(Mark
One)
|
|
ý
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarter ended December 31, 2007
|
|
OR
|
|
q
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
|
For
the transition period from _______ to _____
|
|
Commission
file number 0-27887
|
|
COLLECTORS
UNIVERSE, INC.
(Exact
name of Registrant as specified in its
charter)
|
Delaware
|
33-0846191
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
Incorporation
or organization)
|
|
1921
E. Alton Avenue, Santa Ana, California 92705
|
|
(address of principal executive
offices and zip code)
|
|
Registrant's
telephone number, including area code: (949)
567-1234
|
Large
accelerated filer o
|
Accelerated
filer ý
|
Non-accelerated
filer o
|
Class
|
Outstanding at February 5,
2008
|
||
Common
Stock $.001 Par Value
|
8,562,871
|
||
PART
I
|
Financial
Information
|
Page
|
|
Item
1.
|
|||
1
|
|||
2
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|||
3
|
|||
4
|
|||
6
|
|||
Item
2.
|
20
|
||
20
|
|||
21
|
|||
22
|
|||
22
|
|||
24
|
|||
25
|
|||
31
|
|||
32
|
|||
Item
2A.
|
34
|
||
Item
3
|
35
|
||
PART
II
|
Other
Information
|
||
Item
1
|
35
|
||
Item
1A.
|
36
|
||
Item
2.
|
36
|
||
Item
3
|
36
|
||
Item
6.
|
37
|
||
S-1
|
|||
E-1
|
|||
EXHIBITS
|
|||
Exhibit 31.1
|
Certifications
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
||
Exhibit 31.2
|
Certifications
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
||
Exhibit 32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
||
Exhibit 32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
December
31,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash and cash
equivalents
|
$ | 32,279 | $ | 42,386 | ||||
Accounts receivable, net of
allowance of $77 at December 31,
2007 and
$60 at June 30,
2007
|
2,337 | 1,276 | ||||||
Refundable income
taxes
|
1,220 | 1,220 | ||||||
Inventories, net
|
527 | 442 | ||||||
Prepaid expenses and other current
assets
|
1,499 | 1,060 | ||||||
Customer notes receivable, net of allowance of $25 at
December 31, 2007 and $23 at June 30, 2007
|
3,464 | 2,536 | ||||||
Net deferred income tax
asset
|
2,346 | 1,020 | ||||||
Receivables from sale of net
assets of discontinued operations
|
92 | 92 | ||||||
Total current
assets
|
43,764 | 50,032 | ||||||
Property and equipment,
net
|
4,402 | 4,081 | ||||||
Goodwill
|
13,041 | 12,884 | ||||||
Intangible assets,
net
|
10,170 | 10,365 | ||||||
Note receivable from sale of
discontinued operation
|
183 | 229 | ||||||
Other assets
|
509 | 510 | ||||||
$ | 72,069 | $ | 78,101 | |||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts payable
|
$ | 658 | $ | 1,435 | ||||
Accrued
liabilities
|
2,549 | 2,154 | ||||||
Accrued compensation and
benefits
|
1,424 | 1,988 | ||||||
Income taxes
payable
|
292 | 14 | ||||||
Deferred revenue
|
2,088 | 2,233 | ||||||
Current liabilities of
discontinued operations held for sale
|
26 | - | ||||||
Total current
liabilities
|
7,037 | 7,824 | ||||||
Deferred
rent
|
451 | 477 | ||||||
Other
long-term liabilities
|
40 | 40 | ||||||
Net
deferred income tax liability
|
1,013 | 869 | ||||||
Commitments
and contingencies
|
- | - | ||||||
p Preferred
stock, $.001 par value; 5,000 shares authorized; no shares issued or
outstanding
|
- | - | ||||||
Common
stock, $.001 par value; 45,000 shares authorized; outstanding 8,554 at
December 31, 2007 and 8,496 at June 30, 2007
|
9 | 9 | ||||||
Additional
paid-in capital
|
77,360 | 76,737 | ||||||
Accumulated
deficit
|
(13,841 | ) | (7,855 | ) | ||||
Total stockholders'
equity
|
63,528 | 68,891 | ||||||
$ | 72,069 | $ | 78,101 |
Three
Months Ended
December
31,
|
Six
Months Ended
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
revenues:
|
||||||||||||||||
Grading, authentication and
related services
|
$ | 9,148 | $ | 8,715 | $ | 19,882 | $ | 18,561 | ||||||||
Product sales
|
816 | 78 | 907 | 130 | ||||||||||||
9,964 | 8,793 | 20,789 | 18,691 | |||||||||||||
Cost
of revenues:
|
||||||||||||||||
Grading, authentication and
related services
|
6,004 | 4,298 | 11,176 | 8,623 | ||||||||||||
Product sales
|
793 | 69 | 821 | 100 | ||||||||||||
6,797 | 4,367 | 11,997 | 8,723 | |||||||||||||
Gross
profit
|
3,167 | 4,426 | 8,792 | 9,968 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling and marketing
expenses
|
1,861 | 1,433 | 3,879 | 2,695 | ||||||||||||
General and administrative
expenses
|
3,729 | 3,681 | 7,677 | 7,660 | ||||||||||||
Amortization of intangible
assets
|
286 | 187 | 556 | 358 | ||||||||||||
Total
operating expenses
|
5,876 | 5,301 | 12,112 | 10,713 | ||||||||||||
Operating
loss
|
(2,709 | ) | (875 | ) | (3,320 | ) | (745 | ) | ||||||||
Interest
income, net
|
296 | 546 | 740 | 1,113 | ||||||||||||
Other
income
|
2 | 2 | 3 | 6 | ||||||||||||
Income
(loss) before income taxes
