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, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period to
---- ----
Commission file number - 0-50187
GAMING VENTURE CORP., U.S.A.
Exact name of Registrant as specified in its charter)
NEVADA 86-0883289
(State or other
jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
801 Pascack Road
Paramus, NJ 07652
(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:
6,519,427 Shares of Common Stock
($.001 par value)
Transitional Small Business Disclosure Format (check one):
Yes No x
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2
Gaming Venture Corp., U.S.A.
PART I: Financial Information
ITEM 1 - Financial statements
ITEM 2 - Management's discussion and analysis of
financial condition and results of
operations
ITEM 3 - Controls and Procedures
PART II: Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
3
PART I
Item 1. Financial Statements:
GAMING VENTURE CORP., U.S.A.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2003
(UNAUDITED)
ASSETS
------
Current assets
Cash $ 451,199
Accounts receivable 13,856
Investment in marketable securities 75,185
----------
Total current assets 540,240
Property and equipment - at cost, less accumulated
depreciation 7,905
----------
$ 548,145
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Deferred revenues $ 77,449
----------
Shareholders' equity
Common stock, $.001 par value; 50,000,000 shares
authorized, 6,519,427 shares issued and outstanding 6,519
Additional paid-in capital 1,324,040
Accumulated unrealized loss on investments (189,009)
Accumulated deficit (670,854)
----------
470,696
----------
$ 548,145
==========
The accompanying notes are an integral part of these condensed financial
statements.
4
GAMING VENTURE CORP., U.S.A.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Revenues
Subscriptions $ 49,728 $ 43,802 $ 134,407 $ 125,035
Consulting 20,250 6,250 56,250 29,500
Other 749 902 4,181 4,094
---------- ---------- ---------- ----------
Total revenues 70,727 50,954 194,838 158,629
Cost of revenues 19,786 20,850 60,460 96,336
---------- ---------- ---------- ----------
Gross profit 50,941 30,104 134,378 62,293
General and administrative expenses 43,258 68,393 204,984 191,687
---------- ---------- ---------- ----------
7,683 (38,289) (70,606) (129,394)
---------- ---------- ---------- ----------
Other income (expense)
Realized gain on marketable
securities 3,569 8,595 5,893 81,310
Provision for doubtful accounts,
former affiliates - - (312,299) -
---------- ---------- ---------- ----------
3,569 8,595 (306,406) 81,310
---------- ---------- ---------- ----------
Net income (loss) $ 11,252 $ (29,694) $ (377,012) $ (48,084)
========== ========== ========== ==========
Basic and diluted income (loss)
per share $ 0.00* $ (0.00)* $ (0.06) $ (0.01)
========== ========== ========== ==========
Shares used in calculation of
basic and diluted loss per
share 6,519,427 6,519,427 6,519,427 6,519,427
========== ========== ========== ==========
*Amount is less than $.005
The accompanying notes are an integral part of these condensed financial
statements.
5
GAMING VENTURE CORP., U.S.A.
CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
2003 2002
---------- ----------
Cash flows from operating activities $ (42,337) $ (58,393)
Cash flows from investing activities 61,791 154,963
---------- ----------
Net increase in cash 19,454 96,570
Cash, beginning of period 431,745 329,428
---------- ----------
Cash, end of period $ 451,199 $ 425,998
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
6
GAMING VENTURE CORP., U.S.A.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Gaming Venture Corp., U.S.A. was incorporated on June 1, 1995 in the
State of Nevada. The operations and objectives of the Company are to
provide various types of gaming reports and newsletters regarding the
gaming and hospitality industries. The Company also provides
consulting and advisory services to the gaming and hospitality
industries.
On April 3, 1998, Casino Journal Publishing Group, Inc. ("CJPG") and
its combined affiliates merged with Gaming Venture Corp., U.S.A.
