x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2002

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Delaware
(State or other jurisdiction of Incorporation)

33-0846191
(I.R.S. Employer Identification Number)

Yes

x

No

o

Class

Outstanding at November 11, 2002

Common Stock $.001 Par Value.

24,517,486

Page No.

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of
September 30, 2002 and June 30, 2002 (unaudited)

1

Condensed Consolidated Statements of Operations for the three months ended
September 30, 2002 and 2001 (unaudited)

2

Condensed Consolidated Statements of Cash Flows for the three months ended
September 30, 2002 and  2001 (unaudited)

3

Notes to Condensed Consolidated Financial Statements (unaudited)

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

17

Item 4.

Controls and Procedures

17

Part II.

Other Information

Item 4.

Exhibits and Reports on Form 8-K and Exhibits

18

Signatures

S-1

Certifications of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act

S-2

Certifications of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act

S-3

Exhibits

Exhibit 99.1

Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act

Exhibit 99.2

Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act

September 30,
2002

June 30,
2002

ASSETS

Current assets:

Cash and cash equivalents

$

5,001

$

4,947

Accounts receivable, net

9,157

7,291

Auction consignment advances

1,288

3,359

Inventories, net

7,562

8,166

Prepaid expenses and other

782

513

Notes receivable

465

481

Note receivable from an officer

—  

381

Refundable income taxes

975

1,191

Deferred income taxes

648

648

Total current assets

25,878

26,977

Property and equipment, net

1,601

1,736

Notes receivable, net of current portion

361

476

Goodwill

1,477

14,961

Intangible assets, net

74

93

Deferred income taxes

5,585

1,074

Other assets

143

192

$

35,119

$

45,509

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

173

$

878

Consignor payable

3,716

4,598

Accrued liabilities

1,166

736

Accrued compensation and benefits

861

967

Deferred revenue

837

921

Total current liabilities

6,753

8,100

Deferred rent

291

281

Stockholders’ equity:

Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or outstanding

—  

—  

Common stock, $.001 par value; 30,000 shares authorized; issued 25,017 at  September 30, 2002 and 25,526 at June 30, 2002

25

26

Additional paid-in capital

40,873

41,248

Accumulated deficit

(11,802

)

(3,125

)

Treasury stock, at cost (500 shares)

(1,021

)

(1,021

)

Total stockholders’ equity

28,075

37,128

$

35,119

$

45,509

Three Months Ended

September 30,
2002

September 30,
2001

Net revenues

$

12,593

$

9,329

Cost of revenues

7,119

5,917

Gross profit

5,474

3,412

Selling, general and administrative expenses

5,021

5,218

Amortization of goodwill and intangibles

19

411

Total operating expenses

5,040

5,629

Operating income (loss)

434

(2,217

)

Interest income, net

79

88

Other income (expense), net

(1

)

8

Income (loss) before provision (benefit) for income taxes

512

(2,121

)

Provision (benefit) for income taxes

216

(1,035

)

Net income (loss) before cumulative effect of accounting change

296

$

(1,086

)

Cumulative effect of accounting change, net of taxes of $4,511

(8,973

)

—  

Net loss

$

(8,677

)

$

(1,086

)

Net income (loss) per share – basic

Before cumulative effect of accounting change

$

0.01

$

(0.04

)

Cumulative effect of accounting change

(0.36

)

—

Total

$

(0.35

)

$

(0.04

)

Net income (loss) per share – diluted

Before cumulative effect of accounting change

$

0.01

$

(0.04

)

Cumulative effect of accounting change

(0.36

)

—

Total

$

(0.35

)

$

(0.04

)

Weighted average shares outstanding:

Basic

24,772

24,995

Diluted

25,151

24,995

Three Months Ended
September 30,

2002

2001

OPERATING ACTIVITIES:

Net loss

$

(8,677

)

$

(1,086

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

203

611

Loss on disposal of fixed assets

5

—  

Cumulative effect of accounting change

8,973

—  

Stock-based compensation

—  

13

Interest on notes receivable from an officer

(8

)

—  

Changes in operating assets and liabilities:

Accounts receivable

(1,866

)

2,675

Auction consignment advances

2,071

237

Inventories

604

(120

)

Prepaid expenses and other assets

(269

)

186

Refundable income taxes

216

(1,042

)

Notes receivable

131

—  

Other assets

49

21

Accounts payable and accrued liabilities

(1,253

)

(3,797

)

Deferred revenue

(84

)

245

Net cash provided by (used in) operating activities

95

(2,057

)

INVESTING ACTIVITIES:

Capital expenditures

(54

)

(369

)

Collections (advances) on notes receivable from an officer

3

(85

)

Advances for pending acquisition

—  

(100

)

Net cash used in investing activities

(51

)