|
(2,411 | ) | (327 | ) | (2,577 | ) | 374 | |||||||||
Provision
(benefit) for income taxes
|
(962 | ) | (147 | ) | (1,028 | ) | 171 | |||||||||
Income
(loss) from continuing operations
|
(1,449 | ) | (180 | ) | (1,549 | ) | 203 | |||||||||
Income
from discontinued operations, net of gain on
sales
of discontinued businesses (net
of income taxes)
|
6 | 80 | (4 | ) | 91 | |||||||||||
Net
income (loss)
|
$ | (1,443 | ) | $ | (100 | ) | $ | (1,553 | ) | $ | 294 | |||||
Net
income (loss) per basic share:
|
||||||||||||||||
Income (loss) from continuing operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income from discontinued operations, net of gain
on sales of discontinued
businesses (net of income taxes)
|
- | 0.01 | - | 0.01 | ||||||||||||
Net
income (loss)
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 | |||||
Net
income (loss) per diluted share:
|
||||||||||||||||
Income (loss) from continuing
operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income from discontinued
operations, net of gain
on sales of discontinued
businesses (net of income taxes)
|
- | 0.01 | - | 0.01 | ||||||||||||
Net
income (loss)
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 | |||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
8,491 | 8,309 | 8,477 | 8,328 | ||||||||||||
Diluted
|
8,491 | 8,309 | 8,477 | 8,631 | ||||||||||||
Dividends
declared per common share
|
$ | 0.25 | $ | 0.08 | $ | 0.50 | $ | 0.16 |
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
Treasury
Stock
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||
Balance
at June 30, 2005
|
8,610 | $ | 9 | $ | 78,594 | $ | (7,016 | ) | (125 | ) | $ | (1,021 | ) | $ | 70,566 | |||||||||||||
Exercise
of stock options
|
47 | - | 243 | - | - | - | 243 | |||||||||||||||||||||
Stock-based
compensation expense
|
- | - | 670 | - | - | - | 670 | |||||||||||||||||||||
Tax
benefit on exercise of stock options
|
- | - | 29 | - | - | - | 29 | |||||||||||||||||||||
Shares
repurchased and cancelled
under the
Stock Repurchase Plan
|
(182 | ) | (1 | ) | (2,627 | ) | - | - | - | (2,628 | ) | |||||||||||||||||
Net
income
|
- | - | - | 3,700 | - | - | 3,700 | |||||||||||||||||||||
Dividends
paid to common stockholders
|
- | - | - | (674 | ) | - | - | (674 | ) | |||||||||||||||||||
Balance
at June 30, 2006
|
8,475 | 8 | 76,909 | (3,990 | ) | (125 | ) | (1,021 | ) | 71,906 | ||||||||||||||||||
Exercise
of stock options
|
161 | 1 | 275 | - | - | - | 276 | |||||||||||||||||||||
Stock-based
compensation expense
|
- | - | 726 | - | - | - | 726 | |||||||||||||||||||||
Issuance
of restricted shares
|
57 | - | 164 | - | - | - | 164 | |||||||||||||||||||||
Tax
benefit on exercise of stock options
|
- | - | 633 | - | - | - | 633 | |||||||||||||||||||||
Shares
repurchased and cancelled
under the Stock repurchase
Plan
|
(72 | ) | - | (949 | ) | - | - | - | (949 | ) | ||||||||||||||||||
Net
loss
|
- | - | - | (515 | ) | - | - | (515 | ) | |||||||||||||||||||
Retirement
of treasury shares
|
(125 | ) | - | (1,021 | ) | - | 125 | 1,021 | - | |||||||||||||||||||
Dividends
paid ($0.40 per share)
|
- | - | - | (3,350 | ) | - | - | (3,350 | ) | |||||||||||||||||||
Balance
at June 30, 2007
|
8,496 | 9 | 76,737 | (7,855 | ) | - | - | 68,891 | ||||||||||||||||||||
Cumulative
effect of adoption of
FIN 48 (see note
8)
|
- | - | - | (170 | ) | - | - | (170 | ) | |||||||||||||||||||
Exercise
of stock options
|
37 | - | 111 | - | - | - | 111 | |||||||||||||||||||||
Stock-based
compensation expense
|
21 | - | 512 | - | - | - | 512 | |||||||||||||||||||||
Dividends
paid ($0.50 per share)
|
- | - | - | (4,263 | ) | - | - | (4,263 | ) | |||||||||||||||||||
Net
loss
|
- | - | - | (1,553 | ) | - | - | (1,553 | ) | |||||||||||||||||||
Balance
at December 31, 2007
|
8,554 | $ | 9 | $ | 77,360 | $ | (13,841 | ) | - | $ | - | $ | 63,528 |
Six
Months Ended
December
31,
|
||||||||
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | (1,553 | ) | $ | 294 | |||
Adjustments
to reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
||||||||
Depreciation and
amortization
|
1,164 | 852 | ||||||
Stock-based compensation
expense
|
512 | 420 | ||||||
Tax benefit from exercising of
stock options
|
- | 7 | ||||||
Provision for bad debts and
credit
|
19 | 34 | ||||||
Gain on sale of property and
equipment
|
(1 | ) | - | |||||
Provision for inventory write
down
|
10 | 3 | ||||||
Interest on notes
receivable
|
(6 | ) | - | |||||
Discontinued
operations
|
4 | (91 | ) | |||||
Deferred income
taxes
|
(963 | ) | (10 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(1,077 | ) | 191 | |||||
Inventories
|
(95 | ) | (31 | ) | ||||
Prepaid expenses and other
current assets
|
(438 | ) | (276 | ) | ||||
Income taxes
payable
|
4 | (584 | ) | |||||
