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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

                                 AMENDMENT NO. 1
(Mark One)
[X]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the fiscal year ended June 30, 2004
[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the transition period from ______________ to ______________
Commission File No. 0-27121

                            SUPERIOR GALLERIES, INC.
                 (Name of Small Business Issuer in Its Charter)

              DELAWARE                                       35-2208007
   (State or Other Jurisdiction of                          (IRS Employer
    Incorporation or Organization                      Identification Number)

         9478 WEST OLYMPIC BLVD.                                 90212
        BEVERLY HILLS, CALIFORNIA                             (Zip Code)
(Address of Principal Executive Offices)

                                 (310) 203-9855
                           (Issuer's Telephone Number)

         SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
                                     (None)

         SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
                         Common Stock, par value $0.001
                                (Title of Class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [X] No [ ]

         Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The registrant's revenues for the fiscal year ended June 30, 2004 were
$29,997,312.

         The number of outstanding shares of the registrant's common stock as of
August 10, 2004, was 4,485,942. Based on the last sale price of its common stock
on August 10, 2004 ($1.25), the aggregate market value of the registrant's
common stock held by non-affiliates was approximately $1,600,010(1). Unless
otherwise specified herein, all share, warrant and option amounts give effect to
a 1-for-20 reverse stock split effective as of June 30, 2003.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly described for identification purposes.

         None

         Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]

         The purpose of this Amendment No. 1 is to amend information in Items 1,
3, 5, 6, 7, 8A, 9, 10, 11, 12 and 13 of this company's Annual Report on Form
10-KSB for the year ended June 30, 2004.

---------------
1        For purposes of this calculation, shares owned by executive officers,
         directors and 10% shareholders known to the registrant have been deemed
         to be owned by affiliates. This determination of affiliate status is
         not necessarily a conclusive determination for other purposes.

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<S>     <C>
                                         TABLE OF CONTENTS

                                                                                               Page
                                                                                               ----

PART I...........................................................................................1
   ITEM 1.       DESCRIPTION OF BUSINESS.........................................................1
   ITEM 3.       LEGAL PROCEEDINGS...............................................................8

PART II..........................................................................................9
   ITEM 5.       MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
                   AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES......................9
   ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......................10
   ITEM 7.       FINANCIAL STATEMENTS...........................................................26
   ITEM 8A.      CONTROLS AND PROCEDURES........................................................26

PART III........................................................................................27
   ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                   PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...................27
   ITEM 10.      EXECUTIVE COMPENSATION.........................................................29
   ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                 MANAGEMENT AND RELATED STOCKHOLDER MATTERS.....................................31
   ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................34
   ITEM 13.      EXHIBITS.......................................................................36


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                                     PART I

         This Annual Report on Form 10-KSB includes forward-looking statements
within the meaning of the Securities Exchange Act of 1934, as amended, or the
Exchange Act. These statements are based on our beliefs and assumptions, and on
information currently available to us. Forward-looking statements include among
others, the information concerning possible or assumed future results of
operations of Superior Galleries, Inc. and its subsidiaries set forth under the
heading "Financial Information-Management's Discussion and Analysis or Plan of
Operation." Forward-looking statements also include statements in which words
such as "expect," "anticipate," "intend," "plan," "believe," "estimate,"
"consider" or similar expressions are used.

         Forward-looking statements are not guarantees of future performance.
They involve risks, uncertainties and assumptions. Our future results and
shareholder values may differ materially from those expressed in these
forward-looking statements. We caution you not to put undue reliance on any
forward-looking statements contained in this document.

ITEM 1.           DESCRIPTION OF BUSINESS

COMPANY OVERVIEW

         Our principal line of business is the sale of rare coins on a retail,
wholesale, and auction basis. Our retail and wholesale operations are conducted
in virtually every state in the United States. We also provide auction services
for customers seeking to sell their own coins. We market our services nationwide
through broadcasting and print media and independent sales agents, as well as on
the Internet through third party websites such as eBay and through our own
website at sgbh.com. Our headquarters are in Beverly Hills, California.

         We were originally organized as a Nevada corporation in 1995. On June
30, 2003, our stockholders approved and we completed a reincorporation of our
company in the State of Delaware and changed our corporate name from Tangible
Asset Galleries, Inc. ("Tangible") to Superior Galleries, Inc. ("Superior").
These changes were effective at the close of business on June 30, 2003. Unless
the context otherwise requires, all references in this Annual Report to "us,"
"we," "our" or "Superior" shall mean Superior Galleries, Inc. and Tangible, as
Superior's predecessor.

HISTORY OF THE COMPANY

         Tangible Investments of America, Inc. ("TIA") our predecessor, was
originally founded by our current chief executive officer ("CEO"), Silvano
DiGenova, in 1977 when Mr. DiGenova first exhibited his coins at a national coin
dealer's convention. That same year, Mr. DiGenova first became involved in other
collectibles such as fine arts and antiques. Mr. DiGenova has collected rare
coins since 1971 (when he was nine years old). While attending the Wharton
School of Business in the early 1980s, Mr. DiGenova continued to develop TIA,
and in May 1984, prior to graduating, Mr. DiGenova took a leave of absence from
Wharton and incorporated TIA in Pennsylvania.

         In 1991, Mr. DiGenova relocated TIA to Laguna Beach, California and
continued to develop its rare coin, fine art and collectibles retail and
wholesale business, continuing to expand on a national level. We acquired TIA on
April 28, 1999 through a reverse-merger acquisition.

         In December 1999, we acquired all of the outstanding common shares of
Gehringer and Kellar, Inc. d.b.a. Keystone Coin & Stamp Exchange, or Keystone.
Keystone is a wholesaler, retailer and auctioneer of rare coins located in
Allentown, Pennsylvania. We transferred the operations of this company to


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certain members of its management in November 2001 and completed the sale of the
assets of this company in February 2002. In June 2001, we acquired all of the
outstanding common shares of HotelInteractive, Inc., or HI, an Internet-based
publisher of news and information. In February 2002, we sold this company to a
corporation controlled by Mr. Richard Viola, who was serving as a director on
our board at that time.

         In November 2002, we began to reduce our operations that were focused
on the fine art, jewelry and collectibles ("Art") segment of our business. By
March 2003, with the exception of activities specifically related to the
liquidation of our remaining art inventory, all Art business segment operations
had ceased. We completed the liquidation of our art inventory in October 2003.
We may, at some future date and on a limited basis, re-enter some of the Art
business segment as a consignment auctioneer.

BACKGROUND OF THE COIN AND COLLECTIBLES INDUSTRY

         Throughout history, coins have been widely regarded as a store of
value, particularly those struck in precious metals. Over the past 300 years,
coin collecting for enjoyment and profit has gained increasing prominence. The
coin industry has been active in trading since the 17th century. Today, coins
and collectibles are bought and sold throughout the world in galleries, shops,
stores, auctions and on the Internet at fixed prices.

         According to experts in the field, it is difficult to determine the
total annual sales volume of the coin and collectibles business. One of the two
largest auctioneers in the world in the coin and collectibles markets, reported
annual auction and related revenue from the sale of art and collectibles of $309
million for the year ended December 31, 2003. With specific regard to coins, the
U.S. Mint, in its 2003 annual report for the year ending September 30, 2003,
reported that there are over 130 million people collecting the new quarter
dollar coins from the 50 State Quarters(TM) program developed by the Mint. This
program was designed to increase coin collecting and the number of collectors by
minting five new designs annually of the quarter dollar with each design
featuring one each of the 50 states over a ten year period from 1998 through
2008. In addition, the U.S. Mint reported non-bullion numismatic revenue of $235
million in its 2003 annual report.

         Typically, the coins that we buy and sell were originally manufactured
in the late 1700's to mid-1900's. Many of the items that we sell are
one-of-a-kind, or are one of few examples on the market at any time. We believe
that coin buyers generally start with a modest purchase amount and increase the
size of their transactions and the rarity of the items that they purchase as
they gain experience as a buyer in the market.

COIN GRADING AND TRADING SYSTEMS

         Determining the market value of a given coin plays a vital role in
buying and selling rare coins. Rare coins are graded on a numerical scale from 0
to 70. Zero represents the basal state (or lowest condition or state of
preservation) and 70 represents an uncirculated (or mint state) specimen that is
perfect in condition or state of preservation in every aspect. As a result of
this numerical scale relating to condition or quality, there is a correlation to
value in that the higher its numerical grade, the more valuable a coin is to
collectors or dealers. A one point difference, not even discernible to a
layman's eye, can result in a difference in value of thousands of dollars.
Therefore, consistent grading according to a standard universally accepted by
the marketplace is very important. In 1986, the first uniform grading system was
implemented by the Professional Coin Grading Service, or the PCGS. Silvano
DiGenova, our chief executive officer, was a co-founder of the PCGS and assisted
in the development of the grading system used by the PCGS. Mr. DiGenova sold his
interest in the PCGS in 1987 and, since that time, has not been affiliated with
the PCGS, except as a customer of its services. A year after the PCGS was
founded, the Numismatic Guaranty Corporation, or the NGC, was formed. Mr.
DiGenova is not affiliated with NGC except as a customer of its services.


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         These two firms established a uniform coin-grading standard, which has
gained almost universal acceptance throughout the world. Once a coin has been
graded and certified, both firms encapsulate the coin in tamper-proof acrylic
holders and register them by number, grade, date and mintmark. If applicable,
they identify variety and pedigree as well. Rare coins graded and certified by
either one of these services can then be traded with confidence. The advent of
certified grading has led to the formation of the Certified Coin Exchange, or
the CCE, which is a nationwide computerized trading network for rare coins. The
CCE is also the number one source of instantaneous price information. Coins can
be bought and sold sight unseen because of the certification and confidence
instilled in the market place by the CCE, the PCGS and the NGC. Mr. DiGenova was
a founder and board member of the CCE, and assisted in the organization of the
association. Mr. DiGenova sold his interests in the CCE in the late 1980s and
has not been affiliated with that entity since that time except as a user of its
services.

RETAIL AND WHOLESALE SALES

         We sell rare coins on a wholesale and retail basis. On a wholesale
basis, our contacts include approximately 5,000 rare coin dealers across the
country who we contact through telephone, email, fax, electronic exchanges and
in person at the approximately 30 shows or expositions annually. Wholesale
transactions are usually completed with recognized dealers in the trade and are
often for immediate payment or with approved credit relationships, by payment
within 30 days from the date of sale. Retail transactions typically do not
involve the extension of any credit terms and payment is made at the time of
sale.

         Our CEO, in consultation with senior management team members, approves
trade credit. In wholesale transactions, selling prices for rare coins are
determined by the marketplace and usually individually negotiated with the
buyer. There are several printed pricing guides, some published weekly, which
provide pricing indications as well as the CCE, a real-time exchange with bids
and asks on many of the coins in the market. Often, a wholesale customer is
buying rare coins from us because the wholesale customer has another customer,
whether wholesale or retail, already identified. Wholesale sales prices for rare
coins are determined primarily by the grade of the coins and are often
influenced by non-market factors such as the purchasing or selling dealer's
liquidity, the relative desire or need for the specific rare coin, the length of
time the selling dealer has held the rare coins and other factors. We have an
inventory turnover of four to five times per year.

         When selling rare coins on a retail basis, we utilize direct mail,
telephone, fax, email and Internet-based retail and auctions, both private and
public, as channels of distribution. We maintain a database of over 30,000
potential customers for rare coins who are solicited regularly through these
channels. We currently maintain our website, www.sgbh.com, to offer rare coins
both at retail and at private auction. We have ongoing campaigns on eBay, a
third party website, to sell rare coins at its Internet public auction site. At
retail, we typically sell for immediate payment, holding the rare coins until
good funds are received. In a few instances, on large purchases, we will
consider financing a sale for a retail buyer. In these situations, we will hold
the rare coins as collateral. In retail transactions, the market determines sale
prices for rare coins and there are several pricing guides available to the
retail buyer including monthly and weekly publications and auction prices
realized. The price to be paid by a retail buyer for a rare coin is primarily
based on the coin's condition and rarity as determined by its grade but is also
influenced by the buyer's desire for the particular rare coin, the time it has
taken to find a suitable example for the buyer's collection, the relative rarity
of the coin to others held by the buyer and other factors. In retail
transactions, we principally sell rare coins that have been certified for
authenticity and quality by an independent recognized authority.


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ACQUISITION OF INVENTORY

         We acquire inventory of rare coins at wholesale through other dealers
in the trade, retail customers, trusts or estates desiring to sell their
holdings or by auction. We are not dependent on any major suppliers. During the
year ended June 30, 2004, no supplier provided more than 10% of our aggregate
purchases of coins. When purchasing from other dealers in the trade, we are
typically offered 15 days to pay the net invoice amount. Purchases from retail
customers, trusts and estates or at auction by an independent auction company
require immediate payment upon taking title and possession of the property. On
occasion, we may trade items from our inventory to either a dealer or a retail
customer in exchange for property from the dealer or retail customer. When
buying inventory from a dealer, the majority of these purchases are completed at
shows and expositions around the country, although a significant volume is
transacted over the telephone. Purchasing at auction is another major source of
inventory in rare coins. Purchase prices are negotiated by our buyers with
dealers in the trade and with the retail customers, trusts and estates. When
buying at auction, our buyers compete with other buyers in determining the final
bid for any given lot of property.

AUCTION OPERATIONS

         On July 6, 2001, we acquired substantially all of the assets of
Superior Galleries, Inc., a California corporation, a company that was an
auctioneer of rare coins and collectibles located in Beverly Hills, California
("SGBH," which is not the same legal entity as Superior), for cash and a note.
Through June 30, 2003 we were operating this business as a subsidiary under the
name Superior Galleries Beverly Hills, Inc. although the seller retained certain
rights to the Superior Galleries name in the stamp and space memorabilia markets
for a period of two years from the date of the acquisition. As a result, we were
restricted until July 6, 2003 from doing business in either the rare stamp or
space memorabilia markets under this name for such period. Effective July 1,
2003, the auction operations of SGBH were combined with the remainder of our
operations.

         Superior, as an auctioneer of rare coins and collectibles, has a
history dating back to 1929 with sales primarily in the rare coin and rare stamp
markets. With our long time location in Beverly Hills, our customers and clients
include many well-recognized names in the entertainment and sports fields.

         We solicit and accept consignments of rare coins from individuals,
dealers and trusts and estates and charge a seller's commission along with a
buyer's premium on each lot sold. The combination of the seller's commission and
the buyer's premium on each lot equals approximately 5%-25% but averages
approximately 10%.

         We market our services by advertising in trade journals, direct mail
and telemarketing and through attendance at major shows and exhibitions and by
personal visits. Each consignment of goods is evidenced by a contract signed by
both the consignor and Superior. In some instances, we may loan the consignor
funds in an amount up to approximately 60% of the expected prices realized from
the sale of the property in the consignment. The consignor loan amount maximums
are determined by a loan-to-value ratio based on our estimate of the wholesale
liquidation value in the event the consigned items do not sell at auction. In
this event, the consignor also executes a note and security agreement evidencing
the debt and providing a security interest to us in the consigned items. The
proceeds from the sale of the property are used to repay the loan amount and the
excess funds are paid to the consignor. Upon receipt of the consigned goods, we
record the receipt on our records and then catalog and photograph the items,
storing the information in digital format.


                                      -4-
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         Auction sale dates are established approximately one year in advance.
As deadlines for each auction date approaches, we organize all of the digitized
information into a catalog of goods with photographs and subcontract the
printing and mailing of the catalog to be sent to our mailing list of buyers. In
addition, we load the digitized catalog on our web-site and into software
managed by Internet seller eBay, so that bidders on the Internet worldwide may
also leave absentee bids to be executed by us at the live auction. Our web-site
with its live auction capabilities and eBay's software also allows for Internet
bidders to bid competitively with the live auction in real time in competition
with the bidders present at the auction site.

         Generally, the purchase price from the sale of rare coins is due upon
the completion of the auction, although we maintain credit relationships with
certain dealers in the trade and offer payment terms of 30 days to those
selected dealers. A contract with a consignor requires payment to the consignor,
less any loan amounts, accrued interest and commissions, to be made within 45
days of the sale date.

COMPETITION

         The business of selling rare coins is highly competitive. Methods of
competition include pricing coins at levels that are lower than the published
prices of our competitors, charging reduced auction commissions to sellers,
increasing advertising and expanding Internet presence, and providing more
personalized service. We compete with a number of smaller, comparably sized, and
larger firms throughout the United States. These include: Heritage Rare Coin
Galleries, a large scale coin dealer and auctioneer; National Gold Exchange, a
large coin and bullion dealer; Spectrum, a large scale coin dealer and
auctioneer and a subsidiary of Greg Manning Auctions, Inc., a publicly traded
company; American Numismatic Rarities, a comparably sized coin auction company;
U.S. Coins, a medium-sized coin dealer; and other companies. These competitors
are generally larger and better capitalized than we are. However, we believe
that we are able to compete with these competitors in part because of the
reputation of our Chief Executive Officer, Silvano DiGenova, who has twenty-five
years of experience in the rare coin industry. We cannot assure you, though that
we can continue to compete successfully with other established companies.

REGULATION

         The rare coin markets are not currently subject to direct federal,
state or local regulation. However, the Federal Trade Commission, or FTC, and
many state attorneys general have shown an interest in regulating the sales of
rare coins and other tangible assets as investments. The State of New York has
determined that under certain circumstances, rare coins may be treated as
securities under state law, thereby requiring rare coin dealers to register as
broker-dealers and permitting investors all legal and equitable remedies
otherwise available to buyers of securities. We rely upon a 1998 U.S. Federal
Court ruling that the ordinary retail sale of rare coins to investors does not
constitute the sale of a security under the federal securities laws, and we
believe that our operations are not subject to regulation as involving the sale
of securities. There is no assurance, however, that at some time in the future,
the sale of rare coins will not be subject to increased regulation, and that our
business will not be materially adversely affected by such regulation. Any
increased regulation of our business could increase our costs of operation or
require us to change our business practices, either of which could have a
material and adverse impact on our business. For example, if we were required to
become registered as broker-dealers under federal or state securities laws, we
would have to hire additional staff and expend additional amounts in insuring
compliance with the regulations governing broker-dealers. The imposition of
these additional regulations would likely require us to hire additional
compliance staff and to expend resources in establishing and maintaining systems
to insure our compliance with these rules.

         Over the past 15 years, the FTC has filed suits against numerous rare
coin dealers alleging that the dealers' representations about coins were false
or misleading or that the dealers' retail markups were so high that their
representations about investment risk and appreciation potential became
misleading or untrue. These cases have not, however, created any clear rules by


                                      -5-
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which dealers such as us can assure themselves of compliance. On January 1,
1996, the FTC's Telemarketing Sales Rule, authorized by the 1994 Telemarketing
and Consumer Fraud and Abuse Prevention Act, took effect. "Telemarketing" is
defined as any plan, program, or campaign that is conducted to induce payment
for goods and services by use of more than one interstate telephone call. This
rule applies to all sales of "investment opportunities," which are defined by
whether the seller's marketing materials generally promote items on the basis of
representations about "income, profit, or appreciation." We believe that all of
our retail sales are covered by this rule, even those to collectors.

         The Telemarketing Sales Rule requires us to inform customers of the
following before accepting payment: the number of items being sold, the purchase
price, and our refund/exchange/buyback policy. The rule also prohibits us from
misrepresenting the "risk, liquidity, earnings potential, and profitability" of
the items that we sell. This in itself did not materially change prior law.
However, during debates on the Telemarketing Sales Rule in 1995, FTC staff
attorneys tried to impose additional specific requirements that dealers in
"tangible assets" disclose to retail customers their actual cost for the items
they sell, and also disclose "all material facts" about their goods before
accepting any money from the customer. This would have required us to disclose
our actual margins to our retail customers, as well as impose on us the burden
of determining what facts were material to the purchase of coins or other
collectibles. Although the FTC ultimately removed these additional requirements
from the final version of the rule, the behavior of the FTC staff has
demonstrated its particular concern for telemarketing of coins as investments.
We cannot assure you that the FTC will not amend the rule in the future to
impose these or other additional regulations, or that individual states will not
impose such regulations. If the FTC or any state agency proposed additional
regulations relating to the telemarketing of coins, we could be required to
expend additional funds in order to hire staff and provide training. The expense
of complying with these requirements would likely reduce our profitability.

         In addition, many investors favor rare coins because they can be
bought, owned and sold privately, i.e., without registering with or notifying
any government agency. However, the Internal Revenue Service now requires
dealers such as us to report all sales of coins in which more than $10,000 in
cash or a cash-like instrument is used as payment. The private nature of rare
coin ownership has occasionally resulted in rare coins being purchased by
taxpayers for the purpose of concealing unreported income, or used to "launder"
income derived from unlawful activities. This has caused local authorities to
consider imposing registration and/or reporting requirements upon rare coin
dealers, although we believe that the only such regulation enacted to date (in
the City of Chicago) has not been enforced against full-time dealers in rare
coins. We cannot assure you that additional regulations will not be imposed upon
us in the future, and that our business will not be harmed as a result.

TAXATION OF MAIL ORDER SALES

         We do not collect California sales tax on mail order sales to
out-of-state customers, because interstate sales generally are tax-exempt. Nor
do we collect use tax on our interstate mail order sales. Most states impose a
use tax on "retailer(s) engaged in business in this state" on sales of "tangible
personal property for storage, use, or other consumption in this state." Use tax
is usually set at the same rate as sales tax, and its purpose is to equalize the
tax affects on local retailers who pay sales tax and out-of-state mail order
companies who do not. Some states exempt rare coin sales over $1,000 from sales
or use tax, but most do not. Although the United States Constitution restricts
the right of states to tax interstate commerce, states can assess use tax on any
transaction where the out-of-state mail order firm is deemed to be "engaged in
business" in the state. A retailer which has a "nexus" with the state, i.e., any
physical presence in the state, regardless of whether the sales themselves arise
from that local presence, is deemed to be "engaged in business" in the state.
"Nexus" includes attending conventions, although at least one state (California)
provides a seven-day "safe harbor" for out-of-state dealers attending
conventions and whose sales are less than a certain dollar threshold. It also
would include attending auctions or making buying or selling trips. On that
basis, we may be deemed to have "nexus" in many states.


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         Payment of use tax is the buyer's obligation, but states require
retailers engaged in business in that state to collect the tax on sales to
customers in that state and remit it to the state along with a use tax return.
There is no statute of limitations for use tax if the dealer has filed no
returns. To date, we have not been assessed for use tax by the taxing authority
of any other state for sales to customers in that state claiming that we are
engaged in business in that state and therefore required to collect and remit
the tax, nor have we received any inquiry indicating that we were being audited
for the purposes of such an assessment. However, there is no assurance that we
will not be audited by state taxing authorities and be assessed for unpaid use
taxes (plus interest and penalties) for a period of many years.

         In addition to use tax, many states impose income and franchise taxes
on out-of-state companies that derive net income from business with their
residents. For example, California applies an income-based franchise tax to
out-of-state corporations operating in California for the privilege of using the
corporate form. The maximum California corporate tax rate is approximately 9%,
with a minimum tax of $800 per year. Income derived outside of California is not
taxed, and in-state income of taxpayers liable for tax in more than one state is
calculated using a formula contained in the Uniform Division of Income for
Taxation Purposes Act, a statute in effect in about one-half of the states. As
with use tax, nexus principles apply, and the U.S. Supreme Court requires "a
minimal connection between the interstate activities and the taxing state, and a
rational relationship between the income attributed to the State and the
intrastate values of the enterprise."

         Assuming the existence of nexus, we could be subject to income-based
taxes in each of the states in which we have had a physical presence at
conventions, auctions or otherwise. The only exceptions would be in states where
we are protected by a federal law, 15 U.S.C. ss. 381, which immunizes companies
from state income taxes if the company's only business activities in the taxing
state consists of "solicitation of orders for interstate sales." There is no
statute of limitations for income or franchise tax if the dealer has filed no
return. To date, we have not been assessed for income tax or franchise tax by
the taxing authority of any other state, nor have we received any inquiry
indicating that we were being audited for purposes of such an assessment.
However, we cannot assure you that we will not be audited by state taxing
authorities and be assessed for unpaid income or franchise taxes (plus interest
and penalties) for a period of many years.

CUSTOMERS/DEPENDENCE ON KEY CUSTOMERS

         We generally sell to a large variety of individual retail purchasers as
well as several wholesale purchasers throughout the nation and world. During the
fiscal year ended June 30, 2004, none of our customers accounted for more than
10% of our sales.

