<PAGE>1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
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Commission file number - 33-98184
CASINO JOURNAL PUBLISHING GROUP, INC.
(Formerly 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)
(201) 947-4642
(Registrant's telephone number, including area code)
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 and Exchange
Act of 1934 during the preceding twelve months (or such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to file such filing requirements for the past thirty days.
Yes x No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report:
4,963,734 Shares of Common Stock ($.001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
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Casino Journal Publishing Group, Inc.
PART I: Financial Information
ITEM 1 - Financial statements
ITEM 2 - Management's' discussion and analysis of
financial condition and results of operations
PART II: Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
<PAGE>4
PART I
Item 1. Financial Statements:
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
September 30, December 31,
1998 1997
(unaudited)
Current assets
Cash and cash equivalents $1,252,077 $ 334,355
Accounts receivable 913,812 837,176
Investment in marketable securities 55,810 26,567
Inventories 27,715 33,525
Loans receivable, employees - 6,661
Prepaid expenses 461,608 5,711
---------- ---------
Total current assets 2,711,022 1,243,995
Property and equipment -
at cost, less accumulated depreciation 261,012 217,491
Other investments 899,469 -
Goodwill, less accumulated
amortization of $48,252 1,400,680 -
Loan receivable, shareholders and
related parties 636,534 380,322
Other assets 57,769 47,683
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$ 5,966,486 $ 1,889,491
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Note payable $ 100,000 $ -
Accounts payable 1,015,404 1,060,633
Current portion of deferred
subscription revenues 1,110,026 565,257
Income taxes payable 6,823 -
--------- ---------
Total current liabilities 2,232,253 1,625,890
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Deferred subscription revenues,
less current portion 354,464 449,227
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Minority interest in American
Gaming Summit, LLC 29,819 29,819
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Shareholders' equity (deficiency)
Common stock, $.001 par value; 50,000,000 shares
authorized, 4,963,734 shares issued and outstanding
at September 30, 1998 4,964 11,100
Additional paid-in capital 3,897,859 66,177
Unrealized loss on investments (266,881) -
Accumulated deficit (285,992) (292,722)
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3,349,950 (215,445)
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$ 5,966,486 $ 1,889,491
=========== ===========
See accompanying notes to condensed consolidated financial statements
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $2,186,660 $1,754,633 $6,911,693 $5,093,904
Direct costs 1,237,109 1,163,180 3,463,251 2,840,208
---------- ---------- ---------- ----------
Gross profit 949,551 591,453 3,448,442 2,253,696
General and administrative expenses 1,172,573 630,060 3,445,011 2,098,535
---------- ---------- ---------- ----------
Income (loss) from operations (223,022) (38,607) 3,431 155,161
Other income (expenses) (4,909) 2,686 25,301 19,191
--------- ---------- --------- ---------
Income (loss) before income taxes (227,931) (35,921) 28,732 174,352
Income taxes (benefit) (122,000) - 6,000 -
--------- ---------- -------- --------
Net income (loss) $(105,931) $(35,921) $22,732 $174,352
========= ========== ======== ========
Basic and diluted income (loss) per share $(.02) $.01
===== ====
Pro forma income data
Income (loss) before income taxes, as reported $ (35,921) $174,352
Pro forma income taxes - 70,000
--------- --------
Pro forma net income (loss) $ (35,921) $104,352
========= ========
Basic and diluted income (loss) per share
(pro forma) $ (.01) $ .03
========= ========
Shares used in the calculation of income (loss)
per share 4,919,868 3,000,000 4,164,289 3,000,000
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net income $22,732 174,352
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 92,432 39,382
Minority interest in earnings of American
Gaming Summit, LLC - (20,708)
Changes in assets and liabilities
Accounts receivable (3,046) 78,774
Inventories 5,810 3,627
Prepaid expenses (569,664) (3,462)
Other assets 6,254 (47,781)
Accounts payable (77,573) (98,541)
Deferred subscription revenues 263,267 168,202
Income taxes payable (49,190) -
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Net cash provided by (used in) operating activities (308,978) 293,845
