(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarter ended September 30, 2003
	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

	Class	Outstanding at September 30, 2003
	Common Stock $.001 Par Value	6,196,907

	i

	1

		Three Months Ended
		September 30,
		2003			2002
Net revenues		$	17,187		$	12,593
Cost of revenues			10,910			7,119
Gross profit			6,277			5,474
Selling, general and administrative expenses			5,447			4,962
Provision for doubtful accounts			83			59
Amortization of goodwill and intangibles			5			19
Total operating expenses			5,535			5,040
Operating income			742			434
Interest income, net			39			79
Other expenses			(7	)		(1	)
Income before income taxes			774			512
Provision for income taxes			343			216
Net income before cumulative effect of change in accounting principle		$	431		$	296
Cumulative effect of change in accounting principle, net of taxes of $4,511			-			(8,973	)
Net income (loss)		$	431		$	(8,677	)
Net income (loss) per common share – basic
Before cumulative effect of accounting change		$	0.07		$	0.05
Cumulative effect of accounting change			-			(1.45	)
Net Income (loss) – basic		$	0.07		$	(1.40	)
Net income (loss) per common share – diluted
Before cumulative effect of accounting change		$	0.07		$	0.05
Cumulative effect of accounting change			-			(1.43	)
Net income (loss) – diluted		$	0.07		$	(1.38	)
Weighted average shares outstanding:
Basic			6,172			6,193
Diluted			6,288			6,288

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		Three Months Ended September 30,
		2003			2002
OPERATING ACTIVITIES:
Net income (loss)		$	431		$	(8,677	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			192			203
Loss on disposal of fixed assets			7			5
Cumulative effect of accounting change			-			8,973
Stock-based compensation			12			-
Interest on note receivable from an officer			-			(8	)
Provision for doubtful accounts			83			59
Provision for inventory write down and reserve			(98	)		(36	)
Changes in operating assets and liabilities:
Accounts receivable			(2,338	)		(1,925	)
Auction consignment advances			359			2,071
Inventories			1,407			640
Prepaid expenses and other assets			19			(269	)
Refundable income taxes			599			216
Notes receivable			916			131
Other assets			79			49
Accounts payable and accrued liabilities			2,858			(1,253	)
Deferred revenue			(193	)		(84	)
Net cash provided by operating activities			4,333			95
INVESTING ACTIVITIES:
Capital expenditures			(305	)		(54	)
Proceeds from sale of fixed assets			-			3
Net cash used in investing activities			(305	)		(51	)
FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan			16			8
Proceeds from exercise of stock options			155			2
Net cash provided by financing activities			171			10
Net increase in cash and cash equivalents			4,199			54
Cash and cash equivalents at beginning of period			4,482			4,947
Cash and cash equivalents at end of period		$	8,681		$	5,001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid		$	-		$	-
Income taxes paid		$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
During the three months ended September 30, 2002, an officer of the Company transferred to the Company 130,207 shares of the Company’s common stock owned by him, with a fair value of $386,000 in full satisfaction of the then outstanding balance on a note receivable due from the officer.   In connection with the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, the Company completed the initial impairment test and concluded that certain of its goodwill was impaired, resulting in an impairment charge of $13,484,000, net of a tax benefit of $4,511,000 which was recorded in the three months ended September 30, 2002.

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	4

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Inventories consist of the following:
		(in thousands)
		September 30,			June 30,
		2003			2003
Coins and currency		$	5,945		$	7,175
Sportscards and memorabilia			1,313			1,550
Records			3			3
Other collectibles			364			304
			7,625			9,032
Less inventory reserve			(393	)		(491	)
Inventories, net		$	7,232		$	8,541

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3.             PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
		(in thousands)
		September 30,			June 30,
		2003			2003
Grading reference sets		$	15		$	15
Computer hardware and equipment			1,376			1,285
Computer software			886			882
Equipment			1,482			1,273
Furniture and office equipment			709			726
Leasehold improvements			465			464
Trading card reference library			52			52
			4,985			4,697
Less accumulated depreciation and amortization			(3,542	)		(3,365	)
Property and equipment, net		$	1,443		$	1,332

4.             GOODWILL AND INTANGIBLE ASSETS

The Company completed the initial impairment test in the three months ended September 30, 2002 and concluded that certain of its goodwill was impaired, resulting in a non-cash, after-tax charge of $8,973,000 or $1.45 per share. The charge was recorded as a cumulative effect of an accounting change in the condensed consolidated statement of operations for the three months ended September 30, 2002.

