UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended: March 31, 2004
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _______ to _________
Commission file number: 0-29363
THE PLAYERS NETWORK
(Exact name of small business issuer as specified in its charter)
Nevada 880343702
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4620 Polaris Avenue, Las Vegas, Nevada 89103
(Address of principal executive officer) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock, no par value, outstanding as March 31,
2004: 13,774,195 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
THE PLAYERS NETWORK
PERIOD ENDED MARCH 31, 2004
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements ___
Condensed financial statements of The Players Network:
Balance sheet as of March 31, 2004
Income statements for the three months
ended March 31, 2004 and March 31, 2003
Statements of cash flows for the three months ended March 31,
2004 and March 31, 2003
Notes to financial statements ___
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures ___
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ___
SIGNATURE ___
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE PLAYERS NETWORK
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
2004 2003
------------ ------------
Revenues
Network $ 21,598 $ 83,760
Advertising -- 15,120
Production and other 31,069 10,665
------------ ------------
Total revenues 52,667 109,545
------------ ------------
Operating expenses
Video production costs 20,746 10,503
Selling, general and administrative 175,399 180,732
Depreciation and amortization 77,932 94,814
Interest 1,457 3,193
------------ ------------
Total operating expenses 275,534 289,242
------------ ------------
Other Income 200,000
Net Income (Loss) $ (222,867) $ 20,303
============ ============
Basic and Diluted earnings (loss) per share $ (0.02) $ 0.00
Weighted average shares outstanding 13,774,195 13,558,269
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THE PLAYERS NETWORK
BALANCE SHEET
MARCH 31, 2004
2004
-----------
Current assets
Cash $ 37,419
Accounts receivable 13,040
-----------
Total current assets 50,459
Property and equipment,
net of $353,249 accumulated depreciation 205,906
Intangible assets
Video film library,
net of $1,499,449 accumulated amortization 315,014
Trademark and other assets,
net of $1,828 accumulated amortization 8,574
-----------
Total assets $ 579,953
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 215,051
Accrued expenses 8,565
Accrued salary due to officer 126,956
Deferred revenue 92,146
-----------
Total current liabilities 442,718
-----------
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares
authorized, 13,774,195 shares issued and outstanding 13,774
Additional paid-in capital 7,368,280
Accumulated deficit (7,244,819)
-----------
Stockholders' equity 137,235
-----------
Total liabilities and stockholders' equity $ 579,953
===========
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THE PLAYERS NETWORK
STATEMENT OF CASH FLOWS
3 Months Ended March 31, 2004 and 2003
2004 2003
--------- ---------
Cash flows from operating activities
Net loss ($222,867) $ 20,303
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 77,932 94,814
Writeoff of unused barter credits 5,000
Net changes to:
Accounts receivable 17,318 (4,125)
Other current assets 2,559 (15,803)
Account payable 41,009 (6,603)
Accrued expenses 3,635 17,543
Accrued salary due to officer 20,236 18,187
Deferred revenue 85,498 (9,000)
--------- ---------
Net cash provided by
(used in) operating activities 30,320 115,316
--------- ---------
Cash flows used in investing activities
Proceeds from reduction in deposits 300 5,869
Purchase of property and equipment (1,201)
Additions to video film library (12,655)
--------- ---------
Net cash used in investing activities 300 (7,987)
--------- ---------
Cash flows provided by financing activities
Payment on installment debt (40,381)
--------- ---------
Net increase (decrease) in cash 30,620 66,948
Cash at beginning of period 6,799 79,810
--------- ---------
Cash at end of period 37,419 146,758
========= =========
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Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures
As of the end of the period covered by this report, the Company conducted
an evaluation, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange
Act")). Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures as of the end of the fiscal quarter covered by this Quarterly Report
on Form 10-QSB are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. Management of the Company
has also evaluated, with the participation of the Chief Executive Officer and
Chief Financial Officer of the Company, any change in the Company's internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the fiscal quarter covered by this
Quarterly Report on Form 10-QSB. There was no change in the Company's internal
control over financial reporting during the Company's most recently completed
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
However, due to the limited number of Company employees engaged in the
authorization, recording, processing and reporting of transactions, there is
inherently a lack of segregation of duties. The Company periodically assesses
the cost versus benefit of adding the resources that would remedy or mitigate
this situation and currently, does not consider the benefits to outweigh the
costs of adding additional staff in light of the limited number of transactions
related to the Company's operations. PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Quarterly Report or are
incorporated herein by reference:
Item 6. Management's Discussion and Analysis
Overview
We produce television programming and videos related to gaming instruction and
information for hotel casinos on a private cable channel known as "PLAYERS
NETWORK." We also are a 24-hour digital web broadcaster featuring live and
previously recorded content. We are actively syndicating our network programming
to Satellite broadcasters and Broadband providers.
At March 31, 2004, we had an accumulated operating deficit of $7,244,819 and
stockholders' equity of $137,235.
