Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 13-May-15 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Entity Registrant Name | DGSE COMPANIES INC | |
Entity Central Index Key | 701719 | |
Current Fiscal Year End Date | -19 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,253,846 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $1,179,427 | $2,184,435 |
Trade receivables, net of allowances | 14,668 | 904,076 |
Inventories | 11,442,658 | 11,144,157 |
Prepaid expenses | 196,042 | 104,513 |
Assets related to discontinued operations | 28,478 | 49,729 |
Total current assets | 12,861,273 | 14,386,910 |
Property and equipment, net | 4,237,393 | 4,365,767 |
Intangible assets, net | 24,122 | 27,568 |
Other assets | 127,681 | 128,356 |
Total assets | 17,250,469 | 18,908,601 |
Current Liabilities: | ||
Current maturities of long-term debt | 133,210 | 131,003 |
Current maturities of capital leases | 11,692 | 11,529 |
Accounts payable-trade | 5,347,930 | 5,831,736 |
Accrued expenses | 1,130,765 | 1,541,552 |
Customer deposits and other liabilities | 1,154,027 | 1,082,778 |
Liabilities related to discontinued operations | 279,749 | 303,564 |
Total current liabilities | 8,057,373 | 8,902,162 |
Line of credit, related party | 2,303,359 | 2,303,359 |
Long-term debt, less current maturities | 1,578,143 | 1,616,237 |
Total liabilities | 11,938,875 | 12,821,758 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value; 30,000,000 shares authorized; 12,253,846 and 12,175,584 shares issued and outstanding | 122,538 | 122,388 |
Additional paid-in capital | 34,254,371 | 34,231,271 |
Accumulated deficit | -29,065,315 | -28,266,816 |
Total stockholders' equity | 5,311,594 | 6,086,843 |
Total liabilities and stockholders' equity | $17,250,469 | $18,908,601 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Common stock, par value per share | $0.01 | $0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 12,253,846 | 12,175,584 |
Common stock, shares outstanding | 12,253,846 | 12,175,584 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenue: | ||
Sales | $12,875,149 | $18,064,307 |
Cost of goods sold | 10,541,966 | 14,853,636 |
Gross margin | 2,333,183 | 3,210,671 |
Expenses: | ||
Selling, general and administrative expenses | 2,886,043 | 3,346,774 |
Depreciation and amortization | 140,624 | 90,585 |
Total operating expenses | 3,026,667 | 3,437,359 |
Operating loss | -693,484 | -226,688 |
Other expense (income): | ||
Other income, net | -3,033 | -26,495 |
Interest expense | 83,768 | 80,813 |
Other expense | 80,735 | 54,318 |
Loss from continuing operations before income taxes | -774,219 | -281,006 |
Income tax expense | 26,844 | 3,579 |
Loss from continuing operations | -801,063 | -284,585 |
Discontinued operations: | ||
Income (loss) from discontinued operations, net of taxes | 2,564 | -238,393 |
Net loss | ($798,499) | ($522,978) |
Basic net loss per common share: | ||
Loss from continuing operations | ($0.07) | ($0.02) |
Loss from discontinued operations | ($0.02) | |
Net loss per share | ($0.07) | ($0.04) |
Diluted net loss per common share: | ||
Loss from continuing operations | ($0.07) | ($0.02) |
Loss from discontinued operations | ($0.02) | |
Net loss per share | ($0.07) | ($0.04) |
Weighted-average number of common shares | ||
Basic | 12,245,679 | 12,193,940 |
Diluted | 12,245,679 | 12,193,940 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows From Operating Activities: | ||
Net loss | ($798,499) | ($522,978) |
Income (loss) from discontinued operations, net of tax | 2,564 | -238,393 |
Loss from continuing operations, net of tax | -801,063 | -284,585 |
Adjustments to reconcile loss from continuing operations to net cash used in operating activities of continuing operations: | ||
Depreciation and amortization | 140,624 | 90,585 |
Stock based compensation to employees, officers and directors | 60,433 | 60,200 |
Changes in operating assets and liabilities: | ||
Trade receivables, net | 889,408 | -22,344 |
Inventories | -298,501 | -13,004 |
Prepaid expenses | -91,529 | -70,971 |
Other assets | 675 | 57,694 |
Accounts payable and accrued expenses | -931,776 | -367,918 |
Customer deposits and other liabilities | 71,249 | -444,831 |
Net cash used in operating activities of continuing operations | -960,480 | -995,174 |
Cash Flows From Investing Activities: | ||
Purchases of property and equipment | -8,804 | -100,298 |
Net cash used in investing activities of continuing operations | -8,804 | -100,298 |
Cash Flows From Financing Activities: | ||
Repayment of debt | -31,935 | -29,871 |
Payments on capital lease obligations | -3,789 | -2,729 |
Repayment of line of credit with related party | -80,000 | |
Net cash used in financing activities of continuing operations | -35,724 | -112,600 |
Cash Flows From Discontinued Operations: | ||
Net cash provided by operating activities of discontinued operations | 574,238 | |
Net change in cash | -1,005,008 | -633,834 |
Cash, beginning of period | 2,184,435 | 2,637,726 |
Cash, end of period | 1,179,427 | 2,003,892 |
Supplemental Disclosures: | ||
Cash paid during the period for: Interest | 72,507 | 69,344 |
Cash paid during the period for: Income taxes |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended | ||
Mar. 31, 2015 | |||
Basis of Presentation [Abstract] | |||
Basis of Presentation | -1 | Basis of Presentation | |
