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Wilhelmina International, Inc.

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FY2020 Annual Report · Wilhelmina International, Inc.
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2020 ANNUAL REPORT

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 
_______________ 

FORM 10-K 

(Mark One) 
[x]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2020

[  ] 

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 
(State or other jurisdiction of 
incorporation or organization) 

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

74-2781950
(IRS Employer 
Identification Number) 

75201 
(Zip Code) 

(214) 661-7488
(Registrant’s telephone number, including area code) 

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 

Securities Registered Pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   [  ] 

Yes   [x] No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   [  ] 

Yes   [x] No 

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 [  ] 
Non-Accelerated Filer [x] 

            Emerging growth company [  ] 

Accelerated Filer [  ] 
Smaller Reporting Company [x] 

           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 has filed a report on and attestation to its management’s assessment of the 
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by 
the registered public accounting firm that prepared or issued its audit report. [  ] 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [  ] 

Yes   [x] No 

The aggregate market value of the registrant’s outstanding common stock held by non-affiliates of the registrant computed by 
reference to the price at which the common stock was last sold, as of the last business day of the registrant’s most recently completed 
second fiscal quarter was approximately $7.1 million. 

As of March 16, 2021, the registrant had 5,157,344 shares of common stock outstanding. 

DOCUMENTS INCORPORATED BY REFERENCE 

The information required by Part III is incorporated by reference from the registrant’s definitive proxy statement to be filed 

with the Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report. 

2 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 

Annual Report on Form 10-K 

For the Year Ended December 31, 2020 

BUSINESS 

ITEM 1. 
ITEM 1A.  RISK FACTORS 
ITEM 1B.  UNRESOLVED STAFF COMMENTS 
ITEM 2. 
ITEM 3. 
ITEM 4.  MINE SAFETY DISCLOSURES 

PROPERTIES 
LEGAL PROCEEDINGS 

PART I 

PART II 

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS 

AND ISSUER PURCHASES OF EQUITY SECURITIES 
SELECTED FINANCIAL DATA 

ITEM 6. 
ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 

OF OPERATIONS 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
ITEM 8. 
ITEM 9. 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE 

ITEM 9A.  CONTROLS AND PROCEDURES 
ITEM 9B.  OTHER INFORMATION 

PART III 

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 
ITEM 11.  EXECUTIVE COMPENSATION 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 

RELATED STOCKHOLDER MATTERS 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR 

INDEPENDENCE 

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES 

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 
ITEM 16.  FORM 10-K SUMMARY 

PART IV 

SIGNATURES 

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FORWARD LOOKING STATEMENTS 

This Annual Report on Form 10-K 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 
Wilhelmina International, Inc. (together with its subsidiaries the “Company” or “Wilhelmina”) 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 forward-
looking  statements  include,  in  particular,  projections  about  the  Company’s  future  results,  statements  about  its  plans, 
strategies,  business  prospects,  changes  and  trends  in  its  business  and  the  markets  in  which  it  operates.  Additionally, 
statements  concerning  future  matters  such  as  gross  billing  levels,  revenue  levels,  expense  levels,  and  other  statements 
regarding matters that are not historical are forward-looking statements. Management cautions that these forward-looking 
statements relate to future events or the Company’s future financial performance and are subject to business, economic, 
and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance, 
or achievements of its business or its industry to be materially different from those expressed or implied by any forward-
looking  statements.  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. 

 PART I 

ITEM 1. 

BUSINESS 

DESCRIPTION OF THE WILHELMINA BUSINESS 

Overview 

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. Wilhelmina  provides  traditional,  full-service  fashion  model  and  talent  management  services, 
specializing  in  the  representation  and  management  of  models,  entertainers,  athletes  and  other  talent,  to  various  clients, 
including retailers, designers, advertising agencies, print and electronic media and catalog companies. The Company was 
incorporated in the State of Delaware in 1996. 

 Organization and Operating Divisions 

The Company acquired the predecessor companies constituting its current primary business in 2008. The Company 
conducts  its  business  through  operating  divisions  and  subsidiaries  engaged  in  fashion  model  management  and  other 
complementary businesses.  These business activities are focused on the following key areas: 

Fashion model and social media influencer management

•
• Celebrity management
• Licensing and branding associations

During the third quarter of  2020, Wilhelmina ceased representation of hair and make-up artists, to better focus  on core 
fashion model and social media influencer talent.  The Wilhelmina Studio division, which offered services relating to content 
creation, production, casting, and influencer programming, was closed and ceased operations during the fourth quarter of 
2019. 

4 

Fashion Model and Social Media Influencer Management 

Wilhelmina is focused on providing fashion modeling talent and social media influencer services to clients such as 
advertising  agencies,  branded  consumer  goods  companies,  fashion  designers,  Internet  sites,  retailers,  department  stores, 
product catalogs and magazine publications. 

The  fashion  model/talent/influencer  management  industry  can  be  divided  into  many  subcategories,  including 
advertising campaigns, catalog/e-commerce, runway, showroom and editorial work. Advertising work involves modeling 
for advertisements featuring consumer products such as cosmetics, clothing and other items to be placed in magazines and 
newspapers, on billboards and with other types of media. Catalog and e-commerce work involves modeling of products to 
be  sold  through  promotional  catalogs  and  Internet  commerce  sites. Runway  work  involves  modeling  at  fashion  shows, 
which primarily take place in Paris, Milan, London and New York City. Showroom work involves on-site modeling  of 
products at client showrooms and other events and production “fit” work whereby a model serves as the sizing model for 
apparel items. Editorial work involves modeling for the cover and editorial sections of magazines and websites.   

Clients pay for talent to appear in photo shoots for Internet sites, magazine features, print advertising, direct mail 
marketing, and product catalogs, as well as to appear in runway shows to present new designer collections, fit modeling, 
and  on-location  presentations  and  events.  In  addition,  talent  may  also  appear  in  film  and  television  commercials. 
Wilhelmina develops and diversifies its talent portfolio through a combination of ongoing local, regional and international 
scouting and talent-search efforts to source new talent, as well as cooperating with other agencies that represent talent. 

Within  its  fashion  model  management  business,  Wilhelmina  has  two  primary  sources  of  service  revenue: (i) 
commissions paid by models as a percentage of their gross earnings; and (ii) service charges paid by clients in addition to 
booking fees, calculated as a percentage of the models’ booking fees.  Wilhelmina believes that its commission rates and 
service charges are comparable to those of its principal competitors. 

Wilhelmina’s fashion model management operations are organized into divisions called “boards,” each of which 

specializes by the type of models it represents. Wilhelmina’s boards are generally described in the table below. 

Board Name 
Women 
Men 
Direct 
Curve 
Showroom 
Fitness 

Location 
NYC, LA, Miami, Chicago, London 
NYC, LA, Miami, Chicago, London 
NYC, LA, Miami, Chicago, London 
NYC, LA, Miami, London 
NYC, Miami 
NYC, LA 

Target Market 
High-end female fashion models 
High-end male fashion models 
Established/commercial male/female fashion models 
Full-figured female fashion models 
Live modeling and designer fit clothing modeling 
Athletic models 

Each major board is headed by a director who manages the agents assigned to the board. The agents of each board 
act  both as bookers  (including promoting models, negotiating fees and contracting work)  and as talent scouts/managers 
(including providing models with career and development guidance and helping them better market themselves). Although 
agents individually develop professional relationships with models, models are represented by a board collectively and not 
by a specific agent. Wilhelmina’s organization into boards enables Wilhelmina to provide clients with services tailored to 
their particular needs, to allow models to benefit from agents’ specialized experience in their particular markets, and to limit 
Wilhelmina’s dependency on any specialty market or agent. 

Most senior agents are employed pursuant to employment agreements that include noncompetition provisions such 
as a prohibition from working with Wilhelmina’s models and clients for a certain period of time after the end of the agent’s 
employment with Wilhelmina. Wilhelmina typically signs its models to three-year exclusive contracts, which it actively 
enforces. 

The Aperture division operates in New York and Los Angeles, and offers models, social media influencers, and 

actors representation for commercials, film, and television.   

Wilhelmina  London  Limited  (“London”),  a  wholly  owned  subsidiary  of  Wilhelmina  International,  Inc.,  was 

5 

acquired in January 2015. The London subsidiary establishes a footprint for the Company in Western Europe, provides a 
base of operations to service the Company’s European clients, and serves as a new talent development office for European 
models and artists.  

Celebrity Management 

Wilhelmina’s Celebrity division seeks to secure endorsement and spokesperson work for celebrities from the worlds 
of sports, music and entertainment. The Celebrity division has two primary sources of revenue: (i) commissions paid by 
talent as a percentage of their gross earnings; and (ii) royalties or a service charge paid by clients.  Wilhelmina’s Celebrity 
division  management  works  with  emerging  artists  and  established  celebrity  names  to  match  them  with  leading  fashion 
brands and companies. 

Licensing & Branding Associations 

Wilhelmina Licensing, LLC is a wholly-owned subsidiary that collects third-party licensing fees in connection with 
the  licensing  of  the  “Wilhelmina”  name. Third-party  licensees  include  several  leading  fashion  model  agencies  in  local 
markets  in  the  U.S.  and  internationally.  The  film  and  television  business  consists  of  occasional  television  syndication 
royalties and production series contracts. Also, from time to time, the Company conducts model search contests and other 
events in an effort to expand the Wilhelmina brand and recruit talent. 

Competition 

The fashion model/talent management business is highly competitive. New York City, Los Angeles, and Miami, as 
well  as  London,  Paris,  and  Milan,  are  considered  the  most  important  markets  for  the  fashion  talent  management 
industry.  Most of the leading international firms are headquartered in New York City. Wilhelmina’s principal competitors 
include other large fashion model management businesses in the U.S., including IMG Models, Elite Model Management, 
Ford Models, Inc., DNA Model Management, NEXT Model Management, The Lions Model Management, The Society 
Management, Women 360 Management, and New York Model Management. However, Wilhelmina is the only publicly-
owned fashion talent management company in the world. 

Competition also includes foreign agencies and smaller U.S. agencies in local markets that recruit local talent and 
cater to local market needs.  Several of the larger fashion talent firms operate offices in multiple cities and countries or have 
chosen to partner with local or foreign agencies. 

The Company believes that its sources of revenue, mainly generated from commissions and service charges, are 
comparable to those of its principal competitors.  Therefore, for the Company to obtain a competitive advantage, it must 
develop and maintain a deep pool of talent and deliver high quality service to its clients.  The Company believes that through 
its  scouting  efforts,  name  recognition,  and  licensing  network,  it  is  able  to  recruit  a  deeper  pool  of  talent  relative  to  its 
competitors. These recruitment tools, coupled with the broad range of fashion boards available to the Company’s talent, 
enable the Company to develop talent and generate a broader range of revenues relative to its principal competitors. While 
a broad range of talent and boards provides a level of stability to the business, certain talent may be more inclined to work 
with a boutique agency that may appear to tailor more specifically to their needs. 

For  more  than  50  years,  Wilhelmina  and  its  predecessors  have  created  long-standing  client  relationships  and 
business  activities  related  to  the  fashion  model  management  business  that  provide  exposure  to  diverse  markets  and 
demographics. The Company has also developed a professional workforce with years of talent management experience. 

Clients and Customers 

As  of  December  31,  2020,  Wilhelmina  represented  a  roster  of  approximately  1,500  active  models  and 
talent. Wilhelmina’s active models include Karolína Kurková, Ana Maria Figuerova, Asya Rosh, Bianca Balti, Francisco 
Henriques, Carla Piera, Alva Clair, Bojana Krsmanovic, Cyrielle Lalande, Mitchell Slaggert, Anne de Paula, Ottawa Efoe, 

6 

   
   
 
 
 
  
  
 
  
  
  
  
 
 
  
  
Rainer  Andreesen,  Erik  Van  Gils,  Kate  King,  Parker  Gregory,  Malik  Lindo, Malcolm  Jackson,  Milena  Feuerer,  Oumar 
Diouf, Marianna Dantec, Haejin Lee, Hilda Halilovic, Moon Young, Kailand Morris, Riley Harper, Isabela Grutman, Sabey 
Dantsira,  Lauren  Auerbach,  Davidson  Obennebo,  Mikkel  Jensen,  Sasha  Melnychuk,  Armando  Cabral,  Lola  Hedrickx, 
Vanessa  Cruz,  Tommy  Hackett,  Serena  Marquez,  Nadia  Lee  Cohen,  Sofia  Tesmenitskaya,  Nayara  Oliviera,  Fernando 
Lindez, Dachuan Jin, Thais Borges, Gracie Phillips, Ludwig Wilsdorff, Claudio Montiero, and Nathan Owens.  

Wilhelmina serves approximately 2,400 external clients. Wilhelmina’s customer base is highly diversified, with no 
one customer accounting for more than 3% of overall gross revenues. The top 100 clients of Wilhelmina together accounted 
for approximately 46% of overall gross revenues during 2020. 

Governmental Regulations 

Certain jurisdictions in which Wilhelmina operates, such as California and Florida, require that companies maintain 
a  Talent  Agency  License  in  order  to  engage  in  the  “talent  agency”  business. The  talent  agency  business  is  generally 
considered the business of procuring engagements or any employment or placement of a talent, where the talent performs 
in his or her artistic capacity.  Where required, the Wilhelmina subsidiaries operating in these jurisdictions maintain Talent 
Agency Licenses issued by those jurisdictions.   

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, client roster and its diversification across various talent management 
segments, together with its name recognition and 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  Wilhelmina  competes  with  other  leading  full  service  agencies,  Wilhelmina  believes  it  competed 
successfully in 2020.   

