at June 30, 2021 and subsequent periods using a twelve month rolling period. The Company was in compliance with its bank covenants as of June 30, 2021.

On April 15, 2020, Wilhelmina International, Ltd. (the “Borrower”), a wholly-owned subsidiary of the Company, executed a Business Loan Agreement and a Promissory Note each dated April 13, 2020 (collectively, the “Sub PPP Loan Documents”), with respect to a loan in the amount of $1.8 million (the “Sub PPP Loan”) from Amegy Bank. The Sub PPP Loan was obtained pursuant to the Paycheck Protection Program (the “PPP”), administered by the U.S. Small Business Administration (the “SBA”). The Sub PPP Loan originally matured on April 13, 2022 and bore interest at a rate of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Sub PPP Loan was extended to mature on April 13, 2025. On March 27, 2021, the Company received notice from the SBA that the Sub PPP loan, including $17 thousand accrued interest, had been fully forgiven, resulting in $1.9 million of gain on forgiveness of loan recorded within other expenses (income) during the quarter ended March 31, 2021.
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On April 18, 2020, the Company executed a Business Loan Agreement and a Promissory Note each dated April 17, 2020 (collectively, the “Parent PPP Loan Documents”), with respect to a loan in the amount of $128 thousand (the “Parent PPP Loan”) from Amegy Bank. The Parent PPP Loan was also obtained pursuant to the PPP. The Parent PPP Loan originally matured on April 17, 2022 and bore interest at a rate of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Parent PPP Loan was extended to mature on April 17, 2025. On April 3, 2021, the Company received notice from the SBA that the Parent PPP Loan, including $1 thousand accrued interest, had been fully forgiven, resulting in $0.1 million of gain on forgiveness of loan recorded within other (income) expense during the quarter ended June 30, 2021.
Note 6.Commitments and Contingencies
On October 24, 2013, a putative class action lawsuit was brought against the Company by former Wilhelmina model Alex Shanklin and others, including Louisa Raske, Carina Vretman, Grecia Palomares and Michelle Griffin Trotter (the “Shanklin Litigation”), in New York State Supreme Court (New York County) by the same lead counsel who represented plaintiffs in a prior, now-dismissed action brought by Louisa Raske (the “Raske Litigation”). The claims in the Shanklin Litigation initially included breach of contract and unjust enrichment allegations arising out of matters similar to the Raske Litigation, such as the handling and reporting of funds on behalf of models and the use of model images. Other parties named as defendants in the Shanklin Litigation include other model management companies, advertising firms, and certain advertisers. On January 6, 2014, the Company moved to dismiss the Amended Complaint in the Shanklin Litigation for failure to state a claim upon which relief can be granted and other grounds, and other defendants also filed motions to dismiss. On August 11, 2014, the court denied the motion to dismiss as to Wilhelmina and other of the model management defendants. ~~Further,~~Separately, on March 3, 2014, the judge assigned to the Shanklin Litigation wrote the Office of the New York Attorney General bringing the case to its attention, generally describing the claims asserted therein against the model management defendants, and stating that the case ~~“may~~ “may involve matters in the public interest.” The judge’s letter also enclosed a copy of his decision in the Raske Litigation, which dismissed that case.
Plaintiffs retained substitute counsel, who filed a Second and then Third Amended Complaint. Plaintiffs’ Third Amended Complaint asserts causes of action for alleged breaches of the plaintiffs' management contracts with the defendants, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment. The Third Amended Complaint also alleges that the plaintiff models were at all relevant times employees, and not independent contractors, of the model management defendants, and that defendants violated the New York Labor Law in several respects, including, among other things, by allegedly failing to pay the models the minimum wages and overtime pay required thereunder, not maintaining accurate payroll records, and not providing plaintiffs with full explanations of how their wages and deductions therefrom were computed. The Third Amended Complaint seeks certification of the action as a class action, damages in an amount to be determined at trial, plus interest, costs, attorneys’ fees, and such other relief as the court deems proper. On October 6, 2015, Wilhelmina filed a motion to dismiss as to most of the plaintiffs’ ~~claims, and oral argument on the motion was heard by the Court in June 2016.~~claims. The Court entered a decision granting in part and denying in part Wilhelmina’s motion to dismiss on May 26, 2017. The Court (i) dismissed three of the five New York Labor Law causes of action, along with the conversion, breach of the duty of good faith and fair dealing and unjust enrichment causes of action, in their entirety, and (ii) permitted only the breach of contract causes of action, and some plaintiffs’ remaining two New York Labor Law causes of action to continue, within a limited time frame. The plaintiffs and Wilhelmina ~~have~~each appealed, ~~the decision. The parties appeared before the Court for a status conference on July 18, 2017,~~ and the ~~Court directed the defendants to answer the Third Amended Complaint by~~ decision was affirmed on May 24, 2018. On August 16, ~~2017.~~ 2017, Wilhelmina timely filed its Answer to the Third Amended Complaint on that date, and discovery in this action is continuing.  The Company believes the claims asserted in the Third Amended Complaint are without merit, and intends to continue to vigorously defend the action.Complaint.

On June 6, 2016, another putative class action lawsuit was brought against the Company by former Wilhelmina model Shawn Pressley and others, including Roberta Little (the “Pressley Litigation”), in New York State Supreme Court (New York County) by the same counsel representing the plaintiffs in the Shanklin Litigation, and asserting identical, although more recent, claims as those in the Shanklin Litigation. On June 14, 2016, the Court stayed all proceedings in the Pressley Litigation until a decision was issued on the motion to dismiss in the Shanklin Litigation. At the court conference on July 18, 2017 (mentioned above), the judge directed the plaintiffs to file an amended complaint in the Pressley Litigation, if any, by August 16, 2017, and directed the defendants to move against or answer such amended complaint by September 29, 2017.  The Amended Complaint, asserting essentially the same types of claims as in the Shanklin action, was filed on August 16,^th~~, and~~ 2017. Wilhelmina filed a motion to dismiss the Amended Complaint on September 29, ~~2017. Briefing~~2017, which was granted in part and denied in part on May 10, 2018. Some New York Labor Law and contract claims remain in the ~~motion to dismiss is continuing,~~case. Pressley has withdrawn from the case, leaving Roberta Little as the sole remaining named plaintiff in the Pressley Litigation. On July 12, 2019, the Company filed its Answer and Counterclaim against Little.
On May 1, 2019, the Plaintiffs in the Shanklin Litigation (except Raske) and the Pressley Litigation filed motions for class certification on their contract claims and the remaining New York Labor Law Claims. On July 12, 2019, Wilhelmina filed its opposition to the motions for class certification and filed a cross-motion for summary judgment against Shanklin, Vretman, Palomares, Trotter and Little, and a motion ~~is scheduled~~for summary judgment against Raske.
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By Order Dated May 8, 2020 (the “Class Certification Order”), the Court denied class certification in the Pressley case, denied class certification with respect to the breach of contract and alleged unpaid usage claims, granted class certification as to the New York Labor Law causes of action asserted by Vretman, Palomares and Trotter, and declined to rule on Wilhelmina’s motions for summary judgment, denying them without prejudice to be ~~submitted~~re-filed at a later date. The Court has directed the parties to ~~the Court on November 16, 2017. Discovery~~non-binding mediation and that process is ~~proceeding in this case.~~ underway.
The Company believes the claims asserted in the Shanklin Litigation and Pressley Litigation are without merit and intends to continue to vigorously defend the ~~action.~~actions.

In addition to the legal proceedings disclosed herein, the Company is also engaged in various legal proceedings that are routine in nature and incidental to its business. None of these routine proceedings, either individually or in the aggregate, are believed likely, in the Company's opinion, to have a material adverse effect on its consolidated financial position or its results of operations.

Note 7.Income Taxes

Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of valuation allowances on deferred tax assets, certain ~~amounts of~~ amortization ~~and depreciation~~ expense, stock based compensation, and corporate overhead not being deductible and income being attributable to certain states in which it operates. In 2021, the effective tax rate is lower than in recent years due to PPP loan forgiveness, which is not subject to income tax. In recent years, the majority of taxes paid by the Company were state and foreign taxes, not U.S. federal taxes. The Company operates in four states which have relatively high tax rates: California, New York, Illinois, and Florida. Realization of net operating loss carryforwards, foreign tax credits, and other deferred tax temporary differences are contingent upon future taxable earnings. The Company’s deferred tax assets are reviewed for expected utilization by assessing the available positive and negative factors surrounding recoverability, including projected future taxable income, tax-planning strategies, and results of recent operations. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. As of ~~September~~June 30, ~~2017,~~ 2021, due primarily to the effects of the COVID-19 pandemic on its business, the Company believes it is more likely than not that the benefit from deferred tax assets will not be realized. At June 30, 2021, the Company maintained a $1.4 million valuation allowance against its deferred tax assets. The Company will continue to assess the assumptions used to determine the amount of the valuation allowance and may adjust the valuation allowance in future periods based on changes in estimated future income and other factors.
As of June 30, 2021, the Company had federal income tax loss carryforwards of ~~$1.5~~$2.6 million.

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Note 8.  ~~Shareholder Equity~~ Treasury Shares

During 2012, the Board of Directors authorized a stock repurchase program whereby the Company could repurchase up to 500,000 shares of its outstanding common stock. During 2013, the Board of Directors renewed and extended the Company’s share repurchase authority to enable it to repurchase up to an aggregate of 1,000,000 shares of common stock. ~~On August 12,~~ In 2016, the Board of Directors increased by an additional 500,000 shares the number of shares of the Company’s common stock ~~which~~ that may be repurchased under its stock repurchase program to an aggregate of 1,500,000 shares. The shares may be repurchased from time to time in the open market or through privately negotiated transactions at prices the Company deems appropriate. The program does not obligate the Company to acquire any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion.

From 2012 through ~~September~~June 30, ~~2017,~~ 2021, the Company has repurchased ~~1,090,370~~1,314,694 shares of ~~Common Stock~~common stock at an average price of approximately ~~$4.49~~$4.85 per share, for a total of approximately ~~$4.9~~$6.4 million in repurchases under the stock repurchase program. NoDuring the six months ended June 30, 2021, 0 shares were repurchased under the stock repurchase ~~program during the first nine months of 2017.~~
program.