("Gaming" or the "Company"), a Nevada corporation. CJPG and its
combined affiliates became wholly owned subsidiaries of Gaming, the
legal acquirer. As the shareholders of CJPG and its combined
affiliates acquired 65% of Gaming's outstanding voting shares, the
merger was accounted for as a reverse acquisition of Gaming by CJPG,
the accounting acquirer in the transaction. Simultaneous with the
acquisition, Gaming changed its name to CJPG.
On January 3, 2003, the Board of Directors of CJPG approved the spin-
off of one of its subsidiaries, Gaming Venture Corp., U.S.A., as a
separate company. The terms of the spin-off arrangement were amended on
May 13, 2003. The shareholders of CJPG will receive one share of Gaming
for each share of CJPG owned as of the record date. The accompanying
condensed balance sheet as of September 30, 2003 and the condensed
statements of operations and cash flows for the nine months ended
September
30, 2003 and 2002 were retroactively adjusted to reflect the spin-off
as if it had occurred as of January 1, 2001. The Company increased the
number of outstanding Gaming shares from 1,664,000 to 6,519,427 and
adjusted the par value of common stock and additional paid-in capital
by $4,855 as a result of the increased shares.
Gaming Venture Corp., U.S.A. completed the spin-off effective April 1,
2003. The shareholders of CJPG received one share of Gaming for each
share of CJPG owned on April 30, 2003.
7
GAMING VENTURE CORP., U.S.A.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
2. BASIS OF PRESENTATION
The condensed 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, Form 10SB for the year
ended December 31, 2002.
3. PER SHARE DATA
Basic income (loss) per share is computed by dividing the net income
(loss) by the weighted average number of shares of common stock
outstanding during the periods. Diluted income per share is computed
by dividing the net income by the weighted average number of shares of
common stock, stock warrants and options outstanding during the period.
The Company had no stock options and warrants outstanding for the nine
months ended September 30, 2003 and 2002.
4. CONCENTRATION OF CREDIT RISK
At September 30, 2003, the Company maintained cash balances in banks
and brokerage firms. Balances are insured up to $100,000 by the
Federal Deposit Insurance Corporation. At times, balances may exceed
such insurance limits. The Company believes it mitigates its risk by
banking with major financial institutions.
5. INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES
Investments, consisting of equity securities, are classified as
available-for-sale securities and are carried at fair value.
Unrealized gains and losses are reported as a separate component of
shareholders' equity, net of applicable income taxes. Realized gains
and losses and declines in value deemed to be other than temporary on
available-for-sale securities are included in other income (expense).
8
GAMING VENTURE CORP., U.S.A.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
6. INCOME TAXES AND DEFERRED INCOME TAXES
At December 31, 2002, the Company had a net operating loss carry
forward of approximately $165,000 available to reduce its future
Federal taxable income, if any, through 2022.
7. RELATED PARTY TRANSACTIONS
The Company leases an office facility from its officer under a five-
year lease which began on January 1, 2001. Total related party rent
expense was $18,412 and $18,160 for the nine months ended September 30,
2003 and 2002, respectively.
Approximate future minimum lease payments at September 30, 2003 are as
follows:
Period Ending
September 30,
-------------
2004 $ 24,000
2005 24,000
2006 6,000
----------
$ 54,000
Amounts due from affiliates represented loans and advances to the
affiliated companies and were non-interest-bearing. At June 30, 2003,
the collection of due from former affiliates of approximately $313,000
was uncertain and the Company has provided an allowance for the entire
amount.
8. REPORTABLE SEGMENTS
The Company applies Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131). This statement establishes standards for
the reporting of information about operating segments in annual and
interim financial statements and requires restatement of prior year
information. Operating segments are defined as components of an
enterprise for which separate financial information is available that
is evaluated regularly by the chief operating decision maker(s) in
deciding how to allocate resources and in assessing performance. SFAS
No. 131 also requires disclosures about products and services,
geographic areas and major customers.
