Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 30, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | WESTERN CAPITAL RESOURCES, INC. | ||
Entity Central Index Key | 0001363958 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity File Number | 000-52015 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11,057,000 | ||
Entity Common Stock, Shares Outstanding | 9,265,778 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 27,132,540 | $ 16,724,983 |
Short-term investments | 14,756,665 | 22,394,748 |
Loans receivable (less allowance for losses of $673,000 and $818,000, respectively) | 3,860,411 | 4,111,842 |
Accounts receivable (less allowance for losses of $13,000 and $25,000, respectively) | 517,476 | 493,208 |
Inventory (less reserve of $1,065,000 and $670,000, respectively) | 8,330,691 | 8,467,512 |
Prepaid income taxes | 512,099 | |
Prepaid expenses and other | 2,679,859 | 2,954,794 |
Escrow and other receivables | 3,312,984 | |
TOTAL CURRENT ASSETS | 57,277,642 | 58,972,170 |
INVESTMENTS | 1,500,000 | 1,000,000 |
PROPERTY AND EQUIPMENT, net | 9,725,043 | 9,945,826 |
OPERATING LEASE RIGHT-OF-USE ASSETS | 12,344,894 | |
INTANGIBLE ASSETS, net | 4,041,650 | 4,167,110 |
LOAN RECEIVABLE | 694,987 | |
OTHER | 525,884 | 558,209 |
GOODWILL | 5,796,528 | 5,796,528 |
TOTAL ASSETS | 91,906,628 | 80,439,843 |
CURRENT LIABILITIES | ||
Accounts payable | 7,710,222 | 10,106,182 |
Accrued payroll | 2,572,331 | 1,709,868 |
Current portion operating lease liabilities | 5,079,745 | |
Other current liabilities | 1,276,613 | 1,291,713 |
Income taxes payable | 243,149 | |
Current portion notes payable | 65,414 | |
Current portion finance lease obligations | 1,161 | 51,211 |
Deferred revenue | 794,830 | 1,012,772 |
TOTAL CURRENT LIABILITIES | 17,743,465 | 14,171,746 |
LONG-TERM LIABILITIES | ||
Notes payable | 1,019,837 | 789,216 |
Operating lease liabilities, net of current portion | 7,444,789 | |
Deferred income taxes | 385,000 | 795,000 |
TOTAL LONG-TERM LIABILITIES | 8,849,626 | 1,584,216 |
TOTAL LIABILITIES | 26,593,091 | 15,755,962 |
COMMITMENTS AND CONTINGENCIES (Note 21) | ||
WESTERN SHAREHOLDERS' EQUITY | ||
Common stock, $0.0001 par value, 12,500,000 shares authorized, 9,265,778 and 9,388,677 issued and outstanding as of December 31, 2019 and December 31, 2018, respectively. | 927 | 939 |
Additional paid-in capital | 29,031,741 | 29,031,741 |
Retained earnings | 33,706,035 | 33,774,293 |
TOTAL WESTERN SHAREHOLDERS' EQUITY | 62,738,703 | 62,806,973 |
NONCONTROLLING INTERESTS | 2,574,834 | 1,876,908 |
TOTAL EQUITY | 65,313,537 | 64,683,881 |
TOTAL LIABILITIES AND EQUITY | $ 91,906,628 | $ 80,439,843 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Loans receivable, allowance for losses | $ 673,000 | $ 818,000 |
Accounts receivable, allowance for losses | 13,000 | 25,000 |
Inventory, allowance for losses | $ 1,065,000 | $ 670,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 12,500,000 | 12,500,000 |
Common stock, issued | 9,265,778 | 9,388,677 |
Common stock, outstanding | 9,265,778 | 9,388,677 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | ||
Total Revenues | $ 116,914,541 | $ 114,264,960 |
COST OF REVENUES | ||
Cost of sales | 49,518,838 | 47,620,763 |
Provisions for loans receivable losses | 975,938 | 1,241,638 |
Total Cost of Revenues | 50,494,776 | 48,862,401 |
GROSS PROFIT | 66,419,765 | 65,402,559 |
OPERATING EXPENSES | ||
Salaries, wages and benefits | 33,813,783 | 34,242,187 |
Occupancy | 11,038,556 | 12,406,166 |
Advertising, marketing and development | 6,857,809 | 7,824,393 |
Depreciation | 1,811,918 | 1,899,114 |
Amortization | 699,636 | 794,688 |
Other | 8,448,241 | 10,818,109 |
Total Operating Expenses | 62,669,943 | 67,984,657 |
OPERATING INCOME (LOSS) | 3,749,822 | (2,582,098) |
OTHER INCOME (EXPENSES): | ||
Dividend and interest income | 729,166 | 631,670 |
Interest expense | (115,438) | (189,281) |
Total Other Income (Expenses) | 613,728 | 442,389 |
INCOME (LOSS) BEFORE INCOME TAXES | 4,363,550 | (2,139,709) |
PROVISION FOR INCOME TAX EXPENSE (BENEFIT) | 908,000 | (619,000) |
NET INCOME (LOSS) | 3,455,550 | (1,520,709) |
LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | (1,135,174) | (720,422) |
NET INCOME (LOSS) ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | $ 2,320,376 | $ (2,241,131) |
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS | ||
Basic and diluted (in dollars per share) | $ 0.25 | $ (0.24) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic and diluted (in shares) | 9,369,891 | 9,390,355 |
Sales and Associated Fees [Member] | ||
REVENUES | ||
Total Revenues | $ 91,769,074 | $ 88,895,105 |
Financing Fees and Interest [Member] | ||
REVENUES | ||
Total Revenues | 8,513,084 | 8,922,780 |
Other Revenue [Member] | ||
REVENUES | ||
Total Revenues | $ 16,632,383 | $ 16,447,075 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Noncontrolling Interests [Member] | Total |
Balance at beginning at Dec. 31, 2017 | $ 939 | $ 29,031,741 | $ 37,903,204 | $ 1,757,686 | $ 68,693,570 |
Balance at beginning (in shares) at Dec. 31, 2017 | 9,390,997 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net Income (Loss) | (2,241,131) | 720,422 | (1,520,709) | ||
Noncontrolling interest equity contribution | |||||
Stock redemption | (9,697) | (9,697) | |||
Stock redemption (in shares) | (2,320) | ||||
Dividends | (1,878,083) | (601,200) | (2,479,283) | ||
Balance at end at Dec. 31, 2018 | $ 939 | 29,031,741 | 33,774,293 | 1,876,908 | 64,683,881 |
Balance at end (in shares) at Dec. 31, 2018 | 9,388,677 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net Income (Loss) | 2,320,376 | 1,135,174 | 3,455,550 | ||
Noncontrolling interest equity contribution | 499,352 | (281,906) | |||
Stock redemption | $ (12) | (513,419) | (513,431) | ||
Stock redemption (in shares) | (122,899) | ||||
Dividends | (1,875,215) | (936,600) | (2,811,815) | ||
Balance at end at Dec. 31, 2019 | $ 927 | $ 29,031,741 | $ 33,706,035 | $ 2,574,834 | $ 65,313,537 |
Balance at end (in shares) at Dec. 31, 2019 | 9,265,778 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net Income (Loss) | $ 3,455,550 | $ (1,520,709) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 1,811,918 | 1,899,114 |
Amortization | 699,636 | 794,688 |
Amortization of operating lease right-of-use assets | 5,710,933 | |
Deferred income taxes | (410,000) | (661,000) |
Loss (gain) on disposals | (86,467) | 941,367 |
Changes in operating assets and liabilities: | ||
Loans receivable | 251,431 | 198,161 |
Accounts receivable | (780) | 270,863 |
Inventory | 366,704 | 582,282 |
Prepaid expenses and other assets | 1,259,354 | 242,628 |
Operating lease liabilities | (6,352,423) | |
Accounts payable and accrued expenses | (1,648,156) | (18,812,565) |
Deferred revenue and other current liabilities | (233,042) | (221,932) |
Net cash and cash equivalents provided by (used in) operating activities | 4,824,658 | (16,287,103) |
INVESTING ACTIVITIES | ||
Purchase of investments | (20,907,047) | (29,817,011) |
Proceeds from held-to-maturity investments | 28,045,130 | 41,711,012 |
Purchase of property and equipment | (712,469) | (960,883) |
Acquisition of stores, net of cash acquired | (602,200) | (76,707) |
Advances on note receivable, net | (694,987) | |
Release of escrowed funds | 3,312,984 | 3,435,963 |
Proceeds from the disposal of property, plant and equipment | 1,307,500 | 12,000 |
Net cash and cash equivalents provided by investing activities | 9,748,911 | 14,304,374 |
FINANCING ACTIVITIES | ||
Payments on notes payable - short-term, net | (51,992) | |
Payments on notes payable - long-term | (1,072,622) | |
Common stock redemption | (513,431) | (9,697) |
Payments on finance leases | (50,050) | (47,135) |
Contributions from noncontrolling interests | 281,906 | |
Distributions to noncontrolling interests | (936,600) | (601,200) |
Payments of dividends | (1,875,215) | (1,878,083) |
Net cash and cash equivalents used in financing activities | (4,166,012) | (2,588,107) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 10,407,557 | (4,570,836) |
CASH AND CASH EQUIVALENTS | ||
Beginning of year | 16,724,983 | 21,295,819 |
End of year | 27,132,540 | 16,724,983 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Income taxes paid | 575,501 | 19,284,007 |
Interest paid | 94,723 | 124,817 |
Noncash investing and financing activities: | ||
Assets received in acquisition (See Note 19) | 6,235,183 | |
Liabilities assumed in acquisition (See Note 19) | 4,785,280 | |
Note payable assumed in acquisition (See Note 19) | 1,350,499 | |
Noncontrolling interest contribution to subsidiary (See Note 19) | 217,446 | |
Right-of-use assets obtained, operating lease obligations incurred | 5,786,575 | |
Right-of-use assets and operating lease obligation disposals | $ 2,218,787 |
Basis of Presentation, Nature o
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
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 / Nature of Business Western Capital Resources, Inc. ("WCR") is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. ● Cellular Retail ○ PQH Wireless, Inc. ("PQH") (100%) – operates 222 cellular retail stores as of December 31, 2019 (108 100% owned plus 114 through its controlled but less than 100% owned subsidiaries), exclusively as an authorized retailer of the Cricket brand. ● Direct to Consumer ○ J&P Park Acquisitions, Inc. ("JPPA") (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. ○ J&P Real Estate, LLC ("JPRE") (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. ● Consumer Finance ○ Wyoming Financial Lenders, Inc. ("WFL") (100%) – owns and operates “payday” stores (38 as of December 31, 2019, two of which are located within the Company’s retail pawn stores) in six states (Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. ○ Express Pawn, Inc. ("EPI") (100%) – owns and operates retail pawn stores (three as of December 31, 2019) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” or “EPI” are references only to those companies. Basis of Consolidation The consolidated financial statements include the accounts of WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill 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. Revenue Recognition On January 1, 2018, we adopted Topic 606, as further disclosed later in this Note 1. Also refer to Notes 17, “Revenue,” and 20, “Segment Information”, for additional information, including the disaggregation of revenue by segment. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Fair Value of Financial Measurement In determining fair value measurements, the Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. The topic provides a consistent definition of fair value focusing on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The topic also prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The three level hierarchy is as follows: Level 1 - Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date. Level 2 - Pricing inputs are quoted prices for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 3 - Pricing inputs are unobservable for the assets and liabilities, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s held to maturity securities are comprised of a U.S Treasury zero coupon T-Bill and certificates of deposit. The Company’s available for sale securities consist of mutual funds held in money market mutual funds in a brokerage account, which are classified as cash equivalents. The fair value of these investments is based on quoted prices from recognized pricing services, or in the case of mutual funds, at their closing published net asset value. The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Company’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During the years 2019 and 2018, there were no transfers between levels. Receivables and Loss Allowance Cellular Retail Receivables for noncash sales are recorded when possession of products is taken by the customer or services are completed, represent claims against third parties that will be settled in cash, include unsettled credit card charges, and are included in accounts receivable. The carrying value of accounts receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. Direct to Consumer Receivables for noncash sales are recorded when orders are shipped, represent claims against third parties that will be settled in cash, include unsettled credit card charges and wholesales sales on terms, and are included in accounts receivable. The carrying value of accounts receivable, net of the allowance for doubtful accounts, represents their estimated net realizable value. The allowance for doubtful accounts is estimated based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due receivable balances are written-off when internal collection efforts have been unsuccessful in collecting the amount due. Consumer Finance Included in loans receivable are unpaid principal, interest and fee balances of payday, installment and pawn loans that have not reached their maturity date, and “late” payday loans that have reached maturity within the last 180 days and have remaining outstanding balances. Late payday loans generally are unpaid loans where a customer’s personal check has been deposited and the check has been returned due to non-sufficient funds in the customer’s account, a closed account, or other reasons. All returned items are charged-off after 180 days, as collections after that date have not been significant. Loans are carried at cost plus accrued interest or fees less payments made and a loans receivable allowance. The Company does not specifically reserve for any individual payday or installment loan. The Company aggregates loan types for purposes of estimating the loss allowance using a methodology that analyzes historical portfolio statistics and management’s judgment regarding recent trends noted in the portfolio. This methodology takes into account several factors, including (1) the amount of loan principal, interest and fee outstanding, (2) historical charge offs from loans that originated during the last 24 months, (3) current and expected collection patterns and (4) current economic trends. The Company utilizes a software program to assist with the tracking of its historical portfolio statistics. A loan loss allowance is maintained for anticipated losses for payday and installment loans based primarily on our historical percentages by loan type of net charge offs, applied against the applicable balance of loan principal, interest and fees outstanding. The Company also periodically performs a look-back analysis on its loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. The Company is aware that as conditions change, it may also