<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, 2000
[ ] 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)
8025 Black Horse Pike, 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:
6,469,927 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,
2000 1999
------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 936,856 $ 755,159
Certificate of deposit 401,809 401,809
Accounts receivable 2,432,137 2,409,010
Investment in marketable securities 1,845,172 1,635,216
Inventories 60,441 37,027
Loans receivable, employees 9,772 8,416
Prepaid expenses 114,892 48,677
---------- -----------
Total current assets 5,801,079 5,295,314
Property and equipment - at cost, less accumulated
depreciation and amortization 260,014 230,773
Goodwill, less accumulated
amortization of $243,588 and $213,376 1,585,074 1,615,556
Loan receivable, shareholders and
related parties 780,524 802,105
Other assets 46,038 46,038
------------ ------------
$8,472,729 $ 7,989,786
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------
Current liabilities
Note payable $ 120,000 $ 120,000
Accounts payable and accrued expenses 1,727,363 1,460,848
Current portion of deferred subscriptions
revenues 1,920,078 1,936,475
Deferred trade show revenues 175,971 -
Income taxes payable 93,000 153,000
------------ ------------
Total current liabilities 4,036,412 3,670,323
Deferred subscription revenues, less
current portion 325,683 360,080
----------- ------------
4,362,095 4,030,403
----------- ------------
Shareholders' equity
Common stock, $.001 par value; 50,000,000
Shares authorized, 6,469,927 and 5,004,234
Shares issued 6,470 5,004
Additional paid-in capital 6,144,643 3,995,109
Undistributed stock compensation - 2,145,000
Unrealized loss on investments ( 56,086) (255,173)
Accumulated deficit (1,893,626) (1,930,557)
Common stock in treasury, at cost, 36,307 shares ( 90,767) -
---------- -----------
4,110,634 3,959,383
---------- -----------
$8,472,729 $ 7,989,786
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-2
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------ -----
<S> <C> <C>
Revenues $3,401,922 $3,117,496
Direct costs 1,918,779 1,628,293
----------- -----------
Gross profit 1,483,143 1,489,203
General and administrative expenses 1,461,688 1,242,483
---------- -----------
Income from operations 21,455 246,720
Other income 15,476 10,258
---------- ----------
Income before minority interest 36,931 256,978
Minority interest in earnings of American
Gaming Summit, LLC - (70,400)
----------- ----------
Net income $ 36,931 $ 186,578
=========== ==========
Basic and diluted income per share $ .01 $ .04
=========== ==========
Shares used in the calculation
of income per share 5,036,177 4,973,990
========== ==========
</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, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities
Net income $36,931 $ 186,578
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 46,737 51,652
Barter transactions (65,000) -
Common stock issued for services 6,000 -
Minority interest in earnings of American Gaming
Summit, LLC - 70,400
Changes in assets and liabilities
Accounts receivable (23,127) (425,886)
Inventories (1,914) 348
Deferred promotion expenses - (23,126)
Prepaid expenses 29,285 19,796
Other assets - 3,125
Accounts payable and accrued expenses 214,515 99,318
Income taxes payable (60,000) -
Deferred subscription revenues (50,794) 559,276
Deferred trade show revenues 175,971 6,041
Deferred advertising revenues - 19,166
---------- ----------
Net cash provided by operating activities 308,604 566,688
---------- ----------
Cash flows from investing activities
Additions to property and equipment (45,496) (10,580)
Investment in marketable securities, net (10,869) (147,204)
Loans receivable, employees (1,356) 1,728
Loans receivable, shareholders and related parties (69,186) (74,297)
---------- -----------
Net cash used in investing activities (126,907) (230,353)
---------- -----------
Cash flows from financing activities
Issuance of common stock - 13,875
Dividends paid to minority interest - (25,000)
---------- ----------
Net cash used in financing activities - (11,125)
---------- ----------
Net increase in cash 181,697 325,210
Cash, beginning of period 755,159 $1,124,140
---------- ----------
Cash, end of period $936,856 $1,449,350
========= ==========
Supplemental cash flow disclosures
Interest paid $ 4,252 $ 4,021
Income taxes paid 60,000 -
Noncash investing and financing activities
Issuance of common stock as bonuses 2,145,000 -
Treasury stock received to reduce shareholder loans 90,767 -
Deferred promotion costs resulting from
Barter transactions 95,500 -
</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.