Other assets
|
(7 | ) | (66 | ) | ||||
Accounts
payable
|
(777 | ) | (49 | ) | ||||
Accrued
liabilities
|
396 | 155 | ||||||
Deferred rent and other
long-term liabilities
|
(26 | ) | 89 | |||||
Accrued compensation and
benefits
|
(564 | ) | 21 | |||||
Deferred
revenue
|
(145 | ) | 324 | |||||
Net cash (used in) provided by
operating activities
|
$ | (3,543 | ) | $ | 1,283 | |||
Net
cash provided by operating activities of discontinued
businesses
|
22 | 23 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
(983 | ) | (1,973 | ) | ||||
Proceeds
from sale of property and equipment
|
63 | - | ||||||
Advances
on customer notes receivable
|
(3,501 | ) | (2,626 | ) | ||||
Proceeds
from customer notes receivable
|
2,578 | 4,380 | ||||||
Purchase
of businesses, net of cash acquired
|
- | (6,289 | ) | |||||
Purchase
of patents and other intangible assets
|
(20 | ) | (343 | ) | ||||
Capitalized
software
|
(615 | ) | (777 | ) | ||||
Cash
received on sale of discontinued businesses
|
44 | 177 | ||||||
Net cash used in investing
activities
|
(2,434 | ) | (7,451 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from exercise of stock options
|
111 | 36 | ||||||
Payments
for retirement of common stock
|
- | (949 | ) | |||||
Dividends
paid to common stockholders
|
(4,263 | ) | (1,333 | ) | ||||
Net cash used in financing
activities
|
(4,152 | ) | (2,246 | ) | ||||
Net
decrease in cash and cash equivalents
|
(10,107 | ) | (8,391 | ) | ||||
Cash
and cash equivalents at beginning of period
|
42,386 | 52,110 | ||||||
Cash
and cash equivalents at end of period
|
$ | 32,279 | $ | 43,719 | ||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Interest
paid
|
$ | 9 | $ | 11 | ||||
Income
taxes paid
|
$ | - | $ | 863 |
Six
Months Ended
December
31,
|
||||||||
2007
|
2006
|
|||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION (CONTINUED):
|
||||||||
Effective
July 1, 2006, the Company acquired Expos Unlimited, LLC in a transaction
summarized
as follows:
|
||||||||
Fair value of net liabilities
assumed
|
$ | - | $ | (385 | ) | |||
Intangible
assets
|
- | 1,810 | ||||||
Goodwill
|
- | 1,001 | ||||||
Purchase price, net of $49 cash
acquired
|
$ | - | $ | 2,426 | ||||
Effective
August 18, 2006, the Company acquired American Gemological Laboratories,
Inc. (AGL) in
a transaction summarized as follows:
|
||||||||
Fair value of net liabilities
assumed
|
$ | 2 | $ | (42 | ) | |||
Deferred tax liability
recognized at acquisition
|
110 | (1,205 | ) | |||||
Intangible
assets
|
(274 | ) | 3,030 | |||||
Goodwill
|
162 | 2,083 | ||||||
Purchase price, net of $81 cash
acquired
|
$ | - | $ | 3,866 | ||||
Business
|
Acquisition
Date
|
Purchase
Price
|
Expos
Unlimited, LLC
|
July
1, 2006
|
$2.5
million
|
American
Gemological Laboratories, Inc.
|
August
18, 2006
|
$3.9
million
|
Three
Months Ended
December
31,
(in
thousands)
|
Six
Months Ended
December
31,
(in
thousands)
|
|||||||||||||||
Included
in:
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cost
of revenues
|
$ | 61 | $ | 76 | $ | 122 | $ | 152 | ||||||||
Selling
and marketing expenses(1)
|
- | 2 | (7 | ) | 3 | |||||||||||
General
and administrative expenses(2)
|
205 | 142 | 397 | 265 | ||||||||||||
Pre-tax
stock-based compensation expense
|
$ | 266 | $ | 220 | $ | 512 | $ | 420 |
|
(1)
|
Includes
$8,000 related to a forfeiture of stock options during the six months
ended December 31, 2007.
|
|
(2)
|
Includes
$85,000 and $167,000 in the three and six months ended December 31, 2007,
respectively, and $35,000 and $38,000 in the three and six months ended
December 31, 2006, respectively, for amortization of compensation expense
related to issuance of restricted
stock.
|
Three
Months Ended
December
31,
|
Six
Months Ended
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Dividend
yield
|
6.9 | % | 2.4 | % | 6.9 | % | 2.3 | % | ||||||||
Expected
volatility
|
48.4 | % | 52.0 | % | 48.4 | % | 51.5 | % | ||||||||
Risk-free
interest rate
|
3.9 | % | 4.5 | % | 3.9 | % | 4.6 | % | ||||||||
Expected
term
|
6.0 yrs.
|
5.1
yrs.
|
6.0
yrs.
|
5.1
yrs.
|
Options
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding
at June 30, 2007
|
912,000 | $ | 12.98 |
6.4
yrs.
|
$ | 3,280,000 | ||||||||||
Granted
|
30,000 | $ | 14.50 |
-
|
-
|
|||||||||||
Exercised
|
(37,000 | ) | $ | 5.10 |
-
|
-
|
||||||||||
Forfeited
or cancelled
|
(18,000 | ) | $ | 14.53 |
-
|
-
|
||||||||||
Outstanding
at December 31, 2007
|
887,000 | $ | 13.33 |
6.0
yrs.
|
$ | 1,507,000 | ||||||||||
Exercisable
at December 31, 2007
|
640,000 | $ | 13.08 |
5.5
yrs.
|
$ | 1,468,000 | ||||||||||
Unvested
at December 31, 2007
|
247,000 | $ | 13.96 |
7.5
yrs.
|
$ | 39,000 | ||||||||||
Expected
to vest at December 31, 2007
|
216,000 | $ | 13.97 |
7.5
yrs.
