Filed pursuant to 424(b)(3)
Registration No. 333-32642
PROSPECTUS
1,030,604 SHARES
GREG MANNING AUCTIONS, INC.
COMMON STOCK
The shares of common stock of Greg Manning Auctions, Inc. ("GMAI")
covered by this prospectus are being offered and sold by The Tail Wind Fund
Ltd., LBI Group Inc., Lombard Odier & Cie and China Everbright Technology
Limited, the selling shareholders.
GMAI's common stock is traded on the Nasdaq National Market under the
symbol "GMAI".
Investing in GMAI's common stock involves certain risks. See "Risk
Factors" beginning on page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this Prospectus is April 5, 2000.
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TABLE OF CONTENTS
Risk Factors................................................................2
Use of Proceeds.............................................................4
Selling Shareholders........................................................4
Plan of Distribution........................................................5
Legal Matters...............................................................5
Experts.....................................................................6
Material Changes............................................................6
Additional Information .....................................................7
Incorporation by Reference..................................................7
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RISK FACTORS
Investing in our common stock involves various risks. You should
carefully consider the following risk factors and other information in this
prospectus before deciding to invest in our common stock.
We may fail to obtain an adequate supply of collectibles to sell at auction
The success of our business relies heavily on obtaining collectibles on
consignment for sale at auction and, to a lesser extent, on our ability to
purchase collectibles outright for sale at auction. The supply of collectibles
we have available for sale from time to time is sometimes limited. For example,
a decline in the price levels of, or the demand for, stamps, coins and other
collectibles could result in a decrease in their dollar value when sold at
auction, and this could make owners reluctant to consign collectibles for sale
at auction. While we generally have not experienced a lack of collectibles
preventing us from conducting appropriately-sized auctions on an a schedule
acceptable to us, we cannot be sure that this will always be the case.
The loss of any of our executive officers or key personnel would likely have an
adverse effect on our business
Our future success depends to a significant extent on our retaining
services of our senior management and other key personnel, particularly our
President, Chairman and Chief Executive Officer, Greg Manning. Our business
would be adversely affected if for any reason we failed to retain the services
of Mr. Manning and failed to engage a suitable replacement.
Purchaser default could result in our owing considerable amounts of money to
sellers
We frequently grant credit to purchasers of goods sold at our auctions
in order to allow them to take immediate possession of auctioned property on an
open account basis, within established credit limits, and to make payment in the
future, generally within 30 days. If any such purchaser fails to pay us, we
nevertheless remain liable to the seller of the purchased property. Our
aggregate potential exposure for purchaser default may at any given time be
substantial.
Use of the Internet by consumers could grow more slowly or decline
Our business will be adversely affected if use of the Internet by
consumers, particularly purchasers of collectibles, does not continue to grow. A
number of factors may inhibit consumers from using the Internet. These include
inadequate network infrastructure, security concerns, inconsistent quality of
service and a lack of cost-effective high-speed service. Even if Internet use
grows, the Internet's infrastructure may not be able to support the demands
placed on it by this growth and its performance and reliability may decline. In
addition, many Web sites have experienced service interruptions as a result of
outages and other delays occurring throughout the Internet infrastructure. If
these outages or delays occur frequently in the future, use of the Internet, as
well as use of our Web sites, could grow more slowly or decline.
Governmental regulation and taxation of the Internet is subject to change
A number of legislative and regulatory proposals under consideration by
federal, state, local and foreign governmental organizations may result in there
being enacted laws concerning various aspects of the Internet, including online
content, user privacy, access charges, liability for third-party activities, and
jurisdictional issues. These laws could harm our business by increasing our cost
of doing business or discouraging use of the Internet.
In addition, the tax treatment of the Internet and electronic commerce
is currently unsettled. A number of proposals have been made that could result
in Internet activities, including the sale of goods and services, being taxed.
The U.S. Congress recently passed the Internet Tax Information Act, which places
a three-year moratorium on new state and local taxes on Internet commerce. There
may, however, be enacted in the future laws that change the federal, state or
local tax treatment of the Internet in a way that is detrimental to our
business.
