<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 March 31, 1999
[ ] 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:
4,976,734 Shares of Common Stock ($.001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
------- -------
<PAGE>3
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
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
-------- ------
(Unaudited)
<S> <C> <C>
Current assets
Cash $1,449,350 $1,124,140
Accounts receivable 1,563,479 1,137,593
Investment in marketable securities 1,253,231 1,272,889
Inventories 33,300 33,648
Loans receivable, employees 5,306 7,034
Deferred promotion costs,
less accumulated amortization
of $313,000 and $216,000 564,287 541,161
Prepaid expenses 104,195 123,991
----------- -----------
Total current assets 4,973,148 4,240,456
Property and equipment - at cost,
less accumulated depreciation
and amortization 244,650 250,240
Goodwill, less accumulated amortization
of $126,929 and $91,447 1,707,003 1,742,485
Loans receivable, shareholders
and related parties 701,207 626,910
Other assets 43,356 46,481
----------- ------------
$7,669,364 $6,906,572
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Note payable $100,000 $100,000
Accounts payable and accrued expenses 1,321,701 1,222,383
Current portion of deferred
subscription revenues 1,767,943 1,286,813
Deferred trade show revenues 319,019 312,978
Current portion of deferred
advertising revenues 123,340 83,328
---------- ----------
Total current liabilities 3,632,003 3,005,502
---------- ----------
Deferred subscription revenues,
less current portion 330,931 252,785
---------- ----------
Deferred advertising revenues,
less current portion 13,882 34,728
---------- ----------
Minority interest in American
Gaming Summit, LLC 45,400 -
---------- ----------
Shareholders' equity
Common stock, $.001 par value;
50,000,000 shares authorized,
4,976,734 and 4,968,734 shares
issued and outstanding in
1999 and 1998, respectively 4,977 4,969
Additional paid-in capital 3,942,636 3,928,769
Unrealized loss on investments (239,154) (72,292)
Accumulated deficit (61,311) (247,889)
---------- ----------
3,647,148 3,613,557
---------- ----------
$7,669,364 $6,906,572
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Revenues $3,117,496 $2,080,334
Direct costs 1,628,293 1,153,209
---------- ----------
Gross profit 1,489,203 927,125
General and administrative expenses 1,242,483 1,087,470
---------- ----------
Income (loss) from operations 246,720 (160,345)
Other income (expenses) 10,258 (24,151)
--------- ----------
Income (loss) before minority interest 256,978 (184,496)
Minority interest in earnings of
American Gaming Summit, LLC 70,400 -
--------- ----------
Net income (loss) $186,578 $(184,496)
========= =========
Basic and diluted income per share $.04 (.06)
========= =========
Shares used in the calculation of
Income (Loss) per Share 4,973,990 3,000,000
========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $186,578 $(184,496)
Adjustments to reconcile net income
(loss) to net cash
provided by (used in)
operating activities
Depreciation and amortization 51,652 13,998
Minority interest in earnings of
American Gaming Summit, LLC 70,400 739
Changes in assets and liabilities
Accounts receivable (425,886) 131,063
Inventories 348 (1,254)
Deferred promotion expenses (23,126) -
Prepaid expenses 19,796 (283,015)
Other assets 3,125 (95,948)
Accounts payable and accrued expenses 99,318 74,386
Deferred subscription revenues 559,276 254,421
Deferred trade show revenues 6,041 -
Deferred advertising revenues 19,166 -
------- -------
Net cash provided by (used in)
operating activities 566,688 (90,106)
------- -------
Cash flows from investing activities
Additions to property and equipment (10,580) (42,111)
Investment in marketable securities, net (147,204) 232
Loans receivable, employees 1,728 (1,102)
Loans receivable, shareholders and
related parties (74,297) (184,333)
------- -------
Net cash used in investing activities (230,353) (227,314)
------- -------
Cash flows from financing activities
Notes payable - 200,000
Principal payments on loan payable,
Automobile - (5,109)
Dividends paid - (62,350)
Issuance of common stock 13,875 -
Dividends paid to minority interest (25,000) -
------- -------
Net cash provided by (used in)
financing activities (11,125) 132,541
------- -------
Net increase (decrease) in cash
and cash equivalents 325,210 (184,879)
Cash, beginning of period 1,124,140 334,355
---------- --------
Cash, end of period $1,449,350 $149,476
========== ========
Supplemental cash flow disclosures
Interest paid $4,021 $10,027
====== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>7
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 - ACQUISITION
On April 3, 1998, the Company and its combined
affiliates merged with Gaming Venture Corp., U.S.A., a
Nevada corporation ("Gaming"). The Company and its
combined affiliates became wholly-owned subsidiaries of
Gaming, the legal acquiror. As the Company's and its
combined affiliates' shareholders acquired approximately
65% of Gaming's outstanding voting shares, the merger was
accounted for as a reverse acquisition of Gaming by the
Company, the accounting acquiror in the transaction.
