Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | WESTERN CAPITAL RESOURCES, INC. | |
Entity Central Index Key | 1,363,958 | |
Document Type | 10-Q | |
Trading Symbol | WCRS | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,390,997 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 9,125,283 | $ 21,295,819 |
Short-term investments | 44,386,857 | 32,292,902 |
Loans receivable (net of allowance for losses of $698,000 and $833,000, respectively) | 3,362,498 | 4,310,003 |
Accounts receivable (net of allowance for losses of $57,000 and $16,000, respectively) | 2,191,743 | 764,071 |
Inventory (net of allowance of $577,000 and $576,000, respectively) | 10,010,703 | 9,130,842 |
Prepaid expenses and other | 3,691,137 | 3,762,974 |
Escrow and other receivables | 3,285,231 | 3,482,770 |
TOTAL CURRENT ASSETS | 76,053,452 | 75,039,381 |
INVESTMENTS | 2,000,000 | 3,000,000 |
PROPERTY AND EQUIPMENT, net | 11,116,899 | 11,347,234 |
GOODWILL | 5,796,528 | 5,796,528 |
INTANGIBLE ASSETS, net | 4,819,669 | 4,987,769 |
ESCROW FUNDS RECEIVABLE | 3,250,000 | 3,250,000 |
OTHER | 668,807 | 823,244 |
TOTAL ASSETS | 103,705,355 | 104,244,156 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 11,996,557 | 11,897,968 |
Other current liabilities | 1,198,493 | 1,354,558 |
Income taxes payable | 18,725,244 | 18,730,647 |
Note payable - short-term | 29,250 | 51,992 |
Current portion capital lease obligations | 47,858 | 47,174 |
Deferred revenue | 1,164,450 | 1,073,600 |
TOTAL CURRENT LIABILITIES | 33,161,852 | 33,155,939 |
LONG-TERM LIABILITIES | ||
Notes payable, net of current portion | 789,216 | 789,216 |
Capital lease obligations, net of current portion | 38,934 | 51,172 |
Deferred income taxes | 1,379,000 | 1,456,000 |
Other | 98,259 | 98,259 |
TOTAL LONG-TERM LIABILITIES | 2,305,409 | 2,394,647 |
TOTAL LIABILITIES | 35,467,261 | 35,550,586 |
COMMITMENTS AND CONTINGENCIES (Note 14) | ||
WESTERN SHAREHOLDERS' EQUITY | ||
Common stock, $0.001 par value, 12,500,000 shares authorized, 9,390,997 shares issued and outstanding. | 939 | 939 |
Additional paid-in capital | 29,031,741 | 29,031,741 |
Retained earnings | 37,262,637 | 37,903,204 |
TOTAL WESTERN SHAREHOLDERS' EQUITY | 66,295,317 | 66,935,884 |
NONCONTROLLING INTERESTS | 1,942,777 | 1,757,686 |
TOTAL EQUITY | 68,238,094 | 68,693,570 |
TOTAL LIABILITIES AND EQUITY | $ 103,705,355 | $ 104,244,156 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Loans receivable, allowance for losses | $ 698,000 | $ 833,000 |
Accounts receivable, allowance for losses | 57,000 | 16,000 |
Inventory , allowance for losses | $ 577,000 | $ 576,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 12,500,000 | 12,500,000 |
Common stock, issued | 9,390,997 | 9,390,997 |
Common stock, outstanding | 9,390,997 | 9,390,997 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES | ||
Sales and associated fees | $ 23,817,194 | $ 24,559,130 |
Financing fees and interest | 2,174,546 | 2,233,409 |
Other revenue | 4,467,019 | 4,899,158 |
Total Revenues | 30,458,759 | 31,691,697 |
COST OF REVENUES | ||
Cost of sales | 12,166,033 | 12,067,936 |
Provisions for loans receivable losses | 200,202 | 237,581 |
Total Cost of Revenues | 12,366,235 | 12,305,517 |
GROSS PROFIT | 18,092,524 | 19,386,180 |
OPERATING EXPENSES | ||
Salaries, wages and benefits | 9,317,793 | 8,892,652 |
Occupancy | 3,422,218 | 2,911,292 |
Advertising, marketing and development | 2,029,315 | 1,906,553 |
Depreciation | 558,989 | 326,196 |
Amortization | 214,808 | 54,401 |
Other | 2,695,240 | 2,741,787 |
Total Operating Expenses | 18,238,363 | 16,832,881 |
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS | (145,839) | 2,553,299 |
OTHER INCOME (EXPENSES): | ||
Interest and dividend income | 167,511 | 64,075 |
Interest expense | (87,598) | (57,371) |
Total Other Income (Expense) | 79,913 | 6,704 |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (65,926) | 2,560,003 |
PROVISION FOR INCOME TAX EXPENSE (BENEFIT) FOR CONTINUING OPERATIONS | (80,000) | 951,000 |
NET INCOME FROM CONTINUING OPERATIONS | 14,074 | 1,609,003 |
LESS NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTEREST | (185,091) | |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | (171,017) | 1,609,003 |
DISCONTINUED OPERATIONS | ||
Income from operations of discontinued operations | 1,070,321 | |
Less provision for income taxes for discontinued operations | (412,000) | |
Net income from discontinued operations | 658,321 | |
Less net income from discontinued operations attributable to noncontrolling interests | (5,085) | |
Net income from discontinued operations attributable to Western common shareholders | 653,236 | |
NET INCOME (LOSS) ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | $ (171,017) | $ 2,262,239 |
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | ||
FROM CONTINUING OPERATIONS - Basic and diluted (in dollars per share) | $ (0.02) | $ 0.17 |
FROM DISCONTINUED OPERATIONS - Basic and diluted (in dollars per share) | 0.07 | |
FROM CONTINUING AND DISCONTINUED OPERATIONS - Basic and diluted (in dollars per share) | $ (0.02) | $ 0.24 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic and diluted (in shares) | 9,390,997 | 9,472,934 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||
Net income from continuing operations | $ 14,074 | $ 1,609,003 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 558,989 | 326,196 |
Amortization | 214,808 | 54,401 |
Share based compensation | 8,899 | |
Deferred income taxes | (77,000) | 66,000 |
Investments discount amortization | (99,991) | |
Loss (gain) on disposal of property and equipment | 170,448 | (270) |
Changes in operating assets and liabilities: | ||
Loans receivable | 947,505 | 908,337 |
Accounts receivable | (1,427,672) | (1,085,312) |
Inventory | (960,909) | (1,246,831) |
Prepaid expenses and other assets | 157,752 | (831,683) |
Accounts payable and accrued expenses | 93,186 | 298,300 |
Deferred revenue and other current liabilities | (65,215) | (15,825) |
Operating cash flows from discontinued operations | 354,253 | |
Net cash and cash equivalents provided by (used in) operating activities | (474,025) | 445,468 |
INVESTING ACTIVITIES | ||
Purchases of investments | (11,961,900) | |
Proceeds from held-to-maturity investments | 1,000,000 | |
Purchase of property and equipment | (350,021) | (754,130) |
Acquisition of stores, net of cash acquired | (76,707) | |
Advances on note receivable, net | (517,844) | |
Proceeds from installment sale receivable | 185,963 | |
Proceeds from the disposal of property, plant and equipment | 10,000 | 14,459 |
Cash received from discontinued operations | 3,147,493 | |
Net cash and cash equivalents provided by (used in) investing activities | (11,192,665) | 1,889,978 |
FINANCING ACTIVITIES | ||
Payments on notes payable - short-term, net | (22,742) | (25,799) |
