UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31, 2008
Commission
file number: 000-29363
PLAYERS
NETWORK
(Name of
small business issuer in its charter)
Nevada
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88-0343702
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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4260
Polaris Avenue
Las
Vegas, NV 89103
(Address
of principal executive offices including zip code)
Issuer's
telephone number: (702) 895-8884
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, Par Value $.001
(Title of
class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes o No x
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 o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
|
o |
Accelerated
filer
|
o |
|
o |
Smaller reporting
company
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x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x
The
aggregate market value of the voting and non-voting stock held by non-affiliates
of the registrant, as of June 30, 2008, was approximately 812,855.20. All
executive officers and directors of the registrant have been deemed, solely for
the purpose of the foregoing calculation, to be "affiliates" of the
registrant.
As of
April 9, 2009, there were 37,865,701 shares of the issuer's common stock, $0.001
par value per share, issued and outstanding.
TABLE
OF CONTENTS
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Page
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PART
I
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Special
Note Regarding Forward-Looking Statements
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1
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Item
1. Business
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1
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Item
1A. Risk Factors
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7
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Item
2. Properties
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11
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Item
3. Legal Proceedings
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12
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Item
4. Submission of Matters to a Vote of Security Holders
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12
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PART
II
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Item
5. Market for Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
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12
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Item
6. Selected Financial Data
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15
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Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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15
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Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
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18
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Item
8. Financial Statements and Supplementary Data
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18
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Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
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18
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Item
9A(T). Controls and Procedures
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18
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Item
9B. Other Information
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20
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PART
III
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Item10.
Directors, Executive Officers and Corporate Governance
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20
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Item
11. Executive Compensation
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23
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Item
12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
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25
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Item
13. Certain Relationships and Related Transactions, and Director
Independence
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26
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Item
14. Principal Accountant Fees and Services
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26
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PART
IV
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Item
15. Exhibits and Financial Statement Schedules
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26
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SIGNATURES
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains “forward-looking statements” about our
business, financial condition and prospects based on our current expectations,
assumptions, estimates, and projections about us and our industry. All
statements other than statements of historical fact are “forward-looking
statements”, including, but not limited to, any projections of earnings, revenue
or other financial items; any statements of the plans, strategies and objections
of management for future operations; any statements concerning proposed new
services or developments; any statements regarding future economic conditions or
performance; any statements or belief; and any statements of assumptions
underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar words. These
forward-looking statements present our estimates and assumptions only as of the
date of this report. Unless otherwise required by law, we do not intend, and
undertake no obligation, to update any forward-looking statement.
Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and uncertainties. The
factors impacting these risks and uncertainties include, but are not limited
to:
·
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increased
competitive pressures from existing competitors and new
entrants;
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·
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general
economic and business conditions, and trends in the travel and
entertainment industries;
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·
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trends
in hotel/casino occupancy rates and business and leisure travel patterns,
including the potential impacts that wars, terrorist activities, or other
geopolitical events might have on such occupancy rates and travel
patterns;
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·
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uncertainties
inherent in our efforts to renew or enter into agreements on acceptable
terms with our significant hotel/casino
customers;
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·
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the
regulatory and competitive environment of the industry in which we
operate;
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the
potential impact that any negative publicity, lawsuits, or boycotts by
opponents of gaming or other gaming related activities distributed by us
could have on the willingness of hotel/casino industry participants to
deliver such content to guests;
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·
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the
potential for increased government regulation and enforcement actions, and
the potential for changes in laws that would restrict or otherwise inhibit
our ability to make gaming related programming content available over our
network systems;
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increases
in interest rates or our cost of borrowing or a default under any material
debt agreements;
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·
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deterioration
in general or regional economic conditions;
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·
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loss
of customers or sales weakness;
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·
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competitive
threats posed by rapid technological changes;
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·
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uncertainties
inherent in our ability to execute upgrades of video systems, including
uncertainties associated with operational, economic and other
factors;
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·
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the
ability of vendors to deliver required equipment, software and
services;
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·
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inability
to achieve future sales levels or other operating
results;
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·
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the
unavailability of funds for capital expenditures; and
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·
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operational
inefficiencies in distribution or other
systems.
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For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Risk Factors” in this document.
In this
form 10-K references to “PLAYERS NETWORK”, “the Company”, “we,” “us,” and “our”
refer to PLAYERS NETWORK.
PART
I
ITEM
1. BUSINESS
Overview
Players
Network was incorporated in the State of Nevada in March of 1993. Players
Network is a global media and entertainment company engaged in the development,
production, distribution and marketing of television programs and internet
broadcasting about the Las Vegas and Gaming Lifestyles, and other related
entertainment themes.