|
$ | 36,000 |
Non-Vested
Shares:
|
Shares
|
Weighted
Average
Grant-Date
Fair
Value
|
||||||
Non-vested
at June 30, 2007
|
50,230 | $ | 13.68 | |||||
Granted
|
21,359 | 14.12 | ||||||
Vested
|
(13,927 | ) | 13.60 | |||||
Forfeited or
Cancelled
|
- | - | ||||||
Non-vested
at December 31, 2007
|
57,662 | $ | 13.86 |
Fiscal
Year Ending June 30,
|
Amount
|
|||
2008
|
$ | 490,000 | ||
2009
|
596,000 | |||
2010
|
256,000 | |||
2011
|
120,000 | |||
2012
|
15,000 | |||
$ | 1,477,000 |
|
Concentrations
|
Coins
|
GCAL
including
Gemprint
|
AGL
|
Expos
|
CCE
and
Other
|
Total
|
|||||||||||||||||||
Goodwill:
|
||||||||||||||||||||||||
Balance
at June 30, 2007
|
$ | 515 | $ | 8,168 | $ | 2,083 | $ | 1,001 | $ | 1,117 | $ | 12,884 | ||||||||||||
Purchase price adjustment since
June 30, 2007:
|
||||||||||||||||||||||||
CCE
|
- | - | - | - | (5 | ) | (5 | ) | ||||||||||||||||
AGL
|
- | - | 162 | - | - | 162 | ||||||||||||||||||
Balance
at December 31, 2007
|
$ | 515 | $ | 8,168 | $ | 2,245 | $ | 1,001 | $ | 1,112 | $ | 13,041 | ||||||||||||
Intangible
Assets, Net:
|
||||||||||||||||||||||||
Balance
at June 30, 2007
|
$ | 412 | $ | 4,013 | $ | 2,916 | $ | 1,700 | $ | 1,324 | $ | 10,365 | ||||||||||||
Capitalized
software costs
|
54 | 150 | - | - | 411 | 615 | ||||||||||||||||||
CDE
software license
|
- | 20 | - | - | - | 20 | ||||||||||||||||||
AGL
reference set
|
- | - | (274 | ) | - | - | (274 | ) | ||||||||||||||||
Less: amortization for six
months ended
December 31, 2007
|
(81 | ) | (260 | ) | (57 | ) | (55 | ) | (103 | ) | (556 | ) | ||||||||||||
Balance at December 31,
2007
|
$ | 385 | $ | 3,923 | $ | 2,585 | $ | 1,645 | $ | 1,632 | $ | 10,170 |
2008
(for Q3-Q4)
|
$ | 656,000 | ||
2009
|
$ | 1,406,000 | ||
2010
|
$ | 1,228,000 | ||
2011
|
$ | 780,000 | ||
2012
|
$ | 560,000 |
Three
Months Ended
December
31,
|
Six
Months Ended
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue
|
$ | 9,964 | $ | 8,793 | $ | 20,789 | $ | 18,768 | ||||||||
Operating
loss
|
(2,709 | ) | (875 | ) | (3,320 | ) | (745 | ) | ||||||||
Interest
income, net
|
296 | 546 | 740 | 1,113 | ||||||||||||
Other
income
|
2 | 2 | 3 | 6 | ||||||||||||
Income
(loss) before provision (benefit) for income taxes
|
(2,411 | ) | (327 | ) | (2,577 | ) | 374 | |||||||||
Provision
(benefit) for income taxes
|
(962 | ) | (147 | ) | (1,028 | ) | 171 | |||||||||
Income
(loss) from continuing operations
|
(1,449 | ) | (180 | ) | (1,549 | ) | 203 | |||||||||
Income
from discontinued operations
|
6 | 80 | (4 | ) | 91 | |||||||||||
Net
income (loss)
|
$ | (1,443 | ) | $ | (100 | ) | $ | (1,553 | ) | $ | 294 | |||||
Net
income (loss) per basic share:
|
||||||||||||||||
Income (loss) from continuing
operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income from discontinued
operations
|
$ | - | $ | 0.01 | $ | - | $ | 0.01 | ||||||||
Net income
(loss)
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 | |||||
Net
income (loss) per diluted share:
|
||||||||||||||||
Income (loss) from continuing
operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income from discontinued
operations
|
$ | - | $ | 0.01 | $ | - | $ | 0.01 | ||||||||
Net income
(loss)
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 |
4.
|
INVENTORIES
|
Inventories
consist of the following:
|
||||||||
(in
thousands)
|
||||||||
December
31,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Coins
|
$ | 345 | $ | 253 | ||||
Other
collectibles
|
29 | 33 | ||||||
Grading
raw materials consumable inventory
|
254 | 247 | ||||||
628 | 533 | |||||||
Less
inventory
reserve
|
(101 | ) | (91 | ) | ||||
Inventories,
net
|
$ | 527 | $ | 442 |
Property
and equipment consist of the following:
|
||||||||
(in
thousands)
|
||||||||
December
31,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Coins
and stamp grading reference sets
|
$ | 617 | $ | 222 | ||||
Computer
hardware and equipment
|
1,759 | 1,664 | ||||||
Computer
software
|
1,035 | 1,027 | ||||||
Equipment
|
3,670 | 3,366 | ||||||
Furniture
and office
equipment
|
1,102 | 1,064 | ||||||
Leasehold
improvements
|
1,535 | 1,452 | ||||||
Trading
card reference
library
|
52 | 52 | ||||||
9,770 | 8,847 | |||||||
Less
accumulated depreciation and amortization
|
(5,368 | ) | (4,766 | ) | ||||
Property
and equipment, net
|
$ | 4,402 | $ | 4,081 |
Accrued
liabilities consist of the following:
|
(in
thousands)
|
|||||||
December
31,
|
June
30,
|
|||||||
2007
|
2007
|
|||||||
Warranty
costs
|
$ | 1,432 | $ | 735 | ||||
Professional
fees
|
132 | 183 | ||||||
Other
|
985 | 1,236 | ||||||
$ | 2,549 | $ | 2,154 |
(in
thousands)
|
||||||||
Six
Months
Ended
December
31,
|
Six
Months
Ended
December
31,
|
|||||||
2007
|
2006
|
|||||||
Warranty
reserve, beginning of period
|
$ | 735 | $ | 710 | ||||
Charged
to cost of revenue
|
1,008 | 190 | ||||||
Payments
|
(311 | ) | (196 | ) | ||||
Warranty
reserve, end of period
|
$ | 1,432 | $ | 704 |
7.
