Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 20, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | DGSE COMPANIES INC | |
Entity Central Index Key | 0000701719 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 26,924,381 | |
Trading Symbol | DGSE | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 479,560 | $ 1,453,941 |
Trade receivables, net of allowances | 169,951 | 94,345 |
Inventories | 10,315,661 | 9,765,094 |
Prepaid expenses | 266,630 | 81,094 |
Total current assets | 11,231,802 | 11,394,474 |
Property and equipment, net | 1,274,714 | 1,320,863 |
Intangible assets, net | 235,350 | 234,350 |
Right-of -use assets from operating leases | 1,887,256 | |
Other assets | 68,862 | 68,411 |
Total assets | 14,697,984 | 13,018,098 |
Current Liabilities: | ||
Accounts payable - trade | 358,609 | 838,624 |
Accounts payable - trade, related party | 3,075,120 | 3,088,973 |
Current operating lease liabilities | 452,820 | |
Accrued expenses | 494,350 | 579,203 |
Customer deposits and other liabilities | 54,705 | 97,837 |
Total current liabilities | 4,435,604 | 4,604,637 |
Long-term operating lease liabilities | 1,494,284 | |
Total liabilities | 5,929,888 | 4,604,637 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value; 60,000,000 shares authorized; 26,924,381 shares issued and outstanding | 269,244 | 269,244 |
Additional paid-in capital | 40,172,677 | 40,172,677 |
Accumulated deficit | (31,673,825) | (32,028,460) |
Total stockholders' equity | 8,768,096 | 8,413,461 |
Total liabilities and stockholders' equity | $ 14,697,984 | $ 13,018,098 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 26,924,381 | 26,924,381 |
Common stock, shares outstanding | 26,924,381 | 26,924,381 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue | ||
Sales | $ 16,019,530 | $ 14,055,872 |
Cost of goods sold | 13,801,048 | 11,553,866 |
Gross margin | 2,218,482 | 2,502,006 |
Expenses: | ||
Selling, general and administrative expenses | 1,741,340 | 2,008,667 |
Depreciation and amortization | 74,324 | 89,752 |
Total expenses | 1,815,664 | 2,098,419 |
Operating income | 402,818 | 403,587 |
Other (income) expense: | ||
Other (income) expense, net | 3,398 | (23,959) |
Interest expense | 34,549 | 46,882 |
Total other expense (income) | 37,947 | 22,923 |
Income before income taxes | 364,871 | 380,664 |
Income tax expense | 10,236 | 34,456 |
Net income | $ 354,635 | $ 346,208 |
Basic net income per common share: | $ 0.01 | $ 0.01 |
Diluted net income per share: | $ 0.01 | $ 0.01 |
Weighted-average number of common shares | ||
Basic | 26,924,381 | 26,924,381 |
Diluted | 26,924,381 | 27,233,980 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Dec. 31, 2017 | $ 269,244 | $ 40,172,677 | $ (32,686,145) | $ 7,755,776 |
Beginning Balance, shares at Dec. 31, 2017 | 26,924,381 | |||
Net Income | 346,208 | 346,208 | ||
Ending Balance at Mar. 31, 2018 | $ 269,244 | 40,172,677 | (32,339,937) | 8,101,984 |
Ending Balance, shares at Mar. 31, 2018 | 26,924,381 | |||
Beginning Balance at Dec. 31, 2018 | $ 269,244 | 40,172,677 | (32,028,460) | 8,413,461 |
Beginning Balance, shares at Dec. 31, 2018 | 26,924,381 | |||
Net Income | 354,635 | 354,635 | ||
Ending Balance at Mar. 31, 2019 | $ 269,244 | $ 40,172,677 | $ (31,673,825) | $ 8,768,096 |
Ending Balance, shares at Mar. 31, 2019 | 26,924,381 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows From Operating Activities | ||
Net income | $ 354,635 | $ 346,208 |
Adjustments to reconcile net income from operations to net cash used in operating activities: | ||
Depreciation and amortization | 74,324 | 89,752 |
Loss on sale of equipment | 40,045 | |
Bad debt expense | 30,000 | |
Changes in operating assets and liabilities: | ||
Trade receivables, net | (105,606) | (209,217) |
Trade receivables, related party, net | (39,215) | |
Inventories | (550,567) | (3,190) |
Prepaid expenses | (185,536) | (188,287) |
Intangible assets | (15,000) | |
Note receivable | 8,317 | |
Other assets | (451) | 39,038 |
Accounts payable - trade and accrued expenses | (564,868) | (308,133) |
Accounts payable - trade, related party | (13,853) | (212,616) |
Operating leases | 59,848 | |
Customer deposits and other liabilities | (43,132) | 155,458 |
Net cash used in operating activities | (960,206) | (281,840) |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (14,175) | (86,074) |
Net cash used in investing activities | (14,175) | (86,074) |
Cash Flows From Financing Activities: | ||
