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
Exchange Act of 1934 For the quarterly period ended: September 30, 2004
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _______ to _________
Commission file number: 0-29363
THE PLAYERS NETWORK
(Exact name of small business issuer as specified in its charter)
Nevada 880343702
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4620 Polaris Avenue, Las Vegas, Nevada 89103
(Address of principal executive officer) (Zip 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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock, with par value of $0.001 outstanding as
November __15___, 2004: 14,460,892 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
THE PLAYERS NETWORK
PERIOD ENDED SEPTEMBER 30, 2004
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements ___
Condensed financial statements of The Players Network:
Balance sheet as of September 30, 2004
Income statements for the nine months and three months ended
September 30, 2004 and September 30, 2003
Statements of cash flows for the nine months and three months
ended September 30, 2004 and September 30, 2003
Notes to financial statements ___
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures ___
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds ___
Item 6. Exhibits and Reports on Form 8-K ___
SIGNATURE ___
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE PLAYERS NETWORK
BALANCE SHEET
September 30, 2004
ASSETS
Current assets
Cash $ 771
Accounts receivable 105,673
Prepaid expenses and other current assets 160
-----------
Total current assets 106,604
Property and equipment,
net of $379,510 accumulated depreciation 179,645
Intangible assets
Video film library,
net of $1,590,128 accumulated amortization 224,336
Trademark and other assets,
net of $1,828 accumulated amortization 8,574
-----------
Total assets $ 519,159
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 184,688
Accrued expenses 1,351
Accrued expenses due to stockholders 15,253
Shareholder loan 14,000
Deferred revenue 3,600
-----------
Total liabilities 218,892
-----------
Commitments
Stockholders' Equity
Common stock, $.001 par value; 25,000,000 shares
authorized, 14,460,892 shares issued and outstanding 14,461
Additional paid-in capital 7,540,143
Accumulated deficit (7,254,337)
-----------
Stockholders' equity 300,267
-----------
Total liabilities and stockholders' equity $ 519,159
===========
THE PLAYERS NETWORK
STATEMENTS OF OPERATIONS
Nine and Three Months Ended September 30, 2004 and 2003
For the Nine months ended For the Three months ended
---------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenue
Network $ 58,778 $ 185,306 $ 17,230 $ 56,218
Advertising 42,080 16,695 0 100
Production and other 380,164 41,479 133,164 26,316
------------ ------------ ------------ ------------
Total revenue 481,022 243,480 150,394 82,634
------------ ------------ ------------ ------------
Operating expenses
Cost of production 153,039 39,582 31,084 20,036
Selling, general and administrative 360,407 432,115 48,180 124,056
Impairment 0 30,894 0 0
Depreciation and amortization 194,871 253,950 46,981 74,605
Loss on sale of assets 0 1,159 0 0
------------ ------------ ------------ ------------
Total operating expenses 708,317 756,541 126,245 218,697
------------ ------------ ------------ ------------
Other expenses
Interest expense 5,089 7,183 1,492 480
------------ ------------ ------------ ------------
Net Income (Loss) $ (232,384) $ (520,244) $ 22,657 $ (136,543)
============ ============ ============ ============
Basic and Diluted earnings (loss) per share $ (0.02) $ (0.04) $ 0.00 $ (0.01)
Weighted average shares outstanding 13,599,040 13,919,660 13,572,908 14,090,255
THE PLAYERS NETWORK
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2004 and 2003
2004 2003
--------- ---------
Cash flows from operating activities
Net loss $(232,384) $(520,244)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 194,871 246,405
Stock issued for services 87,550 0
Impairment 0 30,894
Net gain on assets sold 0 (11,156)
Net change in unused barter credits 5,000 (2,500)
Net changes to:
Accounts receivable (75,318) (10,539)
Prepaid assets 2,399 (5,504)
Account payable 15,648 (22,966)
Accrued expenses (3,579) 3,862
Accrued expenses due to stockholder (11,467) 59,914
Deferred revenue (3,048) (27,067)
--------- ---------
Net cash used in operating activities (20,328) (258,901)
--------- ---------
Cash flows used in investing activities
Purchase of property and equipment 0 (4,338)
Additions to video film library 0 (18,250)
Proceeds from the sale of assets 0 26,500
Proceeds from reduction in deposits 300 5,868
--------- ---------
Net cash provided by (used) in investing activities 300 9,780
--------- ---------
Cash flows provided by financing activities
Sales of common stock 0 200,000
Advances by stockholders 14,000 0
Payment on installment debt 0 (19,634)
--------- ---------
Net cash provided by financing activities 14,000 180,366
--------- ---------
Net increase (decrease) in cash (6,028) (68,755)
Cash at beginning of period 6,799 79,810
--------- ---------
Cash at end of period $ 771 $ 11,055
========= =========
Supplemental cash flow information
Non-cash transactions
Interest paid $ -- $ 3,286
Common shares issued in exchange for debt to related party $ 85,000 $ --
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The balance sheet of The Players Network (PNTV) as of September 30, 2004, and
the related statements of operations and cash flows for the nine- and
three-month periods ended September 30, 2004 and 2003 have been prepared by PNTV
without audit. In the opinion of management, the accompanying financial
statements include all adjustments consisting of normal, recurring adjustments
necessary to summarize fairly PNTV's financial position and results of
operations. The results of operations for the current periods are not
necessarily indicative of the results of operations for the full year or any
other interim period. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial
statements for the most recent fiscal year ended December 31, 2003 as reported
in Form 10-KSB, have been omitted.