|
DISCONTINUED
OPERATIONS
|
(in
thousands)
|
||||||||||||||||
Three
Months Ended
December
31,
|
Six
Months Ended
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
revenues
|
$ | 13 | $ | 46 | $ | 17 | $ | 49 | ||||||||
Income
(loss) before income tax expense (benefit)
|
10 | 30 | (6 | ) | 41 | |||||||||||
Gain
on sale of discontinued businesses
|
- | 144 | - | 151 | ||||||||||||
10 | 174 | (6 | ) | 192 | ||||||||||||
Income
tax expense
(benefit)
|
4 | 94 | (2 | ) | 101 | |||||||||||
Net
income (loss) from discontinued operations
|
$ | 6 | $ | 80 | $ | (4 | ) | $ | 91 |
8.
|
INCOME TAXES
|
(in
thousands)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Income
(loss) from continuing operations
|
$ | (1,449 | ) | $ | (180 | ) | $ | (1,549 | ) | $ | 203 | |||||
Income
(loss) from discontinued operations, net of gain
on sales of discontinued
businesses (net of income taxes)
|
6 | 80 | (4 | ) | 91 | |||||||||||
Net
income (loss)
|
$ | (1,443 | ) | $ | (100 | ) | $ | (1,553 | ) | $ | 294 | |||||
NET
INCOME (LOSS) PER SHARE – BASIC:
|
||||||||||||||||
Income (loss) from continuing
operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income (loss) from discontinued
operations, net of gain
on sales
of discontinued businesses (net of income
taxes)
|
- | 0.01 | - | 0.01 | ||||||||||||
Total
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 | |||||
NET
INCOME (LOSS) PER SHARE – DILUTED:
|
||||||||||||||||
Income (loss) from continuing
operations
|
$ | (0.17 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.02 | |||||
Income (loss) from discontinued
operations, net of gain
on sales of discontinued
businesses (net of income taxes)
|
- | 0.01 | - | 0.01 | ||||||||||||
Total
|
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | $ | 0.03 | |||||
WEIGHTED
AVERAGE SHARES OUTSTANDING:
|
||||||||||||||||
Basic
|
8,491 | 8,309 | 8,477 | 8,328 | ||||||||||||
Effect of dilutive
shares
|
- | - | - | 303 | ||||||||||||
Diluted
|
8,491 | 8,309 | 8,477 | 8,631 |
10.
|
BUSINESS
SEGMENTS
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
revenues from external customers
|
||||||||||||||||
Coins
|
$ | 5,527 | $ | 4,896 | $ | 11,565 | $ | 10,486 | ||||||||
Sportscards
|
2,192 | 2,099 | 4,484 | 4,350 | ||||||||||||
Jewelry
|
534 | 426 | 914 | 667 | ||||||||||||
Other
|
1,711 | 1,372 | 3,826 | 3,188 | ||||||||||||
Total revenue
|
$ | 9,964 | $ | 8,793 | $ | 20,789 | $ | 18,691 | ||||||||
Amortization
and depreciation
|
||||||||||||||||
Coins
|
$ | 62 | $ | 36 | $ | 119 | $ | 76 | ||||||||
Sportscards
|
24 | 21 | 47 | 42 | ||||||||||||
Jewelry
|
322 | 179 | 635 | 287 | ||||||||||||
Other
|
97 | 147 | 196 | 287 | ||||||||||||
Total
|
505 | 383 | 997 | 692 | ||||||||||||
Unallocated amortization and
depreciation
|
84 | 79 | 167 | 160 | ||||||||||||
Consolidated amortization and
depreciation
|
$ | 589 | $ | 462 | $ | 1,164 | $ | 852 | ||||||||
Stock-based
compensation
|
||||||||||||||||
Coins
|
$ | 33 | $ | 55 | $ | 67 | $ | 113 | ||||||||
Sportscards
|
5 | 4 | 9 | 20 | ||||||||||||
Jewelry
|
3 | 1 | 6 | 2 | ||||||||||||
Other
|
29 | 25 | 58 | 52 | ||||||||||||
Total
|
70 | 85 | 140 | 187 | ||||||||||||
Unallocated stock-based
compensation
|
196 | 135 | 372 | 233 | ||||||||||||
Consolidated stock-based
compensation
|
$ | 266 | $ | 220 | $ | 512 | $ | 420 | ||||||||
Operating
income (loss) before unallocated expenses
|
||||||||||||||||
Coins
|
$ | 457 | $ | 1,738 | $ | 2,941 | $ | 4,121 | ||||||||
Sportscards
|
424 | 314 | 942 | 752 | ||||||||||||
Jewelry
|
(1,882 | ) | (901 | ) | (3,691 | ) | (1,542 | ) | ||||||||
Other
|
13 | (126 | ) | 322 | 147 | |||||||||||
Total
|
(988 | ) | 1,025 | 514 | 3,478 | |||||||||||
Unallocated operating
expenses
|
(1,721 | ) | (1,900 | ) | (3,834 | ) | (4,223 | ) | ||||||||
Consolidated operating
loss
|
$ | (2,709 | ) | $ | (875 | ) | $ | (3,320 | ) | $ | (745 | ) |
At
December 31
|
At
June 30,
|
|||||||
Identifiable
Assets
|
2007
|
2007
|
||||||
Coins
|
$ | 3,930 | $ | 2,622 | ||||
Sportscards
|
732 | 582 | ||||||
Jewelry
|
20,527 | 20,453 | ||||||
Other
|
8,815 | 7,866 | ||||||
Total
|
34,004 | 31,523 | ||||||
Unallocated
assets
|
38,065 | 46,578 | ||||||
Consolidated
assets
|
$ | 72,069 | $ | 78,101 |
11.
|
LINE
OF CREDIT
|
12.
|
LEGAL
MATTERS
|
13.
