SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
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 office (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 November 8, 1999, Issuer had 6,860,245 shares of its Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one): Yes ___X___ No .
<PAGE>
GREG MANNING AUCTIONS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Table of Contents Page Number
Consolidated Balance Sheet - September 30, 1999 (Unaudited) 3
Consolidated Statements of Operations and Retained Earnings - 4
Three months ended September 30, 1998 and 1999 (Unaudited)
Consolidated Statements of Cash Flows - 5
Three months ended September 30, 1998 and 1999 (Unaudited)
Consolidated Statement of Comprehensive Income 6
Three months ended September 30, 1998 and 1999 (Unaudited)
Notes to Consolidated Financial Statements 7
as of September 30, 1999
Item 2. Management's Discussion and Analysis 11
<PAGE>
GREG MANNING AUCTIONS, INC.
Consolidated Balance Sheet
September 30, 1999
Assets
Current Assets
Cash and cash equivalents $348,046
Accounts receivable
Auctions receivable 6,724,814
Auctions receivable-related party 850,000
Advances to consignors 3,427,233
Inventory 6,627,510
Deferred tax asset 746,788
Prepaid expenses and deposits 379,172
---------------------
Total current assets 19,103,563
Property and equipment, net 781,041
Goodwill 4,445,038
Customer Lists 331,667
Trademarks 2,862,500
Investment in Joint Venture 382,409
Other non-current assets
Deferred Tax Asset 823,000
Inventory 900,000
Advances to consignors 713,612
Other 405,882
---------------------
Total assets $30,748,712
=====================
Liabilities and Stockholders' Equity
Current liabilities:
Demand notes payable $3,662,000
Notes payable 2,156,869
Payable to third party consignors 2,843,463
Accounts payable 989,394
Accrued expenses 1,593,013
---------------------
Total current liabilities 11,244,739
Notes payable - long term 678,496
---------------------
Total liabilities 11,923,235
---------------------
Preferred stock, $.01 par value. Authorized
10,000,000 shares; none issued. 0
Common stock, $.01 par value. Authorized
20,000,000 shares; 6,822,745 issued 68,228
Additional paid in capital 18,000,279
Retained earnings 756,970
---------------------
Total stockholders' equity 18,825,477
=====================
Total liabilities and stockholders' equity $30,748,712
=====================
See accompanying notes to financial statements
<PAGE>
GREG MANNING AUCTIONS, INC.
Consoldiated Statements of Operations
Three Months Ended September 30,
------------------------------------
1998 1999
------------------- ----------------
Operating Revenues
Sales of merchandise $ 996,629 $ 2,378,389
Commissions earned 601,449 1,264,106
------------------- ----------------
1,598,078 3,642,495
Operating Expenses
Cost of merchandise sold 722,166 1,858,199
General and administrative 859,771 2,153,793
Marketing 132,218 523,928
------------------- ----------------
Operating loss (116,077) (893,425)
Other income (expense)
Gain on sale of marketable securities 556,817 14,494
Interest income 96,642 224,286
Interest expense (102,690) (170,832)
Loss from operations of joint venture (59,313)
------------------- ----------------
Income (loss) before income taxes 434,692 (884,790)
Provision for (benefit from) income taxes 225,071 (407,786)
------------------- ----------------
Net Income (loss) $ 209,621 $ (477,004)
=================== ================
Basic Earnings (loss) per share
Weighted average shares outstanding 4,419,997 6,781,941
=================== ================
Basic Earnings (loss) per share $ 0.05 $ (0.07)
=================== ================
Diluted Earnings (loss) per share
Weighted average shares outstanding 4,796,528 6,781,941
=================== ================
Basic Earnings (loss) per share $ 0.04 $ (0.07)
=================== ================
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
GREG MANNING AUCTIONS, INC.
