QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
AMENDMENT NO. 1
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 0-29363
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The Players Network
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(Exact name of small business issuer as specified in its charter)
Nevada 880343702
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
(Issuer's telephone number) (702) 895-8884
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Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 8,287,555 shares of common
stock, par value $.001 per share as of March 31, 2000
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
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The Company provides television programming and produces videos related
to gaming instruction and information to hotel casinos in Nevada, Iowa,
Louisiana and Mississippi 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. It also rents this facility to various production companies.
The Company has three types of revenues. Network revenue, which
consists of subscription and licensing revenues, is recognized when subscription
agreements are signed and equipment is installed. The Company recognizes its
license revenue when the "Affiliate Agreement" is signed and equipment is
installed in the hotel premise. All license fees are non-refundable. Advertising
revenue is recognized when advertisements are aired. Production and other
revenues consist of video production, stage rentals and other production-related
revenues. Video production revenue is recognized when video production is
completed and accepted by the customer. The stage rental and other production
revenue is recognized when the stage rental period has expired.
In June 1999, the Company decided to pursue opportunities available on
the internet. Through March 31, 2000, the Company capitalized web site
development costs of approximately $222,975 which is net of amortization.
The web site "PlayersNetwork.com" which is operational and is
continually being expanded and upgraded, provides consumers with gaming "How to
Play" information in print form and video from the Company's existing library of
instructional gaming videos. Through "PlayersNetwork.com" the Company 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' casinos.
The web site also provides information on almost every casino/gaming
site worldwide and "City Guides" to virtually every location where casinos are
located. In addition, the site provides financial reports on casino and gaming
company stocks. Through "PlayersNetwork.com" the Company provides travel, tour,
show ticket, and golf time reservation services.
The Company is establishing itself as a 24-hour digital web broadcaster
featuring live and previously recorded content.
The Company had accumulated operating deficits of $4,053,746 and
$2,973,168 as of March 31, 2000 and 1999, respectively. However, the Company had
stockholders' equity of $1,510,244 and $504,651 as of March 31, 2000 and 1999,
respectively.
<PAGE>
The Company expects operating losses and negative operating cash flows
to continue for a period for at least the next twelve months. 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 potential
acquisitions 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 acquisitions. The Company issued $118,267 and
$71,610 in stock and options for this purpose for the three months ended March
31, 2000 and 1999, respectively.
As part of the Company's internet e-commerce, the Company expects to
enter into many barter arrangements. For the three months ended March 31, 2000,
the Company recorded certain barter transactions in accordance with EITF 99-17,
"Accounting for Advertising Barter Transactions", which consisted of
approximately $251,000 in barter revenue, $52,000 in advertising expenses, and
$4,000 in travel expenses.
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.
Liquidity and Capital Resources
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The Company's principal source of operating capital has been provided
by private sales of the Company's common stock, stockholders loans and equipment
financing arrangements, as well as revenues from the operations. At March 31,
2000, the Company had positive working capital of $27,184. During the three
months ended March 31, 2000, the Company supplemented its working capital by
receiving cash of $308,953 from the private sale of 852,846 shares of its common
stock.
The Company anticipates capital expenditures in excess of $1,000,000
for its operations of PlayersNetwork.com, web broadcasting activities and video
production during the next twelve months. The Company believes that the current
cash flow generated from its revenues will not be sufficient to fund its
anticipated operations. The Company will require additional funding to finance
its operations through private sales and public debt or equity offerings.
However, there is no assurance that such financing can be obtained by the
Company.
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. In the first quarter of
2000, two employees were hired raising the total to eight.
<PAGE>
During the three months ended March 31, 2000, an officer converted
$160,397 of loans into 542,634 restricted common shares compared to the three
months ended March 31, 1999 where there was no conversion of loans.
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. The Company did
not have any transactions related to these agreements for the period ended March
31, 2000.
In January 2000, the Company signed an agreement with iTravel Marketing
and YouTicket.com which will enable the Company to fulfill worldwide web site
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.
In March 2000, the Company signed a video production agreement with a
major casino hotel chain for approximately $50,000 to be completed in the second
quarter of 2000.
With existing subscription and video production agreements in hand, the
Company should experience nearly 100% revenue growth for the year 2000.
Results of Operations - Three Months Ended March 31, 2000 and 1999
Revenues increased 330% from $100,517 for the three months ended March
31,1999 to $431,711 for the three months ended March 31, 2000. For the three
months ended March 31, 2000, the Company had $94,460 in Network Revenue, $48,745
in Advertising Revenue and $288,506 in Production and Other Revenue compared to
$73,543 in Network Revenue, $9,104 in Advertising Revenue and $17,870 in
Production and Other Revenue for the three months ended March 31, 1999. The
Company recorded approximately $251,000 in revenues from bartering production
services and advertising spots in exchange for magazine advertising.
Operating Expenses increased 115% from $150,457 for the three months
ended March 31,1999 to $323,731 for the three months ended March 31, 2000. The
increase in operating expenses was due to increases in consulting expenses from
$42,000 to $80,665; advertising expense from $1,008 to $52,638; payroll expenses
from $43,537 to $75,220; and legal and accounting expenses from $4,253 to
$52,497 for the three months ended March 31, 1999 compared to the three months
ended March 31, 2000, respectively. Certain expenses, primarily consulting and
production costs, were paid with common stock of $10,007 and $35,225 for the
three months ended March 31, 1999 and March 31, 2000, respectively.
Stock-based compensation charged to operations was $47,802 for the
three months ended March 31, 2000 compared to $48,750 for the three months ended
March 31, 1999. Stock-based compensation consists of warrants and options issued
to outside service providers in lieu of cash. For the three months ended March
31, 2000, the Company capitalized $35,240 in video production costs.
<PAGE>
Depreciation and amortization increased 35% from $56,448 for the three
months ended March 31, 1999 to $76,471 for the three months ended March 31,
2000. This was due to a change in the estimated useful life of the capitalized
video production costs from 10 years to 5.
Interest expense decreased 75% from $13,278 for the three months ended
March 31, 1999 to $3,299 for the three months ended March 31, 2000 due to the
conversion of $473,090 of shareholder loans to common stock at various times
from May 1999 to March 31, 2000.
New Accounting Pronouncement
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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
its operations.
Inflation
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In the opinion of management, inflation has not had a material effect
on the operations of the Company.
Risk Factors and Cautionary Statements
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Forward-looking statements in this report are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The Company wishes to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements, including, but
not limited to, the following: the ability of the Company to meet its cash and
working capital needs, the ability of the Company to successfully market its
product, and other risks detailed in the Company's periodic report filings with
the Securities and Exchange Commission.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit Number Title of Exhibit Page No.
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(2)(A)(1) Articles of Incorporation of The Players Network(1) N/A
(2)(A)(2) Bylaws of The Players Network(1) N/A
(6)(A)(1) Sublease Agreement between Players Network and Colella N/A
Productions, Inc.(1)
(6)(B)(1) Agreement (1) N/A
16 Letter of James Scheifley (1) N/A
27 Financial Data Schedule N/A
(1) Incorporated by reference to the exhibits filed with the Registration
Statement on Form 10-SB, File No. 0-29363
(B) REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
THE PLAYERS NETWORK
By: /s/ Mark Bradley
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Its: Chief Executive Officer
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