need to make additional allowances in future periods. Loan losses or charge-offs of pawn loans are not recorded because the value of the collateral exceeds the loan amount. Inventory Cellular Retail Inventory, consisting of phones and accessories, is stated at cost, determined on the specific identification and weighted-average cost basis, respectively. Direct to Consumer Inventory is valued at the lower of cost or market using the weighted-average method of determining cost. Consumer Finance Merchandise inventory is stated at the lower of cost or market. The principal amount of an unpaid loan becomes the inventory cost for forfeited collateral. Long-Lived Assets Property and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets as follows: ● Computer equipment and software 3 – 10 years ● Improvements and equipment 3 – 15 years ● Building 39 years The cost of maintenance and repairs is charged to operations as incurred while renewals and betterments are capitalized. The Company capitalizes certain internal costs, including payroll costs, incurred in connection with the development of software for internal use. These costs are capitalized beginning when the Company has entered the application development stage. The capitalization of these costs ceases when the software is substantially complete and ready for its intended use. Only costs incurred for enhancements that are expected to result in additional features or functionality are capitalized and expensed over the estimated useful life of the enhancements. Finite-lived intangible assets represent the fair values management assigned to assets acquired through business acquisitions, are amortized over periods of three to 15 years based on management’s estimates of the useful life of the asset and are subject to impairment evaluations. The Company assesses the possibility of impairment of long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry events or trends. Goodwill Goodwill represents the excess of acquisition cost over the fair value of identifiable finite lived net assets acquired and is not amortized. Goodwill is tested for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate potential impairment. The Company tests for goodwill impairment at the reporting unit level, which aligns with the Company’s segments. The Company performs a qualitative assessment to determine if a quantitative impairment test is necessary. If quantitative testing is necessary based on a qualitative assessment, we apply a fair value test. This fair value test involves a two-step process. The first step is to compare the carrying value of our net assets to our fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of the impairment, if any. Merchandise Credits and Gift Card Liabilities Direct to Consumer The Company maintains a liability for unredeemed gift cards, gift certificates and merchandise credits until the earlier of redemption, escheatment or a maximum of two years. The Company has concluded based on historical redemption trends that the likelihood of these liabilities being redeemed beyond two years from the date of issuance is remote. The liability is also reserved for estimated redemption rates which management bases on historical trends. Advertising, Marketing and Development Costs Direct to Consumer The Company expenses advertising costs as they are incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits, not to exceed six months. Direct-response advertising consists primarily of catalog book production, printing, and postage costs. Prepaid advertising costs at December 31, 2019 and 2018 were $0.67 million and $0.88 million, respectively. Consumer Finance The costs of advertising and marketing are expensed as incurred. Stock-based Compensation The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements. Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimate. Income Taxes Deferred income taxes reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts, based on enacted tax laws and statutory tax rates applicable in the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents taxes paid or payable for the current year and changes during the year in deferred tax assets and liabilities. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed by dividing the income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period, including stock options, using the treasury stock method. Options to purchase 65,000 shares granted under the 2015 Stock Incentive Plan effective February 6, 2015 (see Note 15) were outstanding at December 31, 2019. These options have a strike price in excess of the market price as of December 31, 2019 and 2018, were antidilutive and therefore not included in the computation of diluted earnings per share. Thus, there were no dilutive common shares as of December 31, 2019 and 2018. Fair Value of Financial Instruments The amounts reported in the balance sheets for cash, short-term investments, accounts and loans receivable, inventory, and accounts payable are short-term in nature and their carrying values approximate fair values. The amounts reported in the balance sheets for notes payable are both long-term and short-term and for investments are long-term and their carrying value approximates fair value. Reclassifications Certain Statement of Cash Flows reclassifications have been made in the presentation of our prior financial statements to conform to the presentation as of and for the year ended December 31, 2019 Recent Accounting Pronouncements 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. Under the new guidance, lessees are required to recognize the following for all leases: (1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. All entities must classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company adopted ASU 2016-02 and ASC 842 using the modified retrospective method on January 1, 2019. See Note 9 for further disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), related to the measurement of credit losses on financial instruments. The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The ASU is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual period, with early adoption permitted and the standard to be applied using a modified retrospective approach. The Company does not believe adoption of ASU 2016-13 will have a material impact on our financial condition, results of operations or consolidated financial statements In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect to not separate non-lease components from leases when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company adopted certain options available under ASU 2018-11on January 1, 2019. See Note 9 for further disclosures. 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 | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Risks Inherent in the Operating Environment | 2. Risks Inherent in the Operating Environment – Regulatory The Company’s Consumer Finance segment activities are highly regulated under numerous federal, state, and local laws, regulations and rules, which are subject to change. New laws, regulations or rules could be enacted or issued, interpretations of existing laws, regulations or rules may change and enforcement action by regulatory agencies may intensify. Over the past several years, consumer advocacy groups and certain media reports have advocated governmental and regulatory action to prohibit or severely restrict sub-prime lending activities of the kind conducted by the Company. After several years of research, debate, and public hearings, in October 2017 the U.S. Consumer Financial Protection Bureau ("CFPB") adopted a new rule for payday lending. The rule, originally scheduled to go into effect in August 2019, would 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 if the rule is implemented as originally adopted. However, in January 2018, the CFPB issued a statement that it intends to “reconsider” the regulation. The most current information from the CFPB website states the proposals it is considering includes rescinding the mandatory underwriting provisions contained in the rule and to delay the August 19, 2019 compliance date for the other provisions to November 19, 2020. 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. Consumer advocacy groups in many states are actively seeking state law changes which would effectively end the viability of a payday loan business, including Nebraska where we generate approximately 30% of our payday lending revenue or approximately 2% of our consolidated revenue. If these groups are successful in Nebraska, we will likely cease payday lending activities in Nebraska. 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 local, state or federal laws or regulations could result in fines, litigation, closure of one or more store locations or negative publicity. Any such change or failure would have a corresponding impact on the Company’s and segment’s results of operations and financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, or a decrease in operating income through increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects due to lost or decreased operating income or if negative publicity effects its ability to obtain additional financing as needed. In addition, the passage of federal, state or local laws and regulations or changes in interpretations of them could, at any point, essentially prohibit the Consumer Finance segment from conducting its lending business in its current form. Any such legal or regulatory change would certainly have a material and adverse effect on the Company, its operating results, financial condition and prospects, and perhaps even the viability of the Consumer Finance segment. Concentrations The Company has demand deposits at financial institutions, often times in excess of the limit for insurance by the Federal Deposit Insurance Corporation. As of December 31, 2019, the Company had demand deposits in excess of insurance amounts of approximately $6.77 million. Loans receivable in the Consumer Finance segment are concentrated in the sub-prime market and geographically, primarily in the Midwest. For the years ended December 31, 2019 and 2018, the Consumer Finance segment had geographic economic and regulatory risk concentrations (shown as a percentage of the Consumer Finance segment’s revenue by state when 10% or more) as follows: Consumer Finance Segment 2019 % of Revenues 2018 % of Revenues Nebraska 35 % 36 % North Dakota 25 % 23 % Iowa 16 % 17 % Wyoming 14 % 14 % The Company’s Cellular Retail segment is an authorized retailer for Cricket Wireless. As an authorized retailer operating exclusively for a single carrier, the Company is subject to a number of concentrations, including revenues from a single brand, a single supplier for phones, a single operating system provider and select third party processors. Our Direct to Consumer subsidiary JPPA has an agreement with a third-party wholesale grower that is in effect until 2022. The grower has agreed to perform research for JPPA and maintain JPPA’s research crop for product to be sold through 2022. In exchange, this grower/researcher (also a direct-to-consumer competitor) is allowed to sell certain Jackson & Perkins branded roses in their wholesale division. |
Cash Equivalents and Investment
Cash Equivalents and Investments | 12 Months Ended |
Dec. 31, 2019 | |
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: December 31, 2019 December 31, 2018 Cash and cash equivalents Operating accounts $ 10,163,845 $ 10,901,929 Money Market – U.S. Treasury obligations 4,450,433 2,808,576 U.S. Treasury obligations 12,518,262 3,014,478 Subtotal 27,132,540 16,724,983 Held to Maturity Investments Certificates of deposit (4 – 24 month maturities, FDIC insured) $ 9,049,787 $ 12,711,069 U.S. Treasury obligations (less than one year maturities) 7,206,878 10,683,679 Subtotal 16,256,665 23,394,748 TOTAL $ 43,389,205 $ 40,119,731 Held to maturity investments consisted of the following: December 31, 2019 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Estimated Fair Value Certificates of Deposit $ 9,051,618 $ 34,169 $ — $ 9,049,787 $ (32,429 ) $ 9,017,358 U.S. Treasuries 7,153,587 — 53,291 7,206,878 2,883 7,209,761 $ 16,169,205 $ 34,169 $ 53,291 $ 16,256,665 $ (29,546 ) $ 16,227,119 December 31, 2018 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Estimated Fair Value Certificates of Deposit $ 12,670,000 $ 41,069 $ — $ 12,711,069 $ (68,087 ) $ 12,642,982 U.S. Treasuries 10,564,160 25,707 93,812 10,683,679 (30,229 ) 10,653,450 $ 23,234,160 $ 66,776 $ 93,812 $ 23,394,748 $ (98,316 ) $ 23,296,432 Interest income recognized on held-to-maturity investments and other sources was as follows: 2019 2018 Held-to-maturity $ 488,824 $ 503,502 Other 240,342 128,168 $ 729,166 $ 631,670 The Company deposited in aggregate $1.75 million of cash across seven different accounts at a financial institution as an accommodation to its majority stockholder, who has other business relationships with the financial institution. The funds in these accounts can be withdrawn at any time, do not serve as collateral in any way, and are held on market terms. |
Loans Receivable
Loans Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Loans Receivable | 4. Loans Receivable – The Consumer Finance segment’s outstanding loans receivable aging was as follows: December 31, 2019 Payday Installment Pawn Total Current $ 3,322,131 $ 67,891 $ 309,934 $ 3,699,956 1-30 216,753 10,590 — 227,343 31-60 140,872 6,234 — 147,106 61-90 117,544 2,649 — 120,193 91-120 118,626 840 — 119,466 121-150 110,278 395 — 110,673 151-180 108,674 — — 108,674 4,134,878 88,599 309,934 4,533,411 Less Allowance (673,000 ) — — (673,000 ) $ 3,461,878 $ 88,599 $ 309,934 $ 3,860,411 December 31, 2018 Payday Installment Pawn Total Current $ 3,314,182 $ 254,255 $ 321,447 $ 3,889,884 1-30 224,091 41,596 — 265,687 31-60 199,259 30,285 — 229,544 61-90 153,449 15,189 — 168,638 91-120 131,480 9,001 — 140,481 121-150 125,074 4,311 — 129,385 151-180 101,619 4,604 — 106,223 4,249,154 359,241 321,447 4,929,842 Less Allowance (770,000 ) (48,000 ) — (818,000 ) $ 3,479,154 $ 311,241 $ 321,447 $ 4,111,842 |
Loans Receivable Allowance
Loans Receivable Allowance | 12 Months Ended |
Dec. 31, 2019 | |
Provision for Loan and Lease Losses [Abstract] | |
