<PAGE> 2
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] 15, ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]For the fiscal year ended:
10/31/96
OR
[ ] 15, 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: 33-79678
GAMING VENTURE CORP., U.S.A.
(Exact name of registrant as specified in 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)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Check whether the issuer (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 such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for at least the past 90 days. Yes __x__ No ____
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference to Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X].
The Corporation's revenues for its most recent fiscal year were $657,910.
As of October 31, 1997, nine market makers maintained bids in the Company's
securities. The current market value of the registrant's voting $.001 par
value common stock held by non-affiliates of the Registrant is approximately
$2,400,000.
The number of shares outstanding of registrant's only class of common stock,
as of October 31, 1997 was 1,608,734 and at December 31, 1997 was 1,616,734
shares of its $.001 par value common stock. No documents are incorporated
into the text by reference. Transitional Small Business Disclosure Format
(check one): Yes No x
--------- ---------
Exhibit Index is located on Page 23.
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS (A) BUSINESS DEVELOPMENT. The
Company
was incorporated in Nevada on June 1, 1995. The Company is authorized to
issue Fifty Million (50,000,000) Common Shares, $.001 par value. The Board
of Directors of the Company have authorized a dividend distribution of 100,000
"A" Warrants on a pro rata basis to the shareholders of record as of June 4,
1995. The "A" Warrants shall be exercisable for a period of two years from
issuance. The "A" Warrants shall be exercisable into Common Shares of the
Company at the exercise price of $4.00 per Common Share. The Board of
Directors of the Company have also authorized a dividend distribution of
100,000 "B" Warrants on a pro rata basis to the shareholders of record as of
June 4, 1995. The "B" Warrants shall be exercisable for a period of two
years from issuance. The "B" Warrants shall be exercisable into Common
Shares of the Company at the exercise price of $6.00 per Common Share. There
are currently 64,333 Class "A" Warrants and 94,333 Class "B" Warrants issued
and outstanding. In May of 1997, the "A" and "B" Warrants were extended for
two years to expire on June 4, 1999
BUSINESS OBJECTIVE. The operations and objectives of the Company are to
provide a daily 900 number hotline information service, weekly and daily
newsletter regarding all aspects of the gaming industry. The Company also
provides a daily newsletter regarding all aspects of the Lodging Industry.
The Company also provides consulting services. The consulting services shall
include information services described above, consulting regarding day to day
operations of gaming enterprises and consulting regarding investor relations
and corporate communications for gaming enterprises.
No independent organization has conducted market research providing management
with independent assurance from which to estimate potential demand for the
Company's business operations. Even in the event market demand is
independently identified, there is no assurance the Company will be
successful.
EMPLOYEES. As of the date of this Prospectus, the Company has three full
time employees (the Company's current officers) and one part time employees.
The officers conduct all of the business of the Company. See "Risk
Factors."
The Company will, as operations demand, sub-contract the balance of its
personnel through independent contractors or hire additional employees.
SUBSIDIARY. Gaming Venture's West, a subsidiary of the Company was formed on
August 1st, 1997 to provide Public Relations and Advertising services to the
entertainment industry. The Subsidiary also operates a Celebrity Speakers
Bureau. Public Relations and Advertising Fees range from $300 to $5,000 per
month. The Celebrity Speakers Bureau receives between 20% and 30% of all
bookings.
DISTRIBUTION. During June, 1995, the Company entered into a consulting
agreement with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the Company in
its capitalization and the obtainment of additional financing. To date, Pratt
has provided consulting services to the Company regarding capital structuring,
initial equity financing, and preparation of a registration statement.
As partial payment for consulting services, the Company issued 250,000 of its
Common Shares to Pratt, of which 65,000 Common Shares were registered and
distributed to Pratt shareholders and 65,000 Common Shares to a nominee of
Pratt. In addition, Pratt received total cash compensation of $60,000.
Pratt and the Company believed that the distribution to Pratt's shareholders,
which resulted in an increased shareholder base of the Company, will be an
advantage to the Company at such time as the Company may require additional
capital and/or make application to NASDAQ. As a result, the Company paid for
the registration costs of the distribution along with the registration of
common stock on behalf of selling shareholders.
COMPETITION. There is significant competition in the gaming industry. The
Company will be competing with established companies and other entities (many
of which may possess substantially greater resources than the Company).
Almost all of the companies with which the Company competes are substantially
larger, have more substantial histories, backgrounds, experience and records
of successful operations, greater financial, technical, marketing and other
resources, more employees and more extensive facilities than the Company now
has, or will have in the foreseeable future. It is also likely that other
competitors will emerge in the near future. There is no assurance that the
Company will continue to compete successfully with other established gaming
news enterprises. The Company shall compete on the basis of quality and on
public taste in addition to a price basis. Inability to compete successfully
might result in increased costs, reduced yields and additional risks to the
investors herein.
BUSINESS DEVELOPMENT COMPANY. As the Company obtains equity interests in
gaming companies who desire to become public, the Company may become subject
to the provisions of the Investment Company Act of 1940. Due to the letter
of intent to acquire Casino Journal Publishing Group, the Company does not
expect that the business of obtaining equity interests in gaming companies who
desire to go public will be a material part of the Company's future business.
<PAGE>4
It is possible that the Company may choose to elect to be treated as a
Business Development Company ("BDC") pursuant to Section 54 of the
Investment Company Act of 1940 (the "1940 Act"). On October 21, 1980, the
1940 Act was amended by a series of amendments which added sections 59
through 65. These sections comprise the Small Business Investment
Incentive Act of 1980 (the "SMIIA"). For purposes of the SMIIA, a business
development company is defined as a domestic closed-end company which is
operated for the purpose of making certain types of investments and which
makes available significant managerial assistance to the companies in which
it invests. Generally, a company which elects to be treated as a business
development company, or intends within 90 days to so elect, is exempt from
certain provisions of sections 1 through 53 of the 1940 Act.
To take advantage of these special regulatory provisions, a BDC must comply
with sections 59 through 65 of the 1940 Act, which require, among other
things, that:
a. a majority of the BDC's directors must not be "interested persons"
as defined in section 2(a)(19) of the 1940 Act;
b. A BDC is restricted in the kind of investments it can make, i.e.,
at least seventy percent of the BDC's assets (excluding assets necessary to
maintain the business, such as office furniture) must consist of securities of
small, developing business or financially troubled businesses and such liquid
assets as cash or cash items, Government securities or short-term, high
quality debt securities;
c. A BDC must annually furnish to its shareholders a statement, in
such form and manner as the Securities and Exchange Commission may prescribe,
about the risks involved in investing in a BDC due to the nature of its
portfolio, and;
d. A BDC must have a class of equity securities registered under the
1934 Act or have filed a registration statement under that section and must
comply with the periodic reporting requirements under the 1934 Act, including
annual reports, quarterly reports and reports of certain material changes,
rather than with those in section 30 of the 1940 Act.
SEASONAL NATURE OF BUSINESS ACTIVITIES. The Company's business
activities
are not seasonal.
(B) BUSINESS OF ISSUER.
GENERAL. The Company provides the following products and services.
Information Center: The Company's Information Center division covers
all types of gaming. Information concerning all aspects of the gaming
industry shall be provided, including riverboat and land based gambling,
lotteries, paramutuals, charitable gaming and Indian gaming. The Company
shall also provide very limited information on Internet gaming which is
currently unregulated. The Company provides The Gaming Industry Daily Report
Hotline, a 900 number hotline at $.95 per minute with the average length of
the call being 4.5 minutes. The Gaming Industry Daily Report has four
selections which include a daily update, a weekly update, a model portfolio
and CEO interviews. The Company also distributes The Gaming Industry Weekly
Report, which includes news, editorial commentary, insider transactions and a
rumor section. The Gaming Industry Weekly Report charges $75 for 13 weeks
and $250 for 52 weeks by mail. The fax subscription is $125 for 13 weeks and
$400 for 52 weeks. There is also a combination plan where a subscriber
receives the weekly report and the hotline without any 900# charges for $99
per month, payable three months in advance. The subscriber dials a toll
number and enters a code to hear The Gaming Industry Daily Report.