The consolidated interim financial statements of DGSE Companies, Inc., a Nevada corporation, and its subsidiaries (the “Company” or “DGSE”), included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the Commission's rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The Company suggests that these financial statements be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (such fiscal year, “Fiscal 2014” and such Annual Report on Form 10-K, the “Fiscal 2014 10-K”). In the opinion of the management of the Company, the accompanying unaudited interim financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly its results of operations and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. Certain reclassifications were made to the prior year's consolidated financial statements to conform to the current year presentation. |
Principles_of_Consolidation_an
Principles of Consolidation and Nature of Operations | 3 Months Ended | ||
Mar. 31, 2015 | |||
Principles of Consolidation and Nature of Operations [Abstract] | |||
Principles of Consolidation and Nature of Operations | -2 | Principles of Consolidation and Nature of Operations | |
DGSE buys and sells jewelry and bullion products to both retail and wholesale customers throughout the United States through its facilities in Illinois, South Carolina, and Texas, and through its various internet sites. | |||
The interim consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated. |
Critical_Accounting_Policies_a
Critical Accounting Policies and Estimates | 3 Months Ended | ||
Mar. 31, 2015 | |||
Critical Accounting Policies and Estimates [Abstract] | |||
Critical Accounting Policies and Estimates | -3 | Critical Accounting Policies and Estimates | |
Financial Instruments | |||
The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The line of credit, related party does not bear a market rate of interest. Management believes that, based on the Company's situation at the time the line was negotiated, it could not have obtained comparable financing, and as such cannot estimate the fair value of the line of credit, related party. The carrying amounts reported for the Company's long-term debt, and capital leases approximate fair value because substantially all of the underlying instruments have variable interest rates, which adjust frequently, or the interest rates approximate current market rates. None of these instruments are held for trading purposes. | |||
Earnings Per Share | |||
Basic earnings per common share is computed by dividing net earnings available to holders of the Company's common stock by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options outstanding determined using the treasury stock method. | |||
Recent Accounting Pronouncement | |||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients; or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which the Company will adopt the standard in 2017. |
Inventories
Inventories | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Inventories [Abstract] | |||||||||||||
Inventories | -4 | Inventories | |||||||||||
A summary of inventories is as follows: | |||||||||||||
March 31, | December 31, | ||||||||||||
2015 | 2014 | ||||||||||||
Jewelry | $ | 9,931,897 | $ | 9,755,580 | |||||||||
Scrap gold | 611,045 | 536,181 | |||||||||||
Bullion | 502,641 | 493,368 | |||||||||||
Rare coins and Other | 397,075 | 359,028 | |||||||||||
$ | 11,442,658 | $ | 11,144,157 |
Basic_and_Diluted_Average_Shar
Basic and Diluted Average Shares | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Basic and Diluted Average Shares [Abstract] | |||||||||
Basic and Diluted Average Shares | -5 | Basic and Diluted Average Shares | |||||||
A reconciliation of basic and diluted weighted average common shares for the three months ended March 31, 2015 and 2014, is as follows: | |||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Basic weighted average shares | 12,245,679 | 12,193,940 | |||||||
Effect of potential dilutive securities | - | - | |||||||
Diluted weighted average shares | 12,245,679 | 12,193,940 | |||||||
For the three months ended March 31, 2015 and 2014, options to purchase 5,030,000 and 5,347,500 shares of common stock, respectively, were not added to the diluted average shares because inclusion of such shares would be antidilutive. For the three months ended March 31, 2015 and 2014, there were 72,600 and 84,000 unvested Restricted Stock Units (“RSUs”), respectively, not added to the diluted average shares because inclusion of such shares would be antidilutive. |
LongTerm_Debt
Long-Term Debt | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Long-Term Debt [Abstract] | |||||||||||||
Long-Term Debt | -6 | Long-Term Debt | |||||||||||
Outstanding Balance | |||||||||||||
March 31, | December 31, | Current | Maturity | ||||||||||
2015 | 2014 | Interest Rate | |||||||||||
NTR line of credit (1) | $ | 2,303,359 | $ | 2,303,359 | 2 | % | 1-Aug-17 | ||||||
Mortgage payable | 1,688,590 | 1,720,525 | 6.7 | % | 1-Aug-16 | ||||||||
Capital leases (2) | 34,455 | 38,244 | Various | Various | |||||||||
Sub-Total | 4,026,404 | 4,062,128 | |||||||||||
Less: Current maturities of capital leases | 11,692 | 11,529 | |||||||||||
Less: Current maturities of mortgage payable | 133,210 | 131,003 | |||||||||||
Long-term debt | 3,881,502 | 3,919,596 | |||||||||||
