UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

[x]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

OR

 

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission File Number 001-36589

 

WILHELMINA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

 

Delaware 74-2781950
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

200 Crescent Court, Suite 1400, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)

 

(214) 661-7488
(Registrant’s telephone number, including area code)
 
n/a
(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value WHLM Nasdaq Capital Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [x] Yes  [ ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [x] Yes  [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer  [  ] Accelerated filer [  ]
  Non-accelerated filer [ x ] Smaller reporting company [x]
  Emerging growth company [  ]  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [  ] Yes  [x] No

 

As of August 13, 2019, the registrant had 5,175,573 shares of common stock outstanding.

 

 1 

 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

 

Quarterly Report on Form 10-Q

 

For the Three and Six Months Ended June 30, 2019

 

PART I FINANCIAL INFORMATION 3
     
  Item 1. Financial Statements 3
     
    Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018 3
     
    Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited) 4
     
    Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited) 5
       
    Consolidated Statements of Cash Flow for the Six Months Ended June 30, 2019 and 2018 (Unaudited) 6
     
    Notes to Consolidated Financial Statements (Unaudited) 7
     
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
     
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
     
  Item 4. Controls and Procedures 16
     
PART II OTHER INFORMATION 16
     
  Item 1. Legal Proceedings 16
     
  Item 1.A. Risk Factors 17
     
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
     
  Item 3. Defaults Upon Senior Securities 18
     
  Item 4. Mine Safety Disclosures 18
     
  Item 5. Other Information 18
     
  Item 6. Exhibits 18
     
SIGNATURES 19

 

 2 

 

PART I

 

FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) 

 

    (Unaudited)        
   

June 30,

2019

   

December 31,

2018

 
ASSETS      
Current assets:          
Cash and cash equivalents  $6,003   $6,748 
Accounts receivable, net of allowance for doubtful accounts of $1,768 and $1,791, respectively   12,838    11,901 
Prepaid expenses and other current assets   306    197 
Total current assets   19,147    18,846 
           
Property and equipment, net of accumulated depreciation of $3,772 and $3,264, respectively   2,266    2,567 
Right of use assets-operating   1,867    - 
Right of use assets-finance   156    - 
Trademarks and trade names with indefinite lives   8,467    8,467 
Other intangibles with finite lives, net of accumulated amortization of $8,708 and $8,684, respectively   29    53 
Goodwill   13,192    13,192 
Other assets   114    114 
           
TOTAL ASSETS  $45,238   $43,239 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities  $4,417   $5,071 
Due to models   9,213    8,809 
Lease liabilities – operating, current   1,143    - 
Lease liabilities – finance, current   114    - 
Term loan – current   726    623 
Total current liabilities   15,613    14,503 
           
Long term liabilities:          
Net deferred income tax liability   709    631 
Lease liabilities – operating, non-current   880    - 
Lease liabilities – finance, non-current   52    - 
Term loan – non-current   1,625    2,000 
Total long term liabilities   3,266    2,631 
           
Total liabilities   18,879    17,134 
           
Shareholders’ equity:          
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares issued at June 30, 2019 and December 31, 2018   65    65 
Treasury stock, 1,292,620 and 1,264,154 shares at June 30, 2019 and December 31, 2018, at cost   (6,266)   (6,093)
Additional paid-in capital   88,371    88,255 
Accumulated deficit   (55,687)   (56,029)
Accumulated other comprehensive loss   (124)   (93)
Total shareholders’ equity   26,359    26,105 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $45,238   $43,239 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 3 

 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the Three and Six Months Ended June 30, 2019 and 2018

 (In thousands, except per share data)

(Unaudited)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2019  2018  2019  2018
Revenues:            
Service revenues  $19,940   $20,580   $39,975   $40,282 
License fees and other income   5    16    29    30 
Total revenues   19,945    20,596    40,004    40,312 
                     
Model costs   14,156    14,905    28,632    28,747 
                     
Revenues, net of model costs   5,789    5,691    11,372    11,565 
                     
Operating expenses:                    
Salaries and service costs   3,589    3,472    7,305    7,031 
Office and general expenses   1,031    1,198    2,259    2,576 
Amortization and depreciation   298    239    588    475 
Corporate overhead   251    260    583    597 
Total operating expenses   5,169    5,169    10,735    10,679 
Operating income   620    522    637    886 
                     
Other expense:                    
Foreign exchange gain (loss)   12    (27)   (3)   (47)
Interest expense   (30)   (22)   (62)   (47)
Total other expense   (18)   (49)   (65)   (94)
                     
Income before provision for income taxes   602    473    572    792 
                     
Provision for income taxes expense:                    
Current   (89)   (56)   (152)   (140)
Deferred   (62)   (53)   (78)   (63)
Income tax expense   (151)   (109)   (230)   (203)
                     
 Net income  $451   $364   $342   $589 
                     
Other comprehensive expense:                    
Foreign currency translation expense   (59)   (75)   (31)   (32)
Total comprehensive income   392    289    311    557 
                     
Basic net income per common share  $0.09   $0.07   $0.07   $0.11 
Diluted net income per common share  $0.09   $0.07   $0.07   $0.11 
                     
Weighted average common shares outstanding-basic   5,187    5,375    5,196    5,378 
Weighted average common shares outstanding-diluted   5,187    5,375    5,196    5,378 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 4 

 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands)

(Unaudited)

 

   Common
Shares
  Stock
Amount
  Treasury
Shares
  Stock
Amount
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Loss
  Total
Balances at December 31, 2017   6,472   $65    (1,090)  $(4,893)  $87,892   $(56,885)  $4   $26,183 
Share based payment expense   -    -    -    -    109    -    -    109 
Net income to common shareholders   -    -    -    -    -    225    -    225 
Purchases of treasury stock   -    -    (6)   (36)   -    -    -    (36)
Foreign currency translation   -    -    -    -    -    -    43    43 
Balances at March 31, 2018   6,472   $65    (1,096)  $(4,929)  $88,001   $(56,660)  $47   $26,524 
Share based payment expense   -    -    -    -    87    -    -    87 
Net income to common shareholders   -    -    -    -    -    364    -    364 
Purchases of treasury stock   -    -    (7)   (46)   -    -    -    (46)
Foreign currency translation   -    -    -    -    -    -    (75)   (75)
Balances at June 30, 2018   6,472   $65    (1,103)  $(4,975)  $88,088   $(56,296)  $(28)  $26,854 

 

   Common
Shares
  Stock
Amount
  Treasury
Shares
  Stock
Amount
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Loss
  Total
Balances at December 31, 2018   6,472   $65    (1,264)  $(6,093)  $88,255   $(56,029)  $(93)  $26,105 
Share based payment expense   -    -    -    -    64    -    -    64 
Net income to common shareholders   -    -    -    -    -    (109)   -    (109)
Purchases of treasury stock   -    -    (4)   (24)   -    -    -    (24)
Foreign currency translation   -    -    -    -    -    -    28    28 
Balances at March 31, 2019   6,472   $65    (1,268)  $(6,117)  $88,319   $(56,138)  $(65)  $26,064 
Share based payment expense   -    -    -    -    52    -    -    52 
Net income to common shareholders   -    -    -    -    -    451    -    451 
Purchases of treasury stock   -    -    (25)   (149)   -    -    -    (149)
Foreign currency translation   -    -    -    -    -    -    (59)   (59)
Balances at June 30, 2019   6,472   $65    (1,293)  $(6,266)  $88,371   $(55,687)  $(124)  $26,359 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 5 

 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

For the Six Months Ended June 30, 2019 and 2018

 (In thousands)

(Unaudited)

 

   Six Months Ended
June 30,
   2019  2018
Cash flows from operating activities:          
Net (loss) income:  $342   $589 
Adjustments to reconcile net income to net cash used in operating activities:          
Amortization and depreciation   588    475 
Share based payment expense   116    196 
Deferred income taxes   78    63 
Bad debt expense   24    75 
Changes in operating assets and liabilities:          
Accounts receivable   (961)   (1,543)
Prepaid expenses and other current assets   (109)   (139)
Right of use assets-operating   537    - 
Right of use assets-finance   54    - 
Other assets   -    10 
Due to models   404    400 
Lease liabilities-operating   (579)   - 
Lease liabilities-finance   (47)   - 
Accounts payable and accrued liabilities   (445)   812 
Net cash used in operating activities   2    938 
           
Cash flows used in investing activities:          
Purchases of property and equipment   (207)   (204)
Net cash used in investing activities   (207)   (204)
           
Cash flows used in financing activities:          
Purchases of treasury stock   (173)   (82)
Payments on finance leases   (64)   - 
Repayment of term loan   (272)   (259)
Net cash used in financing activities   (509)   (341)
           
Foreign currency effect on cash flows:   (31)   (32)
           
Net change in cash and cash equivalents:   (745)   361 
Cash and cash equivalents, beginning of period   6,748    4,256 
Cash and cash equivalents, end of period  $6,003   $4,617 
           
Supplemental disclosures of cash flow information:          
Cash paid for interest  $60   $46 
Cash paid (refund) of income taxes  $5   $(10)

 

The accompanying notes are an integral part of these consolidated financial statements

 

 6 

 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1.  Basis of Presentation

 

The interim consolidated financial statements included herein have been prepared by Wilhelmina International, Inc. (together with its subsidiaries, "Wilhelmina" or the "Company") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Although certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to those rules and regulations, all adjustments considered necessary in order to make the consolidated financial statements not misleading have been included. In the opinion of the Company’s management, the accompanying interim unaudited consolidated financial statements reflect all adjustments, of a normal recurring nature, that are necessary for a fair presentation of the Company’s consolidated balance sheets, statements of income and comprehensive income, statements of shareholders’ equity, and cash flows for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year.