In September, 1995, the Company launched the Gaming Industry Daily Report
newsletter that is only available by E-mail or fax. The subscription price
is $79 for 13 weeks and $270 for 52 weeks. The Company also offers a
combination plan for both Daily and Weekly newsletter for $169 for 13 weeks
and $530 for a year subscription.
In October of 1997, the Company launched The Daily Lodging Report in a
joint venture with HVS International and Hotels Magazine. The newsletter
is only available by E-mail or fax. The subscription price is $210 for 6
months and $350 for 12 months by fax and $175 for 6 months and $295 for 12
months by E-mail. A combo plan is offered by the joint venture where you
can receive both The Daily Lodging Report and The Gaming Industry Daily
Report by e-mail or fax for $350 for 6 months and $595 for 12 months.
Mr. Woinski is the only principal who has experience in preparing published
reports relating to the gaming industry ( since March, 1993).
The Company intends to expand the information center to include daily fax
updates on the events in the industry and in the financial markets, a wire
service to disseminate the information to the uniformed public and joint
ventures with other industry publications. The Company has expanded its
Information Center with the launching of Gaming Stock Investor Forum on its
web site at http://gamingven.com. The Company intends to expand this in the
future to become a Central Information Center for the gaming industry
including a wire service, corporate profiles and provide 24 hour information
on the gaming industry. The Forum is free to the public and is being
frequented by people all over the world.
There is currently very limited information available regarding the gaming
industry. The Company's information services are targeted at industry
personnel plus consumers of and investors in the industry. The Company
targets areas that have legalized casinos since that is where most of the
<PAGE>5
employees and management reside and work. These areas include Nevada,
Mississippi, Iowa, New Jersey, Missouri, Minnesota, Louisiana, Colorado,
Indiana and Connecticut. Additionally, the Company targets states where
Indian casinos are located and in Canada. The Company will target Mexico
and other South America countries as legalization of casinos occurs in those
areas.
The information provided by the Company includes reporting and analysis of
news releases by gaming companies, Dow Jones Federal Filings new reports and
reports on political decisions affecting the gaming industry and employee
changes in the industry. Dow Jones Federal Filings is a service of Dow Jones
and Co. It includes excerpts from Form 10-Ks, 10-Qs,, and 8-Ks filed by
reporting companies. It also lists insider transactions as they are reported
to the Securities and Exchange Commission. The Company uses these services
from Dow Jones, company press releases, newspaper articles from around the
world and management's contacts in the industry to summarize and disseminate
information to investors and industry personnel who do not have the time,
access to, or desire to get the information themselves.
Consulting Services: The Company provides consulting services to
companies who are involved in all types of gaming and leisure activities.
These services include overseeing operations, public relations, investor
relations, and acting as liaisons in joint ventures, financing, lease
negotiations, etc. The Company's fees for its consulting services range
from $1,000 per month to $20,000 per month depending on the duties to be
performed. The majority of this business has developed directly from
subscribers to The Gaming Industry Weekly Report as well as Mr.
Woinski's public speaking engagements and various articles about and by
Mr. Woinski in trade publications. From December 1992 to August 1995,
Mr. Woinski was President of Lucky Management Corp, an investment advisory
firm which also held interests in other businesses including printing,
real estate, etc. Mr. Woinski served as an advisor for the Monitrend Gaming
and Leisure Mutual Fund from October 1993 to December 1994 and was
Portfolio Manager of the High Rollers Investment Partnership from
December 1992 to October 1993. Mrs. Woinski was Vice President of
Lucky Management Corp., an investment advisory firm which also held
interests in other businesses including printing, real estate, etc. from
December 1992 to August 1995. The Company shall target the same areas
described above under "Information Center".
On December 20, 1995, the Company entered into a consulting agreement with
Players Network, a Nevada corporation. The Company agreed to assist Players
Network in any requested aspects of fund-raising and operations. Players
paid the Company a one time equity fee of 120,000 common shares plus 24,000
2-year warrants to purchase common shares of Players at $2.50 per common
share. On April 1, 1997, the term of the Agreement was extended to July 2,
1998. The Company received an additional 80,000 Common Shares of Players
Network and $15,000 in cash compensation at the time of the extension.
On July 8, 1996, the Company entered into a consulting agreement with
Casinovations Incorporated, a Washington corporation. The Company agreed to
assist Casinovations Incorporated in any requested aspects of fund-raising and
operations. Casinovations paid the Company a one time equity fee of 100,000
common shares and options to purchase 50,000 Common Shares at the option price
of $1.50 per Common Share. The option period is two years. On
February
1, 1997, the term of the Agreement was extended to July 7, 1998. The Company
received an additional cash fee of $45,000 at the time of the extension. On
February 1, 1997, the term of the agreement was extended to July 7, 1998. The
Company received an additional 100,000 common shares and options to purchase
50,000 shares at $1.50 plus an additional cash fee of $45,000 at the time of
the extensions. The options were later changed to warrants. The Company
sold the 100,000 warrants to unrelated parties in September for $100.
Mr. Woinski writes the newsletter and gathers the information for the
newsletter. Mr. Woinski will perform most of the actual consulting
services. Mrs. Woinski is in charge of customer relations, in house
accounting and marketing of the Company's newsletter and other
services.
The following is a summary of segment information for the period ended October
31, 1996 and for the year ended October 31, 1997:
<TABLE>
<CAPTION>
For year For year
ended ended
10/31/97 10/31/96
<S> <C> <C>
1997 1996
Sales to unaffiliated customers:
Subscription sales $ 115,000 $ 91,770
Consulting fees 530,490 259,422
Hotline income 2,870 5,335
Booking agent services 9,550 -
$ 657,910 $ 356,527
<PAGE>6
Income from operations:
Subscription sales $ 115,000 $ 91,770
Consulting fees 530,490 259,422
Hotline income 2,870 5,335
Booking agent services 9,550 -
Other income 49,622 66,744
General corporate expenses (335,323) (186,375)
$ 372,209 $236,896
Identifiable assets:
General corporate $ 1,753,554 $1,260,719
Capital expenditures:
General corporate $ 10,901 $ 8,278
Depreciation:
General corporate $ 4,629 $ 2,711
Amortization:
General corporate $ 638 $ 638
Income from operations represents the net sales from each segment, and
excludes general corporate expenses and other income of a general corporate
nature. General corporate assets consist principally of cash and securities.
During the year ended October 31, 1997 consulting fees received from Players
Network and Casinovations amounted to $90,000 and $112,500, respectively.
These fees represented 14.2% and 17.8% of total revenue, respectively..
During the year ended October 31, 1996 consulting fees received from Players
Network and Casinovations amounted to $90,000 and $37,500, respectively. These
fees represented 25.2% and 10.5% of total revenue, respectively..
LETTER OF INTENT. On October 6, 1997, the Company entered into a letter of
intent to acquire Casino Journal Publishing Group ("CASINO"). Pursuant to the
letter of intent, the Company would acquire all of the outstanding Common
Shares of Casino and issue a total of three million shares of the Company
along with 80,000 options to purchase additional Common Shares of the Company
at the price of $3 5/16 per Common Share.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns no real property and leases all of its facilities. The
Company's executive offices are located at 400 Park Place, #2C, Fort Lee, New
Jersey 07024 and its mailing address is 177 Main Street, Suite 312, Fort Lee,
New Jersey 07024. Telephone No. (201) 947 - 4642. These offices consist of
1,300 square feet on a five year lease commencing November 1, 1995 for $1,500
per month.
Gaming Venture's West leases 285 square feet at 3885 South Decatur
Blvd., Suite 3001, Las Vegas, Nevada at $375 per month on a three year lease expiring
August 31, 1999.
ITEM 3. LEGAL PROCEEDINGS
The Company knows of no material pending or threatened legal proceedings to
which the Company and its subsidiary is a party or of which any of its
properties is subject, and no such proceedings are known to the Company to be
contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended October 31, 1997, no
matters were submitted to a vote of the Company's security holders,
through the solicitation of proxies.