Consolidated Statement of Stockholders' Equity
Three months ended September 30, 1999
Common Stock
---------------------------- Additional Total
Number of Par Paid-in Retained Stockholders'
Shares Value Capital Earnings Equity
------------- ------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1999 6,495,622 $ 67,810 $ 17,862,548 $ 1,233,974 $19,164,332
Options Exercised 41,750 418 86,481 86,899
Income Tax Benefit from
Exercise of stock options 51,250 51,250
Shares issued * 285,373 -
Net loss September 30, 1999 (447,004) (447,004)
------------- ------------- --------------- ------------- -----------------
Balance September 30, 1999 6,822,745 $ 68,228 $ 18,000,279 $ 756,970 $18,825,477
============= ============= =============== ============= =================
</TABLE>
See accompanying notes to financial statements
* See Note 6
<PAGE>
<TABLE>
<CAPTION>
GREG MANNING AUCTIONS, INC.
Consolidated Statements of Cash Flows
Three Months Ended September 30,
1998 1999
------------------ -------------------
<S> <C> <C>
Cash flows from operating activities :
Net Income (loss) $ 209,621 $ (477,003)
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 90,655 293,421
Gain on sale of marketable securities (556,817) (14,494)
Deferred tax expense (benefit) - (407,786)
Equity in earnings of investment in joint venture 59,313
(Increase) decrease in assets:
Auctions receivable 2,413,724 (165,214)
Advances to consignors 635,277 (389,757)
Inventory (378,360) (451,382)
Prepaid expenses and deposits 25,122 68,631
Other assets (246,060) (12,866)
Increase (decrease) in liabilities:
Payable to third-party consignors (2,333,433) (437,921)
Accounts payable (20,542) (846,122)
Accrued expenses and other liabilities (219,401) (166,116)
Income taxes payable 225,071 -
------------------ -------------------
(155,143) (2,947,296)
Cash flows from investing activities:
Capital expenditures for property and equipment (30,126) (177,657)
Additional goodwill (18,296)
Investment in joint venture - (19,360)
Proceeds from sale of marketable securities 621,439 15,649
------------------ -------------------
573,017 (181,368)
Cash flows from financing activities:
Net proceeds from (repayment of) demand notes payable 57,000 (40,000)
Repayment of loans payable (147,070) 16,181
Repayment of term notes payable (738,000)
Proceeds from stock subscription receivable - 3,000,000
Proceeds from exercise of options - 86,897
------------------ -------------------
(828,070) 3,063,078
Net change in cash and cash equivalents (410,196) (65,586)
Cash and cash equivalents at beginning of period 603,628 413,633
------------------ -------------------
Cash and cash equivalents at end of period $ 193,432 $ 348,046
================== ===================
</TABLE>
See accompanying notes to financial statements
<PAGE>
GREG MANNING AUCTIONS, INC.
Statements of Comprehensive Income
Three months ended September 30,
1998 1999
--------------------------------------
Net Income (loss) $ 209,621 $ ( 477,004)
Other comprehensive income (loss)
Unrealized gains on securities 296,534 -
Less:
reclassification adjustment for gains
included in net income (334,090) -
======================================
Comprehensive income (loss) $ 172,065 $ ( 447,004)
======================================
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. Greg Manning Galleries, Inc.,
and Teletrade, Inc. (collectively, the "Company"), is a public auctioneer of
collectibles including rare stamps, stamp collections and stocks, sports trading
cards and memorabilia, movie posters, fine art, rare coins, diamonds, comic
books, Hollywood and Rock and Roll memorabilia. The Company conducts both live
auctions and auctions via the Internet, 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. The
Company also sells collectibles by private treaty for a commission, and sells
its own inventory at auction, wholesale and retail.
The accompanying consolidated balance sheet as of September 30, 1999
and related consolidated statements of operations, stockholders' Eequity, cash
flows and comprehensive income for the three 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,
1999 filed with the Securities and Exchange Commission.
In July 1999, the Company and Afinsa Bienes Tangibles, S.A. ("Afinsa"),
a 16% shareholder of the Company, formed a joint venture known as
GMAI-EUROPE.COM to conduct Internet auction and retail sales in Europe through a
newly established Madrid, Spain office. A definitive agreement is currently
being prepared. The Company will have a 50% investment in GMAI-EUROPE.COM which
will be accounted for under the Equity method of accounting.
(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. The Company does not 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.
