Wilhelmina(WHLM) - 2023 Q4 - Annual Report

Financial Performance - Total revenues decreased by 3.2% to $17.212 million in 2023 from$17.780 million in 2022, primarily due to decreased commissions from model bookings[68][70]. - Operating income fell to $0.728 million in 2023, down from$2.419 million in 2022, resulting in an operating margin decline from 13.6% to 4.2%[68][76]. - Net income decreased significantly to $0.433 million in 2023 compared to$3.529 million in 2022, attributed to lower operating income and a prior year tax benefit[82]. - EBITDA dropped to $0.830 million in 2023 from$2.776 million in 2022, while Adjusted EBITDA decreased to $1.020 million from$2.802 million[69][91]. Expenses - Salaries and service costs increased by 5.3% to $11.481 million in 2023, driven by personnel hires and payroll adjustments[68][72]. - Office and general expenses rose by 20.9$3.830 million in 2023, mainly due to increased legal, rent, and utility expenses[68][73]. - Corporate overhead expenses decreased by 11.7% to $0.965 million in 2023, primarily due to the absence of costs related to SEC filings from the previous year[68][75]. Revenue Sources - Revenues are primarily derived from fashion model bookings and representation of social media influencers and actors for commercials, film, and television[96]. - Service revenues are reported on a net basis, which represents gross amounts billed net of amounts owed to talent, including taxes and commissions[98]. Accounts and Taxes - Accounts receivable are recorded at the gross amounts billed to customers, leading to large accounts receivable and amounts due to models relative to total revenue[99]. - The effective tax rate increased to 37.3$6.1 million at December 31, 2023, down from $12.0 million at the end of 2022, primarily due to cash used in investing activities[84][85]. - Cash and cash equivalents include cash on hand, cash in banks, and short-term investments with maturities of three months or less[104]. Asset Management - Share-based compensation expense is estimated at the grant date based on the award's fair value and recognized over the requisite service period[100]. - Deferred tax assets are recognized for unused tax losses and credits, with a valuation allowance established if future taxable income is uncertain[102]. - The company performs impairment testing for goodwill and intangible assets at least annually, recognizing impairment losses when carrying amounts exceed fair values[108]. - The company evaluates indefinite lived trademark and trade name intangible assets for impairment using the relief from royalty method, updating projections annually[110]. - The company maintains an allowance for doubtful accounts for estimated losses from uncollectible accounts receivable[106].