The following is a summary of the impairment charge by segment and reporting unit, net of a $4,511,000 tax benefit (in thousands):

Reportable Segment	Reporting Unit	Charge
Collectibles sales	Bowers & Merena	$	7,230
	Lyn Knight		1,262
	Odyssey		323
	Superior Sports Auctions		102
Grading and authentication	Professional Stamp Experts		56
		$	8,973

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On June 30, 2003, the Company tested its goodwill and other intangible assets in accordance with the provisions of SFAS No. 142 and concluded that the remaining unamortized goodwill was impaired, resulting in a pre-tax impairment loss of $1,477,000 recorded in the three months ended June 30, 2003.

5.         INCOME TAXES

Income tax expense was provided for at a 44% rate for the three months ended September 30, 2003. This rate reflects the expected federal and state statutory rate of approximately 41% adjusted for certain permanent tax differences. In the three months ended September 30, 2002, income tax expense was provided for at a 42% rate.

6.             NET INCOME (LOSS) PER SHARE

Net income (loss) per share is determined in accordance with SFAS No. 128, Earnings Per Share . Net income per share for the three months ended September 30, 2003 and net loss for the three months ended September 30, 2002, are computed as follows:

		(in thousands, except per share data)
		Three Months Ended September 30,
		2003			2002
Net income before cumulative effect of accounting change applicable to common stockholders		$	431		$	296
Cumulative effect of accounting change (1)			-			(8,973	)
Net income (loss)		$	431		$	(8,677	)
NET INCOME (LOSS) PER SHARE – BASIC
Before cumulative effect of accounting change		$	0.07		$	0.05
Cumulative effect of accounting change			-			(1.45	)
Total		$	0.07		$	(1.40	)
NET INCOME (LOSS) PER SHARE – DILUTED
Before cumulative effect of accounting change		$	0.07		$	0.05
Cumulative effect of accounting change			-			(1.43	)
Total		$	0.07		$	(1.38	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			6,172			6,193
Diluted			6,288			6,288

         

 

        Company to conduct a transitional goodwill impairment test that resulted in a non-cash goodwill impairment charge in that quarter (see Note 4).

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7.             BUSINESS SEGMENTS

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief decision-maker is its Chief Executive Officer. The operating segments of the Company are organized based on the services and products which it offers to its customers. Similar operating segments have been aggregated to reportable operating segments on the basis of the similarity of products or services, types of customers and other criteria as set forth in SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.

We operate principally in two segments: (1) sales of collectibles through auctions and direct sales; and (2) authentication and grading of collectibles. We allocate operating expenses to each business segment based upon activity levels. We do not allocate specific assets to these segments. All of our revenues and identifiable assets are located in the United States. No individual customer accounted for 10% or more of our net revenues in either of the three-month periods ended September 30, 2003 and 2002.

		(in thousands)
		Three Months Ended September 30, 2003
		Collectibles Sales			Grading and Authentication			Total
Net revenues		$	11,145		$	6,042		$	17,187
Operating income			186			2,140			2,326
Unallocated operating expenses									(1,584	)
Consolidated operating income								$	742

 

 

		(in thousands)
		Three Months Ended September 30, 2002
		Collectibles Sales			Grading and Authentication			Total
Net revenues		$	7,080		$	5,513		$	12,593
Operating income			7			2,010			2,017
Unallocated operating expenses									(1,583	)
Consolidated operating income								$	434

The purchase price is the Company's net book value of the assets sold and an additional amount which is based on future sales revenue of Collectible Properties, Inc.; the Company will record this contingent consideration in future periods as the amount becomes determinable. Although the total consideration is not currently determinable, the Company expects the aggregate consideration to be received under the agreement to be significantly less than the original cost of its acquisition of this business of $3,235,000. The Company did not record a gain or loss on the sale in the three months ended September 30, 2003.

Net revenues and operating income (loss) of Lyn Knight Currency Auctions, Inc. included in the Company's collectibles sales segment for the three months ended September 30, 2003, were $1,784,000 and $449,000, respectively, and for the three months ended September 30, 2002 were $610,000 and ($1,000), respectively.