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Cash flows from investing activities
Loans receivable, shareholders and related parties (256,212) 163,348
Loans receivable, employees 6,661 (119,627)
Additions to property and equipment (68,181) (100,989)
Investment in marketable securities, net (168,163) (4,356)
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Net cash used in investing activities (485,895) (61,624)
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Cash flows from financing activities
Notes payable 100,000 (65,659)
Principal payments on loan payable, automobile (9,025) (11,237)
Dividends paid (62,350) (403,650)
Issuance of common stock 656,605 -
Dividends paid to minority interest - (20,000)
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Net cash provided by (used in) financing activities 685,230 (500,546)
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Net decrease in cash and cash equivalents (109,643) (268,325)
Cash and cash equivalents, beginning of period 1,361,720 412,546
--------- --------
Cash and cash equivalents, end of period $ 1,252,077 $ 144,221
=========== =========
Supplemental cash flow disclosures
Interest paid $ 29,080 $ 21,047
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>7
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 - ACQUISITION
On April 3, 1998, the Company and its combined affiliates merged with Gaming
Venture Corp., U.S.A., a Nevada corporation ("Gaming"). The Company and its
combined affiliates became wholly-owned subsidiaries of Gaming, the legal
acquiror. As the Company's and its combined affiliates' shareholders
acquired approximately 65% of Gaming's outstanding voting shares, the merger
was accounted for as a reverse acquisition of Gaming by the Company, the
accounting acquiror in the transaction.
The total cost of the acquisition was $3,346,235, consisting of the purchase
price of $3,217,468, measured by the 1,608,734 common shares retained by
Gaming's shareholders at their fair value at the closing date of $2.00 per
share, plus transaction costs of $128,767.
Simultaneous with the acquisition, Gaming changed its name to Casino Journal
Publishing Group, Inc.
2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated balance sheet as of
September 30, 1998 includes the accounts of the Company and its subsidiaries
(including Gaming). The related accompanying unaudited condensed
consolidated statements of operations and cash flows include the results of
operations and cash flows of the Company and its subsidiaries, and of Gaming
for the period beginning April 3, 1998. The accompanying balance sheet as of
December 31, 1997 is that of Casino Journal Publishing Group, Inc. and its
combined affiliates. All significant intercompany transactions and balances
have been eliminated.
The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and
applicable SEC regulations. They do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for
the full year. The accompanying financial statements should be read in
conjunction with the Company's audited financial statements for the year
ended December 31, 1997.
3 - GOODWILL
Goodwill represents cost in excess of fair value of net assets acquired in
the merger transaction, and is being amortized over 15 years.
4 - DIRECT-RESPONSE ADVERTISING
The Company has capitalized the cost of a direct-response advertising
campaign for magazine subscriptions. The capitalized costs are amortized
over the period in which revenues from the campaign are earned. At September
30, 1998, $390,000 of direct-response advertising costs was included in
prepaid expenses.
5 - NOTE PAYABLE
The note payable of $100,000 is a demand note and requires monthly payments
of interest only, commencing May 1, 1998, at First Union National Bank's
prime rate plus 1%. Marketable securities owned by a shareholder are
collateral for the note.
6 - RELATED PARTY TRANSACTIONS
The Company rents two office facilities from shareholders. One facility is
occupied pursuant to a ten-year lease which began on September 1, 1997 and
requires annual rent payments of $120,000, and the other facility is occupied
pursuant to a five-year lease which began on January 1, 1996 and requires
annual rent payments of $18,000. Total related party rent expense was
$69,903 and $43,309 for the nine months ended September 30, 1998 and 1997,
respectively.
Loans receivable, shareholders and related parties include loans to the
majority shareholder of $489,537 at September 30, 1998. Also included are a
loan of $35,210 receivable from a member of a shareholder's family and a loan
of $111,787 receivable from a shareholder.
There was no interest income for the nine month periods ended September 30,
1998 and 1997.