<PAGE>7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded on the OTC Bulletin Board under the
symbol "GVCU".
The following table sets forth the range of high and low bid quotations for
the Company's common stock for each quarter of the last two fiscal years, as
reported by the OTC Bulletin Board. The Company's market makers are Olsen
Payne, Nash Weiss, Wein Securities,
Hill Thompson, Wilson Davis, Paragon, Sharpe Capital, Knight Securities,
Troster Singer and Frankel. The quotations represent inter-dealer prices
without retail
markup, markdown or commission, and may not necessarily represent actual
transactions.
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended High Bid Low Bid
<S> <C> <C>
1/31/96 * *
4/30/96 * *
7/31/96 3 5/8 2 7/8
10/31/96 4 1/2 3 1/8
1/31/97 5 11/16 2 7/8
4/30/97 4 2
7/31/97 2 3 5/16
10/31/97 3 4 3/8
</TABLE>
The Company's common stock commenced trading on the over-the-counter market in
July, 1996. Prior to that time, there was no market for the securities of
the Company.
Holders. The approximate number of holders of record of the Company's
$.001 par value common stock, as of October 31, 1997, was 905. Currently, as
of January 15, 1998, there are 905 holders of record.
Dividends. Holders of the Company's common stock are entitled to receive
such dividends as may be declared by its Board of Directors. Other than the
distribution of warrants pursuant to the "Joint Action by Unanimous Consent of
the Board of Directors and Shareholders" dated March 25, 1994, since inception
no dividends on the Company's common stock have ever been paid, and the
Company does not anticipate that dividends will be paid on its common stock in
the foreseeable future.
ITEM 6. 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 development and operation of a daily 900 number hotline
information service, a daily and a weekly newsletter regarding the gaming
industry, a daily newspaper regarding the lodging industry 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 based on the current financial condition of the Company. The lack
of future exercise of the Class A or Class B Warrants would negatively impact
the Company's ability to successfully expand operations.
During the year ended October 31, 1997 consulting fees were earned from
Casinovations ($45,000), Players Network ($15,000) Europa Cruises
($30,620), Game Financial Corp. ($12,000), Royal Casino Group, Inc.
($37,500), Vodavi Technology ($24,000), American Wagering, Inc. ($32,060) and
New Horizon Kids Quest ($26,400). Consulting fees also included Casino
Resource Corp. ($17,500) and Chancellor Corp. ($5,250) Public Relations fees
for Gaming Venture's West included Players Network ($4500), Jeff Kutash
Productions ($2,000), Europa Cruises ($3,000). Celebrity Speaking fees
totaled $9,550. There can be no certainty that this limited number of
consulting service customers will continue to utilize the Company's services
or that the Company can replace or add to these consulting customers.
During the period ended October 31, 1995 consulting fees were received from
Europa Cruises, Champps Entertainment and Game Financial Corp. amounted to
$12,205, $4,000 and $4,000 respectively.
Loan Collateralized by Related Party. On July 11, 1997, the Company placed
$200,000 in a 200 day Certificate of Deposit with Bank West located at 3500
West Sahara Avenue in Las Vegas, Nevada. Bank West lent Casinovations, Inc.
up to the full amount of the Company's Collateral and charged Casinovations,
Inc. an interest rate which is the rate of the CD plus 2%.
<PAGE>8
Casinovations, Inc. agreed to pay the Company a payment equal to 8.5% of the
total amount when Casinovations, Inc,. pays off the principal of the loan to
Bank West. The payment will be 8.5% of the principal of $200,000 or a total
of $17,000. If Casinovations, Inc. is unable to pay off the loan balance
after the 200 day period, half of the $17,000 payment must be paid to the
Company. The Company will then have the option of renewing and allowing
Casinovations, Inc. to continue with the loan or convert the principal
balance of the loan into Casinovations, Inc.'s common stock with registration
rights. If the Company elects to renew the Collateral, the same terms from
the first 200 day period will be in effect including a full 8.5% of the
principal being due when the loan is repaid. The $8,500 which is due after
the first 200 day period will not be deducted from the 8.5% due when the loan
is repaid if the CD is rolled over for another 200 day period.
Capital and Source of Liquidity. The Company signed a lease to rent 700
square feet of office space through December 31, 2000. The Company exercised
its option to rent an additional six hundred square feet of space commencing
November 1, 1995. Total lease payments per month increased from $700 per
month to $1,500. This may have a negative impact on the cash flow of the
Company. The landlord is Lucky Management Corp. Other than the lease, the
Company has no material commitments for capital expenditures.
For the year ended October 31, 1996, the Company had a decrease of a note
receivable of $18,000. The Company advanced an unrelated entity $18,000 in
exchange for a profit sharing arrangement with two of the entity's retail
locations in New York City. The financing was provided interest free for the
months of November and December, 1996 in return for the following profit
participation: On the first $10,000 of net pre-tax cash flows from these
locations, the Company will receive $10,000. On the next $10,000 of net
pre-tax cash flows, the Company will receive $5,000. On the next $10,000 of
net pre-tax cash flows, the Company will receive $4,000. On the fourth
$10,000 of net pre-tax cash flows, the Company will receive $3,000 and on any
net pre-tax cash flows above $40,000, the Company will receive 20% of the
excess. In the event that the profit participation arrangement is in
sufficient to repay the $18,000 investment, it will convert into a loan
arrangement as follows: If the Company has received at least $20,000 of net
pre-tax cash flows, no additional payment will be due. In the event that
less than $20,000 has been received, the Company will permit the borrower
until February 28, 1997 to repay the difference between $15,000 and whatever
payment has been made to the Company from net pre-tax cash. This note was
completely repaid during the year ended October 31, 1997.
The note receivable described above was paid back in the year ended October
31, 1997. For the year ended October 31, 1997, the Company received $16,185
from the sale of securities. The Company acquired securities valued at
$28,438 and property and equipment of $10,901. As a result, the Company had
net cash used in investing activities of $5,154.
For the year ended October 31, 1996, the Company received proceeds from the
sale of marketable securities of $54,129 and acquired securities valued at
$56,941. The Company also acquired property and equipment of $8,278. As a
result, the Company had net cash used in investing activities of $29,090 for
the year ended October 31, 1996.
For the year ended October 31, 1997, the Company made payments to related
parties of $515.. The Company issued common stock for cash of $170,000 and
acquired treasury stock valued at $71,496. As a result, the Company had net
cash provided by financing activities of $97,989.
For the year ended October 31, 1996, the Company pursued no financing
activities.
On a long term basis, liquidity is dependent on increased revenues from
operations, additional infusions of capital and debt financing. The Company
believes that additional capital and debt financing in the short term
will allow the Company to increase its marketing and sales efforts and
thereafter result in increased revenue and greater liquidity in the long term.
However, there can be no assurance that the Company will be able to obtain
additional equity or debt financing in the future, if at all.
Results of Operations.
The Company had net operating income of $338,622 for the year ended October
31, 1997. General and administrative expenses for the year ended
October 31, 1997 were $316,277 and related party general and administrative
expenses of $19,046. These consisted principally of officer's salaries
of $99,627, rent of $18,324, telephone of $20,390 and other general
and administrative expenses of $177,936. The Company had a decrease in
accounts receivable of $7,004. Deferred revenue increased $23,767 from the
sale of its newsletter subscriptions and prepaid consulting revenue. The
Company
acquired common stock and options as non-cash consideration valued at $270,000
as partial payment of its consulting services. The Company realized gain on
the sale of securities of $4,685 and had amortization and depreciation of
$4,628 and $638 for the year ended October 31, 1997. The Company had an
increase in prepaid expenses and accounts payable of $43,082. Net cash
provided by operations for the year ended October 31, 1997 was $143,166.
