<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 15, 1998
GAMING VENTURE CORP., U.S.A.
Exact name of Registrant as specified in its charter)
NEVADA 22-3378922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification
Number)
177 Main Street, Suite 312, Fort Lee, NJ 07024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 927-4642
<PAGE>2
Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets. On January 13, 1998, the
Company agreed to issue 3,000,000 shares of its common stock, par value
$001 in exchange for all of the outstanding Common stock of Casino Journal
Publishing Group. Current exchanging shareholders of Casino Journal
Publishing Group shall be issued an additional amount of common shares (up
to 1,500,000 shares) upon reaching revenues of $8 million in 1998 and $9
million in 1999. Additionally, the Company shall grant the exchanging
shareholders options to purchase 380,000 shares of its common stock at an
exercise price of $3.3125 per share.
Item 3. Bankruptcy or Receivership. None.
Item 4. Changes in Registrant's Certifying Accountant. No.
Item 5. Other Events. None.
Item 6. Resignation of Registrant's Directors. None.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
CASINO JOURNAL PUBLISHING GROUP, INC.
AND AFFILIATES
COMBINED FINANCIAL STATEMENTS
WITH ACCOMPANYING INFORMATION
YEARS ENDED DECEMBER 31, 1996 AND 1995 (AUDITED)
AND ELEVEN MONTHS ENDED NOVEMBER 30, 1997
AND 1996 (UNAUDITED)
AND
INDEPENDENT AUDITORS' REPORT
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED FINANCIAL STATEMENTS WITH ACCOMPANYING INFORMATION
YEARS ENDED DECEMBER 31, 1996 AND 1995 (AUDITED)
AND ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND 1996 (UNAUDITED)
<PAGE>3
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF CASINO JOURNAL PUBLISHING GROUP, INC.
AND AFFILIATES
We have audited the accompanying combined balance sheet of CASINO JOURNAL
PUBLISHING GROUP, INC. AND AFFILIATES as of December 31, 1996 and 1995, and
the combined statements of income and retained earnings and cash flows for
the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of CASINO JOURNAL
PUBLISHING GROUP, INC. AND AFFILIATES as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.
December 17, 1997, except for
Note 9, as to which the date is
January 13, 1998
<PAGE>4
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
December 31, November 30,
1996 1995 1997
(Unaudited)
<S> <C> <C> <C>
Current assets
Cash $412,546 $523,156 $376,746
Accounts receivable 925,627 772,896 901,954
Investment in marketable securities 24,177 20,539 27,891
Inventories 22,128 19,529 38,042
Loans receivable, employees and related parties 113,991 116,191 149,421
Prepaid expenses and taxes 15,004 18,900 23,705
Total current assets 1,513,473 1,471,211 1,517,759
Property and equipment - at cost, less accumulated
depreciation 150,463 128,962 226,203
Loan receivable, shareholder 522,764 357,728 204,055
Other assets 27,016 25,490 27,228
$ 2,213,716 $ 1,983,391 $1,975,245
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued expenses $ 874,698 $ 437,603 $ 900,443
Note payable 65,659 180,928 -
Current portion of deferred subscription revenues 548,295 625,150 539,894
Deferred income, trade show - - 205,082
Current maturities of loan payable, automobile 14,585 14,972 10,283
Total current liabilities 1,503,237 1,258,653 1,655,702
Deferred subscription revenues,
less current portion 499,689 379,645 478,006
Loan payable, automobile, less current maturities 9,025 23,610 -
2,011,951 1,661,908 2,133,708
Minority interest in American Gaming Summit, LLC 63,849 108,709 43,849
Shareholders' equity (deficiency)
Common stock 11,100 11,100 11,100
Additional paid-in capital 66,177 66,177 66,177
Retained earnings (deficit) 60,639 135,497 (279,589)
137,916 212,774 (202,312)
$ 2,213,716 $ 1,983,391 $ 1,975,245
</TABLE>
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
