UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended March 31, 2017 | |
OR | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _____ |
Commission file number 1-34240
COLLECTORS UNIVERSE, INC.
(Exact name of Registrant as specified in its charter)
Delaware | 33-0846191 |
(State or other jurisdiction of | (I.E. 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
Not Applicable
(Former name, former address and former fiscal year, if changed, since last year)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232,405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☒ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | |
Smaller reporting company ☐ | |
Emerging growth company ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Securities Exchange Act Rule 12b-2). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class | Outstandizng as of April 30, 2017 | |
Common Stock $.001 Par Value | 8,920,998 |
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31 , 201 7
TABLE OF CONTENTS
PART I | Financial Information | Page | |
Item 1. | Financial Statements (unaudited): | ||
Condensed Consolidated Balance Sheets as of March 31, 2017 and June 30, 2016 | 1 | ||
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2017 and 2016 | 2 | ||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2017 and 2016 | 3 | ||
Notes to Condensed Consolidated Financial Statements | 5 | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 | |
Forward-Looking Statements | 14 | ||
Our Business | 14 | ||
Overview of the Three and Nine Months Ended March 31, 2017 Operating Results | 15 | ||
Factors That Can Affect Our Operating Results and Financial Position | 16 | ||
Critical Accounting Policies and Estimates | 18 | ||
| Results of Operations for the Three and Nine Months Ended March 31, 2017 as compared to the Three and Nine Months Ended March 31, 2016 | 19 | ||
Liquidity and Capital Resources | 24 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 | |
Item 4. | Controls and Procedures | 27 | |
PART II | Other Information | ||
Item 1A. | Risk Factors | 29 | |
Item 6. | Exhibits | 29 | |
SIGNATURES | S-1 | ||
INDEX TO EXHIBITS | E-1 | ||
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 | Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002 | |
Exhibit 32.2 | Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002 | |
Exhibit 101.INS | XBRL Instance Document | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document | |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
Exhibit 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
(i)
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except per share data)
(Unaudited)
| March 31, 2017 | June 30, 2016 | ||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,836 | $ | 11,967 | ||||
Accounts receivable, net of allowance of $64 and $35 at March 31, 2017 and June 30, 2016, respectively | 3,887 | 3,883 | ||||||
Inventories, net | 2,853 | 1,835 | ||||||
Prepaid expenses and other current assets | 1,597 | 1,273 | ||||||
Total current assets | 19,173 | 18,958 | ||||||
Property and equipment, net | 2,953 | 2,839 | ||||||
Goodwill | 2,083 | 2,083 | ||||||
Intangible assets, net | 2,009 | 1,762 | ||||||
Deferred income tax assets | 2,229 | 2,229 | ||||||
Other assets | 412 | 240 | ||||||
Non-current assets of discontinued operations | 79 | 79 | ||||||
Total assets | $ | 28,938 | $ | 28,190 | ||||
LIABILITIES AND STOCKHOLDERS' E QUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,047 | $ | 2,728 | ||||
Accrued liabilities | 2,326 | 2,491 | ||||||
Accrued compensation and benefits | 3,817 | 3,414 | ||||||
Income taxes payable | 2,034 | 782 | ||||||
Deferred revenue | 3,008 | 2,563 | ||||||
Current liabilities of discontinued operations | 522 | 619 | ||||||
Total current liabilities | 14,754 | 12,597 | ||||||
Deferred rent | 308 | 381 | ||||||
Non-current liabilities of discontinued operations | - | 217 | ||||||
Commitments and contingencies (Note 10) | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or outstanding | - | - | ||||||
Common stock, $.001 par value; 20,000 shares authorized; 8,921 and 8,898 issued and outstanding at March 31, 2017 and June 30, 2016, respectively. | 9 | 9 | ||||||
Additional paid-in capital | 80,972 | 80,642 | ||||||
Accumulated deficit | (67,105 | ) | (65,656 | ) | ||||
Total stockholders' equity | 13,876 | 14,995 | ||||||
Total liabilities and stockholders' equity | $ | 28,938 | $ | 28,190 | ||||
See accompanying notes to condensed consolidated financial statements.
