<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 September 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:
6,751,427 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>
September 30, December 31,
2000 1999
------------ -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 747,087 $ 755,159
Certificate of deposit 254,767 401,809
Accounts receivable, net of allowance for
doubtful accounts 2,164,676 2,409,010
Investment in marketable securities 1,471,674 1,635,216
Inventories 57,585 37,027
Loans receivable, employees 13,123 8,416
Prepaid expenses 153,199 48,677
----------- -----------
Total current assets 4,862,111 5,295,314
Property and equipment - at cost, less
accumulated depreciation and amortization 329,894 230,773
Goodwill, less accumulated amortization of
$316,139 and $157,412 1,965,462 1,615,556
Loans receivable, shareholders and related parties 670,909 802,105
Other assets 50,467 46,038
---------- -----------
$7,878,843 $7,989,786
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 179,920 $ 120,000
Accounts payable and accrued expenses 1,628,123 1,460,848
Current portion of deferred subscription revenues 853,642 1,936,475
Income taxes payable 315,514 153,000
---------- ----------
Total current liabilities 2,977,199 3,670,323
Deferred subscription revenues, less current portion 334,253 360,080
Note payable, less current portion 39,162 -
Minority interest 29,021 -
---------- ----------
3,379,635 4,030,403
Shareholders' equity
Common stock, $.001 par value; 50,000,000
shares authorized, 6,751,427 and 5,004,234
shares issued 6,751 5,004
Additional paid-in capital 6,625,188 3,995,109
Undistributed stock compensation - 2,145,000
Accumulated unrealized loss on investments ( 408,528) ( 255,173)
Accumulated deficit (1,549,686) (1,930,557)
Common stock in treasury, at cost, 76,307 shares ( 174,517) -
---------- ----------
4,499,208 3,959,383
---------- ----------
$7,878,843 $7,989,786
========= =========
</TABLE>
<PAGE>5
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues $3,228,781 $2,966,493 $9,968,019 $9,722,909
Direct costs 1,582,952 1,576,432 5,075,427 5,007,271
---------- ----------- ----------- -----------
Gross profit 1,645,829 1,390,061 4,892,592 4,715,638
General and administrative expenses 1,375,604 1,262,745 4,198,217 3,924,211
---------- ---------- ---------- ----------
Income from operations 270,225 127,316 694,375 791,427
Other income 21,935 12,245 74,891 31,360
--------- --------- --------- ---------
Income before income
taxes and minority interest 292,160 139,561 769,266 822,787
Income taxes 151,000 10,000 273,000 158,000
--------- -------- --------- --------
Income before minority
interest 141,160 129,561 496,266 664,787
--------- -------- --------- --------
Minority interest in earnings of
Poker Digest, LLC 2,653 - 2,653 -
American Gaming Summit, LLC and
Southern Gaming Summit, LLC 780 (93,046) (118,051) (158,240)
-------- ------- -------- --------
3,433 (93,046) (115,398) (158,240)
-------- -------- -------- --------
Net income $144,593 $ 36,515 $380,868 $506,547
======== ======== ======== ========
Basic and diluted income per share $ .02 $ .01 $ .07 $ .10
======== ======== ======== ========
Shares used in calculation of income
per share 6,751,210 5,001,734 5,593,773 4,986,708
========= ========= ========= =========
</TABLE>
<PAGE>6
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Cash flows from operating activities ($124,057) $1,118,564
Cash flows from investing activities 65,985 (777,308)
Cash flows from financing activities 50,000 (106,865)
--------- ----------
Net increase (decrease) in cash (8,072) 234,391
Cash, beginning of period 755,159 1,124,140
--------- ----------
Cash, end of period $747,087 $1,358,531
======== ==========
Supplemental cash flow disclosures
Interest paid $ 17,379 $ 11,116
Income taxes paid 117,316 -
Noncash financing activities
Issuance of common stock as bonuses 2,145,000 -
Treasury stock reacquired in reduction of
shareholder loans 174,517 -
Issuance of common stock for services 6,000 -
Financed equipment acquisitions 49,082 -
Issuance of common stock in connection with the
acquisition of 60% of Poker Digest, LLC 480,516 -
</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.
Acquisition
On July 1, 2000, the Company acquired a 60% interest in Poker Digest, LLC
for 301,500 shares of restricted common stock in a business combination
accounted for under the purchase method of accounting. 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. Goodwill of approximately $453,000 was recorded in connection with
the acquisition and will be amortized over a 10-year period. Pro forma
results of operations have not been presented for the acquisition because
the effect of the acquisition was not material to the Company. The
results of operations of Poker Digest, LLC are included in the Company's
condensed consolidated statement of income from the date of acquisition.
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 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.
<PAGE>8
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2 - BASIS OF PRESENTATION (Continued)
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.