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The discussion in this Item 2 and in Item 3 of this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "1933 Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "1934 Act"). Those Sections of the 1933 Act and 1934 Act provide a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their financial performance so long as they provide meaningful, cautionary statements identifying important factors that could cause actual results to differ from projected results. Other than statements of historical fact, all statements in this Report and, in particular, any projections of or statements as to our expectatio ns or beliefs concerning our future financial performance or financial condition or as to trends in our business or in our markets, are forward-looking statements. Forward-looking statements often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements reflect our current expectations about trends in our business and our future financial performance. Our actual results in future periods may differ significantly from those expectations. The sections below entitled "Overview – Factors Affecting Revenues and Margins" and "Additional Factors That May Affect Future Operating Results" describe some, but not all, of the factors that could cause these differences, and readers of this Report are urged to read those sections of this Report in their entirety and the Company’s Annual Report on Form 10-K for its fiscal year ended June 30, 2003, which contains additional information regarding risks and uncertainties that could affect our future financial performance, or trends in our business or in our markets.

Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this Report, which speak only as of the date of this Report, or to make predictions about future performance based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this Report or in our Annual Report on Form 10-K referred to above.

Our Business

Collectors Universe provides grading and authentication services for sportscards, rare coins, vintage stamps and authentication services for autographs and sports memorabilia. We also sell rare coins, sportscards, sports and entertainment memorabilia and other collectibles through auctions and direct sales channels. Most of our collectibles auctions are conducted utilizing a "multi-venue" format that may include in-person, Internet, mail-in, and telephone bidding options. This multi-venue format allows bidders to enter auction bids at any time and from any place in the manner that is most convenient for them. We also sell rare coins, sportscards, sports memorabilia and autographs through shows, catalogs, the Internet and by means of direct sales.

General.  The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In determining the carrying value of some of our assets and liabilities, principally accounts receivable, inventories, warranty obligations, deferred income taxes and goodwill, we must make judgments, estimates and assumptions (which we will refer to in this discussion, collectively as "estimates") regarding future events and circumstances that could affect the value of those assets and liabilities, such as future economic conditions that will affect our ability to co llect our accounts receivable or sell our inventories. Those estimates are based on current information available to us at the time they are made. Many of those events and circumstances; however, are outside of our control and if changes in those events or circumstances occur thereafter, GAAP may require us to adjust our earlier estimates that are affected by those changes. Any downward adjustments in value caused by those changes in estimates are commonly referred to as "write-downs" of the assets involved.

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Under GAAP, we also must make estimates regarding the periods during which, and also regarding the amounts at which, sales are recorded. Those estimates will depend on such factors as the circumstances under which customers may be entitled to return the products or reject or adjust the payment for the services provided to them. Additionally, in those cases when we grant our customers contractual rights to return products sold to them, we establish a reserve or allowance for product returns by means of a reduction in the amount at which the sales are recorded, based primarily on the nature, extensiveness and duration of those rights and our historical product return experience.

In making our estimates, we follow GAAP and accounting practices applicable to our business that we believe will enable us to make fair and consistent estimates of the realizable or recoverable amounts of those assets and establish adequate reserves or allowances for potential write-downs in the value of those assets. Set forth below is a summary of the accounting policies that we believe are material to an understanding of our financial condition and results of operations.

We record revenue from the sale of collectibles at our auctions at the time the collectible is either shipped or delivered in-person to the successful bidder, based on the bidder's preference. Shipment or delivery generally takes place after payment is received from the successful bidder, which can be as long as 60 days after completion of the auction. As a result, revenues from sales made at auctions conducted in the second half of a fiscal quarter usually will not be recorded until the subsequent quarter. However, for certain repeat bidders, we ship or deliver in-person the collectibles at the close of any auction and allow them to pay up to 60 days following the auction. Those sales also are recorded at the time of delivery or shipment. We also offer extended payment terms t o certain collectors or dealers. For collectibles that we own and sell at auction, we record the successful bidder amount, or "hammer," as the sale of the merchandise and record the buyer's fee as commission earned. We also record the cost of the merchandise sold as cost of revenues. For collectibles that are consigned to us for auction, we record, as commissions earned, the amounts of the buyer's and seller's fees. Depending upon the type of collectibles auction, we charge successful bidders a 10% to 15% commission and generally charge consignors a 5% to 15% selling commission. On some large or important consignments, we may negotiate a reduced consignor commission or even pay a fee to the consignor.

