Filed pursuant to 424(b)(3)
Registration No. 333-30054
PROSPECTUS
310,551 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 Amazon.com, Inc., the
selling shareholder.
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 1.
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 March 7, 2000.
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TABLE OF CONTENTS
Forward-Looking Statements...................................................1
Risk Factors.................................................................1
Use of Proceeds..............................................................3
Selling Shareholder..........................................................4
Plan of Distribution.........................................................4
Legal Matters................................................................5
Experts......................................................................5
Material Changes.............................................................5
Additional Information ......................................................6
Incorporation by Reference...................................................7
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FORWARD-LOOKING STATEMENTS
We believe that certain statements in this prospectus constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act. The assumptions reflected in
these statements are subject to certain risks, uncertainties and other factors,
including changes in general economic or business conditions or those affecting
the Internet or the collectibles or coin businesses and uncertainty as to the
future profitability of GMAI.
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, and 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
Our Internet operations are not currently subject to direct regulation
by any U.S. or other government agency. New laws may, however, be adopted that
could decrease the demand for our services and might increase our cost of doing
business.
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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.
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.
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.
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Greg Manning will be able to exercise significant control over our operations
As of February 7, 2000, Greg Manning, our Chairman of the Board,
President and Chief Executive Officer, beneficially owned and controlled the
vote of approximately 20.2% 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 maybe
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, and
accordingly Mr. Manning may sell those shares without restriction. 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 of our
common stock, and has certain rights to require that we register these shares
under the Securities Act.
We have also agreed to register 750,000 shares of our common stock
issued in January and February 2000 in a private placement to certain investors,
as well as 112,500 shares of our common stock issuable upon exercise of warrants
issued to those investors. In addition, we have agreed that upon the closing of
a transaction involving our subsidiary GMAI-Asia.com, we will register an as-yet
undetermined number of shares of our common stock. See "Material Changes,"
below.
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 stockholders 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.
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SELLING SHAREHOLDER
On January 31, 2000, Amazon.com acquired in a private placement 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. This warrant is
immediately exercisable. All of these 310,551 shares of common stock are being
offered for resale pursuant to this prospectus. Before this offering, these
shares of common stock represented 4.1% of our outstanding common stock (based
on 7,921,046 shares of common stock outstanding as of February 7, 2000). After
it sells all the shares offered for resale in this prospectus, Amazon.com will
not own any shares of our common stock. Amazon.com has sole voting and
investment power with respect to all the shares offered for sale in this
prospectus.
PLAN OF DISTRIBUTION
The selling shareholder, which term includes Amazon.com, its
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 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 shareholder 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 aggregate proceeds to the selling shareholder from the sale of the
common stock offered by it hereby will be the purchase price of common stock
less discounts and commissions, if any. The selling shareholder reserves the
right to accept and, together with its 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. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the Nasdaq
National Market under the symbol "GMAI."
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
common stock may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling shareholder and 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. Selling shareholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. The selling
shareholder may not sell any common stock described herein and may not transfer,
devise or gift such securities by other means not described in this prospectus.
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To the extent required, the common stock to be sold, the name(s) of the
selling shareholder(s), the respective purchase prices and the public offering
prices, the names 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 Amazon.com against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments which Amazon.com may be required to make in respect of such
liabilities.
We have agreed with Amazon.com to keep the registration statement, of
which this prospectus is a part, effective for a period ending 24 months from
the date of this prospectus or on any earlier date on which all of the shares
offered by this prospectus have been sold and the distribution contemplated by
this prospectus has been completed, subject to certain exceptions and
limitations.
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 (15,000 of those options are currently exercisable).
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.
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 shareholder.
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.
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. The merger agreement provides for
the merger of Sub with and into Spectrum, with Spectrum continuing as a
wholly-owned subsidiary of GMAI. The merger will become effective upon the
filing of a certificate of merger with the Secretary of State of the State of
Delaware and officer's certificates along with a copy of the merger agreement
with the Secretary of State of the State of California. The Spectrum
shareholders own all the issued and outstanding capital stock of Spectrum. If
the merger is effected, the Spectrum shareholders will exchange all of their
issued and outstanding shares of Spectrum common stock for shares of our common
stock. Of the shares of our common stock to be issued to the Spectrum
shareholders, the Rabard Trust, the Roberts and Ms. Dinges will receive 51.685%,
39.003% and 9.312% respectively. The aggregate value of the shares of our common
stock to be issued in the merger to the Spectrum shareholders is $25,000,000,
minus any expenses over $200,000 incurred by Spectrum in connection with the
merger. Pursuant to the terms of the merger agreement, the shares of our common
stock to be
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issued to the Spectrum shareholders will be valued at $14.25 per share. The
parties negotiated the price taking into account the then-current market price
of our common stock. Once the shares are exchanged, the Spectrum shareholders
will own up to 18.1% of the total issued and outstanding shares of our common
stock. The merger is subject to certain conditions, including approval by our
shareholders and our receipt of a fairness opinion. A special meeting to
consider this matter has been scheduled for February 18, 2000.
On January 31, 2000, we issued in a private placement to Amazon.com,
Inc,, the selling shareholder in this prospectus, 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 of the shares of common stock issued to Amazon.com, together with the shares
of common stock underlying the warrant, are being offered for sale pursuant to
this prospectus. 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.
In late January and early February 2000, GMAI issued in a private
placement to certain investors an aggregate of 750,000 shares of our common
stock, together with warrants to acquire 112,500 shares of our common stock. The
warrants are immediately exercisable at a price of $18.85 per share.
On January 15, 2000, our 51.7%-owned subsidiary, GMAI-Asia.com Inc.,
agreed to enter into a group of related transactions. We expect the closing of
these transactions to occur in mid-February 2000. At the closing, GMAI-Asia.com
will:
o acquire from China Everbright Technology Limited 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$3,624,000, using a conversion rate of RMB8.2788 to US$1.00), payable in
our common stock, and GMAI-Asia.com's guarantee of 40,000,000 Chinese
Renmimbi (approximately US$4,832,000) of indebtedness of China Everbright
Telecom-Land's Shanghai subsidiary;
o enter 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 enter into a management agreement with China Everbright Telecommunication
Products Limited (a Chinese company wholly owned by affiliates of China
Everbright Technology); and
o receive 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.
In addition, we will be guaranteeing performance by GMAI-Asia.com of
its obligations in these various transactions, and will be registering the
shares of our stock that we issue 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
and electronic products in China. These entities sell their 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.
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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.
INCORPORATION BY REFERENCE
Incorporated by reference to this registration statement 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 Report of GMAI on Form 10-QSB for the quarter ended
September 30, 1999;
o the description of our capital stock set forth in its Registration
Statement under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on Form 8-A filed with the SEC on May 14, 1993;
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
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 each person, including any beneficial owner, 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. A copy of any exhibits to these
documents will be furnished to any shareholder upon written request or oral and
payment of a nominal fee.
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310,551 SHARES
GREG MANNING AUCTIONS, INC.
COMMON STOCK
-------------------------
PROSPECTUS
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March 7, 2000