Less: Line of credit (1) | 2,303,359 | 2,303,359 | |||||||||||
Long term debt, less current maturities | $ | 1,578,143 | $ | 1,616,237 | |||||||||
-1 | On July 19, 2012, DGSE entered into a loan agreement with NTR Metals, LLC (“NTR”), an affiliate of DGSE's largest stockholder Elemetal, LLC (“Elemetal”), pursuant to which NTR, agreed to provide the Company a guidance line of revolving credit in an amount up to $7,500,000 (the “Loan Agreement”). The Loan Agreement anticipated termination–at which point all amounts outstanding thereunder would be due and payable (such amounts, the “Obligations”)–upon the earlier of: (i) August 1, 2014; (ii) the date that is twelve months after the Company receives notice from NTR demanding the repayment of the Obligations; (iii) the date the Obligations are accelerated in accordance with the terms of the Loan Agreement; or (iv) the date on which the commitment terminates under the Loan Agreement. In connection with the Loan Agreement, the Company granted a security interest in the respective personal property of each of its subsidiaries. The loan carries an interest rate of two percent (2%) per annum for all funds borrowed pursuant to the Loan Agreement. Proceeds received by the Company pursuant to the terms of the Loan Agreement were used for repayment of all outstanding financial obligations incurred in connection with that certain Loan Agreement, dated as of December 22, 2005, between the Company and Texas Capital Bank, and additional proceeds have been used as working capital in the ordinary course of business. The Company incurred debt issuance costs associated with the Loan Agreement totaling $56,150. The debt issuance costs were included in other assets in the accompanying consolidated balance sheet, were amortized to interest expense on a straight-line basis over two years, and have been completely amortized as of July 2014. On February 25, 2014, we entered into a one-year extension of the Loan Agreement with NTR, extending the termination date to August 1, 2015, and on February 4, 2015, we entered into an additional two-year extension, extending the termination date to August 1, 2017. No debt issuance costs were incurred in relation to these extensions. All other terms of the agreement remain the same. As of March 31, 2015 and December 31, 2014, the outstanding balance of the NTR loan was $2,303,359. | ||||||||||||
-2 | On April 3, 2011, DGSE entered into a capital lease for $58,563 with Graybar Financial Services for phones at the new corporate headquarters. The non-cancelable lease agreement required an advanced payment of $2,304 and monthly payments of $1,077 for 60 months at an interest rate of 4.2% beginning in May 2011. At the end of the lease in May 2018, the equipment can be purchased for $1. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||
Mar. 31, 2015 | |||
Stock-Based Compensation [Abstract] | |||
Stock-Based Compensation | -7 | Stock-Based Compensation | |
The Company accounts for share-based compensation by measuring the cost of the employee services received in exchange for an award of equity instruments, including grants of stock options, based on the fair value of the award at the date of grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statement of cash flows. | |||
In January 2014, DGSE's Board of Directors (the “Board”) granted 112,000 RSUs to its officers and certain key employees. Each RSU is convertible into one share of Common Stock without additional payment pursuant to the terms of the Restricted Stock Unit Award Agreement, dated January 23, 2014, between the Company and each recipient (the “RSU Award Agreement”). One-fourth (or 28,000) of the RSUs vested and were exercisable as of the date of the grant, and an additional one-fourth of the RSUs (calculated using the total number of RSUs at the time of grant) vest and will be exercisable on each subsequent anniversary of the date of grant until 100 percent of the RSUs have vested, subject to the recipient's continued status as an employee on each such date and other terms and conditions of set forth in the RSU Award Agreement. Upon termination of service of the recipient to us, other than by reason of death or disability, any RSUs that have not vested will be forfeited and the award of such units shall terminate. Pursuant to these grants, an additional 15,000 RSUs vested in January 2015, and the recipients were subsequently issued common stock. Of the RSUs granted in January 2014, only 30,000 remain unvested and outstanding as of March 31, 2015. | |||
In September of 2014, the Board granted 14,200 RSUs to each of its three outside directors, for a total of 42,600 RSUs issued. Each RSU is convertible into one share of Common Stock without additional payment pursuant to the terms of the RSU Award Agreement, dated September 17, 2014, between the Company and each recipient. All of the RSUs will vest and become exercisable on the earlier of: (i) the one year anniversary of the grant date, or (ii) the day prior to the next Annual Meeting of the Stockholders of DGSE Companies, Inc., subject to each recipient's continued status as a Director through such dates and other terms and conditions of set forth in the RSU Award Agreement. Upon termination of service of the recipient to the Company, other than by reason of death or disability, any RSUs that have not vested will be forfeited and the award of such units shall terminate. It is expected that these director RSUs will vest on the day prior to our upcoming Annual Meeting of Stockholders, scheduled for June 10, 2015. | |||
