<PAGE>1
<PAGE>2
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 June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
---------- ----------
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:
4,718.734 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
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 ___
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $1,153,193_ $334,355__
Accounts receivable 920,644_ 837,176__
Investment in marketable securities 56,443_ 26,567__
Inventories 30,291_ 33,525__
Loans receivable, employees 3,339_ 6,661__
Prepaid expenses 415,831_ 5,711_____
----------- ---------
Total current assets 2,579,741_ 1,243,995______
Property and equipment - at cost,
less accumulated depreciation 268,640_ 217,491______
Other investments 895,022_ -__
Goodwill, less accumulated amortization of $22,180_ 1,313,587_ -__
Loan receivable, shareholders and related parties 633,544_ 380,322__
Other assets 46,710_ 47,683
---------- ----------
$5,737,244_ $1,889,491_
========== ==========____
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)______
Current liabilities
Note payable $200,000_ $ -__
Accounts payable _ 889,592_ 1,060,633__
Current portion of deferred subscription revenues 657,811_ 565,257__
Income taxes payable 128,823_ - ______
--------- ---------
Total current liabilities 1,876,226_ 1,625,890______
--------- ---------
Deferred subscription revenues, less current portion 725,835_ 449,227______
--------- ---------
Minority interest in American gaming Summit, LLC 29,819_ 29,819______
--------- ---------
Shareholders' equity (deficiency)____
Common stock, $.001 par value; 50,000,000 shares
authorized, 4,718,734 shares issued and outstanding ____
at June 30, 1998 4,719_ 11,100__
Additional paid-in capital 3,441,554_ 66,177__
Unrealized loss on investments (160,848)_ -__
Accumulated deficit (180,061)_ (292,722)_______
--------- ----------
3,105,364_ (215,445)
--------- ----------_______
$5,737,244 $1,889,491_
========== ==========_
</TABLE>
See accompanying notes to condensed financial statement
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
Condensed CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $2,624,699_ $1,659,067_ $4,705,033_ $3,339,271
________
Direct costs 1,029,240_ 896,598_ 2,182,449_ 1,677,028_
---------- ---------- ---------- ----------______
Gross profit_ 1,595,459_ 762,469_ 2,522,584_ 1,662,243_
_______
General and administrative expenses 1,184,968_ 687,908_ 2,272,438_ 1,468,475_
---------- ---------- --------- ---------_______
Income from operations 410,491_ 74,561_ 250,146_ 193,768_
______
Other income 30,668_ 47,572_ 6,517_ 16,505_
---------- ---------- -------- ---------_______
Income before income taxes 441,159_ 122,133_ 256,663_ 210,273_
Income taxes 128,000_ - 128,000_ -
---------- ---------- -------- ---------- ________
Net income $313,159_ $122,133_ $128,663_ $210,273
========= ========== ======== =========_______
Basic and diluted income per share $.07_ $.03______
========= ========___
Pro forma income data _____
Income before income taxes, as reported $122,133_ $210,273__
Pro forma income taxes 34,000_ 75,000_
-------- --------_______
Pro forma net income $88,133_ $135,273
======== ========
________
Basic and diluted income per share (pro forma)_ $.03_ $.05
======== ========________
Shares used in the calculation
of income per share 4,633,020 3,000,000_ 3,803,245_ 3,000,000_
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
_ 1998 1997
<S> <C> <C> _
Cash flows from operating activities
Net income $128,663_ $210,273__
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 51,269_ 26,707__
Minority interest in earnings of American ____
Gaming Summit, LLC -_ (20,708)__
Changes in assets and liabilities
accounts receivable (9,878)_ 209,088__
Inventories 3,234_ 8,519__
prepaid expenses (523,887)_ (2,615)__
other assets 17,473_ (112)_
_ accounts payable (196,397)_ (137,444)__
deferred revenues 182,423_ (43,812)__
Income taxes payable 80,823_ -
-------- -------______
Net cash provided by (used in) operating activities (266,277)_ 249,896
-------- -------______
Cash flows from investing activities
Loans receivable, shareholders and related parties (253,222)_ 226,519__
loans receivable, employees 3,322 (102,316)_
Additions to property and equipment (60,877) _(85,900)_
Marketable securities, net 39,664_ (4,356)______
-------- --------
Net cash provided by (used in) investing activities (271,113)_ 33,947_
-------- --------____
Cash flows from financing activities
Notes payable 200,000_ (65,659)__
Principal payments on loan payable, automobile (9,025)_ (8,469)__
Dividends paid (62,350)_ (403,650)__
Issuance of common stock 200,238_ - __
Dividends paid to minority interest - (20,000)
------- --------______
Net cash provided by (used in) financing activities 328,863_ (497,778)_
-------- --------_____
Net decrease in cash and cash equivalents (208,527)_ (213,935)_____
Cash and cash equivalents, beginning of period 1,361,720_ 412,546_
---------- --------____
Cash and cash equivalents, end of period $1,153,193_ $198,611_
========== ========_____
Supplemental cash flow disclosures
Interest paid $19,145_ $15,284_
======= =======
</TABLE>
See Accompanying notes to condensed consolidated financial statement
<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 $3,331,235, 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 $113,767.