<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. When however, 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 in question. 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:
For the three months ended
-----------------------------------------------------------
September 30, Percentages
------------------------------ -------------------------
1998 1999 1998 1999
-------------- ------------- ----------- ------------
Aggregate Sales $ 4,482,208 $ 10,067,884 100% 100%
================================== =========================
By source:
A. Auction $ 3,485,579 $ 7,689,495 78% 76%
B. Sales of inventory 996,629 2,378,389 22% 24%
---------------------------------- -------------------------
By market:
A. Philatelics $ 4,289,936 $ 3,503,529 96% 35%
B. Sports Collectibles 192,272 2,213,660 4% 22%
C. Numismatics 3,711,789 37%
D. Diamond 168,827 2%
E. Art 20,564 0%
F. Other collectibles 449,515 4%
------------------ ------------- ----------- ------------
Intangible Assets
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 September
30, 1998 and 1999 was approximately $ 369,000 and $ 600,000, respectively. The
recoverability of goodwill is evaluated at each year end balance sheet date as
events or circumstances indicate a possible inability to recover its carrying
amount. This evaluation is based on historical and projected results of
operations and gross cash flows for the underlying businesses. Amortization
expense charged to operations for the three months ended September 30, 1998 and
1999 was approximately $ 23,000 and $ 60,000 respectively.
Trademarks and Customer List
Part of the purchase price for Teletrade was allocated to Trademarks and
Customer List. These are being amortized on a straight-line basis over a 20-year
period for Trademarks and a 5-year period for Customer List. Total accumulated
amortization at September 30, 1999 was approximately $ 205,000. Amortization
expense charged to operations for the three months ended September 30, 1999 was
approximately
$ 58,000.
Investments
The Company accounts for marketable securities pursuant to the
Statement of Financial Accounting Standards No. 115, Accounting for Certain
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
for temporary changes in fair value of marketable securities are credited or
charged to a separate component of Stockholders' Equity.
Earnings (loss) per common and common equivalent share
The Company computes net income per share in accordance with 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.
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 would be reflected in diluted earnings per share by application of the
treasury stock method. There is no dilutive effect to these options for the
three months ended September 30, 1999.
Comprehensive Income
Effective July 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. The objective of the Statement is to
report a measure of all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners ("Comprehensive income"). Comprehensive income is the total of net
income and all other nonowner changes in equity
<PAGE>
(3) Inventories
Inventories as of September 30, 1999 consisted of the following:
Current Non-current Total
-------------- -------------- --------------
Stamps $ 2,888,396 $ 2,888,396
Sports Cards and Memorabilia 1,323,568 1,323,568
Coins 672,899 672,899
Art 321,332 321,332
Other 1,421,315 $ 900,000 2,321,315
============== ============== ==============
$ 6,627,510 $ 900,000 $ 7,527,510
============== ============== ==============
(4) 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.
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
three months ended September 30, 1999, there were no such auction or private
treaty sales.
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, Incorporated, which provides computer services to
the Company. Leon Liebman, who was a director of the Company until his
resignation on October 19, 1999, provided consulting services for the Company.
Total expenditures for services rendered by these firms for the three months
ended September 30, 1998 and 1999 were approximately $24,000 and $ 21,000
respectively, in the case of Kramer, Levin, Naftalis & Frankel, approximately
$17,000 and $46,000 respectively, in the case of Micro Strategies, Incorporated,
of which approximately $ 30,000 was charged to operations in 1999, and $0 and $
13,000 respectively in the case of Mr. Liebman.
Included in Auctions receivable - related party is $850,000 for Afinsa
(see note 1)
(5) Debt
The Company is party to a secured revolving credit and term loan
facility with Brown Brothers Harriman & Co. ("BBH&Co."). At September 30, 1999,
borrowing under the revolving credit facility and term loan totaled $3,662,000
and $ 67,750 respectively. Absent a material adverse change or event of default
as determined by BBH&Co., with respect to the revolving credit loan, BBH&Co. has
agreed to provide 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.
