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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

(Mark One)

|[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: December 31, 2001
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

OR



|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________________ to ________________
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission File Number: 0-27887

Collectors Universe, Inc.

(Exact name of registrant as specified in its charter)


|                                               |  |                                        
|---------------------------------------------- |  | ---------------------------------------
|Delaware                                       |  | 33-0846191                             
|(State or other jurisdiction
of Incorporation) |  | (I.R.S. Employer
Identification Number)

1921 E. Alton Avenue, Santa Ana, California 92705

(Address of principal executive offices and zip code)


Registrants telephone number, including area code: (949) 567-1234

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]   No [   ]

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

|                             |  |                                 
|---------------------------- |  | --------------------------------
|Class                        |  | Outstanding at February 8, 2002:
|                             |  |                                 
|Common Stock $.001 Par Value |  | 25,516,339                      



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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                              | ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K AND EXHIBITS                                        
|SIGNATURES                   



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COLLECTORS UNIVERSE, INC.
 INDEX

|                                   |                                                                                                                                |     |    |  | 
|---------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | --- | -- |  | 
|                                   | Page No.                                                                                                                      
|                                   |                                                                                                                               
|Part I.      Financial Information
|                                  
|Item 1.                            | Financial Statements                                                                                                          
|                                  
|                                   | Condensed Consolidated Balance
        Sheets December 31, 2001 and June 30, 2001 (unaudited)                                  |     | 2  | 
|                                  
|                                   | Condensed Consolidated Statements of Operations three and six months ended December
31, 2001 and December 31, 2000 (unaudited) |     | 3  | 
|                                  
|                                   | Condensed Consolidated Statements of Cash Flows six months ended December 31, 2001 and
December 31, 2000 (unaudited)           |     | 4  | 
|                                  
|                                   | Notes to Condensed Consolidated Financial Statements (unaudited)                                                               |     | 5  | 
|                                  
|Item 2.                            | Managements Discussion and Analysis of Financial Condition and Results of Operations                                          |     | 10 | 
|                                  
|Item 3.                            | Quantitative and Qualitative Disclosures About Market Risk                                                                     |     | 16 | 
|                                  
|Part II.      Other Information   
|                                  
|Item 4.                            | Submission Of Matters To A Vote Of Security Holders                                                                            |     | 16 | 
|                                  
|Item 5.                            | Exhibits and Reports on Form 8-K and Exhibits                                                                                  |     | 16 | 
|                                  
|SIGNATURES                         |                                                                                                                                | S-1 |   



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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of December 31, 2001 and June 30, 2001
(in thousands, except per share data)
(unaudited)

|                                       |                                                                                                                         |                            |        |             |        |          |        |        |        | 
|-------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----------- | ------ | -------- | ------ | ------ | ------ | 
|                                       |                                                                                                                         |                            |        | December 31 |        | June 30,
|                                       |                                                                                                                         |                            |        | 2001        |        | 2001    
|                                       |                                                                                                                         |                            |        |             |        |         
|ASSETS                                 |                                                                                                                         |                            |        |             |        |          |        |       
|Current assets:                        |                                                                                                                         |                            |        |             |        |          |        |       
|                                       | Cash and cash equivalents                                                                                               |                            | $      | 6,240       |        |          | $      | 5,874  |       
|                                       | Accounts receivable, net                                                                                                |                            |        | 9,964       |        |          |        | 8,162  |       
|                                       | Auction consignment advances                                                                                            |                            |        | 3,556       |        |          |        | 1,897  |       
|                                       | Inventories, net                                                                                                        |                            |        | 7,352       |        |          |        | 9,088  |       
|                                       | Prepaid expenses and other                                                                                              |                            |        | 631         |        |          |        | 1,023  |       
|                                       | Note
receivable from an officer                                                                                         |                            |        | 363         |        |          |        | 200    |       
|                                       | Refundable income taxes                                                                                                 |                            |        | 1,227       |        |          |        | 892    |       
|                                       | Deferred taxes                                                                                                          |                            |        | 645         |        |          |        | 645    |       
|
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|                                       |                                                                                                                         | Total current assets       |        |             | 29,978 |          |        |        | 27,781 | 
|                                      
|Property and equipment, net            |                                                                                                                         |                            | 2,020  |             |        |          | 1,898  |       
|Other assets                           |                                                                                                                         |                            | 1,161  |             |        |          | 240    |       
|Goodwill, net                          |                                                                                                                         |                            | 15,356 |             |        |          | 16,146 |       
|Deferred taxes                         |                                                                                                                         |                            | 803    |             |        |          | 803    |       
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|                                       |                                                                                                                         | $                          | 49,318 |             |        | $        | 46,868 |       
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|LIABILITIES AND STOCKHOLDERS EQUITY   |                                                                                                                         |                            |        |             |        |          |        |       
|Current
liabilities:                   |                                                                                                                         |                            |        |             |        |          |        |       
|                                       | Accounts payable                                                                                                        |                            | $      | 390         |        |          | $      | 452    |       
|                                       | Consignor payable                                                                                                       |                            |        | 8,595       |        |          |        | 4,265  |       
|                                       | Accrued liabilities                                                                                                     |                            |        | 613         |        |          |        | 917    |       
|                                       | Accrued compensation and benefits                                                                                       |                            |        | 943         |        |          |        | 650    |       
|                                       | Deferred revenue                                                                                                        |                            |        | 1,093       |        |          |        | 812    |       
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|                                       |                                                                                                                         | Total current liabilities  |        |             | 11,634 |          |        |        | 7,096  | 
|                                      
|Deferred rent                          |                                                                                                                         |                            | 256    |             |        |          | 222    |       
|Commitments and contingencies (note 8) |                                                                                                                         |                            |        |             |        |          |        |       
|Stockholders equity:                  |                                                                                                                         |                            |        |             |        |          |        |       
|                                       | Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or outstanding                              |                            |        |            |        |          |        |       |       
|                                       | Common
stock, $.001 par value; 30,000 shares authorized; issued 25,496 at
December 31, 2001 and 25,470 at June 30, 2001 |                            |        | 26          |        |          |        | 26     |       
|                                       | Additional paid-in capital                                                                                              |                            |        | 41,224      |        |          |        | 41,160 |       
|                                       | Accumulated deficit                                                                                                     |                            |        | (2,801      | )      |          |        | (615   | )     
|                                       | Treasury stock, at cost (500 shares)                                                                                    |                            |        | (1,021      | )      |          |        | (1,021 | )     
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|                                       |                                                                                                                         | Total stockholders equity |        |             | 37,428 |          |        |        | 39,550 | 
|                                       |                                                                                                                         |                            |        |             |        |          |        |       
|                                       |                                                                                                                         | $                          | 49,318 |             |        | $        | 46,868 |       
|                                       |                                                                                                                         |                            |        |             |        |          |        |       