 

Note 2.  Business

 

The primary business of Wilhelmina is fashion model management. These business operations are headquartered in New York City. The Company’s predecessor was founded in 1967 by Wilhelmina Cooper, a renowned fashion model, and became one of the oldest, best known and largest fashion model management companies in the world. Since its founding, Wilhelmina has grown to include operations located in Los Angeles, Miami, Chicago and London, as well as a network of licensees in various local markets in the U.S. and internationally. Wilhelmina provides traditional, full-service fashion model and talent management services, specializing in the representation and management of models, entertainers, artists, athletes and other talent, to various clients, including retailers, designers, advertising agencies, print and electronic media and catalog companies.

 

Note 3.  New Accounting Standards

 

ASU 2016-02, Leases. In 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to accounting for leases. The new guidance requires the recognition of right of use (“ROU”) assets and lease liabilities for those leases classified as operating leases under previous guidance. In 2018, the FASB also approved an amendment that would permit the option to adopt the new standard prospectively as of the effective date, without adjusting comparative periods presented. The new standard was effective for the Company beginning January 1, 2019. Wilhelmina has elected the optional transition approach to not apply the new lease standard in the comparative periods presented and also elected to not recognize short-term leases of 12 months or less on the balance sheet. Adoption of the standard resulted in the recognition of ROU assets of $2.6 million and lease liabilities of $2.8 million at January 1, 2019, primarily from recognition of ROU assets and lease liabilities related to our office space and model apartment leases. The adoption of the new standard did not have a material impact on the consolidated statement of operations or stockholder’s equity. During the first six months of 2019, $64 thousand of lease payments historically included as rent expense within office and general expenses are now classified as amortization expense, and included within cash used in financing activities on the Company’s statement of cash flows. At June 30, 2019, the weighted-average remaining lease term was 1.8 years for operating leases and 1.7 years for finance type leases. At June 30, 2019, the weighted average discount rate was 4.8% for operating leases and 4.5% for finance type leases.

 

The following table presents additional information regarding Wilhelmina’s financing and operating leases for the three and six month periods ended June 30, 2019 (in thousands):

 

  

Three months ended

June 30, 2019

 

Six months ended

June 30, 2019

Finance lease expense          
Amortization of ROU assets  $27   $61 
Interest on lease liabilities   2    4 
Operating lease expense   299    597 
Short term lease expense   60    119 
Cash paid for amounts included in the measurement of lease liabilities for finance leases          
Financing cash flows   30    64 
Cash paid for amounts included in the measurement of lease liabilities for operating leases          
Operating cash flows   316    632 
ROU assets obtained in exchange for lease liabilities          
Finance leases   -      2,404 
Operating leases   -      210 

 

As of June 30, 2019, future maturities of lease liabilities were as follows (in thousands):

 

   Operating  Finance
July 1, 2019 to December 31, 2019  $604   $60 
2020   1,135    81 
2021   369    31 
Total   2,108    172 
Less: Present value discount   (85)   (6)
Lease liability  $2,023   $166 

 

 7 

 

 

Note 4.  Foreign Currency Translation

 

The functional currency of the London subsidiary is the British Pound. Assets and liabilities are translated into U.S. dollars at the exchange rates in effect at each balance sheet date, revenues and expenses are translated at average monthly exchange rates and resulting translation gains or losses are accumulated in other comprehensive income as a separate component of shareholders’ equity.

 

Note 5.  Line of Credit

 

The Company has a credit agreement with Amegy Bank which provides a $4.0 million revolving line of credit and previously provided up to a $3.0 million term loan which could be drawn through October 24, 2016. Amounts outstanding under the term loan reduce the availability under the revolving line of credit. The revolving line of credit is also subject to a borrowing base derived from 80% of eligible accounts receivable (as defined) and the Company’s minimum net worth covenant of $20.0 million. The revolving line of credit bears interest at prime plus 0.50% payable monthly. As of June 30, 2019, the Company had a $0.2 million irrevocable standby letter of credit outstanding under the revolving line of credit and had additional borrowing capacity of $1.4 million.

 

On August 16, 2016, the Company drew $2.7 million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction. The term loan bears interest at 4.5% per annum and is payable in monthly payments of interest only until November, 2016, followed by 47 equal monthly payments of principal and interest computed on a 60-month amortization schedule and a final payment of principal and interest due on October 24, 2020.

 

On July 16, 2018, the Company amended its Credit Agreement with Amegy Bank to provide for an additional term loan of up to $1.0 million that may be drawn by the Company through July 12, 2019, for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at 5.15% per annum and payable in monthly installments of interest only through July 12, 2019. Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in 60 months with the balance of principal and accrued interest due on July 12, 2023. The amendment also revised the calculation of the fixed charge coverage ratio for the three quarters following the maturity date of the previous term loan, provided that such term loan is paid in full on or before its maturity date.

 

Amounts outstanding under the additional term loan further reduce the availability under the Company’s revolving line of credit with Amegy Bank. On August 1, 2018, the Company drew $0.7 million of the additional term loan and used the proceeds to fund the purchase of 100,000 shares of its common stock in a private transaction. On December 12, 2018, the Company drew $0.3 million of the additional term loan and used the proceeds to partially fund a purchase of 50,000 shares of its common stock in a private transaction. As of June 30, 2019, a total of $2.4 million was outstanding on the two term loans.

 

Note 6.  Commitments and Contingencies

 

On October 24, 2013, a putative class action lawsuit was brought against the Company by former Wilhelmina model Alex Shanklin and others, including Louisa Raske, Carina Vretman, Grecia Palomares and Michelle Griffin Trotter (the “Shanklin Litigation”), in New York State Supreme Court (New York County) by the same lead counsel who represented plaintiffs in a prior, now-dismissed action brought by Louisa Raske (the “Raske Litigation”).  The claims in the Shanklin Litigation initially included breach of contract and unjust enrichment allegations arising out of matters similar to the Raske Litigation, such as the handling and reporting of funds on behalf of models and the use of model images.  Other parties named as defendants in the Shanklin Litigation include other model management companies, advertising firms, and certain advertisers.  On January 6, 2014, the Company moved to dismiss the Amended Complaint in the Shanklin Litigation for failure to state a claim upon which relief can be granted and other grounds, and other defendants also filed motions to dismiss.  On August 11, 2014, the court denied the motion to dismiss as to Wilhelmina and other of the model management defendants.  Separately, on March 3, 2014, the judge assigned to the Shanklin Litigation wrote the Office of the New York Attorney General bringing the case to its attention, generally describing the claims asserted therein against the model management defendants, and stating that the case “may involve matters in the public interest.” The judge’s letter also enclosed a copy of his decision in the Raske Litigation, which dismissed that case. 

Plaintiffs retained substitute counsel, who filed a Second and then Third Amended Complaint. Plaintiffs’ Third Amended Complaint asserts causes of action for alleged breaches of the plaintiffs' management contracts with the defendants, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment.  The Third Amended Complaint also alleges that the plaintiff models were at all relevant times employees, and not independent contractors, of the model management defendants, and that defendants violated the New York Labor Law in several respects, including, among other things, by allegedly failing to pay the models the minimum wages and overtime pay required thereunder, not maintaining accurate payroll records, and not providing plaintiffs with full explanations of how their wages and deductions therefrom were computed.  The Third Amended Complaint seeks certification of the action as a class action, damages in an amount to be determined at trial, plus interest, costs, attorneys’ fees, and such other relief as the court deems proper.  On October 6, 2015, Wilhelmina filed a motion to dismiss as to most of the plaintiffs’ claims.  The Court entered a decision granting in part and denying in part Wilhelmina’s motion to dismiss on May 26, 2017.  The Court (i) dismissed three of the five New York Labor Law causes of action, along with the conversion, breach of the duty of good faith and fair dealing and unjust enrichment causes of action, in their entirety, and (ii) permitted only the breach of contract causes of action, and some plaintiffs’ remaining two New York Labor Law causes of action to continue, within a limited time frame.  The plaintiffs and Wilhelmina each appealed, and the decision was affirmed on May 24, 2018. On August 16, 2017, Wilhelmina timely filed its Answer to the Third Amended Complaint.

 8 

 

On June 6, 2016, another putative class action lawsuit was brought against the Company by former Wilhelmina model Shawn Pressley and others, including Roberta Little (the “Pressley Litigation”), in New York State Supreme Court (New York County) by the same counsel representing the plaintiffs in the Shanklin Litigation, and asserting identical, although more recent, claims as those in the Shanklin Litigation.  The Amended Complaint, asserting essentially the same types of claims as in the Shanklin action, was filed on August 16, 2017.  Wilhelmina filed a motion to dismiss the Amended Complaint on September 29, 2017, which was granted in part and denied in part on May 10, 2018.  Some New York Labor Law and contract claims remain in the case.  Pressley has withdrawn from the case, leaving Roberta Little as the sole remaining named plaintiff in the Pressley Litigation.  On July 12, 2019, the Company filed its Answer and Counterclaim against Little.

On May 1, 2019, the Plaintiffs in the Shanklin Litigation (except Raske) and the Pressley Litigation filed motions for class certification on their contract claims and the remaining New York Labor Law Claims. On July 12, 2019, Wilhelmina filed its opposition to the motions for class certification and filed a cross-motion for summary judgment against Shanklin, Vretman, Palomares, Trotter and Little, and a motion for summary judgment against Raske.  The Plaintiffs’ reply papers are due September 12, 2019 and Wilhelmina’s reply on its summary judgment motions is due October 12, 2019.           

The Company believes the claims asserted in the Shanklin and Pressley Litigations are without merit and intends to continue to vigorously defend the actions.

In addition to the legal proceedings disclosed herein, the Company is also engaged in various legal proceedings that are routine in nature and incidental to its business. None of these routine proceedings, either individually or in the aggregate, are believed likely, in the Company's opinion, to have a material adverse effect on its consolidated financial position or its results of operations.

 

Note 7.  Income Taxes

 

Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of certain amortization expense, stock based compensation, and corporate overhead not being deductible and income being attributable to certain states in which it operates. In recent years, the majority of taxes being paid by the Company were state taxes, not federal taxes. The Company operates in four states which have relatively high tax rates: California, New York, Illinois, and Florida. As of June 30, 2019, the Company had federal income tax loss carryforwards of $0.2 million.