Note 9. ~~Common Stock~~
On July 7, 2017, the Company filed with the Delaware Secretary of State a Certificate of Amendment of its Restated Certificate of Incorporation. As approved by shareholders at the Annual Meeting held June 13, 2017, the Certificate of Amendment eliminated any class of preferred stock from the shares of capital stock the Company is authorized to issue and decreased the number of shares of common stock the Company is authorized to issue from 12,500,000 shares to 9,000,000 shares.
~~Note 10.~~  Related Parties

The Executive Chairman of the Company, Mark E. Schwarz, is also the chairman, chief executive officer and portfolio manager of Newcastle Capital Management, L.P. (“NCM”). NCM is the general partner of Newcastle Partners L.P. (“Newcastle”), which is the largest shareholder of the Company. ~~James Dvorak (Managing Director at NCM) also serves as director of the Company.~~

The Company’s corporate headquarters are located at ~~200 Crescent Court, Suite 1400, Dallas, Texas 75201, which are also~~ the offices of NCM. The Company occupies a portion of NCM space on a month-to-month basis at $2.5 thousand per month, pursuant to a services agreement entered into between the parties. Pursuant to the services agreement, the Company receives the use of NCM’s facilities and equipment and accounting, legal and administrative services from employees of NCM. The Company incurred expenses pursuant to the services agreement totaling approximately ~~$7.5 thousand and $22.5~~$15 thousand for the ~~three and nine~~six months ended both ~~September~~June 30, ~~2017~~ 2021 and ~~2016.~~2020. The Company did not owe NCM any amounts under the services agreement as of ~~September~~June 30, ~~2017.~~2021.
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In the second quarter of 2021, the Company recorded $32 thousand related to the recovery of short-swing profits disgorged from one of the Company’s shareholders under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company recognized these related party proceeds as an increase to additional paid-in capital in the accompanying condensed consolidated balance sheet as of June 30, 2021, as well as cash provided by financing activities of $32 thousand in the accompanying consolidated statement of cash flows for the quarter ended June 30, 2021.
Note 10.Goodwill

The Company previously owned an unconsolidated 50% interest in Wilhelmina Kids & Creative Management LLC (“Kids”), a New York City-based modeling agency that specialized in representing child models/talents, from newborns to children 14 yearsDuring the first quarter of ~~age. On December 9, 2016, the owners of Kids agreed to dissolve Kids and ceased related business operations of Kids. On March 1, 2017,~~2020, the Company ~~paid $0.1 million to another owner~~determined that recent declines in revenue, COVID-19 impacts on its retail clients, and declines in its stock price triggered the requirement for goodwill impairment testing. The results of ~~Kids in accordance with~~ the ~~December 9, 2016 agreement to liquidate~~impairment test indicated that the ~~enterprise.~~carrying value of goodwill exceeded its estimated fair value. As a result, ~~Wilhelmina no longer maintains a child models division.~~
~~Note 11. Subsequent Events~~
~~On November 8, 2017,~~ during March 2020, the Company ~~and Amegy extended~~recorded an impairment charge of $0.8 million related to its goodwill. NaN asset impairment charges were incurred during the ~~revolving line of credit on substantially~~six months ended June 30, 2021. Further declines in the ~~same terms for one year until October 24, 2018~~Company’s stock price could result in additional goodwill impairment charges.

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Item 2.  ~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is a discussion of the interim unaudited consolidated financial condition and results of operations for the Company and its subsidiaries for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020. It should be read in conjunction with the financial statements of the Company, the notes thereto and other financial information included elsewhere in this report, and the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016, as amended.~~2020.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain ~~“forward-looking”~~“forward-looking” statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the ~~“Exchange Act”~~“Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such forward looking statements relating to the Company and its subsidiaries are based on the beliefs of the ~~Company’s~~Company’s management as well as information currently available to the ~~Company’s~~Company’s management.When used in this report, the words ~~“anticipate,~~“anticipate,” ~~“believe,~~“believe,” ~~“estimate,~~“estimate,” ~~“expect”~~“expect” and ~~“intend”~~“intend” and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements.Such statements ~~are subject to~~reflect the current risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, the interest rate environment, governmental regulation and supervision, seasonality, changes in industry practices, one-time events and other factors described herein and in other filings made by the Company with the SEC.Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.The Company does not undertake any obligation to publicly update these forward-looking statements.As a result, you should not place undue reliance on these forward-looking statements.

OVERVIEW

The ~~Company’s~~ primary business of Wilhelmina is fashion model management. These business operations are headquartered in New York City. The Company’s predecessor was founded in 1967 by Wilhelmina Cooper, a renowned fashion model, and became one of the oldest, best known and largest fashion model management companies in the world. Since its founding, Wilhelmina has grown to include operations located in Los Angeles, Miami, and ~~complementary business activities. The business~~London, as well as a network of licensees. Wilhelmina provides traditional, full-service fashion model and talent management ~~firms, such~~services, specializing in the representation and management of models, entertainers, athletes and other talent, to various clients, including retailers, designers, advertising agencies, print and electronic media and catalog companies.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as ~~Wilhelmina, depends~~a pandemic, which spread rapidly throughout the United States and the world. As the global impact of COVID-19 continues, Wilhelmina’s first priority has been to protect the health and safety of its employees and talent. To help mitigate the spread of the virus and in response to health advisories and governmental actions and regulations, the Company has modified its business practices and has implemented health and safety measures that are designed to protect employees and represented talent.
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The Company’s revenues are heavily dependent on the ~~state~~level of economic activity in the United States and the United Kingdom, particularly in the fashion, advertising and publishing industries, all of which have been negatively impacted by the pandemic and may not recover as quickly as other sectors of the ~~advertising industry,~~economy. There have been mandates from federal, state, and local authorities requiring forced closures of non-essential businesses. As a result, beginning in March 2020, the Company saw a significant reduction in customer bookings, resulting in a negative impact to revenue and earnings. While bookings remain below pre-pandemic levels, during the second half of 2020 and the first half of 2021, bookings increased from the preceding months.
In addition to reduced revenue, business operations have been adversely affected by reductions in productivity, limitations on the ability of customers to make timely payments, disruptions in talents’ ability to travel to needed locations, and supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations for photoshoots and other bookings. Many of the Company’s customers are large retail and fashion companies, some of which have had to close stores in the United States and internationally due to the spread of COVID-19. Some of these customers have filed for bankruptcy and others may be unable to pay amounts already owed to the Company, resulting in increased future bad debt expense. These customers also may not emerge from the pandemic with the financial ability, or need, to purchase Wilhelmina’s services to the extent that they did in previous years. Some model talent have been quarantined far from the major cities where Wilhelmina’s offices are located, and also away from where most modeling jobs take place. Many U.S. and international airlines have decreased their flight schedules which, as ~~demand~~economic activities resume and clients increase booking requests, may make it difficult for talent to be available when and where they are needed. The B.1.1.7 (Alpha) and B.1.617.2 (Delta) variants of the COVID-19 virus, which are believed to spread easily and quickly, have resulted in increased local restrictions and mandates in the cities in which the Company operates. While these disruptions are currently expected to be temporary, there continues to be uncertainty around the duration.
Although some clients have increased activity and bookings recently, rising COVID-19 infection rates in cities where Wilhelmina operates could lead to a slower economic recovery in those markets, and possible additional business closings or local mandates that could slow the recovery in operations there. Since Wilhelmina extends customary payment terms to its clients, even as bookings resume, there is ~~driven by Internet, print~~likely to be a lag in cash collections. In the meantime, the Company continues to have significant employee, office rent, and ~~television advertising campaigns for consumer goods~~other expenses.
Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy Bank has limited its access to additional financing. Net losses during 2020 also impacted compliance with the financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional financing. Since the pandemic began, many stock markets, including Nasdaq Capital Market where Wilhelmina’s common stock is listed, have been volatile. A decline in the Company’s stock price would reduce its market capitalization and ~~retail clients. Wilhelmina believes it~~could require additional goodwill or intangible asset impairment writedowns.
The Company has ~~strong brand recognition which enables it~~taken the following actions to ~~attract and retain top agents and talent to service a broad universe~~address the impact of ~~clients. In~~COVID-19, in order to ~~take advantage of these opportunities~~efficiently manage the business and ~~support its continued growth,~~maintain adequate liquidity and maximum flexibility:
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In April 2020, obtained approximately $2.0 million in loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”). In 2021, the SBA communicated to the Company that these loans have been 100% forgiven.
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Eliminated discretionary travel and entertainment expenses.
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Suspended share repurchases.
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Did not renew the leases on three New York City model apartments when the terms ended in June and August, 2020.
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Did not renew the lease on the Company’s New York City office when the term ended in February 2021, and required all New York based staff to work remotely.
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Suspended efforts to fill two highly compensated executive roles following the resignation of the Company’s Chief Executive Officer and Vice President in early 2020.
- Negotiated discounts with various vendors and service providers.
- Effective July 1, 2020, implemented layoffs of approximately 36% of its staff, including employees at each of the Company’s five offices, and elected temporary salary reductions for the remaining staff.
If quarantines and limitations on non-essential work are re-implemented, or persist for an extended period, the Company ~~will~~may need to implement additional cost savings measures.
On December 27, 2020, the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law. The CAA expanded eligibility for an employee retention credit for companies impacted by the pandemic with fewer than five hundred employees and at least a twenty percent decline in gross receipts compared to the same quarter in 2019, to encourage retention of employees. This payroll tax credit is a refundable tax credit against certain employment taxes of up to $7 thousand per employee for eligible employers, equal to 70% of qualified wages paid to employees during a quarter, capped at $10 thousand of qualified wages per employee. For the three and six months ended June 30, 2021, the Company recorded $0.4 million and $0.9 million, respectively, of Other Income for employee retention credit funds receivable. The CAA provides an election to use the prior quarter’s gross receipts for purposes of determining eligibility in the current quarter. The Company has elected to use the prior quarter election for determining eligibility and expects to continue to ~~successfully allocate resources and staffing in a way that enhances its ability to respond to new opportunities.~~receive additional tax credits under the CAA for qualified wages through September 30, 2021. The Company ~~continues~~has also benefitted from the CAA guidance to ~~focus on tightly managing costs, recruiting top agents when available, and scouting and developing new talent.~~treat expenses associated with forgiven PPP loans as tax deductible.
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BREXIT

~~Although Wilhelmina has a large and diverse client base, it is not immune to global economic conditions. The Company closely monitors economic conditions, client spending,~~On January 31, 2020, the United Kingdom (“UK”) withdrew from the European Union (“EU”). Effective January 1, 2021, new visa requirements and other ~~industry factors and continually evaluates opportunities~~restrictions limit the freedom of movement for British workers to ~~increase its market share and further expand its geographic reach.  There can be no assurance as~~travel to the ~~effects on~~EU for work, which may impact the ability of the Company’s London office to book modeling photoshoots that take place in the European Union. It may also be more difficult, in the future, for talent represented by Wilhelmina ~~of future economic circumstances, client spending patterns, client creditworthiness~~London, but based in the EU, to travel to London and other ~~developments~~parts of the UK for photoshoots and ~~whether,~~campaign work. New immigration sponsorship or ~~to what extent, Wilhelmina’s efforts to respond to them will be effective.~~
visa requirements could discourage fashion brands and other clients from booking as frequently in London, which has historically been an international fashion and modeling hub, and could impact the revenue of the Company’s London operations.