See accompanying notes to condensed consolidated financial statements



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |        |    | 
|-------------------------------------------- | -------------- | ----------------- | ------ | ------------------ | ------ | ---------------- | ------ | ------------ | ---- | ------------ | ------ | ------ | ------ | - | ------ | ------ | -- | 
|                                             |                |                   |        | Three Months Ended |        | Six Months Ended
|                                             |                |                   |        |                    |        |                 
|                                             |                |                   |        | December 31,       |        | December 31,     |        | December 31, |      | December 31,
|                                             |                |                   |        | 2001               |        | 2000             |        | 2001         |      | 2000        
|                                             |                |                   |        |                    |        |                  |        |              |      |             
|Net revenues                                 |                | $                 | 10,615 |                    |        | $                | 12,112 |              |      | $            | 19,944 |        |        | $ | 24,700 |       
|Cost of revenues                             |                |                   | 6,254  |                    |        |                  | 7,094  |              |      |              | 12,170 |        |        |   | 14,007 |       
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                             | Gross profit   |                   |        | 4,361              |        |                  |        | 5,018        |      |              |        | 7,774  |        |   |        | 10,693 |   
|                                            
|Selling, general and administrative expenses |                |                   | 5,125  |                    |        |                  | 4,147  |              |      |              | 10,329 |        |        |   | 9,134  |       
|Amortization of goodwill and intangibles     |                |                   | 411    |                    |        |                  | 486    |              |      |              | 823    |        |        |   | 973    |       
|Impairment of goodwill                       |                |                   |       |                    |        |                  | 906    |              |      |              |       |        |        |   | 906    |       
|Stock-based compensation                     |                |                   | 13     |                    |        |                  | 14     |              |      |              | 26     |        |        |   | 26     |       
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|Total operating expenses                     |                |                   | 5,549  |                    |        |                  | 5,553  |              |      |              | 11,178 |        |        |   | 11,039 |       
|                                            
|                                             | Operating loss |                   |        | (1,188             | )      |                  |        | (535         | )    |              |        | (3,404 | )      |   |        | (346   | ) 
|Interest income, net                         |                |                   | 38     |                    |        |                  | 212    |              |      |              | 127    |        |        |   | 525    |       
|Other
income (expense)                       |                |                   | 7      |                    |        |                  | (1     | )            |      |              | 13     |        |        |   | (1     | )     
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|Income (loss) before income taxes            |                |                   | (1,143 | )                  |        |                  | (324   | )            |      |              | (3,264 | )      |        |   | 178    |       
|Provision (benefit) for income taxes         |                |                   | (43    | )                  |        |                  | (129   | )            |      |              | (1,078 | )      |        |   | 105    |       
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                             |                | Net income (loss) |        | $                  | (1,100 | )                |        | $            | (195 | )            |        | $      | (2,186 | ) |        | $      | 73 | 
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                            
|Net income (loss) per share:                 |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                             | Basic          |                   | $      | (0.04              | )      |                  | $      | (0.01        | )    |              | $      | (0.09  | )      |   | $      | 0.00   |   
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                             | Diluted        |                   | $      | (0.04              | )      |                  | $      | (0.01        | )    |              | $      | (0.09  | )      |   | $      | 0.00   |   
|                                             |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|Weighted average shares outstanding:         |                |                   |        |                    |        |                  |        |              |      |              |        |        |        |   |        |       
|                                             | Basic          |                   |        | 24,996             |        |                  |        | 25,089       |      |              |        | 24,996 |        |   |        | 25,258 |   
|                                             | Diluted        |                   |        | 24,996             |        |                  |        | 25,089       |      |              |        | 24,996 |        |   |        | 25,937 |   

See accompanying notes to condensed consolidated financial statements



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share and per share data)
(unaudited)

|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |        |        |        |        |  
|------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | ---- | ---------------- | ------ | ------ | ------ | ------ | ------ | -
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      | Six Months Ended
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      | December 31,    
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                 
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      | 2001             |        | 2000  
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|OPERATING ACTIVITIES:                                                                             |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Net income (loss)                                                                                 |                                                                                                    | $                                                   | (2,186                                   | )                                                   |      | $                | 73     |       
|                                                                                                  | Adjustments
to reconcile net income (loss) to net cash provided by
(used in)
operating activities: |                                                     |                                          |                                                     |      |                  |        |        |       
|                                                                                                  |                                                                                                    |                                                     | Depreciation and amortization            |                                                     |      | 1,250            |        |        |        | 2,226  |       
|                                                                                                  |                                                                                                    |                                                     | Stock-based compensation                 |                                                     |      | 26               |        |        |        | 26     |       
|                                                                                                  |                                                                                                    |                                                     | Provision
for doubtful accounts          |                                                     |      | 32               |        |        |        | 24     |       
|                                                                                                  | Changes in assets and liabilities:                                                                 |                                                     |                                          |                                                     |      |                  |        |        |       
|                                                                                                  |                                                                                                    |                                                     | Accounts receivable                      |                                                     |      | (1,834           | )      |        |        | 2,160  |       
|                                                                                                  |                                                                                                    |                                                     | Auction consignment advances             |                                                     |      | (1,659           | )      |        |        | 272    |       
|                                                                                                  |                                                                                                    |                                                     | Inventories                              |                                                     |      | 1,736            |        |        |        | (1,710 | )     
|                                                                                                  |                                                                                                    |                                                     | Prepaid expenses and other assets        |                                                     |      | 492              |        |        |        | 527    |       
|                                                                                                  |                                                                                                    |                                                     | Refundable
income taxes                  |                                                     |      | (335             | )      |        |        |       |       
|                                                                                                  |                                                                                                    |                                                     | Other assets                             |                                                     |      | (969             | )      |        |        |       |       
|                                                                                                  |                                                                                                    |                                                     | Accounts payable and accrued liabilities |                                                     |      | 4,291            |        |        |        | (5,529 | )     
|                                                                                                  |                                                                                                    |                                                     | Deferred revenue                         |                                                     |      | 281              |        |        |        | (614   | )     
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                  |                                                                                                    |                                                     |                                          | Net cash provided by (used in) operating activities |      |                  | 1,125  |        |        |        | (2,545 | )
|                                                                                                 
|INVESTING ACTIVITIES:                                                                             |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                  | Capital expenditures                                                                               |                                                     |                                          | (549                                                | )    |                  |        | (817   | )     
|                                                                                                  | Collections on notes receivable                                                                    |                                                     |                                          | 15                                                  |      |                  |        | 10     |       
|                                                                                                  | Net
advances on note receivable from an officer                                                    |                                                     |                                          | (163                                                | )    |                  |        | (355   | )     
|                                                                                                  | Advances
for pending acquisition                                                                   |                                                     |                                          | (100                                                | )    |                  |        |       |       
|                                                                                                  | Net cash paid for acquired businesses                                                              |                                                     |                                          |                                                    |      |                  |        | (794   | )     
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                  |                                                                                                    | Net cash used in investing activities               |                                          |                                                     | (797 | )                |        |        | (1,956 | )     
|                                                                                                 
|FINANCING ACTIVITIES:                                                                             |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                  | Proceeds from employee stock purchase plan                                                         |                                                     |                                          | 38                                                  |      |                  |        | 53     |       
|                                                                                                  | Purchase of company common stock                                                                   |                                                     |                                          |                                                    |      |                  |        | (1,003 | )     
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                  |                                                                                                    | Net cash provided by (used in) financing activities |                                          |                                                     | 38   |                  |        |        | (950   | )     
|                                                                                                 
|Net increase (decrease) in cash and cash equivalents                                              |                                                                                                    |                                                     | 366                                      |                                                     |      |                  | (5,451 | )     
|Cash and cash equivalents at beginning of period                                                  |                                                                                                    |                                                     | 5,874                                    |                                                     |      |                  | 14,580 |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Cash and cash equivalents at end of period                                                        |                                                                                                    | $                                                   | 6,240                                    |                                                     |      | $                | 9,129  |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Interest paid                                                                                     |                                                                                                    | $                                                   | 22                                       |                                                     |      | $                |       |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Income taxes paid                                                                                 |                                                                                                    | $                                                   |                                         |                                                     |      | $                | 236    |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|                                                                                                 
|SUPPLEMENTAL DISCLOSURE ON NON-CASH TRANSACTIONS:                                                 |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|During the six month period ended December 31, 2001, the Company
acquired a business, as follows: |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Fair value of assets acquired                                                                     |                                                                                                    |                                                     |                                          |                                                     |      | $                | (25    | )     
|Cash paid in acquisition, net of cash acquired                                                    |                                                                                                    |                                                     |                                          |                                                     |      |                  | 794    |       
|Liabilities assumed                                                                               |                                                                                                    |                                                     |                                          |                                                     |      |                  | 68     |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       
|Goodwill                                                                                          |                                                                                                    |                                                     |                                          |                                                     |      | $                | 837    |       
|                                                                                                  |                                                                                                    |                                                     |                                          |                                                     |      |                  |        |       

