SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period ________ to ________
Commission file number 1-11988
GREG MANNING AUCTIONS, INC.
(Exact name of Small Business Issuer as specified in its Charter)
NEW YORK 22-2365834
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
775 Passaic Avenue
West Caldwell, New Jersey 07006
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (973) 882-0004
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to filing requirements for the past 90
days. Yes X No _____
As of April 29,1998, Issuer had 4,419,997 shares of its Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one):Yes _____ No X .
<PAGE>
GREG MANNING AUCTIONS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Table of Contents Page Number
Consolidated Balance Sheet - March 31, 1998 (Unaudited) 3
Consolidated Statements of Operations and Retained Earnings - 4
Three months ended March 31, 1997 and 1998 (Unaudited)
Nine months ended March 31, 1997 and 1998 (Unaudited)
Consolidated Statements of Cash Flows - 5
Nine months ended March 31, 1997 and 1998 (Unaudited)
Notes to Consolidated Financial Statements 6
as of March 31, 1998
Item 2. Management's Discussion and Analysis 10
<PAGE>
<TABLE>
<CAPTION>
GREG MANNING AUCTIONS, INC.
Consolidated Balance Sheet
March 31, 1998
(UNAUDITED)
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 435,923
Accounts receivable
Auctions receivable 5,894,956
Advances to consignors 1,749,982
Notes receivable - current portion 200,000
Inventory 3,076,163
Income Taxes Receivable 560,462
Due from affiliate - CRM 183,052
Deferred tax asset 253,400
Prepaid expenses and deposits 105,156
----------
Total current assets 12,459,094
Property and equipment, net 603,775
Goodwill 1,743,835
Marketable securities 592,150
Notes receivable - long-term portion 241,096
Other assets 354,895
---------
Total assets $15,994,845
==========
Liabilities and Stockholders' Equity
Current liabilities:
Demand notes payable $4,335,000
Notes payable - current portion 654,265
Payable to third party consignors 2,766,592
Accounts payable 259,469
Accrued expenses 708,851
---------
Current liabilities 8,724,177
Notes payable - long-term portion 168,246
----------
Total liabilities 8,892,423
----------
Commitments and Contingencies
-
Preferred stock, $.01 par value. Authorized
10,000,000 shares; none issued
Common stock, $.01 par value. Authorized
20,000,000 shares; 4,419,997 issued and outstanding 44,200
Additional paid in capital 6,819,686
Unrealized gain on marketable securities 163,550
Retained earnings 74,983
----------
Total stockholders' equity 7,102,422
----------
Total liabilities and stockholders' equity $15,994,845
==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
GREG MANNING AUCTIONS, INC.
Consolidated Statements of Operations
(UNAUDITED)
Three months ended Nine months ended
March 31, March 31,
------------------------------ ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating revenues
Sales of merchandise $ 2,342,674 $ 3,548,074 $ 4,946,870 $ 7,621,560
Commissions earned 623,756 763,931 1,527,701 1,977,765
-------------- -------------- -------------- --------------
2,966,430 4,312,005 6,474,571 9,599,325
-------------- -------------- -------------- --------------
Operating expenses
Cost of merchandise sold 1,586,504 2,350,769 3,786,402 4,907,016
General and administrative 1,014,037 1,163,029 3,321,986 3,150,226
Marketing 100,602 166,216 423,025 478,557
-------------- -------------- -------------- --------------
2,701,143 3,680,014 7,531,413 8,535,799
-------------- -------------- -------------- --------------
Operating profit (loss) 265,287 631,991 (1,056,842) 1,063,526
Other income (expense)
Interest and other income 74,283 224,280 263,267 557,029
Interest expense (115,242) (217,002) (468,689) (618,062)
-------------- -------------- -------------- --------------
Income (loss) before income taxes 224,328 639,269 (1,262,264) 1,002,493
Provision (benefit) for income taxes 126,234 257,108 (452,375) 433,997
-------------- -------------- -------------- --------------
Net income (loss) 98,094 382,161 (809,889) 568,496
Retained earnings, beginning of period (23,111) 228,437 884,872 224,268
-------------- -------------- -------------- --------------
Retained earnings, end of period 74,893 610,598 74,983 792,764
============== ============== ============== ==============
Basic Earnings (Loss) per share:
Weighted average shares outstanding 4,419,997 4,419,997 4,419,997 4,419,997
Basic Earnings (Loss) per share $ 0.02 $ 0.09 $ (0.18) $ 0.13
============== ============== ============== ==============
Diluted Earnings (Loss) per share:
Weighted average shares outstanding 4,419,997 4,419,997 4,419,997 4,419,997
Diluted Earnings (Loss) per share $ 0.02 $ 0.09 $ (0.18) $ 0.13
============== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
GREG MANNING AUCTIONS, INC.