Payments on line of credit, net | (853,544) | |
Payments on notes payable - long-term | (501,669) | |
Common stock redemption | (480,928) | |
Payments on capital leases | (11,554) | (11,960) |
Payment of dividends | (469,550) | (234,775) |
Financing activities of discontinued operations | (3,178,348) | |
Net cash and cash equivalents used in financing activities | (503,846) | (5,287,023) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (12,170,536) | (2,951,577) |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 21,295,819 | 14,159,975 |
End of period | 9,125,283 | 11,208,398 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Income taxes paid | 2,403 | 7,169 |
Interest paid | $ 20,869 | $ 135,686 |
Basis of Presentation, Nature o
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies | 1. Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies – Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to the Condensed Consolidated Financial Statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2017. The condensed consolidated balance sheet at December 31, 2017, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP. Nature of Business Western Capital Resources, Inc. (WCR) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. Cellular Retail o PQH Wireless, Inc. (PQH) (100%) – operates 236 cellular retail stores as of March 31, 2018 (179 100% owned plus 57 through a 70% owned subsidiary), as an exclusive dealer of the Cricket brand. Direct to Consumer o J & P Park Acquisitions, Inc. (JPPA) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. o J & P Real Estate, LLC (JPRE) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. Consumer Finance o Wyoming Financial Lenders, Inc. (WFL) (100%) – owns and operates “payday” stores (40 as of March 31, 2018) in seven states (Colorado, Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. o Express Pawn, Inc. (EPI) (100%) – owns and operates retail pawn stores (three as of March 31, 2018) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. Discontinued Operations 2017 - Franchise o AlphaGraphics, Inc. (AGI) – franchisor of domestic and international AlphaGraphics Business Centers which specialize in the planning, production, and management of visual communications for businesses and individuals throughout the world. AGI was sold on October 2, 2017. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” “EPI” or “AGI” are references only to those companies. Basis of Consolidation The consolidated financial statements include the accounts of the WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation, with the exception of the presentation of dividends received from discontinued subsidiary operations in the Condensed Consolidated Statement of Cash Flows. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the loans and accounts receivable allowance, carrying value and impairment of long-lived goodwill and intangible assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate and merchandise credits liability and deferred taxes and tax uncertainties. Reclassifications Certain Statements of Income and Statements of Cash Flows reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three months ended March 31, 2018. In accordance with ASC 205-20-45-6, interest on debt required to be paid as a result of our Franchise segment disposal transaction has been allocated to discontinued operations and, in accordance with ASC 205-20-45-9, general corporate overhead has not been allocated to discontinued operations. These re-allocations and related income tax have been made in the presentation of our prior financial statements and accompanying notes. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP. This standard is effective for annual and interim periods beginning after December 15, 2017. The Company has adopted this standard as of January 1, 2018 applying it on a retrospective basis as of the date adopted and determined it had no impact on our financial condition, results of operations and consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), related to recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that annual period, with early adoption permitted and to be applied using a modified retrospective approach. The Company is currently evaluating the impact the ASU will have on our financial condition, results of operations and consolidated financial statements and expects its adoption to have a material impact on our financial condition due to a material addition of operating lease assets and liabilities in accordance with the ASU. No other new accounting pronouncements issued or effective during the fiscal year have had or are expected to have a material impact on the consolidated financial statements. |
Risks Inherent in the Operating
Risks Inherent in the Operating Environment | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Risks Inherent in the Operating Environment | 2. Risks Inherent in the Operating Environment – Regulatory The Company’s Consumer Finance segment activities are highly regulated under numerous federal, state, and local laws, regulations and rules, which are subject to change. New laws, regulations or rules could be enacted or issued, interpretations of existing laws, regulations or rules may change and enforcement action by regulatory agencies may intensify. Over the past several years, consumer advocacy groups and certain media reports have advocated governmental and regulatory action to prohibit or severely restrict sub-prime lending activities of the kind conducted by the Company. After several years of research, debate, and public hearings, in October 2017 the U.S. Consumer Financial Protection Bureau (CFPB) issued new rules for payday lending. The proposed rules, scheduled to go into effect in August 2019, would impose significant restrictions on the industry, and it is expected that a large number of lenders would be forced to close their stores. The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate. At this time it is uncertain whether the rule will be implemented as announced, rewritten with more favorable terms for the industry, or thrown out altogether. If the rule is implemented as written, it could have a significant and negative impact on business conducted within our Consumer Finance segment. The above rule or any other adverse change in present federal, state, or local laws or regulations that govern or otherwise affect lending could result in the Consumer Finance segment’s curtailment or cessation of operations in certain or all jurisdictions or locations. Furthermore, any failure to comply with any applicable federal, state or local laws or regulations could result in fines, litigation, closure of one or more store locations or negative publicity. Any such change or failure would have a corresponding impact on the Company’s and segment’s results of operations and financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, decrease in operating income through increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects due to lost or decreased operating income or if negative publicity affects its ability to obtain additional financing as needed. In addition, the passage of federal, state or local laws and regulations or changes in interpretations of them could, at any point, essentially prohibit the Consumer Finance segment from conducting its lending business in its current form. Any such legal or regulatory change would certainly have a material and adverse effect on the Company, its operating results, financial condition and prospects, and perhaps even the viability of the Consumer Finance segment. |
