Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 13, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | WESTERN CAPITAL RESOURCES, INC. | |
Entity Central Index Key | 0001363958 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity File Number | 000-52015 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,853,816 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 28,754,705 | $ 27,132,540 |
Short-term investments | 17,079,672 | 14,756,665 |
Loans receivable (net of allowance for losses of $312,700 and $673,000, respectively) | 2,597,405 | 3,860,411 |
Accounts receivable (net of allowance for losses of $9,000 and $13,000, respectively) | 830,367 | 517,476 |
Inventories (net of allowance of $814,000 and $1,065,000, respectively) | 9,061,668 | 8,330,691 |
Prepaid income taxes | 271,663 | |
Prepaid expenses and other | 2,329,535 | 2,679,859 |
TOTAL CURRENT ASSETS | 60,925,015 | 57,277,642 |
INVESTMENTS | 1,000,000 | 1,500,000 |
PROPERTY AND EQUIPMENT, net | 8,652,770 | 9,725,043 |
OPERATING LEASE RIGHT-OF-USE ASSETS | 10,703,625 | 12,344,894 |
INTANGIBLE ASSETS, net | 3,734,235 | 4,041,650 |
LOANS RECEIVABLE | 473,080 | 694,987 |
OTHER | 475,365 | 525,884 |
GOODWILL | 5,796,528 | 5,796,528 |
TOTAL ASSETS | 91,760,618 | 91,906,628 |
CURRENT LIABILITIES | ||
Accounts payable | 6,495,247 | 7,710,222 |
Accrued payroll | 2,264,213 | 2,572,331 |
Current portion operating lease liabilities | 4,700,889 | 5,079,745 |
Other current liabilities | 1,843,448 | 1,276,613 |
Income taxes payables | 243,149 | |
Current portion notes payable | 65,414 | |
Current portion finance lease obligations | 1,161 | |
Contract liabilities | 495,483 | 794,830 |
TOTAL CURRENT LIABILITIES | 15,799,280 | 17,743,465 |
LONG-TERM LIABILITIES | ||
Notes payable, net of current portion | 1,019,837 | |
Operating lease liabilities, net of current portion | 6,443,450 | 7,444,789 |
Deferred income taxes | 352,000 | 385,000 |
TOTAL LONG-TERM LIABILITIES | 6,795,450 | 8,849,626 |
TOTAL LIABILITIES | 22,594,730 | 26,593,091 |
COMMITMENTS AND CONTINGENCIES (Note 15) | ||
WESTERN SHAREHOLDERS' EQUITY | ||
Common stock, $0.0001 par value, 12,500,000 shares authorized, 8,853,816 and 9,265,778 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 885 | 927 |
Additional paid-in capital | 29,031,741 | 29,031,741 |
Retained earnings | 38,068,810 | 33,706,035 |
TOTAL WESTERN SHAREHOLDERS' EQUITY | 67,101,436 | 62,738,703 |
NONCONTROLLING INTERESTS | 2,064,452 | 2,574,834 |
TOTAL EQUITY | 69,165,888 | 65,313,537 |
TOTAL LIABILITIES AND EQUITY | $ 91,760,618 | $ 91,906,628 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Loans receivable, allowance for losses | $ 312,700 | $ 673,000 |
Accounts receivable, allowance for losses | 9,000 | 13,000 |
Inventory, allowance for losses | $ 814,000 | $ 1,065,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 12,500,000 | 12,500,000 |
Common stock, issued | 8,853,816 | 9,265,778 |
Common stock, outstanding | 8,853,816 | 9,265,778 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
REVENUES | ||||
Total Revenues | $ 30,288,314 | $ 24,517,462 | $ 103,457,693 | $ 84,631,787 |
COST OF REVENUES | ||||
Cost of sales | 14,166,064 | 9,617,969 | 45,071,285 | 35,413,874 |
Provisions for loans receivable losses | 30,768 | 311,496 | 110,165 | 705,604 |
Total Cost of Revenues | 14,196,832 | 9,929,465 | 45,181,450 | 36,119,478 |
GROSS PROFIT | 16,091,482 | 14,587,997 | 58,276,243 | 48,512,309 |
OPERATING EXPENSES | ||||
Salaries, wages and benefits | 8,072,951 | 8,171,391 | 24,922,510 | 24,332,859 |
Occupancy | 2,616,528 | 2,717,531 | 8,207,235 | 8,129,476 |
Advertising, marketing and development | 910,400 | 1,059,814 | 4,736,975 | 4,859,494 |
Depreciation | 464,888 | 441,337 | 1,454,512 | 1,309,035 |
Amortization | 167,763 | 155,507 | 541,432 | 518,422 |
Other | 1,934,642 | 1,914,734 | 7,223,660 | 6,200,604 |
Total Operating Expenses | 14,167,172 | 14,460,314 | 47,086,324 | 45,349,890 |
OPERATING INCOME | 1,924,310 | 127,683 | 11,189,919 | 3,162,419 |
OTHER INCOME (EXPENSES): | ||||
Dividend and interest income | 54,596 | 198,817 | 265,043 | 574,336 |
Interest expense | (13,936) | (28,918) | (45,342) | (84,332) |
Total Other Income (Expenses) | 40,660 | 169,899 | 219,701 | 490,004 |
INCOME BEFORE INCOME TAXES | 1,964,970 | 297,582 | 11,409,620 | 3,652,423 |
PROVISION FOR INCOME TAX EXPENSE | 388,420 | 7,000 | 2,398,530 | 683,000 |
NET INCOME | 1,576,550 | 290,582 | 9,011,090 | 2,969,423 |
LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (575,748) | (340,274) | (1,492,220) | (837,502) |
NET INCOME (LOSS) ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | $ 1,000,802 | $ (49,692) | $ 7,518,870 | $ 2,131,921 |
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | ||||
Basic and diluted (in dollars per share) | $ 0.11 | $ (0.01) | $ 0.82 | $ 0.23 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic and diluted (in shares) | 9,074,440 | 9,377,563 | 9,183,895 | 9,384,932 |
Sales and Associated Fees [Member] | ||||
REVENUES | ||||
Total Revenues | $ 23,569,858 | $ 18,200,217 | $ 83,697,619 | $ 66,199,796 |
Financing Fees and Interest [Member] | ||||
REVENUES | ||||
Total Revenues | 1,419,231 | 2,203,155 | 4,636,027 | 6,303,800 |
Other Revenue [Member] | ||||
REVENUES | ||||
Total Revenues | $ 5,299,225 | $ 4,114,090 | $ 15,124,047 | $ 12,128,191 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Noncontrolling Interests [Member] | Total |
Balance at beginning at Dec. 31, 2018 | $ 939 | $ 29,031,741 | $ 33,774,293 | $ 1,876,908 | $ 64,683,881 |
Balance at beginning (in shares) at Dec. 31, 2018 | 9,388,677 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,050,413 | 249,697 | 1,300,110 | ||
Noncontrolling Interest equity contribution | 17,446 | 17,446 | |||
Distributions to Noncontrolling Interests | (266,600) | (266,600) | |||
Dividends | (469,434) | (469,434) | |||
Balance at end at Mar. 31, 2019 | $ 939 | 29,031,741 | 34,355,272 | 1,877,451 | 65,265,403 |
Balance at end (in shares) at Mar. 31, 2019 | 9,388,677 | ||||
Balance at beginning at Dec. 31, 2018 | $ 939 | 29,031,741 | 33,774,293 | 1,876,908 | 64,683,881 |
Balance at beginning (in shares) at Dec. 31, 2018 | 9,388,677 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 2,969,423 | ||||
Balance at end at Sep. 30, 2019 | $ 935 | 29,031,741 | 34,339,217 | 1,795,256 | 65,167,149 |
Balance at end (in shares) at Sep. 30, 2019 | 9,348,695 | ||||
Balance at beginning at Mar. 31, 2019 | $ 939 | 29,031,741 | 34,355,272 | 1,877,451 | 65,265,403 |
Balance at beginning (in shares) at Mar. 31, 2019 | 9,388,677 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,131,200 | 247,531 | 1,378,731 | ||
Distributions to Noncontrolling Interests | (470,000) | (470,000) | |||
Dividends | (469,434) | (469,434) | |||
Balance at end at Jun. 30, 2019 | $ 939 | 29,031,741 | 35,017,038 | 1,654,982 | 65,704,700 |
Balance at end (in shares) at Jun. 30, 2019 | 9,388,677 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (49,692) | 340,274 | 290,582 | ||
Distributions to Noncontrolling Interests | (200,000) | (200,000) | |||
Stock redemption | $ (4) | (159,217) | (159,221) | ||
Stock redemption (in shares) | (39,982) | ||||
Dividends | (468,912) | (468,912) | |||
Balance at end at Sep. 30, 2019 | $ 935 | 29,031,741 | 34,339,217 | 1,795,256 | 65,167,149 |
Balance at end (in shares) at Sep. 30, 2019 | 9,348,695 | ||||
Balance at beginning at Dec. 31, 2019 | $ 927 | 29,031,741 | 33,706,035 | 2,574,834 | 65,313,537 |
Balance at beginning (in shares) at Dec. 31, 2019 | 9,265,778 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,904,335 | 462,568 | 2,366,903 | ||
Distributions to Noncontrolling Interests | (45,000) | (45,000) | |||
Dividends | (463,289) | (463,289) | |||
Balance at end at Mar. 31, 2020 | $ 927 | 29,031,741 | 35,147,081 | 2,992,402 | 67,172,151 |
Balance at end (in shares) at Mar. 31, 2020 | 9,265,778 | ||||
Balance at beginning at Dec. 31, 2019 | $ 927 | 29,031,741 | 33,706,035 | 2,574,834 | 65,313,537 |
Balance at beginning (in shares) at Dec. 31, 2019 | 9,265,778 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 9,011,090 | ||||
Balance at end at Sep. 30, 2020 | $ 885 | 29,031,741 | 38,068,810 | 2,064,452 | 69,165,888 |
Balance at end (in shares) at Sep. 30, 2020 | 8,853,816 | ||||
Balance at beginning at Mar. 31, 2020 | $ 927 | 29,031,741 | 35,147,081 | 2,992,402 | 67,172,151 |