 

The U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017 introduced significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain related-party payments. The Company’s repatriation liability is not deemed material due to a foreign deficit.

 

Note 8. Treasury Shares

 

During 2012, the Board of Directors authorized a stock repurchase program whereby the Company could repurchase up to 500,000 shares of its outstanding common stock. During 2013, the Board of Directors renewed and extended the Company’s share repurchase authority to enable it to repurchase up to an aggregate of 1,000,000 shares of common stock. In 2016, the Board of Directors increased by an additional 500,000 shares the number of shares of the Company’s common stock that may be repurchased under its stock repurchase program to an aggregate of 1,500,000 shares. The shares may be repurchased from time to time in the open market or through privately negotiated transactions at prices the Company deems appropriate. The program does not obligate the Company to acquire any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion.

 

From 2012 through June 30, 2019, the Company has repurchased 1,292,620 shares of common stock at an average price of approximately $4.85 per share, for a total of approximately $6.3 million in repurchases under the stock repurchase program. During the first six months of 2019, 28,466 shares were repurchased under the stock repurchase program for approximately $173 thousand.

 

Note 9.  Related Parties

 

The Executive Chairman of the Company, Mark E. Schwarz, is also the chairman, chief executive officer and portfolio manager of Newcastle Capital Management, L.P. (“NCM”). NCM is the general partner of Newcastle Partners L.P. (“Newcastle”), which is the largest shareholder of the Company. James Dvorak (Managing Director at NCM) also serves as a director of the Company.

 

The Company’s corporate headquarters are located at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, which are also the offices of NCM. The Company occupies a portion of NCM space on a month-to-month basis at $2.5 thousand per month, pursuant to a services agreement entered into between the parties. Pursuant to the services agreement, the Company receives the use of NCM’s facilities and equipment and accounting, legal and administrative services from employees of NCM. The Company incurred expenses pursuant to the services agreement totaling approximately $15 thousand for the six months ended both June 30, 2019 and 2018. The Company did not owe NCM any amounts under the services agreement as of June 30, 2019.

 

 9 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following is a discussion of the interim unaudited consolidated financial condition and results of operations for the Company and its subsidiaries for the three and six months ended June 30, 2019 and 2018. It should be read in conjunction with the financial statements of the Company, the notes thereto and other financial information included elsewhere in this report, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as amended.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains certain “forward-looking” statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such forward looking statements relating to the Company and its subsidiaries are based on the beliefs of the Company’s management as well as information currently available to the Company’s management.  When used in this report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements.  Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, the interest rate environment, governmental regulation and supervision, seasonality, changes in industry practices, one-time events and other factors described herein and in other filings made by the Company with the SEC.  Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.  The Company does not undertake any obligation to publicly update these forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements.

 

OVERVIEW

 

The Company’s primary business is fashion model management and complementary business activities. The business of talent management firms, such as Wilhelmina, depends heavily on the state of the advertising industry, as demand for talent is driven by Internet, print and television advertising campaigns for consumer goods and retail clients. Wilhelmina believes it has strong brand recognition which enables it to attract and retain top agents and talent to service a broad universe of clients. In order to take advantage of these opportunities and support its continued growth, the Company will need to continue to successfully allocate resources and staffing in a way that enhances its ability to respond to new opportunities. The Company continues to focus on tightly managing costs, recruiting top agents when available, and scouting and developing new talent.

 

Although Wilhelmina has a large and diverse client base, it is not immune to global economic conditions. The Company closely monitors economic conditions, client spending, and other industry factors and continually evaluates opportunities to increase its market share and further expand its geographic reach.  There can be no assurance as to the effects on Wilhelmina of future economic circumstances, client spending patterns, client creditworthiness and other developments and whether, or to what extent, Wilhelmina’s efforts to respond to them will be effective.

 

Trends and Opportunities

 

The Company expects that the combination of Wilhelmina’s main operating base in New York City, the industry’s capital, with the depth and breadth of its talent pool and client roster and its diversification across various talent management segments, together with its geographical reach, should make Wilhelmina’s operations more resilient to industry changes and economic swings than those of many of the smaller firms operating in the industry. Similarly, in the segments where the Company competes with other leading full-service agencies, Wilhelmina competed successfully during the first six months of 2019.  

 

With total annual advertising expenditures on major media (newspapers, magazines, television, cinema, outdoor and Internet) exceeding approximately $200 billion in recent years, North America is by far the world’s largest advertising market.  For the fashion talent management industry, including Wilhelmina, advertising expenditures on magazines, television, Internet and outdoor are of particular relevance.

 

In recent periods, traditional retail clients in the fashion and beauty industry have had increased competition from digital, social, and new media, reducing their budgets for advertising and model talent. Wilhelmina reviews the mix of talent and resources available to best operate in the changing environment.

 

 10 

 

Strategy

 

Management’s strategy is to increase value to shareholders through the following initiatives:

 

increase Wilhelmina’s brand awareness and consideration among advertisers and potential talent;
expand the Wilhelmina network through strategic geographic market development;
expand the women’s high end fashion board;
expand the Aperture division’s representation in commercials, film, and television;
expand the Wilhelmina Studio division’s content creation and production business;
expand celebrity and social media influencer representation; and
promote model search contests and events and partner on media projects (television, film, books, etc.).

 

Due to the ubiquity of the Internet as a standard business tool, the Company has increasingly sought to harness the opportunities of the Internet and other digital media to improve its communications with clients and to facilitate the effective exchange of fashion model and talent information. The Company continues to make significant investments in technology in pursuit of gains in efficiency and better communications with clients.  At the same time, the Internet presents challenges for the Company, including (i) the cannibalization of traditional print media businesses, and (ii) pricing pressures with respect to digital media photo shoots and client engagements.

 

Key Financial Indicators

 

In addition to net income, the key financial indicators that the Company reviews to monitor its business are revenues, model costs, operating expenses and cash flows.

 

The Company analyzes revenue by reviewing the mix of revenues generated by the different “boards”, each a specific division of the fashion model management operations which specializes by the type of model it represents, by geographic locations and from significant clients. Wilhelmina’s primary sources of revenue include: (i) revenues from principal relationships where the gross amount billed to the client is recorded as revenue when earned and collectability is reasonably assured; and (ii) separate service charges, paid by clients in addition to the booking fees, which are calculated as a percentage of the models’ booking fees and are recorded as revenues when earned and collectability is reasonably assured. See “Critical Accounting Policies - Revenue Recognition.”

 

Wilhelmina provides professional services. Therefore, salary and service costs represent the largest part of the Company’s operating expenses. Salary and service costs are comprised of payroll and related costs and travel, meals and entertainment (“T&E”) to deliver the Company’s services and to enable new business development activities.

 

 11 

 

Analysis of Consolidated Statements of Operations and Service Revenues

(in thousands)  Three Months Ended  Six Months Ended   
   June 30  June 30  % Change  June 30  June 30  % Change
   2019  2018  2019 vs 2018  2019  2018  2019 vs 2018
Service revenues   19,940    20,580    (3.1%)   39,975    40,282    (0.8%)
License fees and other income   5    16    (68.8%)   29    30    (3.3%)
TOTAL REVENUES   19,945    20,596    (3.2%)   40,004    40,312    (0.8%)
Model costs   14,156    14,905    (5.0%)   28,632    28,747    (0.4%)
REVENUES NET OF MODEL COSTS   5,789    5,691    1.7%   11,372    11,565    (1.7%)
GROSS PROFIT MARGIN   29.0%   27.6%        28.4%   28.7%     
Salaries and service costs   3,589    3,472    3.4%   7,305    7,031    3.9%
Office and general expenses   1,031    1,198    (13.9%)   2,259    2,576    (12.3%)
Amortization and depreciation   298    239    24.7%   588    475    23.8%
Corporate overhead   251    260    (3.5%)   583    597    (2.3%)
OPERATING INCOME   620    522    18.8%   637    886    28.1%
OPERATING MARGIN   3.1%   2.5%        1.6%   2.2%     
Foreign exchange gain (loss)   12    (27)   (144.4%)   (3)   (47)   (93.6%)
Interest expense   (30)   (22)   36.4%   (62)   (47)   31.9%
INCOME BEFORE INCOME TAXES   602    473    27.3%   572    792    (27.8%)
Income tax expense   151    109    38.5%   230    203    13.3%
Effective tax rate   25.1%   23.0%        40.2%   25.6%     
NET INCOME   451    364    23.9%   342    589    (41.9%)

 

 Service Revenues

 

The Company’s service revenues fluctuate in response to its clients’ willingness to spend on advertising and the Company’s ability to have the desired talent available. The decreases of 3.1% and 0.8% for the three and six months ended June 30, 2019, when compared to the three and six months ended June 30, 2018, were primarily due to an decrease in bookings in the Wilhelmina Studios division.

 

License Fees and Other Income

 

License fees and other income include franchise revenues from independently owned model agencies that use the Wilhelmina trademark and various services provided by the Company. License fees decreased by 68.8% and 3.3% for the three and six months ended June 30, 2019, when compared to three and six months ended June 30, 2018. The decreases were primarily due to the timing of income from licensing agreements.

 

Gross Profit Margin

 

Gross profit margin increased by 140 basis points for the three months ended June 30, 2019, when compared to the three months ended June 30, 2018 primarily due to a change in board revenue mix and a decrease in revenue from Wilhelmina Studios, which is lower margin than traditional core model bookings and reduced commissions owed on talent bookings. Gross profit margin decreased by 30 basis points for the six months ended June 30, 2019, when compared to the six months ended June 30, 2018 due to a change in board revenue mix.

 

 Salaries and Service Costs

 

Salaries and service costs consist of payroll related costs and T&E required to deliver the Company’s services to its clients and talents. The 3.4% and 3.9% increases in salaries and service costs during the three and six months ended June 30, 2019, when compared to the three and six months ended June 30, 2018 were primarily due to an increase in employee salaries, partially offset by a reduction in share based payment expense.