Cash Equivalents and Investment
Cash Equivalents and Investments | 3 Months Ended |
Mar. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Cash Equivalents and Investments | 3. Cash Equivalents and Investments – The following table shows the Company’s cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash equivalents or short- and long-term investments as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Cash and cash equivalents Operating accounts $ 8,778,235 $ 10,524,923 Certificates of deposit - 750,000 Money Market Mutual Funds - U.S. Treasury obligations 347,048 10,020,896 Subtotal 9,125,283 21,295,819 Held to Maturity Investments Certificates of deposit 14,297,734 13,250,000 T-Bill Zero CPN 32,089,123 22,042,902 Subtotal 46,386,857 35,292,902 TOTAL $ 55,512,140 $ 56,588,721 As of March 31, 2018, held to maturity securities consisted of the following: Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 14,250,000 $ 47,734 $ - $ 14,297,734 $ (87,544) $ 14,210,190 Treasury Bills $ 31,961,012 $ - $ 128,111 $ 32,089,123 $ (1,897) $ 32,087,226 |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Loans Receivable | 4. Loans Receivable – The Consumer Finance segment’s outstanding loans receivable aging was as follows: March 31, 2018 Payday Installment Pawn & Title Total Current $ 2,773,711 $ 190,525 $ 263,650 $ 3,227,886 1-30 166,548 38,121 - 204,669 31-60 108,590 23,535 - 132,125 61-90 145,640 15,484 - 161,124 91-120 97,171 9,294 - 106,465 121-150 112,903 3,299 - 116,202 151-180 110,344 1,683 - 112,027 3,514,907 281,941 263,650 4,060,498 Less Allowance (627,000) (71,000) - (698,000) $ 2,887,907 $ 210,941 $ 263,650 $ 3,362,498 December 31, 2017 Payday Installment Pawn & Title Total Current $ 3,550,077 $ 271,926 $ 318,361 $ 4,140,364 1-30 216,376 47,356 - 263,732 31-60 187,916 27,766 - 215,682 61-90 150,278 17,976 - 168,254 91-120 110,943 11,870 - 122,813 121-150 131,171 4,748 - 135,919 151-180 93,222 3,017 - 96,239 4,439,983 384,659 318,361 5,143,003 Less Allowance (745,000) (88,000) - (833,000) $ 3,694,983 $ 296,659 $ 318,361 $ 4,310,003 |
Loans Receivable Allowance
Loans Receivable Allowance | 3 Months Ended |
Mar. 31, 2018 | |
Provision for Loan and Lease Losses [Abstract] | |
Loans Receivable Allowance | 5. Loans Receivable Allowance – A rollforward of the Consumer Finance segment’s loans receivable allowance is as follows: Three Months Ended March 31, 2018 Year Ended December 31, 2017 Loans receivable allowance, beginning of period $ 833,000 $ 1,036,000 Provision for loan losses charged to expense 200,202 1,122,144 Charge-offs, net (335,202) (1,325,144) Loans receivable allowance, end of period $ 698,000 $ 833,000 |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | 6. Accounts Receivable – A breakdown of accounts receivables by segment as of March 31, 2018 and December 31, 2017 are as follows: March 31, 2018 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 315,549 $ 1,920,585 $ 12,609 $ 2,248,743 Less allowance - (57,000) - (57,000) Net account receivable $ 315,549 $ 1,863,585 $ 12,609 $ 2,191,743 December 31, 2017 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 399,459 $ 365,476 $ 15,136 $ 780,071 Less allowance - (16,000) - (16,000) Net account receivable $ 399,459 $ 349,476 $ 15,136 $ 764,071 |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | 7. Inventory – Finished goods inventory net of allowance by segment consists of the following: Three Months Ended March 31, 2018 Year Ended December 31, 2017 Cellular Retail $ 5,742,969 $ 5,287,932 Direct to Consumer 3,457,377 2,988,052 Consumer Finance 810,357 854,858 $ 10,010,703 $ 9,130,842 |
Notes Payable - Long Term
Notes Payable - Long Term | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable - Long Term | 8. Notes Payable – Long Term – March 31, 2018 December 31, 2017 Subsidiary subordinated note pa yab le to seller with monthly interest only payments at 6%, guaranteed by PQH , maturing August 5 22 the . 789,216 789,216 Total 789,216 789,216 Less current maturities - - $ 789,216 $ 789,216 The Company is party to a Credit Agreement with a financial institution entered into on April 22, 2016 and subject to subsequent amendments. The Credit Agreement provides the Company with a revolving line of credit facility in an aggregate amount up to $3,000,000, having a maturity date of April 21, 2018 and an acquisition loan facility in an aggregate amount of up to $9,000,000, having a maturity date of April 21, 2018. The revolver and the acquisition loan facility bear interest at a floating per annum rate equal to one-month LIBOR plus 3.50%, adjusted on a monthly basis. Funds advanced under the acquisition loan facility mature five years from the date of advance. At March 31, 2018, the entire $12,000,000 of credit was available under the credit facilities. See Notes 14 and 15 for additional terms, conditions and amendment related to the Credit Agreement. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes – The provision for income taxes for continuing operations is 121.3% and 37.1% of income before the provision for income taxes for the three month period ended March 31, 2018 and 2017, respectively. The significant difference in rate is the result of the 2018 net income attributable to noncontrolling interests not being subjected to income tax at the corporate level. Rather the “passthrough” taxable income is taxed to the noncontrolling interests at an individual level. |
Cash Dividends
Cash Dividends | 3 Months Ended |
Mar. 31, 2018 | |
Dividends [Abstract] | |
Cash Dividends | 10. Cash Dividends – Date declared January 18, 2018 Record date February 9, 2018 Date paid February 14, 2018 Dividend per share of common stock $0.05 |
Other Operating Expense
Other Operating Expense | 3 Months Ended |
Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Operating Expense | 11. Other Operating Expense – A breakout of other expense is as follows: For The Three Months Ended March 31, 2018 2017 Bank fees $ 502,564 $ 532,175 Collection costs 84,605 89,894 Insurance 205,295 240,740 Management and advisory fees 193,710 153,481 Professional and consulting fees 543,096 662,089 Supplies 217,436 324,136 Other 948,534 739,272 $ 2,695,240 $ 2,741,787 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 12. Discontinued Operations – As more fully disclosed in Note 19 of the Notes to Consolidated Financial Statements for the year ended December 31, 2017, on October 3, 2017 the Company closed on the sale of its franchise segment. In accordance with the provisions of ASC 205-20, the Company has not included the results of operations of the Franchise segment in the results from continuing operations. The results of operations for this business have been reflected as discontinued operations in the unaudited Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2017, and consist of the following: Three Months Ended March 31, 2017 REVENUES OF DISCONTINUED OPERATIONS $ 3,943,309 COST OF REVENUES OF DISCONTINUED OPERATIONS 648,197 GROSS PROFIT OF DISCONTINUED OPERATIONS 3,295,112 OPERATING EXPENSES OF DISCONTINUED OPERATIONS: Salaries, wages and benefits 1,098,739 Occupancy 42,764 Advertising, marketing and development 102,597 Depreciation 24,092 Amortization 86,118 Other 789,700 2,144,010 OPERATING INCOME OF DISCONTINUED OPERATIONS 1,151,102 OTHER INCOME (EXPENSE) OF DISCONTINUED OPERATIONS Interest expense (80,781) INCOME BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS 1,070,321 PROVISION FOR INCOME TAXES OF DISCONTINUED OPERATIONS 412,000 NET INCOME OF DISCONTINUED OPERATIONS 658,321 Less net income of discontinued operations attributable to noncontrolling interests (5,085) NET INCOME OF DISCONTINUED OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS $ 653,236 In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations of the Franchise segment in the Consolidated Statements of Cash Flows. The cash flow activity from discontinued operations have been reflected as discontinued operations in the Consolidated Statements of Cash Flows for the three month period ended March, 2017, and consist of the following: Three Months Ended March 31, 2017 DISCONTINUED OPERATING ACTIVITIES Net income of discontinued operations $ 658,321 Adjustments to reconcile net income of discontinued operations to net cash provided by operating activities of discontinued operations: Depreciation 24,092 Amortization 86,118 Share based compensation 2,243 Deferred income taxes (29,000) Changes in operating assets and liabilities: Accounts receivable (606,126) Prepaid expenses and other assets 114,753 Accounts payable and accrued expenses (597,356) Deferred revenue and other current liabilities 682,016 Other liabilities – long-term 19,192 Net cash provided by operating activities of discontinued operations $ 354,253 FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS Principal payments on capital lease obligations $ (7,620) Dividends to shareholders (3,170,728) Net cash used in financing activities of discontinued operations $ (3,178,348) |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 13. Segment Information – Segment information related to the three month periods ended March 31, 2018 and 2017 for continuing operations is presented below: Three Months Ended March 31, 2018 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 17,107 $ 10,681 $ 2,671 $ - $ 30,459 Net income (loss) $ (375) $ 329 $ 331 $ (271) $ 14 Total segment assets $ 27,567 $ 15,057 $ 7,003 $ 54,078 $ 103,705 Expenditures for segmented assets $ 117 $ 310 $ - $ - $ 427 Three Months Ended March 31, 2017 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Discontinued Operations Total Revenue from external customers $ 17,045 $ 11,904 $ 2,743 $ - $ - $ 31,692 Net income (loss) $ 669 $ 866 $ 254 $ (180) $ - $ 1,609 Total segment assets $ 24,794 $ 15,429 $ 8,047 $ 4,076 $ 8,879 $ 61,225 Expenditures for segmented assets $ 673 $ 81 $ - $ - $ - $ 754 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies – Employment Agreements Pursuant to the Company’s numerous employment agreements, bonuses for continuing operation of approximately $73,000 and $256,000 were accrued for the three month periods ended March 31, 2018 and 2017, respectively. Credit Facility The Company is party to a Credit Agreement with a financial institution. Certain Company subsidiaries are guarantors of the borrowings and obligations under the Credit Agreement. All borrowings under the Credit Agreement are secured by substantially all assets of WCR and the guarantor subsidiaries. The Credit Agreement requires WCR to meet certain financial tests, including a leverage ratio and a fixed charge coverage ratio, as defined in the Credit Agreement. Subject to certain exceptions, the Credit Agreement contains covenants limiting the Company’s ability to (or to permit the guarantor subsidiaries to) merge or consolidate with, or engage in a sale of substantially all assets to, any party, but WCR or any guarantor subsidiary generally may nonetheless merge with another party if (i) WCR or guarantor subsidiary is the entity surviving such merger, and (ii) immediately after giving effect to such merger, no default shall have occurred and be continuing under the Credit Agreement. Subject to certain exceptions, the Credit Agreement also contains covenants limiting WCR’s ability to (or to permit the guarantor subsidiaries to) create liens on assets, incur additional indebtedness, make certain types of investments, and pay dividends or make certain other types of restricted payments, but WCR may nonetheless pay dividends to its shareholders if (a) there are no outstanding loans or unpaid interest under the revolving credit facility, and (b) no default shall have occurred and be continuing under the Credit Agreement. Some covenant waivers were granted by the financial institution during the period ended March 31, 2018. Assigned Leases The Company’s Cellular Retail segment has transferred operations of 37 locations to other dealers. Minimum lease payments of assigned or assumed non-cancelable operating leases related to transferred locations in which a release has not been obtained from the lessor are approximately $3,000,000 as of March 31, 2018. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events – Credit Facility On April 26, 2018 the Company entered into a Fourth Loan Modification Agreement related to the Credit Agreement with a financial institution, pursuant to which, among other things, the maturity date of the Credit Agreement was extended to April 21, 2020 and the financial covenants were modified by removing the consolidated leverage ratio and consolidated fixed charge coverage ratio covenants and adding a minimum liquidity covenant. Dividend Declared Our Board of Directors declared the following dividend: Date declared May 2, 2018 Record date May 17, 2018 Date paid May 24, 2018 Dividend per share of common stock $0.05 We evaluated all events or transactions that occurred after March 31, 2018 up through the date we issued these financial statements. During this period we did not have any material subsequent events that impacted our financial statements. |
