SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE EXCHANGE ACT OF 1934
The Players Network
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(Exact name of registrant as specified in its charter)
Nevada 880343702
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4620 Polaris Avenue, Las Vegas, Nevada 89103
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (702) 895-8884
------------------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered each class to be registered
None None
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.001 Per Share
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(Title of class)
<PAGE>
TABLE OF CONTENTS
PAGE
PART I ........................................................................2
Item 1. Description of Business...............................................2
Item 2. Management's Discussion and Analysis of Plan of Operation.............5
Item 3. Description of Property...............................................7
Item 4. Security Ownership of Certain Beneficial Owners and Management........8
Item 5. Directors and Executive Officers, Promoters and Control Persons......10
Item 6. Executive Compensation...............................................13
Item 7. Certain Relationships and Related Transactions.......................13
Item 8. Description of Securities............................................14
Part II .....................................................................14
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters. ..............................14
Item 2. Legal Proceedings....................................................15
Item 3. Changes in and Disagreements with Accountants........................15
Item 4. Recent Sales of Unregistered Securities..............................16
Item 5. Indemnification of Directors and Officers............................18
Part F/S .....................................................................19
Part III .....................................................................37
Item 1. Index to Exhibits....................................................37
<PAGE>
PART I
Item 1. Description of Business
The Players Network (the "Company") was incorporated under the laws of
the State of Nevada, on March 16, 1993. The Company owns and operates a digital
24-hour gaming and entertainment network called "PLAYERS NETWORK" which
specializes in producing television programming to serve the gaming industry.
The Company currently broadcasts its programming directly into the guestrooms of
casino hotels through a customized private cable channel. The Company's format
is designed to educate new players and promote casino games and activities. The
Company's programming includes shows in basic gaming instruction, news, sports
and racing, entertainment and tournaments. The Company has, until recently,
primarily operated as a television and video production company and programming
distributor. Over the past years the Company has expanded the placement of its
programming from hotel rooms and casino floors to home computers through the
world wide web.
Products and Services.
- - ----------------------
In addition to operating a 24-hour closed-circuit gaming entertainment
television network in a limited format to guestrooms in casino hotels, the
Company's programming is also accessible on casino floors through interactive
kiosks.
The Company has produced a series of gaming instructional videos,
including videos entitled "Game Watch" for International Game Technology
("IGT"). IGT distributes these videos to their casino customers to educate them
on the latest slot machines and technology.
The Company also operates and rents a television and video production
sound stage in Las Vegas, Nevada.
In September 1999 the Company launched PlayersNetwork.com, the
Company's gaming portal and e-commerce world wide web site. Currently in the
preview stage, www.PlayersNetwork.com (hereinafter referred to as
"PlayersNetwork.com" or the "Company's Web Site") is a full service gaming
information, e-commerce and interactive world wide web site. When fully
operational, the Company anticipates that PlayersNetwork.com will include
instructional videos both on a streaming full motion video basis and on demand.
In addition to teaching visitors how to play casino games, PlayersNetwork.com
allows visitors to preview casinos worldwide, make reservations and receive
discounts on such items as airfare, hotels and gaming merchandise.
PlayersNetwork.com will feature: (i) 24-hour televised live and prerecorded
gaming-related programming, (ii) on-demand information services, including
gaming financial reports, casino executive and industry profiles, gaming news
reports, national lottery picks, show previews and a gaming travel guide and
(iii) interactive multimedia services, including, daily slot and poker
tournaments, interactive slot and video play, live chat and
<PAGE>
interviews with guests from the gaming industry and live events and special
report web-cast.
In December 1999 the Company entered into an agreement with Play
Streaming Media Group ("Play") whereby the Company received the right to utilize
Play's GlobeCaster video production system for the Company's network operations,
video productions and world wide web broadcasting. The Company will utilize this
technology to enter the video commerce industry with the launch of a 24-hour
television network on their PlayersNetwork.com gaming and entertainment internet
portal website. Play's GlobeCaster will enable the Company to record, edit and
stream video onto the internet through PlayersNetwork.com. The Company plans to
provide live broadcasts and pre-recorded programming on events involving the
gaming and entertainment industries.
Distribution and Marketing
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The Company markets its closed-circuit network television programs
through "PLAYERS NETWORK" to hotel casinos. The Company's programming is
currently available in hotel casinos in Nevada, Iowa, Louisiana and Mississippi.
The Company's web site targets the millions of people who visit casinos in the
United States each year as well as the those individuals who visit gaming
destinations worldwide and who have access to the internet through a personal
computer (and, to a limited extent, through a Web-TV). PlayersNetwork.com
currently attracts individuals seeking gaming instruction, gaming merchandise,
travel packages and city directories. As soon as it becomes fully operational,
the Company's Web Site will target individuals seeking 24 hour live televised
gaming-related programming and interactive multimedia services.
In order to create an awareness of the Company's existence among
individuals in the target markets, the Company intends to focus its marketing
efforts primarily on other web sites that are co-branded with the Company's Web
Site and which will enable users of the other sites to link up to the Company's
Web Site. The use of search engines will also enable PlayersNetwork.com to be
listed as a match if users type in key words such as "gaming," "poker," "racing"
or "Las Vegas hotels and casinos." The Company will also employ direct marketing
techniques that will primarily consist of mass mail campaigns targeting people
who have been a guest at a casino resort in the last 36 months. Additionally,
the Company will advertise the Company's Web Site through traditional media
advertising, including radio, television, print and publicity campaigns.
Competition.
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The Company is not aware of any other companies that currently offer
services similar to the ones it provides within hotels and casinos. The Company
believes that the hotels and casinos that currently provide guests with
instructional video gaming and entertainment services either produce such
products in-house or engage the services of video producers who do not
specialize in producing videos for the gaming industry. Unlike these other video
producers, the Company has already built a significant gaming video library,
developed and acquired market research studies to validate audience
<PAGE>
demand, owns digital broadcast equipment and software and has aligned itself
with a reserve of writers, producers and directors who understand the casino
industry.
Additionally, the Company believes that PlayersNetwork.com is the only
web site that focuses on the gaming industry by offering gaming entertainment,
education and information, gaming city directories, and thousands of gaming
products but does not contain gambling. Although other internet sites provide
travel reservation services, offer show tickets and educate their audiences
about various gaming destinations, PlayerNetwork.com offers these services in
addition to its original programming content.
Principal Suppliers.
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The Company's three principal suppliers are: (i) the Gamblers General
Store ("General Store"), (ii) iTravel Marketing, Inc. ("Travel") and (iii) Play
Streaming Media Group ("Play"). The General Store, which is the largest gambling
supply store in the world, has given the Company the right to market and sell
the General Store's products on the Company's Web Site. Currently the Company
offers 900 products from the General Store's catalogue, including, playing
cards, gaming chips, casino tables and slot and video poker machines. Travel
provides individuals who are visiting the Company's web site access to, among
other things, airline, rental car and hotel room reservations and golf
tee-times. Play provides the Company equipment, training and technical support
for the Company' s internet broadcast business.
Trademark.
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The slogans "Everybody wants to be a player" and "The only game in
town" are registered trademarks of the Company with the United States Patent and
Trademark Office. The Company has filed applications for the trademark "Players
Network" and for the service mark "Players Network" and is awaiting registration
of these marks.
Need for Governmental Approval.
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The Company does not believe that any governmental approvals are
required to sell its products or services.
Cost of Research and Development.
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In the last two years the Company has expended approximately $2,000,000
in research and development activities related to developing the Company's video
library and internet site, including market research and the purchase of certain
computer hardware and software.
<PAGE>
Employees.
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The Company currently has six full-time employees. Management will hire
additional employees on an as needed basis. The Company is not a party to any
collective bargaining agreement or labor union contract, nor has it been
subjected to any strikes or employment disruptions in its history.
Item 2. Management's Discussion and Analysis of Plan of Operation
Overview
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The Company provides television and video production and programming
related to gaming instruction and information to hotel casinos in Las Vegas and
hotels throughout the United States on a private cable channel known as "PLAYERS
NETWORK". The Company also has an independent working sound stage in Las Vegas
on which it produces videos and rents to various production companies.
In June 1999, the Company decided to capitalize on the opportunities
available on the Internet and started a full e-commerce model, selling goods and
services on a web site known as PLAYERSNETWORK.COM.
The Web site, which is currently operational and being expanded,
provides consumers with gaming "How to Play" information in print form and video
from the Company's existing library of instructional gaming videos.
PLAYERSNETWORK.COM provides visitors with gaming supplies at The Players General
Store, a 900 item catalogue of gaming items including "How to Play" books and
tapes, playing cards, casino quality gaming chips, casino game table tops, and
actual casino tables and slot machines purchased off the floor of Las Vegas's
casinos. PLAYERSNETWORK.COM also provides travel, tour, show ticket, and golf
time reservation services.
The Web site also provides information on every casino/gaming site
worldwide and "City Guides" to every location where casinos are located. In
addition, the site provides financial reports on casino and gaming companies
stocks.
The Company is establishing itself as a full 24-hour digital web
broadcaster featuring live and previously recorded content.
The Company had accumulated operating deficits of $3,543,298 and
$2,853,502 as of September 30, 1999 and December 31, 1998, respectively.
However, the Company had stockholders' equity of $762,337 and $527,623 as of
September 30, 1999 and December 31, 1998, respectively.
<PAGE>
The Company expects operating losses and negative operating cash flow
to continue for the foreseeable future. It anticipates losses to continue
because it expects to incur 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 possibly, the acquisition of
related complementary businesses.
The Company saves a significant amount of cash by offering a
combination of cash and common stock and/or stock options to vendors and outside
consultants for services and asset acquisition.
Although the Company has experienced revenue growth since implementing
its Internet e-commerce business, continued revenue growth may not be indicative
of future operating results and there can be no assurance that it will achieve
or maintain profitability.
Due to these factors, the Company believes that period-to-period
comparisons of its 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.
While expanding its Internet e-commerce, the Company expects to enter
into many barter arrangements. For the year ended December 31, 1998, the amounts
of barter expense and revenue from the Internet are immaterial to the Company's
operations. The Company saves money each year in travel expenses by using
complimentary hotel rooms and food service for production staff and talent at
client hotels during production shoots.
Liquidity and Capital Resources
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To date, operations have been financed from the sale of common stock,
stockholder loans, equipment loans, and capital equipment leasing arrangements.
As of September 30, 1999, the Company had $5,121 in cash. The Company
has not established a line of credit with any financial institution and will
continue to rely on the sale of stock for on-going liquidity.
During the nine months ended September 30, 1999, an officer exchanged
$289,366 of loans for 859,597 shares of common stock. During the year ended
December 31, 1998, a shareholder exchanged $294,069 of loans for 408,430 shares.
