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, 2005 [ ] 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: 6,514,427 Shares of Common Stock ($.001 par value) Transitional Small Business Disclosure Format (check one): Yes No x ------- ------- 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. BALANCE SHEET March 31, 2005 (UNAUDITED) ASSETS ------ Current assets Cash $ 572,101 Accounts receivable 15,120 Prepaid expenses 19,275 ---------- Total current assets 606,496 ---------- Property and equipment-at cost, less accumulated depreciation 4,630 ---------- Available for sale securities 81,884 ---------- $ 693,010 ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities Accounts payable and accrued expenses $ 6,048 Deferred revenues 95,827 ---------- Total current liabilities 101,875 ---------- Stockholders' equity Common stock, $.001 par value; 50,000,000 shares authorized, 6,514,427 shares issued and outstanding 6,514 Additional paid-in capital 1,324,045 Accumulated deficit (758,892) Other Comprehensive income: Currency translation adjustment 19,468 ---------- 591,135 ---------- $ 693,010 ========== The accompanying notes are an integral part of these financial statements. 4 GAMING VENTURE CORP., U.S.A. STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ---------- ---------- Revenues Subscriptions $ 69,280 $ 56,665 Consulting 59,700 20,100 Other 1,124 1,049 ---------- ---------- Total revenues 130,104 77,814 ---------- ---------- Cost of revenues 25,590 23,199 ---------- ---------- Gross profit 104,514 54,615 General and administrative expenses 77,740 73,760 ---------- ---------- Operating income (loss) 26,774 (19,145) ---------- ---------- Other income (expense) Realized gain on marketable securities 26,085 13,358 Other - 714 ---------- ---------- 26,085 14,072 ---------- ---------- Income (loss) before income taxes 52,859 (5,073) Income taxes - - ---------- ---------- Net Income (loss) 52,859 (5,073) Reclassification adjustments for gains included in net (loss) - (9,100) Unrealized gains on available for sale securities 470 5,261 ---------- ---------- Comprehensive income (loss) $ 53,329 $ (8,912) ========== ========== Basic and diluted income (loss) per share $ 0.01 $ (0.00) ========== ========== Weighted average shares outstanding - basic and diluted 6,514,427 6,514,427 ========== ========== The accompanying notes are an integral part of these financial statements. 5 GAMING VENTURE CORP., U.S.A. STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ---------- ---------- Cash flows from operating activities $ 23,689 $ (9,681) ---------- ---------- Cash flows from investing activities 52,665 16,358 ---------- ---------- Cash flows from financing activities - - ---------- ---------- Net increase in cash 76,354 6,677 Cash, beginning of period 495,747 442,149 ---------- ---------- Cash, end of period $ 572,101 $ 448,826 ========== ========== The accompanying notes are an integral part of these financial statements. 6 GAMING VENTURE CORP., U.S.A. NOTES TO UNAUDITED FINANCIAL STATEMENTS March 31, 2005 1 Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and Item 310(b) of Regulation S-B. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only 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. For further information, refer to the financial statements of the Company as of December 31, 2004, and for each of the two years then ended, including notes thereto included in the Company's Form 10-KSB. 2 Earnings Per Share The Company calculates net income (loss) per share as required by Statement of Financial Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when anti-dilutive commons stock equivalents are not considered in the computation. 3 Available for Sale Securities Marketable securities consist of common stocks with a cost basis of $62,416 and fair market value of $81,884 at March 31, 2005, and are classified as available for sale. The gross realized gains on sales of available-for-sale securities were $26,085 and $13,358 and sales proceeds were $52,665 and $16,358 during the periods ended March 31, 2005 and 2004. The adjustment to unrealized holding gains on available-for-sale securities included in accumulated other comprehensive income as a component of stockholders' equity increased by $470 during the period ended March 31, 2005, and accumulated gains aggregated $19,468 at March 31, 2005. 7 4 Income Taxes The Company accounts for income taxes under SFAS 109, which requires use of the liability method. SFAS 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the periods ended March 31, 2005 and 2004. The sources and tax effects of the differences are as follows: Income tax provision at the federal statutory rate 34 percent Effect of operating losses (34)percent ---------- - percent ========== As of March 31, 2005, the Company has a net operating loss carry forward of approximately $440,000. This loss will be available to offset future taxable income. If not used, this carry forward will expire through 2024. The deferred tax asset of approximately $150,000 relating to the operating loss carry forward has been fully reserved at December 31, 2004. The principal difference between the accumulated deficit for income tax purposes and for financial reporting purposes results from the permanent decline in the valuation of marketable securities being charged to operations for financial reporting purposes. 5 Reportable Segments The Company has two reportable segments, newsletter and gaming subscriptions and consulting services. All revenues generated in the segments are external. For the periods ended March 31, 2005 and 2004, 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 period ended March 31, 2005: Reportable segments External revenues $ 69,280 $ 59,700 $ 1,124 $ 130,104 Depreciation and amortization 211 187 - 398 Operating income 7,272 19,502 - 26,774 Assets 21,748 17,277 653,985 693,010 8 Capital expenditures - - - - Newsletter and Gaming Consulting Corporate/ Total As Subscriptions Services Other Reported ---------- ---------- ---------- ---------- For the period ended March 31, 2004: Reportable segments External revenues $ 55,665 $ 20,100 $ 1,049 $ 77,814 Depreciation and amortization 715 253 - 968 Operating (loss) (16,631) (2,514) - (19,145) Assets 7,968 4,209 549,527 561,704 Products and Services Revenues The table below presents external revenues for groups of similar products and services for the periods ended March 31, 2005 and 2004. 