NUMBER OF EMPLOYEES

         As of July 27, 2004, we co-employed or obtained contract services from
30 persons, of which 27 were full-time co-employees. Our co-employment
relationship is with Administaff, as a professional employer organization. We
believe that our future success depends in part upon our ability to recruit and
retain qualified numismatists, marketing and other personnel. We consider our
relations with our employees to be good. None of our employees is represented by
a labor union.


                                      -7-
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FACILITIES

         Our principal offices are located at 9478 West Olympic Boulevard,
Beverly Hills, California. We have another location located at 3444 Via Lido,
Newport Beach, California that we closed in September 2003. On June 1, 2004, we
entered into a short-term agreement to sub-lease a portion of the Newport Beach
facility. The Newport Beach office lease will not be renewed upon the
termination of the current lease on September 30, 2004 and the sub-lease ends
concurrently with our lease. We believe that our facilities are adequate for our
needs for the near future.

ITEM 3.           LEGAL PROCEEDINGS

         From time to time, we may be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of our business. However,
we are not currently involved in any litigation which we believe could have a
materially adverse effect on our financial condition, results of operations,
liquidity or cash flows.


                                      -8-
<PAGE>

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                  SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

         Our common stock is traded on the OTC Bulletin Board under the symbol
"SPGR." Prior to July 1, 2003 our symbol was "TAGZ." Due to the reduced volume
of trading over the past 60 days, no public market is deemed to exist for our
common stock at this time.

         The following table shows the trading price data for our common stock
as reported by NASDAQ as the range of representative bid prices for our common
stock for the quarters indicated. Our common stock is quoted in the National
Quotation Bureau's Pink Sheets and listed on the OTC's Electronic Bulletin
Board. The quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission, may not represent actual transactions and have been
retroactively restated to reflect the one-for-twenty reverse split of our common
stock on June 30, 2003.


                                                          Fiscal 2004
                                                    ---------------------
                  Fiscal Quarter Ended:                High        Low
                                                    ---------   ---------
                         June 30                    $   2.15    $   0.75
                         March 31                       1.92        0.75
                         December 31                    1.06        0.60
                         September 30                   1.01        0.24

                                                          Fiscal 2003
                                                    ---------------------
                  Fiscal Quarter Ended:                High        Low
                                                    ---------   ---------
                         June 30                    $   1.50    $   0.02
                         March 31                       0.60        0.02
                         December 31                    0.60        0.20
                         September 30                   2.40        0.60

HOLDERS

         The number of holders of record of our common stock as of the close of
business on August 10, 2004 was approximately 200.

DIVIDENDS

         To date, we have declared no cash dividends on our common stock, and do
not expect to pay cash dividends in the near future. We intend to retain future
earnings, if any, to provide funds for the operation of our business. The terms
of our Series A Redeemable 8% Convertible Preferred Stock, or Series A Preferred
Stock, prohibit us from paying dividends on shares of our common stock unless
dividends in such amount shall have been simultaneously paid or declared and set
apart for payment to the holders of our Series A Preferred Stock. In addition,
the terms of our Series B $1.00 Convertible Preferred Stock, or Series B
Preferred Stock, prohibit us from making any distributions on our common stock
without the vote or written consent of the holders of a majority of the
outstanding shares of the Series B Preferred Stock, voting as a separate class.


                                      -9-
<PAGE>

STOCK OPTIONS

         At June 30, 2004, there were 426,000 options outstanding under the 2003
Omnibus Stock Option Plan at a weighted average exercise price of $1.50.

RECENT SALES OF UNREGISTERED SECURITIES

         On August 6, 2003 we issued options to purchase our common stock to 6
persons, each of whom was an officer, director or consultant to the company. A
total of 110,000 shares were covered by such options. The options contain
vesting provisions that provide that they will become exercisable over a period
of from one to four years after the vesting date, and the option term expires
five years after the date of issuance. The option exercise prices range from
$0.30 to 0.33 per share. The options were issued in a private transaction exempt
from registration under Section 4(2) of the Securities Act of 1933, with persons
who had a preexisting business relationship with us. No advertising or general
solicitation was made in connection with these issuances. Of these options,
35,000 were subsequently cancelled.

         On September 12, 2003 we issued options to purchase our common stock to
1 person who was a consultant to the company. A total of 25,000 shares were
covered by such options. The options contain vesting provisions that provide
that they will become exercisable over a period of from one to four years after
the issuance date, and the option term expires five years after the vesting
date. The option exercise price was $0.24 per share. The options were issued in
a private transaction exempt from registration under Section 4(2) of the
Securities Act of 1933, with a person who had a preexisting business
relationship with us. No advertising or general solicitation was made in
connection with this issuance.

         On April 26, 2004 we issued options to purchase our common stock to 12
persons, each of whom was an officer, employee or consultant to the company. A
total of 275,000 shares were covered by such options. The options contain
vesting provisions that provide that they will become exercisable over a period
of from one to four years after the issuance date, and the option term expires
five years after the vesting date. The option exercise price was $1.01 per
share. The options were issued in a private transaction exempt from registration
under Section 4(2) of the Securities Act of 1933, with persons who had a
preexisting business relationship with us. No advertising or general
solicitation was made in connection with these issuances.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

CAUTIONARY STATEMENTS

         This Annual Report on Form 10-KSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend that such
forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Annual Report contains forward-looking statements regarding
our financial condition, operating results, business prospects or any other
information or aspect of our company, you are advised that our actual financial
condition, operating results and business performance may differ materially from
that projected or estimated by us in forward-looking statements. The differences
may be caused by a variety of factors, including but not limited to:

         o        those identified under "Risk Factors" below,

         o        adverse economic conditions,


                                      -10-
<PAGE>

         o        unexpected costs and operating deficits,

         o        lower sales and revenues than forecast,

         o        loss of customers,

         o        litigation and administrative proceedings involving our
                  company,

         o        the possible acquisition of new businesses that result in
                  operating losses or that do not perform as anticipated,
                  resulting in unanticipated losses,

         o        adverse publicity and news coverage,

         o        inability to carry out our marketing and sales plans,

         o        changes in interest rates and inflationary factors, and

         o        other specific risks that may be referred to in this Annual
                  Report or in other reports that we have issued.

         In addition, our business and operations are subject to substantial
risks that increase the uncertainty inherent in the forward-looking statements.
The inclusion of forward-looking statements in this Annual Report should not be
regarded as a representation by us or any other person that we will achieve our
objectives or plans.

TRENDS AND UNCERTAINTIES

         As a dealer and auctioneer of rare coins, our revenue and profitability
can be materially affected by economic factors such as interest rates,
inflation, stock market performance, the price of gold and other precious metals
and world political stability. The demand for and therefore the price of rare
coins tends to increase with the price of gold. During times of unstable stock
market performance and low interest rates rare coins may become more attractive
as an investment as compared to the stock market or interest bearing securities.
In times of strong stock market returns and high interest rates, rare coins may
be viewed as a less favorable investment. Political instability may also
increase the demand for rare coins as individuals may perceive the security and
portability of rare coins more favorably as compared to other financial assets
such as stocks, bonds or cash. While we are currently experiencing economic
conditions that have increased the demand for rare coins, resulting in higher
revenue and profitability for us, future changes in the economy such as rapid
increases in interest rates, a decrease in the price of gold or strong growth in
the stock market could materially reduce our revenue, margins and profitability
and affect our liquidity as inventory turns would diminish.

         Furthermore, certain types of rare coins, as is the case with other
collectibles, may become more or less popular based on market trends that we
cannot predict. Although we carry a diverse range of categories of rare coins, a
decrease in popularity in a particular category could result in diminished
liquidity as inventory turns decrease for the affected category.

         Within the rare coin industry many of our customers and suppliers are
other dealers. We may be materially affected by both external and internal
factors that could affect the financial stability and liquidity of other dealers
with whom we conduct business. Our revenues and profitability could
significantly decrease if several dealers faced financial difficulties that
curtailed their ability to sell or purchase rare coins either directly or at our
auctions.


                                      -11-
<PAGE>

         Prior to the year ended June 30, 2004, we incurred substantial losses
that severely diminished our capital base and our liquidity. Although we have
returned to profitability, we have a shareholders' deficit, limited working
capital and most our debt is short-term. Any significant unfavorable change in
the economic environment or in our industry could quickly result in declining
revenue and a return to operating losses. Our challenge is to both raise
additional permanent equity capital and restructure our debt to include a larger
long-term portion. Although we cannot assure you that we will be able to
accomplish these objectives, we believe that the achievement of these goals
would permit us to increase the levels of inventory that we have available for
sale and increase the funds available to loan to our consignment customers, thus
enhancing our revenues. Accordingly, it is our hope that if we are able to
restructure our debt and the raise additional equity we will mitigate some of
the impact of a future negative economic environment and conversely will benefit
more sharply from a positive environment.

CRITICAL ACCOUNTING POLICIES

         Our Financial Statements are based on the selection and application of
significant accounting policies, which require our management to make estimates
and assumptions that affect the amounts reported in the Balance Sheets and the
Statements of Operations. We believe that the following are the most critical
areas that may affect our financial condition and results of operations.

         ACCOUNTS RECEIVABLE. We are required to estimate the collectibility of
our accounts receivables. A considerable amount of judgment is required in
assessing the collectibility of these receivables, including judgments about the
current creditworthiness and financial condition of each client and related
aging of past due balances. We evaluate specific accounts receivable balances
when we become aware of a situation where a client may not be able to meets its
financial obligations to us. The amount of the required allowance is based on
the facts available to us and is reevaluated and adjusted as additional
information is available. Allowances are also established for probable loss
inherent in the remainder of the accounts receivable based on our historical bad
debt loss information. As a result of the expansion of our rare coin auction
business, we may attract new customers that may adversely affect our estimates
of accounts receivable collectibility, and, the creditworthiness of our clients
may deteriorate. These factors would require the reassessment of our estimates
and additional allowances resulting in a reduction of our operating results.

         AUCTION AND CUSTOMER ADVANCES. We are required to estimate the
collectibility of our auction and customer advances. All of our advances are
secured by rare coins. Although we make our decision to advance funds based on
customers' creditworthiness, business history, and collateral valuation, the
collectibility of advances is primarily based on our estimate of sale of
customers' rare coin collateral on a wholesale liquidation basis. We evaluate
specific advance balances when we become aware of situations where a client may
not be able to meet its financial obligations to us or the value of collateral
securing the advance is impaired. Due to the availability of a line of credit
from Stanford Financial Group Company, which is an affiliate of our principal
shareholder, Stanford Venture Capital Holdings, Inc. ("Stanford"), we have
recently and significantly expanded our auction and customer advance activities
and we do not have historical data to estimate probable loss nor have we had any
significant history of losses. It is difficult to assess future performance of
the rare coin market. A rapid adverse change in the rare coin market could
diminish the value of the collateral and the creditworthiness of our clients may
deteriorate. These factors would require the reassessment of our estimates and
additional allowances resulting in a reduction of our operating results.

         REVENUE RECOGNITION. We generate revenue from wholesale and retail
sales of rare coins and precious metals bullion. The recognition of revenue
varies for wholesale and retail transactions and is, in large part, dependent on
the type of payment arrangements made between the parties.


                                      -12-
<PAGE>

         We sell rare coins to other wholesalers/dealers within our industry on
credit, generally for terms of 15 to 60 days, but in no event greater than one
year. We grant credit to new dealers based on extensive credit evaluations and
for existing dealers based on established business relationships and payment
histories. We generally do not obtain collateral with which to secure our
accounts receivable when the sale is made to a dealer. We maintain reserves for
potential credit losses based on an evaluation of specific receivables and the
Company's historical experience related to credit losses. We recognize revenue
for monetary transactions (i.e., cash and receivables) with dealers when the
merchandise is shipped to a dealer.

         We also sell rare coins to retail customers on credit, generally for
terms of 30 to 60 days, but in no event greater than one year. We grant credit
to retail customers based on credit evaluations and for existing retail
customers based on established business relationships and payment histories.
When a retail customer is granted credit, we generally collect a payment of 25%
of the sales price, establish a payment schedule for the remaining balance and
hold the merchandise as collateral as security against the customer's receivable
until all amounts due under the credit arrangement are paid in full. If the
customer defaults in the payment of any amount when due, we may declare the
customer's obligation in default, liquidate the collateral in a commercially
reasonable manner using such proceeds to extinguish the remaining balance and
disburse any amount in excess of the remaining balance to the customer.

         Under this retail arrangement, we recognize revenue when our customer
agrees to the terms of the credit and makes the initial payment. Less than 5% of
our sales are retail credit sales. We have limited-in-duration money back
guaranty policies for our retail customers only, as discussed below.

         In limited circumstances, we exchange merchandise for similar
merchandise and/or monetary consideration with both dealers and retail
customers, for which we recognize revenue in accordance with APB No. 29,
"ACCOUNTING FOR NON-MONETARY TRANSACTIONS." When we exchange merchandise for
similar merchandise and there is no monetary component to the exchange, we do
not recognize any revenue. Instead, the basis of the merchandise relinquished
becomes the basis of the merchandise received, less any indicated impairment of
value of the merchandise relinquished. When we exchange merchandise for similar
merchandise and there is a monetary component to the exchange, we recognize
revenue to the extent of monetary assets received and determine the cost of sale
based on the ratio of monetary assets received to monetary and non-monetary
assets received multiplied by the cost of the assets surrendered.

         We have a return policy (money-back guarantee). The policy covers
retail transactions involving graded rare coins only. Our customers may return
graded rare coins purchased within 7 days of the receipt of the rare coins for a
full refund as long as the rare coins are returned in exactly the same condition
as they were delivered. In the case of rare coin sales on account, our customers
may cancel the sale within 7 days of making a commitment to purchase the rare
coins. The receipt of a deposit and a signed purchase order evidences the
commitment.

         Historically, our retail customers have not exercised their rights to
money-back guarantees and as such, we have not provided a reserve for sales
returns in the accompanying financial statements. Revenues from the sale of
consigned goods are recognized as commission income on such sale if we are
acting as an agent for the consignor. If in the process of selling consigned
goods, we make an irrevocable payment to a consignor for the full amount due on
the consignment and the corresponding receivable from the buyer(s) has not been
collected by us at that payment date, then we record that payment as a purchase
and the sale of the consigned good(s) to the buyer as revenue as we have assumed
all collection risk.


                                      -13-
<PAGE>

         Our auction business generates revenue in the form of commissions
charged to buyers and sellers of auction lots. Auction commissions include
buyers' commissions, sellers' commissions, and buyback commissions, each of
which are calculated based on a percentage of the hammer price, which is the
amount of the winning bid at an auction excluding the buyer's commission.
Buyers' and sellers' commissions are recognized upon the confirmation of the
identification of the winning bidders. Funds charged to winning bidders include
the hammer price plus the commission. Only the commission portion of the funds
received by winning bidders is recorded as revenue. Buyback commissions
represent an agreed upon rate charged by us for goods entered in the auction and
not sold. Goods remain unsold when an auction lot does not meet the consignor
reserve, which is the minimum sales price as determined prior to auction, and
when items sold at auction are returned subsequent to the winning bidder taking
possession. Buyback commission is recognized along with sellers' commission or
at the time an item is returned. Returns from winning bidders are very limited
and primarily occur when a rare coin sold auction has an error in its
description which the winning bidder relied upon to purchase the item.

         INVENTORY VALUATION. We value our inventory at the lower of cost or
market. On a periodic basis our numismatic staff will review market data to
determine whether or not the cost of our inventory is above or below market
price. If the market value of a coin is significantly less than its cost to us,
we will establish a reserve against inventory to reflect that the market value
of our rare coin inventory in the aggregate is below cost, which results in
reflecting the value of our inventory at the lower of cost or market.

RESULTS OF OPERATIONS

FOR THE YEAR ENDED JUNE 30, 2004 AND 2003

         The following table sets forth the percentage of net revenue
represented by each item in our statements of operations for the periods
indicated:

                                                    Year Ended      Year Ended
                                                   June 30, 2004   June 30, 2003
                                                   -------------   -------------
Net Sales                                               89.7%          88.6%
Commission Income                                       10.3%          11.4%
                                                   -------------   -------------
Total Revenue                                          100.0%         100.0%
Cost of Sales                                           77.9%          78.4%
                                                   -------------   -------------
Gross Profit                                            22.1%          21.6%
Selling, general and administrative expenses            19.9%          32.8%
Impairment of goodwill                                   0.0%           2.9%
                                                   -------------   -------------
Income (loss) from operations                            2.2%         -14.1%
Other income (expense)                                  -0.3%          -3.0%
                                                   -------------   -------------
Income (loss) before taxes                               1.9%         -17.1%
Income taxes                                             0.1%           0.1%
                                                   -------------   -------------
Net Income (loss)                                       -1.8%         -17.2%
                                                   =============   =============

         Our net income for the year ended June 30, 2004 was $552,266 or $0.11
and $0.06 per share on a basic and fully diluted basis respectively as compared
to a net loss of $3,491,003 or $1.75 per share on both a basic and fully diluted
basis for the year ended June 30, 2003. The improvement in our operating results
were primarily due to revenue growth resulting from the strength in the rare
coin market, decreased overhead costs and lower net interest expenses.

         TOTAL REVENUE The table below sets forth our primary sources of revenue
for the periods indicated:


                                      -14-
<PAGE>

<TABLE>
                                                  ------------------     ------------------
                                                      Year Ended             Year Ended
                                                     June 30, 2004          June 30, 2003
                                                  ------------------     ------------------
<S>                                               <C>            <C>     <C>            <C>
                  Net Sales
                    Coins - Wholesale             $19,195,220    64%     $ 9,050,773    44%
                    Coins - Retail                  7,344,986    25%       8,263,941    41%
                    Art, collectibles & other         376,078     1%         729,112     4%
                                                  ------------  ----     ------------  ----
                  Total Net Sales                  26,916,284    90%      18,043,826    89%
                  Commission Income                 3,081,028    10%       2,311,082    11%
                                                  ------------  ----     ------------  ----

                  Total Revenue                   $29,997,312   100%     $20,354,908   100%
                                                  ============  ====     ============  ====
</TABLE>

         We recorded total revenue of $29,997,312 for the year ended June 30,
2004, an increase of $9,642,404 or 47% over the total revenue of $20,354,908
recorded for the year ended June 30, 2003. The increase in revenue is primarily
due to increased wholesale coin sales. Wholesale coin sales, which represented
64% of total revenue, increased $10,144,447 or 112% to $19,195,220. This
increase was primarily due to the strong market demand which was caused, we
believe, by an increase in the price of gold, low interest rates and uncertainty
in the stock market, and due to our higher level of inventory available for
sale, which resulted from the availability to us of new financing to purchase
that inventory. Retail coin sales, which represented 25% of total revenue,
decreased $918,955 or 11% to $7,344,986. This decrease was primarily due to our
aggressive pricing in 2003 to generate cash from inventory that resulted in
higher sales, but reduced gross margins.

         Fine art, collectibles and other sales decreased $353,034 or 48% to
$376,078 during the year ended June 30, 2004. The decrease was primarily due to
the completion of the liquidation of our art inventory. In November 2002, we
made the decision to substantially reduce our art business segment operations
and by March 2003 all operational activities had ceased with the exception of
our efforts to liquidate the balance of our art inventory. The final liquidation
of our art inventory occurred in October 2003. Since that date that we have had
no material sales of fine art and other collectibles.

         Commission income, which represented 10% of total revenue, increased
$769,946 or 33% to $3,081,028 for the year ended June 30, 2004. The increase in
commission income was primarily due to the continued strength in the rare coin
market and the number of rare auctions increasing to seven in fiscal 2004, as
compared to six in fiscal 2003. Auction sales (hammer prices realized) were
$30,032,985 for the year ended June 30, 2004 as compared to $25,023,893 for the
year ended June 30, 2003.

         Our revenue and profitability during the year is subject to
seasonality. Our first and third fiscal quarters have traditionally been our
strongest because two well-attended auctions are normally scheduled during each
of these quarters and during these quarters there are more frequent and
better-attended trade shows. Our second fiscal quarter has traditionally been
our weakest because we conduct only one auction event and there are fewer, less
popular trade shows.

         COST OF SALES. Cost of sales is primarily comprised of the acquisition
price we pay for coins, and is dependent on our skill in identifying coins that
may be offered for sale at advantageous prices, as well as supply and demand
factors at the time that we are purchasing coins. Cost of sales increased
$7,429,890 to $23,381,949 for the year ended June 30, 2004, representing 78% of
total revenue, compared to $15,952,059, for the year ended June 30, 2003, which
also represented 78% of total revenue. The increase in the aggregate cost of
sales was primarily due to the increased sale of rare coins as discussed in
"Total Revenue" above, rather than factors that might have influenced the cost
of any particular item of inventory. Thus, the increase in cost of sales in 2004
of 46% over 2003 is comparable to the net increase in total revenue in 2004 of
47% over 2003. During our 2003 and 2004 fiscal years, we had comparable success


                                      -15-
<PAGE>

in purchasing coins at advantageous prices, which resulted in our cost of sales
as a percentage of revenue remaining similar. Although cost of sales as a
percentage of total revenue may be similar from year to year, this may result
from a coincidental combination of factors that are not always consistent. These
factors, which we cannot predict from year to year, include our success in
buying coins that generate substantial margin, the supply of coins that our
customers wish to purchase, and the level of auction sales and the percentage of
commission on these sales that we earn.

         GROSS PROFIT. Gross profit for the year ended June 30, 2004 increased
$2,212,514 or 50% to $6,615,363. This represented 22% of total revenue for the
year ended June 30, 2004, as compared to $4,402,849 for the year ended June 30,
2003, which also represented 22% of total revenue for that year. The increase in
the total amount of gross profit in 2004 was primarily due to the increase in
our rare coin sales and increased auction commission revenue. Gross profit as a
percentage of revenue will vary from period to period due to variations in the
factors discussed in "Cost of Sales," above.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $716,800 or 11% to $5,958,829 for the year
ended June 30, 2004 from $6,675,629 for the year ended June 30, 2003. These
expenses represented 20% of total revenue for the year ended June 30, 2004 as
compared to 33% of total revenue for the year ended June 30, 2003. The decrease
in these expenses, both as a percentage of revenue and in the aggregate, were
due in part to the effect of our operational consolidation efforts that were
completed during the last half of the fiscal year ending June 30, 2003. Our
operational consolidation included the elimination of our Newport Beach
location, the reduction of staff as a result of our exit of the art business
segment and the elimination of duplicative systems with regard to operations,
accounting and sales and marketing. The cost savings from the operational
consolidation were approximately $325,000, however these cost savings were
offset in 2004 primarily by costs associated with increases in staff at our
Beverly Hills location of approximately $190,000 and increased advertising and
marketing costs of approximately $110,000. The prior year also included a
$418,000 fee to be the official auctioneer at a national rare coin trade show,
and two unusual bad debts totaling $330,714. There were no such costs in the
current year.

         IMPAIRMENT OF GOODWILL. In July 2001, we recorded goodwill of $591,521
in connection with acquisition of our Superior Galleries Beverly Hills auction
unit. Based on our annual fair value assessment to determine the impairment, if
any, of goodwill, we determined that the goodwill associated with this
acquisition had become fully impaired resulting in charge of $591,521 for the
year ended June 30, 2003. There was no similar charge for the year ended June
30, 2004.

         OTHER INCOME AND EXPENSES. Other expenses decreased $521,494 on a net
basis to $91,812 for the year ended June 30, 2004 from $613,306 for the year
ended June 30, 2003. This decrease is attributable primarily to an increase in
interest income of $350,789 as a result of a higher level of advances to
customers, and reductions in interest rates on our outstanding debt that
decreased interest expense by $137,050 for the year ended June 30, 2004 as
compared to the year ended June 30, 2003. Our higher level of auction and
customer advances during the year ended June 30, 2004 resulted from the
availability of our $7.5 million line of credit facility provided by Stanford
Financial Group Company in October 2003. Our ability to increase the level of
auction and customer advances enabled us to obtain more consignments which in
turn increased our commission revenue.