Payments on capital lease obligations | (1,181) | |
Net cash used in financing activities | (1,181) | |
Net change in cash and cash equivalents | (974,381) | (369,095) |
Cash and cash equivalents, beginning of period | 1,453,941 | 1,272,208 |
Cash and cash equivalents, end of period | 479,560 | 903,113 |
Cash paid during the period for: | ||
Interest | 34,549 | 46,882 |
Income taxes |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [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, 2018 (such fiscal year, “Fiscal 2018” and such Annual Report on Form 10-K, the “Fiscal 2018 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 and
Principles of Consolidation and Nature of Operations | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [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 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 an
Critical Accounting Policies and Estimates | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [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, trade receivables, accounts payable, accounts payable related party and accrued expenses approximate fair value because of the immediate or short-term nature of these financial instruments. 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 and warrants outstanding determined using the treasury stock method. Recent Accounting Pronouncement On January 1, 2019 we adopted the new lease accounting standard in Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases The Company elected certain of the available transition practical expedients, including those that permit it to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment. The most significant impact of the new guidance was the recognition of right-of-use (“ROU”) assets and liabilities for operating leases. See Note 9 for additional information. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | (4) Inventories A summary of inventories is as follows: March 31, December 31, 2019 2018 Jewelry $ 7,040,262 $ 7,001,477 Scrap gold/silver 1,301,312 1,205,111 Bullion 1,255,631 801,717 Rare coins and Other 718,456 756,789 $ 10,315,661 $ 9,765,094 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | (5) Property and Equipment Property and equipment consists of the following: March 31, December 31, 2019 2018 Building and improvements $ 1,543,883 $ 1,529,649 Machinery and equipment 1,039,013 1,039,013 Furniture and fixtures 453,699 453,699 3,036,595 3,022,361 Less: accumulated depreciation (1,761,881 ) (1,701,498 ) Total property and equipment $ 1,274,714 $ 1,320,863 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (6) Intangible Assets Intangible assets consist of the following: March 31, December 31, 2019 2018 Domain names $ 41,352 $ 41,352 Point of sale system 285,000 270,000 326,352 311,352 Less: accumulated amortization (91,002 ) (77,002 ) Total intangibles $ 235,350 $ 234,350 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | (7) Accrued Expenses Accrued expenses consist of the following: March 31, December 31, 2019 2018 Professional fees $ 84,088 $ 149,000 Advertising - 52,590 Board member fees - 7,500 Employee benefits - 10,383 Insurance 179,046 - Payroll 67,278 205,112 Property taxes 57,000 - Sales tax 53,823 111,739 State income tax 53,115 42,879 Total accrued accounts payable $ 494,350 $ 579,203 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | (8) Revenue Recognition Revenue is recognized when we transfer promised goods or jewelry and watch repair services to customers in an amount that reflects the consideration to which the Company expects to be paid in exchange for those goods and services. The Company’s revenue is primarily generated from the sale of finished goods and jewelry and watch repair services through retail, e-commerce or wholesale channels. We generate revenue through the sale of jewelry, rare coins, currency, collectibles, bullion, scrap and the repair of jewelry and watches. The Company’s performance obligations underlying such revenue, and the timing of revenue recognition, remains substantially unchanged following the adoption of ASC 606. ASC 606 provides guidance to identify performance obligations for revenue-generating transactions. The initial guide is to identify the contract with a customer created with the sales invoice or a repair ticket. Secondly, to identify the performance obligations in the contract as we promise to deliver the purchased item, or promised repairs in return for payment or future payment as a receivable. The