<PAGE>9
The Company had net operating income of $236,896 for the year ended October
31, 1996. General and administrative expenses for the year ended
October 31, 1996 were $186,375 and consisted principally of officer's salaries
of $92,750, rent of $18,312, telephone of $13,556 and miscellaneous general
and administrative expenses of $61,757. The Company had an increase in
accounts receivable of $27,470 due to increased operations. Deferred
revenue increased $228,302 from the sale of its newsletter subscriptions and
prepaid consulting revenue. The Company acquired common stock and options as
non-cash consideration valued at $330,000 as partial payment of its consulting
services. The Company realized gain on the sale of securities of $27,440 and
had amortization and depreciation of $638 and $2,711 for the year ended
October 31, 1996. The Company had an increase in prepaid expenses of $2,390
due to increased operations and had a slight increase in accounts payable of
$422. Net cash provided by operations for the year ended October 31, 1996
was $81,669.
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.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements The response to this item is being submitted as a
separate section of this report beginning on page 25.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Neither during the twenty-four months prior to the date of the Company's
financial statements included herein nor in any subsequent period
thereafter
did the Company file a Form 8-K with the Securities and Exchange Commission
reporting a change of accountants involving a disagreement of any matter of
accounting principles or practices of financial statement disclosure.
<PAGE>10
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors and Executive Officers of the Company. The
following table sets forth the names and ages of all directors and executive
officers of the Company and all persons nominated or chosen to become
a
director, indicating all positions and offices with the Company held by each
such person and the period during which he has served as a director:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Alan Woinski, age 33 President Inception to
and Director present
Kim Santangelo-Woinski, Vice President, Secretary, Inception to
age 34 Treasurer and Director present
Louis Dachis, age 28 Director Inception to present
Bruce Merrin, age 52 Vice President August 1, 1997 to present
Pat Cruzen, age 50 Director 1997 to present
Jean Regan, age 40 Director 1997 to present
</TABLE>
Alan Woinski - Mr. Woinski is currently President and a Director of the
Company. Mr. Woinski founded The Gaming Industry Daily Report in March, 1993
and has been its editor since August 1993. Mr. Woinski was Vice President of
A & E Printing, Inc. from January 1988 to December 1994. From January 1995 to
July, 1996, Mr. Woinski was President of A & E Printing, Inc., a commercial
printing company. As Vice-President, Mr. Woinski was in charge of sales,
marketing and production. As president, Mr. Woinski's duties were expanded to
hiring and firing personnel, inventory control and overseeing all operations
of the company. From December 1992 to August 1995, Mr. Woinski was also
President of Lucky Management Corp, an investment advisory firm which also
held interests in other businesses including printing, real estate, etc. As
president, Mr. Woinski handled all investment advisory accounts including
being the advisor to the Monitrend Gaming and Leisure fund. Mr. Woinski
served as an advisor for the Monitrend Gaming and Leisure Mutual Fund from
October 1993 to December 1994 and was Portfolio Manager of the High Rollers
Investment Partnership from December 1992 to October 1993. Duties as advisor
and portfolio manager included updates on the gaming industry including trend
analysis, technical analysis on securities on companies in the gaming
industry, buy and sell recommendations, etc. Mr. Woinski graduated from
Hofstra University in 1986.
Kim Santangelo-Woinski - Mrs. Woinski is currently Vice President,
Secretary/Treasurer and a Director of the Company. Mrs. Woinski was Vice
President of Lucky Management Corp., an investment advisory firm which also
held interests in other businesses including printing, real estate, etc. from
December 1992 to August 1995. Mrs. Woinski was vice president in charge of
all in-house accounting and customer relations as well as running the entire
office including ordering supplies, equipment, etc. From January 1992 to
January 1994, Mrs. Woinski worked as operations manager/personal assistant to
the President of Tee Dee's, Inc., a women's clothing store. Mrs. Woinski's
duties included office management and personnel supervision. From 1990 to
1992, Mrs. Woinski was beverage manager of Waypointe, Inc., and served as
beverage manager of Treadway Inn Hotel from 1989 to 1991. Her duties as
beverage manager included hiring staff, inventory and overseeing and filing
reports for the parent company.
Louis Dachis - Mr. Dachis is currently a Director of the Company. Mr. Dachis
was self-employed as a freelance graphic artist from May 1991 to February
1994. From April 1994 to the present, Mr. Dachis has been the marketing
director for Game Financial Corporation, a credit card cash machine company.
In August 1996, he became vice president of Marketing for Game Financial
Corporation. Mr. Dachis is in charge of marketing and investor relations for
the company. Mr. Dachis attended the California Institute of The Arts from
1989 to 1993.
Bruce Merrin. Mr. Merrin is currently an officer of the Company. Mr. Merrin
founded a public relations firm, Bruce Merrin Public Relations and Celebrity
Speakers & Entertainment in 1974. For the past twenty four years, Mr. Merrin's
firm has represented a myriad of entertainment, hotel & resort, business and
sports and literary clients. Mr. Merrin obtained a Fine Arts Degree in Theater
Arts/Motion Pictures from UCLA in 1970.
<PAGE>11
Pat Cruzen - Mr. Cruzen is presently President of Cruzen & Associates, a
casino consulting and marketing firm. Prior to this Mr. Cruzen was
President and Chief Operating Officer of Grand Casinos. Prior to this he
was head of marketing for MGM Grand Hotel and Casino. He has also held
various upper level position with other casino companies in Nevada. Mr.
Cruzen earned a B.S. in Accounting and is a Certified Public Accountant.
He is 50 years old.
Jean Regan - Ms. Regan is presently Executive Vice-President with New
Horizon Kids Quest, a provider of day care facilities to casino companies.
She is also a vice-president with Cruzen & Associates. Prior to this she
was an executive recruiter for top level executives for the gaming industry
with HVS Executive Search. Prior to this she was in the marketing and
promotions department of the Trump Organization. She is 39 years old.
Note - Due to a change in the policy of the firm in which he is employed
regarding outside directorships, Mr. Lawrence Zipkin, who had been a director
since inception, resigned his position of Director in the fourth quarter of
1995. Mr. Zipkin also returned to treasury all of his common shares,
warrants and options previously issued by the Company.
CONFLICTS OF INTEREST POLICY. The Company has adopted a policy that any
transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only be
on terms consistent with industry standards and approved by a majority of the
disinterested directors of the Company's Board of Directors. The Board of
Directors resolved that the Bylaws of the Company shall be amended to provide
that no such transactions by the Company shall be either void or voidable
solely because of such relationship or interest of directors or officers or
solely because such directors are present at the meeting of the Board of
Directors of the Company or a committee thereof which approves such
transactions, or solely because their votes are counted for such purpose if:
(i) the fact of such common directorship or financial interest is disclosed or
known by the Board of Directors or committee and noted in the minutes, and the
Board or committee authorizes, approves or ratifies the contract or
transaction in good faith by a vote for that purpose without counting the vote
or votes of such interested directors; or (ii) the fact of such common
directorship or financial interest is disclosed to or known by the
shareholders entitled to vote and they approve or ratify the contract or
transaction in good faith by a majority vote or written consent of
shareholders holding a majority of the Common Shares entitled to vote (the
votes of the common or interested directors or officers shall be counted in
any such vote of shareholders), or (iii) the contract or transaction is fair
and reasonable to the Company at the time it is authorized or approved. In
addition, interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors of the Company or a committee
thereof which approves such transactions.
INDEMNIFICATION. The Corporation shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Nevada, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation,
or served any other enterprise as director, officer or employee at the request
of the Corporation. The Board of Directors, in its discretion, shall have the
power on behalf of the Corporation to indemnify any person, other than a
director or officer, made a party to any action, suit or proceeding by reason
of the fact that he/she is or was an employee of the Corporation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Corporation,
the Corporation has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Corporation of expenses incurred or paid by a director, officer or controlling
person of the Corporation in the successful defense of any action, suit or
proceedings) is asserted by such director, officer, or controlling person in
connection with any securities being registered, the Corporation will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE
CORPORATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY THE
SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE
UNENFORCEABLE.
ITEM 10. EXECUTIVE COMPENSATION During fiscal 1997, and as of the date
of filing this report, only cash compensation has been paid. Mr. Woinksi
was paid $65,550 as an officer of the Company., Kim Santangelo-Woinski was
paid $26,000 as an officer of the
Company. and Bruce Merrin was paid $18,076 as an officer of Gaming Venture
Corp. and President of Gaming Venture's West. Bruce was also paid a $20,000
compensation signing bonus on August 1, 1997. There been not been any
compensation arrangements or plans, other
than what has been indicated below.
