SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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
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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
- -------------------------------------------- --------------------------------
- -------------------------------------------- --------------------------------
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
Item 1. Description of Business...............................................
Item 2. Management's Discussion and Analysis of Plan of Operation.............
Item 3. Description of Property...............................................
Item 4. Security Ownership of Certain Beneficial Owners and Management........
Item 5. Directors and Executive Officers, Promoters and Control Persons.......
Item 6. Executive Compensation................................................
Item 7. Certain Relationships and Related Transactions........................
Item 8. Description of Securities.............................................
Part II ......................................................................
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters........................................
Item 2. Legal Proceedings.....................................................
Item 3. Changes in and Disagreements with Accountants.........................
Item 4. Recent Sales of Unregistered Securities...............................
Item 5. Indemnification of Directors and Officers.............................
Part F/S ......................................................................
Part III ......................................................................
Item 1. Index to Exhibits.....................................................
<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 also operates an independent working sound stage in Las
Vegas Nevada where it produces videos for hire. The Company develops and markets
gaming instruction and information videos for consumers. For example, 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 rents its sound stage to other
independent producers.
In September 1999 the Company launched PlayersNetwork.com, the
Company's gaming portal and e-commerce world wide web site. Currently, the
Company's web site, "www.PlayersNetwork.com" (hereinafter referred to as
"PlayersNetwork.com" or the "Company's Web Site") is a gaming information and
e-commerce world wide web site. Presently, PlayersNetwork.com provides
instruction on casino games, enables visitors to make reservations and receive
discounts on airfare and hotels, educates the Company's Web Site visitors about
gaming destinations and sells gaming merchandise. When fully operational, the
Company anticipates that PlayersNetwork.com will include gaming instructional
videos both on a streaming full motion video basis and on demand. Specifically,
the Company intends that 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,
<PAGE>
interactive slot and video play, live chat and 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
- --------------------------
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 has entered into affiliate agreements with these hotels pursuant to
which the Company produces gaming programming for hotel casinos and the hotels
distribute the programming to its guests over the hotel's privately operated
cable television distribution system. The affiliate agreements usually run for a
period of between one to two years and may be renewed upon the mutual agreement
of the Company and the hotel. The affiliate agreements provide the hotel and the
Company with the opportunity to terminate the agreement upon a breach by the
other party of a material term of the agreement and the failure of such party to
cure the breach. The fees payable by the hotel to the Company under these
agreements may include: (i) an initial production and start up fee, (ii) a
monthly programming and customization fee, and (iii) an annual membership fee
which covers, among other things, the cost of equipment and maintenance.
The Company's web site targets the millions of people who visit casinos
in the United States each year as well as the 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
<PAGE>
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 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.
- -------------------
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.
Major Customers
- ---------------
In 1998, four customers accounted for 75% of the gross revenue of the
Company. These customers were (i) Primmadonna Corporation, which accounted for
26% of the Company's gross revenue in 1998 (the "1998 Gross Revenue"), (ii) the
Stratosphere Corporation, which accounted for 22% of the 1998 Gross Revenue,
(iii) Networks North, which accounted for 16% of the 1998 Gross Revenue and (iv)
IGT, which accounted for 11% of the 1998 Gross Revenue. In 1999, three customers
accounted for 60% of the gross revenue of the Company. These customers were (i)
Station Casinos, which accounted for 24% of the Company's gross revenue in 1999
(the "1999 Gross Revenue"),
<PAGE>
(ii) Primmadonna Corporation, which accounted for 22% of the 1999 Gross Revenue
and (iii) IGT, which accounted for 14% of the 1999 Gross Revenue.
Trademark.
- ---------
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.
- ------------------------------
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.
Employees.
- ---------
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
- --------
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 recognizes its license revenue when the "Affiliate
Agreement" is signed and equipment is installed in the hotel premise. All
license revenues are non-refundable. The Company met all the requirements of SAB
101, Topic 13, "Revenue Recognition" that persuasive evidence of an arrangement
exists, delivery has occurred or
<PAGE>
services have been rendered, the seller's price to the buyer is fixed or
determinable and collectibility is reasonably assured. 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. Advertising revenue is recognized when advertisements are aired.
Production and other revenues, which consist of video product, stage rental and
other production-related revenues, are recognized when video production is
completed and the stage rental period has expired.
In June 1999, the Company decided to pursue opportunities available on
the Internet. In 1999, the Company capitalized approximately $136,000 in web
site development costs.
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. Also through
"PlayersNetwork.com" the Company 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 company
stocks.
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 $4,081,956 and
$2,853,502 as of December 31, 1999 and December 31, 1998, respectively. However,
the Company had stockholders' equity of $885,698 and $527,623 as of December 31,
1999 and December 31, 1998, respectively.
The Company expects operating losses and negative operating cash flow
to continue for a period of 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 acquisition. The Company issued $1,051,711
and $678,850 in stock and options for this purpose for the years ended December
31, 1999 and December 31, 1998, respectively.
<PAGE>
As part of the Company's Internet e-commerce, the Company expects to
enter into many barter arrangements. For the year ended December 31, 1999, the
Company recorded certain barter transactions in accordance with EITF 99-17,
"Accounting for Advertising Barter Transactions", which resulted in
approximately $102,000 in barter revenue, $66,000 in prepaid production cost,
$22,000 in capitalized video production costs, $67,000 in web site development
costs and $14,000 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
- -------------------------------
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 December 31,
1999, the Company had a working capital deficiency of $401,697. During 1999, the
Company supplemented its working capital by receiving cash of $154,375 from the
private sale of 379,000 shares of its common stock. In January and February
2000, the Company received cash of approximately $295,000 from the private sale
of 665,000 share 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.
For the year ended December 31, 1999, stockholders and officers
converted $312,693 of loans into 979,597 restricted common shares compared to
the year ended December 31, 1998 when a stockholder converted $294,069 of loans
for 408,430 shares. At December 31, 1999, the company owed an officer $160,397,
which was converted into 517,410 of common shares in January 2000.
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>
Recent Events
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The company sold approximately $462,000 in common stock from October
1999 through February 2000.
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 year ended
December 31, 1999.
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 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 as "V-Commerce," which 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 Players Network
will be the first digital network focused gaming and entertainment content. The
Company did not have any transaction related to the Play Streaming Media Group
for the year ended December 31, 1999. The value of the "Globecasters" received
is specified in the agreement. The Company has not assigned any value to
syndication rights in 1999.
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.
