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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

(10) Revenue Recognition

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

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

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

CONSOLIDATED		Three Months Ended September 30,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
DGSE
Jewelry		$	4,036,825			$	1,149,134				28.5	%		$	3,694,204			$	1,223,144				33.1	%
Bullion/Rare Coin			9,621,146				442,573				4.6	%			8,120,071				727,555				9.0	%
Scrap			2,547,912				359,255				14.1	%			1,317,133				226,090				17.2	%
Other			447,044				67,890				15.2	%			527,987				300,380				56.9	%

Subtotal			16,652,927				2,018,852				12.1	%			13,659,395				2,477,169				18.1	%

Echo Entities
Recycle			5,133,181				2,408,416				46.9	%			-				-				-
Reuse			1,075,093				759,186				70.6	%			-				-				-

Subtotal			6,208,274				3,167,602				51.0	%			-				-				-

		$	22,861,201			$	5,186,454				22.7	%		$	13,659,395			$	2,477,169				18.1	%

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

TEXAS		Three Months Ended September 30,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
DGSE
Jewelry		$	3,506,998			$	957,867				27.3	%		$	3,404,889			$	1,083,550				31.8	%
Bullion/Rare Coin			9,473,024				433,389				4.6	%			8,001,990				711,529				8.9	%
Scrap			2,547,912				359,255				14.1	%			1,317,133				226,090				17.2	%
Other			385,823				54,360				14.1	%			498,409				299,600				60.1	%

Subtotal			15,913,757				1,804,871				11.3	%			13,222,421				2,320,769				17.6	%

Echo Entities
Recycle			5,133,181				2,408,416				46.9	%			-				-				-
Reuse			1,075,094				759,186				70.6	%			-				-				-

Subtotal			6,208,275				3,167,602				51.0	%			-				-				-

		$	22,122,032			$	4,972,473				22.5	%		$	13,222,421			$	2,320,769				17.6	%

SOUTH CAROLINA		Three Months Ended June 30,
		2019												2018
		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
DGSE
Jewelry		$	529,825			$	191,267				36.1	%		$	289,315			$	139,594				48.2	%
Bullion/Rare Coin			148,122				9,184				6.2	%			118,081				16,026				13.6	%
Other			61,222				13,530				22.1	%			29,578				780				2.6	%

Subtotal			739,169				213,981				28.9	%			436,974				156,400				35.8	%

Echo Entities			-				-				-				-				-				-

Subtotal			-				-				-				-				-				-

		$	739,169			$	213,981				28.9	%		$	436,974			$	156,400				35.8	%

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

CONSOLIDATED		Nine Months Ended September 30,
		2019												2018
DGSE		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	12,432,060			$	3,715,091				29.9	%		$	13,519,276			$	3,840,235				28.4	%
Bullion/Rare Coin			30,543,290				1,468,358				4.8	%			21,828,412				2,128,921				9.8	%
Scrap			5,514,091				801,216				14.5	%			3,782,718				669,461				17.7	%
Other			2,761,652				522,497				18.9	%			1,318,124				531,037				40.3	%

Subtotal			51,251,093				6,507,162				12.7	%			40,448,530				7,169,654				17.7	%

Echo Entities
Recycle			6,721,265				3,156,235				47.0	%			-				-				-
Reuse			1,845,810				1,106,854				60.0	%

Subtotal			8,567,075				4,263,089				49.8	%			-				-				-

		$	59,818,168			$	10,770,251				18.0	%		$	40,448,530			$	7,169,654				17.7	%

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

TEXAS		Nine Months Ended September 30,
		2019												2018
DGSE		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	11,264,742			$	3,224,943				28.6	%		$	12,279,064			$	3,353,686				27.3	%
Bullion/Rare Coin			30,026,499				1,416,360				4.7	%			21,406,758				2,060,247				9.6	%
Scrap			5,514,091				801,216				14.5	%			3,782,718				669,461				17.7	%
Other			2,357,201				419,387				17.8	%			1,145,752				449,581				39.2	%

Subtotal			49,162,533				5,861,906				11.9	%			38,614,292				6,532,975				16.9	%

Echo Entities
Recycle			6,721,265				3,156,235				47.0	%			-				-				-
Reuse			1,845,810				1,106,854				60.0	%

Subtotal			8,567,075				4,263,089				49.8	%			-				-				-

		$	57,729,608			$	10,124,995				17.5	%		$	38,614,292			$	6,532,975				16.9	%

SOUTH CAROLINA		Nine Months Ended September 30,
		2019												2018
DGSE		Revenues				Gross Profit				Margin				Revenues				Gross Profit				Margin
Jewelry		$	1,167,318			$	490,148				42.0	%		$	1,240,212			$	486,549				39.2	%
Bullion/Rare Coin			516,791				51,998				10.1	%			421,654				68,674				16.3	%
Other			404,451				103,110				25.5	%			172,372				81,456				47.3	%

Subtotal			2,088,560				645,256				30.9	%			1,834,238				636,679				34.7	%

Echo Entities

Subtotal			-				-				-				-				-				-

		$	2,088,560			$	645,256				30.9	%		$	1,834,238			$	636,679				34.7	%

Revenues for monetary transactions (i.e., cash and receivables) with commercial dealers and the retail public are recognized when the merchandise is delivered and payment has been made either by immediate payment or through a receivable obligation. We also recognize revenue upon the shipment of goods when retail or wholesale customers have fulfilled their obligation to pay, or promise to pay, through e-commerce or phone sales. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Our scrap is sold to a local refiner that was a related party before the purchase of the Echo Entities on May 20, 2019. Since the refiner is local we deliver the scrap to the refiner. The metal is assayed, price is determined from the assay and payment is made usually in one to two days. Revenue is recognized from the sale once payment is received.

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

In our retail operations, in limited circumstances, we exchange merchandise for similar merchandise and/or monetary consideration with both dealers and retail customers, for which we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 845, Nonmonetary Transactions. 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 our retail customers the option of third party financing for customers wishing to borrow money for the purchase. The customer applies on-line with the third party and upon going through the credit check will be approved or denied. If accepted, the customer is allowed to purchase according to the limits set by the financing company. We recognize the revenue of the sale upon the promise of the financing company to pay.

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

The Echo Entities are large-scale processors of circuit boards and electronic waste. We are committed to fast and cost-efficient service to many different industries that need to recycle electronic components. There are three main revenue streams within our product mix. The first category is recycling fees, whereby we will receive electronic components and other material to process from a vendor. Upon the determination of the makeup of the materials we charge a processing fee to the vendor and also pay them for items we can sell. Revenue is recognized when service charges are determined after waste materials are sorted and processed. The second revenue stream is outright sales, which is the sale of processed material to a customer after we have sorted material, charged recycling fees and paid our vendors for that material. The sale is recognized when delivery has occurred and title and risk of loss has passed to the buyer upon the notice of bill of sale ending with a cash transaction or evidence of credit extended producing a trade accounts receivable. The third revenue stream is the settlement of precious metals processed from our recycling services. The precious metal we extract is sent to a refiner and is assayed. We recognize revenue when we receive the settlement from the refiner, except at quarter and year end when we accrue any outstanding settlements received after the end of a quarter or year.