 

 12 

 

Office and General Expenses

 

Office and general expenses consist of office and equipment rents, advertising and promotion, insurance expenses, administration and technology cost.  These costs are less directly linked to changes in the Company’s revenues than are salaries and service costs. The decrease in office and general expenses of 13.9% and 12.3% for the three and six months ended June 30, 2019 when compared to the three and six months ended June 30, 2018, were primarily due to reduced rent expense, legal fees and bad debt expenses, as well as the reclassification of certain lease payments as amortization expense under the new lease accounting rules.

 

Amortization and Depreciation

 

Amortization and depreciation expense is incurred with respect to certain assets, including computer hardware, software, office equipment, furniture, and certain intangibles. Amortization and depreciation expense increased by 24.7% and 23.8% for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018, primarily due to new equipment which will be depreciated going forward, and certain lease payments previously included within office and general expenses which are now classified as amortization under the new lease accounting rules. Fixed asset purchases (mostly related to technology and computer equipment) totaled approximately $112 thousand and 207 thousand during the three and six months ended June 30, 2019, compared to $42 thousand and $204 thousand for the three and six months ended June 30, 2018.

 

Corporate Overhead

 

Corporate overhead expenses include director and executive officer compensation, legal, audit and professional fees, corporate office rent and travel. Corporate overhead decreased by 3.5% and 2.3% for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018, primarily due to lower securities compliance costs.

 

Operating Margin

 

Operating margin increased by 60 basis points for the three months ended June 30, 2019, when compared to the three months ended June 30, 2018, primarily due to the increased gross profit margin. Operating margin decreased by 60 basis points for the six months ended June 30, 2019, when compared to the six months ended June 30, 2018, primarily due to the lower gross profit margin and higher employee salaries, partially offset by lower office and general expenses.

 

Foreign Currency Translation

 

The Company realized $12 thousand of foreign currency exchange gains during the three months ended June 30, 2019, and $27 thousand of foreign currency exchange loss during the three months ended June 30, 2018. The Company realized $3 thousand and $47 thousand of foreign currency exchange loss for the six months ended June 30, 2019 and June 30, 2018. Foreign currency gain and loss is due to fluctuations in currencies from Great Britain, Europe, and Latin America.

 

Interest Expense

 

Interest expense for the three and six months ended June 30, 2019 and June 30, 2018 was primarily attributable to accrued interest on term loans drawn during 2016 and 2018. See, “Liquidity and Capital Resources.”

 

Income before Income Taxes

 

Income before income taxes increased to $602 thousand for the three months ended June 30, 2019, compared to $473 thousand for the three months ended June 30, 2018, primarily due to the increase in operating income. Income before income taxes decreased to $572 thousand for the six months ended June 30, 2019, compared to $792 thousand for the six months ended June 30, 2018, primarily due to the decrease in operating income.

 

Income Taxes

 

Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of certain amortization expense, foreign taxes, and corporate overhead not being deductible and income being attributable to certain states in which it operates. Currently, the majority of taxes being paid by the Company are state and foreign taxes, not federal U.S. taxes. The Company operates in four states which have relatively high tax rates: California, New York, Illinois and Florida. In addition, foreign taxes in the United Kingdom related to our London office are not deductible from U.S. federal taxes.

 

 13 

 

Net Income

 

Net income for the three months ended June 30, 2019 was $451 thousand compared to $364 thousand for the same period of the prior year. The increase in net income was primarily due to the increase in operating income. Net income for the six months ended June 30, 2019 was $342 thousand compared to $589 thousand for the same period of the prior year. The decrease in net income was primarily due to the decrease in operating income.

 

Liquidity and Capital Resources

 

The Company’s cash balance decreased to $6.0 million at June 30, 2019 from $6.7 million at December 31, 2018. The cash balances decreased as a result of $0.2 million net cash used in investing activities and $0.5 cash used in financing activities.

 

The $0.2 million of cash used in investing activities was attributable to purchases of property and equipment, including software, office furniture, and computer equipment. The $0.5 million of cash used in financing activities was attributable to principal payments on the Company’s term loan, purchases of treasury stock, and payments on finance leases.

The Company’s primary liquidity needs are for working capital associated with performing services under its client contracts and servicing its term loan. Generally, the Company incurs significant operating expenses with payment terms shorter than its average collections on billings. Based on 2019 budgeted and year-to-date cash flow information, management believes that the Company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months.

 

Amegy Bank Credit Agreement

 

The Company has a credit agreement with Amegy Bank which provides a $4.0 million revolving line of credit and previously provided up to a $3.0 million term loan which could be drawn through October 24, 2016. Amounts outstanding under the term loan reduce the availability under the revolving line of credit. The revolving line of credit is also subject to a borrowing base derived from 80% of eligible accounts receivable (as defined) and the Company’s minimum net worth covenant of $20.0 million. The revolving line of credit bears interest at prime plus 0.50% payable monthly. As of June 30, 2019, the Company had a $0.2 million irrevocable standby letter of credit outstanding under the revolving line of credit and had additional borrowing capacity of $1.4 million.

 

On August 16, 2016, the Company drew $2.7 million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction. The term loan bears interest at 4.5% per annum and is payable in monthly payments of interest only until November, 2016, followed by 47 equal monthly payments of principal and interest computed on a 60-month amortization schedule and a final payment of principal and interest due on October 24, 2020.

 

On July 16, 2018, the Company amended its Credit Agreement with Amegy Bank to provide for an additional term loan of up to $1.0 million that may be drawn by the Company through July 12, 2019, for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at 5.15% per annum and payable in monthly installments of interest only through July 12, 2019. Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in 60 months with the balance of principal and accrued interest due on July 12, 2023. The amendment also revised the calculation of the fixed charge coverage ratio for the three quarters following the maturity date of the previous term loan, provided that such term loan is paid in full on or before its maturity date.

 

Amounts outstanding under the additional term loan further reduce the availability under the Company’s revolving line of credit with Amegy Bank. On August 1, 2018, the Company drew $0.7 million of the additional term loan and used the proceeds to fund the purchase of 100,000 shares of its common stock in a private transaction. On December 12, 2018, the Company drew $0.3 million of the additional term loan and used the proceeds to partially fund a purchase of 50,000 shares of its common stock in a private transaction. As of June 30, 2019, a total of $2.4 million was outstanding on the two term loans.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2019, the Company had outstanding a $0.2 million irrevocable standby letter of credit under the revolving credit facility with Amegy Bank. The letter of credit serves as security under the lease relating to the Company’s office space in New York City that expires February 2021.

 

 14 

 

Effect of Inflation

 

Inflation has not historically been a material factor affecting the Company’s business. General operating expenses, such as salaries, employee benefits, insurance and occupancy costs are subject to normal inflationary pressures.

 

Critical Accounting Policies

 

Basis of Presentation

 

The consolidated financial statements include the accounts of Wilhelmina and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Revenue Recognition

 

In compliance with generally accepted accounting principles in United States of America, when reporting revenue gross as a principal versus net as an agent, the Company assesses whether the Company, the model or the talent is the primary obligor. The Company evaluates the terms of its model, talent and client agreements as part of this assessment. In addition, the Company gives appropriate consideration to other key indicators such as latitude in establishing price, discretion in model or talent selection and credit risk the Company undertakes. The Company operates broadly as a modeling agency and in those relationships with models and talents where the key indicators suggest the Company acts as a principal, the Company records the gross amount billed to the client as revenue when earned and collectability is reasonably assured, and the related costs incurred to the model or talent as model or talent cost. In other model and talent relationships, where the Company believes the key indicators suggest the Company acts as an agent on behalf of the model or talent, the Company records revenue when earned and collectability is reasonably assured, net of pass-through model or talent cost.

 

The Company also recognizes management fees as revenues for providing services to other modeling agencies as well as consulting income in connection with services provided to a television production network according to the terms of the contract.  The Company recognizes royalty income when earned based on terms of the contractual agreement. Revenues received in advance are deferred and amortized using the straight-line method over periods pursuant to the related contract. The Company also records fees from licensees when the revenues are earned and collectability is reasonably assured.

 

Advances to models for the cost of initial portfolios and other out-of-pocket costs, which are reimbursable only from collections from the Company’s clients as a result of future work, are expensed to model costs as incurred. Any repayments of such costs are credited to model costs in the period received.

 

Goodwill and Intangible Assets

 

Goodwill consists primarily of customer and talent relationships arising from past business acquisitions. Intangible assets with finite lives are amortized over useful lives ranging from two to seven years. Goodwill and intangible assets with indefinite lives are not subject to amortization, but rather to an annual assessment of impairment by applying a fair-value based test. A significant amount of judgment is required in estimating fair value and performing goodwill impairment tests.

 

The Company annually assesses whether the carrying value of its intangible assets exceeds their fair value and, if necessary, records an impairment loss equal to any such excess. Each interim reporting period, the Company assesses whether events or circumstances have occurred which indicate that the carrying amount of an intangible asset exceeds its fair value. If the carrying amount of the intangible asset exceeds its fair value, an asset impairment charge will be recognized in an amount equal to that excess. No asset impairment charges were incurred during the six months ended June 30, 2019 or June 30, 2018.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are accounted for at net realizable value, do not bear interest, and are short-term in nature. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability to collect on accounts receivable. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to the valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. The Company generally does not require collateral.

 

 15 

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities 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 and operating loss and tax credit carryforwards. 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 effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company continually assesses the need for a tax valuation allowance based on all available information. As of June 30, 2019, the Company believes that its deferred tax assets are more likely than not to be realized. In addition, the Company continuously evaluates its tax contingencies.

 

Accounting for uncertainty in income taxes recognized in an enterprise’s financial statements requires a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Also, consideration should be given to de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There was no change to the net amount of assets and liabilities recognized in the consolidated balance sheets as a result of the Company’s tax positions.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 

Not required for smaller reporting company

 

Item 4.  Controls and Procedures.