         PROVISION FOR INCOME TAXES. Although we recorded income for the current
year, we have net operating losses ("NOL") carried forward from previous years
and we have only recorded income tax expenses of $12,456 for state and other
minimum taxes for the year ended June 30, 2004. We incurred a loss for the year
ended June 30, 2003 and we recorded income taxes expense of $13,396 for state
and other minimum taxes for that year. For federal income tax purposes, we have
a NOL carryforward of approximately $9,620,000 which is available to offset
future federal taxable income through 2023. For state income tax purposes, we


                                      -16-
<PAGE>

also have a NOL carryforward of approximately $5,370,000, which is available to
offset state taxable income through 2012. The use of these NOL carryforwards in
future years will be limited due to past changes in our ownership, the full
effect of which has yet to be calculated. In addition, NOL carryforwards for the
purposes of offsetting California state taxable income have been suspended for
the tax years beginning in 2002 and 2003.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2004, we had a working capital deficiency of $286,128. We
recorded net income of $552,266 and used cash in operating activities of
$6,237,294 for the year then ended. Given our June 30, 2004 cash balance of
$446,530 and our projected operating cash requirements, we anticipate that our
existing capital resources may not be adequate to satisfy our cash flow
requirements through June 30, 2005. We may require additional funding. Our cash
flow estimates are based upon achieving certain levels of sales and reductions
in operating expenses. Should sales be less than forecast, expenses be higher
than forecast or the liquidity not be available through financings of debt
and/or equity, we will not have adequate resources to fund operations. We were
in default under one of our lines of credit until September 30, 2003 when we
renegotiated the line of credit with our lender and cured the default. However,
the line of credit is callable by the lender on demand, and although we are
continuing to seek an agreement with the lender for extended payments terms,
there is no guarantee the lender will agree to provide such extended terms. We
do not expect future fixed obligations through June 30, 2005 to be paid by cash
generated from operating activities. We intend to pursue the following options,
among others, to provide cash to satisfy fixed obligations: (i) additional
debt/equity financings; (ii) extending vendor payments; (iii) an expanded line
of credit with Stanford Financial Group Company, and (iv) liquidation of
inventory. We cannot assure you, though, that any of these financing
alternatives will be available to us. If we are unable to satisfy our fixed
obligations as they become due, our creditors will be entitled to take legal
action against us. If they do, our business could be materially harmed.

         OPERATING ACTIVITIES. Cash decreased $242,342 during the year ended
June 30, 2004 to $446,530 from $688,872 at June 30, 2003.

         Cash used in our operating activities totaled $6,237,294, resulting
primarily from increases in our accounts receivable, inventories, and auction
and customer advances of $887,167, $3,609,158 and $2,906,538 respectively and
were partially offset by our net income of $552,266 and an increase in our
accounts payable of $422,671. The increases in receivable, inventories, and
auction and customer advances are primarily the result the significant increases
in total revenues as compared to the previous year.

         We will continue to strive to gain operating efficiencies by turning
our inventory more quickly and monitoring the amount of inventory that we carry,
although there is no assurance we will achieve these efficiencies.

         INVESTING ACTIVITIES. Cash used in investing activities during year
ended June 30, 2004 was $45,583 consisting of purchases of property and
equipment of $55,757 and offset by $10,174 in proceeds on the sale of property
and equipment.

         FINANCING ACTIVITIES. Until the quarter ending March 31, 2004, we had
incurred losses since July 1999 and have financed these losses through
short-term and long-term borrowings, by issuing shares in various private
placement transactions and by liquidating assets. Cash provided by financing
activities totaled $6,040,535 for the year ended June 30, 2004 resulting from
the transactions described below.


                                      -17-
<PAGE>

         FINANCING ACTIVITIES - DEBT On October 17, 2000 we entered into a
long-term loan agreement, secured by a delivery van, payable in 60 monthly
installments of $457 each consisting of principal and interest at an annual
interest rate of 5.9%. The loan was repaid in full on December 16, 2003. During
the year ended June 30, 2004, the note was reduced by $7,008.

         On July 6, 2001, we executed a note payable for the acquisition of the
assets of SGBH, secured by the assets acquired, and guaranteed by our CEO. The
loan provided for periodic payments through January 2002. We failed to pay the
loan in full at that date but continued to make loan payments through July 2002.
In October 2002 we renegotiated the payment terms by increasing the note balance
by $49,110 to cover unpaid interest and establishing a new interest rate of 4.5%
over the prime lending rate, to be paid in biweekly installments over one year.
On November 1, 2002 we made a lump-sum payment of $179,350 and renegotiated the
terms of payment for the balance due with the creditor. This note required ten
principal and interest installments of $19,133 each, beginning on December 1,
2002, with interest at the rate of 12% per annum. The note payable was repaid in
full on September 1, 2003. During the year ended June 30, 2004, the note was
reduced by $56,832.

         On April 10, 2002 we executed a subordinated note payable to our CEO
bearing interest at 9% per annum with quarterly installment payments of $150,000
plus interest. No principal payments had been made through February 2003. On
February 14, 2003, the terms of the note were modified to provide for repayment
of principal in the amount of $50,000 per quarter commencing on September 30,
2003 and for interest to be paid monthly. The payments that were due March 31,
2004 and June 30, 2004, were deferred by verbal agreement with our CEO to
September 30, 2004. If we desire to obtain a further extension of the deferred
portion of this loan, but our CEO is unwilling to provide such an extension, we
will be required to liquidate sufficient inventory to make this payment. During
the year ended June 30, 2004, the note was reduced by $100,000.

         On July 9, 2002 and July 26, 2002 we entered into temporary working
capital loan agreements with a private lender ("Lender") in the amounts of
$1,500,000 and $1,000,000 respectively. These loans bore interest at the prime
lending rate plus 7% per annum, were secured by our inventory and a personal
guarantee of our CEO and were due to be repaid in 60 days. On August 8, 2002 we
converted the two loans from the Lender into a line of credit (the "Private
LOC") with the Lender by executing a Secured Revolving Line of Credit Agreement.
The Private LOC bore interest at the prime lending rate plus 7% per annum, was
due on September 9, 2002, and was secured by substantially all the assets of the
Company and a personal guarantee of our CEO. The Private LOC provides for
interest payments to be made in cash, inventory or restricted common shares of
the Company at the sole discretion of the Lender. On September 16, 2002 the
Private LOC was amended to extend the due date to October 15, 2002. In November
2002 the Lender died and the Private LOC became an asset of the Estate of the
Lender ("Lender Estate"). On September 30, 2003, we executed a Renewal and
Modification Agreement that amended the Private LOC. In exchange for payment of
$230,000 representing interest in arrears through September 30, 2003, the Lender
Estate agreed to reduce the interest rate to 6% effective October 1, 2003,
release its priority lien position on all of our accounts receivable and to
consider the default cured at that time. The amendment also required monthly
interest payments that began on November 1, 2003 and included a provision that
the Private LOC was callable with five days notice and there is no guarantee
that the Line of Credit will not be called for repayment at any time. There can
be no assurance that we will be able to negotiate a repayment schedule for this
obligation on terms acceptable to us. As of June 30, 2004 the outstanding
balance was $2,500,000, not including accrued interest, all of which was paid to
date. No payments were made to reduce the Line of Credit during the year ended
June 30, 2004.

         On December 10, 2002 and December 13, 2002, our CEO advanced us
$289,970 and $70,000 respectively for working capital purposes. We executed two
unsecured promissory notes both payable on demand and bearing interest at the
rate of 12% per annum. On October 23, 2003, we reduced our unsecured notes


                                      -18-
<PAGE>

payable to our CEO by $350,000 as a result of his purchase of our art inventory
for $350,000 (see "Other Liquidity Plans," below). On February 4, 2004 the
remaining balance of the unsecured notes payable to our CEO of $9,970 was
repaid. During the year ended June 30, 2004 the notes payable were reduced by
$359,970.

         On February 21, 2003, we entered into an auction line of credit
agreement ("Auction LOC") with a private lender whereby the lender would advance
funds to us for the sole purpose of providing auction advances to our
consignment customers. The maximum limit of the Auction LOC was $2,000,000 and
it bore interest at a rate of 10% per annum. The Auction LOC was secured by the
collateralization of inventory consigned by our auction advance customers and
the assignment of the auction advance agreements to the private lender. The
lender had the right to terminate this arrangement at any time. In September
2003, the private lender agreed to temporarily increase the Auction LOC maximum
limit to $2,800,000. On October 28, 2003 the Auction LOC was repaid in full and
the lender and Superior mutually agreed to terminate the agreement.

         On October 13, 2003, we executed a Commercial Loan and Security
Agreement ("Commercial LOC"') with Stanford Financial Group Company, an
affiliate of a principal stockholder, Stanford Venture Capital Holdings, Inc.,
to provide us with a $7.5 million line of credit for purposes of financing our
inventory, auction advances and inventory loans to other rare coin dealers and
collectors. The Commercial LOC bears interest at the prime-lending rate (4.00%
at June 30, 2004), is secured by substantially all of our assets and matures on
October 1, 2005. As of June 30, 2004 the outstanding Commercial LOC balance was
$6,600,000. This balance reflects the net borrowing against the Commercial LOC
for the year ended June 30, 2004.

         Since the Private LOC and Commercial LOC are secured by substantially
all of our assets, if we default in the performance of our obligations under
either of these loans the lender could foreclose its security interest, which
could lead to a termination of our business or require us to file a bankruptcy
petition.

         We are currently in compliance with all of the financial covenants
contained in our credit agreements. While we are in default of the redemption
requirements of our Series A Preferred Stock, this default has not affected our
liquidity, as there are no cross default provisions in our outstanding debt
instruments that are tied to such a default. Our future liquidity, however, will
be reduced by the amount that we are required to pay in order to redeem our
Series A Preferred Stock, once we are legally permitted to do so. See Note 11 of
Notes to Financial Statements at June 30, 2004.

         FINANCING ACTIVITIES - EQUITY. In April 2002 we raised $3,000,000
through the private placement of our Series B Preferred Stock to Stanford and
our CEO, Silvano DiGenova. In February 2003 we raised an additional $2,000,000
through the private placement of our Series D Preferred Stock and our CEO
converted his Series C Preferred Stock, which were equity securities that carry
redemption obligations similar to debt, into $700,000 of our common stock at
$1.20 per common share, which was the equivalent conversion price of the Series
D Preferred Stock. We have invested the net proceeds from each private placement
in our current operations and to reduce debt. However, this equity capital may
be insufficient to permit us to execute our operating plan.

         OTHER LIQUIDITY PLANS. In November 2002, we began to reduce our
operations focused on the Art segment of our business. Our initial plans
included using both our own and third party auction houses and Internet sites to
sell our inventory. From July 1, 2002 through June 30, 2003, we sold
approximately $700,000 of our Art inventory while still maintaining modest gross
margins on these sales. In February 2003, in addition to our exit from the Art


                                      -19-
<PAGE>

business segment, we began to consolidate all our operations into our Beverly
Hills, California location. This operational consolidation allowed us to reduce
overhead costs by eliminating duplicative operational and administrative
expenses. In June 2003, we determined that our initial liquidation plans were no
longer effective and we decided to solicit offers from other art dealers and
collectors for them to purchase the balance of the Art inventory owned by us. In
June 2003, based on our continued assessment of recoverability of the art
inventory including our evaluation of the current Art market and informal offers
from other art dealers, we established a reserve to $665,000 or approximately
65% of our carrying cost. On October 23, 2003, our Board of Directors, after
reviewing other bids to purchase our art inventory, approved the sale of the art
inventory to our CEO for $350,000. This amount represented the highest bid that
we received. With this transaction, we completed our exit from the Art business
segment. However, at some future date, we may resume our activities, on a
limited basis, as a consignment auctioneer in some areas of the Art business
segment.

         While we have completed our cost reduction plans and have plans to
secure additional financing and/or to raise additional capital, we cannot assure
you that we will be successful in completing these critical tasks. If we are
unable to successfully complete these critical tasks, we may be forced to
significantly and materially reduce our operations and/or liquidate inventory at
amounts below current carrying value to generate the necessary working capital
to fund any ongoing operations.

         CAPITAL EXPENDITURES The Company did not incur any material capital
expenditures for property and equipment during the year ended June 30, 2004 and
does not have any plans for material capital expenditures through the current
fiscal year ending June 30, 2005.

         Pursuant to a lease agreement executed on August 6, 2002, we extended
our lease on our corporate headquarters and primary gallery located in Beverly
Hills, California. The monthly base rent is $17,193 and the lease will expire on
September 30, 2007.

         The following table outlines payments due under our significant
contractual obligations over the next four years, exclusive of interest:


<TABLE>
                                                                 PAYMENT DUE BY PERIOD
                                                                 ---------------------
CONTRACT OBLIGATIONS                                     LESS THAN       LESS THAN       LESS THAN
AT JUNE 30, 2004(1)                        TOTAL          1 YEAR          2 YEARS         3 YEARS      AFTER 3 YEARS
----------------------------------     ------------    ------------    ------------    ------------    -------------
<S>                                    <C>             <C>             <C>             <C>             <C>
Short Term Debt(2)                     $ 9,100,000     $ 9,100,000     $        --     $        --     $         --
Long Term Debt(3)                        1,587,500         643,750         475,000         268,750          200,000
Operating Leases                           765,981         261,135         224,376         224,376           56,094
                                       ------------    ------------    ------------    ------------    -------------
Total Contractual Cash Obligations     $11,453,481     $10,004,885     $   699,376     $   493,126     $    256,094
                                       ============    ============    ============    ============    =============
</TABLE>
----------

(1)      The above table outlines our obligations as of June 30, 2004 and does
         not reflect any changes in our obligations that have occurred after
         that date.
(2)      Short term debt is comprised of (a) a line of credit from a private
         lender with a balance of $2.5 million bearing interest at 6% per annum
         and (b) a line of credit from our affiliate, Stanford Financial Group
         Company, that at June 30, 2004 had a principal balance of $6.6 million
         and was bearing interest at the prime rate. We are unable to predict
         the future amount of interest payments as the line of credit from
         Stanford Financial Group Company will fluctuate during the year
         depending on our usage.
(3)      Long-term debt consists of (a) a note payable to our Chief Executive
         Officer in the amount of $900,000 at June 30, 2004, bearing interest at
         9% per annum, and (b) the balance due on the redemption of our Series A
         stock in the amount of $687,500 bearing interest at 9% per annum. The
         maximum interest payable in our fiscal year ending June 30, 2005 on
         this debt is $142,875, and the actual amount that will be payable will
         depend on whether any principal reductions are made to this debt.


                                      -20-
<PAGE>

(4)      The foregoing amounts do not contain any amounts pertaining to our
         obligations under our Guarantied Liquidity and Buy-Back at Grade
         Warranty. Under this warranty, we agree with our customers to
         repurchase coins we sell to them at a price that we determine is the
         wholesale market price of the coins. This warranty has not historically
         been exercised in any material amount, largely due to the fact that the
         repurchase price will normally be less than the price paid by the
         customer for the coin.

RISK FACTORS

         WE HAVE A RECENT HISTORY OF LOSSES AND MAY INCUR FUTURE LOSSES.

         We may not be able to sustain profitability or significantly increase
our revenues. Although we recorded net income of $552,000 for the year ended
June 30, 2004, we incurred a net loss of $3,491,000 for the year ended June 30,
2003, and have incurred losses in prior fiscal years since July 1999. We cannot
assure you that we will be profitable in the future.

         BECAUSE WE HAVE LIMITED WORKING CAPITAL, IT MAY BE DIFFICULT TO
         MAINTAIN OR EXPAND OUR OPERATIONS.

         Our working capital deficiency at June 30, 2004 was $286,128. There can
be no assurance that our revenue or results of operations will not decline in
the future, that we will not have losses in the future, or that we will be able
to continue funding such losses if they occur. Our limited capital could
adversely affect our ability to continue our operations.

         OUR AUDIT OPINION COULD ADVERSELY AFFECT OUR STOCK PRICE.

         Our auditors have expressed an opinion on our financial statements for
the years ended June 30, 2004 and 2003 that contain an explanatory paragraph
that expresses doubt about our ability to continue as a going concern due to
recurring negative cash flows from operations, significant debt and limited
working capital.

         IF WE ARE UNABLE TO COMPETE SUCCESSFULLY, OUR REVENUE AND PROFITABILITY
         WILL DECREASE.

         The business of selling coins and other collectibles is highly
competitive. We compete with a number of comparably sized and smaller firms, as
well as a number of larger firms throughout the United States. Our primary
competitors are Heritage Rare Coins, a large scale coin dealer and auctioneer,
the Spectrum Numismatic unit of Greg Manning Auctions, a large scale coin dealer
and auctioneer, National Globe Exchange, a large scale coin dealer and American
Numismatic Rarities, a comparably-sized coin auctioneer. Many of our competitors
have the ability to attract customers as a result of their reputation and the
quality collectibles they obtain through their industry connections.
Additionally, other reputable companies that sell or auction rare coins and
other collectibles may decide to enter our markets to compete with us. These
companies have greater name recognition and have greater financial and marketing
resources than we do. If these auction companies are successful in entering the
specialized market for premium collectibles in which we participate or if
dealers and sellers participate less in our auctions, we may attract fewer
buyers and our revenue could decrease.


                                      -21-
<PAGE>

         THE VOTING POWER OF SUPERIOR GALLERIES, INC. IS SUBSTANTIALLY
         CONTROLLED BY STANFORD VENTURE CAPITAL HOLDINGS, INC. AND A GROUP OF
         AFFILIATED PERSONS. THIS CONCENTRATION OF VOTING POWER MAY, AMONG OTHER
         THINGS, DELAY OR FRUSTRATE THE REMOVAL OF INCUMBENT DIRECTORS OR A
         TAKEOVER ATTEMPT, EVEN IF SUCH EVENTS MAY BE BENEFICIAL TO OUR
         SHAREHOLDERS.

         Stanford Venture Capital Holdings, Inc., or "Stanford," and certain of
its affiliates collectively hold 57% of our voting securities. Consequently,
Stanford and its affiliates have sufficient voting power to control the outcome
of virtually all corporate matters submitted to the vote of our common
shareholders. Those matters could include the election of directors, changes in
the size and composition of the board of directors, and mergers and other
business combinations involving Superior. In addition, through this control of
the board of directors and voting power, Stanford is able to control certain
decisions, including decisions regarding the qualification and appointment of
officers, dividend policy, access to capital (including borrowing from
third-party lenders and the issuance of additional equity securities), and our
acquisition or disposition of assets. Also, the concentration of voting power in
the hands of Stanford could have the effect of delaying or preventing a change
in control of our company, even if the change in control would benefit our
shareholders, and may adversely affect the market price of our common stock.

         THE HIGH LEVEL OF OUR DEBT MAY LIMIT OUR ABILITY TO IMPLEMENT BUSINESS
         STRATEGIES TO GROW OUR REVENUE AND IMPROVE OUR PROFITABILITY.

         At June 30, 2004, we had total indebtedness of $10,687,500, of which
$9,743,750 was short-term debt. Our high level of debt limits the amount of
additional funds we can borrow, which in turn limits our ability to increase
inventory or make additional customer advances, thus restricting our ability to
grow our revenues. We do not have sufficient cash flow from operations to
rapidly repay this debt, and therefore if this debt was not renewed we would
have to seek new debt or equity financing to refinance our existing debt, or
liquidate inventory, possibly on unfavorable terms. In the past, we have
renegotiated or renewed the terms of our indebtedness on various occasions, but
we cannot assure you that we will be able to do so in the future or that new
debt or equity financing will be available for this purpose. This could result
in losses from operations, or could even require us to seek protection under the
bankruptcy laws.

         IF WE ARE UNABLE TO PAY OUR SECURED DEBT ON A TIMELY BASIS, THE LENDERS
         COULD REQUIRE THAT OUR ASSETS BE SOLD IN A FORECLOSURE SALE, WHICH
         COULD RESULT IN OUR BANKRUPTCY.

         We have borrowed funds from Stanford Venture Capital Group and another
private party, each of which has been granted a security interest in
substantially all of our assets. If we default in the repayment of these debts,
these lenders could, among other things, foreclose on their security interests,
which could result in the sale of substantially all of our assets, the proceeds
of which would be applied to repay our debts to them. If this were to occur, we
could be forced to file a bankruptcy petition, or could go out of business.

         DECREASED DEMAND FOR RARE COINS COULD REDUCE OUR REVENUE AND
         PROFITABILITY.

         We derive substantially all of our revenues from commissions paid to us
on the sale of rare coins in our auctions and sales of rare coins from our own
inventory. Sales of rare coins depend on discretionary consumer spending and are
affected by general market conditions, including perceived scarcity, subjective
value, general consumer trends, changes in the prices of precious metals,
government regulation of rare coin transactions, interest rates and other
general economic conditions. Many factors affect discretionary consumer
spending, including the unemployment rate, business conditions, interest rates,
inflation and tax rates. Spending on the types of luxury items that we typically
sell and auction are impacted by these factors more than sales of consumer
products in general.


                                      -22-
<PAGE>

         Some of the market conditions that could cause the dollar volume spent
in our auctions to decrease include the following:

         o        fewer rare coins offered for sale;
         o        a decline in the prices buyers are willing to pay; and
         o        shifts in consumer trends.

         As buyers' tastes change and economic conditions fluctuate, the supply,
demand and dollar volume of rare coins sales could decrease, which could reduce
our revenues and profits, or cause us to incur losses.

         WE COULD BE SUBJECT TO SALES TAXES, INTEREST AND PENALTIES ON
         INTERSTATE SALES FOR WHICH WE HAVE NOT COLLECTED TAXES.

         We do not collect California sales tax on mail-order sales to
out-of-state customers, nor do we collect use tax on our interstate mail order
sales. We believe that our sales to interstate customers are generally
tax-exempt due to varying state exemptions relative to the definitions of being
engaged in business in particular states and the lack of current Internet
taxation. While we have not been contacted by any state authorities seeking to
enforce sales or use tax regulations, we cannot assure you that we will not be
contacted by authorities in the future with inquiries concerning our compliance
with current statutes, nor can we assure you that future statutes will not be
enacted that affect the sales and use tax aspects of our business.

         THE LOSS OF THE SERVICES OF OUR CHIEF EXECUTIVE OFFICER COULD
         SIGNIFICANTLY REDUCE OUR REVENUE AND PROFITABILITY.

         Our success and future performance depends on the continued services of
our Chief Executive Officer, Silvano DiGenova, on whom we rely heavily for his
expertise and reputation in the rare coin market. Specifically, Mr. DiGenova is
a substantial buyer, appraiser and seller of rare coins on our behalf as well as
a substantial draw to potential auction consigners. Mr. DiGenova's services
would be difficult to replace and the loss of these services could cause
significant harm to our business. While we have an employment agreement with Mr.
DiGenova, this employment agreement may not provide us with meaningful assurance
that we will continue to have his services available to us through that date.

         OUR QUARTERLY OPERATING RESULTS MAY VARY, WHICH MAY CAUSE VOLATILITY OR
         A DECLINE IN THE PRICE OF OUR COMMON STOCK.

         Our revenue, expenses and operating results may vary significantly from
quarter to quarter due to a number of factors, some of which are beyond our
control. These factors include the following:

         o        potential unfavorable supply of or demand for rare coins;
         o        quarter-to-quarter variations due to the timing of coin
                  auctions;
         o        potential changes in consumer trends negatively affecting the
                  popularity of rare coins that we auction and sell from time to
                  time;
         o        unfavorable fluctuations in the prices of precious metals;
         o        costs associated with unanticipated personnel changes;
         o        our inability to maintain customer satisfaction;
         o        quarter-to-quarter variations due to the size and timing of
                  capital expenditures and other costs associated with the
                  expansion of our business and infrastructure;
         o        our inability to resell our inventory of rare coins in a
                  timely manner;
         o        unexpected or severe price competition;


                                      -23-
<PAGE>

         o        our inability to maintain gross margins; and
         o        our inability to expand our sales and distribution channels.

         Additional factors that may negatively affect our quarterly operating
results generally include technical difficulties or network downtime and general
economic conditions and economic conditions specific to our industries.

         IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL, OUR ABILITY TO INCREASE
         REVENUE AND PROFITABILITY WILL BE LIMITED.

         Since our business involves the financing of inventory, receivables,
and auction and customer advances, we may require substantial amounts of capital
in order to achieve and accomplish our future business plans. However, to the
extent we are in need of any additional financing, we cannot assure you that any
such additional financing will be available to us on acceptable terms, or at
all. If we raise additional funds through the issuance of equity securities,
further dilution to our existing shareholders may result.

         THE COSTS ASSOCIATED WITH OUR GROWTH PLANS MAY RESULT IN REDUCED
         PROFITABILITY.

         We have experienced significant periods of growth and increased
personnel, marketing and other operational costs, and we anticipate that further
expansion will be required to address potential growth in our customer base and
market opportunities. This expansion has placed, and we expect it will continue
to place, a significant strain on our management and our operational and
financial resources. To manage this growth we must do the following:

         o        establish and develop operational, financial and management
                  systems;
         o        train, manage and motivate our employee base;
         o        hire additional technology and operations personnel; and
         o        hire additional rare coin specialists and appraisers.

         We expect to incur significant costs in connection with these efforts.
If we underestimate the costs of these efforts or overestimate our anticipated
growth in revenue, we will incur reduce profitability or even losses.

         WE MAY INCUR LOSSES AS A RESULT OF ACCUMULATING INVENTORY.