Trends and Opportunities

The Company expects that the combination of Wilhelmina’s main operating base in New York City, the industry’s capital, with the depth and breadth of its talent pool and client roster and its diversification across various talent management segments, together with its geographical reach, should make Wilhelmina’s operations more resilient to industry changes and economic swings than those of many of the smaller firms operating in the industry. ~~Similarly, in the segments where the Company competes with other leading full-service agencies, Wilhelmina competed successfully during the first nine months of 2017.~~

With total annual advertising expenditures on major media (newspapers, magazines, television, cinema, outdoor and Internet) exceeding approximately ~~$187~~$220 billion in recent years, North America is by far the world’s largest advertising market.  For the fashion talent management industry, including Wilhelmina, advertising expenditures on magazines, television, Internet and outdoor are of particular relevance.

In recent ~~quarters,~~periods, traditional retail clients in the fashion and beauty industry have had increased competition from digital, social, and new media, reducing their budgets for advertising and model talent. Wilhelmina reviews the mix of talent and resources available to best operate in the changing environment.
9
Although Wilhelmina has a large and diverse client base, it is not immune to global economic conditions. The Company closely monitors economic conditions, client spending, and other industry factors and continually evaluates opportunities to increase its market share and further expand its geographic reach.  There can be no assurance as to the effects on Wilhelmina of current or future economic circumstances, client spending patterns, client creditworthiness and other developments and whether, or to what extent, Wilhelmina’s efforts to respond to them will be effective.

Strategy

Management’s long-term strategy is to increase value to shareholders through the following initiatives:

•         increase Wilhelmina’s brand awareness ~~and consideration~~ among advertisers and potential talent;
~~expand the Wilhelmina network through strategic geographic market development;~~
•         expand the women’s ~~high-end~~high end fashion board;
•         expand the Aperture division’s representation in commercials, film, and television;
•         expand celebrity and social media influencer representation;
•         expand the Wilhelmina network through strategic geographic market development; and
•         promote model search contests and events and ~~partnering~~partner on media projects (television, film, books, etc.).

~~Due~~The Company makes use of digital technology to ~~the increasing ubiquity of the Internet as a standard business tool, the Company has increasingly sought to harness the opportunities of the Internet~~effectively connect with clients and talent, utilizing video conferencing and other digital ~~media~~tools to ~~improve its communications with clients~~best position our team to identify opportunities to grow the careers of the talent we represent and ~~to facilitate the effective exchange of fashion model and talent information.~~expand our business. The Company ~~continues to make~~has made significant investments in technology, ~~(including developing in-house art~~infrastructure, and ~~social media departments) in pursuit of gains in efficiency~~personnel, to support our clients and better communications with clients.  At the same time, the Internet presents challenges for the Company, including (i) the cannibalization of traditional print media businesses, and (ii) pricing pressures with respect to digital media photo shoots and client engagements.talent.

In January 2015, the Company purchased 100% of the outstanding shares of Union Models Management Ltd. in London and renamed it Wilhelmina London Limited (“London”). The strategic acquisition of London established a footprint for the Company and the brand in Western Europe. London also serves as a base of operations to service the Company’s European clients, and as a new talent development office for European models and artists.
~~In September 2016, Wilhelmina opened a Chicago office to better provide models and talents with direct access to clients in the mid west region of the United States.~~
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Key Financial Indicators

~~The~~In addition to net income, the key financial indicators that the Company reviews to monitor its business are ~~gross billings,~~ revenues, model costs, operating expenses and cash flows.

The Company analyzes revenue by reviewing the mix of revenues generated by the different ~~“boards” (each~~“boards,” each a specific division of the fashion model management operations which specializes by the type of model it represents, ~~(Women, Men, Artist, Showroom, Curve, Celebrity, etc.))~~ by geographic locations and from significant clients. ~~Wilhelmina has three~~Wilhelmina’s primary sources of ~~revenue:~~revenue include: (i) ~~gross billings are~~ revenues from principal relationships where the gross amount billed to the client is recorded as revenue when earned and collectability is reasonably assured; ~~(ii) revenues from agent relationships where commissions paid by models as a percentage of their gross earnings are recorded as revenue when earned~~ and ~~collectability is reasonably assured; and (iii)~~(ii) separate service charges, paid by clients in addition to the booking fees, which are calculated as a percentage of the models’ booking fees and are recorded as revenues when earned and collectability is reasonably assured. See “Critical Accounting Policies - Revenue Recognition.” Gross billings are an important business metric that ultimately drive profits and cash flows. Model costs represents costs paid to model and artist talent and to mother agents relating to photoshoots and other jobs booked by Wilhelmina.

Wilhelmina provides professional services. Therefore, salary and service costs represent the largest part of the Company’s operating expenses. Salary and service costs are comprised of payroll and related costs and travel, meals and entertainment (“T&E”) to deliver the Company’s services and to enable new business development ~~activities.~~
10
activities

Analysis of Consolidated Statements of Operations and Service Revenues

(in thousands) Three Months Ended Nine Months Ended
Sept 30 Sept 30 % Change Sept 30 Sept 30 % Change
2017 2016 2017 vs 2016 2017 2016 2017 vs 2016
Service revenues 18,712 20,880 (10.4 %) 56,120 64,512 (13.0 %)
License fees and other income 6 28 (78.6 %) 34 82 (58.5 %)
TOTAL REVENUES 18,718 20,908 (10.5 %) 56,154 64,594 (13.1 %)
Model costs 13,265 14,888 (10.9 %) 39,910 45,952 (13.1 %)
REVENUES NET OF MODEL COSTS 5,453 6,020 (9.4 %) 16,244 18,642 (12.9 %)
GROSS PROFIT MARGIN 29.1 % 28.8 % 28.9 % 28.9 %
Salaries and service costs 3,447 3,708 (7.0 %) 10,611 11,594 (8.5 %)
Office and general expenses 1,400 1,381 1.4 % 3,832 4,267 (10.2 %)
Amortization and depreciation 232 89 160.7 % 672 295 127.8 %
Corporate overhead 236 192 22.9 % 817 768 6.4 %
OPERATING INCOME 138 650 (78.8 %) 312 1,718 (81.8 %)
OPERATING MARGIN 0.7 % 3.1 % 0.6 % 2.7 %
Foreign exchange gain (loss) (18 ) 1 * (54 ) 8 *
Gain (loss) from unconsolidated subsidiary (2 ) 5 * (40 ) 11 *
Interest Expense (31 ) (21 ) 47.6 % (88 ) (21 ) 319.0 %
Revaluation of contingent liability - (30 ) * - (30 ) *
INCOME BEFORE INCOME TAXES 87 605 (85.6 %) 130 1,686 (92.3 %)
Income tax expense (61 ) (378 ) (83.9 %) (147 ) (1,006 ) (85.4 %)
Effective tax rate 70.1 % 62.5 % 113.1 % 59.7 %
NET (LOSS) INCOME 26 227 (88.5 %) (17 ) 680 (102.5 %)
* Not Meaningful
(in thousands)

Three Months Ended

Six Months Ended

June 30

June 30

% Change

June 30

June 30

% Change

2021

2020

2021 vs 2020

2021

2020

2021 vs 2020

Service revenues
14,502 4,523 220.6% 26,468 19,070 38.8%
License fees and other income
8 5 60.0% 18 10 80.0%
TOTAL REVENUES
14,510 4,528 220.5% 26,486 19,080 38.8%
Model costs
10,412 3,397 206.5% 19,051 14,003 36.0%
REVENUES NET OF MODEL COSTS
4,098 1,131 262.3% 7,435 5,077 46.4%
GROSS PROFIT MARGIN
28.2 % 25.0 % 28.1 % 26.6 %
Salaries and service costs
2,057 2,788 (26.2%) 3,928 5,915 (33.6%)
Office and general expenses
709 947 (25.1%) 1,564 2,002 (21.9%)
Amortization and depreciation
243 298 (18.5%) 509 592 (14.0%)
Goodwill impairment
- - - - 800 (100.0%)
Corporate overhead
198 238 (16.8%) 443 547 (19.0%)
OPERATING INCOME (LOSS)
891 (3,140 ) 128.4% 991 (4,779 ) 120.7%
OPERATING MARGIN
6.1 % (69.3 %) 3.7 % (25.0 %)
Foreign exchange loss (gain)
20 14 (42.9%) 88 (51 ) (272.5%)
Gain on forgiveness of loan
(129 ) - * (1,994 ) - *
Employee retention credit
(436 ) - * (862 ) - *
Interest expense
13 23 (43.5%) 42 50 (16.0%)
INCOME (LOSS) BEFORE INCOME TAXES
1,423 (3,177 ) 144.8% 3,717 (4,778 ) 177.8%
Current income tax (expense) benefit
(74 ) 75 198.7% (110 ) 16 *
Deferred tax expense
(228 ) 402 156.7% (265 ) (598 ) (55.7%)
Effective tax rate
21.2 % 15.0 % 10.1 % (12.2 %)
NET INCOME (LOSS)
1,121 (2,700 ) 141.5% 3,342 (5,360 ) 162.4%
* Not meaningful

Service Revenues

The Company’s service revenues fluctuate in response to its clients’ willingness to spend on advertising and the Company’s ability to have the desired talent available. The ~~decrease~~increases of ~~10.4%~~220.6%% and ~~13.0%~~38.8% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, when compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, was~~2020, were primarily due to ~~a decrease in core model bookings. The decrease in core model~~increased bookings ~~in United States was partially offset by an increase in core model bookings in~~as the ~~London office, bookings from the Aperture division~~cities where Wilhelmina operates reopened and ~~bookings from the Celebrity division.~~business activity increased as COVID-19 vaccination rates rose.