We sometimes provide our customers with limited rights to return collectibles sold to them. We establish an allowance for estimated returns, if necessary, which reduces the amounts of our reported revenues, based on historical returns experience.

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Accounts Receivable and the Allowance for Doubtful Accounts. In the normal course of business, we extend payment terms to creditworthy collectibles dealers. We regularly review their accounts and estimate the amount of and establish an allowance for uncollectible amounts in each reporting period. The amount of that allowance is based on several factors, including the age of unpaid amounts, a review of significant past due accounts, economic conditions that may affect the ability of dealers to keep their accounts current, and the value of any collateral securing the customer’s payment obligations. Estimates of uncollectible amounts are reviewed each period and, based on that review, are revised to reflect changed circumstances or conditions in the period they become known. For example, if the financial condition of any dealers or economic conditions were to deteriorate, adversely affecting the ability of the dealers to make payments on their account, increases in the allowance may be required. Since the allowance is created by recording a charge against income that is reflected in the provision for doubtful accounts, an increase in the allowance will increase our operating expenses and, therefore, will cause a decline in our operating results in the period when the charge is recorded.

Inventory Valuation Reserve . Inventories are valued at the lower of cost or market and are reduced by an inventory valuation allowance to provide for declines in the value of our inventory, which consists of collectible coins, sportscards and other collectibles. The amount of the allowance is determined on the basis of historical experience, estimates concerning future economic conditions and estimates of future sales. If there was an economic downturn or a decline in sales that caused inventories of some collectibles to accumulate, it might become necessary to increase the allowance. Increases in this allowance will cause a decline in operating result s because such increases are effectuated by charges against income.

Goodwill and Intangible Assets . Goodwill and intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Prior to fiscal 2003, estimated undiscounted future cash flows were used to determine if an asset was impaired and, if such a determination was made, the carrying value of the asset would be reduced to fair value. Any resulting impairment was recorded as a charge against income in the period in which the impairment was recorded. However, under a new standard established by Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, that became applicable in fiscal 2003, we are required to make goodwill impairment determinations on the basis of the fair values of the assets of our reporting units, as defined in SFAS No. 142, rather than on the basis of undiscounted cash flows.

SFAS No. 142 required us to perform a transitional goodwill impairment test as of the beginning of fiscal 2003, the year of adoption of that new standard. Accordingly, we conducted that test at a "reporting unit" level and compared each reporting unit's fair value to its carrying value. We first determined that Collectors Universe’s reporting units were sub-units of its reportable segments. We then measured the value for each reporting unit on the basis of a weighted combination of valuation approaches, including discounted cash flows and multiples of sales and earnings before interest, taxes, depreciation and amortization (EBITDA). On the basis of that valuation, we concluded that a substantial portion of our goodwill was impa ired, and we recorded a non-cash after-tax charge of $8,973,000 or $1.45 per share, as a cumulative effect of an accounting change, in the first quarter of fiscal 2003, that ended on September 30, 2002.

We conducted an additional impairment test, in accordance with SFAS 142 at June 30, 2003 and concluded that all of our remaining goodwill was impaired and, as a result, we recorded an additional non-cash impairment charge of $1,477,000 in the quarter ended June 30, 2003, in that case as an operating expense rather than as a transitional charge for an accounting change.

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Factors Affecting Revenues and Margins

Auction Revenues . We conduct our collectibles auctions periodically throughout the fiscal year. The number, scheduling and size of those auctions vary from quarter to quarter, depending largely on the volume, value and timing of the collectibles consignments that we are able to obtain for our auctions. For this reason, our auction revenue and, as a result, also our cash flow, can vary, sometimes significantly, from quarter to quarter. These circumstances make it difficult to forecast, on a quarterly basis, revenue that will be attributable to our auction business.

Gross Profit Margins . The gross profit margins on grading submissions are affected by the mix of submissions between vintage or "classic" coins and sportscards, on the one hand, and modern coins and sportscards, on the other hand. Generally, our prices for grading services vary depending on the "turn-around" time requested by dealers and collectors who submit collectibles to us for grading and authentication. As a general rule, dealers and collectors request faster turn-around for vintage or classic coins and sportscards than they do for modern submissions.