<TABLE>
<CAPTION>
Eleven Months Ended
Year Ended December 31, November 30,
1996 1995 1997 1996
(Unaudited)
<S> <C> <c. <C> <C>
Revenues
Advertising $ 3,885,898 $ 3,482,320 $ 4,504,082 $ 3,449,289
Subscriptions 1,845,233 1,531,255 1,311,697 1,266,531
Trade shows 864,531 528,190 476,103 437,646
Management fee - related party - 56,000 - -
Other 393,494 332,168 144,125 309,348
6,989,156 5,929,933 6,436,007 5,462,814
Operating costs
Printing 1,573,927 1,237,834 1,489,558 1,427,908
Production 883,993 506,750 565,284 537,671
Postage 396,075 324,656 359,727 334,458
Distribution 269,018 213,307 284,306 229,697
Commissions 491,917 476,002 628,663 466,777
Other 259,469 304,136 85,917 82,545
3,874,399 3,062,685 3,413,455 3,079,056
Gross profit 3,114,757 2,867,248 3,022,552 2,383,758
General and administrative expenses 3,018,466 2,553,144 2,651,713 2,703,616
Operating income (loss) 96,291 314,104 370,839 (319,858)
Other income 31,293 12,158 12,583 87,973
Income (loss) before income taxes
and minority interest 127,584 326,262 383,422 (231,885)
Income taxes 6,715 4,415 - -
Income (loss) before minority
interest 120,869 321,847 383,422 (231,885)
Minority interest in earnings of American
Gaming Summit, LLC 80,139 101,917 - -
Net income (loss) 40,730 219,930 383,422 (231,885)
Retained earnings, beginning of period 135,497 35,567 60,639 135,497
Dividends paid (115,588) (120,000 (723,650) (115,588)
Retained earnings (deficit),
end of period $ 60,639 $135,497 $(279,589) $ (211,976)
</TABLE>
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Eleven Months Ended
Year Ended December 31, November 30,
1996 1995 1997 1996
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $40,730 $219,930 $383,422 $(231,885)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities
Depreciation and amortization 50,737 58,017 47,952 23,098
Minority interest in earnings of American
Gaming Summit, LLC 80,139 101,917 - -
Changes in assets and liabilities
Accounts receivable (152,731) (102,966) 23,673 (316,870)
Inventories (2,599) 7,108 (15,914) (4,253)
Prepaid expenses and taxes 3,896 (5,567) (8,701) 7,741
Other assets (1,526) (2,727) (212) (1,826)
Accounts payable and accrued
expenses 437,096 (96,085) 25,745 383,428
Deferred subscription revenue 43,189 268,788 (30,084) 216,552
Deferred income, trade show - - 205,082 289,668
Net cash provided by operating
activities 498,931 448,415 630,963 365,653
Cash flows from investing activities
Additions to property and equipment (72,238) (62,014) (123,692) (51,792)
Investment in marketable securities (3,638) (4,997) (3,714) (420)
Loans receivable, employees 2,200 (35,162) (35,430) (1,894)
Loans receivable, shareholder (165,036) (5,360) 318,709 (126,326)
Net cash provided by (used in)
investing activities (238,712) (107,533) 155,873 (180,432)
Cash flows from financing activities
Principal payments on note payable (115,269) (112,072) (65,659) (106,197)
Principal payments on loan payable,
automobiles (14,972) (8,774) (13,327) (14,178)
Capital contributed - 10,000 - -
Dividends paid (115,588) (120,000) (723,650) (115,588)
Dividends paid to minority interest (125,000) (40,000) (20,000) (65,000)
Net cash used in financing activities (370,829) (270,846) (822,636) (300,963)
Net increase (decrease) in cash (110,610) 70,036 (35,800) (115,742)
Cash, beginning of period 523,156 453,120 412,546 523,156
Cash, end of period $ 412,546 $ 523,156 $376,746 $ 407,414
Supplemental cash flow disclosures
Interest paid $ 30,584 $ 36,874 $ 23,380 $ 29,656
Income taxes paid 6,858 6,120 - -
</TABLE>
<PAGE>7
CASINO JOURNAL PUBLISHING GROUP, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Company, with offices in Atlantic City, New Jersey, and Las Vegas,
Nevada, publishes consumer gaming magazines and gaming industry trade
publications. The Company also sponsors and operates gaming industry trade
shows.