Balance at beginning (in shares) at Mar. 31, 2020 | 9,265,778 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 4,613,733 | 453,904 | 5,067,637 | ||
Distributions to Noncontrolling Interests | (1,079,602) | (1,079,602) | |||
Stock redemption | $ (14) | (547,169) | (547,183) | ||
Stock redemption (in shares) | (130,889) | ||||
Dividends | (230,865) | (230,865) | |||
Balance at end at Jun. 30, 2020 | $ 913 | 29,031,741 | 38,982,780 | 2,366,704 | 70,382,138 |
Balance at end (in shares) at Jun. 30, 2020 | 9,134,889 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,000,802 | 575,748 | 1,576,550 | ||
Distributions to Noncontrolling Interests | (878,000) | (878,000) | |||
Stock redemption | $ (28) | (1,686,399) | (1,686,427) | ||
Stock redemption (in shares) | (281,073) | ||||
Dividends | (228,373) | (228,373) | |||
Balance at end at Sep. 30, 2020 | $ 885 | $ 29,031,741 | $ 38,068,810 | $ 2,064,452 | $ 69,165,888 |
Balance at end (in shares) at Sep. 30, 2020 | 8,853,816 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
OPERATING ACTIVITIES | ||
Net income | $ 9,011,090 | $ 2,969,423 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 1,454,512 | 1,309,035 |
Amortization | 541,432 | 518,422 |
Amortization of operating lease right-of-use assets | 4,203,264 | 4,200,455 |
Deferred income taxes | (33,000) | 359,000 |
Loss (gain) on disposals | 436,775 | (73,086) |
Accrued interest from investing activities | (1,932) | |
Changes in operating assets and liabilities: | ||
Loans receivable | 1,263,006 | 426,596 |
Accounts receivable | (312,891) | (259,146) |
Inventory | (649,557) | (411,322) |
Prepaid expenses and other assets | 97,064 | 28,833 |
Operating lease liabilities | (4,811,774) | (4,675,738) |
Accounts payable and accrued expenses | (1,406,202) | (3,335,321) |
Contract liabilities and other current liabilities | (346,368) | (325,811) |
Net cash and cash equivalents provided by operating activities | 9,445,419 | 731,340 |
INVESTING ACTIVITIES | ||
Purchases of investments | (37,263,764) | (23,728,805) |
Proceeds from held-to-maturity investments | 35,417,921 | 30,965,130 |
Purchases of property and equipment | (409,194) | (544,864) |
Acquisition of stores, net of cash acquired | (566,586) | (164,400) |
Advances on loans receivable | (6,590) | (578,948) |
Proceeds from the disposal of operating assets | 382,989 | 1,195,000 |
Net cash and cash equivalents provided by (used in) investing activities | (2,445,224) | 7,143,113 |
FINANCING ACTIVITIES | ||
Payments on notes payable - long-term | (1,085,251) | (54,226) |
Common stock redemption | (1,619,754) | (159,221) |
Payments on finance leases | (1,161) | (37,275) |
Distributions to noncontrolling interests | (1,749,337) | (936,600) |
Payments of dividends | (922,527) | (1,407,780) |
Net cash and cash equivalents used in financing activities | (5,378,030) | (2,595,102) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 1,622,165 | 5,279,351 |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 27,132,540 | 16,724,983 |
End of period | 28,754,705 | 22,004,334 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Income taxes paid | 2,952,337 | 576,638 |
Interest paid | 50,509 | 69,246 |
Noncash investing and financing activities: | ||
Assets received in acquisition (see Note 13) | 1,233,616 | 1,738,546 |
Liabilities assumed in acquisition (see Note 13) | 1,233,616 | 1,369,024 |
Note payable assumed in acquisition (see Note 13) | 347,918 | |
Noncontrolling interest contribution to subsidiary (see Note 13) | 17,446 | |
Right-of-use assets obtained and operating lease obligations incurred | 2,656,498 | 244,077 |
Right-of-use asset disposals | 1,145,732 | |
Right-of-use liability disposals | 706,030 | |
Stock repurchase | 613,856 | |
Distribution to noncontrolling interest applied to loan receivable | $ 253,265 |
Basis of Presentation, Nature o
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies | 1. Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies – Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (SEC) and, therefore, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Management has analyzed the impact of the Coronavirus pandemic (“COVID-19”) on its financial statements as of September 30, 2020 and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets or long-lived assets. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet at December 31, 2019, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by GAAP. Nature of Business Western Capital Resources, Inc. (“WCR”) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. ● Cellular Retail ○ PQH Wireless, Inc. (“PQH”) (100%) – operates 206 cellular retail stores as of September 30, 2020 (102 100% owned plus 104 held through its controlled but less than 100% owned subsidiaries), exclusively as an authorized retailer of the Cricket brand. ● Direct to Consumer ○ J&P Park Acquisitions, Inc. (“JPPA”) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. ○ J&P Real Estate, LLC (“JPRE”) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. ● Consumer Finance ○ Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates “payday” stores (37 as of September 30, 2020, two of which are located within the Company’s retail pawn stores) in six states (Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. ○ Express Pawn, Inc. (“EPI”) (100%) – owns and operates retail pawn stores (three as of September 30, 2020) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” or “EPI” are references only to those companies. Basis of Consolidation The consolidated financial statements include the accounts of WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill, intangible assets, and right-of-use assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate and merchandise credits liability and deferred taxes and tax uncertainties. Reclassifications Certain Statement of Income reclassifications have been made in the presentation of our prior financial statements to conform to the presentation as of and for the three and nine months ended September 30, 2020. Recent Accounting Pronouncements In April, 2020 the staff of the Financial Accounting Standards Board (FASB) issued a question-and-answer document that states entities may elect not to evaluate whether a concession provided by a lessor to a lessee in response to the effects of the coronavirus pandemic is a lease modification. Retailers may make the elections for any lessor-provided concessions related to the effects of the coronavirus pandemic as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. The Company has made such election. The Company has received minimal rent concessions and has not entered into any related lease modifications to date. As such, the Company does not believe this election will have a material impact on its financial condition, results of operations or consolidated financial statements. No other new accounting pronouncements issued or effective during the period have had or are expected to have a material impact on the consolidated financial statements. |
Risks Inherent in the Operating
Risks Inherent in the Operating Environment | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks Inherent in the Operating Environment | 2. Risks Inherent in the Operating Environment – Regulatory The Company’s Consumer Finance segment activities are highly regulated under numerous federal, state, and local laws, regulations and rules, which are subject to change. New laws, regulations or rules could be enacted or issued, interpretations of existing laws, regulations or rules may change and enforcement action by regulatory agencies may intensify. Over the past several years, consumer advocacy groups and certain media reports have advocated governmental and regulatory action to prohibit or severely restrict sub-prime lending activities of the kind conducted by the Company. After several years of research, debate, and public hearings, in October 2017 the U.S. Consumer Financial Protection Bureau (“CFPB”) adopted a new rule for payday lending. The rule, originally scheduled to go into effect in August 2019, would have imposed significant restrictions on the industry, and it was expected that a large number of lenders would be forced to close their stores as a result of the rule. The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate if the rule was