1
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
(Unaudited)
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net revenues | $ | 18,596 | $ | 17,329 | $ | 52,206 | $ | 44,583 | ||||||||
Cost of revenues | 7,365 | 6,288 | 19,979 | 16,444 | ||||||||||||
Gross profit | 11,231 | 11,041 | 32,227 | 28,139 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing expenses | 2,210 | 2,132 | 6,959 | 6,341 | ||||||||||||
General and administrative expenses | 4,312 | 4,504 | 13,274 | 12,508 | ||||||||||||
Total operating expenses | 6,522 | 6,636 | 20,233 | 18,849 | ||||||||||||
Operating income | 4,709 | 4,405 | 11,994 | 9,290 | ||||||||||||
Interest income and other expense, net | 13 | 3 | (59 | ) | (39 | ) | ||||||||||
Income before provision for income taxes | 4,722 | 4,408 | 11,935 | 9,251 | ||||||||||||
Provision for income taxes | 1,765 | 1,695 | 4,467 | 3,600 | ||||||||||||
Income from continuing operations | 2,957 | 2,713 | 7,468 | 5,651 | ||||||||||||
Income (loss) from discontinued operations, net of income taxes | 6 | 65 | (3 | ) | 47 | |||||||||||
Net income | $ | 2,963 | $ | 2,778 | $ | 7,465 | $ | 5,698 | ||||||||
Net income per basic share: | ||||||||||||||||
Income from continuing operations | $ | 0.35 | $ | 0.32 | $ | 0.88 | $ | 0.67 | ||||||||
Income from discontinued operations | - | 0.01 | - | - | ||||||||||||
Net income per basic share | $ | 0.35 | $ | 0.33 | $ | 0.88 | $ | 0.67 | ||||||||
Net income per diluted share: | ||||||||||||||||
Income from continuing operations | $ | 0.35 | $ | 0.32 | $ | 0.87 | $ | 0.66 | ||||||||
Income from discontinued operations | - | - | - | 0.01 | ||||||||||||
Net income per diluted share | $ | 0.35 | $ | 0.32 | $ | 0.87 | $ | 0.67 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 8,482 | 8,447 | 8,478 | 8,441 | ||||||||||||
Diluted | 8,569 | 8,549 | 8,569 | 8,544 | ||||||||||||
Dividends declared per common share | $ | 0.35 | $ | 0.35 | $ | 1.05 | $ | 1.05 | ||||||||
See accompanying notes to condensed consolidated financial statements.
2
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended March 31, | ||||||||
2017 | 201 6 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 7,465 | $ | 5,698 | ||||
Discontinued operations | 3 | (47 | ) | |||||
Income from continuing operations | 7,468 | 5,651 | ||||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | 1,243 | 1,094 | ||||||
Stock-based compensation expense | 330 | 449 | ||||||
Provision for bad debts | 32 | 5 | ||||||
Provision for inventory write-down | 32 | 46 | ||||||
Provision for warranty | 506 | (293 | ) | |||||
Gain on sale of property and equipment | 5 | (2 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (36 | ) | (1,213 | ) | ||||
Inventories | (1,050 | ) | (262 | ) | ||||
Prepaid expenses and other | (323 | ) | (313 | ) | ||||
Other assets | (172 | ) | (31 | ) | ||||
Accounts payable and accrued liabilities | (286 | ) | 47 | |||||
Accrued compensation and benefits | 402 | (960 | ) | |||||
Income taxes payable | 1,252 | 2,020 | ||||||
Deferred revenue | 445 | 109 | ||||||
Deferred rent | (73 | ) | (15 | ) | ||||
Net cash provided by operating activities of continuing operations | 9,775 | 6,332 | ||||||
Net cash used in operating activities of discontinued businesses | (379 | ) | (331 | ) | ||||
Net cash provided by operating activities | 9,396 | 6,001 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from sale of business | 53 | 49 | ||||||
Capital expenditures | (919 | ) | (1,113 | ) | ||||
Capitalized software | (723 | ) | (615 | ) | ||||
Patents and other intangibles | (5 | ) | (4 | ) | ||||
Net cash used in investing activities | (1,594 | ) | (1,683 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Dividends paid to common stockholders | (8,933 | ) | (8,991 | ) | ||||
Net cash used in financing activities | (8,933 | ) | (8,991 | ) | ||||
Net decrease in cash and cash equivalents | (1,131 | ) | (4,673 | ) | ||||
Cash and cash equivalents at beginning of period | 11,967 | 17,254 | ||||||
Cash and cash equivalents at end of period | $ | 10,836 | $ | 12,581 | ||||
See accompanying notes to condensed consolidated financial statements.
3
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
(Unaudited)
Nine Months Ended March 31, | ||||||||
201 7 | 201 6 | |||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Interest paid during the period | $ | - | $ | - | ||||
Income taxes paid during the period | $ | 2,934 | $ | 1,609 | ||||
See accompanying notes to condensed consolidated financial statements.
4
COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. | SUMMARY OF Significant Accounting Policies |