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Some local telephone carriers claim that the increasing popularity of
the Internet has burdened the existing telecommunications infrastructure and
that many areas with high Internet use are experiencing interruptions in
telephone service. These carriers have petitioned the Federal Communications
Commission to impose access fees on Internet service providers. If these access
fees are imposed, the cost of communicating on the Internet could increase, and
this could decrease the demand for our services and increase our cost of doing
business.
We may be unable to manage our significant growth
Our significant growth has placed substantial pressures on our
personnel and systems. In order to support this growth, we have added a
significant number of new operating procedures, facilities and personnel.
Although we believe this will be sufficient to enable us to meet our growing
operating needs, we cannot be certain.
Our business will suffer if we are unable to expand and promote our brand name
We believe that establishing and maintaining our brand name is an
important aspect of our efforts to expand our business. We also believe that
brand recognition will become more important if, as we expect, the number of
Internet sites grows and barriers to entry remain relatively low. If we fail to
adequately promote and maintain our brand name, our financial performance will
suffer.
We face substantial competition
The business of selling stamps, coins and other collectibles at auction
is highly competitive. We compete with a number of auction houses throughout the
U.S. and overseas. While we believe that there is no dominant company in the
stamp or coin auction or collectibles businesses in which we operate, we can
give no assurances that other concerns with greater financial and other
resources and greater name recognition will not enter the market. Among our
primary competitors in the domestic and worldwide philatelic auction business
are Matthew Bennett, Inc., Charles Shreve Galleries, Inc., H.R. Harmer, Robert
A. Siegel, Philatelists on Line and eBay. With respect to our sports trading
card and sports memorabilia auction business, our primary competitors are
Lelands, Mastro Auctions, Sotheby's, Collector's Universe and eBay. With respect
to our coin operations, our primary competitors are Heritage, Stacks,
Collector's Universe, Bower's and Merena, and Superior. With respect to our
Hollywood rock 'n' roll memorabilia business, our primary competitors are
Butterfield & Butterfield, Sotheby's and Christies. With respect to our comic
book business, our primary competitor is Sotheby's. With respect to our movie
poster business, our primary competitors are Howard Lowery, Skinners,
Butterfield & Butterfield, Sotheby's and Vintage Poster Auctions.
With respect to our Internet operations, the market for Internet
products and services is highly competitive and there are no substantial
barriers to entry. We expect that competition will continue to intensify. Many
of our Internet competitors have more experience than we have maintaining
Internet operations and have greater brand recognition.
Greg Manning will be able to exercise significant control over our operations
As of February 28, 2000, Greg Manning, our Chairman of the Board,
President and Chief Executive Officer, beneficially owned and controlled the
vote of approximately 15.2% of the outstanding shares of our common stock. This
concentration of ownership, which is not subject to any voting restrictions,
could limit the price that investors might be willing to pay for common stock.
In addition, Mr. Manning is in a position to impede transactions that may be
desirable for other shareholders. He could, for example, make it more difficult
for anyone to take control of us.
The market price of our common stock could be adversely affected by future sales
of substantial amounts of common stock by existing shareholders
The market price of our common stock could be adversely affected by
future sales of substantial amounts of common stock by existing shareholders,
including Mr. Manning. Mr. Manning may sell some or all of his shares, either
pursuant to registration under the Securities Act or under exemptions limiting
the manner and volume of sales. In particular, we have registered 1.3 million of
the shares owned by Mr. Manning for resale under the Securities Act,
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and accordingly Mr. Manning may sell those shares without restriction. All those
shares currently remain unsold. In addition, 100,000 of the shares owned by Mr.
Manning represent shares underlying certain currently exercisable options
granted to Mr. Manning pursuant to our stock option plans. These shares,
together with the shares underlying the options granted and to be granted to our
other officers, employees and directors pursuant to our stock option plans, have
also been registered under the Securities Act and accordingly may be sold
without restriction.
In addition, Leon Liebman, a former shareholder of Teletrade, Inc.,
which was acquired by us in October 1998, owns approximately 887,420 shares of
our common stock, and has certain rights to require that we register these
shares under the Securities Act.