Consolidated Statements of Cash Flows
(UNAUDITED)
Nine months ended
March 31,
-------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (809,889) $ 568,497
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 280,369 258,213
Provision for bad debts 153,750 68,354
Changes in assets (increase) decrease:
Auctions receivable 4,781,209 976,393
Advances to consignors 3,957,315 (2,125,483)
Notes and other receivables 161,387 299,970
Inventories 822,088 (169,177)
Due from affiliate - CRM (12,165) (7,171)
Income taxes receivable (560,462) 34,345
Prepaid expenses 31,359 104,620
Other assets 2,380 10,000
Changes in liabilities (decrease) increase
Payable to third-party consignors (5,409,349) (1,002,087)
Accounts payable (1,337,379) 167,759
Accrued expenses and other liabilities 295,989 (5,953)
Income taxes payable (121,786) 69,489
--------------- --------------
2,234,816 (752,231)
--------------- --------------
Cash flows from investing activities:
Capital expenditures for property and equipment (58,778) (103,988)
Additional goodwill (46,328) (43,705)
--------------- --------------
(105,106) (147,693)
--------------- --------------
Cash flows from financing activities:
Proceeds from (repayment of) notes payable 243,000 1,440,000
Repayment of loans payable (2,572,008) (738,137)
Net proceeds from issuance of stock - (27,580)
--------------- --------------
(2,329,008) 674,283
--------------- --------------
Net decrease in cash and cash equivalents (199,298) (225,641)
Cash and cash equivalents at beginning of period 635,221 558,506
=============== ==============
Cash and cash equivalents at end of period $ 435,923 $ 332,865
=============== ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
(1) Organization, Business and Basis of Presentation
Greg Manning Auctions, Inc., together with its wholly owned
subsidiaries Ivy & Mader Philatelic Auctions, Inc. and Greg Manning Galleries,
Inc. (collectively, the Company), is a public auctioneer of collectibles
including rare stamps, stamp collections and stocks, and regularly conducts rare
stamp auctions bringing together purchasers and sellers located throughout the
world. The Company accepts property for sale at auctions from sellers on a
consignment basis, and earns a commission on the sale. In addition to stamps,
the other collectibles auctioned by the Company include trading cards and sports
memorabilia and other collectibles such as antiquities. The Company also sells
collectibles by private treaty for a commission, and sells its own inventory at
auction, wholesale and retail.
In July, 1997, the Company acquired the assets of Cee Jay Auctions,
Inc., whose operating results are included in Greg Manning Galleries, Inc. The
purchase price for the acquisition is not considered material.
The accompanying consolidated balance sheet as of March 31, 1998 and
related consolidated statements of operations and retained earnings for the
three and nine months ended March 31, 1997 and 1998 and consolidated statements
of Cash Flows for the nine month periods then ended, have been prepared from the
books and records maintained by the Company, in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation SB. Accordingly, they
do not include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, which are of a normal recurring nature, considered
necessary for a fair presentation have been included. For further information,
refer to the consolidated financial statements and disclosures thereto in the
Company's Form 10-KSB for the year ended June 30, 1997 filed with the Securities
and Exchange Commission.
(2) Summary of Certain Significant Accounting Policies
Revenue Recognition
Revenue is recognized by the Company when the rare stamps and
collectibles are sold and is represented by a commission received from the buyer
and seller. Auction commissions represent a percentage of the hammer price at
auction sales as paid by the buyer and the seller.
In addition to auction sales. the Company also sells via private
treaty. This occurs when an owner of property arranges with the Company to sell
such property to a third party at a privately negotiated price. In such a
transaction, the owner may set selling price parameters for the Company, or the
Company may solicit selling prices for the owner, and the owner may reserve the
right to reject any selling price. In certain transactions, the Company may be
requested to guarantee a fixed price to the owner, which would be payable
regardless of the actual sales price ultimately received. The Company recognizes
as private treaty revenue an amount equal to a percentage of the sales price, or
in the case of a guaranteed fixed price, the difference between the actual sales
price and the guaranteed fixed price when the properties are sold.