See accompanying notes to condensed consolidated financial statements



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except per share data)
(unaudited)

1.   SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying interim condensed consolidated financial statements
as of and for the three-month and six-month periods ended December 31,
2001 include the accounts of Collectors Universe, Inc. and its
subsidiaries (the Company). On July 14, 2000, the Company acquired
Odyssey Publications, Inc. (Odyssey) and, accordingly the accompanying
condensed consolidated financial statements of the Company for the
six-month period ended December 31, 2000 include the accounts of Odyssey
from the date of its acquisition by the Company; whereas the condensed
consolidated financial statements of the Company for the six months ended
December 31, 2001 include the accounts of Odyssey for that entire six
month period.

Unaudited Interim Financial Information

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying interim condensed consolidated financial statements
have been prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission (the SEC) for interim financial
reporting. These interim condensed consolidated financial statements are
unaudited and, in the opinion of management, include all adjustments
(consisting of normal recurring adjustments and accruals) necessary to
present fairly the consolidated balance sheets, consolidated operating
results, and consolidated cash flows for the periods presented in
accordance with accounting principles generally accepted in the United
States of America (GAAP). Operating results for the three and six-month
periods ended December 31, 2001, are not necessarily indicative of the
results that may be expected for the year ending June 30, 2002. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted in
accordance with the rules and regulations of the SEC. These interim
condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto
contained in the Companys Annual Report on Form 10-K for the fiscal year
ended June 30, 2001. Certain prior period amounts have been reclassified
to conform to the current period presentation.

Use of Estimates

| |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates, and
such differences may be material to the consolidated financial statements.

Recent Accounting Pronouncements

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities.The Company adopted SFAS No. 133 effective for the first
quarter of its fiscal year that began July 1, 2000. SFAS No. 133 requires
that the Company record all derivatives on the balance sheets at fair
value. The Company does not have any derivative instruments nor does the
Company engage in hedging activities. Therefore, the adoption of SFAS No.
133 had no impact on the Companys financial statements.

| | 
| | 



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In July 2001, the FASB issued FASB Statements No. 141, Business
Combinations(SFAS 141), and No. 142, Goodwill and Other Intangible Assets
(SFAS 142). SFAS No. 141 requires the use of the purchase method of
accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS
No. 141 also will require the Company to recognize acquired
intangible assets, apart from goodwill, if the acquired intangible assets
meet certain criteria. SFAS No. 141 applies to all business combinations
initiated after June 30, 2001 and for purchase business combinations
completed on or after July 1, 2001. It also will require the Company to
reclassify the carrying amounts of intangible assets and goodwill based on
the criteria in SFAS No. 141 effective as of the date on which the Company
adopts SFAS 142 (which is discussed below).

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SFAS No. 142, which the Company will adopt on July 2, 2002, requires,
among other things, that companies no longer amortize goodwill, but
instead test goodwill for impairment at least annually. In addition, SFAS
No. 142 requires that companies identify reporting units for the purposes
of assessing potential future impairments of goodwill, reassess the useful
lives of other existing recognized intangible assets, and cease
amortization of intangible assets that have indefinite useful lives. An
intangible asset with an indefinite useful life will be required to be
tested for impairment at least annually in accordance with the guidance in
SFAS
No. 142. SFAS No. 142 is required to be applied in fiscal years
beginning after December 15, 2001 to all goodwill and other intangible
assets recognized at that date, regardless of when those assets were
initially recognized. SFAS No. 142 will require the Company to reassess
the useful lives of other intangible assets within the first interim
quarter after adoption of SFAS No. 142 and to complete a transitional
goodwill impairment test by January 2, 2003, six months from the date of
the Companys adoption of SFAS 142.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys previous business combinations were accounted for using
the purchase method of accounting. As of December 31, 2001 and June 30,
2001, the net carrying amounts of goodwill were $15,356,000 and
$16,146,000, respectively. Amortization expense for the three and
six-month periods ended December 31, 2001 was $411,000 and $823,000,
respectively. Amortization expense for the three and six-month periods
ended December 31, 2000 was $486,000 and $973,000, respectively. The
Company currently is assessing, but has not yet determined, how the
adoption of SFAS No. 142 will impact its financial statements.

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

RECLASSIFICATIONS

Certain prior period
amounts have been reclassified to conform to the current period
presentation.

2.   INVENTORIES

Inventories consist of the following:

|                            |  |                |       |          |  |   |       |  
|--------------------------- |  | -------------- | ----- | -------- |  | - | ----- | -
|                            |  | (In thousands)
|                            |  | December 31,   |       | June 30,
|                            |  | 2001           |       | 2001    
|                            |  |                |       |         
|Coins and currency          |  | $              | 5,020 |          |  | $ | 5,791 |  
|Sportscards and memorabilia |  |                | 2,362 |          |  |   | 3,210 |  
|Records                     |  |                | 35    |          |  |   | 371   |  
|Other collectibles          |  |                | 272   |          |  |   | 28    |  
|                            |  |                |       |          |  |   |       |  
|                            |  |                | 7,689 |          |  |   | 9,400 |  
|Less inventory reserve      |  |                | (337  | )        |  |   | (312  | )
|                            |  |                |       |          |  |   |       |  
|Inventories, net            |  | $              | 7,352 |          |  | $ | 9,088 |  
|                            |  |                |       |          |  |   |       |  



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except per share data)
(unaudited)