As the Company pursues its Internet e-commerce strategy, it expects to
increase the number of full time employees. In the fourth quarter of 1999, the
Company added three employees raising the total to six.
Recent Events
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The Company signed three agreements with hotels in December 1999 and
January 2000, which will increase monthly subscription revenues by $10,000 per
month. The agreements also include licensing fees of $48,000.
In November 1999, the Company signed a production for hire agreement
worth $240,000 to produce 40 videos from January to May 2000.
In December 1999, the Company signed an agreement with Play Streaming
Media Group, which agreed to deliver to the Company six "GlobeCasters" at no
cost to the Company in exchange for syndication of PLAYERS NETWORK online video
content. The syndication of online video content is referred to "V-Commerce" is
an area of high interest among media companies.
This equipment enables PLAYERS NETWORK to become a 24-hour a day web
network broadcaster. The Company will be the first digital network focused
gaming and entertainment content.
In January 2000, the Company signed an agreement with iTravel Marketing
and YouTicket.com to fulfill worldwide website room reservations, golf tee times
and show tickets. iTravel Marketing also provides e-commerce Internet solutions
and software and is the Company's Internet site programmer.
Forward Looking Statements
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Except for the historical information contained herein, certain of
matters discussed in this report are "forward-looking statements" as defined in
the Securities Exchange Act of 1934, as amended, which involve certain risks and
uncertainties which could cause actual results to differ materially from those
discussed herein. Such risks and uncertainties include, but are not limited to
recoverability of the capitalized video production costs, liquidity and
financing requirements, variability of quarterly results and prior losses,
certain accounting policies including amortization and adjustments of the costs,
dependence on key personnel, production deficits, risks involved in the
Internet, competition, government regulation, labor relations, limited operating
history and continued operating losses. In addition, the Company faces risks
associated with offering new services, risks associated with growth and
expansion, liability for online content, rapidly changing technology, standards
and consumer demands, online commerce security risks, including credit card
fraud, system disruptions and capacity constraints. See the relevant discussions
elsewhere herein.
<PAGE>
Years Ended December 31, 1998 and 1997
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Revenues increased 3,089% from $10,000 for the year ended December 31,
1997 to $308,872 for the year ended December 31, 1998. The increase in revenues
is due to the Company starting operations after leaving the development stage.
The Company signed its first hotel client in the first quarter of 1998. The
Company also had its first pay for production and stage rental income in the
second quarter of 1998. The Company signed two more hotel customers and
continued to perform paid production and obtain stage rentals through the
remainder of the year.
Selling, general and administrative charges increased 19% from $492,399
for the year ended December 31, 1997 to $586,637 for the year ended December 31,
1998. The increase in operating expenses was due to increases in office staff,
sales and marketing expenses, legal and accounting expenses, occupancy expense
and common stock issued for services rendered.
Stock based compensation charged to operations was $324,537 for the
year ended December 31, 1998. There was none charged to operations in 1997.
Stock based compensation consists of common stock warrants and options issued to
outside service providers in lieu of cash. In addition, the Company capitalized
$51,690 for the year ended December 31, 1997 and $237,913 for the year ended
December 31, 1998 as video production costs. These costs include writers,
directors, production supervisors whose services otherwise would be unaffordable
to the Company.
Depreciation and amortization increased 332% from $28,208 for the year
ended December 31, 1997 to $121,969 for the year ended December 31, 1998. The
increase was due to amortization of the capitalized video production costs, the
carrying value of which increased 43% from $656,757 at December 31, 1997 to
$940,848 at December 31, 1998.
Interest expense increased 226% from $20,780 for the year ended
December 31, 1997 to $67,859 for the year ended December 31, 1998 due to the
increase in leases outstanding and the average balance of stockholders' loans
throughout the year.
Nine Months Ended September 30, 1998 and 1999
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Revenues increased 11% from $ 218,970 for the period ended September
30, 1998 to $242,858 for the period ended September 30, 1999. The Company
increased the number of hotel clients from three to five in 1999; however, it
was unable to charge the new customers as much as they charged the earlier
customers. The Company's second largest customer declined to renew its network
license after a change in ownership.
Selling, general and administrative charges increased 45% from $376,016
for the period ended September 30, 1998 to $546,310 for the period ended
September 30, 1999. The increase in operating expenses was due to increases in
office staff, sales and marketing expenses, and Internet programming
development.
Stock based compensation charged to operations was $243,043 for the
period ended September 30, 1999. Stock based compensation consists of common
stock, warrants and options issued to outside service providers in lieu of cash.
In addition, the Company capitalized $0 for the period ended September 30, 1998
and $26,600 for the period ended September 30, 1999 as capitalized video
production costs. These costs include writers, directors, production supervisors
whose services other wise would be unaffordable to the Company.
Depreciation and amortization increased 6% from $98,649 for the period
ended September 30, 1998 to $104,302 for the period ended September 30, 1999.
This was due to increase in amortization of the capitalized video production
costs the value of which increased 38% from $685,097 at September 30, 1998 to
$948,015 at September 30, 1999.
Interest expense decreased 26% from $52,985 for the period ended
September 30, 1998 to $38,999 for the period ended September 30, 1999 due to the
conversion of $289,366 of shareholder loans to equity at various times from
December 31, 1998 to September 30, 1999.
Year 2000 Readiness Disclosure
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Many existing computer programs cannot distinguish between a year
beginning with "20" and a year beginning with "19" because they use only the
last two digits to refer to a year. For example, these programs cannot tell the
difference between the year 2000 and the year 1900. As a result, these programs
may malfunction or fail completely.
Since our business, and consequently, our hardware, telecommunication
and software systems are new, we believe most of these systems are already year
2000 compliant and we do not expect internal year 2000 problems to materially
affect us. Nevertheless, because our business relies heavily on the internet and
on computer and telecommunication systems, including those of our suppliers,
customers and other third parties, the year 2000 problem could seriously harm
us.
Item 3. Description of Property
The principal executive office of the Company is located at 4620
Polaris Avenue, Las Vegas, Nevada 89103. This facility houses the Company's
technical and administrative operations. The Company subleases approximately
7,200 square feet of combined office space and soundproofed warehouse at these
premises pursuant to a 12 month sublease which commenced on March 1, 1998 and
which is continuing on a month to month basis. The monthly rent is $5,300. The
Company is currently negotiating a new lease arrangement for these premises with
the lessor.
<PAGE>
The Company believes that this leased property is in good condition, is
well maintained and is adequate for the Company's current and immediately
foreseeable operating needs. The Company does not have any policies regarding
investments in real estate, securities or other forms of property.
Item 4. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners.
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The following table sets forth information, to the best of the
Company's knowledge, as of January 4, 2000, regarding the beneficial ownership
of the Company's common stock by each person who is known by the Company to
beneficially own more than 5 percent of the Company's common stock.
<TABLE>
Title of Class Name and Address of Amount and Nature of Percent of
- - -------------- -------------------- --------------------- ----------
Beneficial Owner Beneficial Ownership Class(1)
---------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Mark Bradley 3,580,277(2) 45%
4620 Polaris Avenue
Las Vegas, NV 89103
Common Stock Cede & Company 1,037,855 14.9%
P.O. Box 222
Bowling Green Station
New York, NY 10274
Common Stock Joost Van Adelsberg 414,258(3) 5.9%
1809 Via Visalia
Palos Verdes, CA 90274
(1) This table is based on 6,977,920 shares of Common Stock outstanding on
January 4, 2000. If a person listed on this table has the right to obtain
additional shares of Common Stock within sixty (60) days from January 4, 2000,
the additional shares are deemed to be outstanding for the purpose of computing
the percentage of class owned by such person, but are not deemed to be
outstanding for the purpose of computing the percentage of any other person.
(2) This figure includes: (a) 18,000 shares of Common Stock issuable upon the
exercise of currently exercisable stock options, 3,000 of which are exercisable
at a price of $.60 per share and 15,000 of which are exercisable at a price of
$.75 per share and (b) 950,000 shares of Common Stock issuable upon the exercise
of a currently exercisable warrant, 300,000 of which are exercisable at a price
of $1.25 per share, 300,000 of which are exercisable at a price of $.90 per
share and 350,000 of which are exercisable at a price of $1.75 per share.
<PAGE>
(3) This figure includes 36,000 shares of Common Stock issuable upon the
exercise of currently exercisable stock options, 12,000 of which are exercisable
at a price of $.75 per share, 3,000 of which are exercisable at a price of $.60
per share and 21,000 of which are exercisable at a price of $2.50 per share.
</TABLE>
Security Ownership of Management.
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The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of January 4, 2000 by: (i) each of
the Company's directors, (ii) each of the executive officers named in the
summary compensation table set forth in Item 6 -- "Executive Compensation", and
(iii) all directors and executive officers of the Company as a group.
<TABLE>
Title of Class Name and Address of Amount and Nature of Percent of
- - -------------- -------------------- --------------------- ----------
Beneficial Owner Beneficial Ownership Class(1)
---------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Mark Bradley 3,580,277(2) 45%
4620 Polaris Avenue
Las Vegas, NV 89103
Common Stock Seth A. Horn 50,000 0.7%
4652 Chamrock Dr.
Irvine, CA 92604
Common Stock Darius Irani 252,088(3) 3.6%
1809 Via Visalia
Palos Verdes, CA 90274
Common Stock Peter Rona 157,000(4) 2.2%
14 Meteor Dr.
Etobicoke, ON
MOW 1A4
Canada
Common Stock Joost Van Adelsberg 414,258(5) 5.9%
1809 Via Visalia
Palos Verdes, CA 90274
Common Stock Directors and Executive 4,453,623(6) 55%(7)
Officers as a Group
(1) This table is based on 6,977,920 shares of Common Stock outstanding on
January 4, 2000. If a person listed on this table has the right to obtain
additional shares of Common Stock within sixty (60) days from January 4, 2000,
the additional shares are deemed to be outstanding for the purpose of computing
the percentage of class owned by such person, but are not deemed to be
outstanding for the purpose of computing the percentage of any other person.
<PAGE>
(2) This figure includes: (a) 18,000 shares issuable upon the exercise of
currently exercisable stock options, 3,000 of which are exercisable at a price
of $.60 per share and 15,000 of which are exercisable at a price of $.75 per
share and (b) 950,000 shares issuable upon the exercise of a currently
exercisable warrant, 300,000 of which are exercisable at a price of $1.25 per
share, 300,000 of which are exercisable at a price of $.90 per share and 350,000
of which are exercisable at a price of $1.75 per share.
(3) This figure includes 43,500 shares issuable upon the exercise of currently
exercisable stock options, 15,000 of which are exercisable at a price of $.75
per share, 3,000 of which are exercisable at a price of $.60 per share and
25,500 of which are exercisable at a price of $2.50 per share.