<PAGE>12
The Company has not entered into Employment Agreements with any of its
officers except for Bruce Merrin. Pursuant to his employment agreement
effective August 1, 1997, Mr. Merrin shall receive a salary of $30,000. Mr.
Merrin shall receive a total of 15,000 Common Shares of the Company over the
next three quarters ended July 31, 1998. The agreement has a term of one year.
Pursuant to the Agreement Mr. Merrin agreed that, during the period of his
contract and for a further period of Two (2) years after leaving the employ
of the Company, he will not, directly or indirectly, engage in the
production, manufacture, or distribution of any products similar to or
competitive with, those manufactured or sold by the Company, either for his
own benefit or for the benefit of any other person, firm or Company whatsoever
other than the Company.
Additionally, during the Employment Term and for a period of Two (2) years
thereafter, Mr. Merrin shall not (a)(i) compete with Company in defined
Territory in the conduct of its business or in the conduct of any other
business carried on by Company or (ii) engage or participate, directly or
indirectly, in any business or businesses substantially similar to the
business as conducted by Company as at the time of this agreement or as may
thereafter be conducted by Company at any time during the Employment Term (b)
solicit or cause to be solicited within or without the Territory any customers
of Company or (c) recruit or cause any other person to recruit any employee of
Company to any of said business or businesses.
The Board of Directors and shareholders have approved a Non-Statutory Stock
Option Plan to attract and retain persons of experience and ability and whose
services are considered valuable and to encourage the sense of proprietorship
in such persons and to stimulate the active interest of such persons in the
development and success of the Corporation.
1. Persons Eligible to Participate in Non-Statutory Stock Option Plan.
The persons eligible for participation in the Plan as recipients of
Non-statutory Stock Options ("NSOs") shall include full-time and part-time
employees (as determined by the Committee) and officers of the Company or of
an Affiliated Corporation. In addition, directors of the Company or any
Affiliated Corporation who are not employees of the Company or an Affiliated
Corporation and any attorney, consultant or other adviser to the Company or
any Affiliated Corporation shall be eligible to participate in the Plan. For
all purposes of the Plan, any director who is not also a common law employee
and is granted an option under the Plan shall be considered an "employee"
until the effective date of the director's resignation or removal from the
Board of Directors, including removal due to death or disability. The
Committee shall have full power to designate, from among eligible individuals,
the persons to whom NSOs may be granted. A person who has been granted an NSO
may be granted an additional NSO or NSOs, if the Committee shall so determine.
The granting of an NSO shall not be construed as a contract of employment or
as entitling the recipient thereof to any rights of continued employment.
2. Stock Reserved for the Plan. Subject to adjustment, a total of
750,000 shares of Common Stock, $.001 par value per share ("Stock"), of the
Company shall be subject to the Plan. The Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company or any Affiliated Corporation, and such amount of shares shall be
and is hereby reserved for sale for such purpose. Any of such shares which
may remain unsold and which are not subject to outstanding NSOs at the
termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan, the Company shall at all times
reserve a sufficient number of shares to meet the requirements of the Plan.
Should any NSO expire or be canceled prior to its exercise in full, the
unexercised shares theretofore subject to such NSO may again be subjected to
an NSO under the Plan.
3. Option Price. The purchase price of each share of Stock placed under
NSO shall not be less than Eighty Five percent (85%) of the fair market value
of such share on the date the NSO is granted. The fair market value of a
share on a particular date shall be deemed to be the average of either (i) the
highest and lowest prices at which shares were sold on the date of grant, if
traded on a national securities exchange, (ii) the high and low prices
reported in the consolidated reporting system, if traded on a "last sale
reported" system, such as NASDAQ, for over the counter securities, or (iii)
the high bid and high asked price for other over-the-counter securities. If
no transactions in the Stock occur on the date of grant, the fair market value
shall be determined as of the next earliest day for which reports or
quotations are available. If the common shares are not then quoted on any
exchange or in any quotation medium at the time the option is granted, then
the Board of Directors or Committee will use its discretion in selecting a
good faith value believed to represent fair market value based on factors then
known to them. The cash proceeds from the sale of Stock are to be added to
the general funds of the Company.
4. Exercise Period. (a) The NSO exercise period shall be a term of
not more than ten (10) years from the date of granting of each NSO and shall
automatically terminate:
(i) Upon termination of the optionee's employment with the Company
for cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason other
than death, without cause; provided, that if the optionee dies within such
nine-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of
death of the optionee.
<PAGE>13
(b) "Employment with the Company" as used in the Plan shall include
employment with any Affiliated Corporation, and NSOs granted under the Plan
shall not be affected by an employee's transfer of employment among the
Company and any Parent or Subsidiary thereof. An optionee's employment with
the Company shall not be deemed interrupted or terminated by a bona fide leave
of absence (such as sabbatical leave or employment by the Government) duly
approved, military leave or sick leave.
The following options and warrants are currently issued to officers and
directors of the Company.
Alan Woinski 10,000 options to purchase Common Shares at $.01.
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Kim Woinski 10,000 options to purchase Common Shares at $.01.
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Louis Dachis 10,000 options to purchase Common Shares at $.01
Expiration date is June, 1998
15,000 options to purchase Common Shares at $1.50
Expiration date is July, 1999
5,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Bruce Merrin 10,000 options to purchase Common Shares at $2.50
Expiration date is June 3, 2000
Pat Cruzen 10,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Jean Regan 10,000 options to purchase Common Shares at $4.50
Expiration date is January 7, 2000
Louis Dachis 667 "A" Warrants, exercisable into Common Shares at
$4.00 per Common Share
Expiration date is June 1999
667 "B" Warrants, exercisable into Common Shares at
$6.00 per Common Share
Expiration date is June 1999
Board of Directors Compensation. Members of the Board of Directors may
receive an amount yet to be determined annually for their participation and
will be required to attend a minimum of four meetings per fiscal year. All
expenses for meeting attendance or out of pocket expenses connected directly
with their Board representation will be reimbursed by the Corporation.
Director liability insurance may be provided to all members of the Board of
Directors. No differentiation is made in the compensation of "outside
directors" and those officers of the Corporation serving in that capacity.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There are currently 1,608,734 Common Shares outstanding. The following
tabulates holdings of shares of the Corporation by each person who, subject to
the above, at the date of this Memorandum, holds of record or is known by
Management to own beneficially more than 5.0% of the Common Shares and, in
addition, by all directors and officers of the Corporation individually and as
a group.
Shareholdings at Date of
This Memorandum
<TABLE>
<CAPTION>
Amount
Name and Address of of Common Shares
Beneficial Owner Currently Owned Percent
<S> <C> <C>
Alan Woinski 714,000(1)(2)(3) 45.19%
177 Main Street
Suite 312
Fort Lee, NJ 07024
<PAGE>14
Lucky Management Corp. 714,000(1)(2)(3) 44.16%
177 Main Street
Suite 374
Fort Lee, NJ 07024
Kim Santangelo-Woinski 714,000(1)(2)(3) 44.16%
177 Main Street
Suite 312
Fort Lee, NJ 07024
Louis Dachis 5,000 .31%
13705 1st Avenue North
Minneapolis, MN 55441
Pat Cruzen 0 0%
6310 Maple Ridge Drive
Victoria, MN 55331
Bruce Merrin 0 0%
3885 So. Decatur Boulevard
Suite 3001
Las Vegas, NV 89103
Jean Regan 0 0%
140 Carlson Parkway
Minnetonka, MN 55305
All Directors & Officers
as a group (3 persons) 719,000 44.47%
</TABLE>
(1)pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to a security whether through a contract, arrangement,
understanding, relationship or otherwise. Unless otherwise indicated, each
person indicated above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to applicable community
property laws.
(2)Includes Lucky Management Corp., Alan Woinski, the principal
shareholder thereof, and Kim Santangelo-Woinski, who is married to Mr.