third guide is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. The final step in the guidance is to recognize revenue as each performance obligation is satisfied. The following disaggregation of revenue is listed by sales category: Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 4,556,368 $ 1,325,658 29.1 % $ 5,299,962 $ 1,596,620 30.1 % Bullion/Rare Coin 9,984,146 516,157 5.2 % 7,099,751 553,781 7.8 % Scrap 1,218,151 185,047 15.2 % 1,283,644 209,484 16.3 % Other 260,865 191,620 73.5 % 372,515 142,121 38.2 % $ 16,019,530 $ 2,218,482 13.8 % $ 14,055,872 $ 2,502,006 17.8 % The following disaggregation of revenue is listed by sales category and state: TEXAS Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 4,149,254 $ 1,200,632 28.9 % $ 4,618,131 $ 1,385,252 30.0 % Bullion/Rare Coin 9,780,278 501,592 5.1 % 6,890,182 538,025 7.8 % Scrap 1,218,151 185,047 15.2 % 1,283,644 209,484 16.3 % Other 257,104 189,474 73.7 % 372,515 142,121 38.2 % $ 15,404,787 $ 2,076,745 13.5 % $ 13,164,472 $ 2,274,882 17.3 % SOUTH CAROLINA Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 407,114 $ 125,026 30.7 % $ 681,831 $ 211,368 31.0 % Bullion/Rare Coin 203,868 14,565 7.1 % 209,569 15,756 7.5 % Other 3,761 2,146 57.1 % - - - $ 614,743 $ 141,737 23.1 % $ 891,400 $ 227,124 25.5 % Revenues for monetary transactions (i.e., cash and receivables) with dealers and the retail public are recognized when the merchandise is delivered and payment has been made either by immediate payment or through a receivable obligation at one of our over the counter retail stores. We also recognize revenue upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Our scrap is sold to a local related entity refiner Elemetal. Since Elemetal is local we deliver the scrap to the refiner. The metal is assayed, price is determined from the assay and payment is made usually in one to two days. Revenue is recognized from the sale once payment is received. We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days. In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions The Company offers the option of third party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the financing company. We recognize the revenue of the sale upon the promise of the financing company to pay. We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. We have established an allowance for estimated returns related to Fiscal 2018 sales, which is based on our review of historical returns experience, and reduces our reported revenues and cost of sales accordingly. As of March 31, 2019 and December 31, 2018, our allowance for returns remained the same at $28,402 and $28,402, respectively. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | (9) Leases On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). We adopted ASC 842 on January 1, 2019, by applying its provisions prospectively. The financial results reported in periods prior to January 1, 2019 are unchanged. Upon adoption, we recognized all of our leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, the FASB retained a duel model, requiring leases to be classified as either operating of finance. Classification is based on certain criteria and we have determined that all of our retail building leases fall into the operating lease category. Our leases are included in our consolidated balance sheet as right-of-use assets along with the the current operating lease liabilities and long-term operating lease liabilities. The Company recognized $1,994,840 of operating lease right-of-use assets, $446,462 in short-term operating lease liabilities and $1,609,891 in long-term operating lease liabilities on the consolidated sheet upon adoption of the new standard. The operating lease liabilities were determined based on the present value of the remaining minimum rental payments and the operating lease right-of-use asset was determined based on the value of the lease liabilities, adjusted for deferred rent balances of $61,500, which were previously included in other liabilities. In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842 requires us to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in the lease agreement, we utilize our incremental borrowing rate. The Company has five operating leases, four in the Dallas/Fort Worth Metroplex and one in Charleston South Carolina. We have two leases expiring next year. Our Euless, Texas lease expires March 31, 2020, with an option for an additional five years which we