In January 2000, the Company completed a video production barter
transaction for advertising space in various gaming related magazines which, in
accordance will result in recognizing approximately $270,000 in revenues in the
first quarter of 2000.
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 in the year 2000.
Results of Operations - Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------
Revenues increased 43% from $308,872 for the period ended December 31,
1998 to $441,297 for the year ended December 31, 1999. The Company increased the
number of hotel clients from three to five in 1999. The Company recorded
approximately
<PAGE>
$102,000 in revenues from bartering advertising spots in exchange for post
production and web site development services. For the year ended December 31,
1999, the Company had $227,925 in Network Revenue, $130,731 in Advertising
Revenue and $82,641 in Production and Other Revenue compared to $232,604 in
Network Revenue, $11,806 in Advertising Revenue and $64,462 in Production and
Other Revenue for the year ended December 31, 1998.
The increase in operating expenses was primarily due to increases in
consulting and marketing expenses from $255,871 to $630,587 and legal and
accounting expenses from $76,368 to $99,808 for the year ended December 31, 1998
compared to the year ended December 31, 1999. Some of the increase was paid in
common stock of $250,186 compared to $116,400 for the years ended December 31,
1999 and December 31, 1998, respectively. The majority of the expenses paid in
stock were for consulting and advertising.
Stock-based compensation charged to operations was $703,120 for the
year ended December 31, 1999 compared to $324,537 for the year ended December
31, 1998. Stock-based compensation consists of warrants and options issued to
outside service providers in lieu of cash. In addition, the Company capitalized
$237,913 of stock-based compensation for the year ended December 31, 1998 and
$98,405 for the year ended December 31, 1999 as capitalized video production and
web development costs.
Depreciation and amortization increased 114% from $121,969 for the year
ended December 31, 1998 to $260,408 for the year ended December 31, 1999. 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 32% from $67,859 for the year ended December
31, 1998 to $46,037 for the year ended December 31, 1999 due to the conversion
of $312,693 of shareholder loans to common stock at various times from December
31, 1998 to December 31, 1999.
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
its operations.
<PAGE>
Year 2000 Readiness Disclosure
- ------------------------------
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 may malfunction
or fail completely.
Since our business, and consequently, our hardware, telecommunications
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.
To date, we have not experienced any significant Year 2000 problems.
Testing and compliance monitoring will continue into 2000 to ensure proper
operations and that system changes and additions are Year 2000 compliant, and to
support the growth and development of our network.
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.
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.
- -----------------------------------------------
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.
<PAGE>
<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 ("Shares")
outstanding on January 4, 2000. If a person listed on this table has the right
to obtain additional Shares 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 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 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.
</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.
<PAGE>
<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 Charnock 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 outstanding on January 4, 2000. If a
person listed on this table has the right to obtain additional Shares 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 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.
<PAGE>
(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 that each director and
executive officer of the Company owns plus the number of Shares 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 outstanding as of January 4, 2000 plus the
number of Shares 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
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 founded the Company in 1993 and has served as its chief
executive officer from 1993 until the present. During 1997 and 1998, 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 1988 and 1989. 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
<PAGE>
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 has served as the managing partner of DHIJ Management Company, a
company that owns and manages real estate income properties from 1992 until the
present. 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.
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
<PAGE>
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.
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-sation Stock Options/ LTIP Compen-
Year Salary Bonus 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 valued at $.01 per share. (2) Mark Bradley's salary consisted of cash in
the amount of $150,000 and 4,000 Shares valued at $0.31 per share.
(3) Mr. Bradley's salary consisted of cash in the amount of $75,000 and 10,000
Shares valued at $0.31 per share.
<PAGE>
(4) Mr. Rona's salary consisted of 85,000 Shares 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.
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 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 or any
other securities. The Common Stock is not subject to redemption and carries no
subscription or conversion rights. All outstanding Shares are fully 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.
<PAGE>
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
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
The Company is not a party to any pending legal proceeding.
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 and
dismissed Mr. Scheifley on December 17, 1999.
<PAGE>
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.
Item 4. Recent Sales of Unregistered Securities
During the last three fiscal years the Company has raised capital
through private placements and has issued stock to individuals for services
rendered to the Company in reliance upon the exemption from registration
contained in Section 4(2) of the Securities Act of 1933. The Company's issuance
of its common stock did not involve a public offering and no underwriters were
used and no underwriting commissions were paid in any of these transactions.
In 1997, the Company sold an aggregate of 688,174 Shares for a total
consideration of $1,135,423.50 as follows:
<TABLE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
1/17/97 3,000 Mitsuo Tatsugawa Cash Sale $4,500
1/27/97 4,000 Five Management, LLC Cash Sale $6,000
1/29/97 6,000 David Tarino Production Services $9,000
2/4/97 15,000 Michael Bush Production Services $150
2/4/97 15,000 William Huggins Production Services $150
2/4/97 7,500 Five Management, LLC Cash Sale $11,250
3/13/97 27,000 Douglas Johnston Cash Sale $40,500
4/22/97 3,000 Billauer Living Trust Cash Sale $4,500
4/22/97 3,500 Thomas Di Salvatore Cash Sale $5,250
4/22/97 24,000 Merry & Elizabeth Haack Cash Sale $36,000
4/22/97 700 Dan Baker Production Services $1,050
4/22/97 1,500 Nanette Barbera Production Services $2,250
4/22/97 12,000 Scott Christensen Production Services $18,000
4/22/97 4,000 Al & Linda Colella Rent $6,000
4/22/97 4,300 Diane Driscol Production Services $6,450
4/22/97 7,000 Nancy Ferguson Production Services $10,500
4/22/97 5,330 Huntington Press Advertising $7,995
4/22/97 2,800 Alistar McKenneh Production Services $4,200
4/22/97 10,000 Bruce Merrin Production Services $15,000
4/22/97 3,000 Tanja Nikolic-Norbert Production Services $4,500
4/22/97 7,000 Peter Nissen Production Services $10,500
4/22/97 25,000 Pratt Wylce and Lords Consulting Services $37,500
4/22/97 50,000 Sea Change International Asset Purchase $75,000
4/22/97 2,000 Roger & Richard Sullivan Production Services $3,000
<PAGE>
Date Amount of Name and Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- ---------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
4/22/97 5,000 Mark Wolfson Production Services $7,500
8/7/97 44,375 Chip & Travis Miller Production Services $221,875
9/14/97 7,500 MicroCap World, L.L.C. Cash Sale $11,250
9/21/97 6,669 Jerome Feinberg Cash Sale $10,003.50
9/21/97 34,000 Kevork Koushagjian Cash Sale $51,000
9/21/97 2,000 Dana Gelbard Cash Sale $3,000
9/21/97 2,000 Dustin Gelbard Cash Sale $3,000
9/21/97 4,000 Aaron Grunfeld Cash Sale $6,000
9/21/97 2,600 Dick Isaacson Cash Sale $3,900
9/21/97 12,500 Pratt Wylce and Lords Cash Sale $18,750
9/21/97 2,000 Paul Spiegler Cash Sale $3,000
9/21/97 42,400 Clint Clark Production Services $63,600
9/23/97 34,000 John Plati Cash Sale $51,000
9/23/97 1,500 Janet Stein Cash Sale $2,250
9/23/97 5,000 Ari Stein Consulting Services $50
10/6/97 120,000 Gaming Ventures Corp. Consulting Services $180,000
10/6/97 80,000 Gaming Ventures Corp. Consulting Services $120,000
10/9/97 500 Nicolette Frederico/Living Cash Sale $750
Trust
10/9/97 1,000 Mitch Kofsky Cash Sale $1,500
10/9/97 2,000 Garrett Mathney Cash Sale $3,000
12/1/97 3,000 Kevin Stocks Cash Sale $4,500
12/10/97 16,750 Terrence Bean, P.C. Cash Sale $25,125
12/19/97 16,750 Joost Van Adelsberg (1) Cash Sale $25,125
(1) Joost Van Adelsberg is a member of the Board of Directors of the Company.