With  total  advertising  expenditures  on  major  media  (television,  Internet,  outdoor,  cinema,  magazines,  and 
newspapers)  of  approximately  $220  billion  in  2020,  North  America  is  the  world’s  largest  advertising  market.  For  the 
fashion talent management industry, including Wilhelmina, advertising expenditures on television, Internet, magazines, and 
outdoor are of particular relevance. 

Strategy 

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

•
•
•
•
•
•

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

The  Company  makes  use  of  digital  technology  to  effectively  connect  with  clients  and  talent,  utilizing  video 
conferencing and other digital tools to best position our team to identify opportunities to grow the careers of the talent we 
represent  and  expand  our  business.    The  Company  has  made  significant  investments  in  technology,  infrastructure,  and 
personnel, to support our clients and talent.  

7 

EMPLOYEES 

As of December 31, 2020, the Company had 70 employees, 42 of whom were located in New York City, five of 
whom were located at Wilhelmina’s Miami office, 10 of whom were located at Wilhelmina’s Los Angeles office, 11 of 
whom were located at Wilhelmina’s London office and two of whom were located at the corporate headquarters in Dallas. 

TRADEMARKS AND LICENSING 

The “Wilhelmina” brand is essential to the success and competitive position of the Company. The “Wilhelmina” 
trademark  is  vital  to  the  licensing  business  because  licensees  pay  for  the  right  to  use  the  trademark. The  Company  has 
invested significant resources in the “Wilhelmina” brands in order to obtain the public recognition that these brands currently 
enjoy. Wilhelmina relies upon domestic and international trademark laws, license agreements and nondisclosure agreements 
to protect the “Wilhelmina” brand name used in its business. Trademarks registered in the U.S. have a duration of ten years 
and are generally subject to an indefinite number of renewals for a like period on continued use and appropriate application. 

ITEM 1A. 

RISK FACTORS 

Not applicable to smaller reporting company. 

ITEM 1B. 

UNRESOLVED STAFF COMMENTS 

None. 

ITEM 2. 

PROPERTIES 

The  Company’s  corporate  headquarters  are  currently  located  at  200  Crescent  Court,  Suite  1400,  Dallas,  Texas 
75201,  which  are  also  the  offices  of  Newcastle  Capital  Management,  L.P.  (“NCM”).  NCM  is  the  general  partner  of 
Newcastle Partners L.P. (“Newcastle”), the Company’s largest shareholder. The Company occupies a portion of NCM’s 
space on a month-to-month basis at $2,500 per month, pursuant to a services agreement entered into between the parties in 
2006. 

The following table summarizes information with respect to the material facilities of the Company for leased office 

space and model apartments: 

Description of Property 

Area (sq. feet) 

Lease Expiration 

Office for California-based operations – Los Angeles, CA 
Office for Florida-based operations – Miami, FL 
Office for London-based operations – London, UK 
Office for Illinois-based operations – Chicago, IL 
One model apartment – London, UK 
One model apartment – New York, NY 
Two model apartments – Miami, FL 

3,605 
2,100 
995 
1,800 
1,400 
1,800 
2,000 

July 31, 2021 
March 31, 2023 
July 19, 2023 
June, 30 2021 
Month-to-Month 
May 31, 2021 
March 31, 2023 

The Company’s lease on its former New York City offices expired in February 2021.  Due to all of the New York 

staff working remotely during the ongoing COVID-19 pandemic, Wilhelmina elected not to renew the lease and vacated 
the premises.  The Company presently expects that all employees based in New York will continue to work remotely until 
it is deemed safe to return to an office environment.  At that time, Wilhelmina expects to lease a new office space for its 
New York City operational headquarters.  The Company believes there is sufficient office space available at favorable 
leasing terms to replace its former office space and to satisfy any need for future expansion. 

8 

ITEM 3. 

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.   

             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.   

By Order Dated May 8, 2020 (the “Class Certification Order”), the Court denied class certification in the Pressley 
case,  denied  class  certification  with  respect  to  the  breach  of  contract  and  alleged  unpaid  usage  claims,  granted  class 
certification as to the New York Labor Law causes of action asserted by Vretman, Palomares and Trotter, and declined to 

9 

   
   
  
rule on Wilhelmina’s motions for summary judgment, denying them without prejudice to be re-filed at a later date. On June 
12, 2020, the Plaintiffs in both the Shanklin and Pressley actions filed Notices of Appeal to the Appellate Division, First 
Department,  from  those  portions  of  the  Class  Certification  Order  on  which  Wilhelmina  prevailed.    On  June  22,  2020, 
Wilhelmina  filed  Notices  of  Cross-Appeal  from  those  portions  of  the  Class  Certification  order  that  granted  class 
Certification and denied summary judgment.  The Court has directed the parties to non-binding mediation and that process 
is underway.  

The Company believes the claims asserted in the Shanklin Litigation and Pressley Litigation 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 4. 

MINE SAFETY DISCLOSURES 

 Not applicable. 

PART II 

ITEM 5. 

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND 
ISSUER PURCHASES OF EQUITY SECURITIES 

Market Information 

The  Company’s  $0.01  par  value  common  stock  has  traded  on  the  Nasdaq  Capital  Market  under  the  symbol 
“WHLM” since September 2014. Previously, the common stock was quoted in the over-the-counter market on the OTC 
Bulletin Board.   

The following table shows the high and low sales prices of the common stock for each calendar quarter of 2019 

and 2020. 

Year Ended December 31, 2019: 

1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

Year Ended December 31, 2020: 

1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

High 

Low 

  $ 
  $ 
  $ 
  $ 

  $ 
  $ 
  $ 
  $ 

6.20  
6.84  
6.20  
5.54  

  $ 
  $ 
  $ 
  $ 

5.13  
5.17  
12.92  
5.84  

  $ 
  $ 
  $ 
  $ 

5.05  
4.68  
4.82  
3.00  

2.35  
3.15  
2.32  
2.72  

Equity Compensation Plan Information 

The following table provides information with respect to the Company’s equity compensation plans as of December 

31, 2020: 

10 

Number of 
securities to be 
issued upon 
exercise of 
outstanding 
options, warrants 
and rights 
(a)

60,000 

- 

60,000 

Weighted-average 
exercise price of 
outstanding 
options, warrants 
and rights 
(b)

$6.93

- 

$6.93 

Number of 
securities 
remaining 
available for 
future issuance 
under equity 
compensation 
plans (excluding 
securities 
reflected in 
column (a)) 
(c) 

340,000 

- 

340,000 

Plan Category 

Equity compensation plans approved by security 
holders 
Equity compensation plans not approved by security 
holders 
Total 

Additional  information  regarding  equity  compensation  can  be  found  in  the  notes  to  the  consolidated  financial 

statements. 

Issuer Repurchases 

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 Company did not make any purchases pursuant 
to the stock repurchase program during the quarter ended December 31, 2020. 

Shareholders 

As of March 16, 2021 there were 5,157,344 shares of the Company’s common stock outstanding held by 437 

holders of record.    

Dividend Policy 

The Company has not declared or paid any cash dividends on its common stock during the past two completed 
fiscal years.  The Board of Directors of the Company expects to continue this policy for the foreseeable future in order to 
retain cash for the continued expansion of the Company’s business. The Company’s credit agreement with Amegy Bank 
contains a covenant which could limit its ability to pay dividends on the common stock. 

ITEM 6. 

SELECTED FINANCIAL DATA 

Not applicable to smaller reporting company. 

11 

ITEM 7. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS 

The following is a discussion of the Company’s financial condition and results of operations comparing the calendar 
years ended December 31, 2020 and 2019. This section should be read in conjunction with the Company’s Consolidated 
Financial Statements and the Notes thereto that are incorporated herein by reference and the other financial information 
included herein and the notes thereto. 

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 digital, mobile, print and television advertising campaigns for consumer goods, e-commerce, 
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, and 
scouting and developing talent. 

Although Wilhelmina has a large and diverse client base, it is not immune to global economic conditions, such as 
the impact from the COVID-19 pandemic. The Company closely monitors economic conditions, client spending, and other 
industry factors and continually evaluates opportunities to increase the market share of its existing boards and further expand 
its  geographic  reach. There  can  be  no  assurance  as  to  the  effects  on  Wilhelmina  of  future  economic  circumstances, 
technological developments, client spending patterns, client creditworthiness and other developments and whether, or to 
what extent, Wilhelmina’s efforts to respond to them will be effective. 

COVID-19 PANDEMIC 

On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as a 
pandemic, which spread rapidly throughout the United States and the world. As the global impact of COVID-19 continues, 
Wilhelmina’s first priority has been to protect the health and safety of its employees and talent.  To help mitigate the spread 
of the virus and in response to health advisories and governmental actions and regulations, the Company has modified its 
business practices and has implemented health and safety measures that are designed to protect employees and represented 
talent. 

The  Company’s  revenues  are  heavily  dependent  on  the  level  of  economic  activity  in  the  United  States  and  the 
United  Kingdom,  particularly  in  the  fashion,  advertising  and  publishing  industries,  all  of  which  have  been  negatively 
impacted by the pandemic and may not recover as quickly as other sectors of the economy. There have been mandates from 
federal, state, and local authorities requiring forced closures of non-essential businesses. As a result, beginning in March 
2020, the Company saw a significant reduction in customer bookings, resulting in a negative impact to revenue and earnings. 
During  the  second  half  of  2020,  bookings  increased  from  the  preceding  months,  but  remained  significantly  below  pre-
pandemic levels. 

In addition to reduced revenue, business operations  have been  adversely affected by reductions in  productivity, 
limitations on the ability of customers to make timely payments, disruptions in talents’ ability to travel to needed locations, 
and supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations for photoshoots and other 
bookings. Many of the Company’s customers are large retail and fashion companies, some of which have had to close stores 
in the United States and internationally due to the spread of COVID-19. Some of these customers have filed for bankruptcy 
in 2020 and others may be unable to pay amounts already owed to the Company, resulting in increased current and future 
bad debt expense. These customers also may not emerge from the pandemic with the financial ability, or need, to purchase 

12 

 
Wilhelmina’s services to the extent that they did in previous years. Some model talent have been quarantined with family 
far from the major cities where Wilhelmina’s offices are located, and also away from where most modeling jobs take place. 
Many U.S. and international airlines have decreased their flight schedules which, as economic activities resumes and clients 
increase booking requests, may make it difficult for talent to be available when and where they are needed. The B.1.1.7 
variant  of  the  COVID-19  virus,  which  is  believed  to  spread  easily  and  quickly,  has  particularly  impacted  the  United 
Kingdom in recent months, resulting in renewed strict lockdowns that have impacted Wilhelmina’s London operations and 
are continuing into 2021.  While these disruptions are currently expected to be temporary, there continues to be uncertainty 
around the duration. 

Postponed  and  cancelled  bookings  related  to  the  pandemic  contributed  significantly  to  reduced  revenues  and 
increased operating losses during 2020. Although some clients increased activity and bookings during the second half of 
2020, rising COVID-19 infection rates in cities where Wilhelmina operates could lead to a slower economic recovery in 
those markets, and possible additional business closings or local mandates that could slow the recovery in operations there. 
Since Wilhelmina extends customary payment terms to its clients, even as bookings resume, there is likely to be a lag before 
significant cash collections return. In the meantime, the Company continues to have significant employee, office rent, and 
other expenses. 

Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy 
Bank has limited its access to additional financing. Net losses in recent periods have also impacted compliance with the 
financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional 
financing. Since the pandemic began, many stock markets, including Nasdaq Capital Market where Wilhelmina’s common 
stock is listed, have been volatile. A further decline in the Company’s stock price would reduce its market capitalization 
and could require additional goodwill or intangible asset impairment writedowns. 

The Company has taken the following actions to address the impact of COVID-19 and the current recessionary 

environment, in order to efficiently manage the business and maintain adequate liquidity and maximum flexibility: 

-

-
-

In April 2020, obtained approximately $2.0 million in loans under the Paycheck Protection Program (the “PPP”)
of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small 
Business Administration (“SBA”).
Eliminated discretionary travel and entertainment expenses.
Suspended share repurchases.  The terms of the Company’s PPP loans restrict share repurchases until 12 months 
have passed after full repayment.

- Did not renew the leases on three New York City model apartments when the terms ended in June and August,

2020.

 - Did not renew the lease on the Company’s New York City office, and required all New York based staff to 

-

work remotely.
Suspended efforts to fill two highly compensated executive roles following the resignation of the Company’s 
Chief Executive Officer and Vice President in early 2020.
Negotiated discounts with various vendors and service providers.

- 
- Effective July 1, 2020, implemented layoffs of approximately 36% of its staff, including employees at each of

the  Company’s five offices, and effected temporary salary reductions for the remaining staff.

If the quarantines and limitations on non-essential work are re-implemented, or persist for an extended period, the 

Company may need to implement additional cost savings measures. 

The  Consolidated  Appropriations  Act,  2021,  which  includes  The  COVID-related  Tax  Relief  Act  of  2020 and 
the  Taxpayer  Certainty  and  Disaster  Tax  Relief  Act  of  2020,  was  passed  and  signed  into  law  the  last  week  of 2020.  
The  many  provisions  of  the  legislation  include  items  such  as  expenses  associated  with  forgiven  PPP  loans, business 
meals deductions, individual tax rebates and unemployment benefits.  The Company is currently evaluating the impact of 
this new legislation.  

13 

BREXIT 

On January 31, 2020, the United Kingdom (“UK”) withdrew from the European Union (“EU”).  Effective January 
1, 2021, new visa requirements and other restrictions limit the freedom of movement for British workers to travel to the EU 
for work, which may impact the ability of the Company’s London office to book modeling photoshoots that take place in 
the European Union.  It may also be more difficult, in the future, for talent represented by Wilhelmina London, but based 
in the EU, to travel to London and other parts of the UK for photoshoots and campaign work.  New immigration sponsorship 
or visa requirements could discourage fashion brands, and other clients, from booking as frequently in London, which has 
historically  been  an  international  fashion  and  modeling  hub,  and  could  impact  the  revenue  of  the  Company’s  London 
operations.  