 

The Company maintains disclosure controls and procedures designed to ensure that information it is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

The Company’s management, including the Company’s principal executive officer and principal financial officer have evaluated the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. During the most recent fiscal quarter, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II

 

OTHER INFORMATION

 

Item 1.Legal Proceedings.

 

On October 24, 2013, a putative class action lawsuit was brought against the Company by former Wilhelmina model Alex Shanklin and others, including Louisa Raske, Carina Vretman, Grecia Palomares and Michelle Griffin Trotter (the “Shanklin Litigation”), in New York State Supreme Court (New York County) by the same lead counsel who represented plaintiffs in a prior, now-dismissed action brought by Louisa Raske (the “Raske Litigation”).  The claims in the Shanklin Litigation initially included breach of contract and unjust enrichment allegations arising out of matters similar to the Raske Litigation, such as the handling and reporting of funds on behalf of models and the use of model images.  Other parties named as defendants in the Shanklin Litigation include other model management companies, advertising firms, and certain advertisers.  On January 6, 2014, the Company moved to dismiss the Amended Complaint in the Shanklin Litigation for failure to state a claim upon which relief can be granted and other grounds, and other defendants also filed motions to dismiss.  On August 11, 2014, the court denied the motion to dismiss as to Wilhelmina and other of the model management defendants.  Separately, on March 3, 2014, the judge assigned to the Shanklin Litigation wrote the Office of the New York Attorney General bringing the case to its attention, generally describing the claims asserted therein against the model management defendants, and stating that the case “may involve matters in the public interest.” The judge’s letter also enclosed a copy of his decision in the Raske Litigation, which dismissed that case. 

 16 

 

Plaintiffs retained substitute counsel, who filed a Second and then Third Amended Complaint. Plaintiffs’ Third Amended Complaint asserts causes of action for alleged breaches of the plaintiffs' management contracts with the defendants, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment.  The Third Amended Complaint also alleges that the plaintiff models were at all relevant times employees, and not independent contractors, of the model management defendants, and that defendants violated the New York Labor Law in several respects, including, among other things, by allegedly failing to pay the models the minimum wages and overtime pay required thereunder, not maintaining accurate payroll records, and not providing plaintiffs with full explanations of how their wages and deductions therefrom were computed.  The Third Amended Complaint seeks certification of the action as a class action, damages in an amount to be determined at trial, plus interest, costs, attorneys’ fees, and such other relief as the court deems proper.  On October 6, 2015, Wilhelmina filed a motion to dismiss as to most of the plaintiffs’ claims.  The Court entered a decision granting in part and denying in part Wilhelmina’s motion to dismiss on May 26, 2017.  The Court (i) dismissed three of the five New York Labor Law causes of action, along with the conversion, breach of the duty of good faith and fair dealing and unjust enrichment causes of action, in their entirety, and (ii) permitted only the breach of contract causes of action, and some plaintiffs’ remaining two New York Labor Law causes of action to continue, within a limited time frame.  The plaintiffs and Wilhelmina each appealed, and the decision was affirmed on May 24, 2018. On August 16, 2017, Wilhelmina timely filed its Answer to the Third Amended Complaint.

On June 6, 2016, another putative class action lawsuit was brought against the Company by former Wilhelmina model Shawn Pressley and others, including Roberta Little (the “Pressley Litigation”), in New York State Supreme Court (New York County) by the same counsel representing the plaintiffs in the Shanklin Litigation, and asserting identical, although more recent, claims as those in the Shanklin Litigation.  The Amended Complaint, asserting essentially the same types of claims as in the Shanklin action, was filed on August 16, 2017.  Wilhelmina filed a motion to dismiss the Amended Complaint on September 29, 2017, which was granted in part and denied in part on May 10, 2018.  Some New York Labor Law and contract claims remain in the case.  Pressley has withdrawn from the case, leaving Roberta Little as the sole remaining named plaintiff in the Pressley Litigation.  On July 12, 2019, the Company filed its Answer and Counterclaim against Little.

On May 1, 2019, the Plaintiffs in the Shanklin Litigation (except Raske) and the Pressley Litigation filed motions for class certification on their contract claims and the remaining New York Labor Law Claims. On July 12, 2019, Wilhelmina filed its opposition to the motions for class certification and filed a cross-motion for summary judgment against Shanklin, Vretman, Palomares, Trotter and Little, and a motion for summary judgment against Raske.  The Plaintiffs’ reply papers are due September 12, 2019 and Wilhelmina’s reply on its summary judgment motions is due October 12, 2019.

The Company believes the claims asserted in the Shanklin and Pressley Litigations are without merit and intends to continue to vigorously defend the actions.

In addition to the legal proceedings disclosed herein, the Company is also engaged in various legal proceedings that are routine in nature and incidental to its business. None of these routine proceedings, either individually or in the aggregate, are believed likely, in the Company's opinion, to have a material adverse effect on its consolidated financial position or its results of operations.

 

Item 1.A.Risk Factors.

 

Not required for smaller reporting company.

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

 

During 2012, the Board of Directors authorized a stock repurchase program whereby the Company could repurchase up to 500,000 shares of its outstanding common stock. During 2013, the Board of Directors renewed and extended the Company’s share repurchase authority to enable it to repurchase up to an aggregate of 1,000,000 shares of common stock. In 2016, the Board of Directors increased by an additional 500,000 shares the number of shares of the Company’s common stock which may be repurchased under its stock repurchase program to an aggregate of 1,500,000 shares. The shares may be repurchased from time to time in the open market or through privately negotiated transactions at prices the Company deems appropriate. The program does not obligate the Company to acquire any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion. The following table furnishes information for purchases made pursuant to the stock repurchase program during the quarter ended June 30, 2019:

 17 

 

Period 

Total Number of Shares
Purchased

 

Average

Price Paid

Per Share

 

Total Number of
Shares Purchased as
Part of the Publicly
Announced Plans

 

Maximum Number of
Shares that May Yet
Be Purchased Under
the Plans

 April 1-30, 2019    18,899   $6.23    1,287,165    212,835 
 May 1-31, 2019    800   $6.29    1,287,965    212,035 
 June 1-30, 2019    4,655   $5.56    1,292,620    207,380 
 Total    24,354   $5.86           

 

Item 3.Defaults Upon Senior Securities.

 

None.

 

Item 4.Mine Safety Disclosures.

 

Not applicable.

 

Item 5.Other Information.

 

Not applicable.

 

Item 6.Exhibits.

 

The following is a list of exhibits filed as part of this Form 10-Q:

 

Exhibit No. Description
3.1 Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form S-1/A, filed January 30, 2012).
3.2 Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to the Form 8-K, filed July 15, 2014).
3.3 Certificate of Amendment of the Restated Certificate of Incorporation of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.1 to Form 8-K filed July 12, 2017).
3.4 Amended and Restated Bylaws of Wilhelmina International, Inc. (incorporated by reference from Exhibit 3.2 to Form 8-K, filed May 24, 2011).
4.1 Form of Stock Certificate of Common Stock of Billing Concepts Corp. (incorporated by reference from Exhibit 4.1 to Form 10-Q, filed May 15, 1998).
31.1 Certification of Principal Executive Officer in Accordance with Section 302 of the Sarbanes-Oxley Act. *
31.2 Certification of Principal Financial Officer in Accordance with Section 302 of the Sarbanes-Oxley Act. *
32.1 Certification of Principal Executive Officer in Accordance with Section 906 of the Sarbanes-Oxley Act. *
32.2 Certification of Principal Financial Officer in Accordance with Section 906 of the Sarbanes-Oxley Act. *
101.INS XBRL Instance Document *
101.SCH XBRL Taxonomy Extension Schema *
101.CAL XBRL Taxonomy Extension Calculation Linkbase *
101.DEF XBRL Taxonomy Extension Definition Linkbase *
101.LAB XBRL Taxonomy Extension Label Linkbase *
101.PRE XBRL Taxonomy Extension Presentation Linkbase *

________________

* Filed herewith

 18 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  WILHELMINA INTERNATIONAL, INC.  
  (Registrant)  
     
     
Date:  August 13, 2019 By:  /s/ James A. McCarthy  
  Name: James A. McCarthy  
  Title:

Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

 

 

 

19

 

 

 

Exhibit 31.1

 

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

 

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, William J. Wackermann, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Wilhelmina International, Inc. for the quarterly period ended June 30, 2019;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

August 13, 2019   /s/ William J. Wackermann
    Name: William J. Wackermann
    Title:

Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

 

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

 

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, James A. McCarthy, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Wilhelmina International, Inc. for the quarterly period ended June 30, 2019;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

August 13, 2019   /s/ James A. McCarthy
    Name: James A. McCarthy
    Title:

Chief Financial Officer

(Principal Financial Officer)

 

Exhibit 32.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

 

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Wilhelmina International, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Wackermann, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 

  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented.

 

 

August 13, 2019   /s/ William J. Wackermann
    Name: William J. Wackermann
    Title:

Chief Executive Officer

(Principal Executive Officer)

Exhibit 32.2

 

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

 

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Wilhelmina International, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James A. McCarthy, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 

  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the presented.

