-----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, Md1xevrSQ2V1gsSqKE23o2bplSV8WzMiRdxcLWcla1r3fVcT6kN3K9XeVb7oK5qM 8NCAsmx4qZULVDm2JvXlDA== /in/edgar/work/20000815/0000763730-00-500005/0000763730-00-500005.txt : 20000922 0000763730-00-500005.hdr.sgml : 20000921 ACCESSION NUMBER: 0000763730-00-500005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALLERY OF HISTORY INC CENTRAL INDEX KEY: 0000763730 STANDARD INDUSTRIAL CLASSIFICATION: [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: 702847 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 STREET 2: PROMENADE SUITE 207 CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUSEUM OF HISTORICAL DOCUMENTS CHARTERED/NV/ DATE OF NAME CHANGE: 19900816 10QSB 1 r10qjun.txt JUNE 10-Q DOC SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [x]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 June 30, 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 5,625,984 shares of Common Stock, par value $.0005, outstanding as of August 1, 2000. Part 1 - FINANCIAL INFORMATION GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ______________________________________________________________________ JUNE 30, SEPTEMBER 30, 2000 1999 UNAUDITED ----------- ------------ ASSETS Cash $ 140,735 $ 258,263 Accounts receivable 108,674 204,492 Prepaid expenses 32,401 35,808 Documents owned 7,195,256 6,768,573 Land and building-net 1,341,617 1,379,496 Property and equipment-net 587,163 467,834 Other assets 130,848 136,796 ---------- ---------- TOTAL ASSETS $ 9,536,694 $ 9,251,262 ========== ========== LIABILITIES Accounts payable $ 100,425 $ 177,867 Notes payable 1,801,172 1,596,621 Indebtedness to related parties 1,605,000 1,000,000 Deposits 18,154 21,154 Deferred tax 171,011 171,011 Accrued and other liabilities 121,413 79,395 ---------- ---------- TOTAL LIABILITIES 3,817,175 3,046,048 ---------- ---------- STOCKHOLDERS' EQUITY Common stock: $.0005 par value; 20,000,000 shares authorized; 11,935,308 shares issued and outstanding 5,968 5,918 Additional paid-in-capital 9,710,542 9,392,363 Less deferred compensation-restricted common stock (236,321) -- Accumulated deficit (751,999) (265,514) Common stock in treasury (6,309,324 and 6,286,824 shares), at cost (3,008,671) (2,927,553) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 5,719,519 6,205,214 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,536,694 $ 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 NINE MONTHS ENDED JUNE 30, JUNE 30, 2000 1999 2000 1999 -------- -------- ---------- ---------- REVENUES $ 446,708 $ 616,560 $1,442,317 $1,866,886 COST OF GOODS SOLD 184,782 233,763 619,292 712,159 --------- -------- --------- --------- GROSS PROFIT 261,926 382,797 823,025 1,154,727 --------- -------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 384,180 329,009 1,044,795 1,061,886 Depreciation 30,760 21,358 84,787 55,130 Advertising 9,584 14,630 27,497 46,478 Maintenance & repairs 10,502 3,571 23,462 10,867 Loss on gallery closure -- -- -- 9,475 --------- -------- --------- --------- TOTAL OPERATING EXPENSES 435,026 368,568 1,180,541 1,183,836 --------- -------- --------- --------- OPERATING INCOME (LOSS) (173,100) 14,229 (357,516) (29,109) --------- -------- --------- --------- OTHER INCOME (EXPENSE) Interest expense (70,600) (37,250) (192,453) (119,959) Other 28,043 23,114 63,484 65,970 --------- -------- --------- --------- TOTAL OTHER EXPENSE (42,557) (14,136) (128,969) (53,989) --------- -------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES (215,657) 93 (486,485) (83,098) CREDIT FOR INCOME TAX -- -- -- 8,161 --------- -------- --------- --------- NET INCOME (LOSS) $ (215,657) $ 93 $ (486,485) $ (74,937) ========= ======== ========= ========= EARNINGS (LOSS) PER SHARE: Basic $(.04) $ -- $(.09) $(.01) ==== ==== ==== ==== Diluted $(.04) $ -- $(.09) $(.01) ==== ==== ==== ==== See the accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------ GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED _________________________________________________________________________ NINE MONTHS ENDED JUNE 30, 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(486,485) $(74,937) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 134,326 104,669 Common stock issued for services 81,908 Deferred tax -- (7,674) (Increase) decrease in: Accounts receivable 95,818 250,008 Prepaid expenses 3,407 25,344 Documents owned (426,683) (29,440) Other assets 5,948 11,141 (Decrease) increase in: Accounts payable (77,442) 99,127 Deposits (3,000) (8,449) Accrued and other liabilities 42,018 35,061 -------- -------- Net cash provided by (used in) operating activities (630,185) 404,850 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (215,776) (313,333) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) from credit facilities 809,551 392,939 Repurchase of common stock (81,118) (496,557) Net cash provided by (used in) financing activities 728,433 (103,618) -------- -------- NET DECREASE IN CASH (117,528) (12,101) CASH, BEGINNING OF PERIOD 258,263 15,069 -------- -------- CASH, END OF PERIOD $ 140,735 $ 2,968 ======== ======== See the accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------ GALLERY OF HISTORY, INC. and SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nine Month Period Ended June 30, 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 be 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 weighted average number of shares outstanding for the three months ended June 30, 2000 and 1999 were 5,534,317 and 5,552,066, respectively; and for the nine month period ended June 30, 2000 and 1999 the weighted average number of shares outstanding were 5,529,081 and 5,571,320, respectively. Because of the Company's loss, no potential dilution has been considered; therefore the weighted average number of shares for diluted earnings per share is the same as the basic earnings 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. 6) Restricted Common Stock During the current quarter, the Company entered into a consultant agreement with an expert investment banker and money manager. As compensation for the consulting services rendered, the Company has issued 100,000 restricted shares of its common stock which will vest over the three year term of the agreement. As of June 30, 2000, 8,333 shares have vested. The total 100,000 shares have been included in the Common Stock Issued and Outstanding presented in the Company's June 30, 2000 Balance Sheet. 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 nine month period ended June 30, 2000 largely as a result of the net operating loss and an increase in the Company's document inventory. Document inventory purchases totaled approximately $740,000 in the current nine month period. Because an auction was held late in the month of September 1999, accounts receivable decreased comparing that balance with June 2000. Similarly, accounts payable also decreased due to fewer consignments outstanding in June 2000 compared to September 1999. 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 document purchases. 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, 2001. Loans under the line are secured by the Company's inventory. As of June 30, 2000, the Company has fully utilized this line of credit for document purchases in the period. 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 June 30, 2000, there was approximately $2,000 available under this line of credit with a principal balance of $1,675,965. 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 $605,000 as of June 30, 2000 on these additional borrowed funds. 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 28% for the quarter period ended June 30, 2000 compared to the previous year quarter, and decreased 23% comparing the nine month periods ended June 30, 2000 and 1999. Comparing the two quarter periods, auction revenues decreased 30% in the current quarter; however, retail revenues increased 28% in the current quarter. Comparing the nine month periods, auction revenues decreased 24% in the current period and retail revenues decreased 9% in the current period. The decrease can be contributed to the increased competition in the auction market. Comparing the two nine month periods, the number of auction winning bidders has decreased 29% in the current period. The number of units sold has decreased by 36% comparing the nine month period ended June 30, 2000 to the nine month period ended June 30, 1999. Cost of goods sold increased to 41% of net revenues for the quarter ended June 30, 2000 compared to 38% of net revenues for the quarter ended June 30, 1999. Cost of goods sold increased to 43% of net revenues for the nine month period ended June 30, 2000 compared to 38% of net revenues for the nine month period ended June 30, 1999. Document costs remained constant at 23% of net revenues for both quarter periods. However, document costs decreased slightly to 23% of net revenues comparing the nine month period ended June 30, 2000 from 24% of net revenues for the nine month period ended June 30, 1999. Cost of catalogs increased to 19% of net revenues for the quarter ended June 2000 compared to 15% of net revenues for the quarter ended June 1999. For the nine month periods, catalog costs increased to 20% of net revenues