RESULTS OF OPERATIONS OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2020 
COMPARED TO YEAR ENDED DECEMBER 31, 2019 

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, 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. 

Analysis of Consolidated Statements of Operations 
 For the Years Ended December 31, 2020 and 2019 

(in thousands) 
Service revenues 
License fees and other income 

TOTAL REVENUES 
Model costs 
REVENUES NET OF MODEL COSTS 
GROSS PROFIT MARGIN 
Salaries and service costs 
Office and general expenses 
Amortization and depreciation 
Goodwill impairment 
Corporate overhead 
OPERATING LOSS 
OPERATING MARGIN 
Foreign exchange (gain) loss 
Interest expense 
LOSS BEFORE INCOME TAXES 
Current income tax expense 
Deferred tax expense 
Effective tax rate 
NET LOSS 

14 

 2020 
41,577 
26 

41,603 
29,885 
11,718 
28.2% 
9,142 
3,608 
1,249 
800 
888 
(3,969) 
(9.5%) 
(16) 
86 
(4,039) 
(178) 
(724) 
(22.3%) 
(4,941) 

 2019 
75,452  
52  

75,504  
54,249  
21,255  
28.2%  
13,944  
4,408  
1,192  
4,845  
1,038  
(4,172)  
(5.5%)  
97  
117  
(4,386)  
(306)  
(94)  
(9.1%)  
(4,786)  

% Change 
2020 vs 2019 
(44.9%) 
(50.0%) 

(44.9%) 
(44.9%) 
(44.9%) 

(34.4%) 
(18.1%) 
4.8% 
(83.5%) 
(14.5%) 
(4.9%) 

116.5% 
(26.5%) 
(7.9%) 
(41.8%) 
670.2% 

3.2% 

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. In 2020, the COVID-19 pandemic had a material impact on revenues, 
as many customers cancelled or postponed bookings while non-essential business activities were temporarily barred in the 
cities  where  Wilhelmina  operates.    Service  revenues  decreased  44.9%  for  the  year  ended  December  31,  2020,  when 
compared to the year ended December 31, 2019, primarily due to cancelled bookings resulting from COVID-19, as well as 
the closure of the Wilhelmina Studios division in the fourth quarter of 2019 and the closure of the hair and makeup artist 
division in the second half of 2020. 

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 50.0% for the year ended 
December 31, 2020, when compared to the year ended December 31, 2019, primarily due to the timing of income from 
licensing agreements and the closure of Wilhelmina’s Dubai licensee in 2020. 

Gross Profit Margin 

Gross profit margins were unchanged for the year ended December 31, 2020, when compared to the year ended 

December 31, 2019. 

Salaries and Service Costs 

Salaries and service costs consist of payroll and related costs and T&E required to deliver the Company’s services 
to its clients and talent. The 34.4% decrease in salaries and service costs during the year ended December 31, 2020 compared 
to the year ended December 31, 2019 was primarily due to employee layoffs in July 2020, temporary reductions in staff 
salaries, the closure of the Wilhelmina Studios division during the fourth quarter of 2019, the closure of the hair and makeup 
artist division in the second half of 2020, open positions for two executives that resigned in January 2020, and a reduction 
in share-based payment expense. 

 Office and General Expenses 

Office and general expenses consist of office and equipment rents, advertising and promotion, insurance expenses, 
administration  and  technology  cost.   During  the  year  ended  December  31, 2020,  office  and general  expenses  decreased 
18.1% when compared to the year ended December 31, 2019, primarily due to reduced rent expense, legal fees, computer 
expense, utilities, and other office expenses, partially offset by an increase in bad debt expense.   

Amortization and Depreciation 

Amortization  and  depreciation  expense  is  incurred  with  respect  to  certain  assets,  including  computer  hardware, 
software, office equipment, furniture and certain finance lease assets. Amortization and depreciation expense increased by 
4.8%  for  the  year  ended  December  31,  2020  compared  to  the  year  ended  December  31,  2019,  primarily  due  to  new 
equipment  being  placed  in  service,  which  will  be  depreciated  going  forward.    Fixed  asset  purchases  (mostly  related  to 
technology and computer equipment) totaled approximately $0.2 million in 2020 and $0.4 million in 2019. 

Goodwill Impairment 

The Company incurred goodwill impairment of $0.8 million and $4.8 million, for the years ended December 31, 
2020 and December 31, 2019, respectively, due to the Company’s impairment tests indicating that the carrying value of 
goodwill exceeded the estimated fair value at the end of the fourth quarter of 2019 and the first quarter of 2020. 

15 

   
   
 
  
 
  
 
  
 
  
  
  
 
  
 
  
 
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 14.5% for the year ended December 31, 2020, when 
compared to the year ended December 31, 2019, primarily due to lower corporate travel costs and temporary reductions in 
fees to the Company’s Board of Directors.   

Operating Income and Operating Margin 

Operating  loss  of  $4.0  million  and  negative  operating  margin  of  9.5%  for  the  year  ended  December  31,  2020, 
compared to operating loss of $4.2 million and negative operating margin of 5.5% for the year ended December 31, 2019.  
The reduced operating loss but increased negative operating margin was primarily due to the combined impact of lower 
goodwill impairment and operating expenses, as well as decreased revenue net of model costs. 

Foreign Currency Loss 

The Company realized a gain of $16 thousand from foreign currency exchange during the year ended December 
31, 2020, compared to loss of $97 thousand from foreign currency exchange during the year ended December 31, 2019.  
Foreign currency gain and loss is due to fluctuations in currencies from Great Britain, Europe, and Latin America. 

Interest Expense 

Interest  expense  for  the  years  ended  December  31,  2020  and  December  31,  2019  was  primarily  attributable  to 
accrued interest on term loans drawn during 2016 and 2018 and on finance leases.  See, “Liquidity and Capital Resources.” 

Loss before Income Taxes 

Loss before income taxes decreased $0.4 million to a loss of $4.0 million for the year ended December 31, 2020, 
compared to a loss of $4.4 million for the year ended December 31, 2019, primarily due to the decrease in operating loss 
and foreign currency exchange expense. 

Income Taxes 

Generally, the Company’s combined effective tax rate is high relative to reported net income as a result of certain 
valuation  allowances  on  deferred  tax  assets,  amortization  expense,  foreign  taxes,  and  corporate  overhead  not  being 
deductible and income being attributable to certain states in which it operates. The Company operates in four states which 
have relatively high tax rates: California, New York, Illinois, and Florida. The Company had income tax of $0.9 million for 
the year ended December 31, 2020, compared to $0.4 million for the year ended December 31, 2019.  The Company reported 
income tax expense for 2020 despite a pre-tax loss due primarily to a $1.5 million valuation allowance recorded against 
deferred tax assets.  The valuation allowance was the result of management’s assessment as of December 31, 2020 that the 
benefit of the Company’s deferred tax assets would not be realized primarily due to the impact of the COVID-19 pandemic 
on its business. 

Net Income 

The Company had a net loss of $4.9 million for the year ended December 31, 2020, compared to net loss of $4.8 
million for the year ended December 31, 2019, primarily due to the increase in income tax expense, partially offset by the 
decrease in operating loss. 

16 

   
   
 
  
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Liquidity and Capital Resources 

The Company’s cash balance decreased to $5.6 million at December 31, 2020 from $7.0 million at December 31, 
2019. The cash balance decreased primarily as a result of $2.0 million net cash used by operating activities and $0.2 million 
cash used in investing activities, partially offset by $0.6 million cash provided by financing activities, as well as $0.1 million 
foreign currency effect on cash flow. 

Net cash used in operating activities of $2.0 million was primarily the result of net loss and decreases in amounts 
due  to  models,  accounts  payable  and  accrued  liabilities,  and  lease  liabilities,  partially  offset  by  decreases  in  accounts 
receivable and right of use assets.  The $0.2 million cash used in investing activities was attributable to purchases of property 
and equipment, including software and computer equipment.  The $0.6 million of cash used in financing  activities  was 
primarily attributable to receipt of $2.0 million of PPP loans, partially offset by $1.3 million principal payments on the 
Company’s Amegy Bank term loans, 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 remaining term loan. Generally, the Company incurs significant operating expenses with payment 
terms shorter than its average collections on billings.  The COVID-19 pandemic has had an impact on the Company’s cash 
flows  during  the  year  ended  December  31,  2020,  primarily  due  to  reduced  bookings  and  modeling  jobs  and  delayed 
payments from customers.  The Company has taken actions to address the impact of COVID-19 by reducing expenses and 
has the ability to implement more significant cost savings measures if the current limitations on non-essential work persist 
for an extended period.  Based on 2021 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. The revolving line of credit bears interest at prime plus 0.50% payable monthly. As of December 31, 2020, 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 $1.7 million. The revolving line of credit presently expires October 24, 2022. 

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 bore interest at 4.5% per annum and was 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.  A final $0.6 million payment of principal and interest was paid on October 
28, 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 could 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 was 
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.  

Amounts outstanding under the additional term loan 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 December 31, 2020, a total of $0.7 million was outstanding on the term 
loan. 

17 

Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy 
Bank  has  limited  access  to  additional  financing.  Net  losses  in  recent  periods  have  also  impacted  compliance  with  the 
financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional 
financing. On March 26, 2020, the Company entered into a Thirteenth Amendment to Credit Agreement (the “Thirteenth 
Amendment”) with Amegy Bank. The Thirteenth Amendment amended the minimum net worth covenant to require the 
Company to maintain tangible net worth (as defined therein) of $4.0 million, determined on a quarterly basis. Under the 
Thirteenth Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy the old 
$20.0  million  minimum  net  worth  covenant  as  of  December  31,  2019.  On  May  12,  2020,  the  Company  entered  into  a 
Fourteenth  Amendment  to  Credit  Agreement  (the  “Fourteenth  Amendment”)  with  Amegy  Bank.  The  Fourteenth 
Amendment amended the line of credit to reduce the maximum borrowing capacity to $3.0 million. Under the Fourteenth 
Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy both the minimum 
fixed charge coverage ratio through March 31, 2020 and minimum tangible net worth as of March 31, 2020.  The Company 
obtained waivers from Amegy Bank of its failures to satisfy the fixed charge coverage ratio, the minimum tangible net 
worth, and the borrowing base for the quarters ended June 30, 2020 and September 30, 2020.  On November 10, 2020, the 
Company entered into a Fifteenth Amendment to Credit Agreement (the “Fifteenth Amendment”) with Amegy Bank.  The 
Fifteenth Amendment waived the minimum tangible net worth covenant until December 31, 2021, after which a minimum 
tangible net worth of $1.5 million will be required.  The Fifteenth Amendment also revised the calculation of the fixed 
charge coverage ratio such that it will be tested at December 31, 2020 based on the preceding six month period, tested at 
March 31, 2021 based on the preceding nine month period, and tested at June 30, 2021 and subsequent periods using a 
twelve month rolling period. 

Paycheck Protection Program Loan 

On April 15, 2020, Wilhelmina International, Ltd. (the “Borrower”), a wholly-owned subsidiary of the Company, 
executed a Business Loan Agreement and a Promissory Note each dated April 13, 2020 (collectively, the “Sub PPP Loan 
Documents”), with respect to a loan in the amount of $1.8 million (the “Sub PPP Loan”) from Amegy Bank. The Sub PPP 
Loan was obtained pursuant to the PPP. The Sub PPP Loan originally matured on April 13, 2022 and bears interest at a rate 
of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Sub PPP Loan was extended to mature 
on April 13, 2025 and is payable in 44 equal monthly payments of $43 thousand commencing in August 2021. 

On April 18, 2020, the Company executed a Business Loan Agreement and a Promissory Note each dated April 17, 
2020 (collectively, the “Parent PPP Loan Documents”), with respect to a loan in the amount of $128 thousand (the “Parent 
PPP Loan”) from Amegy Bank. The Parent PPP Loan was also obtained pursuant to the PPP. The Parent PPP Loan originally 
matured on April 17, 2022 and bears interest at a rate of 1.00% per annum. As  allowed under the Paycheck Protection 
Flexibility Act, the Parent PPP Loan was extended to mature on April 17, 2025 and is payable in 44 equal monthly payments 
of $3 thousand commencing in August 2021. 

Both the Sub PPP Loan and the Parent PPP Loan (collectively, the “PPP Loans”) may be prepaid at any time prior 
to maturity with no prepayment penalties. Both the Sub PPP Loan Documents and the Parent PPP Loan Documents contain 
various provisions related to the PPP, as well customary representations, warranties, covenants, events of default and other 
provisions. Neither of the PPP Loans is secured by either the Borrower or the Company, and both are guaranteed by the 
SBA. All or a portion of the PPP Loans may be forgiven by the SBA upon application by the Borrower or the Company, 
respectively, accompanied by documentation of expenditures in accordance with the SBA requirements under the PPP. In 
the event all or any portion of the PPP Loans is forgiven, the amount forgiven is applied to outstanding principal, and would 
be recorded as forgiveness of debt income. 

As of December 31, 2020, a total of $2.0 million was outstanding on the PPP Loans. 

Off-Balance Sheet Arrangements 

As of December 31, 2020, the Company had outstanding a $0.2 million irrevocable standby letter of credit under 
the Company’s revolving credit facility with Amegy Bank. The letter of credit served as security under the lease relating to 
the Company’s office space in New York City that expired on February 28, 2021. 