3.   PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

|                                               |  |                |        |          |  |   |        |  
|---------------------------------------------- |  | -------------- | ------ | -------- |  | - | ------ | -
|                                               |  | (In thousands)
|                                               |  | December 31,   |        | June 30,
|                                               |  | 2001           |        | 2001    
|                                               |  |                |        |         
|Grading reference sets                         |  | $              | 13     |          |  | $ | 13     |  
|Computer hardware and equipment                |  |                | 1,899  |          |  |   | 1,608  |  
|Computer software                              |  |                | 1,027  |          |  |   | 690    |  
|Equipment                                      |  |                | 1,216  |          |  |   | 1,198  |  
|Furniture and office equipment                 |  |                | 834    |          |  |   | 796    |  
|Leasehold improvements                         |  |                | 424    |          |  |   | 379    |  
|Construction in progress                       |  |                |       |          |  |   | 189    |  
|                                               |  |                |        |          |  |   |        |  
|                                               |  |                | 5,413  |          |  |   | 4,873  |  
|Less accumulated depreciation and amortization |  |                | (3,393 | )        |  |   | (2,975 | )
|                                               |  |                |        |          |  |   |        |  
|Property and equipment, net                    |  | $              | 2,020  |          |  | $ | 1,898  |  
|                                               |  |                |        |          |  |   |        |  

4.   GOODWILL

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Goodwill arises from business acquisitions and represents the excess of
the purchase price paid over the fair value of net assets acquired and is
amortized using the straight-line method over periods ranging from five to
fifteen years. The Company periodically evaluates the recoverability of
goodwill by determining whether the amortization of the balances over
their remaining useful lives can be recovered through projected
undiscounted future operating cash flows. Based on our most recent
analysis, we believe no impairment exists at December 31, 2001. Goodwill
was $15,356,000 net of accumulated amortization of $3,398,000 as of
December 31, 2001. Goodwill was $16,146,000, net of accumulated
amortization of $2,609,000 as of June 30, 2001.

5.   NET INCOME (LOSS) PER SHARE

| |                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net income (loss) per share is determined in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income
(loss) per share for the three and six-month periods ended December 31,
2001 and December 31, 2000, is computed, as follows:

|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |   |        | 
|--------------------------------------------------- | --------------------------------------------------------------------------------------- | --------------------------------- | ------ | ------------------------------------- | ------ | ---------------- | ---- | ---- | ------ | ---- | ------ | - | ------ | - | -- | - | ------ | 
|                                                    |                                                                                         |                                   |        | (In thousands, except per share data)
|                                                    |                                                                                         |                                   |        | Three Months Ended                    |        | Six Months Ended
|                                                    |                                                                                         |                                   |        | December 31,                          |        | December 31,    
|                                                    |                                                                                         |                                   |        |                                       |        |                 
|                                                    |                                                                                         |                                   |        | 2001                                  |        | 2000             |      | 2001 |        | 2000
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |     
|Net income (loss) applicable to common
stockholders |                                                                                         | $                                 | (1,100 | )                                     |        | $                | (195 | )    |        | $    | (2,186 | ) |        | $ | 73 |  
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  
|Net income (loss) per share:                        |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  
|                                                    | Weighted average shares outstanding
used in computation of net income
(loss) per share: |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |   |       
|                                                    |                                                                                         | Basic                             |        |                                       | 24,996 |                  |      |      | 25,089 |      |        |   | 24,996 |   |    |   | 25,258 | 
|                                                    |                                                                                         | Effects of dilutive stock options |        |                                       |       |                  |      |      |       |      |        |   |       |   |    |   | 679    | 
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  
|                                                    |                                                                                         | Diluted                           |        |                                       | 24,996 |                  |      |      | 25,089 |      |        |   | 24,996 |   |    |   | 25,937 | 
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  
|                                                    | Net income (loss) per share:                                                            |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |   |       
|                                                    |                                                                                         | Basic                             |        | $                                     | (0.04  | )                |      | $    | (0.01  | )    |        | $ | (0.09  | ) |    | $ | 0.00   | 
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  
|                                                    |                                                                                         | Diluted                           |        | $                                     | (0.04  | )                |      | $    | (0.01  | )    |        | $ | (0.09  | ) |    | $ | 0.00   | 
|                                                    |                                                                                         |                                   |        |                                       |        |                  |      |      |        |      |        |   |        |   |    |  

| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The dilutive effects of stock options for 746 and 596 shares
for the three and six-month periods, respectively, are excluded from
loss per share computations as the effect is antidilutive.



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except per share data)
(unaudited)

6.   STOCK COMPENSATION EXPENSE

| |                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Stock-based compensation is composed of stock-based charges related to the
grant of stock options after June 30, 1999 and prior to our initial public
offering at an exercise price that was lower than the initial public
offering price.

7.   BUSINESS SEGMENTS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We operate principally in two segments: (1) sales of collectibles through
auctions and direct sales; and (2) authentication and grading of
collectibles. Effective April 1, 2001, we changed the description of our
Auction business segment to Collectibles Sales to reflect more
accurately the business conducted in this business segment. Accordingly,
the description of the business segments for the three and six-month
periods ended December 31, 2000 has been changed to conform to the
presentation for the three and six-month periods ended December 31, 2001.
We allocate operating expenses to each business segment based upon
activity levels. We do not allocate specific assets to these service
segments. All of our revenues and identifiable assets are located in the
United States.

|                               |  |                                      |       |                |  |                |       |  |  |   |        |  
|------------------------------ |  | ------------------------------------ | ----- | -------------- |  | -------------- | ----- |  |  | - | ------ | -
|                               |  |                                      |       |                |  | (In thousands) |       |  |  |  
|                               |  | Three Months Ended December 31, 2001
|                               |  |                                     
|                               |  | Collectibles                         |       | Grading and    |  |                |       | 
|                               |  | Sales                                |       | Authentication |  | Total         
|                               |  |                                      |       |                |  |               
|Net revenues                   |  | $                                    | 6,552 |                |  | $              | 4,063 |  |  | $ | 10,615 |  
|                               |  |                                      |       |                |  |                |       |  |  |   |        |  
|Operating income (loss)        |  | $                                    | (341  | )              |  | $              | 590   |  |  | $ | 249    |  
|Unallocated
operating expenses |  |                                      |       |                |  |                |       |  |  |   | (1,437 | )
|                               |  |                                      |       |                |  |                |       |  |  |   |        |  
|Operating
loss, consolidated   |  |                                      |       |                |  |                |       |  |  | $ | (1,188 | )
|                               |  |                                      |       |                |  |                |       |  |  |   |        |  

|                               |  |                                      |        |                |  |                |       |  |  |   |        |  
|------------------------------ |  | ------------------------------------ | ------ | -------------- |  | -------------- | ----- |  |  | - | ------ | -
|                               |  |                                      |        |                |  | (In thousands) |       |  |  |  
|                               |  | Three Months Ended December 31, 2000
|                               |  |                                     
|                               |  | Collectibles                         |        | Grading and    |  |                |       | 
|                               |  | Sales                                |        | Authentication |  | Total         
|                               |  |                                      |        |                |  |               
|Net revenues                   |  | $                                    | 6,882  |                |  | $              | 5,230 |  |  | $ | 12,112 |  
|                               |  |                                      |        |                |  |                |       |  |  |   |        |  
|Operating income (loss)        |  | $                                    | (1,301 | )              |  | $              | 1,232 |  |  | $ | (69    | )
|Unallocated operating expenses |  |                                      |        |                |  |                |       |  |  |   | (466   | )
|                               |  |                                      |        |                |  |                |       |  |  |   |        |  
|Operating
loss, consolidated   |  |                                      |        |                |  |                |       |  |  | $ | (535   | )
|                               |  |                                      |        |                |  |                |       |  |  |   |        |  