With an
emphasis on unique, high-quality programming that captures the excitement,
passion, enjoyment, sex appeal, entertainment, information, celebrity, and the
non-stop adrenaline rush of the Las Vegas Gaming Lifestyle, Players Network’s
content goes beyond poker, casino action, sports betting, and racing, to
lifestyle programs about entertainment and fine living, attracting the young and
the sophisticated viewers who view digital content most.
Much of
Players Network’s programming is educational, involving experts helping viewers
become smarter gaming consumers, so when they visit a casino they have the best
chance possible to win. Many shows are celebrity driven, since so many
celebrities in movies and music, TV and sports come to Las Vegas to
play.
Players
Network programming is conceived and produced to create successful advertising,
cross-promotional and marketing opportunities for distributors and sponsors by
engaging this highly targeted, desirable audience in programming that excites
them.
Market
Opportunity
The
technology of media distribution and the digital revolution is rapidly changing
in regards to the way consumers’ access television content. Instead of scheduled
programming, video can now be viewed “On Demand” through digital cable
television and satellite networks, broadband internet, and by downloading
content to mobile and wireless devices such as MP3 players, cell phones and
PDAs.
Programming is becoming more targeted
to specific consumer groups who want to watch specific content at their
convenience
According
to the American Gaming Association, more than $70 billion is spent annually on
gaming and gaming-related activities and entertainment in the United States
alone. The Las Vegas Visitor and Convention Authority also reports that at least
40 Million people visit Las Vegas and other U.S. gaming venues every
year.
Players
Network develops, produces, acquires and distributes a wide range of original,
high-quality lifestyle television programming to serve consumers interested in
gaming and entertainment, and activities associated with, or surrounding gaming.
Our programming focuses primarily on Las Vegas, but also includes gaming
lifestyle programming worldwide. The Company’s proprietary productions include
gaming instruction, gaming news, instruction on sports and racing wagering,
gaming entertainment, tournaments, events and travel.
By
selectively aggregating the broadest aspects of life and leisure time activities
that make up the diverse “Gaming Lifestyle” category, Players Network has
defined a unified, integrated, mainstream category whose wide-ranging
participants’ appetite for content, merchandise, experiences, information and
services has yet to be met. This Gaming Lifestyle Category encompasses all forms
of gambling, but also includes travel, entertainment, fine living, instruction,
information, tournaments, news, and more. As much of the content as possible is
celebrity driven.
Players
Network believes that it is the only company in the world that has developed a
media network dedicated solely to this Gaming Lifestyle market. We believe that
the changes in the media marketplace, and Players Network’s early adaptation of
Gaming Lifestyle and Las Vegas entertainment media, which in the past several
years has gained more mainstream acceptance than ever before, has positioned
Players Network to become a leading provider of programming to this lucrative
market.
During
the last three years we have built a substantial distribution base with major
partners that are now delivering Players networks programming in over 22 million
homes. This has allowed the company to become one of the first new content
companies to establish itself as a leader in new media distribution. The company
has built relationships in the Video on Demand (“VOD”) and internet protocol
television (“IPTV”) space, by signing distribution agreements with Comcast,
AT&T, Verizon, Direct TV and Dish Network. As part of the Company’s
agreements, Players Network retains the rights to all advertising revenue earned
by its programming. In addition to television households, the company
has signed distribution and revenue sharing agreements with Sling media,
Hulu.com and Blinkx in the rapidly expanding IPTV market.
In August
2007 Players Network received its first corporate sponsorship from IGT
International Gaming Technologies to sponsor and co-produce a television series
called, “Winners and Jackpots.” The television series is about winning life
changing money, and what the winners of large jackpots do with their winnings,
in addition to, the impact it has on their lives. The sponsorship included an
initial deposit and a per show production fee.
In
November 2005, we entered into an agreement with Comcast Communications pursuant
to which we began offering our original, proprietary programming through a
dedicated VOD television channel to Comcast digital subscribers. In our first
month of broadcasting, over 32,000 of the Company’s videos were viewed by
Comcast subscribers, and by the end of 2008, Comcast subscribers had viewed over
1.4 million of the Company’s videos. Comcast’s digital distribution has now
expanded to just over 16 million television homes. Combined with its Broadband
distribution, Players Network’s content is now being viewed in excess of 3
million times per month. Comcast estimates that its Video-on-Demand service,
including Players Network, will be available in approximately 21 million homes
by the end of 2009, which we believe will exponentially increase the number of
Players Network’s videos that are viewed, and as a result, make our programming
inventory more valuable to sponsors.