18 

   
   
 
 
  
  
 
 
 
 
Effect of Inflation 

Inflation has not 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 and Estimates 

The  consolidated  financial  statements  of  the  Company  are  prepared  in  accordance  with  generally  accepted 
accounting  practices  in  the  United  States  of  America  (“U.S.  GAAP”).    The  preparation  of  these  consolidated  financial 
statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, 
costs,  and  expenses  and  related  disclosures.    We  base  our  estimates  on  historical  experience  and  on  various  other 
assumptions that we believe to be reasonable under the circumstances.  In many instances, we could have reasonably used 
different accounting estimates, and in other instances, changes in the accounting estimates are reasonably likely to occur 
from period to period.  Accordingly, actual results could differ significantly from the estimates made by our management.  
To the extent that there are material differences between these estimates and actual results, our future financial statement 
presentation, financial condition, results of operations and cash flows may be affected. 

The following items require significant estimation or judgement.  For additional information about our accounting 
policies,  refer  to  “Note  2,  Summary  of  Significant  Accounting  Policies”  in  the  audited  financial  statements  included 
herewith. 

Revenue Recognition 

The Company has adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from 
Contracts with Customers (Topic 606) (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the 
transfer  of  promised  goods  or  services  to  customers,  in  an  amount  that  reflects  the  expected  consideration  received  in 
exchange for those goods or services. 

Our revenues are derived primarily from fashion model bookings, and representation of social media influencers and 
actors for commercials, film, and television. Our performance obligations are primarily satisfied at a point in time when the 
talent has completed the contractual requirements.   

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or 
as, the performance obligation is satisfied. The performance obligations for most of the Company’s core modeling bookings 
are satisfied on the day of the event, and the “day rate” total fee is agreed in advance when the customer books the model 
for a particular date.  For contracts with multiple performance obligations, we allocate the contract’s transaction price to 
each performance obligation based on the estimated relative standalone selling price.  

Model Costs 

Model costs include amounts owed to talent, including taxes required to be withheld and remitted directly to taxing 
authorities, commissions owed to other agencies, and related costs such as those paid for photography.  Costs are accrued 
in the period in which the event takes place consistent with when the revenue is recognized.  The Company typically enters 
into contractual agreements with models under which the Company is obligated to pay talent upon collection of fees from 
the customer. 

Share Based Compensation 

Share-based compensation expense is estimated at the grant date based on the award’s fair value as calculated by the 
Black-Scholes option pricing model and is recognized on a straight line basis as an expense over the requisite service period, 
which is generally the vesting period. The determination of the fair value of share-based awards on the date of grant using 

19 

   
   
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective 
variables.  These  variables  include  the  estimated  volatility  over  the  expected  term  of  the  awards,  actual  and  projected 
employee stock option exercise behaviors, risk-free interest rates, estimated forfeitures and expected dividends.   

Income Taxes 

We are subject to income taxes in the United States, the United Kingdom, and numerous local jurisdictions. 

Deferred tax assets are recognized for unused tax losses, unused tax credits, and deductible temporary differences to 

the extent that it is probable that future taxable profits will be available against which they can be used. Unused tax loss 
carry-forwards are reviewed at each reporting date and a valuation allowance is established if it is doubtful we will 
generate sufficient future taxable income to utilize the loss carry-forwards. 

In determining the amount of current and deferred income tax, we take into account whether additional taxes, 

interest, or penalties may be due. Although we believe that we have adequately reserved for our income taxes, we can 
provide no assurance that the final tax outcome will not be materially different. To the extent that the final tax outcome is 
different than the amounts recorded, such differences will affect the provision for income taxes in the period in which 
such determination is made and could have a material impact on our financial condition and operating results. 

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 allowance.  Balances that remain outstanding after the Company has used 
reasonable collection efforts are written  off through a charge to the allowance  and a credit to accounts receivable.  The 
Company generally does not require collateral. 

Goodwill and Intangible Asset Impairment Testing 

  The  Company  performs  impairment  testing  at  least  annually  and  more  frequently  if  events  and  circumstances 
indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds 
the  reporting  unit’s  fair  value.  The  Company  sometimes  utilizes  an  independent  valuation  specialist  to  assist  with  the 
determination  of  fair  value.    In  accordance  with  ASU  2017-03,  effective  January  1,  2020,  only  a  one-step  quantitative 
impairment test is performed, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s 
carrying  amount  over  its  fair  value.    If  the  carrying  amount  of  the  reporting  unit’s  goodwill  exceeds  its  fair  value,  an 
impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill.   

Whenever events or circumstances change, entities have the option to first make a qualitative evaluation about the 
likelihood of goodwill impairment. If impairment is deemed more likely than not, management would perform the goodwill 
impairment test. Otherwise, the goodwill impairment test is not required. In assessing the qualitative factors, the Company 
assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The 
identification  of  relevant  events  and  circumstances  and  how  these  may  impact  a  reporting  unit’s  fair  value  or  carrying 
amount  involve  significant  judgments  and  assumptions.  The  judgment  and  assumptions  include  the  identification  of 
macroeconomic conditions, industry and market considerations, overall financial performance, Company specific events 
and  share  price  trends,  an  assessment  of  whether  each  relevant  factor  will  impact  the  impairment  test  positively  or 
negatively, and the magnitude of any such impact 

ITEM 7A. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Not applicable to smaller reporting company. 

20 

ITEM 8. 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

The  consolidated  financial  statements  of  the  Company  and  the  related  report  of  the  Company’s  independent 

registered public accounting firm thereon are included in this report at the pages indicated. 

Report of Independent Registered Public Accounting Firm 
Consolidated Balance Sheets as of December 31, 2020 and 2019 
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2020 and 2019 
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020 and 2019 
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 
Notes to the Consolidated Financial Statements 

Page 
F-2 
F-4 
F-5 
F-6 
F-7 
F-8 

ITEM 9. 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE 

None. 

ITEM 9A. 

CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures 

As of the end of the period covered by this report, the Company’s principal executive officer and principal financial 
officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 
15d-15(e) under the Exchange Act). Based on their evaluation of the Company’s disclosure controls and procedures, the 
Company’s principal executive officer and principal financial officer, with the participation of the Company’s management, 
have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2020, to ensure 
that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is 
(a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) 
accumulated  and  communicated  to  management,  including  the  Company’s  principal  executive  officer  and  principal 
financial officer, as appropriate to allow for timely decisions regarding required disclosure.   

Management’s Annual Report on Internal Control over Financial Reporting 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial 
reporting,  as  such  term  is  defined  in  Exchange  Act  Rules  13a-15(f)  and  15d-15(f).  Under  the  supervision  and  with  the 
participation of the Company’s management, including the Company’s principal executive officer and principal financial 
officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting 
as of December 31, 2020 based on the framework in Internal Control - Integrated Framework 2013 issued by the Committee 
of  Sponsoring  Organizations  of  the  Treadway  Commission.  Based  on  that  evaluation,  the  Company’s  management 
concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.  

ITEM 9B. 

OTHER INFORMATION 

None. 

21 

   
   
  
  
   
 
 
  
  
 
 
  
 
  
 
  
 
 
 
 
 
 
 
 
  
PART III 

ITEM 10. 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

The information required by Item 10 is incorporated by reference from the Company’s definitive proxy statement 
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end 
of the fiscal year covered by this report. 

ITEM 11. 

EXECUTIVE COMPENSATION 

The information required by Item 11 is incorporated by reference from the Company’s definitive proxy statement 
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end 
of the fiscal year covered by this report. 

ITEM 12. 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 
STOCKHOLDER MATTERS 

The information required by Item 12 is incorporated by reference from the Company’s definitive proxy statement 
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end 
of the fiscal year covered by this report. 

ITEM 13. 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 

The information required by Item 13 is incorporated by reference from the Company’s definitive proxy statement 
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end 
of the fiscal year covered by this report. 

ITEM 14. 

PRINCIPAL ACCOUNTANT FEES AND SERVICES 

The information required by Item 14 is incorporated by reference from the Company’s definitive proxy statement 
to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end 
of the fiscal year covered by this report. 

22 

   
   
  
  
 
 
 
  
  
  
 
 
  
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 15. 

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 

PART IV 

(a) Documents Filed as Part of Report 

1.  Financial Statements: 

The consolidated financial statements of the Company and the related report of the Company’s independent public 
accountants thereon have been filed under Item 8 hereof. 

2.  Financial Statement Schedules: 

The information required by this item is not applicable. 

3.  Exhibits: 

The exhibits listed below are filed as part of or incorporated by reference in this report.   

Exhibit 
Number 

Description of Exhibits 

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). 

10.1 

10.2 

10.3 

10.4 

   Mutual Support Agreement, dated August 25, 2008, by and among Newcastle Partners, L.P., Dieter Esch, 
Lorex  Investments  AG,  Brad  Krassner  and  Krassner  Family  Investments  Limited  Partnership 
(incorporated by reference from Annex D to the Proxy Statement on Schedule 14A filed December 22, 
2008). 

   First  Amendment  to  Mutual  Support  Agreement,  dated  October  18,  2010,  by  and  among  Newcastle 
Partners,  L.P.,  Dieter  Esch,  Lorex  Investments  AG,  Brad  Krassner  and  Krassner  Family  Investments 
Limited Partnership (incorporated by reference from Exhibit 10.2 to Form 8-K filed October 21, 2010). 

   Credit Agreement, dated as of April 20, 2011, by and between Wilhelmina International, Inc. and Amegy 
Bank National Association (incorporated by reference from Exhibit 10.1 to Form 8-K filed May 5, 2011). 

   Promissory Note, dated as of April 20, 2011, by and between Wilhelmina International, Inc. for the benefit 
of Amegy Bank National Association (incorporated by reference from Exhibit 10.2 to Form 8-K filed 
May 5, 2011). 

23 

   
   
  
  
  
  
  
 
  
  
 
 
 
 
  
  
     
 
    
  
 
 
 
 
 
 
 
  
  
 
 
 
  
10.5 

   Pledge and Security Agreement, dated as of April 20, 2011, by and between Wilhelmina International, 
Inc., the guarantor signatories thereto and Amegy Bank National Association (incorporated by reference 
from Exhibit 10.3 to Form 8-K filed May 5, 2011). 

10.6 

   Guaranty, dated as of April 20, 2011, by the guarantor signatories thereto for the benefit of Amegy Bank 

National Association (incorporated by reference from Exhibit 10.4 to Form 8-K filed May 5, 2011). 

10.7 

10.8 

10.9 

10.10 

10.11 

10.12 

10.13 

10.14 

10.15 

10.16 

10.17 

10.18 

   First Amendment to Credit Agreement, dated January 1, 2012, by and among Wilhelmina International, 
Inc., the guarantor signatories thereto and Amegy Bank National Association (incorporated by reference 
from Exhibit 10.1 to Form 8-K filed January 19, 2012). 

   Amended  and  Restated  Line  of  Credit  Promissory  Note,  dated  as  of  January  1,  2012,  by  Wilhelmina 
International, Inc. for the benefit of Amegy Bank National Association (incorporated by reference from 
Exhibit 10.2 to Form 8-K filed January 19, 2012). 

   First  Amendment  to  Pledge  and  Security  Agreement,  dated  as  of  January  1,  2012,  by  and  among 
Wilhelmina International, Inc., the guarantor signatories thereto and Amegy Bank National Association 
(incorporated by reference from Exhibit 10.3 to Form 8-K filed January 19, 2012). 

   Second  Amendment  to  Credit  Agreement,  dated  as  of  October  24,  2012,  by  and  between  Wilhelmina 
International, Inc. and Amegy Bank National Association (incorporated by reference from Exhibit 10.1 
to Form 8-K filed October 30, 2012). 

   Second  Amended  and  Restated  Line  of  Credit  Promissory  Note,  dated  as  of  October  24,  2012,  by 
Wilhelmina  International,  Inc.  for  the  benefit  of  Amegy  Bank  National  Association  (incorporated  by 
reference from Exhibit 10.2 to Form 8-K filed October 30, 2012). 

   Second  Amendment  to  Pledge  and  Security  Agreement,  dated  as  of  October  24,  2012,  by  and  among 
Wilhelmina International, Inc., the guarantor signatories thereto and Amegy Bank National Association 
(incorporated by reference from Exhibit 10.3 to Form 8-K filed October 30, 2012). 

   Third  Amendment  to  Pledge  and  Security  Agreement,  dated  as  of  July  31,  2014,  by  and  among 
Wilhelmina International, Inc., the guarantor signatories thereto and Amegy Bank National Association 
(incorporated by reference from Exhibit 10.30 to Form 10-K filed March 27, 2015). 

  Fourth  Amendment  to  Credit  Agreement,  dated  November  10,  2015,  by  and  among  Wilhelmina 
International, Inc., the guarantor signatories thereto and Amegy Bank National Association (incorporated 
by reference from Exhibit 10.32 to Form 10-Q filed November 16, 2015). 

   Third Amended and Restated Line of Credit Promissory Note, dated November 10, 2015, by and among 
Wilhelmina International, Inc., the guarantor signatories thereto and Amegy Bank National Association 
(incorporated by reference from Exhibit 10.33 to Form 10-Q filed November 16, 2015). 

   Term Loan Promissory Note, dated November 10, 2015, by and among Wilhelmina International, Inc., 
the guarantor signatories thereto and Amegy Bank National Association (incorporated by reference from 
Exhibit 10.34 to Form 10-Q filed November 16, 2015). 

   Third  Amendment  to  Pledge  and  Security  Agreement,  dated  November  10,  2015,  by  and  among 
Wilhelmina International, Inc., the guarantor signatories thereto and Amegy Bank National Association 
(incorporated by reference from Exhibit 10.35 to Form 10-Q filed November 16, 2015). 