Stock-based compensation expense for the three months ended March 31, 2015 and 2014 was $60,433 and $60,200, respectively, relating to employee and director RSUs, and included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Certain stock compensation expenses related to the discontinued Southern Bullion Coin & Jewelry (“Southern Bullion”) operations for the three months ended March 31, 2014, have been reclassified to discontinued operations. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |
Mar. 31, 2015 | ||
Related Party Transactions [Abstract] | ||
Related Party Transactions | -8 | Related Party Transactions |
DGSE has a corporate policy governing the identification, review, consideration and approval or ratification of transactions with related persons, as that term is defined in the Instructions to Item 404(a) of Regulation S-K, promulgated under the Securities Act (“Related Party”). Under this policy, all Related Party transactions are identified and approved prior to consummation of the transaction to ensure they are consistent with DGSE's best interests and the best interests of its stockholders. Among other factors, DGSE's Board considers the size and duration of the transaction, the nature and interest of the of the Related Party in the transaction, whether the transaction may involve a conflict of interest and if the transaction is on terms that are at least as favorable to DGSE as would be available in a comparable transaction with an unaffiliated third party. DGSE's Board reviews all Related Party transactions at least annually to determine if it is in DGSE's best interests and the best interests of DGSE's stockholders to continue, modify, or terminate any of the Related Party transactions. DGSE's Related Person Transaction Policy is available for review in its entirety under the “Investors” menu of the Company's corporate relations website at www.DGSECompanies.com. | ||
Elemetal is DGSE's largest shareholder. Elemetal and its affiliates are also DGSE's primary refiner and bullion trading partner. In the three months ended March 31, 2015, 14% of sales and 36% of purchases were transactions with Elemetal, and in the same period of 2014, these transactions represented 28% of DGSE's sales and 30% of DGSE's purchases. As of March 31, 2015, the Company was obligated to pay $3,942,399 to Elemetal as a trade payable, and had a $4,382 receivable from Elemetal. As of December 31, 2014, the Company was obligated to pay $3,721,144 to Elemetal as a trade payable, and had a $34,343 receivable from Elemetal. In the three months ended March 31, 2015 and 2014, the Company paid Elemetal $42,802 and $37,826, respectively, in interest on the Company's outstanding payable. | ||
On July 19, 2012, the Company entered into the Loan Agreement with NTR, pursuant to which NTR agreed to provide the Company with a guidance line of revolving credit in an amount up to $7,500,000. The Loan Agreement provides that the Loan Agreement will terminate—and DGSE's Obligations will be due and payable–upon the earlier of: (i) August 1, 2014; (ii) the date that is twelve months after DGSE receives notice from NTR demanding the repayment of the Obligations; (iii) the date the Obligations are accelerated in accordance with the terms of the Loan Agreement; or, (iv) the date on which the commitment terminates under the Loan Agreement. In connection with the Loan Agreement, DGSE granted a security interest in the respective personal property of each of its subsidiaries. The loan carries an interest rate of two percent (2%) per annum for all funds borrowed pursuant to the Loan Agreement. Proceeds received by DGSE pursuant to the terms of the Loan Agreement were used for repayment of all outstanding financial obligations incurred in connection with that certain Loan Agreement, dated as of December 22, 2005, between DGSE and Texas Capital Bank, N.A., and additional proceeds are expected were used as working capital in the ordinary course of business. On February 25, 2014, we entered into a one-year extension of the Loan Agreement with NTR, extending the termination date to August 1, 2015, and on February 4, 2015, we entered into an additional two-year extension, extending the termination date to August 1, 2017. All other terms of the agreement remain the same. As of March 31, 2015 and December 31 2014, the outstanding balance of the NTR loan was $2,303,359. In the three months ended March 31, 2015 and 2014, the Company paid NTR $11,260 and $11,470, respectively, in interest on the Company's line of credit. | ||
In April 2011 DGSE moved its principal corporate offices to office space at 15850 Dallas Parkway, Suite 140, Dallas, Texas. This property is owned by an affiliate of Elemetal and also serves as their headquarters. DGSE leases space in the building subject to a lease that will expire in December 2015. In the three months ended March 31, 2015 and 2014, the Company recognized rent expense of $11,125 and $11,125, respectively, related to this lease. | ||