</TABLE>
In 1998, the Company sold an aggregate of 276,933 Shares for a total
consideration of $393,900 as follows:
<TABLE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
2/26/98 33,333 Joost Van Adelsberg (1) Cash Sale $50,000
4/28/98 10,000 Jerry Kutner Marketing Services $15,000
7/13/98 20,000 Susan Jaslow Cash Sale $20,000
8/6/98 5,000 Jay Beynon Cash Sale $5,000
8/7/98 5,000 Billauer Trust Cash Sale $5,000
8/19/98 10,000 Modern Solutions Cash Sale $10,000
9/28/98 3,000 Mateo Urrutia Cash Sale $3,000
10/9/98 3,000 Joyce Carrole Production Services $4,500
10/9/98 5,000 Bonnie Feldgreber (2) Production Services $7,500
10/9/98 2,000 Titanium White Production Services $3,000
10/9/98 50,000 Casino Journal Production Services $75,000
10/9/98 6,000 Rogich Communications Production Services $9,000
10/9/98 3,000 John Raczka Production Services $4,500
10/9/98 15,000 John Dorsett Production Services $22,500
10/9/98 2,000 John Thor Production Services $3,000
<PAGE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
10/9/98 2,000 Bess Greenberg Legal Accounting $3,000
Services
10/9/98 1,000 Robert Nash Production Services $1,500
10/9/98 15,000 Seltex Corporation Production Services $22,500
10/9/98 2,000 Kirsten Ashley Board of Directors $3,000
Services
10/9/98 1,600 Linda Colella Outside Service $2,400
10/9/98 5,000 Administrative Systems Legal Accounting $7,500
11/9/98 25,000 Jerome Kutner Marketing Services $37,500
11/9/98 3,000 John O'Reilly Consulting Services $4,500
11/9/98 6,000 Joseph Connell Production Services $9,000
11/9/98 3,000 Joseph Connell Production Services $4,500
11/9/98 12,000 Mike Bush Production Services $18,000
11/9/98 10,000 Jerry Kutner Marketing Services $15,000
11/17/98 5,000 Steve Trapp Outside Service $7,500
12/14/98 2,000 Mark Bradley (3) Board of Directors $3,000
Services
12/14/98 2,000 Mark Bradley (3) Board of Directors $3,000
Services
12/14/98 2,000 Darius Irani (4) Board of Directors $3,000
Services
12/14/98 2,000 Darius Irani (4) Board of Directors $3,000
Services
12/14/98 2,000 Peter Rona (5) Board of Directors $3,000
Services
12/14/98 2,000 Peter Rona (5) Board of Directors $3,000
Services
12/14/98 2,000 Joost Van Adelsberg (1) Board of Directors $3,000
Services
(1) Joost Van Adelsberg is a member of the Board of Directors of the Company.
(2) Bonnie Feldgreber is the sister of the Chief Executive Officer of the
Company.
(3) Mark Bradley is the Chief Executive Officer of the Company and is a member
of the Board of Directors of the Company.
(4) Darius Irani is a member of the Board of Directors of the Company.
(5) Peter Rona is the Chairman of the Company and is a member of the Board of
Directors of the Company.