implemented as originally adopted. However, in January 2018, the CFPB issued a statement that it intended to “reconsider” the regulation and delayed the August 19, 2019 compliance date for the other provisions to November 19, 2020. In July 2020, the CFPB issued a final rule applicable to the 2017 rule. The final rule rescinds the mandatory underwriting provisions of the 2017 rule but does not rescind or alter the payments provisions of the 2017 rule. The CFPB will seek to have these rules go into effect with a reasonable period for entities to come into compliance. The implementation of the final rule is likely to result in a reduction of in-house bad debt collections, higher collection costs and thus a negative impact on business conducted within our Consumer Finance segment. Consumer advocacy groups in many states are actively seeking state law changes which would effectively end the viability of a payday loan business, including Nebraska where in 2019 we generate approximately 30% of our payday lending revenue, or approximately 2% of our consolidated revenue. If these groups are successful in Nebraska, we will likely cease payday lending activities in Nebraska. In June 2020, a Nebraska group submitted signatures for a ballot initiative that would limit all fees charged by payday lenders in Nebraska to an annual interest rate of 36%. As a result, the initiative is expected to be on the Nebraska statewide ballot for the November 3, 2020 election. The implementation of the CFPB rule, the passage of the Nebraska ballot initiative or any other adverse change in present federal, state, or local laws or regulations that govern or otherwise affect lending could result in the Consumer Finance segment’s curtailment or cessation of operations in certain or all jurisdictions or locations. Furthermore, any failure to comply with any applicable local, state or federal laws or regulations could result in fines, litigation, closure of one or more store locations or negative publicity. Any such change or failure would have a corresponding impact on the Company’s and segment’s results of operations and financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, or a decrease in operating income through increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects due to lost or decreased operating income or if negative publicity effects its ability to obtain additional financing as needed. In addition, the passage of federal, state or local laws and regulations or changes in interpretations of them could, at any point, essentially prohibit the Consumer Finance segment from conducting its lending business in its current form. Any such legal or regulatory change would certainly have a material and adverse effect on the Company, its operating results, financial condition and prospects, and perhaps even the viability of the Consumer Finance segment. Concentrations The Company has demand deposits at financial institutions, often times in excess of the limit for insurance by the Federal Deposit Insurance Corporation. As of September 30, 2020, the Company had demand deposits in excess of insurance amounts of approximately $7.39 million. COVID-19 In December 2019 COVID-19 emerged in Wuhan, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to almost all other countries, including the United States, and infections have been reported globally, with much of the United States experiencing a “third peak” in infections during the fall months. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders and others proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. Since the start of the pandemic, the Company’s Cellular Retail segment had temporarily closed approximately 75 locations, all but 22 of which subsequently re-opened by the end of April 2020. In June 2020, those 22 closed locations plus five others were permanently closed. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s businesses and the duration for which it may have an impact cannot be determined at this time. |
Cash Equivalents and Marketable
Cash Equivalents and Marketable Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Cash Equivalents and Marketable Investments | 3. Cash Equivalents and Marketable Investments – The following table shows the Company’s cash and cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash and cash equivalents or short- and long-term investments: September 30, 2020 December 31, 2019 Cash and cash equivalents Operating accounts $ 14,070,233 $ 10,163,845 Money Market – U.S. Treasury obligations 1,284,804 12,518,262 U.S. Treasury obligations 13,399,668 4,450,433 Subtotal 28,754,705 27,132,540 Held to Maturity Investments Certificates of deposit (4 – 24 month maturities, FDIC insured) $ 18,079,672 $ 9,049,787 U.S. Treasury obligations (less than one year maturities) — 7,206,878 Subtotal 18,079,672 16,256,665 TOTAL $ 46,834,377 $ 43,389,205 Held to maturity investments consisted of the following: September 30, 2020 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 18,028,318 $ 51,354 $ — $ 18,079,672 $ 13,040 $ 18,092,712 U.S. Treasuries — — — — — — $ 18,028,318 $ 51,354 $ — $ 18,079,672 $ 13,040 $ 18,092,712 December 31, 2019 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 9,015,618 $ 34,169 $ — $ 9,049,787 $ (32,429 ) $ 9,017,358 U.S. Treasuries 7,153,587 — 53,291 7,206,878 2,883 7,209,761 $ 16,169,205 $ 34,169 $ 53,291 $ 16,256,665 $ (29,546 ) $ 16,227,119 Interest income recognized on held-to-maturity investments and other sources was as follows: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Held-to-maturity $ 44,694 $ 112,158 $ 210,725 $ 412,855 Other 9,902 86,659 54,318 161,481 $ 54,596 $ 198,817 $ 265,043 $ 574,336 The Company deposited in aggregate $1.75 million of cash across seven different accounts at a financial institution as an accommodation to its majority stockholder, who has other business relationships with the financial institution. The funds in these accounts can be withdrawn at any time, do not serve as collateral in any way, and are held on market terms. |
Loans Receivable
Loans Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loans Receivable | 4. Loans Receivable – The Consumer Finance segment’s outstanding loans receivable aging is as follows: September 30, 2020 Payday Installment Pawn Total Current $ 2,197,694 $ 42,495 $ 261,599 $ 2,501,788 1-30 130,093 4,793 — 134,886 31-60 84,270 546 — 84,816 61-90 81,382 — — 81,382 91-120 44,418 — — 44,418 121-150 17,964 — — 17,964 151-180 44,851 — — 44,851 2,600,672 47,834 261,599 2,910,105 Less Allowance (312,700 ) — — (312,700 ) $ 2,287,972 $ 47,834 $ 261,599 $ 2,597,405 December 31, 2019 Payday Installment Pawn Total Current $ 3,322,131 $ 67,891 $ 309,934 $ 3,699,956 1-30 216,753 10,590 — 227,343 31-60 140,872 6,234 — 147,106 61-90 117,544 2,649 — 120,193 91-120 118,626 840 — 119,466 121-150 110,278 395 — 110,673 151-180 108,674 — — 108,674 4,134,878 88,599 309,934 4,533,411 Less Allowance (673,000 ) — — (673,000 ) $ 3,461,878 $ 88,599 $ 309,934 $ 3,860,411 |
Loans Receivable Allowance
Loans Receivable Allowance | 9 Months Ended |
Sep. 30, 2020 | |
Provision for Loan and Lease Losses [Abstract] | |