We have also registered 285,551 shares of our common stock issued on
January 31, 2000 in a private placement to Amazon.com, Inc., as well as 25,000
shares of our common stock issuable upon exercise of a warrant issued to
Amazon.com, Inc. in the same transaction.
GMAI and the shareholders of Spectrum Numismatics International, Inc.
(see "Material Changes," below) have entered into an agreement pursuant to which
the Spectrum shareholders have agreed to limit sales of their stock for the
first year following the closing to an aggregate of 491,227 shares, among other
restrictions.
Certain provisions of our restated certificate of incorporation and by-laws
could limit the price that investors are willing to pay for our common stock
Our restated certificate of incorporation and by-laws contain certain
provisions that could make it more difficult for shareholders to effect certain
corporate actions, and could make it more difficult for anyone to acquire
control of us without negotiating with our board of directors. For example, the
board of directors has the authority to issue shares of preferred stock with
such rights and preferences as it may choose, and our board of directors is a
classified board with staggered terms. These provisions could limit the price
that investors might be willing to pay in the future for our common stock.
USE OF PROCEEDS
GMAI will not receive any proceeds from any sales of the shares.
SELLING SHAREHOLDERS
In late January and early February 2000, GMAI issued in a private
placement to The Tail Wind Fund Ltd., LBI Group Inc. and Lombard Odier & Cie
375,000, 312,500 and 62,500 shares, respectively, of our common stock (an
aggregate of 750,000 shares), together with warrants to acquire 56,250, 46,875,
and 9,375 shares of our common stock (an aggregate of 112,500 shares), the
warrants being immediately exercisable at a price of $18.85 per share. All of
these 862,500 shares of common stock are being offered for resale pursuant to
this prospectus. After they sell all the shares offered for resale in this
prospectus, The Tail Wind Fund Ltd., LBI Group Inc. and Lombard Odier & Cie will
not own any shares of our common stock. Each of those entities has sole voting
and investment power with respect to all its shares of our common stock offered
for sale in this prospectus.
On February 15, 2000, as part of certain transactions we and our
subsidiary, GMAI-Asia.com, Inc., entered into with China Everbright Technology
Limited and certain of its affiliates, we issued to China Everbright Technology
Limited in a private placement 168,104 shares of our common stock. All of these
168,104 shares of common stock are being offered for resale pursuant to this
prospectus. After it sells all its shares offered for resale in this prospectus,
China Everbright Technology Limited will not own any shares of our common stock.
China Everbright Technology Limited has sole voting and investment power with
respect to all of its shares of our common stock offered for sale in this
prospectus.
The aggregate proceeds to the selling shareholders from the sale of the
common stock offered by them hereby will be the purchase price of common stock
less discounts and commissions, if any.
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PLAN OF DISTRIBUTION
The selling shareholders, which term includes their successors,
transferees, pledgees or donees or their successors, may sell the common stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling shareholders or the purchasers, which discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
The common stock may be sold by the selling shareholders in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at prices related to such prevailing market prices, at varying prices determined
at the time of sale, or at negotiated prices. Such sales may be effected in
transactions, which may involve crosses or block transactions (1) on any
national securities exchange or quotation service on which the common stock may
be listed or quoted at the time of sale, (2) in the over-the-counter market, (3)
in transactions otherwise than on such exchanges or services or in the
over-the-counter market, (4) through the writing of options, whether such
options are listed on an options exchange or otherwise, or (5) through the
settlement of short sales. In connection with the sale of our common stock or
otherwise, the selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions which may in turn engage in short
sales of the common stock and deliver these securities to close out such short
positions, or loan or pledge the common stock to broker-dealers that in turn may
sell these securities.
The selling shareholders reserve the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents.
Our outstanding common stock is listed for trading on the Nasdaq
National Market under the symbol "GMAI".
Any underwriters, broker-dealers or agents that participate in the sale
of the common stock may be "underwriters" within the meaning of Section 2(11) of
the Securities Act. Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under
the Securities Act.