We expect operating losses and negative operating cash flows to continue for at
least the next twelve months, because of expected additional costs and expenses
related to brand development; marketing and other promotional activities; hiring
of management, sales and other personnel; the expansion of infrastructure and
customer support services; strategic relationship development; and potential
acquisitions of related complementary businesses.
Liquidity and Capital Resources
Our principal source of operating capital has been provided by private sales of
our common stock and stockholder loans, as well as revenues from the operations.
At March 31, 2004, we had negative working capital of approximately $392,000, of
which $92,000 of current liabilities are unearned revenue of which $85,500 will
be earned in the second quarter. In addition, $127,000 is unpaid salary owed an
officer.
Although we did not have revenue growth this period, this 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, we believe that
period-to-period comparisons of our results of operations are not necessarily a
good indication of future performance. The results of operations in some future
periods may be below the expectations of analysts and investors.
We anticipate capital expenditures in excess of $100,000 to expand our operation
during the next twelve months. We believe that the current cash flows generated
from its revenues will not be sufficient to fund our anticipated expansion of
operations. We may require additional funding to finance our operations through
private sales and public debt or equity offerings. However, there is no
assurance that we can obtain such financing.
At March 31, 2004, we had two full time employees and three part time
consultants.
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Recent Events:
In December 2002, we received a "Letter of Intent" from an investment group to
purchase 13,636,363 of our company's common shares for $4.5 million, and an
option to purchase an additional 10,000,000 shares at $.50 each. Accompanying
the "Letter of Intent" was $100,000 for the purchase of 303,303 shares our
common stock. In March 2003, we received $200,000 in connection with the "letter
of intent" in exchange for 606,060 shares of our common stock.
In August 2003, we terminated this agreement due to "non-performance" and the
investor returned 606,060 shares of common stock which were subsequently
cancelled. Our financial statements reflect this change of events.
In July 2003 we signed an agreement with Morningstar Entertainment Inc. to
distribute our videos to mass marketers such as Wal-Mart, Rite-Aid, and
Walgreens. Our videos began appearing in stores across North America in January
2004.
Results of Operations - Three Months Ended March 31, 2004 and 2003
Revenues decreased 52% from $110,000 for the first quarter of 2003 to $53,000
for the first quarter of 2004. For the first quarter of 2004, we had $22,000 in
network revenue, no advertising revenue, and $31,000 in production and other
revenue, compared to $84,000 in network revenue, $15,000 in advertising revenue
and $11,000 in Production and Other Revenue for the first quarter of 2003. We
received an $85,500 advance partial payment for an $185,000 production that will
occur in the second quarter of 2004 in connection with our paid advertising
television model. We believe this a beginning of a substantial increase in
sponsored television programming on the Dish Network and non-gaming hotel
properties.
Video production expense increased 100% to $21,000 from $10,500. The increase is
due to our charging production costs for the paid adverting television
production in the period they occur.
Selling and administrative expenses decreased 4% to $175,000 from $182,000. Rent
fell to $15,000 from $19,000, legal and accounting expense rose to $40,000 from
$35,000; and travel expenses increased to $30,000 from $12,000.
Depreciation and amortization decreased 18% to $78,000 from $95,000. This is due
to our charging off production for our hotel customers over the life of the
network agreement as video production expense and not amortizing this
production. Also, our "PLAYERSNETWORK.COM" website was fully amortized in 2003.
Interest expense decreased 48% to $1,500 from $3,200, because our notes payable
were paid in full later in 2003.
Critical Accounting Policies
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Video Library
Our Video Library consists of over 500 completed videos. The library consists of
gaming instruction which were produced at our own expense, videos produced for
gaming equipment manufacturers and videos produced for our network hotel
customers. For gaming instruction and equipment video, we record the cost of
production and amortize the cost over the estimated useful life (7 years). We
amortize hotel customer production over the life of the hotel network agreement,
which usually run 24 to 36 months. This policy recognizes that customized video
for hotel customers are subject to a shorter "shelf life" than gaming
instruction video. We review our library catalogue quarterly and determine which
videos are no longer of value. At 3/31/04 we had a net carrying value for our
Video of $313,000.
Revenue Recognition
We adopted revenue recognition policies to comply fully with the guidance in
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." Network revenue consists of initial, subscription and renewal
revenues. We had $92,000 in deferred and unearned revenue at March 31, 2004.
Advertising revenue is recognized when advertisements are aired. Production and
other revenues consist of video production, stage rentals and post production
revenues. Video production revenue is recognized when video production is
completed and accepted by the customer. The stage rental and other production
revenue is recognized when the stage rental period has expired.
Inflation
In our opinion, inflation has not had a material effect on our operations.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. We wish to
advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: our ability to meet our cash and working capital needs, our ability
to successfully market our product, and other risks detailed in our periodic
report filings with the Securities and Exchange Commission.
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Exhibit
Number Description
31.01 Certification pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934.
32.01 Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
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SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE PLAYERS NETWORK
(Registrant)
By: /s/ Mark Bradley
----------------------------
Mark Bradley,
Chief Executive Officer
By: /s/ Seth Horn
----------------------------
Seth Horn,
Chief Financial Officer
Dated: May 18, 2004
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