 

 

August 13, 2019   /s/ James A. McCarthy
    Name: James A. McCarthy
    Title:

Chief Financial Officer

(Principal Financial Officer)

v3.19.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 13, 2019
Document Information [Line Items]    
Entity Registrant Name Wilhelmina International, Inc.  
Entity Central Index Key 0001013706  
Trading Symbol whlm  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Common Stock, Shares Outstanding (in shares)   5,175,573
Entity Shell Company false  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Title of 12(b) Security Common Stock  
v3.19.2
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 6,003 $ 6,748
Accounts receivable, net of allowance for doubtful accounts of $1,768 and $1,791, respectively 12,838 11,901
Prepaid expenses and other current assets 306 197
Total current assets 19,147 18,846
Property and equipment, net of accumulated depreciation of $3,772 and $3,264, respectively 2,266 2,567
Right of use assets-operating 1,867
Right of use assets-finance 156
Trademarks and trade names with indefinite lives 8,467 8,467
Other intangibles with finite lives, net of accumulated amortization of $8,708 and $8,684, respectively 29 53
Goodwill 13,192 13,192
Other assets 114 114
TOTAL ASSETS 45,238 43,239
Current liabilities:    
Accounts payable and accrued liabilities 4,417 5,071
Due to models 9,213 8,809
Lease liabilities – operating, current 1,143
Lease liabilities – finance, current 114
Term loan – current 726 623
Total current liabilities 15,613 14,503
Long term liabilities:    
Net deferred income tax liability 709 631
Lease liabilities – operating, non-current 880
Lease liabilities – finance, non-current 52
Term loan – non-current 1,625 2,000
Total long term liabilities 3,266 2,631
Total liabilities 18,879 17,134
Shareholders’ equity:    
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares issued at June 30, 2019 and December 31, 2018 65 65
Treasury stock, 1,292,620 and 1,264,154 shares at June 30, 2019 and December 31, 2018, at cost (6,266) (6,093)
Additional paid-in capital 88,371 88,255
Accumulated deficit (55,687) (56,029)
Accumulated other comprehensive loss (124) (93)
Total shareholders’ equity 26,359 26,105
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 45,238 $ 43,239
v3.19.2
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts $ 1,768 $ 1,791
Property and equipment, accumulated depreciation 3,772 3,264
Other intangibles, accumulated amortization $ 8,708 $ 8,684
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 9,000,000 9,000,000
Common stock, shares issued (in shares) 6,472,038 6,472,038
Treasury stock, shares (in shares) 1,292,620 1,264,154
v3.19.2
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Revenues:        
Revenues $ 19,945 $ 20,596 $ 40,004 $ 40,312
Model costs 14,156 14,905 28,632 28,747
Revenues, net of model costs 5,789 5,691 11,372 11,565
Operating expenses:        
Salaries and service costs 3,589 3,472 7,305 7,031
Office and general expenses 1,031 1,198 2,259 2,576
Amortization and depreciation 298 239 588 475
Corporate overhead 251 260 583 597
Total operating expenses 5,169 5,169 10,735 10,679
Operating income 620 522 637 886
Other expense:        
Foreign exchange gain (loss) 12 (27) (3) (47)
Interest expense (30) (22) (62) (47)
Total other expense (18) (49) (65) (94)
Income before provision for income taxes 602 473 572 792
Provision for income taxes expense:        
Current (89) (56) (152) (140)
Deferred (62) (53) (78) (63)
Income tax expense (151) (109) (230) (203)
Net income 451 364 342 589
Other comprehensive expense:        
Foreign currency translation expense (59) (75) (31) (32)
Total comprehensive income $ 392 $ 289 $ 311 $ 557
Basic net income per common share (in dollars per share) $ 0.09 $ 0.07 $ 0.07 $ 0.11
Diluted net income per common share (in dollars per share) $ 0.09 $ 0.07 $ 0.07 $ 0.11
Weighted average common shares outstanding-basic (in shares) 5,187 5,375 5,196 5,378
Weighted average common shares outstanding-diluted (in shares) 5,187 5,375 5,196 5,378
Service [Member]        
Revenues:        
Revenues $ 19,940 $ 20,580 $ 39,975 $ 40,282
License Fees and Other [Member]        
Revenues:        
Revenues $ 5 $ 16 $ 29 $ 30
v3.19.2
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balances (in shares) at Dec. 31, 2017 6,472,000 (1,090,000)        
Balances at Dec. 31, 2017 $ 65 $ (4,893) $ 87,892 $ (56,885) $ 4 $ 26,183
Share based payment expense 109 109
Net income to common shareholders 225 225
Purchases of treasury stock (in shares) (6,000)        
Purchases of treasury stock $ (36) (36)
Foreign currency translation 43 43
Balances (in shares) at Mar. 31, 2018 6,472,000 (1,096,000)        
Balances at Mar. 31, 2018 $ 65 $ (4,929) 88,001 (56,660) 47 26,524
Balances (in shares) at Dec. 31, 2017 6,472,000 (1,090,000)        
Balances at Dec. 31, 2017 $ 65 $ (4,893) 87,892 (56,885) 4 26,183
Net income to common shareholders           589
Foreign currency translation           (32)
Balances (in shares) at Jun. 30, 2018 6,472,000 (1,103,000)        
Balances at Jun. 30, 2018 $ 65 $ (4,975) 88,088 (56,296) (28) 26,854
Balances (in shares) at Mar. 31, 2018 6,472,000 (1,096,000)        
Balances at Mar. 31, 2018 $ 65 $ (4,929) 88,001 (56,660) 47 26,524
Share based payment expense 87 87
Net income to common shareholders 364 364
Purchases of treasury stock (in shares) (7,000)        
Purchases of treasury stock $ (46) (46)
Foreign currency translation (75) (75)
Balances (in shares) at Jun. 30, 2018 6,472,000 (1,103,000)        
Balances at Jun. 30, 2018 $ 65 $ (4,975) 88,088 (56,296) (28) 26,854
Balances (in shares) at Dec. 31, 2018 6,472,000 (1,264,000)        
Balances at Dec. 31, 2018 $ 65 $ (6,093) 88,255 (56,029) (93) 26,105
Share based payment expense 64 64
Net income to common shareholders (109) (109)
Purchases of treasury stock (in shares) (4,000)        
Purchases of treasury stock $ (24) (24)
Foreign currency translation 28 28
Balances (in shares) at Mar. 31, 2019 6,472,000 (1,268,000)        
Balances at Mar. 31, 2019 $ 65 $ (6,117) 88,319 (56,138) (65) 26,064
Balances (in shares) at Dec. 31, 2018 6,472,000 (1,264,000)        
Balances at Dec. 31, 2018 $ 65 $ (6,093) 88,255 (56,029) (93) 26,105
Net income to common shareholders           $ 342
Purchases of treasury stock (in shares)           (28,466)
Purchases of treasury stock           $ (173)
Foreign currency translation           (31)
Balances (in shares) at Jun. 30, 2019 6,472,000 (1,293,000)        
Balances at Jun. 30, 2019 $ 65 $ (6,266) 88,371 (55,687) (124) 26,359
Balances (in shares) at Mar. 31, 2019 6,472,000 (1,268,000)        
Balances at Mar. 31, 2019 $ 65 $ (6,117) 88,319 (56,138) (65) 26,064
Share based payment expense 52 52
Net income to common shareholders 451 451
Purchases of treasury stock (in shares) (25,000)        
Purchases of treasury stock $ (149) (149)
Foreign currency translation (59) (59)
Balances (in shares) at Jun. 30, 2019 6,472,000 (1,293,000)        
Balances at Jun. 30, 2019 $ 65 $ (6,266) $ 88,371 $ (55,687) $ (124) $ 26,359
v3.19.2
Consolidated Statements of Cash Flow (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net (loss) income: $ 342 $ 589
Adjustments to reconcile net income to net cash used in operating activities:    
Amortization and depreciation 588 475
Share based payment expense 116 196
Deferred income taxes 78 63
Bad debt expense 24 75
Changes in operating assets and liabilities:    
Accounts receivable (961) (1,543)
Prepaid expenses and other current assets (109) (139)
Right of use assets-operating 537
Right of use assets-finance 54
Other assets 10
Due to models 404 400
Lease liabilities-operating (579)
Lease liabilities-finance (47)
Accounts payable and accrued liabilities (445) 812
Net cash used in operating activities 2 938
Cash flows used in investing activities:    
Purchases of property and equipment (207) (204)
Net cash used in investing activities (207) (204)
Cash flows used in financing activities:    
Purchases of treasury stock (173) (82)
Payments on finance leases (64)
Repayment of term loan (272) (259)
Net cash used in financing activities (509) (341)
Foreign currency effect on cash flows: (31) (32)
Net change in cash and cash equivalents: (745) 361
Cash and cash equivalents, beginning of period 6,748 4,256
Cash and cash equivalents, end of period 6,003 4,617
Supplemental disclosures of cash flow information:    
Cash paid for interest 60 46
Cash paid (refund) of income taxes $ 5 $ (10)
v3.19.2
Note 1 - Basis of Presentation
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
Note
1.
  Basis of Presentation
 
The interim consolidated financial statements included herein have been prepared by Wilhelmina International, Inc. (together with its subsidiaries, "Wilhelmina" or the "Company") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Although certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to those rules and regulations, all adjustments considered necessary in order to make the consolidated financial statements
not
misleading have been included. In the opinion of the Company’s management, the accompanying interim unaudited consolidated financial statements reflect all adjustments, of a normal recurring nature, that are necessary for a fair presentation of the Company’s consolidated balance sheets, statements of income and comprehensive income, statements of shareholders’ equity, and cash flows for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form
10
-K for the fiscal year ended
December 31, 2018. 
Results of operations for the interim periods are
not
necessarily indicative of results that
may
be expected for any other interim periods or the full fiscal year.
v3.19.2
Note 2 - Business
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Basis of Accounting [Text Block]
Note
2.
  Business
 
The primary business of Wilhelmina is fashion model management. These business operations are headquartered in New York City. The Company’s predecessor was founded in
1967
by Wilhelmina Cooper, a renowned fashion model, and became
one
of the oldest, best known and largest fashion model management companies in the world. Since its founding, Wilhelmina has grown to include operations located in Los Angeles, Miami, Chicago and London, as well as a network of licensees in various local markets in the U.S. and internationally. Wilhelmina provides traditional, full-service fashion model and talent management services, specializing in the representation and management of models, entertainers, artists, athletes and other talent, to various clients, including retailers, designers, advertising agencies, print and electronic media and catalog companies.
v3.19.2
Note 3 - New Accounting Standards
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]
Note
3.
  New Accounting Standards
 
ASU
2016
-
02,
Leases.
In
2016,
the Financial Accounting Standards Board (“FASB”) issued new guidance related to accounting for leases. The new guidance requires the recognition of right of use (“ROU”) assets and lease liabilities for those leases classified as operating leases under previous guidance. In
2018,
the FASB also approved an amendment that would permit the option to adopt the new standard prospectively as of the effective date, without adjusting comparative periods presented. The new standard was effective for the Company beginning
January 1, 2019.
Wilhelmina has elected the optional transition approach to
not
apply the new lease standard in the comparative periods presented and also elected to
not
recognize short-term leases of
12
months or less on the balance sheet. Adoption of the standard resulted in the recognition of ROU assets of
$2.6
million and lease liabilities of
$2.8
million at
January 1, 2019,
primarily from recognition of ROU assets and lease liabilities related to our office space and model apartment leases. The adoption of the new standard did
not
have a material impact on the consolidated statement of operations or stockholder’s equity. During the
first
six
months of
2019,
$64
thousand of lease payments historically included as rent expense within office and general expenses are now classified as amortization expense, and included within cash used in financing activities on the Company’s statement of cash flows. At
June 30, 2019,
the weighted-average remaining lease term was
1.8
years for operating leases and
1.7
years for finance type leases. At
June 30, 2019,
the weighted average discount rate was
4.8%
for operating leases and
4.5%
for finance type leases.
 