Loans Receivable Allowance | 5. Loans Receivable Allowance – A rollforward of the Consumer Finance segment’s loans receivable allowance is as follows: Nine Months Ended September 30, 2020 Year Ended December 31, 2019 Loans receivable allowance, beginning of period $ 673,000 $ 818,000 Provision for loan losses charged to expense 110,165 975,938 Write-offs, net (470,465 ) (1,120,938 ) Loans receivable allowance, end of period $ 312,700 $ 673,000 |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | 6. Accounts Receivable – A breakdown of accounts receivables by segment is as follows: September 30, 2020 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 225,696 $ 590,533 $ 23,138 $ 839,367 Less allowance — (9,000 ) — (9,000 ) Net accounts receivable $ 225,696 $ 581,533 $ 23,138 $ 830,367 December 31, 2019 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 184,519 $ 318,235 $ 27,722 $ 530,476 Less allowance — (13,000 ) — (13,000 ) Net accounts receivable $ 184,519 $ 305,235 $ 27,722 $ 517,476 A portion of accounts receivable are unsettled credit card sales from the prior one to five business days. This makes up 74% and 68% of the net accounts receivable balance at September 30, 2020 and December 31, 2019, respectively. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | 7. Inventory – Inventories consist of: September 30, 2020 December 31, 2019 Finished Goods Cellular Retail $ 5,466,853 $ 5,687,771 Direct to Consumer 3,682,418 2,888,483 Consumer Finance 726,397 819,437 Reserve (814,000 ) (1,065,000 ) TOTAL $ 9,061,668 $ 8,330,691 As a result of changes in the market for certain Company products and the resulting deteriorating value, carrying amounts for those inventories were reduced by approximately $814,000 and $1,065,000 at September 30, 2020 and December 31, 2019, respectively. These inventory write-downs have been reflected in adjustments to cost of goods sold in the statement of operations. Management believes that these reductions properly reflect inventory at lower of cost or market, and no additional losses will be incurred upon disposition. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 8. Leases – The Company lease accounting policy follows the guidance from ASC 842 - Leases, which provides guidance on the recognition, presentation and disclosure of leases in consolidated condensed financial statements. Total components of operating lease expense for the real property asset class (in thousands) were as follows: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Operating lease expense $ 1,520 $ 4,760 Variable lease expense 506 1,663 Total lease expense $ 2,026 $ 6,423 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease expense $ 1,421 $ 4,190 Variable lease expense 633 2,008 Total lease expense $ 2,054 $ 6,198 Other information related to operating leases was as follows: September 30, 2020 September 30, 2019 Weighted average remaining lease term, in years 2.83 2.79 Weighted average discount rate 5.5 % 5.9 % Future minimum lease payments under operating leases as of September 30, 2020 (in thousands) were as follows: Operating Leases Remainder of 2020 $ 1,440 2021 4,800 2022 3,273 2023 1,690 2024 779 2025 138 Thereafter 28 Total future minimum lease payments 12,148 Less: imputed interest (1,004 ) Total $ 11,144 Current portion operating lease liabilities $ 4,701 Non-current operating lease liabilities 6,443 Total $ 11,144 |
Notes Payable - Long Term
Notes Payable - Long Term | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable - Long Term | 9. Notes Payable – Long Term – September 30, 2020 December 31, 2019 Subsidiary subordinated note pa yab le to seller with monthly interest only payments at 6%, guaranteed by PQH , with a maturity date of August 5 22. The note was paid off in August 2020. $ — $ 789,216 Subsidiary note payable to a financial institution, with monthly principal and interest payments of $6,692, bearing interest at 5.5%, secured by substantially all assets of the subsidiary, and maturing January 4, 2024. The note was paid off in September 2020 and refinanced internally. — 296,035 Total — 1,085,251 Less current maturities — (65,414 ) $ — $ 1,019,837 |
Cash Dividends
Cash Dividends | 9 Months Ended |
Sep. 30, 2020 | |
Dividends [Abstract] | |
Cash Dividends | 10. Cash Dividends – Date Declared Record Date Dividend Per Share Payment Date Dividend Paid February 13, 2020 February 28, 2020 $0.050 March 9, 2020 $463,289 May 5, 2020 May 22, 2020 $0.025 June 2, 2020 $230,865 August 10, 2020 August 25, 2020 $0.025 September 4, 2020 $228,373 |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 11. Revenue – Revenue generated from contracts with customers and recognized per ASC 606 primarily consists of sales of merchandise and services at the point of sale and compensation from Cricket Wireless. As a Cricket Wireless authorized retailer, we earn compensation from Cricket Wireless for activating a new customer on the Cricket Wireless network, activating new devices for existing Cricket Wireless customers (“back-end compensation”) and upon an existing Cricket Wireless customer whom we originally activated on the Cricket Wireless GSM network making a continuing service payment (“CSP”). Due to COVID-19 and at the request of Cricket Wireless, the Cellular Retail segment temporarily closed approximately 75 retail locations in March 2020. In conjunction with the request, Cricket Wireless notified the Company that it would be providing temporary supplemental commissions for the store closures. In addition, Cricket Wireless temporarily increased other supplemental commissions for qualifying activations. COVID-19 related supplemental commissions of approximately $0 and $1,530,000, as reported to us by Cricket, was included in revenue in the three and nine month periods ended September 30, 2020. The closure related supplemental compensation assistance from Cricket ended by June 30, 2020. Revenue generated from short-term lending agreements in the Consumer Finance segment and from Company investments are recognized in accordance with ASC 825. Total net sales of merchandise, which exclude sales taxes, are generally recorded as follows: ● Cellular Retail – net sales reflects the transaction price at point of sale when payment is received or receivable, the customer takes control of the merchandise and, applicable to devices, the device has been activated on the Cricket Wireless network. The sale and activation of a wireless device also correlates to the recording of back-end compensation from Cricket Wireless. Sales returns are generally not material to our financial statements. ● Direct to Consumer – net sales reflect the transaction price when product is shipped to customers, FOB shipping point, reduced by variable consideration. Shipping and handling fees are also included in total net sales. Variable consideration is comprised of estimated future returns and merchandise credits which are estimated based primarily on historical rates and sales levels. ● Consumer Finance - net sales reflects the transaction price at point of sale when payment in full is received and the customer takes control of the merchandise. Sales returns are generally not material to our financial statements. Services revenue from customer paid fees is generally recorded at point of sale when payment is received and the customer receives the benefit of the service. CSP compensation from Cricket Wireless is recorded as of the time certain Cricket Wireless customers make a service payment, as reported to us by Cricket Wireless. Recognized as revenue per ASC 825, Consumer Finance loan fees and interest on cash advance loans are recognized on a constant-yield basis ratably over a loan’s term. Installment loan fees and interest are recognized using the interest method, except that installment loan origination fees are recognized as they become non-refundable and installment loan maintenance fees are recognized when earned. The Company recognizes fees on pawn loans on a constant-yield basis ratably over the loans’ terms, less an estimated amount for expected forfeited pawn loans which is based on historical forfeiture rates. See Note 14, “Segment Information,” for disaggregation of revenue by segment. |
Other Operating Expense
Other Operating Expense | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Other Operating Expense | 12. Other Operating Expense – A breakout of other expense is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Bank fees $ 411,189 $ 353,064 $ 1,705,582 $ 1,397,631 Collection costs 93,464 82,503 250,939 242,855 Insurance 191,108 178,414 587,440 545,056 Management and advisory fees 220,303 211,003 651,609 624,151 Professional and consulting fees 354,725 325,824 1,004,461 1,115,629 Supplies 185,744 170,387 605,898 453,198 Loss on disposal — 66,685 662,522 77,883 Other 478,109 526,854 1,755,209 1,744,201 $ 1,934,642 $ 1,914,734 $ 7,223,660 $ 6,200,604 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | 13. Acquisitions – Cellular Retail Acquisitions In 2020, PQH completed Cricket retail location transactions, acquiring 19 locations. In 2019, PQH contributed a note payable in exchange for a 51% ownership interest in a newly formed subsidiary Summit JV, LLC (“Summit”) and another Cricket Wireless dealer contributed substantially all its assets, including 28 Cricket Wireless retail locations, and specified liabilities in exchange for a 49% ownership interest in Summit and receipt of the note payable contributed by PQH. Effective March 1, 2019, we consummated the