<PAGE>2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT 1 TO
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
---------- ----------
Commission file number - 000-21483
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)
8025 Blackhorse Pike, Bayport One, Suite 470
West Atlantic City, NJ 08232
(Address of principal executive offices) (Zip Code)
(201) 599-8484
(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:
5,001,734 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
ASSETS
------------
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
----------------- ------------------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 1,358,531 $ 1,124,140
Accounts receivable 1,768,909 1,137,593
Investment in marketable securities 1,547,865 1,272,889
Inventories 38,981 33,648
Loans receivable, employees 11,477 7,034
Deferred promotion costs, less accumulated amortization
of $376,000 and $216,000 505,688 541,161
Prepaid expenses 39,696 123,991
--------------- ---------------
Total current assets 5,271,147 4,240,456
Property and equipment - at cost, less accumulated depreciation
and amortization 249,984 250,240
Goodwill, less accumulated amortization of
$187,894 and $91,447 1,646,038 1,742,485
Loans receivable, shareholders and related parties 797,312 626,910
Other assets 46,038 46,481
------------- ------------
$ 8,010,519 $ 6,906,572
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Note payable $ 90,000 $ 100,000
Accounts payable and accrued expenses 1,205,114 1,222,383
Current portion of deferred subscription revenues 2,162,927 1,286,813
Deferred trade show revenues 14,342 312,978
Current portion of deferred advertising revenues 55,526 83,328
Income taxes payable 158,000 -
--------------- ----------------
Total current liabilities 3,685,909 3,005,502
--------------- ----------------
Deferred subscription revenues, less current portion 419,364 252,785
--------------- ---------------
Deferred advertising revenues, less current portion - 34,728
-------------- ---------------
Shareholders' equity
Common stock, $.001 par value; 50,000,000 shares authorized,
5,001,734 and 4,968,734 shares issued and outstanding in
1999 and 1998, respectively 5,002 4,969
Additional paid-in capital 3,990,111 3,928,769
Unrealized loss on investments (348,525) ( 72,292)
Retained earnings (deficit) 258,658 (247,889)
-------------- -------------
3,905,246 3,613,557
-------------- --------------
$ 8,010,519 $ 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
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1999 1998 1999 1998
------ ----- ----- -----
<S> <C> <C> <C> <C>
Revenues $ 2,966,493 $2,186,660 $ 9,722,909 $ 6,911,693
Direct costs 1,576,432 1,237,109 5,007,271 3,463,251
------------ ---------- ----------- -----------
Gross profit 1,390,061 949,551 4,715,638 3,448,442
General and administrative expenses 1,262,745 1,172,573 3,924,211 3,445,011
----------- ---------- ---------- ---------
Income (loss) from operations 127,316 (223,022) 791,427 3,431
Other income (expenses) 12,245 ( 4,909) 31,360 25,301
---------- ---------- --------- ----------
Income (loss) before income
taxes and minority interest 139,561 (227,931) 822,787 28,732
Income taxes (benefit) 10,000 (122,000) 158,000 6,000
--------- ---------- -------- --------
Income (loss) before minority
interest 129,561 (105,931) 664,787 22,732
Minority interest in earnings of
American Gaming Summit, LLC and
Southern Gaming Summit, LLC 93,046 - 158,240 -
-------- -------- -------- ---------
Net income (loss) $ 36,515 $ (105,931) $ 506,547 $ 22,732
========= =========== ========== =========
Basic and diluted income (loss) per share $ .01 $ (.02) $ .10 $ .01
========= =========== ========== =========
Shares used in calculation of income
(loss) per share 5,001,734 4,916,868 4,986,708 4,164,289
========= =========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----- ------
<S> <C> <C>
Cash flows from operating activities
Net income $ 506,547 $ 22,732
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 147,957 92,432
Minority interest in earnings of American Gaming
Summit, LLC and Southern Gaming Summit, LLC 158,240 -
Changes in assets and liabilities
Accounts receivable (631,316) (3,046)
Inventories (5,333) 5,810
Deferred promotion costs 35,473 -
Prepaid expenses 84,295 (569,664)
Other assets 443 6,254
Accounts payable and accrued expenses (17,269) (77,573)
Deferred subscription revenues 1,042,693 263,267
Deferred trade show revenues (298,636) -
Deferred advertising revenues (62,530) -
Income taxes payable 158,000 (49,190)
--------- -------
Net cash provided by (used in) operating activities 1,118,564 (308,978)
--------- -------
Cash flows from investing activities
Additions to property and equipment (51,254) (68,181)
Investment in marketable securities, net (551,209) (168,163)