Basis of Presentation, Nature21
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to the Condensed Consolidated Financial Statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2017. The condensed consolidated balance sheet at December 31, 2017, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP. |
Nature of Business | Nature of Business Western Capital Resources, Inc. (WCR) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. · Cellular Retail o PQH Wireless, Inc. (PQH) (100%) – operates 236 cellular retail stores as of March 31, 2018 (179 100% owned plus 57 through a 70% owned subsidiary), as an exclusive dealer of the Cricket brand. · Direct to Consumer o J & P Park Acquisitions, Inc. (JPPA) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. o J & P Real Estate, LLC (JPRE) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. · Consumer Finance o Wyoming Financial Lenders, Inc. (WFL) (100%) – owns and operates “payday” stores (40 as of March 31, 2018) in seven states (Colorado, Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. o Express Pawn, Inc. (EPI) (100%) – owns and operates retail pawn stores (three as of March 31, 2018) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. · Discontinued Operations 2017 - Franchise o AlphaGraphics, Inc. (AGI) – franchisor of domestic and international AlphaGraphics Business Centers which specialize in the planning, production, and management of visual communications for businesses and individuals throughout the world. AGI was sold on October 2, 2017. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” “EPI” or “AGI” are references only to those companies. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of the WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation, with the exception of the presentation of dividends received from discontinued subsidiary operations in the Condensed Consolidated Statement of Cash Flows. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the loans and accounts receivable allowance, carrying value and impairment of long-lived goodwill and intangible assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate and merchandise credits liability and deferred taxes and tax uncertainties. |
Reclassifications | Reclassifications Certain Statements of Income and Statements of Cash Flows reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three months ended March 31, 2018. In accordance with ASC 205-20-45-6, interest on debt required to be paid as a result of our Franchise segment disposal transaction has been allocated to discontinued operations and, in accordance with ASC 205-20-45-9, general corporate overhead has not been allocated to discontinued operations. These re-allocations and related income tax have been made in the presentation of our prior financial statements and accompanying notes. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP. This standard is effective for annual and interim periods beginning after December 15, 2017. The Company has adopted this standard as of January 1, 2018 applying it on a retrospective basis as of the date adopted and determined it had no impact on our financial condition, results of operations and consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), related to recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that annual period, with early adoption permitted and to be applied using a modified retrospective approach. The Company is currently evaluating the impact the ASU will have on our financial condition, results of operations and consolidated financial statements and expects its adoption to have a material impact on our financial condition due to a material addition of operating lease assets and liabilities in accordance with the ASU. No other new accounting pronouncements issued or effective during the fiscal year have had or are expected to have a material impact on the consolidated financial statements. |
Cash Equivalents and Investme22
Cash Equivalents and Investments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash equivalents or short- and long-term investments | The following table shows the Company’s cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash equivalents or short- and long-term investments as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Cash and cash equivalents Operating accounts $ 8,778,235 $ 10,524,923 Certificates of deposit - 750,000 Money Market Mutual Funds - U.S. Treasury obligations 347,048 10,020,896 Subtotal 9,125,283 21,295,819 Held to Maturity Investments Certificates of deposit 14,297,734 13,250,000 T-Bill Zero CPN 32,089,123 22,042,902 Subtotal 46,386,857 35,292,902 TOTAL $ 55,512,140 $ 56,588,721 |
Schedule of held to maturity securities | As of March 31, 2018, held to maturity securities consisted of the following: Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Gain (Loss) Estimated Fair Value Certificates of Deposit $ 14,250,000 $ 47,734 $ - $ 14,297,734 $ (87,544) $ 14,210,190 Treasury Bills $ 31,961,012 $ - $ 128,111 $ 32,089,123 $ (1,897) $ 32,087,226 |
Loans Receivable (Table)
Loans Receivable (Table) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Schedule of outstanding loans receivable aging | The Consumer Finance segment’s outstanding loans receivable aging was as follows: March 31, 2018 Payday Installment Pawn & Title Total Current $ 2,773,711 $ 190,525 $ 263,650 $ 3,227,886 1-30 166,548 38,121 - 204,669 31-60 108,590 23,535 - 132,125 61-90 145,640 15,484 - 161,124 91-120 97,171 9,294 - 106,465 121-150 112,903 3,299 - 116,202 151-180 110,344 1,683 - 112,027 3,514,907 281,941 263,650 4,060,498 Less Allowance (627,000) (71,000) - (698,000) $ 2,887,907 $ 210,941 $ 263,650 $ 3,362,498 December 31, 2017 Payday Installment Pawn & Title Total Current $ 3,550,077 $ 271,926 $ 318,361 $ 4,140,364 1-30 216,376 47,356 - 263,732 31-60 187,916 27,766 - 215,682 61-90 150,278 17,976 - 168,254 91-120 110,943 11,870 - 122,813 121-150 131,171 4,748 - 135,919 151-180 93,222 3,017 - 96,239 4,439,983 384,659 318,361 5,143,003 Less Allowance (745,000) (88,000) - (833,000) $ 3,694,983 $ 296,659 $ 318,361 $ 4,310,003 |
Loans Receivable Allowance (Tab
Loans Receivable Allowance (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Provision for Loan and Lease Losses [Abstract] | |