To the extent required, the common stock to be sold, the name of each
selling shareholder, the respective purchase prices and the public offering
prices, the name of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We have agreed to indemnify the selling shareholders against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments that the selling shareholders may be required to make in
respect of such liabilities.
We have agreed with the selling shareholders to keep the registration
statement of which this prospectus is a part effective for a period of two years
or until all of the shares offered by this prospectus have been sold, whichever
period ends earlier.
LEGAL MATTERS
Certain legal matters in connection with the shares of our common stock
offered for resale in this prospectus have been passed upon for us by Kramer
Levin Naftalis & Frankel LLP, New York, New York. A member of that firm is a
director of GMAI and owns 4,000 shares of GMAI common stock and options granted
pursuant to our stock option plans to acquire an additional 45,000 shares of our
common stock (options for 15,000 of those shares are currently exercisable).
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EXPERTS
Amper, Politziner & Mattia P.A., independent public accountants,
audited our consolidated financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement, as
indicated in their report with respect thereto. These documents are incorporated
by reference herein in reliance upon the authority of Amper, Politziner & Mattia
P.A. as experts in accounting and auditing in giving the report.
MATERIAL CHANGES
On December 8, 1999, we entered into a merger agreement with Spectrum
Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of GMAI
("Sub"), Spectrum Numismatics International, Inc. ("Spectrum"), and the
shareholders of Spectrum, namely Warren Trepp, as trustee of the Rabard Trust
dated August 25, 1989 (the "Rabard Trust"), Gregory N. Roberts and Sharon
Roberts (the "Roberts"), and Elaine Dinges, providing for the merger of Sub with
and into Spectrum, with Spectrum continuing as a wholly-owned subsidiary of
GMAI. Our shareholders approved this merger at a special meeting of shareholders
held on February 18, 2000, and the closing of this transaction took place the
same day. The merger became effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware and the filing of officer's
certificates and a copy of the merger agreement with the Secretary of State of
the State of California. The Spectrum shareholders owned all the issued and
outstanding capital stock of Spectrum. In the merger, the Spectrum shareholders
exchanged all of their shares of Spectrum common stock for shares of our common
stock. Of the shares of our common stock issued to the Spectrum shareholders,
the Rabard Trust, the Roberts and Ms. Dinges received 51.685%, 39.003% and
9.312%, respectively. The aggregate value of the shares of our common stock
issued in the merger to the Spectrum shareholders was $25,000,000, minus $5,000
of expenses in excess of $200,000 incurred by Spectrum in connection with the
merger. Pursuant to the terms of the merger agreement, the shares of our common
stock issued to the Spectrum shareholders were valued at $14.25 per share. The
parties negotiated the price taking into account the then-current market price
of our common stock. The shares issued to the Spectrum shareholders in this
transaction represent 20% of our outstanding common stock (based on 9,844,434
shares of common stock outstanding as of February 28, 2000).
On January 31, 2000, we issued in a private placement to Amazon.com,
Inc. 285,551 shares of our common stock, together with a warrant to acquire
25,000 shares of our common stock at an exercise price per share of $20.19. The
warrant is immediately exercisable. All 285,551 shares of our common stock
issued to Amazon.com, Inc. were registered for resale with the Securities and
Exchange Commission. In connection with this equity investment, GMAI and
Amazon.com Auctions LLC, a subsidiary of Amazon.com, entered into a marketing
agreement pursuant to which we will offer collectibles for sale on the
subsidiary's Web site.