 

The gross margin on revenues from the auction of consigned collectibles is significantly higher than the gross margin on sales of owned collectibles, because we realize commissions on auctions of consigned collectibles while incurring associated costs of 20% to 25%. By contrast, upon the sale of owned collectibles, we record the costs of acquiring those collectibles, which are usually a significantly higher percentage of the selling price.  As a result, the mix of auction sales, between consigned collectibles and owned collectibles affects our gross margin on auction sales and the sale of owned collectibles can reduce our overall auction margins to a level that is significantly below that realized for authentication and grading services.

 

    The Company generates substantially all of its revenues from the collectibles markets, which is affected by discretionary consumer spending. For that reason, unfavorable economic conditions have in the past, and could in the future, adversely affect the Company’s operating results and financial condition.

RESULTS OF OPERATIONS

Net Revenues

		Three Months Ended September 30,
		2003			2002
Net revenues		$	17,187,000		$	12,593,000

Net revenues include fees generated from the grading and authentication of sportscards, coins, autographs and stamps; the sales prices of owned collectibles sold in our auctions and directly to collectors; commissions earned on sales of consigned collectibles at our auctions; and revenue from the publication of collectibles magazines. Net revenues are determined net of discounts and allowances, product returns, and commissions paid to consignors on sales of their collectibles.

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Gross Profit

		Three Months Ended September 30,
		2003			2002
Gross profit		$	6,277,000		$	5,474,000
Gross profit margin			37	%		43	%

Gross profit is calculated by subtracting the cost of revenues from net revenues. Cost of revenues consist of labor to grade and authenticate coins and sportscards, production costs, printing, credit cards fees, warranty expense and the cost of owned collectibles sold in our auctions. Gross profit margin is gross profit stated as a percent of net revenues. Gross profit for the three months ended September 30, 2003 increased 15% due to the increase in both grading and collectibles sales revenues. However, the gross profit margin in the quarter ended September 30, 2003 declined to 37% from 43% in the same quarter of the prior year. That decline was due to a combination of factors, the most important of which consisted of (i) the more substantial increase in auction and direct col lectibles sales revenue, than in our higher margin grading and authentication services, which caused lower margin sales to comprise a higher proportion of our total sales in the quarter ended September 30, 2003; and (ii) a decrease in the gross margin earned on the Company's auction and direct collectibles sales. That decrease in gross margin on collectible sales was attributable to decisions made in the current year’s first quarter to reduce the inventory of our slower moving owned collectibles by selling them at a discount, and to reduce the average rate charged for auction commissions in order to increase consignments and, thereby, the size of our collectibles auctions.

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Selling, General and Administrative Expenses

		Three Months Ended September 30,
		2003			2002
SG&A		$	5,447,000		$	4,962,000
Percent of net revenues			32	%		39	%

Selling, general and administrative ("SG&A") expenses include primarily advertising and sales promotional expenses, wages and payroll-related expenses, professional and consulting expenses, travel and entertainment, facility-related expenses and security charges. SG&A expenses increased 10% to $5,447,000 for the three months ended September 30, 2003 from $4,962,000 in the corresponding period in the prior year. SG&A, as a percent of net revenues, decreased from 39% to 32% for the three-month period ended September 30, 2003, when compared to the same prior year period. The decline in SG&A expenses as a percentage of net revenues was attributable to the increase in net revenues in the three months ended September 30, 2003.

Provision for Doubtful Accounts

		Three Months Ended September 30,
		2003			2002
Provision for doubtful accounts		$	83,000		$	59,000
Percent of net revenues			0.5	%		0.5	%

The provision for doubtful accounts increased $24,000 in the three months ended September 30, 2003 as compared to the corresponding period of the prior year, in response to the increase in sales volume. As a result, the provision, as a percent of revenues, remained constant at 0.5% of net revenues.

Amortization of Goodwill and Intangibles

		Three Months Ended September 30,
		2003			2002
Amortization of goodwill and intangibles		$	5,000		$	19,000
Percent of net revenues			0.0	%		0.2	%

We adopted SFAS No. 142, Goodwill and Other Intangible Assets, effective as of July 1, 2002. In accordance with SFAS 142, we ceased amortizing goodwill recorded in past business combinations effective as of July 1, 2002. As a result, there is no charge for goodwill amortization expense contained in our statements of operations for the three months ended September 30, 2003 and 2002, respectively. See Note 4 to the Company’s Condensed Consolidated Financial Statements included earlier in this Report. The amortization charges in the thr ee months ended September 30, 2003 and 2002 relate to intangible assets other than goodwill.