transaction. The purchase price calculations (in thousands) are as follows: 2020 2019 Cash $ 568 $ — Note payable — 18 Noncontrolling interests/equity — 17 $ 568 $ 35 The assets acquired and liabilities assumed (in thousands) were recorded at their estimated fair values as of the purchase dates as follows: 2020 2019 Cash $ 2 $ 14 Receivables — 272 Inventory 82 50 Property and equipment 272 596 Intangible assets 234 — Operating lease right-of-use assets 1,178 772 Other assets 33 48 Other liabilities (55 ) (597 ) Operating lease liabilities (1,178 ) (772 ) Term note payable — (348 ) $ 568 $ 35 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 14. Segment Information – Segment information related to the three and nine month periods ended September 30, 2020 and 2019 (in thousands) is as follows: Three Months Ended September 30, 2020 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 22,589 $ 5,901 $ 379 $ — $ 28,869 Fees and interest income $ — $ — $ 1,419 $ — $ 1,419 Total revenue $ 22,589 $ 5,901 $ 1,798 $ — $ 30,288 Net income (loss) $ 1,717 $ (60 ) $ 112 $ (192 ) $ 1,577 Expenditures for segmented assets $ 62 $ 138 $ — $ — $ 200 Three Months Ended September 30, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 16,969 $ 4,925 $ 420 $ — $ 22,314 Fees and interest income $ — $ — $ 2,203 $ — $ 2,203 Total revenue $ 16,969 $ 4,925 $ 2,623 $ — $ 24,517 Net income (loss) $ 690 $ (610 ) $ 279 $ (69 ) $ 290 Expenditures for segmented assets $ 185 $ 149 $ — $ — $ 334 Nine Months Ended September 30, 2020 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 63,609 $ 33,841 $ 1,372 $ — $ 98,822 Fees and interest income $ — $ — $ 4,636 $ — $ 4,636 Total Revenue $ 63,609 $ 33,841 $ 6,008 $ — $ 103,458 Net income (loss) $ 4,435 $ 4,672 $ 478 $ (574 ) $ 9,011 Total segment assets $ 34,375 $ 14,155 $ 7,792 $ 35,439 $ 91,761 Expenditures for segmented assets $ 696 $ 337 $ — $ — $ 1,033 Nine Months Ended September 30, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 49,753 $ 27,339 $ 1,236 $ — $ 78,328 Fees and interest income $ — $ — $ 6,304 $ — $ 6,304 Total Revenue $ 49,753 $ 27,339 $ 7,540 $ — $ 84,632 Net income (loss) $ 1,702 $ 733 $ 741 $ (207 ) $ 2,969 Total segment assets $ 30,779 $ 12,976 $ 8,817 $ 35,761 $ 88,333 Expenditures for segmented assets $ 507 $ 216 $ — $ — $ 723 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 15. Commitments and Contingencies – Employment Agreements Pursuant to the numerous employment agreements, bonuses of approximately $347,000 and $932,000 were accrued for the three and nine months ended September 30, 2020, respectively. Assigned Leases The Company’s Cellular Retail segment has transferred operations of many locations to other dealers and remains contingently liable under many lease agreements. Minimum lease payments of assigned or assumed non-cancelable operating leases related to transferred locations in which a release has not been obtained from the lessor are approximately $1,312,000 as of September 30, 2020. Legal Proceedings The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events – Consumer Finance – NE Operations On November 3, 2020, Nebraska voters passed a ballot initiative that limits all fees charged by payday lenders in Nebraska to an annual interest rate of 36%. This initiative will cause us to close our Nebraska payday lending operations which we expect to have completed by mid-December 2020. The loss of Nebraska operations will have a significant impact on this segment’s contributions to shareholder earnings. Dividend Declared Our Board of Directors declared the following dividend: Date Declared Record Date Dividend Per Share Payment Date November 3, 2020 November 17, 2020 $0.025 November 30, 2020 We evaluated all events or transactions that occurred after September 30, 2020 through the date we issued these financial statements. During this period we did not have any other material subsequent events that impacted our financial statements. |
Basis of Presentation, Nature_2
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (SEC) and, therefore, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Management has analyzed the impact of the Coronavirus pandemic (“COVID-19”) on its financial statements as of September 30, 2020 and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets or long-lived assets. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet at December 31, 2019, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by GAAP. |
Nature of Business | Nature of Business Western Capital Resources, Inc. (“WCR”) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. ● Cellular Retail ○ PQH Wireless, Inc. (“PQH”) (100%) – operates 206 cellular retail stores as of September 30, 2020 (102 100% owned plus 104 held through its controlled but less than 100% owned subsidiaries), exclusively as an authorized retailer of the Cricket brand. ● Direct to Consumer ○ J&P Park Acquisitions, Inc. (“JPPA”) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. ○ J&P Real Estate, LLC (“JPRE”) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. ● Consumer Finance ○ Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates “payday” stores (37 as of September 30, 2020, two of which are located within the Company’s retail pawn stores) in six states (Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. ○ Express Pawn, Inc. (“EPI”) (100%) – owns and operates retail pawn stores (three as of September 30, 2020) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” or “EPI” are references only to those companies. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill, intangible assets, and right-of-use assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate and merchandise credits liability and deferred taxes and tax uncertainties. |
Reclassifications | Reclassifications Certain Statement of Income reclassifications have been made in the presentation of our prior financial statements to conform to the presentation as of and for the three and nine months ended September 30, 2020. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April, 2020 the staff of the Financial Accounting Standards Board (FASB) issued a question-and-answer document that states entities may elect not to evaluate whether a concession provided by a lessor to a lessee in response to the effects of the coronavirus pandemic is a lease modification. Retailers may make the elections for any lessor-provided concessions related to the effects of the coronavirus pandemic as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. The Company has made such election. The Company has received minimal rent concessions and has not entered into any related lease modifications to date. As such, the Company does not believe this election will have a material impact on its financial condition, results of operations or consolidated financial statements. No other new accounting pronouncements issued or effective during the period have had or are expected to have a material impact on the consolidated financial statements. |
Cash Equivalents and Marketab_2
Cash Equivalents and Marketable Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash equivalents or short and long-term investments | The following table shows the Company’s cash and cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash and cash equivalents or short- and long-term investments: September 30, 2020 December 31, 2019 Cash and cash equivalents Operating accounts $ 14,070,233 $ 10,163,845 Money Market – U.S. Treasury obligations 1,284,804 12,518,262 U.S. Treasury obligations 13,399,668 4,450,433 Subtotal 28,754,705 27,132,540 Held to Maturity Investments Certificates of deposit (4 – 24 month maturities, FDIC insured) $ 18,079,672 $ 9,049,787 U.S. Treasury obligations (less than one year maturities) — 7,206,878 Subtotal 18,079,672 16,256,665 TOTAL $ 46,834,377 $ 43,389,205 |
Schedule of held to maturity investments | Held to maturity investments consisted of the following: September 30, 2020 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 18,028,318 $ 51,354 $ — $ 18,079,672 $ 13,040 $ 18,092,712 U.S. Treasuries — — — — — — $ 18,028,318 $ 51,354 $ — $ 18,079,672 $ 13,040 $ 18,092,712 December 31, 2019 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 9,015,618 $ 34,169 $ — $ 9,049,787 $ (32,429 ) $ 9,017,358 U.S. Treasuries 7,153,587 — 53,291 7,206,878 2,883 7,209,761 $ 16,169,205 $ 34,169 $ 53,291 $ 16,256,665 $ (29,546 ) $ 16,227,119 |