Loans Receivable Allowance | 5. Loans Receivable Allowance – As a result of the Consumer Finance segment’s collection efforts, it historically writes off approximately 40% of returned payday items, the most significant element making up loans receivable. Based on days past the check return date, write-offs of payday returned items historically have tracked at the following approximate percentages: 1 to 30 days – 40%; 31 to 60 days – 66%; 61 to 90 days – 85%; 91 to 120 days – 89%; and 121 to 150 – 92% and 151+ days – 93%. A rollforward of the Company’s loans receivable allowance is as follows: Year Ended December 31, 2019 2018 Loans receivable allowance, beginning of year $ 818,000 $ 833,000 Provision for loan losses charged to expense 975,938 1,241,638 Charge-offs, net (1,120,938 ) (1,256,638 ) Loans receivable allowance, end of year $ 673,000 $ 818,000 |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | 6. Accounts Receivable – A breakdown of accounts receivables by segment are as follows: December 31, 2019 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 184,519 $ 318,235 $ 27,722 $ 530,476 Less allowance — (13,000 ) — (13,000 ) Net account receivable $ 184,519 $ 305,235 $ 27,722 $ 517,476 December 31, 2018 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 130,251 $ 372,076 $ 15,881 $ 518,208 Less allowance — (25,000 ) — (25,000 ) Net account receivable $ 130,251 $ 347,076 $ 15,881 $ 493,208 A portion of accounts receivable are unsettled credit card sales from the prior one to five business days. This makes up 68% and 57% of the net accounts receivable balance at December 31, 2019 and December 31, 2018, respectively. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | 7. Inventory – Inventories consist of: 2019 2018 Finished Goods Cellular Retail $ 5,687,771 $ 5,456,898 Direct to Consumer 2,888,483 2,848,484 Consumer Finance 819,437 832,130 Reserve (1,065,000 ) (670,000 ) TOTAL $ 8,330,691 $ 8,467,512 As a result of changes in the market for certain Company products and the resulting deteriorating value, carrying amounts for those inventories were reduced by approximately $1,065,000 and $670,000 during the year ended December 31, 2019 and 2018, respectively. These inventory write-downs have been reflected in cost of goods sold in the statement of operations. Management believes that these reductions properly reflect inventory at lower of cost or market, and no additional losses will be incurred upon disposition. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 8. Property and Equipment – A rollforward of the Company’s property and equipment is as follows: December 31, 2018 Acquisitions Additions Deletions December 31, 2019 Property, equipment and sales floor $ 8,182,321 $ 1,606,331 $ 531,028 $ (1,840,524 ) $ 8,479,156 Software 1,736,669 — 159,137 (11,325 ) 1,884,481 Building (owned) 5,458,008 — 30,214 — 5,488,222 Land 1,200,000 — — — 1,200,000 16,576,998 1,606,331 720,379 (1,851,849 ) 17,051,859 Accumulated depreciation (6,631,172 ) — (1,811,918 ) 1,116,274 (7,326,816 ) $ 9,945,826 $ 1,606,331 $ (1,091,539 ) $ (735,575 ) $ 9,725,043 December 31, 2017 Acquisitions Additions Deletions December 31, 2018 Property, equipment and sales floor $ 8,706,997 $ 30,000 $ 693,448 $ (1,248,124 ) $ 8,182,321 Software 1,634,489 — 102,180 — 1,736,669 Building - owned 5,292,753 — 165,255 — 5,458,008 Land 1,200,000 — — — 1,200,000 Other 39,294 — — (39,294 ) — 16,873,533 30,000 960,883 (1,287,418 ) 16,576,998 Accumulated depreciation (5,526,299 ) — (1,899,114 ) 794,241 (6,631,172 ) $ 11,347,234 $ 30,000 $ (938,231 ) $ (493,177 ) $ 9,945,826 As of December 31, 2019, estimated future depreciation expense for property and equipment (in thousands) is as follows: 2020 $ 1,765 2021 1,478 2022 903 2023 495 2024 303 Thereafter 3,581 $ 8,525 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 9. Leases – The Company adopted ASC 842 - Leases, using the modified retrospective method on January 1, 2019. The Company elected the package of practical expedients relief option offered in ASU 2016-02 and the accounting policy election for lessees not to separate lease and non-lease components (election applies to leased real property asset class). The most significant impact of the adoption of ASC 842 was the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases of $11.53 million and $11.76 million, respectively, and a reversal of deferred rent of $0.23 million on January 1, 2019. The Company’s accounting for finance leases, which are insignificant, remained unchanged. The adoption of ASC 842 did not have any impact on the Company’s operating results or cash flows. The Company has many retail and office space lease agreements and insignificant equipment lease agreements which are accounted for as operating leases. The real property leases typically are for three- to five-year terms with many containing options for similar renewal periods. The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease liabilities (current and noncurrent) in the condensed consolidated balance sheet. Finance leases are included in property and equipment and finance lease obligations in the condensed consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, Management used the Company’s collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The lease payment terms may include fixed payment terms and variable payments. Fixed payment terms and variable payments that depend on an index (i.e., Consumer Price Index, or “CPI”) or rate are considered in the determination of the operating lease liabilities. While lease liabilities are not remeasured because of changes to the CPI, changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Variable payments that do not depend on an index or rate are not included in the lease liabilities determination. Rather, these payments are recognized as variable lease expense when incurred. Expenses related to leases with a lease term of one month or less are recognized as variable lease expense when incurred. Variable lease payments are included within operating costs and expenses in the condensed consolidated statement of operations. Due to the significant assumptions and judgements required in accounting for leases (to include whether a contract contains a lease, the allocation of the consideration, and the determination of the discount rate), the judgements and estimates made could have a significant effect on the amount of assets and liabilities recognized. Total components of operating lease expense for the real property asset class (in thousands) were as follows: 2019 Operating lease expense $ 5,701 Variable lease expense 2,708 Total lease expense $ 8,409 Other information related to operating leases as of December 31, 2019 was as follows: Weighted average remaining lease term, in years 3.00 Weighted Average Discount Rate 5.8 % Future minimum lease payments under operating leases as of December 31, 2019 (in thousands) were as follows: 2020 $ 5,660 2021 3,940 2022 2,403 2023 1,144 2024 525 Thereafter 118 Total minimum lease payments 13,790 Less: Imputed interest (1,265 ) Total present value of minimum lease payments $ 12,525 Current portion operating lease liabilities $ 5,080 Non-Current operating lease liabilities 7,445 Total operating lease liabilities $ 12,525 |
Goodwill and Long-Lived Assets
Goodwill and Long-Lived Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Long-Lived Assets | 10. Goodwill and Long-Lived Assets – During the fourth quarter of 2019, the Company completed the annual impairment assessments for goodwill and long-lived assets, determining there was no impairment. A rollforward of the carrying amount of goodwill is as follows: Cellular Retail Segment Direct to Consumer Segment Consumer Finance Segment Total Balance at December 31, 2017 Goodwill $ 5,765,284 $ 31,244 $ 7,559,063 $ 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses 5,765,284 31,244 — 5,796,528 2018 Activity: Goodwill acquired during year — — — — Impairment losses — — — — Balance at December 31, 2018 Goodwill 5,765,284 31,244 7,559,063 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses 5,765,284 31,244 — 5,796,528 2019 Activity: Goodwill acquired during year — — — — Impairment losses — — — — Balance at December 31, 2019 Goodwill 5,765,284 31,244 7,559,063 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses $ 5,765,284 $ 31,244 $ — $ 5,796,528 A rollforward of the Company’s intangible assets is as follows: December 31, 2018 Acquisitions Additions Deletions December 31, 2019 Customer relationships $ 10,142,533 $ 747,903 $ — $ (888,405 ) $ 10,002,031 Other 227,000 — — — 227,000 Amortizable Intangible assets 10,369,533 747,903 — (888,405 ) 10,229,031 Less accumulated amortization (6,202,423 ) — (699,636 ) 714,678 (6,187,381 ) Net Amortizable Intangible Assets 4,167,110 747,903 (699,636 ) (173,727 ) 4,041,650 Non-amortizable trademarks — — — — — Intangible Assets, net $ 4,167,110 $ 747,903 $ (699,636 ) $ (173,727 ) $ 4,041,650 December 31, 2017 Acquisitions Additions Deletions December 31, 2018 Customer relationships $ 10,381,426 $ 46,707 $ — $ (285,600 ) $ 10,142,533 Other 227,000 — — — 227,000 Amortizable Intangible assets 10,608,426 46,707 — (285,600 ) 10,369,533 Less accumulated amortization (5,620,657 ) — (794,688 ) 212,922 (6,202,423 ) Net Amortizable Intangible Assets 4,987,769 46,707 (794,688 ) (72,678 ) 4,167,110 Non-amortizable trademarks — — — — — Intangible Assets, net $ 4,987,769 $ 46,707 $ (794,688 ) $ (72,678 ) $ 4,167,110 As of December 31, 2019, estimated future amortization expense for the amortizable intangible assets is as follows: 2020 $ 677,627 2021 578,832 2022 539,117 2023 521,452 2024 491,721 Thereafter 1,232,901 $ 4,041,650 |
Loans Receivable - Non-Current
Loans Receivable - Non-Current | 12 Months Ended |
Dec. 31, 2019 | |
Loans Receivable - Non-current | |
Loans Receivable - Non-Current | 11. Loans Receivable – Non-Current – The Company has two non-current loans receivable from noncontrolling interests. The loans include a 5% annual interest rate, include no prepayment penalties and the Company, at its option, has the right to apply non-tax related distributions to the outstanding balances. |
Deferred Revenue and Other Liab
Deferred Revenue and Other Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue and Other Liabilities | 12. Deferred Revenue and Other Liabilities – Deferred revenue and other liabilities consisted of the following: December 31, 2019 2018 Deferred financing fees $ 218,113 $ 218,729 Merchandise credits and gift card liability 576,717 794,043 Total $ 794,830 $ 1,012,772 |
Notes Payable - Long Term
Notes Payable - Long Term | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable - Long Term | 13. Notes Payable – Long Term – The Company’s long-term debt was as follows: December 31, 2019 2018 Subsidiary note payable to seller with monthly interest only payments at 6%, guaranteed by PQH , maturing August 5 22 the . $ 789,216 $ 789,216 Subsidiary note payable with $6,692 monthly payments of principal together with interest at 5.5%, , maturing January 4, 2024 . 296,035 — Total 1,085,251 789,216 Less current maturities (65,414 ) — $ 1,019,837 $ 789,216 Future minimum long-term principal payments as of December 31, 2019 were as follows: 2020 $ 65,414 2021 69,202 2022 862,378 2023 77,347 2024 10,910 Thereafter — $ 1,085,251 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes – The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled The Company’s provision for income tax expense (benefit) was as follows for the year ended December 31: 2019 2018 Current: Federal $ 1,026,000 $ — State 292,000 42,000 1,318,000 42,000 Deferred: Federal (319,000 ) (574,000 ) State (91,000 ) (87,000 ) (410,000 ) (661,000 ) $ 908,000 $ (619,000 ) Deferred income tax assets (liabilities) are summarized as follows: December 31, 2019 2018 Allowance for accounts and loans receivable $ 179,000 $ 216,000 Inventory capitalization 57,000 57,000 Inventory reserve 139,000 136,000 Accrued expenses 147,000 116,000 Net operating loss carryforward — 135,000 Prepaid expense (209,000 ) (243,000 ) Property and equipment (587,000 ) (686,000 ) Goodwill and intangible assets (111,000 ) 259,000 Installment sale proceeds receivable — (785,000 ) Net deferred income tax asset (liability) $ (385,000 ) $ (795,000 ) Reconciliations from the statutory federal income tax rate to the effective income tax rate are as follows for the year ended December 31: 2019 2018 Income tax expense (benefit) using the statutory federal rate $ 917,000 $ (449,000 ) State income taxes, net of federal benefit 235,000 (55,000 ) Non-deductible meals and entertainment 12,000 9,000 Noncontrolling interest’s pass through income (270,000 ) (163,000 ) Other 14,000 39,000 Income tax expense (benefit) $ 908,000 $ (619,000 ) For the year ended December 31, 2018, the Company generated federal net operating losses (“NOLs”) of approximately $500,000 which were fully utilized in 2019. It is the Company’s practice to recognize penalties and/or interest related to income tax matters in interest and penalties expense. As of December 31, 2019 and 2018, the Company had an immaterial amount of accrued interest and penalties. The Company is subject to income taxes in the U.S. federal jurisdiction and various states and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Company and recognize a tax liability (or asset) if the Company has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by the Company and has concluded that as of December 31, 2019, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the consolidated financial statements. The Company is subject to routine audits by taxing jurisdictions. Currently the Company has no federal or state audits in progress. Management believes the Company is no longer subject to income tax examinations for years prior to 2016. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Equity | 15. Equity – WCR 2015 Stock Incentive Plan On February 2, 2008, the Board of Directors of the Company approved and adopted the Company’s 2008 Stock Incentive Plan, pursuant to which an aggregate of 100,000 shares of common stock have been reserved for issuance. Effective February 6, 2015, the Board of Directors terminated the 2008 Stock Incentive Plan and adopted the Company’s new 2015 Stock Incentive Plan. There were no incentives issued or outstanding under the terminated plan. As of December 31, 2019 65,000 options had been granted under the 2015 plan. The Board of Directors, or a committee of the Board, administers the 2015 Stock Incentive Plan and has complete authority to award incentives, to interpret the plan and to make any other determination which it believes necessary and advisable for the proper administration of the plan. A total of 100,000 shares of common stock were reserved in connection with the adoption of the 2015 Stock Incentive Plan. The 2015 Stock Incentive plan permits the granting of incentives in any one or a combination of the following forms: ● stock options, including options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, as “qualified” or “incentive” stock options; ● stock appreciation rights (often referred to as “SARs”) payable in shares of common stock; ● restricted stock and restricted stock units; ● performance awards of cash, stock or property; and ● stock awards. The following table summarizes nonvested stock option awards outstanding at December 31, 2019 and the changes for the year then ended: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term ( in years Aggregate Intrinsic Value Outstanding and nonvested at December 31, 2018 — $ — $ — Granted — — — Vested — — — Forfeited — — — Outstanding and nonvested at December 31, 2019 — $ — $ — Exercisable at December 31, 2019 65,000 $ 6.00 $ — The vested options were granted on February 9, 2015 and have a contract life of ten years. The strike price of outstanding vested options exceeded the share value at December 31, 2019 and thus there was no intrinsic value in outstanding vested options at December 31, 2019. As of December 31, 2019, there was no unrecognized stock-based compensation expense. Noncontrolling Interests The subsidiary PQH owns less than a 100% interest in subsidiary limited liability companies. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of ASC 810, which are applicable to reporting the equity and net income or loss attributable to noncontrolling interests. |