</TABLE>
In 1999, the Company sold an aggregate of 1,518,232 Shares for a total
consideration of $877,354 as follows:
<TABLE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
1/29/99 25,000 Larry Smith Cash Sale $25,000
2/22/99 2,000 Kirsten Ashley Employee $1,500
2/22/99 50,000 Peter Rona (1) Consulting Services $37,500
2/22/99 2,000 Peter Rona (1) Consulting Services $1,500
<PAGE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
2/22/99 5,000 Steve Trapp Public Relations $3,750
2/22/99 2,000 Joost Van Adelsberg (2) Consulting Services $1,500
2/22/99 2,000 Mark Bradley (3) Employee $1,500
2/22/99 12,000 John Dorsett Production Services $9,000
2/22/99 2,000 Darius Irani (4) Consulting Services $1,500
3/22/99 3,000 Derek Schreck Production Services $1,968
3/22/99 3,000 Sydney Schreck Production Services $1,968
4/26/99 70,000 Casino Journal Advertising $32,760
4/26/99 10,000 Kaufman Associates Consulting Services $4,680
5/13/99 30,000 Adam Jaslow Cash Consideration $15,000
5/14/99 2,000 Mark Bradley (3) Board of Director $1,374
Services
5/14/99 2,000 Darius Irani (4) Consulting Services $1,374
5/14/99 2,333 John Rigelhoff Consulting Services $1,603
5/14/00 25,000 Rogich Communications Consulting Services $17,175
5/14/99 2,000 Peter Rona (1) Consulting Services $1,374
5/14/99 2,000 Joost Van Adeslberg (2) Consulting Services $1,374
6/8/99 10,000 Kirsten Ashley Employee Bonus $4,060
6/8/99 2,000 Mark Bradley (3) Board of Directors $812
Services
6/8/99 355,099 Mark Bradley (3) Conversion of Loan $355,099
6/8/99 25,000 Brenda Carter Conversion of Loan $10,250
6/8/99 2,000 Darius Irani (4) Consulting Services $812
6/8/99 5,000 Tom Nevitt Accounting Services $2,030
6/8/99 2,000 Peter Rona (1) Consulting Services $812
6/8/99 2,000 Joost Van Adelsberg (2) Consulting Services $812
8/26/99 10,000 Terrance Bean Cash Sale $5,000
10/20/99 3,000 Dominic Cipolla Cash Sale $930
10/16/99 20,000 Malik Pomfret Cash Sale $6,200
10/27/99 10,000 Joost Van Adelsberg (2) Cash Sale $5,000
12/1/99 10,000 Joost Van Adelsberg (2) Cash Sale $5,000
12/1/99 10,000 Terrance Bean Cash Sale $3,100
12/1/99 30,000 Robert Bedrossian Cash Sale $9,375
12/1/99 16,000 Steve Di'orio Cash Sale $4,960
12/1/99 40,000 Donte Holdings Cash Sale $12,400
12/1/99 80,000 Darius Irani (4) Conversion of Loan $22,569
12/1/99 10,000 Darius Irani (4) Cash Sale $5,000
12/1/99 16,000 Dorothy Levin Cash Sale $4,960
12/1/99 20,000 Jason Loeman Cash Sale $6,200
12/1/99 80,000 Reddy Vivek Cash Sale $24,800
12/1/99 20,000 Steve Rose Cash Sale $6,200
12/1/99 10,000 Kirsten Ashley Bonus $5,620
12/1/99 2,000 Mark Bradley (3) Board of Director $1,124
Services
12/1/99 28,000 Wayne Camardo Consulting Services $15,736
12/1/99 2,000 Darius Irani (4) Consulting Services $1,124
12/1/99 25,000 Kaufman Associates Consulting Services $14,050
12/1/99 5,000 Tom Nevitt Accounting Services $5,620
12/1/99 700 John Rigelhoff Production Services $393
<PAGE>
Date Amount of Name of Person to Whom Sold Nature of Consideration Amount of
- ---- ---------- --------------------------- ----------------------- ---------
Shares Issued Consideration
------------- -------------
<S> <C> <C> <C> <C>
12/1/99 2,000 Peter Rona (1) Consulting Services $1,124
12/1/99 25,000 Peter Rona (1) Consulting Services $14,050
12/1/99 4,000 Steve Trapp Public Relations $2,248
Services
12/1/99 4,000 Steve Trapp Public Relations $2,248
Services
12/1/99 4,000 Steve Trapp Public Relations $2,248
Services
12/1/99 2,000 Joost Van Adelsberg (2) Consulting Services $1,124
12/1/99 15,000 AA Capital Ventures Consulting Services $8,430
12/1/99 10,000 John Dorsett Production Services $5,620
12/1/99 2,000 Bess Greenberg Accounting Services $1,124
12/1/99 50,000 Seth Horn (5) Consulting Services $28,100
12/1/99 15,000 Mike Marcovsky Consulting Services $8,430
12/1/99 2,000 Tanja Norbert Consulting Services $1,124
12/1/99 10,000 John Raczka Consulting Services $5,620
12/1/99 2,000 John Thor Advertising $1,124
12/1/99 25,000 iTravel Internet Development $14,050
Services
12/9/99 4,000 Mark Allerman Cash Sale $1,240
12/9/99 1,000 Alexander Aram Cash Sale $310
12/9/99 6,000 Issam Baghal Cash Sale $1,860
12/9/99 3,100 Michael Buckworth Cash Sale $3,100
12/9/99 5,000 Joe Csencits Cash Sale $1,550
12/9/99 2,000 Mark Delorenzo Cash Sale $620
12/9/99 10,000 Thomas Disalvatore Cash Sale $3,100
12/9/99 10,000 Denise Donahue Cash Sale $3,100
12/9/99 10,000 Robert Ferrara Cash Sale $3,100
12/9/99 40,000 Peter Jankowski Cash Sale $12,400
12/9/99 10,000 Walter Janlowski Cash Sale $3,100
12/9/99 20,000 Greg Kolomatis Cash Sale $6,200
12/9/99 10,000 Mark Malzberg Cash Sale $3,100
12/9/99 5,000 John Morano Cash Sale $1,550
12/9/99 4,000 Richard Nopolitano Cash Sale $1,240
12/9/99 2,000 Jan Palombo Cash Sale $620
12/9/99 6,000 Gregorgy Scholtz Cash Sale $1,860
12/9/99 10,000 Ronald Scholtz Cash Sale $3,100
12/9/99 10,000 Debra Spilewski Cash Sale $3,100
12/9/99 10,000 Robert Spilewski Cash Sale $3,100
12/9/99 10,000 Sandra Stanzione Cash Sale $3,100
12/9/99 6,000 Agustinus Sudibya Cash Sale $1,860
12/9/99 10,000 Jerome Tomicich Cash Sale $3,100
12/9/99 2,000 Mario Tomicich Cash Sale $620
12/9/99 10,000 James Waite Cash Sale $3,100
12/9/99 10,000 Gaming Ventures Consulting Services $3,120
12/9/99 12,000 Mike Marcovsky Consulting Services $3,744
12/9/99 4,000 Victor Woinski Consulting Services $1,248
(1) Peter Rona is the Chairman of the Company and a member of its Board of
Directors.
<PAGE>
(2) Joost Van Adelsberg is a member of the Board of Directors of the Company.
(3) Mark Bradley is the Chief Executive Officer of the Company and is a member
of its Board of Directors.
(4) Darius Irani is a member of the Board of Directors of the Company.
(5) Seth Horn is the Chief Financial Officer of the Company.
</TABLE>
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.