The
Company intends to keep expanding its new media distribution platforms and
continue its production of original programming for its own distribution
platforms, while also expanding its distribution through partnerships with
additional new and traditional media companies in areas that include cable
television, broadcast and satellite television, Pay-Per-View, DVD distribution,
television syndication, including more broadband, downloadable devices and
mobile devices, additional land-based locations, in-flight venues, and on-board
sources. The Company plans to generate new revenues from sponsorship,
advertising, content licensing, subscriptions and live events through video chat
and commerce.
During
2007, this change in the Company’s business strategy has increased and is
expected to continue to increase the Company's production costs for the near
future. There can be no assurance that the Company will be successful in
implementing its new strategy, or that it will be able to achieve positive cash
flow or profitable operations. See “RISK FACTORS - THE CURRENT CHANGE IN OUR
BUSINESS FOCUS PRESENTS A NUMBER OF CHALLENGES AND MAY NOT PROVE TO BE
SUCCESSFUL OR CAUSE US TO BECOME PROFITABLE.” However, the Company believes
that strong market indicators, including the ability of 58 million households to
access the Company’s content, maximizes its chance for success. In addition,
television reporting and ratings giant Nielsen has began to conduct beta testing
with Comcast and will soon develop a rating system for VOD advertisers,
including Players Network’s channel.
Content/Programming
Our
content is highly creative, entertaining, informative, authoritative, sometimes
edgy, and always credible, featuring knowledgeable celebrities from the worlds
of gaming, entertainment and business as program hosts and participants. We are
also developing our own on-air personalities.
We
emphasize quality entertainment that captures the excitement, passion,
enjoyment, sex appeal, entertainment, information, celebrity, and the non-stop
adrenaline rush of the Gaming Lifestyle. Our content is divided into five main
categories:
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Gaming
(casino action, poker, sports and racing, card & board games,
lotteries);
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Entertainment
(Vegas-style shows, concerts, comedy, theater, nightclubs, gambling-themed
specials, movies and television
series);
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Events
(tournaments, competitions, conventions, parties);
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Instruction,
information, reality shows and profiles (games & gaming education,
news & information, gambling-themed documentaries, biographies, etc.);
and
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Lifestyle
(travel, leisure and fine living, shopping, dining, cars, electronics,
fashion, problem gambling, etc.)
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The
development of Players Network’s programming is led by Michael Berk, who is one
of Hollywood’s most successful television producers. Michael Berk has created
over 500 hours of network television that includes five television series. Mr.
Berk is best known for his series “Baywatch”, which he created and for which he
was the Executive Producer for twelve years. Baywatch is distributed in 144
countries and is in the Guinness World Book of Records as the most watched
television show in history.
We have a
library of 1,250 gambling and gaming lifestyle videos, including several new
series of both long and short form content. Some of these series include Players
Network originals; Hidden Vegas, Tattoo Tails that include 30 originally
produced hours of programming from the World Series of Poker(R), which
Players Network had the exclusive rights to produce and air live. In 2006
Players Network produced over 50 videos at the Hooters Hotel and Casino, 28 new
gaming instructional videos aimed at slots and video poker players, a series of
23 videos on magic entitled “Hocus Pocus”, The “Best of Vegas” series, “Neon
Buzz”, an entertainment report that covered red carpet events and many more. Our
growing programming library is an asset which represents long-term revenue
opportunities in advertising, sponsorship, direct sales and product integration,
domestic and international program sales, broadband syndication, subscription
fees and increased home video sales.
Strategy
Players
Network’s goal is to build the dominant media, marketing and merchandising brand
in the Las Vegas and Gaming Lifestyle Category by:
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Creating
a brand identity as “the trusted name in gaming entertainment, education,
information and services” that addresses the full spectrum of audience
demographics within the Gaming Lifestyle Category;
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Building
an ever-expanding, valuable library of entertainment, instruction and
information content that appeals to the “Player” in everyone for
distribution on all platforms;
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Leveraging
our various distribution channels as a mechanism to attract people with
gaming interest with the goal of building a strong customer base and
community;
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Gaining
a broad and diversified audience base through its distribution arrangement
with Comcast as well as other distribution channels, including linear
programming via digital cable, internet and broadband, wireless, packaged
media, video games, mobile media through cell phones and I-pods, radio,
publishing, and IPTV. In 2006 we entered into agreements with
Google/Google.UK and Yahoo that enables us to distribute our content
through sites operated by Google and Yahoo, including YouTube. In 2008 the
company added Hulu, Blinkx and Sling media to its broadband partnership
platforms.
