-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FTvd5blWI745JPzDF//tbhCFqoaCSfApJKiD1acOI3x/yiWP8JYdYEu6sQ+bkyXS 7UMjPkMapGnDs5dM/7lTog== 0000763730-00-000004.txt : 20000516 0000763730-00-000004.hdr.sgml : 20000516 ACCESSION NUMBER: 0000763730-00-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALLERY OF HISTORY INC CENTRAL INDEX KEY: 0000763730 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 880176525 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13757 FILM NUMBER: 635606 BUSINESS ADDRESS: STREET 1: 3601 WEST SAHARA AVE STREET 2: PROMENADE SUITE CITY: LAS VEGAS STATE: NV ZIP: 89102-5822 BUSINESS PHONE: 7023641000 MAIL ADDRESS: STREET 1: 3601 WEST SAHARA AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUSEUM OF HISTORICAL DOCUMENTS CHARTERED/NV/ DATE OF NAME CHANGE: 19900816 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] 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 0-13757 GALLERY OF HISTORY, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Nevada 88-0176525 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3601 West Sahara Avenue, Las Vegas, Nevada 89102-5822 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (702) 364-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 The Registrant had 5,525,984 shares of Common Stock, par value $.0005, outstanding as of May 1, 2000. Part 1 - FINANCIAL INFORMATION GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS _________________________________________________________________________
MARCH 31, SEPTEMBER 30, 2000 1999 UNAUDITED ----------- ------------ ASSETS Cash $ 26,742 $ 258,263 Accounts receivable 17,588 204,492 Prepaid expenses 54,230 35,808 Documents owned 6,969,290 6,768,573 Land and building-net 1,354,244 1,379,496 Property and equipment-net 488,607 467,834 Other assets 133,196 136,796 ---------- ---------- TOTAL ASSETS $ 9,043,897 $ 9,251,262 ========== ========== LIABILITIES Accounts payable $ 79,650 $ 177,867 Notes payable 1,744,660 1,596,621 Indebtedness to related parties 1,065,000 1,000,000 Deposits 23,467 21,154 Deferred tax 171,011 171,011 Accrued and other liabilities 106,841 79,395 ---------- ---------- TOTAL LIABILITIES 3,190,629 3,046,048 ---------- ---------- STOCKHOLDERS' EQUITY Common stock: $.0005 par value; 20,000,000 shares authorized; 11,835,308 shares issued and outstanding 5,918 5,918 Additional paid-in-capital 9,392,363 9,392,363 Accumulated deficit (536,342) (265,514) Common stock in treasury (6,309,324 and 6,270,524 shares), at cost (3,008,671) (2,927,553) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 5,853,268 6,205,214 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,043,897 $ 9,251,262 ========== ========== See the accompanying notes to consolidated financial statements.
GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED ____________________________________________________________________________
THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, 2000 1999 2000 1999 -------- -------- ---------- ---------- REVENUES $ 574,313 $ 621,825 $ 995,610 $1,250,327 COST OF GOODS SOLD 230,242 240,755 434,511 478,396 --------- -------- --------- --------- GROSS PROFIT 344,071 381,070 561,099 771,931 --------- -------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 325,502 375,395 660,614 732,878 Depreciation 29,431 17,313 54,027 33,772 Advertising 8,800 13,130 17,913 31,848 Maintenance & repairs 9,262 5,660 12,961 7,296 Loss on gallery closure -- 9,475 -- 9,475 --------- -------- --------- --------- TOTAL OPERATING EXPENSES 372,995 420,973 745,515 815,269 --------- -------- --------- --------- OPERATING LOSS (28,924) (39,903) (184,416) (43,338) --------- -------- --------- --------- OTHER INCOME (EXPENSE) Interest expense (66,321) (38,487) (121,852) (82,709) Other 18,725 23,269 35,440 42,856 --------- -------- --------- --------- TOTAL OTHER EXPENSE (47,596) (15,218) (86,412) (39,853) --------- -------- --------- --------- LOSS BEFORE INCOME TAXES (76,520) (55,121) (270,828) (83,191) CREDIT FOR INCOME TAX -- -- -- 8,161 --------- -------- --------- --------- NET LOSS $ (76,520) $ (55,121) $ (270,828) $ (75,030) ========= ======== ========= ========= LOSS PER SHARE: Basic $(.01) $(.01) $(.05) $(.01) ==== ==== ==== ==== Diluted $(.01) $(.01) $(.05) $(.01) ==== ==== ==== ==== See the accompanying notes to consolidated financial statements.
GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED ___________________________________________________________________________
SIX MONTHS ENDED MARCH 31, 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(270,828) $(75,030) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 87,053 66,798 Deferred tax -- (7,674) (Increase) decrease in: Accounts receivable 186,904 258,704 Prepaid expenses (18,422) 29,491 Documents owned (200,717) 92,085 Other assets 3,600 5,852 (Decrease) increase in: Accounts payable (98,217) 93,630 Deposits 2,313 (6,546) Accrued and other liabilities 27,446 28,485 -------- ------- Net cash provided by (used for) operating activities (280,868) 485,795 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (82,574) (104,579) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) from credit facilities 213,039 53,253 Repurchase of common stock (81,118) (433,020) -------- ------- Net cash provided by (used for) financing activities 131,921 (379,767) -------- ------- NET INCREASE (DECREASE) IN CASH (231,521) 1,449 CASH, BEGINNING OF PERIOD 258,263 15,069 -------- ------- CASH, END OF PERIOD $ 26,742 $ 16,518 ======== ======= See the accompanying notes to consolidated financial statements.
GALLERY OF HISTORY, INC. and SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Month Period Ended March 31, 2000 and 1999 _____________________________________________________________________________ 1) Summary of Significant Accounting Policies The consolidated financial statements included herein have been prepared by Gallery of History, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting of normal recurring items, necessary for a fair presentation of the results for the interim periods have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated financial statements are read in conjunction with the financial statements and the notes thereto included in the Company's 1999 Annual Report on Form 10-KSB. 2) Unclassified Balance Sheet The Company includes in its financial statements an unclassified balance sheet because it believes that such presentation is more meaningful as a consequence of the Company's historical policy of acquiring documents in excess of its current needs, when feasible, and it is not practicable to determine what portion of the documents owned will be sold within the next twelve months. 3) Repurchase of Common Stock In fiscal 1999, the Company purchased 576,584 shares of its common stock at an average price of $.86 a share. In October 1999, the Company purchased 22,500 shares of its common stock at an average price of $3.61 a share. Some of these purchases were made in the open market and others were privately negotiated transactions. 4) Earnings per Share The computation of earnings or loss per share is based on the weighted average number of shares of common stock outstanding and stock options granted that are outstanding, if applicable. To derive basic earnings per share, the average number of shares outstanding for the three months ended March 31, 2000 and 1999 were 5,525,984 and 5,564,784, respectively; and for the six month period ended March 31, 2000 and 1999 the average number of shares outstanding were 5,526,475 and 5,580,945, respectively. Because of the Company's loss, no potential dilution has been considered; therefore the average number of shares for diluted earning per share is the same as the basic earning per share. 5) Stock Split The Company declared a two-for-one stock split for its shareholders of record as of December 24, 1998. The distribution was made January 8, 1999. All common stock numbers presented herein have been restated to reflect the stock split. Part 1 - Item 2 Financial Information MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- Due to the nature of the Company's inventory of documents owned, the Company has presented an unclassified balance sheet (see Note 2 to the consolidated financial statements). Accordingly, the traditional measures of liquidity in terms of changes in working capital are not applicable. The Company incurred a decrease in cash provided by operating activities in its six month period ended March 31, 2000 resulting from the net loss, a decrease in accounts payable and an increase in the purchasing of new document inventory. Accounts payable were higher at the beginning of the period because of the amounts due for consigned inventory that was sold in the Company's September 1999 auction. Document inventory purchases increased during the six month period due to favorable buying opportunities. A decrease in accounts receivable resulted from the timing of auctions held. In October 1999, the Company purchased 22,500 shares of its Common Stock for $3.61 a share. The Company has utilized its bank lines of credit to finance its operations and common stock repurchase. The Company has available a line of credit from its bank in the amount of $100,000 at an interest rate of 1.5% over the prime rate with a maturity date of July 15, 2000. Loans under the line are secured by the Company's inventory. As of March 31, 2000, there was a $25,000 outstanding balance on this line of credit. In July 1997, the Company's term mortgage note was converted to a reducing revolving line of credit in the amount of $1,839,523. The line of credit has a 59 month amortization of principal at a 9% interest rate and a balloon payment due at maturity in July 2002 of the then current balance. The Company's headquarters building collateralizes this line of credit. As of March 31, 2000, there was approximately $3,000 available under this line of credit with a principal balance of $1,690,478. In March 1999, the Company borrowed $1,000,000 from Mr. Axelrod. This note is due April 30, 2002, with interest payments monthly at a rate of 8%. The purpose of this note was to reduce the Company's outstanding line of credit and to finance its stock repurchase program. The Company has also borrowed additional funds during the period, when necessary, from Mr. Axelrod. The Company pays the same interest rate as its bank revolving line of credit and has an outstanding balance of $65,000 as of March 31, 2000. The Company believes its current cash and working capital requirements will be satisfied for the near term by revenue generated from operations and amounts available under the existing lines of credit. In the event the Company does not generate sufficient working capital from operations, the Company will seek alternative