2. ISSUANCE OF COMMON SHARES
In July 2004, PNTV issued 555,000 common shares for services valued at $61,050.
In September 2004, PNTV issued 850,000 common shares in exchange for $85,000 in
back pay to the CEO and CFO, and issued 265,000 common shares for services to
valued at $26,500.
3. SHAREHOLDER LOAN
In January 2004, a shareholder paid $14,000 of PNTV debt. There is no interest,
collateral, or due date for the loan.
Item 2. Management's Discussion and Analysis
Overview
We produce television programming and videos related to gaming instruction and
information for hotel casinos on a private cable channel known as "PLAYERS
NETWORK." We also are a 24-hour digital web broadcaster featuring live and
previously recorded content. We are actively syndicating our network programming
to Satellite broadcasters and Broadband providers.
At September 30, 2004, we had an accumulated operating deficit of $7,254,337 and
stockholders' equity of $300,267.
We expect operating losses and negative operating cash flows to continue for at
least the next twelve months, because of expected additional costs and expenses
related to brand development; marketing and other promotional activities; hiring
of management, sales and other personnel; the expansion of infrastructure and
customer support services; strategic relationship development; and potential
acquisitions of related complementary businesses.
Liquidity and Capital Resources
Our principal source of operating capital has been provided by private sales of
our common stock and stockholder loans, as well as revenues from the operations.
At September 30, 2004, we had negative working capital of $112,288, of which
$14,000 is a shareholder note that is to be converted into common stock.
We did experience an increase in revenue growth during this nine-month period,
which may not be indicative of future operating results and there can be no
assurance that we will achieve or maintain profitability. Due to these factors,
we believe that period-to-period comparisons of our results of operations are
not necessarily a good indication of future performance. The results of
operations in some future periods may be below the expectations of analysts and
investors.
We anticipate capital expenditures in excess of $100,000 to expand our operation
during the next twelve months. We believe that the current cash flows generated
from its revenues will not be sufficient to fund our anticipated expansion of
operations. We may require additional funding to finance our operations through
private sales and public debt or equity offerings. However, there is no
assurance that we can obtain such financing.
At September 30, 2004, we had one full time employee and seven part time
consultants.
Recent Events:
In July 2003 we signed an agreement with Morningstar Entertainment Inc. to
distribute our videos to mass marketers. Our videos are available at Wal-Mart
and BMG Music and in stores across North America. We are quickly approaching the
minimum level of shipments to cover the distributors' costs.
In March 2004, we signed a Video Production Agreement calling for the production
of 4, 30 minute videos for total revenues of $257,000. These videos will also be
saleable through our retail distribution agreement. We have completed four of
these videos as of September 30, 2004.
On July 31, 2004, we signed a Service Agreement with two downtown Las Vegas
hotels.
This agreement is for a 12-month period with a monthly charge of $3,050. The
owners of these hotels own three other downtown hotels and have an option to
obtain service in these other facilities.
Results of Operations - Nine Months Ended September 30, 2004 and 2003
Revenues increased $238,000 or 98 % for the first nine months of 2004. This
increase in revenue is attributable to production and advertising revenue is in
connection with our paid advertising television model. We believe this is a
beginning of a substantial increase in sponsored television programming on the
Dish Network and for non-gaming hotel properties. We will continue to support
and promote our traditional network revenue but out primary thrust is in
advertiser production and advertising as the core to our core growth strategy.
Video production expense increased $113,000 or 283% for the first nine months of
2004, which is related to the increase in our production revenues. Approximately
$100,000 of our cost is attributable to the production agreement we signed in
March 2004. In addition $35,150 of production expenses for editing and directing
were paid in common stock
Selling and administrative expenses decreased $71,000 or 17% for the first nine
months of 2004. Payroll expenses have decreased $47,000, Legal expense decreased
$17,000 and Internet transmission costs decreased $9,000. In addition $47,400 of
consulting, employee compensation and directors expenses were paid in common
stock
Depreciation and amortization decreased $59,000 or 23% for the first nine months
of 2004, due to our charging off all our production costs and not capitalizing
this production. Also, our "PLAYERSNETWORK.COM" website was fully amortized in
2003. This trend will continue as our oldest capitalized videos are now becoming
fully amortized.
