-----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, OtOL/23VqwOawcLBAkPyF0/0tpyNXTmukSvM82ELR/vNt9RgUyX09H7UUE6IkJWw 5enn8PPtTBPAPHi+j92Ydw== 0000763730-96-000009.txt : 19960805 0000763730-96-000009.hdr.sgml : 19960805 ACCESSION NUMBER: 0000763730-96-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 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: 96602713 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3601 WEST SAHARA AVENUE CITY: LAS VEGAS STATE: NV ZIP: 89102 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUSEUM OF HISTORICAL DOCUMENTS CHARTERED/NV/ DATE OF NAME CHANGE: 19900816 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO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, 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 August 1, 1996. Part 1 - FINANCIAL INFORMATION GALLERY OF HISTORY, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED ______________________________________________________________________
JUNE 30, SEPTEMBER 30, 1996 1995 ----------- ------------- ASSETS Cash $ 238,229 $ 171,295 Prepaid expenses 52,001 57,843 Accounts receivable 152,659 -- Documents owned 8,743,718 9,123,220 Land and building-net 1,495,788 1,530,278 Property and equipment-net 184,363 204,033 Other assets 415,878 460,359 __________ __________ TOTAL ASSETS $11,282,636 $11,547,028 LIABILITIES Accounts payable $ 64,755 $ 60,950 Notes payable 361,810 321,553 Indebtedness to related parties 69,356 105,929 Mortgage notes payable 1,885,996 1,918,216 Deposits 28,105 266,828 Accrued and other liabilities 101,899 129,129 __________ __________ TOTAL LIABILITIES $ 2,511,921 $ 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 (627,566) (653,858) __________ __________ TOTAL STOCKHOLDERS' EQUITY $ 8,770,715 $ 8,744,423 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,282,636 $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 NINE MONTHS ENDED JUNE 30, JUNE 30, 1996 1995 1996 1995 -------- -------- ---------- ---------- REVENUES $ 813,773 $ 579,573 $1,723,177 $1,838,200 COST OF REVENUES 248,476 124,458 491,443 460,199 -------- -------- --------- --------- GROSS PROFIT 565,297 455,115 1,231,734 1,378,001 -------- -------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 304,902 372,505 997,578 1,118,027 Depreciation 29,374 44,205 97,245 143,457 Advertising 3,901 6,839 14,984 17,703 Maintenance & repairs 6,625 8,125 20,504 26,782 Loss on gallery closure -- -- 5,877 -- -------- -------- --------- --------- TOTAL OPERATING EXPENSES 344,802 431,674 1,136,188 1,305,969 -------- -------- --------- --------- OPERATING INCOME 220,495 23,441 95,546 72,032 OTHER INCOME (EXPENSE) Interest expense (56,973) (60,503) (174,392) (195,305) Other 39,671 39,116 105,238 118,775 -------- -------- --------- --------- TOTAL OTHER INCOME (EXPENSE) (17,302) (21,387) (69,154) (76,530) -------- -------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES 203,193 2,054 26,392 (4,498) (PROVISION) CREDIT FOR INCOME TAXES -- (1,370) (100) 69,568 -------- -------- --------- -------- NET INCOME $ 203,193 $ 684 $ 26,292 $ 65,070 ======== ======== ========= ======== EARNINGS PER SHARE: $.03 $ -- $ -- $.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, 1996 1995 ________ ________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 26,292 $ 65,070 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation and amortization 142,407 178,574 Loss on disposal of property 3,436 -- (Increase) decrease in: Prepaid expenses 5,842 3,290 Accounts receivable (152,659) -- Documents owned 379,502 281,084 Other assets 44,481 22,277 (Decrease) increase in: Accounts payable 3,805 (16,372) Customer deposits (238,723) (126,276) Accrued and other liabilities (27,230) 22,059 -------- -------- Net cash provided by operating activities 187,153 429,706 -------- -------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (91,683) (716) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank line of credit 85,000 125,000 Repayments of bank line of credit (85,000) (185,000) Proceeds from notes payable 185,400 -- Repayments of mortgage and notes payable (213,936) (338,418) -------- -------- Net cash used in financing activities (28,536) (398,418) -------- -------- NET INCREASE IN CASH 66,934 30,572 CASH, BEGINNING OF PERIOD 171,295 33,961 -------- -------- CASH, END OF PERIOD $ 238,229 $ 64,533 ======== ======== 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. 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, 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 June 30, 1996 and 1995 was 5,917,654. The average number of shares of outstanding common stock for each of the nine months ended June 30, 1996 and 1995 was 5,917,654 and 5,917,297, 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 for operating activities for the nine month period ended June 30, 1996. An increase in accounts receivable resulted from auction sales that occurred in the second and third quarters of 1996. Deposits from customers decreased during the nine month period ended June 30, 1996 due to the elimination of deposits received and held for future auction sales. The Company realized a decrease in its document inventory resulting from an increase in sales in the current quarter and a reduction in purchasing of document inventory. 