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, 2000 and December 31, 1999 and the
accompanying unaudited condensed consolidated statements of income
and cash flows include the results of operations and cash flows of
the Company and its subsidiaries for the three months ended March
31, 2000 and 1999. 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, 1999 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,
included in Form 10-KSB, for the year ended December 31, 1999.
3 - BARTER TRANSACTIONS
The Company accounts for barter transactions in accordance
with EITF 99-17, "Accounting for Advertising Barter Transactions",
which requires the recognition of revenue and expense only if the
fair value of the advertising surrendered is determinable based on
the Company's experience in receiving cash or other consideration
readily convertible to cash.
On January 17, 2000, the Company entered into an agreement to
render advertising services in exchange for video production
services for $234,000. These videos will be used primarily in the
promotion of the Company's magazines. As of March 31, 2000, the
Company has provided advertising services of $182,000 and deferred
the remaining $52,000 until the advertisement services are
provided. In addition, the Company distributed promotional videos
with a cost of approximately $145,000, which was recognized as
promotion expense in the three months ended March 31, 2000. The
cost of the remaining videos has been deferred and will be
recognized as expense when distributed.
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, 2000.
<PAGE>8
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5 - NOTE PAYABLE
The note payable of $120,000 is a demand note and requires
monthly payments of interest only, beginning April 1, 1999, at
First Union National Bank's prime rate plus 1%. Marketable
securities owned by a shareholder and the certificate of deposit
owned by the Company are collateral for the note. Interest
expense on the note was $4,252 and $4,021 for the three months
ended March 31, 2000 and 1999, 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 for the three months
ended March 31, 2000 and 1999 was $34,500 for each period.
Loans receivable, shareholders and related parties include
loans to the majority shareholder of $542,472, a loan of $7,918 to
a family member of a shareholder, and loans of $230,134 to two
shareholders. Repayments began at the end of the first quarter of
2000 by returning 36,307 shares of the Company's common stock held
at a minimum rate of 10% of the outstanding loan balance per
quarter.
7 - COMMON STOCK
On March 6, 2000, the Company issued 2,000 shares of
restricted common stock, with a fair value of $6,000, in exchange
for consulting services.
On March 30, 2000, the Company issued 1,463,693 shares of
restricted common stock, with a fair value of $2,145,000 as
compensation to four officers as part of the merger agreement with
Gaming Venture Corp., U.S.A dated April 3, 1998. The related
compensation expense was recognized during the year ended December
31, 1999.
On March 30, 2000, the Company reacquired 36,307 shares of
restricted common stock from three shareholders, valued at
$90,767, for repayment of shareholder loans receivable.
8 - COMPREHENSIVE INCOME
The components of comprehensive income were as follows:
Three Months Ended
March 31,
-------------------
2000 1999
---- ----
Net income $ 36,931 $ 186,578
Change in unrealized gain (loss) on
investments 199,087 (166,862)
-------- ---------
$236,018 $ 19,716
======== =========
<PAGE>9
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.
Risk Factors and Cautionary Statements. Forward-looking statements
in this report are made pursuant to the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the
statements, including, but not limited to, the following: the ability
of the Company to meet its cash and working capital needs, the ability
of the Company to successfully market its product, and other risks
detailed in the Company's periodic report filings with the Securities
and Exchange Commission.
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 5 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 for the three months ended March 31, 2000
and 1999 was $34,500 for each period.
