-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, D2h8er0Nr0nrSeaaBOsuTjA+QelUryADIe+GGbopf+OmMk/a6zxkhhxIANOeZnjx Gx81XF44VELjo4PNPbA5iQ== 0000763730-95-000007.txt : 19950804 0000763730-95-000007.hdr.sgml : 19950804 ACCESSION NUMBER: 0000763730-95-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950803 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-13757 FILM NUMBER: 95558555 BUSINESS ADDRESS: STREET 1: 3601 WEST SAHARA AVE 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3601 WEST SAHARA AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUSEUM OF HISTORICAL DOCUMENTS CHARTERED/NV/ DATE OF NAME CHANGE: 19900816 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO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 June 30, 1995 [ ] 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 5,917,654 shares of Common Stock, par value $.001, outstanding as of August 1, 1995. Part 1 - FINANCIAL INFORMATION GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED
JUNE 30, SEPTEMBER 30, 1995 1994 ----------- ------------- ASSETS Cash $ 64,533 $ 33,961 Prepaid expenses 63,022 66,312 Documents owned 9,168,704 9,449,788 Land and building-net 1,541,775 1,576,264 Property and equipment-net 242,919 386,288 Other assets 489,072 511,349 __________ __________ TOTAL ASSETS $11,570,025 $12,023,962 ========== ========== LIABILITIES Accounts payable $ 76,818 $ 93,190 Bank lines of credit -- 60,000 Notes payable 352,039 518,531 Indebtedness to related parties 153,234 314,453 Mortgage notes payable 1,928,483 1,957,940 Deposits 29,897 156,173 Accrued and other liabilities 179,021 156,962 __________ __________ TOTAL LIABILITIES $ 2,719,492 $ 3,257,249 STOCKHOLDERS' EQUITY Common stock: $.001 par value; authorized, 10,000,000 shares; issued and outstanding, 5,917,654 and 5,910,154 shares 5,918 5,910 Additional paid-in-capital 9,392,363 9,373,621 Accumulated deficit (547,748) (612,818) __________ __________ TOTAL STOCKHOLDERS' EQUITY $ 8,850,533 $ 8,766,713 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,570,025 $12,023,962 ========== ========== 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, 1995 1994 1995 1994 --------- --------- --------- --------- REVENUES $ 579,573 $ 309,824 $1,838,200 $1,397,577 COST OF REVENUES 124,458 66,091 460,199 305,883 -------- -------- --------- --------- GROSS PROFIT 455,115 243,733 1,378,001 1,091,694 -------- -------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 372,505 398,068 1,118,027 1,241,152 Depreciation 44,205 59,801 143,457 207,057 Advertising 6,839 2,952 17,703 7,070 Maintenance & repairs 8,125 9,550 26,782 30,025 Loss on gallery closure -- -- -- 42,056 -------- -------- --------- --------- TOTAL OPERATING EXPENSES 431,674 470,371 1,305,969 1,527,360 -------- -------- --------- --------- OPERATING INCOME (LOSS) 23,441 (226,638) 72,032 (435,666) OTHER INCOME (EXPENSE): Interest expense (60,503) (66,984) (195,305) (194,872) Other 39,116 21,891 118,775 83,253 -------- -------- --------- -------- TOTAL OTHER INCOME(EXPENSE) (21,387) (45,093) (76,530) (111,619) -------- -------- --------- -------- INCOME (LOSS) BEFORE TAX AND CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 2,054 (271,731) (4,498) (547,285) (PROVISION) CREDIT FOR INCOME TAXES (1,370) -- 69,568 (1,939) -------- ------- --------- -------- INCOME (LOSS) BEFORE CUMULA- TIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 684 (271,731) 65,070 (549,224) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE -- -- -- (90,992) -------- --------- --------- --------- NET INCOME (LOSS) $ 684 $ (271,731) $ 65,070 $ (640,216) ======== ========= ========= ========= EARNINGS (LOSS) PER SHARE: Before cumulative effect of a change in accounting principle $ -- $(.05) $ .01 $(.09) Cumulative effect of a change in accounting principle -- -- -- ( 02) ---- ---- ---- ---- Total net income (loss) $ -- $(.05) $ .01 $(.11) ==== ==== ==== ==== 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, 1995 1994 ------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ 65,070 $(640,216) Adjustments to reconcile net income (loss) to net cash provided from (used in) operating activities: Depreciation and amortization 178,574 242,261 Loss on disposal of property -- 45,828 Deferred income taxes -- 91,231 (Increase) decrease in: Prepaid expenses 3,290 (9,600) Documents owned 281,084 81,896 Other assets 22,277 57,538 (Decrease) increase in: Accounts payable (16,372) (16,006) Customer deposits (126,276) 19,704 Accrued and other liabilities 22,059 (45,852) Net cash provided by (used in) ------- ------- operating activities 429,706 (173,216) ------- ------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (716) (14,395) Proceeds from sale of equipment -- 12,750 Net cash provided by (used in) ------- ------- investing activities (716) (1,645) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank line of credit 125,000 259,000 Repayments of bank line of credit (185,000) (290,000) Proceeds from notes payable -- 400,260 Repayments of mortgage and notes payable (338,418) (340,390) Net proceeds from sale of common stock or exercise of stock options -- 232,580 Net cash provided by (used in) ------- ------- financing activities (398,418) 261,450 ------- ------- NET INCREASE IN CASH 30,572 86,589 CASH, BEGINNING OF PERIOD 33,961 14,324 ------- ------- CASH, END OF PERIOD $ 64,533 $ 100,913 ======= ======= SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: For the nine month period ended June 30, 1995: (1) Stock options were exercised in part for the retirement of a note payable in the amount of $18,750 to a related party. For the nine month period ended June 30, 1994: (1) Debt of $7,914 was incurred for the purchase of equipment. 