In the fourth quarter of Fiscal 2011 the Company established a wholly owned subsidiary named Carbon Fund One, LLC to act as the general partner (the “General Partner”) for Carbon Fund One, LP (the “Fund”), which was established at the same time. The Fund was an investment fund specializing in the buying and selling of gemstones. The General Partner receives a one percent ownership interest of the Fund, and is paid 2% carried interest on assets under management by the Fund, and 20% of net earnings before distributions to the limited partners. The Fund was intended to provide an investment vehicle for individuals interested in investment opportunities in diamonds and gemstones, and provide incremental value to the Company's shareholders by utilizing the Company's expertise, infrastructure, and retail and wholesale customer base, to generate additional profit through earnings from its role as General Partner. Ultimately DGSE's management made the decision to end its involvement in the Fund, and the General Partner has begun winding down the Fund's activities and liquidating all remaining inventory. The Fund transacted business with the Company from time to time, including buying gemstones from and selling gemstones to the Company. In the quarter ended March 31, 2015, the Company made no sales to the Fund, had purchases of $11,330 from the Fund, and owed the Fund $148,085 as of March 31, 2015 in trade payables. In the quarter ended March 31, 2014, the Company made sales of $12,192 to the Fund, had purchases of $4,111 from the Fund, and owed the Fund $4,111 as of March 31, 2014 in trade payables. Additionally, in the quarter ended March 31, 2015 the General Partner generated net income of $1,269 from its role with the Fund, while in the same quarter of 2014, the General Partner generated net income of $13,430, which was driven by greater activity within the Fund at that time. |
Legal_Proceedings
Legal Proceedings | 3 Months Ended | ||
Mar. 31, 2015 | |||
Legal Proceedings [Abstract] | |||
Legal Proceedings | -9 | Legal Proceedings | |
There have been no material changes with respect to the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. |
Discontinued_Operations
Discontinued Operations | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Discontinued Operations [Abstract] | |||||||||||||
Discontinued Operations | (10) Discontinued Operations | ||||||||||||
In February 2014, the Company elected to discontinue the operations of six Southern Bullion locations and in April 2014 elected to discontinue the operations of the 17 remaining Southern Bullion locations, due to the lack of profitability and management's belief that it was unlikely that profitability would be reached in the foreseeable future. The significant change in the precious metals market in 2013, including a 30% decline in the spot price of gold since the acquisition of Southern Bullion in 2011, had a disproportionately negative impact on the customer traffic, transactional volume and profitability of the Southern Bullion operations. As a result, during 2013, the Southern Bullion operations generated a net loss of approximately $1.9 million. The operating results for all Southern Bullion operations have been reclassified as discontinued operations in the consolidated statements of operations for the quarters ended March 31, 2015 and 2014. | |||||||||||||
For the Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Revenue: | |||||||||||||
Sales | $ | 65 | $ | 2,746,336 | |||||||||
Cost of goods sold | - | 1,428,497 | |||||||||||
Gross margin | 65 | 1,317,839 | |||||||||||
Expenses: | |||||||||||||
Selling, general and administrative expenses | (2,459 | ) | 1,443,175 | ||||||||||
Depreciation and amortization | - | 100,338 | |||||||||||
Total expenses | (2,459 | ) | 1,543,513 | ||||||||||
Operating income (loss) | 2,524 | (225,674 | ) | ||||||||||
Other expense (income): | |||||||||||||
Other income, net | - | (4,766 | ) | ||||||||||
Interest (income) expense | (40 | ) | 3,749 | ||||||||||
(40 | ) | (1,018 | ) | ||||||||||
Income (loss) from discontinued operations before income taxes | 2,564 | (224,656 | ) | ||||||||||
Income tax expense | - | 13,737 | |||||||||||
Income (loss) from discontinued operations after income taxes | $ | 2,564 | $ | (238,393 | ) | ||||||||
Discontinued operations for the three months ended March 31, 2015, include minor adjustments of existing expense accruals related to winding down the operations of Southern Bullion. The quarter ended March 31, 2014, includes losses related to store operations, prior to all stores being closed as of April 17, 2014, as well as expenses for key Southern Bullion personnel involved in winding down the business, and expenses related to cancellation of leases and other contracts. The Company believes it has now recognized all material expenses related to the closure of Southern Bullion operations. |
Critical_Accounting_Policies_a1
Critical Accounting Policies and Estimates (Policy) | 3 Months Ended |
Mar. 31, 2015 | |
Critical Accounting Policies and Estimates [Abstract] | |
Financial Instruments | Financial Instruments |