Loans receivable, employees (4,443) 6,661
Loans receivable, shareholders and related parties (170,402) (256,212)
---------- --------
Net cash used in investing activities (777,308) (485,895)
--------- --------
Cash flows from financing activities
Notes payable (10,000) 100,000
Principal payments on loan payable, automobile - (9,025)
Issuance of common stock 61,375 656,605
Dividends paid - (62,350)
Dividends paid to minority interest (158,240) -
--------- --------
Net cash provided by (used in) financing activities (106,865) 685,230
-------- --------
Net increase (decrease) in cash 234,391 (109,643)
Cash, beginning of period 1,124,140 1,361,720
--------- ---------
Cash, end of period $ 1,358,531 $ 1,252,077
============ ============
Supplemental cash flow disclosures
Interest paid $ 11,116 $ 29,080
========= =========
</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 shareholders of the Company and its
combined affiliates 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
September 30, 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 nine months ended September 30, 1998 include the
results of operations and cash flows of the Company and its subsidiaries,
and of Gaming for the period beginning April 3, 1998. 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.
Amortization of direct response advertising costs was $160,000 and
$155,000 for the nine months ended September 30, 1999 and 1998,
respectively, and is included in promotion expenses.
<PAGE>8
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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
September 30, 1999.
5 - NOTE PAYABLE
The note payable of $90,000 at September 30, 1999 is a demand note
and required monthly payments of interest only, for the period May 1,
1998 to August 31, 1999, at First Union National Bank's prime rate plus
1%. Effective September 1, 1999, the Company is making monthly
principal payments of $10,000 in addition to interest. Marketable
securities owned by a shareholder are collateral for the note.
Interest expense was $7,766 and $6,315 for the nine months ended
September 30, 1999 and 1998, respectively.
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 $103,500 and $69,903 for the nine months
ended September 30, 1999 and 1998, respectively.
Loans receivable, shareholders and related parties at September
30, 1999 include loans to the majority shareholder of $530,106, a loan
of $4,806 to a member of a shareholder's family, a loan of $249,652 to
another shareholder, and loans to two shareholders totaling $12,748.
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.
On June 1, 1999, options to purchase 15,000 shares of common stock
at $1.50 a share were exercised.
On June 9, 1999, options to purchase 10,000 shares of common stock
at $2.50 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
and nine months ended September 30, 1999, which includes the unrealized
loss on investments for the periods of $601 and $276,233, respectively,
was $35,914 and $230,314, respectively. Total comprehensive loss for
the three months and nine months ended September 30, 1998, which
includes the unrealized loss on investments for the periods of $106,033
and $266,881, respectively, was $(186,587) and $(218,772),
respectively.
<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.
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, measured 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 $103,500 and $69,903 for the nine months
ended September 30, 1999 and 1998, respectively.
For the nine months ended September 30, 1999, the Company had an
increase in loan receivables from shareholders and related parties of
$170,402 and an increase in loans receivable from employees of $4,443.
The Company purchased $51,254 worth of equipment, and had an increase
in marketable securities of $551,209. As a result, the Company had
cash flow used in investing activities of $777,308 for the nine months
ended September 30, 1999.
For the nine months ended September 30, 1998, the Company had an
increase in loan receivables from shareholders and related parties of
$256,212 and an decrease in loans receivable from employees of $6,661.
The Company purchased $68,181 worth of equipment, and had an increase
in marketable securities of $168,163. As a result, the Company had
cash flow used in investing activities of $485,895 for the nine months
ended September 30, 1998.
For the nine months ended September 30, 1999, the Company had a
decrease in notes payable of $10,000. The Company made distributions
of $158,240 to a minority interest. The Company received proceeds of
$61,375 from the issuance of its common stock. As a result, the
Company had net cash used in financing activities of $106,865 for the
nine months ended September 30, 1999.