|
SUBSEQUENT
EVENT
|
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
revenues
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of revenues
|
68.2 | % | 49.7 | % | 57.7 | % | 46.7 | % | ||||||||
Gross
profit
|
31.8 | % | 50.3 | % | 42.3 | % | 53.3 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Selling and marketing
expenses
|
18.7 | % | 16.3 | % | 18.7 | % | 14.4 | % | ||||||||
General and administrative
expenses
|
37.4 | % | 41.9 | % | 36.9 | % | 41.0 | % | ||||||||
Amortization of
intangibles
|
2.9 | % | 2.1 | % | 2.7 | % | 1.9 | % | ||||||||
Total operating
expenses
|
59.0 | % | 60.3 | % | 58.3 | % | 57.3 | % | ||||||||
Operating
loss
|
(27.2 | %) | (10.0 | %) | (16.0 | %) | (4.0 | %) | ||||||||
Interest
income, net
|
3.0 | % | 6.3 | % | 3.6 | % | 6.0 | % | ||||||||
Other
income
|
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Income
(loss) before provision (benefit) for income taxes
|
(24.2 | %) | (3.7 | %) | (12.4 | %) | 2.0 | % | ||||||||
Provision
(benefit) for income taxes
|
(9.6 | %) | (1.7 | %) | (5.0 | %) | 0.9 | % | ||||||||
Income
(loss) from continuing operations
|
(14.6 | %) | (2.0 | %) | (7.4 | %) | 1.1 | % | ||||||||
Income
(loss) from discontinued operations, net of gain on
sales of discontinued
businesses (net of income taxes)
|
0.1 | % | 0.9 | % | (0.1 | %) | 0.5 | % | ||||||||
Net
income (loss)
|
(14.5 | %) | (1.1 | %) | (7.5 | %) | 1.6 | % |
Units
Processed
Three
Months Ended December 31,
|
Declared
Value (000)
Three
Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||
Coins
|
292,800 | 42.3 | % | 281,400 | 43.0 | % | $ | 246,840 | 57.9 | % | $ | 322,673 | 78.9 | % | ||||||||||||||||||
Sportscards
|
313,000 | 45.3 | % | 295,600 | 45.1 | % | 19,402 | 4.5 | % | 21,568 | 5.3 | % | ||||||||||||||||||||
Autographs
|
50,000 | 7.2 | % | 43,800 | 6.7 | % | 6,159 | 1.4 | % | 4,152 | 1.0 | % | ||||||||||||||||||||
Stamps
|
11,700 | 1.7 | % | 18,000 | 2.7 | % | 8,928 | 2.1 | % | 2,296 | 0.5 | % | ||||||||||||||||||||
Currency
|
10,800 | 1.6 | % | 7,200 | 1.1 | % | 13,487 | 3.2 | % | 7,453 | 1.8 | % | ||||||||||||||||||||
Diamonds
|
12,000 | 1.7 | % | 9,000 | 1.4 | % | 115,418 | 27.1 | % | 33,924 | 8.3 | % | ||||||||||||||||||||
Colored Gemstones*
|
1,100 | 0.2 | % | 200 | - | 16,066 | 3.8 | % | 17,042 | 4.2 | % | |||||||||||||||||||||
Total
|
691,400 | 100.0 | % | 655,200 | 100.0 | % | $ | 426,300 | 100.0 | % | $ | 409,108 | 100.0 | % |
Units
Processed
Six
Months Ended December 31,
|
Declared
Value (000)
Six
Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||
Coins
|
659,900 | 44.6 | % | 762,700 | 50.2 | % | $ | 711,762 | 73.2 | % | $ | 787,595 | 82.5 | % | ||||||||||||||||||
Sportscards
|
651,500 | 44.0 | % | 617,100 | 40.6 | % | 41,997 | 4.3 | % | 44,163 | 4.6 | % | ||||||||||||||||||||
Autographs
|
94,800 | 6.4 | % | 78,000 | 5.1 | % | 16,634 | 1.7 | % | 14,626 | 1.5 | % | ||||||||||||||||||||
Stamps
|
31,400 | 2.1 | % | 30,300 | 2.0 | % | 11,987 | 1.2 | % | 5,356 | 0.6 | % | ||||||||||||||||||||
Currency
|
21,800 | 1.5 | % | 16,300 | 1.1 | % | 21,929 | 2.3 | % | 15,895 | 1.7 | % | ||||||||||||||||||||
Diamonds
|
19,700 | 1.3 | % | 15,000 | 1.0 | % | 138,627 | 14.3 | % | 57,134 | 6.0 | % | ||||||||||||||||||||
Colored Gemstones*
|
2,000 | 0.1 | % | 300 | - | 29,210 | 3.0 | % | 30,187 | 3.1 | % | |||||||||||||||||||||
Total
|
1,481,100 | 100.0 | % | 1,519,700 | 100.0 | % | $ | 972,146 | 100.0 | % | $ | 954,956 | 100.0 | % |
Three
Months Ended December 31,
|
||||||||||||||||||||||||
2007
|
2006
|
Increase
|
||||||||||||||||||||||
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Product
revenues
|
$ | 816 | 8.2 | % | $ | 78 | 0.9 | % | $ | 738 | 946.2 | % | ||||||||||||
Grading
and authentication service fees
|
7,680 | 77.1 | % | 7,455 | 84.8 | % | 225 | 3.0 | % | |||||||||||||||
Other
related services
|
1,468 | 14.7 | % | 1,260 | 14.3 | % | 208 | 16.5 | % | |||||||||||||||
Total
services
|
9,148 | 91.8 | % | 8,715 | 99.1 | % | 433 | 5.0 | % | |||||||||||||||
Total
net revenues
|
$ | 9,964 | 100.0 | % | $ | 8,793 | 100.0 | % | $ | 1,171 | 13.3 | % |
Six
Months Ended December 31,
|
||||||||||||||||||||||||
2007
|
2006
|
Increase
|
||||||||||||||||||||||
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
Amount
|
%
of Net
Revenues
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Product
revenues
|
$ | 907 | 4.4 | % | $ | 130 | 0.7 | % | $ | 777 | 597.7 | % | ||||||||||||
Grading
and authentication service fees
|
16,651 | 80.1 | % | 15,770 | 84.4 | % | 881 | 5.6 | % | |||||||||||||||
Other
related services
|
3,231 | 15.5 | % | 2,791 | 14.9 | % | 440 | 15.8 | % | |||||||||||||||
Total
services
|
19,882 | 95.6 | % | 18,561 | 99.3 | % | 1,321 | 7.1 | % | |||||||||||||||
Total
net revenues
|
$ | 20,789 | 100.0 | % | $ | 18,691 | 100.0 | % | $ | 2,098 | 11.2 | % |
Three
Months Ended December 31,
|
||||||||||||||||||||||||||||||||
2007
|
2006
|
2007
vs. 2006
|