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Harnessing
the power of the media in order to provide customized media solutions and
marketing services for key Lifestyle Category companies, principally major
Las Vegas Casino Properties. Players Network uses its strong relationships
in the Gaming Industry to lock in special trade relationships that can
contribute to content, advertising, VIP Services, and club amenities which
will solidify Players Network’s credibility in the category;
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·
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Grow
the Company’s robust, proprietary database of gaming enthusiasts, and
create lifestyle communities by offering deals, discounts, and prizes to
its customers, while marketing its strategic partners and
sponsors;
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·
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Offering
advertisers a new content category with creative cross-platform
advertising/sponsorship packages, at reasonable rates, in an environment
of unique, sexy content surrounded by sizzling attitude, that delivers
desirable demographics;
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·
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Expanding
its production and operations infrastructure to include a Digital Asset
Management System (DAMS) that will enable Players Network to: 1)
accommodate any distribution platform immediately, 2) manage and fully
exploit the value of all produced and acquired content in Players
Network’s own library (and for third-parties with digital assets)
including re-purposing content for all
platforms
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·
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Continuing
to build a lean management team with proven experience that can move
quickly, control costs, rapidly create a broad range of high-quality
content, and leverage significant, long-term relationships in the media,
entertainment and gaming industries allowing the company to accelerate its
market leadership.
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Distribution
We
distribute our gaming lifestyle media programming through a variety of media
platforms, including Video on Demand, broadband/Internet, Satellite television,
Cable Television, packaged media, and on our proprietary website. Through our
new dedicated channel available through Comcast, we intend to deliver live and
taped original television series, live pay per view events, mobile and internet
content down loading, information segments and interactive content. The
channel’s expanded programming will include popular poker programs, reality
shows, game shows, documentaries, talk shows and special events on the gaming
lifestyle. In the fall of 2006, we launched our Players Network channel by
upgrading the content and production value and changed the Electronic
Programming Guide (EPG) to Vegas on Demand. This change immediately increased
our viewership substantially.
Video
on Demand (VOD)
In 2005
the Company entered into an agreement with Comcast Communications pursuant to
which its content is broadcast over a dedicated channel available to Comcast's
digital subscribers through its "Select on Demand" services.
This
service allows consumers to select from a menu of available programs for viewing
at any time. Players Network is required to provide a certain amount of content
and refresh it periodically. The Company is seeking sponsorship and advertiser
support, including merchandising, to generate revenues.
Players
Network’s agreement with Comcast is an invaluable asset in the growth of the
Players Network brand. It is a cost-effective way in which to launch a cable
channel on the largest cable network in the world. Traditional cable channels
can cost hundreds of million of dollars to launch, however, Players Network’s
agreement with Comcast provides that Comcast pays for all distribution costs
associated with the distribution of Players Network’s content. All Players
Network has to pay for is the content and marketing. This represents a huge net
savings to the Company.
Comcast
projects that its digital cable service, including the Players Network Channel,
will have over 36 million subscriber households by 2010.
Broadband/Internet
The
Company’s goal is to be the all-encompassing resource for gaming enthusiasts and
novices alike, providing them with gaming and gambling entertainment, education,
information, services, and everything else related to the Gaming
Lifestyle.
The
Company is continuously seeking advertiser and sponsorship support with some
premium content available to consumers for a fee. As brand awareness grows
through advertising and major industry tie-ins, the Company will seek to become
an aggregating portal for other gaming sites.
Players
Network intends to heavily market and cross-promote its website and the Company
is actively exploring additional relationships through the social media
networks, such as Face Book, My Space and Twitter.
The
Company also believes there is a great opportunity to provide content to and
share content with other internet gaming-related information, data,
entertainment, gambling and educational sites. Players Network intends to use
its website to develop gaming lifestyle communities, then offer the members of
these communities live video events, information services, discounts, travel,
commerce, etc., as well as instant messaging, chat, comments, reviews and
perspectives from consumers on a variety of topical subjects.
International
Television
In
creating a truly global brand, Players Network plans to take advantage of
opportunities for channel and programming distribution outside of the U.S. on
both full channels and as programming blocks on existing services.
As the
Company begins its program sales efforts to license individual programs and
series to overseas distributors, it will have the advantage of determining the
specific global distribution partners with which it desires to develop deeper,
longer-lasting linear channel relationships.