Dividends
Dividends | 12 Months Ended |
Dec. 31, 2019 | |
Dividends, Common Stock [Abstract] | |
Dividends | 16. Dividends – Our Board of Directors declared the following dividends payable in 2019: Date Declared Record Date Dividend Per Share Payment Date Dividend Paid February 2, 2019 March 1, 2019 $0.05 March 11, 2019 $469,434 May 2, 2019 May 23, 2019 $0.05 June 3, 2019 $469,434 August 1, 2019 August 23, 2019 $0.05 September 3, 2019 $468,912 October 31, 2019 November 15, 2019 $0.05 November 25, 2019 $467,435 |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Revenue | 17. Revenue – Revenue generated from contracts with customers and recognized per ASC 606 primarily consists of sales of merchandise and services at the point of sale and compensation from Cricket Wireless. As a Cricket Wireless authorized retailer, we earn compensation from Cricket Wireless for activating a new customer on the Cricket Wireless network, activating new devices for existing Cricket Wireless customers (“back-end compensation”) and upon an existing Cricket Wireless customer whom we originally activated on the Cricket Wireless GSM network making a continuing service payment (“CSP”). Compensation from Cricket Wireless in 2019 and 2018 was $29.19 million and $29.29 million, respectively. Revenue generated from short-term lending agreements in the Consumer Finance segment and from Company investments are recognized in accordance with ASC 825. Total net sales of merchandise, which exclude sales taxes, are generally recorded as follows: ● Cellular Retail – net sales reflects the transaction price at point of sale when payment is received or receivable, the customer takes control of the merchandise and, applicable to devices, the device has been activated on the Cricket Wireless network. The sale and activation of a wireless device also correlates to the recording of back-end compensation from Cricket Wireless. Sales returns are generally not material to our financial statements. ● Direct to Consumer – net sales reflect the transaction price when product is shipped to customers, FOB shipping point, reduced by variable consideration. Shipping and handling fees are also included in total net sales. Variable consideration is comprised of estimated future returns and merchandise credits which are estimated based primarily on historical rates and sales levels. ● Consumer Finance - net sales reflects the transaction price at point of sale when payment in full is received and the customer takes control of the merchandise. Sales returns are generally not material to our financial statements. Services revenue from customer paid fees is generally recorded at point of sale when payment is received and the customer receives the benefit of the service. CSP compensation from Cricket Wireless is recorded as of the time certain Cricket Wireless customers make a service payment, as reported to us by Cricket Wireless. Recognized as revenue per ASC 825, Consumer Finance loan fees and interest on cash advance loans are recognized on a constant-yield basis ratably over a loan’s term. Installment loan fees and interest are recognized using the interest method, except that installment loan origination fees are recognized as they become non-refundable and installment loan maintenance fees are recognized when earned. The Company recognizes fees on pawn loans on a constant-yield basis ratably over the loans’ terms, less an estimated amount for expected forfeited pawn loans which is based on historical forfeiture rates. See Note 20, “Segment Information,” for disaggregation of revenue by segment. |
Other Operating Expenses
Other Operating Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Other Operating Expenses | 18. Other Operating Expenses – A breakout of other operating expenses is as follows for the year ended December 31: 2019 2018 Bank fees $ 1,956,674 $ 1,915,795 Collection costs 324,595 331,712 Insurance 805,547 867,204 Management and advisory fees 835,154 794,800 Professional and consulting fees 1,406,914 1,935,561 Supplies 658,500 702,371 Disposal loss on closed/sold locations 75,077 1,731,893 Other 2,385,780 2,538,773 $ 8,448,241 $ 10,818,109 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combination, Description [Abstract] | |
Acquisitions | 19. Acquisitions – Cellular Retail Acquisitions In 2019, the Company’s Cellular Retail segment completed numerous small Cricket retail location transactions, acquiring 67 locations in total, most of which involved the selling party contributing a noncontrolling interest. The purchase price calculation is as follows: 2019 Cash $ 738 Note payable 18 Noncontrolling interests / equity 218 $ 974 The assets acquired and contributed and liabilities assumed (in thousands) were recorded at their estimated fair values as of the purchase date as follows: 2019 Cash $ 136 Inventory 458 Property and equipment 1,579 Intangible assets 748 Operating lease right-of-use assets 3,606 Other assets 582 Other liabilities (1,179 ) Notes payable (1,350 ) Operating lease liabilities (3,606 ) $ 974 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 20. Segment Information – The Company has grouped its operations into four segments – Cellular Retail, Direct to Consumer, Consumer Finance and Corporate. The Cellular Retail segment is an authorized retailer for Cricket Wireless selling cellular phones and accessories, ancillary services and serving as a payment center for customers. The Direct to Consumer segment, which consists of an online and direct marketing distribution retailer with product offerings including seeds, live goods and garden accessories operating in the retail market under Park Seed, Jackson & Perkins and Wayside Gardens, and in the wholesale market under Park Wholesale, and an online retail seller of home improvement and restoration products operating over the internet through the domain name of www.Vandykes.com and through direct mail catalogs. The Consumer Finance segment provides financial and ancillary services. The Corporate segment includes the parent company activities, inclusive of the acquisitions department and management of acquired subsidiaries. Segment information related to the year ended December 31, 2019 and 2018 is as follows: December 31, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 68,682 $ 38,024 $ 1,696 $ — $ 108,402 Fees and interest income $ — $ — $ 8,513 $ — $ 8,513 Total Revenue $ 68,682 $ 38,024 $ 10,209 $ — $ 116,915 Depreciation and amortization $ 1,961 $ 513 $ 31 $ 7 $ 2,512 Interest expense $ 62 $ 2 $ — $ 51 $ 115 Income tax expense (benefit) $ 490 $ 175 $ 381 $ (138 ) $ 908 Net income (loss) $ 2,502 $ 588 $ 1,066 $ (700 ) $ 3,456 Total segment assets $ 35,816 $ 12,397 $ 8,582 $ 35,112 $ 91,907 Expenditures for segmented assets $ 1,007 $ 308 $ — $ — $ 1,315 December 31, 2018 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 65,096 $ 38,433 $ 1,813 $ — $ 105,342 Fees and interest income $ — $ — $ 8,923 $ — $ 8,923 Total Revenue $ 65,096 $ 38,433 $ 10,736 $ — $ 114,265 Depreciation and amortization $ 2,121 $ 512 $ 51 $ 10 $ 2,694 Interest expense $ 47 $ 5 $ — $ 137 $ 189 Income tax expense (benefit) $ (573 ) $ (136 ) $ 397 $ (307 ) $ (619 ) Net income (loss) $ (1,272 ) $ (481 ) $ 1,117 $ (885 ) $ (1,521 ) Total segment assets $ 24,816 $ 13,769 $ 7,408 $ 34,447 $ 80,440 Expenditures for segmented assets $ 512 $ 504 $ 22 $ — $ 1,038 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 21. Commitments and Contingencies – Employment Agreements The Company is party to an employment agreement with its Chief Executive Officer, Mr. John Quandahl. The agreement runs from November 1, 2019 through November 2022. The agreement provides an annual base salary and eligibility for an annual performance-based cash bonus pool for management and contains customary non-solicitation and non-competition provisions as well as provisions for severance payments upon termination by the Company without cause or upon termination by Mr. Quandahl with good reason. The Company is party to an Amended and Restated Employment Agreement effective August 16, 2017 with its Chief Financial Officer / Chief Investment Officer, Mr. Angel Donchev. The agreement provides an annual base salary and eligibility for a discretionary annual performance-based bonus up to $135,000 and contains provisions for severance payments upon termination by the Company without cause. The Company has also entered into several employment agreements with certain members of subsidiary management. The terms of each agreement are different. However, one or all of these agreements include stipulated base salary and bonus potential. The agreements also contain customary non-solicitation and non-competition provisions as well as provisions for severance payments upon termination by the Company without cause. Pursuant to the numerous employment agreements, bonuses of approximately $881,000 and $286,000 were accrued for the year ended December 31, 2019 and 2018, respectively. Assigned Leases The Company’s Cellular Retail segment has transferred operations of many locations to other dealers and remains contingently liable under many lease agreements. Minimum lease payments of assigned or assumed non-cancelable operating leases related to transferred of 45 locations in which a release has not been obtained from the lessor are approximately $2,208,000 as of December 31, 2019. Legal Proceedings The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. |
Management and Advisory Agreeme
Management and Advisory Agreement | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Management and Advisory Agreement | 22. Management and Advisory Agreement – The Company is party to a Second Amended and Restated Management and Advisory Agreement dated November 1, 2017 with Blackstreet Capital Management, LLC, (“Blackstreet”) under which Blackstreet provides certain financial, managerial, strategic and operating advice and assistance to the Company. The agreement requires the Company to pay Blackstreet a fee in an amount equal to $400,000 upon the closing of an acquisition in consideration for Blackstreet’s referral to the Company of such acquisition opportunity, and Blackstreet’s assistance in the performance of due diligence services relating thereto. The annual fees under the agreement equal the greater of (i) $674,840 (subject to annual increases of five percent) or (ii) five percent of Western Capital’s “EBITDA” as defined under the agreement. Finally, the agreement may only be terminated by mutual consent of the parties. Upon any termination, the Company shall pay a termination fee equal to three times the previous 12-month annual fee. The annual management and advisory fees related to the management and advisory agreement with Blackstreet for the years ended December 31, 2019 and 2018 were $735,154 and $697,335, respectively. |
Committees of the Board of Dire
Committees of the Board of Directors | 12 Months Ended |
Dec. 31, 2019 | |
Committees Of Board Of Directors | |
Committees of the Board of Directors | 23. Committees of the Board of Directors – The Board of Directors has appointed Mr. Ellery Roberts to various committees of the Board. Annual Director and committee fees expense was $42,000 and $21,000 for the year ended December 31, 2019 and 2018, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 24. Related Party Transactions – Leases The Company leases three properties from an officer of the Company and another party under operating leases, one that is month-to-month, requiring monthly lease payments of $1,680, one that month-to-month, requiring monthly lease payments of $1,200, and one that is month-to-month, requiring monthly lease payments of $5,500. On August 31, 2011, the Company entered into two operating leases for property owned by Ladary, LLC. Ladary, which acquired the two properties in foreclosure sales, is partially owned by the Chief Executive Officer and Chief Financial Officer of the Company, two current or past directors and one employee of the management company that manages the Company’s largest shareholder. The leases, one of which replaced an earlier lease that the Company had entered into with the prior landlord, have four-year terms, require aggregate monthly rental payments of $4,200, and are on terms and conditions substantially similar to those contained in the replaced leases. In 2018, Ladary, LLC sold one of the properties and acquired another in which the Company had existing leases in place. The leases that the Company had entered into with the prior landlord have five-year terms expiring in 2020 and require aggregate monthly rental payments of $6,696. Annual rent expense to related parties for the retail locations for 2019 and 2018 was approximately $209,000 and $205,000, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 25. Subsequent Events – Dividend Our Board of Directors declared the following dividends payable in 2020: Date Declared Record Date Dividend Per Share Payment Date February 13, 2020 February 28, 2020 $0.05 March 9, 2020 We evaluated all events or transactions that occurred after December 31, 2019 up through the date we issued these financial statements. During this period we did not have any other material subsequent events that impacted our financial statements. |
Basis of Presentation, Nature_2