On January 15, 2000, our 51.7% owned subsidiary, GMAI-Asia.com, Inc.,
agreed to enter into a group of related transactions. The closing of these
transactions occurred on February 15, 2000. At the closing, GMAI-Asia.com did
the following:
o acquired from China Everbright Technology Limited, a selling shareholder in
this prospectus, a 65% interest in China Everbright Telecom-Land Network
Limited (a British Virgin Islands company) for consideration of 30,000,000
Chinese Renmimbi (approximately US$3,623,714, using a conversion rate of
RMB8.2788 to US$1.00), payable in our common stock (namely 168,104 of the
shares of our common stock offered for resale pursuant to this prospectus),
and GMAI-Asia.com's guarantee of 40,000,000 Chinese Renmimbi (approximately
US$4,831,618) of indebtedness of China Everbright Telecom-Land's Shanghai
subsidiary;
o entered into a shareholders' agreement governing the management of China
Everbright Telecom-Land and its Shanghai subsidiary and providing
GMAI-Asia.com certain rights to acquire the remaining 35% interest in China
Everbright Telecom-Land;
o entered into a management agreement with China Everbright Telecommunication
Products Limited (a Chinese company wholly owned by affiliates of China
Everbright Technology);
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o received an option to acquire a 65% interest in China Everbright
Telecommunication Products for nominal consideration and certain rights to
acquire the remaining 35% interest in China Everbright Telecommunication
Products; and
o in connection with the above-mentioned guarantee by GMAI-Asia.com, pledged
its interest in China Everbright Telecom-Land and its rights under the
management agreement and the option referred to above to China Everbright
Group, Inc., an affiliate of China Everbright Technology Limited.
In addition, we guaranteed performance by GMAI-Asia.com of its
obligations in these various transactions, and undertook to register the shares
of our stock that we issued to China Everbright Technology Limited.
China Everbright Telecom-Land and its Shanghai subsidiary are currently
engaged in the wholesale and retail distribution of consumer telecommunication
products in China. These entities sell these products through China Everbright
Telecommunication Products' distribution network of retail locations.
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission relating to the common stock offered by this prospectus.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. Statements contained in this prospectus concerning the contents of
any contract or other document referred to are not necessarily complete and in
each instance we refer you to the copy of the contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference.
For further information with respect to us and the common stock we are
offering, please refer to the registration statement. A copy of the registration
statement can be inspected by anyone without charge at the public reference room
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices located at 7 World Trade Center, Suite
1300, New York, New York 10048, and 500 West Madison Street, Chicago, Illinois
60601. Please call the Commission at 1-800-SEC-0330 for further information on
the operation of the public reference room. Copies of these materials can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site (http://www.sec.gov) that contains information regarding
registrants that file electronically with the Commission.
Our common stock is quoted for trading on the Nasdaq National Market,
and you may inspect at the offices of the Nasdaq National Market, located at
1735 K Street, N.W., Washington, D.C. 20006, the registration statement relating
to the common stock offered by this prospectus, reports filed by us under the
Exchange Act, and other information concerning us.
INCORPORATION BY REFERENCE
Incorporated by reference into this prospectus is the information set
forth in the following documents:
o our Annual Report on Form 10-KSB for the fiscal year ended June 30,
1999;
o our Quarterly Reports on Form 10-QSB for the quarters ended September
30, 1999 and December 31,1999;
o our Current Report on Form 8-K filed March 6, 2000;
o the description of our capital stock set forth in our Registration
Statement under the Securities Exchange
o all other reports filed by us pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual
report referred to above; and
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o all documents subsequently filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of this offering.
We will furnish to any person to whom this prospectus is delivered,
without charge, a copy of these documents upon written or oral request to Martha
Husick, Corporate Secretary, 775 Passaic Avenue, West Caldwell, New Jersey
07006, tel. (973) 882-0004. A copy of any exhibits to these documents will be
furnished to any shareholder upon written or oral request and payment of a
nominal fee.
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No dealer, salesman or other person has been authorized to give any information
or to make representations other than those contained in this prospectus, and if
given or made, such information or representations must not be relied upon as
having been authorized by us or the selling shareholders. Neither the delivery
of this prospectus nor any sale hereunder will, under any circumstances, create
an implication that the information herein is correct as of any time subsequent
to its date. This prospectus does not constitute an offer to or solicitation of
offers by anyone in any jurisdiction in which such an offer or solicitation is
not authorized or in which the person making such an offer is not qualified to
do so or to anyone to whom it is unlawful to make such an offer or solicitation.
1,030,604 SHARES
GREG MANNING AUCTIONS, INC.
COMMON STOCK
--------------------------------
PROSPECTUS
--------------------------------
APRIL 5, 2000