9
GAMING VENTURE CORP., U.S.A.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
8. REPORTABLE SEGMENTS (Continued)
The Company has two reportable segments, newsletter and gaming
subscriptions and consulting services. All revenues generated in the
segments are external. For the nine months ended September 30, 2003
and 2002, the total reportable segment information is as follows:
Newsletter
and Gaming Consulting Corporate/ Total As
Subscriptions Services Other Reported
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
For the nine months ended
September 30, 2002:
Reportable segments
External revenues $ 125,035 $ 29,500 $ 4,094 $ 158,629
Depreciation and amortization 2,052 6,356 - 8,408
Operating loss (22,515) (106,879) - (129,394)
Assets 12,447 6,575 858,465 877,487
For the nine months ended
September 30, 2003:
Reportable segments
External revenues $ 134,407 $ 56,250 $ 4,181 $ 194,838
Depreciation and amortization 6,742 2,481 - 9,223
Operating loss (61,826) (8,780) - (70,606)
Assets 7,776 4,107 536,262 548,145
10
GAMING VENTURE CORP., U.S.A.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
8. REPORTABLE SEGMENTS (Continued)
Products and Services Revenues
The table below presents external revenues for groups of similar
products and services for the nine months ended September 30, 2003 and
2002.
2003 2002
---------- ----------
Newsletter and gaming subscriptions $ 134,407 $ 125,035
Consulting 56,250 29,500
Other 4,181 4,094
---------- ----------
$ 194,838 $ 158,629
========== ==========
The segments of the Company are operating in, and derived their
revenues in, the United States.
9. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) is the total of (1) net income (loss) plus
(2) all other changes in net assets arising from non-owner sources,
which are referred to as other comprehensive income (loss). Other
comprehensive income (loss) consists of net unrealized (gains) losses
from marketable securities and reclassification adjustments for
reconciliation of previously unrealized losses.
The components of comprehensive income (loss) were as follows:
Nine Months Ended
September 30,
2003 2002
---------- ----------
Net loss $ (377,012) $ (48,084)
Unrealized gain on investments 17,174 61,118
---------- ----------
$ (359,838) $ 13,034
11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Trends and Uncertainties. Demand for Gaming Venture's future products
and services will be dependent on, among other things, market
acceptance of Gaming Venture's concept, our proposed operations and
general economic conditions that are cyclical in nature. Inasmuch as
a major portion of our activities are the revenues generating from the
sale of our newsletters, Gaming Venture's business operations may be
adversely affected by competitors and prolonged recessionary periods.
On April 3, 1998, Casino Journal Publishing Group, Inc. and its
combined affiliates merged with Gaming Venture Corp., U.S.A., a Nevada
corporation. Casino Journal and its combined affiliates became wholly
owned subsidiaries of Gaming Venture, the legal acquiror. As the
shareholders of Casino Journal and its combined affiliated acquired 65%
of Gaming's outstanding voting shares, the merger was accounted for as
a reverse acquisition of Gaming Venture by Casino Journal, the
accounting acquiror in the transaction. Simultaneous with the
acquisition, Gaming Venture Corp., U.S.A. changed its name to Casino
Journal Publishing Group while the Gaming Venture's West, Inc.
subsidiary changed its name to Gaming Venture Corp., U.S.A.
On January 3, 2003, the Board of Directors of Casino Journal approved
the spin-off of one of its subsidiaries, Gaming Venture Corp., U.S.A.,
as a separate company. The terms of this spin-off arrangement were
amended on May 13, 2003. Casino Journal will provide its shareholders
one share of Gaming Venture for each share of Casino Journal owned as
of the record date. No fractional shares will be issued. Gaming
Venture Corp., U.S.A. completed the spin-off effectively April 1, 2003.
On April 30, 2003, the shareholders of CJPG received one share of
Gaming for each share of CJPG owned as of the record date. The SEC
has determined that Gaming did not fully comply with the provisions of
Staff Legal Bulletin No. 4 regarding the spin-off. Gaming is
currently working with the SEC regarding the appropriate manner in
which to address the non-compliance.