Basis of Combination
The accompanying financial statements include the accounts of Casino Journal
Publishing Group, Inc. (formerly known as Ace Marketing, Inc.) and its
affiliates, Casino Journal of New Jersey, Inc., Casino Journal of Nevada,
Inc., Casino Communications, Inc., Gaming Entertainment Expositions, Inc.,
and its 60%-owned subsidiary, American Gaming Summit, LLC (collectively, the
"Company"). These entities have been combined based on common control and
the shareholders' plan to sell the stock of these entities in a single
transaction. All significant intercompany transactions and balances have
been eliminated.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses.
Investment in Marketable Securities
Marketable securities, consisting of common stock, are classified as
available-for-sale in accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". SFAS No. 115 requires that such
investments be stated at fair value, with unrealized gains or losses shown as
a separate component of shareholders' equity. Unrealized gains and losses at
December 31, 1996 and 1995 are not material and, accordingly, have not been
reflected in the accompanying financial statements.
Inventories
Inventories, which consist principally of books, are stated at the lower of
cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are carried at cost. Depreciation is computed on the
straight-line and accelerated methods over the estimated useful lives of the
assets.
Revenue Recognition
Subscription revenues are deferred and recognized in income as issues of
magazines and newsletters are delivered to the subscribers. Advertising
revenue is recognized on publication of the respective magazine.
Income Taxes
Each entity has elected S Corporation status for Federal and New Jersey
income tax purposes, where applicable. Under these elections, taxable income
or loss is reportable on the shareholders' individual income tax returns, and
the Companies are not required to make provision for Federal income tax.
Provisions are made for New Jersey S Corporation tax.
Interim Unaudited Financial Information
The financial statements as of November 30, 1997 and for the eleven months
ended November 30, 1997 and 1996 are unaudited; however, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) necessary for fair presentation of the financial statements for
these interim periods have been included. The results of interim periods are
not necessarily indicative of the results to be obtained for a full fiscal
year.
<PAGE>8
2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31, November 30,
1996 1995 1997
(Unaudited)
<S> <C> <C> <C>
Equipment 82,993 $ 88,250 $ 87,809
Furniture and fixtures 174,419 130,229 292,996
Vehicles 75,123 75,123 75,123
332,535 293,602 455,928
Less - Accumulated
depreciation 182,072 164,640 229,725
$ 150,463 $ 128,962 $ 226,203
</TABLE>
3 - NOTE PAYABLE
The note, which was payable to a vendor (see Note 7), was satisfied in 1997
and required monthly payments of $10,000 including interest at 10%. Interest
expense on the note was $15,947 and $23,306 for the years ended December 31,
1996 and 1995, respectively.
4 - LOAN PAYABLE, AUTOMOBILE
The loan, which matures in 1998, requires monthly payments of $1,322,
including interest at 7.5%. Interest expense on the loan was $1,261 and
$2,327 for the years ended December 31, 1996 and 1995, respectively.
5 - COMMON STOCK
Common stock, all of which is no par value, consists of the following:
<TABLE>
<CAPTION>
Shares
Issued and
Company Authorized Outstanding Amount
<S> <C> <C>
Casino Journal Publishing Group, Inc. 2,500 100 $ 100
Casino Journal of New Jersey, Inc. 5,000 100 -
Casino Journal of Nevada, Inc. 5,000 100 -
Casino Communications, Inc. 2,500 100 1,000
Gaming Entertainment Expositions, Inc. 25,000 300 10,000
40,000 1,600 $ 11,100
</TABLE>
6 - RELATED PARTY TRANSACTIONS
The Company rents office space on a month-to-month basis from one of its
shareholders. Rent expense was $17,735 (unaudited) and $18,581 (unaudited)
for the eleven months ended November 30, 1997 and 1996, respectively, and
$22,105 and $22,210 for the years ended December 31, 1996 and 1995,
respectively.