(4) This figure includes 68,000 shares issuable upon the exercise of currently
exercisable stock options, 65,000 of which are exercisable at a price of $.75
per share and 3,000 of which are exercisable at a price of $.60 per share.
(5) This figure includes 36,000 shares issuable upon the exercise of currently
exercisable stock options, 12,000 of which are exercisable at a price of $.75
per share, 3,000 of which are exercisable at a price of $.60 per share and
21,000 of which are exercisable at a price of $2.50 per share.
(6) This figure is based on the current number of shares of Common Stock that
each director and executive officer of the Company owns plus the number of
shares of Common Stock that each director and executive officer has the right to
obtain within 60 days from January 4, 2000.
(7) This percentage was derived by dividing the figure obtained in footnote (6)
above by the total number of shares of Common Stock outstanding as of January 4,
2000 plus the number of shares of Common Stock that each director and executive
officer has the right to obtain within 60 days from January 4, 2000.
</TABLE>
Item 5. Directors and Executive Officers, Promoters and Control Persons
The Company's directors and executive officers, and their ages as of
January 4, 2000 are as follows:
Name Age Position
- - ---- --- --------
Mark Bradley 37 Chief Executive Officer and Director
Seth A. Horn 44 Chief Financial Officer
Darius Irani 67 Director
Peter Rona 53 Chairman and Director
Dr. Joost Van Adelsberg 75 Director
<PAGE>
Terms of Directors.
- - -------------------
Mark Bradley has served as a director of the Company since its
inception in 1993. Peter Rona has served as a director of the Company for one
year and Dr. Joost Van Adelsberg and Darius Irani have served as directors of
the Company for the past two years. The directors of the Company serve as such
until the next annual meeting of the stockholders and until their successors are
elected and qualified.
Business Experience of the Directors and Executive Officers.
- - ------------------------------------------------------------
Mark Bradley is the Company's founder and chief executive officer. Mr.
Bradley was a staff producer/director at United Artists where he produced
original programming and television commercials and also directed multi-camera
music videos and live to tape sports and variety shows. Mr. Bradley was a studio
manager and postproduction supervisor with United Cable Television in Los
Angeles. In this capacity he engaged in the production, packaging and
syndication of television film productions and a myriad of other entertainment
programming content for such media venues as HBO, Nickelodeon, Prime Ticket and
MTV. He was also engaged as an independent producer/director, creating and
promoting live pay-per-view events for television, negotiating entertainment
programming distribution deals and budgeting and packaging television
programming. In 1985 he created the Real Estate Broadcast Network which was the
first 24-hour real estate channel. In 1984 he joined the partnership of JMJ
Communications. He performed media buying and selling services, produced
corporate promotional and marketing videos, and developed direct-response
marketing companies for consumer products. Mr. Bradley's education includes the
completion of the producers program at the University of California Los Angeles.
Seth Horn is the Company's chief financial officer. He has over ten
years of experience in financial and accounting management and has been a
certified public accountant for almost 20 years. He has experience in capital
markets, mergers and acquisitions, SEC reporting, securities registration and
proxy statements. From 1991 to 1998 Mr. Horn was a managing director at General
Capital, an Investment Banking firm in Newport Beach, California, from 1997 to
1998 he was the Chief Financial Officer and Controller at International Vinyl
Products and from 1998 to 1999 Mr. Horn was a consultant to Powerine Oil
Company. Mr. Horn has a Bachelor of Arts degree in accounting and business from
Pennsylvania State University.
Darius Irani is a member of the Board of the Directors of the Company.
Mr. Irani is the managing partner of DHIJ Management Company, a company that
owns and manages real estate income properties. From 1964 to 1992 Mr. Irani
worked at Allied Signal Aerospace Company ("Allied") in various technical and
management capacities. Mr. Irani's most recent position with Allied was as
Director of Engineering of the Actuation System Division where he was
responsible for the primary and secondary flight controls for both commercial
and military aircraft. Mr. Irani holds a Masters Degree in Electrical
Engineering from the University of Toronto.
<PAGE>
Peter Rona is the Chairman of the Company and is a member of the
Company's Board of Directors. In 1985 Mr. Rona founded a communications and
entertainment company named Network North, Inc. ("Network). Mr. Rona is
Network's Chairman, President and Chief Executive Officer. Network's wholly
owned subsidiary, NTN Interactive Network, Inc. ("NTN") is the exclusive
Canadian licensee of NTN Communications, Inc., a leading producer and programmer
of interactive television and on-line and internet entertainment. Magic Lantern
Communications, Ltd., another wholly owned subsidiary of Network, markets and
distributes educational video products, media resources and software to
educational networks and governmental agencies. Mr. Rona has been President of
Anor Management Services, Ltd., a personal consulting and management company
since 1973. He was also a director of NorBee Financial Services, Inc., a company
that specializes in mortgage brokerage and other financial services. Mr. Rona
received a Bachelor of Arts degree from Sir Williams University in Montreal and
Quebec.
Dr. Joost Van Adelsberg is a member of the Board of Directors of the
Company. Dr. Van Adelsberg is a medical doctor and currently has an active
family practice in California. He is a member and is on the staff of the Little
Company of Mary Hospital in Torrance, California. Dr. Van Adelsberg is a
clinical instructor at the Department of Family Practice, School of Medicine at
the University of California at Los Angeles.
Family Relationships.
- - ---------------------
There are no family relationships among directors, executive officers
or persons nominated or chosen by the Company to become directors or executive
officers.
Involvement in Certain Legal Proceedings.
- - -----------------------------------------
The Company is not aware of any material legal proceedings that have
occurred within the past five years concerning any director, director nominee,
promoter or control person which involved a criminal conviction, a pending
criminal proceeding, a pending or concluded administrative or civil proceeding
limiting one's participation in the securities or banking industries, or a
finding of securities or commodities law violations. Moreover, no bankruptcy
petition has been filed by or against any business of which a director, director
nominee, promoter or control person was a general partner or executive officer
either at the time of such bankruptcy or within two years prior to that time.
<PAGE>
Item 6. Executive Compensation
<TABLE>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Securities
Principal Annual Restricted Underlying All Other
Position Compen- Stock Options/ LTIP Compen-
Year Salary Bonus sation Award(s) SARs Payouts sation
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark Bradley 1997 $75,232.50(1) None None None None None None
CEO
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
Mark Bradley 1998 $151,240(2) None None None None None None
CEO
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
Mark Bradley 1999 $78,100(3) None None None None None None
CEO
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
Peter Rona 1999 $26,350(4) None None None None None None
Chairman
- - -------------- -------- ----------------- ----------- ------------- ------------- ------------- ----------- -----------
(1) Mark Bradley's salary consisted of cash in the amount of $75,000 and 23,250
shares of the Corporation's Common Stock valued at $.01 per share.
(2) Mark Bradley's salary consisted of cash in the amount of $150,000 and 4,000
shares of the Corporation's Common Stock valued at $0.31 per share.
(3) Mr. Bradley's salary consisted of cash in the amount of $75,000 and 10,000
shares of the Corporation's Common Stock valued at $0.31 per share.
(4) Mr. Rona's salary consisted of 85,000 shares of the Corporation's Common
Stock valued at $0.31 per share.
</TABLE>
Standard Arrangements
- - ---------------------
Directors of the Corporation do not receive cash compensation for their
services as directors or members of committees of the Board of Directors, but
are given 2,000 shares and 3,000 options of the Corporation's Common Stock for
each meeting of the Board of the Directors that such director attends.
Item 7. Certain Relationships and Related Transactions
There have not been any transactions or proposed transactions during
the past two years to which the Company was or is to be a party in which any
director, executive officer, any nominee for election as a director, any person
holding more than 5% of the Company's voting securities or any member of the
immediate family of any of these persons had or is to have a direct or indirect
material interest.
<PAGE>
Item 8. Description of Securities
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, $0.001 par value. As of January 4, 2000, 6,977,920
shares of Common Stock were issued and outstanding. All Shares of Common Stock
entitle the holder thereof to: (i) one non-cumulative vote for each share held
of record on all matter submitted to a vote of shareholders, (ii) to participate
equally and to receive any and all such dividends as may be declared by the
Board of Directors out of funds legally available therefore; and (iii) to
participate pro rata in any distribution of assets upon liquidation of the
Company. Stockholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or any other securities. The Common Stock is
not subject to redemption and carries no subscription or conversion rights. All
outstanding shares of Common Stock are full paid and non-assessable. There are
not provisions in the Articles of Incorporation or the Bylaws of the Company
that would delay, defer or prevent a change in control of the Company.
Part II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
The Company's Common Stock is currently traded on the over the counter
bulletin board market (OTCBB) under the symbol PNTV. The following table sets
forth the high and low sales prices for each quarter within the last two fiscal
years.
Fiscal Year Ended December 31, 1998
- - -----------------------------------
Quarter Ended High Sales Price Low Sales Price
- - ------------- ---------------- ---------------
March 31, 1998 2 3/4 2 7/16
June 30, 1998 2 14/25 1 /18
September 30, 1998 1 7/16 9/16
December 31, 1998 1 1/2 3/8
Fiscal Year Ended December 31, 1999
- - -----------------------------------
Quarter Ended High Sales Price Low Sales Price
- - ------------- ---------------- ---------------
March 31, 1999 1 1/2 51/86
June 30, 1999 11/16 5/16
September 30, 1999 51/86 5/16
December 31, 1999 3/4 10/37
<PAGE>
As of January 4, 2000, there were approximately 164 holders of record
of the Company's Common Stock. The Company has not declared or paid any cash
dividends on its Common Stock during the past two fiscal years and through
September 30, 1999. The Company's board of directors currently intends to retain
all earnings for use in the Company's business for the foreseeable future. Any
future payment of dividends will depend on the Company's results of operations,
financial condition, cash requirements and other factors deemed relevant by the
Company's board of directors.
Item 2. Legal Proceedings
On August 16, 1999, Jerome S. Kutner filed a complaint in the District
Court of Clark County Nevada against the Company. Mr. Kutner's complaint alleges
that the Company breached the Independent Consulting/Finder Fee Agreement (the
"Fee Agreement") between the Company and Mr. Kutner when the Company failed to
pay him monies owed under the Fee Agreement. Mr. Kutner has requested $183,000
in damages. The Company has alleged in its answer to Mr. Kutner's complaint that
the Fee Agreement was superceded by a Settlement Agreement pursuant to which the
Company and Mr. Kutner agreed that: (i) their respective obligations under the
Fee Agreement would be terminated and (ii) the Company would pay Mr. Kutner
$5,539.00 as satisfaction in full of all monies owed to him (the "Settlement
Sum"). It is the Company's contention that the Settlement Agreement controls in
this case and that Mr. Kutner is only entitled to the Settlement Sum.