         In addition to auctioning rare coins on consignment, a substantial
portion of the rare coins that we sell are from our own inventory. We purchase
these rare coins from dealers and collectors and assume the inventory and price
risks of these items until they are sold. If we are unable to resell the rare
coins that we purchase when we want or need to, or at prices sufficient to
generate a profit from their resale, or if the market value of our inventory of
purchased rare coins were to decline, our revenue would likely decline.

         IF WE ARE UNABLE TO OBTAIN A SUFFICIENT SUPPLY OF RARE COINS FOR RESALE
         AND FOR SALE AT AUCTIONS, WE WILL BE UNABLE TO SUSTAIN OR INCREASE OUR
         REVENUES.

         Our business depends substantially on our ability to obtain rare coins
for appraisal, sale and auction. We depend on the availability of rare coins
through dealers and collectors, and we cannot assure you that rare coins will
continue to be available as before. Although we deal with numerous dealers and
collectors from whom we are able to obtain rare coins for resale and for our
auctions, only a limited number of dealers exist with the capacity to supply
rare coins for resale and auction on a regular basis. A change in our
relationships with suppliers or dealers could negatively affect our ability to
obtain, resell or auction rare coins in the quantities and at the times we
desire. A shortage in the supply of rare coins could impair our ability to
attract customers, which would harm our business, operating results and
financial condition.


                                      -24-
<PAGE>

         IF WE ARE UNABLE TO ATTRACT SUFFICIENT CONSIGNMENT MERCHANDISE FOR SALE
         AT OUR AUCTIONS, OUR AUCTION OPERATIONS MAY INCUR A LOSS.

         We incur certain fixed costs in connection with each auction. Our
auction operations generate commission revenue based on the successful sale of
consigned merchandise. If the volume of sales at our auctions does not generate
sufficient commission revenue to cover fixed costs, our auction operations will
generate a loss.

         IF WE EXPERIENCE AN INCREASE IN THE RESCISSION OF SALES, OUR REVENUE
         AND PROFITABILITY COULD DECREASE.

         Our operating results could suffer if we experience a significant
increase in the number of sales that are rescinded due to questions about title,
provenance or authenticity of an item. We warrant the title, provenance and
authenticity of each item that we sell, including items sold at auction. If a
buyer believes that any of these characteristics is in doubt, he or she must
notify us in writing within a certain number of days after the date of sale of
the property. If we cannot substantiate the questioned characteristics, the
buyer may rescind his or her purchase and we will refund the price paid at
auction to the buyer. When a purchase is rescinded, the seller is required to
refund the item's sale price less sellers' commissions and other sellers' fees.

         OUR PLANNED EXPANSION AND ENHANCEMENT OF OUR WEBSITE AND INTERNET
         OPERATIONS MAY NOT RESULT IN INCREASED PROFITABILITY.

         The satisfactory performance, reliability and availability of our
website and network infrastructure are and will be critical to our reputation
and our ability to attract and retain customers and technical personnel and to
maintain adequate customer service levels. Any system interruptions or reduced
performance of our website could materially adversely affect our reputation and
our ability to attract new customers and technical personnel. We are in the
process of development and/or enhancement of several portions of our website
that will offer content and auctions for rare coins that may have a lower
average selling price than many of the rare coins in the markets we currently
serve. Continued development of our website will require significant resources
and expense. If the planned expansion of our website does not result in
increased revenue, we may experience decreased profitability.

         OUR WEBSITE MAY BE VULNERABLE TO SECURITY BREACHES AND SIMILAR THREATS
         WHICH COULD RESULT IN OUR LIABILITY FOR DAMAGES AND HARM TO OUR
         REPUTATION.

         Despite the implementation of network security measures, our website is
vulnerable to computer viruses, break-ins and similar disruptive problems caused
by Internet users. These occurrences could result in our liability for damages,
and our reputation could suffer. The circumvention of our security measures may
result in the misappropriation of proprietary information. Any such security
breach could lead to interruptions and delays and the cessation of service to
our customers and could result in a decline in revenue and income.


                                      -25-
<PAGE>

         OUR COMMON STOCK PRICE IS POTENTIALLY SUBJECT TO SIGNIFICANT
         VOLATILITY, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR INVESTORS.

         Because we have low trading volume in our stock and we have several
shareholders who own very large blocks of our stock, the market price of our
common stock could fluctuate significantly in the future if one or more of these
shareholders attempted to sell a large number of shares.

         Consequently, the price at which you purchase shares of our common
stock may not be indicative of the price that will prevail in the trading
market. You may be unable to sell your shares of common stock at or above your
purchase price, which may result in substantial losses to you.

         BECAUSE OUR STOCK IS NOT LISTED ON A NATIONAL SECURITIES EXCHANGE, YOU
         MAY FIND IT DIFFICULT TO DISPOSE OF OR OBTAIN QUOTATIONS FOR OUR COMMON
         STOCK.

         Our common stock trades under the symbol "SPGR" on the OTC Bulletin
Board. Because our stock trades on the OTC Bulletin Board rather than on a
national securities exchange, you may find it difficult to either dispose of, or
to obtain quotations as to the price of, our common stock.

ITEM 7.           FINANCIAL STATEMENTS

         The financial statements and corresponding notes to the financial
statements called for by this item appear under the caption "Index to Financial
Statements" beginning on Page F-1 of this Annual Report on Form 10-KSB.

ITEM 8A.          CONTROLS AND PROCEDURES

         Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have concluded,
based on their evaluation as of June 30, 2004 ("Evaluation Date"), that the
design and operation of our "disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) under Exchange Act), are effective to ensure that
information required to be disclosed by us in reports filed or submitted by us
under the Exchange Act is accumulated, recorded, processed, summarized and
reported to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding whether or
not disclosure is required. There were no significant changes in our internal
controls or in other factors that could significantly affect our internal
controls subsequent to the Evaluation Date.

         During the year ended June 30, 2004, there were no changes in our
"internal controls over financial reporting" (as defined in Rule 13a-15(f) under
the Exchange Act) that have materially affected or are reasonably likely to
materially affect, our internal controls over financial reporting.


                                      -26-
<PAGE>

                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

         Our directors and executive officers are as follows:

<TABLE>
<S>     <C>
         Name                       Age     Position
         ----                       ---     --------

         Silvano DiGenova           42      Chairman of the Board, Chief Executive Officer and
                                            Director

         J. Michael Wolfe           46      Chief Operating Officer and Executive Vice President

         Paul Biberkraut            43      Chief Financial Officer, Executive Vice President,
                                            Secretary and Director

         Lee Ittner                 42      Director

         David Rector               57      Director (1)

         (1) Chairman of Compensation Committee
</TABLE>

         SILVANO DIGENOVA is our chairman of the board, chief executive officer
and a director. He has served in these positions since the time our corporate
predecessor was formed in 1984. Mr. DiGenova has also served as our acting chief
financial officer from September 2002 through December 2002. Mr. DiGenova
founded TIA, which would later become our company, in 1977. Mr. DiGenova has
extensive experience in the numismatic and fine arts fields. In 1986, Mr.
DiGenova helped form the Professional Coin Grading Service, the first widely
accepted uniform grading system for rare coins. Mr. DiGenova attended the
Wharton School of Business at the University of Pennsylvania for four years.
However, Mr. DiGenova left Wharton in his fourth year to develop TIA, our
predecessor, and did not obtain a degree from Wharton.

         J. MICHAEL WOLFE is our chief operating officer and executive vice
president. Mr. Wolfe has served in this role since July 2004. Mr. Wolfe has over
twenty years of experience in management roles in sales and marketing,
operations and executive management. Prior to joining our company, Mr. Wolfe was
a principal in a privately-held direct marketing start-up company, Ad Home
Direct, LLC from April 2002 to June 2004. Mr. Wolfe was the president and chief
operating officer from 1992 to 2000 and chief executive officer from 2000 to
2002 of Concepts Direct, Inc., a publicly traded company specializing in catalog
and internet retailing.

         PAUL BIBERKRAUT is our chief financial officer, executive vice
president, secretary and a director. Mr. Biberkraut has served in this role
since December 2002 and previously was our chief financial officer and vice
president of finance from October 1999 to December 2000. Mr. Biberkraut has over
fifteen years of experience in management roles with varying levels of
responsibilities for finance, accounting, information technology, operations and
human resources. Prior to returning to our company Mr. Biberkraut was a senior
finance manager for information technology at PacifiCare Health Systems, Inc., a
health care insurance company, from December 2000 to November 2002 and was the
corporate controller of Quality Systems, Inc., a medical software developer,
from November 1997 to June 1999. Mr. Biberkraut also served as the chairman of
the audit committee for an Orange County, California based credit union from
1997 to 1999 and had served as a board member, treasurer and president of an
Orange County, California based not-for-profit social service agency from 1989
to 1998.


                                      -27-
<PAGE>

         LEE ITTNER is one of our Directors. Mr. Ittner has served in the role
since May 2003. Mr. Ittner is currently the Vice President for Latin America for
Kyocera Wireless Corp., a position he has held since 2001. From 1989 to 2001,
Mr. Ittner held positions up to and including Senior Vice President of the
Americas Region for Cellstar Corporation, a provider of wireless telephone
services. Mr. Ittner has over 14 years of experience in both domestic and
international operational management, sales and marketing, customer relations
and strategic planning in the communications industry.

         DAVID RECTOR is one of our Directors and Chairman of our Compensation
Committee. Mr. Rector has served in this role since May 2003. Mr. Rector is
currently the chief executive officer, president and director of Nanoscience
Technologies, Inc., a publicly traded company, a position he has held since May
2004. From 1992 to 2004, Mr. Rector had been a principal management consultant
with The David Stephen Group, where he provided executive management services
for several companies, overseeing operations and strategic planning. Mr. Rector
has over twenty years of experience as a senior executive focusing on general
management with Fortune 100 and developmental companies.

         All directors hold office until the next annual meeting of shareholders
or until their respective successors are elected or until their earlier death,
resignation or removal. Executive officers are appointed by and serve at the
discretion of the board of directors.

AUDIT COMMITTEE FINANCIAL EXPERT

         During 2003 and through August 7, 2004, the late Mark Cohen served as a
Director and chairman of our Audit Committee, and was the Audit Committee
financial expert as defined by Item 401(e) of Regulation S-B. The late Mr. Cohen
was a Certified Public Accountant licensed in the State of Florida, and since
1988 was engaged in the practice of public accounting through his own accounting
firm. Mr. Cohen had over ten years of experience in corporate accounting and
finance at a management level for both public and private companies. He provided
a wide range of accounting services, including audits of publicly traded
companies. Mr. Cohen's passing was unexpected and the Company is currently in
the process of filling the vacant positions of Director and Chairman of the
Audit Committee, as well as the position of Audit Committee financial expert, as
defined by Item 401(e) of Regulation S-B.

CODE OF ETHICS

         We adopted a code of ethics as defined by Item 406 of Regulation S-B.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, requires our executive officers and directors, and persons who
beneficially own more than 10% of our common stock to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission. These officers, directors and shareholders are required by
Commission regulations to furnish us with copies of all such reports that they
file.

         We have reviewed copies of such reports furnished to us during the
fiscal year ended June 30, 2004 and thereafter, and written representations
received by us from our directors and officers and the beneficial owners of more
than 10% of our common stock concerning their compliance with Section 16(a) of
the Exchange Act. Based on this review, we believe that during the 2004 fiscal
year, the only failure by any such person to timely file a report under Section
16(a) of the Exchange Act was a late filing of a Form 4 Statement of Changes in
Beneficial Ownership of Securities by Paul Biberkraut, our chief financial
officer, executive vice president and director. This filing has now been made.


                                      -28-
<PAGE>

ITEM 10.          EXECUTIVE COMPENSATION

         The summary compensation table below shows certain compensation
information for services rendered in all capacities to us by our chief executive
officer and by each other executive officer whose total annual salary and bonus
exceeded $100,000 during the fiscal years ended June 30, 2004 and 2003. Other
than as set forth below, no executive officer's total annual salary and bonus
exceeded $100,000 during our last fiscal year.

<TABLE>
                                        SUMMARY COMPENSATION TABLE
                                            Annual Compensation                        Awards              Payouts
                                        ---------------------------                  ----------    ------------------------
                                                                                     Securities
                                                              Other      Restricted  Underlying
                                                              Annual       Stock       Options/      LTIP       All Other
      Name and                        Salary     Bonus     Compensation    Awards        SARs      Payouts     Compensation
 Principal Position       Year         ($)        ($)           ($)          ($)         (#)         ($)           ($)
--------------------    --------    ---------   --------   ------------  ----------  ----------    --------    ------------
<S>                       <C>       <C>         <C>              <C>          <C>      <C>            <C>           <C>
Silvano DiGenova,         2004      $375,000    $37,500         -0-          -0-       10,000        -0-           -0-
  Chairman of the         2003      $350,000       -0-          -0-          -0-         -0-         -0-           -0-
  Board, Chief
  Executive Officer
  and President
Paul Biberkraut,          2004      $127,500    $30,000         -0-          -0-       60,000        -0-           -0-
  Chief Financial         2003       $61,585       -0-          -0-          -0-         -0-         -0-           -0-
  Officer, Executive
  Vice President and
  Secretary
Stephen Deeds,            2004           n/a       n/a          n/a          n/a         n/a         n/a           n/a
  Executive Vice          2003      $215,625       -0-     $ 115,436(2)      -0-         -0-         -0-           -0-
  President(1)
</TABLE>
-------------------

(1)      Mr. Deeds resigned as an officer of our company effective June 30, 2003
         and on July 1, 2003 we entered into an independent contractor agreement
         with Stephen Deeds, Inc., a company controlled by Mr. Deeds, to provide
         certain consulting services. The agreement to provide consulting
         services was terminated in February 2004.
(2)      Consists of sales commissions.

STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING FISCAL 2004

         The following table summarizes options to purchase shares of our common
stock that we granted during the fiscal year ended June 30, 2004 to each of the
executive officers identified in the summary compensation table above. We have
never granted any stock appreciation rights.


<TABLE>
                        NUMBER OF       PERCENT OF
                        SECURITIES     TOTAL OPTIONS
                        UNDERLYING      GRANTED TO        EXERCISE
                         OPTIONS       EMPLOYEES IN        PRICE(S)     EXPIRATION
NAME                     GRANTED (#)   FISCAL YEAR (%)    ($/SHARE)       DATE(S)
------------------      ------------   ---------------    ---------    -------------
<S>                      <C>              <C>               <C>            <C>
Silvano DiGenova         10,000           4.55%             $0.33      May 2009
Paul Biberkraut          10,000           4.55%             $0.30      May 2009
Paul Biberkraut          25,000          11.36%             $0.30      December 2012
Paul Biberkraut          25,000          11.36%             $1.01      April 2013
</TABLE>
----------


                                      -29-
<PAGE>

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

         The following table summarizes exercises of stock options during the
fiscal year ended June 30, 2004 by each of the executive officers named in the
summary compensation table above and the year-end value of unexercised options
for these executive officers.


<TABLE>
                                                              Number of
                                                        Unexercised Securities         Value of Unexercised
                            Shares         Value          Underlying Options           In-the-Money Options
                           Acquired       Realized        at Fiscal Year End            at Fiscal Year End
    Name                 on Exercise         ($)       Exercisable/Unexercisable     Exercisable/Unexercisable
    ----                 -----------      --------     -------------------------     -------------------------
<S>                          <C>           <C>                 <C>                          <C>
Silvano DiGenova              0             N/A                 37,500/0                     $17,950/0
Paul Biberkraut               0             N/A              16,250/43,750                $26,000/$52,250
</TABLE>

LONG-TERM INCENTIVE PLAN AWARDS

         In fiscal 2004, no awards were given to the executive officers named in
the summary compensation table under long-term incentive plans.

DIRECTORS' COMPENSATION

         Each of our non-employee directors currently receive cash compensation
in the amount of $5,000 per year for service on our board of directors and all
directors are reimbursed for certain expenses in connection with attendance at
board meetings. At the discretion of our board of directors, directors may be
granted stock options. During the fiscal year ended June 30, 2004, our five
directors were each granted options to purchase 10,000 shares of our common
stock at an exercise price of $0.30 per share. These options fully vested on May
31, 2004 and are exercisable for a period of five years after vesting or for
three months, if vested, following the termination or resignation of the
director from the board.

REPRICING OF OPTIONS

         No adjustments to, or repricing of, stock options previously awarded to
the executive officers named in the summary compensation table above occurred in
fiscal 2004.

EMPLOYMENT AGREEMENTS

         On June 15, 2001, we entered into an employment agreement with Silvano
DiGenova under which we agreed to pay an annual salary of $375,000 and bonus
arrangements based on a sliding scale of 5% to 50% of base salary based on a
corresponding fiscal year pre-tax income (as defined) of our company from
$250,000 to $4,000,000.

         On December 27, 2002 we entered into an employment agreement with our
Chief Financial Officer, Paul Biberkraut, under which we agreed to pay an annual
salary of $120,000 and bonus arrangements of up to 50% of base salary based on
personal and Company performance. Effective April 1, 2004, Mr. Biberkraut's
agreement was modified to increase his annual base salary to $150,000 and reduce
the maximum bonus as a percentage of base salary to 30%.


                                      -30-
<PAGE>

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  AND RELATED STOCKHOLDER MATTERS

         The following table sets forth, as of August 10, 2004, certain
information with respect to the beneficial ownership of our stock by (i) each of
our executive officers named in the summary compensation table above (except
Stephen Deeds, who resigned as an officer on June 30, 2003), (ii) each of our
directors, (iii) each person known to us to be the beneficial owner of more than
5% of each class of our outstanding voting securities, and (iv) all of our
directors and executive officers as a group.

<TABLE>
                                                                                                        Percentage of
       Name and Address                                                   Amount and Nature of              Stock
    of Beneficial Owner(1)                   Title of Class              Beneficial Ownership(2)        Outstanding(1)
---------------------------------------      ------------------------    -----------------------        --------------
<S>                                                <C>                         <C>                          <C>
Silvano DiGenova                             Common(3)                         2,038,434                    42.30%
                                             Series B Preferred Stock            400,000                    11.76%

Paul Biberkraut                              Common(4)                            16,500                         *

Lee Ittner                                   Common(5)                            10,000                         *

David Rector                                 Common(6)                            10,000                         *

Stanford Venture Capital Holdings, Inc.      Common (7)(8)                     4,666,667                    60.98%
6075 Poplar Avenue                           Series B Preferred Stock          3,000,000                    88.24%
Memphis, TN 38119                            Series D Preferred Stock          2,000,000                   100.00%

All Executive Officers and Directors         Common(9)                         2,084,684                    42.85%
   as a Group (6 persons)                    Series B Preferred Stock            400,000                    11.76%
</TABLE>

-------------------

(1)      The address for each of Messrs. DiGenova, Biberkraut, Ittner and Rector
         is 9478 West Olympic Blvd., Beverly Hills, California 90212. Messrs.
         DiGenova, Biberkraut, Ittner and Rector are our directors. Messrs.
         DiGenova and Biberkraut are officers of the Company.
(2)      Based upon information furnished to us by the directors and executive
         officers or obtained from our stock transfer books showing 4,485,942
         shares of common stock outstanding as of August 10, 2004. We are
         informed that these persons hold the sole voting and dispositive power
         with respect to the common stock except as noted herein. For purposes
         of computing "beneficial ownership" and the percentage of outstanding
         common stock held by each person or group of persons named above as of
         August 10, 2004, any security which such person or group of persons has
         the right to acquire within 60 days after such date is deemed to be
         outstanding for the purpose of computing beneficial ownership and the
         percentage ownership of such person or persons, but is not deemed to be
         outstanding for the purpose of computing the percentage ownership of
         any other person.
(3)      Includes 132,500 shares of common stock issuable upon the exercise of
         options and warrants, 200,000 shares of common stock issuable upon the
         conversion of Series B Preferred Stock, all of which were convertible
         within 60 days of the date of this table, and 1,000 shares held by Mr.
         DiGenova's minor children, over which Mr. DiGenova exercises voting
         control.
(4)      Includes 22,500 shares of common stock issuable upon the exercise of
         options that are exercisable within 60 days.
(5)      Includes 10,000 shares of common stock issuable upon the exercise of
         options that are exercisable within 60 days.
(6)      Includes 10,000 shares of common stock issuable upon the exercise of
         options that are exercisable within 60 days.


                                      -31-
<PAGE>

(7)      Voting and investment control of Stanford Venture Capital Holdings,
         Inc. is held by R. Allen Stanford. Stanford Venture Capital Holdings,
         Inc. is affiliated with Stanford Group Company, a broker-dealer.
         Stanford Venture Capital Holdings, Inc., our principal stockholder, has
         provided us with a line of credit (see "Management's Discussion and
         Analysis of Financial Condition and Results of Operations--Liquidity
         and Capital Resources; Financing Activities.") Stanford Venture Capital
         Holdings, Inc. has represented to us that at the time that it acquired
         securities from us, it purchased these securities for investment and
         not with a view to the distribution thereof, and did not have any
         agreements or understandings, directly or indirectly, with any person
         to distribute these securities. We pay Stanford Venture Capital
         Holdings, Inc. a management fee of $5,000 per month, provide auction
         services to parties affiliated with it, and from time to time sell
         coins to it and its affiliates.
(8)      Includes 1,500,000 shares of common stock issuable upon the conversion
         of Series B Preferred Stock and 1,666,667 shares of common stock
         issuable upon the conversion of Series D Preferred Stock both of which
         are currently convertible within the next 60 days. Includes 750,000
         shares of common stock owned by four of Stanford's employees, Daniel
         Bogar, William Fusselmann, Osvaldo Pi and Ronald Stein, in equal
         amounts.
(9)      Includes 16,250 shares of common stock issuable upon the exercise of
         options held by Paul Biberkraut and 10,000 shares each of common stock
         issuable upon the exercise of options held by Lee Ittner and David
         Rector, all of which were exercisable within 60 days of the date of
         this table.

EQUITY COMPENSATION PLAN INFORMATION

         The following table provides information about our common stock that
may be issued upon the exercise of options, warrants and rights that we have
granted under (a) our 2003 Omnibus Stock Option Plan and (b) individual
compensation arrangements in exchange for consideration in the form of goods or
services as of June 30, 2004.

<TABLE>
                                    EQUITY COMPENSATION PLAN INFORMATION


                                               Number of Securities       Weighted Average          Number of
                                                to be Issued Upon         Exercise Price of         Securities
                                             Exercise of Outstanding         Outstanding             Remaining
                                                Options, Warrants         Options, Warrants        Available for
              Plan Category                       and Rights(1)              and Rights           Future Issuance
-----------------------------------------    -----------------------      -----------------       ---------------
<S>                                                 <C>                        <C>                     <C>
Equity compensation plans approved by
   security holders(2)                              420,000                    $ 1.24                  380,000
Equity compensation plans not approved by
   security holders(3)                                6,000                    $20.00                      N/A
Total                                               426,000                    $ 1.50                  380,000
</TABLE>
-------------------

(1)      Number of shares is subject to adjustment in the future for changes in
         capitalization resulting from stock splits, stock dividends and similar
         events.
(2)      Consists of our 2003 Omnibus Stock Option Plan. This Plan authorizes us
         to grant options to purchase up to 800,000 shares of our common stock
         during the term of our Plan. Our Plan permits grants of both incentive
         stock options and non-qualified stock options. Options under all plans
         generally vest over 3 to 5 years, though the vesting periods may vary
         from person to person, and are exercisable subject to continued
         employment and other conditions.
(3)      Consists of options to purchase an aggregate of 6,000 shares of our
         common stock granted to employees prior to the adoption of our 2000
         Omnibus Stock Option Plan which was replaced by our 2003 Omnibus Stock
         Option Plan that came into effect on June 30, 2003.


                                      -32-
<PAGE>

         Our 2003 Omnibus Stock Option Plan was adopted by our board of
directors on May 1, 2003 and approved by our shareholders at our annual
shareholders' meeting on June 30, 2003. This plan permits us to grant both
incentive stock options and nonqualified stock options. Options under this plan
generally vest over three to five years, though the vesting periods may vary
from person to person, and are exercisable subject to continued employment and
other conditions.


                                      -33-
<PAGE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The following describes certain transactions with certain parties with
whom we are affiliated, and which occurred during or after our 2003 fiscal year
(ended June 30, 2003). We believe that the terms of each of these transactions
were comparable to those that we could have obtained in similar transactions
with unrelated third parties.