   Fifth Amendment to Credit Agreement dated May 13, 2016, by and among Wilhelmina International, 
Inc., Amegy Bank National Association and the guarantors signatory thereto (incorporated by reference 
from Exhibit 10.1 to Form 8-K filed May 17, 2016). 

24 

   
   
  
  
  
  
  
  
 
  
  
 
 
  
 
 
 
 
10.19 

10.20 

10.21 

10.22 

10.23 

10.24 

10.25 

10.26 

10.27 

10.28 

10.29 

10.30

10.31

Sixth Amendment to Credit Agreement and First Amendment to Line of Credit Note dated November 9, 
2016, between Wilhelmina International, Inc. and Amegy Bank (incorporated by reference from Exhibit 
10.2 to Form 10-Q filed November 14, 2016). 

Seventh Amendment to Credit Agreement dated May 4, 2017, by and among Wilhelmina International, 
Inc., the guarantor signatories thereto, and Amegy Bank (incorporated by reference from Exhibit 10.1 to 
Form 8-K filed May 8, 2017). 

Eighth Amendment to Credit Agreement and Waiver dated August 1, 2017, by and among Wilhelmina 
International, Inc., the guarantor signatories thereto, and Amegy Bank (incorporated by reference from 
Exhibit 10.1 to Form 8-K filed August 4, 2017). 

Ninth Amendment to Credit Agreement and Second Amendment to Line of Credit Note dated October 
24, 2017, by and among Wilhelmina International, Inc., the guarantor signatories thereto,  and  Amegy 
Bank (incorporated by reference from Exhibit 10.2 to Form 10-Q filed November 9, 2017). 

Tenth Amendment to Credit Agreement dated July 12, 2018, by and among Wilhelmina International, 
Inc., ZB, N.A. dba Amegy Bank and the guarantors signatory thereto (incorporated by reference to Exhibit 
10.1 to Form 8-K filed July 17, 2018). 

Promissory Note dated July 12, 2018, by and between Wilhelmina International, Inc. and ZB, N.A. dba 
Amegy Bank (incorporated by reference to Exhibit 10.2 to Form 8-K files July 17, 2018). 

Eleventh Amendment to Credit Agreement and Third Amendment to Line of Credit Note dated October 
24, 2018, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors 
signatory thereto (incorporated by reference to Exhibit 10.3 to Form 10-Q filed November 9, 2018). 

Twelfth Amendment to Credit Agreement and Fourth Amendment to Line of Credit Note dated October 
24, 2019, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors 
signatory thereto (incorporated by reference to Exhibit 10.1 to Form 10-Q filed November 12, 2019). 

Thirteenth  Amendment  to  Credit  Agreement  dated  March  26,  2020,  by  and  among  Wilhelmina 
International,  Inc.,  ZB,  N.A.  dba  Amegy  Bank  and  the  guarantors  signatory  thereto  (incorporated  by 
reference to Exhibit 10.27 to Form 10-K filed March 30, 2020) 

Fourteenth Amendment to Credit Agreement and Fourth Amendment to Line of Credit Note dated May 
12, 2020, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the guarantors 
signatory thereto (incorporated by reference to Exhibit 10.1 to Form 10-Q filed May 14, 2020). 

Fifteenth  Amendment  to  Credit  Agreement  and  Fourth  Amendment  to  Line  of  Credit  Note  dated 
November 10, 2020, by and among Wilhelmina International, Inc., ZB, N.A. dba Amegy Bank and the 
guarantors signatory thereto (incorporated by reference to Exhibit 10.1 to Form 10-Q filed November 12, 
2020). 

Business  Loan  Agreement  and  Promissory  Note,  each  dated  April  13,  2020,  between  Wilhelmina 
International, Ltd. and Zions Bancorporation, N.A. dba Amegy Bank (incorporated by reference  from 
Exhibit 10.1 to Form 8-K filed April 21, 2020). 

Business  Loan  Agreement  and  Promissory  Note,  each  dated  April  17,  2020,  between  Wilhelmina 
International,  Inc.  and  Zions  Bancorporation,  N.A.  dba  Amegy  Bank  (incorporated  by  reference  from 
Exhibit 10.2 to Form 8-K filed April 21, 2020). 

25 

 
*10.32 

   Wilhelmina International, Inc. 2015 Incentive Plan (incorporated by reference from Exhibit 10.1 to Form 

8-K filed June 16, 2015). 

*10.33 

*10.34 

21.1 

31.1 

Form of Stock Option Grant Agreement (incorporated by reference from Exhibit  10.21 to Form 10-K 
filed March 23, 2017). 

Letter  agreement  dated  April  4,  2016  between  Wilhelmina  International,  Inc.  and  James  McCarthy 
(incorporated by reference from Exhibit 10.1 to Form 8-K filed April 25, 2016). 

   List of Subsidiaries (filed herewith). 

   Certification of Principal Executive Officer in Accordance with Section 302 of the Sarbanes-Oxley Act 

(filed herewith). 

31.2 

   Certification of Principal Financial Officer in Accordance with Section 302 of the Sarbanes-Oxley Act 

(filed herewith). 

32.1 

   Certification of Principal Executive Officer in Accordance with Section 906 of the Sarbanes-Oxley Act 

(filed herewith). 

32.2 

  Certification of Principal Financial Officer in Accordance with Section 906 of the Sarbanes-Oxley Act 

(filed herewith). 

101.INS 

XBRL Instance Document (filed herewith) 

101.SCH 

XBRL Taxonomy Extension Schema Document (filed herewith) 

101.CAL 

XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) 

101.DEF 

XBRL Taxonomy Extension Definition Linkbase Document (filed herewith) 

101.LAB 

XBRL Taxonomy Extension Label Linkbase Document (filed herewith) 

101.PRE 

XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) 

* 

Includes compensatory plan or arrangement. 

ITEM 16. 

FORM 10-K SUMMARY 

Not applicable. 

26 

   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Pursuant to the requirements of Section 13 or 15(d) 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. 

SIGNATURES 

WILHELMINA INTERNATIONAL, INC. 

(Registrant) 

Date:  March 16, 2021 

/s/ Mark E. Schwarz 

By: 
Name  Mark E. Schwarz 
Title: 

Executive Chairman 
(principal executive officer) 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the 

following persons on behalf of the registrant and in the capacities indicated on the 16th day of March, 2021. 

/s/ Mark E. Schwarz 
Mark E. Schwarz 

/s/ James A. McCarthy 
James A. McCarthy 

/s/ Clinton J. Coleman 
Clinton J. Coleman 

/s/ James A. Dvorak 
James A. Dvorak 

/s/ Horst-Dieter Esch 
Horst-Dieter Esch 

/s/ Mark E. Pape 
Mark E. Pape 

/s/ James C. Roddey 
James C. Roddey 

/s/ Jeffrey R. Utz 
Jeffrey R. Utz 

Director and 
Executive Chairman 
(principal executive officer) 

Chief Financial Officer 
(principal financial officer) 

Director 

Director 

Director 

Director 

Director 

Director 

___________________________________________________________________________________ 

27 

[This page intentionally left blank] 

WILHELMINA INTERNATOINAL, INC. AND SUBSIDIARIES 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

Report of Independent Registered Public Accounting Firm 
Consolidated Balance Sheets as of December 31, 2020 and 2019 
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2020 and 2019 
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020 and 2019 
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 
Notes to Consolidated Financial Statements 

Page 
F-2 
F-4 
F-5 
F-6 
F-7 
F-8 

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Board of Directors and 
Shareholders of Wilhelmina International, Inc. and Subsidiaries: 

Opinion on the Financial Statements 

We  have  audited 
the  accompanying  consolidated  balance  sheets  of  Wilhelmina  International,  Inc.  and  Subsidiaries 
(collectively,  the  "Company")  as  of  December  31,  2020  and  2019,  the  related  consolidated  statements  of  operations  and 
comprehensive  loss,  shareholders’  equity,  and  cash  flows,  for  the  years  ended  December  31,  2020  and  2019,  and  the  related 
notes  (collectively  referred  to  as  the  "consolidated  financial  statements").  In  our  opinion,  the  consolidated  financial  statements 
present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and  the  results  of  its 
operations  and  its  cash  flows  for  the  years  then  ended,  in  conformity  with  accounting  principles  generally accepted in the United 
States of America. 

Basis for Opinion 

These  consolidated  financial  statements  are  the  responsibility  of  the  Company's  management.  Our  responsibility  is  to  express an 
opinion  on  the  Company's  consolidated  financial  statements  based  on  our  audits.  We  are  a  public  accounting  firm  registered  with 
the  Public  Company  Accounting  Oversight  Board  (United  States)  ("PCAOB")  and  are  required  to  be  independent with respect to 
the  Company  in  accordance  with  the  U.S.  federal  securities  laws  and  the  applicable  rules  and  regulations  of  the  Securities  and 
Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the  audit  to 
obtain  reasonable  assurance  about  whether  the  consolidated  financial  statements  are  free  of  material  misstatement,  whether 
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit  of  its  internal  control  over 
financial  reporting.  As  part  of  our  audits  we  are  required  to  obtain  an  understanding  of  internal  control  over  financial  reporting 
but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  Company's  internal  control  over  financial 
reporting. Accordingly, we express no such opinion. 

Our  audits  included  performing  procedures  to  assess  the  risks  of  material  misstatement  of  the  consolidated  financial 
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, 
on  a  test  basis,  evidence  regarding  the  amounts  and  disclosures  in  the  consolidated  financial  statements.  Our  audits  also  included 
evaluating  the  accounting  principles  used  and  significant  estimates  made  by  management,  as  well  as  evaluating  the  overall 
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 

Critical Audit Matter 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial 
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts 
or  disclosures  that  are  material  to  the  consolidated  financial  statements  and  (2)  involved  our  especially  challenging, 
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the 
consolidated  financial  statements,  taken  as  a  whole,  and  we  are  not,  by  communicating  the  critical  audit  matter  below, 
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 

F-2

Trademarks and Trade Name Impairment Assessment - Refer to Note 2 to the Consolidated Financial Statements 

Critical Audit Matter Description 

As reflected in the Company’s consolidated financial statements, the Company’s trademarks and trade name with indefinite lives had a 
balance of approximately $8.5 million at December 31, 2020.  As described in Note 2 to the consolidated financial  statements,  the 
Company's  trademarks  and  trade  name  are  tested  for  impairment  at  least  annually.  The  Company  elected  not  to  perform  the 
qualitative  assessment  (Step  0)  in  connection  with  testing  its  trademarks  and  trade  name  for  impairment.  Instead,  a  quantitative 
assessment  (Step  1)  was  performed  using  the  royalty-relief  method,  which  is  based  upon  projected  revenues and estimated royalty 
and discount rates.   The determination of the fair value of the trademarks and trade name requires  management  to  make  significant 
estimates  and  assumptions  related  to  forecasts  of  future  revenues  and  royalty  and  discount  rates.    As  disclosed  by  management, 
changes in these assumptions could have a significant impact on the fair value of the trademarks and trade name and the amount of 
any impairment expense recognized.     

We  identified  the  Step  1  trademarks  and  trade  name  impairment  assessment  as  a  critical  audit  matter,  as  auditing 
management’s  judgments  regarding  forecasts  for  future  revenue  and  royalty  and  discount  rates  involve  a  high  degree  of 
subjectivity and an increased extent of audit effort, including the need to involve our fair value specialists. 

How the Critical Audit Matter Was Addressed in the Audit 

Our audit procedures related to the critical audit matter included the following: 

• We obtained an understanding of the design and implementation of internal controls over the estimates and assumptions used  by
management  in  the  determination  of  the  fair  value  of  the  trademarks  and  trade  name  including  controls  addressing:

o Management’s  review  and  approval  of  key  assumptions  and  inputs,  including  financial  projections,  projected  growth

rates of revenues, capitalization, royalty and discount rates and peer information used in the model.

o The completeness and accuracy of the model.

• We performed, with the assistance of an auditor employed valuation specialist, substantive procedures on management’s estimates

and assumptions used in determining the fair value of the trademarks and trade name including:

o We evaluated the reasonableness of management’s forecasts of future revenues by comparing these forecasts to historical
operating results and considered whether such assumptions were consistent with evidence obtained in other areas of the
audit.

o We tested the mathematical accuracy of the model, as well as the completeness and accuracy of the information used in it.
o We evaluated the appropriateness of the methodology used, as well as the capitalization, royalty and discount rate

assumptions.

o We  prepared  a  benchmarking  analysis  comparing  the  royalty  rate  used  in  the  model  with  third  party  licensing
transactions and developed an independent estimate using an implied royalty rate based on a profit split method.

o We  performed  sensitivity  analysis  of  the  significant  assumptions  (i.e.  projected  revenues,  royalty  and  discount  rates) to
evaluate the changes in the fair value of the trademarks and trade name that would result from such changes in the
assumptions.

We have served as the Company's auditor since 2012. 