Item 3. Changes in and Disagreements with Accountants
The Company hired the accounting firm of Winter and Scheifley ("W&S")
to audit its 1996 and 1997 financial statements. During such engagement W&S
dissolved. The partner that had been in charge of auditing the Company's
financial statements started his own practice and finished the 1996 and the 1997
Company audit. Although Mr. Scheifley proposed to audit the Company's 1998
financial statements, the Board of Directors of the Company determined that the
Company should hire a larger and more established accounting company. Therefore,
in December of 1999 the Company hired the accounting firm of Friedman, Alpren &
Green.
The Company did not have any disagreements with W&S or Mr. Scheifley on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure. Mr. Scheifley's report on the financial
statements for 1996 and 1997 did not contain an adverse opinion or disclaimer of
opinion and was not modified as to uncertainty, audit scope or accounting
principles.
<PAGE>
Item 4. Recent Sales of Unregistered Securities
During the last three fiscal years the Company has issued the following
unregistered securities in reliance upon the exemption from registration
contained in Section 4(2) of the Securities Act of 1933. No underwriters were
used and no underwriting commissions were paid in any of transactions listed
below.
1. In January, 1997 the Corporation sold an aggregate of 16,000 shares of its
Common Stock to four investors for a total offering price of $24,000, $15,000 of
which was paid to the Corporation in cash and $9,000 of which was given to
Corporation in the form of consulting and production services.
2. In February, 1997 the Corporation sold an aggregate of 37,500 shares of its
Common Stock to three investors for a total offering price of $11,550, $11,250
of which was paid to the Corporation in cash and $300 of which was given to the
Corporation in the form of consulting and production services.
3. In March, 1997 the Corporation sold 27,000 shares of its Common Stock to one
investor for $40,500.
4. In April, 1997 the Corporation sold an aggregate of 175,130 shares of its
Common Stock to 19 investors for total offering price of $255,245, $45,800 of
which was paid to the Corporation in cash and $209,445 of which was given to the
Corporation in the form of consulting and production services.
5. In July, 1997 the Corporation sold 100,000 shares of its Common Stock to one
investor for $1,000.
6. In August, 1997 the Corporation sold an aggregate of 286,375 shares of its
Common Stock to three investors for $224,295, $2,420 of which was paid to the
Corporation in cash and $221,875 of which was given to the Corporation in the
form of consulting and production services.
7. In September, 1997 the Corporation sold an aggregate of 156,169 shares of its
Common Stock to 13 investors for $226,803.50, $163,153.50 of which was paid to
the Corporation in cash and $63,650 of which was given to the Corporation in the
form of consulting and production services.
8. In October, 1997 the Corporation sold an aggregate of 203,500 shares of its
Common Stock to five investors for $305,250, $5,250 of which was paid to the
Corporation in cash and $300,000 of which was given to the Corporation in the
form of consulting and production services.
9. In December, 1997 the Corporation sold an aggregate of 393,520 shares of its
Common Stock to nine investors for cash in the amount of $58,110.95.
<PAGE>
10. In February, 1998 the Corporation sold 33,333 shares of its Common Stock to
one investor for cash in the amount of $50,000.
11. In April, 1998 the Corporation issued 10,000 shares of its Common Stock to
one individual for consulting and production services rendered to the
Corporation in the amount of $15,000.
12. In July, 1998 the Corporation sold 20,000 shares of its Common Stock to one
investor for cash in the amount of $20,000.
13. In August, 1998 the Corporation sold an aggregate of 20,000 shares of its
Common Stock to three investors for cash in the amount of $20,000.
14. In September, 1998 the Corporation sold 3,000 shares of its Common Stock to
one investor for cash in the amount of $3,000.
15. In October, 1998 the Corporation issued an aggregate of 112,600 shares of
its Common Stock to 14 individuals in return for consulting and production
services in an aggregate amount of $112,600.
16. In November, 1998 the Corporation issued an aggregate of 64,000 shares of
its Common Stock to seven individuals in return for consulting and production
services in an aggregate amount of $64,000.
17. In December, 1998 the Corporation issued an aggregate of 14,000 shares of
its Common Stock to seven individuals in return for consulting and production
services in an aggregate amount of $14,000.
18. In January, 1999 the Corporation sold an aggregate of 294,000 shares of its
Common Stock to 13 investors for $115,980, $104,980 of which was paid to the
Corporation in cash and $11,000 of which was given to the Corporation in the
form of consulting and production services.
19. In February, 1999 the Corporation issued an aggregate of 77,000 shares of
its Common Stock to 8 individuals in return for consulting and production
services in an aggregate amount of $77,000.
20. In March, 1999 the Corporation issued an aggregate of 6,400 shares of its
Common Stock to three individuals in return for consulting and production
services in an aggregate amount of $6,400.
21. In April, 1999 the Corporation issued an aggregate of 83,000 shares of its
Common Stock to three individuals in return for consulting and production
services in an aggregate amount of $83,000.
<PAGE>
22. In May, 1999 the Corporation sold an aggregate of 65,333 shares of its
Common Stock to 13 investors for $50,333, $15,000 of which was paid to the
Corporation in cash and $35,333 of which was given to the Corporation in the
form of consulting and production services.
23. In June, 1999 the Corporation issued an aggregate of 23,000 shares of its
Common Stock to six individuals in return for consulting and production services
in an aggregate amount of $23,000.
24. In August, 1999 the Corporation sold 10,000 shares of its Common Stock to
one investor for $5,000.
25. In October, 1999 the Corporation sold 33,000 shares of its Common Stock to
three investors for $12,130.
26. In December, 1999 the Corporation sold an aggregate of 823,700 shares of its
Common Stock to 60 investors for $506,450, $237,750 of which was paid to the
Corporation in cash, $268,700 of which was given to the Corporation in the form
of consulting and production services.
Item 5. Indemnification of Directors and Officers
Section 6 of the Company's Articles of Incorporation contains a
provision that eliminates or limits the personal liability of a director,
officer or stockholder for damages for breach of a fiduciary duty but does not
eliminate or limit the liability of a director, officer or stockholder for: (i)
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law or (ii) the payment of dividends in violation of section 78.300
of the Nevada Revised Statutes.
<PAGE>
FRIEDMAN
ALPREN & 1700 BROADWAY
GREEN LLP NEW YORK, NY 10019
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 212-582-1600
FAX 212-265-4761
www.nyccpas.com
INDEPENDENT AUDITORS' REPORT
----------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE PLAYERS NETWORK
We have audited the accompanying balance sheet of THE PLAYERS NETWORK
as of December 31, 1998, and the related statements of operations, cash flows
and changes in stockholders' equity for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We did not audit the financial statements of THE PLAYERS NETWORK for
the year ended December 31, 1997. The financial statements for the year ended
December 31, 1997 were audited by other auditors whose reports express
unqualified opinions on those statements, and our opinion, insofar as it relates
to amounts for the year ended December 31, 1997 included in the statements of
operations, cash flows and changes in stockholders' equity, is based solely on
the reports of the other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors,
the financial statements referred to above present fairly, in all material
respects, the financial position of THE PLAYERS NETWORK as of December 31, 1998,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Friedman Alpren & Green LLP
February 1, 2000
<PAGE>
THE PLAYERS NETWORK
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets
Cash $ 1,823
Prepaid expenses 2,336
-----------
Total current assets 4,159
Property and equipment - net 329,599
Capitalized video production costs - net 940,848
Intangible and other assets 10,953
-----------
Total assets $ 1,285,559
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 92,957
Accrued expenses 31,696
Current portion of long-term liabilities 22,932
Installment purchase agreement 156,500
Notes payable, stockholders 411,304
-----------
Total current liabilities 715,389
Long-term liabilities, less current portion 42,547
-----------
Total liabilities 757,936
-----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
25,000,000 shares authorized
4,666,821 shares
issued and outstanding 4,666
Additional paid-in-capital 3,376,459
Accumulated deficit (2,853,502)
-----------
Stockholders equity 527,623
-----------
Total liabilities and stockholders' equity $ 1,285,559
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE PLAYERS NETWORK
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
----------- ------------
Revenues
Network subscriptions $ 216,104 $ --
Other 92,768 10,000
----------- -----------
Total revenues 308,872 10,000
----------- -----------
Operating expenses
Selling, general and administrative 586,537 492,399
Stock based compensation, non-employees 324,537 --
Depreciation and amortization 121,969 28,208
----------- -----------
Total operating expenses 1,033,043 520,607
----------- -----------
Other expenses
Interest expense 67,859 20,780
----------- -----------
Net loss $ (792,030) $ (531,387)
=========== ===========
Basic and diluted loss per share $ (0.19) $ (0.14)
Weighted average shares outstanding 4,070,204 3,773,294
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(792,030) $(531,387)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 121,969 28,208
Common stock issued for services 116,400 --
Stock based compensation, non-employees 324,537 151,814
--------- ---------
(229,124) (351,365)
Changes in Assets and Liabilities
(Increase) Decrease in:
Prepaid expenses (176) 887
Other assets -- (6,000)
Accounts and other payables (8,656) 7,331
Accrued expenses 31,695 --
Due to officer -- 34,300
--------- ---------
Net cash used in operating activities (206,261) (314,847)
--------- ---------
Investing activities
Increase in capitalized video production costs (130,263) (605,067)
Acquisition of equipment (21,359) (89,210)
Increase in intangible assets (2,831) (2,449)
--------- ---------
Net cash used in investing activities (154,453) (696,726)
--------- ---------
Financing activities
Proceeds from the issuance of common stock 93,000 345,988
Proceeds from notes payable, stockholder 155,847 359,141
Proceeds from equipment loan 42,800 --
Payments on long term liabilities (7,904) (2,413)
--------- ---------
Net cash provided by financing activities 283,743 702,716
--------- ---------
Net decrease in cash (76,971) (308,857)
Cash, beginning of year 78,794 387,651
--------- ---------
Cash, end of year $ 1,823 $ 78,794
========= =========
Suplemental cash flow information
Interest paid $ 7,013 $ 3,551
Non-cash investing and financing activities
Stock based compensation charged to expenses $ 324,537 --
Capitalized video costs paid with common stock $ 237,913 $ 51,690
Common stock issued in exchange for shareholder loans $ 294,069 --
Equipment acquired through capital lease -- $ 33,121
Equipment acquired in exchange for stock -- $ 75,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0 3,565,130 $ 3,565 $ 1,687,150 $ (1,530,085) $ 160,630
Shares issued pursuant to a private placement 230,659 231 345,757 0 345,988
Shares issued for services and equipment 185,669 185 278,319 0 278,504
Net loss 0 0 0 (531,387) (531,387)
---------------------------------------------------------------------------
Balance at December 31, 1997 3,981,458 3,981 2,311,226 (2,061,472) 253,735
Shares issued for cash 76,333 76 92,924 0 93,000
Shares issued for services 200,600 201 300,699 0 300,900
Stock based compensation from options and warrants 0 0 377,949 0 377,949
Shares issued at fair value to officer in exchange for debt 408,430 408 293,661 0 294,069
Net loss 0 0 0 (792,030) (792,030)
---------------------------------------------------------------------------
Balance at December 31, 1998 4,666,821 $ 4,666 $ 3,376,459 $(2,853,502) $ 527,623
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
The Players Network
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Players Network (the "Company"), was organized under the laws of the State
of Nevada on March 16, 1993. The Company is engaged in the development and
marketing of a customized, interactive, full-service gaming television network.