Part F/S
THE PLAYERS NETWORK
FINANCIAL STATMENTS
DECEMBER 31, 1999 AND 1998
<PAGE>
THE PLAYERS NETWORK
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report 1
as of December 31, 1999 and 1998
Report of Independent Auditors as of December 31, 1997 1A
Balance Sheet as of December 31, 1999 and 1998 2
Statement of Operations
Years Ended December 31, 1999 and 1998 3
Statement of Cash Flows
Years Ended December 31, 1999 and 1998 4
Statement of Changes in Stockholders' Equity
Years Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6 - 16
<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, 1999 and 1998, and the related statements of operations, cash
flows and changes in stockholders' equity for the years 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of THE PLAYERS NETWORK
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Friedman Alpren & Green LLP
March 20, 2000
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
The Players Network
We have audited the accompanying balance sheet of The Players Network as of
December 31, 1997, and the related statements of operations, stockholders'
equity, and cash flows 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of The Players Network (a
development stage Company) as of December 31, 1997, and the results of its
operations, changes in stockholders' equity, and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
September 9, 1998
<PAGE>
<TABLE>
THE PLAYERS NETWORK
BALANCE SHEET
DECEMBER 31, 1999 AND 1998
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 64,295 $ 1,823
Prepaid expenses 66,718 2,336
-------------------- --------------------
Total current assets 131,013 4,159
Property and equipment - net 299,143 329,599
Capitalized video production costs - net 882,226 940,848
Capitalized web site development costs 135,900 -
Intangible and other assets 8,677 10,953
-------------------- --------------------
Total assets $ 1,456,959 $ 1,285,559
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 96,033 $ 92,957
Accrued expenses 115,109 31,696
Current portion of long-term liabilities 14,671 22,932
Installment purchase agreement 146,500 156,500
Notes payable, stockholders 160,397 411,304
-------------------- --------------------
Total current liabilities 532,710 715,389
Long-term liabilities, less current portion 38,551 42,547
-------------------- --------------------
Total liabilities 571,261 757,936
-------------------- --------------------
Stockholders' Equity
Common stock, $.001 par value;
25,000,000 shares authorized,
6,741,251 and 4,666,821 shares
issued and outstanding 6,741 4,666
Additional paid-in capital 4,960,913 3,376,459
Accumulated deficit (4,081,956) (2,853,502)
-------------------- --------------------
Stockholders' equity 885,698 527,623
-------------------- --------------------
Total liabilities and stockholders' equity $ 1,456,959 $ 1,285,559
==================== ====================
The accompanying note are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENT OF OPERATIONS
For The Years Ended December 31, 1999 and 1998
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
Revenues
Network $ 227,925 $ 232,604
Advertising 130,731 11,806
Production and other 82,641 64,462
-------------------- --------------------
Total revenues 441,297 308,872
-------------------- --------------------
Operating expenses
Selling, general and administrative 1,363,306 911,074
Depreciation and amortization 260,408 121,969
-------------------- --------------------
Total operating expenses 1,623,714 1,033,043
-------------------- --------------------
Other expenses
Interest expense 46,037 67,859
-------------------- --------------------
Net loss $ (1,228,454) $ (792,030)
==================== ====================
Basic and diluted loss per share $ (0.23) $ (0.19)
Weighted average shares outstanding 5,258,891 4,070,204
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PLAYERS NETWORK
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
1999 1998
-------------------- -------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (1,228,454) $ (792,030)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 260,408 121,969
Barter transactions (88,000)
Notes payable, stockholders 61,786 155,847
Common stock issued for services 250,186 116,400
Stock-based compensation, non-employees 703,120 324,537
-------------------- -------------------
(40,954) (73,277)
Changes in assets and liabilities:
Prepaid expenses 1,753 (176)
Accounts and other payables (6,924) (8,656)
Accrued expenses 16,413 31,695
-------------------- -------------------
Net cash used in operating activities (29,712) (50,414)
-------------------- -------------------
-------------------- -------------------
Investing activities
Increase in capitalized video production costs (110,319) (130,263)
Acquisition of equipment (7,125) (21,359)
Increase in intangible assets (240) (2,831)
-------------------- -------------------
Net cash used in investing activities (117,684) (154,453)
-------------------- -------------------
Financing activities
Proceeds from the issuance of common stock 222,125 93,000
Proceeds from equipment loan - 42,800
Payments on long-term liabilities (12,257) (7,904)
-------------------- -------------------
Net cash provided by financing activities 209,868 127,896
-------------------- -------------------
Net increase (decrease) in cash 62,472 (76,971)
Cash, beginning of year 1,823 78,794
-------------------- -------------------
Cash, end of year $ 64,295 $ 1,823
==================== ===================
Supplemental cash flow information
Interest paid $ 8,983 $ 7,013
Non-cash investing and financing activities
Capitalized web site costs paid with common stock and stock options $ 68,900 $ -
Capitalized web site costs resulting from barter transactions 67,000 -
Capitalized video production costs paid with common stock
and stock options 29,505 237,913
Capitalized video production costs resulting from barter transactions 21,865 -
Common stock issued in exchange for notes payable, stockholders 312,693 294,069
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, 1999 AND 1998
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 3,981,458 $ 3,981 $ 2,311,226 $ (2,061,472) $ 253,735
Stock issued for cash 76,333 76 92,924 - 93,000
Stock issued for services 200,600 201 300,699 - 300,900
Stock based compensation from options and warrants - - 377,949 - 377,949
Stock issued at fair value to stockholder in exchange
for notes 408,430 408 293,661 - 294,069
Net loss - - - (792,030) (792,030)
--------------------------------------------------------------
Balance at December 31, 1998 4,666,821 4,666 3,376,459 (2,853,502) 527,623
Stock issued for cash 595,800 596 221,529 - 222,125
Stock issued for services 499,033 499 288,306 - 288,805
Stock-based compensation from options and warrants - - 762,906 - 762,906
Stock issued at fair value to stockholders in exchange
for notes 979,597 980 311,713 - 312,693
Net loss - - - (1,228,454) (1,228,454)
----------------------------------------------------------------------
Balance at December 31, 1999 6,741,251 $ 6,741 $ 4,960,913 $ (4,081,956) $ 885,698
======================================================================
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.
In addition, the Company is developing a web site for the purpose of selling
primarily gaming supplies and travel-related services over the Internet. This
web site will become operational during January 2000 and, accordingly, revenues
from this activity were immaterial during the years ended December 31, 1999 and
1998.
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.
Capitalized video production costs:
Capitalized video production costs which are expected to benefit future periods
are capitalized as incurred. The individual film forecast method is used to
amortize these costs. Under this method, costs accumulated in the production of
a video are amortized in the proportion that gross realized revenues bear to
management's estimate of total gross revenues. Amortization expense of
approximately $221,000 and $84,000 was charged to operations for the years ended
December 31, 1999 and 1998, respectively. Accumulated amortization was
approximately $305,000 and $84,000 at December 31, 1999 and 1998, respectively.