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation / Nature of Business | Basis of Presentation / Nature of Business Western Capital Resources, Inc. ("WCR") is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below. ● Cellular Retail ○ PQH Wireless, Inc. ("PQH") (100%) – operates 222 cellular retail stores as of December 31, 2019 (108 100% owned plus 114 through its controlled but less than 100% owned subsidiaries), exclusively as an authorized retailer of the Cricket brand. ● Direct to Consumer ○ J&P Park Acquisitions, Inc. ("JPPA") (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand. ○ J&P Real Estate, LLC ("JPRE") (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA. ● Consumer Finance ○ Wyoming Financial Lenders, Inc. ("WFL") (100%) – owns and operates “payday” stores (38 as of December 31, 2019, two of which are located within the Company’s retail pawn stores) in six states (Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals. ○ Express Pawn, Inc. (EPI) (100%) – owns and operates retail pawn stores (three as of December 31, 2019) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers. References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as” “PQH,” “JPPA,” “JPRE,” “WFL,” or “EPI” are references only to those companies. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill 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. |
Revenue Recognition | Revenue Recognition On January 1, 2018, we adopted Topic 606, as further disclosed later in this Note 1. Also refer to Notes 17, “Revenue,” and 20, “Segment Information”, for additional information, including the disaggregation of revenue by segment. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. |
Fair Value of Financial Measurement | Fair Value of Financial Measurement In determining fair value measurements, the Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. The topic provides a consistent definition of fair value focusing on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The topic also prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The three level hierarchy is as follows: Level 1 - Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date. Level 2 - Pricing inputs are quoted prices for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 3 - Pricing inputs are unobservable for the assets and liabilities, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s held to maturity securities are comprised of a U.S Treasury zero coupon T-Bill and certificates of deposit. The Company’s available for sale securities consist of mutual funds held in money market mutual funds in a brokerage account, which are classified as cash equivalents. The fair value of these investments is based on quoted prices from recognized pricing services, or in the case of mutual funds, at their closing published net asset value. The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Company’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During the years 2019 and 2018, there were no transfers between levels. |
Receivables and Loss Allowance | Receivables and Loss Allowance Cellular Retail Receivables for noncash sales are recorded when possession of products is taken by the customer or services are completed, represent claims against third parties that will be settled in cash, include unsettled credit card charges, and are included in accounts receivable. The carrying value of accounts receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. Direct to Consumer Receivables for noncash sales are recorded when orders are shipped, represent claims against third parties that will be settled in cash, include unsettled credit card charges and wholesales sales on terms, and are included in accounts receivable. The carrying value of accounts receivable, net of the allowance for doubtful accounts, represents their estimated net realizable value. The allowance for doubtful accounts is estimated based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due receivable balances are written-off when internal collection efforts have been unsuccessful in collecting the amount due. Consumer Finance Included in loans receivable are unpaid principal, interest and fee balances of payday, installment and pawn loans that have not reached their maturity date, and “late” payday loans that have reached maturity within the last 180 days and have remaining outstanding balances. Late payday loans generally are unpaid loans where a customer’s personal check has been deposited and the check has been returned due to non-sufficient funds in the customer’s account, a closed account, or other reasons. All returned items are charged-off after 180 days, as collections after that date have not been significant. Loans are carried at cost plus accrued interest or fees less payments made and a loans receivable allowance. The Company does not specifically reserve for any individual payday or installment loan. The Company aggregates loan types for purposes of estimating the loss allowance using a methodology that analyzes historical portfolio statistics and management’s judgment regarding recent trends noted in the portfolio. This methodology takes into account several factors, including (1) the amount of loan principal, interest and fee outstanding, (2) historical charge offs from loans that originated during the last 24 months, (3) current and expected collection patterns and (4) current economic trends. The Company utilizes a software program to assist with the tracking of its historical portfolio statistics. A loan loss allowance is maintained for anticipated losses for payday and installment loans based primarily on our historical percentages by loan type of net charge offs, applied against the applicable balance of loan principal, interest and fees outstanding. The Company also periodically performs a look-back analysis on its loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. The Company is aware that as conditions change, it may also need to make additional allowances in future periods. Loan losses or charge-offs of pawn loans are not recorded because the value of the collateral exceeds the loan amount. |
Inventory | Inventory Cellular Retail Inventory, consisting of phones and accessories, is stated at cost, determined on the specific identification and weighted-average cost basis, respectively. Direct to Consumer Inventory is valued at the lower of cost or market using the weighted-average method of determining cost. Consumer Finance Merchandise inventory is stated at the lower of cost or market. The principal amount of an unpaid loan becomes the inventory cost for forfeited collateral. |
Long-Lived Assets | Long-Lived Assets Property and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets as follows: ● Computer equipment and software 3 – 10 years ● Improvements and equipment 3 – 15 years ● Building 39 years The cost of maintenance and repairs is charged to operations as incurred while renewals and betterments are capitalized. The Company capitalizes certain internal costs, including payroll costs, incurred in connection with the development of software for internal use. These costs are capitalized beginning when the Company has entered the application development stage. The capitalization of these costs ceases when the software is substantially complete and ready for its intended use. Only costs incurred for enhancements that are expected to result in additional features or functionality are capitalized and expensed over the estimated useful life of the enhancements. Finite-lived intangible assets represent the fair values management assigned to assets acquired through business acquisitions, are amortized over periods of three to 15 years based on management’s estimates of the useful life of the asset and are subject to impairment evaluations. The Company assesses the possibility of impairment of long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry events or trends. |
Goodwill | Goodwill Goodwill represents the excess of acquisition cost over the fair value of identifiable finite lived net assets acquired and is not amortized. Goodwill is tested for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate potential impairment. The Company tests for goodwill impairment at the reporting unit level, which aligns with the Company’s segments. The Company performs a qualitative assessment to determine if a quantitative impairment test is necessary. If quantitative testing is necessary based on a qualitative assessment, we apply a fair value test. This fair value test involves a two-step process. The first step is to compare the carrying value of our net assets to our fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of the impairment, if any. |
Merchandise Credits and Gift Card Liabilities | Merchandise Credits and Gift Card Liabilities Direct to Consumer The Company maintains a liability for unredeemed gift cards, gift certificates and merchandise credits until the earlier of redemption, escheatment or a maximum of two years. The Company has concluded based on historical redemption trends that the likelihood of these liabilities being redeemed beyond two years from the date of issuance is remote. The liability is also reserved for estimated redemption rates which management bases on historical trends. |
Advertising, Marketing and Development Costs | Advertising, Marketing and Development Costs Direct to Consumer The Company expenses advertising costs as they are incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits, not to exceed six months. Direct-response advertising consists primarily of catalog book production, printing, and postage costs. Prepaid advertising costs at December 31, 2019 and 2018 were $0.67 million and $0.88 million, respectively. Consumer Finance The costs of advertising and marketing are expensed as incurred. |
Stock-based Compensation | Stock-based Compensation The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements. Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimate. |
Income Taxes | Income Taxes Deferred income taxes reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts, based on enacted tax laws and statutory tax rates applicable in the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents taxes paid or payable for the current year and changes during the year in deferred tax assets and liabilities. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed by dividing the income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period, including stock options, using the treasury stock method. Options to purchase 65,000 shares granted under the 2015 Stock Incentive Plan effective February 6, 2015 (see Note 15) were outstanding at December 31, 2019. These options have a strike price in excess of the market price as of December 31, 2019 and 2018, were antidilutive and therefore not included in the computation of diluted earnings per share. Thus, there were no dilutive common shares as of December 31, 2019 and 2018. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The amounts reported in the balance sheets for cash, short-term investments, accounts and loans receivable, inventory, and accounts payable are short-term in nature and their carrying values approximate fair values. The amounts reported in the balance sheets for notes payable are both long-term and short-term and for investments are long-term and their carrying value approximates fair value. |
Reclassifications | Reclassifications Certain Statement of Cash Flows reclassifications have been made in the presentation of our prior financial statements to conform to the presentation as of and for the year ended December 31, 2019 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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. Under the new guidance, lessees are required to recognize the following for all leases: (1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. All entities must classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company adopted ASU 2016-02 and ASC 842 using the modified retrospective method on January 1, 2019. See Note 9 for further disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), related to the measurement of credit losses on financial instruments. The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The ASU is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual period, with early adoption permitted and the standard to be applied using a modified retrospective approach. The Company does not believe adoption of ASU 2016-13 will have a material impact on our financial condition, results of operations or consolidated financial statements In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect to not separate non-lease components from leases when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company adopted certain options available under ASU 2018-11on January 1, 2019. See Note 9 for further disclosures. 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. |
Basis of Presentation, Nature_3
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of property and equipment estimated useful lives | Depreciation is provided on the straight-line method over the estimated useful lives of the related assets as follows: ● Computer equipment and software 3 – 10 years ● Improvements and equipment 3 – 15 years ● Building 39 years |
Risks Inherent in the Operati_2
Risks Inherent in the Operating Environment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Schedule of geographic economic and regulatory risk concentrations | For the years ended December 31, 2019 and 2018, the Consumer Finance segment had geographic economic and regulatory risk concentrations (shown as a percentage of the Consumer Finance segment’s revenue by state when 10% or more) as follows: Consumer Finance Segment 2019 % of Revenues 2018 % of Revenues Nebraska 35 % 36 % North Dakota 25 % 23 % Iowa 16 % 17 % Wyoming 14 % 14 % |
Cash Equivalents and Investme_2
Cash Equivalents and Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [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: December 31, 2019 December 31, 2018 Cash and cash equivalents Operating accounts $ 10,163,845 $ 10,901,929 Money Market – U.S. Treasury obligations 4,450,433 2,808,576 U.S. Treasury obligations 12,518,262 3,014,478 Subtotal 27,132,540 16,724,983 Held to Maturity Investments Certificates of deposit (4 – 24 month maturities, FDIC insured) $ 9,049,787 $ 12,711,069 U.S. Treasury obligations (less than one year maturities) 7,206,878 10,683,679 Subtotal 16,256,665 23,394,748 TOTAL $ 43,389,205 $ 40,119,731 |