Key
international distribution targets are Cable & Wireless, UPC and BskyB
Europe, Cable & Wireless/Optus, Foxtel and Austar, Australia, CBC and TV
Ontario, Canada, UniVision, Cisneros, Latin America and others. Additionally,
the Company will begin discussions with potential distribution partners in China
and Japan.
Packaged
Media
The
Company will continue from time to time to produce and sell its programming in a
DVD format; however, as the world converts to digital media that is
downloadable, packaged media will become increasingly obsolete.
Mobile
Mobile is
an exciting method to reach a growing 21+year-old audience, passionate about
gaming, and not yet brand-loyal. In 2005, Players Network conducted a pilot test
during The World Series of Poker through a mobile aggregator who processed our
messages to Cingular/ATT, Verizon, T-Mobile, and Sprint/Nextel customers.
Players Network is continuing to explore expanding into the mobile content
industry.
Players
Network intends to continue to seek opportunities to distribute its content
through video and screen saver downloads to mobile devices. Mobile Video
Downloads of short 45 to 60 second clips with little dialogue so that the
content will translate across all languages, and Still Photos captured from
videos as screen savers, is anticipated to be a fast emerging market that the
company plans to monetize with its content.
In the
first quarter of 2008 the company entered into an exclusive mobile distribution
agreement with Budai gaming. The agreement called for Budai, upon funding a
minimum of $1.5 million dollars, pay Players network $15,000 per months, plus
15% ownership in the company. Budai Gaming has not yet obtained the minimum
funding.
Broadcast
Television
Players
Network signed an agreement with Buzz TV to “nest” programming through Buzz TV’s
121 million European homes. Players network retained the rights to expand it
programming to a primetime (channel available six hours per night) each
night.
COMPETITION
Although
we are unaware of any other company that is aimed exclusively at the gaming
lifestyle market, we face intense competition from a variety of other companies
that develop and distribute gaming lifestyle content, including (i) full service
in-room providers, (ii) cable television companies, (ii) direct broadcast
satellite services, (iv) television networks and programmers, such as ESPN, the
Travel Channel, E!, the Food Network; (v) Internet service providers, (vi)
broadband connectivity companies, and (vi) other telecommunications companies.
In addition, our services compete for a viewer’s time and entertainment
resources with other forms of entertainment.
We
believe that the primary competitive factors affecting our operations include
our distribution agreements, brand recognition, the quality and extent of our
content (we have built a significant video library of over 850 short and long
form segments); our understanding of our market and our ability to develop
content geared to our chosen market (we have developed and acquired market
research studies that validate our audience’s demands and we have a reserve of
writers, producers and directors who understand television, the casino industry
and the gaming lifestyle market). Over the past 15 years Players Network has
built substantial relationships and gained the trust and respect of Las Vegas
casinos, gaming manufacturers and the gaming community in general, and has
developed a Las Vegas based production infrastructure to support our
operations.
GOVERNMENTAL
APPROVAL AND REGULATION
Players
Network does not believe that any governmental approvals are required to sell
its products or services. The Communications Act of 1934, as amended by the
Cable Communications Policy Act of 1984, the Cable Television Consumer
Protection and Competition Act of 1992 and the Telecommunications Act of 1996,
governs the distribution of video programming by cable, satellite or
over-the-air technology, through regulation by the Federal Communications
Commission (“FCC”). However, because Players Network’s video distribution
systems do not use any public rights of way, they are not classified as cable
systems and are subject to minimal regulation. Thus, the FCC does not directly
regulate the programming provided by the Company.
Although
the FCC generally does not directly regulate the services provided by Players
Network, the regulation of video distribution and communications services is
subject to the political process and has been in constant flux over the past
decade. Further material changes in the law and regulatory requirements must be
anticipated and there can be no assurance that Players Network’s business will
not be adversely affected by future legislation or new regulations.
RESEARCH
AND DEVELOPMENT
Players
Network is constantly at the fore front of technology in terms of research and
development. Although research and development costs are incorporated into our
costs of operations on each project as it is developed, Players Network
understands the importance of utilizing the latest available technology and
constantly seeks to improve their delivery methods in today’s fast changing
society.
SEASONALITY
The
amount of revenue realized by the Company each month is only affected slightly
by the season for a variety of factors, that mainly include summer break, and
holidays, when internet use increases.
EMPLOYEES
As of
December 31, 2008, Players Network has three full time employee as well as ten
contract personnel that support and operate our production and post-production
operations. Management will hire additional employees on an as needed basis.