||||||||||||||||||||||||||||||
Increase
(Decrease)
|
||||||||||||||||||||||||||||||||
%
of Net
|
%
of Net
|
Revenues
|
Units
Processed
|
|||||||||||||||||||||||||||||
Amount
|
Revenues
|
Amount
|
Revenues
|
Amounts
|
Percent
|
Number
|
Percent
|
|||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||||||
Product
revenues
|
$ | 816 | 8.2 | % | $ | 78 | 0.9 | % | $ | 738 | 946.2 | % | N/A |
N/A
|
||||||||||||||||||
Coins
|
4,711 | 47.3 | % | 4,818 | 54.8 | % | (107 | ) | (2.2 | %) | 11 | 4.1 | % | |||||||||||||||||||
Sportscards
|
2,192 | 22.0 | % | 2,099 | 23.9 | % | 93 | 4.4 | % | 17 | 5.9 | % | ||||||||||||||||||||
Other
(1)
|
2,245 | 22.5 | % | 1,798 | 20.4 | % | 447 | 24.9 | % | 8 | 9.5 | % | ||||||||||||||||||||
Net
Revenues
|
$ | 9,964 | 100.0 | % | $ | 8,793 | 100.0 | % | $ | 1,171 | 13.3 | % | 36 | 5.5 | % |
Six
Months Ended December 31,
|
||||||||||||||||||||||||||||||||
2007
|
2006
|
2007
vs. 2006
|
||||||||||||||||||||||||||||||
Increase
(Decrease)
|
||||||||||||||||||||||||||||||||
%
of Net
|
%
of Net
|
Revenues
|
Units
Processed
|
|||||||||||||||||||||||||||||
Amount
|
Revenues
|
Amount
|
Revenues
|
Amounts
|
Percent
|
Number
|
Percent
|
|||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||||||
Product
revenues
|
$ | 907 | 4.4 | % | $ | 130 | 0.7 | % | $ | 777 | 597.7 | % | N/A | N/A | ||||||||||||||||||
Coins
|
10,658 | 51.2 | % | 10,356 | 55.4 | % | 302 | 2.9 | % | (103 | ) | (13.5 | ) | |||||||||||||||||||
Sportscards
|
4,484 | 21.6 | % | 4,350 | 23.3 | % | 134 | 3.1 | % | 34 | 5.6 | % | ||||||||||||||||||||
Other
(1)
|
4,740 | 22.8 | % | 3,855 | 20.6 | % | 885 | 23.0 | % | 30 | 21.3 | % | ||||||||||||||||||||
Net
Revenues
|
$ | 20,789 | 100.0 | % | $ | 18,691 | 100.0 | % | $ | 2,098 | 11.2 | % | (39 | ) | (2.5 | %) |
(1)
|
Consists
of autographs, stamps, currency, diamonds and colored gemstones, CCE
subscription business, our CFC dealer financing business, and our
collectibles convention business.
|
Three
Months Ended December 31,
|
Six
Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||
Gross
Profit
|
Gross
Profit
|
Gross
Profit
|
Gross
Profit
|
|||||||||||||||||||||||||||||
Amount
|
Margin
|
Amount
|
Margin
|
Amounts
|
Margin
|
Amount
|
Margin
|
|||||||||||||||||||||||||
Gross
profit-products
|
$ | 23,000 | 2.8 | % | $ | 9,000 | 11.5 | % | $ | 86,000 | 9.5 | % | 30,000 | 23.1 | % | |||||||||||||||||
Gross
profit-services
|
3,144,000 | 34.4 | % | 4,417,000 | 50.7 | % | 8,706,000 | 43.8 | % | 9,938,000 | 53.5 | % | ||||||||||||||||||||
Gross
profit-totals
|
$ | 3,167,000 | 31.8 | % | $ | 4,426,000 | 50.3 | % | $ | 8,792,000 | 42.3 | % | 9,968,000 | 53.3 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Selling and marketing
expenses
|
$ | 1,861,000 | $ | 1,433,000 | $ | 3,879,000 | $ | 2,695,000 | ||||||||
Percent of net
revenue
|
18.7 | % | 16.3 | % | 18.7 | % | 14.4 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
General
and administrative expenses
|
$ | 3,729,000 | $ | 3,681,000 | $ | 7,677,000 | $ | 7,660,000 | ||||||||
Percent
of net revenue
|
37.4 | % | 41.9 | % | 36.9 | % | 41.0 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Amortization
and intangibles
|
$ | 286,000 | $ | 187,000 | $ | 556,000 | $ | 358,000 | ||||||||
Percent
of net revenue
|
2.9 | % | 2.1 | % | 2.7 | % | 1.9 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
Included
In:
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cost
of revenues
|
$ | 61,000 | $ | 76,000 | $ | 122,000 | $ | 152,000 | ||||||||
Selling
and marketing expenses
|
- | 2,000 | (7,000 | ) | 3,000 | |||||||||||
General
and administrative expenses
|
205,000 | 142,000 | 397,000 | 265,000 | ||||||||||||
$ | 266,000 | $ | 220,000 | $ | 512,000 | $ | 420,000 |
Fiscal
Year Ending June 30,
|
Amount
|
|||
2008
|
$ | 490,000 | ||
2009
|
596,000 | |||
2010
|
256,000 | |||
2011
|
120,000 | |||
2012
|
15,000 | |||
$ | 1,477,000 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Interest
Income, net
|
$ | 296,000 | $ | 546,000 | $ | 740,000 | $ | 1,113,000 | ||||||||
Percent
of net revenue
|
3.0 | % | 6.3 | % | 3.6 | % | 6.0 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Income
tax (benefit) expense
|
$ | (962,000 | ) | $ | (147,000 | ) | $ | (1,028,000 | ) | $ | 171,000 | |||||
Percent
of net revenue
|
(9.6 | %) | (1.7 | %) | (5.0 | %) | 0.9 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December
31,
|
December
31,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Income
(loss) from discontinued operations,
net of gain on sales of discontinued
businesses
(net of income
taxes)
|
$ | 6,000 | $ | 80,000 | $ | (4,000 | ) | $ | 91,000 | |||||||
Percent
of net revenue
|
0.1 | % | 0.9 | % | (0.1 | %) | 0.5 | % |
Fiscal
Year
|
||||
2008 (remaining
6 months)
|
$ | 912,000 | ||
2009
|
2,131,000 | |||
2010
|
1,243,000 | |||
2011
|
792,000 | |||
2012
|
789,000 | |||
Thereafter
|
3,802,000 | |||
$ | 9,669,000 |
·
|
changes