/s/ Baker Tilly US, LLP 
Plano, Texas 
March 16, 2021 

F-3

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
As of December 31, 2020 and 2019 
(In thousands, except share data)  

 2020

 2019 

ASSETS 
Current assets: 

 Cash and cash equivalents 
  Accounts receivable, net of allowance for doubtful accounts of $1,635 and $1,423, respectively 
  Prepaid expenses and other current assets 
  Total current assets 

$ 

5,556    $
7,146  
105  
12,807  

Property and equipment, net of accumulated depreciation of $5,451 and $4,300, respectively 
Right of use assets-operating 
Right of use assets-finance 
Trademarks and trade names with indefinite lives 
Goodwill 
Other assets 

928  
585
218
8,467  
7,547  
93  

6,993  
9,441  
243  
16,677  

1,925  
1,261
316
8,467  
8,347  
115  

TOTAL ASSETS 

 $

30,645    $

37,108  

LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities: 
  Accounts payable and accrued liabilities 
 Due to models 
 Lease liabilities – operating, current 
 Lease liabilities – finance, current 
 Term loans - current 
 Total current liabilities 

Long term liabilities: 
  Deferred income taxes, net 
 Lease liabilities – operating, non-current 
 Lease liabilities – finance, non-current 
 Term loans - non-current 
  Total long-term liabilities 

Total liabilities 

Shareholders’ equity: 

 Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares     
   issued at December 31, 2020 and December 31, 2019 
 Treasury stock, 1,314,694 and 1,309,861 at December 31, 2020 and December 31, 2019, at cost 
 Additional paid-in capital 
 Accumulated deficit 
 Accumulated other comprehensive income  

Total shareholders’ equity 

 $

2,867    $
6,265  
435
77
414  
10,058  

1,449  
180
149
2,303 
4,081  

3,815  
7,495
1,055
94
1,257  
13,716  

725
328
225
743
2,021

14,139

15,737

65
(6,371)
88,487  
(65,756)
81
16,506  

65
(6,352)  
88,471
(60,815)
2  
21,371  

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 

 $

30,645    $

37,108

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

F-4

 
 
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 
For the Years Ended December 31, 2020 and 2019 
(In thousands, except per share data) 

Revenues: 

  Service revenues 
  License fees and other income 
  Total revenues 

  Model costs 

  Revenues, net of model costs 

Operating expenses: 

  Salaries and service costs 
  Office and general expenses 
  Amortization and depreciation 
  Goodwill impairment 
 Corporate overhead 
  Total operating expenses 

Operating loss  

Other expense: 

 Foreign exchange (gain) loss 
  Interest expense, net 
Total other expense 

Loss before provision for income taxes  

Provision for income taxes: 

 Current 
  Deferred 
Income tax expense 

Net loss 

Other comprehensive income: 

 Foreign currency translation   

Total comprehensive loss 

Basic net loss per common share 
Diluted net loss per common share 

Weighted average common shares outstanding-basic 
Weighted average common shares outstanding-diluted 

 $ 

 2020 

 2019 

 $ 

41,577  
26  
41,603  

75,452  
52  
75,504  

29,885  

54,249  

11,718  

21,255  

9,142  
3,608  
1,249  
800 
888  
15,687  
(3,969)  

13,944  
4,408  
1,192  
4,845 
1,038  
25,427  
(4,172)  

(16)

86     
70 

97
117
214 

(4,039)  

(4,386)  

(178)
(724)
(902)

(306)
(94)
(400)

   $ 

(4,941)      $ 

(4,786)  

$ 

   $ 
   $ 

79 
(4,862) 

$ 

95 
(4,691) 

(0.96)      $ 
(0.96)      $ 

5,158  
5,158  

(0.92)  
(0.92)  

5,184  
5,184 

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

F-5

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 
For the Years Ended December 31, 2020 and 2019 
(In thousands) 

Balances at December 31, 2018 
  Share based payment expense 
  Net loss 
  Purchases of treasury stock 
  Foreign currency translation 
Balances at December 31, 2019 
  Share-based payment expense 
  Net loss  
  Purchases of treasury stock 
  Foreign currency translation 
Balances at December 31, 2020 

Common 
Shares    

Stock 
Amount  
65
-
-
-
-
65
-
-
-
-
65

6,472 $
-
-
-
-

-
-
-
-
6,472 $

Treasury 
Shares 

(1,264) 
- 
- 
(46) 
- 
(1,310) 
- 
- 
(5) 
- 
(1,315) 

Stock 
Amount    
$ (6,093)
-
-
(259)
-
$ (6,352)
-
-
(19)
-
$ (6,371)

   6,472 $

Additional 
Paid-in 
Capital 
$  88,255   $

Accumulated 
Deficit 
(56,029)  
- 
(4,786) 
- 
- 
(60,815) 
- 
(4,941) 
- 
- 
(65,756) 

 $

 $

 $ 

216  
-  
-  
-  

16  
-  
-  
-  

$  88,471   $

$  88,487   $

    Accumulated 

Other 
Comprehensive 
Income (Loss) 

-
-
-
95

Total    
(93) $ 26,105  
216 
(4,786)  
(259)  
95  
2 $ 21,371  
-
16  
(4,941)  
-
(19)  
-
79  
79
81 $ 16,506  

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

F-6

   
  
    
 
 
  
 
    
     
 
 
     
 
 
     
 
 
   
 
 
 
 
  
 
 
 
  
 
 
     
 
 
 
 
 
    
 
  
  
 
  
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
For the Years Ended December 31, 2020 and 2019 
 (In thousands) 

Cash flows from operating activities: 
Net loss: 
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: 

 2020

2019

  $

(4,941)   $ 

(4,786) 

   Amortization and depreciation 
   Goodwill impairment 
   Share-based payment expense 
   Deferred income taxes 
 Bad debt expense  

Changes in operating assets and liabilities: 

   Accounts receivable 
   Prepaid expenses and other current assets 
   Right of use assets-operating 
   Other assets 
   Due to models 
   Lease liabilities-operating 
   Accounts payable and accrued liabilities 

Net cash (used in) provided by operating activities 

Cash flows from investing activities: 

   Purchases of property and equipment 

Net cash used in investing activities 

Cash flows from financing activities: 

 Purchases of treasury stock 
   Payments on finance leases 
   Proceeds from loan 
   Payments on term loans 

Net cash provided by (used in) financing activities 

Foreign currency effect on cash flows: 

Net change in cash and cash equivalents: 

 Cash and cash equivalents, beginning of year 
 Cash and cash equivalents, end of year 

Supplemental disclosures of cash flow information: 
  Cash paid for interest 
  Cash paid for income taxes 

1,249  
800  
16   
724   
173  

2,122   
138   
676  
22  
(1,230)  
(768)  
(948)  
(1,967)   

(154)  
(154)   

(19)   
(93)  
1,975  
(1,258)  
605   

79  

(1,437)   
6,993  
5,556   $ 

77   $ 
233   $ 

1,192 
4,845 
216 
94 
11 

2,449 
(46) 
1,143
(1) 
(1,314) 
(1,219) 
(1,047)
1,537 

(394) 
(394) 

(259) 
(111) 
- 
(623) 
(993)

95 

245 
6,748 
6,993 

114 
5 

  $

  $
  $

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

F-7

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the Years Ended December 31, 2020 and 2019 

Note 1.  Business Activity 

Overview 

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. Wilhelmina  provides  traditional,  full-service  fashion  model  and  talent  management  services, 
specializing  in  the  representation  and  management  of  models,  entertainers,  athletes  and  other  talent,  to  various  clients, 
including retailers, designers, advertising agencies, print and electronic media and catalog companies. 

Note 2.  Summary of Significant Accounting Policies 

The consolidated financial statements are prepared in conformity with generally accepted accounting principles in 
the United States of America (“GAAP”). The following is a summary of significant policies used in the preparation of the 
accompanying financial statements.   

Principles of Consolidation and Basis of Presentation 

The financial statements include the consolidated accounts of Wilhelmina and its wholly owned subsidiaries.  All 
significant inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have 
been reclassified to conform to current year presentation.   

Revenue Recognition 

The Company has adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from 
Contracts with Customers (Topic 606) (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the 
transfer  of  promised  goods  or  services  to  customers,  in  an  amount  that  reflects  the  expected  consideration  received  in 
exchange for those goods or services.  The guidance provides a five-step analysis of transactions to determine when and 
how revenue is recognized. 

Under the revenue standard, the Company recognizes revenues when its customer obtains control of promised goods 
or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods 
or  services.  The  Company  recognizes  revenues  following  the  five-step  model  prescribed  under  ASU  No.  2014-09:  (i) 
identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction 
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or 
as) the Company satisfies the performance obligation. 

Service Revenues 

Our service revenues are derived primarily from fashion model bookings and representation of social media influencers 
and actors for commercials, film, and television. Revenues from services are recognized and related model costs are accrued 
when the customer obtains control of the Company’s product, which occurs at a point in time, typically when the talent has 
completed  the  contractual  requirement.  The  Company  expenses  incremental  costs  of  obtaining  a  contract  as  and  when 
incurred because the expected amortization period of the asset that it would have recognized is one year or less or the amount 
is  immaterial.  Our  performance  obligations  are  primarily  satisfied  at  a  point  in  time  when  the  talent  has  completed  the 
contractual requirements. 

F-8

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or 
as,  the  performance  obligation  is  satisfied.  The  performance  obligations  for  most  of  the  Company’s  core  modeling 
bookings are satisfied on the day of the event, and the “day rate” total fee is agreed in advance, when the customer books 
the model for  a  particular  date.    For  contracts  with  multiple  performance  obligations  (which  are  typically  all  satisfied 
within  1  to  3  days), we allocate the contract’s transaction price to each performance obligation based on the estimated 
relative standalone 
selling price. 

When  reporting  service  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  the  revenues  are  earned  and  collectability  is  probable,  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 the revenues 
are earned and collectability is probable, net of pass-through model or talent cost. 

License Fees 

License  fees,  in  connection  with  the  licensing  of  the  “Wilhelmina”  name,  are  collected  on  a  monthly  or 
quarterly  basis under the terms of Wilhelmina’s agreements with licensees.  The Company recognizes revenue relating to 
license fees where payment is deemed to be probable, over the license period. 

Contract Assets 

Contract  assets,  which  primarily  relate  to  the  Company’s  right  to  consideration  for  work  completed  but  not 
billed  at  the  reporting  date  are  included  within  accounts  receivable  and  approximated  $0.1  million  and  $2.1  million  at 
December 31, 2020 and 2019, respectively. 

Advances to Models 

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 net of 
such costs that are expected to be recouped. 

Use of Estimates 

The  preparation  of  the  consolidated  financial  statements  in  conformity  with  GAAP  requires  management  to 
make  estimates  that  affect  the  amounts  reported  in  the  consolidated  financial  statements  and  the  accompanying  notes. 
Accounting estimates and assumptions discussed herein are those that management considers to be the most critical to an 
understanding  of  the  consolidated  financial  statements  because  they  inherently  involve  significant  judgments  and 
uncertainties. Estimates are  used  for,  but  not  limited  to  revenue  recognition,  allowance  for  doubtful  accounts,  useful 
lives  for  depreciation  and  amortization,  income  taxes,  the  assumptions  used  for  share-based  compensation,  and 
impairments  of  goodwill  and  long-lived  assets.    All  of  these  estimates  reflect  management’s  judgment  about  current 
economic  and  market  conditions  and  their  effects  based  on  information  available  as  of  the  date  of  these  consolidated 
financial  statements. If  such  conditions  persist  longer or deteriorate further than expected, it is reasonably possible that 
the judgments and estimates could change, which may result in future impairments of assets among other effects. 

Cash Equivalents 

The Company considers all highly liquid investments purchased with original maturities of three months or less to 

be cash equivalents. 

Accounts Receivable and Allowance for Doubtful Accounts 

F-9

   
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 allowance. At December 31, 2020, the Company had an allowance of $1.6 
million, and recorded an $0.2 million bad debt charge to earnings. Balances that remain outstanding after the Company has 
used reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable.  The 
Company generally does not require collateral. 

 Concentrations of Credit Risk 

The balance sheet items that potentially subject the Company to concentrations of credit risk are primarily cash and 
cash  equivalents  and  accounts  receivable.  The  Company  maintains  its  cash  balances  in  several  different  financial 
institutions  in  New  York,  Los  Angeles,  Miami,  and  London.  Balances  in  accounts  other  than  “noninterest-bearing 
transaction  accounts”  are  insured  up  to  Federal  Deposit  Insurance  Corporation  (“FDIC”)  limits  of  $250  thousand  per 
institution. At December 31, 2020, the Company had cash balances in excess of FDIC insurance coverage of approximately 
$2.4 million. Balances in London accounts are covered by Financial Services Compensation Scheme (“FSCS”) limits of 
£75  thousand  or  approximately  $0.1  million  per  institution.  At  December  31,  2020,  the  Company  had  cash  balances  in 
excess of FSCS coverage of approximately $2.7 million. Concentrations of credit risk with accounts receivable are mitigated 
by  the  Company’s  large  number  of  clients  and  their  dispersion  across  different  industries  and  geographical  areas. The 
Company performs ongoing credit evaluations of its clients and maintains an allowance for doubtful accounts based upon 
the expected collectability of all accounts receivable. 

Property and Equipment 

Property and equipment are stated at cost. Depreciation and amortization, based upon the estimated useful lives 
(ranging  from  two  to  seven  years)  of  the  assets  or  terms  of  the  leases,  are  computed  by  use  of  the  straight-line 
method. Leasehold  improvements  are  amortized  based  upon  the  shorter  of  the  terms  of  the  leases  or  asset  lives. When 
property and equipment are retired or sold, the cost and accumulated depreciation and amortization are eliminated from the 
related accounts and gains or losses, if any, are reflected in the consolidated statement of operations. 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that 
the carrying amount of an asset may not be recoverable. If it is determined that impairment has occurred, the amount of the 
impairment is charged to operations. 

 Goodwill and Intangible Assets 

Goodwill represents the excess of the purchase price in a business combination over the fair value of the tangible 
and intangible assets acquired and the liabilities assumed. The Company’s intangible assets other than goodwill consist of 
trademarks and trade name.  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.   

At least annually, the Company assesses whether the carrying value of its goodwill and intangible assets exceeds 
their fair value and, if necessary, records an impairment loss equal to any such excess. The Company sometimes utilizes an 
independent valuation specialist to assist with the determination of fair value.  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.  