         On April 10, 2002 we borrowed $1,000,000 from our CEO pursuant to a
subordinated note bearing interest at 9% per annum with quarterly installment
payments of $150,000 plus interest. No principal payments had been made through
February 2003. On February 14, 2003, the terms of the note were modified to
provide for repayment of principal in the amount of $50,000 per quarter
commencing on September 30, 2003 and for interest to be paid monthly. The
payments that were due March 31, 2004 and June 30, 2004, were deferred by verbal
agreement with our CEO to September 30, 2004. As of June 30, 2004 the
outstanding balance was $900,000 and all interest payments were paid to date and
continue to be paid current on a monthly basis.

         On December 10, 2002 and December 13, 2002, our CEO advanced us
$289,970 and $70,000 respectively, for working capital purposes. We executed two
unsecured promissory notes to him, both payable on demand, and bearing interest
at the rate of 12% per annum. On October 23, 2003, we reduced our unsecured
notes payable to our CEO by $350,000 as a result of his purchase of our art
inventory for $350,000, as described below. On February 4, 2004 the remaining
balance of these notes of $9,970 was repaid.

         On January 31, 2003, we entered into a consulting agreement with
Stanford, a principal stockholder, to provide financial and advisory services to
us for a three year period commencing on April 1, 2003. The annual fee for such
services is $60,000 and is payable on a quarterly basis. These fees are
comparable to or lower than those that would be charged to us by an unrelated
third party.

         In February 2003 we issued 2,000,000 shares of our Series D Preferred
Stock to Stanford in order to raise $2,000,000 in equity capital. As a condition
of that transaction, the exercise price of certain outstanding warrants was
reduced to $0.001 per common share. The reduction of the exercise price was
required by Stanford as a condition to their agreement to invest in the Series D
Preferred Stock. We believe that as a result of our substantial losses prior to
that time, if we did not agree to these terms we would have been unable to
secure financing elsewhere and would not have been able to continue our
operations. At the time of this exercise price reduction, our stock was traded
only in the "pink sheets," and was trading at $0.20 per share. On July 24, 2003,
these warrants were exercised, resulting in the issuance of 1,845,100 common
shares to the following related parties and affiliates:

<TABLE>
                                                                                  NUMBER
NAME AND RELATIONSHIP                                                            OF SHARES         VALUE(1)
---------------------                                                           -----------       ----------
<S>                                                                                <C>            <C>
Silvano DiGenova - Chief executive officer and principal stockholder..........     345,100        $  68,675
Stanford Venture Capital Holdings, Inc. - Principal stockholder...............     750,000          149,250
Daniel Bogar - Employee of Stanford affiliate.................................     187,500           37,312
William Fusselmann - Employee of Stanford affiliate...........................     187,500           37,312
Osvaldo Pi - Employee of Stanford affiliate...................................     187,500           37,312
Ronald Stein - Employee of Stanford affiliate.................................     187,500           37,312
                                                                                -----------       ----------
         Total................................................................   1,845,100        $ 367,173
</TABLE>
----------
(1)      Value is equal to the difference per share ($0.199) between the
         original and amended exercise prices times the number of shares that
         were issuable under the warrants.


                                      -34-
<PAGE>

         The total proceeds to us from the issuance of the above referenced
common stock was $1,845.

         On July 1, 2003, we entered into an Independent Contractor and
Proprietary Information Agreement with Stephen Deeds, Inc., a company controlled
by Stephen Deeds, who was one of our officers until June 30, 2003. Under this
agreement, Stephen Deeds, Inc. would receive payments consisting of a base
amount of $19,250 per month and commissions equal to 5% (until August 31, 2003)
and 10% (thereafter) of gross commissions and buyback fees received by us during
the consulting period. This agreement was terminated in February 2004. During
the period from July 1, 2003 to the termination date we paid the consultant an
aggregate of $337,401 under this agreement.

         On October 13, 2003, we executed a Commercial Loan and Security
Agreement ("Commercial LOC") with Stanford Financial Group Company, an affiliate
of a principal stockholder, Stanford Venture Capital Holdings, Inc., to provide
us with a $7.5 million line of credit for purposes of financing our inventory,
auction advances and inventory loans to other rare coin dealers and collectors.
The Commercial LOC bear interest at the prime-lending rate (4.00% at June 30,
2004) and is secured by substantially all of our assets.

         On October 23, 2003, our Board of Directors approved the sale of our
remaining fine art inventory to Silvano DiGenova, our chief executive officer
and a principal stockholder ("CEO"), who is also an independent dealer of fine
art, for $350,000. We solicited bids from unrelated third parties and the bid
from the CEO was the highest. We realized a gross profit of $15,860 on sale of
the art inventory to the CEO. The sale was paid in full by reductions in the
balances owing on notes payable to the CEO. The remaining balances on these
notes were subsequently paid in full.

         On May 28, 2004, our Board of Directors approved a short-term sub-lease
of a portion of our vacant Newport Beach facility to our CEO. The sublease term
was from June 1, 2004 through September 30, 2004 and provided for a monthly
rental payment of $4,000. The sub-lease terminated concurrently with our master
lease of the Newport facility.


                                      -35-
<PAGE>

ITEM 13.          EXHIBITS

         The following documents are filed as part of this Annual Report on Form
10-KSB.

                  (1) FINANCIAL STATEMENTS. The following Financial Statements
         and the Reports of Independent Registered Public Accounting Firms are
         on page F-1 through F-44 hereof.

                       Reports of Independent Registered Public Accounting Firms

                       Balance Sheets

                       Statements of Operations

                       Statements of Stockholders' Equity

                       Statements of Cash Flows

                       Notes to Financial Statements

                  (2) FINANCIAL STATEMENT SCHEDULES. All Financial Statement
         Schedules have been omitted because they are not applicable or because
         the applicable disclosures have been included in the Financial
         Statements or in the Notes thereto.

                  (3) EXHIBITS.

        EXHIBIT
        NUMBER                     DESCRIPTION
        ------                     -----------

         2.1      Agreement and Plan of Merger dated June 30, 2003 by and
                  between Tangible Asset Galleries, Inc. and Superior Galleries,
                  Inc. (incorporated herein by this reference to Exhibit C to
                  the definitive Proxy Statement of Tangible Asset Galleries,
                  Inc. filed under the Exchange Act on June 5, 2003).
         3.1      Certificate of Incorporation of Superior Galleries, Inc.
                  (including Certificates of Designation of Superior Galleries,
                  Inc., relating to Series A $5.00 Redeemable 8% Convertible
                  Preferred Stock, Series B $1.00 Convertible Preferred Stock
                  and Series D $1.00 Convertible Preferred Stock) (incorporated
                  herein by this reference to Exhibit D to the definitive Proxy
                  Statement of Tangible Asset Galleries, Inc. filed under the
                  Exchange Act on June 5, 2003).
         3.2      Bylaws of Superior Galleries, Inc. (incorporated herein by
                  this reference to Exhibit E to the definitive Proxy Statement
                  of Tangible Asset Galleries, Inc. filed under the Exchange Act
                  on June 5, 2003).
         4.1      2003 Omnibus Stock Option Plan (incorporated herein by this
                  reference to Exhibit A to the definitive Proxy Statement of
                  Tangible Asset Galleries, Inc., filed under the Exchange Act
                  on June 5, 2003).
         4.2      Form of Nonqualified Stock Option Agreement for 2003 Omnibus
                  Stock Option Plan (incorporated herein by this reference to
                  Exhibit 4.2 to the Annual Report on Form 10-KSB of Superior
                  Galleries, Inc., filed under the Exchange Act, for the fiscal
                  year ended June 30, 2003) .
         4.3      Form of Employee Incentive Stock Option Agreement for 2003
                  Omnibus Stock Option Plan (incorporated herein by this
                  reference to Exhibit 4.3 to the Annual Report on Form 10-KSB
                  of Superior Galleries, Inc., filed under the Exchange Act, for
                  the fiscal year ended June 30, 2003).


                                      -36-
<PAGE>

        EXHIBIT
        NUMBER                     DESCRIPTION
        ------                     -----------

         4.4      Lockup Agreement dated April 3, 2002 by and among Stanford
                  Venture Capital Holdings, Inc. and certain stockholders of
                  Tangible Asset Galleries, Inc. (incorporated herein by this
                  reference to Exhibit G included in Exhibit 10.1 to the Current
                  Report on Form 8-K of Tangible Asset Galleries, Inc., filed
                  under the Exchange Act on April 24, 2002).
         4.5      Form of Warrant to Purchase Common Stock Issued to Series A
                  Preferred Stock Investors (incorporated herein by this
                  reference to Exhibit 4.14 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.6      Warrant to Purchase 1,500,000 Shares of Common Stock dated
                  June 15, 2001 Issued to Silvano DiGenova (incorporated herein
                  by this reference to Exhibit 4.9 of the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc., for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         4.7      Warrant to Purchase 1,000,000 Shares of Common Stock dated
                  November 27, 2001 Issued to NRLP (incorporated herein by this
                  reference to Exhibit 4.10 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.8      Warrant to Purchase 250,000 Shares of Common Stock dated June
                  26, 2001 Issued to NRLP (incorporated herein by this reference
                  to Exhibit 4.11 of the Annual Report on Form 10-KSB of
                  Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.9      Warrant to Purchase 250,000 Shares of Common Stock dated
                  November 14, 2000 Issued to NRLP (incorporated herein by this
                  reference to Exhibit 4.12 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.10     Warrant to Purchase 500,000 Shares of Common Stock dated July
                  3, 2001 Issued to KSH Investment Fund LLP (incorporated herein
                  by this reference to Exhibit 4.13 of the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc., for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         4.11     Liquidation Preferences Agreement between Tangible Asset
                  Galleries, Inc., the holders of the outstanding Series B
                  Preferred Stock of Tangible Asset Galleries, Inc. and Stanford
                  Venture Capital Holdings, Inc. dated January 31, 2003
                  (incorporated herein by this reference to Exhibit 4.1 to the
                  Current Report on Form 8-K of Superior Galleries, Inc. filed
                  March 3, 2003).
         9.1      Shareholders' Agreement dated April 3, 2002 by and among
                  Silvano DiGenova, Stanford Venture Capital Holdings, Inc. and
                  Tangible Asset Galleries, Inc. (incorporated herein by this
                  reference to exhibit E included in Exhibit 10.1 to the Current
                  Report on Form 8-K of Tangible Asset Galleries, Inc., filed
                  under the Exchange Act on April 24, 2002).
         10.3     Standard Multi-Tenant Office Lease-Gross dated August 6, 2002
                  by and between DBKK, LLC and Tangible Asset Galleries, Inc.
                  (incorporated herein by this reference to Exhibit 10.14 to the
                  Annual Report on Form 10-KSB of Tangible Asset Galleries, Inc.
                  for the year ended June 30, 2002, filed under the Exchange Act
                  on February 19, 2003).
         10.4     Registration Rights Agreement dated April 3, 2002 by and among
                  Tangible Asset Galleries, Inc. and holders of our Series B
                  Preferred Stock, Series C Preferred Stock and Certain Warrants
                  (incorporated herein by this reference to exhibit D included
                  in Exhibit 10.1 to the Current Report on Form 8-K of Tangible
                  Asset Galleries, Inc., filed under the Exchange Act on April
                  24, 2002).


                                      -37-
<PAGE>

        EXHIBIT
        NUMBER                     DESCRIPTION
        ------                     -----------

         10.5     Employment Agreement dated June 1, 2001 between Tangible Asset
                  Galleries, Inc. and Silvano DiGenova. (incorporated herein by
                  this reference to Exhibit 10.16 to the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc. for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         10.6     Employment Agreement dated December 27, 2002 between Tangible
                  Asset Galleries, Inc. and Paul Biberkraut (incorporated herein
                  by this reference to Exhibit 10.6 to the Annual Report on Form
                  10-KSB of Superior Galleries, Inc., filed under the Exchange
                  Act, for the fiscal year ended June 30, 2003).
         10.7     Commercial Loan and Security Agreement dated October 13, 2003
                  between Superior Galleries, Inc. and Stanford Financial Group
                  Company (incorporated herein by this reference to Exhibit 10.1
                  to the Current Report on Form 8-K of Superior Galleries, Inc.
                  filed under the Exchange Act, filed October 16, 2003)
         10.8     Commercial Note by Superior Galleries, Inc. to Stanford
                  Financial Group Company dated October 1, 2003 (incorporated
                  herein by this reference to Exhibit 10.2 to the Current Report
                  on Form 8-K of Superior Galleries, Inc. filed October 16,
                  2003)
         10.9     Secured Revolving Line of Credit Agreement dated August 8,
                  2002 between Tangible Asset Galleries, Inc. and John Wesley
                  English (incorporated herein by reference to Exhibit 10.9 of
                  the registrant's Registration Statement on Form SB-2, as
                  amended, filed September 24, 2004)
         10.10    Renewal and Modification Agreement dated September 30, 2003
                  between Superior Galleries, Inc. and the John Wesley English
                  Living Trust (incorporated herein by reference to Exhibit
                  10.10 of the registrant's Registration Statement on Form SB-2,
                  as amended, filed September 24, 2004)
         10.11    Promissory Note in the maximum amount of $1,000,000, dated
                  February 10, 2003, from Tangible Asset Galleries, Inc. to
                  Silvano DiGenova (incorporated herein by reference to Exhibit
                  10.11 of the registrant's Registration Statement on Form SB-2,
                  as amended, filed September 24, 2004)
         10.12    Promissory Note dated December 10, 2002 by Tangible Asset
                  Galleries, Inc. to Silvano DiGenova (incorporated herein by
                  reference to Exhibit 10.12 of the registrant's Registration
                  Statement on Form SB-2, as amended, filed September 24, 2004)
         10.13    Promissory Note dated December 13, 2002 by Tangible Asset
                  Galleries, Inc. to Silvano DiGenova (incorporated herein by
                  reference to Exhibit 10.13 of the registrant's Registration
                  Statement on Form SB-2, as amended, filed September 24, 2004)
         10.14    Series D Preferred Stock Purchase and Warrant Exercise
                  Agreement dated January 31, 2003, between Tangible Asset
                  Galleries, Inc., Stanford Venture Capital Holdings, Inc.,
                  Silvano DiGenova and certain warrant holders (incorporated
                  herein by this reference to Exhibit 10.1 to the Current Report
                  on Form 8-K of Superior Galleries, Inc. filed March 3, 2003).
         10.15    Share Exchange and Note Modification Agreement dated January
                  31, 2003 between Tangible Asset Galleries, Inc., Stanford
                  Venture Capital Holdings, Inc. and Silvano DiGenova
                  (incorporated herein by this reference to Exhibit 10.2 to the
                  Current Report on Form 8-K of Superior Galleries, Inc. filed
                  March 3, 2003).
         10.16    Consulting Agreement between Tangible Asset Galleries, Inc.
                  and Stanford Venture Capital Holdings, Inc., dated January 31,
                  2003 (incorporated herein by reference to Exhibit 10.16 of the
                  registrant's Registration Statement on Form SB-2, as amended,
                  filed September 24, 2004).
         10.17    Independent Contractor and Proprietary Information Agreement
                  dated July 1, 2003 between Superior Galleries, Inc. and
                  Stephen Deeds, Inc. (incorporated herein by reference to
                  Exhibit 10.17 of the registrant's Registration Statement on
                  Form SB-2, as amended, filed September 24, 2004)


                                      -38-
<PAGE>

        EXHIBIT
        NUMBER                     DESCRIPTION
        ------                     -----------

         14.1     Superior Galleries, Inc. Code of Ethics (previously filed).
         31.1     Certification of Chief Executive Officer as required by
                  Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
         31.2     Certification of Chief Financial Officer as required by
                  Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
         32.1     Officer's Certification of Annual Report pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
         32.2     Officer's Certification of Annual Report pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
-----------------


                                      -39-
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 4, 2005                               SUPERIOR GALLERIES, INC.


                                                   By:  /s/ Silvano DiGenova
                                                       ------------------------
                                                        Silvano DiGenova,
                                                        Chief Executive Officer

Dated: March 4, 2005                               SUPERIOR GALLERIES, INC.


                                                   By:  /s/ Paul Biberkraut
                                                       ------------------------
                                                        Paul Biberkraut,
                                                        Chief Financial Officer


                                      -40-
<PAGE>

                            Superior Galleries, Inc.

                          Index to Financial Statements



Independent Registered Public Accounting Firms' Reports......................F-2

Financial Statements - June 30, 2004 and 2003

     Balance Sheets..........................................................F-4

     Statements of Operations................................................F-6

     Statements of Stockholders' Equity (Deficit)............................F-8

     Statements of Cash Flows...............................................F-10

     Notes to Financial Statements..........................................F-12

Schedule II - Valuation and Qualifying Accounts ............................F-40


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Superior Galleries, Inc.
Beverly Hills, California

We have audited the balance sheet of Superior Galleries, Inc. as of June 30,
2004, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Superior Galleries, Inc. as of
June 30, 2004, and the results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 14 to the
financial statements, the Company has suffered negative cash flows from
operations, has significant debt that is callable on demand, and has limited
working capital. This raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 14. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                      /s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
                                      ------------------------------------------

Los Angeles, California
July 27, 2004


                                      F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Superior Galleries, Inc. and Subsidiaries
Beverly Hills, California

We have audited the accompanying consolidated balance sheet of Superior
Galleries, Inc. and subsidiaries (the "Company") as of June 30, 2003, and the
related consolidated statement of operations, stockholders' equity (deficit) and
cash flows for the year ended June 30, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Superior Galleries,
Inc. and subsidiaries as of June 30, 2003, and the results of their operations
and their cash flows for the year ended June 30, 2003, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 14 to
the consolidated financial statements, the Company has suffered recurring losses
from operations, negative cash flows from operations, is in default on a
significant debt obligation, and has limited working capital that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 14. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



                                                        /s/ HASKELL & WHITE LLP
                                                        -----------------------

Irvine, California
September 5, 2003


                                      F-3
<PAGE>

<TABLE>
                                        SUPERIOR GALLERIES, INC.
                                             BALANCE SHEETS


                                                                          June 30, 2004    June 30, 2003
                                                                          -------------    -------------
                                                 ASSETS
                                             (NOTE 6 AND 7)
CURRENT ASSETS
<S>                                                                       <C>              <C>
     Cash and cash equivalents (Note 1)                                   $    446,530     $    688,872
     Accounts receivable, net of allowance for uncollectible accounts
       of $259,007 (2004) and $270,663 (2003) (Note 1)                       3,712,866        2,825,699
     Auction and customer advances (Notes 1, 5 and 6)                        6,401,873        3,495,335
     Inventories (Notes 1, 2, 6, 7 and 9)                                    6,106,593        2,497,435
     Prepaid expense and other                                                  50,574           89,788
                                                                          -------------    -------------

         Total current assets                                               16,718,436        9,597,129

Property and equipment, net (Notes 1 and 3)                                    135,361          216,424
Other assets                                                                    11,100           13,779
                                                                          -------------    -------------

         TOTAL ASSETS                                                     $ 16,864,897     $  9,827,332
                                                                          =============    =============

                             LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

      Line of credit - related party (Note 6)                             $  6,600,000     $         --
      Line of credit (Note 7)                                                2,500,000        2,500,000
      Accounts payable and accrued expenses                                  7,260,814        6,838,143
      Notes payable to a related party (Note 9)                                300,000          559,970
      Series A stock redemption payable (Note 11)                              343,750               --
      Notes payable (Note 8)                                                        --           56,832
                                                                          -------------    -------------

         Total current liabilities                                          17,004,564        9,954,945
                                                                          -------------    -------------

                            (See accompanying notes to Financial Statements)


                                                  F-4
</TABLE>
<PAGE>

<TABLE>
                                            SUPERIOR GALLERIES, INC.
                                           BALANCE SHEETS (CONTINUED)


                                                                               June 30, 2004      June 30, 2003
                                                                               --------------     --------------
LONG-TERM LIABILITIES
<S>                                                                            <C>                <C>
      Notes payable to a related party, net of current portion (Note 9)        $     600,000      $     800,000
      Series A stock redemption payable, net of
         current portion (Note 11)                                                   343,750                 --
      Notes payable, net of current portion (Note 8)                                      --              7,008
                                                                               --------------     --------------

         Total long-term liabilities                                                 943,750            807,008
                                                                               --------------     --------------

               TOTAL LIABILITIES                                                  17,948,314         10,761,953
                                                                               --------------     --------------

Series A $5.00 redeemable 8% convertible preferred stock $0.001 par value,
   1,400,000 shares designated, 125,000 shares issued and outstanding with
   a liquidation preference of $637,500
   (Note 11)                                                                              --            637,469
                                                                               --------------     --------------

COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS (NOTES 5, 6, 7,
   9, 10, 11, 12 AND 14)

STOCKHOLDERS' EQUITY (DEFICIT) (NOTE 11)

      Preferred Stock, 3,193,000 shares undesignated, none outstanding                    --                 --
      Series B convertible preferred stock $1.00 par value, 3,400,000
         shares designated 3,400,000 shares issued and outstanding with a
         liquidation preference of $3,400,000                                      2,966,500          2,966,500
      Series D convertible preferred stock $1.00 par value, 2,000,000
         shares designated 2,000,000 shares issued and outstanding with a
         liquidation preference of $2,000,000                                      1,931,456          1,931,456
      Common stock, $.001 par value, 12,500,000 shares authorized,
         4,485,942 (2004) and 2,640,836 (2003) issued and outstanding                  4,486              2,641
      Additional paid in capital                                                   7,911,988          7,939,925
      Accumulated deficit                                                        (13,897,847)       (14,412,612)
                                                                               --------------     --------------

            Total stockholders' equity (deficit)                                  (1,083,417)        (1,572,090)
                                                                               --------------     --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                           $  16,864,897      $   9,827,332
                                                                               ==============     ==============

                                (See accompanying notes to Financial Statements)


                                                      F-5
</TABLE>
<PAGE>

<TABLE>
                                     SUPERIOR GALLERIES, INC.
                                     STATEMENTS OF OPERATIONS


                                                            Year Ended               Year Ended
                                                           June 30,2004             June 30,2003
                                                          --------------           --------------
<S>                                                       <C>                      <C>
Net sales                                                 $  26,916,284            $  18,043,826
Commission income                                             3,081,028                2,311,082
                                                          --------------           --------------
TOTAL REVENUE                                                29,997,312               20,354,908

COST OF SALES                                                23,381,949               15,952,059
                                                          --------------           --------------

GROSS PROFIT                                                  6,615,363                4,402,849

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  5,958,829                6,675,629

IMPAIRMENT OF GOODWILL (NOTES 1 AND 4)                               --                  591,521
                                                          --------------           --------------

Income (loss) from operations                                   656,534               (2,864,301)
                                                          --------------           --------------

OTHER INCOME (EXPENSE)
 Interest income                                                476,300                  125,511
 Interest expense (Notes 6, 7, 8 and 9)                        (535,248)                (672,298)
 Other expense, net                                             (32,864)                 (66,519)
                                                          --------------           --------------

     Total other income (expense)                               (91,812)                (613,306)
                                                          --------------           --------------

INCOME (LOSS) BEFORE INCOME TAX PROVISION                       564,722               (3,477,607)

INCOME TAX PROVISION (NOTE 10)                                   12,456                   13,396
                                                          --------------           --------------

NET INCOME (LOSS)                                         $     552,266            $  (3,491,003)
                                                          ==============           ==============

                         (See accompanying notes to Financial Statements)


                                               F-6
</TABLE>
<PAGE>

<TABLE>
                                     SUPERIOR GALLERIES, INC.
                               STATEMENTS OF OPERATIONS (CONTINUED)


                                                                  Year Ended          Year Ended
                                                                 June 30,2004       June 30,2003
                                                                 -------------      -------------
<S>                                                              <C>                <C>
Calculation of net income (loss) per share:
Net income (loss)                                                $    552,266       $ (3,491,003)
Preferred stock accretion                                             (50,031)           (66,681)
Preferred stock dividend                                              (37,500)          (429,267)
                                                                 -------------      -------------

Net income (loss) applicable to common shares                    $    464,735       $ (3,986,951)
                                                                 =============      =============

NET INCOME (LOSS) PER COMMON SHARE:
    from net income (loss), basic                                $       0.11       $      (1.75)
                                                                 =============      =============
    from net income (loss), fully diluted                        $       0.06       $      (1.75)
                                                                 =============      =============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
         Basic                                                      4,369,675          2,277,672
                                                                 =============      =============
         Fully diluted                                              8,098,265          2,277,672
                                                                 =============      =============

                         (See accompanying notes to Financial Statements)


                                               F-7
</TABLE>
<PAGE>
<TABLE>
                                                      SUPERIOR GALLERIES, INC.
                                            STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                             FOR THE YEARS ENDED JUNE 30, 2002 AND 2003


