| Revenue Recognition | (10) Revenue Recognition Revenue is
recognized when we transfer promised goods, 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, recycled goods, recycled raw materials, scrap, jewelry and watch repair services through wholesale
contracts, retail and e-commerce. 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 total revenue
is listed by sales category and segment:
CONSOLIDATED Three Months Ended September 30,
2019 2018
Revenues Gross Profit Margin Revenues Gross Profit Margin
DGSE
Jewelry $ 4,036,825 $ 1,149,134 28.5 % $ 3,694,204 $ 1,223,144 33.1 %
Bullion/Rare Coin 9,621,146 442,573 4.6 % 8,120,071 727,555 9.0 %
Scrap 2,547,912 359,255 14.1 % 1,317,133 226,090 17.2 %
Other 447,044 67,890 15.2 % 527,987 300,380 56.9 %
Subtotal 16,652,927 2,018,852 12.1 % 13,659,395 2,477,169 18.1 %
Echo Entities
Recycle 5,133,181 2,408,416 46.9 % - - -
Reuse 1,075,093 759,186 70.6 % - - -
Subtotal 6,208,274 3,167,602 51.0 % - - -
$ 22,861,201 $ 5,186,454 22.7 % $ 13,659,395 $ 2,477,169 18.1 % The following disaggregation of revenue is
listed by sales category, segment and state:
TEXAS Three Months Ended September 30,
2019 2018
Revenues Gross Profit Margin Revenues Gross Profit Margin
DGSE
Jewelry $ 3,506,998 $ 957,867 27.3 % $ 3,404,889 $ 1,083,550 31.8 %
Bullion/Rare Coin 9,473,024 433,389 4.6 % 8,001,990 711,529 8.9 %
Scrap 2,547,912 359,255 14.1 % 1,317,133 226,090 17.2 %
Other 385,823 54,360 14.1 % 498,409 299,600 60.1 %
Subtotal 15,913,757 1,804,871 11.3 % 13,222,421 2,320,769 17.6 %
Echo Entities
Recycle 5,133,181 2,408,416 46.9 % - - -
Reuse 1,075,094 759,186 70.6 % - - -
Subtotal 6,208,275 3,167,602 51.0 % - - -
$ 22,122,032 $ 4,972,473 22.5 % $ 13,222,421 $ 2,320,769 17.6 %
SOUTH CAROLINA Three Months Ended June 30,
2019 2018
Revenues Gross Profit Margin Revenues Gross Profit Margin
DGSE
Jewelry $ 529,825 $ 191,267 36.1 % $ 289,315 $ 139,594 48.2 %
Bullion/Rare Coin 148,122 9,184 6.2 % 118,081 16,026 13.6 %
Other 61,222 13,530 22.1 % 29,578 780 2.6 %
Subtotal 739,169 213,981 28.9 % 436,974 156,400 35.8 %
Echo Entities - - - - - -
Subtotal - - - - - -
$ 739,169 $ 213,981 28.9 % $ 436,974 $ 156,400 35.8 % The following disaggregation of total revenue
is listed by sales category and segment:
CONSOLIDATED Nine Months Ended September 30,
2019 2018
DGSE Revenues Gross Profit Margin Revenues Gross Profit Margin
Jewelry $ 12,432,060 $ 3,715,091 29.9 % $ 13,519,276 $ 3,840,235 28.4 %
Bullion/Rare Coin 30,543,290 1,468,358 4.8 % 21,828,412 2,128,921 9.8 %
Scrap 5,514,091 801,216 14.5 % 3,782,718 669,461 17.7 %
Other 2,761,652 522,497 18.9 % 1,318,124 531,037 40.3 %
Subtotal 51,251,093 6,507,162 12.7 % 40,448,530 7,169,654 17.7 %
Echo Entities
Recycle 6,721,265 3,156,235 47.0 % - - -
Reuse 1,845,810 1,106,854 60.0 %
Subtotal 8,567,075 4,263,089 49.8 % - - -
$ 59,818,168 $ 10,770,251 18.0 % $ 40,448,530 $ 7,169,654 17.7 % The following disaggregation of revenue is
listed by sales category, segment and state:
TEXAS Nine Months Ended September 30,
2019 2018
DGSE Revenues Gross Profit Margin Revenues Gross Profit Margin
Jewelry $ 11,264,742 $ 3,224,943 28.6 % $ 12,279,064 $ 3,353,686 27.3 %
Bullion/Rare Coin 30,026,499 1,416,360 4.7 % 21,406,758 2,060,247 9.6 %
Scrap 5,514,091 801,216 14.5 % 3,782,718 669,461 17.7 %
Other 2,357,201 419,387 17.8 % 1,145,752 449,581 39.2 %
Subtotal 49,162,533 5,861,906 11.9 % 38,614,292 6,532,975 16.9 %
Echo Entities
Recycle 6,721,265 3,156,235 47.0 % - - -
Reuse 1,845,810 1,106,854 60.0 %
Subtotal 8,567,075 4,263,089 49.8 % - - -
$ 57,729,608 $ 10,124,995 17.5 % $ 38,614,292 $ 6,532,975 16.9 %
SOUTH CAROLINA Nine Months Ended September 30,
2019 2018
DGSE Revenues Gross Profit Margin Revenues Gross Profit Margin
Jewelry $ 1,167,318 $ 490,148 42.0 % $ 1,240,212 $ 486,549 39.2 %
Bullion/Rare Coin 516,791 51,998 10.1 % 421,654 68,674 16.3 %
Other 404,451 103,110 25.5 % 172,372 81,456 47.3 %
Subtotal 2,088,560 645,256 30.9 % 1,834,238 636,679 34.7 %
Echo Entities
Subtotal - - - - - -
$ 2,088,560 $ 645,256 30.9 % $ 1,834,238 $ 636,679 34.7 % Revenues for
monetary transactions (i.e., cash and receivables) with commercial 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. We also recognize revenue
upon the shipment of goods when retail or 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 refiner that was a related party before the purchase of the Echo Entities on
May 20, 2019. Since the refiner 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. The retail
portion of the Company offers 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 our retail
operations, 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 our retail customers 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
September 30, 2019 and December 31, 2018, our allowance for returns remained the same at $28,402 and $28,402, respectively. The Echo Entities
are large-scale processors of circuit boards and electronic waste. We are committed to fast and cost-efficient service to many
different industries that need to recycle electronic components. There are three main revenue streams within our product mix. The
first category is recycling fees, whereby we will receive electronic components and other material to process from a vendor. Upon
the determination of the makeup of the materials we charge a processing fee to the vendor and also pay them for items we can sell.
Revenue is recognized when service charges are determined after waste materials are sorted and processed. The second revenue stream
is outright sales, which is the sale of processed material to a customer after we have sorted material, charged recycling fees
and paid our vendors for that material. The sale is recognized when delivery has occurred and title and risk of loss has passed
to the buyer upon the notice of bill of sale ending with a cash transaction or evidence of credit extended producing a trade accounts
receivable. The third revenue stream is the settlement of precious metals processed from our recycling services. The precious metal
we extract is sent to a refiner and is assayed. We recognize revenue when we receive the settlement from the refiner, except at
quarter and year end when we accrue any outstanding settlements received after the end of a quarter or year. |