are reasonably certain to exercise. Our Southlake, Texas location expires July 31, 2020, and with no current options. We will evaluate whether to continue to lease in the present location. Our lease on the main flagship store located at 13022 Preston Road, Dallas, Texas will be expiring October 31, 2021 with no current lease options. The Grand Prairie, Texas lease expires June 30, 2022, and has no current lease options. On April 19, 2018, we entered into an agreement with the landlord in Charleston, South Carolina, to increase the rental space by 2,104 square feet by taking over the vacant suite next door. The lease was amended to include the new space and extended to April 30, 2025. All five leases are triple net leases that we pay our proportionate amount of common area maintenance, property taxes and property insurance. Our total leasing costs for the three months ending March 31, 2019 was $174,347, which consists of $134,595 of rental lease expense and $39,752 of variable lease costs. As of March 31, 2019, the weighted average remaining lease term and weighted average discount rate for operating leases was 3.1 years and 5.5%, respectively. The Company’s future operating lease obligations that have not yet commenced are immaterial. For the period ending March 31, 2019, the Company’s cash paid for operating lease liabilities was $136,260. Future annual minimum lease payments as of March 31, 2019: Operating Leases 2019 (excluding the three months ending March 31, 2019) $ 411,392 2020 550,624 2021 491,541 2022 247,040 2023 223,045 2024 and thereafter 289,327 Total minimum lease payments $ 2,212,969 Less imputed interest (265,865 ) Operating lease liability $ 1,947,104 |
Basic and Diluted Average Share
Basic and Diluted Average Shares | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Average Shares | (10) Basic and Diluted Average Shares A reconciliation of basic and diluted weighted average common shares for the three months ended March 31, 2019 and 2018 is as follows: For the Three Months Ended March 31, 2019 2018 Basic weighted average shares 26,924,381 26,924,381 Effect of potential dilutive securities - 309,599 Diluted weighted average shares 26,924,381 27,233,980 For the three months ended March 31, 2019 and 2018 there were approximately 15,000 stock options excluded from the earnings per share calculation because their impact is antidilutive. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | (11) 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. Stock-based compensation expense for the three months ended March 31, 2019 and 2018 was $0 and $0, respectively. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (12) Related Party Transactions Through a series of transactions beginning in 2010, Elemetal, NTR and Truscott (“Related Entities”) became the largest shareholders of our common stock, par value $0.01 per share. A certain Related Entity has been DGSE’s primary refiner and bullion trading partner. In the three months ended March 31, 2019, 10.4% of sales and 10.8% of purchases were transactions with a certain Related Entity, and in the same period of 2018, these transactions represented 10% of DGSE’s sales and 2% of DGSE’s purchases. On December 9, 2016, DGSE and a certain Related Entity closed the transactions contemplated by the Debt Exchange Agreement whereby DGSE issued a certain Related Entity 8,536,585 shares of its common stock and a warrant to purchase an additional 1,000,000 shares to be exercised within two years after December 9, 2016, in exchange for the cancellation and forgiveness of $3,500,000 of trade payables owed to a certain Related Entity as a result of bullion-related transactions. As of March 31, 2019, the Company was obligated to pay $3,075,120 to the certain Related Entity as a trade payable. As of December 31, 2018, the Company was obligated to pay $3,088,973 to the certain Related Entity as a trade payable. For the three months ended March 31, 2019 and 2018, the Company paid the Related Entities $34,549 and $46,882, respectively, in interest on the Company’s outstanding payable. |
Sales and Use Tax
Sales and Use Tax | 3 Months Ended |
Mar. 31, 2019 | |
Sales And Use Tax | |
Sales and Use Tax | (13) Sales and Use Tax The Texas Comptroller conducted a sales and use tax audit of our Texas operations with respect to the period July 1, 2013 through December 31, 2016. The audit was finalized and a determination was made on April 2, 2018, that we owed a total of $17,294, which includes interest and penalties. An initial reserve of $70,000 was established at December 31, 2017 to cover any liability. That reserve was reduced to the amount owed of $17,294 for the accompanying consolidated balance sheet as of March 31, 2018. |
