<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, 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 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:
6,449,927 Shares of Common Stock ($.001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
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<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>
June 30, December 31,
2000 1999
--------- ------------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 677,128 $ 755,159
Certificate of deposit 412,789 401,809
Accounts receivable, net of allowance for doubtful
accounts 1,626,094 2,409,010
Investment in marketable securities 1,846,537 1,635,216
Inventories 52,565 37,027
Loans receivable, employees 8,993 8,416
Prepaid expenses 114,892 48,677
----------- -----------
Total current assets 4,738,998 5,295,314
Property and equipment - at cost, less
accumulated depreciation
and amortization 323,875 230,773
Goodwill, less accumulated amortization of
$60,964 and $157,412 1,554,592 1,615,556
Loans receivable, shareholders and
related parties 699,541 802,105
Other assets 47,481 46,038
---------- -----------
$ 7,364,487 $ 7,989,786
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 178,898 $ 120,000
Accounts payable and accrued expenses 1,678,089 1,460,848
Current portion of deferred subscription
revenues 1,198,847 1,936,475
Income taxes payable 215,000 153,000
------------ -----------
Total current liabilities 3,270,834 3,670,323
Deferred subscription revenues,
less current portion 178,427 360,080
Note payable, less current portion 42,328 -
----------- ----------
3,491,589 4,030,403
----------- ----------
Shareholders' equity
Common stock, $.001 par value;
50,000,000 shares authorized,
6,449,927 and 5,004,234 shares issued 6,450 5,004
Additional paid-in capital 6,144,973 3,995,109
Undistributed stock compensation - 2,145,000
Unrealized loss on investments ( 453,476) ( 255,173)
Accumulated deficit ( 1,694,282) ( 1,930,557)
Common stock in treasury, at cost,
56,307 shares (130,767) -
----------- -----------
3,872,898 3,959,383
----------- -----------
$ 7,364,487 $ 7,989,786
=========== ===========
</TABLE>
<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,
------------------- ----------------
2000 1999 2000 1999
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues $ 3,337,315 $ 3,638,920 $ 6,739,238 $ 6,756,416
Direct costs 1,573,696 1,802,546 3,492,475 3,430,839
------------ ------------ ------------ ------------
Gross profit 1,763,619 1,836,374 3,246,763 3,325,577
General and administrative expenses 1,360,925 1,418,983 2,822,613 2,661,466
------------ ------------ ----------- ------------
Income from operations 402,694 417,391 424,150 664,111
Other income 37,480 8,857 52,956 19,115
------------ ------------ ----------- ------------
Income before income taxes
and minority interest 440,174 426,248 477,106 683,226
Income taxes 122,000 148,000 122,000 148,000
------------ ------------ ----------- ------------
Income before minority
interest 318,174 278,248 355,106 535,226
Minority interest in earnings (loss) of
American Gaming Summit, LLC
And Southern Gaming Summit 118,831 (5,206) 118,831 65,194
------------ ------------ ----------- ------------
Net income $ 199,343 $ 283,454 $ 236,275 $ 470,032
============ ============ =========== ============
Basic and diluted income per share $ .03 $ .06 $ .04 $ .09
============ ============ =========== ============
Shares used in calculation of income
per share 6,433,620 4,984,097 5,734,898 4,979,071
============ ============ =========== ============
</TABLE>
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---------- -----------
<S> <C> <C>
Cash flows from operating activities $ 526,195 $ 781,081
Cash flows from investing activities ( 523,769) ( 700,373)
Cash flows from financing activities ( 80,457) ( 3,819)
----------- ------------
Net increase (decrease) in cash ( 78,031) 76,889
Cash, beginning of period 755,159 1,124,140
----------- ------------
Cash, end of period $ 677,128 $ 1,201,029
=========== ------------
Supplemental cash flow disclosures
Interest paid $ 10,144 $ 7,366
Income taxes paid 60,000 -
Noncash financing activities
Issuance of common stock as bonuses $ 2,145,000 -
Treasury stock received to reduce
shareholder loans 130,767 -
Issuance of common stock for services 6,000 -
Financed equipment acquisitions 51,226 -
</TABLE>
<PAGE>7
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 - ORGANIZATION
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 condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and applicable rules and regulations of the
Securities and Exchange Commission. 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 primarily 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 and Form
10KSB for the year ended December 31, 1999 and Form 8-K filed on August
8, 2000.
The condensed consolidated financial statements include the accounts
of the Company and all of its wholly owned and majority owned
subsidiaries. All significant intercompany balances and transactions
have been eliminated.
<PAGE>
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3 - BARTER TRANSACTIONS
The Company accounts for barter transactions in accordance with EITF
93-11, "Accounting for Barter Transaction Involving Barter Credits", and
APB No. 29, "Accounting for Nonmonetary Transactions", which require that
the fair value of the nonmonetary asset exchanged be used in recording
the nonmonetary transactions.
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 June 30, 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 six months ended June
30, 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 June
30, 2000.
5 - NOTES PAYABLE
The note payable of $170,000 is a demand note and requires monthly
payments of interest only, beginning May 1, 1999, at First Union National
Bank's prime rate plus 1%. Marketable securities owned by a shareholder
are collateral for the note. Interest expense was $6,697 and $5,281 for
the six months ended June 30, 2000 and 1999, respectively.
The note payable in the original amount of $53,755 is a finance
obligation payable to First Union National Bank. It is collateralized by
a Company truck and is payable in monthly installments of $1,129,
including interest at 9.16% a year through March 2005. For the six
months ended June 30, 2000, interest expense was $859.
<PAGE>9
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 approximately $78,000 and $69,000 for the six
months ended June 30, 2000 and 1999, respectively.