The Company filed a 15c2-11 with the National Association of Securities Dealers,
which became effective on March 30, 1998 and received the stock-trading symbol
PNTV. The Company's common stock is listed on the Over the Counter Bulletin
Board.
Estimates:
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could differ from those estimates.
Research and development:
The Company expenses all research and development costs related to the
production of videos for its gaming television network. Research and development
costs charged to operations were $44,363 for the year ended December 31, 1997.
Capitalized video production costs:
In 1997 and 1998, the Company capitalized the costs necessary to produce videos,
and began amortizing the costs in 1998 over the expected marketable life of the
videos, which is currently estimated at ten years. Management periodically
evaluates the recoverability of the capitalized video production costs.
Amortization expense of approximately $84,000 was charged to operations for the
year ended December 31, 1998. There was no amortization expense in 1997.
Property and equipment:
Property and equipment are carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. When assets
are retired or otherwise disposed of, the cost and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
recognized in that period. The cost of repairs and maintenance is charged to
operations as incurred and significant renewals or betterments are capitalized.
Useful lives for property and equipment are as follows:
Office furniture 10 years
Office equipment 5-10 years
Video Equipment 10 years
Intangible assets:
The Company has applied for trademark protection for its videos. Trademark costs
aggregating $2,449 are amortized using the straight-line method over a period of
ten years.
The Company incurred certain costs in obtaining lease financing. These costs
have been capitalized and are amortized over the lives of the leases (60
months).
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Long-lived assets:
The Company makes reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. An impairment loss
would be recognized when estimated future cash flows expected to result from the
use of the asset and its eventual disposition is less than its carrying amount.
The Company has identified no such impairment losses for 1998 and 1997.
Basic and diluted loss per share:
The basic loss per share is computed by dividing the net loss for the period by
the weighted average number of common shares outstanding for the period. Basic
loss per share is unchanged on a diluted basis since the assumed exercise of
potential common stock would have an anti-dilutive effect.
Revenue recognition:
The Company recognizes revenue from hotel in-house network contracts as the
broadcasts are aired. Advertising revenue is recognized as the advertisements
are aired.
Advertising costs:
The Company's policy is to expense advertising costs as a period expense.
Advertising costs of $ 475 and $ 3,418 were charged to operations during the
years ended December 31, 1998 and 1997, respectively.
Stock-based compensation:
The Company has adopted Statement of Financial Accounting Standard No. 123 (SFAS
123), "Accounting for Stock-Based Compensation". The Company measures
compensation expense for its stock-based employee compensation plans using the
intrinsic value method prescribed by APB No. 25, "Accounting for Stock Issued to
Employees", and has provided in Note 9 pro forma disclosures of the effect on
net income and earnings per share as if the fair value-based method prescribed
by SFAS 123 had been applied in measuring compensation expense.
New accounting pronouncement:
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 expect
these pronouncements to have a material impact on the results of operations of
the company.
Reclassifications:
Certain reclassifications have been made to the prior year financial statements
to conform to the current year presentation.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Furniture and equipment $ 14,209
Video equipment 359,622
Work-in process 21,359
----------
Total cost 395,190
Accumulated depreciation (65,591)
----------
Net book value $ 329,599
==========
Depreciation expense charged to operations amounted to $37,257 and $28,208 for
the years ended December 31, 1998 and 1997, respectively.
The cost of equipment held under capital leases totaled $ 33,121 at December 31,
1998. The related accumulated depreciation was $ 9,156 at December 31, 1998.
3. INSTALLMENT EQUIPMENT PURCHASE
During 1997, the Company entered into an agreement with a vendor to purchase
video equipment for $326,500. The purchase has been executed through the
exchange of 50,000 shares of common stock valued at $75,000, cash payment of
$176,500 to be made in 1998, and $75,000 of deferred advertising services to be
performed over a 3 year period. In addition, the vendor was given options to
purchase an additional 20,000 shares of common stock at $2.50 per share and
30,000 shares at $3.00 per share. The options expired in 1998 and 1999 and were
never exercised. The Company made $20,000 in payments of the installment
agreement and performed no advertising services in 1998.
4. NOTES PAYABLE, STOCKHOLDERS
The Company has short-term notes payable with three stockholders aggregating
$411,304 as of December 31, 1998. The notes are unsecured, payable on demand and
bear interest at 10% per annum. Each of the note holders have the option to
convert the debt instrument into shares of common stock at the average
prevailing price per share at any time prior to repayment.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
5. LONG-TERM LIABILITIES
The Company has the following long-term liabilities:
Capital lease obligation payable to Advanta Business
Services, collateralized by specified video equipment,
payable in monthly installments of $228 including
interest at 24.84%. $ 6,375
Capital lease obligation payable to Granite Financial
Services, collateralized by specified video equipment,
payable in monthly installments of $661 including
interest at 18.39%. 19,283
Equipment loan payable to Granite Financial Services,
collateralized by specified video equipment, payable in
monthly installments of $1,022 including interest at
16.4%. 39,820
--------
$ 65,479
Less: current portion 22,932
--------
$ 42,547
========
Future minimum payments at December 31, 1998 are as follows:
Year Ending
-----------
1999 $ 22,932
2000 22,932
2001 12,264
2002 7,350
-----------------------------------
$ 65,479
=========
6. STOCKHOLDERS EQUITY
Common stock:
At inception, the Company issued 2,218,750 shares of its common stock for cash
aggregating $2,500.
During March 1994 the Company issued 189,500 shares of common stock for services
valued at $1,895. The shares were issued to the subscribers during 1997.
During December 1995 the Company issued 98,000 shares of common stock for cash
aggregating $98,000.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
During the period August to December, 1996 the Company issued 463,800 shares of
its common stock for cash aggregating $695,700 in conjunction with a private
placement offering. In addition, during the period March 1996 to December 1996
the Company authorized the issuance of 595,080 shares of its common stock in
exchange for services valued at $892,620.
During the year ended December 31, 1997, the Company issued 50,000 shares of its
common stock in exchange for fixed assets valued at $75,000, 34,460 shares in
exchange for deferred video production costs valued at $51,690, and 101,209
shares in exchange for services valued at $151,814.
In addition, during the year ended December 31, 1997 the Company issued 230,659
shares of its common stock for cash aggregating $345,988.
In 1998, the Company issued 76,333 shares of its common stock for cash
aggregating $93,000.
During the year ended December 31, 1998, the Company issued 123,000 shares in
exchange for capitalized video production costs valued at $184,500 and 77,600
shares in exchange for services valued at $116,400. In addition, the president
of the Company converted $294,069 of debt owed to him for 408,430 shares.
Warrants:
During 1996, the Company approved the issuance of 450,000 warrants for the
purchase of common stock. These warrants were never issued and subsequently
cancelled.
On January 15, 1996, the Company issued 90,000 warrants to five specific
stockholders of record, with a 30-day call option at $.001 per warrant. The
warrants expire on January 14, 2000 and carry an exercise price of $2.50 per
share.
On April 1, 1997, the Company approved the issuance of 100,000 stock warrants to
a stockholder. The warrants expire in 10 months and contain an exercise price of
$1.75.
On December 4, 1997, the Company's principal stockholder received 350,000
warrants with an exercise price of $1.50 per share and a 60 month expiration
period.
Stock Options:
On May 6, 1996 the Company approved the issuance of a total of 110,000 stock
options to three stockholders. The options expire between 24 and 34 months and
carry an exercise price of $2.50.
On January 20, 1997 the Company approved the issuance of 50,000 stock options as
part of the purchase of video equipment (see Note 3).
On April 1, 1997 the Company approved the issuance of a total of 73,500 stock
options to seven stockholders. The options expire between 12 and 24 months and
contain exercise prices of $2.50 and $2.75.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
On May 21, 1997 the Company approved the issuance of a total of 60,000 stock
options to two stockholders. The options expire between 18 and 24 months and
carry an exercise price of $2.50.
On August 8, 1997 the Company approved the issuance of a total of 68,000 stock
options to ten stockholders. The options expire between 12 and 24 months and
carry an exercise price of $2.50.
On December 4, 1997 the Company issued a total of 84,000 stock options to twelve
stockholders. The options expire in 24 months and carry an exercise price of
$2.50. In addition two stockholders received a total of 50,000 90-day stock
options to purchase common stock at $1.75 per share.
On January 1, 1998, the Company issued 452,000 stock options that expire in 12
to 24 months and carry an exercise price of $2.50. In addition, the Company
approved 299,500 stock options from February to December 1998 that expire in 12
to 24 months and carry exercise prices that range from $.60 to $2.50.
As of December 31, 1998 none of the warrants or options had been exercised.
7. INCOME TAXES AND DEFERRED INCOME TAXES
Income taxes and components of deferred tax assets are as follows:
Deferred tax assets
Net operating loss carryforwards $ 931,515
Stock-based compensation 110,343
1,041,858
---------
Less - Valuation allowance (1,041,858)
----------
Net deferred tax asset $ 0
==========
The Company has available net operating loss carryforwards of approximately
$2,740,000, which expire as follows: 2010, $9,000; 2011, $1,732,000; 2012,
$531,000; and 2018, $468,000.
8. COMMITMENTS
Effective December 4, 1997, the Company entered into an employment agreement
with its president who is responsible for the day-to-day operations of the
Company's business, the implementation of policies and creative direction of the
Company. The Company agrees to pay an annual base salary of $70,000, adjusted
annually for cost of living increases. As Executive Producer and Creator, the
president will also be entitled to a 5% fee on any Company royalties received on
the production content developed and produced by him. In 1998, the Company
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
issued 350,000 warrants to its president for a period of 5 years exercisable at
$1.50 per share. Unpaid and accrued salaries of approximately $115,000 are
included in notes payable to stockholders at December 31, 1998.