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License Fees and Other Income

License fees and other income include ~~management and administrative services fees, from an unconsolidated subsidiary,~~ franchise revenues from independently owned model agencies that use the Wilhelmina trademark and various services provided by the Company. License fees ~~decreased~~increased by ~~78.6%~~60.0% and ~~58.5%~~80.0% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, when compared to three and ~~nine~~six months ended ~~in September~~June 30, ~~2016. The decrease was~~2020, primarily due to ~~ending~~the timing of income from licensing ~~agreements with affiliates.~~agreements.

Gross Profit Margin

Gross profit margin increased by ~~0.3%~~320 and 150 basis points for the three and six months ended ~~September~~June 30, ~~2017,~~2021, when compared to the three and six months ended ~~September~~June 30, ~~2016~~2020, primarily due to ~~higher recovery of model chargebacks, an increase~~a change in ~~higher margin celebrity~~board revenue mix and a ~~decrease~~smaller percentage of consolidated revenue from the Aperture division in ~~client reimbursable expenses in 2017. For the nine months ended September 30, 2017, when compared to the nine months ended September 30, 2016, the gross profit~~2021, which is lower margin ~~remained relatively unchanged.~~than traditional core model bookings.

Salaries and Service Costs

Salaries and service costs consist of payroll related costs and T&E required to deliver the Company’s services to its clients and talents. The ~~decrease~~26.2% and 33.6% decreases in salaries and service costs ~~of 7.0% and 8.5% for~~during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, when compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 was~~2020, were primarily due to ~~severance paid to~~employee layoffs in July 2020, temporary reductions in staff salaries, and the ~~Company’s former Chief Executive Officer~~closure of the hair and ~~another employee~~makeup artist division in ~~2016, changes in personnel to better align~~ the ~~number~~second half of ~~employees at each Wilhelmina office with the needs of each geographic region, and more effective management of T&E during the first nine months of 2017.~~2020.

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Office and General Expenses

Office and general expenses consist of office and equipment rents, advertising and promotion, insurance expenses, administration and technology cost.  ~~These costs are less directly linked to changes in the Company’s revenues than are salaries and service costs.~~ The ~~increase~~decrease in office and general expenses of ~~1.4%~~25.1% and 21.9% for the three and six months ended ~~September~~June 30, ~~2017~~2021, when compared to the three and six months ended ~~September~~June 30, ~~2016, was~~2020, were primarily due to ~~costs associated with the Company’s 50th anniversary in 2017~~reduced rent expense, other office related expenses, and ~~higher~~ bad debt ~~expense. For the nine months ended September 30, 2017, when compared to the nine months ended~~expense, partially offset by an increase in ended September 30, 2016, the decrease of 10.2% was primarily due to $233 thousand related to the recruiting of the Company’s Chief Executive Officer and Chief Financial Officer and $160 thousand of non-income tax expenses that were incurred during the first nine months of 2016.legal expense in 2021.
Amortization and Depreciation

Amortization and depreciation expense is incurred with respect to certain assets, including computer hardware, software, office equipment, furniture, and ~~other intangibles. During~~finance leases. Amortization and depreciation expense decreased by 18.5% and 14.0% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, depreciation and amortization expense increased by 160.7% and 127.8%~~2021 compared to the ~~same periods~~three and six months ended June 30, 2020 primarily due to reduced depreciation of ~~the prior year, primarily related to the Company’s new accounting software being placed~~assets that became fully amortized in ~~service during the fourth quarter of 2016.~~2020. Fixed asset purchases (mostly related to technology and computer ~~equipment and technology)~~equipment) totaled approximately ~~$122~~$4 thousand and ~~$600~~$6 thousand during the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, compared to ~~$367~~$32 thousand and ~~$1,118~~$88 thousand for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020.
Goodwill Impairment
No goodwill impairment charges were incurred during the six months ended June 30, 2021. In March 2020, the Company determined that recent declines in revenue, COVID-19 impacts on its retail clients, and declines in its stock price triggered the requirement for goodwill impairment testing. The results of the impairment test indicated that the carrying value of goodwill exceeded its estimated fair value. As a result, during March 2020, the Company recorded an impairment charge of $0.8 million related to its goodwill. Further declines in the Company’s stock price could result in additional goodwill impairment charges.
Corporate Overhead

Corporate overhead expenses include director and executive officer compensation, ~~insurance,~~ legal, audit and professional fees, corporate office rent and ~~travel costs.~~travel. Corporate overhead ~~increased~~decreased by ~~22.9%~~16.8% and ~~6.4%~~19.0% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 respectively,~~2021, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase was~~2020, primarily due to ~~increase~~temporary reduction in ~~professional services~~ fees paid to corporate employees and ~~an increase in corporate travel costs.~~the Company’s directors.

Operating Income and Loss and Operating Margin

Operating ~~margin decreased by 2.4%~~income of $0.9 million and ~~2.1%~~$1.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, when~~2021 compared to losses of $3.1 million and $4.8 million in the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2020. As a result, operating margin increased to 6.1% and 3.7% for the three and six months ended June 30, 2021, compared to negative 69.3% and 25.0% for the three and six months ended June 30, 2020. These increases were primarily ~~due to decreases in revenues outpacing reductions in~~the result of increased revenue net of model costs and lower operating expenses.
16

Foreign Currency ~~Translation~~Exchange

The Company realized ~~$18~~$20 thousand and ~~$54~~$88 thousand ofloss from foreign currency exchange ~~loss~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, as compared to a~~2021, and $14 thousand loss and $51 thousand gain ~~of $1 thousand and $8 thousand~~from foreign currency exchange during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. The foreign~~2020. Foreign currency gain and loss is due to fluctuations in currencies ~~primarily~~ from Great Britain, Europe, and ~~Europe.~~Latin America.

~~Unconsolidated Subsidiary~~Gain on Forgiveness of Loan

On March 27, 2021, the Company received notice from the SBA that $1.9 million of loans under the PPP were forgiven. On April 3, 2021, the Company received notice that an additional $0.1 million of loans were forgiven. The ~~losses from an unconsolidated subsidiary~~Company recorded these gains on forgiveness of loan during the first and second quarters of 2021, respectively.
Employee Retention Credit Income
During 2021, the Company was eligible for employee retention credits under the CAA, as a refundable tax credit against certain employment taxes of up to $7,000 per employee. The Company recorded $0.4 million and $0.9 million of employee retention credits during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, compared to gains for the same periods of the prior year, are the result of the dissolution of the unconsolidated subsidiary and discontinuation of its operations.~~2021.

Interest Expense

Interest expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and June 30, 2020 was primarily attributable to accrued interest on a term ~~loan~~loans drawn during ~~the third quarter of 2016.~~2016 and 2018. See, “Liquidity and Capital Resources.”
Income and Loss before Income Taxes
Income before income taxes increased to $1.4 million and $3.7 million for the three and six months ended June 30, 2021, compared to losses of $3.2 million and $4.8 million for the three and six months ended June 30, 2020. The pre-tax income in 2021 was primarily due to the gain on forgiveness of loans, employee retention credits, and operating income. The loss in 2020 was primarily due to operating losses and goodwill impairment expense.
Income Taxes

Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of certain ~~amounts of~~valuation allowances on deferred tax assets, amortization expense, foreign taxes, and corporate overhead not being deductible and income being attributable to certain states in which it operates. ~~Currently,~~In 2021, the ~~majority of taxes being paid by the Company are state taxes,~~effective tax rate is lower than in recent years due to PPP loan forgiveness, which is not ~~federal taxes.~~subject to income tax. The Company operates in ~~four~~three states, which have relatively high tax rates: California, New York, ~~Illinois~~ and Florida. In addition, foreign taxes in the United Kingdom related to our London office are not deductible from U.S. federal taxes. The Company had income tax expense of $0.3 million and $0.4 million for the three and six months ended June 30, 2021, compared to income tax benefit of $0.5 million and income tax expense of $0.6 million for the three and six months ended June 30, 2020. The increase in income tax expense for the three months ended June 30, 2021 was primarily due higher pretax income. The higher income tax expense during the six months ended June 30, 2020 was due to a valuation allowance against deferred tax assets due to the effects of the COVID-19 pandemic on business.

Net Income and Loss
12

The Company had net income of $1.1 and $3.3 million for the three and six months ended June 30, 2021, compared to net loss of $2.7 and $5.4 million for the three and six months ended June 30, 2020, primarily due to the increase in operating income, gain on forgiveness of loans, and employee retention credits.
Liquidity and Capital Resources
The Company’s cash balance increased to $7.0 million at June 30, 2021 from $5.6 million at December 31, 2020. The cash balances increased as a result of $1.5 million net cash from operating activities, partially offset by $0.1 million cash used by financing activities during the six months ended June 30, 2021.
Net cash provided by operating activities of $1.5 million was primarily the result of the net income and increases in amounts due to models, accounts payable and accrued liabilities, partially offset by an increase in accounts receivable. The $0.1 million of cash used in financing activities was primarily attributable to principal payments on the Company’s Amegy Bank term loans and payments on finance leases.
17

The Company’s primary liquidity needs are for working capital associated with performing services under its client ~~contracts.~~contracts and servicing its remaining term loan. Generally, the Company incurs significant operating expenses with payment terms shorter than its average collections on billings. The COVID-19 pandemic had an impact on the Company’s cash flows during the six months ended June 30, 2021, primarily due to reduced bookings and modeling jobs. The Company has taken actions to address the impact of COVID-19 by reducing expenses and has the ability to implement more significant cost savings measures if the adverse effects of the pandemic persist for an extended period. Based on 2021 budgeted and year-to-date cash flow information, management believes that the Company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months.