2005 2004 ---------- ---------- Newsletter and gaming subscriptions $ 69,280 $ 56,665 Consulting 59,700 20,100 Other 1,124 1,049 ---------- ---------- $ 130,104 $ 77,814 ========== ========== Both segments of the Company are operating in and have derived their revenues in the United States. 6 Significant Customers The Company derived approximately 21 percent of its total revenue and approximately 46 percent of its consulting revenue, of which $12,600 was paid in cash and $15,000 was paid in the form of investment securities, from a single entity during the period ended March 31, 2005. 9 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 on a basis of one share of Gaming Venture for three shares of Casino Journal owned as of the record date. The record date was April 1, 2003 and the initial distribution was made on April 30, 2003, the pay date. No fractional shares were issued prior to the adjustment of the distribution ratio. The terms of this spin-off arrangement were amended on May 13, 2003 to provide for a pro-rata distribution of one share of Gaming Venture for each share of Casino Journal owned as of the record date. No fractional shares were issued. The additional shares required to provide for a pro-rata distribution were sent to the shareholders on June 25, 2003. No cash payments were made or received in connection with either the initial spin-off distributions or the distributions completed to achieve a pro rata distribution. Due to the fact that the common shares distributed in the spin-off was initially not on a pro-rata basis and the pay date was prior to completion of the Form 10-SB, the exemption from registration provided by Staff Legal Bulletin No. 4 is not available and Gaming Venture may have violated Section 5 of the Securities Act of 1933. On April 14, 2005, Gaming Venture entered into an Agreement of Merger and Plan of Reorganization among SK2, Inc., a Delaware corporation and parent company of Kuhlman retail stores ("Kuhlman"), and GV Acquisition Co., a Delaware corporation and wholly owned subsidiary of Gaming Venture. Kuhlman is a specialty retailer and wholesale provider of exclusively designed, distinctive, high quality apparel. The transaction of the subject agreement is designed as a reverse merger with Kuhlman to be the surviving corporation and an operating subsidiary of Gaming Venture. Under the agreement, GV Acquisition Co. 10 will merge with and into Kuhlman. As a result of the merger and in exchange for the cancellation of their shares, Kuhlman shareholders will receive shares of Gaming Venture. Prior to the closing of the merger, Gaming Venture will effectuate a 1-for-5 reverse split and change the name of the company to Kuhlman Company, Inc. The completion of the merger is contingent, among other things, on shareholder approval by the shareholders of Kuhlman. Gaming Venture shareholders are not required under Nevada law or the Merger Agreement to approve the transaction. The board of directors of both companies have approved the transaction. Prior to the Merger, Gaming Venture will wind down and cease operating its newsletter and consulting/advisory-services business. Gaming Venture has incurred accumulated losses of $758,892 through March 31, 2005. Capital and Source of Liquidity. For the three months ended March 31, 2005 and 2004, Gaming Venture relied on the sale of marketable securities to provide for any shortfalls of cash needed for operations. For the three months ended March 31, 2005, Gaming Venture received proceeds from the sale of marketable securities of $52,665. For the three months ended March 31, 2004, Gaming Venture received proceeds from the sale of marketable securities of $16,358. For the three months ended March 31, 2005 and 2004, Gaming Venture did not have any financing activities. Results of Operations. Gaming Venture had net income of $52,859 and a net loss of ($5,073) for the three months ended March 31, 2005 and 2004, respectively. The change from net loss for the three months ended March 31, 2004 to net income for the three months ended March 31, 2005 was due to decreased legal and accounting costs related to the completion of the spin-off and an increase in consulting revenue. For the three months ended March 31, 2005, Gaming Venture had revenues from subscriptions of $69,280, consulting of $59,700 and other revenue of $1,124 with costs of revenues of $25,590. Gross profit for the three months ended March 31, 2005 was $104,514. For the three months ended March 31, 2004, Gaming Venture had revenues from subscriptions of $56,665, consulting of $20,100 and other revenue of $1,049 with costs of revenues of $23,199. Gross profit for the three months ended March 31, 2005 was $54,615. For the three months ended March 31, 2005, the increase in subscriptions revenue of newsletters circulation of approximately $12,615 and the increase in consulting revenue of approximately $39,600 from March 31, 2004 was mainly due to an increase in subscriptions and an increase in consulting services rendered. Portions of the payroll, 11 payroll taxes, employee benefits and telephone expense were allocated to the 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, 2004 and 2003, respectively. General and administrative expenses for the three months ended March 31, 2005 were $77,740 compared to $73,760 for the same period in 2004. The slight increase was due to an increase in advertising fees. The general and administrative expense for the three months ended March 31, 2005 and 2004 consisted of mainly salaries and related expenses, rent, investor relation expense and professional fees. 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 related to contracts with a short duration, are recognized as income upon the completion of services. Gaming Venture occasionally receives marketable securities in exchange for consulting services. These transactions 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. 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. 12 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. 13 PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) Exhibit 31 - 302 Certification Exhibit 32 - 906 Certification (b) Reports on Form 8-K On January 19,2005, Gaming Venture changed its certified auditor and filed a Form 8-K, including the required Item 4 and 7 disclosure. 14 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, 2005 /s/Alan Woinski ------------------------ Alan Woinski, President