<PAGE>8
7 - SALE OF COMMON STOCK
On August 9, 1998, the Company issued 200,000 shares of its common stock to
an unaffiliated party at $2.00 a share, pursuant to a private placement.
8 - COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
Comprehensive income is defined to include not only net income or loss, but
also the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. Total
comprehensive loss for the three months and nine months ended September 30,
1998, which includes the unrealized loss on investments for the periods, was
$(186,587) and $(218,772), respectively. There were no items of other
comprehensive income for the three months and nine months ended September 30,
1997, and the Company's total comprehensive income or loss is equal to its
net income or loss for those periods. Adoption of SFAS No. 130 has no impact
on net income or loss or shareholders' equity.
See accompanying notes to condensed consolidated financial statements.
<PAGE>9
Casino Journal Publishing Group, Inc.
PART I (cont.)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Trends and Uncertainties. Inasmuch as a major portion of the Company's
activities is the publishing of magazines and newsletters primarily for
the U.S. gaming industry and its consumers, the organization and sponsorship
of major trade shows and conventions for the gaming industry as well as
consumer gaming festivals for specific resorts or casinos, the publishing of
a mail order-catalog selling various gaming-related products, the
development and operation of a daily 900 number hotline information
service and providing consulting services, the Company's business operations
may be adversely affected by competitors and prolonged recessionary
periods.
In addition, the future exercise of any of the outstanding Warrants
is uncertain. The lack of future exercise of the Class A or Class B
Warrants could negatively impact the Company's ability to successfully
expand operations.
Capital and Source of Liquidity. On April 3, 1998, the Company and its
combined affiliates merged with Gaming Venture Corp., U.S.A., A Nevada
corporation ("Gaming"). The Company and its combined affiliates became
wholly-owned subsidiaries of Gaming, the legal acquiror. As the Company's
and its combined affiliates' shareholders acquired approximately 65% of
Gaming's outstanding voting shares, the merger was accounted for as a reverse
acquisition of Gaming by the Company, the accounting acquiror in the
transaction.
The total cost of the acquisition was $3,346,235, consisting of the purchase
price of $3,217,468, measure by the 1,608,734 common shares retained by the
Gaming's shareholders at their fair value at the closing date of $2.00 per
share, plus transaction costs of $128,767.
The Company rents two office facilities from a shareholders. One of them is
occupied pursuant to a ten-year lease which began on September 1, 1997 and
requires annual rent payments of $120,000. The Other is pursuant to a five-
year lease which began on January 1, 1996 and requires annual rental payments
of $18,000. Total related party rent expense was $69,903 and $4 for the
nine months ended September 30, 1998 and 1997, respectively. Other than the
leases, the Company has no material commitments for capital expenditures.
For the nine months ended September 30, 1998, the Company had an increase in
loan receivables from shareholders and related parties of $256,212 and a
decrease in loans receivable from employees of $6,661. The Company
purchased $68,181 worth of equipment, and received net proceeds from the sale
of marketable securities of $168,163. As a result, the Company had cash flow
used in investing activities of $485,895 for the nine months ended September
30, 1998.
For the nine months ended September 30, 1997, the Company had an decrease in
loan receivables from shareholders and related parties of $163,348 and an
increase in loans receivable from employees of $119,627. The Company
purchased $100,989 worth of equipment, and received net proceeds from the
sale of marketable securities of $4,356. As a result, the Company had cash
flow used in investing activities of $61,624 for the nine months ended
September 30, 1997.
For the nine months ended September 30, 1998, the Company had a net increase
in notes payable of $100,000. The Company made principal payments on loan
payable, automobile of $9,025. The Company made distributions of $62,350 to
the then sole stockholder for the nine months ended September 30, 1998 prior
to the merger and received proceeds of $656,605 from the issuance of its
common stock. As a result, the Company had net cash provided by financing
activities of $685,230 for the nine months ended September 30, 1998.