The following table presents additional information regarding Wilhelmina’s financing and operating leases for the
three
and
six
month periods ended
June 30, 2019 (
in thousands):
 
   
Three months ended
June 30, 2019
 
Six months ended
June 30, 2019
Finance lease expense                
Amortization of ROU assets   $
27
    $
61
 
Interest on lease liabilities    
2
     
4
 
Operating lease expense    
299
     
597
 
Short term lease expense    
60
     
119
 
Cash paid for amounts included in the measurement of lease liabilities for finance leases                
Financing cash flows    
30
     
64
 
Cash paid for amounts included in the measurement of lease liabilities for operating leases                
Operating cash flows    
316
     
632
 
ROU assets obtained in exchange for lease liabilities                
Finance leases    
-  
     
2,404
 
Operating leases    
-  
     
210
 
 
As of
June 30, 2019,
future maturities of lease liabilities were as follows (in thousands):
 
    Operating   Finance
July 1, 2019 to December 31, 2019   $
604
    $
60
 
2020    
1,135
     
81
 
2021    
369
     
31
 
Total    
2,108
     
172
 
Less: Present value discount    
(85
)    
(6
)
Lease liability   $
2,023
    $
166
 
v3.19.2
Note 4 - Foreign Currency Translation
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Foreign Currency Disclosure [Text Block]
Note
4.
  Foreign Currency Translation
 
The functional currency of the London subsidiary is the British Pound. Assets and liabilities are translated into U.S. dollars at the exchange rates in effect at each balance sheet date, revenues and expenses are translated at average monthly exchange rates and resulting translation gains or losses are accumulated in other comprehensive income as a separate component of shareholders’ equity.
v3.19.2
Note 5 - Line of Credit
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Debt Disclosure [Text Block]
Note
5.
  Line of Credit
 
The Company has a credit agreement with Amegy Bank which provides a
$4.0
million revolving line of credit and previously provided up to a
$3.0
million term loan which could be drawn through
October 24, 2016.
Amounts outstanding under the term loan reduce the availability under the revolving line of credit. The revolving line of credit is also subject to a borrowing base derived from
80%
of eligible accounts receivable (as defined) and the Company’s minimum net worth covenant of
$20.0
million. The revolving line of credit bears interest at prime plus
0.50%
payable monthly. As of
June 30, 2019,
the Company had a
$0.2
million irrevocable standby letter of credit outstanding under the revolving line of credit and had additional borrowing capacity of
$1.4
million.
 
On
August 16, 2016,
the Company drew
$2.7
million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction. The term loan bears interest at
4.5%
per annum and is payable in monthly payments of interest only until
November, 2016,
followed by
47
equal monthly payments of principal and interest computed on a
60
-month amortization schedule and a final payment of principal and interest due on
October 24, 2020.
 
On
July 16, 2018,
the Company amended its Credit Agreement with Amegy Bank to provide for an additional term loan of up to
$1.0
million that
may
be drawn by the Company through
July 12, 2019,
for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at
5.15%
per annum and payable in monthly installments of interest only through
July 12, 2019.
Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in
60
months with the balance of principal and accrued interest due on
July 12, 2023.
The amendment also revised the calculation of the fixed charge coverage ratio for the
three
quarters following the maturity date of the previous term loan, provided that such term loan is paid in full on or before its maturity date.
 
Amounts outstanding under the additional term loan further reduce the availability under the Company’s revolving line of credit with Amegy Bank. On
August 1, 2018,
the Company drew
$0.7
million of the additional term loan and used the proceeds to fund the purchase of
100,000
shares of its common stock in a private transaction. On
December 12, 2018,
the Company drew
$0.3
million of the additional term loan and used the proceeds to partially fund a purchase of
50,000
shares of its common stock in a private transaction. As of
June 30, 2019,
a total of
$2.4
million was outstanding on the
two
term loans.
v3.19.2
Note 6 - Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
Note
6.
  Commitments and Contingencies
 
On
October 24, 2013,
a putative class action lawsuit was brought against the Company by former Wilhelmina model Alex Shanklin and others, including Louisa Raske, Carina Vretman, Grecia Palomares and Michelle Griffin Trotter (the “Shanklin Litigation”), in New York State Supreme Court (New York County) by the same lead counsel who represented plaintiffs in a prior, now-dismissed action brought by Louisa Raske (the “Raske Litigation”).  The claims in the Shanklin Litigation initially included breach of contract and unjust enrichment allegations arising out of matters similar to the Raske Litigation, such as the handling and reporting of funds on behalf of models and the use of model images.  Other parties named as defendants in the Shanklin Litigation include other model management companies, advertising firms, and certain advertisers.  On
January 6, 2014,
the Company moved to dismiss the Amended Complaint in the Shanklin Litigation for failure to state a claim upon which relief can be granted and other grounds, and other defendants also filed motions to dismiss.  On
August 11, 2014,
the court denied the motion to dismiss as to Wilhelmina and other of the model management defendants.  Separately, on
March 3, 2014,
the judge assigned to the Shanklin Litigation wrote the Office of the New York Attorney General bringing the case to its attention, generally describing the claims asserted therein against the model management defendants, and stating that the case
“may
involve matters in the public interest.” The judge’s letter also enclosed a copy of his decision in the Raske Litigation, which dismissed that case. 
Plaintiffs retained substitute counsel, who filed a Second and then Third Amended Complaint. Plaintiffs’ Third Amended Complaint asserts causes of action for alleged breaches of the plaintiffs' management contracts with the defendants, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment.  The Third Amended Complaint also alleges that the plaintiff models were at all relevant times employees, and
not
independent contractors, of the model management defendants, and that defendants violated the New York Labor Law in several respects, including, among other things, by allegedly failing to pay the models the minimum wages and overtime pay required thereunder,
not
maintaining accurate payroll records, and
not
providing plaintiffs with full explanations of how their wages and deductions therefrom were computed.  The Third Amended Complaint seeks certification of the action as a class action, damages in an amount to be determined at trial, plus interest, costs, attorneys’ fees, and such other relief as the court deems proper.  On
October 6, 2015,
Wilhelmina filed a motion to dismiss as to most of the plaintiffs’ claims.  The Court entered a decision granting in part and denying in part Wilhelmina’s motion to dismiss on
May 26, 2017. 
The Court (i) dismissed
three
of the
five
New York Labor Law causes of action, along with the conversion, breach of the duty of good faith and fair dealing and unjust enrichment causes of action, in their entirety, and (ii) permitted only the breach of contract causes of action, and some plaintiffs’ remaining
two
New York Labor Law causes of action to continue, within a limited time frame.  The plaintiffs and Wilhelmina each appealed, and the decision was affirmed on
May 24, 2018. 
On
August 16, 2017, 
Wilhelmina timely filed its Answer to the Third Amended Complaint.
On
June 6, 2016,
another putative class action lawsuit was brought against the Company by former Wilhelmina model Shawn Pressley and others, including Roberta Little (the “Pressley Litigation”), in New York State Supreme Court (New York County) by the same counsel representing the plaintiffs in the Shanklin Litigation, and asserting identical, although more recent, claims as those in the Shanklin Litigation.  The Amended Complaint, asserting essentially the same types of claims as in the Shanklin action, was filed on
August 16, 2017. 
Wilhelmina filed a motion to dismiss the Amended Complaint on
September 29, 2017,
which was granted in part and denied in part on
May 10, 2018.  
Some New York Labor Law and contract claims remain in the case.  Pressley has withdrawn from the case, leaving Roberta Little as the sole remaining named plaintiff in the Pressley Litigation.  On
July 12, 2019,
the Company filed its Answer and Counterclaim against Little.
On
May 1, 2019,
the Plaintiffs in the Shanklin Litigation (except Raske) and the Pressley Litigation filed motions for class certification on their contract claims and the remaining New York Labor Law Claims. On
July 12, 2019,
Wilhelmina filed its opposition to the motions for class certification and filed a cross-motion for summary judgment against Shanklin, Vretman, Palomares, Trotter and Little, and a motion for summary judgment against Raske.  The Plaintiffs’ reply papers are due
September 12, 2019
and Wilhelmina’s reply on its summary judgment motions is due
October 12, 2019.           
The Company believes the claims asserted in the Shanklin and Pressley Litigations are without merit and intends to continue to vigorously defend the actions.
In addition to the legal proceedings disclosed herein, the Company is also engaged in various legal proceedings that are routine in nature and incidental to its business.
None
of these routine proceedings, either individually or in the aggregate, are believed likely, in the Company's opinion, to have a material adverse effect on its consolidated financial position or its results of operations.
v3.19.2
Note 7 - Income Taxes
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
Note
7.
  Income Taxes
 
Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of certain amortization expense, stock based compensation, and corporate overhead
not
being deductible and income being attributable to certain states in which it operates. In recent years, the majority of taxes being paid by the Company were state taxes,
not
federal taxes. The Company operates in
four
states which have relatively high tax rates: California, New York, Illinois, and Florida. As of
June 30, 2019,
the Company had federal income tax loss carryforwards of
$0.2
million.
 