Gaming Venture has incurred accumulated losses of $670,854 through
September 30, 2003. It also has annual operating costs of
approximately $300,000 to $400,000 and no significant sources of
revenues to mitigate these operating losses. Gaming Venture plans to
increase revenues by increased newsletter sales, new newsletters
catered to different hospitality industries such as restaurants and
timeshare, and additional regional newsletters for the lodging
industry. Historically, Gaming Venture launched a new publication
every two years, resulting in a 20% increase in revenue. The last new
publication launched was the Daily Lodging Report - Asia Pacific in
February 2000.
Gaming Venture also plans to expand the consulting business to the
lodging industry along with expansion of gaming clients. Management
is in discussions with other hotel consulting companies to partner up
with them on contracts. Gaming Venture would provide investor
communication services to the hotel companies and assist on financial
12
consulting and would split the retainer fee with the other consulting
firms. Management has held very preliminary discussions with certain
hotel consulting companies and public relations firms with hotel
company clients. The discussions have been general on possible
working together in the future on some mutual clients. There has been
no further progress on this as management has been focusing on existing
operations and completion of the spin-off.
Capital and Source of Liquidity.
For the nine months ended September 30, 2003, Gaming Venture received
proceeds from the sale of marketable securities of $59,533. The Company
had a decrease of $2,238 due from an affiliate. As a result the Company
had cash flow from investing activities of $61,791 for the nine months
ended September 30, 2003.
For the nine months ended September 30, 2002, Gaming Venture received
proceeds from the sale of marketable securities of $129,549, and had an
decrease in due from affiliates of $25,414 resulting in net cash from
investing activities of $154,963.
For the nine months ended September 30, 2003 and 2002, Gaming Venture
did not have any financing activities.
Results of Operations. The Company had net losses of $377,012 and
$48,084 for each of the nine months ended September 30, 2003 and 2002,
respectively. Revenues for the nine months ended September 30, 2003
compared to September 30, 2002 increased from $158,629 to $194,838
mainly due to an increase in consulting revenue from $29,500 in 2002 to
$56,250 in 2003. The costs of revenues for the nine months ended
September 30, 2003 compared to September 30, 2002 decreased from
$96,336 to $60,460 mainly due to a decrease in officers' salary from
$87,150 to $37,375. The cost of revenues primarily consisted of
payroll, payroll taxes, employees' benefit and telephone expense.
Portions of the payroll, payroll taxes, employee benefit and telephone
expense were allocated to cost of revenues based on the percentage of
time spent by the employee in connection with generating revenues for
the nine months ended September 30, 2003 and 2002. General and
administrative expenses for 2003 were greater at $204,984 compared to
the same period in 2002 of $191,687. This was due to an increase in
legal and accounting to effectuate the spin-off in connection with the
preparation of the SEC filings and increased consulting. The general
and administrative expense for 2003 and 2002 consisted of mainly
salaries and related expenses, rent, investor relation expense and
professional fees.
For the nine months ended September 30, 2003 and 2002, Gaming Venture
realized a gain on marketable securities of $5,893 and $81,310,
respectively.
In 2003 the Company had an increase in accounts receivable of $6,546.
Deferred subscription revenues increased by $11,409 from the increase
in its newsletter subscriptions. The Company had depreciation and
13
amortization of $8,407 and other increases in non-cash adjustments of
$321,405 for the nine months ended September 30, 2003. Net cash used in
operations for the nine months ended September 30, 2003 was $42,337.
In 2002 the Company had a decrease in accounts receivable of $6,901.
Deferred subscription revenues increased by $4,313 from the increase in
its newsletter subscriptions. The Company had depreciation and
amortization of $7,537 and other decreases in non-cash adjustments of
$28,935 for the nine months ended September 30, 2002. The Company had a
decrease in accounts payable and accrued expenses of $125. Net cash
used in operations for the nine months ended September 30, 2002 was
$58,393.
Controls and Procedures. The chief executive officer and the chief
financial officer of Gaming Venture has made an evaluation of the
disclosure controls and procedures relating to the financial statements
of Gaming Venture on Form 10QSB for the nine months ended September 30,
2003 and 2002 as filed with the Securities and Exchange Commission and
has judged such controls and procedures to be effective as of September
30, 2003 (the evaluation date).