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COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except per share data)
(unaudited)

|                               |  |                                    |        |                |  |                |        |   |  |   |        |  
|------------------------------ |  | ---------------------------------- | ------ | -------------- |  | -------------- | ------ | - |  | - | ------ | -
|                               |  |                                    |        |                |  | (In thousands) |        |   |  |  
|                               |  | Six Months Ended December 31, 2001
|                               |  |                                   
|                               |  | Collectibles                       |        | Grading and    |  |                |        |  
|                               |  | Sales                              |        | Authentication |  | Total         
|                               |  |                                    |        |                |  |               
|Net revenues                   |  | $                                  | 11,533 |                |  | $              | 8,411  |   |  | $ | 19,944 |  
|                               |  |                                    |        |                |  |                |        |   |  |   |        |  
|Operating income (loss)        |  | $                                  | 566    |                |  | $              | (1,287 | ) |  | $ | (721   | )
|Unallocated operating expenses |  |                                    |        |                |  |                |        |   |  |   | (2,683 | )
|                               |  |                                    |        |                |  |                |        |   |  |   |        |  
|Operating
loss, consolidated   |  |                                    |        |                |  |                |        |   |  | $ | (3,404 | )
|                               |  |                                    |        |                |  |                |        |   |  |   |        |  

|                               |  |                                    |        |                |  |                |        |  |  |   |        |  
|------------------------------ |  | ---------------------------------- | ------ | -------------- |  | -------------- | ------ |  |  | - | ------ | -
|                               |  |                                    |        |                |  | (In thousands) |        |  |  |  
|                               |  | Six Months Ended December 31, 2000
|                               |  |                                   
|                               |  | Collectibles                       |        | Grading and    |  |                |        | 
|                               |  | Sales                              |        | Authentication |  | Total         
|                               |  |                                    |        |                |  |               
|Net revenues                   |  | $                                  | 14,054 |                |  | $              | 10,646 |  |  | $ | 24,700 |  
|                               |  |                                    |        |                |  |                |        |  |  |   |        |  
|Operating income (loss)        |  | $                                  | (1,703 | )              |  | $              | 2,323  |  |  | $ | 620    |  
|Unallocated operating expenses |  |                                    |        |                |  |                |        |  |  |   | (966   | )
|                               |  |                                    |        |                |  |                |        |  |  |   |        |  
|Operating
loss, consolidated   |  |                                    |        |                |  |                |        |  |  | $ | (346   | )
|                               |  |                                    |        |                |  |                |        |  |  |   |        |  

8.   COMMITMENTS AND CONTINGENCIES

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As reported in the Companys Form 10-Q quarterly report to the Securities
and Exchange Commission for the quarterly period ended September 30, 2001,
the Company had agreed to acquire certain assets and the business of
Collectible Properties, Inc. (CPI) for a purchase price of $375,000,
subject to successful completion of negotiations of a definitive purchase
agreement. CPI is wholly owned by Lyn F. Knight, an employee of
the Company, and the former sole owner of Lyn F. Knight Rare
Coins, Inc. (Lyn Knight). The Company acquired the
currency auction business of Lyn Knight in February 1999. Acquisition negotiations are continuing and, if successfully
concluded, it is expected that this acquisition would be completed during
the third quarter of the current fiscal year. The Company had previously
advanced $100,000 to the sole owner of CPI, to be applied toward the purchase
price of CPI and has recorded this amount in other assets. In the event
that negotiations of the definitive agreement cannot be successfully
concluded, the advance will be refunded.



9



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|         |  |                                                                                      
|-------- |  | -------------------------------------------------------------------------------------
|ITEM  2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The discussion in this Item 2 and in Item 3 of this Quarterly Report on
Form 10-Q includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. That Act provides a safe
harbor for forward-looking statements to encourage companies to provide
prospective information about their financial performance so long as they
provide meaningful, cautionary statements identifying important factors that
could cause actual results to differ from the projected results. Other than
statements of historical fact, all statements in this Report and, in
particular, any projections of or statements as to our expectations or beliefs
concerning our future financial performance or financial position or as to
future trends in our business or in our markets, are forward-looking
statements. Forward-looking statements reflect our current expectations about
trends in our business and our future financial performance and our actual
results in future periods may differ significantly from those expectations.
The sections below entitled Overview  Factors Affecting Revenues and Margins
and Additional Factors That May Affect Future Operating Results describe
some, but not all, of the factors that could cause these differences, and
readers of this Report are urged to read those sections in their entirety and
the Companys Annual Report on Form 10-K for its fiscal year ended June 30,
2001, which contains additional information regarding factors that could affect
our future financial performance.

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

Overview

Factors Affecting Revenues and Margins

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

Revenue Recognition Policies. Historically, grading fees have generally
been prepaid, although we have offered open account privileges to numerous
larger dealers. In order to improve our competitive position, we expanded open
account privileges to smaller dealers throughout fiscal 2001. When the
collectibles market began to soften in the latter part of fiscal 2001, some of
our customers experienced cash flow difficulties, and our accounts receivable
delinquency rate increased. In the first quarter of fiscal 2002, we
re-evaluated our credit policies and restricted open account privileges to that
part of our dealer customer base that is comprised of larger dealers with good
credit histories.

We record, as deferred revenue, all prepaid grading submissions until the
items are graded and returned to the submitter. Upon shipment, we record the
revenue from grading and deduct this amount from deferred revenue. For dealers
who have open account status, we record revenue at the time of shipment. For
auctions, we record revenue at the time the collectible is delivered to the
successful bidder. For certain repeat bidders, we deliver the collectibles at
the close of an auction and allow them to pay up to 60 days following the
auction. In certain limited circumstances, we offer extended payment
terms to
certain collectors or dealers. For collectibles that we own and sell at
auction, we record the successful bidder amount, or hammer, as the sale of
the merchandise and record the buyers fee as commission earned. We also
record the cost of the merchandise sold as cost of revenues. For collectibles
that are consigned to us for auction, we record, as commissions earned, the
amounts of the buyers and sellers fees. Depending upon the type of
collectibles auction, we charge successful bidders a 10% to 15% commission and
generally charge consignors a 5% to 15% selling commission. On some large or
important consignments, we may negotiate a reduced consignor commission or even
pay a fee to the consignor.