The carrying amounts reported in the consolidated balance sheets for cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The line of credit, related party does not bear a market rate of interest. Management believes that, based on the Company's situation at the time the line was negotiated, it could not have obtained comparable financing, and as such cannot estimate the fair value of the line of credit, related party. The carrying amounts reported for the Company's long-term debt, and capital leases approximate fair value because substantially all of the underlying instruments have variable interest rates, which adjust frequently, or the interest rates approximate current market rates. None of these instruments are held for trading purposes. | |
Earnings Per Share | Earnings Per Share |
Basic earnings per common share is computed by dividing net earnings available to holders of the Company's common stock by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options outstanding determined using the treasury stock method. | |
Recent Accounting Pronouncement | Recent Accounting Pronouncement |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients; or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which the Company will adopt the standard in 2017. |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Inventories [Abstract] | |||||||||||||
Schedule of Inventories | A summary of inventories is as follows: | ||||||||||||
March 31, | December 31, | ||||||||||||
2015 | 2014 | ||||||||||||
Jewelry | $ | 9,931,897 | $ | 9,755,580 | |||||||||
Scrap gold | 611,045 | 536,181 | |||||||||||
Bullion | 502,641 | 493,368 | |||||||||||
Rare coins and Other | 397,075 | 359,028 | |||||||||||
$ | 11,442,658 | $ | 11,144,157 |
Basic_and_Diluted_Average_Shar1
Basic and Diluted Average Shares (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Basic and Diluted Average Shares [Abstract] | |||||||||
Schedule of Reconciliation of Basic and Diluted Average Common Shares | A reconciliation of basic and diluted weighted average common shares for the three months ended March 31, 2015 and 2014, is as follows: | ||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Basic weighted average shares | 12,245,679 | 12,193,940 | |||||||
Effect of potential dilutive securities | - | - | |||||||
Diluted weighted average shares | 12,245,679 | 12,193,940 |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Long-Term Debt [Abstract] | |||||||||||||
Schedule of Long-Term Debt | Outstanding Balance | ||||||||||||
March 31, | December 31, | Current | Maturity | ||||||||||
2015 | 2014 | Interest Rate | |||||||||||
NTR line of credit (1) | $ | 2,303,359 | $ | 2,303,359 | 2 | % | 1-Aug-17 | ||||||
Mortgage payable | 1,688,590 | 1,720,525 | 6.7 | % | 1-Aug-16 | ||||||||
Capital leases (2) | 34,455 | 38,244 | Various | Various | |||||||||
Sub-Total | 4,026,404 | 4,062,128 | |||||||||||
Less: Current maturities of capital leases | 11,692 | 11,529 | |||||||||||
Less: Current maturities of mortgage payable | 133,210 | 131,003 | |||||||||||
Long-term debt | 3,881,502 | 3,919,596 | |||||||||||
Less: Line of credit (1) | 2,303,359 | 2,303,359 | |||||||||||
Long term debt, less current maturities | $ | 1,578,143 | $ | 1,616,237 | |||||||||
-1 | On July 19, 2012, DGSE entered into a loan agreement with NTR Metals, LLC (“NTR”), an affiliate of DGSE's largest stockholder Elemetal, LLC (“Elemetal”), pursuant to which NTR, agreed to provide the Company a guidance line of revolving credit in an amount up to $7,500,000 (the “Loan Agreement”). The Loan Agreement anticipated termination–at which point all amounts outstanding thereunder would be due and payable (such amounts, the “Obligations”)–upon the earlier of: (i) August 1, 2014; (ii) the date that is twelve months after the Company receives notice from NTR demanding the repayment of the Obligations; (iii) the date the Obligations are accelerated in accordance with the terms of the Loan Agreement; or (iv) the date on which the commitment terminates under the Loan Agreement. In connection with the Loan Agreement, the Company granted a security interest in the respective personal property of each of its subsidiaries. The loan carries an interest rate of two percent (2%) per annum for all funds borrowed pursuant to the Loan Agreement. Proceeds received by the Company pursuant to the terms of the Loan Agreement were used for repayment of all outstanding financial obligations incurred in connection with that certain Loan Agreement, dated as of December 22, 2005, between the Company and Texas Capital Bank, and additional proceeds have been used as working capital in the ordinary course of business. The Company incurred debt issuance costs associated with the Loan Agreement totaling $56,150. The debt issuance costs were included in other assets in the accompanying consolidated balance sheet, were amortized to interest expense on a straight-line basis over two years, and have been completely amortized as of July 2014. On February 25, 2014, we entered into a one-year extension of the Loan Agreement with NTR, extending the termination date to August 1, 2015, and on February 4, 2015, we entered into an additional two-year extension, extending the termination date to August 1, 2017. No debt issuance costs were incurred in relation to these extensions. All other terms of the agreement remain the same. As of March 31, 2015 and December 31, 2014, the outstanding balance of the NTR loan was $2,303,359. | ||||||||||||