The process of estimating the fair value of goodwill is subjective and requires the Company to make estimates that 
may significantly impact the outcome of the analysis.  A qualitative assessment considers events and circumstances such as 
macroeconomic  conditions,  industry  and  market  conditions,  cost  factors,  and  overall  financial  performance.    If  after 
performing this assessment, the Company concludes it is more likely than not that the fair value of the reporting unit is less 

F-10

than its carrying amount, then the Company performs the quantitative test. 

Under  the  quantitative  test,  a  goodwill  impairment  is  identified  by  comparing  the  fair  value  to  the  carrying 
amount, including  goodwill.    If  the  carrying  amount  exceeds  the  fair  value,  goodwill  is  considered  impaired  and  an 
impairment  charge is recognized in an amount equal to the excess, not to exceed the carrying amount of goodwill. 

Due to Models 

Due to models represents the liability for amounts owed to talent for jobs that have taken place, but where the model 
or talent fee has not yet been paid, typically due to the Company awaiting receipt of payment from the customer.   The 
due  to  model  liabilities  are  accrued  in  the  period  in  which  the  event  takes  place  consistent  with  when  the  revenue  is 
recognized.    The  Company’s  contractual  agreements  with  models  typically  condition  payment  to  talent  upon  the 
collection of fees from the customer. 

Advertising 

The  Company  expenses  all  advertising  costs  as  incurred.  Advertising  expense  for  the  year  ended  December  31, 
2020 approximated $11 thousand, as compared to $35 thousand of advertising expense for the year ended December 31, 
2019.  

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 base 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.   

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.  Tax  positions  are  subject  to  change  in  the 
future,  as  a  number  of  years  may  elapse  before  a  particular  matter  for  which  an  established  reserve  is  audited 
and  finally  resolved.  Federal  tax  returns  for  tax  years  2017  through  2019  remained  open  for  examination  as  of 
December 31, 2020. 

Share-Based Compensation 

The Company utilizes share-based awards as a form of compensation for certain officers. The Company records 
compensation  expense  for  all  awards  granted. The  Company  uses  the  Black-Scholes  valuation  model  and  straight-line 
amortization of compensation expense over the requisite service period for each separately vesting portion of the grants. 

Fair Value Measurements 

The  Company  has  adopted  the  provisions  of  ASC  820,  “Fair  Value  Measurements”  (“ASC  820”),  for 
financial  assets  and  financial  liabilities.  ASC  820  defines  fair  value,  establishes  a  framework  for  measuring  fair  value 
under GAAP, and expands disclosure about fair value measurements. ASC 820 applies to all financial instruments that are 
being measured and reported on a fair value basis. ASC 820 defines fair value as the price that would be received to sell an 
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 
also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into the following three 
levels: 
•
•

Level 1 Inputs-Unadjusted: quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs-Observable: inputs other than Level 1  prices, such as quoted prices for similar assets or liabilities;

F-11

•

quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable 
market data for substantially the full term of the assets or liabilities. 
Level 3 Inputs-Unobservable: inputs that are supported by little or no market activity and that are significant to the
fair  value  of  the  assets  or  liabilities. Level  3  assets  and  liabilities  include  financial  instruments  whose  value  is
determined  using  pricing  models,  discounted cash  flow  methodologies,  or  other  valuation  techniques,  as  well  as
instruments for which the determination of fair value requires significant management judgment or estimation.

F-12

Recent Accounting Pronouncements 

In  June  2016,  the  FASB  issued ASU  No.  2016-13,  “Financial  Instruments  -  Credit  Losses  (Topic  326): 
Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which amends the FASB’s prior guidance on 
the impairment of financial instruments. The ASU adds to GAAP an impairment model (known as the “current expected 
credit loss model”) that is based on expected losses rather than incurred losses. ASU 2016-13 becomes effective for the 
Company for annual reporting periods ending after December 15, 2022, including interim periods within those fiscal years. 
The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s consolidated financial statements. 

In January 2017, the FASB issued ASU No. 2017-03 “Intangibles-Goodwill and Other (Topic 350): Simplifying the 
Test  for  Goodwill  Impairment” (“ASU  2017-03”)  effective  for  periods  beginning  after  December  15,  2019.  The  ASU 
requires only a one-step qualitative impairment test, whereby a goodwill impairment loss will be measured as the excess of 
a reporting unit’s carrying amount over its fair value. It eliminates Step 2 of the prior two-step goodwill impairment test, 
under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill 
with the carrying amount of that goodwill. The adoption of ASU No. 2017-03 did not have a material impact on the results 
of the Company’s goodwill impairment testing procedures. 

In  November  2018,  the  FASB  issued ASU  No.  2018-19, “Codification  Improvements  to  Topic  326,  Financial 
Instruments-Credit Losses”  (“ASU 2018-19”), which clarifies that receivables arising from operating leases are not within 
the scope of the credit losses standard but rather should be accounted for in accordance with the lease standard. ASU 2018-
19 became effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those 
fiscal  years.  The  adoption  of  ASU  2018-19  did  not  have  a  material  impact  on  the  Company’s  consolidated  financial 
statements. 

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting 
for Income Taxes”.  The standard includes multiple key provisions, including removal of certain exceptions to ASC 740, 
Income Taxes, and simplification in several other areas such as accounting for a franchise tax that is partially based on 
income.  ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within 
those fiscal years.  The Company is currently assessing the impact of adopting this standard but does not expect the adoption 
of this guidance to have a material impact on its consolidated financial statements. 

In October 2020, the FASB issued ASU No. 2020-10 “Codification Improvements.”  The new accounting rules 
improve  the  consistency  of  the  Codification  by  including  all  disclosure  guidance  in  the  appropriate  Disclosure  Section 
(Section  50)  that  had  only  been  included  in  the  Other  Presentation  Matters  Section  (Section  45)  of  the  Codification. 
Additionally, the new rules also clarify guidance across various topics including defined benefit plans, foreign currency 
transactions, and interest expense.  The standard is effective for the Company in the first quarter of 2021.  The Company 
does not expect the adoption of the new accounting rules to have a material impact on its consolidated financial statements. 

Note 3.  Debt 

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.  The  revolving  line  of  credit  bears  interest  at  prime  plus  0.50%  payable  monthly.  As  of 
December  31,  2020,  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  $1.7  million.  The  revolving  line  of  credit  presently 
expires October 24, 2022. 

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 bore interest at 4.5% per annum and was 
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.  A final $0.6 million payment of principal and interest was paid on 
October 28, 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 could 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 was 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.  

Amounts outstanding under the additional term loan 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  December  31,  2020,  a  total  of  $0.7  million  was 
outstanding on the term loan. 

Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy 
Bank  has  limited  access  to  additional  financing.  Net  losses  in  recent  periods  have  also  impacted  compliance  with  the 
financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional 
financing. On March 26, 2020, the Company entered into a Thirteenth Amendment to Credit Agreement (the “Thirteenth 
Amendment”) with Amegy Bank. The Thirteenth Amendment amended the minimum net worth covenant to require the 
Company to maintain tangible net worth (as defined therein) of $4.0 million, determined on a quarterly basis. Under the 
Thirteenth  Amendment,  Amegy  Bank  also  waived  an  existing  default  caused  by  the  Company’s  failure  to  satisfy  the 
previously required $20.0 million minimum net worth covenant as of December 31, 2019. On May 12, 2020, the Company 
entered  into  a  Fourteenth  Amendment  to  Credit  Agreement  (the  “Fourteenth  Amendment”)  with  Amegy  Bank.  The 
Fourteenth Amendment amended the line of credit to reduce the maximum borrowing capacity to $3.0 million. Under the 
Fourteenth Amendment, Amegy Bank also waived an existing default caused by the Company’s failure to satisfy both the 
minimum fixed charge coverage ratio through March 31, 2020 and minimum tangible net worth as of March 31, 2020.  The 
Company obtained waivers from Amegy Bank of its failures to satisfy the fixed charge coverage ratio, the minimum tangible 
net worth, and the borrowing base for the quarters ended June 30, 2020 and September 30, 2020.  On November 10, 2020, 
the Company entered into a Fifteenth Amendment to Credit Agreement (the “Fifteenth Amendment”) with Amegy Bank. 
The  Fifteenth  Amendment  waived  the  minimum  tangible  net  worth  covenant  until  December  31,  2021,  after  which  a 
minimum tangible net worth of $1.5 million will be required.  The Fifteenth Amendment also revised the calculation of the 
fixed charge coverage ratio such that it will be tested at December 31, 2020 based on the preceding six month period, tested 
at March 31, 2021 based on the preceding nine month period, and tested at June 30, 2021 and subsequent periods using a 
twelve month rolling period. 

On April 15, 2020, Wilhelmina International, Ltd. (the “Borrower”), a wholly-owned subsidiary of the Company, 
executed a Business Loan Agreement and a Promissory Note each dated April 13, 2020 (collectively, the “Sub PPP Loan 
Documents”), with respect to a loan in the amount of $1.8 million (the “Sub PPP Loan”) from Amegy Bank. The Sub PPP 
Loan was obtained pursuant to the PPP. The Sub PPP Loan originally matured on April 13, 2022 and bears interest at a rate 
of 1.00% per annum. As allowed under the Paycheck Protection Flexibility Act, the Sub PPP Loan was extended to mature 
on April 13, 2025 and is payable in 44 equal monthly payments of $43 thousand commencing in August 2021. 

On April 18, 2020, the Company executed a Business Loan Agreement and a Promissory Note each dated April 17, 
2020 (collectively, the “Parent PPP Loan Documents”), with respect to a loan in the amount of $128 thousand (the “Parent 
PPP Loan”) from Amegy Bank. The Parent PPP Loan was also obtained pursuant to the PPP. The Parent PPP Loan originally 
matured  on April 17, 2022  and bears  interest  at a rate of  1.00% per  annum. As allowed  under  the Paycheck  Protection 
Flexibility Act, the Parent PPP Loan was extended to mature on April 17, 2025 and is payable in 44 equal monthly payments 
of $3 thousand commencing in August 2021. 

Both the Sub PPP Loan and the Parent PPP Loan (collectively, the “PPP Loans”) may be prepaid at any time prior 
to maturity with no prepayment penalties. Both the Sub PPP Loan Documents and the Parent PPP Loan Documents contain 

various provisions related to the PPP, as well customary representations, warranties, covenants, events of default and other 
provisions. Neither of the PPP Loans is secured by either the Borrower or the Company, and both are guaranteed by the 
SBA. All or a portion of the PPP Loans may be forgiven by the SBA upon application by the Borrower or the Company, 
respectively, accompanied by documentation of expenditures in accordance with the SBA requirements under the PPP. In 
the event all or any portion of the PPP Loans is forgiven, the amount forgiven is applied to outstanding principal, and would 
be recorded as income. 

As of December 31, 2020, a total of $2.0 million was outstanding on the PPP Loans. 

 As of December 31, 2020, future maturities of long term debt were as follows (in thousands): 

2021 
2022 
2023 
2024 
2025 
Total 

414 
738 
884 
545 
136 
 2,717 

Note 4.  Property and Equipment 

Property and equipment at December 31, 2020 and 2019 was comprised of the following (in thousands): 

Furniture and fixtures 
Software and software development costs 
Computer and equipment 
Leasehold improvements 
Total 
Less: Accumulated depreciation 
Property and equipment, net 

 December 31, 2020  

 $1,490 
2,944 
981 
964 
 6,379 
 (5,451) 
 $928 

 December 31, 2019 
 $1,488 
 2,944 
 829 
 964 
 6,225 
 (4,300) 
 $1,925 

For  the  years  ended  December  31,  2020  and  2019,  depreciation  expense  totaled  $1.2  million  and  $1.0  million, 
respectively. Depreciation expense increased primarily due to new assets being placed into service in 2020 and 2019. 

 Note 5.  Leases 

The Company is obligated under non-cancelable lease agreements for the rental of office space and various other 
lease  agreements  for  the  leasing  of  office  equipment. These  operating  leases  expire  at  various  dates  through  2024. In 
addition to the minimum base rent, the office space lease agreements provide that the Company shall pay its pro-rata share 
of real estate taxes and operating costs as defined in the lease agreements. The Company also leases certain corporate office 
space from an affiliate. 

During 2020, $0.1 million of lease payments were classified as amortization expense, and included within cash used 
in financing activities on the Company’s statement of cash flows.  At December 31, 2020, the weighted-average remaining 
lease term was 1.4 years for operating leases and 3.5 years for finance type leases.  At December 31, 2020, the weighted 
average discount rate was 4.1% for operating leases and 5.2% for finance type leases.  

The following table presents additional information regarding the Company’s financing and operating leases for 

the year ended December 31, 2019 (in thousands): 

Finance lease expense 

 Amortization of ROU assets 
 Interest on lease liabilities 

Operating lease expense 
Short term lease expense 

       Year ended 
December 31, 2020  

        Year ended  
December 31, 2019 

 $ 97 
 14 
 1,157 
 250 

 $      102 
 8 
 1,159 
 273 

Cash paid for amounts included in the measurement of lease 
liabilities for finance leases 

 Financing cash flows 

 109  

 113 

Cash paid for amounts included in the measurement of lease 
liabilities for operating leases 

 Operating cash flows 

ROU assets obtained in exchange for lease liabilities 

 Finance leases 
 Operating leases 

 1,140 

 - 
 332 

 1,236 

 452 
 2,404 

As of December 31, 2020, future maturities of lease liabilities were as follows (in thousands): 

2021 
2022 
2023 
2024 
Total 
Less: Present value discount 
Lease liability 

Operating 
446 
117 
 68 
- 
 631 
 (16) 
 $615 

 Finance 
 86 
 55 
 55 
 50 
 246 
 (20) 
 $226 

The following table summarizes future minimum payments under the current lease agreements: 

Years Ending 
December 31 
2021 
2022 
2023 
2024 
Total 

Amount 
(in thousands) 

563  
173  
122  
50  
908  

 $ 

Rent expense totaled approximately $1.5 million for each of the years ended December 31, 2020 and 2019. 