<PAGE>
The Company also sells its own inventory at auction, wholesale and
retail. Revenue with respect to inventory at auction is recognized when sold and
for wholesale or retail sales, revenue is recognized when delivered or released
to the customer or to a common carrier for delivery.
The Company does not provide any guarantee with respect to the
authenticity of property offered for sale at auction. Each lot is sold as
genuine and as described by the Company in the catalog. However, when, in the
opinion of a competent authority mutually acceptable to the Company and the
purchaser, a lot is declared otherwise, the purchase price will be refunded in
full if the lot is returned to the Company within a specified period. In such
event, the Company will return such lot to the consignor before a settlement
payment has been made to such consignor for such lot. To date, returns have not
been material. Large collections are generally sold on an "as is" basis.
Principles of Consolidation
The consolidated financial statements of the Company include the
accounts of its wholly owned subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
Business Segment
The company operates in one segment, the auctioning or private treaty
sale of rare stamps and other collectibles. Set forth below is a table of
aggregate sales of the Company, subdivided by source and market:
<TABLE>
<CAPTION>
For the nine months ended
March 31, Percentages
------------------------------------- -----------------------------
1998 1997 1998 1997
------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Aggregate Sales $ 13,367,911 $19,009,079 100% 100%
===================================== =============================
By source:
A. Auction $ 8,421,040 $11,387,520 63% 60%
B. Sales of inventory 4,946,871 7,621,559 37% 40%
------------------------------------- -----------------------------
By market:
A. Philatelics $ 12,774,219 $15,990,538 91% 84%
B. Sports collectibles 443,951 854,376 3% 5%
C. Other collectibles 149,741 2,164,165 1% 11%
------------------------------------- -----------------------------
</TABLE>
Goodwill
Goodwill primarily includes the excess purchase price paid over the
fair value of the net assets acquired. Goodwill is being amortized on a
straight-line basis over twenty to twenty five years. Total accumulated
amortization at March 31, 1998 was $ 323,073. The recoverability of goodwill is
evaluated at each year end balance sheet date as events or circumstances
indicate a possible inability to recover their carrying amount. This evaluation
is based on historical and projected results of operations and gross cash flows
for the underlying businesses.
Investments
The Company accounts for marketable securities pursuant to the
Statement of Financial Accounting Standards No. 115, Accounting for Certain
<PAGE>
Investments in Debt and Equity Securities. Under this statement, the Company's
marketable securities with a readily determinable fair value have been
classified as available for sale and are carried at fair value with an
offsetting adjustment to Stockholders' Equity. Net unrealized gains and losses
on marketable securities are credited or charged to a separate component of
Stockholders' Equity.
Earnings (loss) per common and common equivalent share
The Company has adopted Statement of Financial Accounting Standards No.
128 ("SFAS 128"), "Earnings Per Share". In accordance with SFAS 128, primary
earnings per share have been replaced with basic earnings per share, and fully
diluted earnings per share have been replaced with diluted earnings per share
which includes potentially dilutive securities such as outstanding options and
convertible securities. Prior periods have been presented to conform with SFAS
128.
Basic earnings per share is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding during the period increased to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued. The dilutive effect of the outstanding options is
reflected in diluted earnings per share by application of the treasury stock
method. The dilutive effect of convertible securities is reflected using the
if-converted method. The following table sets forth the computation of basic and
diluted earnings per share.