For the nine months ended September 30, 1997, the Company had an decrease in
notes payable of $65,659. The Company made principal payments on loan
payable, automobile of $11,287. The Company made distributions of $403,650
to the then sole stockholder for the nine months ended September 30, 1997 and
made distributions of $20,000 to minority interest. As a result, the
Company had net cash used in financing activities of $500,546 for the nine
months ended September 30, 1997.
Results of Operations. The Company had net income of $22,732 for the nine
months ended September 30, 1998. The Company received revenues of 6,911,693
which consisted of advertising revenue of $4,204,794, subscription revenue of
$1,389,657 and other revenues which consisted primarily of consulting fees
and tradeshow revenues of $1,317,241 and had direct costs of $3,463,251 for
the nine months ended September 30, 1998. General and administrative
expenses for the nine months ended September 30, 1998 were $3,445,011.
These consisted principally of payroll related costs $1,925,015, advertising
and promotion $334,161, postage $196,119, travel and entertainment of
$153,181, bad debts of $100,362 and other nonmaterial expenses of $736,174.
<PAGE>10
The Company had an increased in accounts receivable of $3m046. Inventories
decreased $5,610 for the nine months ended September 30, 1998 and prepaid
expenses increased substantially by $569,664 due primarily to capitalization
due to the costs associated with a direct mail marketing campaign. Deferred
revenue increased $263,267 from the sale of its magazine and newsletter
subscriptions. The Company had amortization and depreciation of $92,432 for
the nine months ended September 30, 1998. The Company had a decrease in
accounts payable of $77,573. Other assets decreased by $6,254 and income
taxes payable increased by $49,190 for the nine months ended September 30,
1998. Net cash used in operations for the nine months ended September 30,
1998 was $308,978.
The Company had net income of $174,352 for the nine months ended September
30, 1997. The Company received revenues of $5,093,904 which consisted of
advertising revenue of $3,171,763, subscription revenue of $1,186,339 and
other revenues which consisted primarily of trade show revenue of $735,802
and had direct costs of $2,840,208 for the nine months ended September 30,
1997. General and administrative expenses for the nine months ended
September 30, 1997 were $2,098,535. These consisted principally of payroll
related costs of $1,079,785, advertising and promotion of $526,428, bad debts
of $53,584, travel and entertainment of $142,857 and other nonmaterial
expenses of $526,428. The Company had an decrease in accounts receivable
of $142,857. Inventories decreased $3,627 for the nine months ended
September 30, 1997 and prepaid expenses increased by $3,462. Deferred
revenue increased $$168,202. The Company had amortization and depreciation
of $39,382 for the nine months ended September 30, 1997. The Company had a
decrease in accounts payable of $98,541. Other assets increased by $47,781
for the nine months ended September 30, 1997. Net cash provided by
operations for the nine months ended September 30, 1997 was $293,845.
The Company is seeking to lower its operating expenses while expanding
operations and increasing its customer base and operating revenues. The
Company is focusing on decreasing administrative costs. However,
increased marketing expenses will probably occur in future periods as the
Company attempts to further increase its marketing and sales efforts.
<PAGE>11
GAMING VENTURE CORP., U.S.A.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
None
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements 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.
Date: /s/ Alan Woinski
----------------------------
Alan Woinski, President
November 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,252,077
<SECURITIES> 55,810
<RECEIVABLES> 913,812
<ALLOWANCES> 0
<INVENTORY> 27,715
<CURRENT-ASSETS> 2,711,022
<PP&E> 261,012
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,966,486
<CURRENT-LIABILITIES> 2,232,253
<BONDS> 0
<COMMON> 4,964
0
0
<OTHER-SE> 3,344,986
<TOTAL-LIABILITY-AND-EQUITY> 5,966,486
<SALES> 6,911,693
<TOTAL-REVENUES> 6,911,693
<CGS> 3,463,251
<TOTAL-COSTS> 3,463,251
<OTHER-EXPENSES> 3,445,011
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,301
<INCOME-PRETAX> 28,732
<INCOME-TAX> 6,000
<INCOME-CONTINUING> 22,732
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,732
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