Schedule of loans receivable allowance | A rollforward of the Consumer Finance segment’s loans receivable allowance is as follows: Three Months Ended March 31, 2018 Year Ended December 31, 2017 Loans receivable allowance, beginning of period $ 833,000 $ 1,036,000 Provision for loan losses charged to expense 200,202 1,122,144 Charge-offs, net (335,202) (1,325,144) Loans receivable allowance, end of period $ 698,000 $ 833,000 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivables | A breakdown of accounts receivables by segment as of March 31, 2018 and December 31, 2017 are as follows: March 31, 2018 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 315,549 $ 1,920,585 $ 12,609 $ 2,248,743 Less allowance - (57,000) - (57,000) Net account receivable $ 315,549 $ 1,863,585 $ 12,609 $ 2,191,743 December 31, 2017 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 399,459 $ 365,476 $ 15,136 $ 780,071 Less allowance - (16,000) - (16,000) Net account receivable $ 399,459 $ 349,476 $ 15,136 $ 764,071 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Finished goods inventory net of allowance by segment consists of the following: Three Months Ended March 31, 2018 Year Ended December 31, 2017 Cellular Retail $ 5,742,969 $ 5,287,932 Direct to Consumer 3,457,377 2,988,052 Consumer Finance 810,357 854,858 $ 10,010,703 $ 9,130,842 |
Notes Payable - Long Term (Tabl
Notes Payable - Long Term (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | March 31, 2018 December 31, 2017 Subsidiary subordinated note pa yab le to seller with monthly interest only payments at 6%, guaranteed by PQH , maturing August 5 22 the . 789,216 789,216 Total 789,216 789,216 Less current maturities - - $ 789,216 $ 789,216 |
Cash Dividends (Tables)
Cash Dividends (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Dividends, Common Stock [Abstract] | |
Schedule of dividends payable | Date declared January 18, 2018 Record date February 9, 2018 Date paid February 14, 2018 Dividend per share of common stock $0.05 |
Other Operating Expense (Tables
Other Operating Expense (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Schedule of other operating expense | A breakout of other expense is as follows: For The Three Months Ended March 31, 2018 2017 Bank fees $ 502,564 $ 532,175 Collection costs 84,605 89,894 Insurance 205,295 240,740 Management and advisory fees 193,710 153,481 Professional and consulting fees 543,096 662,089 Supplies 217,436 324,136 Other 948,534 739,272 $ 2,695,240 $ 2,741,787 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of statements | The results of operations for this business have been reflected as discontinued operations in the unaudited Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2017, and consist of the following: Three Months Ended March 31, 2017 REVENUES OF DISCONTINUED OPERATIONS $ 3,943,309 COST OF REVENUES OF DISCONTINUED OPERATIONS 648,197 GROSS PROFIT OF DISCONTINUED OPERATIONS 3,295,112 OPERATING EXPENSES OF DISCONTINUED OPERATIONS: Salaries, wages and benefits 1,098,739 Occupancy 42,764 Advertising, marketing and development 102,597 Depreciation 24,092 Amortization 86,118 Other 789,700 2,144,010 OPERATING INCOME OF DISCONTINUED OPERATIONS 1,151,102 OTHER INCOME (EXPENSE) OF DISCONTINUED OPERATIONS Interest expense (80,781) INCOME BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS 1,070,321 PROVISION FOR INCOME TAXES OF DISCONTINUED OPERATIONS 412,000 NET INCOME OF DISCONTINUED OPERATIONS 658,321 Less net income of discontinued operations attributable to noncontrolling interests (5,085) NET INCOME OF DISCONTINUED OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS $ 653,236 The cash flow activity from discontinued operations have been reflected as discontinued operations in the Consolidated Statements of Cash Flows for the three month period ended March, 2017, and consist of the following: Three Months Ended March 31, 2017 DISCONTINUED OPERATING ACTIVITIES Net income of discontinued operations $ 658,321 Adjustments to reconcile net income of discontinued operations to net cash provided by operating activities of discontinued operations: Depreciation 24,092 Amortization 86,118 Share based compensation 2,243 Deferred income taxes (29,000) Changes in operating assets and liabilities: Accounts receivable (606,126) Prepaid expenses and other assets 114,753 Accounts payable and accrued expenses (597,356) Deferred revenue and other current liabilities 682,016 Other liabilities – long-term 19,192 Net cash provided by operating activities of discontinued operations $ 354,253 FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS Principal payments on capital lease obligations $ (7,620) Dividends to shareholders (3,170,728) Net cash used in financing activities of discontinued operations $ (3,178,348) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment information | Segment information related to the three month periods ended March 31, 2018 and 2017 for continuing operations is presented below: Three Months Ended March 31, 2018 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 17,107 $ 10,681 $ 2,671 $ - $ 30,459 Net income (loss) $ (375) $ 329 $ 331 $ (271) $ 14 Total segment assets $ 27,567 $ 15,092 $ 7,003 $ 54,043 $ 103,705 Expenditures for segmented assets $ 117 $ 310 $ - $ - $ 427 Three Months Ended March 31, 2017 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Discontinued Operations Total Revenue from external customers $ 17,045 $ 11,904 $ 2,743 $ - $ - $ 31,692 Net income (loss) $ 669 $ 866 $ 254 $ (180) $ - $ 1,609 Total segment assets $ 24,794 $ 15,429 $ 8,047 $ 4,076 $ 8,879 $ 61,225 Expenditures for segmented assets $ 673 $ 81 $ - $ - $ - $ 754 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events Tables | |
Schedule of dividends payable | Our Board of Directors declared the following dividend: Date declared May 2, 2018 Record date May 17, 2018 Date paid May 24, 2018 Dividend per share of common stock $0.05 |
Basis of Presentation, Nature33
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Details Narrative) | Mar. 31, 2018USD ($)N |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | |
Number of stores | 236 |
Percentage of equity method investment | 100.00% |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | PQH South LLC. [Member] | |
Number of stores | 57 |
Percentage of equity method investment | 70.00% |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | PQH Other Subsidiary [Member] | |
Number of stores | 179 |
Percentage of equity method investment | 100.00% |
JPPA [Member] | Direct to Consumer [Member] | |
Percentage of equity method investment | 100.00% |
JPRE [Member] | Direct to Consumer [Member] | |
Percentage of equity method investment | 100.00% |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | |
Number of stores | 40 |
Percentage of equity method investment | 100.00% |
Number of states in which entity operates | 7 |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Minimum [Member] | Payday [Member] | |