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, 1995 and 1994 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 1994 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 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) Income Taxes The Company realized $69,568 credit for income taxes in its second quarter of fiscal 1995 due to a federal income tax refund resulting from a net operating loss carryback. The Company adopted the Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" in its first fiscal quarter of 1994 by reporting a cumulative effect of a change in accounting principle and not restating prior periods. The effect decreased net income as a non- cash, non-recurring cumulative effect of a change in accounting principle by an amount totaling $90,992. 4) Reclassifications Certain amounts in the 1994 financial statements have been reclassified to conform with the 1995 presentation. As a result of an audit adjustment in the prior periods, the three month and nine month period figures have been adjusted. The effect on net income was an additional loss of $8,204 for the three month period ended June 30, 1994 and $24,609 additional loss for the nine month period ended June 30, 1994. 5) Earnings (Loss) 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. The average number of shares of outstanding common stock for each of the three months ended June 30, 1995 and 1994 was 5,917,654 and 5,910,154, respectively. The average number of shares of outstanding common stock for each of the nine months ended June 30, 1995 and 1994 was 5,917,297 and 5,910,154, respectively. 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 1 to the consolidated financial statements). Accordingly, the traditional measures of liquidity in terms of changes in working capital are not applicable. Net cash provided by operating activities exceeded net cash used in operating activities for the nine month period ended June 30, 1995, by $429,706 largely due to the net income from operations and a decrease in the document inventory, in addition to the non- cash depreciation charge. The decrease in the document inventory was due to increased sales and reduced purchasing of inventory. Deposits from customers decreased $126,276 during the nine month period ended June 30, 1995 due to the completion of September 1994 sales. The cash generated from operations was primarily used in financing activities to reduce the Company's bank line of credit and other notes and mortgage payable by $398,418 during the first nine months of fiscal 1995. The line of credit the Company has available from its bank is in the amount of $100,000 at an interest rate of 1.5% over the prime rate with a maturity date of July 15, 1996. Loans under the line are secured by the Company's inventory. As of June 30, 1995, there was no outstanding balance on this line of credit. The Company believes that by continuing to reduce its overhead and increasing revenues, 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 line 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 sales increased 87% for the three month period ended June 30, 1995 as compared to the three month period ended June 30, 1994 and sales increased 32% for the nine month period ended June 30, 1995 as compared to the period ended June 30, 1994. The Company ran a promotional campaign during November and December 1994 and another during May and June 1995, which accounted for approximately 12% of the current nine month period sales. The Company has elected to sell at auction material which has proven not to be popular in its galleries, lesser desirable material and material such as signed books which do not lend themselves to framing or exhibition, in addition to the Company's good marketable materials. Based on past auction results, the Company intends to offer better and more desirable materials in future auctions. Sales generated from auctions during the current nine month period amount to 10% of total sales. Sales to wholesale and/or major customers (i.e., individual customers whose purchases account for 10% or more of total document sales) amounted to approximately 12% of the nine month sales total for the period ended June 30, 1995 as compared to no major customer sales during the nine month period ended June 30, 1994. Cost of sales remained the same at 21% of sales for both three month periods ended June 30, 1995 and 1994. Cost of sales amounted to 25% of net sales for the nine month period ended June 30, 1995 as compared to 22% of net sales for the period ended June 30, 1994. This increase is largely due to sales at wholesale pricing realized in the auction sales during the current nine month period, which resulted in a cost of 29% of net