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.   

By Order Dated May 8, 2020 (the “Class Certification Order”), the Court denied class certification in the Pressley 
case,  denied  class  certification  with  respect  to  the  breach  of  contract  and  alleged  unpaid  usage  claims,  granted  class 
certification as to the New York Labor Law causes of action asserted by Vretman, Palomares and Trotter, and declined to 
rule on Wilhelmina’s motions for summary judgment, denying them without prejudice to be re-filed at a later date. On June 
12, 2020, the Plaintiffs in both the Shanklin and Pressley actions filed Notices of Appeal to the Appellate Division, First 
Department,  from  those  portions  of  the  Class  Certification  Order  on  which  Wilhelmina  prevailed.    On  June  22,  2020, 
Wilhelmina  filed  Notices  of  Cross-Appeal  from  those  portions  of  the  Class  Certification  order  that  granted  class 
Certification and denied summary judgment.  The Court has directed the parties to non-binding mediation and that process 
is underway.  

The Company believes the claims asserted in the Shanklin Litigation and Pressley Litigation 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 

The following table summarizes the income tax (expense) benefit for the years ended December 31, 2020 and 2019 

(in thousands):  

Current: 

 Federal 
 State 
 Foreign 
 Current Total 

Deferred: 

 Federal 
 State 
 Foreign 
 Deferred Total 
 Total 

2020 

2019 

 $ 

-      $ 

(36) 
(142)  
(178)  

(633)  
(91)  
-  
(724)  
(902) 

$ 

 - 
(30)  
(276)  
(306)  

(36)  
(58)  
-  
(94)   

 $ 

 (400)  

The income tax expense differs from the amount computed by applying the statutory federal and state income tax 
rates to the net income before income tax.  The following table shows the reasons for these differences (in thousands): 

Computed income tax benefit at statutory rate 
Increase in taxes resulting from: 
       Permanent and other deductions, net 
       Goodwill impairment 
       Global intangible low-taxed income 
       Foreign income taxes 
       State income taxes, net of federal benefit 
Deferred tax effects 
Valuation allowance 
Total income tax expense 
Effective tax rate 

2020 

2019 

  $                   789        $               944

51
(120)       
(113)       
10       
120       
(153)       
(1,486)       

(55) 
(727) 
(200) 
-  
(9) 
(13) 
(340) 
(902)   $            (400) 
22.3%                   9.1%  

$ 

The  Company  reported  income  tax  expense  of  $0.9  million  for  2020  despite  a  pre-tax  loss.  The  expense 
was  primarily due to  a  $1.5  million  valuation  allowance  recorded  against  deferred  tax  assets.    The  valuation  allowance 
was  the  result  of  management’s  assessment  as  of  December  31,  2020  that  it  was  not  more  likely  than  not  that  the 
benefit  of  the  Company’s deferred tax assets would be realized primarily due to the impact of the COVID-19 pandemic 
on  its  business.  Income tax expense for 2020 was also impacted by foreign taxes in the United Kingdom related to the 
Company’s London office that are not deductible for U.S. income tax purposes.  In addition, the $0.8 million goodwill 
impairment recorded in 2020 resulted in only a $0.1 million tax benefit due to certain permanent tax differences. 

The  Company  reported  income  tax  expense  of  $0.4  million  for  2019  despite  a  pre-tax  loss  due  primarily  to  a 
$0.3  million  valuation  allowance  recorded  against  deferred  tax  assets  related  to  forfeited  stock  options.    Income  tax 
expense for 2019  was  also  impacted  by  foreign  taxes  in  the  United  Kingdom  related  to  the  Company’s  London  office 
that  are  not  deductible  for  U.S.  income  tax  purposes.    In  addition,  the  $4.8  million  goodwill  impairment  recorded  in 
2019 resulted in only a $0.3 million tax benefit due to certain permanent tax differences. 

 
 
 
 
 
 
      
 
  
 
        
 
    
   
   
    
    
    
    
  
 
 
The following table shows the tax effect of significant temporary differences, which comprise the deferred tax asset 

and liability (in thousands): 

Deferred tax asset: 

Net operating loss carryforward 

       Foreign tax credits 
Accrued expenses 

       Allowance for doubtful accounts 

Lease liability 

       Share-based compensation 
Other intangible assets 
       Interest expense limitation 
Less: Valuation allowance 
       Total deferred income tax asset 
Deferred tax liability: 
       Property and equipment 
       Right of use asset 
       Intangible assets-brand name 
       Goodwill 
       Other intangible assets 
       Total deferred income tax liability 
       Net deferred tax liability 

    2020 

      2019 

$ 

$ 

1,063    $ 
483       
396       
78       
146 
49       
30
23 
(1,486) 
782 

(159) 
(136) 
(1,197) 
(288) 
(451) 
(2,231) 
(1,449) 

 $ 

103 
483 
549 
85 
422 
384 
36
11 
(340) 
1,733 

(393) 
(391) 
(1,079) 
(257) 
(338) 
(2,458) 
(725) 

tax  assets  and 

The  presentation  of  net  deferred 

the 
Company’s  Consolidated  Balance  Sheets.    Deferred  income  tax  balances  reflect  the  effects  of  temporary  differences 
between  the  carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be 
in effect when the taxes are actually paid or recovered.  The Company recognizes a valuation allowance for deferred tax 
assets when it is more likely than not that these assets will not be realized.  In making this determination, all positive and 
negative  evidence  is  considered,  including  future  reversals  of  existing  taxable  temporary  differences,  tax  planning 
strategies, future taxable income, and taxable income in prior carryback years.   

liabilities  are  presented  as  noncurrent  within 

At December 31, 2020 and December 31, 2019, the Company has $4.3 million and $0.5 million, respectively, of 
federal  net  operating  loss  carryforwards,  of  which  $0.5  million  expires  in  2037  and  the  remainder  do  not 
expire.    Additionally,  the  Company  has  $0.5  million  of  U.S.  federal  foreign  tax  credit  carryforwards,  which  expire 
between 2023 and 2029.   

The Company does not believe that it had any significant uncertain tax positions at December 31, 2020 and 

December 31, 2019, nor is this expected to change within the next twelve months due to the settlement and expiration of 
statutes of limitation. 

The U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 and 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, which are referred to as the global 
intangible low-taxed income tax and base erosion tax, respectively. In January 2018, the FASB released guidance on the 
accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act.  The GILTI provisions 
impose  a  tax  on  foreign  income  in  excess  of  a  deemed  return  on  tangible  assets  of  foreign  corporations.    The 
Company elected to treat any potential GILTI inclusions as a period cost. 

Note 8.  Treasury Stock 

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. 

From  2012  through  December  31,  2020,  the  Company  repurchased  an  aggregate  of  1,314,694  shares  of 
common  stock  at  an  average  price  of  approximately  $4.85  per  share,  for  a  total  of  approximately  $6.4  million  in 
repurchases  under  the  stock  repurchase  program.  During  the  year  ended  December  31,  2020,  4,833  shares  were 
repurchased  at  an  average  price  of  $4.04  per  share.    The  repurchase  of  an  additional  185,306  shares  is  presently 
authorized  under  the  stock  repurchase  program. 

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.

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 $2,500 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 administrative services from employees of NCM. The Company 
incurred  expenses  pursuant  to  the  services  agreement  totaling  approximately  $30  thousand  for  each  of  the  years 
ended  December 31, 2020 and 2019. The Company did not owe NCM any amounts under the services agreement as of 
December 31, 2020. 

Note 10.  Stock Options and Stock Purchase Warrants 

During 2015, shareholders of the Company approved the 2015 Incentive Plan which authorized the issuance of 
up to  an 500,000  shares  of  the  common  stock  pursuant  to  stock  options,  restricted  stock,  stock  appreciation  rights  and 
other equity incentives awarded to directors, officers, consultants, advisors and employees of the Company. Stock option 
awards  under  the  2015  Incentive  Plan  are  granted  at  the  market  value  of  the  common  stock  on  the  date  of  grant,  have 
vesting periods of five years, and expire to the extent unexercised after ten years.   

Under the 2015 Incentive Plan, no stock option awards were granted during 2020 or 2019.  No stock options 

were exercised during either 2020 or 2019. 

The following table shows a summary of stock option transactions under the 2015 Incentive Plan during 2020 and 2019: 

Outstanding, January 1, 2018 

Granted 
Exercised 
Forfeited or expired 

Outstanding, December 31, 2019 

Granted 
Exercised 
Forfeited or expired 

Outstanding, December 31, 2020 

Weighted 
Average 
Exercise 
Price 

Number 
of Shares 

460,000     $ 

-  
-  
-  

460,000     $ 

- 
-  
(400,000)  

60,000     $ 

7.34  
-  
-  
-  
7.34  
- 
-  
(7.40)  
6.93  

Weighted average remaining contractual life was 5.83 years at December 31, 2020 and 6.61 years at December 31, 
2019.    The  exercise  price  of  all  stock  options  was  below  the  market  value  at  both  December  31,  2020  and  2019.  
Therefore,  there  is  no  intrinsic  value  at  December  31,  2020  and  2019.    Total  unrecognized  compensation  expense  on 
options outstanding as of December 31, 2020 was $8 thousand.  Options to purchase 42,000 shares of common stock were 
exercisable as of December 31, 2020. 

The  Company  estimates  the  fair  value  of  each  stock  option  granted  on  the  date  of  grant  using  the 
Black-Scholes  option  pricing  model.  Expected  volatilities  are  based  on  the  historical  volatility  of  Wilhelmina’s  and 
similar companies’  common  stock  for  a  period  equal  to  the  expected  term.  The  risk-free  interest  rates  for  periods 
within  the  contractual  term  of  the  options  are  based  on  rates  for  U.S.  Treasury  Notes  with  maturity  dates 
corresponding  to  the options’ expected lives on the dates of grant. Expected term is determined based on the option term 
of ten years. 

Note 11.  Benefit Plans 

The  Company  has  established  a  401(k)  Plan  for  eligible  employees  of  the  Company. Generally,  all  employees 
of the Company who are at least twenty-one years of age are eligible to participate in the 401(k) Plan. The 401(k) Plan 
is  a  defined  contribution  plan, which  provides  that  participants  may  make  voluntary  salary  deferral  contributions,  on  a 
pretax basis, between 1% and 100% of their compensation in the form of voluntary payroll deductions, up to a maximum 
amount  as 
indexed  for  cost-of-living  adjustments.  The  Company  may  make  discretionary  contributions.  No 
discretionary  contributions were made during the years ended December 31, 2020 and 2019. 

Note 12.  Goodwill 

Changes to the carrying amount of Goodwill are as follows (in thousands): 

Balances at December 31, 2018 
 2019 Goodwill impairment 
Balance as of December 31, 2019 
 2020 Goodwill Impairment 
Balance as of December 31, 2020 

 U.S. 

London 
 Goodwill 

Goodwill 

Total 

$  12,563  $ 
(4,845) 
7,718 
(800) 
  $ 6,918 

629    $ 
-  
629  
-  
$   629  

13,192  
(4,845) 
8,347 
(800) 
$   7,547 

In March 2020 and December 2019, the Company determined there were triggering events, primarily caused by 
a  sustained  decrease  in  the  Company’s  stock  price.    The  results  of  the  goodwill  impairment  tests  indicated  that  the 
carrying values  exceeded  the  estimated  fair  values.    Thus,  during  March  2020  and  December  2019,  the  Company 
recorded impairment charges of $0.8 million and $4.8 million, respectively, related to its goodwill.  Further declines in the 
Company’s stock price could result in additional goodwill impairment charges. 

CORPORATE INFORMATION

Mark E. Schwarz
  Executive Chairman and Director
  Chairman and Chief Executive Officer of Newcastle Capital Management, L.P.

James A. McCarthy
  Chief Financial Officer

OTHER DIRECTORS

Maya Burkenroad
President of Retail Ecommerce 
Ventures LLC

Clinton J. Coleman
Chairman and Chief Executive 
Officer of Novo Labs, Inc.

James A. Dvorak
Senior Vice President – Investments 
of Hallmark Financial Services, Inc.

Alexander F. Mehr
Chief Executive Officer of Retail 
Ecommerce Ventures LLC

Mark E. Pape
Managing Director, Brookview 
Advisors, Inc.

James C. Roddey
Sole Member of Roddey Consulting 
LLC

CORPORATE OFFICE

Wilhelmina International, Inc.
Two Lincoln Centre
5420 LBJ Freeway
Lockbox # 25
Dallas, TX 75240
(214) 661-7488
www.wilhelmina.com

AGENCY OFFICES

New York
Los Angeles
London
Miami

STOCK EXCHANGE AND TRADING SYMBOL

Wilhelmina International, Inc.
Common stock is traded on the 
NASDAQ Capital Market under trading 
symbol “WHLM”

STOCK TRANSFER AGENT

Securities Transfer Corporation
2901 N. Dallas Parkway, Suite 380
Frisco, Texas

INDEPENDENT REGISTERED PUBLIC 
ACCOUTING FIRM

Baker Tilly US, LLP
Plano, Texas

EXTERNAL LEGAL COUNSEL

McGuire Craddock & Strother, P.C. 
Dallas, Texas

INVESTOR INFORMATION

For further information visit www.wilhelmina.com/investor-relations/