<TABLE>
<CAPTION>
For the three months For the nine months ended
ended March 31, March 31,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ 382,161 $ 98,094 $ 568,496 $ (809,889)
Denominator:
Denominator for basic earnings (loss) per share -
weighted average shares outstanding 4,419,997 4,419,997 4,419,997 4,419,997
Effect of Dilutive Securities:
Dilutive options outstanding - - - -
Denominator for diluted earnings per share -
adjusted weighted average shares and assumed 4,419,997 4,419,997 4,419,997 4,419,997
conversions
Basic Earnings (loss) per share $ 0.09 $ 0.02 $ 0.13 $ (0.18)
Diluted Earnings (loss) per share $ 0.09 $ 0.02 $ 0.13 $ (0.18)
</TABLE>
(3) Inventories
Inventories as of March 31, 1998 consisted of the following:
Stamps $ 1,420,300
Sports cards and sports memorabilia 521,305
Other collectibles 1,134,558
----------
$3,076,163
<PAGE>
(4) Marketable Securities
As of March 31, 1998, the Company owned 11.4% or 4,112,289 common
shares of PICK Communications, which is primarily engaged in the business of
selling blocks of telephone time. These securities are classified as available
for sale having a cost of $215,200 and a fair value of approximately $500,000
resulting in a cumulative unrealized gain of $284,800. The Company also owned
100,000 shares of Pro Net Link Corp., an Internet service company. These
securities are classified as available for sale having a cost of $200,000 and a
fair value of approximately $78,750 resulting in a cumulative unrealized loss of
$121,250.
(5) Related-party Transactions
The Company accepts rare stamps and other collectibles for sale at
auction on a consignment basis from Collectibles Realty Management, Inc.,
("CRM") which owned approximately 29%, as of March 31, 1998, of the Company's
common stock. Such stamps and collectibles have been auctioned by the Company or
sold at private treaty under substantially the same terms as for third party
customers and the Company charges CRM a seller's commission for items valued at
under $100,000 per lot. In the case of auction, the hammer price of the sale,
less any seller's commission, is paid to CRM upon successful auction, and in the
case of private treaty, the net price after selling commissions is paid to CRM.
For the nine months ended March 31, 1998, such auction and private treaty sales
were not material.
Scott Rosenblum, a director of the Company, is a partner of the law
firm Kramer, Levin, Naftalis & Frankel, which provides legal services to the
Company. Anthony L. Bongiovanni, Jr., also a director of the Company, is
president of Micro Strategies, Inc., which provides computer services to the
Company. Amounts charged to operations for services rendered by these firms for
the nine months ended March 31, 1997 and 1998 were approximately $ 132,581 and $
120,264 respectively, in the case of Kramer, Levin, Naftalis & Frankel, and
approximately $ 104,598 and $ 56,300 respectively, in the case of Micro
Strategies, Inc.
(6) Debt
The Company is party to secured revolving credit and term loan facility
with Brown Brothers Harriman & Co. ("BBH&Co."). At March 31, 1998, borrowing
under the revolving credit facility and term loan totaled $ 4,335,000 and $
181,250 respectively. Absent a material adverse change or event of default as
determined by BBH&Co., BBH&Co. has agreed to provide of the revolving credit
loan, the Company with a 120-day notification period prior to issuing a demand
for repayment, so long as the Company is in compliance with certain financial
and operating guidelines. As of March 31, 1998, the Company was not in
compliance with one covenant of the loan agreement relating to the formula of
earnings before interest, depreciation and taxes to interest expense. As a
result, BBH & Co. has the right under the credit agreement to demand immediate
payment of all amounts outstanding. The Company has remained in compliance with
all other covenants of the loan agreement and BBH & Co. has continued to offer
its credit facilities to the Company without interruption. Management has worked
closely with BBH & Co. and BBH & Co. has not indicated that it has any present
plans to discontinue its credit relationship with the Company and that it will
give ample notice to the Company if it decides to do so. During the third
quarter, BBH & Co. granted the Company two separate demand loans totaling $
243,000, both of which are payable on July 31, 1998.
<PAGE>
(7) Supplementary Cash Flow Information
Following is a summary of supplementary cash flow information:
<TABLE>
<CAPTION>
For the nine months ended March 31,
1997 1998
----------------- ------------------
<S> <C> <C>
Interest paid $ 591,733 $ 583,689
Income taxes paid 274,603 176,901
Noncash investing and financing activities:
Acquisition of inventory under note payable 700,000
</TABLE>
(8) Significant transactions
During the year ended June 30, 1997, two customers in three separate
transactions purchased certain inventory for an aggregate selling price of
$6,600,000, which increased operating profit by $2,241,500. Included in accounts
receivable at March 31, 1998, is $ 1,000,000 from one customer, collateralized
by certain assets.
During the year ended June 30, 1996, an individual and related entities
purchased certain inventory for $2,935,000, which increased operating profit by
$1,110,000. Included in notes receivable at March 31, 1998 is $ 441,000,
collateralized by certain assets.