Schedule of held to maturity investments | Held to maturity investments consisted of the following: December 31, 2019 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Estimated Fair Value Certificates of Deposit $ 9,051,618 $ 34,169 $ — $ 9,049,787 $ (32,429 ) $ 9,017,358 U.S. Treasuries 7,153,587 — 53,291 7,206,878 2,883 7,209,761 $ 16,169,205 $ 34,169 $ 53,291 $ 16,256,665 $ (29,546 ) $ 16,227,119 December 31, 2018 Cost Accrued Interest Amortized Discount Amortized Cost Unrealized Estimated Fair Value Certificates of Deposit $ 12,670,000 $ 41,069 $ — $ 12,711,069 $ (68,087 ) $ 12,642,982 U.S. Treasuries 10,564,160 25,707 93,812 10,683,679 (30,229 ) 10,653,450 $ 23,234,160 $ 66,776 $ 93,812 $ 23,394,748 $ (98,316 ) $ 23,296,432 |
Schedule of interest income recognized on held-to-maturity investments | Interest income recognized on held-to-maturity investments and other sources was as follows: 2019 2018 Held-to-maturity $ 488,824 $ 503,502 Other 240,342 128,168 $ 729,166 $ 631,670 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of outstanding loans receivable aging | The Consumer Finance segment’s outstanding loans receivable aging was as follows: December 31, 2019 Payday Installment Pawn Total Current $ 3,322,131 $ 67,891 $ 309,934 $ 3,699,956 1-30 216,753 10,590 — 227,343 31-60 140,872 6,234 — 147,106 61-90 117,544 2,649 — 120,193 91-120 118,626 840 — 119,466 121-150 110,278 395 — 110,673 151-180 108,674 — — 108,674 4,134,878 88,599 309,934 4,533,411 Less Allowance (673,000 ) — — (673,000 ) $ 3,461,878 $ 88,599 $ 309,934 $ 3,860,411 December 31, 2018 Payday Installment Pawn Total Current $ 3,314,182 $ 254,255 $ 321,447 $ 3,889,884 1-30 224,091 41,596 — 265,687 31-60 199,259 30,285 — 229,544 61-90 153,449 15,189 — 168,638 91-120 131,480 9,001 — 140,481 121-150 125,074 4,311 — 129,385 151-180 101,619 4,604 — 106,223 4,249,154 359,241 321,447 4,929,842 Less Allowance (770,000 ) (48,000 ) — (818,000 ) $ 3,479,154 $ 311,241 $ 321,447 $ 4,111,842 |
Loans Receivable Allowance (Tab
Loans Receivable Allowance (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Provision for Loan and Lease Losses [Abstract] | |
Schedule of loans receivable allowance | A rollforward of the Company’s loans receivable allowance is as follows: Year Ended December 31, 2019 2018 Loans receivable allowance, beginning of year $ 818,000 $ 833,000 Provision for loan losses charged to expense 975,938 1,241,638 Charge-offs, net (1,120,938 ) (1,256,638 ) Loans receivable allowance, end of year $ 673,000 $ 818,000 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of accounts receivable | A breakdown of accounts receivables by segment are as follows: December 31, 2019 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 184,519 $ 318,235 $ 27,722 $ 530,476 Less allowance — (13,000 ) — (13,000 ) Net account receivable $ 184,519 $ 305,235 $ 27,722 $ 517,476 December 31, 2018 Cellular Retail Direct to Consumer Consumer Finance Total Accounts receivable $ 130,251 $ 372,076 $ 15,881 $ 518,208 Less allowance — (25,000 ) — (25,000 ) Net account receivable $ 130,251 $ 347,076 $ 15,881 $ 493,208 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories consist of: 2019 2018 Finished Goods Cellular Retail $ 5,687,771 $ 5,456,898 Direct to Consumer 2,888,483 2,848,484 Consumer Finance 819,437 832,130 Reserve (1,065,000 ) (670,000 ) TOTAL $ 8,330,691 $ 8,467,512 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | A rollforward of the Company’s property and equipment is as follows: December 31, 2018 Acquisitions Additions Deletions December 31, 2019 Property, equipment and sales floor $ 8,182,321 $ 1,606,331 $ 531,028 $ (1,840,524 ) $ 8,479,156 Software 1,736,669 — 159,137 (11,325 ) 1,884,481 Building (owned) 5,458,008 — 30,214 — 5,488,222 Land 1,200,000 — — — 1,200,000 16,576,998 1,606,331 720,379 (1,851,849 ) 17,051,859 Accumulated depreciation (6,631,172 ) — (1,811,918 ) 1,116,274 (7,326,816 ) $ 9,945,826 $ 1,606,331 $ (1,091,539 ) $ (735,575 ) $ 9,725,043 December 31, 2017 Acquisitions Additions Deletions December 31, 2018 Property, equipment and sales floor $ 8,706,997 $ 30,000 $ 693,448 $ (1,248,124 ) $ 8,182,321 Software 1,634,489 — 102,180 — 1,736,669 Building - owned 5,292,753 — 165,255 — 5,458,008 Land 1,200,000 — — — 1,200,000 Other 39,294 — — (39,294 ) — 16,873,533 30,000 960,883 (1,287,418 ) 16,576,998 Accumulated depreciation (5,526,299 ) — (1,899,114 ) 794,241 (6,631,172 ) $ 11,347,234 $ 30,000 $ (938,231 ) $ (493,177 ) $ 9,945,826 |
Schedule of estimated future depreciation expense for property and equipment | As of December 31, 2019, estimated future depreciation expense for property and equipment (in thousands) is as follows: 2020 $ 1,765 2021 1,478 2022 903 2023 495 2024 303 Thereafter 3,581 $ 8,525 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of components of lease expense | Total components of operating lease expense for the real property asset class (in thousands) were as follows: 2019 Operating lease expense $ 5,701 Variable lease expense 2,708 Total lease expense $ 8,409 |
Schedule of weighted average remaining lease terms and discount rates held | Other information related to operating leases as of December 31, 2019 was as follows: Weighted average remaining lease term, in years 3.00 Weighted Average Discount Rate 5.8 % |
Schedule of future minimum lease payments under leases | Future minimum lease payments under operating leases as of December 31, 2019 (in thousands) were as follows: 2020 $ 5,660 2021 3,940 2022 2,403 2023 1,144 2024 525 Thereafter 118 Total minimum lease payments 13,790 Less: Imputed interest (1,265 ) Total present value of minimum lease payments $ 12,525 Current portion operating lease liabilities $ 5,080 Non-Current operating lease liabilities 7,445 Total operating lease liabilities $ 12,525 |
Goodwill and Long-Lived Assets
Goodwill and Long-Lived Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amount of goodwill | A rollforward of the carrying amount of goodwill is as follows: Cellular Retail Segment Direct to Consumer Segment Consumer Finance Segment Total Balance at December 31, 2017 Goodwill $ 5,765,284 $ 31,244 $ 7,559,063 $ 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses 5,765,284 31,244 — 5,796,528 2018 Activity: Goodwill acquired during year — — — — Impairment losses — — — — Balance at December 31, 2018 Goodwill 5,765,284 31,244 7,559,063 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses 5,765,284 31,244 — 5,796,528 2019 Activity: Goodwill acquired during year — — — — Impairment losses — — — — Balance at December 31, 2019 Goodwill 5,765,284 31,244 7,559,063 13,355,591 Accumulated impairment losses — — (7,559,063 ) (7,559,063 ) Goodwill, net of impairment losses $ 5,765,284 $ 31,244 $ — $ 5,796,528 |
Schedule of intangible assets | A rollforward of the Company’s intangible assets is as follows: December 31, 2018 Acquisitions Additions Deletions December 31, 2019 Customer relationships $ 10,142,533 $ 747,903 $ — $ (888,405 ) $ 10,002,031 Other 227,000 — — — 227,000 Amortizable Intangible assets 10,369,533 747,903 — (888,405 ) 10,229,031 Less accumulated amortization (6,202,423 ) — (699,636 ) 714,678 (6,187,381 ) Net Amortizable Intangible Assets 4,167,110 747,903 (699,636 ) (173,727 ) 4,041,650 Non-amortizable trademarks — — — — — Intangible Assets, net $ 4,167,110 $ 747,903 $ (699,636 ) $ (173,727 ) $ 4,041,650 December 31, 2017 Acquisitions Additions Deletions December 31, 2018 Customer relationships $ 10,381,426 $ 46,707 $ — $ (285,600 ) $ 10,142,533 Other 227,000 — — — 227,000 Amortizable Intangible assets 10,608,426 46,707 — (285,600 ) 10,369,533 Less accumulated amortization (5,620,657 ) — (794,688 ) 212,922 (6,202,423 ) Net Amortizable Intangible Assets 4,987,769 46,707 (794,688 ) (72,678 ) 4,167,110 Non-amortizable trademarks — — — — — Intangible Assets, net $ 4,987,769 $ 46,707 $ (794,688 ) $ (72,678 ) $ 4,167,110 |
Schedule of estimated future amortization expense | As of December 31, 2019, estimated future amortization expense for the amortizable intangible assets is as follows: 2020 $ 677,627 2021 578,832 2022 539,117 2023 521,452 2024 491,721 Thereafter 1,232,901 $ 4,041,650 |
Deferred Revenue and Other Li_2
Deferred Revenue and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
Schedule of deferred revenue and other liabilities | Deferred revenue and other liabilities consisted of the following: December 31, 2019 2018 Deferred financing fees $ 218,113 $ 218,729 Merchandise credits and gift card liability 576,717 794,043 Total $ 794,830 $ 1,012,772 |
Notes Payable - Long Term (Tabl
Notes Payable - Long Term (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The Company’s long-term debt was as follows: December 31, 2019 2018 Subsidiary note payable to seller with monthly interest only payments at 6%, guaranteed by PQH , maturing August 5 22 the . $ 789,216 $ 789,216 Subsidiary note payable with $6,692 monthly payments of principal together with interest at 5.5%, , maturing January 4, 2024 . 296,035 — Total 1,085,251 789,216 Less current maturities (65,414 ) — $ 1,019,837 $ 789,216 |
Schedule of future minimum long-term principal payments | Future minimum long-term principal payments as of December 31, 2019 were as follows: 2020 $ 65,414 2021 69,202 2022 862,378 2023 77,347 2024 10,910 Thereafter — $ 1,085,251 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | The Company’s provision for income tax expense (benefit) was as follows for the year ended December 31: 2019 2018 Current: Federal $ 1,026,000 $ — State 292,000 42,000 1,318,000 42,000 Deferred: Federal (319,000 ) (574,000 ) State (91,000 ) (87,000 ) (410,000 ) (661,000 ) $ 908,000 $ (619,000) |
Schedule of deferred income tax assets (liabilities) | Deferred income tax assets (liabilities) are summarized as follows: December 31, 2019 2018 Allowance for accounts and loans receivable $ 179,000 $ 216,000 Inventory capitalization 57,000 57,000 Inventory reserve 139,000 136,000 Accrued expenses 147,000 116,000 Net operating loss carryforward — 135,000 Prepaid expense (209,000 ) (243,000 ) Property and equipment (587,000 ) (686,000 ) Goodwill and intangible assets (111,000 ) 259,000 Installment sale proceeds receivable — (785,000 ) Net deferred income tax asset (liability) $ (385,000 ) $ (795,000 ) |
Schedule of effective income tax rate | Reconciliations from the statutory federal income tax rate to the effective income tax rate are as follows for the year ended December 31: 2019 2018 Income tax expense (benefit) using the statutory federal rate $ 917,000 $ (449,000 ) State income taxes, net of federal benefit 235,000 (55,000 ) Non-deductible meals and entertainment 12,000 9,000 Noncontrolling interest’s pass through income (270,000 ) (163,000 ) Other 14,000 39,000 Income tax expense (benefit) $ 908,000 $ (619,000 ) |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of nonnvested stock option awards outstanding | he following table summarizes nonvested stock option awards outstanding at December 31, 2019 and the changes for the year then ended: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term ( in years Aggregate Intrinsic Value Outstanding and nonvested at December 31, 2018 — $ — $ — Granted — — — Vested — — — Forfeited — — — Outstanding and nonvested at December 31, 2019 — $ — $ — Exercisable at December 31, 2019 65,000 $ 6.00 $ — |
Dividends (Tables)
Dividends (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Dividends, Common Stock [Abstract] | |
Schedule of declared dividends payable | Our Board of Directors declared the following dividends payable in 2019: Date Declared Record Date Dividend Per Share Payment Date Dividend Paid February 2, 2019 March 1, 2019 $0.05 March 11, 2019 $469,434 May 2, 2019 May 23, 2019 $0.05 June 3, 2019 $469,434 August 1, 2019 August 23, 2019 $0.05 September 3, 2019 $468,912 October 31, 2019 November 15, 2019 $0.05 November 25, 2019 $467,435 |
Other Operating Expense (Tables
Other Operating Expense (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of other operating expenses | A breakout of other operating expenses is as follows for the year ended December 31: 2019 2018 Bank fees $ 1,956,674 $ 1,915,795 Collection costs 324,595 331,712 Insurance 805,547 867,204 Management and advisory fees 835,154 794,800 Professional and consulting fees 1,406,914 1,935,561 Supplies 658,500 702,371 Disposal loss on closed/sold locations 75,077 1,731,893 Other 2,385,780 2,538,773 $ 8,448,241 $ 10,818,109 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combination, Description [Abstract] | |
Schedule of purchase price | The purchase price calculation is as follows: 2019 Cash $ 738 Note payable 18 Noncontrolling interests / equity 218 $ 974 |
Schedule of assets acquired and liabilities assumed | The assets acquired and contributed and liabilities assumed (in thousands) were recorded at their estimated fair values as of the purchase date as follows: 2019 Cash $ 136 Inventory 458 Property and equipment 1,579 Intangible assets 748 Operating lease right-of-use assets 3,606 Other assets 582 Other liabilities (1,179 ) Notes payable (1,350 ) Operating lease liabilities (3,606 ) $ 974 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment information | Segment information related to the year ended December 31, 2019 and 2018 is as follows: December 31, 2019 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 68,682 $ 38,024 $ 1,696 $ — $ 108,402 Fees and interest income $ — $ — $ 8,513 $ — $ 8,513 Total Revenue $ 68,682 $ 38,024 $ 10,209 $ — $ 116,915 Depreciation and amortization $ 1,961 $ 513 $ 31 $ 7 $ 2,512 Interest expense $ 62 $ 2 $ — $ 51 $ 115 Income tax expense (benefit) $ 490 $ 175 $ 381 $ (138 ) $ 908 Net income (loss) $ 2,502 $ 588 $ 1,066 $ (700 ) $ 3,456 Total segment assets $ 35,816 $ 12,397 $ 8,582 $ 35,112 $ 91,907 Expenditures for segmented assets $ 1,007 $ 308 $ — $ — $ 1,315 December 31, 2018 (in thousands) Cellular Retail Direct to Consumer Consumer Finance Corporate Total Revenue from external customers $ 65,096 $ 38,433 $ 1,813 $ — $ 105,342 Fees and interest income $ — $ — $ 8,923 $ — $ 8,923 Total Revenue $ 65,096 $ 38,433 $ 10,736 $ — $ 114,265 Depreciation and amortization $ 2,121 $ 512 $ 51 $ 10 $ 2,694 Interest expense $ 47 $ 5 $ — $ 137 $ 189 Income tax expense (benefit) $ (573 ) $ (136 ) $ 397 $ (307 ) $ (619 ) Net income (loss) $ (1,272 ) $ (481 ) $ 1,117 $ (885 ) $ (1,521 ) Total segment assets $ 24,816 $ 13,769 $ 7,408 $ 34,447 $ 80,440 Expenditures for segmented assets $ 512 $ 504 $ 22 $ — $ 1,038 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Schedule of declared dividends payable | Our Board of Directors declared the following dividends payable in 2020: Date Declared Record Date Dividend Per Share Payment Date February 13, 2020 February 28, 2020 $0.05 March 9, 2020 |