-2 | On April 3, 2011, DGSE entered into a capital lease for $58,563 with Graybar Financial Services for phones at the new corporate headquarters. The non-cancelable lease agreement required an advanced payment of $2,304 and monthly payments of $1,077 for 60 months at an interest rate of 4.2% beginning in May 2011. At the end of the lease in May 2018, the equipment can be purchased for $1. |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Discontinued Operations [Abstract] | |||||||||||||
Schedule of Discontinued Operations | For the Three Months Ended | ||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Revenue: | |||||||||||||
Sales | $ | 65 | $ | 2,746,336 | |||||||||
Cost of goods sold | - | 1,428,497 | |||||||||||
Gross margin | 65 | 1,317,839 | |||||||||||
Expenses: | |||||||||||||
Selling, general and administrative expenses | (2,459 | ) | 1,443,175 | ||||||||||
Depreciation and amortization | - | 100,338 | |||||||||||
Total expenses | (2,459 | ) | 1,543,513 | ||||||||||
Operating income (loss) | 2,524 | (225,674 | ) | ||||||||||
Other expense (income): | |||||||||||||
Other income, net | - | (4,766 | ) | ||||||||||
Interest (income) expense | (40 | ) | 3,749 | ||||||||||
(40 | ) | (1,018 | ) | ||||||||||
Income (loss) from discontinued operations before income taxes | 2,564 | (224,656 | ) | ||||||||||
Income tax expense | - | 13,737 | |||||||||||
Income (loss) from discontinued operations after income taxes | $ | 2,564 | $ | (238,393 | ) |
Critical_Accounting_Policies_a2
Critical Accounting Policies and Estimates (Details) | Mar. 31, 2015 |
Instruments | |
Critical Accounting Policies and Estimates [Abstract] | |
Number of instruments held for trading purposes | 0 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Inventories [Abstract] | ||
Jewelry | $9,931,897 | $9,755,580 |
Scrap gold | 611,045 | 536,181 |
Bullion | 502,641 | 493,368 |
Rare coins and Other | 397,075 | 359,028 |
Total | $11,442,658 | $11,144,157 |
Basic_and_Diluted_Average_Shar2
Basic and Diluted Average Shares (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the denominator in the computation of earnings per share | 5,030,000 | 5,347,500 |
Unvested Restricted Stock Units ("RSUs") [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the denominator in the computation of earnings per share | 72,600 | 84,000 |
Basic_and_Diluted_Average_Shar3
Basic and Diluted Average Shares (Reconciliation of Basic Earnings per Common Share and Diluted Earnings Per Common Share) (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Basic and Diluted Average Shares [Abstract] | ||
Basic weighted average shares | 12,245,679 | 12,193,940 |
Effect of potential dilutive securities | ||
Diluted weighted average shares | 12,245,679 | 12,193,940 |
LongTerm_Debt_Schedule_of_Debt
Long-Term Debt (Schedule of Debt) (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Dec. 31, 2014 | |||
Debt Instrument [Line Items] | ||||
Sub-Total | $4,026,404 | $4,062,128 | ||
Less: Current maturities of capital leases | 11,692 | 11,529 | ||
Less: Current maturities of mortgage payable | 133,210 | 131,003 | ||
Long-term debt | 3,881,502 | 3,919,596 | ||
Less: Line of credit | 2,303,359 | [1] | 2,303,359 | [1] |
Long-term debt, less current maturities | 1,578,143 | 1,616,237 | ||
NTR line of credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Sub-Total | 2,303,359 | [1] | 2,303,359 | [1] |
Current Interest Rate | 2.00% | |||
Maturity | 1-Aug-17 | |||
Mortgage payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Sub-Total | 1,688,590 | 1,720,525 | ||
Current Interest Rate | 6.70% | |||
Maturity | 1-Aug-16 | |||
Capital leases [Member] | ||||
Debt Instrument [Line Items] | ||||
Sub-Total | $34,455 | [2] | $38,244 | [2] |
[1] | On July 19, 2012, DGSE entered into a loan agreement with NTR Metals, LLC (bNTRb), an affiliate of DGSE's largest stockholder Elemetal, LLC (bElemetalb), pursuant to which NTR, agreed to provide the Company a guidance line of revolving credit in an amount up to $7,500,000 (the bLoan Agreementb). The Loan Agreement anticipated terminationbat which point all amounts outstanding thereunder would be due and payable (such amounts, the bObligationsb)bupon the earlier of: (i) August 1, 2014; (ii) the date that is twelve months after the Company receives notice from NTR demanding the repayment of the Obligations; (iii) the date the Obligations are accelerated in accordance with the terms of the Loan Agreement; or (iv) the date on which the commitment terminates under the Loan Agreement. In connection with the Loan Agreement, the Company granted a security interest in the respective personal property of each of its subsidiaries. The loan carries an interest rate of two percent (2%) per annum for all funds borrowed pursuant to the Loan Agreement. Proceeds received by the Company pursuant to the terms of the Loan Agreement were used for repayment of all outstanding financial obligations incurred in connection with that certain Loan Agreement, dated as of December 22, 2005, between the Company and Texas Capital Bank, and additional proceeds have been used as working capital in the ordinary course of business. The Company incurred debt issuance costs associated with the Loan Agreement totaling $56,150. The debt issuance costs were included in other assets in the accompanying consolidated balance sheet, were amortized to interest expense on a straight-line basis over two years, and have been completely amortized as of July 2014. On February 25, 2014, we entered into a one-year extension of the Loan Agreement with NTR, extending the termination date to August 1, 2015, and on February 4, 2015, we entered into an additional two-year extension, extending the termination date to August 1, 2017. No debt issuance costs were incurred in relation to these extensions. All other terms of the agreement remain the same. As of March 31, 2015 and December 31, 2014, the outstanding balance of the NTR loan was $2,303,359. | |||