The total cost of the acquisition was $3,726,235,
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 and the value of stock options $(350,000)
granted to shareholders of the Company, plus transaction
costs of $158,767.
Simultaneous with the acquisition, Gaming changed its
name to Casino Journal Publishing Group, Inc.
2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated
balance sheet as of March 31, 1999 and the related
accompanying unaudited condensed consolidated statements
of operations and cash flows include the results of
operations and cash flows of the Company and its
subsidiaries. The accompanying unaudited condensed
consolidated statements of operations and cash flows for
the three months ended March 31, 1998 exclude the
operations of Gaming. 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 balance sheet as of December 31, 1998 has been
derived from the audited consolidated financial statements
of the Company, but does not include all disclosures
required by generally accepted accounting principles. The
accompanying financial statements should be read in
conjunction with the Company's audited financial
statements for the year ended December 31, 1998.
3 - DEFERRED PROMOTION COSTS
The Company began several direct mailing programs in
1998. It accounts for direct-response advertising costs
in accordance with the American Institute of Certified
Public Accountants' Statement of Position 93-7, "Reporting
on Advertising Costs". The primary purpose of these
programs is to elicit sales from customers who can be
shown to have responded specifically to the advertising,
which, accordingly, results in probable future economic
benefits. Direct-response advertising consists primarily
of printing, postage and promotional costs and will be
amortized over the estimated period of the future benefit
using the ratio of current period revenues to total
current and estimated future period revenues.
<PAGE>8
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortization of direct response advertising costs was
$313,000 for the period ended March 31, 1999 and is
included in promotion expenses.
4 - GOODWILL
Goodwill represents cost in excess of fair value of
net assets acquired in the merger transaction, and is
being amortized over 15 years. The Company periodically
re-evaluates its recoverability. In management's opinion,
there has been no impairment of goodwill at March 31,
1999.
5 - NOTE PAYABLE
The note payable of $100,000 is a demand note and
requires monthly payments of interest only, beginning May
1, 1998, at First Union National Bank's prime rate plus
1%. Marketable securities owned by a shareholder are
collateral for the note. Interest expense was $4,021 for
the three months ended March 31, 1999.
6 - RELATED PARTY TRANSACTIONS
The Company rents two office facilities from
shareholders. One facility is occupied pursuant to a ten-
year lease which began on June 1, 1997 and requires annual
rent payments of $120,000, and the other facility is
occupied pursuant to a five-year lease which began on
January 1, 1996 and requires annual rent payments of
$18,000. Total related party rent expense was $34,500 and
$35,403 for the three months ended March 31, 1999 and
1998, respectively.
Loans receivable, shareholders and related parties
include loans to the majority shareholder of $528,267, a
loan of $3,201 to a family member of a shareholder, and a
loan of $169,739 to another shareholder. The loans bear
interest at 6%.
7 - SALE OF COMMON STOCK
On January 21, 1999, options to purchase 5,000 shares
of common stock at $1.50 a share were exercised.
On February 19, 1999, options to purchase 3,000
shares of common stock at $2.125 a share were exercised.
8 - COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards 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 for the three months ended March 31, 1999, which
includes the unrealized loss on investments for the period
of $166,862, was $19,716. There were no items of other
comprehensive income for the three months ended March 31,
1998.
<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 $3,726,235, 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 and the value of stock options ($350,000) granted to shareholders of
the Company (see Note 4 to the Audited Financial Statements) plus
transaction costs of $158,767.
The Company rents two office facilities from shareholders. One facility is
occupied pursuant to a ten year lease which began on June 1, 1997 and
requires annual rent payments of $120,000, and the other facility is
occupied pursuant to a five year lease which began on January 1, 1996 and
requires annual rent payments of $18,000. Total related party rent expense
was $34,500 and $35,403 for the three months ended March 31, 1999 and 1998,
respectively.
For the quarter ended March 31, 1999, the Company had an increase in loan
receivables from shareholders and related parties of $74,297 and a decrease
in loans receivable from employees of $1,728. The Company purchased $10,580
worth of equipment, and had an increase in marketable securities of
$147,204. As a result, the Company had cash flow used in investing
activities of $230,353 for the quarter ended March 31, 1999.
For the quarter ended March 31, 1998, the Company had an increase in loan
receivables from shareholders and related parties of $184,333 and an
increase in loans receivable from employees of $1,102 . The Company
purchased $42,111 worth of equipment, and had a decrease in marketable
securities of $232. As a result, the Company had cash flow used in
investing activities of $227,314 for the quarter ended March 31, 1998.
For the quarter ended March 31, 1999, the Company made distributions of
$25,000 to aminority interests for the quarter ended March 31, 1999
The Company received proceeds of $13,875 from the issuance of its common
stock. As a result, the Company had net cash provided by financing
activities of $11,125 for the quarter ended March 31, 1999.
For the quarter ended March 31, 1998, the Company had an increase in notes
payable of $200,000. The Company made principal payments on loan payable,
automobile of $5,109. The Company made distributions of $62,350 to the then
sole stockholder for the quarter ended March 31, 1998. As a result, the
Company had net cash provided financing activities of $132,541 for the
quarter ended March 31, 1999.