Critical Accounting Policies _2
Critical Accounting Policies and Estimates (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Financial Instruments | Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash equivalents, trade receivables, accounts payable, accounts payable related party and accrued expenses approximate fair value because of the immediate or short-term nature of these financial instruments. |
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 and warrants outstanding determined using the treasury stock method. |
Recent Accounting Pronouncement | Recent Accounting Pronouncement On January 1, 2019 we adopted the new lease accounting standard in Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases The Company elected certain of the available transition practical expedients, including those that permit it to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment. The most significant impact of the new guidance was the recognition of right-of-use (“ROU”) assets and liabilities for operating leases. See Note 9 for additional information. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | A summary of inventories is as follows: March 31, December 31, 2019 2018 Jewelry $ 7,040,262 $ 7,001,477 Scrap gold/silver 1,301,312 1,205,111 Bullion 1,255,631 801,717 Rare coins and Other 718,456 756,789 $ 10,315,661 $ 9,765,094 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following: March 31, December 31, 2019 2018 Building and improvements $ 1,543,883 $ 1,529,649 Machinery and equipment 1,039,013 1,039,013 Furniture and fixtures 453,699 453,699 3,036,595 3,022,361 Less: accumulated depreciation (1,761,881 ) (1,701,498 ) Total property and equipment $ 1,274,714 $ 1,320,863 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following: March 31, December 31, 2019 2018 Domain names $ 41,352 $ 41,352 Point of sale system 285,000 270,000 326,352 311,352 Less: accumulated amortization (91,002 ) (77,002 ) Total intangibles $ 235,350 $ 234,350 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following: March 31, December 31, 2019 2018 Professional fees $ 84,088 $ 149,000 Advertising - 52,590 Board member fees - 7,500 Employee benefits - 10,383 Insurance 179,046 - Payroll 67,278 205,112 Property taxes 57,000 - Sales tax 53,823 111,739 State income tax 53,115 42,879 Total accrued accounts payable $ 494,350 $ 579,203 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following disaggregation of revenue is listed by sales category: Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 4,556,368 $ 1,325,658 29.1 % $ 5,299,962 $ 1,596,620 30.1 % Bullion/Rare Coin 9,984,146 516,157 5.2 % 7,099,751 553,781 7.8 % Scrap 1,218,151 185,047 15.2 % 1,283,644 209,484 16.3 % Other 260,865 191,620 73.5 % 372,515 142,121 38.2 % $ 16,019,530 $ 2,218,482 13.8 % $ 14,055,872 $ 2,502,006 17.8 % |
Schedule of Disaggregation of Revenue Listed by Sales Category and State | The following disaggregation of revenue is listed by sales category and state: TEXAS Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 4,149,254 $ 1,200,632 28.9 % $ 4,618,131 $ 1,385,252 30.0 % Bullion/Rare Coin 9,780,278 501,592 5.1 % 6,890,182 538,025 7.8 % Scrap 1,218,151 185,047 15.2 % 1,283,644 209,484 16.3 % Other 257,104 189,474 73.7 % 372,515 142,121 38.2 % $ 15,404,787 $ 2,076,745 13.5 % $ 13,164,472 $ 2,274,882 17.3 % SOUTH CAROLINA Three Months Ended March 31, 2019 2018 Revenues Gross Profit Margin Revenues Gross Profit Margin Jewelry $ 407,114 $ 125,026 30.7 % $ 681,831 $ 211,368 31.0 % Bullion/Rare Coin 203,868 14,565 7.1 % 209,569 15,756 7.5 % Other 3,761 2,146 57.1 % - - - $ 614,743 $ 141,737 23.1 % $ 891,400 $ 227,124 25.5 % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Future Annual Minimum Lease Payments | Future annual minimum lease payments as of March 31, 2019: Operating Leases 2019 (excluding the three months ending March 31, 2019) $ 411,392 2020 550,624 2021 491,541 2022 247,040 2023 223,045 2024 and thereafter 289,327 Total minimum lease payments $ 2,212,969 Less imputed interest (265,865 ) Operating lease liability $ 1,947,104 |
Basic and Diluted Average Sha_2