Schedule of interest income recognized on held-to-maturity investments | Interest income recognized on held-to-maturity investments and other sources was as follows: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Held-to-maturity $ 44,694 $ 112,158 $ 210,725 $ 412,855 Other 9,902 86,659 54,318 161,481 $ 54,596 $ 198,817 $ 265,043 $ 574,336 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of outstanding loans receivable aging | The Consumer Finance segment’s outstanding loans receivable aging is as follows: September 30, 2020 Payday Installment Pawn Total Current $ 2,197,694 $ 42,495 $ 261,599 $ 2,501,788 1-30 130,093 4,793 — 134,886 31-60 84,270 546 — 84,816 61-90 81,382 — — 81,382 91-120 44,418 — — 44,418 121-150 17,964 — — 17,964 151-180 44,851 — — 44,851 2,600,672 47,834 261,599 2,910,105 Less Allowance (312,700 ) — — (312,700 ) $ 2,287,972 $ 47,834 $ 261,599 $ 2,597,405 December 31, 2019 Payday Installment Pawn Total Current $ 3,322,131 $ 67,891 $ 309,934 $ 3,699,956 1-30 216,753 10,590 — 227,343 31-60 140,872 6,234 — 147,106 61-90 117,544 2,649 — 120,193 91-120 118,626 840 — 119,466 121-150 110,278 395 — 110,673 151-180 108,674 — — 108,674 4,134,878 88,599 309,934 4,533,411 Less Allowance (673,000 ) — — (673,000 ) $ 3,461,878 $ 88,599 $ 309,934 $ 3,860,411 |
Loans Receivable Allowance (Tab
Loans Receivable Allowance (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Provision for Loan and Lease Losses [Abstract] | |
Schedule of loans receivable allowance | A rollforward of the Consumer Finance segment’s loans receivable allowance is as follows: Nine Months Ended September 30, 2020 Year Ended December 31, 2019 Loans receivable allowance, beginning of period $ 673,000 $ 818,000 Provision for loan losses charged to expense 110,165 975,938 Write-offs, net (470,465 ) (1,120,938 ) Loans receivable allowance, end of period $ 312,700 $ 673,000 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | A breakdown of accounts receivables by segment is as follows: September 30, 2020 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 225,696 $ 590,533 $ 23,138 $ 839,367 Less allowance — (9,000 ) — (9,000 ) Net accounts receivable $ 225,696 $ 581,533 $ 23,138 $ 830,367 December 31, 2019 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 184,519 $ 318,235 $ 27,722 $ 530,476 Less allowance — (13,000 ) — (13,000 ) Net accounts receivable $ 184,519 $ 305,235 $ 27,722 $ 517,476 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories consist of: September 30, 2020 December 31, 2019 Finished Goods Cellular Retail $ 5,466,853 $ 5,687,771 Direct to Consumer 3,682,418 2,888,483 Consumer Finance 726,397 819,437 Reserve (814,000 ) (1,065,000 ) TOTAL $ 9,061,668 $ 8,330,691 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of components of lease expense | Total components of operating lease expense for the real property asset class (in thousands) were as follows: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Operating lease expense $ 1,520 $ 4,760 Variable lease expense 506 1,663 Total lease expense $ 2,026 $ 6,423 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease expense $ 1,421 $ 4,190 Variable lease expense 633 2,008 Total lease expense $ 2,054 $ 6,198 |
Schedule of weighted average remaining lease terms and discount rates held | Other information related to operating leases was as follows: September 30, 2020 September 30, 2019 Weighted average remaining lease term, in years 2.83 2.79 Weighted average discount rate 5.5 % 5.9 % |
Schedule of future minimum lease payments under leases | Future minimum lease payments under operating leases as of September 30, 2020 (in thousands) were as follows: Operating Leases Remainder of 2020 $ 1,440 2021 4,800 2022 3,273 2023 1,690 2024 779 2025 138 Thereafter 28 Total future minimum lease payments 12,148 Less: imputed interest (1,004 ) Total $ 11,144 Current portion operating lease liabilities $ 4,701 Non-current operating lease liabilities 6,443 Total $ 11,144 |
Notes Payable - Long Term (Tabl
Notes Payable - Long Term (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | September 30, 2020 December 31, 2019 Subsidiary subordinated note pa yab le to seller with monthly interest only payments at 6%, guaranteed by PQH , with a maturity date of August 5 22. The note was paid off in August 2020. $ — $ 789,216 Subsidiary note payable to a financial institution, with monthly principal and interest payments of $6,692, bearing interest at 5.5%, secured by substantially all assets of the subsidiary, and maturing January 4, 2024. The note was paid off in September 2020 and refinanced internally. — 296,035 Total — 1,085,251 Less current maturities — (65,414 ) $ — $ 1,019,837 |
Cash Dividends (Tables)
Cash Dividends (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Dividends [Abstract] | |
Schedule of cash dividends | Date Declared Record Date Dividend Per Share Payment Date Dividend Paid February 13, 2020 February 28, 2020 $0.050 March 9, 2020 $463,289 May 5, 2020 May 22, 2020 $0.025 June 2, 2020 $230,865 August 10, 2020 August 25, 2020 $0.025 September 4, 2020 $228,373 |
Other Operating Expense (Tables
Other Operating Expense (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of other operating expenses | A breakout of other expense is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Bank fees $ 411,189 $ 353,064 $ 1,705,582 $ 1,397,631 Collection costs 93,464 82,503 250,939 242,855 Insurance 191,108 178,414 587,440 545,056 Management and advisory fees 220,303 211,003 651,609 624,151 Professional and consulting fees 354,725 325,824 1,004,461 1,115,629 Supplies 185,744 170,387 605,898 453,198 Loss on disposal — 66,685 662,522 77,883 Other 478,109 526,854 1,755,209 1,744,201 $ 1,934,642 $ 1,914,734 $ 7,223,660 $ 6,200,604 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of purchase price | The purchase price calculations (in thousands) are as follows: 2020 2019 Cash $ 568 $ — Note payable — 18 Noncontrolling interests/equity — 17 $ 568 $ 35 |
Schedule of assets acquired and liabilities assumed | The assets acquired and liabilities assumed (in thousands) were recorded at their estimated fair values as of the purchase dates as follows: 2020 2019 Cash $ 2 $ 14 Receivables — 272 Inventory 82 50 Property and equipment 272 596 Intangible assets 234 — Operating lease right-of-use assets 1,178 772 Other assets 33 48 Other liabilities (55 ) (597 ) Operating lease liabilities (1,178 ) (772 ) Term note payable — (348 ) $ 568 $ 35 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment information | Segment information related to the three and nine month periods ended September 30, 2020 and 2019 (in thousands) is as follows: Three Months Ended September 30, 2020 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 22,589 $ 5,901 $ 379 $ — $ 28,869 Fees and interest income $ — $ — $ 1,419 $ — $ 1,419 Total revenue $ 22,589 $ 5,901 $ 1,798 $ — $ 30,288 Net income (loss) $ 1,717 $ (60 ) $ 112 $ (192 ) $ 1,577 Expenditures for segmented assets $ 62 $ 138 $ — $ — $ 200 Three Months Ended September 30, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 16,969 $ 4,925 $ 420 $ — $ 22,314 Fees and interest income $ — $ — $ 2,203 $ — $ 2,203 Total revenue $ 16,969 $ 4,925 $ 2,623 $ — $ 24,517 Net income (loss) $ 690 $ (610 ) $ 279 $ (69 ) $ 290 Expenditures for segmented assets $ 185 $ 149 $ — $ — $ 334 Nine Months Ended September 30, 2020 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 63,609 $ 33,841 $ 1,372 $ — $ 98,822 Fees and interest income $ — $ — $ 4,636 $ — $ 4,636 Total Revenue $ 63,609 $ 33,841 $ 6,008 $ — $ 103,458 Net income (loss) $ 4,435 $ 4,672 $ 478 $ (574 ) $ 9,011 Total segment assets $ 34,375 $ 14,155 $ 7,792 $ 35,439 $ 91,761 Expenditures for segmented assets $ 696 $ 337 $ — $ — $ 1,033 Nine Months Ended September 30, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 49,753 $ 27,339 $ 1,236 $ — $ 78,328 Fees and interest income $ — $ — $ 6,304 $ — $ 6,304 Total Revenue $ 49,753 $ 27,339 $ 7,540 $ — $ 84,632 Net income (loss) $ 1,702 $ 733 $ 741 $ (207 ) $ 2,969 Total segment assets $ 30,779 $ 12,976 $ 8,817 $ 35,761 $ 88,333 Expenditures for segmented assets $ 507 $ 216 $ — $ — $ 723 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Schedule of declared dividends payable | Our Board of Directors declared the following dividend: Date Declared Record Date Dividend Per Share Payment Date November 3, 2020 November 17, 2020 $0.025 November 30, 2020 |