The Company entered into numerous "Hotel Affiliate Sales Agreements" with
various hotels to provide an in-house gaming channel over a privately operated
cable television distribution system. The Company agrees to install digital
playback equipment and provide the programming, maintenance and service to this
equipment at no additional cost. The term of these agreements range from 12
months to 24 months with renewal options.
On July 8, 1998 the company entered into an "Independent Consulting / Finders
Fee Agreement" with an independent sales /marketing consultant to enhance the
Company's business, for a term of 24 months. The Company will pay the
independent contractor a base fee of $52,000 per year in cash and 25,000 shares
of restricted stock. He will also receive a 10% commission on all upfront money
for production and equipment along with a 3% commission on the gross / net
revenues as defined.
9 - STOCK OPTIONS AND WARRANTS
The Company has issued stock options and warrants to purchase the Company's
common stock to officers, key employees, directors and outsiders as compensation
and for services rendered.
The stock options and warrants are summarized as follows:
<TABLE>
Number of Weighted Average Number of Weighted Average
Options Exercise Price Warrants Exercise Price
------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1997 495,500 $ 2.46 990,000 $ 3.96
Issued 751,500
2.19 -
Exercised
- -
Expired (250,000) 2.37 (100,000) 1.75
Cancelled (450,000) 6.67
-
Outstanding at December 31, 1998 997,000 $ 2.26 440,000 $ 1.70
Stock options exercisable at:
December 31, 1998 997,000 $ 2.26
December 31, 1997 495,500 $ 2.46
Warrants exercisable at:
December 31, 1998 440,000 $ 1.70
December 31, 1997 990,000 $ 3.96
</TABLE>
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Summary information about the Company's stock options and warrants outstanding
at December 31, 1998 is as follows:
Outstanding and Weighted Average
Exercisable at Contractual Periods Weighted Average
December 31, 1998 in Years Exercise Price
----------------- -------- --------------
OPTIONS
- - -------
12,000 2.00 $ 0.60
9,000 2.00 0.75
36,500 2.00 2.50
25,000 1.25 2.50
50,000 1.43 2.50
265,000 2.00 2.50
80,000 1.50 2.50
30,000 1.50 3.00
16,000 1.50 2.50
31,000 2.00 2.50
20,000 1.75 2.50
220,000 2.00 1.75
13,000 2.00 1.75
23,000 2.00 2.50
3,000 2.00 2.50
25,000 1.00 1.00
38,500 2.00 2.50
50,000 2.00 2.50
13,000 1.58 2.50
10,000 2.00 2.50
27,000 2.00 2.50
------ ---- ----
997,000 1.79 $ 2.26
======= ==== ==================
WARRANTS
350,000 1.83 $ 1.50
90,000 2.00 2.50
440,000 1.92 $ 1.70
======= ==== ==================
The Company accounts for stock options and warrants issued to non-employees
under the fair value method, pursuant to SFAS No. 123, "Accounting for Stock -
Based Compensation". The fair value of these stock options and warrants was
calculated at the date of issuance using a Black-Scholes Option Valuation Model
assuming a risk-free interest rate of 4.59% and a volatility factor of expected
market price of the Company's common stock of 146.39%. Under the provisions of
SFAS No. 123, compensation expense arising from the issuance of stock options
and warrants for the year ended December 31, 1998 was $377,348 of which $53,413
was included in capitalized video production costs. The related deferred tax
asset of approximately $128,500 is based on a 34% tax rate.
Compensation expense chargeable to operations for stock options and warrants
issued to non-employees was not material for the year ended December 31, 1997.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
The Company also measures compensation in accordance with the provisions of
Accounting Principles Board Opinion No. 25 in accounting for stock options
issued to employees. Accordingly, compensation cost of $602 has been recorded
for stock options issued to employees for the year ended December 31, 1998 using
the intrinsic value method. In addition, the fair value of each stock option and
warrant issued has been estimated on the issuance date using the Black-Scholes
Option Valuation Model. The following assumptions were made in estimating the
fair value:
Dividend yield 0%
Risk-free interest rate 4.59%
Expected life 2 and 5 years
Expected volatility 146.39%
Had compensation cost been determined under SFAS No. 123, net loss per share for
the year ended December 31, 1998 would have been increased as follows :
Net loss
As reported $ (792,030)
Pro forma (1,036,539)
Basic and diluted loss
per share
As reported $ (0.19)
Pro forma (0.25)
<PAGE>
THE PLAYERS NETWORK
BALANCE SHEET
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ -----------------
ASSETS:
Current assets
Cash $ 5,121 $ 5,574
Prepaid expenses 8,394 5,551
----------- -----------
Total current assets 13,515 11,125
Property and equipment, net 301,562 345,888
Capitalized video production costs, net 948,015 685,097
Intangible and other assets 10,722 8,912
----------- -----------
Total assets $ 1,273,814 $ 1,051,022
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 87,858 $ 92,212
Accrued expenses 59,340 29,564
Current portion of long-term liabilities 13,880 5,779
Installment purchase agreement 156,500 156,500
Notes payable, stockholders 151,284 692,691
----------- -----------
Total current liabilities 468,862 976,746
Long-term liabilities, less current
portion 42,615 21,220
----------- -----------
Total liabilities 511,477 997,966
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
25,000,000 shares authorized
5,836,151 and 4,067,791 shares
issued and outstanding 5,836 4,068
Additional paid-in-capital 4,299,799 2,419,140
Accumulated deficit (3,543,298) (2,370,152)
----------- -----------
Stockholders' equity 762,337 53,056
----------- -----------
Total liabilities and stockholders' equity $ 1,273,814 $ 1,051,022
=========== ===========
UNAUDITED
<PAGE>
THE PLAYERS NETWORK
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
Revenues
Network subscriptions $ 160,968 $ 138,132
Other 81,890 80,838
----------- -----------
Total revenues 242,858 218,970
----------- -----------
Operating expenses
Selling, general and administrative 546,310 376,016
Stock based compensation, non-employees 243,043 0
Depreciation and amortization 104,302 98,649
----------- -----------
Total operating expenses 893,655 474,665
----------- -----------
Other expenses
Interest expense 38,999 52,985
----------- -----------
Net loss ($ 689,796) ($ 308,680)
=========== ===========
Basic and diluted loss per share ($ 0.16) ($ 0.08)
Weighted average shares outstanding 4,263,069 4,024,625
UNAUDITED
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<CAPTION>
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($689,796) ($308,680)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 104,302 98,649
Common stock issued for services 310,500 15,000
Stock based compensation, non-employees 243,043 0
--------- ---------
(31,951) (195,031)
Changes in assets and liabilities (Increase) Decrease in:
Prepaid assets (6,058) 3,391
Other assets 0 0
Accounts payable 5,101 10,599
Accrued expenses 27,644 9,294
--------- ---------
Net cash used in operating activities (5,264) (171,747)
--------- ---------
Investing activities
Increase in capitalized video production costs (54,766) (98,964)
Acquisition of equipment 0 (28,208)
Increase in intangible assets (240) (245)
--------- ---------
Net cash used in investing activities (55,006) (127,417)
--------- ---------
Financing activities:
Proceeds from the issuance of stock 55,000 93,000
Proceeds from notes payable, stockholders 17,552 136,597
Payments on long-term liabilities (8,984) (3,652)
--------- ---------
Net cash provided by financing activities 63,568 225,945
--------- ---------
Net Increase (Decrease) in Cash 3,298 (73,220)
Cash, beginning of period 1,823 78,794
--------- ---------
Cash, end of period $ 5,121 $ 5,574
========= =========
Non-cash investing and financing activities
Stock based compensation charged to expenses $ 243,043 $ --
Capitilized video production costs paid with Common Stock $ 26,600 $ --
Common stock issued in exchange for shareholder loans $ 289,366 $ --
Supplemental cash flow information
Interest paid in cash $ 8,983 $ 4,357
</TABLE>
UNAUDITED
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30 1999 AND THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,565,130 $ 3,565 $ 1,687,150 ($1,530,085) $ 160,630
Shares issued pursuant to a private placement 230,659 231 345,757 0 345,988
Shares issued for services 185,669 185 278,319 0 278,504
Net loss 0 0 0 (531,387) (531,387)
-------------------------------------------------------------------
Balance at December 31, 1997 3,981,458 3,981 2,311,226 (2,061,472) 253,735
Shares issued for cash 76,333 76 92,924 0 93,000
Shares issued for services 200,600 201 300,699 0 300,900
Stock based compensation from options and warrants 0 0 377,949 0 377,949
Shares issued at fair value to officer in exchange for debt 408,430 408 293,661 0 294,070
Net loss 0 0 0 (792,030) (792,030)
-------------------------------------------------------------------
Balance at December 31, 1998 4,666,821 4,666 3,376,460 (2,853,502) 527,624
Shares issued for cash 85,000 85 54,915 0 55,000
Shares issued for services 224,733 225 336,875 0 337,100
Shares issued at fair value to officer in exchange for debt 859,597 860 288,506 0 289,366
Stock based compensation from options and warrants 0 0 243,043 0 243,043
Net loss 0 0 0 (689,796) (689,796)
-------------------------------------------------------------------
Balance at September 30, 1999 5,836,151 $ 5,836 $ 4,299,799 $(3,543,298) $ 762,337
-------------------------------------------------------------------
-------------------------------------------------------------------
UNAUDITED
</TABLE>
<PAGE>
THE PLAYERS NETWORK
NOTE TO FINANCIAL STATEMENT
UNAUDITED
BASIS OF PRESENTATION
The accompanying unaudited balance sheets as of September 30, 1999 and 1998 and
the related accompanying unaudited statements of operations, cash flows and
changes in stockholders' equity include the results of operations and cash flows
of The Players Network ( the "Company").
The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and applicable
SEC regulations. 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 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 for the year ended December 31, 1998.
<PAGE>
Shareholders and Board of Directors
The Players Network
We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of The Players Network for the year ended December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the results of operations, changes in stockholders' equity, and
cash flows for The Players Network for the year ended December 31, 1997, are in
conformity with generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
September 9, 1998
<PAGE>
Part III
Item 1. Index to Exhibits
Exhibit Number Title of Exhibit Page No.
- - -------------- ---------------- --------
(2)(A)(1) Articles of Incorporation of The Players Network
(2)(A)(2) Bylaws of The Players Network
<PAGE>
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on behalf of the
undersigned, thereunto duly authorized.