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 3-10 years
Video equipment 10 years
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Capitalized web site development costs:
The Company has capitalized certain costs associated with the development of its
e-commerce web site, PLAYERSNETWORK.COM. The Company follows the guidance
promulgated by Statement of Position 98-1, "Accounting for Software Developed
for Internal Use," which requires that all costs incurred to establish
technological feasibility should be expensed as incurred. After technological
feasibility was established, development costs are capitalized and amortized
over the estimated useful life. Total costs capitalized through December 31,
1999 were $135,900. These costs will be amortized on a straight-line basis over
a period of three years. There was no amortization expense in 1999.
Intangible assets:
The Company has applied for trademark protection for its videos. Trademark costs
of approximately $2,700 are amortized using the straight-line method over a
period of ten years.
Long-lived assets:
The Company makes reviews for the potential impairment of long-lived assets and
certain identifiable intangibles, such as capitalized video production costs and
capitalized web site development costs, 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 approximately
$2,000 of impairment losses for finance costs in 1999. Such losses were written
off and included in the 1999 financial statements.
Income taxes:
The Company applies the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. A valuation allowance has been
established until realization of deferred tax assets is reasonably assured.
Deferred tax assets and liabilities are measured using the enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled.
Basic and diluted loss per share:
The basic loss per share is computed by dividing the net loss by the weighted
average number of common shares outstanding for the period. Diluted loss per
share is the same as basic loss per share because the assumed exercise of
potential common stock would have an anti-dilutive effect.
Barter transactions:
The Company accounts for barter transactions in accordance with EITF 99-17,
"Accounting for Advertising Barter Transactions", which requires the recognition
of revenue and expense only if the fair value of the advertising surrendered is
determinable based on the Company's experience in receiving cash or other
consideration readily convertible to cash.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Revenue recognition:
Network revenue, which consists of subscription and licensing revenues, is
recognized when subscription agreements are signed and equipment is installed.
Advertising revenue is recognized when advertisements are aired. Production and
other revenues, which consist of video production, stage rental and other
production-related revenues, are recognized when video production is completed
and the stage rental period has expired.
Advertising costs:
The Company's policy is to expense advertising costs as a period expense.
Advertising costs of $35,755 and $475 were charged to operations during the
years ended December 31, 1999 and 1998, respectively.
Stock-based compensation:
The Company has adopted Statement of Financial Accounting Standard No. 123 (SFAS
123), "Accounting for Stock-Based Compensation". In accordance with SFAS 123,
the Company records stock-based compensation for stock instruments issued to
nonemployees in exchange for goods or services based on the fair value of goods
and services received or the fair value of stock instruments surrendered. 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".
Comprehensive income:
SFAS 130, "Reporting Comprehensive Income", requires the disclosure of
comprehensive income (loss), which consists of net income or net loss and other
comprehensive income. Other comprehensive income (loss) consists of unrealized
gains and losses that are not recorded in the traditional statement of
operations and, instead, are presented as a separate section of stockholders'
equity on the balance sheet. During the years ended December 31, 1999 and 1998,
the Company had no other comprehensive income.
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 its operations.
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:
1999 1998
-------------- ---------
Furniture and equipment $ 21,334 $ 14,209
Video equipment 359,622 359,622
Work in process 21,359 21,359
-------------- --------------
Total cost 395,190
Accumulated depreciation (103,172) (65,591)
-------------- --------------
Net book value $ 299,143 $ 329,599
============== ==============
Work in process consists of the construction cost of the video production booth,
which will be completed in the year 2000.
The cost of equipment held under capital leases totaled $33,121 at December 31,
1999 and 1998, respectively. The related accumulated depreciation was $18,312
and $9,156 at December 31, 1999 and 1998, respectively.
Depreciation expense charged to operations amounted to $37,581 and $37,257 for
the years ended December 31, 1999 and 1998, respectively.
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 and were never exercised.
The Company made $30,000 in payments of the installment agreement and performed
$10,000 of advertising services.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
4. NOTES PAYABLE, STOCKHOLDERS
The Company had short-term notes payable to the president and two other
stockholders aggregating $160,397 and $411,304, including accrued interest, as
of December 31, 1999 and 1998, respectively. The notes are unsecured, payable on
demand and bear interest at 10% per annum. Each of the note holders has 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. During the years
ended December 31, 1999 and 1998, these notes were issued in lieu of payments of
salary to the president and interest accrued on these notes. Notes totaling
$312,693 were converted into 979,597 common shares at various times throughout
1999 using the market value when the conversions were made. Notes payable to the
president of $160,397 at December 31, 1999 were converted to 517,410 common
shares in January 2000.
5. LONG-TERM LIABILITIES
The Company has the following long-term liabilities:
1999 1998
----------- --------
Capital lease obligation payable to
Advanta Business Services,
collateralized by specified video
equipment, payable in monthly
installments of $228 including
interest at 24.84%. $ 5,075 $ 6,376
Capital lease obligation payable to
Granite Financial Services,
collateralized by specified video
equipment, payable in monthly
installments of $661 including
interest at 18.39%. 14,515 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%. 33,632 39,820
----------- -----------
$ 53,222 $ 65,479
=========== ===========
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Future minimum payments at December 31, 1999 are as follows:
Year Ending
-----------
2000 $ 22,944
2001 22,944
2002 14,502
2003 7,154
------------
Less: amount representing interest 14,322
------------
53,222
Less: current portion 14,671
------------
$ 38,551
============
6. STOCKHOLDERS' EQUITY
Common stock:
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.
During the year ended December 31, 1999, the Company issued 28,700 of shares in
exchange for capitalized video production costs valued at $18,949 and 470,333
shares in exchange for services valued at $269,856. In addition, stockholders
converted $312,692 of notes into 979,597 common shares.
Stock warrants:
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 December 4, 1997, the Company's president and principal stockholder received
350,000 warrants with an exercise price of $1.50 per share and a 60-month
expiration period.
In 1999, the Company's president and principal stockholder received 150,000
warrants with an exercise price of $1.25 per share expiring December 31, 2000.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Stock Options:
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 January 1, 1998, the Company issued 452,000 stock options for services 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.
During 1999, the Company issued 659,000 stock options for services that expire
in 24 months and with exercise prices ranging from $.75 to $2.50.