None of our employees are subject to any collective bargaining agreement or
labor union contract, nor has the Company been subjected to any strikes or
employment disruptions in its history. We intend to use the services of
independent consultants and contractors to perform various professional services
when and as they are deemed necessary. We believe that the use of third-party
service providers may enhance our ability to contain general and administrative
expenses.
Players
Network’s proposed personnel structure could be divided into four broad
categories: management and production, professional, administrative, and project
personnel. As in most small companies, the divisions between these three
categories are somewhat indistinct, except for production, as employees are
engaged in various functions as projects and workloads
demand.
ITEM
1A. RISK FACTORS.
In
addition to the other information in this Annual Report, the following risk
factors, among others, should be considered carefully in evaluating the Company
and its business.
1. Risks
Related To Our Company
We
have had a history of losses, we expect losses in the future, and there can be
no assurance that we will become profitable in the future.
The
Company was incorporated under the laws of the State of Nevada on March 16,
1993. Since
inception, we have experienced operating losses on an on-going basis. For our
fiscal year ended December 31, 2008, we incurred net losses of $779,949. As of
such date, we had an accumulated deficit of $15,899,164. We expect our losses to
continue for the foreseeable future. These continuing losses may be greater than
current levels. If our revenues do not increase substantially or if our expenses
exceed our expectations, we may never become profitable. Even if we do achieve
profitability, we may not sustain profitability on a quarterly or annual basis
in the future.
Our
auditor has given us a "going concern" qualification, which questions our
ability to continue as a going concern without additional
financing.
Our
independent certified public accountant has added an emphasis paragraph to its
report on our financial statements for the year ended December 31, 2008
regarding our ability to continue as a going concern. Key to this determination
is our recurring net losses, an accumulated deficit, and a working capital
deficiency. Management plans to try to increase sales and improve operating
results through the expansion of the distribution channels of our programming
with a view to increasing advertising and sponsorship revenues. Management believes that
funds generated from operations will not be sufficient to cover cash needs in
the foreseeable future, and we will continue to rely on expected increased
revenues and private equity to cover our cash needs, although there can be no
assurance in this regard. In the event sales do not materialize at the expected
rates, management would seek additional financing or would conserve cash by
further reducing expenses. There can be no assurance that we will be successful
in achieving these objectives, becoming profitable or continuing our business
without either a temporary interruption or a permanent cessation.
We
need additional capital in the future to finance our planned growth, which we
may not be able to raise or it may only be available on terms unfavorable to us
or our stockholders, which may result in our inability to fund our working
capital requirements and harm our operational results.
We have
and expect to continue to have substantial capital expenditure and working
capital needs. We do not now have funds sufficient to fund our operations at
their current level for the next 12 months. We need to raise additional cash to
fund our operations and implement our business plan. We are maintaining an
on-going effort to locate sources of additional funding, without which we will
not be able to remain a viable entity. No financing arrangements are currently
under contract, and there are no assurances that we will be able to obtain
adequate financing. If we are able to obtain the financing required to remain in
business, eventually achieving operating profits will require substantially
increasing revenues or drastically reducing expenses from their current levels
or both. If we are able to obtain the required financing to remain in business,
future operating results depend upon a number of factors that are outside of our
control. We have secured convertible debt financing in the original principal
amount of $465,000. We currently do not have the funds to repay this
indebtedness but have the option to convert it to common stock upon its 36 month
anniversary which occurs over various dates in 2009. The expected operating
losses, coupled with a lack of liquidity, raise a substantial doubt about our
ability to continue as a going concern. If we raise additional funds through the
issuance of equity or convertible debt securities, the percentage ownership of
our stockholders would be reduced, and these newly issued securities might have
rights, preferences or privileges senior to those of existing stockholders. For
more information about our capital needs and abilities, see "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - OVERVIEW AND OUTLOOK -
Liquidity and Capital Resources” herein.
At
this stage of our business operations, even with our good faith efforts,
potential investors have a possibility of losing their investment.
Because
the nature of our business is expected to change as a result of shifts as a
result of market conditions, competition, and the development of new and
improved technology, management forecasts are not necessarily indicative of
future operations and should not be relied upon as an indication of future
performance. While management believes its estimates of projected occurrences
and events are within the timetable of its business plan, our actual results may
differ substantially from those that are currently anticipated.
If
we are unable to retain the services of Messrs. Bradley or Berk, or if we are
unable to successfully recruit qualified managerial and sales personnel having
experience in business, we may not be able to continue our
operations.