equity and/or debt financing, the availability and terms of which cannot be assured. Results of Operations - --------------------- Document revenues decreased 8% for the quarter period ended March 31, 2000 compared to the quarter ended March 31, 1999, and decreased 20% comparing the two six month periods. Auction revenues decreased 8% comparing the quarter ended March 31, 2000 to March 31, 1999. Auction revenues decreased 20% comparing the six month periods. The decrease is a result of a 29% decline in the number of bidders, down from an average of 126 bidders in the four auctions held during the six month period ended March 31, 1999 to an average of 90 bidders for the four auctions held during the six month period ended March 31, 2000. As a result, the number of units sold decreased 34% comparing the auction held during the six month periods. However, the average sales price has increased to $1,109 per item sold for auctions held during the six month period ended March 31, 2000 compared to an average sales price of $922 per item for auctions held during the six month period ended March 31, 1999. Retail revenues were 5% of total revenues for both quarter periods; however, retail revenues decreased 19% comparing the six month periods largely due to revenues generated at the Washington DC gallery that was closed in January 1999. Cost of goods sold increased to 40% of net revenues for the quarter ended March 31, 2000 compared to 39% of net revenues for the quarter ended March 31, 1999. Cost of goods sold increased to 44% of net revenues for the six month period ended March 2000 compared to 38% of net revenues for the six month period ended March 1999. Document costs decreased to 23% of net revenues for the quarter ended March 31, 2000 compared to 24% of net revenues for the quarter ended March 31, 1999. Document costs remained consistent at 24% of net revenues for both six month periods. Cost of catalogs increased to 17% of net revenues for the quarter ended March 2000 compared to 15% of net revenues for the quarter ended March 1999. For the six month periods, catalog costs increased to 20% of net revenues for 2000 compared to 14% of net revenues for 1999. The increase is due to enhancements in the printing of the catalogs. Comparing the two six month periods, the cost of catalogs has increased 19%. Total operating expenses decreased 11%, to 65% of net revenues for the quarter ended March 31, 2000 compared to 68% of net revenues for the quarter ended March 31, 1999. Total operating expenses decreased 9% comparing the six month periods, however total operating expenses increased as a percent of revenues because of the lower current period total revenues, to 75% of net revenues for the current six month period from 65% of net revenues for the prior six month period. Selling, general and administrative expenses decreased 13% comparing the quarter periods and 10% comparing the six month periods. The decrease is, in part, attributed to a decrease in expenses related to the closure of the Company's retail gallery in Washington, D.C. in January 1999. In addition, salaries and related payroll taxes decreased 10% comparing the quarter periods and 9% comparing the six month periods. The decrease is a result of in-house computer personnel employed by the Company in the previous six moth period. Currently, the Company has engaged outside specialists to maintain its computer systems. This is the reason for the increase in maintenance & repairs expenses, which increased 64% comparing the quarter periods and 78% comparing the six month periods. Depreciation expense increased by 70% comparing the quarter periods to 5% of net revenues for the quarter ended March 31, 2000 compared to 3% of net revenues for the quarter period ended March 31, 1999. Depreciation expense increased 60% comparing the six month periods to 5% of net revenues for the six months ended March 31, 2000 compared to 3% of net revenues for the six month period ended March 31, 1999. The increase is a result of the Company's expanded computer equipment and software acquisitions. Advertising decreased 33% for the quarter ended March 2000 compared to March 1999, from 2% of net revenues for 1999 to 1.5% of net revenues for 2000. Advertising also decreased comparing the six month periods to 2% net revenues for 2000 compared to 2.5% of net revenues for 1999. Advertising expenses have been scaled back to help lower total operating expenses. Interest expense increased 72% comparing the quarter periods to 11.5% of net revenues for the quarter period ended March 31, 2000 from 6% of net revenues for the quarter ended March 31, 1999. Interest increased to 12% of net revenues for the six month period ended March 2000 compared to 7% of net revenues for the six month period in 1999. The increase is a result of higher outstanding loan balances on the Company's lines of credit, which were drawn on to finance its operations, the purchase of document inventory and the repurchase of the Company's common stock. Other income is largely the result of the rental operation for the Company's headquarters building. The decrease comparing the periods was a result of a reduction in leased square footage to outside tenants. Part II - Other Information Item 1-5. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. (27) Financial Data Schedule. (b) Reports on Form 8-K. None. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Gallery of History, Inc. _______________________________ (Registrant) Date May 15, 2000 /s Todd M. Axelrod ______________________ ________________________________ Todd M. Axelrod President and Chairman of the Board (Principal Executive Officer) Date May 15, 2000 /s Rod Lynam ______________________ _______________________________ Rod Lynam Treasurer and Director (Principal Accounting Officer) EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-QSB
5 This schedule contains summary financial information extracted from the Company's Consolidated Balance Sheet dated March 31, 2000 and its Consolidated Statement of Operations covering the period from October 1, 1999 to March 31, 2000 and is qualified in its entirety by reference to such financial statement and notes thereof. 6-MOS SEP-30-2000 MAR-31-2000 26742 0 17588 0 6969290 0 2732582 1469731 9043897 0 2809660 0 0 5918 5847350 9043897 995610 995610 434511 434511 745515 0 121852 (270828) 0 (270828) 0 0 0 (270828) (.05) (.05)
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