The Company’s cash balance decreased to $2.6 million at September 30, 2017, from $5.7 million at December 31, 2016. For the nine months ended September 30, 2017, cash balances decreased primarily as a result of cash flows used by operations of $2.2 million, capital expenditures of $0.6 million, and $0.4 million for repayment on the Amegy Bank ~~term loan.~~
The Company’s use of cash for operating activities included employee bonus payments, payment of accrued non-income taxes, final payment to the former London owner, final payment to another owner of a dissolved unconsolidated subsidiary, and payments due to models/talents during the first nine months of 2017.Credit Agreement

The Company has a credit agreement with Amegy Bank ~~providing~~which originally provided a $4.0 million revolving line of credit and up to a $3.0 million term loan which could be drawn through October 24, 2016. Amounts outstanding under the term loan reduced the availability under the revolving line of credit. The revolving line of credit is subject to a borrowing base derived from 80% of eligible accounts receivable (as defined) and the Company’s minimum net worth ~~covenant of $20.0 million.~~covenant. The revolving line of credit bears interest at prime plus ~~0.5%~~0.50% payable monthly. ~~As of September 30, 2017, the~~The Company previously had a $0.2 million irrevocable standby letter of credit outstanding under the revolving line of credit which terminated June 9, 2021, and had no letters of credit outstanding at June 30, 2021. The Company had additional borrowing capacity of ~~$1.5 million.~~$2.4 million at June 30, 2021. The revolving line of credit presently expires on October 24, ~~2018.~~2022.

On August 16, 2016, the Company drew $2.7 million of the term loan and used the proceeds to fund the purchase of shares of its common ~~stock.~~stock in a private transaction. The term loan ~~bears~~bore interest at 4.5% per annum and iswas payable in monthly payments of interest only until November, 2016, followed by 47 equal monthly payments of principal and interest computed on a 60-month amortization ~~schedule and a~~schedule. A final $0.6 million payment of principal and interest ~~due~~was paid on October ~~24,~~28, 2020.

On ~~May 4, 2017,~~July 16, 2018, the Company amended its credit agreement with Amegy Bank to provide for an additional term loan of up to $1.0 million that could be drawn by the Company through July 12, 2019, for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at 5.15% per annum and was payable in monthly installments of interest only through July 12, 2019. Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in 60 months with the balance of principal and accrued interest due on July 12, 2023.
Amounts outstanding under the additional term loan reduce the availability under the Company’s revolving line of credit with Amegy Bank. On August 1, 2018, the Company drew $0.7 million of the additional term loan and used the proceeds to fund the purchase of 100,000 shares of its common stock in a private transaction. On December 12, 2018, the Company drew $0.3 million of the additional term loan and used the proceeds to partially fund a purchase of 50,000 shares of its common stock in a private transaction. As of June 30, 2021, a total of $0.6 million was outstanding on the term loan.
Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy Bank has limited access to additional financing. Net losses in recent periods have also impacted compliance with the financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional financing. On March 26, 2020, the Company entered into a ~~Seventh~~Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”) with Amegy Bank. The Thirteenth Amendment amended the minimum net worth covenant to require the Company to maintain tangible net worth (as defined therein) of $4.0 million, determined on a quarterly basis. Under the Thirteenth Amendment, Amegy Bank ~~reducing~~also waived an existing default caused by the Company’s failure to satisfy the previously required $20.0 million minimum net worth covenant as of December 31, 2019. On May 12, 2020, the Company entered into a Fourteenth Amendment to Credit Agreement (the “Fourteenth Amendment”) with Amegy Bank. The Fourteenth Amendment amended the line of credit to reduce the maximum borrowing capacity to $3.0 million. Under the Fourteenth Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy both the minimum fixed charge coverage ratio through ~~December~~March 31, ~~2017.~~2020 and minimum tangible net worth as of March 31, 2020. The Company obtained ~~a waiver~~waivers from Amegy Bank of its ~~failure~~failures to satisfy the fixed charge coverage ratio, the minimum tangible net worth, and the borrowing base for the quarters ended June 30, 2020 and September 30, 2020. On November 10, 2020, the Company entered into a Fifteenth Amendment to Credit Agreement (the “Fifteenth Amendment”) with Amegy Bank. The Fifteenth Amendment waived the minimum tangible net worth covenant until December 31, 2021, after which a minimum tangible net worth of $1.5 million will be required. The Fifteenth Amendment also revised the calculation of the fixed charge coverage ratio such that it was tested at December 31, 2020 based on the preceding six month period, tested at March 31, 2021 based on the preceding nine month period, and tested at June 30, 2021 and subsequent periods using a twelve month rolling period. The Company was in compliance with its bank covenants as of June 30, 2021.
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Paycheck Protection Program Loan
On April 15, 2020, Wilhelmina International, Ltd. (the “Borrower”), a wholly-owned subsidiary of the Company, executed a Business Loan Agreement and a Promissory Note each dated April 13, 2020 (collectively, the “Sub PPP Loan Documents”), with respect to a loan in the amount of $1.8 million (the “Sub PPP Loan”) from Amegy Bank. The Sub PPP Loan was obtained pursuant to the PPP. The Sub PPP Loan originally matured on April 13, 2022 and bore interest at a rate of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Sub PPP Loan was extended to mature on April 13, 2025. On March 27, 2021, the Company received notice from the SBA that the Sub PPP loan, including $17 thousand accrued interest, had been fully forgiven, resulting in $1.9 million of gain on forgiveness of loan recorded within other expenses (income) during the quarter ended March 31, 2021.
On April 18, 2020, the Company executed a Business Loan Agreement and a Promissory Note each dated April 17, 2020 (collectively, the “Parent PPP Loan Documents”), with respect to a loan in the amount of $128 thousand (the “Parent PPP Loan”) from Amegy Bank. The Parent PPP Loan was also obtained pursuant to the PPP. The Parent PPP Loan originally matured on April 17, 2022 and bore interest at a rate of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Parent PPP Loan was extended to mature on April 17, 2025. On April 3, 2021, the Company received notice from the SBA that the Parent PPP Loan, including $1 thousand accrued interest, had been fully forgiven, resulting in $0.1 million of gain on forgiveness of loan recorded within other expenses (income) during the quarter ended June 30, 2017. On August 1, 2017, the Company entered into an Eighth Amendment to Credit Agreement with Amegy Bank eliminating the requirement to test the fixed charge coverage ratio for the quarter ended September 30, 2017.2021.

~~The Company believes its cash on hand combined with cash from operations and the availability under the revolving credit facility will be sufficient to fund operations for the next 12 months.~~
Off-Balance Sheet Arrangements

~~As of September 30, 2017, the~~The Company previously had ~~outstanding~~ a $0.2 million irrevocable standby letter of credit outstanding under the ~~Company’s~~ revolving ~~credit facility with Amegy Bank. The letter~~line of credit, ~~serves~~which served as security under the lease ~~relating to~~of the Company’s office space in New York City that ~~expires~~expired on February 2021.
The letter of credit terminated June 9, 2021 and the Company had no letters of credit outstanding at June 30, 2021.

Effect of Inflation

Inflation has not historically been a material factor affecting the Company’s business. General operating expenses, such as salaries, employee benefits, insurance and occupancy costs are subject to normal inflationary pressures.

Critical Accounting Policies

Basis of Presentation

The consolidated financial statements include the ~~consolidated~~ accounts of Wilhelmina and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Revenue Recognition

~~In compliance~~The Company has adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.
Our revenues are derived primarily from fashion model bookings, and representation of social media influencers and actors for commercials, film, and television. Our performance obligations are primarily satisfied at a point in time when the talent has completed the contractual requirements.
A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The performance obligations for most of the Company’s core modeling bookings are satisfied on the day of the event, and the “day rate” total fee is agreed in advance when the customer books the model for a particular date. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on the estimated relative standalone selling price.
19
Model Costs
Model costs include amounts owed to talent, including taxes required to be withheld and remitted directly to taxing authorities, commissions owed to other agencies, and related costs such as those paid for photography. Costs are accrued in the period in which the event takes place consistent with when the revenue is recognized. The Company typically enters into contractual agreements with models under which the Company is obligated to pay talent upon collection of fees from the customer.
Share Based Compensation
Share-based compensation expense is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option pricing model and is recognized on a straight line basis as an expense over the requisite service period, which is generally ~~accepted accounting principles~~the vesting period. The determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the estimated volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, estimated forfeitures and expected dividends.
Income Taxes
We are subject to income taxes in the United States, ~~of America, when reporting revenue gross as a principal versus net as an agent,~~ the ~~Company assesses whether the Company, the model or the talent is the primary obligor. The Company evaluates the terms of its model, talent~~United Kingdom, and client agreements as part of this assessment. In addition, the Company gives appropriate consideration to other key indicators such as latitude in establishing price, discretion in model or talent selectionnumerous local jurisdictions.
Deferred tax assets are recognized for unused tax losses, unused tax credits, and credit risk the Company undertakes. The Company operates broadly as a modeling agency and in those relationships with models and talents where the key indicators suggest the Company acts as a principal, the Company records the gross amount billeddeductible temporary differences to the ~~client as revenue when earned~~extent that it is probable that future taxable profits will be available against which they can be used. Unused tax loss carry-forwards are reviewed at each reporting date and ~~collectability~~a valuation allowance is ~~reasonably assured, and~~established if it is doubtful we will generate sufficient future taxable income to utilize the related costs incurred to the model or talent as model or talent cost. In other model and talent relationships, where the Company believes the key indicators suggest the Company acts as an agent on behalf of the model or talent, the Company records revenue when earned and collectability is reasonably assured, net of pass-through model or talent cost.loss carry-forwards.

