Revenue Recognition

6 Months Ended

Jun. 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:

	Three Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
DGSE
Jewelry	$	4,093,488	$	1,240,299		30.3	%	$	4,525,109	$	1,020,470		22.6	%
Bullion/Rare Coin		10,937,998		509,628		4.7	%		6,608,590		847,585		12.8	%
Scrap		1,748,028		256,914		14.7	%		1,181,941		233,887		19.8	%
Other		1,799,123		262,987		14.6	%		417,622		88,536		21.2	%
Subtotal		18,578,637		2,269,828		12.2	%		12,733,262		2,190,478		17.2	%
Echo Entities
5/20/19 - 6/30/2019									-		-		-
Recycle		1,588,084		747,819		47.1	%		-		-		-
Reuse		770,716		347,668		45.1	%
Subtotal		2,358,800		1,095,487		46.4	%		-		-		-
	$	20,937,437	$	3,365,315		16.1	%	$	12,733,262	$	2,190,478		17.2	%

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

TEXAS	Three Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
DGSE
Jewelry	$	3,863,109	$	1,139,043		29.5	%	$	4,169,364	$	908,970		21.8	%
Bullion/Rare Coin		10,773,197		481,379		4.5	%		6,514,586		830,976		12.8	%
Scrap		1,748,028		256,914		14.7	%		1,181,941		233,887		19.8	%
Other		1,459,655		175,553		12.0	%		331,507		32,381		9.8	%
Subtotal		17,843,989		2,052,889		11.5	%		12,197,398		2,006,214		16.4	%
Echo Entities
5/20/19 - 6/30/2019									-		-		-
Recycle		1,588,084		747,819		47.1	%		-		-		-
Reuse		770,716		347,668		45.1	%
Subtotal		2,358,800		1,095,487		46.4	%		-		-		-
	$	20,202,789	$	3,148,376		15.6	%	$	12,197,398	$	2,006,214		16.4	%

SOUTH CAROLINA	Three Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
DGSE
Jewelry	$	230,379	$	101,256		44.0	%	$	355,745	$	111,500		31.3	%
Bullion/Rare Coin		164,801		28,249		17.1	%		94,004		16,882		18.0	%
Other		339,468		87,434		25.8	%		86,115		56,155		65.2	%
Subtotal		734,648		216,939		29.5	%		535,864		184,537		34.4	%
Echo Entities
5/20/19 - 6/30/2019		-		-		-			-		-		-
Subtotal		-		-		-			-		-		-
	$	734,648	$	216,939		29.5	%	$	535,864	$	184,537		34.4	%

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

	Six Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
DGSE
Jewelry	$	8,395,236	$	2,565,957		30.6	%	$	9,825,072	$	2,617,091		26.6	%
Bullion/Rare Coin		20,922,144		1,025,785		4.9	%		13,708,341		1,401,366		10.2	%
Scrap		2,966,179		441,961		14.9	%		2,465,585		443,371		18.0	%
Other		2,314,608		454,607		19.6	%		790,137		230,657		29.2	%
Subtotal		34,598,167		4,488,310		13.0	%		26,789,135		4,692,485		17.5	%
Echo Entities
5/20/19 - 6/30/2019									-		-		-
Recycle		1,588,084		747,819		47.1	%		-		-		-
Reuse		770,716		347,668		45.1	%
Subtotal		2,358,800		1,095,487		46.4	%		-		-		-
	$	36,956,967	$	5,583,797		15.1	%	$	26,789,135	$	4,692,485		17.5	%

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

TEXAS	Six Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
Jewelry	$	7,757,744	$	2,267,076		29.2	%	$	8,874,175	$	2,270,136		25.6	%
Bullion/Rare Coin		20,553,475		982,971		4.8	%		13,404,768		1,348,718		10.1	%
Scrap		2,966,179		441,961		14.9	%		2,465,585		443,371		18.0	%
Other		1,971,378		365,027		18.5	%		647,343		149,981		23.2	%
Subtotal		33,248,776		4,057,035		12.2	%		25,391,871		4,212,206		16.6	%
Echo Entities
5/20/19 - 6/30/2019									-		-		-
Recycle		1,588,084		747,819		47.1	%		-		-		-
Reuse		770,716		347,668		45.1	%
Subtotal		2,358,800		1,095,487		46.4	%		-		-		-
	$	35,607,576	$	5,152,522		14.5	%	$	25,391,871	$	4,212,206		16.6	%

SOUTH CAROLINA	Six Months Ended June 30,
	2019							2018
	Revenues		Gross Profit		Margin			Revenues		Gross Profit		Margin
Jewelry	$	637,493	$	298,881		46.9	%	$	950,897	$	346,955		36.5	%
Bullion/Rare Coin		368,669		42,814		11.6	%		303,573		52,648		17.3	%
Other		343,229		89,580		26.1	%		142,794		80,676		56.5	%
Subtotal		1,349,391		431,275		32.0	%		1,397,264		480,279		34.4	%
Echo Entities
5/20/19 - 6/30/2019		-		-		-			-		-		-
Subtotal		-		-		-			-		-		-
	$	1,349,391	$	431,275		32.0	%	$	1,397,264	$	480,279		34.4	%

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 June 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.