                         Series B               Series D                                                 Retained
                     Preferred Stock        Preferred Stock                               Additional     Earnings          Total
                   --------------------    --------------------      Common                  paid      (Accumulated    Stockholder's
                    Shares      Amount      Shares      Amount       Shares     Amount    in Capital      Deficit)         Equity
                    ------      ------      ------      ------       ------     ------    ----------      --------         ------
<S>                <C>        <C>         <C>        <C>            <C>         <C>       <C>           <C>            <C>
Balance,
  June 30, 2004    3,400,000  $2,966,500         --  $        --    2,060,573   $ 2,061   $ 6,938,810   $(10,492,343)  $  (584,972)

 Issuance of
  Series D
  Preferred
  stock,
  net of
  offering
  cost
  (Note 11)               --          --  2,000,000    1,931,456           --        --            --             --     1,931,456
 Issuance of
  common
  stock in
  exchange
  for Series C
  Preferred
  Stock
  (Note 11)               --          --         --           --      583,333       583       699,417             --       700,000
 Fair value of
  re-priced
  warrants
  as dividends
  on Series
  B Preferred
  Stock (Note 11)         --          --         --           --           --        --       340,000       (340,000)           --
 Fair value of
  re-priced
  warrants
  pursuant to
  Series D
  Preferred
  Stock
  offering
  (Note 11)               --          --         --           --           --        --        29,020             --        29,020
 Purchase and
  cancellation
  of
  common stock            --          --         --           --       (3,070)       (3)         (641)           --           (644)
 Accretion of
  redemption
  value of
  Series A
  Preferred
  Stock
  (Note 11)               --          --         --           --           --        --       (66,681)            --       (66,681)
 Dividends on
  preferred
  stock                   --          --         --           --           --        --            --        (89,266)      (89,266)
      Net loss            --          --         --           --           --        --            --     (3,491,003)   (3,491,003)
                   ----------  ---------- ----------  -----------   ----------   -------   -----------   ------------   -----------
 Balance
  June 30, 2003    3,400,000   2,966,500  2,000,000    1,931,456    2,640,836     2,641     7,939,925    (14,412,612)   (1,572,090)

                                          (See accompanying notes to Financial Statements)
</TABLE>


                                                                F-8
<PAGE>

<TABLE>
                                                      SUPERIOR GALLERIES, INC.
                                            STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                       FOR THE YEARS ENDED JUNE 30, 2004 AND 2003 (CONTINUED)

                         Series B               Series D                                                  Retained
                     Preferred Stock        Preferred Stock                               Additional      Earnings         Total
                   --------------------    --------------------      Common                  paid      (Accumulated    Stockholder's
                    Shares      Amount      Shares      Amount       Shares     Amount    in Capital      Deficit)         Equity
                    ------      ------      ------      ------       ------     ------    ----------      --------         ------
<S>                <C>        <C>         <C>        <C>            <C>         <C>       <C>           <C>            <C>
Reverse split
  adjustment              --          --         --           --            6        --            --             --            --
 Issuance of
  common
  stock
  (Note 11)               --          --         --           --    1,845,100     1,845            --             --         1,845
 Fair value
  of options
  granted                 --          --         --           --           --        --        22,094             --        22,094
 Accretion of
  redemption
  value of
  Series A
  Preferred
  Stock
  (Note 11)               --          --         --           --           --        --       (50,031)            --       (50,031)
 Dividends
  on preferred
  stock                   --          --         --           --           --        --            --        (37,500)      (37,500)
    Net income            --          --         --           --           --        --            --        552,265       552,265
                   ---------- ----------- ---------- ------------  -----------  --------  ------------  -------------  ------------
Balance,
  June 30, 2004    3,400,000  $2,966,500  2,000,000  $ 1,931,456    4,485,942   $ 4,486   $ 7,911,988   $(13,897,847)  $(1,083,417)
                   ========== =========== ========== ============  ===========  ========  ============  =============  ============

                                          (See accompanying notes to Financial Statements)


                                                                 F-9
</TABLE>
<PAGE>

                            SUPERIOR GALLERIES, INC.
                            STATEMENTS OF CASH FLOWS


                                                  Year Ended       Year Ended
                                                 June 30, 2004    June 30, 2003
                                                 -------------    -------------
CASH FLOWS FROM OPERATING ACTIVITIES                      --               --

Net income (loss)                                $   552,266      $(3,491,003)
Adjustments to reconcile net income
 (loss) to net cash
 used in operating activities:
Depreciation and amortization                         93,781          127,376
Bad debts                                                 --          130,714
Loss on retirement of property and
 equipment                                            32,864           48,786
Loss on investments                                       --           16,872
Impairment of goodwill                                    --          591,521
Fair value of options, warrants and
 common stock granted                                 22,094           29,020
Increase (decrease) in cash from
 changes in assets and
 liabilities
    Accounts receivable                             (887,167)       2,428,989
    Other receivables                                     --           26,844
    Inventories                                   (3,609,158)         786,409
    Prepaid expenses and other                        39,214          (34,631)
    Other assets                                       2,679          222,609
    Auction and customer advances, net            (2,906,538)      (1,647,167)
    Accounts payable and accrued expenses            422,671         (124,791)
    Customer deposits                                     --         (241,880)
                                                 ------------     ------------

Net cash used in operating activities             (6,237,294)      (1,130,332)
                                                 ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment                  (55,757)         (48,464)
Proceeds from sale of property and equipment          10,174           20,480
Collection on sale note receivable                        --           69,286
                                                 ------------     ------------

Net cash (used in) provided by investing
 activities                                          (45,583)          41,302
                                                 ------------     ------------

                (See accompanying notes to Financial Statements)


                                      F-10
<PAGE>

<TABLE>
                                  SUPERIOR GALLERIES, INC.
                                  STATEMENTS OF CASH FLOWS


                                                              Year Ended        Year Ended
                                                             June 30, 2004     June 30, 2003
                                                             -------------     -------------
<S>                                                          <C>               <C>
  CASH FLOWS FROM FINANCING ACTIVITIES

  Borrowings under related party line of credit                11,000,000                --
  Repayments under related party line of credit                (4,400,000)               --
  Borrowings under lines of credit                              3,300,000         2,500,000
  Repayments under lines of credit                             (3,300,000)         (376,393)
  Borrowings under notes payable                                       --         2,191,325
  Repayments under notes payable                                  (63,840)       (4,212,002)
  Borrowings under related party debt                                  --           359,970
  Repayments under related party debt                            (459,970)               --
  Repayments on obligations under capital lease                        --            (3,646)
  Repayments under repurchase agreement                                --          (556,361)
  Issuance of common shares                                         1,845                --
  Issuance of Series D preferred shares, net of offering
   expenses                                                            --         1,931,456
  Purchase of common stock for cancellation
                                                                       --              (644)
  Payment of dividends on preferred stock                         (37,500)          (89,267)
                                                             -------------     -------------
  Net cash provided by financing activities                     6,040,535         1,744,438
                                                             -------------     -------------

  Net (decrease) increase in cash and equivalents                (242,342)          655,408

  Cash and cash equivalents beginning of year                     688,872            33,464
                                                             -------------     -------------
  Cash and cash equivalents, end of year                     $    446,530      $    688,872
                                                             =============     =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the year for:
  Interest                                                   $    749,393      $    458,124
                                                             =============     =============
  Income taxes                                               $      9,008      $      2,310
                                                             =============     =============

                      (See accompanying notes to Financial Statements)


                                            F-11
</TABLE>
<PAGE>
                            SUPERIOR GALLERIES, INC.
                            STATEMENTS OF CASH FLOWS


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY

During the years ended June 30, 2004 and 2003, the Company completed non-cash
transactions as follows:

                                                      Year Ended    Year Ended
                                                    June 30, 2004  June 30, 2003
                                                    -------------  -------------
     NON-CASH INVESTING AND FINANCING ACTIVITIES

     Accretion of redemption value of
          Series A Preferred stock                       50,031       66,681
     Series A preferred stock redemption liability      687,500           --
     Issuance of common stock on conversion
          of Series C preferredstock                         --      700,000
     Fair value of re-priced warrants as
          dividends on Series B preferred stock              --      340,000
     Cancellation of treasury common stock                   --          644

                (See accompanying notes to Financial Statements)


                                      F-12
<PAGE>

                            SUPERIOR GALLERIES, INC.
                          NOTES TO FINANCIAL STATEMENTS


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         ORGANIZATION AND BUSINESS

         Superior Galleries, Inc. ("Superior" or the "Company") is a wholesaler,
         retailer, and auctioneer of rare coins. The Company is based in Beverly
         Hills, California. On June 30, 2003 as part of a reincorporation in the
         State of Delaware the Company's name was changed to Superior Galleries,
         Inc. from Tangible Asset Galleries, Inc. Additionally, the Company's
         subsidiary Superior Galleries, Inc., a Nevada corporation, name was
         changed to Superior Galleries Beverly Hills, Inc. ("SGBH"). As of July
         1, 2003, all operations in SGBH ceased and were transferred to
         Superior.

         PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

         At June 30, 2003, the consolidated financial statements include the
         accounts of Superior and SGBH. At June 30, 2004 the financial
         statements include only the accounts of Superior as all the accounts
         and operations in SGBH were transferred effective July 1, 2003. For
         purposes of presentation, the balances as at and the results of
         operations for the year ended June 30, 2003 were consolidated, but the
         balances as at and the results of operations for the year ended June
         30, 2004 were not consolidated. The corporate charter of SGBH was
         surrendered during the year ending June 30, 2004.

         For purposes of the consolidated financial statements during the year
         ending, and, at June 30, 2003, all significant inter-company balances
         and transactions have been eliminated in consolidation.

         See also Note 14 for discussions of going concern matters.

         RECLASSIFICATIONS

         Certain amounts may have been reclassified in the 2003 consolidated
         financial statements to conform to the basis of presentation used in
         2004. Such amounts, if any, are not material.

         CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments with original
         maturities of three months or less when purchased to be cash
         equivalents. The Company places its cash with high credit quality
         institutions. The Federal Deposit Insurance Corporation ("FDIC")
         insures cash accounts at each institution for up to $100,000. From time
         to time, the Company maintains cash in excess of the FDIC limit.

         INVENTORIES

         Inventories consisting of rare coins are stated at the lower of cost
         (on a specific identification basis) or market.


                                      F-13
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost and are depreciated or
         amortized (as applicable) using the straight-line method over the
         estimated useful lives of the related assets, ranging from three to
         seven years. Maintenance and repairs are charged to expense as
         incurred. Significant renewals and betterments are capitalized. At the
         time of retirement or other disposition of property and equipment, the
         cost and accumulated depreciation and amortization are removed from the
         accounts and any resulting gain or loss is reflected in operations.

         The Company assesses the recoverability of property and equipment by
         determining whether the depreciation and amortization of property and
         equipment over its remaining life can be recovered through projected
         un-discounted future cash flows. The amount of property and equipment
         impairment, if any, is measured based on fair value and is charged to
         operations in the period in which property and equipment impairment is
         determined by management. At June 30, 2004 and 2003, management of the
         Company has not identified any impaired assets.

         GOODWILL

         Effective July 1, 2002, the Company adopted Statement of Financial
         Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
         Assets". SFAS 142 requires that goodwill be tested for impairment on an
         annual basis. As the Company recorded goodwill for its purchase of its
         SGBH subsidiary in July 2001, it tested the goodwill for impairment
         during the quarter ended December 31, 2002. Management estimated the
         fair value of the reporting unit (i.e. Company as a whole) using a
         present value model on estimated future cash flows. This value was then
         adjusted to calculate the implied fair value of goodwill based on the
         allocation of the reporting units assets and liabilities. The
         calculation identified that the implied fair value was less than the
         carrying amount of goodwill, indicating that the goodwill had been
         impaired. Based on this analysis, goodwill was determined to be fully
         impaired and the Company had recorded an impairment of goodwill charge
         to operations of $591,521 during the quarter ended December 31, 2002.


                                      F-14
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosure of contingent assets
         and liabilities at the date of the financial statements, and the
         reported amounts of revenues and expenses during the reported periods.
         Actual results could materially differ from those estimates. Areas
         where significant estimation is involved include, but are not limited
         to, the evaluation of the collectibility of accounts receivable, and,
         auction and customer advances, and the realizability and valuation of
         inventories.

         REVENUE RECOGNITION

         The Company generates revenue from wholesale and retail sales of rare
         coins and precious metals bullion. The recognition of revenue varies
         for wholesale and retail transactions and is, in large part, dependent
         on the type of payment arrangements made between the parties. We
         recognize sales on an F.O.B. shipping point basis.

         The Company sells rare coins to other wholesalers/dealers within its
         industry on credit, generally for terms of 15 to 60 days, but in no
         event greater than one year. The Company grants credit to new dealers
         based on extensive credit evaluations and for existing dealers based on
         established business relationships and payment histories. The Company
         generally does not obtain collateral with which to secure its accounts
         receivable when the sale is made to a dealer. The Company maintains
         reserves for potential credit losses based on an evaluation of specific
         receivables and the Company's historical experience related to credit
         losses. As of June 30, 2004 and 2003, management has established an
         accounts receivable reserve of $259,007 and $270,663, respectively.

         Revenues for monetary transactions (i.e., cash and receivables) with
         dealers are recognized when the merchandise is shipped to the related
         dealer.

         The Company also sells rare coins to retail customers on credit,
         generally for terms of 30 to 60 days, but in no event greater than one
         year. The Company grants credit to retail customers based on extensive
         credit evaluations and for existing retail customers based on
         established business relationships and payment histories. When a retail
         customer is granted credit, the Company generally collects a payment of
         25% of the sales price, establishes a payment schedule for the
         remaining balance and holds the merchandise as collateral as security
         against the customer's receivable until all amounts due under the
         credit arrangement are paid in full. If the customer defaults in the
         payment of any amount when due, the Company may declare the customer's
         obligation in default, liquidate the collateral in a commercially
         reasonable manner using such proceeds to extinguish the remaining
         balance and disburse any amount in excess of the remaining balance to
         the customer.

         Under this retail arrangement, revenues are recognized when the
         customer agrees to the terms of the credit and makes the initial
         payment. Less than 5% of the Company's sales are retail credit sales.
         The Company's has a limited-in-duration money back guaranty policies
         (as discussed below).


                                      F-15
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         REVENUE RECOGNITION (CONTINUED)

         In limited circumstances, the Company exchanges merchandise for similar
         merchandise and/or monetary consideration with both dealers and retail
         customers, for which the Company recognizes revenue in accordance with
         APB No. 29, "ACCOUNTING FOR NON-MONETARY TRANSACTIONS." When the
         Company exchanges merchandise for similar merchandise and there is no
         monetary component to the exchange, the Company does not recognize any
         revenue. Instead, the basis of the merchandise relinquished becomes the
         basis of the merchandise received, less any indicated impairment of
         value of the merchandise relinquished. When the Company exchanges
         merchandise for similar merchandise and there is a monetary component
         to the exchange, the Company recognizes revenue to the extent of
         monetary assets received and determines the cost of sale based on the
         ratio of monetary assets received to monetary and non-monetary assets
         received multiplied by the cost of the assets surrendered.

         The Company has a return policy (money-back guarantee). The policy
         covers retail transactions involving graded rare coins only. Customers
         may return graded rare coins purchased within 7 days of the receipt of
         the rare coins for a full refund as long as the rare coins are returned
         in exactly the same condition as they were delivered. In the case of
         rare coin sales on account, customers may cancel the sale within 7 days
         of making a commitment to purchase the rare coins. The receipt of a
         deposit and a signed purchase order evidences the commitment. Any
         customer may return a coin if they can demonstrate that the coin is not
         authentic, or there was an error in the description of a graded coin.

         Historically, the Company's retail customers have not exercised their
         rights to money-back guarantees and as such, the Company's management
         has not provided a reserve for sales returns in the accompanying
         financial statements. Revenues from the sale of consigned goods are
         recognized as commission income on such sale if the Company is acting
         as an agent for the consignor. If in the process of selling consigned
         goods, the Company makes an irrevocable payment to a consignor for the
         full amount due on the consignment and the corresponding receivable
         from the buyer(s) has not been collected by the Company at that payment
         date, the Company records that payment as a purchase and the sale of
         the consigned good(s) to the buyer as revenue as the Company has
         assumed all collection risk.

         The Company's auction businesses generate revenue in the form of
         commissions charged to buyers and sellers of auction lots. Auction
         commissions include buyers' commissions, sellers' commissions, and
         buyback commissions, each of which are calculated based on a percentage
         of the hammer price.

         Buyers' and sellers' commissions are recognized upon the confirmation
         of the identification of the winning bidders. Funds charged to winning
         bidders include the hammer price plus the commission. Only the
         commission portion of the funds received by winning bidders is recorded
         as revenue.


                                      F-16
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         REVENUE RECOGNITION (CONTINUED)

         Buyback commissions represent an agreed upon rate charged by the
         Company for goods entered in the auction and not sold. Goods remain
         unsold when an auction lot does not meet the consignor reserve, which
         is the minimum sales price as determined prior to auction, and when
         items sold at auction are returned subsequent to the winning bidder
         taking possession. Buyback commission is recognized along with sellers'
         commission or at the time an item is returned. Returns from winning
         bidders are very limited and primarily occur when a rare coin sold
         auction has an error in its description in which the winner bidder
         relied upon to purchase the item.

         ADVERTISING

         Advertising costs are expensed as incurred. During the years ended June
         30, 2004 and 2003, advertising expenses were $578,116 and $502,260
         respectively.

         INCOME TAXES

         The Company accounts for income taxes under Statement of Financial
         Accounting Standards No. 109, "ACCOUNTING FOR INCOME TAXES", ("SFAS
         109"). Under SFAS 109, deferred tax assets and liabilities are
         recognized for the future tax consequences attributable to differences
         between the financial statement carrying amounts of existing assets and
         liabilities and their respective tax bases. Deferred tax assets and
         liabilities are measured using enacted tax rates expected to apply to
         taxable income in the years in which those temporary differences are
         expected to be recovered or settled. A valuation allowance is provided
         for significant deferred tax assets when it is more likely than not
         that such assets will not be recovered.

         STOCK-BASED COMPENSATION

         The Financial Accounting Standards Board issued Statement of Financial
         Accounting Standards ("SFAS") No. 123 "ACCOUNTING FOR STOCK-BASED
         COMPENSATION," encourages, but does not require companies to record
         compensation cost for stock-based employee compensation plans at fair
         value. As permitted under SFAS No. 123 and as amended by SFAS No. 148,
         "ACCOUNTING FOR STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE -
         AN AMENDMENT OF STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 123,"
         the Company accounts for stock-based compensation using the intrinsic
         value method prescribed by Accounting Principles Board Opinion No. 25
         ("APB 25"), "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" and related
         interpretations, and provides the pro forma disclosure. Accordingly,
         compensation cost for the stock options is measured as the excess, if
         any, of the fair value of the Company's stock at the date of the grant
         over the amount an employee must pay to acquire the stock.


                                      F-17
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         STOCK-BASED COMPENSATION (CONTINUED)

         Pro forma information regarding net income (loss) and income (loss) per
         share is required by SFAS 123, and is to be determined as if the
         Company had accounted for its employee stock options granted under the
         fair value method pursuant to SFAS 123, rather than the intrinsic
         method pursuant to APB 25. The fair value of these options was
         estimated at the date of grant using a Black-Scholes option pricing
         model with the following range of assumptions for 2004 (there were no
         options granted in 2003):

                                                          2004             2003
                                                          ----             ----

                  Risk free interest rate                1 - 2%             n/a
                  Dividends                                -                n/a
                  Volatility factor                       275%              n/a
                  Expected life                          1 - 3 years        n/a

                  For purpose of pro forma disclosures, the estimated fair value
         of the options is amortized to expense over the options' vesting
         period. The Company's pro-forma information for years ending June 30,
         2004 and 2003 as follows:

                                                       2004             2003
                                                       ----             ----

         Net income (loss) applicable to
                  common shares, as reported        $    464,735    $(3,986,951)
         Less: Total stock-based employee
                  compensation
                  Expense determined under
                  Black-Scholes
                  option pricing model, net
                  of tax effects                         21,030              --
                                                    ------------    ------------

         Pro forma net income (loss)                $   443,705     $(3,986,951)
                                                    ============    ============
         Earnings (loss) per share - as reported:
                  Basic                             $      0.11     $     (1.75)
                  Diluted                           $      0.06     $     (1.75)

         Earnings (loss) per share - pro forma:
                  Basic                             $      0.10     $     (1.75)
                  Diluted                           $      0.05     $     (1.75)


                                      F-18
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         EARNINGS (LOSS) PER SHARE

         Basic "Earnings Per Share ("EPS")," is computed as net income (loss)
         applicable to common shares divided by the weighted average number of
         common shares outstanding for the period. Net income (loss) applicable
         to common shares is calculated as net income (loss) less dividends and
         accretion on preferred stock. Dividends and accretion on preferred
         stock totaled $37,500 and $50,031, respectively, for the year ended
         June 30, 2004. Dividends and accretion on preferred stock totaled
         $429,267 and $66,681, respectively, for the year ended June 30, 2003.
         Diluted EPS reflects the potential dilution that could occur from
         common shares issuable through stock options, warrants and other
         convertible securities. The total potential common shares that have not
         been included in the calculation of diluted net loss per common share
         totaled 5,671,209 at June 30, 2003, as the effects of such are
         anti-dilutive for that year. All share and per share amounts have been
         retroactively adjusted for the effect of a one-for-twenty reverse stock
         split of the Company's common stock at June 30, 2003.

         SEGMENT REPORTING

         The Company adopted SFAS No. 131 ("SFAS 131"), "DISCLOSURES ABOUT
         SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION," during fiscal 1999.
         SFAS 131 establishes standards for the way that public companies report
         information about operating segments and related disclosures about
         products and services, geographic areas and major customers in annual
         financial statements. The Company views its operations and manages its
         business as one segment, collectibles.

         COMPREHENSIVE INCOME

         Effective January 1, 1998, the Company adopted Statement of Financial
         Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
         130"). SFAS 130 established new rules for the reporting and display of
         comprehensive income and its components in a full set of
         general-purpose financial statements. The adoption of SFAS 130 had no
         effect on the accompanying financial statements, because the Company
         had and continues to have no other components of comprehensive income.


                                      F-19
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         CUSTOMER AND VENDOR CONCENTRATIONS

         During the years ended June 30, 2004 and 2003, the Company had no
         customer that accounted for 10% or more of the Company's net sales. As
         of June 30, 2004, the Company had one customer that represented 18% of
         accounts receivable as of such date; and as of June 30, 2003, the
         Company had two customers that represented 31% of accounts receivable
         as of such date.

         During the years ended June 30, 2004 and 2003, the Company did not
         purchase 10% or more of its inventories from any single vendor. As of
         June 30, 2004, the Company had no vendor that represented more than 10%
         of accounts payable of such date; and as June 30, 2003 the Company had
         one vendor that represented more than 21% of accounts payable as of
         such date.

         RISKS AND UNCERTAINTIES

         MARKET RISK

         Over time, market demand for investment grade coins will vary due to
         perceived scarcity, subjective valuation, general consumer trends,
         variations in the price of precious metals, and other general economic
         conditions. The Company derives a significant portion of its revenues
         from wholesale dealers and retail collectors on the sales of investment
         grade coins. Declines in market demand for investment grade coins would
         likely cause a decrease in annual sales revenue and have an overall
         negative effect on operations.

         INVENTORY RISK

         The Company purchases investment grade coins from dealers and
         collectors and assumes the inventory and price risks of these items
         until sold. If the Company were unable to sell such inventory, or if
         the prices were insufficient to generate a profit, or if the market
         value of such inventory were to decline, the ultimate amounts realized
         by the Company from the sale of such inventory could be less than the
         carrying values reflected in the accompanying balance sheets.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "DISCLOSURES ABOUT
         FAIR VALUE OF FINANCIAL INSTRUMENTS", requires the disclosure of the
         fair value, if reasonably obtainable, of the Company's financial
         instruments. The Company's financial instruments consist of its cash,
         accounts receivable, line of credit, accounts payable and accrued
         expense; note payable and notes payable to related parties. Management
         has determined that, except for notes payable (see Note 9) to related
         parties, the fair values of the Company's financial instruments
         approximate their carrying values at June 30, 2004 and 2003. Management
         was unable to determine the fair value of the notes payable to related
         parties, as an active market for such instruments does not exist.


                                      F-20
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


2.       INVENTORIES

         Inventories are comprised of the following:

                                                   June 30, 2004   June 30, 2003
                                                   -------------   -------------
         Rare coins                                 $ 6,106,593     $ 2,147,435
         Fine and decorative arts                            --       1,015,138
         Reserve                                             --        (665,138)
                                                    ------------    ------------
                                                    $ 6,106,593     $ 2,497,435
                                                    ============    ============

         Inventory totaling $1,228,813 and $904,677 was on consignment with
         third parties at June 30, 2004 and 2003, respectively. Inventory
         totaling $0 and $171,562, was held for display at the residence of the
         chief executive officer at June 30, 2004 and 2003, respectively.