Woinski, who together constitute a "group," as that term is defined in
Section 13D of the Securities Exchange Act of 1934, as amended.
(3)The above disclosure does not include common shares which may be issued
upon the exercise of the Class A or Class B Warrants. Assuming exercise of
the Class A and Class B Warrants, Alan Woinski, Kim Santangelo-Woinski and
Lucky Management shall beneficially own a total of 947,332 common shares.
There are currently 64,333 Class A Warrants outstanding. The following
tabulates holdings of Class A Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Total Number of Percentage
Class A Warrants Owned
Alan Woinski(1) 0 0%
Kim Santangelo-Woinski(1) 0 0%
Lucky Management Corp.(1) 0 0%
Louis Dachis 667 .0104%
Pat Cruzen 0 0%
Jean Regan 0 0%
Bruce Merrin 0 0%
All Officers and Directors -3 667 .0104%
</TABLE>
(1)pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to a security whether through a contract, arrangement,
understanding, relationship or otherwise. Unless otherwise indicated, each
person indicated above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to applicable community
property laws.
(2)Includes Lucky Management Corp., Alan Woinski, the principal shareholder
thereof, and Kim Santangelo-Woinski, who is married to Mr. Woinski, who
together constitute a "group," as that term is defined in Section 13D of the
Securities Exchange Act of 1934, as amended.
There are currently 99,333 Class B Warrants outstanding. The following
tabulates holdings of Class B Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<PAGE>15
<TABLE>
<CAPTION>
<S> <C> <C>
Name Total Number of Percentage
Class B Warrants Owned
Alan Woinski(1) 0 0%
Kim Santangelo-Woinski(1) 0 0%
Louis Dachis 667 .0071%
Lucky Management Corp.(1) 0 0%
Pat Cruzen 0 0%
Jean Regan 0 0%
Bruce Merrin 0 0%
All Officers and Directors - 667 .0071%
</TABLE>
(1)pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to a security whether through a contract, arrangement,
understanding, relationship or otherwise. Unless otherwise indicated, each
person indicated above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to applicable community
property laws.
(2)Includes Lucky Management Corp., Alan Woinski, the principal shareholder
thereof, and Kim Santangelo-Woinski, who is married to Mr. Woinski, who
together constitute a "group," as that term is defined in Section 13D of the
Securities Exchange Act of 1934, as amended.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY TRANSACTIONS. During the period ended October 31, 1995,
Mr.
Alan Woinski, an officer of the Company, lent the Company $1,100. The loan
was payable upon demand. Based on the fact that there is no annual interest
rate for the loan and the fact that Mr. Woinski is a principal in the Company
and is aware of the current financial situation of the Company, the Company is
of the opinion that the terms are as or more favorable as those which could
have been obtained by nonaffiliates. The Company repaid $585 in July, 1995.
During June, 1995, affiliates of the Company exchanged office equipment with a
historical cost basis of $7,498 for common stock of the Company.
During November, 1995 the Company entered into a lease for its office
facilities with a related party expiring during November 2000. The rent
pursuant to the lease approximates fair market. Minimum annual rent payment
due under the lease totals $18,000 for each year ended October 31, 1996
through 2000.
DISTRIBUTION OF SECURITIES. On June 4, 1995, the Board of Directors
authorized the distribution of 100,000 each of A and B stock purchase warrants
exercisable as follows:
$4.00 plus one A warrant for each share of common stock; and
$6.00 plus one B warrant for each share of common stock.
The warrants are exercisable for a period of two years from the date of issue
and are callable with 30 days notice at a price of $.001 per warrant.
Upon the resignation of a director, 667 of the Class "A" and Class "B"
Warrants were retired.
LOCKUP AGREEMENT. Pursuant to a written agreement in October, 1995, the
principal shareholders and officers and directors (Alan Woinski, Kim
Santangelo-Woinski, Lucky Management Corp., Louis Dachis who received warrants
issued them pursuant to the Special Meeting of the Board of Directors held on
June 4, 1995 have agreed as follows:
In the event the shareholder exercises any warrants, the stock issued to the
shareholder pursuant to the exercise shall be locked in and restricted from
trading for a period of two years. A notice is to be placed on the face of
each stock certificate covered by the terms of the Agreement stating that the
transfer of the stock evidenced by the certificate is restricted until
twenty-four (24) months from the date of issuance. The shareholder also
agrees not to sell or otherwise transfer their interest in the warrants except
to an underwriter or other market makers in the stock once a market is
established. The shareholder further agrees that the total value in cash, or
other consideration, paid by the buyer to the seller shall not exceed $.01 per
warrant.
<PAGE>16
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(A) FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and schedules are filed as part of
this report:
Report of Independent Public Auditors............................ 17
Consolidated Balance Sheets.......................................... 18
Consolidated Statement of Operations............................... 19
Consolidated Statement of Stockholder's Equity....................... 20
Statement of Cash Flows........................................... 21
Notes to Financial Statements..................................... 22
Schedules Omitted: All schedules other than those shown have been
omitted because they are not applicable, not required, or the required
information is shown in the financial statements or notes thereto.
(b) List of Exhibits
The following of exhibits are filed with this report:
(3) Articles of Incorporation and Bylaws incorporated by reference to
Form S-1, file number 33-98184
(4) Specimen certificate for Common Stock incorporated by reference to
Form S-1, file number 33-98184- to be filed by amendment
(10.1) Consulting Agreement with Europa Cruises incorporated by reference
to Form S-1, file number 33-98184
(10.2) Consulting Agreement with Game Financial Corp. to be filed by
Amendment
(10.3) Consulting Agreement with Players Network incorporated by
reference to Form S-1, file number 33-98184
(10.4) Consulting Agreement with Casinovations Incorporated February 1, 1997.
(10.5) Consulting Agreement Extension with Players Network dated April 1,
1997.
(10.6) Consulting Agreement Extension with Casinovations, Inc.
(10.7) collateral Loan for Casinovations, Inc. July 10, 1997
(10.8) Promissory Note with Royal Casino Group dated July 9, 1997.
(10.9) Agreement with Hotels Magazine, Hotel Consulting Services, Inc. and the
Company dated September 4, 1997.
(10.10)Letter of Intent to Acquire Casino Journal Publishing Group dated
October 6, 1997.
(10.11)Employment Agreement with Bruce Merrin
(99) Consulting Agreement with Pratt, Wylce & Lords, Ltd.
incorporated by reference to Form S-1, file number 33-98184
REPORTS FILED ON FORM 8-K. The Company filed no reports on Form 8-K during
the fourth quarter of the Company's fiscal year ended October 31, 1997.
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Gaming Venture Corp., U.S.A. and Subsidiary
We have audited the accompanying consolidated balance sheet of Gaming Venture
Corp., U.S.A. and Subsidiary as of October 31, 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for the year ended October 31, 1997 and 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates 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 financial statements referred to above present fairly, in
all material respects, the financial position of Gaming Venture Corp., U.S.A.
and Subsidiary as of October 31, 1997, and the results of its operations, and
its cash flows for the years ended October 31, 1997 and 1996 in conformity
with generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
December 11, 1997
<PAGE>18
Gaming Venture Corp., USA and Subsidiary
Consolidated Balance Sheet
October 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 845,785
Cash-restricted 202,572
Accounts receivable 25,295
Prepaid expenses 2,281
Total current assets 1,075,933
Available for sale securities 38,625
Property and equipment, at cost, net of
accumulated depreciation of $8,134 20,463
Organization costs, at cost, net of
accumulated amortization of $1,596 1,595
Investments 616,938
$1,753,554
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $12,151
Income taxes payable 33,587
Deferred revenue 268,466
Total current liabilities 314,204
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value,
50,000,000 shares authorized,
1,608,734 shares issued and outstanding 1,609
Paid in capital 1,374,489
Unrealized holding loss on securities (24,127)
Retained Earnings 87,379
1,439,350
$1,753,554
See accompanying notes to financial statements.