in general economic conditions or changes in conditions in the
collectibles or high-value assets markets in which we operate, such as a
possible decline in the popularity of some high-value collectibles or
assets, either of which could reduce the volume of authentication and
grading submissions and, therefore, the grading fees we
generate;
|
·
|
a
lack of diversity in our sources of revenues and, more particularly, our
dependence on collectible coin authentication and grading for a
significant percentage of our total revenues, which makes us more
vulnerable to adverse changes in economic conditions, including declines
in the value of precious metals or recessionary or other conditions that
could lead to reduced coin and other collectibles submissions that would,
in turn, result in reductions in our revenues and
income;
|
·
|
our
dependence on certain key executives and collectibles experts, the loss of
the services of any of which could adversely affect our ability to obtain
authentication and grading submissions and, therefore, could harm our
operating results;
|
·
|
the
fact that for the fiscal year ended June 30, 2007 and the six months ended
December 31, 2007, our five
largest coin authentication and grading customers
accounted for approximately 14% and 10% of our net revenues, respectively,
which means that the loss of any of those customers, or a reduction in
their grading submissions to us, would result in a decline in our revenues
and a reduction in our operating
income;
|
·
|
increased
competition from other collectibles’ authentication and grading companies
that could result in reductions in collectibles submissions to us or could
require us to reduce the prices we charge for our services, either of
which could result in reductions in our revenue and
income;
|
·
|
the
risk that we will incur unanticipated liabilities under our authentication
and grading warranties that would increase our operating
expenses;
|
·
|
the
risk that warranty claims will increase to a higher level than in the past
such that we will have to recognize additional warranty accruals in
anticipation of these claims and our ongoing warranty accrual rate will
increase to cover potential higher claims in the
future;
|
·
|
the
risk that new collectibles service offerings and business initiatives,
such as autograph, stamp and paper currency grading services, diamonds and
colored gemstones, and our dealer financing program, will not gain market
acceptance or will be unsuccessful and will, as a result, increase our
operating expenses and reduce our overall profitability or cause us to
incur losses;
|
·
|
the
risks involved in acquiring existing or commencing new authentication and
grading businesses, including the risks that we will be unable to
successfully integrate new businesses into our operations; that our new
businesses (in particular our diamond and colored gemstones businesses)
may not gain market acceptance; that business expansion may result in a
costly diversion of management time and resources from our existing
businesses and increase our operating expenses; that acquisition-related
goodwill and intangible assets may become impaired, which could adversely
impact our financial statements and results of operations; and that we
will not achieve adequate returns on the investments we may make in
acquiring other or establishing new businesses, any of which would harm
our profitability or cause us to incur
losses;
|
·
|
the
risks that we will encounter problems with or failures of our computer
systems that would interrupt our services or result in loss of data that
we need for our business; and
|
·
|
the
potential of increased government regulation of our businesses that could
cause operating costs to increase.
|
ITEM
1.
|
ITEM
1A.
|
Nominees
|
Votes
For
|
Votes
Withheld
|
||||||
A.
Clinton Allen
|
6,677,005 |
14,238
|
||||||
Deborah
A. Farrington
|
6,676,970 |
14,273
|
||||||
David
G. Hall
|
6,672,194 |
19,049
|
||||||
Michael
R. Haynes
|
6,671,944 |
19,299
|
||||||
Michael
J. McConnell
|
6,675,845 |
15,398
|
||||||
A.
J. “Bert” Moyer
|
6,676,755 |
14,488
|
||||||
Van
D. Simmons
|
6,671,119 |
20,424
|
||||||
Bruce
A. Stevens
|
6,676,755 |
14,488
|
Number
of Shares
|
Percent
of
Shares
Voted
|
|||||||
Voted
For
|
6,544,411 | 98 | % | |||||
Voted
Against
|
11,686 | 0 | % | |||||
Voted
as Abstentions
|
135,146 | 2 | % |
ITEM
6.
|
(a)
|
Exhibits:
|
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: February
11, 2008
|
/s/
MICHAEL R. HAYNES
|
|
Michael
R. Haynes
|
||
Chief
Executive Officer
|
COLLECTORS
UNIVERSE, INC.
|
||
Date: February
11, 2008
|
/s/
JOSEPH J. WALLACE
|
|
Joseph
J. Wallace
|
||
Chief
Financial Officer
|
Number
|
Description
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act of
2002
|
Exhibit
32.1
|
Chief
Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|
Exhibit
32.2
|
Chief
Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
|