As of December 31, 1999, 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:
1999 1998
------------ -------------
Deferred tax assets
Net operating loss carryforwards $ 1,074,444 $ 931,515
Stock-based compensation 588,399 110,343
------------ -------------
1,041,858
Less - Valuation allowance (1,662,843) (1,041,858)
------------ -------------
Net deferred tax asset $ -0- $ -0-
============ =============
The Company has available net operating loss carryforwards of approximately
$3,160,000, which expire as follows: 2010, $9,000; 2011, $1,732,000; 2012,
$531,000; 2018, $339,000 and 2019, $549,000.
8. COMMITMENTS
Effective December 4, 1997, the Company entered into a five-year 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 agreement provides for 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.
Unpaid and accrued salaries of approximately $62,000 and $115,000 are included
in notes payable to stockholders at December 31, 1999 and 1998, respectively.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
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 ranges 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 agreed to pay the
independent contractor a base fee of $52,000 per year in cash and 25,000 shares
of restricted stock. He also received a 10% commission on all upfront money for
production and equipment along with a 3% commission on the gross/net revenues as
defined. The agreement was terminated in March 1999.
Effective January 1, 1999, the Company entered into an agreement with a director
to act as the Chairman of the Board of Directors in exchange for 50,000 shares
of restricted stock and 50,000 options that expire in 24 months and carry an
exercise price of $1.50.
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>
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Options Price Warrants Price
------- ----- -------- -----
<S> <C> <C> <C> <C>
Outstanding at January 1, 1998 495,500 $ 2.46 990,000 $ 3.96
Issued 751,500 2.19 - -
Exercised - - (100,000) 1.75
Expired (250,000) 2.37 (450,000) 6.67
Cancelled - - - -
----------- -----------
Outstanding at December 31, 1998 997,000 2.26 440,000 1.70
Issued 659,000 .81 150,000 1.25
Exercised - - - -
Expired (415,500) 2.45 - -
Cancelled - - - -
----------- -----------
Outstanding at December 31, 1999 1,240,500 1.43 590,000 1.75
=========== ===========
Stock options exercisable at:
December 31, 1999 1,240,500 1.43
December 31, 1998 997,000 2.26
Warrants exercisable at:
December 31, 1999 590,000 1.75
December 31, 1998 440,000 1.70
</TABLE>
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
Summary information about the Company's stock options and warrants outstanding
at December 31, 1999 is as follows:
<TABLE>
Outstanding and Weighted Average
Weighted Average Exercisable at Contractual Periods
Exercise Price December 31, 1999 in Years
-------------- ----------------- --------
<S> <C> <C> <C>
OPTIONS
- -------
$ .60 12,000 1.83
.75 634,000 1.93
1.75 263,000 2.00
2.50 331,500 2.02
-------------
$ 1.43 1,240,500 1.95
======= ============= =====
WARRANTS
- --------
$ 1.25 150,000 2.00
1.50 350,000 2.87
2.50 90,000 4.00
-------------
$ 1.75 590,000 2.96
======= ============= =====
</TABLE>
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 risk-free interest rates of 6.22% and 5.95% and a volatility
factor of expected market price of the Company's common stock of 172.87%. Under
the provisions of SFAS No. 123, compensation expense arising from the issuance
of stock options and warrants for the years ended December 31, 1999 and 1998 was
$703,120 and $324,537, respectively, which was included in selling, general and
administrative expenses.
<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 $2,884 and $602 has been
recorded for stock options issued to employees for the years ended December 31,
1999 and 1998, respectively, 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 5.95% and 6.22%
Expected life 1 and 2 years
Expected volatility 172.87%
Had compensation cost been determined under SFAS No. 123, net loss per share for
the years ended December 31, 1999 and 1998 would have been increased as follows:
<TABLE>
1999 1998
---------------- ----------
<S> <C> <C>
Net loss
As reported $ (1,228,454) $ (792,030)
Pro forma (1,622,939) (1,036,539)
Basic and diluted loss per share
As reported $ (.23) $ (.19)
Pro forma (.31) (.25)
</TABLE>
10. BARTER TRANSACTIONS
In 1999, the Company transferred software acquired from a vendor to a video
postproduction company in exchange for $88,000 in postproduction services, of
which the Company utilized approximately $22,000 of services. These transactions
are reflected in the financial statements for the year ended December 31, 1999.
In connection with two subscription agreements with hotels, the Company receives
up to $5,000 per month in complimentary room and food services. In 1999, the
Company utilized approximately $13,600 in room and food services. These
transactions are reflected in the 1999 financial statements.
The Company entered into an agreement to render advertising services, in
exchange for various services for approximately $350,000. For the year ended
December 31, 1999, unrendered advertising services of $67,000 have been accrued
and reflected in the 1999 financial statements.
<PAGE>
THE PLAYERS NETWORK
NOTES TO FINANCIAL STATEMENTS
11. MAJOR CUSTOMERS
Sales to three customers were approximately 60% and 58% of total revenues for
the years ended December 31, 1999 and 1998, respectively.
12. SUBSEQUENT EVENTS
In January and February 2000, the Company issued approximately 665,000 shares of
common stock for approximately $295,000.
<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
(6)(A)(1) Sublease Agreement between Players Network and Colella
Productions, Inc.
(6)(B)(1) Agreement
16 Letter of James Scheifley
<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: April 13, 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.
SECTION 9. 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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
March 26, 1998
Mr. Al Colella
Colella Productions, Inc.
4620 Polaris Avenue
Las Vegas, NV 89103
RE: Sublease Agreement
4620 Polaris Avenue
Las Vegas, NV 89103
Dear Al:
Sublease Agreement between Players Network and Colella Productions will be
referred to as "Colella" and Players Network will be referred to as "Players" in
the following.
Building: 4620 Polaris Avenue. This is an
- -------- approximately 7,200 sq. ft. combined
office space and soundproofed warehouse,
along with outside adjacent parking for
approximately 15 vehicles.
Premises: The portion of the building subject to the
- -------- initial Sub-Lease includes a 60 x 90'
soundproofed warehouse space, the entire
upstairs back offices, reception area,
dressing and kitchen areas, two small
downstairs offices, storage room adjacent
to stage, existing furniture in building
and access to all other common
areas/restrooms, as well as primary
parking rights to at least 15 parking
spaces (excluding street-front parking).
Purpose of Use: Business and Professional offices
- -------------- in keeping with the character of a first
class office property. It is expressly
important to note that
<PAGE>
Mr. Al Colella
March 23, 1998
Page 2
Players Network will especially require
that any and all other building occupants
abide by "quiet rules" during production
activities.
Lease Term: The Primary Lease Term shall be for a
- ---------- period of twelve (12) months beginning
March 1, 1998.
