-----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, NZH3XawOzlvWLHCr4l/Yw4LLVs/fCDsCsb5uZxr9SLvRGIfxW40RrVMXTfFhq+OW qgh9VzWYbdJNBudmp1b0Sg== 0000763730-96-000005.txt : 19960517 0000763730-96-000005.hdr.sgml : 19960517 ACCESSION NUMBER: 0000763730-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96564751 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3601 WEST SAHARA AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUSEUM OF HISTORICAL DOCUMENTS CHARTERED/NV/ DATE OF NAME CHANGE: 19900816 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO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 March 31, 1996 [ ] 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 May 1, 1996. Part 1 - FINANCIAL INFORMATION GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED ______________________________________________________________________
MARCH 31, SEPTEMBER 30, 1996 1995 ----------- ------------- ASSETS Cash $ 53,473 $ 171,295 Prepaid expenses 50,798 57,843 Documents owned 8,943,753 9,123,220 Land and building-net 1,507,285 1,530,278 Property and equipment-net 204,328 204,033 Other assets 465,678 460,359 __________ __________ TOTAL ASSETS $11,225,315 $11,547,028 ========== ========== LIABILITIES Accounts payable $ 82,045 $ 60,950 Notes payable 405,612 321,553 Indebtedness to related parties 70,027 105,929 Mortgage notes payable 1,896,977 1,918,216 Deposits 54,223 266,828 Accrued and other liabilities 148,909 129,129 __________ __________ TOTAL LIABILITIES $ 2,657,793 $ 2,802,605 ---------- ---------- STOCKHOLDERS' EQUITY Common stock: $.001 par value; authorized, 10,000,000 shares; issued and outstanding, 5,917,654 shares 5,918 5,918 Additional paid-in-capital 9,392,363 9,392,363 Accumulated deficit (830,759) (653,858) __________ __________ TOTAL STOCKHOLDERS' EQUITY $ 8,567,522 $ 8,744,423 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,225,315 $11,547,028 ========== ========== 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, 1996 1995 1996 1995 -------- -------- ---------- ---------- REVENUES $ 273,783 $ 565,191 $ 909,404 $1,258,626 COST OF REVENUES 72,056 150,061 242,967 335,740 -------- -------- --------- --------- GROSS PROFIT 201,727 415,130 666,437 922,886 -------- -------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 334,519 371,854 692,677 745,522 Depreciation 30,855 46,309 67,870 99,252 Advertising 1,371 1,908 11,083 10,864 Maintenance & repairs 7,089 9,050 13,879 18,657 Loss on gallery closure 201 -- 5,877 -- -------- -------- --------- --------- TOTAL OPERATING EXPENSES 374,035 429,121 791,386 874,295 -------- -------- --------- --------- OPERATING INCOME (LOSS) (172,308) (13,991) (124,949) 48,591 --------- -------- --------- --------- OTHER INCOME (EXPENSE) Interest expense (58,586) (66,121) (117,419) (134,802) Other 12,880 36,599 65,567 79,529 --------- -------- --------- --------- TOTAL OTHER INCOME (EXPENSE) (45,706) (29,522) (51,852) (55,273) --------- -------- --------- --------- LOSS BEFORE INCOME TAXES (218,014) (43,513) (176,801) (6,682) (PROVISION) CREDIT FOR INCOME TAXES -- 71,138 (100) 71,068 --------- -------- --------- --------- NET INCOME (LOSS) $(218,014) $ 27,625 $ (176,901) $ 64,386 ========= ======== ========= ========= EARNINGS (LOSS) PER SHARE: $(.04) $ -- $(.03) $ .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, 1996 1995 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $(176,901) $ 64,386 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation and amortization 97,984 122,664 Loss on disposal of property 3,436 -- (Increase) decrease in: Prepaid expenses 7,045 (1,164) Documents owned 179,467 218,561 Other assets (5,319) 15,897 (Decrease) increase in: Accounts payable 21,095 11,333 Customer deposits (212,605) (129,635) Accrued and other liabilities 19,780 37,192 -------- -------- Net cash provided by (used in) operating activities (66,018) 339,234 -------- -------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (78,722) (716) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank line of credit 35,000 125,000 Repayments of bank line of credit (35,000) (185,000) Proceed from notes payable 150,000 -- Repayments of mortgage and notes payable (123,082) (195,111) -------- -------- Net cash provided by (used in) financing activities 26,918 (255,111) -------- -------- NET INCREASE (DECREASE) IN CASH (117,822) 83,407 CASH, BEGINNING OF PERIOD 171,295 33,961 -------- -------- CASH, END OF PERIOD $ 53,473 $ 117,368 ======== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: For the six month period ended March 31, 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. 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, 1996 and 1995 _______________________________________________________________ 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 1995 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) 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 both three months ended March 31, 1996 and 1995 was 5,917,654. The average number of shares of outstanding common stock for each of the six months ended March 31, 1996 and 1995 was 5,917,654 and 5,917,118, 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 used for operating activities exceeded net cash provided by operating activities for the six month period ended March 31, 1996 by $66,018 largely due to the net loss from operations. The Company realized a decrease in its document inventory resulting from the reduced purchasing of inventory. Deposits from customers decreased during the six month period ended March 31, 1996 due to a reduction of deposits received and held for future auction sales. The Company supplemented its working capital with a $150,000 term loan obtained from its bank maturing March 1999 at an interest rate of 1.5% over the prime rate. 