In the foregoing transactions, the Company has physical possession of
the collateral, and has the right to sell such assets upon certain defined
circumstances of default.
It is reasonably possible that changes in this volatile and competitive
industry could occur in the near term which could adversely affect the value of
the collateral outlined above.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
General
The Company's revenues are represented by the sum of (a) the proceeds
from the sale of the Company's inventory, and (b) the portion of sale proceeds
from auction or private treaty that the Company is entitled to retain after
remitting the sellers' share, consisting primarily of commissions paid by
sellers and buyers. Generally, the Company earns a commission from the seller of
10% to 15% (although the commission may be slightly lower on high value
properties). During the nine month period ended March 31, 1998, the Company
earned a commission of 10% TO 15% from the buyers in all markets.
The Company's operating expenses consist of the cost of sales of the
Company's inventory and general and administrative expenses and marketing
<PAGE>
expenses for the nine months ended March 31, 1997 and 1998. General and
administrative expenses are incurred to pay employees and to provide support and
services to those employees, including the physical facilities and data
processing. Marketing expenses are incurred to promote the services of the
Company to sellers and buyers of collectibles through advertising and public
relations, producing and distributing its auction catalogs and conducting
auctions.
Three months ended March 31, 1998 Compared with the three months ended March 31,
1997
The Company recorded a decrease in revenues of $ 1,345,575 (31%), from
$4,312,005 for the three months ended March 31, 1997 to $ 2,966,430 for the
three months ended March 31, 1998. This decrease was attributable to a decrease
in non-stamp sales of $ 2,100,426 (100%)which was partly offset by an increase
of $ 978,294 (84%) in stamp auction sales.
While gross margins on the sales of the Company's inventory decreased
by $ 441,135 (37%) in the three months ended March 31, 1998 compared to the
three months ended March 31, 1997, gross margins on stamp auctions increased
from $ 202,209 to $ 641,035 (217%) and gross profit margins on these sales
increased from 17.4% to 31.3%.
The Company's operating expenses decreased $214,606 (16%) to $
1,114,639 for the three months ended March 31, 1998 as compared to the same
period last year. Most of the savings were the result of lower payroll expenses
together with reductions in bank loan fees and accounting fees. These costs
resulted in operating costs of 37% of operating revenues for the three months
ended March 31, 1998 compared to 31% for the comparable period in the prior
year.
Interest and other income decreased by $ 149,997 in the quarter ended
March 31, 1998 compared to the prior year's comparable quarter primarily as a
result of reduced accounts and advances receivable.
Interest expense decreased by $ 101,760 in the three months ended March
31, 1998 compared to the three months ended March 31, 1997 primarily as a result
of the lower average daily borrowings for the comparable period. The borrowings
under the Company's secured revolving credit facility are utilized to support
the operations of the Company, including the advances to consignors, auctions
receivables and merchandise inventories.
Net Income: The Company recorded net income before income taxes of $
224,328 for the three months ended March 31, 1998 compared to net income
before income taxes of $639,269 for the three months ended March 31, 1997.
This change was primarily due to decreased sales which were partly offset by
decreased costs as outlined above.
Nine months ended March 31, 1998 Compared with the nine months ended March 31,
1997
The Company had a decrease in revenue of $ 3,124,754 (32%) to $
6,474,571 for the nine months ended March 31, 1998 as compared to the comparable
period ended March 31,1997. This decrease was due to decreases from the sale
of the Company's inventories by $2,674,690 (35%) and commissions earned from
consignments of $450,064 (23%) for the nine months ended March 31, 1998 compared
to the prior year's comparable period. The primary reason for these decreases
<PAGE>
were the failure of Ivy & Mader to hold an auction during the second quarter of
1998 because of a lack of material available for auction.
Gross margin percentages on the sales of the Company's inventories
decreased from 36% to 23% for the nine months ended March 31, 1998 as compared
the nine months ended March 31, 1997. This decrease in gross margin percentages
was primarily the result of a decrease in non-stamp sales during the third
quarter 1998 as compared to the third quarter 1997. These sales traditionally
have significantly higher gross profit margins than regular sales (43% vs. 33%).