13
~~The Company also recognizes management fees as revenues~~In determining the amount of current and deferred income tax, we take into account whether additional taxes, interest, or penalties may be due. Although we believe that we have adequately reserved for ~~providing services to other modeling agencies as well as consulting~~our income ~~in connection with services provided to a television production network according to~~taxes, we can provide no assurance that the ~~terms of~~final tax outcome will not be materially different. To the ~~contract.  The Company recognizes royalty~~extent that the final tax outcome is different than the amounts recorded, such differences will affect the provision for income when earned based on terms of the contractual agreement. Revenues received in advance are deferred and amortized using the straight-line method over periods pursuant to the related contract. The Company also records fees from licensees when the revenues are earned and collectability is reasonably assured.
Advances to models for the cost of initial portfolios and other out-of-pocket costs, which are reimbursable only from collections from the Company’s clients as a result of future work, are expensed to model costs as incurred. Any repayments of such costs are credited to model coststaxes in the period ~~received.~~
~~Goodwill~~in which such determination is made and ~~Intangible Assets~~
~~Goodwill consists primarily of customer~~could have a material impact on our financial condition and talent relationships arising from past business acquisitions. Intangible assets with finite lives are amortized over useful lives ranging from two to seven years. Goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather to an annual assessment of impairment by applying a fair-value based test. A significant amount of judgment is required in estimating fair value and performing goodwill impairment tests.
The Company annually assesses whether the carrying value of its intangible assets exceeds their fair value and, if necessary, records an impairment loss equal to any such excess. Each interim reporting period, the Company assesses whether events or circumstances have occurred which indicate that the carrying amount of an intangible asset exceeds its fair value. If the carrying amount of the intangible asset exceeds its fair value, an asset impairment charge will be recognized in an amount equal to that excess. No asset impairment charges were incurred during the three and nine months ended September 30, 2017 and September 30, 2016.operating results.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are accounted for at net realizable value, do not bear interest and are short-term in nature. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability to collect on accounts receivable. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to the ~~valuation~~ allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the ~~valuation~~ allowance and a credit to accounts receivable.  The Company generally does not require collateral.

~~Income Taxes~~Goodwill and Intangible Asset Impairment Testing

~~Income taxes are accounted for under~~The Company performs impairment testing at least annually and more frequently if events and circumstances indicate that the asset ~~and liability method. Deferred income tax assets and liabilities are~~might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the reporting unit’s fair value. The Company sometimes utilizes an independent valuation specialist to assist with the determination of fair value. In accordance with ASU 2017-03, effective January 1, 2020, only a one-step quantitative impairment test is performed, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value. If the carrying amount of the reporting unit’s goodwill exceeds its fair value, an impairment loss is recognized for any excess of the ~~future tax consequences attributable~~carrying amount of the reporting unit’s goodwill.
Whenever events or circumstances change, entities have the option to ~~differences between~~first make a qualitative evaluation about the ~~financial statement carrying amounts~~likelihood of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred income 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 income tax assets and liabilities of a change in tax ratesgoodwill impairment. If impairment is recognized in income in the period that includes the enactment date. The Company continually assesses the need for a tax valuation allowance based on all available information. As of September 30, 2017, and as a result of this assessment, the Company believes that its deferred tax assets aredeemed more likely than not, ~~to be realized.~~management would perform the goodwill impairment test. Otherwise, the goodwill impairment test is not required. In ~~addition,~~assessing the qualitative factors, the Company ~~continuously evaluates its tax contingencies.~~assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, overall financial performance, Company specific events and share price trends, an assessment of whether each relevant factor will impact the impairment test positively or negatively, and the magnitude of any such impact

Accounting for uncertainty in income taxes recognized in an enterprise’s financial statements requires a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Also, consideration should be given to de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There was no change to the net amount of assets and liabilities recognized in the consolidated balance sheets as a result of the Company’s tax positions.
20

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting company

14
Item 4.Controls and Procedures.

The Company maintains disclosure controls and procedures designed to ensure that information it is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, including the Company’s principal executive officer and principal financial officer ~~or persons performing similar functions,~~ have evaluated the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company’s principal executive officer and principal financial officer ~~or persons performing similar functions,~~ have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
During the most recent fiscal quarter, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

15
PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

On October 24, 2013, a putative class action lawsuit was brought against the Company by former Wilhelmina model Alex Shanklin and others, including Louisa Raske, Carina Vretman, Grecia Palomares and Michelle Griffin Trotter (the “Shanklin Litigation”), in New York State Supreme Court (New York County) by the same lead counsel who represented plaintiffs in a prior, now-dismissed action brought by Louisa Raske (the “Raske Litigation”). The claims in the Shanklin Litigation initially included breach of contract and unjust enrichment allegations arising out of matters similar to the Raske Litigation, such as the handling and reporting of funds on behalf of models and the use of model images. Other parties named as defendants in the Shanklin Litigation include other model management companies, advertising firms, and certain advertisers. On January 6, 2014, the Company moved to dismiss the Amended Complaint in the Shanklin Litigation for failure to state a claim upon which relief can be granted and other grounds, and other defendants also filed motions to dismiss. On August 11, 2014, the court denied the motion to dismiss as to Wilhelmina and other of the model management defendants. ~~Further,~~Separately, on March 3, 2014, the judge assigned to the Shanklin Litigation wrote the Office of the New York Attorney General bringing the case to its attention, generally describing the claims asserted therein against the model management defendants, and stating that the case “may involve matters in the public interest.” The judge’s letter also enclosed a copy of his decision in the Raske Litigation, which dismissed that case.
Plaintiffs retained substitute counsel, who filed a Second and then Third Amended Complaint. Plaintiffs’ Third Amended Complaint asserts causes of action for alleged breaches of the plaintiffs' management contracts with the defendants, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment. The Third Amended Complaint also alleges that the plaintiff models were at all relevant times employees, and not independent contractors, of the model management defendants, and that defendants violated the New York Labor Law in several respects, including, among other things, by allegedly failing to pay the models the minimum wages and overtime pay required thereunder, not maintaining accurate payroll records, and not providing plaintiffs with full explanations of how their wages and deductions therefrom were computed. The Third Amended Complaint seeks certification of the action as a class action, damages in an amount to be determined at trial, plus interest, costs, attorneys’ fees, and such other relief as the court deems proper. On October 6, 2015, Wilhelmina filed a motion to dismiss as to most of the plaintiffs’ ~~claims, and oral argument on the motion was heard by the Court in June 2016.~~claims. The Court entered a decision granting in part and denying in part Wilhelmina’s motion to dismiss on May 26, 2017. The Court (i) dismissed three of the five New York Labor Law causes of action, along with the conversion, breach of the duty of good faith and fair dealing and unjust enrichment causes of action, in their entirety, and (ii) permitted only the breach of contract causes of action, and some plaintiffs’ remaining two New York Labor Law causes of action to continue, within a limited time frame. The plaintiffs and Wilhelmina ~~have~~each appealed, ~~the decision. The parties appeared before the Court for a status conference on July 18, 2017,~~ and the ~~Court directed the defendants to answer the Third Amended Complaint by~~decision was affirmed on May 24, 2018. On August 16, ~~2017.~~2017, Wilhelmina timely filed its Answer to the Third Amended Complaint on that date, and discovery in this action is continuing.  The Company believes the claims asserted in the Third Amended Complaint are without merit, and intends to continue to vigorously defend the action.Complaint.
21

On June 6, 2016, another putative class action lawsuit was brought against the Company by former Wilhelmina model Shawn Pressley and others, including Roberta Little (the “Pressley Litigation”), in New York State Supreme Court (New York County) by the same counsel representing the plaintiffs in the Shanklin Litigation, and asserting identical, although more recent, claims as those in the Shanklin Litigation. On June 14, 2016, the Court stayed all proceedings in the Pressley Litigation until a decision was issued on the motion to dismiss in the Shanklin Litigation. At the court conference on July 18, 2017 (mentioned above), the judge directed the plaintiffs to file an amended complaint in the Pressley Litigation, if any, by August 16, 2017, and directed the defendants to move against or answer such amended complaint by September 29, 2017.  The Amended Complaint, asserting essentially the same types of claims as in the Shanklin action, was filed on August 16,^th~~, and~~ 2017. Wilhelmina filed a motion to dismiss the Amended Complaint on September 29, ~~2017. Briefing~~2017, which was granted in part and denied in part on May 10, 2018. Some New York Labor Law and contract claims remain in the ~~motion to dismiss is continuing,~~case. Pressley has withdrawn from the case, leaving Roberta Little as the sole remaining named plaintiff in the Pressley Litigation. On July 12, 2019, the Company filed its Answer and Counterclaim against Little.
On May 1, 2019, the Plaintiffs in the Shanklin Litigation (except Raske) and the Pressley Litigation filed motions for class certification on their contract claims and the remaining New York Labor Law Claims. On July 12, 2019, Wilhelmina filed its opposition to the motions for class certification and filed a cross-motion for summary judgment against Shanklin, Vretman, Palomares, Trotter and Little, and a motion ~~is scheduled~~for summary judgment against Raske.
By Order Dated May 8, 2020 (the “Class Certification Order”), the Court denied class certification in the Pressley case, denied class certification with respect to the breach of contract and alleged unpaid usage claims, granted class certification as to the New York Labor Law causes of action asserted by Vretman, Palomares and Trotter, and declined to rule on Wilhelmina’s motions for summary judgment, denying them without prejudice to be ~~submitted~~re-filed at a later date. The Court has directed the parties to ~~the Court on November 16, 2017. Discovery~~non-binding mediation and that process is ~~proceeding in this case.~~ underway.
The Company believes the claims asserted in the Shanklin Litigation and Pressley Litigation are without merit and intends to continue to vigorously defend the ~~action.~~actions.

In addition to the legal proceedings disclosed herein, the Company is also engaged in various legal proceedings that are routine in nature and incidental to its business. None of these routine proceedings, either individually or in the aggregate, are believed likely, in the Company's opinion, to have a material adverse effect on its consolidated financial position or its results of operations.

Item 1.A.Risk Factors.

Not required for smaller reporting company.