Included in loans receivable, employees and related parties is a loan to a
family member of a shareholder. The balance of this loan was $35,110
(unaudited), $25,343 and $15,143 at November 30, 1997 and December 31, 1996
and 1995, respectively. Also included is a loan to a shareholder of one of
the entities. The balance of this loan was $104,454 (unaudited), $62,734 and
$88,878 at November 30, 1997 and December 31, 1996 and 1995, respectively.
In 1995, the Company received a nonrecurring management fee of $56,000 from
an entity that was 50% owned by its majority shareholder.
7 - ADDITIONAL CASH FLOWS STATEMENT INFORMATION
In 1995, an automobile was acquired with financing of $42,492.
During 1996, fully depreciated assets with a cost of approximately $32,700
were written off.
In 1995, a liability of $293,000 to a vendor was converted to a note payable
secured by accounts receivable and inventory (see Note 3).
<PAGE>9
8 - LEASE COMMITMENT
The Company leases premises under a noncancelable operating lease expiring
September 30, 1999. The lease requires additional rent payments based on
increases in real estate taxes and operating expenses over base period
amounts.
Approximate future minimum rent payments are as follows:
Year Ending
December 31,
1997 $ 56,000
1998 58,000
1999 49,000
$ 163,000
Rent expense, including month-to-month rentals (see Note 6), was $154,507
(unaudited) and $94,307 (unaudited) for the eleven months ended November 30,
1997 and 1996, respectively, and $105,042 and $93,958 for the years ended
December 31, 1996 and 1995, respectively.
9 - SUBSEQUENT EVENT
On January 13, 1998, the Company entered into an exchange of stock/purchase
agreement with Gaming Venture Corp., USA, ("Gaming"), a publicly held company
traded on the OTC Bulletin Board, pursuant to which Gaming would acquire all
of the outstanding ownership interests of the Company. Upon consummation of
the merger, the shareholders of Casino Journal Publishing Group, Inc. and
affiliates will own 3,000,000 shares, or approximately 65% of Gaming.
(b) Pro forma financial information.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed financial
statements give effect to the Merger as if the Merger were effected as of
November 1, 1996. Although Gaming Venture Corp., U.S.A.'s ('Gaming') common
stock is being issued to the Casino Journal Publishing Group, Inc. ('Casino')
shareholders in the Merger, the transaction is being accounted for as a
purchase of Gaming by Casino, since it is Casino's management that will
control the combined entity after the Merger.
The pro forma combined condensed statements of operations combine
the unaudited statement of operations for Casino for the year ended December
31, 1997 with the statement of operations of Gaming for the year ended
October 31, 1997.
The pro forma combined condensed statements of operations may not
be indicative of the results that actually would have been achieved if the
Merger had been in effect as of the date and for the periods indicated or
which may be obtained in the future. The pro forma condensed statements of
operations should be read in conjunction with the notes thereto and with the
financial statements contained elsewhere herein.
.
<PAGE>10
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
Gaming Casino Journal
Venture Publishing Pro Forma
Corp., U.S.A. Group, Inc. Adjustments Combined
ASSETS
<S> <C> <C> <C> <C>
Current assets
Cash $ 845,785 $ 334,355 $ - $ 1,180,140
Cash - restricted 202,572 - - 202,572
Accounts receivable 25,295 837,176 - 862,471
Prepaid expenses 2,281 5,711 - 7,992
Inventories - 33,525 - 33,525
Loans receivable, employees and
related parties - 154,434 - 154,434
--------- --------- ------- ----------
Total current assets 1,075,933 1,365,201 - 2,441,134
Available-for-sale securities 38,625 28,680 - 67,305
Property and equipment, net 20,463 217,491 - 237,954
Organization costs, net 1,595 - - 1,595
Loans receivable, shareholders - 216,949 - 216,949
Investments 616,938 - - 616,938
Goodwill - - 972,400 (2) 972,400
Other assets - 25,283 - 25,283
--------- ----------- --------- -----------
$ 1,753,554 $ 1,853,604 $ 972,400 $ 4,579,558
=========== =========== ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
expenses $ 12,151 $ 1,051,609 $ - $ 1,063,760
Loans payable, automobile - 9,025 - 9,025
Deferred revenues 268,466 565,257 - 833,723
Income taxes payable 33,587 - - 33,587
-------- ----------- --------- ------------
Total current liabilities 314,204 1,625,891 - 1,940,095
-------- ----------- --------- ------------
Deferred revenues, net of
current portion - 449,227 - 449,227
-------- ----------- --------- ------------
Minority interest in American Gaming
Summit, LLC - 29,818 - 29,818
-------- ----------- --------- ------------
Shareholders' equity
Common stock 1,609 11,100 (8,100)(1) 4,609
Additional paid-in capital 1,374,489 66,177 1,067,879 (1)(2) 2,508,545
Unrealized holding loss on securities (24,127) - - (24,127)
Retained earnings (deficit) 87,379 (328,609) (87,379)(1) (328,609)
--------- ----------- ---------- -----------
1,439,350 (251,332) 972,400 2,160,418
--------- ----------- ---------- -----------
$ 1,753,554 $ 1,853,604 $ 972,400 $ 4,579,558
=========== =========== ========== ===========
</TABLE>
See notes to pro forma combined condensed financial statements.