Non-recourse debt | $ | $ 100 |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Minimum [Member] | Installment [Member] | |
Non-recourse debt | $ | 300 |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Maximum [Member] | Payday [Member] | |
Non-recourse debt | $ | 500 |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Maximum [Member] | Installment [Member] | |
Non-recourse debt | $ | $ 800 |
Express Pawn, Inc. [Member] | Consumer Finance [Member] | |
Number of stores | 3 |
Percentage of equity method investment | 100.00% |
Risks Inherent in the Operati34
Risks Inherent in the Operating Environment (Details Narrative) | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Description of attrition rate | The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate. |
Cash Equivalents and Investme35
Cash Equivalents and Investments (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Cash and cash equivalents | ||||
Operating accounts | $ 8,778,235 | $ 10,524,923 | ||
Certificates of deposit | 750,000 | |||
Money Market Mutual Funds - U.S. Treasury obligations | 347,048 | 10,020,896 | ||
Subtotal | 9,125,283 | 21,295,819 | $ 11,208,398 | $ 14,159,975 |
Held to Maturity Investments | ||||
Certificates of deposit | 14,297,734 | 13,250,000 | ||
T-Bill Zero CPN | 32,089,123 | 22,042,902 | ||
Subtotal | 46,386,857 | 35,292,902 | ||
TOTAL | $ 55,512,140 | $ 56,588,721 |
Cash Equivalents and Investme36
Cash Equivalents and Investments (Details 1) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Held to Maturity Investments | |
Certificates of deposit (Cost) | $ 14,250,000 |
Certificates of deposit (Accrued Interest) | 47,734 |
Certificates of deposit (Amortized Cost) | 14,297,734 |
Certificates of deposit (Unrealized Gain (Loss)) | (87,544) |
Certificates of deposit (Estimated Fair Value) | 14,210,190 |
T-Bill Zero CPN (Cost) | 31,961,012 |
T-Bill Zero CPN (Amortized Discount) | 128,111 |
T-Bill Zero CPN (Amortized cost) | 32,089,123 |
T-Bill Zero CPN (Unrealized Gain (Loss)) | (1,897) |
T-Bill Zero CPN (Estimated Fair Value) | $ 32,087,226 |
Loans Receivable (Details)
Loans Receivable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | $ 4,060,498 | $ 5,143,003 |
Less Allowance | (698,000) | (833,000) |
Notes, Loans and Financing Receivable, Net, current | 3,362,498 | 4,310,003 |
Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 3,514,907 | 4,439,983 |
Less Allowance | (627,000) | (745,000) |
Notes, Loans and Financing Receivable, Net, current | 2,887,907 | 3,694,983 |
Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 281,941 | 384,659 |
Less Allowance | (71,000) | (88,000) |
Notes, Loans and Financing Receivable, Net, current | 210,941 | 296,659 |
Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 263,650 | 318,361 |
Less Allowance | ||
Notes, Loans and Financing Receivable, Net, current | 263,650 | 318,361 |
Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 3,227,886 | 4,140,364 |
Current [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,773,711 | 3,550,077 |
Current [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 190,525 | 271,926 |
Current [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 263,650 | 318,361 |
1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 204,669 | 263,732 |
1 To 30 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 166,548 | 216,376 |
1 To 30 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 38,121 | 47,356 |
1 To 30 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 132,125 | 215,682 |
31 to 60 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 108,590 | 187,916 |
31 to 60 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 23,535 | 27,766 |
31 to 60 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 161,124 | 168,254 |
61 To 90 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 145,640 | 150,278 |
61 To 90 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 15,484 | 17,976 |
61 To 90 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 106,465 | 122,813 |
91 To 120 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 97,171 | 110,943 |
91 To 120 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 9,294 | 11,870 |
91 To 120 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 116,202 | 135,919 |
121 To 150 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 112,903 | 131,171 |
121 To 150 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 3,299 | 4,748 |
121 To 150 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
151 To 180 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 112,027 | 96,239 |
151 To 180 Days [Member] | Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 110,344 | 93,222 |
151 To 180 Days [Member] | Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 1,683 | 3,017 |
151 To 180 Days [Member] | Pawn Title [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current |
Loans Receivable Allowance (Det
Loans Receivable Allowance (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||
Loans receivable allowance, beginning of period | $ 833,000 | $ 1,036,000 |
Provision for loan losses charged to expense | 200,202 | 1,122,144 |
Charge-offs, net | (335,202) | (1,325,144) |
Loans receivable allowance, end of period | $ 698,000 | $ 833,000 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable | $ 2,248,743 | $ 780,071 |
Less allowance | (57,000) | (16,000) |
Net account receivable | 2,191,743 | 764,071 |
Cellular Retail [Member] | ||
Accounts receivable | 315,549 | 399,459 |
Less allowance | ||
Net account receivable | 315,549 | 399,459 |
Direct to Consumer [Member] | ||
Accounts receivable | 1,920,585 | 365,476 |
Less allowance | (57,000) | (16,000) |
Net account receivable | 1,863,585 | 349,476 |
Consumer Finance [Member] | ||
Accounts receivable | 12,609 | 15,136 |
Less allowance | ||
Net account receivable | $ 12,609 | $ 15,136 |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Finished Goods | ||
TOTAL | $ 10,010,703 | $ 9,130,842 |
Cellular Retail [Member] | ||
Finished Goods | ||
TOTAL | 5,742,969 | 5,287,932 |
Direct to Consumer [Member] | ||
Finished Goods | ||
TOTAL | 3,457,377 | 2,988,052 |
Consumer Finance [Member] | ||
Finished Goods | ||
TOTAL | $ 810,357 | $ 854,858 |
Notes Payable - Long Term (Deta
Notes Payable - Long Term (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Total | $ 789,216 | $ 789,216 |
Less current maturities | ||
Notes payable, noncurrent | 789,216 | 789,216 |
Note Payable to Seller [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 789,216 | $ 789,216 |
Notes Payable - Long Term (De42
Notes Payable - Long Term (Details Narrative) - USD ($) | Apr. 22, 2016 | Mar. 31, 2018 |
Debt Instrument [Line Items] | ||
Remaining maximum borrowing capacity | $ 12,000,000 | |
Note Payable to Seller [Member] | ||
Debt Instrument [Line Items] | ||