16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During 2012, the Board of Directors authorized a stock repurchase program whereby the Company could repurchase up to 500,000 shares of its outstanding common stock. During 2013, the Board of Directors renewed and extended the Company’s share repurchase authority to enable it to repurchase up to an aggregate of 1,000,000 shares of common stock.
~~On August 12,~~ In 2016, the Board of Directors increased by an additional 500,000 shares the number of shares of the Company’s common stock which may be repurchased under its stock repurchase program to an aggregate of 1,500,000 shares. The shares may be repurchased from time to time in the open market or through privately negotiated transactions at prices the Company deems appropriate. The program does not obligate the Company to acquire any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion. ~~No shares were repurchased~~The Company did not make any purchases pursuant to the stock repurchase program during the ~~nine months~~quarter ended ~~September~~June 30, ~~2017.~~
2021.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On November 8, 2017, the Company and Amegy Bank executed a Ninth Amendment to Credit Agreement and Second Amendment to Line of Credit Note (the “Ninth Amendment”) to be effective as of October 24, 2107. The Ninth Amendment extends the maturity date of the Company’s $4.0 million revolving line of credit for one year until October 24, 2018. The Ninth Amendment also increases the fee payable to Amegy upon issuance of any letter of credit from 1.0% to 1.25% of the face amount of such letter of credit (but not less than $1,000). The foregoing description of the Ninth Amendment is qualified in its entirety by reference to the definitive agreement filed as an exhibit hereto and incorporated herein by this reference.Not applicable.

22

17
Item 6. Exhibits.

The following is a list of exhibits filed as part of this Form 10-Q:

Exhibit No.
Description
3.1 Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form S-1/A, ~~dated~~filed January 30, 2012).
3.2 Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to the Form 8-K, filed July 15, 2014).
3.3 Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form 8-K filed July 12, 2017).
3.4 Amended and Restated Bylaws of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.2 to Form 8-K, filed May 24, 2011).
4.1 Form of Stock Certificate of Common Stock of Billing Concepts Corp. (incorporated by reference from Exhibit 4.1 to Form 10-Q, ~~dated March 31,~~filed May 15, 1998).
~~10.1~~ Eighth Amendment to Credit Agreement and waiver dated August 1, 2017, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors signatory thereto (incorporated by reference from Exhibit 10.1 to Form 8-K filed August 4, 2017).
~~10.2~~ Ninth Amendment to Credit Agreement and Second Amendment to Line of Credit Note dated October 24, 2017, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors signatory thereto.*
31.1 Certification of Principal Executive Officer in ~~Accordance~~accordance with Section 302 of the Sarbanes-Oxley Act. *
31.2
Certification of Principal Financial Officer in ~~Accordance~~accordance with Section 302 of the Sarbanes-Oxley Act. *
32.1
Certification of Principal Executive Officer in ~~Accordance~~accordance with Section 906 of the Sarbanes-Oxley Act. *
32.2
Certification of Principal Financial Officer in ~~Accordance~~accordance with Section 906 of the Sarbanes-Oxley Act. *
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document *
101.SCH
Inline XBRL Taxonomy Extension Schema Document *
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF
Inline XBRL Taxonomy Extension Label Linkbase Document *
101.LAB
Inline XBRL Taxonomy Extension Presentation Linkbase Document *
101.PRE
Inline XBRL Taxonomy Extension Definition Linkbase Document *
~~101.LAB~~104 Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Extension Label Linkbase *and contained in Exhibit 101)
~~101.PRE~~ XBRL Taxonomy Extension Presentation Linkbase *
________________
* Filed herewith

18

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WILHELMINA INTERNATIONAL, INC.

(Registrant)
Date:  August 11, 2021
By:
/s/ James A. McCarthy
Name:
James A. McCarthy
Title:
Chief Financial Officer

(principal financial officer)
~~Date:  November 9, 2017~~ ~~By:~~ ~~/s/ James A. McCarthy~~
~~Name:~~    ~~James A. McCarthy~~
~~Title:~~
~~Chief Financial Officer~~
~~(Principal Financial Officer)~~

19
24

	~~[ ]~~
	For the quarterly period ended June 30, 2021

	OR

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

	For the transition period from ________ to ________

Delaware	74-2781950
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~200 Crescent Court, Suite 1400,~~ 5420 LBJ Freeway, Lockbox #25, Dallas, Texas	~~75201~~ 75240
(Address of principal executive offices)	(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	WHLM	Nasdaq Capital Market

	Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~☐
	Non-accelerated filer ~~[ ]~~☒	Smaller reporting company ~~[x]~~☒
	Emerging growth company ~~[ ]~~☐

PART I	FINANCIAL INFORMATION		3

	Item 1.	Financial Statements	3

		Condensed Consolidated Balance ~~Sheet~~Sheets as of ~~September~~June 30, ~~2017~~2021 (Unaudited) and December 31, ~~2016~~2020	34

		Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (Unaudited)	45

		Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	6

		Condensed Consolidated Statements of Cash Flow for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (Unaudited)	57

		Notes to Condensed Consolidated Financial Statements (Unaudited)	68

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	912

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1421

	Item 4.	Controls and Procedures	1521

PART II	OTHER INFORMATION		1621

	Item 1.	Legal Proceedings	1621

	Item 1.A.	Risk Factors	1622

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1722

	Item 3.	Defaults Upon Senior Securities	1722

	Item 4.	Mine Safety Disclosures	1722

	Item 5.	Other Information	1722

	Item 6.	Exhibits	1823

SIGNATURES			1924

	(Unaudited) September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	2,640		$	5,688
Accounts receivable, net of allowance for doubtful accounts of $2,158 and $1,646, respectively		16,543			16,947
Prepaid expenses and other current assets		287			847
Total current assets		19,470			23,482

Property and equipment, net of accumulated depreciation of $2,134 and $1,525, respectively		3,197			3,206
Trademarks and trade names with indefinite lives		8,467			8,467
Other intangibles with finite lives, net of accumulated amortization of$8,589 and $8,527, respectively		147			210
Goodwill		13,192			13,192
Other assets		115			164

TOTAL ASSETS	$	44,588		$	48,721

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,916		$	4,781
Due to models		10,975			14,217
Contingent consideration to seller - current		-			97
Term loan - current		519			502
Total current liabilities		15,410			19,597

Long term liabilities:
Deferred income tax liability		1,532			1,567
Term loan - non-current		1,756			2,147
Total long-term liabilities		3,288			3,714

Total liabilities		18,698			23,311

Shareholders’ equity:
Common stock, $0.01 par value, 9,000,000 and 12,500,000 shares authorized; 6,472,038 shares issued at September 30, 2017 and December 31, 2016		65			65
Treasury stock, 1,090,370 at September 30, 2017 and December 31, 2016, at cost		(4,893	)		(4,893	)
Additional paid-in capital		87,748			87,336
Accumulated deficit		(57,065	)		(57,048	)
Accumulated other comprehensive income (loss)		35			(50	)
Total shareholders’ equity		25,890			25,410

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	44,588		$	48,721

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenues:
Revenues	$	18,712		$	20,880		$	56,120		$	64,512
License fees and other income		6			28			34			82
Total revenues		18,718			20,908			56,154			64,594

Model costs		13,265			14,888			39,910			45,952

Revenues net of model costs		5,453			6,020			16,244			18,642

Operating expenses:
Salaries and service costs		3,447			3,708			10,611			11,594
Office and general expenses		1,400			1,381			3,832			4,267
Amortization and depreciation		232			89			672			295
Corporate overhead		236			192			817			768
Total operating expenses		5,315			5,370			15,932			16,924
Operating income		138			650			312			1,718

Other income (expense):
Foreign exchange gain (loss)		(18	)		1			(54	)		8
Gain (loss) from unconsolidated affiliate		(2	)		5			(40	)		11
Interest expense		(31	)		(21	)		(88	)		(21	)
Revaluation of contingent liability		-			(30	)		-			(30	)
Total other income (expense)		(51	)		(45	)		(182	)		(32	)

Income before provision for income taxes		87			605			130			1,686

Provision for income taxes: (expense) benefit
Current		(57	)		(281	)		(182	)		(648	)
Deferred		(4	)		(97	)		35			(358	)
Income tax (expense)		(61	)		(378	)		(147	)		(1,006	)

Net income (loss)	$	26		$	227		$	(17	)	$	680

Other comprehensive income (expense):
Foreign currency translation income (expense)		20			(12	)		85			(50	)
Total comprehensive income		46			215			68			630

Basic net income (loss) per common share	$	0.00		$	0.04		$	0.00		$	0.12
Diluted net income (loss) per common share	$	0.00		$	0.04		$	0.00		$	0.12

Weighted average common shares outstanding-basic		5,382			5,586			5,382			5,716
Weighted average common shares outstanding-diluted		5,382			5,637			5,382			5,768

	(Unaudited)
	June 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	6,979		$	5,556
Accounts receivable, net of allowance for doubtful accounts of $1,672 and $1,635, respectively		9,036			7,146
Prepaid expenses and other current assets		142			105
Total current assets		16,157			12,807

Property and equipment, net of accumulated depreciation of $5,912 and $5,451, respectively		477			928
Right of use assets-operating		446			585
Right of use assets-finance		170			218
Trademarks and trade names with indefinite lives		8,467			8,467
Goodwill		7,547			7,547
Other assets		109			93

TOTAL ASSETS	$	33,373		$	30,645

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,258		$	2,867
Due to models		7,247			6,265
Lease liabilities – operating, current		243			435
Lease liabilities – finance, current		56			77
Term loan – current		199			414
Total current liabilities		11,003			10,058

Long term liabilities:
Net deferred income tax liability		1,714			1,449
Lease liabilities – operating, non-current		206			180
Lease liabilities – finance, non-current		121			149
Term loan – non-current		448			2,303
Total long term liabilities		2,489			4,081

Total liabilities		13,492			14,139

Shareholders’ equity:
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares issued at June 30, 2021 and December 31, 2020		65			65
Treasury stock, 1,314,694 shares at June 30, 2021 and December 31, 2020, at cost		(6,371	)		(6,371	)
Additional paid-in capital		88,523			88,487
Accumulated deficit		(62,414	)		(65,756	)
Accumulated other comprehensive income		78			81
Total shareholders’ equity		19,881			16,506

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	33,373		$	30,645

	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income:	$	(17	)	$	680
Adjustments to reconcile net income to net cash used in operating activities:
Amortization and depreciation		672			295
Share based payment expense		412			253
Deferred income taxes		(35	)		358
Contingent liability to seller		(97	)		30
Bad debt expense		128			40
Changes in operating assets and liabilities:
Accounts receivable		276			(4,832	)
Prepaid expenses and other current assets		560			(199	)
Other assets		49			108
Due to models		(3,242	)		2,585
Accounts payable and accrued liabilities		(865	)		1,017
Net cash (used in) provided by operating activities		(2,159	)		335