Interest Income, Net

		Three Months Ended September 30,
		2003			2002
Interest income, net		$	39,000		$	79,000
Percent of net revenues			0.2	%		0.6	%

Interest income, net declined in the three months ended September 30, 2003 as compared to the corresponding period of the prior year because the amount of interest bearing consignment advances that we made during the three months ended September 30, 2002 was higher due primarily to the timing of the auctions we conducted in last year’s first quarter as compared to this year’s first quarter.

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Income Tax Benefit

		Three Months Ended September 30,
		2003			2002
Income tax expense (benefit)		$	343,000		$	216,000

Cumulative Effect of Change in Accounting Principle

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have relied on internally generated funds, rather than borrowings, as our primary source of funds to support operations. Our grading and authentication services provide us with a relatively steady source of cash because, in most instances, our customers prepay for services at the time they submit their collectibles for authentication and grading. As discussed above, our auction activities experience significant fluctuations in cash flows depending upon each individual auction cycle and size of the auctions. Until the end of calendar 2002, we had a $1.5 million short-term unsecured credit facility with a commercial bank, which we had used occasionally to fund (i) advances to consignors primarily to our Bowers & Merena coin auctions, and (ii) short-term worki ng capital requirements. Due to the relatively small size of that credit line, which was obtained from a local community bank where our Bowers & Merena division was headquartered, we decided to allow that credit line to expire, rather than to seek its renewal.

We are seeking a new and significantly larger line of credit primarily to enable us to fund advances to obtain larger collectibles consignments to our auctions and to provide advances to coin and other collectibles dealers as a means of generating additional interest income and also providing an additional incentive for large consignors and collectibles dealers to do business with us. We anticipate that any such advances that we might make generally would be secured by collectibles consigned to our auctions or dealers’ collectibles inventories. However, there is no assurance that we will be successful in obtaining such a line of credit.

	17

Operating activities provided net cash of $4,333,000 during the three-month period ended September 30, 2003 as compared to providing net cash of $95,000 in the three-month period ended September 30, 2002. This internally-generated cash flow was due primarily to collections of tax refunds and decreases in inventories and notes receivable.

Net cash used in investing activities was $305,000 for the three-month period ended September 30, 2003 and consisted primarily of expenditures for fixed assets for the Company's new Bowers & Merena facility in Louisiana.

Financing activities provided net cash of $171,000 in the three-month period ended September 30, 2003, consisting of proceeds from sales of our shares under our Employee Stock Purchase Plan and the exercise of employee stock options.

We believe that our existing cash balances and internally generated funds will be sufficient to fund our cash requirements for at least the next twelve months. However, our cash requirements will depend on several factors, including our ability to achieve and maintain operating profitability, the need to increase inventory of collectibles for auction, capital expenditures for our new enterprise software system and various other factors. Depending on our profitability and working capital requirements, we may require additional financing from external sources in the future through equity or debt offerings, which may or may not be available or may be dilutive to our stockholders. Our ability to obtain financing from external sources will depend upon our operating results, financia l condition, future business prospects, our stock price performance and conditions then prevailing in the relevant capital markets.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after September 15, 2002. The adoption of SFAS 143 did not have a material impact on the Company’s financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses significant issues relating to the implementation of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and develops a single a ccounting model, based on the framework established by SFAS No. 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. SFAS No. 144 was adopted by the Company on July 1, 2002. The adoption of SFAS No. 144 did not have a material impact on the Company’s financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities.  SFAS No. 146 addresses significant issues regarding the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities. SFAS No. 146 also addresses recognition of certain costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily termin ated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company's financial position or results of operations for the three-month period ended September 30, 2003.