</TABLE>
<PAGE>19
Gaming Venture Corp., USA and Subsidiary
Consolidated Statements of Operations
For the Years Ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues $ 657,910 $ 356,527
Costs and expenses:
General and administrative 316,277 168,063
General and administrative-related party 19,046 18,312
335,323 186,375
Income (loss) from operations 322,587 170,152
Other income :
Gain on sale of marketable securities 4,685 27,440
Interest income 44,937 39,304
49,622 66,744
Income (loss) before income taxes 372,209 236,896
Provision for income taxes 33,587
Net income $ 338,622 $ 236,896
Per share information:
Net income $0.21 $0.15
Weighted average shares outstanding 1,604,903 1,591,834
</TABLE>
See accompanying notes to financial statements.
<PAGE>20
Gaming Venture Corp., USA and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
For the Years Ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
Unrealized Retained
Common Stock Paid in Holding Earnings
Shares Amount Capital Loss (Deficit)
Total
<S> <C> <C> <C> <C> <C>
<C>
Balance, October 31, 1995 1,591,834 $ 1,592 $ 1,276,002 $ $
(488,139 $ 789,455
Unrealized holding loss (13,502)
(13,502)
Net income for the year 236,896
236,896
Balance, October 31, 1996 1,591,834 1,592 1,276,002 (13,502)
(251,243) 1,012,849
Exercise of common stock "B" warrants 5,000 5 29,995
30,000
Exercise of common stock "A" warrants 35,000 35 139,965
140,000
Common stock reacquired and retired (23,100) (23) (71,473)
(71,496)
Unrealized holding loss (10,625)
(10,625)
Net income for the year 338,622
338,622
Balance, October 31, 1997 1,608,734 $ 1,609 $ 1,374,489 $ (24,127)
$ 87,379 $1,439,350
</TABLE>
See accompanying notes to financial statements.
<PAGE>21
Gaming Venture Corp., USA and Subsidiary
Consolidated Statement of Cash Flows
For the Years Ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net income $ 338,622 $ 236,896
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 4,629 2,711
Amortization 638 638
Gain on sale of securities (4,685) (27,440)
Common stock and options (acquired) issued
for consulting services (270,000) (330,000)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 7,004 (27,470)
(Increase) decrease in prepaid expenses 109 (2,390)
Increase (decrease) in income taxes payable 33,587
Increase (decrease) in deferred revenue 23,767 228,302
Increase (decrease) in accounts payable and
accrued expenses 9,495 422
Total adjustments (195,456) (155,227)
Net cash provided by (used in) operating activities 143,166 81,669
Cash flows from investing activities:
(Increase decrease in restricted cash (202,572)
(Increase) decrease in note receivable 18,000 (18,000)
Proceeds from sale of securities 16,185 54,129
Common stock reacquired and canceled (71,496)
Acquisition of securities (28,438) (56,941)
Acquisition of property and equipment (10,901) (8,278)
Net cash provided by (used in) investing activities (279,222) (29,090)
Cash flows from financing activities:
Proceeds from (payments to) related parties (515)
Common stock issued for cash 170,000
Net cash provided by (used in) financing activities 169,485
Increase (decrease) in cash 33,429 52,579
Cash and cash equivalents,
beginning of period 812,356 759,777
Cash and cash equivalents,
end of period $ 845,785 $ 812,356
Supplemental cash flow information:
Cash paid for interest $ $
Cash paid for income taxes $ 200 $ 200
</TABLE>
See accompanying notes to financial statements.
<PAGE>22
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
Note 1. ORGANIZATION
The Company was incorporated on June 1, 1995, in the State of Nevada The
operations and objectives of the Company are to provide daily hotline
information and a weekly newsletter regarding the gaming industry and the
lodging industry. The Company also provides consulting services and in 1997
started a new division providing booking agent services for celebrity speakers
. The Company has chosen October 31, as a year end.
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary Gaming Venture West, Inc. ("West"). All
significant intercompany transactions have been eliminated. West was
incorporated in the state of Nevada during the year ended October 31, 1997.
All of the outstanding shares of West were acquired by the Company at
inception, and West currently operates the Company's booking agent service.
Use of Estimates:
Management of the Company uses estimates and assumptions in preparing
financial statements in accordance with generally accepted accounting
principles. 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. Actual results could vary from the
estimates that management uses. Management believes that the estimates used
are reasonable.
Revenue recognition:
The Company recognizes revenue from its services as follows:
Consulting fees - upon the completion of its services
Hotline - upon usage by the customer
Newsletter - prorated over the life of the subscription
Booking agent fees- upon booking
Fixed assets:
The Company depreciates its office equipment utilizing the straight line
method over a period of five years. Depreciation charged to operations was
$4,629 and $2,711 for the years ended October 31, 1997 and 1996, respectively.
Net income (loss) per share:
The net income (loss) per share is computed by dividing the net income(loss)
for the year by the weighted average number of common shares outstanding for
the year. Common stock equivalents are excluded from the computation in loss
years as their effect would be anti-dilutive.
<PAGE>23
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
(Continued)
Organization costs:
The Company amortizes its organization costs over a period of 5 years using
the straight line method. Amortization charged to operations was $638 for the
years ended October 31 1997 and 1996, respectively.
Cash and cash equivalents:
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of less than three months
Financial Instruments:
The Company's short term financial instruments consist of cash and cash
equivalents, accounts receivable/payable and notes payable. The carrying
amounts of such financial instruments approximate fair value because of the
short term maturities of these instruments.
Advertising Costs:
The Company's policy is to expense advertising costs as the advertisement is
shown. Advertising and promotion costs of $18,004 and $4,562 were charged to
operations during the years ended October 31, 1997 and 1996, respectively.
Included as an asset on the balance sheet were $2,036 and $950 of prepaid
advertising costs at October 31, 1997 and 1996, respectively.
Long-Lived Assets:
In accordance with Statement of Financial Accounting Standards No. 121
("FAS 121"), Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of, the Company reviews for the impairment of
long-lived assets and certain identifiable intangibles whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Under FAS 121, an impairment loss would be recognized when
estimated future cash flows expected to result from the use of the asset and
its eventual disposition is less than its carrying amount. No such impairment
losses have been identified by the Company.
Recent Pronouncement:
In 1996 Financial Accounting Standards No. 125 (FAS 125) Accounting for
Transfer and Servicing of Financial Assets and Extinguishments of Liabilities
was issued. FAS 125 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after December 31, 1996.
The Company has adopted FAS 125 in 1997. However, adoption of FAS 125 does
not have a material effect on the Company's financial position or operating
results.
<PAGE>24
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
(Continued)
Note 2. AVAILABLE FOR SALE SECURITIES:
The Company's securities that were bought and held principally for the purpose
of selling them in the near term are classified as trading securities at
October 31, 1995. Trading securities are recorded at fair value as a current
asset with the change in fair value during the period included in earnings.
Effective November 1, 1995 these securities have been classified as available
for sale securities, recorded at fair value as a non-current asset, with the
change in fair value during the period included as a separate component of
stockholders' equity
At October 31, 1997 the Company held equity securities with a fair value of
$38,625 and a cost of $60,252. The unrealized holding loss was $10,625 and
$13,502 for the years ended October 31, 1997 and 1996, respectively and has
been shown as a separate component of stockholders' equity each year. The
Company had sales proceeds from available for sale securities of $16,185 and
$54,129 during the years ended October 31, 1997 and 1996, respectively. Cost
is determined by the specific identification method for computing realized
gains or losses on securities.
Note 3. INVESTMENTS:
The Company is holding shares of common stock in the following privately held
companies as of October 31, 1997:
Corporation Number of Shares Held Fair Value
Casinovations 200,000 $300,000
Players Network 200,000 $300,000
The shares were acquired in exchange for consulting services provided by the
Company to Casinovations and Players Network during the years ended October
31, 1997 and 1996, respectively and for services to be rendered during the
year ending October 31, 1998. The Company had $202,500 of deferred income
included on the balance sheet at October 31, 1997 with respect to these future
consulting services.