10



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Gross Profit Margins. The gross margin on sales of consigned collectibles
is significantly higher than the gross margin on sales of owned collectibles
because we realize commissions on sales of consigned collectibles without
having to incur any significant associated costs. By contrast, upon the sale
of owned collectibles, we record the costs of acquiring those collectibles,
which are usually a significant percentage of the selling price. As a result,
the sale of owned collectibles reduces our overall auction margins to a level
that is significantly below that realized for authentication and grading
services. Additionally, to a lesser extent, the gross profit margins on
grading submissions can be affected by the mix of submissions between vintage
or classic coins and sportscards, on the one hand, and modern coins and
sportscards, on the other hand. Generally, our prices for grading services
vary depending on the turn-around time requested by submitting dealers and
collectors, who are willing to pay more for faster turn-around of the coins and
sportscards they submit for grading. As a general rule, dealers and collectors
request faster turn-around for vintage or classic coins and sportscards than
they do for modern submissions. Consequently, our gross margin depends, not
only upon the mix of grading revenues and auction revenues, but also upon the
mix of consigned and owned collectibles sold at our auctions and the mix of
vintage and modern collectibles submitted for grading and authentication.

Our auctions are held periodically throughout the fiscal year. The number
and size of the auctions we conduct vary from quarter to quarter, depending
largely on the volume, value and timing of the collectibles consignments that
we receive for our auctions. For this reason, our auction revenue can vary,
sometimes significantly, from quarter to quarter. Additionally, under our
revenue recognition policies, we do not recognize auction revenues until the
items sold at an auction are shipped or delivered to the winning bidders.
Since those items generally are not shipped to the winning bidders until
payment is received from them, which can take up to 60 days after completion of
an auction, revenue generated from auctions conducted near the end of a fiscal
period often cannot be reported until the succeeding fiscal period, which
contributes to the period-to-period variability in our auction revenues. These
circumstances also make it difficult to forecast, on a quarterly basis, revenue
that will be attributable to our auction business.

Our cash flow is also affected by the number and timing of the auctions we
conduct. Generally, we pay consignors of collectibles to our auctions the cash
price at which their collectibles were sold, less the sellers commissions
earned by us, approximately 45 days after completion of the auction. However,
most of the payments for those collectibles from the winning
bidders are not received until 60 days after an auction is completed. As a result, we
experience significant cash outflows within the first 45 days, and cash inflows
beginning 60 days, following completion of a large auction. Therefore, the amount of cash that we have at the end of any
fiscal period can vary widely, depending on the number and timing of the
auctions conducted during that fiscal period.

The Company generates substantially all of its revenues from the
collectibles market segment, which primarily relies on discretionary consumer
spending. During the last quarter of fiscal year 2001, which ended on June 30,
2001, and through the first and second quarters of the current fiscal year,
which ended on September 30, 2001 and December 31, 2001, respectively, the
Company experienced lower revenues from grading submissions, sales of owned
collectibles and fees earned on the sale of consigned collectibles. We believe
these lower revenues reflect, at least in part, the impact of recent
unfavorable economic conditions on consumer spending. If these unfavorable
economic conditions persist, it is likely that they will adversely affect the
Companys operating results and financial condition in future periods, as well.

Recent Acquisitions

On July 14, 2000, we acquired the business of Odyssey Publications, Inc.
(Odyssey) for $814,000 in cash. The operations of Odyssey have been included
in our operating results from the date of its acquisition. Consequently, our
operating results for the six months ended December 31, 2001 include the
operations of Odyssey for the entire period, whereas our operating results for
the six months ended December 31, 2000 include approximately eleven weeks of
the operations of Odyssey.



11



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##### Table of Contents



RESULTS OF OPERATIONS

Net Revenues

|             |  |                    |            |                  |  |      |            |      |  |   |            |  |  |   |            | 
|------------ |  | ------------------ | ---------- | ---------------- |  | ---- | ---------- | ---- |  | - | ---------- |  |  | - | ---------- | 
|             |  | Three Months Ended |            | Six Months Ended
|             |  | December 31,       |            | December 31,    
|             |  |                    |            |                 
|             |  | 2001               |            | 2000             |  | 2001 |            | 2000
|             |  |                    |            |                  |  |      |            |     
|Net revenues |  | $                  | 10,615,000 |                  |  | $    | 12,112,000 |      |  | $ | 19,944,000 |  |  | $ | 24,700,000 | 

Net revenues include fees generated from the grading and authentication of
sportscards, coins, autographs and stamps; the sales prices of owned
collectibles sold in our auctions and directly to collectors; commissions
earned on sales of consigned collectibles at our auctions; and revenue from the
publication of collectibles magazines. Net revenues for the three and
six-month periods ended December 31, 2001 decreased by 12% and 19% to
$10,615,000 and $19,944,000, respectively, as compared to the corresponding
three and six-month periods of the prior year. We experienced revenue declines
in both our grading and authentication and our collectibles sales business
segments in both the quarter and six months ended December 31, 2001.

Grading and
authentication revenue declined 22% and 21% in the three and
six months ended December 31, 2001, respectively, when compared to the same periods last year
primarily because of a continued decline in sportscard grading submissions.
Grading submissions, particularly for modern sportscards, began to decline
noticeably in the quarter ended June 30, 2001 and have continued to do so
throughout the six months ended December 31, 2001. If these unfavorable
economic conditions persist, it is likely that they will adversely affect the
Companys operating results and financial condition in future periods, as well.

Auction and collectibles sales revenues were lower by 5% for the
three-month period, and 18% for the six-month period, ended December 31, 2001
as compared to the same prior year periods. The decline in the auction and
collectibles sales during the three and six-month periods ended December 31,
2001 was primarily due to a continued softening in demand for sportscards and
coins, which we believe is primarily the result of recessionary economic
conditions which reduced the amount of discretionary income available to
collectors.

Gross Profit

|                    |  |                    |           |                  |  |      |           |      |  |   |           |  |  |   |            | 
|------------------- |  | ------------------ | --------- | ---------------- |  | ---- | --------- | ---- |  | - | --------- |  |  | - | ---------- | 
|                    |  | Three Months Ended |           | Six Months Ended
|                    |  | December 31,       |           | December 31,    
|                    |  |                    |           |                 
|                    |  | 2001               |           | 2000             |  | 2001 |           | 2000
|                    |  |                    |           |                  |  |      |           |     
|Gross profit        |  | $                  | 4,361,000 |                  |  | $    | 5,018,000 |      |  | $ | 7,774,000 |  |  | $ | 10,693,000 | 
|Gross profit
margin |  |                    | 41%       |                  |  |      | 41%       |      |  |   | 39%       |  |  |   | 43%        | 

Gross profit is calculated by subtracting the cost of revenues from net
revenues. Cost of revenues consists of labor to grade and authenticate coins
and sportscards, production costs, printing, credit cards fees, warranty
expense and the cost of owned collectibles sold in our auctions. Gross profit
margin is gross profit stated as a percent of net revenues. Gross profit
decreased by 13% in the current quarter to $4,361,000 from $5,018,000 in the
prior year. Gross profit margin for the quarter ended December 31, 2001 was
unchanged at 41% from the comparable prior year quarter. For the six-month
period ended December 31, 2001, gross profit decreased 27% to $7,774,000, from
$10,693,000 for the comparable prior year period, and gross profit margin
declined to 39% from 43% for the same prior year period. The decline in our
gross profit margin for the first six months of the current fiscal year
occurred as a result of several factors, including (i) lower gross profit
margins on grading activities because we received a higher proportion of
modern sportscards for grading and (ii) the decline in net sales which affected
gross profit margins because a significant portion of our costs of sales are
fixed and, therefore, cannot be reduced directly in proportion to decreases in
our revenues.