Our
success depends to a significant extent upon the continued service of Mr. Mark
Bradley, our Chief Executive Officer and Mr. Michael Berk, our President of
Programming. Loss of the services of Messrs. Bradley or Berk could have a
material adverse effect on our growth, revenues, and prospective business. In
order to successfully implement and manage our business plan, we will be
dependent upon (among other things) successfully recruiting qualified managerial
and sales personnel having experience in business. Competition for qualified
individuals is intense. There can be no assurance that we will be able to find,
attract and retain existing employees or that we will be able to find, attract
and retain qualified personnel on acceptable terms.
Our
current management resources may not be sufficient for the future, and we have
no assurance that we can attract additional qualified personnel.
There can
be no assurance that the current level of management is sufficient to perform
all responsibilities necessary or beneficial for management to perform. Our
success in attracting additional qualified personnel will depend on many
factors, including our ability to provide them with competitive compensation
arrangements, equity participation and other benefits. There is no assurance
that (if we need to) we will be successful in attracting highly qualified
individuals in key management positions.
Limitations
on claims against our officers and directors, and our obligation to indemnify
them, could prevent our recovery for losses caused by them.
The
corporation law of Nevada allows a Nevada corporation to limit the liability of
its directors to the corporation and its stockholders to a certain extent, and
our Articles of Incorporation have eliminated our directors’ and officers’
personal liability for damages for breaches of fiduciary duty but do not
eliminate or limit the liability of a director officer for (a) acts or omissions
which involve intentional misconduct, fraud or a knowing violation of the law,
or (b) the payment of dividends in violation of applicable law. The corporation
law of Nevada allows a Nevada corporation to indemnify each director, officer,
agent and/or employee to the extent that certain standards are met. Further, we may purchase
and maintain insurance on behalf of any such persons whether or not we have the
power to indemnify such person against the liability insured against.
Consequently, because of the actions or omissions of officers, directors, agents
and employees, we could incur substantial losses and be prevented from
recovering such losses from such persons. Further, the Commission maintains that
indemnification for liabilities arising under the Securities Act is against the
public policy expressed in the Securities Act, and is therefore
unenforceable.
Officers
and Directors own a large percentage of our outstanding stock, and cumulative
voting is not available to stockholders.
Our
current Officers and Directors currently own (directly or indirectly)
approximately 26.8% of our outstanding common stock and 100% of our outstanding
Series A Preferred Stock. Each share of common stock is entitled to one vote on
stockholder matters and each share of Series A Preferred Stock is entitled to 25
votes on stockholder matters. Cumulative voting is not provided for in the
election of directors. Accordingly, the holder or holders of a majority of our
outstanding shares of voting stock may elect all of our directors. Management's
large percentage ownership of our outstanding common stock helps enable them to
maintain their positions as such and thus control of our business and
affairs.
We
may experience rapid growth, and in such case we will need to manage this growth
effectively.
We
believe that, given the right business opportunities, we may expand our
operations rapidly and significantly. If rapid growth were to occur, it could
place a significant strain on our management, operational and financial
resources. To manage any significant growth of our operations, we will be
required to undertake the following successfully:
·
|
Manage
relationships with various strategic partners and other third
parties;
|
·
|
Hire
and retain skilled personnel necessary to support our
business;
|
·
|
Train
and manage a growing employee base;
and
|
·
|
Continually
develop our financial and information management
systems.
|
If we
fail to make adequate allowances for the costs and risks associated with this
expansion or if our systems, procedures or controls are not adequate to support
our operations, our business could be harmed. Our inability to manage growth
effectively could materially adversely affect our business, results of
operations and financial condition.
2. Risks
Related To Our Business
Our
business is speculative (among other reasons) because our revenues are derived
from the acceptance of our programming and the timely expansion to new media
distribution, which is difficult to predict, and our failure to develop
appealing programming would probably materially adversely affect
us.
Our
programming is the key to our success. It represents the catalyst for generating
our revenues, and is subject to a number of uncertainties. Our success depends
on the quality of
our programming and the quality of other programming released into marketplace
at or near the same time as ours, the availability of alternative forms of
entertainment and leisure time activities, general economic conditions and other
tangible and intangible factors, all of which can change and cannot be predicted
with certainty. There can be no assurance that our current or future programming
will appeal to consumer or persons who would pay to broadcast it. Any failure to
develop appealing programming would materially and adversely affect our
business, results of operations and financial condition.
There
are various risks associated with our proprietary rights.