Basis of Presentation, Nature_4
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computer Equipment And Software [Member] | Minimum [Member] | |
Useful lives | P3Y |
Computer Equipment And Software [Member] | Maximum [Member] | |
Useful lives | P10Y |
Improvements And Equipment [Member] | Minimum [Member] | |
Useful lives | P3Y |
Improvements And Equipment [Member] | Maximum [Member] | |
Useful lives | P15Y |
Building [Member] | |
Useful lives | P39Y |
Basis of Presentation, Nature_5
Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2019USD ($)Numbershares | Dec. 31, 2018USD ($) | |
Prepaid advertising costs | $ | $ 670,000 | $ 880,000 |
Increase in right-of-use assets and associated lease liabilities | $ | $ 5,786,575 | |
2015 Stock Incentive Plan [Member] | ||
Number of shares, granted | shares | 65,000 | |
Minimum [Member] | ||
Finite-lived intangible asset, useful life | 3 years | |
Maximum [Member] | ||
Finite-lived intangible asset, useful life | 15 years | |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | ||
Number of stores | 222 | |
Percentage of equity method investment | 100.00% | |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | PQH Other Subsidiary [Member] | ||
Number of stores | 108 | |
Percentage of equity method investment | 100.00% | |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | PQH South LLC. [Member] | ||
Number of stores | 114 | |
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 | 38 | |
Percentage of equity method investment | 100.00% | |
Number of states in which entity operates | 6 | |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Minimum [Member] | Payday [Member] | ||
Number of states in which entity operates | 100 | |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Minimum [Member] | Installment [Member] | ||
Number of states in which entity operates | 300 | |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Maximum [Member] | Payday [Member] | ||
Number of states in which entity operates | 500 | |
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member] | Maximum [Member] | Installment [Member] | ||
Number of states in which entity operates | 800 | |
Express Pawn, Inc. [Member] | Consumer Finance [Member] | ||
Number of stores | 3 | |
Percentage of equity method investment | 100.00% |
Risks Inherent in the Operati_3
Risks Inherent in the Operating Environment (Details) - Consumer Finance Segment [Member] | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Nebraska [Member] | ||
Percentage of revenues | 35.00% | 36.00% |
North Dakota [Member] | ||
Percentage of revenues | 25.00% | 23.00% |
Iowa [Member] | ||
Percentage of revenues | 16.00% | 17.00% |
Wyoming [Member] | ||
Percentage of revenues | 14.00% | 14.00% |
Risks Inherent in the Operati_4
Risks Inherent in the Operating Environment (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Description of attrition rate | The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate if the rule is implemented as originally adopted. |
WCRS Cash,Excess Over FDIC Insured Amount | $ 6,770,000 |
Payday Lending Revenue [Member] | |
Percentage of revenues | 30.00% |
Cash Equivalents and Investme_3
Cash Equivalents and Investments (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | |||
Cash and cash equivalents | $ 27,132,540 | $ 16,724,983 | $ 21,295,819 |
Held-to-maturity investments | |||
Held to maturity investments | 16,256,665 | 23,394,748 | |
TOTAL | 43,389,205 | 40,119,731 | |
Operating Accounts [Member] | |||
Cash and cash equivalents | |||
Cash and cash equivalents | 10,163,845 | 10,901,929 | |
U.S. Treasuries [Member] | |||
Cash and cash equivalents | |||
Cash and cash equivalents | 12,518,262 | 3,014,478 | |
Held-to-maturity investments | |||
Held to maturity investments | 7,206,878 | 10,683,679 | |
Money Markets [Member] | |||
Cash and cash equivalents | |||
Cash and cash equivalents | 4,450,433 | 2,808,576 | |
Certificates of Deposit [Member] | |||
Held-to-maturity investments | |||
Held to maturity investments | $ 9,049,787 | $ 12,711,069 |
Cash Equivalents and Investme_4
Cash Equivalents and Investments (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Marketable Securities [Line Items] | ||
Cost | $ 16,169,205 | $ 23,234,160 |
Accrued Interest | 34,169 | 66,776 |
Amortized Discount | 53,291 | 93,812 |
Amortized Cost | 16,256,665 | 23,394,748 |
Unrealized Gain (Loss) | (29,546) | (98,316) |
Estimated Fair Value | 16,227,119 | 23,296,432 |
Certificates of Deposit [Member] | ||
Marketable Securities [Line Items] | ||
Cost | 9,051,618 | 12,670,000 |
Accrued Interest | 34,169 | 41,069 |
Amortized Discount | ||
Amortized Cost | 9,049,787 | 12,711,069 |
Unrealized Gain (Loss) | (32,429) | (68,087) |
Estimated Fair Value | 9,017,358 | 12,642,982 |
U.S. Treasuries [Member] | ||
Marketable Securities [Line Items] | ||
Cost | 7,153,587 | 10,564,160 |
Accrued Interest | 25,707 | |
Amortized Discount | 53,291 | 93,812 |
Amortized Cost | 7,206,878 | 10,683,679 |
Unrealized Gain (Loss) | 2,883 | (30,229) |
Estimated Fair Value | $ 7,209,761 | $ 10,653,450 |
Cash Equivalents and Investme_5
Cash Equivalents and Investments (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Held-to-maturity | $ 488,824 | $ 503,502 |
Other | 240,342 | 128,168 |
Dividend and interest income | $ 729,166 | $ 631,670 |
Cash Equivalents and Investme_6
Cash Equivalents and Investments (Details Narrative) | Dec. 31, 2019USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Aggregate deposite | $ 1,750,000 |
Loans Receivable (Details)
Loans Receivable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | $ 4,533,411 | $ 4,929,842 |
Less Allowance | (673,000) | (818,000) |
Notes, Loans and Financing Receivable, Net, current | 3,860,411 | 4,111,842 |
Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 3,699,956 | 3,889,884 |
1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 227,343 | 265,687 |
31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 147,106 | 229,544 |
61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 120,193 | 168,638 |
91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 119,466 | 140,481 |
121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 110,673 | 129,385 |
151 To 180 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 108,674 | 106,223 |
Payday [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 4,134,878 | 4,249,154 |
Less Allowance | (673,000) | (770,000) |
Notes, Loans and Financing Receivable, Net, current | 3,461,878 | 3,479,154 |
Payday [Member] | Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 3,322,131 | 3,314,182 |
Payday [Member] | 1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 216,753 | 224,091 |
Payday [Member] | 31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 140,872 | 199,259 |
Payday [Member] | 61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 117,544 | 153,449 |
Payday [Member] | 91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 118,626 | 131,480 |
Payday [Member] | 121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 110,278 | 125,074 |
Payday [Member] | 151 To 180 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 108,674 | 101,619 |
Installment Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 88,599 | 359,241 |
Less Allowance | (48,000) | |
Notes, Loans and Financing Receivable, Net, current | 88,599 | 311,241 |
Installment Loans [Member] | Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 67,891 | 254,255 |
Installment Loans [Member] | 1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 10,590 | 41,596 |
Installment Loans [Member] | 31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 6,234 | 30,285 |
Installment Loans [Member] | 61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 2,649 | 15,189 |
Installment Loans [Member] | 91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 840 | 9,001 |
Installment Loans [Member] | 121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 395 | 4,311 |
Installment Loans [Member] | 151 To 180 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 4,604 | |
Pawn [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 309,934 | 321,447 |
Less Allowance | ||
Notes, Loans and Financing Receivable, Net, current | 309,934 | 321,447 |
Pawn [Member] | Current [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | 309,934 | 321,447 |
Pawn [Member] | 1 To 30 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
Pawn [Member] | 31 to 60 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
Pawn [Member] | 61 To 90 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
Pawn [Member] | 91 To 120 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
Pawn [Member] | 121 To 150 Days [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | ||
Pawn [Member] | 151 To 180 Days [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 ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||
Loans receivable allowance, beginning of year | $ 818,000 | $ 833,000 |
Provision for loan losses charged to expense | 975,938 | 1,241,638 |
Charge-offs, net | (1,120,938) | (1,256,638) |
Loans receivable allowance, end of year | $ 673,000 | $ 818,000 |
Loans Receivable Allowance (D_2
Loans Receivable Allowance (Details Narrative) | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 40.00% |
1 To 30 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 40.00% |
31 to 60 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 66.00% |
61 To 90 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 85.00% |
91 To 120 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 89.00% |
121 To 150 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 92.00% |
151 To 180 Days [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Percentage of historical written off | 93.00% |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable | $ 530,476 | $ 518,208 |
Less allowance | (13,000) | (25,000) |
Net accounts receivable | 517,476 | 493,208 |
Cellular Retail [Member] | ||
Accounts receivable | 318,235 | 130,251 |
Less allowance | (13,000) | |
Net accounts receivable | 305,235 | 130,251 |
Direct to Consumer [Member] | ||
Accounts receivable | 27,722 | 372,076 |
Less allowance | (25,000) | |
Net accounts receivable | 27,722 | 347,076 |
Consumer Finance [Member] | ||
Accounts receivable | 184,519 | 15,881 |
Less allowance | ||
Net accounts receivable | $ 184,519 | $ 15,881 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narratve) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Net accounts receivable unsettled of credit card | 68.00% | 57.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Finished Goods | ||
TOTAL | $ 8,330,691 | $ 8,467,512 |
Reserve | (1,065,000) | (670,000) |
Cellular Retail [Member] | ||
Finished Goods | ||
TOTAL | 5,687,771 | 5,456,898 |
Direct to Consumer [Member] | ||
Finished Goods | ||
TOTAL | 2,888,483 | 2,848,484 |
Consumer Finance [Member] | ||
Finished Goods | ||
TOTAL | 819,437 | 832,130 |
Reserve [Member] | ||
Finished Goods | ||
Reserve | $ (1,065,000) | $ (670,000) |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Reduction in inventory | $ 1,065,000 | $ 670,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 17,051,859 | $ 16,576,998 | $ 16,873,533 |
Property, plant and equipment, acquisitions, gross | 1,606,331 | 30,000 | |
Property, plant and equipment, additions, gross | 720,379 | 960,883 | |
Property, plant and equipment, deletions, gross | (1,851,849) | (1,287,418) | |
Accumulated depreciation | (7,326,816) | (6,631,172) | (5,526,299) |
Accumulated depreciation, additions | (1,811,918) | (1,899,114) | |
Accumulated depreciation, deletions | 1,116,274 | 794,241 | |
Property, plant and equipment, net | 9,725,043 | 9,945,826 | 11,347,234 |
Property, plant and equipment, acquisitions, net | 1,606,331 | 30,000 | |
Property, plant and equipment, additions, net | (1,091,539) | (938,231) | |
Property, plant and equipment, deletions, net | (735,575) | (493,177) | |
Property, Equipment And Sales Floor [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 8,479,156 | 8,182,321 | 8,706,997 |
Property, plant and equipment, acquisitions, gross | 1,606,331 | 30,000 | |
Property, plant and equipment, additions, gross | 531,028 | 693,448 | |
Property, plant and equipment, deletions, gross | (1,840,524) | (1,248,124) | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,884,481 | 1,736,669 | 1,634,489 |
Property, plant and equipment, acquisitions, gross | |||
Property, plant and equipment, additions, gross | 159,137 | 102,180 | |
Property, plant and equipment, deletions, gross | (11,325) | ||
Building (owned) [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 5,488,222 | 5,458,008 | 5,292,753 |
Property, plant and equipment, acquisitions, gross | |||
Property, plant and equipment, additions, gross | 30,214 | 165,255 | |
Property, plant and equipment, deletions, gross | |||
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,200,000 | 1,200,000 | 1,200,000 |
Property, plant and equipment, acquisitions, gross | |||
Property, plant and equipment, additions, gross | |||
Property, plant and equipment, deletions, gross | |||
Other [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 39,294 | ||
Property, plant and equipment, acquisitions, gross | |||
Property, plant and equipment, additions, gross | |||
Property, plant and equipment, deletions, gross | $ (39,294) |
Property and Equipment (Detai_2
Property and Equipment (Details 1) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Property, Plant and Equipment [Abstract] | |
2020 | $ 1,765 |
2021 | 1,478 |
2022 | 903 |
2023 | 495 |
2024 | 303 |
Thereafter | 3,581 |
Total | $ 8,525 |
Leases (Details)
Leases (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease expense | $ 5,701 |
Variable lease expense | 2,708 |
Total lease expense | $ 8,409 |
Leases (Details 1)
Leases (Details 1) | Dec. 31, 2019 |
Other Information: | |
Weighted average remaining lease term for operating leases | 3 years |
Weighted average discount rate | 5.80% |
Leases (Details 2)
Leases (Details 2) - USD ($) | Dec. 31, 2019 | Jan. 02, 2019 | Dec. 31, 2018 |
Operating Leases | |||
Remainder of 2020 | $ 5,660 | ||
2021 | 3,940 | ||
2022 | 2,403 | ||
2023 | 1,144 | ||
2024 | 525 | ||
Thereafter | 118 | ||
Total future minimum lease payments | 13,790 | ||
Less: imputed interest | (1,265) | ||
Total | 12,525 | $ 11,760,000 | |
Current portion operating lease liabilities | 5,079,745 | ||
Non-Current operating lease liabilities | 7,444,789 | ||
Total | $ 12,525 | $ 11,760,000 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Jan. 02, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | |||
ROU operating lease assets | $ 11,530,000 | $ 12,344,894 | |