sales. The resulting gross profit decreased to 75% of net sales for the nine months ended June 30, 1995 as compared to a gross profit of 78% of net sales for the nine months ended June 30, 1994. Operating expenses decreased 8% to 74% of net sales for the quarter ended June 30, 1995 from 152% of net sales for the quarter ended June 30, 1994. For the nine month period, operating expenses decreased 14% to 71% of net sales for 1995 compared to 109% of net sales for 1994. Approximately 50% of the nine month decrease was attributed to the closure of two galleries in fiscal 1994. Selling, general and administrative expense decreased 6% to 64% of net sales for the three month period ended June 30, 1995 from 128% of net sales for the three month period ended June 30, 1994. Comparing the quarters, insurance cost decreased 17% due to reduced document inventory, a reduction in travel expenses accounted for a 83% decrease and professional fees decreased 58%. For the nine month period in the current year, selling, general and administrative expenses decreased 10% to 61% of net sales as compared to 89% of net sales for the previous year expenses. The closing of the galleries in fiscal 1994 reduced these expenses approximately $90,000 or 73% of the decrease comparing the two nine month periods. General insurances decreased 23% comparing the nine month periods for the reason stated above. A reduction in travel expenses resulted in a decrease of 31% and reduced professional fees resulted in a decrease of 37% comparing the two nine month periods. Payroll and related benefits and taxes decreased 4% due to reduced personnel in the current nine month period. Expenses attributed to the headquarters building operation, part of which are allocated to selling, general and administrative expenses, decreased 17% comparing the two nine month periods primarily due to a change in janitorial services. Depreciation expense decreased 26% to 8% of net sales for the three month period ended June 30, 1995 from 19% of net sales for the three months ended June 30, 1994. For the nine month periods ended June 30, depreciation expense decreased 31% to 8% of net sales for 1995 as compared to 15% of net sales for 1994. Comparing the nine month periods, gallery closures accounted for 27% of this decrease and the remaining decrease can be attributed to a reduction of equipment sold in previous periods. Advertising expenses increased approximately $10,000 comparing the two nine month periods due to promotional campaigns the Company employed during November and December 1994 and again in May and June 1995. Repair expenses decreased 15% comparing the two quarter periods and 11% comparing the two nine month periods which was directly related to the gallery closures. Interest expense amounted to 10% of net sales for the three months ended June 30, 1995 as compared to 22% of net sales for the three months ended June 30, 1994. For the two nine month periods ended June 30, interest was 11% of net sales for 1995 as compared to 14% of net sales for 1994. The decrease in interest expense can be attributed to the lower average outstanding loan balances in the current period. Included in selling, general and administrative expenses is 50% of the operating cost to maintain the headquarters building. This percentage is the approximate percentage of leasable space of the building occupied by the Company's headquarters operation. The remaining building operating expenses plus the rental revenues realized are offset and included in other income and expense. This amounted to approximately $38,000 operating profit for the three month period ended June 30, 1995 as compared to approximately $24,000 operating profit for the three month period ended June 30, 1994. For the nine month period ended June 30, 1995, the operating profit was approximately $115,000 compared to approximately $72,000 operating profit for the nine months ended June 30, 1994. The increase is due to an increase in the square footage leased, increased rents and a reduction in operating expenses. A credit for income taxes was realized in the nine month period ended June 30, 1995 resulting from a federal income tax refund due to a carryback of last year's losses to a previous year's income. Part II - Other Information Item 1-5. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (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) August 2, 1995 /s Todd M. Axelrod Date _________________ ________________________________ Todd M. Axelrod President and Chairman of the Board (Principal Executive Officer) August 2, 1995 /s Rod Lynam Date _________________ _______________________________ Rod Lynam Treasurer and Director (Principal Accounting Officer) EX-27 2
5 THIS SCHEDULE SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S 6/30/95 CONSOLIDATED BALANCE SHEET AND ITS CONSOLIDATED STATEMENT OF OPERATIONS COVERING THE PERIOD 10/1/94 THROUGH 6/30/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS SEP-30-1995 JUN-30-1995 64533 0 0 0 9168704 92962595 3485762 2281068 11570025 629006 0 5918 0 0 8844615 11570025 1838200 1838200 460199 460199 1305969 0 195305 (4498) (69568) 65070 0 0 0 65070 .01 .01
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