The fair value of these shares of stock has been determined based upon the per
share price of private placement sales of these securities during 1997 and
1996. Periodic adjustments to the initial fair value are made when deemed
appropriate by management based upon intervening events or circumstances that
would have a material effect on the Company's ability to liquidate the
securities. Such intervening events and circumstances would include among
others material changes in the investee's financial position and results of
operations, doubts about the investee's ability to continue as a going
concern, a petition in bankruptcy, the discovery of a material legal or
environmental claim, more recent sales of non-trading securities or the
abandonment of plans to complete a registration of the securities for public
sale. As of October 31, 1997, the Company has determined that the investee
companies are continuing with their efforts to establish a public markets for
their securities.
<PAGE>25
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
(Continued)
In addition, the Company is carrying a long-term investment of 2,500 and 7,000
shares of two publicly traded companies with an aggregate carrying value of
$16,938 (cost approximates market). The shares were acquired in exchange for
consulting services provided by the Company to these two companies during the
year ended October 31, 1997 and for services to be rendered during the year
ending October 31, 1998. The Company had $15,688 of deferred income included
on the balance sheet at October 31, 1997 with respect to these future
consulting services.
Note 4. COMMON STOCK:
During June, 1995, the Company authorized a distribution to shareholders of
100,000 each of A, and B stock purchase warrants exercisable as follows:
$ 4.00 plus one A warrant for each share of common stock
$ 6.00 plus one B warrant for each share of common stock
The warrants were exercisable for a period of 24 months from the date of issue
and are callable with 30 days notice at a price of $.001 per warrant. The
warrants were subsequently extended for an additional 24 months through June,
1999.
During the year ended October 31, 1997 the shareholders exercised 35,000 "A"
warrants for $140,000 and 5,000 "B" warrants for $30,000.
During June, 1995 the Company approved a Stock Option Plan. Eligible to
participate in the plan are employees, officers and directors. The plan will
administered by the Company's Board of Directors. The Company has reserved
750,000 shares of $.001 par value common stock for the plan. The option price
shall not be less than 85% of the fair market value of the stock on the date
the option is granted and shall be for a term of not more than 10 years.
During the year ended October 31, 1995 the Company granted 30,000 options to
its directors at an exercise price of $.01 per share for a period of 3 years.
Compensation expense was recorded for the difference between the exercise
price of the options and the fair value of the common stock of $1.50 per share
($44,700). None of the options had been exercised through October 31, 1997.
During October, 1995 the Company filed a registration statement with the
Securities and Exchange Commission on Form S-1 to register 100,000 Class A
warrants, 100,000 Class B warrants, and 1,196,834 shares of common stock
(including the 200,000 common shares underlying the A and B warrants). The
registration became effective during July, 1996.
Note 5. INCOME TAXES:
The Company provides for income taxes pursuant to Financial Accounting
Standards Board Statement No. 109 Accounting for Income Taxes. No provision
for income taxes has been provided for during the year ended October 31, 1996
because of the operating loss for the period. At October 31, 1996 the Company
had approximately a $250,000 net operating loss carryforward which was
completely utilized during the year ended October 31, 1997.
<PAGE>26
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
(Continued)
The current provision for income taxes consist of the following at October 31,
1997:
Federal $ 30,587
State 3,000
$ 33,587
The income tax basis of assets and liabilities is the same as the book basis
at October 31, 1997 and as such no provision for deferred income taxes is
necessary.
The difference between the federal statutory tax rate and the effective tax
rate is reconciled as follows for the years ended October 31, 1997 and 1996,
respectively:
1997 1996
Income tax provision at statutory rate 145,162 39% $ 75,290 32%
Utilization of net operating loss
carryforward (111,575) (30) (75,290) (32)
Income tax provision at
effective tax rate $ 33,587 9% $ - -%
Note 6. RELATED PARTY TRANSACTIONS:
During November, 1995 the Company entered into a lease for its office
facilities with a related party expiring during November, 2000. The rent
pursuant to the lease approximates fair market. Minimum annual rent payments
due under the lease are as follows:
Year ended October 31, 1998: $18,000
1999: $18,000
2000: $18,000
Rent expense charged to operations was $18,324 and $18,312 for the years ended
October 31, 1997 and 1996, respectively
Note 7. BUSINESS SEGMENTS:
The Company currently provides services in four industry segments consisting
of newsletter subscription sales, hotline services, providing consulting
services and booking agent services for celebrity speakers. The following is a
summary of segment information for the years ended October 31, 1997 and 1996,
respectively:
1997 1996
Sales to unaffiliated customers:
Subscription sales $ 115,000 $ 91,770
Consulting fees 530,490 259,422
Hotline income 2,870 5,335
Booking agent services 9,550 -
$ 657,910 $ 356,527
<PAGE>26
Gaming Venture Corp., U.S.A. and Subsidiary
Notes to Financial Statements
October 31, 1997
(Continued)
Income from operations:
Subscription sales $ 115,000 $ 91,770
Consulting fees 530,490 259,422
Hotline income 2,870 5,335
Booking agent services 9,550 -
Other income 49,622 66,744
General corporate expenses (335,323) (186,375)
$ 372,209 $236,896
1997 1996
Identifiable assets:
General corporate $ 1,753,554 $1,260,719
Capital expenditures:
General corporate $ 10,901 $ 8,278
Depreciation:
General corporate $ 4,629 $ 2,711
Amortization:
General corporate $ 638 $ 638
Income from operations represents the net sales from each segment, and
excludes general corporate expenses and other income of a general corporate
nature. General corporate assets consist principally of cash and securities.
During the year ended October 31, 1997 consulting fees received from Players
Network and Casinovations amounted to $90,000 and $112,500, respectively.
These fees represented 14.2% and 17.8% of total revenue, respectively..
During the year ended October 31, 1996 consulting fees received from Players
Network and Casinovations amounted to $90,000 and $37,500, respectively. These
fees represented 25.2% and 10.5% of total revenue, respectively..
Note 8. CONCENTRATION OF CREDIT RISK AND RESTRICTED CASH:
The Company had $736,965 bearing interest at 5.25% per annum at October 31,
1997 on deposit in a money market fund at a single broker. The amount of SIPC
insurance on this fund is limited to $100,000.
In addition, the Company maintained a short-term certificate of deposit
(maturing on February 1, 1998) with a balance including interest of
approximately $203,000 at one bank, which is in excess of the FDIC insurance
coverage of $100,000. The certificate of deposit has been pledged as
collateral for a loan to Casinovations (see Note 3) made by the bank for
$200,000. Casinovations has agreed to pay the Company a fee of 8.5% of the
original principal amount of the certificate of deposit ($200,000) when the
loan is repaid. If the loan is not repaid by the maturity date, one half of
the $17,000 fee will become due and the Company will have the option of
renewing the certificate of deposit with the same 8.5% fee arrangement or
converting the principal balance of the loan into Casinovations common stock
with registration rights. If Casinovations defaults on the bank loan, they
have agreed to repay the Company the amount of the certificate of deposit in
either Casinovations common stock with registration rights or through a agreed
upon payment plan.
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned duly authorized person.
Date: January 27, 1998
GAMING VENTURE CORP., U.S.A.
/s/ Alan Woinski
--------------------------------
By: Alan Woinski, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of
the Registrant and in the capacities and on the dates indicated.
/s/ Alan Woinski 1/27/98
- ---------------------- Chief Executive Officer, ----------
Alan Woinski Chief Operating Officer
and Director
/s/ Kim Santangelo-Woinski 1/27/98
- ---------------------- Chief Financial Officer/Controller ----------
Kim Santangelo-Woinski and Director
/s/ Louis Dachis 1/27/98
- ---------------------- Director ----------
Louis Dachis
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<CASH> 1,048,357
<SECURITIES> 38,625
<RECEIVABLES> 25,295
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,114,558
<PP&E> 20,463
<DEPRECIATION> 8,134
<TOTAL-ASSETS> 1,753,554
<CURRENT-LIABILITIES> 314,204
<BONDS> 0
<COMMON> 1,632
0
0
<OTHER-SE> 1,437,718
<TOTAL-LIABILITY-AND-EQUITY> 1,753,554
<SALES> 657,910
<TOTAL-REVENUES> 657,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 335,323
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 372,209
<INCOME-TAX> 33,587
<INCOME-CONTINUING> 338,622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338,622
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