ROU operating lease liability | 11,760,000 | $ 12,525 | |
Deferred rent | $ 230,000 |
Goodwill and Long-Lived Asset_2
Goodwill and Long-Lived Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2018 | |
Goodwill | $ 13,355,591 | $ 13,355,591 | $ 13,355,591 |
Accumulated impairment losses | (7,559,063) | (7,559,063) | (7,559,063) |
Goodwill, net of impairment losses | 5,796,528 | 5,796,528 | 5,796,528 |
Goodwill acquired (disposed) during year | |||
Impairment losses | |||
Cellular Retail [Member] | |||
Goodwill | 5,765,284 | 5,765,284 | 5,765,284 |
Accumulated impairment losses | |||
Goodwill, net of impairment losses | 5,765,284 | 5,765,284 | 5,765,284 |
Goodwill acquired (disposed) during year | |||
Impairment losses | |||
Direct to Consumer Segment [Member] | |||
Goodwill | 31,244 | 31,244 | 31,244 |
Accumulated impairment losses | |||
Goodwill, net of impairment losses | 31,244 | 31,244 | 31,244 |
Goodwill acquired (disposed) during year | |||
Impairment losses | |||
Consumer Finance Segment [Member] | |||
Goodwill | 7,559,063 | 7,559,063 | 7,559,063 |
Accumulated impairment losses | (7,559,063) | (7,559,063) | (7,559,063) |
Goodwill, net of impairment losses | |||
Goodwill acquired (disposed) during year | |||
Impairment losses |
Goodwill and Long-Lived Asset_3
Goodwill and Long-Lived Assets (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross amortizable intangible assets | $ 10,229,031 | $ 10,369,533 | $ 10,608,426 |
Acquisitions, Gross | 747,903 | 46,707 | |
Acquisitions, accumulated amortization | |||
Acquisitions | 747,903 | 46,707 | |
Additions, accumulated amortization | (699,636) | (794,688) | |
Additions | (699,636) | (794,688) | |
Deletions, gross | (888,405) | (285,600) | |
Deletions, accumulated amortization | 714,678 | 212,922 | |
Deletions | (173,727) | (72,678) | |
Acquisition Non-amortizable trademarks | |||
Less accumulated amortization | (6,187,381) | (6,202,423) | (5,620,657) |
Net Amortizable Intangible Assets | 4,041,650 | 4,167,110 | 4,987,769 |
Non-amortizable trademarks | |||
Intangible Assets, net | 4,041,650 | 4,167,110 | 4,987,769 |
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross amortizable intangible assets | 10,002,031 | 10,142,533 | 10,381,426 |
Acquisitions, Gross | 747,903 | 46,707 | |
Additions, gross | |||
Deletions, gross | (888,405) | (285,600) | |
Other [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross amortizable intangible assets | 227,000 | 227,000 | $ 227,000 |
Acquisitions, Gross | |||
Additions, gross | |||
Deletions, gross |
Goodwill and Long-Lived Asset_4
Goodwill and Long-Lived Assets (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2020 | $ 677,627 | ||
2021 | 578,832 | ||
2022 | 539,117 | ||
2023 | 521,452 | ||
2024 | 491,721 | ||
Thereafter | 1,232,901 | ||
Finite-Lived Intangible Assets, Net | $ 4,041,650 | $ 4,167,110 | $ 4,987,769 |
Loans Receivable - Non-Current
Loans Receivable - Non-Current (Details narrative) | 12 Months Ended |
Dec. 31, 2019 | |
Loans Receivable Noncurrent Details Narrative Abstract | |
Loans receivable interest rate | 0.05 |
Deferred Revenue and Other Li_3
Deferred Revenue and Other Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Revenue Disclosure [Abstract] | ||
Deferred financing fees | $ 218,113 | $ 218,729 |
Merchandise credits and gift card liability | 576,717 | 794,043 |
Total | $ 794,830 | $ 1,012,772 |
Notes Payable - Long Term (Deta
Notes Payable - Long Term (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Total | $ 1,085,251 | $ 789,216 |
Less current maturities | (65,414) | |
Notes payable, noncurrent | 1,019,837 | 789,216 |
Note Payable to Seller [Member] | ||
Debt Instrument [Line Items] | ||
Total | 789,216 | $ 789,216 |
Note Payable to Seller Two [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 296,035 |
Notes Payable - Long Term (De_2
Notes Payable - Long Term (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2020 | $ 65,414 | |
2021 | 69,202 | |
2022 | 862,378 | |
2023 | 77,347 | |
2024 | 10,910 | |
Thereafter | ||
Long-term Debt | $ 1,085,251 | $ 789,216 |
Notes Payable - Long Term (De_3
Notes Payable - Long Term (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Note Payable to Seller [Member] | |
Debt Instrument [Line Items] | |
Maturity date | Aug. 5, 2022 |
Stated interest rate | 6.00% |
Note Payable to Seller Two [Member] | |
Debt Instrument [Line Items] | |
Maturity date | Jan. 4, 2024 |
Principal periodic payment | $ 6,692 |
Stated interest rate | 5.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | $ 1,026,000 | |
State | 292,000 | 42,000 |
Current Income Tax Expense (Benefit) | 1,318,000 | 42,000 |
Deferred: | ||
Federal | (319,000) | (574,000) |
State | (91,000) | (87,000) |
Deferred Income Tax Expense (Benefit) | (410,000) | (661,000) |
Income tax expense (benefit) | $ 908,000 | $ (619,000) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Allowance for accounts and loans receivable | $ 179,000 | $ 216,000 |
Inventory capitalization | 57,000 | 57,000 |
Inventory reserve | 139,000 | 136,000 |
Accrued expenses | 147,000 | 116,000 |
Net operating loss carryforward | 135,000 | |
Prepaid expense | (209,000) | (243,000) |
Property and equipment | (587,000) | (686,000) |
Goodwill and intangible assets | (111,000) | 259,000 |
Installment sale proceeds receivable | (785,000) | |
Net deferred income tax asset (liability) | $ (385,000) | $ (795,000) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
Income tax expense (benefit) using the statutory federal rate | $ 917,000 | $ (449,000) |
State income taxes, net of federal benefit | 235,000 | (55,000) |
Non-deductible meals and entertainment | 12,000 | 9,000 |
Noncontrolling interest's pass through income | (270,000) | (163,000) |
Other | 14,000 | 39,000 |
Income tax expense (benefit) | $ 908,000 | $ (619,000) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Dec. 31, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
Net operating loss | $ 500,000 |
Equity (Details)
Equity (Details) - WCR 2015 Stock Incentive Plan [Member] | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding and nonvested at beginning | shares | |
Granted | shares | |
Vested | shares | |
Forfeited | shares | |
Outstanding and nonvested at ending | shares | |
Exercisable at ending | shares | 65,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Outstanding and nonvested at beginning | |
Granted | |
Vested | |
Forfeited | |
Outstanding and nonvested at ending | |
Exercisable at ending | $ 6 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding and nonvested at beginning | $ | |
Granted | |
Vested | $ | |
Forfeited | |
Outstanding and nonvested at ending | $ | |
Exercisable at ending | $ |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 06, 2015 | Feb. 02, 2008 | |
PQH Wireless, Inc. [Member] | Cellular Retail [Member] | PQH South LLC. [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Description of noncontrolling interest | Less than a 100% | ||
2015 Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 65,000 | ||
Vesting option granted date | Feb. 9, 2015 | ||
Expiration period | 10 years | ||
2008 Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved for future issuance (in shares) | 100,000 | ||
WCR 2015 Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved for future issuance (in shares) | 100,000 | ||
Options granted | |||
Vested option | |||
Unrecognized stock-based compensation expense | $ 0 |
Dividends (Details)
Dividends (Details) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Dividends [Member] | |
Date Declared | Feb. 2, 2019 |
Record Date | Mar. 1, 2019 |
Dividend Per Share | $ / shares | $ 0.05 |
Payment Date | Mar. 11, 2019 |
Dividend Paid | $ | $ 469,434 |
Dividends One [Member] | |
Date Declared | May 2, 2019 |
Record Date | May 23, 2019 |
Dividend Per Share | $ / shares | $ 0.05 |
Payment Date | Jun. 3, 2019 |
Dividend Paid | $ | $ 469,434 |
Dividends Two [Member] | |
Date Declared | Aug. 1, 2019 |
Record Date | Aug. 23, 2019 |
Dividend Per Share | $ / shares | $ 0.05 |
Payment Date | Sep. 3, 2019 |
Dividend Paid | $ | $ 468,912 |
Dividends Three [Member] | |
Date Declared | Oct. 31, 2019 |
Record Date | Nov. 15, 2019 |
Dividend Per Share | $ / shares | $ 0.05 |
Payment Date | Nov. 25, 2019 |
Dividend Paid | $ | $ 467,435 |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue Source Concentration Details Narrative Abtract | ||
Compensation expense | $ 29,190,000 | $ 29,290,000 |
Other Operating Expenses (Detai
Other Operating Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | ||
Bank fees | $ 1,956,674 | $ 1,915,795 |
Collection costs | 324,595 | 331,712 |
Insurance | 805,547 | 867,204 |
Management and advisory fees | 835,154 | 794,800 |
Professional and consulting fees | 1,406,914 | 1,935,561 |
Supplies | 658,500 | 702,371 |
Disposal loss on closed/sold locations | 75,077 | 1,731,893 |
Other | 2,385,780 | 2,538,773 |
Total other expenses | $ 8,448,241 | $ 10,818,109 |
Acquisitions (Details)
Acquisitions (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Business Combination, Description [Abstract] | |
Cash | $ 738 |
Note payable | 18 |
Noncontrolling interests / equity | 218 |
Purchase price | $ 974 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment | $ 1,606,331 | $ 30,000 |
Asset Purchase Agreement [Member] | Cellular Retail Segment [Member] | ||
Cash | 136 | |
Inventory | 458 | |
Property and equipment | 1,579 | |
Intangible assets | 748 | |
Operating lease right-of-use assets | 3,606 | |
Other assets | 582 | |
Other liabilities | (1,179) | |
Notes payable | (1,350) | |
Operating lease liabilities | (3,606) | |
Net assets acquired | $ 974 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Revenue from external customers | $ 108,402,000 | $ 105,342,000 |
Fees and interest income | 8,513,000 | 8,923,000 |
Total Revenue | 116,914,541 | 114,264,960 |
Depreciation and amortization | 2,512,000 | 2,694,000 |
Interest expense | 115,438 | 189,281 |
Income tax expense (benefit) | 908,000 | (619,000) |
Net income (loss) | 3,455,550 | (1,520,709) |
Total segment assets | 91,906,628 | 80,439,843 |
Expenditures for segmented assets | 1,315,000 | 1,038,000 |
Cellular Retail [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue from external customers | 68,682,000 | 65,096,000 |
Total Revenue | 68,682,000 | 65,096,000 |
Depreciation and amortization | 1,961,000 | 2,121,000 |
Interest expense | 62,000 | 47,000 |
Income tax expense (benefit) | 490,000 | (573,000) |
Net income (loss) | 2,502,000 | (1,272,000) |
Total segment assets | 35,816,000 | 24,816,000 |
Expenditures for segmented assets | 1,007,000 | 512,000 |
Direct to Consumer [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue from external customers | 38,024,000 | 38,433,000 |
Total Revenue | 38,024,000 | 38,433,000 |
Depreciation and amortization | 513,000 | 512,000 |
Interest expense | 2,000 | 5,000 |
Income tax expense (benefit) | 175,000 | (136,000) |
Net income (loss) | 588,000 | (481,000) |
Total segment assets | 12,397,000 | 13,769,000 |
Expenditures for segmented assets | 308,000 | 504,000 |
Consumer Finance [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue from external customers | 1,696,000 | 1,813,000 |
Fees and interest income | 8,513,000 | 8,923,000 |
Total Revenue | 10,209,000 | 10,736,000 |
Depreciation and amortization | 31,000 | 51,000 |
Income tax expense (benefit) | 381,000 | 397,000 |
Net income (loss) | 1,066,000 | 1,117,000 |
Total segment assets | 8,582,000 | 7,408,000 |
Expenditures for segmented assets | 22,000 | |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | 7,000 | 10,000 |
Interest expense | 51,000 | 137,000 |
Income tax expense (benefit) | (138,000) | (307,000) |
Net income (loss) | (700,000) | (885,000) |
Total segment assets | $ 35,112,000 | $ 34,447,000 |
Segment Information (Details N
Segment Information (Details Narrative) | 12 Months Ended |
Dec. 31, 2019Number | |
Segment Reporting [Abstract] | |
Number of operating segment | 4 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Aug. 16, 2017USD ($) | Dec. 31, 2019USD ($)Number | Dec. 31, 2018USD ($) |
Cellular Retail [Member] | |||
Number of stores | Number | 45 | ||
Non-cancelable operating leases | $ 2,208,000 | ||
Amended and Restated Employment Agreement [Member] | Mr. Angel Donchev [Member] | Maximum [Member] | |||
Bonus arrangement current | $ 135,000 | ||
Other Employment Agreement [Member] | |||
Bonus arrangement current | $ 881,000 | $ 286,000 |
Management and Advisory Agree_2
Management and Advisory Agreement (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other fee payable description | The second amended and restated management requires the Company to pay Blackstreet a fee in an amount equal to $400,000 upon the closing of an acquisition in consideration for Blackstreet’s referral to the Company of such acquisition opportunity, and Blackstreet’s assistance in the performance of due diligence services relating thereto. | |
Management fee payable description | The annual fees under the agreement equal the greater of (i) $674,840 (subject to annual increases of five percent) or (ii) five percent of Western Capital’s “EBITDA” as defined under the agreement. | |
Investment Advisory, Management and Administrative Service [Member] | ||
Total Revenues | $ 735,154 | $ 697,335 |
Committees of the Board of Di_2
Committees of the Board of Directors (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Committees Of Board Of Directors | ||
Director committees fees expense | $ 42,000 | $ 21,000 |
Related Party Transactions (De
Related Party Transactions (Details Narrative) | Aug. 31, 2011USD ($)Number | Dec. 31, 2019USD ($)Number | Dec. 31, 2018USD ($) |
New Lease Property [Member] | Ladary Inc [Member] | |||
Number of properties | Number | 2 | ||
Lease payments | $ 4,200 | ||
Lease term | 4 years | ||
Number of operating leases | Number | 2 | ||
Other Related Party [Member] | |||
Number of properties | Number | 3 | ||
Other Related Party [Member] | Lease Property Month-To-Month [Member] | |||
Lease payments | $ 1,680 | ||
Other Related Party [Member] | Lease Property Month-To-Month [Member] | |||
Lease payments | 1,200 | ||
Other Related Party [Member] | Lease Property Month-To-Month [Member] | |||
Lease payments | 5,500 | ||
Related Party [Member] | |||
Lease payments | 209,000 | $ 205,000 | |
Related Party [Member] | Latter Lease [Member] | |||
Lease payments | $ 6,696 | ||
Lease term | 5 years |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Feb. 13, 2020$ / shares |
Subsequent Event [Line Items] | |
Date Declared | Feb. 13, 2020 |
Record Date | Feb. 28, 2020 |
Dividend Per Share | $ 0.05 |
Payment Date | Mar. 9, 2020 |