Basis of Presentation, Nature_3
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended |
Sep. 30, 2020Number | |
JPPA [Member] | Direct to Consumer [Member] | |
Subsidiary ownership percentage | 100.00% |
JPRE [Member] | Direct to Consumer [Member] | |
Subsidiary ownership percentage | 100.00% |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | |
Number of stores | 37 |
Subsidiary ownership percentage | 100.00% |
Number of states in which entity operates | 6 |
Wyoming Financial Lenders, Inc. [Member] | Minimum [Member] | Payday [Member] | Consumer Finance [Member] | |
Payday loan range | 100 |
Wyoming Financial Lenders, Inc. [Member] | Minimum [Member] | Installment [Member] | Consumer Finance [Member] | |
Payday loan range | 300 |
Wyoming Financial Lenders, Inc. [Member] | Maximum [Member] | Payday [Member] | Consumer Finance [Member] | |
Installment loan range | 500 |
Wyoming Financial Lenders, Inc. [Member] | Maximum [Member] | Installment [Member] | Consumer Finance [Member] | |
Installment loan range | 800 |
Express Pawn, Inc. [Member] | Consumer Finance [Member] | |
Number of stores | 3 |
Subsidiary ownership percentage | 100.00% |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | |
Number of stores | 206 |
Subsidiary ownership percentage | 100.00% |
PQH Wireless, Inc. [Member] | PQH Subsidiaries [Member] | Cellular Retail [Member] | |
Number of stores | 104 |
PQH Wireless, Inc. [Member] | PQH [Member] | Cellular Retail [Member] | |
Number of stores | 102 |
Number of stores ownership percentage | 100.00% |
Risks Inherent in the Operati_2
Risks Inherent in the Operating Environment (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($)Number | |
Description of attrition rate | The CFPB's studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate if the rule was implemented as originally adopted. |
WCRS Cash,Excess Over FDIC Insured Amount | $ | $ 7,390,000 |
Percentage of revenue | 2.00% |
NEBRASKA | |
Percentage of revenue | 30.00% |
Annual interest rate | 36.00% |
Cellular Retail [Member] | |
Number of locations closed | Number | 75 |
Cash Equivalents and Marketab_3
Cash Equivalents and Marketable Investments (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and cash equivalents | ||||
Cash and cash equivalents | $ 28,754,705 | $ 27,132,540 | $ 22,004,334 | $ 16,724,983 |
Held-to-maturity investments | ||||
Held to maturity investments | 18,079,672 | 16,256,665 | ||
TOTAL | 46,834,377 | 43,389,205 | ||
Operating Accounts [Member] | ||||
Cash and cash equivalents | ||||
Cash and cash equivalents | 14,070,233 | 10,163,845 | ||
Money Market - U.S. Treasury Obligations [Member] | ||||
Cash and cash equivalents | ||||
Cash and cash equivalents | 1,284,804 | 12,518,262 | ||
U.S. Treasury Obligations [Member] | ||||
Cash and cash equivalents | ||||
Cash and cash equivalents | 13,399,668 | 4,450,433 | ||
Held-to-maturity investments | ||||
Held to maturity investments | 7,206,878 | |||
Certificates of Deposit [Member] | ||||
Held-to-maturity investments | ||||
Held to maturity investments | $ 18,079,672 | $ 9,049,787 |
Cash Equivalents and Marketab_4
Cash Equivalents and Marketable Investments (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents [Line Items] | ||
Cost | $ 18,028,318 | $ 16,169,205 |
Accrued Interest | 51,354 | 34,169 |
Amortized Discount | 53,291 | |
Amortized Cost | 18,079,672 | 16,256,665 |
Unrealized Gain (Loss) | 13,040 | (29,546) |
Estimated Fair Value | 18,092,712 | 16,227,119 |
Certificates of Deposit [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Cost | 18,028,318 | 9,015,618 |
Accrued Interest | 51,354 | 34,169 |
Amortized Discount | ||
Amortized Cost | 18,079,672 | 9,049,787 |
Unrealized Gain (Loss) | 13,040 | (32,429) |
Estimated Fair Value | 18,092,712 | 9,017,358 |
U.S. Treasury Obligations [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Cost | 7,153,587 | |
Accrued Interest | ||
Amortized Discount | 53,291 | |
Amortized Cost | 7,206,878 | |
Unrealized Gain (Loss) | 2,883 | |
Estimated Fair Value | $ 7,209,761 |
Cash Equivalents and Marketab_5
Cash Equivalents and Marketable Investments (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Held-to-maturity | $ 44,694 | $ 112,158 | $ 210,725 | $ 412,855 |
Other | 9,902 | 86,659 | 54,318 | 161,481 |
Dividend and interest income | $ 54,596 | $ 198,817 | $ 265,043 | $ 574,336 |
Cash Equivalents and Marketab_6
Cash Equivalents and Marketable Investments (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Cash and Cash Equivalents [Line Items] | |
Aggregate deposite | $ 1,750,000 |
Certificates of Deposit [Member] | Minimum [Member] | |
Cash and Cash Equivalents [Line Items] | |
Maturity terms | 4 months |
Certificates of Deposit [Member] | Maximum [Member] | |
Cash and Cash Equivalents [Line Items] | |
Maturity terms | 24 months |
U.S. Treasury Obligations [Member] | Maximum [Member] | |
Cash and Cash Equivalents [Line Items] | |
Maturity terms | 1 year |
Loans Receivable (Details)
Loans Receivable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | $ 2,910,105 | $ 4,533,411 |
Less Allowance | (312,700) | (673,000) |
Notes, Loans and Financing Receivable, Net, current | 2,597,405 | 3,860,411 |
Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,600,672 | 4,134,878 |
Less Allowance | (312,700) | (673,000) |
Notes, Loans and Financing Receivable, Net, current | 2,287,972 | 3,461,878 |
Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 47,834 | 88,599 |
Less Allowance | ||
Notes, Loans and Financing Receivable, Net, current | 47,834 | 88,599 |
Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 261,599 | 309,934 |
Less Allowance | ||
Notes, Loans and Financing Receivable, Net, current | 261,599 | 309,934 |
Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,501,788 | 3,699,956 |
Current [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,197,694 | 3,322,131 |
Current [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 42,495 | 67,891 |
Current [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 261,599 | 309,934 |
1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 134,886 | 227,343 |
1 To 30 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 130,093 | 216,753 |
1 To 30 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 4,793 | 10,590 |
1 To 30 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 84,816 | 147,106 |
31 to 60 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 84,270 | 140,872 |
31 to 60 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 546 | 6,234 |
31 to 60 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 81,382 | 120,193 |
61 To 90 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 81,382 | 117,544 |
61 To 90 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,649 | |
61 To 90 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 44,418 | 119,466 |
91 To 120 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 44,418 | 118,626 |
91 To 120 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 840 | |
91 To 120 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 17,964 | 108,674 |
121 To 150 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 17,964 | 110,278 |
121 To 150 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 395 | |
121 To 150 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
151 To 180 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 44,851 | 110,673 |
151 To 180 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 44,851 | 108,674 |
151 To 180 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
151 To 180 Days [Member] | Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current |
Loans Receivable Allowance (Det
Loans Receivable Allowance (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||
Loans receivable allowance, beginning of year | $ 673,000 | $ 818,000 |
Provision for loan losses charged to expense | 110,165 | 975,938 |
Write-offs, net | (470,465) | (1,120,938) |
Loans receivable allowance, end of year | $ 312,700 | $ 673,000 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts receivable | $ 839,367 | $ 530,476 |
Less allowance | (9,000) | (13,000) |
Net accounts receivable | 830,367 | 517,476 |