Interest expense decreased $2,000 or 29% for the first nine months of 2004, due
to the conversion of notes payable in late 2003 and the payoff of our equipment
leases.
Critical Accounting Policies
Video Library
Our Video Library consists of over 520 completed gaming instruction videos. For
gaming instruction and equipment video, we had recorded the cost of production
and amortized the cost over the estimated useful life (7 years). We amortize
hotel customer production over the life of the hotel network agreement, which
usually run 24 to 36 months. 0This policy recognizes that customized video for
hotel customers are subject to a shorter "shelf life" than gaming instruction
video. We have not capitalized any video production that meets the criterion to
be amortized over seven years during the fiscal years 2002, 2003 and 2004 to
date. We review our library catalogue quarterly and determine which videos are
no longer of value. At September 30, 2004, we had a net carrying value for our
video of $224,000.
Revenue Recognition
We adopted revenue recognition policies to comply fully with the guidance in
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." Network revenue consists of initial, subscription and renewal
revenues. We had $3,600 in deferred and unearned revenue at September 30, 2004.
Advertising revenue is recognized when advertisements are aired. Production and
other revenues consist of video production, stage rentals and post production
revenues. Video production revenue is recognized when video production is
completed and accepted by the customer. The stage rental and other production
revenue is recognized when the stage rental period has expired.
Inflation
In our opinion, inflation has not had a material effect on our 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. We wish 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: our ability to meet our cash and working capital needs, our ability
to successfully market our product, and other risks detailed in our periodic
report filings with the Securities and Exchange Commission.
Item 3. Controls and Procedures
As of the end of the period covered by this report, the Company
conducted an evaluation, under the supervision and with the participation of the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange
Act")). Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures as of the end of the fiscal quarter covered by this Quarterly Report
on Form 10-QSB are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. Management of the Company
has also evaluated, with the participation of the Chief Executive Officer and
Chief Financial Officer of the Company, any change in the Company's internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the fiscal quarter covered by this
Quarterly Report on Form 10-QSB. There was no change in the Company's internal
control over financial reporting during the Company's most recently completed
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
However, due to the limited number of Company employees engaged in the
authorization, recording, processing and reporting of transactions, there is
inherently a lack of segregation of duties. The Company periodically assesses
the cost versus benefit of adding the resources that would remedy or mitigate
this situation and currently, does not consider the benefits to outweigh the
costs of adding additional staff in light of the limited number of transactions
related to the Company's operations.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
From July to September 2004, the company issued 820,000 of common shares valued
at $87,550 to 3 consultants that have been working for the company this year in
the areas of marketing, productions and management advisory service capacities;
and directors for director services. In addition, the company issued 850,000 of
common shares valued at $91,000 in exchange for back pay to the CEO and CFO.
The Company claims these issuances fit within the exemption provided by
Sections 4(2) of the Securities Act of 1933, as amended, and the rules and
regulations there under.
[NOTE: ALL THAT IS REQUIRED BY THIS SECTION IS A REPORT ON SALES OF UNREGISTERED
SECURITIES, NOT REGISTERED ONES LIKE S-8 SHARES. HOWEVER, THE CAPITAL AND
LIQUIDITY PORTION OF THE MD&A SECTION WILL FREQUENTLY DESCRIBE THE S-8
ISSUANCES. ALSO, PLEASE NOTE THAT, AS DESCRIBED IN MY PREVIOUS E-MESSAGE
REGARDING CHANGES TO THE REPORTING REQUIREMENTS FOR CURRENT REPORTS ON FORM 8-K
THAT WENT INTO EFFECT LAST AUGUST, SALES OF UNREGISTERED SECURITIES MUST NOW BE
REPORTED WITHIN FOUR DAYS ON A CURRENT REPORT RATHER THAN WAITING FOR THE NEXT
QUARTERLY OR ANNUAL REPORT. IF THE SALES DESCRIBED ABOVE HAD BEEN TIMELY
REPORTED ON A CURRENT REPORT, THEN NO FURTHER REPORTING WOULD HAVE BEEN REQUIRED
HERE.]
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
Exhibit Number
Page No. Title of Exhibit
-------------- ----------------
31.01 Certification pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.
32.01 Certification Pursuant to 18 U.S.C. Section 1350, as pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K
None
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE PLAYERS NETWORK
(Registrant)
By: /s/ Mark Bradley
---------------------------
Mark Bradley,
Chief Executive Officer
By: /s/ Seth Horn
---------------------------
Seth Horn,
Chief Financial Officer
Dated: November _____, 2004