Loans receivable, shareholders and related parties include loans to
the majority shareholder of $479,561, a loan of $8,635 to a family member
of a shareholder, and loans of $211,345 to two shareholders. Repayments
began at the end of the first quarter of 2000 with the shareholders
returning 56,307 shares of the Company's common stock held at a minimum
rate of 10% of the outstanding loan balance per quarter. See Note 7.
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. The related
compensation expense was recognized during the year ended December 31,
1999.
During the six months ended June 30, 2000, the Company reacquired
56,307 shares of restricted common stock from three shareholders, valued
at $130,767, for partial repayment of shareholder loans receivable.
8 - COMPREHENSIVE INCOME (LOSS)
The components of comprehensive income (loss) were as follows:
Six Months Ended
June 30,
-------------------
2000 1999
------ ------
Net income $ 236,275 $ 470,032
Change in unrealized loss on
investments (198,303) (275,632)
--------- ---------
$ 37,972 $ 194,400
========= =========
<PAGE>10
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9 - SUBSEQUENT EVENT
On August 7, 2000, the Company acquired a 60% interest in Poker
Digest, LLC for 301,500 shares of restricted common stock. The remaining
40% interest will be held by the founders of Poker Digest, LLC, who will
continue to operate the Company. Poker Digest, LLC is the holding
company for Poker Digest magazine, a biweekly magazine focusing on the
poker and card club niche market of the gaming industry, and Classic
Poker Cruises, which organizes seven- and ten-day poker cruises with
existing cruise lines.
<PAGE>11
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.
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, 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 $78,000 and $69,000 for the six months ended June 30, 2000 and 1999,
respectively.
For the six months ended June 30, 2000, the Company had an increase in loan
receivables from shareholders and related parties of $28,203 and an increase
in loans receivable from employees of $577. The Company purchased $74,385
worth of equipment, and had an increase in marketable securities of
$409,624. As a result, the Company had cash flow used in investing
activities of $523,769 for the six months ended June 30, 2000.
For the six months ended June 30, 1999, the Company had an increase in loan
receivables from shareholders and related parties of $105,401 and an increase
in loans receivable from employees of $4,225. The Company purchased $35,807
worth of equipment, and had an increase in marketable securities of
$554,940. As a result, the Company had cash flow used in investing
activities of $700,373 for the six months ended June 30, 1999.
For the six months ended June 30, 2000, the Company had an increase in
notes payable of $101,226, which includes finance obligation of
company truck of $51,226. The Company also reacquired common stock
valued at $130,767 to reduce shareholder loans receivable. As a
result, the Company had net cash used in financing activities of
$80,457 for the six months ended June 30, 2000.
For the six months ended June 30, 1999, the Company made distributions of
$65,194 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 $3,819 for the six months ended
June 30, 1999.
Results of Operations. The Company had net income of $236,275 for the
six months ended June 30, 2000. The Company received revenues of
$6,739,238 that consisted of advertising revenue of $3,737,352,
subscription revenues of $1,469,415 and other revenues which consisted
primarily of consulting fees of $305,405, tradeshow revenues of
$1,027,192 and miscellaneous revenues of $199,874. The Company had
direct costs of $3,246,763 for the six months ended June 30, 2000.
Operating expenses for the six months ended June 30, 2000 were
$2,822,613 that includes payroll related costs of $1,682,781 , postage
of $333,327 and other nonmaterial expenses of $513,270. Promotion
expenses were $293,235 for the six months ended June 30, 2000.
The Company had a decrease in accounts receivable of $782,916.
Inventories increased $15,538 for the six months ended June 30, 2000
and prepaid expenses increased by $14,215. Deferred promotion expenses
increased $52,000. Deferred subscription revenues decreased $964,874
from the sale of its magazine and newsletter subscriptions. Deferred
tradeshow revenues decreased $6,407. The Company had depreciation and
amortization of $93,473 for the six months ended June 30, 2000. The
Company had minority interest in earnings of American Gaming Summit,
LLC and Southern Gaming Summit of $118,831. The Company had an
increase in accounts payable and accrued expense of $217,241 and an
increase in income taxes payable of $62,000. Other assets increased
by $1,443 for the six months ended June 30, 2000. Net cash provided by
operations for the six months ended June 30, 2000 was $526,195.
The Company had net income of $470,032 for the six months ended June
30, 1999. The Company received revenues of $6,756,416 that consisted
of advertising revenue of $3,530,629, subscription revenues of
$1,607,357 and other revenues which consisted primarily of consulting
fees of $281,325, tradeshow revenues of $1,186,148 and miscellaneous
revenues of $150,957. The Company had direct costs of $3,430,839 for
the six months ended June 30, 1999. Operating expenses for the six
months ended June 30, 1999 were $2,661,466 that includes payroll
related costs of $1,578,580, postage of $138,711 and other nonmaterial
expenses of $680,838. Promotion expenses were $263,337 for the six
months ended June 30, 1999.
The Company had an increase in accounts receivable of $654,739.
Inventories increased $338 for the six months ended June 30, 1999 and
prepaid expenses decreased by $19,029. Deferred promotion expenses
decreased $13,931. Deferred advertising revenues decreased $31,667.
Deferred subscription revenues increased $961,671 from the sale of its
magazine and newsletter subscriptions. Deferred tradeshow revenues
decreased $312,978. The Company had depreciation and amortization of
$100,933 for the six months ended June 30, 1999. The Company had
minority interest in earnings of American Gaming Summit, LLC of
$65,194. The Company had a decrease in accounts payable and accrued
expense of $1,430 and an increase in income taxes payable of $148,000.
Other assets decreased by $3,443 for the six months ended June 30,
1999. Net cash provided by operations for the six months ended June
30, 1999 was $781,081.
<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.
/s/ Alan Woinski
----------------------------
Alan Woinski, President
August 11, 1999
