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Discontinued Operations
 9 Months Ended
Sep. 30, 2014
Discontinued Operations [Abstract]  
Discontinued Operations

(10) Discontinued Operations

 

In January of 2014, the Company elected to discontinue the operations of six of its Southern Bullion locations due to the lack of profitability and management's belief that it was unlikely that profitability would be reached in the foreseeable future. The Company officially discontinued these operations on February 3, 2014, and the operating results for these six locations for the three months ended March 31, 2014 and 2013 were reclassified as discontinued operations in the consolidated statements of operations for the quarter ended March 31, 2014.

 

In April of 2014, the Company elected to discontinue the operations of all 17 remaining Southern Bullion locations. During 2013, the Southern Bullion operations generated a net loss of approximately $1.9 million. The significant change in the precious metal markets, including a 30% decline in the spot price of gold since the acquisition of Southern Bullion in 2011, had a disproportionately negative impact on the customer traffic, transactional volume and profitability of the Southern Bullion operations. The Company officially discontinued these operations on or about April 19, 2014. The operating results for all Southern Bullion operations have been reclassified as discontinued operations in the consolidated statements of operations beginning with the quarter ended June 30, 2014.

 

  Three Months Ended September 30,

Nine Months Ended September 30,
    2014          2013          2014          2013
                                 
Revenue:                        
Sales   $   59   $   4,754,922   $   5,367,867   $   17,514,693
Cost of goods sold       (5,433 )     3,534,443       3,642,244       13,005,112
Gross margin       5,492       1,220,479       1,725,623       4,509,581
                                 
Expenses:                                
Selling, general, and administrative expenses       (76,042 )     1,689,995       2,480,104       5,310,899
Depreciation and amortization       -       99,753       3,259,552       274,622
Total expenses       (76,042 )     1,789,748       5,739,656       5,585,521
                                 
Operating income (loss)       81,534       (569,269 )     (4,014,033 )     (1,075,940)
                                 
Other expense (income):                                
Other income, net       (77 )     (596 )     (19,475 )     (18,417)
Interest (income) expense       (920 )     -       9,968       -
        (997 )     (596 )     (9,507 )     (18,417)
                                 
Income (loss) from discontinued operations before income taxes       82,531       (568,673 )     (4,004,526 )     (1,057,523)
                                 
Income tax benefit       (84,226 )     -       (18,699 )     -
                                 
                                 
Income (loss) from discontinued operations after income taxes   $   166,757   $   (568,673 ) $   (3,985,827 ) $   (1,057,523)

 

Discontinued operations for the nine months ended September 30, 2014 include store operations through April 17, 2014, ongoing expenses for key Southern Bullion personnel involved in winding down the business, and expenses related to cancellation of leases and other contracts. For the nine months ended September 30, 2014, discontinued operations also includes the write-off of the $2.9 million intangible asset attributed to the “Southern Bullion Coin & Jewelry” trade name and the write-off of approximately $296,000 related to the net book value of fixed assets previously utilized in Southern Bullion operations. The Company does not anticipate that it will utilize the trade name in the foreseeable future. 

 

For the quarter ended September 30, 2014, income from discontinued operations includes the reversal of certain previously established expense accruals, as the Company has been able to successfully negotiate releases from various long term contracts and leases related to Southern Bullion. Income from discontinued operations also includes state and local tax benefits estimated as the Company exits certain geographies. The Company believes it has now recognized all material expenses related to the closure of Southern Bullion operations.