Simultaneous with the acquisition, Gaming changed its name to Casino Journal
Publishing Group, Inc.
2 - Basis of Presentation
The accompanying unaudited balance sheet as of June 30, 1998 includes the
accounts of the Company and its subsidiaries (including Gaming). The related
accompanying unaudited statements of income 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 June 30,
1998, $410,000 of direct-response advertising costs was included in prepaid
expenses.
5 - NOTE PAYABLE
The note payable of $200,000 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 a shareholder, one of them on a
month-to-month basis. The other space is occupied pursuant to a ten-year
lease which began on June 1, 1997 and requires annual rent payments of
$120,000. Total related party rent expense was $35,403 and $8,809 for the
six months ended June 30, 1998 and 1997, respectively.
Loans receivable, shareholders and related parties include loans to the
majority shareholder of $484,226 at June 30, 1998. Also included are a loan
of $35,210 receivable from a member of a shareholder's family and a loan of
$114,108 receivable from a shareholder of one of the subsidiaries.
There was no interest income for the six month periods ended June 30, 1998
and 1997.
7 - SALE OF COMMON STOCK
On June 8, 1998, the Company issued 100,000 shares of its common stock to an
unaffiliated party at $2.00 a share, pursuant to a private placement.
<PAGE>8
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 income (loss) for the three months and six months ended June
30, 1998, which includes the unrealized loss on investments for the periods,
was $152,311 and $(32,185), respectively. There were no items of other
comprehensive income for the three months ended March 31, 1998 and 1997 and
June 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.
<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 $3,331,235, 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 $113,767.
The Company rents two office facilities from a shareholders, one of them on a
month-to-month basis. The other space is occupied pursuant to a ten-year
lease which began on June 1, 1997 and requires annual rent payments of
$120,000. Total related party rent expense was $35,403 and $8,809 for the
six months ended June 30, 1998 and 1997, respectively. The Company also rents
office space at the rate $1,500 per month rented from Lucky Management Corp.
Other than the leases, the Company has no material commitments for capital
expenditures.
For the six months ended June 30, 1998, the Company had an increase in loan
receivables from shareholders and related parties of $253,222 and a decrease
in loans receivable from employees of $3,322. The Company purchased $60,877
worth of equipment, and received net proceeds from the sale of marketable
securities of $39,664. As a result, the Company had cash flow used in
investing activities of $271,113 for the six months ended June 30, 1998.
For the six months ended June 30, 1997, the Company had an decrease in loan
receivables from shareholders and related parties of $226,519 and an increase
in loans receivable from employees of $102,316. The Company purchased
$85,900 worth of equipment, and received net proceeds from the sale of
marketable securities of $4,356. As a result, the Company had cash flow
provided by investing activities of $33,947 for the six months ended June 30,
1997.