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 September 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 nine months ended
September 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 transactions, and is being amortized over periods of 10 to 15
years. The Company periodically re-evaluates its recoverability. In
management's opinion, there has been no impairment of goodwill at
September 30, 2000.
5 - NOTES PAYABLE
A 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 $13,083 and $6,315 for the
nine months ended September 30, 2000 and 1999, respectively.
<PAGE>9
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5 - NOTES PAYABLE (Continued)
A 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 nine months ended September
30, 2000, interest expense was $1,242.
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 $103,500 for each of the nine months ended
September 30, 2000 and 1999, respectively.
Loans receivable, shareholders and related parties include loans to the
majority shareholder of $455,797, a loan of $9,420 to a family member of a
shareholder, and loans of $211,645 to another shareholder. Repayments on
the loans began at the end of the first quarter of 2000 with the
shareholders returning 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 nine months ended September 30, 2000, the Company reacquired
76,307 shares of restricted common stock from three shareholders, valued
at $174,517, as partial repayment of shareholder loans receivable.
<PAGE>10
CASINO JOURNAL PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8 - COMPREHENSIVE INCOME
The components of comprehensive income were as follows:
Nine Months Ended
September 30,
-----------------------
2000 1999
-------- --------
Net income $380,868 $506,547
Unrealized loss on investments (153,355) (276,233)
-------- --------
$227,513 $230,314
======== ========
9 - RECENT PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in
Financial Statements". SAB 101 summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition
in financial statements. The Company is continuing to evaluate the
potential impact of SAB 101 on the Company's results of operations and
financial position. Based on the SEC's latest timeline for implementing
SAB 101, the Company would be required to comply with the guidelines in
the fourth quarter of 2000.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", was issued in June 1998 and was subsequently amended by SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133". SFAS No. 133
addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging
activities. Adoption of these pronouncements is required for the period
beginning on July 1, 2000. The Company does not invest in derivative
instruments and, accordingly, does not expect these pronouncements to have
a material impact on the results of its operations.
<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.
Recent Acquisition. On July 1, 2000, the Company acquired a 60% interest
in Poker Digest, LLC for 301,500 shares of restricted common stock in a
business combination accounted for under the purchase method of
accounting. 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. Goodwill of approximately
$453,000 was recorded in connection with the acquisition and will be
amortized over a 10-year period. Pro forma results of operations have not
been presented for the acquisition because the effect of the acquisition
was not material to the Company. The results of operations of Poker
Digest, LLC are included in the Company's condensed consolidated statement
of income from the date of acquisition.
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 for each of the nine months
ended September 30, 2000 and 1999.
For the nine months ended September 30, 2000, the Company had an
increase in loan receivables from shareholders and related parties of
$43,321 and an increase in loans receivable from employees of $4,707.
The Company purchased $98,932 worth of equipment, and sold marketable
securities for $37,038 and a decrease in Certificates of Deposit of
$147,042. The Company also received cash of $28,865 in the
acquisition of Poker Digest, LLC. As a result, the Company had cash
flow from investing activities of $65,985 for the nine months ended
September 30, 2000.
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, 2000, the Company had an
increase in notes payable of $99,082, which includes finance
obligations of a company truck of $49,082. The Company also
reacquired common stock valued at $174,517 to reduce shareholder loans
receivable. The Company had net cash from financing activities of
$50,000 for the nine months ended September 30, 2000.
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.
Results of Operations. The Company had net income of $380,868 for
the nine months ended September 30, 2000. The Company received
revenues of $9,968,019 that consisted of advertising revenue of
$5,833,969, subscription revenues of $2,356,892 and other revenues
which consisted primarily of consulting fees of $349,855, tradeshow
revenues of $1,125,232 and miscellaneous revenues of $302,071. The
Company had direct costs of $5,075,427 for the nine months ended
September 30, 2000. Operating expenses for the nine months ended
September 30, 2000 were $4,198,217 that includes payroll related costs
of $2,611,108, postage of $254,679 and other expenses of $881,486.
Promotion expenses were $450,944 for the nine months ended September
30, 2000.
The Company had a decrease in accounts receivable of $335,176 for the
nine months ended September 30, 2000. Inventories increased $17,482
and prepaid expenses increased by $123,110. Deferred subscription
revenues decreased $1,108,660 from the sale of its magazine and
newsletter subscriptions. The Company had depreciation and
amortization of $153,324 for the nine months ended September 30, 2000.
The Company had minority interest in earnings of American Gaming
Summit, LLC and Southern Gaming Summit of $118,051. The Company had
an increase in accounts payable and accrued expense of $100,437 and an
increase in income taxes payable of $162,514. Other assets increased
by $7,415 for the nine months ended September 30, 2000. Net cash used
in operations for the nine months ended September 30, 2000 was
$124,057.
<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
November 14, 2000