There have not been any significant changes in the internal controls of
Gaming Venture or other factors that could significantly affect
internal controls relating to Gaming Venture since the evaluation date.
Critical Accounting Policies.
Revenue Recognition
Gaming Venture has two types of revenues, subscription revenue on
newsletters for gaming and lodging industries and consulting income on
gaming related business. Gaming Venture recognizes the revenue from
newsletter subscriptions when they are delivered to subscribers. Any
unfilled subscriptions are accounted for as deferred revenues.
Consulting revenue is recognized when services are rendered for either
cash or marketable securities. Any cash or marketable securities
received for services that have not yet performed are deferred.
Marketable securities received are valued at the quoted market price on
the applicable securities exchange on the date consulting contracts are
signed. Gaming Venture retains all rights and title of the securities
received.
Investment in Available for Sale Securities
Gaming Venture accounts for the marketable securities as available for
sale securities in accordance with SFAS 115, Accounting for Certain
Investments in Debt and Equity Securities. Gaming Venture acquires its
securities for cash or for consulting services rendered. Gaming
Venture does not intend to trade its securities with the objective of
generating profits based on short-term differences in price, but sells
the securities to generate cash for operations.
14
New Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities" ("FIN 46"). FIN 46 is applicable immediately for variable
interest entities created after January 31, 2003. For variable
interest entities created before February 1, 2003, the provisions of
FIN 46 are applicable no later than the end of the first interim or
annual period ending after December 15, 2003. The Company has no
transactions with any variable interest entities.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 changes the accounting for certain financial
instruments that, under previous guidance, could be classified as
equity or "mezzanine" equity, by now requiring those instruments to be
classified as liabilities (or assets in some circumstances) in the
Balance Sheets. Further, SFAS No. 150 requires disclosure regarding
the terms of those instruments and settlement alternatives. The
guidance in SFAS No. 150 generally is effective for all financial
instruments entered into or modified after May 31, 2003, and is
otherwise effective at the beginning of the first interim period
beginning after June 15, 2003. The Company has evaluated SFAS No. 150
and determined that it does not have an impact on the Company's
financial reporting and disclosures.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our
chief executive officer, conducted an evaluation of our "disclosure
controls and procedures" (as defined in Securities Exchange Act of 1934
(the "Exchange Act") Rules 13a-14(c)). Based on his evaluation, our
chief executive officer and chief financial officer have concluded that
as of the Evaluation Date, our disclosure controls and procedures are
effective to ensure that all material information required to be filed
in this quarterly report on Form 10QSB has been made known to him in a
timely fashion.
Changes in Internal Controls
There have been no significant changes (including corrective actions
with regard to significant deficiencies or material weaknesses) in our
internal controls or in other factors that could significantly affect
these controls subsequent to the Evaluation Date set forth above.
15
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit 99 - Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
None
16
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: November 14, 2003
/s/Alan Woinski
------------------------
Alan Woinski, President
17
CERTIFICATION
I, Alan Woinski, certify that:
1. I have reviewed this quarterly report on Form 10QSB of Gaming
Venture Corp., U.S.A.
2. Based on my knowledge, the quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present, in all material respects, the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business
issuer and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the small business
issuer, including its consolidated subsidiaries, is made known to me by
others within those entities, particularly during the period in which
this quarterly report is being prepared;
(b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this quarterly
report my conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) disclosed in this quarterly report any change in the small
business issuer's internal control over financial reporting that
occurred during the small business issuer's most recent fiscal quarter
that has materially affected, or is reasonably likely to materially
affect, the small business issuer's internal control over financial
reporting; and
18
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the small business issuer's
auditors and the audit committee of the small business issuer's board
of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
Date: November 14, 2003
/s/Alan Woinski
Alan Woinski
Chief Executive Officer
Chief Financial Officer