In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107, and rescission of FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the interim and annual financial statement d isclosures that are required to be made by companies that have guaranteed third party obligations. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing a guarantee. The initial recognition and measurement provisions of this interpretation became

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From time to time the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to (i) certain asset purchase agreements, under which the company may provide customary indemnification to the seller of the business being acquired; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental or other liabilities and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship. The terms o f such obligations vary by contract and in most instances a specific or maximum dollar amount is not explicitly stated therein. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheets. There were no guarantees issued in the three-month period ended September 30, 2003.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin ("ARB") No. 51. FIN 46 requires that variable interest entities be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that companies are not required to consolidate but in which a company has a significant variable interest. The consolidation requirements of FIN 46 will apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements will apply to entities established prior to January 31, 2003 in the first year or interim period beginning after June 15, 2003. The disclosure requirements apply in all financial statements issued after January 31, 2003. The Company has no interests in variable interest entities and the adoption of FIN No. 46 did not have a material impact on the Company’s financial position or results of operations.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

There are a number of risks and uncertainties that could affect our future operating results and financial condition. Those risks and uncertainties include those discussed in the Section of this Quarterly Report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the factors described under the caption " Factors That Could Affect Our Future Performance " contained in "Item 1 – DESCRIPTION OF BUSINESS," of our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 filed with the Secur ities and Exchange Commission, to which reference is hereby made for additional information regarding these risks, uncertainties and other factors. In particular, the factors described in our Annual Report that could adversely affect our future financial performance include: the risk that the popularity of collectibles will decline or that general economic conditions will deteriorate, either of which can result in reductions in purchases of collectibles and in grading submissions by collectors and dealers; changes in the popularity of certain collectibles could cause revenues to fluctuate; frequency and fluctuations in the size of auctions, which are largely a function of our ability to obtain consignments of collectibles from dealers and collectors, also could cause our revenues to fluctuate; competition for limited supplies of high-end collectibles for auctions among collectibles companies which could have the effect of reducing profit margins; the dependence of our operations on certain key executives and collectibles experts, the loss of the services of any of which could adversely affect our ability to obtain consignments for our auctions or grading submissions and, therefore, could harm our operating results; the possibility of having to write down the carrying value of owned collectibles inventories because of market value fluctuations or an inability to sell collectibles in a timely manner; increased competition from other collectibles auction and grading companies; the risk that we will incur unanticipated liabilities under our authentication and grading warranties; the risk that we will not generate adequate investment returns on new business opportunities; and government regulation that could cause operating costs to increase.

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Market risk represents the risk of loss that may impact the financial position, results of operations or cash flows of the Company due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, commodity price risk and other relevant market rate or price risks.

Due to the cash balances that we maintain, we are exposed to risk of changes in short-term interest rates. At June 30, 2003 and September 30, 2003, we had $4,482,000 and $8,681,000, respectively, in cash and cash equivalents. These cash balances are primarily invested in a highly liquid money market fund and interest earned is re-invested in the same fund, which accounts for the interest income that we generate. Reductions in short-term interest rates could result in reductions in the amount of that income. However, the impact on our operating results of such changes is not expected to be material.

The Company has no activities that would expose it to foreign currency exchange rate risk or commodity price risks.

ITEM 4.  CONTROLS AND PROCEDURES

The Company’s management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) in effect as of September 30, 2003.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2003, the Company’s disclosure controls and procedures were adequate and effective and designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within these entities.

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

(a)	Exhibits
	Exhibit 31.1	Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act
	Exhibit 31.2	Certification of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act
	Exhibit 32.1	Chief Executive Officer Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.2	Chief Financial Officer Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b)	Reports on Form 8-K.
		A Current Report on Form 8-K dated September 30, 2003 was filed to report, under Item 12 – Disclosure of Results of Operations and Financial Condition, the issuance by the Company of its earnings release for the quarter and fiscal year ended June 30, 2003, a copy of which was included as Exhibit 99.1 to that Report.

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		COLLECTORS UNIVERSE, INC.
Date:    November 14, 2003		/s/ MICHAEL R. HAYNES
		Michael R. Haynes
		Chief Executive Officer

		COLLECTORS UNIVERSE, INC.
Date:    November 14, 2003		/s/ MICHAEL J. LEWIS
		Michael J. Lewis
		Chief Financial Officer

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INDEX TO EXHIBITS

Number	Description
Exhibit 31.1	Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act
Exhibit 31.2	Certification of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act
Exhibit 32.1	Chief Executive Officer Certification of Periodic Report Under Section 906 of the Sarbanes-Oxley Act
Exhibit 32.2	Chief Financial Officer Certification of Periodic Report Under Section 906 of the Sarbanes-Oxley Act

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