Dated: February 3, 2000
The Players Network
By: /s/ Mark Bradley
-----------------------------------------
Its: Chief Executive Officer
ARTICLES OF INCORPORATION
OF:
THE PLAYERS NETWORK
THE UNDERSIGNED, to form a corporation under Chapter 78 of the
Nevada Revised Statutes, Certify:
I. NAME: The name of this Corporation is: THE PLAYERS NETWORK.
II. REGISTERED OFFICE: The registered office of the Corporation in the
state of Nevada is to be located at: (Address/City/State/Zip) 1095 S. EASTERN
AVE., LAS VEGAS, NV 89104. The Corporation may also maintain an office or
offices at such other places within or outside of the state of Nevada as it may
from time to time determine. Corporate business of every kind and nature may be
conducted and meetings of Directors and stockholders held outside the state of
Nevada the same as in the state of Nevada.
III. PURPOSE: The nature of the business or object or purposes proposed
to be transacted, promoted or carried on by the Corporation is to engage in any
lawful practice or activity.
IV. CAPITAL STOCK: The total authorized capital stock of the
Corporation shall be:
(number) (type)
25,000,000 shares of COMMON stock, $0.001 par value.
V. The Corporation is to have perpetual existence.
VI. LIABILITY: This Corporation contains provisions eliminating or
limiting personal liability of a director, officer or stockholders for damages
for breach of fiduciary duty but does not eliminate or limit the liability of a
director, officer or stockholder for:
<PAGE>
(a) Acts or omissions which involve intentional misconduct, fraud
or a knowing violation of the law.
(b) The payment of dividends in violation of NRS 78.300.
VII. RESIDENT AGENT: In the matter of: THE PLAYERS NETWORK DOLORES J.
PASSARETTI hereby certify that on the 16th day of March, 1993, accepted the
appointment as Resident Agent of the above entitled corporation in accordance
with Sec. 78.090, NRS 1957. Furthermore, at the registered office in this state
is located at: (address/city/COUNTY/state/zip), 1905 S. EASTERN AVE., LAS VEGAS,
CLARK, NEVADA 89104.
IN WITNESS WHEREOF, have hereunto set my hand this 16th day of March,
1993.
-----------------------------------------------
Resident Agent
VIII. DIRECTORS: The governing board of the corporation shall consist
of one, two or three, with the exact number to be fixed by the By-Laws of the
Corporation, provided the number so fixed by the By-Laws may be increased or
decreased from time to time. Directors of the corporation need not be
stockholders provided by NRS 78.115. The names and addresses of the first Board
of Directors of the Corporation which are: (number of Directors) ONE
1) Mark Bradley Feldgreber, 18700 Community St., Northridge, CA 91324
2) _____________________________________________________________________________
3) _____________________________________________________________________________
4) _____________________________________________________________________________
<PAGE>
The Directors shall have the power to make and alter the By-Laws of the
Corporation. By-Laws so made can be altered, amended or repealed by the
directors and shareholders at any meeting called and held for the purpose.
IX. INCORPORATOR: The name and address of the incorporator(s) of this
corporation is as follows:
1) Mark Bradley Feldgreber, 18700 Community St., Northridge, CA 91324
2) _______________________________________________________________________
3) _______________________________________________________________________
4) _______________________________________________________________________
IN WITNESS WHEREOF, the incorporator does set his/her hand this 9th day
of March, 1993.
(sig.)
---------------------------- ------------------------------
(Print) MARK BRADLEY FELDGREBER
(sig.)
---------------------------- ------------------------------
(Print)
<PAGE>
STATE __________________)
)
COUNTY: Los Angeles )
On this 9th day of March, 1993 the undersigned personally appeared before , a
Notary Public, in and for said County and State.
(1) Mark Bradley Feldgreber (2)
---------------------------------
(3) (4)
------------------------------ ---------------------------------
Known to be the person described in and who executed the foregoing instrument,
who acknowledged to me that he executed the same freely and voluntarily and for
the uses and purposes mentioned.
IN WITNESS WHEREOF,
I have hereunto set my hand
and affixed my official seal this 9th day of March, 1993.
__________________________
Notary Public
BY LAWS
OF ARTICLE 1
MEETING OF STOCKHOLDERS
SECTION 1. The annual meetings of the stockholders of the Company shall be held
at its office in the City of Las Vegas, Clark County, Nevada, at 1:30 P.M. on
the first Wednesday of April in each year, if not a legal holiday, and a legal
holiday, then on the next succeeding day not a legal holiday, for the purpose of
electing directors of the company to serve during the ensuing year and for the
transaction of such other business as may be brought before the meeting.
At least five day's written notice specifying the time and place, when and
where, the annual meeting shall be convened, shall be mailed in a United States
Post Office addressed to each of the stockholders of record at the time of
issuing the notice at his or her, or its addressed last known, as the same
appears on the books of the company.
section 2. Special meetings of the stockholders may be held at the office of the
company in the State of Nevada, or elsewhere, whenever called by the President,
or by the Board of Directors, or by vote of, or by an instrument in writing
signed by the holders of forty (40)% of the issued and outstanding capital stock
of the company. At least ten days written notice of such meeting, specifying the
day and hour and place, when and where such meetings shall be convened, and
objects for calling the same, shall be mailed in a United States Post Office,
addressed to each of the stockholders of record at the time of issuing the
notice, at his or her or its address last known, as the appears on the books of
the company.
SECTION 3. If all the stockholders of the company shall waive notice of a
meeting, no notice of such meeting shall be required, and whenever all of the
stockholders shall meet in person or by proxy, such meetings shall be valid for
all purposes without call or notice, and such meeting any corporate action may
be taken. The written certificate of the officer or officers calling any meeting
setting forth the substance of the notice, and the time and place of the mailing
of the same to the several stockholders, and respective address to which the
same were mailed, shall be prima facie evidence of the manner and fact of the
calling and giving such notice.
If the address of any stockholders does not appear upon the books of the
company, it will be sufficient to address any notice to such stockholder at the
principal office of the corporation.
It the address of any stock holder does not appear upon the books of the
company, it will be sufficient to address any notice to such stockholder at the
principle office of the corporation.
SECTION 4. All business lawful to be transacted by the stockholders of the
company, may be transacted at any special meting or at any adjournment thereof.
Only such business, however, shall be acted upon at special meeting of the
stockholders as shall have been referred to in the notice calling such meetings,
but at any stockholders meetings at which all the outstanding capital stock of
the company is represented, either in person or by proxy, any lawful business
may be transacted, and such meeting shall be valid for all purposes.
<PAGE>
SECTION 5. At the stockholders meeting the holders of fifty-one percent (51%) in
amount of the entire issued and outstanding capital stock of the company, shall
constitute a quorum for all purposes of such meetings. If the holders of the
amount of stock necessary to constitute a quorum shall fail to attend, in person
or by proxy, at the time and place fixed by these By-Laws for any annual
meeting, or fixed by a notice as above provided for a special meeting, a
majority in interest of the stockholders present in person or by proxy may
adjourn form time to time without notice other than by announcement at the
meeting, until holders of the amount of stock requisite to constitute a quorum
shall attend. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted as originally
called.
At each meeting of the stockholders, a full, true and complete list, in
alphabetical order, of all the stockholders entitled to vote at such meeting,
and indicating the number of shares held by each, certified by the Secretary of
the Company, shall by furnished, which list shall be prepared at least tan days
before such meeting and shall be open to the inspection of the stockholders, or
their agents or proxies, at the place where such meeting is to be held, and for
ten days prior thereto. Only the persons in whose names shares of stock are
registered on the books of the company for ten days proceedings the date of such
meetings, as evidenced by the list of stockholders, shall be entitled to vote at
such meeting. Proxies and powers of Attorney to vote must be filed with the
Secretary of the Company before an election or a meeting of the stockholders, or
they cannot be used at such election or meeting.
SECTION 6. At each meeting of the stockholders the polls shall be opened and
closed; the proxies and ballots issued, received, and be taken in charge of, for
the purpose of the meeting, and all questions touching the qualifications of
voters and the validity of proxies, and the acceptance or rejection of votes,
shall be decided by two inspectors. Such inspectors shall be appointed at the
meeting by the presiding officer of the meeting.
SECTION 7. At the stockholder's meetings, the regular order of business shall be
as follows:
(1) Reading and approval of the Minutes of previous meeting or
meetings;
(2) Reports of the Board of Directors, the President, Treasurer and
Secretary of the Company in the ordered named;
(3) Reports of Committee;
(4) Election of Directors:
(5) Unfinished Business;
(6) New Business;
(7) Adjournment.
<PAGE>
ARTICLE II
DIRECTORS AND THEIR MEETINGS
SECTION 1. The Board of Directors of the Company shall consist of five (5)
persons who shall be chosen by the stockholders annually, at annual meeting of
the Company, and who shall hold office for one year, and until their successors
are elected and qualify.
SECTION 2. When any vacancy occurs among the Directors by death, resignation,
disqualification or other cause, the stockholders, at any regular or special
meeting, or at any adjourned meeting thereof, or the remaining Directors, by the
affirmative vote of a majority thereof, shall elect a successor to hold office
for the unexplored portion of the term of the Director whose place shall have
become vacant and until his successor shall have been elected and shall qualify.
SECTION 3. Meeting of the Directors may be held a the principal office of the
company in the stale of Nevada, or elsewhere, at such place or places as the
Board of Directors may, from time to time, determine.
SECTION 4. Without notice or call, the Board of Directors shall hold its first
annual meeting for the year immediately after the annual meeting of the
stockholders or immediately after the election of Directors at such annual
meeting.
Regular meetings of the Board of Directors shall be held at the office of the
company in the City of Las Vegas at 10:00 A.M. in the state of Nevada, on the
Wednesday following the end of each calendar quarter. Notice of such regular
meetings shall be mailed to each Director by the Secretary at least three days
previous to the day fixed for such meetings, but no regular meetings shall be
held void or invalid if such notice is not given, provided the meeting is held
at the time and place fixed by these By-Laws for holding such regular meetings.
Special meetings of the Board of Directors may be held on the call of the
President or Secretary on at least three days notice by mail or telegraph.
Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without or of which notices shall have been waived
by all absentees, provided a quorum shall be present, shall be valid for all
purposes unless otherwise indicated in the notice calling of the meeting or in
waiver of notice.
Any and all business may be transacted by any meeting of the Board of Directors,
either regular or special.
SECTION 5. A majority of the Board of Directors in office shall constitute a
quorum for the transaction of business, but if any meeting of the Board there be
less than a quorum present, a majority of those present may adjourn form time to
time, until a quorum shall be present, and notice of such adjournment shall be
required. The Board of Directors may prescribe rules not in conflict with these
By-Laws for the conduct of its business; provided, however, that in fixing of
salaries of the officers of the corporation, the unanimous action of all the
Directors shall be required.
<PAGE>
SECTION 6. A director need not be a stock holder of the corporation.
SECTION 7. The Directors shall be allowed and paid all necessary expenses
incurred in attending any meeting of the Board, but shall not receive any
compensation for their services as Directors until such time as the company is
able to declare and pay dividends on its capital stock unless previously
authorized during a duly authorized shareholder meeting.