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Selling, General and Administrative Expenses

|                       |  |                    |           |                  |  |      |           |      |  |   |            |  |  |   |           | 
|---------------------- |  | ------------------ | --------- | ---------------- |  | ---- | --------- | ---- |  | - | ---------- |  |  | - | --------- | 
|                       |  | Three Months Ended |           | Six Months Ended
|                       |  | December 31,       |           | December 31,    
|                       |  |                    |           |                 
|                       |  | 2001               |           | 2000             |  | 2001 |           | 2000
|                       |  |                    |           |                  |  |      |           |     
|SG&A                   |  | $                  | 5,125,000 |                  |  | $    | 4,147,000 |      |  | $ | 10,329,000 |  |  | $ | 9,134,000 | 
|Percent of net revenue |  |                    | 48%       |                  |  |      | 34%       |      |  |   | 52%        |  |  |   | 37%       | 

Selling, general and administrative (SG&A) expenses primarily include
advertising and sales promotional expenses, wages and payroll-related expenses,
professional and consulting expenses, travel and entertainment,
facility-related expenses and security charges. SG&A expenses increased from
$4,147,000 in the three months ended December 31, 2000 to $5,125,000 for the
three-month period ended December 31, 2001, and from $9,134,000 in the
six-month period ended December 31, 2000 to $10,329,000 for the same period
ended December 31, 2001. SG&A, as a percentage of net revenue, increased from
34% to 48% and from 37% to 52% for the three and six-month periods ended December
31, 2001, respectively, when compared to the same prior year periods. The
increases in SG&A were primarily attributed to severance payments attributable
to staff reductions and expenses associated with the implementation of a new
enterprise software system, which were only partially offset by lower travel,
postage and printing expenses associated with collectibles shows and auctions.

Amortization of Goodwill and Intangibles

|                                         |  |                    |         |                  |  |      |         |      |  |   |         |  |  |   |         | 
|---------------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                         |  | Three Months Ended |         | Six Months Ended
|                                         |  | December 31,       |         | December 31,    
|                                         |  |                    |         |                 
|                                         |  | 2001               |         | 2000             |  | 2001 |         | 2000
|                                         |  |                    |         |                  |  |      |         |     
|Amortization of Goodwill and
intangibles |  | $                  | 411,000 |                  |  | $    | 486,000 |      |  | $ | 823,000 |  |  | $ | 973,000 | 
|Percent of net revenue                   |  |                    | 3.9%    |                  |  |      | 4%      |      |  |   | 4.1%    |  |  |   | 3.9%    | 

Amortization of goodwill and intangibles consist of goodwill charges
relating to acquisitions by the Company and amortization charges for
non-competition agreements that we obtained from the sellers in those
acquisitions. We amortize goodwill over periods of 5 to 15 years and the
non-competition agreements over the duration of those agreements, which range
from 3 to 5 years. Amortization expense for the second quarter was $411,000 as
compared to $486,000 last year. Amortization for the six months ended December
31, 2001 was $823,000 down from $973,000 for the same year earlier period. The
reduction in amortization expense results from a charge for the impairment of
goodwill that was recorded in the second quarter of the prior fiscal year,
which reduced total goodwill and, therefore, also the subsequent quarterly
amortization charges for goodwill.

Stock-Based Compensation

Stock-based compensation relates to stock-based charges from the grant of
stock options after June 30, 1999 and prior to the Companys initial public
offering at a price that was lower than the price at which shares were sold in
that public offering.

Interest Income

|                       |  |                    |        |                  |  |      |         |      |  |   |         |  |  |   |         | 
|---------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                       |  | Three Months Ended |        | Six Months Ended
|                       |  | December 31,       |        | December 31,    
|                       |  |                    |        |                 
|                       |  | 2001               |        | 2000             |  | 2001 |         | 2000
|                       |  |                    |        |                  |  |      |         |     
|Interest income, net   |  | $                  | 38,000 |                  |  | $    | 212,000 |      |  | $ | 127,000 |  |  | $ | 525,000 | 
|Percent of net revenue |  |                    | 0.4%   |                  |  |      | 1.8%    |      |  |   | 0.6%    |  |  |   | 2.1%    | 

Interest income, net for the three and six -month periods ended December 31,
2001 was lower than in the corresponding periods of the prior year because of
lower cash and cash equivalent balances, lower short-term interest rates and a
$22,000 charge in the quarter ended September 30, 2001 for interest expense
resulting from a sales tax audit. Our cash balances fluctuate because of the
variability in the timing and size of our auctions, and accordingly it is
anticipated that interest income will fluctuate on a quarter-to-quarter basis
(see Overview  Factors Affecting Revenues and Margins above in this Item 2).



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Income Taxes

Income tax benefit was provided for at a 33% rate for the first six months
of the current year, which reflects the statutory rate for a California-based
company of 40.8% and the non-deductibility of certain goodwill amortization
charges and other permanent tax differences. In the first six months of the
prior fiscal year, income tax expense was provided for at a 46.6% rate. Due
primarily to the non-deductibility of certain goodwill amortization charges and
other permanent tax differences, we expect our tax rate to remain at
approximately the current rate for the remainder of this fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2001, we had cash and cash equivalents of $6,240,000 as
compared to cash and cash equivalents of $5,874,000 at June 30, 2001. That
increase resulted, in part, from the period-to-period variability in the timing
of our collectibles auctions, which was partially offset by the loss from
operations incurred in the six months ended December 31, 2001. We generally
pay consignors to our auctions on the 45th day following the close of an
auction. However, most of the payments for those collectibles from
the winning bidders are not received until 60 days after an auction
is completed. As a result, we experience significant cash outflows
within the first 45 days, and cash inflows beginning
60 days, following completion of a large auction until this
auction cycle resumes. Depending on the number of auctions held in
any fiscal period, the relative size of those auctions in terms of
the number and value of the items sold and the timing of each
auction, this auction "cycle" can cause significant fluctuations in
our cash balances. Because the variability in the timing, number and
size of our auctions is an inherent feature of our business, we
expect that our cash and cash equivalent balances will be subject to
continuing period to period fluctuations in subsequent reporting periods.

Historically, we have relied on internally generated funds, rather than
borrowings, as our primary source of funds to support operations. Our grading
and authentication services provide us with a relatively steady source of cash,
because, in most instances, our customers prepay for services at the time they
submit their collectibles for authentication and grading. Our auction
activities experience significant fluctuations in cash flows depending upon
each individual auction cycle and size of the auctions. We do not have a
credit facility.