Cash flows from investing activities:
Purchases of property and equipment		(600	)		(1,118	)
Net cash used in investing activities		(600	)		(1,118	)

Cash flows from financing activities:
Purchases of treasury stock		-			(2,775	)
Proceeds from term loan		-			2,730
Repayment of term loan		(374	)		-
Net cash used in financing activities		(374	)		(45	)

Foreign currency effect on cash flows:		85			(50	)

Net change in cash and cash equivalents:		(3,048	)		(878	)
Cash and cash equivalents, beginning of period		5,688			4,556
Cash and cash equivalents, end of period	$	2,640		$	3,678

Supplemental disclosures of cash flow information:
Cash paid for interest	$	74		$	21
Cash refund of income taxes	$	87		$	320

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Revenues:
Service revenues	$	14,502		$	4,523		$	26,468		$	19,070
License fees and other income		8			5			18			10
Total revenues		14,510			4,528			26,486			19,080

Model costs		10,412			3,397			19,051			14,003

Revenues, net of model costs		4,098			1,131			7,435			5,077

Operating expenses:
Salaries and service costs		2,057			2,788			3,928			5,915
Office and general expenses		709			947			1,564			2,002
Amortization and depreciation		243			298			509			592
Goodwill impairment		0			0			0			800
Corporate overhead		198			238			443			547
Total operating expenses		3,207			4,271			6,444			9,856
Operating income (loss)		891			(3,140	)		991			(4,779	)

Other (income) expense:
Foreign exchange loss (gain)		20			14			88			(51	)
Gain on forgiveness of loan		(129	)		0			(1,994	)		0
Employee retention credit		(436	)		0			(862	)		0
Interest expense		13			23			42			50
Total other (income) expense, net		(532	)		37			(2,726	)		(1	)

Income (loss) before (provision for) benefit from income taxes		1,423			(3,177	)		3,717			(4,778	)

(Provision for) benefit from income taxes:
Current		(74	)		75			(110	)		16
Deferred		(228	)		402			(265	)		(598	)
(Provision for) benefit from income taxes, net		(302	)		477			(375	)		(582	)

Net income (loss)	$	1,121		$	(2,700	)	$	3,342		$	(5,360	)

Other comprehensive income (loss):
Foreign currency translation adjustment		16			(5	)		(3	)		(239	)
Total comprehensive income (loss)		1,137			(2,705	)		3,339			(5,599	)

Basic net income (loss) per common share	$	0.22		$	(0.52	)	$	0.65		$	(1.04	)
Diluted net income (loss) per common share	$	0.22		$	(0.52	)	$	0.65		$	(1.04	)

Weighted average common shares outstanding-basic		5,157			5,157			5,157			5,159
Weighted average common shares outstanding-diluted		5,157			5,157			5,157			5,159

	Common Shares		Stock Amount		Treasury Shares			Stock Amount			Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
Balances at December 31, 2019		6,472	$	65		(1,310	)	$	(6,352	)	$	88,471	$	(60,815	)	$	2		$	21,371
Share based payment expense		-		0		-			0			6		0			0			6
Net loss to common shareholders		-		0		-			0			0		(2,660	)		0			(2,660	)
Purchases of treasury stock		0		0		(5	)		(19	)		0		0			0			(19	)
Foreign currency translation		-		0		-			0			0		0			(234	)		(234	)
Balances at March 31, 2020		6,472	$	65		(1,315	)	$	(6,371	)	$	88,477	$	(63,475	)	$	(232	)	$	18,464
Share based payment expense		-		0		-			0			4		0			0			4
Net loss to common shareholders		-		0		-			0			0		(2,700	)		0			(2,700	)
Purchases of treasury stock		0		0		0			0			0		0			0			0
Foreign currency translation		-		0		-			0			0		0			(5	)		(5	)
Balances at June 30, 2020		6,472	$	65		(1,315	)	$	(6,371	)	$	88,481	$	(66,175	)	$	(237	)	$	15,763

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net income (loss):	$	3,342		$	(5,360	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation		509			592
Goodwill impairment		0			800
Share based payment expense		4			10
Gain on forgiveness of loan		(1,994	)		0
Employee retention credit		(35	)		0
Deferred income taxes		265			598
Bad debt expense		78			93
Changes in operating assets and liabilities:
Accounts receivable		(1,968	)		4,449
Prepaid expenses and other current assets		(2	)		31
Right of use assets-operating		139			515
Other assets		(16	)		19
Due to models		982			(2,992	)
Lease liabilities-operating		(166	)		(561	)
Accounts payable and accrued liabilities		408			(794	)
Net cash provided by (used in) operating activities		1,546			(2,600	)

Cash flows from investing activities:
Purchases of property and equipment		(10	)		(88	)
Net cash used in investing activities		(10	)		(88	)

Cash flows from financing activities:
Purchases of treasury stock		0			(19	)
Shareholder short swing profit disgorgement		32			0
Proceeds of term loan		0			1,975
Payments on finance leases		(49	)		(47	)
Repayment of term loan		(93	)		(374	)
Net cash (used in) provided by financing activities		(110	)		1,535

Foreign currency effect on cash flows:		(3	)		(239	)

Net change in cash and cash equivalents:		1,423			(1,392	)
Cash and cash equivalents, beginning of period		5,556			6,993
Cash and cash equivalents, end of period	$	6,979		$	5,601

Supplemental disclosures of cash flow information:
Cash paid for interest	$	18		$	45
Cash paid for income taxes	$	5		$	0

Noncash investing and financing activities
Gain on forgiveness of loan	$	1,994			0

(in thousands)	Three Months Ended									Nine Months Ended
	Sept 30			Sept 30			% Change			Sept 30			Sept 30			% Change
	2017			2016			2017 vs 2016			2017			2016			2017 vs 2016
Service revenues		18,712			20,880			(10.4	%)		56,120			64,512			(13.0	%)
License fees and other income		6			28			(78.6	%)		34			82			(58.5	%)
TOTAL REVENUES		18,718			20,908			(10.5	%)		56,154			64,594			(13.1	%)
Model costs		13,265			14,888			(10.9	%)		39,910			45,952			(13.1	%)
REVENUES NET OF MODEL COSTS		5,453			6,020			(9.4	%)		16,244			18,642			(12.9	%)
GROSS PROFIT MARGIN		29.1	%		28.8	%					28.9	%		28.9	%
Salaries and service costs		3,447			3,708			(7.0	%)		10,611			11,594			(8.5	%)
Office and general expenses		1,400			1,381			1.4	%		3,832			4,267			(10.2	%)
Amortization and depreciation		232			89			160.7	%		672			295			127.8	%
Corporate overhead		236			192			22.9	%		817			768			6.4	%
OPERATING INCOME		138			650			(78.8	%)		312			1,718			(81.8	%)
OPERATING MARGIN		0.7	%		3.1	%					0.6	%		2.7	%
Foreign exchange gain (loss)		(18	)		1			*			(54	)		8			*
Gain (loss) from unconsolidated subsidiary		(2	)		5			*			(40	)		11			*
Interest Expense		(31	)		(21	)		47.6	%		(88	)		(21	)		319.0	%
Revaluation of contingent liability		-			(30	)		*			-			(30	)		*
INCOME BEFORE INCOME TAXES		87			605			(85.6	%)		130			1,686			(92.3	%)
Income tax expense		(61	)		(378	)		(83.9	%)		(147	)		(1,006	)		(85.4	%)
Effective tax rate		70.1	%		62.5	%					113.1	%		59.7	%
NET (LOSS) INCOME		26			227			(88.5	%)		(17	)		680			(102.5	%)

Exhibit No.	Description

3.1	Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form S-1/A, ~~dated~~filed January 30, 2012).
3.2	Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to the Form 8-K, filed July 15, 2014).
3.3	Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form 8-K filed July 12, 2017).
3.4	Amended and Restated Bylaws of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.2 to Form 8-K, filed May 24, 2011).
4.1	Form of Stock Certificate of Common Stock of Billing Concepts Corp. (incorporated by reference from Exhibit 4.1 to Form 10-Q, ~~dated March 31,~~filed May 15, 1998).
~~10.1~~	Eighth Amendment to Credit Agreement and waiver dated August 1, 2017, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors signatory thereto (incorporated by reference from Exhibit 10.1 to Form 8-K filed August 4, 2017).
~~10.2~~	Ninth Amendment to Credit Agreement and Second Amendment to Line of Credit Note dated October 24, 2017, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors signatory thereto.*
31.1	Certification of Principal Executive Officer in ~~Accordance~~accordance with Section 302 of the Sarbanes-Oxley Act. *
31.2	Certification of Principal Financial Officer in ~~Accordance~~accordance with Section 302 of the Sarbanes-Oxley Act. *
32.1	Certification of Principal Executive Officer in ~~Accordance~~accordance with Section 906 of the Sarbanes-Oxley Act. *
32.2	Certification of Principal Financial Officer in ~~Accordance~~accordance with Section 906 of the Sarbanes-Oxley Act. *
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document *
101.SCH	Inline XBRL Taxonomy Extension Schema Document *
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF	Inline XBRL Taxonomy Extension Label Linkbase Document *
101.LAB	Inline XBRL Taxonomy Extension Presentation Linkbase Document *
101.PRE	Inline XBRL Taxonomy Extension Definition Linkbase Document *
~~101.LAB~~104	Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Extension Label Linkbase *and contained in Exhibit 101)
~~101.PRE~~	XBRL Taxonomy Extension Presentation Linkbase *

	WILHELMINA INTERNATIONAL, INC.
	(Registrant)


Date: August 11, 2021	By:	/s/ James A. McCarthy
	Name:	James A. McCarthy
	Title:	Chief Financial Officer

	(principal financial officer)
~~Date: November 9, 2017~~	~~By:~~	~~/s/ James A. McCarthy~~
	~~Name:~~	~~James A. McCarthy~~
	~~Title:~~	~~Chief Financial Officer~~ ~~(Principal Financial Officer)~~