[2] | On April 3, 2011, DGSE entered into a capital lease for $58,563 with Graybar Financial Services for phones at the new corporate headquarters. The non-cancelable lease agreement required an advanced payment of $2,304 and monthly payments of $1,077 for 60 months at an interest rate of 4.2% beginning in May 2011. At the end of the lease in May 2018, the equipment can be purchased for $1. |
LongTerm_Debt_Footnotes_Detail
Long-Term Debt (Footnotes) (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
Feb. 25, 2014 | Jul. 19, 2012 | Mar. 31, 2015 | Dec. 31, 2014 | |
NTR Loan Agreement [Member] | ||||
Debt Instrument [Line Items] | ||||
Issuance date | 19-Jul-12 | |||
Credit facility amount, maximum | $7,500,000 | |||
Maturity | 1-Aug-15 | 1-Aug-14 | 1-Aug-17 | |
Interest rate, credit | 2.00% | |||
Debt issuance costs | 56,150 | |||
Period in which debt issuance costs are to be amortized | 2 years | |||
Outstanding balance of credit facility | 2,303,359 | 2,303,359 | ||
Graybar Financial Services lease [Member] | ||||
Debt Instrument [Line Items] | ||||
Issuance date | 3-Apr-11 | |||
Debt instrument, face amount | 58,563 | |||
Advances on capital leases | 2,304 | |||
Monthly payments | 1,077 | |||
Term | 60 months | |||
Interest rate, debt | 4.20% | |||
Equipment purchase option, purchase price | $1 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 1 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Jan. 31, 2015 | Sep. 30, 2014 | Jan. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $60,433 | $60,200 | |||
RSUs [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units granted | 42,600 | 112,000 | |||
Units vested | 15,000 | 28,000 | |||
Units outstanding | 30,000 | ||||
RSUs [Member] | Outside Director One [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units granted | 14,200 | ||||
RSUs [Member] | Outside Director Two [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units granted | 14,200 | ||||
RSUs [Member] | Outside Director Three [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units granted | 14,200 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 1 Months Ended | 3 Months Ended | |||
Feb. 25, 2014 | Jul. 19, 2012 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | |||||
Interest paid | $72,507 | $69,344 | |||
Accounts payable-trade | 5,347,930 | 5,831,736 | |||
Net income | -798,499 | -522,978 | |||
Elemetal [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due to related party | 3,942,399 | 3,721,144 | |||
Due from related party | 4,382 | 34,343 | |||
Interest paid | 42,802 | 37,826 | |||
Carbon Fund One [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related party revenue | 12,192 | ||||
Purchases from related party | 11,330 | 4,111 | |||
Accounts payable-trade | 148,085 | 4,111 | |||
Net income | 1,269 | 13,430 | |||
Sales [Member] | Elemetal [Member] | |||||
Related Party Transaction [Line Items] | |||||
Concentration risk, percentage | 14.00% | 28.00% | |||
Purchases [Member] | Elemetal [Member] | |||||
Related Party Transaction [Line Items] | |||||
Concentration risk, percentage | 36.00% | 30.00% | |||
NTR Loan Agreement [Member] | |||||
Related Party Transaction [Line Items] | |||||
Interest paid | 11,260 | 11,470 | |||
Issuance date | 19-Jul-12 | ||||
Credit facility amount, maximum | 7,500,000 | ||||
Interest rate, credit | 2.00% | ||||
Maturity | 1-Aug-15 | 1-Aug-14 | 1-Aug-17 | ||
Long-term Line of Credit | 2,303,359 | 2,303,359 | |||
Corporate Office [Member] | |||||
Related Party Transaction [Line Items] | |||||
Rent expenses | $11,125 | $11,125 |
Discontinued_Operations_Narrat
Discontinued Operations (Narrative) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2013 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net loss | ($798,499) | ($522,978) | |
Southern Bullion [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net loss | ($1,900,000) |
Discontinued_Operations_Schedu
Discontinued Operations (Schedule of Discontinued Operations) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Selling, general and administrative expenses | $2,886,043 | $3,346,774 |
Other income, net | -3,033 | -26,495 |
Other income, net | 80,735 | 54,318 |
Income (loss) from discontinued operations after income taxes | 2,564 | -238,393 |
Southern Bullion [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Sales | 65 | 2,746,336 |
Cost of goods sold | 1,428,497 | |
Gross margin | 65 | 1,317,839 |
Selling, general and administrative expenses | -2,459 | 1,443,175 |
Depreciation and amortization | 100,338 | |
Total expenses | -2,459 | 1,543,513 |
Operating income (loss) | 2,524 | -225,674 |
Other income, net | -4,766 | |
Interest (income) expense | -40 | 3,749 |
Other income, net | -40 | -1,018 |
Income (loss) from discontinued operations before income taxes | 2,564 | -224,656 |
Income tax expense | 13,737 | |
Income (loss) from discontinued operations after income taxes | $2,564 | ($238,393) |