Cellular Retail [Member] | ||
Accounts receivable | 225,696 | 184,519 |
Less allowance | ||
Net accounts receivable | 225,696 | 184,519 |
Direct to Consumer [Member] | ||
Accounts receivable | 590,533 | 318,235 |
Less allowance | (9,000) | (13,000) |
Net accounts receivable | 581,533 | 305,235 |
Consumer Finance [Member] | ||
Accounts receivable | 23,138 | 27,722 |
Less allowance | ||
Net accounts receivable | $ 23,138 | $ 27,722 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narratve) | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Net accounts receivable unsettled of credit card | 74.00% | 68.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Finished Goods | ||
TOTAL | $ 9,061,668 | $ 8,330,691 |
Reserve | (814,000) | (1,065,000) |
Cellular Retail [Member] | ||
Finished Goods | ||
TOTAL | 5,466,853 | 5,687,771 |
Direct to Consumer [Member] | ||
Finished Goods | ||
TOTAL | 3,682,418 | 2,888,483 |
Consumer Finance [Member] | ||
Finished Goods | ||
TOTAL | 726,397 | 819,437 |
Reserve [Member] | ||
Finished Goods | ||
Reserve | $ (814,000) | $ (1,065,000) |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Reduction in inventory | $ 814,000 | $ 1,065,000 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease expense | $ 1,520 | $ 1,421 | $ 4,760 | $ 4,190 |
Variable lease expense | 506 | 633 | 1,663 | 2,008 |
Total lease expense | $ 2,026 | $ 2,054 | $ 6,423 | $ 6,198 |
Leases (Details 1)
Leases (Details 1) | Sep. 30, 2020 | Sep. 30, 2019 |
Other Information: | ||
Weighted average remaining lease term for operating leases | 2 years 9 months 29 days | 2 years 9 months 14 days |
Weighted average discount rate | 5.50% | 5.90% |
Leases (Details 2)
Leases (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
Remainder of 2020 | $ 1,440 | |
2021 | 4,800 | |
2022 | 3,273 | |
2023 | 1,690 | |
2024 | 779 | |
2025 | 138 | |
Thereafter | 28 | |
Total future minimum lease payments | 12,148 | |
Less: imputed interest | (1,004) | |
Total | 11,144 | |
Current portion operating lease liabilities | 4,700,889 | $ 5,079,745 |
Non-Current operating lease liabilities | 6,443,450 | $ 7,444,789 |
Total | $ 11,144 |
Notes Payable - Long Term (Deta
Notes Payable - Long Term (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total | $ 1,085,251 | |
Less current maturities | (65,414) | |
Notes payable, noncurrent | 1,019,837 | |
Note Payable to Seller [Member] | ||
Debt Instrument [Line Items] | ||
Total | 789,216 | |
Note Payable to Seller Two [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 296,035 |
Notes Payable - Long Term (De_2
Notes Payable - Long Term (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Note Payable to Seller [Member] | |
Debt Instrument [Line Items] | |
Maturity date | Aug. 5, 2022 |
Stated interest rate | 6.00% |
Note Payable to Seller Two [Member] | |
Debt Instrument [Line Items] | |
Maturity date | Jan. 4, 2024 |
Principal periodic payment | $ 6,692 |
Stated interest rate | 5.50% |
Cash Dividends (Details)
Cash Dividends (Details) - USD ($) | 1 Months Ended | 9 Months Ended |
Aug. 31, 2020 | Sep. 30, 2020 | |
Date Declared | Nov. 3, 2020 | |
Record Date | Nov. 17, 2020 | |
Dividend Per Share | $ 0.025 | |
Payment Date | Nov. 30, 2020 | |
Dividends [Member] | ||
Date Declared | Feb. 13, 2020 | |
Record Date | Feb. 28, 2020 | |
Dividend Per Share | $ 0.05 | |
Payment Date | Mar. 9, 2020 | |
Dividend Paid | $ 463,289 | |
Dividends [Member] | ||
Date Declared | May 5, 2020 | |
Record Date | May 22, 2020 | |
Dividend Per Share | $ 0.025 | |
Payment Date | Jun. 2, 2020 | |
Dividend Paid | $ 230,865 | |
Dividends [Member] | ||
Date Declared | Aug. 10, 2020 | |
Record Date | Aug. 25, 2020 | |
Dividend Per Share | $ 0.025 | |
Payment Date | Sep. 4, 2020 | |
Dividend Paid | $ 228,373 |
Revenue (Details Narrative)
Revenue (Details Narrative) - Cellular Retail [Member] | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($)Number | |
Number of location closed | Number | 75 | |
Supplemental commissions | $ | $ 0 | $ 1,530,000 |
Other Operating Expense (Detail
Other Operating Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | ||||
Bank fees | $ 411,189 | $ 353,064 | $ 1,705,582 | $ 1,397,631 |
Collection costs | 93,464 | 82,503 | 250,939 | 242,855 |
Insurance | 191,108 | 178,414 | 587,440 | 545,056 |
Management and advisory fees | 220,303 | 211,003 | 651,609 | 624,151 |
Professional and consulting fees | 354,725 | 325,824 | 1,004,461 | 1,115,629 |
Supplies | 185,744 | 170,387 | 605,898 | 453,198 |
Loss on disposal | 66,685 | 662,522 | 77,883 | |
Other | 478,109 | 526,854 | 1,755,209 | 1,744,201 |
Total other expenses | $ 1,934,642 | $ 1,914,734 | $ 7,223,660 | $ 6,200,604 |
Acquisitions (Details)
Acquisitions (Details) - Cellular Retail Acquisitions [Member] - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Cash | $ 568 | |
Note payable | 18 | |
Noncontrolling interests/equity | 17 | |
Total | $ 568 | $ 35 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Business Combinations [Abstract] | ||
Cash | $ 2 | $ 14 |
Receivables | 272 | |
Inventory | 82 | 50 |
Property and equipment | 272 | 596 |
Intangible assets | 234 | |
Operating lease right-of-use assets | 1,178 | 772 |
Other assets | 33 | 48 |
Other liabilities | (55) | (597) |
Operating lease liabilities | (1,178) | (772) |
Term note payable | (348) | |
Total | $ 568 | $ 35 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - Cellular Retail Acquisitions [Member] - Number | Sep. 30, 2020 | Sep. 30, 2019 |
Ownership interest | 49.00% | |
Summit JV LLC [Member] | ||
Ownership interest | 51.00% | |
Number of retail locations | 19 | 28 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||||||
Revenue from external customers | $ 28,869 | $ 22,314 | $ 98,822 | $ 78,328 | |||||
Fees and interest income | 1,419 | 2,203 | 4,636 | 6,304 | |||||
Total Revenue | 30,288,314 | 24,517,462 | 103,457,693 | 84,631,787 | |||||
Net income (loss) | 1,576,550 | $ 5,067,637 | $ 2,366,903 | 290,582 | $ 1,378,731 | $ 1,300,110 | 9,011,090 | 2,969,423 | |
Total segment assets | 91,760,618 | 88,333 | 91,760,618 | 88,333 | $ 91,906,628 | ||||
Expenditures for segmented assets | 200 | 334 | 1,033 | 723 | |||||
Cellular Retail [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue from external customers | 22,589 | 16,969 | 63,609 | 49,753 | |||||
Fees and interest income | |||||||||
Total Revenue | 22,589 | 16,969 | 63,609 | 49,753 | |||||
Net income (loss) | 1,717 | 690 | 4,435 | 1,702 | |||||
Total segment assets | 34,375 | 30,779 | 34,375 | 30,779 | |||||
Expenditures for segmented assets | 62 | 185 | 696 | 507 | |||||
Direct to Consumer [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue from external customers | 5,901 | 4,925 | 33,841 | 27,339 | |||||
Fees and interest income | |||||||||
Total Revenue | 5,901 | 4,925 | 33,841 | 27,339 | |||||
Net income (loss) | (60) | (610) | 4,672 | 733 | |||||
Total segment assets | 14,155 | 12,976 | 14,155 | 12,976 | |||||
Expenditures for segmented assets | 138 | 149 | 337 | 216 | |||||
Consumer Finance [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue from external customers | 379 | 420 | 1,372 | 1,236 | |||||
Fees and interest income | 1,419 | 2,203 | 4,636 | 6,304 | |||||
Total Revenue | 1,798 | 2,623 | 6,008 | 7,540 | |||||
Net income (loss) | 112 | 279 | 478 | 741 | |||||
Total segment assets | 7,792 | 8,817 | 7,792 | 8,817 | |||||
Expenditures for segmented assets | |||||||||
Corporate [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue from external customers | |||||||||
Fees and interest income | |||||||||
Total Revenue | |||||||||
Net income (loss) | (192) | (69) | (574) | (207) | |||||
Total segment assets | 35,439 | 35,761 | 35,439 | 35,761 | |||||
Expenditures for segmented assets |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
Other Employment Agreement [Member] | ||
Bonus arrangement current | $ 347,000 | $ 932,000 |
Cellular Retail [Member] | ||
Non-cancelable operating leases | $ 1,312,000 | $ 1,312,000 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended |
Aug. 31, 2020$ / shares | |
Subsequent Events [Abstract] | |
Date Declared | Nov. 3, 2020 |
Record Date | Nov. 17, 2020 |
Dividend Per Share | $ 0.025 |
Payment Date | Nov. 30, 2020 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Nov. 03, 2020 |
Lender [Member] | Subsequent Event [Member] | NEBRASKA | |
Interest rate | 36.00% |