For the six months ended June 30, 1998, the Company had a increase in notes
payable of $200,000. 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 six months ended June 30, 1998 prior to the merger
and received proceeds of $200,238 from the issuance of its common stock. As
a result, the Company had net cash provided by financing activities of
$328,863 for the six months ended June 30, 1998.
For the six months ended June 30, 1997, the Company had an decrease in notes
payable of $65,659. The Company made principal payments on loan payable,
automobile of $8,469. The Company made distributions of $403,650 to the then
sole stockholder for the six months ended June 30, 1997 and made
distributions of $20,000 to minority interest. As a result, the Company had
net cash used in financing activities of $497,778 for the six months ended
June 30, 1997.
Results of Operations. The Company had net income of $128,663 for the six
months ended June 30, 1998. The Company received revenues of $4,705,033
which consisted of advertising revenue of $2,722,540, subscription revenue of
$930,641 and other revenues which consisted primarily of consulting fees and
tradeshow revenues of $1,051,852 and had direct costs of $2,182,449 for the
six months ended June 30, 1998. General and administrative expenses for
the six months ended June 30, 1998 were $2,272,438. These consisted
principally of payroll related costs $1,268,432, advertising and promotion
$179,668, postage $131,404, travel and entertainment of $119,248 , bad debts
of $91,509 and other nonmaterial expenses of $482,177.
<PAGE>10
The Company had a increased in accounts receivable of $9,878. Inventories
decreased $3,234 for the six months ended June 30, 1998 and prepaid expenses
increased substantially by $523,887 due to primarily to capitalization due to
the costs associated with a direct mail marketing campaign. Deferred revenue
increased $182,423 from the sale of its magazine and newsletter
subscriptions. The Company had amortization and depreciation of $51,269 for
the six months ended June 30, 1998. The Company had a decrease in accounts
payable of $196,397. Other assets decreased by $17,473 and income taxes
payable increased by $80,823 for the six months ended June 30, 1998. Net
cash used in operations for the six months ended June 30, 1998 was $266,277.
The Company had net income of $210,273 for the six months ended June 30,
1997. The Company received revenues of $3,339,271 which consisted of
advertising revenue of $1,850,276, subscription revenue of $876,378 and other
revenues which consisted primarily of tradeshow revenue of $612,617 and had
direct costs of $1,677,028 for the six months ended June 30, 1997. General
and administrative expenses for the six months ended June 30, 1997 were
$1,468,475. These consisted principally of payroll related costs of
$778,889, advertising and promotion of $83,316, bad debts of $38,801 travel
and entertainment of $92,167 and other nonmaterial expenses of $475,302. The
Company had an decrease in accounts receivable of $209,088. Inventories
increased $8,519 for the six months ended June 30, 1997 and prepaid expenses
increased by $2,615. Deferred revenue decreased $43,812. The Company had
amortization and depreciation of $26,707 for the six months ended June 30,
1997. The Company had a decrease in accounts payable of $137,444. Other
assets increased by $2,615 for the six months ended June 30, 1997. Net cash
provided by operations for the six months ended June 30, 1997 was $249,896.
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
Casino Journal Publishing Group, Inc.
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: August 7, 1998 /s/ Alan Woinski
----------------------------
Alan Woinski, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 1,153,193
<SECURITIES> 56,443
<RECEIVABLES> 920,644
<ALLOWANCES> 0
<INVENTORY> 30,291
<CURRENT-ASSETS> 2,579,741
<PP&E> 268,640
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,737,244
<CURRENT-LIABILITIES> 1,876,226
<BONDS> 0
<COMMON> 4,719
0
0
<OTHER-SE> 3,100,645
<TOTAL-LIABILITY-AND-EQUITY> 5,737,364
<SALES> 4,705,033
<TOTAL-REVENUES> 4,705,033
<CGS> 2,182,449
<TOTAL-COSTS> 2,182,449
<OTHER-EXPENSES> 2,272,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 256,663
<INCOME-TAX> 128,000
<INCOME-CONTINUING> 128,663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 128,000
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