         The Company, from time to time, enters into informal partnerships with
         third parties who are either vendors or customers for the purchase and
         sale of specific rare coins. These arrangements include joint ownership
         of the rare coin and equal participation in profit or loss on specific
         transactions adjusted for agreed upon expenses and interest costs. When
         the rare coins are purchased the Company records its proportional
         ownership as inventory and upon the sale of the rare coins, the Company
         records its proportional sale and profit or loss. In most instances,
         the Company elects to buy-out the partnership interest in rare coins
         prior to its sale and the recording of a proportional sale and profit
         or loss are no longer applicable. At any given time, the Company may be
         involved in one to two of these agreements. As of June 30, 2004 and
         2003, inventory totals reflected the Company's total proportional
         ownership and does not include any minority interest claims in regard
         to such partnership arrangements.

         The inventory reserve of $665,138 at June 30, 2003 is the result of
         management's estimate of the liquidation value of the entire Art
         inventory based on management's decision to exit the Art business
         segment. The Company completed the liquidation of the Art inventory in
         October 2003 (see Note 13).


                                      F-21
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


3.       PROPERTY AND EQUIPMENT

                                                        June 30,        June 30,
                                                         2004            2003
                                                       ----------     ----------

          Furniture and equipment                      $ 133,847      $ 232,615
          Computer equipment                             216,674        268,906
          Vehicles                                            --         24,676
          Leasehold improvements                         111,580        152,542
                                                       ----------     ----------
                                                         462,101        678,739

         Accumulated depreciation and amortization      (326,740)      (462,315)
                                                       ----------     ----------

                                                       $ 135,361      $ 216,424
                                                       ==========     ==========

         Depreciation expense for the years ended June 30, 2004 and 2003 were
         $93,781 and $127,376, respectively.

4.       GOODWILL

         On July 6, 2001, the Company recorded goodwill for its purchase of its
         SGBH subsidiary in the amount of $591,521. The Company tested the
         goodwill for impairment during the quarter ended December 31, 2002.
         Management estimated the fair value of the reporting unit (i.e. Company
         as a whole) using a present value model on estimated future cash flows.
         This value was then adjusted to calculate the implied fair value of
         goodwill based on the allocation of the reporting units assets and
         liabilities. The calculation identified that the implied fair value was
         less than the carrying amount of goodwill, indicating that the goodwill
         had been impaired. Based on this analysis, goodwill was determined to
         be fully impaired and the Company recorded an impairment of goodwill
         charge to operations of $591,521 during the year ended June 30, 2003.

5.       AUCTION AND CUSTOMER ADVANCES

         Superior has established two short-term lending programs consisting of
         (i) advancing consignment customers cash based on consigned inventory
         acquired for upcoming auctions, and, (ii) advancing customers cash
         based on the customer's assigning specific rare coins in their
         inventory to Superior as collateral. Superior can advance a customer up
         to 70% of consigned or assigned rare coin(s)' wholesale value. For
         auction advances, Superior will advance cash to a customer and take
         control of the inventory to be held on consignment for auction. The
         customer will sign a note receivable for the funds advanced to be
         secured by the consigned inventory. As consigned inventory is sold, the
         proceeds will be collected, repaying Superior for the auction advance
         and any auction fees, with the remaining amount due to the consignor.
         For customer inventory advances, Superior will advance cash to a
         customer and take control of the assigned inventory. The customer will
         sign a promissory note for the funds advanced to be secured by the
         assigned inventory. Auction and customer advances bear interest at
         rates between 6% and 12% based primarily on the customer's
         creditworthiness and the loan size. The average term of the loan is
         approximately three months and no individual loan will exceed one year.
         Customers may require minimum prices for their consigned coins, and if
         the coin has not sold by the loan maturity date, the customer must
         either refinance the loan, repay the loan, or permit us to liquidate
         the coin. Superior will retain control of the assigned inventory until
         the customer repays the advance. Auction and customer advances consist
         of the follows:


                                      F-22
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


                                                 June 30, 2004  June 30, 2003
                                                 -------------  -------------
                  Auction advances               $  4,453,873   $  3,495,335


                  Customer inventory advances       1,948,000             --
                                                 -------------  -------------
                                                 $  6,401,873   $  3,495,335
                                                 =============  =============

6.       LINE-OF-CREDIT - RELATED PARTY

         On October 13, 2003, Superior executed a Commercial Loan and Security
         Agreement ("LOC"') with Stanford Financial Group Company, an affiliate
         of a principal stockholder, Stanford Venture Capital Holdings, Inc., to
         provide the Company with a $7.5 million line of credit for purposes of
         financing inventory, auction advances and inventory loans to other rare
         coin dealers and collectors. The LOC bear interest at the prime-lending
         rate (4.00% at June 30, 2004) and is secured by substantially all of
         Superior's assets. The LOC expires on October 1, 2004. As of June 30,
         2004 the outstanding LOC balance was $6,600,000. This balance reflects
         the net borrowing against the LOC for the year ended June 30, 2004.

         During the year ended June 30, 2004, Superior incurred interest expense
         on the line of credit - related party totaling $104,206.


                                      F-23
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


7.       LINES-OF-CREDIT

         On July 9, 2002 and July 26, 2002 the Company entered into temporary
         working capital loan agreements with a private lender ("Lender") in the
         amounts of $1,500,000 and $1,000,000 respectively. These loans bore
         interest at the prime lending rate plus 7% per annum (11% at June 30,
         2003), were secured by the inventory of the Company and a personal
         guarantee of the Company's chief executive officer and a principal
         stockholder, and, were due to be repaid in 60 days. On August 8, 2002
         the Company converted the two loans from the Lender into a Line of
         Credit with the Lender by executing a Secured Revolving Line of Credit
         Agreement ("Line of Credit"). The Line of Credit bore interest at the
         prime lending rate plus 7% per annum, was due on September 9, 2002, was
         secured by substantially all the assets of the Company and a personal
         guarantee of the Company's CEO. The Line of Credit provided for
         interest payments to made in cash, inventory or restricted common
         shares of the Company at the sole discretion of the Lender. On
         September 16, 2002 the Line of Credit was amended to extend the due
         date to October 15, 2002. In November 2002 the Lender became deceased
         and the aforementioned Line of Credit became an asset of the Estate of
         the Lender ("Lender Estate"). On September 30, 2003 the Company and the
         executor of the Lender Estate executed a Renewal and Modification
         Agreement that amended the Line of Credit. In exchange for a payment of
         $230,000 representing interest in arrears through September 30, 2003,
         the Lender Estate agreed to reduce the interest rate to 6% effective
         October 1, 2003, release its first priority lien position on all
         accounts receivable of the Company and to consider the default cured at
         that time. The amendment also required monthly interest payments
         beginning on November 1, 2003. The executor of the Lender Estate orally
         agreed to discuss repayment terms at a future date, but the Line of
         Credit is callable with five days notice and there is no guarantee that
         the Line of Credit will not be called for repayment at any time. There
         can be no assurance that the Company will be able to negotiate a
         repayment schedule for this obligation on terms acceptable to the
         Company. The Company is current with monthly interest payments, but has
         not made principal repayments during the years ended June 30, 2004 and
         2003. As of June 30, 2004 the outstanding balance was $2,500,000.

         On February 21, 2003, the Company entered into an oral auction line of
         credit agreement ("Auction LOC") with a private lender whereby the
         lender would advance funds to Superior for the sole purpose of
         providing auction advances to its consignment customers. The maximum
         limit of the Auction LOC was $2,000,000 and it bore interest at rate of
         10% per annum with interest payable monthly. The Auction LOC was
         secured by the collateralization of inventory consigned by Superior's
         auction advance customers and the assignment of the auction advance
         agreements to the private lender. The lender could have terminated this
         arrangement and demanded payment at any time. At June 30, 2003, there
         was no balance due on the Auction LOC. In September 2003, the private
         lender agreed to temporarily increase the Auction LOC maximum limit to
         $2,800,000. On October 28, 2003, the Auction LOC was repaid in full and
         the lender and the Company mutually agreed to terminate the agreement.


                                      F-24
<PAGE>

                                            SUPERIOR GALLERIES, INC.
                                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


8.       NOTES PAYABLE

         Notes payable consist of the following:

<TABLE>
                                                                                June 30, 2004      June 30, 2003
                                                                                -------------      -------------
<S>                                                                             <C>                <C>
         Note payable for acquisition of assets of SGBH, secured by assets
         acquired, and guaranteed by the Company and principal stockholder and
         chief executive officer. The loan provided for periodic payments
         through January 2002, however, payments were suspended by the Company.
         The Company renegotiated payment terms by increasing the note balance
         by $49,110 to cover unpaid interest, establishing a new rate of 4.5%
         over prime lending rate, to be paid in biweekly installments over one
         year. In November 2002 , the Company and creditor renegotiated the
         payment terms. The Company made a lump-sum payment of $179,350 and
         renegotiated the terms of payment for the balance due with the
         creditor. The Company made ten principal and interest installments of
         $19,133 each that began on December 1, 2002 with interest at the rate
         of 12% per annum. The note payable was repaid in full on September 1,
         2003.                                                                             -       $      56,832

         Long-term  loan  agreement  dated October 17, 2000,  secured by a
         delivery  van,  payable in 60 monthly  installments  of principal
         and  interest at an annual  interest  rate of 5.9%.  The loan was
         repaid in full on December 16, 2003.                                              -               7,008
                                                                                -------------      --------------
                                                                                           -              63,840
         Less current portion                                                              -             (56,832)
                                                                                -------------      --------------
                                                                                $          -       $       7,008
                                                                                =============      ==============


                                                      F-25
</TABLE>
<PAGE>

                                            SUPERIOR GALLERIES, INC.
                                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9.       NOTES PAYABLE TO A RELATED PARTY

<TABLE>
         Notes payable to a related party consist of the following:
                                                                                June 30, 2004      June 30, 2003
                                                                                -------------      -------------
<S>                                                                             <C>                <C>
         Subordinated note payable to Company's chief executive officer and
         principal stockholder "CEO", secured by inventory, bearing interest at
         9% per annum. In April 2002 the note was renegotiated to include
         quarterly installment payments of $150,000 plus accrued interest. No
         principal payments had been made. In February 2003, pursuant to the
         sale of Series D preferred stock (Note 10), the note was amended to
         include quarterly payments of principal of $50,000 commencing September
         30, 2003. The current portion of the Notes Payable to a Related Party
         reflect the current portion of the subordinated note payable. During
         the year ending June 30, 2004, $100,000 of principal payments were
         made. The CEO has verbally agreed to delay two principal payments of
         $50,000 each that were due on March 31, 2004 and June 30,
         2004 to September 30, 2004                                             $    900,000       $ 1,000,000

         Demand note payable to Company's chief  executive  officer and
         principal  stockholder that bore interest at 12% per annum. On
         October 23, 2003,  the Company  repaid the loan as part of the
         sale of its art inventory to the CEO (see Note 13)                                -           289,970

         Demand note payable to Company's chief  executive  officer and
         principal  stockholder that bore interest at 12% per annum. On
         October  23,  2003,  the  Company  repaid  $60,030 of the loan
         principal as part of the sale of its art  inventory to the CEO
         (see Note 13). On February 4, 2004, the remaining  balance was
         repaid                                                                            -            70,000
                                                                                -------------      -------------
                                                                                     900,000          1,359,970
         Less current portion                                                       (300,000)          (559,970)
                                                                                -------------      -------------
                                                                                $    600,000       $    800,000
                                                                                =============      =============


                                                      F-26
</TABLE>
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


9.       NOTES PAYABLE TO A RELATED PARTY (CONTINUED)

         Interest expense incurred to related parties during the year ended June
         30, 2004 and 2003 totaled $101,392 and $121,855 respectively. Future
         minimum payments under notes payable to a related party are as follows:

                        Year Ending
                          June 30                      Amount
                        -----------                   ---------
                            2005                      $300,000
                            2006                      $200,000
                            2007                      $200,000
                            2008                      $200,000
                                                      ---------
                                                      $900,000
                                                      =========

10.      INCOME TAXES

         The provision for income taxes consists of the following components:

                                                 Year Ended        Year Ended
                                               June 30, 2004     June 30, 2003
                                               -------------     --------------
         Current:
           Federal                             $          -      $           -
           State                                     12,456             13,396
                                               -------------     --------------
                                                     12,456             13,396
                                               -------------     --------------
         Deferred:
           Federal                                        -                  -
           State                                          -                  -
                                               -------------     --------------
                                                          -                  -
                                               -------------     --------------
                                               $     12,456      $      13,396
                                               =============     ==============


                                      F-27
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.      INCOME TAXES (CONTINUED)

         Deferred income taxes reflect the net tax effect of temporary
         differences between the carrying amount of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. The income tax effects of significant items comprising the
         Company's net deferred income tax assets and liabilities are as
         follows:
                                                    June 30, 2004  June 30, 2003
                                                    -------------  -------------
         Deferred tax assets:
            Unearned income                         $     7,465    $     6,941
            Net operating loss carryforwards          3,746,449      3,040,308
            Inventory reserve                                --        264,954
            Goodwill                                    202,726        204,211
            Intangible asset                              8,389          7,800
           Accrued vacation pay                          29,171         22,096
           Allowance for doubtful accounts              110,959        189,762
           Contributions                                  1,187          1,104
           Options and warrants not exercised            54,489         41,865
           Depreciation                                  11,553         36,063
           Other                                          7,772        308,488
                                                    ------------   ------------
         Gross deferred tax assets                    4,180,160      4,123,592
         Valuation allowance                         (3,987,921)    (4,011,206)
                                                    ------------   ------------
              Deferred tax assets, net of reserve       192,239        112,386
         Deferred tax liabilities:
            Depreciation                               (192,239)      (112,386)
                                                    ------------   ------------
         Net deferred tax liabilities               $        --    $        --
                                                    ============   ============

         At June 30, 2004 and 2003, a 100% valuation allowance has been provided
         on the net deferred income tax assets since the Company cannot
         determine that it is "more likely than not" they will be realized.

         The income tax benefit differs from the amount of income tax determined
         by applying the expected U.S. Federal income tax rate to pretax loss
         for the fiscal periods as a result of:

                                             Year Ended         Year Ended
                                            June 30, 2004      June 30, 2003
                                            -------------      -------------
         Computed tax benefit               $    192,005       $ (1,182,386)

         Decrease (increase) in income
         tax benefit resulting from:

           Nondeductible expenses                 12,348              4,152
           State income tax expense               46,250              2,112
           Change in valuation allowance        (238,147)         1,173,586
           Other                                      --             15,932
                                            -------------      -------------
                                            $     12,456       $     13,396
                                            =============      =============


                                      F-28
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.      INCOME TAXES (CONTINUED)

         At June 30, 2004, the Company has a Federal tax net operating loss
         ("NOL") carryforward of approximately $9,620,000, which expires at
         various dates though 2023, and a state net operating loss carryforward
         of approximately $5,370,000, which expires at various dates through
         2012.

         A portion of the NOLs described above are subject to provisions of the
         Internal Revenue Code ss.382 which limits the use of NOL carryforwards
         when changes of ownership of more than 50% occur during a three-year
         testing period. During the year ended June 30, 2003, the cumulative
         effects of Stanford's investment in the Company through the Sale of
         Series B and Series D preferred stock on April 3, 2002 and February 14,
         2003, respectively, the Company ownership changed by more than 50%. The
         issues of common and preferred stock during the years-ended June 30,
         2002 and 2003 will limit the use of these NOLs. Further changes in
         common or preferred stock ownership in future years potentially limit
         the use of NOLs. The effect of such limitations has yet to be
         determined. In addition, NOL carryforwards for the purposes of
         offsetting California state taxable income have been suspended for the
         tax years beginning in 2002 and 2003.

11.      EQUITY

         AUTHORIZED CAPITAL CHANGES

         On June 30, 2003, the Company's stockholders at the Annual Meeting of
         the Shareholders approved both an amendment to the Company's articles
         of incorporation to effect a one-for-twenty reverse split of the
         Company's common shares and the Company's re-incorporation into the
         State of Delaware with authorized common stock of 12,500,000 and
         preferred stock of 10,000,000. The Series A, B and D preferred shares
         retained the same rights and privileges as previously granted. All
         common share amounts presented have been retroactively adjusted to
         reflect a one-for-twenty reverse stock split.

         COMMON STOCK TRANSACTIONS

         On December 26, 2002, the Company purchased 3,222 of its own common
         stock for $644. The common stock was held as treasury shares until they
         were cancelled on March 26, 2003.

         On July 24, 2003, the Company issued 1,845,100 common shares pursuant
         to the exercise of 1,845,100 warrants to purchase the Company's common
         stock with an exercise price of $0.001 per common share (see additional
         discussion of warrants in Sale of Series D Convertible Preferred Stock
         below).


                                      F-29
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         SALE AND REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK

         On July 3, 2001, the Board of Directors of the Company authorized
         15,000,000 shares of $.001 par value preferred stock and
         simultaneously, the Company commenced a private placement of Series A
         $5.00 Redeemable 8% Convertible Preferred Stock ("Series A Preferred
         Stock"). The Series A Preferred Stock carried an annual dividend of
         $0.40 per share payable quarterly in cash or common stock of the
         Company at the Company's election, was convertible into 11 shares of
         the Company's common stock and provided for cash redemption or
         conversion into common stock of the Company based on elections by the
         holder or by the Company with certain contingencies. In addition, the
         Series A Preferred Stockholders had lien rights on the Company's
         inventory. The Company was prevented for allowing any liens on
         inventory, unless subordinated to the interests of the Series A
         Preferred Stockholders. The interest was 150% of the aggregate value of
         the outstanding Series A Preferred Stock, or $937,500 at June 30, 2003.
         The offering closed on October 31, 2001 with sales of 125,000 shares of
         preferred stock with aggregate proceeds from the offering of $625,000.
         The Series A Preferred Stock was redeemable after March 31, 2004 for
         cash, at the option of the holder, in the amount of $5.50 per share,
         with such aggregate amount for each holder payable in ten (10) equal
         quarterly installments, the first such payment due the quarter
         immediately following the redemption date. Since the option to redeem
         into cash was at the option of the holder, the Company had classified
         this security on the balance sheet outside of stockholders' equity. The
         Series A Preferred Stock would have automatically converted into shares
         of the Company's common stock upon sale of all the Company's assets,
         any merger or consolidation where the Company was not to survive, or
         any sale or exchange of all outstanding shares on the company's common
         stock. Prior to the reincorporation and merger of the Company into a
         Delaware corporation on June 30, 2003, the Series A Preferred Stock's
         certificate of designation was amended, as approved by a majority of
         the Series A Preferred Stockholders, so that the Series A Preferred
         Stock would not automatically convert into shares of the Company's
         common stock as a result of the reincorporation and merger. The Company
         had the option to redeem the Series A Preferred Stock for cash in the
         amount of $5.10 per share, or for shares of the Company's common stock
         in accordance with the conversion rate, in the event the closing quoted
         market price of the Company's common stock is greater than or equal to
         $18.00 for any consecutive five day period.

         Since the redemption amount of the Series A Preferred Stock exceeded
         the net proceeds of the offering, the carrying value of the issuance
         was being increased through accretion up to the future redemption value
         at the redemption date, March 31, 2004.


                                      F-30
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         SALE AND REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK (CONTINUED)

         The offering required that the Company file a registration statement of
         the common stock of the Company issuable upon the conversion of the
         Series A Preferred Stock sixty days following the closing of the
         offering, or March 31, 2002. Because the Company was engaged in
         negotiations for a private placement of a Series B preferred stock that
         would also require a registration statement, the Company did not timely
         file the registration statement pursuant to the offering of the Series
         A Preferred Stock, but rather planned on combining the two registration
         statements. As of June 30, 2003 no registration statement had been
         filed. As a result, the Company was obligated to issue warrants to
         purchase an aggregate of 6,250 shares of common stock of the Company to
         the holders of the Series A Preferred Stock with an exercise price
         equal to the average of the closing price of the common stock for the
         five days preceding the date the registration statement should have
         been filed with an exercise period of three years. The expense that
         corresponded to this issuance was recorded in the fiscal year ended
         June 30, 2002.

         On March 31, 2004, in accordance with the redemption provisions of the
         Series A Preferred Stock, all the holders of the Series A Preferred
         Stock requested the redemption of their shares. However, because the
         Company's liabilities did and currently exceed its assets, the Company
         is prohibited under Delaware corporation law from commencing the
         redemption. The Company has informed the stockholders of the redemption
         provision. The Company intends to begin the redemption once it is
         legally allowed to do so. The Company has reflected the Series A
         Preferred Stock redemption payable as a liability on its Balance Sheet.
         As of June 30, 2004, the balance payable with respect to the Series A
         Preferred Stock redemption is $687,500. Of this amount, $343,750 is
         reflect as a current liability, as the Company is required to make ten
         equal quarterly payments commencing June 30, 2004. Therefore, five
         payments are due in fiscal 2005. The Company will continue to make
         quarterly dividend payments as long as the Series A Preferred Stock
         redemption payable remains outstanding.

         Future minimum payments under the Series A Preferred Stock redemption
         payable are as follows:

                        Year Ending
                          June 30                      Amount
                        -----------                   ---------
                            2005                      $343,750
                            2006                      $343,750
                                                      ---------
                                                      $687,500
                                                      =========


                                      F-31
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         SALE OF SERIES D CONVERTIBLE PREFERRED STOCK

         On February 14, 2003, the Company issued 2,000,000 shares of newly
         created Series D $1.00 convertible preferred stock ("Series D stock")
         for a purchase price of $2,000,000 pursuant to a stock purchase and
         warrant agreement ("purchase agreement") with Stanford. On that date
         $1,500,000 of the purchase price was paid with $500,000 in cash and the
         conversion of $1,000,000 in bridge loans that Stanford granted to the
         Company in anticipation of the closing of the purchase agreement. The
         balance of the purchase price less interest due on the converted bridge
         loans and legal fees was paid on March 14, 2003. The Series D stock is
         convertible into common shares of the company at any time at the option
         of Stanford at the conversion rate 0.833333 common shares for each
         Series D share subject to certain anti-dilution adjustments. The Series
         D stockholders are entitled to vote on all matters requiring a vote of
         the shareholders and are entitled to the number of votes equal to the
         number of common shares into which the Series D stock is convertible.
         The purchase agreement also provided for the reduction to $0.001 per
         common share of the purchase price of 1,500,000 warrants that were
         issued to Stanford and their designated warrant holders as part of the
         Series B stock sale in April 2002. In connection with warrant price
         reduction the Company recorded a dividend of $300,000 on the Series B
         stock as its estimate of the fair value of the transaction. The reduced
         warrant price contemplated the reverse stock split that was provided
         for in the purchase agreement and that was subsequently approved by the
         Company's stockholders on June 30, 2003. The warrants were exercised on
         July 24, 2003. Concurrently with the closing of the purchase agreement,
         the Company, Stanford and the CEO enter into a share exchange and note
         modification agreement ("modification agreement"). Under the
         modification agreement the CEO exchanged 7,000 Series C shares of the
         Company for 583,333 common shares of the Company. The modification
         agreement provided for a reduction to $0.001 per common share of the
         exercise price of 345,100 warrants that were previously issued to the
         CEO. The previously issued warrants consist of 200,000 warrants issued
         in connection with the Series B stock in April 2002 and 145,100
         warrants issued in connection with personal loan guarantees by the CEO
         for the Company's debt. In connection with the warrant price reductions
         the Company recorded a dividend of 40,000 on the Series B stock and
         interest expense of $29,020 as its estimates of the fair value of the
         transactions. The reduced warrant price contemplated reverse stock
         split that was provided for in the purchase agreement and that was
         subsequently approved by the Company's stockholders on June 30, 2003.
         The warrants were exercised on July 24, 2003. Additionally, the CEO
         agreed to amend his $1,000,000 promissory note due from the Company, to
         provide for quarterly principal payments of $50,000 that were to
         commence on September 30, 2003 (Note 9).

         The shareholders of preferred stock issued by the Company have a
         liquidation preference over the common shareholders. The Series A
         Preferred shareholders have primary preferential liquidation rights at
         $5.10 per share, followed by the Series B and Series D Preferred
         shareholders at $1.00 per share each.