The Company recorded an increase in operating expenses of $ 116,228
(3%) for the nine months ended March 31, 1998 compared to the nine months ended
March 31, 1997. This net increase was primarily attributable to increased bad
debt expense of $88,750, increased depreciation and amortization of $20,264 and
increased General & Administrative expense of $65,147, partly offset by
decreased marketing expense of $55,732.
Interest expense decreased by approximately $ 149,373 in the nine
months ended March 31, 1998 compared to the nine months ended March 31, 1997.
This decrease was primarily attributable to lower average borrowings during the
period. This was offset by a decrease in interest income of approximately $
149,997 for the nine months ended March 31, 1998 as compared to the comparable
period of the prior year primarily earned on trade receivables and advances to
consignors.
Net Income: The Company recorded a net loss before income taxes of
$1,262,264 for the nine months ended March 31, 1998 compared to net income
before income taxes of $1,002,493 for the nine months ended March 31, 1997.
This change was primarily due to a decrease in operating profits of
approximately $2,120,368 as outlined above.
<PAGE>
Liquidity and Capital Resources
At March 31, 1998, the Company's working capital position was $
3,566,671, compared to $4,645,765 as of June 30, 1997. This decrease of $
1,079,094 is primarily due to decreases in inventories purchased for future
auctions ($822,088), advances to consignors ($3,957,315) and a decrease in
auctions receivable ($4,781,209). These decreases to working capital were offset
by decreases in consignor payables ($5,409,349), accounts payable ($1,337,379)
and the demand notes payable ($2,499,102). These items were the material cause
of the positive cash flow from operating activities of $2,234,816.
The Company experienced a decrease in cash flow from investing
activities for the nine months ended March 31, 1998 of $ 105,106 This was
attributable to the purchase of equipment of $ 58,788 and additional goodwill
related to the purchase of Ivy and Mader, in the amount of $ 46,328.
The Company experienced a decrease in cash flow from financing
activities for the nine months ended March 31, 1998 of $ 2,329,008. This was
primarily attributable to the Company repaying notes and loans payable of
$2,572,007. This was partially offset by the receipt of new term loans of
approximately $243,000 during this period.
The Company's need for liquidity and working capital is expected to
increase as a result of any proposed business expansion activities. In addition
to the need for such capital, and to enhance the Company's ability to offer cash
advances to a larger number of potential consignors of property (which
management believes is an important aspect of the marketing of an auction
business). In addition, the Company will likely require additional working
capital in the future in order to further expand its sports trading card and
sports memorabilia auction business as well as to acquire collectibles for sale
in the Company's business.
Management believes that the Company's cash flow from ongoing
operations supplemented by the Company's working capital credit facilities will
be adequate to fund the Company's working capital requirements for the next 12
months. However, to complete any of the Company's proposed expansion activities
or to make any significant acquisitions, the Company may consider exploring
financing alternatives including increasing its working capital credit
facilities or raising additional debt or equity capital.
The decision to expand, the desired rate of expansion, and the areas of
expansion will be determined by management and the Board of Directors only after
careful consideration of all relevant factors. This will include the Company's
financial resources and working capital needs, and the necessity of continuing
its growth and position in its core business area of stamp auctions.
<PAGE>
GREG MANNING AUCTIONS, INC.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-k.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-k
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
GREG MANNING AUCTIONS, INC.
Dated: April 30,1998
/s/ Greg Manning
Greg Manning
Chairman and Chief Executive Officer
/s/ James Smith
James Smith
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- -------- ------------------------------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000895516
<NAME> GREG MANNING AUCTIONS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 435923
<SECURITIES> 592150
<RECEIVABLES> 6229956
<ALLOWANCES> (396750)
<INVENTORY> 3076163
<CURRENT-ASSETS> 12459094
<PP&E> 1420971
<DEPRECIATION> (817196)
<TOTAL-ASSETS> 15994845
<CURRENT-LIABILITIES> 8724177
<BONDS> 0
0
0
<COMMON> 44200
<OTHER-SE> 7058222
<TOTAL-LIABILITY-AND-EQUITY> 15994845
<SALES> 4946870
<TOTAL-REVENUES> 6474571
<CGS> 3786402
<TOTAL-COSTS> 3745011
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 153750
<INTEREST-EXPENSE> 468689
<INCOME-PRETAX> (1262264)
<INCOME-TAX> (452375)
<INCOME-CONTINUING> (809889)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (809889)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