Basic and Diluted Average Shares (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic and Diluted Weighted Average Common Shares | A reconciliation of basic and diluted weighted average common shares for the three months ended March 31, 2019 and 2018 is as follows: For the Three Months Ended March 31, 2019 2018 Basic weighted average shares 26,924,381 26,924,381 Effect of potential dilutive securities - 309,599 Diluted weighted average shares 26,924,381 27,233,980 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Jewelry | $ 7,040,262 | $ 7,001,477 |
Scrap gold/silver | 1,301,312 | 1,205,111 |
Bullion | 1,255,631 | 801,717 |
Rare coins and Other | 718,456 | 756,789 |
Inventories | $ 10,315,661 | $ 9,765,094 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross, Total | $ 3,036,595 | $ 3,022,361 |
Less: accumulated depreciation | (1,761,881) | (1,701,498) |
Total property and equipment | 1,274,714 | 1,320,863 |
Building and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross, Total | 1,543,883 | 1,529,649 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross, Total | 1,039,013 | 1,039,013 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross, Total | $ 453,699 | $ 453,699 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Intangible assets, gross | $ 326,352 | $ 311,352 |
Less: accumulated amortization | (91,002) | (77,002) |
Total intangibles | 235,350 | 234,350 |
Domain Names [Member] | ||
Intangible assets, gross | 41,352 | 41,352 |
Point of Sale System [Member] | ||
Intangible assets, gross | $ 285,000 | $ 270,000 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Professional fees | $ 84,088 | $ 149,000 |
Advertising | 52,590 | |
Board member fees | 7,500 | |
Employee benefits | 10,383 | |
Insurance | 179,046 | |
Payroll | 67,278 | 205,112 |
Property taxes | 57,000 | |
Sales tax | 53,823 | 111,739 |
State income tax | 53,115 | 42,879 |
Total accrued accounts payable | $ 494,350 | $ 579,203 |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Sales returns and allowances, goods, total | $ 28,402 | $ 28,402 | |
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | |||
Financing receivable, percent past due | 25.00% |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 16,019,530 | $ 14,055,872 |
Gross Profit | $ 2,218,482 | $ 2,502,006 |
Margin | 13.80% | 17.80% |
Jewelry [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 4,556,368 | $ 5,299,962 |
Gross Profit | $ 1,325,658 | $ 1,596,620 |
Margin | 29.10% | 30.10% |
Bullion/Rare Coin [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 9,984,146 | $ 7,099,751 |
Gross Profit | $ 516,157 | $ 553,781 |
Margin | 5.20% | 7.80% |
Scrap [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 1,218,151 | $ 1,283,644 |
Gross Profit | $ 185,047 | $ 209,484 |
Margin | 15.20% | 16.30% |
Other [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 260,865 | $ 372,515 |
Gross Profit | $ 191,620 | $ 142,121 |
Margin | 73.50% | 38.20% |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Disaggregation of Revenue Listed by Sales Category and State (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 16,019,530 | $ 14,055,872 |
Gross Profit | $ 2,218,482 | $ 2,502,006 |
Margin | 13.80% | 17.80% |
Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 15,404,787 | $ 13,164,472 |
Gross Profit | $ 2,076,745 | $ 2,274,882 |
Margin | 13.50% | 17.30% |
South Carolina [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 614,743 | $ 891,400 |
Gross Profit | $ 141,737 | $ 227,124 |
Margin | 23.10% | 25.50% |
Jewelry [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 4,556,368 | $ 5,299,962 |
Gross Profit | $ 1,325,658 | $ 1,596,620 |
Margin | 29.10% | 30.10% |
Jewelry [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 4,149,254 | $ 4,618,131 |
Gross Profit | $ 1,200,632 | $ 1,385,252 |
Margin | 28.90% | 30.00% |
Jewelry [Member] | South Carolina [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 407,114 | $ 681,831 |
Gross Profit | $ 125,026 | $ 211,368 |
Margin | 30.70% | 31.00% |
Bullion/Rare Coin [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 9,984,146 | $ 7,099,751 |
Gross Profit | $ 516,157 | $ 553,781 |
Margin | 5.20% | 7.80% |
Bullion/Rare Coin [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 9,780,278 | $ 6,890,182 |
Gross Profit | $ 501,592 | $ 538,025 |
Margin | 5.10% | 7.80% |
Bullion/Rare Coin [Member] | South Carolina [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 203,868 | $ 209,569 |
Gross Profit | $ 14,565 | $ 15,756 |
Margin | 7.10% | 7.50% |
Scrap [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 1,218,151 | $ 1,283,644 |