                                      F-32
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         SERIES B CONVERTIBLE PREFERRED STOCK

         The Company currently has 3,400,000 shares of Series B $1.00
         Convertible Preferred Stock, or Series B Preferred Stock, outstanding.
         These shares were issued on April 10, 2002. In connection with this
         transaction, the Company issued to the purchasers warrants to purchase
         an aggregate of 1,700,000 shares of our common stock, at exercise
         prices ranging from $2.00 to $4.00 per share. Management estimated the
         fair value of these warrants at $433,500, based on an appraisal of
         previously issued options with similar terms and the trading price of
         the Company's stock, and this amount was recorded as additional paid-in
         capital. The Series B Preferred Stock has voting rights with respect to
         all matters presented to our stockholders, and is entitled to the
         number of votes equal to the number of shares of Common Stock into
         which it is convertible. The Series B Preferred Stock is not entitled
         to dividends or preemptive rights.

         Each share of Series B Preferred Stock is convertible into 0.5 shares
         of Common Stock at the election of the holder subject to certain
         adjustments, and is adjustable upon our issuance of Common Stock or
         securities convertible into Common Stock at a price less than $1.00 per
         share.


                                      F-33
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         STOCK OPTIONS

         During the year ended June 30, 2004, the Company granted to certain
         employees and non-employees, 410,000 stock options to purchase common
         stock at an average exercise price of $0.77. The range of exercise
         prices of options issued during the year was $0.24 to $1.01. Certain
         stock options vest immediately and others vest over time. All are
         exercisable over period of up to four years and expire at earlier of
         five years after the vesting date of each option or one month after the
         termination of employment or service agreement with the Company. The
         stock options were granted at strike prices, which were set at closing
         price of the Company's stock as listed on the NASDAQ Over-the-counter
         Bulletin Board and Pink Sheets as of the date of grant. During the year
         ended June 30, 2004, the Company cancelled 97,750 that expired or had
         not vested at the time of employees and non-employees discontinued
         service with the Company. The stock option grants during the year ended
         June 30, 2004 include 50,000 stock options to Board of Director
         members. No options were granted during the year ended June 30, 2003.

         The following table summarizes information about stock option
         transactions for the years shown:

<TABLE>
                                                   Year Ended             Year Ended
                                                 June 30, 2004           June 30, 2003
                                           -----------------------    --------------------
                                                         Weighted                 Weighted
                                                          Average                  Average
                                           Option        Exercise      Option     Exercise
                                           Shares         Price        Shares      Price
                                          ---------     ----------    ---------   --------
<S>                                        <C>          <C>            <C>         <C>
         Outstanding at beginning of
           period                          113,750      $    6.05      119,750     $14.20
         Options granted                   410,000           0.77           --         --
         Options canceled                  (97,750)          3.74       (6,000)     25.45
         Options exercised                      --             --           --         --
                                          ---------     ----------    ---------    -------
         Outstanding at end of period      426,000      $    1.50      113,750     $ 6.05
                                          =========     ==========    =========    =======
         Exercisable at end of period      121,250      $    2.96       95,667     $ 6.76
                                          =========     ==========    =========    =======

         The weighted average remaining contractual life of the options
         outstanding at June 30, 2004, is 7.6 years.

         The following table provides information for the stock options granted
         during the year ended June 30, 2004:

                                                                                      Weighted
                                                                                       Average          Weighted
                                                                                      Exercise          Average
                                                                      Number            Price          Fair Value
                                                                      -------         ---------        ----------
         Options exercise price equal to stock price                  400,000           $0.78             $0.77
         Options exercise price exceeds the stock price                10,000           $0.33             $0.27


                                                      F-34
</TABLE>
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


11.      EQUITY (CONTINUED)

         STOCK OPTIONS (CONTINUED)

         The following table provides additional information for stock options
         outstanding at June 30, 2004:

<TABLE>
                                                        Outstanding                                    Exercisable
                                                         Weighted        Weighted                        Weighted
                                                         Average          Average                        Average
                    Range                                Exercise       Contractual                      Exercise
            From             To            Number         Price            Life             Number         Price
          -------         -------          -------      -----------     -----------        --------    -----------
<S>       <C>             <C>              <C>             <C>               <C>             <C>          <C>
          $  0.24         $  0.33          100,000        $ 0.29             6.9             56,250       $  0.31
          $  1.00         $  2.00          287,500        $ 1.04             8.3             26,500       $  1.16
          $  5.00         $  8.75           32,500        $ 5.87             4.8             32,500       $  5.87
          $ 20.00         $ 20.00            6,000        $20.00             4.8              6,000       $ 20.00
                                           -------                                          -------
                                           426,000                                          121,500
                                           -------                                          -------
</TABLE>

         As of June 30, 2004 and 2003, the Company had reserved shares of common
         stock for the following purposes:

                                                       June 30,        June 30,
                                                         2004            2003
                                                    ------------    ------------

         Options                                        426,000         113,750
         Warrants                                       189,063       2,122,042
         Series A Convertible Preferred Stock                 -          68,750
         Series B Convertible Preferred Stock         1,700,000       1,700,000
         Series D Convertible Preferred Stock         1,666,667       1,666,667
                                                    ------------    ------------

               Total                                  3,981,730       5,671,209
                                                    ============    ============


                                      F-35
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


12.      COMMITMENTS AND CONTINGENCIES

         LEASES

         The Company leases office space in Beverly Hills and Newport Beach,
         California under operating lease agreements expiring in September 2007
         and September 2004, respectively. Future minimum rental payments
         required under the above leases as of June 30, 2004 are as follows:

                      YEARS ENDING JUNE 30
                         2005                                $  261,135
                         2006                                   224,376
                         2007                                   224,376
                         2008                                    56,094
                                                             -----------

                                                             $  765,981
                                                             ===========

         Rent expense for all leases for the years ended June 30, 2004 and 2003
         was $385,966 and $387,750 respectively.

         2003 OMNIBUS STOCK OPTION PLAN

         On May 1, 2003, the Company's Board of Directors approved, subject to
         shareholder approval which was obtained on June 30, 2003, a stock
         option plan to attract and retain competent personnel and to provide to
         participating officers, directors, employees and consultants long-term
         incentive for high levels of performance and for unusual efforts to
         improve the financial performance of the Company. The Plan provides for
         both incentive stock options specifically tailored to the provisions of
         the Internal Revenue Code and for options not qualifying as incentive
         stock options. Employees and consultants of the Company, including
         officers and directors, are eligible to receive options granted under
         the Plan. The shares subject to the options will generally be made
         available from authorized, but unissued shares. The Board of Directors
         ("Board") will administer the Plan. The Board has full authority to
         award options under the Plan, to establish the terms of the option
         agreements, and to take all other action deemed appropriate for
         administration of the Plan. This Plan replaced the 2000 Omnibus Stock
         Option Plan.

         2000 OMNIBUS STOCK OPTION PLAN

         On August 1, 2000, the Company's Board of Directors approved, subject
         to shareholder approval which was obtained, a stock option plan to
         attract and retain competent personnel and to provide to participating
         officers, directors, employees and consultants long-term incentive for
         high levels of performance and for unusual efforts to improve the
         financial performance of the Company. The Plan provides for both
         incentive stock options specifically tailored to the provisions of the
         Internal Revenue Code and for options not qualifying as incentive stock
         options. Employees and consultants of the Company, including officers
         and directors, are eligible to receive options granted under the Plan.
         The shares subject to the options will generally be made available from
         authorized, but unissued shares. The Board of Directors ("Board") will
         administer the Plan. The Board has full authority to award options
         under the Plan, to establish the terms of the option agreements, and to
         take all other action deemed appropriate for administration of the
         Plan. This Plan was terminated on May 1, 2003 and was replaced by the
         2003 Omnibus Stock Option Plan.


                                      F-36
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


12.      COMMITMENTS AND CONTINGENCIES (CONTINUED)

         GUARANTEED LIQUIDITY AND BUY BACK

         The Company provides a Guaranteed Liquidity and Buy Back at Grade
         warranty (the "Guarantee") to its retail rare coin customers. Retail
         rare coin sales amounted to $7,344,986 and $8,263,941 for years ended
         June 30, 2004 and 2003 respectively. The policy grants the customer the
         opportunity to sell their coins back to the Company at the prevailing
         market "bid" (below the current wholesale price). The Company
         determines the "bid" price based on the prevailing market price at
         which the Company believes it could readily liquidate the coin. The
         "bid" price may be substantially below what the customer originally
         paid for the coin.

         The values of the rare coins sold to retail customers continually
         fluctuate. Furthermore, retail customers continually resell or trade
         coins purchased from the Company with third parties. Once retail
         customers resell the rare coins to third parties, the Guarantee is
         void. Lastly, the Company has had minimal historical experience with
         customers exercising the Guarantee. As a result, it is not possible for
         the Company to determine the potential repurchase obligation pursuant
         to the Guarantee that it may be subject to as a result of previous
         sales of retail rare coins.

         PROFIT SHARING PLANS

         The Company had a 401(k) profit sharing plan covering all employees who
         have met certain service requirements. Through December 31, 2002,
         employees were allowed to make contributions to the plan of up to 15%
         of their salary. The Company was required to make nondiscretionary
         matching contributions of 3% of eligible employees' salaries. Effective
         January 1, 2003 no further contributions by employees were permitted as
         all of the Company's employees became co-employees of Administaff, a
         professional employer organization. The Company terminated the plan
         effective January 1, 2004. The Company had failed to make timely
         nondiscretionary matching contributions, caught up prior to the plan
         termination, but may be subject to penalties. The amount of the
         potential penalties, if any, is indeterminable at this time.

         LEGAL PROCEEDINGS

         The Company may from time to time be involved in various claims,
         lawsuits, disputes with third parties, actions involving allegations of
         discrimination, or breach of contract actions incidental to the
         operation of its business. The Company is not currently involved in any
         such litigation which it believes could have a material adverse effect
         on its financial condition, results of operations, liquidity or cash
         flows.

         STATE SALES AND USE TAXES

         The Company does not collect sales and use taxes for interstate sales.
         Management believes that the Company's sales to interstate customers
         are generally tax-exempt due to varying state exemptions relative to
         the definitions of being engaged in business in particular states and
         the lack of current internet taxation. While the Company has not been
         contacted by any state authorities seeking to enforce sales or use tax
         regulations, there is no assurance that the Company will not be
         contacted by authorities in the future with inquiries relative to
         compliance with current statutes, nor is there any assurance that
         future statutes will not be enacted that affect the sales and use
         aspects of the Company's business.


                                      F-37
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


13.      RELATED PARTY TRANSACTIONS

         On January 31, 2003, the Company entered into a consulting agreement
         with Stanford Venture Capital Holdings, Inc., a principal stockholder
         to provide financial and advisory services for a three year period
         commencing on April 1, 2003. The annual fee for such services is
         $60,000 and is payable on a quarterly basis.

         On October 23, 2003, the Company's Board of Directors approved the sale
         of Superior's remaining fine art inventory to the Company's chief
         operating officer and a principal stockholder ("CEO"), who is also an
         independent dealer of fine art, for $350,000. The Company solicited
         bids from third parties and the bid from the CEO was the highest. The
         Company realized a gross profit of $15,860 on sale of the art inventory
         to the CEO. The sale was paid in full by reductions of notes payable to
         the CEO (see Note 8).

         On May 28, 2004, the Company's Board of Directors approved a short-term
         sub-lease of a portion of Superior's vacant Newport Beach facility to
         the CEO. The lease term is from June 1, 2004 through September 30, 2004
         and provides for a monthly rental payment of $4,000. The sub-lease
         terminates concurrently with the Company's master lease of the Newport
         facility.

         See also notes 2, 6, 7, 8, 9 and 11 for discussion of additional
         transactions with related parties

14.      GOING CONCERN

          The accompanying financial statements have been prepared in conformity
          with accounting principles generally accepted in the United States of
          America, which contemplate continuation of the Company as a going
          concern. However, although the Company has returned to profitability
          in the last six month of the year ended June 30, 2004, the Company
          continues to have negative cash flows from operations, significant
          debt that is callable on demand by the creditor, and has limited
          working capital. These items raise doubt about the Company's ability
          to continue as a going concern.

          The Company has made and is continuing to make efforts to raise
          additional permanent debt and equity and renegotiate debt. On February
          14, 2003, the Company completed an additional equity capital financing
          of $2 million with Stanford and the Company's chief executive officer
          converted 7,000 shares of the Company's $100 Series C Preferred Stock
          into $700,000 of the Company's common stock (see Note 11).

          On September 30, 2003, the Company renegotiated a $2.5 million dollar
          line of credit (Note 7) that was in default and callable by the
          creditor. The default was cured, but the line of credit is callable
          with 5 days notice. Although management does not anticipate the
          creditor calling the loan, there can be no assurance that this
          obligation will not become immediately due. Given the current cash
          position of the Company, it would be unable to satisfy this obligation
          in cash. The Company continues to seek opportunities to refinance the
          line of credit with Stanford and is having on-going discussions with
          the lender to grant extended payments terms. However there can be no
          assurance that this obligation will be able to be refinanced on terms
          acceptable to the Company.


                                      F-38
<PAGE>

                            SUPERIOR GALLERIES, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


14.      GOING CONCERN (CONTINUED)

         In October 2003, the Company completed negotiations with Stanford to
         provide a line of credit of $7.5 million (see Note 6) for auction
         advances, inventory financing, and, inventory loans to other dealers
         and collectors. The Company is intending to request an expansion of the
         line of credit over the current limit of $7.5 million when the line of
         credit comes up for renewal on October 1, 2004. Although there can be
         no assurance that the Stanford line of credit will be renewed and
         expanded on terms acceptable to the Company, management believes that
         the line of credit will be sufficient to continue to fund the Company's
         operations.


                                      F-39
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Superior Galleries, Inc.
Beverly Hills, California


Our audit was conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
July 27, 2004


                                      F-40
<PAGE>

<TABLE>
                                          SUPERIOR GALLERIES, INC.
                                                SCHEDULE II


                                                              Charged to
                                               Balance at      expenses/        Write-offs
                                               Beginning        against           net of        Balance at
                                                of Year         revenue           asset         End of Year
                                               ----------     ----------        ----------      -----------
<S>                                             <C>               <C>            <C>             <C>
  Allowance for doubtful accounts:
     Year ended June 30, 2003                   $  25,000         250,663              --        $  270,663
     Year ended June 30, 2004                   $ 270,663          20,134         (31,790)       $  259,007

  Inventory reserve:
     Year ended June 30, 2003                   $ 525,000         140,138              --        $  665,138
     Year ended June 30, 2004                   $ 665,138              --        (665,138)       $       --


                                                       F-41
</TABLE>
<PAGE>

                                INDEX TO EXHIBITS

        EXHIBIT
        NUMBER              DESCRIPTION
        ------              -----------

         2.1      Agreement and Plan of Merger dated June 30, 2003 by and
                  between Tangible Asset Galleries, Inc. and Superior Galleries,
                  Inc. (incorporated herein by this reference to Exhibit C to
                  the definitive Proxy Statement of Tangible Asset Galleries,
                  Inc. filed under the Exchange Act on June 5, 2003).
         3.1      Certificate of Incorporation of Superior Galleries, Inc.
                  (including Certificates of Designation of Superior Galleries,
                  Inc., relating to Series A $5.00 Redeemable 8% Convertible
                  Preferred Stock, Series B $1.00 Convertible Preferred Stock
                  and Series D $1.00 Convertible Preferred Stock) (incorporated
                  herein by this reference to Exhibit D to the definitive Proxy
                  Statement of Tangible Asset Galleries, Inc. filed under the
                  Exchange Act on June 5, 2003).
         3.2      Bylaws of Superior Galleries, Inc. (incorporated herein by
                  this reference to Exhibit E to the definitive Proxy Statement
                  of Tangible Asset Galleries, Inc. filed under the Exchange Act
                  on June 5, 2003).
         4.1      2003 Omnibus Stock Option Plan (incorporated herein by this
                  reference to Exhibit A to the definitive Proxy Statement of
                  Tangible Asset Galleries, Inc., filed under the Exchange Act
                  on June 5, 2003).
         4.2      Form of Nonqualified Stock Option Agreement for 2003 Omnibus
                  Stock Option Plan (incorporated herein by this reference to
                  Exhibit 4.2 to the Annual Report on Form 10-KSB of Superior
                  Galleries, Inc., filed under the Exchange Act, for the fiscal
                  year ended June 30, 2003) .
         4.3      Form of Employee Incentive Stock Option Agreement for 2003
                  Omnibus Stock Option Plan (incorporated herein by this
                  reference to Exhibit 4.3 to the Annual Report on Form 10-KSB
                  of Superior Galleries, Inc., filed under the Exchange Act, for
                  the fiscal year ended June 30, 2003).
         4.4      Lockup Agreement dated April 3, 2002 by and among Stanford
                  Venture Capital Holdings, Inc. and certain stockholders of
                  Tangible Asset Galleries, Inc. (incorporated herein by this
                  reference to Exhibit G included in Exhibit 10.1 to the Current
                  Report on Form 8-K of Tangible Asset Galleries, Inc., filed
                  under the Exchange Act on April 24, 2002).
         4.5      Form of Warrant to Purchase Common Stock Issued to Series A
                  Preferred Stock Investors (incorporated herein by this
                  reference to Exhibit 4.14 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.6      Warrant to Purchase 1,500,000 Shares of Common Stock dated
                  June 15, 2001 Issued to Silvano DiGenova (incorporated herein
                  by this reference to Exhibit 4.9 of the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc., for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         4.7      Warrant to Purchase 1,000,000 Shares of Common Stock dated
                  November 27, 2001 Issued to NRLP (incorporated herein by this
                  reference to Exhibit 4.10 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.8      Warrant to Purchase 250,000 Shares of Common Stock dated June
                  26, 2001 Issued to NRLP (incorporated herein by this reference
                  to Exhibit 4.11 of the Annual Report on Form 10-KSB of
                  Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).
         4.9      Warrant to Purchase 250,000 Shares of Common Stock dated
                  November 14, 2000 Issued to NRLP (incorporated herein by this
                  reference to Exhibit 4.12 of the Annual Report on Form 10-KSB
                  of Tangible Asset Galleries, Inc., for the year ended June 30,
                  2002, filed under the Exchange Act on February 19, 2003).


                                      F-42
<PAGE>

        EXHIBIT
        NUMBER              DESCRIPTION
        ------              -----------

         4.10     Warrant to Purchase 500,000 Shares of Common Stock dated July
                  3, 2001 Issued to KSH Investment Fund LLP (incorporated herein
                  by this reference to Exhibit 4.13 of the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc., for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         4.11     Liquidation Preferences Agreement between Tangible Asset
                  Galleries, Inc., the holders of the outstanding Series B
                  Preferred Stock of Tangible Asset Galleries, Inc. and Stanford
                  Venture Capital Holdings, Inc. dated January 31, 2003
                  (incorporated herein by this reference to Exhibit 4.1 to the
                  Current Report on Form 8-K of Superior Galleries, Inc. filed
                  March 3, 2003).
         9.1      Shareholders' Agreement dated April 3, 2002 by and among
                  Silvano DiGenova, Stanford Venture Capital Holdings, Inc. and
                  Tangible Asset Galleries, Inc. (incorporated herein by this
                  reference to exhibit E included in Exhibit 10.1 to the Current
                  Report on Form 8-K of Tangible Asset Galleries, Inc., filed
                  under the Exchange Act on April 24, 2002).
         10.3     Standard Multi-Tenant Office Lease-Gross dated August 6, 2002
                  by and between DBKK, LLC and Tangible Asset Galleries, Inc.
                  (incorporated herein by this reference to Exhibit 10.14 to the
                  Annual Report on Form 10-KSB of Tangible Asset Galleries, Inc.
                  for the year ended June 30, 2002, filed under the Exchange Act
                  on February 19, 2003).
         10.4     Registration Rights Agreement dated April 3, 2002 by and among
                  Tangible Asset Galleries, Inc. and holders of our Series B
                  Preferred Stock, Series C Preferred Stock and Certain Warrants
                  (incorporated herein by this reference to exhibit D included
                  in Exhibit 10.1 to the Current Report on Form 8-K of Tangible
                  Asset Galleries, Inc., filed under the Exchange Act on April
                  24, 2002).
         10.5     Employment Agreement dated June 1, 2001 between Tangible Asset
                  Galleries, Inc. and Silvano DiGenova. (incorporated herein by
                  this reference to Exhibit 10.16 to the Annual Report on Form
                  10-KSB of Tangible Asset Galleries, Inc. for the year ended
                  June 30, 2002, filed under the Exchange Act on February 19,
                  2003).
         10.6     Employment Agreement dated December 27, 2002 between Tangible
                  Asset Galleries, Inc. and Paul Biberkraut (incorporated herein
                  by this reference to Exhibit 10.6 to the Annual Report on Form
                  10-KSB of Superior Galleries, Inc., filed under the Exchange
                  Act, for the fiscal year ended June 30, 2003).
         10.7     Commercial Loan and Security Agreement dated October 13, 2003
                  between Superior Galleries, Inc. and Stanford Financial Group
                  Company (incorporated herein by this reference to Exhibit 10.1
                  to the Current Report on Form 8-K of Superior Galleries, Inc.
                  filed under the Exchange Act, filed October 16, 2003)
         10.8     Commercial Note by Superior Galleries, Inc. to Stanford
                  Financial Group Company dated October 1, 2003 (incorporated
                  herein by this reference to Exhibit 10.2 to the Current Report
                  on Form 8-K of Superior Galleries, Inc. filed October 16,
                  2003)
         10.9     Secured Revolving Line of Credit Agreement dated August 8,
                  2002 between Tangible Asset Galleries, Inc. and John Wesley
                  English (incorporated herein by reference to Exhibit 10.9 of
                  the registrant's Registration Statement on Form SB-2, as
                  amended, filed September 24, 2004)
         10.10    Renewal and Modification Agreement dated September 30, 2003
                  between Superior Galleries, Inc. and the John Wesley English
                  Living Trust (incorporated herein by reference to Exhibit
                  10.10 of the registrant's Registration Statement on Form SB-2,
                  as amended, filed September 24, 2004)


                                      F-43
<PAGE>

        EXHIBIT
        NUMBER              DESCRIPTION
        ------              -----------

         10.11    Promissory Note in the maximum amount of $1,000,000, dated
                  February 10, 2003, from Tangible Asset Galleries, Inc. to
                  Silvano DiGenova (incorporated herein by reference to Exhibit
                  10.11 of the registrant's Registration Statement on Form SB-2,
                  as amended, filed September 24, 2004)
         10.12    Promissory Note dated December 10, 2002 by Tangible Asset
                  Galleries, Inc. to Silvano DiGenova (incorporated herein by
                  reference to Exhibit 10.12 of the registrant's Registration
                  Statement on Form SB-2, as amended, filed September 24, 2004)
         10.13    Promissory Note dated December 13, 2002 by Tangible Asset
                  Galleries, Inc. to Silvano DiGenova (incorporated herein by
                  reference to Exhibit 10.13 of the registrant's Registration
                  Statement on Form SB-2, as amended, filed September 24, 2004)
         10.14    Series D Preferred Stock Purchase and Warrant Exercise
                  Agreement dated January 31, 2003, between Tangible Asset
                  Galleries, Inc., Stanford Venture Capital Holdings, Inc.,
                  Silvano DiGenova and certain warrant holders (incorporated
                  herein by this reference to Exhibit 10.1 to the Current Report
                  on Form 8-K of Superior Galleries, Inc. filed March 3, 2003).
         10.15    Share Exchange and Note Modification Agreement dated January
                  31, 2003 between Tangible Asset Galleries, Inc., Stanford
                  Venture Capital Holdings, Inc. and Silvano DiGenova
                  (incorporated herein by this reference to Exhibit 10.2 to the
                  Current Report on Form 8-K of Superior Galleries, Inc. filed
                  March 3, 2003).
         10.16    Consulting Agreement between Tangible Asset Galleries, Inc.
                  and Stanford Venture Capital Holdings, Inc., dated January 31,
                  2003 (incorporated herein by reference to Exhibit 10.16 of the
                  registrant's Registration Statement on Form SB-2, as amended,
                  filed September 24, 2004).
         10.17    Independent Contractor and Proprietary Information Agreement
                  dated July 1, 2003 between Superior Galleries, Inc. and
                  Stephen Deeds, Inc. (incorporated herein by reference to
                  Exhibit 10.17 of the registrant's Registration Statement on
                  Form SB-2, as amended, filed September 24, 2004)
         14.1     Superior Galleries, Inc. Code of Ethics (previously filed).
         31.1     Certification of Chief Executive Officer as required by
                  Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
         31.2     Certification of Chief Financial Officer as required by
                  Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
         32.1     Officer's Certification of Annual Report pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
         32.2     Officer's Certification of Annual Report pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
----------------


                                      F-44