for 2000 compared to 15% of net revenues for 1999. The increase is due to enhancements in the printing of the catalogs. Total operating expenses increased 18%, to 97% of net revenues for the quarter ended June 30, 2000 compared to 60% of net revenues for the quarter ended June 30, 1999. Total operating expenses increased to 82% of net revenues for the current nine month period from 63% of net revenues for the prior nine month period. Selling, general and administrative expenses increased 17% comparing the quarter periods to 86% of net revenues for the quarter ended June 30, 2000 from 53% of net revenues for the quarter ended June 30, 1999. Selling, general and administrative expenses decreased slightly comparing the nine month periods, however, the expenses increased to 72% of net revenues in 2000 compared to 57% of net revenues in 1999. During the current quarter, the Company had entered into a consultant agreement with an expert investment banker and money manager. As compensation for the consulting services rendered, the Company has issued 100,000 restricted shares of its common stock which will vest over the three year term of the agreement. Consulting fees incurred during the current quarter to record this transaction resulted in a 23% increase in selling, general and administrative expenses or 18% of net revenues. Without considering the consulting fees, selling, general and administrative expenses would have decreased 8% comparing the quarter ended June 30, 2000 to the quarter ended June 30, 1999. Maintenance and repair expenses increased to 2% of net revenues for the quarter and nine month period ended June 30, 2000 compared to 1% of net revenues for the quarter and nine month periods ended June 30, 1999. The increase is attributed to the Company utilizing an outside specialist to maintain its computer systems. Depreciation expense increased by 44% comparing the quarter periods to 7% of net revenues for the quarter ended June 30, 2000 compared to 3% of net revenues for the quarter period ended June 30, 1999. Depreciation expense increased 54% comparing the nine month periods to 6% of net revenues for the nine months ended June 30, 2000 compared to 3% of net revenues for the nine month period ended June 30, 1999. The increase is a result of the Company's expanded computer equipment and software acquisitions. Advertising decreased 34% comparing the quarter periods and decreased 41% comparing the nine month periods. Advertising expenses have been scaled back to help lower total operating expenses. Interest expense increased 90% comparing the quarter periods to 16% of net revenues for the quarter period ended June 30, 2000 from 6% of net revenues for the previous year quarter. Interest increased to 13% of net revenues for the nine month period ended June 2000 compared to 6% of net revenues for the nine 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 and the purchase of document inventory. 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. None. Item 2. Changes in Securities and Use of Proceeds. (c) Effective April 1, 2000, the Company entered into a Consulting Agreement with an expert investment banker and money manager. As compensation for the consulting services rendered, the Company has issued 100,000 restricted shares of its common stock which will vest over the three year term of the agreement. As of June 30, 2000, 8,333 of these shares had vested. The offer and sale of the securities were made in a private placement to the consultant and were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) of the Securities Act. Item 3-5. 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 August 15, 2000 /s Todd M. Axelrod ______________________ ________________________________ Todd M. Axelrod President and Chairman of the Board (Principal Executive Officer) Date August 15, 2000 /s Rod Lynam ______________________ _______________________________ Rod Lynam Treasurer and Director (Principal Accounting Officer) EX-27 2 fdsjun.frm JUNE FDS
5 This schedule contains summary financial information extracted from the Company's Consolidated Balance Sheet dated June 30, 2000 and its Consolidated Statement of Operations covering the period from October 1, 1999 to June 30, 2000 and is qualified in its entirety by reference to such financial statements and notes thereof. 9-MOS Oct-01-1999 Sep-30-2000 Jun-30-2000 140,735 0 108,674 0 7,195,256 0 2,865,784 1,517,004 9,536,694 0 3,406,172 0 0 5,968 5,713,551 9,536,694 1,442,317 1,442,317 619,292 619,292 1,180,541 0 192,453 (486,485) 0 (486,485) 0 0 0 (486,485) (0.09) (0.09)
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