SPGR News Superior Galleries Reports Record Fiscal 2006 Revenues
BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Superior Galleries, Inc. (“Superior”)
(OTCBB:SPGR) today reported results for its fourth quarter and fiscal
year ended June 30, 2006, including record revenues for the fiscal 2006
fiscal year of $46.3 million, an increase of $6.8 million, or
approximately 17.2%, from $39.5 million for the year ended June 30, 2005.
The Company’s net loss for the year ended June
30, 2006 was $2.5 million, or $0.52 per share, as compared to a net loss
of $616,000, or $0.13 per share, for the year ended June 30, 2005. The
$2.5 million loss in fiscal 2006 includes $1.7 million in non-cash
expenses, including expenses recorded for depreciation of $145,000, the
fair value of common stock grants of $36,000 and the fair value of stock
option awards of $410,000. The Company also increased its reserves by
$241,000 for delinquent accounts receivable and by $840,000 for the fair
market value of its rare coin inventory. Management attributed the
decline in operating results primarily to additional infrastructure
costs to support current and anticipated future growth, increased
reserves against accounts receivable and inventory values, higher net
interest expenses, and costs incurred in connection with the proposed
merger with DGSE, Inc. that was announced July 17, 2006.
The Company recorded revenues of approximately $10.0 million for its
fourth quarter ended June 30, 2006, a decrease of $0.2 million, or 2.3%,
from $10.2 million for the fourth quarter of 2005.
For the quarter ended June 30, 2006, the Company recorded a net loss of
$1.7 million, or $0.36 per share, versus a net loss of $408,000, or
$0.09 per share, for the comparable period of fiscal 2005. As in
connection with the fiscal year, management attributed the decline to
the effects of decreased quarterly revenue year over year, combined with
higher infrastructure costs, increased reserves against accounts
receivable and inventory values, higher net interest expenses, and costs
incurred in connection with the proposed merger with DGSE.
Silvano DiGenova, CEO of Superior, commented, “While
record fiscal year revenues did not translate into profitability due to
our investments in building the Company, we are confident that we are
positioning Superior for success. This can be seen in part in the
higher-quality inventory we are now emphasizing, which helped to
generate such impressive results in our recent Elite auctions in Santa
Clara, Beverly Hills and Denver. We are also pleased with the increase
in rare coin purchases by Stanford Coins and Bullion in fiscal 2006, and
with the continued support of its parent company, Stanford Financial
Group, which agreed to extend the maturity of loans to us under the
Commercial Loan and Security Agreement to October 1, 2007. Finally, we
believe that the proposed merger of Superior with DGSE testifies to the
long-term viability of our business model, infrastructure and staff.”
Superior Galleries, Inc. is a publicly traded company, acting as a
dealer and auctioneer in rare coins and other fine collectibles. The
firm markets its products through its prestigious location in Beverly
Hills, California, and the Company’s web site
atwww.sgbh.com.
Included in this release are statements that are “forward-looking
statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including express and
implied statements concerning future results of operations, expansion
plans and expectations. Although the company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that the expectations reflected in
such forward looking statements will prove to be correct. These
forward-looking statements are subject to certain risks and
uncertainties, including market and other conditions that may affect the
Company’s ability to expand its auction and
dealer activities and control our operating costs, changes in investment
recommendations by financial advisors and risks identified in its SEC
filings. The company’s actual results could
differ materially from those anticipated in the forward looking
statements as a result of certain factors including sales levels,
operating costs, distribution and competition trends, consumer
preferences and other market factors. Past sales performance may not be
indicative of future results. No assurances are given that sales trends
or sales performance on behalf of consignors or customers will continue.
Superior Galleries, Inc.
Statement of Operations
(In thousands, except per share data)
(Unaudited)
Year Ended
Three Months Ended
June
June
June
June
30, 2006
30, 2005
30, 2006
30, 2005
Total revenue
46,317
39,535
9,972
10,205
Cost of sales
38,393
32,027
8,527
8,364
Gross profit
7,924
7,508
1,445
1,841
Selling, general and administrative expenses
9,792
7,708
2,921
2,114
Income (loss) from operations
(1,868)
(200)
(1,476)
(273)
Other income (expense)
(669)
(415)
(240)
(135)
Income (loss) before income tax provision
(2,537)
(615)
(1,716)
(408)
Income tax provision (benefit)
2
1
1
-
Net income (loss) before extraordinary gain
$ (2,539)
$ (616)
$ (1,717)
$ (408)
Extraordinary gain from extinguished debt
50
-
-
-
Net income (loss)
$ (2, 489)
$ (616)
$ (1,717)
$ (408)
Net income (loss) per common share
from net income (loss), basic
$ (0.52)
$ (0.13)
$ (0.36)
$ (0.09)
from net income (loss), fully diluted
$ (0.52)
$ (0.13)
$ (0.36)
$ (0.09)
Weighted average number of common shares outstanding
Basic
4,817
4,627
4,808
4,743
Fully diluted
4,817
4,627
4,808
4,743
Superior Galleries, Inc.
Balance Sheets
(In thousands)
June
June
30, 2006
30, 2005
Assets
Current assets
Cash and cash equivalents
$ 4,770
$ 417
Accounts receivable, net of allowance for uncollectible
accounts of $363 (2006) and $122 (2005)
4,987
4,969
Auction and customer advances
1,829
4,950
Inventories, net of reserve of $840 (2006) and $0 (2005)
7,592
8,713
Prepaid expense
232
346
Total current assets
19,410
19,395
Property and equipment, net
384
220
Total assets
$ 19,794
$ 19,615
Liabilities and Stockholders' Equity
Current liabilities
Line of credit - related party
$ 10,850
$ 9,250
Line of credit
-
2,200
Accounts payable and accrued expenses
8,619
5,154
Notes payable to a related party
200
350
Series A stock redemption payable
-
275
Notes payable
650
650
Total current liabilities
$ 20,319
$ 17,879
Long-term liabilities
Notes payable to a related party, net of current portion
$ 300
$ 400
Series A stock redemption payable, net of current portion
Series B convertible preferred stock $1.00 par value, 3,400 shares
designated 3,400 shares issued and outstanding with a liquidation
preference of $3,400
2,967
2,967
Series D convertible preferred stock $1.00 par value, 2,000 shares
designated 2,000 shares issued and outstanding with a liquidation
preference of $2,000
1,931
1,931
Series E convertible preferred stock $1.00 par value, 2,500 shares
designated 2,500 shares issued and outstanding with a liquidation
preference of $2,500
2,488
2,488
Common stock, $0.001 par value, 12,500 shares authorized, 4,808
(2006) and 4,820 (2005) issued and outstanding
5
5
Additional paid in capital
8,788
8,459
Accumulated deficit
(17,004)
(14,514)
Total stockholders' equity (deficit)
(825)
1,336
Total liabilities and stockholders' equity (deficit)
19,794
$ 19,615
See the Company’s filing with the SEC on Form
10K for notes to financial statements.