SECTION 8. The Board of Directors shall make a report to the Stock holders at
annual meetings of the stockholders of the condition of the company, and shall,
at request, furnish each of the stockholders with a true copy thereof. The Board
of Directors in its discretion may submit any contract or act for approval or
ratification at any annual meeting of the stockholders called for the purpose of
considering any such contract or act, which, it approved, or ratified by the
vote of the holders of a majority of the capital stock of the company
represented in person or by proxy, while be valid and binding upon the
corporation and upon all the stockholders be there stockholders thereof, as if
it had been approved or ratified by every stockholder of the corporation.
The Board of Directors shall have the power from time to time to provide for the
management of the offices of the company in such manner as they see fit, and in
particular from time to time to delegate any of the powers of the Board in the
course of the current business of the company to any standing or special
committee or to any officer or agent and to appoint any persons to be agent of
the company with such powers (including other power to sub-delegate), and upon
such terms as may be deemed fit.
SECTION 10. The Board of Directors is vested with the complete and unrestrained
authority in the management of all the affairs of the company, and is authorized
to exercise for such purpose as the General Agent of the Company, its entire
corporate authority.
SECTION 11. The regular order of business at meeting of the Board of Directors
shall be as follows:
(1) Reading and approval of the minutes of any previous meeting or
meetings;
(2) Reports of officers and committeemen:
(3) Election of officers;
(4) New business;
(5) Adjournment.
ARTICLE III
OFFICERS AND THEIR DUTIES
SECTION 1. The Board of Directors, at its first and after each meeting after the
annual meeting of stockholders, shall elect a President, a Vice President, a
Secretary and a Treasurer, to
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hold office for one year next coming, and until their successors are elected and
qualify. The offices of the Secretary and Treasurer may be hold by one person.
Any vacancy in any of said offices may be filled by the Board of Directors.
The Board of Directors may from time to time, by resolution, appoint such
additional Vice Presidents and additional Assistant Secretaries, Assistant
Treasurer and Transfer Agents of the company as it may deem advisable; prescribe
their duties, and fix their compensation, and all such appointed officers shall
be subject to removal at any time by the Board of Directors. All officers,
agents and factors of the company shall be chosen and appointed in such manner
and shall hold their office form such terms as the Board of Directors may by
resolution prescribe.
SECTION 2. The President shall be the executive officer of the company and shall
have the supervision and, subject to the control of the Board of Directors, the
direction of the Company's affairs, with full power to execute all resolutions
and order of the Board of Directors not especially entrusted to some other
officer of the company. He shall be a member of the Executive Committee, and the
Chairman thereof; he shall sign the Certificates of Stock issued by the company,
and shall perform such other duties as shall so perform such other duties as
shall be prescribed by the Board of Directors.
SECTION 3. The Vice President shall be vested with all the powers and perform
all the duties of the President in his absence or inability to act, including
the signing of the Certificates of Stock issued by the company, and he shall so
performs such other duties as shall be prescribed by the Board of Directors.
SECTION 4. The treasurer shall have the custody of all the funds and securities
of the company. When necessary or proper he shall endorse on behalf of the
company for collection checks, notes, and other obligations; he shall deposit
all Moines to the credit of the company in such bank or banks or other
depository as the Board of Directors may designate; he shall sign all receipts
and vouchers for payments made by the company, except as herein otherwise
provided. He shall sign with the President all bills of exchange and promissory
notes of the company; he shall also have the care and custody of the stocks,
bonds, certificates, vouchers, evidence of debts, securities, and such other
property belonging to the company as the Board of Directors shall designate; he
shall sign all papers required by law or by those By-Laws or the Board of
Directors to be signed by the Treasurer. Whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter
regularly in the books of the company to be kept by him for the purpose, full
and accurate accounts of all monies received and paid by him on account of the
company. He shall at all reasonable times exhibit the books of account to any
Directors of the company during business hours, and he shall perform all acts
incident to the position of Treasurer subject to control of the Board of
Directors.
The Treasurer shall, if required by the Board of Directors, give bond to the
company conditioned for the faithful performances of all his duties as Treasurer
in such sum, and with such surety as shall be approved by the Board of
Directors, with expense as such bond to be borne by the company.
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SECTION 5. The Board of Directors may appoint an Assistant Treasurer who shall
have such powers arid performs such duties as may be prescribed for him by the
Treasurer of the company or by the Board of Directors, and the Board of
Directors shall, require the Assistant Treasurer to give a bond to the company
in such sum and with such security as it shall approve, as conditioned for the
faithful performance of his duties as Assistant Treasurer, the expense of such
bond to be borne by the company.
SECTION 6. The Secretary shall keep the Minutes of all meetings of the Board of
Directors and the Minutes of all meetings of the Stockholders and of the
Executive Committee in books provided for that purpose. He shall attend to the
giving and serving of all notice of the company; he may sign with the President
or Vice President, in the name of the Company, all contracts authorized by the
Board of Directors or Executive Committee; he shall have the custody of the
corporate seal of the company; he shall have charge of Stock Certificate Books,
Transfer books and Stock Ledgers, and such other books and papers as the Board
of Directors or the Executive Committee may direct, all of which shall at all
reasonable times be open to the examination of any Director upon application at
the office of the company during business hours, and shall, in general, perform
all duties incident to the office of Secretary.
SECTION 7. The Board of Directors may appoint as Assistant Secretary who shall
have such powers and perform such duties as may be prescribed for him by the
Secretary of the company or by the Board of Directors.
SECTION 8. Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority in behalf of the company to attend and to
act and to vote at any meetings of the stockholders of any corporation in which
the company may hold stock, and at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock,
and which as the now owner thereof, the company might have possessed and
exercised if present. The Board of Directors, by resolution, from time to time,
may confer like powers on any person or persons in place of the President to
represent the company for the purpose in this section mentioned.
ARTICLE IV
CAPITAL STOCK
SECTION 1. The capital stock of the company shall be issued in such manner and
at such times and upon such conditions as shall be prescribed by the Board of
Directors.
SECTION 2. Ownership of stock in the company shall be evidenced by certificates
of stock in such forms as shall be prescribed by the Board of Directors, and
shall be under the seal of the company and signed by the President or the Vice
President and also by the Secretary or by an Assistant Secretary.
All certificates shall be consecutively numbered; the name of the person owning
the shares represented thereby with the number of such shares and the date of
issue shall be entered on the company's books.
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No certificates shall be valid unless it is signed by the President or Vice
President and by the Secretary or Assistant Secretary.
All certificates surrendered to the company shall be canceled and no new
certificate shall be issued until the former certificate for the same number of
shares shall have been surrendered or canceled.
SECTION 3. No transfer of stock shall be valid as against the company except on
surrender and cancellation of the certificate therefor, accompanied by an
assignment or transfer, made either in person or under assignment, a new
certificate shall be issued therefor.
Whenever any transfer shall be expressed as made for collateral security and not
absolutely, the same shall be as expressed in the entry of said transfer on the
books of the company.
SECTION 4. The Board of Directors shall have power and authority to make all
such rules and regulations not inconsistent herewith as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the company.
The Board of Directors may appoint a transfer agent and a register of transfers
and may require all stock certificates to bear the signature of such transfer
agent and such register of transfer.
SECTION 5. The Stock Transfer Books shall be closed for all meetings of the
stockholders for the period of ten day prior to such meetings and shall be
closed for the payment of dividends during such periods as from time to time may
be fixed by the Board of Directors, and during such periods no stock shall be
transferable.
SECTION 6. Any person or persons applying for a certificate of stock in lieu of
one alleged to have been lost or destroyed, shall make affidavit or affirmation
of the fact, and shall deposit with the company an affidavit. Whereupon, at the
end of six months after the deposit of said affidavit and upon such persons
giving Bond of Indemnity to the company with surety to be approved by the
company, which may or can arise in consequence of a new or duplicate certificate
being issued in lieu of the one lost or missing, the Board of Directors may
cause to issued to such person or persons a new certificate, or a duplicate of
the certificate, so lost or destroyed. The Board of Directors may, In its
discretion refuse to issue such new or duplicate certificate save upon the order
of some court having in such matter, any thing herein to the contrary
notwithstanding.
ARTICLE V
OFFICES AND BOOKS
SECTION 1. The principal office of the corporation, in Las Vegas, Nevada shall
be at 4620 Polaris Avenue and the company may have a principal office in any
other state or territory as the Board of Directors may designate.
SECTION 2. The Stock and Transfer Books and a copy of the By-Laws and Articles
of Incorporation of the company shall be kept at its principal office in the
County of Clark, State of Nevada, for the inspection of all who are authorized
or have the right to see the same, and for the
<PAGE>
transfer of stock. All other books of the company shall be kept at such places
as may be prescribed by the Board of Directors.
ARTICLE VI
MISCELLANEOUS
SECTION 1. The Board of Directors shall have power to reserve over and above the
capital stock paid in, such an amount in its discretion as it may deem advisable
to fix as a reserve fund, and may, from time to time, declare dividends from the
accumulated profits of the company in excess of the amounts so reserved, and pay
the same to the stockholders of the company, and may also, if it deems the same
advisable, declare stock dividends of the non-issued capital stock of the
company.
SECTION 2. No agreement, contract or obligation (other than checks in payment of
indebtedness incurred by authority of the Board of Directors) involving the
payment of monies or the credit of the company for more than $25,000.00 dollars,
shall be made without the authority of the Board of Directors, or of the
Executive Committee acting as such.
SECTION 3. Unless otherwise ordered by the Board of Directors, all agreements
and contracts shall be signed by the President and the Secretary in the name and
on behalf of the company, and shall have the corporate seal thereto affixed.
SECTION 4. All monies of the corporation shall be deposited when and as received
by the Treasurer in such bank or banks or other depository as may from time to
lime be designated by the Board of Directors, and such deposits shall be made in
the name of company.
SECTION 5. No note, draft, acceptance, endorsement or other evidence of
indebtedness shall be valid against the company unless the same shall be signed
by the President or Vice President, and attested by the Secretary or Assistant
Secretary, or signed by he Treasurer or Assistant Treasurer may, without
countersignature, make endorsement for deposit to the credit of the company in
all its duly authorized depositories.
SECTION 6. No loan or advance of money shall be made by the company to any
stockholder or officer therein, unless the Board of Directors shall otherwise
authorize.
SECTION 7. No director nor executive officer nor any other corporate officer of
the company shall be entitled to any salary or compensation for any services
Performed for the company, unless such salary or compensation shall be fixed by
resolution of the Board of Directors, adopted by the unanimous vote of all the
Directors voting in favor therefor.