For the nine months ended September 30, 1998, the Company had an
increase in notes payable of $100,000. The Company made principal
payments on loan payable, automobile of $9,025. The Company received
proceeds of $656,605 from the issuance of its common stock. The
Company made distributions of $62,350 to the then sole stockholder for
the nine months ended September 30, 1998. As a result, the Company
had net cash provided by financing activities of $685,230 for the nine
months ended September 30, 1998.
<PAGE>10
Results of Operations. The Company had net income of $506,547 for
the nine months ended September 30, 1999. The Company received
revenues of $9,772,909 that consisted of advertising revenue of
$5,478,864 , subscription revenues of $2,398,583 and other revenues
which consisted primarily of consulting fees of $477,581, tradeshow
revenues of $1,185,335 and miscellaneous revenues of $182,546. The
Company had direct costs of $5,007,271 for the nine months ended
September 30, 1999. Operating expenses for the nine months ended
September 30, 1999 were $3,924,211 that includes payroll related costs
of $2,355,280 , postage of $210,545 and other nonmaterial expenses of
$1,027,133. Promotion expenses were $331,253 for the nine months
ended September 30, 1999.
The Company had an increase in accounts receivable of $631,316.
Inventories increased $5,333 for the nine months ended September 30,
1999 and prepaid expenses decreased by $84,295. Deferred promotion
costs decreased $35,473. Deferred advertising revenues decreased
$62,530. Deferred subscription revenues increased $1,042,693 from the
sale of its magazine and newsletter subscriptions. Deferred tradeshow
revenues decreased $298,636. The Company had depreciation and
amortization of $147,957 for the nine months ended September 30, 1999.
The Company had minority interest in earnings of American Gaming
Summit, LLC and Southern Gaming Summit, LLC or $158,240. The Company
had a decrease in accounts payable and accrued expense of $17,269 and
an increase in income taxes payable of $158,000. Other assets
decreased by $443 for the nine months ended September 30, 1999. Net
cash provided by operations for the nine months ended September 30,
1999 was $1,118,564.
The Company had net income of $22,732 for the nine months ended
September 30, 1998. The Company received revenues of $6,911,693 that
consisted of advertising revenue of $4,204,794, subscription revenue of
$1,389,657 and other revenues that consisted primarily of consulting
fees of 403,344, trade show revenue of $659,612 and miscellaneous
revenues of $254,286. The Company had direct costs of $3,463,251 for
the nine months ended September 30, 1998. Operating expenses for the
nine months ended September 30, 1998 were $3,445,011. These consisted
principally of general payroll related costs of $1,925,015, advertising
and promotion of $334,161, postage of $196,119, travel and
entertainment of $153,181, bad debts of $100,361 and other nonmaterial
expenses of $736,174. The Company had an increase in accounts
receivable of $3,046. Inventories decreased $5,810 for the nine
months ended September 30, 1998 and prepaid expenses increased by
$569,664. Deferred subscription revenue increased $263,267. The
Company had depreciation and amortization of $92,432 for the nine
months ended September 30, 1998. The Company had a decrease in
accounts payable and accrued expenses of $77,573 and a decrease in
income taxes payable of $49,190. Other assets decreased by $6,254 for
the nine months ended September 30, 1998. Net cash used in operations
for the nine months ended September 30, 1998 was $308,978.
The Company 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.
<PAGE>11
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>12
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: /s/ Alan Woinski
----------------------------
Alan Woinski, President
November 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 1,358,531
<SECURITIES> 1,547,865
<RECEIVABLES> 1,768,909
<ALLOWANCES> 0
<INVENTORY> 38,981
<CURRENT-ASSETS> 5,271,147
<PP&E> 249,988
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,010,519
<CURRENT-LIABILITIES> 3,685,909
<BONDS> 0
<COMMON> 5,002
0
0
<OTHER-SE> 3,900,244
<TOTAL-LIABILITY-AND-EQUITY> 8,010,519
<SALES> 9,722,909
<TOTAL-REVENUES> 9,722,909
<CGS> 5,007,271
<TOTAL-COSTS> 5,007,271
<OTHER-EXPENSES> 3,924,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 822,787
<INCOME-TAX> 158,000
<INCOME-CONTINUING> 506,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 506,587
<EPS-BASIC> .10
<EPS-DILUTED> .10
</TABLE>
