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Revenue Recognition

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

(8)

Revenue Recognition

Revenue is recognized when we transfer promised goods or jewelry and watch repair services to customers in an amount that reflects the consideration to which the Company expects to be paid in exchange for those goods and services. The Company’s revenue is primarily generated from the sale of finished goods and jewelry and watch repair services through retail, e-commerce or wholesale channels. We generate revenue through the sale of jewelry, rare coins, currency, collectibles, bullion, scrap and the repair of jewelry and watches. The Company’s performance obligations underlying such revenue, and the timing of revenue recognition, remains substantially unchanged following the adoption of ASC 606.

ASC 606 provides guidance to identify performance obligations for revenue-generating transactions. The initial guide is to identify the contract with a customer created with the sales invoice or a repair ticket. Secondly, to identify the performance obligations in the contract as we promise to deliver the purchased item, or promised repairs in return for payment or future payment as a receivable. The third guide is determining the transaction price of the contract obligation as in the full ticket price, negotiated price or a repair price. The next step is to allocate the transaction price to the performance obligations as we designate a separate price for each item. The final step in the guidance is to recognize revenue as each performance obligation is satisfied.

The following disaggregation of revenue is listed by sales category:

		Three Months Ended March 31,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	4,556,368			$	1,325,658				29.1	%		$	5,299,962			$	1,596,620				30.1	%
Bullion/Rare Coin			9,984,146				516,157				5.2	%			7,099,751				553,781				7.8	%
Scrap			1,218,151				185,047				15.2	%			1,283,644				209,484				16.3	%
Other			260,865				191,620				73.5	%			372,515				142,121				38.2	%
		$	16,019,530			$	2,218,482				13.8	%		$	14,055,872			$	2,502,006				17.8	%

The following disaggregation of revenue is listed by sales category and state:

TEXAS		Three Months Ended March 31,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	4,149,254			$	1,200,632				28.9	%		$	4,618,131			$	1,385,252				30.0	%
Bullion/Rare Coin			9,780,278				501,592				5.1	%			6,890,182				538,025				7.8	%
Scrap			1,218,151				185,047				15.2	%			1,283,644				209,484				16.3	%
Other			257,104				189,474				73.7	%			372,515				142,121				38.2	%
		$	15,404,787			$	2,076,745				13.5	%		$	13,164,472			$	2,274,882				17.3	%

SOUTH CAROLINA		Three Months Ended March 31,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	407,114			$	125,026				30.7	%		$	681,831			$	211,368				31.0	%
Bullion/Rare Coin			203,868				14,565				7.1	%			209,569				15,756				7.5	%
Other			3,761				2,146				57.1	%			-				-				-
		$	614,743			$	141,737				23.1	%		$	891,400			$	227,124				25.5	%

Revenues for monetary transactions (i.e., cash and receivables) with dealers and the retail public are recognized when the merchandise is delivered and payment has been made either by immediate payment or through a receivable obligation at one of our over the counter retail stores. We also recognize revenue upon the shipment of goods when retail and wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Our scrap is sold to a local related entity refiner Elemetal. Since Elemetal is local we deliver the scrap to the refiner. The metal is assayed, price is determined from the assay and payment is made usually in one to two days. Revenue is recognized from the sale once payment is received.

We also offer a structured layaway plan. When a retail customer utilizes the layaway plan, we collect a minimum payment of 25% of the sales price, establish a payment schedule for the remaining balance and hold the merchandise as collateral as security against the customer’s deposit until all amounts due are paid in full. Revenue for layaway sales is recognized when the merchandise is paid in full and delivered to the retail customer. Layaway revenue is also recognized when a customer fails to pay in accordance with the sales contract and the sales item is returned to inventory with the forfeit of deposited funds, typically after 90 days.

In limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. When we exchange merchandise for similar merchandise and there is no monetary component to the exchange, we do not recognize any revenue. Instead, the basis of the merchandise relinquished becomes the basis of the merchandise received, less any indicated impairment of value of the merchandise relinquished. When we exchange merchandise for similar merchandise and there is a monetary component to the exchange, we recognize revenue to the extent of the monetary assets received and determine the cost of sale based on the ratio of monetary assets received to monetary and non-monetary assets received multiplied by the cost of the assets surrendered.

The Company offers the option of third party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the financing company. We recognize the revenue of the sale upon the promise of the financing company to pay.

We have a return policy (money-back guarantee). The policy covers retail transactions involving jewelry, graded rare coins and currency only. Customers may return jewelry, graded rare coins and currency purchased within 30 days of the receipt of the items for a full refund as long as the items are returned in exactly the same condition as they were delivered. In the case of jewelry, graded rare coins and currency sales on account, customers may cancel the sale within 30 days of making a commitment to purchase the items. The receipt of a deposit and a signed purchase order evidences the commitment. Any customer may return a jewelry item or graded rare coins and currency if they can demonstrate that the item is not authentic, or there was an error in the description of a graded coin or currency piece. Returns are accounted for as a reversal of the original transaction, with the effect of reducing revenues, and cost of sales, and returning the merchandise to inventory. We have established an allowance for estimated returns related to Fiscal 2018 sales, which is based on our review of historical returns experience, and reduces our reported revenues and cost of sales accordingly. As of March 31, 2019 and December 31, 2018, our allowance for returns remained the same at $28,402 and $28,402, respectively.