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, 1997. Loans under the line are secured by the Company's inventory. As of March 31, 1996, there was no outstanding balance on this line of credit. The Company closed its Dallas, Texas gallery December 26, 1995. The loss realized in the current period for the closure amounted to $5,877, which was primarily the write-off of leasehold improvements. The Company believes that the reduction of overhead expenses resulting from the gallery closures, 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 decreased 52% for the three month period and 28% for the six month ended March 31, 1996 as compared to the previous year periods. Comparing the six month period ended March 31, 1996 to that of 1995, retail sales decreased 40%. In this period, sales at the gallery locations decreased 27% and retail sales generated from the Company's headquarters location decreased 86%. Sales generated from auctions increased 47% during the current six month period which amounted to 29% of total sales compared to 14% of total sales in the six month period ended March 31, 1995. Cost of retail sales remained the same at 26% of net retail sales as did cost of auction sales at 29% of net auction sales for both six month periods ended March 31, 1996 and 1995. Total operating expenses decreased 13% for the quarter ended March 31, 1996 compared to the quarter ended March 31, 1995. Total expenses decreased 9% for the six month period ended March 31, 1996 compared to the six month period ended March 31, 1995. However, due to the decrease in sales, operating expenses increased to 87% of net sales in the six month period of 1996 compared to 69% of net sales in 1995. Selling, general and administrative expense decreased 10% comparing the quarter periods and decreased 7% comparing the six month periods. Comparing the quarters, salaries and related payroll taxes and benefits decreased 4%, and for the six month period these expenses decreased 6% due to the closing of galleries and a reduction of staff at the headquarters operation. Also related to the closing of galleries, travel expenses decreased 69% comparing the quarters and 56% comparing the six month periods; utilities decreased 38% comparing the quarters and 18% comparing the six month periods; and freight expenses decreased 38% for the quarter periods and 41% for the six month periods. Depreciation expense decreased 33% for the three month period ended March 31, 1996 compared to the three month period ended March 31, 1995. Comparing the six month periods, depreciation expenses decreased 32%. The decrease can be attributed to a reduction of furnishings and equipment largely due to the closure of galleries. Advertising expenses decreased 28% in the current quarter as compared to the previous year quarter, however, the expenses increased by 2% comparing the six month periods due to expanded promotional campaigns the Company employed. Repair expenses decreased 22% comparing the two quarter periods and 26% comparing the two six month periods that was directly related to the gallery closures. Interest expense decreased 11% for the three month period and 13% for the six month period ended March 31, 1996 compared to the previous year periods. The decrease in interest expense can be attributed to the reduced interest rates and lower average outstanding loan balances in the current periods. 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 $75,000 operating profit for the three month period ended March 31, 1996 as compared to approximately $40,000 operating profit for the three month period ended March 31, 1995. For the six month period, the operating profit amounted to $92,000 for 1996 compared to $77,000 for 1995. The increase is due to an increase in the square footage leased in addition to increased rents. Also included as an other expense in the current six month period is approximately $40,000 of inventory write down due to discovery of fraudulent signatures. 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) May 14, 1996 /s Todd M. Axelrod Date _________________ ________________________________ Todd M. Axelrod President and Chairman of the Board (Principal Executive Officer) May 14, 1996 /s Rod Lynam Date _________________ _______________________________ Rod Lynam Treasurer and Director (Principal Accounting Officer) EX-27 2
5 This schedule contains summary financial information extracted from the Company's Consolidated Balance Sheet dated March 31, 1996 and its Consolidated Statement of Operations covering the period from October 1, 1995 to March 31, 1996 and is qualified in its entirety by reference to such financial statement and notes thereof. 6-MOS SEP-30-1996 MAR-31-1996 53473 0 0 0 8943753 0 3332748 2201135 11225315 0 1896977 0 0 5918 7561604 11225315 909404 909404 242967 242967 791386 0 117419 (176801) 100 (176901) 0 0 0 (176901) (.03) (.03)
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