Gross Profit | $ 185,047 | $ 209,484 |
Margin | 15.20% | 16.30% |
Scrap [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 1,218,151 | $ 1,283,644 |
Gross Profit | $ 185,047 | $ 209,484 |
Margin | 15.20% | 16.30% |
Other [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 260,865 | $ 372,515 |
Gross Profit | $ 191,620 | $ 142,121 |
Margin | 73.50% | 38.20% |
Other [Member] | Texas [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 257,104 | $ 372,515 |
Gross Profit | $ 189,474 | $ 142,121 |
Margin | 73.70% | 38.20% |
Other [Member] | South Carolina [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 3,761 | |
Gross Profit | $ 2,146 | |
Margin | 57.10% | 0.00% |
Leases (Details Narrative)
Leases (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2019USD ($)Integer | Dec. 31, 2018USD ($) | Apr. 19, 2018ft² | |
Operating lease right-of-use assets | $ 1,887,256 | ||
Short-term operating lease liabilities | 452,820 | ||
Long-term operating lease liabilities | $ 1,494,284 | ||
Number of operating lease | Integer | 5 | ||
Lease cost | $ 174,347 | ||
Rental lease expense | 134,595 | ||
Variable lease costs | $ 39,752 | ||
Weighted average remaining lease term | 3 years 1 month 6 days | ||
Weighted average discount rate | 5.50% | ||
Operating lease expenses | $ 136,260 | ||
Euless [Member] | |||
Lease expiration period | March 31, 2020 | ||
Southlake [Member] | |||
Lease expiration period | July 31, 2020 | ||
Dallas [Member] | |||
Lease expiration period | October 31, 2021 | ||
The Grand Prairie [Member] | |||
Lease expiration period | June 30, 2022 | ||
Charleston [Member] | |||
Lease expiration period | April 30, 2025 | ||
Increase in rental space | ft² | 2,104 | ||
Accounting Standards Update 2016-02 [Member] | |||
Operating lease right-of-use assets | $ 1,994,840 | ||
Short-term operating lease liabilities | 446,462 | ||
Long-term operating lease liabilities | 1,609,891 | ||
Deferred rent | $ 61,500 |
Leases - Schedule of Future Ann
Leases - Schedule of Future Annual Minimum Lease Payments (Details) | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
2019 (excluding the three months ending March 31, 2019) | $ 411,392 |
2020 | 550,624 |
2021 | 491,541 |
2022 | 247,040 |
2023 | 223,045 |
2024 and thereafter | 289,327 |
Total minimum lease payments | 2,212,969 |
Less imputed interest | (265,865) |
Operating lease liability | $ 1,947,104 |
Basic and Diluted Average Sha_3
Basic and Diluted Average Shares (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Stock options excluded from the earnings per share | 15,000 | 15,000 |
Basic and Diluted Average Sha_4
Basic and Diluted Average Shares - Schedule of Reconciliation of Basic and Diluted Weighted Average Common Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares | 26,924,381 | 26,924,381 |
Effect of potential dilutive securities | 309,599 | |
Diluted weighted average shares | 26,924,381 | 27,233,980 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Stock based compensation expenses | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Dec. 09, 2016 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Related Party Transaction [Line Items] | ||||
Common stock, par value | $ 0.01 | $ 0.01 | ||
Concentration risk, percentage | 13.80% | 17.80% | ||
Related Entities [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock, par value | $ 0.01 | |||
Due to related parties | $ 3,075,120 | $ 3,088,973 | ||
Due from related parties | $ 34,549 | $ 46,882 | ||
Related Entities [Member] | Debt Exchange Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Debt conversion, converted instrument, shares issued | 8,536,585 | |||
Class of warrant or right, number of securities called by warrants or rights | 1,000,000 | |||
Debt cancellation and forgiveness | $ 3,500,000 | |||
Related Entities [Member] | Sales [Member] | ||||
Related Party Transaction [Line Items] | ||||
Concentration risk, percentage | 10.40% | 10.00% | ||
Related Entities [Member] | Purchases [Member] | ||||
Related Party Transaction [Line Items] | ||||
Concentration risk, percentage | 10.80% | 2.00% |
Sales and Use Tax (Details Narr
Sales and Use Tax (Details Narrative) - USD ($) | Apr. 02, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Sales And Use Tax | |||
Income tax examination, penalties and interest accrued | $ 17,294 | ||
Initial reserve to cover tax assessment, penalty and interest | $ 70,000 | ||
Reduction in reserve | $ 17,294 |