Results of Operations. The Company had net income of $186,578 for the
quarter ended March 31, 1999. The Company received revenues of $3,117,496
that consisted of advertising revenue of $1,546,624, subscription revenues
of $782,282 and other revenues which consisted primarily of consulting fees
of $114,014, tradeshow revenues of $577,305 and miscellaneous revenues of
$97,271. The Company had direct costs of $1,628,293 for the quarter ended
March 31, 1999. Operating expenses for the quarter ended March 31, 1999
were $1,242,483 that includes payroll related costs of $829,462, postage of
$67,791 and other nonmaterial expenses of $283,943. Promotion expenses
were $61,287 for the quarter ended March 31, 1999.
The Company had an increase in accounts receivable of $425,886.
Inventories decreased $348 for the quarter ended March 31, 1999 and prepaid
expenses decreased by $19,796. Deferred promotion expenses increased
$23,126 due primarily to the Company's direct mail marketing campaigns.
Deferred advertising revenues increased $19,166. Deferred subscription
revenues increased $559,276 from the sale of its magazine and newsletter
subscriptions. Deferred tradeshow revenues increased $6,041. The Company
had depreciation and amortization of $51,652 for the quarter ended March 31,
1999. The Company had minority interest in earnings of American Gaming
Summit, LLC of $70,400. The Company had an increase in accounts payable and
accrued expense of $99,318. Other assets decreased by $3,125 for the
quarter ended March 31, 1999. Net cash provided by operations for the
quarter ended March 31, 1999 was $566,688
<PAGE>10
The Company had net loss of $184,496 for the quarter ended March 31, 1998.
The Company received revenues of $2,080,334 that consisted of advertising
revenue of 1,232,892, subscription revenue of $505,931 and other revenues
that consisted primarily of trade show revenue of $170,148 and miscellaneous
revenues of $171,363. The Company had direct costs of $1,153,209 for the
quarter ended March 31, 1998. Operating expenses for the quarter ended
March 31, 1998 were $1,087,470. These consisted principally of general
payroll related costs of $507,562, bad debts of $88,753, travel and
entertainment of $56,830 and other nonmaterial expenses of $361,611.
Promotion expenses were $72,714. The Company had a decrease in accounts
receivable of $131,063. Inventories increased $1,254 for the quarter
ended March 31, 1998 and prepaid expenses increased by $283,015. Deferred
subscription revenue increased $254,421. For the quarter ended March 31,
1998, the Company had minority interest in earnings of subsidiary of $739.
The Company had depreciation and amortization of $13,998 for the quarter
ended March 31, 1998. The Company had an increase in accounts payable and
accrued expenses of $74,386. Other assets increased by $95,948 for the
quarter ended March 31, 1998. Net cash used in operations for the quarter
ended March 31, 1998 was $90,106.
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.
Impact of Year 2000. The Year 2000 issue is the result of computer
programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that have time-
sensitive software may recognize a date using 000 as the year 1900 rather
than the year 2000.
This could result in a system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to
process transactions, send payments on invoices, or engage in similar normal
business activities.
The Company has initiated formal communications with its business venture
associates and affiliates to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to
remediate their own Year 2000 issues. There can be no guarantee that the
systems of other companies on which the Company's own systems may rely will
be timely converted and would not have an adverse effect on the Company's
systems.
The majority of the Company's computer systems and network are Macintosh
based The Y2K bug are not expected to affect Macintosh based systems. The
Company's MIS Director has assessed the computer systems for the Company and
determined the overall systems to be Y2K ready. The few PC computer
systems in the Company have been converted to newer computers that are
Certified Year 2000 compliant. Some individual minor issues have been
addressed and will be resolved in the middle of 1999. These issues would
not significantly affect the function of the Company in any case.
The Company believes that the Year 2000 issue will not pose significant
operational problems for its computer systems.
<PAGE>11
GAMING VENTURE CORP., U.S.A.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
None
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Date: /s/ Alan Woinski
----------------------------
Alan Woinski,
President
May 11, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1998
<CASH> 1,449,350
<SECURITIES> 1,253,231
<RECEIVABLES> 1,563,479
<ALLOWANCES> 0
<INVENTORY> 33,300
<CURRENT-ASSETS> 4,973,148
<PP&E> 244,650
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,669,364
<CURRENT-LIABILITIES> 3,632,003
<BONDS> 0
<COMMON> 4,977
0
0
<OTHER-SE> 3,642,171
<TOTAL-LIABILITY-AND-EQUITY> 7,669,364
<SALES> 3,117,496
<TOTAL-REVENUES> 3,117,496
<CGS> 1,628,293
<TOTAL-COSTS> 3,627,293
<OTHER-EXPENSES> 1,242,483
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 186,578
<INCOME-TAX> 0
<INCOME-CONTINUING> 186,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186,578
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