Optional Lease Terms: At the end of the Primary Lease Term,
Players Network has an exclusive "First
Right of Refusal" to Sub-Lease the entire
Premises and/or Building for a rate of Six
Thousand Dollars ($6,000) per month, up to
an additional two (2) years, the exact
terms and conditions to be agreed at the
end of the Primary Lease Term, or at any
given time that is mutually agreed upon
during the term of the lease. Players
Network reserves the right to facilitate
building with its own furniture and
fixtures. In the event Players Network
does not wish to utilize Colella
Productions' furniture, Players Network
will deduct Three Hundred Dollars ($300)
per month and give Colella Productions a
45-day notice.
Base Rent: The rental rate shall be based on a full-
- ---------- service gross basis:
Months Rental Rate
------ -----------
1 - 12 $5,300 Per Month
Real Estate Taxes & Operating Players Network shall not be responsible
- ------------------------------ for property taxes on the Building or
Adjustment: Premises. Players Network will be
- ----------- responsible for the utility cost.
<PAGE>
Mr. Al Colella
March 23, 1998
Page 3
Landlord will be responsible for his own
warehouse space to facilitate storage for
the existing mail order business. Players
Network has paid Four Thousand Dollars
($4,000) for March rent, and agrees to pay
Colella Productions the remaining Twelve
Hundred Dollars ($1,200) at a time when
and if the company can afford it. Colella
Productions agrees to clean out the
storage room studio floor and all
possessions belonging to Colella
Productions no later than March 20th. If
possessions are not removed, Players
Network will be entitled to deduct Six
Hundred Dollars ($600) for March and $600
for each month that Players Network does
not have complete access to paid storage
spaces.
Sub-Lease Rights: Players will not have right, to
- ---------------- Sub-Lease or assign all or a part of the
Premises to a third party except for
Players Network's business of sound stage
and production service rentals.
Security: Players will be responsible to have a
- --------- Receptionist during daily normal working
hours. Players will also reserve the
right to provide 24-hour security to
protect its equipment.
Non-Disturbance Players will receive appropriate
- --------------- subordination non-disturbance and
Agreements: attornment agreements from all mortgages
- ---------- and holders of superior Interests, if any.
Insurance and Damage: Players will also maintain its own
- -------------------- production and liability insurance.
<PAGE>
Mr. Al Colella
March 23, 1998
Page 4
Title Three Issues: At the cost and the expense of Colella,
- ------------------- the Building and Premises will comply
with all relevant provisions of the
Americans With Disabilities Act.
Compliance: Colella Productions will be responsible
- ---------- for standard maintenance and property
upkeep including, but not limited to
plumbing, swamp coolers, fire
extinguishers, etc. Players Network will
submit receipts to Colella Productions for
any repair costs incurred by Players
Network. Expenses will be reimbursed to
Players Network or deducted from the Rent.
General Provisions: Both parties enter into this Sub-Lease in
- ------------------- good faith and in a reasonable
manner toward the peaceful and productive
use of the Building and Premises.
Additional Terms: Upon signing this agreement,
- ---------------- Players Network is allowing Colella
Productions to keep the Four Thousand
Shares (4,000) of Players Network stock
without any of its value to be applied
towards the lease.
PLAYERS NETWORK
- ---------------
BY: ---------------------------------------
Mark Bradley
President & Chief Executive Officer
AL COLELLA COLELLA PRODUCTIONS
- ---------- -------------------
BY: BY:
------------------------------------ ---------------------------------
Al Colella, Individually Al Colella, President
November 27, 1999
Mr. Ed Rogich
Vice President of Marketing
IGT
185 Palms Airport Drive
Las Vegas, NV 89119
Dear Ed,
Per our proposal regarding the production of GameWatch slot machine
instructional videos, Players Network will be producing a series of high-quality
videos which include a field reporter shot at a casino introducing each featured
game. She will toss to our host/instructor on the GameWatch set, who will
conduct the actual educational portion of the game. The segments will also
include celebrity sound bites (i.e. Barbara Eden, Dick Clark, etc.), including
additional B-roll and miscellaneous interviews. Players Network will build the
Game Watch set in our studio, where a multi-camera production will take place.
The above-described production cost is based on shooting a minimum of four
machines on any given production day, with a maximum of six machines. This
series of production could include up to 40 different slot machines, or as many
as IGT gets approved by the Gaming Control Board.
Taking into consideration that this is to be a joint effort benefiting both of
our companies, I have priced this project at a fixed rate of $6,700 per
completed video machine segment, which will include all the services we
previously provided from script to screen including production, talent, writing
and editing.
The payment terms can be simplified into two payments with 50% payable in
advance and 50% payable upon completion of all the videos.
Marketing
- ---------
IGT and Players Network will each be responsible for duplication costs for their
respective circulation needs.
Players Network will provide videos, at cost, to any hotel or casino desirous of
running the Game Watch videos in their guestrooms. Customized editing of the
videos for the hotels will also be provided by Players Network with only a
minimal markup. Prices for these editing services will be quoted on a case by
case basis.
<PAGE>
Additionally, Players Network will air the Game Watch segments in our affiliate
hotel rooms, stream video on our internet site, PlayersNetwork.com as well as
any other forms of distribution which become available (i.e. Game Show Network).
Players Network will also be purchasing lots of media to cross-promote
PlayersNetwork.com. In doing so, we will create some customized advertising
which makes potential internet visitors aware of the fact that they can view our
Game Watch segments.
If the above meets your approval, please sign below and return a copy of these
offices.
AGREED BY:
PLAYERS NETWORK INTERNATIONAL GAME TECHNOLOGY
MARK BRADLEY ED ROGICH, JR.
- --------------------------- ----------------------------------
SIGNATURE SIGNATURE
MARK BRADLEY ED ROGICH, JR.
- --------------------------- ----------------------------------
PRINT NAME PRINT NAME
11/27/99 11/27/99
- --------------------------- ----------------------------------
DATE DATE
James E. Scheifley & Associates, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
PO BOX 2158
22 BRUSHWOOD COURT
DILLON, COLORADO 80435
PHONE (970) 513-9308 FAX (419) 821-5638 E-MAIL [email protected]
April 12, 2000
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549
Re: The Players Network, Inc.
Dear Sir/Madam:
Pursuant to the request of the above named company, we affirm that:
(1) We have read the Company's response to Item 304(a) of Form 10-SB
(2) We agree with the response.
Sincerely,
James E. Scheifley & Associates, P.C.