The U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted in
December 2017
introduced significant changes to U.S. income tax law. Effective in
2018,
the Tax Act reduced the U.S. statutory tax rate from
35%
to
21%
and created new taxes on certain foreign-sourced earnings and certain related-party payments. The Company’s repatriation liability is
not
deemed material due to a foreign deficit.
v3.19.2
Note 8 - Treasury Shares
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Treasury Stock [Text Block]
Note
8.
Treasury Shares
 
During
2012,
the Board of Directors authorized a stock repurchase program whereby the Company could repurchase up to
500,000
shares of its outstanding common stock. During
2013,
the Board of Directors renewed and extended the Company’s share repurchase authority to enable it to repurchase up to an aggregate of
1,000,000
shares of common stock. In
2016,
the Board of Directors increased by an additional
500,000
shares the number of shares of the Company’s common stock that
may
be repurchased under its stock repurchase program to an aggregate of
1,500,000
shares. The shares
may
be repurchased from time to time in the open market or through privately negotiated transactions at prices the Company deems appropriate. The program does
not
obligate the Company to acquire any particular amount of common stock and
may
be modified or suspended at any time at the Company’s discretion.
 
From
2012
through
June 30, 2019,
the Company has repurchased
1,292,620
shares of common stock at an average price of approximately
$4.85
per share, for a total of approximately
$6.3
million in repurchases under the stock repurchase program. During the
first
six
months of
2019,
28,466
shares were repurchased under the stock repurchase program for approximately
$173
thousand.
v3.19.2
Note 9 - Related Parties
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
Note
9.
  Related Parties
 
The Executive Chairman of the Company, Mark E. Schwarz, is also the chairman, chief executive officer and portfolio manager of Newcastle Capital Management, L.P. (“NCM”). NCM is the general partner of Newcastle Partners L.P. (“Newcastle”), which is the largest shareholder of the Company. James Dvorak (Managing Director at NCM) also serves as a director of the Company.
 
The Company’s corporate headquarters are located at
200
Crescent Court, Suite
1400,
Dallas, Texas
75201,
which are also the offices of NCM. The Company occupies a portion of NCM space on a month-to-month basis at
$2.5
thousand per month, pursuant to a services agreement entered into between the parties. Pursuant to the services agreement, the Company receives the use of NCM’s facilities and equipment and accounting, legal and administrative services from employees of NCM. The Company incurred expenses pursuant to the services agreement totaling approximately
$15
thousand for the
six
months ended both
June 30, 2019
and
2018.
The Company did
not
owe NCM any amounts under the services agreement as of
June 30, 2019.
v3.19.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
The interim consolidated financial statements included herein have been prepared by Wilhelmina International, Inc. (together with its subsidiaries, "Wilhelmina" or the "Company") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Although certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to those rules and regulations, all adjustments considered necessary in order to make the consolidated financial statements
not
misleading have been included. In the opinion of the Company’s management, the accompanying interim unaudited consolidated financial statements reflect all adjustments, of a normal recurring nature, that are necessary for a fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form
10
-K for the fiscal year ended
December 31, 2018. 
Results of operations for the interim periods are
not
necessarily indicative of results that
may
be expected for any other interim periods or the full fiscal year.
v3.19.2
Note 3 - New Accounting Standards (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Lease, Cost [Table Text Block]
   
Three months ended
June 30, 2019
 
Six months ended
June 30, 2019
Finance lease expense                
Amortization of ROU assets   $
27
    $
61
 
Interest on lease liabilities    
2
     
4
 
Operating lease expense    
299
     
597
 
Short term lease expense    
60
     
119
 
Cash paid for amounts included in the measurement of lease liabilities for finance leases                
Financing cash flows    
30
     
64
 
Cash paid for amounts included in the measurement of lease liabilities for operating leases                
Operating cash flows    
316
     
632
 
ROU assets obtained in exchange for lease liabilities                
Finance leases    
-  
     
2,404
 
Operating leases    
-  
     
210
 
Lessee, Lease, Liability, Maturity [Table Text Block]
    Operating   Finance
July 1, 2019 to December 31, 2019   $
604
    $
60
 
2020    
1,135
     
81
 
2021    
369
     
31
 
Total    
2,108
     
172
 
Less: Present value discount    
(85
)    
(6
)
Lease liability   $
2,023
    $
166
 
v3.19.2
Note 3 - New Accounting Standards (Details Textual) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Jun. 30, 2018
Jan. 01, 2019
Dec. 31, 2018
Operating Lease, Right-of-Use Asset $ 1,867 $ 1,867   $ 2,600
Operating Lease, Liability, Total 2,023 2,023   $ 2,800  
Finance Lease, Principal Payments $ 30 $ 64    
Operating Lease, Weighted Average Remaining Lease Term 1 year 292 days 1 year 292 days      
Finance Lease, Weighted Average Remaining Lease Term 1 year 255 days 1 year 255 days      
Operating Lease, Weighted Average Discount Rate, Percent 4.80% 4.80%      
Finance Lease, Weighted Average Discount Rate, Percent 4.50% 4.50%      
v3.19.2
Note 3 - New Accounting Standards - Lease Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Jun. 30, 2018
Amortization of ROU assets $ 27 $ 61  
Interest on lease liabilities 2 4  
Operating lease expense 299 597  
Short term lease expense 60 119  
Finance Lease, Principal Payments 30 64
Operating cash flows 316 632  
Finance leases 2,404  
Operating leases $ 210  
v3.19.2
Note 3 - New Accounting Standards - Maturities of Lease Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Jan. 01, 2019
July 1, 2019 to December 31, 2019, Operating $ 604  
July 1, 2019 to December 31, 2019, Finance 60  
2020, Operating 1,135  
2020, Finance 81  
2021, Operating 369  
2021, Finance 31  
Total, Operating 2,108  
Total, Finance 172  
Less: Present value discount, Operating (85)  
Less: Present value discount, Finance (6)  
Lease liability, Operating 2,023 $ 2,800
Lease liability, Finance $ 166  
v3.19.2
Note 5 - Line of Credit (Details Textual)
$ in Millions
6 Months Ended
Dec. 12, 2018
USD ($)
shares
Aug. 01, 2018
USD ($)
shares
Oct. 24, 2016
USD ($)
Aug. 16, 2016
USD ($)
Jun. 30, 2019
USD ($)
shares
Jul. 16, 2018
USD ($)
Treasury Stock, Shares, Acquired | shares 50,000 100,000     28,466  
Amegy [Member] | Credit Agreement After Fifth Amendment [Member] | Revolving Credit Facility [Member]            
Debt Agreement, Maximum Borrowing Capacity     $ 4.0      
Debt Agreement, Borrowing Base Percentage of Collateral Modified From     80.00%      
Debt Agreement, Covenant Compliance, Minimum Net Worth     $ 20.0      
Amegy [Member] | Credit Agreement After Fifth Amendment [Member] | Revolving Credit Facility [Member] | Prime Rate [Member]            
Debt Instrument, Basis Spread on Variable Rate     0.50%      
Amegy [Member] | Credit Agreement After Fifth Amendment [Member] | Term Loan [Member]            
Debt Agreement, Maximum Borrowing Capacity     $ 3.0      
Proceeds from Issuance of Long-term Debt, Total       $ 2.7    
Debt Instrument, Interest Rate, Stated Percentage       4.50%    
Long-term Debt, Number of Monthly Payments, Principal and Interest       47    
Amegy [Member] | Credit Agreement After Fifth Amendment [Member] | Standby Letters of Credit [Member]            
Long-term Line of Credit, Total         $ 0.2  
Line of Credit Facility, Remaining Borrowing Capacity         1.4  
Amegy [Member] | Tenth Amendment to Credit Agreement [Member] | Term Loan [Member]            
Debt Agreement, Maximum Borrowing Capacity           $ 1.0
Proceeds from Issuance of Long-term Debt, Total $ 0.3 $ 0.7        
Debt Instrument, Interest Rate, Stated Percentage           5.15%
Long-term Debt, Total         $ 2.4  
v3.19.2
Note 7 - Income Taxes (Details Textual)
$ in Millions
12 Months Ended 18 Months Ended
Dec. 31, 2017
Jun. 30, 2019
USD ($)
Number of States in which Entity Operates   4
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 35.00% 21.00%
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]    
Operating Loss Carryforwards, Total   $ 0.2
v3.19.2
Note 8 - Treasury Shares (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended 90 Months Ended
Dec. 12, 2018
Aug. 01, 2018
Aug. 12, 2016
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Jun. 30, 2019
Dec. 31, 2018
Dec. 31, 2013
Dec. 31, 2012
Stock Repurchase Program, Number of Shares Authorized to be Repurchased     1,500,000               1,000,000 500,000
Stock Repurchase Program, Additional Shares Authorized     500,000                  
Treasury Stock, Shares, Ending Balance       1,292,620       1,292,620 1,292,620 1,264,154    
Treasury Stock Acquired, Average Cost Per Share                 $ 4.85      
Treasury Stock, Value, Ending Balance       $ 6,266       $ 6,266 $ 6,266 $ 6,093    
Treasury Stock, Shares, Acquired 50,000 100,000           28,466        
Treasury Stock, Value, Acquired, Cost Method       $ 149 $ 24 $ 46 $ 36 $ 173        
v3.19.2
Note 9 - Related Parties (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
NCM [Member]    
Due to Related Parties, Current, Total $ 0  
Rent [Member]    
Related Party Transaction, Monthly Rent 2,500  
Services Agreements [Member]    
Related Party Transaction, Expenses from Transactions with Related Party $ 15,000 $ 15,000