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 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 40% for the three month period ended June 30, 1996 compared to the three month period ended June 30, 1995. Comparing the two nine month periods, sales decreased in the current year by 6%. In the current nine month period, sales generated from auctions increased 337% compared to the nine month period ended June 30, 1995. Auction sales comprised 45% of total document sales in the nine month period ended June 30, 1996 compared to approximately 10% during the nine months ended June 30, 1995. The increase illustrates the Company's shift in marketing strategy to auction and wholesale sales in addition to its retail sales. Retail sales decreased 43% in the current nine month period ended June 30, 1996 compared to the nine month period ended June 30, 1995. Retail sales originating from a gallery that was discontinued in the current year amounted to 7% of total sales in the nine month period ended June 30, 1996 compared to that gallery generating 15% of total sales in 1995. Cost of goods sold for auction sales increased to 31% of auction sales for the nine month period ended June 30, 1996 as compared to 29% in 1995. This increase is directly related to the increased quantity of material sold at wholesale pricing. Cost of retail sales remained approximately the same at 26% of net retail sales for the nine month period ended June 30, 1996 as compared to 25% of net retail sales for the nine month period ended June 30, 1995. Total operating expenses decreased 20% for the quarter ended June 30, 1996 which was 42% of net sales as compared to the quarter ended June 30, 1995 which amounted to 74% of net sales. Total operating expenses decreased 13% for the nine month period ended June 30, 1996 or 66% of net sales as compared to the nine month period ended June 30, 1995 which was 71% of net sales. Selling, general and administrative expense decreased 18% comparing the quarter periods, from 64% of net sales in 1995 to 37% of net sales in 1996. The expenses decreased 11% comparing the nine month periods, from 61% of net sales in 1995 to 58% of net sales in 1996. Comparing the quarters, salaries and related payroll taxes and benefits decreased 17%, and for the nine month period these expenses decreased 9% due to the closing of galleries and a reduction of staff at the headquarters operation. Also related to the closing of galleries, rent expenses decreased 30% comparing the quarters and 23% comparing the nine month periods; utilities decreased 42% comparing the quarters and 26% comparing the nine month periods; and freight expenses decreased 31% for the quarter periods and 47% for the nine month periods. Depreciation expense decreased 34% for the three month period ended June 30, 1996 to 4% of net sales compared to the three month period ended June 30, 1995 which was at 8% of net sales. Comparing the nine month periods, depreciation expenses decreased 32%, from 6% of net sales for 1995 to 8% of net sales for 1996. The decrease can be attributed to a reduction of furnishings and equipment largely due to the closure of galleries. Advertising expenses decreased 43% in the current quarter as compared to the previous year quarter, and advertising decreased by 15% comparing the nine month periods. Repair expenses decreased 18% comparing the two quarter periods and 23% comparing the two nine month periods which decrease was directly related to the gallery closures. Interest expense decreased 6% for the three month period and 11% for the nine month period ended June 30, 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 $53,000 operating profit for the three month period ended June 30, 1996 as compared to approximately $38,000 operating profit for the three month period ended June 30, 1995. For the nine month period, the operating profit amounted to $145,000 for 1996 compared to $115,000 for 1995. The increase is due to an increase in the square footage leased in addition to increased rents. The Company has conducted a substantiative review of its inventory and has taken a $44,000 write down in its inventory value in the current nine month period recorded as other expense due to its discovery of non-authentic material. Part II - Other Information Item 1-3. None. Item 4. Submission of Matters to a Vote of Security Holders. On June 24, 1996, the Company held its annual meeting of shareholders for the following purposes: (1) to elect five Directors to serve until the next annual meeting of shareholders; and (2) to approve the appointment of Arthur Andersen LLP, as the Company's independent auditors for the fiscal year ending September 30, 1996. At the Meeting the following Directors were elected by a vote of 5,892,868 for and 1,452 withholding authority: Todd M. Axelrod, Rod Lynam, Marc DuCharme, H. Stan Johnson and Pamela Axelrod. Voting for the appointment of Arthur Andersen LLP, as the Company's independent auditors, 5,893,901 shares were in favor and 350 shares against. Item 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 1, 1996 /s Todd M. Axelrod Date _________________ ________________________________ Todd M. Axelrod President and Chairman of the Board (Principal Executive Officer) August 1, 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 June 30, 1996 and its Consolidated Statement of Operations covering the period from October 1, 1995 to June 30, 1996 and is qualified in its entirety by reference to such financial statement and notes thereof. 9-MOS SEP-30-1996 JUN-30-1996 238229 0 152659 0 8743718 0 3345710 2245558 11282636 0 1885996 0 0 5918 8764797 11282636 1723177 1723177 491443 491443 1136188 0 174392 26392 100 26292 0 0 0 26292 0 0
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