For the three months ended March 31, 2000, the Company had an increase
in loan receivables from shareholders and related parties of $69,186
and an increase in loans receivable from employees of $1,356. The
Company purchased $45,496 worth of equipment and had an increase in
marketable securities of $10,869. As a result, the Company had cash
flow used in investing activities of $126,907 for the three months
ended March 31, 2000.
For the three months 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 three months
ended March 31, 1999.
For the three months ended March 31, 2000, the Company had no
financing activities.
<PAGE>10
For the three months ended March 31, 1999, the Company paid
distributions to minority interest of $25,000. The Company received
proceeds of $13,875 from the issuance of its common stock. As a
result, the Company had net cash used in financing activities of
$11,125 for the three months ended March 31, 1999.
Results of Operations. The Company had a net income of $36,931 for
the three months ended March 31, 2000. The Company received revenues
of $3,401,922 that consisted of advertising revenues of $1,785,472,
subscriptions revenues of $681,414 and other revenues, which consisted
primarily of consulting fees of $189,476, tradeshow revenues of
$476,278 and miscellaneous revenues of $269,282. The Company had
direct costs of $1,918,779 for the three months ended March 31, 2000.
Operating expenses for the three months ended March 31, 2000 were
$1,461,688. These consisted principally of general and
administrative expenses of $1,229,679 which includes payroll related
costs of $856,671, postage of $79,258 and other nonmaterial expenses
of $176,516. Promotion expenses were $117,234 for the three months
ended March 31, 2000.
The Company had an increase in accounts receivable of $23,127.
Inventories increased $1,914 for the three months ended March 31, 2000
and prepaid expenses decreased by $29,285. Deferred subscription
revenues decreased $50,794 from the sale of its magazine and
newsletter subscriptions. Deferred tradeshow revenues increased
$175,971. The Company had depreciation and amortization of $46,737
for the three months ended March 31, 2000. The Company had barter
transaction of $65,000 and common stock issued for services of
$6,000 for the three months ended March 31, 2000. The Company had an
increase in accounts payable and accrued expense of $214,515. Income
taxes payable decreased by $60,000. Net cash provided by operations
for the three months ended March 31, 2000 was $308,604.
The Company had a net income of $186,578 for the three months ended
March 31, 1999. The Company received revenues of $3,117,496 that
consisted of advertising revenues 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 three months ended March 31, 1999. Operating expenses for the
three months ended March 31, 1999 were $1,242,483 which 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 three months ended March 31, 1999.
The Company had an increase in accounts receivable of $425,886.
Inventories decreased $348 for the three months 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 and minority interest in earnings of
American Gaming Summit, LLC of $70,400 for the three months ended
March 31, 1999. The Company had an increase in accounts payable and
accrued expense of $99,318. Other assets decreased by $3,125 for the
three months ended March 31, 1999. Net cash provided by operations
for the three months ended March 31, 1999 was $566,688.
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.
(b) List of Exhibits
The following exhibits are filed with this report:
(2) Exchange of Stock/Purchase Agreement incorporated by reference to
Form 8-K filed 1/26/98
(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
(27) Financial Data Schedule
<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: May 13, 2000 /s/ Alan Woinski
----------------------------
Alan Woinski, President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 936,856
<SECURITIES> 1,845,172
<RECEIVABLES> 2,432,137
<ALLOWANCES> 0
<INVENTORY> 60,441
<CURRENT-ASSETS> 5,801,079
<PP&E> 260,014
<DEPRECIATION>
<TOTAL-ASSETS> 8,472,729
<CURRENT-LIABILITIES> 4,036,412
<BONDS> 0
<COMMON> 6,470
0
0
<OTHER-SE> 4,104,164
<TOTAL-LIABILITY-AND-EQUITY> 8,472,729
<SALES> 3,401,922
<TOTAL-REVENUES> 3,401,922
<CGS> 1,918,779
<TOTAL-COSTS> 1,918,779
<OTHER-EXPENSES> 1,461,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,931
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,931
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