In addition, on October 27, 1998, the Company secured additional
borrowing from BBH&Co. totaling $1,500,000 related to the acquisition of
Teletrade, Inc. The note is payable in quarterly installments of $150,000
beginning on June 30, 2000 unless there is any breach of specific Financial and
Operating Guidelines or the default of the secured promissory note or any
material adverse change (as defined therein) in the Company. Absent a material
adverse change or event of default as determined by BBH&Co., BBH&Co. has agreed
to provide the Company with a 366-day notification period prior to issuing a
demand for repayment, so long as the Company is in compliance with certain
financial and operating guidelines.
(6) Stock subscriptions receivable
On February 10, 1999, the Company entered into a stock
purchase agreement with whereby Afinsa agreed to purchase 475,624 shares of the
Company's Common Stock for an aggregate purchase price of $5 million (at $10.51
per share, which was the closing price of the Company's common stock as reported
by NASDAQ at the close of business on the date the agreement was signed). During
the year ended June 30, 1999, the Company received $2 million from Afinsa and
issued 172,251 shares of common stock.
As of June 30, 1999, the Company had recorded a stock
subscription receivable for the remaining 285,373 shares with an aggregate
purchase price of $3 million. This amount was received from Afinsa on July 9,
1999.
(7) Supplementary Cash Flow Information
Following is a summary of supplementary cash flow information:
Three Months Ended
September 30,
--------------------------------------------
1998 1999
------------------ -------------------
Interest paid $ 117,922 $ 124,265
Income taxes paid 1,314 1,222
Summary of significant non-cash transactions:
Income tax effect of the
exercise of options - $ 51,250
(8) Acquisition of Subsidiary
On October 29, 1998, the Company completed the acquisition
(the "Acquisition") of all of the common stock of Teletrade, Inc. from Leon
Liebman, Richard Makely and Bernard Rome. The purchase price for the Acquisition
was $5,895,040 consisting of $1,875,000 in securities of the Company, $3,000,000
in cash, $675,000 in promissory notes, $75,000 in options to purchase the
Company's common stock and $270,040 in acquisition related expenses. The
acquisition was recorded using the purchase method of accounting. The amount of
consideration paid was determined by arm's length negotiations among the Company
and Messrs. Liebman, Makely and Rome. The cash used for the Acquisition was
available from (i) a private placement of 200,000 shares of the Company's Common
Stock to each of Leon Liebman, Greg Manning and Afinsa and (ii) a term loan, as
described below. Reference is made to the Company's report on Form 8-K/A1, which
was filed by the Company on January 12, 1999. The results of operations of
Teletrade are included from October 30, 1998.
<PAGE>
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
5% to 15% (although the commission may be slightly lower on high value
properties) and a commission of 10% to 15% from the buyers
The Company's operating expenses consist of the cost of sales of the
Company's inventory and general and administrative expenses and marketing
expenses for the three months ended September 30, 1998 and 1999. 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 September 30, 1999
Compared with the three months ended September 30, 1998
The Company recorded an increase in revenues of approximately
$2,044,000 (128%), from approximately $1,598,000 for the three months ended
September 30, 1998 to approximately $3,642,000 for the three months ended
September 30, 1999. This increase was primarily attributable to revenues
generated from Teletrade of approximately $1,379,000 which were not included in
the similar period last year, increases in revenues from the sale of the
Company's inventories of approximately $886,000 (89%) for the three month period
ended September 30, 1999 compared to the prior year.
Gross margins on the sales of the Company's inventory increased by
approximately $ 246,000 (90%) in the three months ended September 30, 1999
compared to the three months ended September 30, 1999. The overall gross margin
decreased to 22% on inventory sales during the three months ended September 30,
1999 from 28% for the comparable period in the prior year. The stamp area had a
decrease in gross margins from 45% to 26% during the three months ended
September 30, 1999 compared to the prior year comparable period.
The Company's operating expenses increased by approximately $1,686,000
(170%) during the three months ended September 30, 1999 compared to the same
period in the prior year. Marketing costs increased approximately $ 392,000
(297%) of which approximately $242,000 were related to Teletrade (which was not
included in the comparable period in 1998). Of the remaining approximately $
1,294,000 increase in general and administrative expenses, approximately $
812,000 related to Teletrade. Other increases in general and administrative
expenses include salaries and shareholder expenses of approximately $ 326,000.