<PAGE>11
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
Gaming Casino Journal
Venture Publishing Pro Forma
Corp., U.S.A. Group, Inc. Adjustments Combined
<S> <C> <C> <C> <C>
Revenues $ 657,910 $ 7,265,011 $ - $ 7,922,921
Cost of sales - 3,896,740 - 3,896,740
--------- ----------- -------- -----------
Gross profit 657,910 3,368,271 - 4,026,181
--------- ----------- -------- -----------
Costs and expenses
General and administrative 316,277 2,991,360 64,825(3) 3,372,462
General and administrative - related
party 19,046 - - 19,046
--------- ----------- -------- -----------
335,323 2,991,360 64,825 3,391,508
--------- ----------- -------- -----------
Income from operations 322,587 376,911 (64,825) 634,673
--------- ----------- -------- -----------
Other income
Gain on sale of marketable securities 4,685 - - 4,685
Interest income 44,937 20,485 - 65,422
--------- ----------- -------- -----------
49,622 20,485 - 70,107
--------- ----------- -------- -----------
Income before income taxes and
minority interest 372,209 397,396 (64,825) 704,780
Income taxes 33,587 2,124 142,883(4) 178,594
--------- ----------- -------- -----------
Income before minority interest 338,622 395,272 (207,708) 526,186
Minority interest in earnings of
American Gaming Summit, LLC - 60,870 - 60,870
--------- ----------- -------- -----------
Net income $ 338,622 $ 334,402 $ (207,708) $ 465,316
Net income per share $ .23 $ .10
========= ===========
Weighted average number of common
shares outstanding 1,604,903 4,604,903
========= ===========
See notes to pro forma combined condensed financial statements.
<PAGE>12
GAMING VENTURE CORP., U.S.A. AND CASINO JOURNAL PUBLISHING GROUP, INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The unaudited pro forma financial statements give effect to the
Merger as if the Merger were completed as of November 1, 1996 as to operating
results, and as of October 31, 1997 as to balance sheet data.
PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made:
(1) To reflect the issuance of Gaming's common shares to the
Casino stockholders and adjustment to eliminate the retained
earnings of Gaming under the purchase method of accounting.
(2) To reflect goodwill for the excess of cost over net assets
acquired.
(3) Adjustment for amortization of goodwill over 15 years.
(4) To reflect pro forma income tax expense at Casino's
estimated effective rates, upon termination of Casino's S
Corporation election.
NET INCOME PER SHARE
Net income per share has been computed assuming 4,604,903 as the
weighted average number of common shares outstanding during the period
presented. It is assumed that Gaming's weighted average number of common
shares outstanding for the year ended October 31, 1997 of 1,604,903 plus the
3,000,000 Gaming shares to be issued in the Merger are outstanding for the
period presented.
(c) Exhibits. None
Item 8. Change in Fiscal Year. None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Gaming Venture Corp., U.S.A.
(Registrant)
By: Alan Woinski, President
----------------------------
Date: March 25, 1998
</TABLE>