Maturity date | Aug. 5, 2022 | |
Stated interest rate | 6.00% | |
Credit Facilities Overview [Member] | ||
Debt Instrument [Line Items] | ||
Maturity date | Apr. 21, 2018 | |
Description of variable rate | one-month LIBOR plus 3.50% | |
Equity debt | $ 3,000,000 | |
Credit Facilities Overview [Member] | Acquisition Loan Facility [Member] | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 9,000,000 | |
Description of maturity date | Mature five years from the date of advance. |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Taxes Details Narrative | ||
Provision for income taxes for continuing operations (in percent) | 121.30% | 37.10% |
Cash Dividends (Details)
Cash Dividends (Details) - Dividends [Member] | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Date Declared | Jan. 18, 2018 |
Record Date | Feb. 9, 2018 |
Payment Date | Feb. 14, 2018 |
Dividend Per Share | $ 0.05 |
Other Operating Expense (Detail
Other Operating Expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Other Income and Expenses [Abstract] | ||
Bank fees | $ 502,564 | $ 532,175 |
Collection costs | 84,605 | 89,894 |
Insurance | 205,295 | 240,740 |
Management and advisory fees | 193,710 | 153,481 |
Professional and consulting fees | 543,096 | 662,089 |
Supplies | 217,436 | 324,136 |
Other | 948,534 | 739,272 |
Total other operating expenses | $ 2,695,240 | $ 2,741,787 |
Discontinued Operations (Detail
Discontinued Operations (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
OTHER INCOME (EXPENSE) OF DISCONTINUED OPERATIONS | |
INCOME BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS | $ 1,070,321 |
PROVISION FOR INCOME TAXES OF DISCONTINUED OPERATIONS | 412,000 |
NET INCOME OF DISCONTINUED OPERATIONS | 658,321 |
Less net income of discontinued operations attributable to noncontrolling interests | (5,085) |
Franchise Segment Discontinued Operations [Member] | |
REVENUES OF DISCONTINUED OPERATIONS | 3,943,309 |
COST OF REVENUES OF DISCONTINUED OPERATIONS | 648,197 |
GROSS PROFIT OF DISCONTINUED OPERATIONS | 3,295,112 |
OPERATING EXPENSES OF DISCONTINUED OPERATIONS: | |
Salaries, wages and benefits | 1,098,739 |
Occupancy | 42,764 |
Advertising, marketing and development | 102,597 |
Depreciation | 24,092 |
Amortization | 86,118 |
Other | 789,700 |
TOTAL OPERATING EXPENSES OF DISCONTINUED OPERATIONS | 2,144,010 |
OPERATING INCOME OF DISCONTINUED OPERATIONS | 1,151,102 |
OTHER INCOME (EXPENSE) OF DISCONTINUED OPERATIONS | |
Interest expense | (80,781) |
INCOME BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS | 1,070,321 |
PROVISION FOR INCOME TAXES OF DISCONTINUED OPERATIONS | 412,000 |
NET INCOME OF DISCONTINUED OPERATIONS | 658,321 |
Less net income of discontinued operations attributable to noncontrolling interests | (5,085) |
NET INCOME OF DISCONTINUED OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | $ 653,236 |
Discontinued Operations (Deta47
Discontinued Operations (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Adjustments to reconcile net income of discontinued operations to net cash provided by operating activities of discontinued operations: | ||
Depreciation | $ 558,989 | $ 326,196 |
Amortization | 214,808 | 54,401 |
Share based compensation | 8,899 | |
Deferred income taxes | (77,000) | 66,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,427,672) | (1,085,312) |
Prepaid expenses and other assets | 157,752 | (831,683) |
Accounts payable and accrued expenses | 93,186 | 298,300 |
Deferred revenue and other current liabilities | (65,215) | (15,825) |
Net cash provided by operating activities of discontinued operations | 354,253 | |
FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS | ||
Dividends to shareholders | (469,550) | (234,775) |
Net cash used in financing activities of discontinued operations | (3,178,348) | |
Franchise Segment Discontinued Operations [Member] | ||
DISCONTINUED OPERATING ACTIVITIES | ||
Net income of discontinued operations | 658,321 | |
Adjustments to reconcile net income of discontinued operations to net cash provided by operating activities of discontinued operations: | ||
Depreciation | 24,092 | |
Amortization | 86,118 | |
Share based compensation | 2,243 | |
Deferred income taxes | (29,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (606,126) | |
Prepaid expenses and other assets | 114,753 | |
Accounts payable and accrued expenses | (597,356) | |
Deferred revenue and other current liabilities | 682,016 | |
Other liabilities - long-term | 19,192 | |
Net cash provided by operating activities of discontinued operations | 354,253 | |
FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS | ||
Principal payments on capital lease obligations | (7,620) | |
Dividends to shareholders | (3,170,728) | |
Net cash used in financing activities of discontinued operations | $ (3,178,348) |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Revenues from external customers | $ 30,458,759 | $ 31,691,697 | |
Net income (loss) | 14,074 | 1,609,003 | |
Total segment assets | 103,705,355 | 61,225,000 | $ 104,244,156 |
Expenditures for segmented assets | 427,000 | 754,000 | |
Cellular Retail [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 17,107,000 | 17,045,000 | |
Net income (loss) | (375,000) | 669,000 | |
Total segment assets | 27,567,000 | 24,794,000 | |
Expenditures for segmented assets | 117,000 | 673,000 | |
Direct to Consumer [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 10,681,000 | 11,904,000 | |
Net income (loss) | 329,000 | 866,000 | |
Total segment assets | 15,057,000 | 15,429,000 | |
Expenditures for segmented assets | 310,000 | 81,000 | |
Consumer Finance [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | 2,671,000 | 2,743,000 | |
Net income (loss) | 331,000 | 254,000 | |
Total segment assets | 7,003,000 | 8,047,000 | |
Expenditures for segmented assets | |||
Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | |||
Net income (loss) | (271,000) | (180,000) | |
Total segment assets | 54,078,000 | 4,076,000 | |
Expenditures for segmented assets | |||
Discontinued Operations [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues from external customers | |||
Net income (loss) | |||
Total segment assets | 8,879,000 | ||
Expenditures for segmented assets |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended | |
Mar. 31, 2018USD ($)N | Mar. 31, 2017USD ($) | |
Cellular Retail [Member] | ||
Number of locations transferred | N | 37 | |
Minimum lease payments for transfrred location | $ 3,000,000 | |
Other Employment Agreement [Member] | ||
Bonus arrangement current | $ 73,000 | $ 256,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | May 02, 2018$ / shares |
Subsequent Event [Line Items] | |
Date declared | May 2, 2018 |
Record Date | May 17, 2018 |
Payment Date | May 24, 2018 |
Dividend Per Share | $ 0.05 |