These costs resulted in operating costs of 74% of operating revenues for the
three months ended September 30, 1999 compared to 62% for the comparable period
in the prior year.
Interest income increased by approximately $128,000 substantially due
to a higher level of outstanding interest bearing advances to consignors during
the quarter ended September 30, 1999 as compared to the three months ended
September 30, 1999. This was offset by an increase in interest expense of
approximately $ 68,000 during the three months ended September 30, 1999 as
compared to the comparable period of the prior year due primarily to increased
overall borrowings.
Net Income: The Company's decrease in operating profits of
approximately $ 777,000 during the three months ended September 30, 1999 as
compared to the same period of the prior year and the decrease in the gain on
sale of PICK stock of approximately $ 542,000 were the primary components of the
net loss of approximately $ 477,000 for the three months ended September 30,
1999 compared to the net income of approximately $ 210,000 during the three
months ended September 30, 1998.
The Company is aware of the Year 2000 issue and has commenced a program
to identify, remediate, test and develop contingency plans for the Year 2000
issue (the "Y2K Program"), which was substantially completed by the summer of
1999. The Company has retained a consultant who will assist in the management of
the Y2K Program as it relates to (1) the software and systems used in the
Company's internal business; and (2) third party vendors, manufacturers and
suppliers. The Company currently does not anticipate that the cost of the Y2K
Program will be material to its financial condition or results of operations.
Nevertheless, satisfactorily addressing the Year 2000 issue is dependent on many
factors, some of which are not completely within the Company's control. Should
the Company's internal systems or the internal systems of one or more
significant vendors or suppliers fail to achieve Year 2000 compliance, the
Company's business and its results of operations could be adversely affected.
Liquidity and Capital Resources
At September 30, 1999, the Company's working capital position was
approximately $ 7,859,000, compared to approximately $ 9,002,000 as of June 30,
1999. This decrease of approximately $ 1,143,000 was primarily due to decreases
in stock subscriptions receivable of $3,000,000 and accounts payable of
approximately $ 846,000, which were partly offset by increases in auctions
receivable of approximately $ 129,000, inventory of approximately $ 451,000 (in
anticipation of increased e-commerce activity), advances to consignors of
approximately $ 390,000 and deferred tax asset of approximately $ 408,000.
The Company experienced a decrease in cash flow from investing
activities for the three months ended September 30, 1999 of approximately $
181,000. This was primarily attributable to the acquisition of property and
equipment.
The Company experienced an increase in cash flow from financing
activities for the three months ended September 30, 1999 of approximately $
3,063,000. This was primarily attributable to the exercise of employee stock
options and the proceeds from stock subscriptions receivable.
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.
Subsequent events
By letter received by the Company on October 19, 1999, Mr. Leon
Liebman, a director of the Company whose term was due to expire in 1999 at the
annual meeting of shareholders, resigned as director of the Company, effective
immediately. Mr. Liebman indicated that his decision was due to various other
professional commitments requiring the bulk of his time and attention.
<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
The Company held a special meeting of shareholders on October 7, 1999 to approve
and ratify the issuance and sale of 200,000 shares each to Greg Manning, Leon
Liebman and Afinsa Bienes Tangibles, SA.
Set forth below is information concerning the voting results of this matter:
For: 3,528,541
Against: 253,368
Abstain: 5,145
PROPOSAL APPROVED
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: November 15, 1999
/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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 348046
<SECURITIES> 0
<RECEIVABLES> 7739552
<ALLOWANCES> (164738)
<INVENTORY> 3427233
<CURRENT-ASSETS> 19103563
<PP&E> 2402216
<DEPRECIATION> (1621175)
<TOTAL-ASSETS> 30773080
<CURRENT-LIABILITIES> 11947603
<BONDS> 0
0
0
<COMMON> 68228
<OTHER-SE> 18757249
<TOTAL-LIABILITY-AND-EQUITY> 30773080
<SALES> 2378389
<TOTAL-REVENUES> 3642495
<CGS> 1858199
<TOTAL-COSTS> 2677721
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170832
<INCOME-PRETAX> (884790)
<INCOME-TAX> (407786)
<INCOME-CONTINUING> (477004)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (477004)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