Operating activities
provided cash of $1,125,000 during the six-month
period ended December 31, 2001 as compared to using net cash of $2,545,000 in
the six-month period ended December 31, 2000. The increase in internally
generated cash flow during the first six months of this year was due
primarily to the
number and timing of the auctions that we completed during that period, which
resulted in an inflow of cash during December 2001 from winning bidders and to
reductions in collectibles inventories as a result of an inventory reduction
program initiated during the first quarter of the current fiscal year.

Net cash used in
investing activities was $797,000 for the six-month
period ended December 31, 2001 and consisted of expenditures for fixed assets,
primarily for software costs associated with a new enterprise software system
and related computer servers, and for an advance made to an officer
of the Company. In
addition, $100,000 was advanced to the seller of a business to be acquired by
the Company which is to be applied to the purchase price of that business, as
more fully described in Note 8 to the interim condensed consolidated financial
statements included in Item 1 of this Report.

Net cash provided by financing activities for the six-month period ended
December 31, 2001, was $38,000 and consisted solely of the proceeds from our
Employee Stock Purchase Plan that allows employees to purchase stock at a
formula discount at six-month intervals.

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



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RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued FASB Statements No. 141, Business
Combinations(SFAS 141), and No. 142, Goodwill and Other Intangible Assets
(SFAS 142). SFAS No. 141 requires the use of the purchase method of accounting
and prohibits the use of the pooling-of-interests method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 141 also
requires that the Company recognize acquired intangible assets, apart from
goodwill, if the acquired intangible assets meet certain criteria. SFAS No.
141 applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
will require the Company to reclassify the carrying amounts of intangible
assets and goodwill based on the criteria in SFAS No. 141 at the time it adopts
SFAS No. 142, which is described below.

SFAS No. 142, which the Company will adopt on July 2, 2002, requires,
among other things, that companies no longer amortize goodwill, but instead
test goodwill for impairment at least annually. In addition, SFAS No. 142
requires that companies identify reporting units for the purposes of assessing
potential future impairments of goodwill, reassess the useful lives of other
existing recognized intangible assets, and cease amortization of intangible
assets with indefinite useful lives. An intangible asset with an indefinite
useful life will be tested for impairment at least annually in accordance with
the guidance in SFAS No. 142. SFAS No. 142 is required to be applied in fiscal
years beginning after December 15, 2001 to all goodwill and other intangible
assets recognized at that date, regardless of when those assets were initially
recognized. Our first fiscal year after December 15, 2001 will begin on July
2, 2002. SFAS No. 142 requires the Company to reassess the useful lives of
other intangible assets within the first interim quarter after adoption of SFAS
No. 142 and to complete a transitional goodwill impairment test by January 2,
2002, which is six months from the date it will be adopted by the Company.

The Companys previous business combinations were accounted for using the
purchase method of accounting. As of December 31, 2001 and June 30, 2001, the
net carrying amounts of goodwill were $15,356,000 and $16,146,000,
respectively. Amortization expense for the three and six-month periods ended
December 31, 2001 was $411,000 and $823,000, respectively. Amortization
expense for the three and six-month periods ended December 31, 2000 was
$486,000 and $973,000, respectively. Currently, the Company is assessing, but
has not yet determined, how the adoption of SFAS No. 142 will impact its
financial statements.

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

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

There are a number of factors that could affect our future operating
results and financial condition. Those factors include the factors discussed
in the Section of this Quarterly Report entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations and the factors
described under the caption Factors That Could Affect Our Future Performance
contained in Item 1  DESCRIPTION OF BUSINESS, of our Annual Report on Form
10-K for the fiscal year ended June 30, 2001 filed with the Securities and
Exchange Commission, to which reference is hereby made for additional
information regarding these factors. In particular, among the factors
described in the Annual Report that could adversely affect the Companys future
financial performance, include the risk that the popularity of collectibles
will decline; declines in the general economic conditions which can result in
reductions in purchases of collectibles and in grading submissions by
collectors and dealers; temporary popularity of certain collectibles could
cause revenues to fluctuate; frequency and fluctuations in the size of
auctions, which are largely a function of our ability to obtain consignments of
collectibles from dealers and collectors, could cause revenues to fluctuate;
competition for limited supplies of high-end collectibles for auctions among
collectibles companies; lack of adequate returns on new business opportunities;
the possibility of having to write down the carrying value of owned
collectibles inventories because of market value fluctuations or an inability
to sell collectibles in a timely manner; increased competition; the risk that
we will incur unanticipated liabilities under our authentication and grading
warranties; and government regulation that could cause operating costs to
increase.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Due to the cash balances that we maintain, we are exposed to risk of
changes in short-term interest rates. At June 30, 2001 and December 31, 2001,
we had $5,874,000 and $6,240,000, respectively, in cash and cash equivalents.
These cash balances are primarily invested in a highly liquid money market fund
and interest earned is re-invested in the same fund, which accounts for the
interest income that we generate. Reductions in short-term interest rates
could result in reductions in the amount of that income. However, the impact
on our operating results of such changes is not expected to be material.

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




PART II. OTHER INFORMATION




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our Annual Meeting of Stockholders was held on December 4, 2001. At that
meeting stockholders voted on the election of seven directors to serve for a
term of one year. The election was uncontested and all of the nominees of the
Board of Directors were elected to serve for a one year term ending on the date
of the next Annual Meeting of Stockholders which is currently scheduled to take
place on December 4, 2002. There were no broker non-votes in the election of
directors. Set forth below are the results of the voting:

|                 |  |       |            |          |  |  |         | 
|---------------- |  | ----- | ---------- | -------- |  |  | ------- | 
|                 |  | VOTES
|                 |  |      
|NOMINEES         |  | For   |            | Withhold
|                 |  |       |            |         
|A. Clinton Allen |  |       | 17,304,135 |          |  |  | 288,918 | 
|Q. David Bowers  |  |       | 17,476,602 |          |  |  | 116,451 | 
|Ben A. Frydman   |  |       | 17,557,302 |          |  |  | 35,751  | 
|David G. Hall    |  |       | 17,483,202 |          |  |  | 109,851 | 
|Roger W. Johnson |  |       | 17,504,102 |          |  |  | 88,951  | 
|James H. ONeal  |  |       | 17,558,602 |          |  |  | 34,451  | 
|Van D. Simmons   |  |       | 17,452,402 |          |  |  | 140,651 | 




ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K AND EXHIBITS



| | (a) |  | Exhibits.                                                                  
| | --- |  | ---------------------------------------------------------------------------
|
| |     |  | None                                                                       
|
| | (b) |  | Reports on Form 8-K.                                                       
|
| |     |  | No reports on Form 8-K were filed for the quarter ended September 30, 2001.



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SIGNATURES

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

|                        |  |                                                                              
|----------------------- |  | -----------------------------------------------------------------------------
|                        |  | COLLECTORS UNIVERSE, INC.                                                    
|                       
|                       
|                       
|                       
|                        |  |                                                                              
|Date: February 14, 2002 |  | /s/   ROGER W. JOHNSON
Roger W. Johnson,
Chairman and Chief Executive Officer
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                        |  |                                                                              
|Date: February 14, 2002 |  | /s/   MICHAEL J. LEWIS
Michael J. Lewis,
Chief Financial Officer             



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