No patent protection. We have
no proprietary technology, and accordingly, have no patents. We intend to rely
on a combination of copyright and trade secret protection and nondisclosure
agreements to establish and protect our proprietary rights. Despite our
precautions, it may be possible for a third party to copy or otherwise obtain
and use our proprietary information, products or technology without
authorization, to imitate our programming, or to develop similar or superior
programming or ideas independently. Imitation of our programming, the creation
of similar or superior programming, or the infringement of our intellectual
property rights could diminish the value of our programming or otherwise
adversely affect our potential for revenue. Policing unauthorized
use of our intellectual property will be difficult and expensive. In addition,
effective copyright and trade secret protection may be unavailable or limited in
certain foreign countries. We cannot provide any assurances that the steps we
take will prevent misappropriation of our technology or that our confidentiality
or other protective agreements will be enforceable.
Enforcing our proprietary rights may
require litigation. Litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets, to protect our
copyrights, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Any such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on our business, operating results or
financial condition.
Others may assert infringement
claims against us. One of the risks of our business is the possibility of
claims that our productions infringe on the intellectual property rights of
third parties with respect to previously developed content. In addition, our
technology and software may be subject to patent, copyright or other
intellectual property claims of third parties. We could receive in the future
claims of infringement of other parties’ proprietary rights. There can be no
assurance that infringement claims will not be asserted or prosecuted against
us, or that any assertions or prosecutions will not materially adversely affect
our business, financial condition or results of operations. Irrespective of the
validity or the successful assertion of such claims, we would incur significant
costs and diversion of resources with respect to the defense thereof, which
could have a material adverse effect on our business, financial condition or
results of operations. If any claims or actions are asserted against us, we may
seek to obtain a license under a third party’s intellectual property rights. We
cannot provide any assurances, however, that under such circumstances a license
would be available on reasonable terms or at all.
We
may be adversely affected by changing consumer preferences
Gambling
and new media appears to have become more accepted by and popular with many more
persons in recent years. However, the gambling industry is subject to shifting
consumer preferences and perceptions. A dramatic shift in consumer acceptance or
interest in gaming could materially adversely affect us. We are also dependent
on consumers becoming acclimated to using new media by watching video over the
internet and on VOD television platforms.
We
will rely on a number of third parties, and such reliance exposes us to a number
of risks.
Our
operations will depend on a number of third parties. We will have limited
control over these third parties. We will probably not have many long-term
agreements with many of them. We rely upon a number of third parties to carry
our programming, and we will need to expand in the future the number of third
parties doing this on our behalf. There can be no assurance that existing such
agreements will not be terminated or that they will be renewed in the future on
terms acceptable to us, or that we will be able to enter into additional such
agreements. Our inability to preserve and expand the channels for distributing
our programming would likely materially adversely affect our business, results
of operations and financial condition. We also will rely on a variety of
technology that we will license from third parties. Our loss of or inability to
maintain or obtain upgrades to any of these technology licenses could result in
delays. These delays could materially adversely affect our business, results of
operations and financial condition, until equivalent technology could be
identified, licensed or developed and integrated. Moreover, we occasionally use
third parties in connection with our production work and work on our Web site.
In addition, we do not own a gateway onto the Internet. Instead, we now and
presumably always will rely on a network operating center to connect our Web
site to the Internet. Overall, our inability to maintain satisfactory
relationships with the requisite third parties on acceptable commercial terms,
or the failure of such third parties to maintain the quality of services they
provide at a satisfactory standard, could materially adversely affect our
business, results of operations and financial condition.
We
could be materially adversely affected by future regulatory changes applicable
to our business.
We do not
believe that any governmental approvals are required to sell our products or
services, and that we are not currently subject to significant regulation by any
government agency in the United States, other than regulations applicable to
businesses generally. However, a number of laws and regulations may be adopted
with respect to our business in the future. Such legislation could dampen or
increase the cost of our business. Such a development could materially and
adversely affect our business, results of operations and financial
condition.
Competition
in our industry is moderate. We are very small and have a limited operating
history although compared to the vast majority of our competitors we are more
experienced.
We intend
to compete with major and independent providers of content to the Broadband and
VOD television the majority of our anticipated competitors have substantially
greater financial and other resources than we do. In addition, larger
competitors may be able to absorb the burden of any changes in federal, state
and local laws and regulations more easily than we can, which would adversely
affect our competitive position. These competitors may be able to pay more for
technology upgrades and marketing. In addition, some of our competitors have
been operating in our core areas for a much longer time than we have and have
demonstrated the ability to operate through industry cycles.
3. Risks
Related To Our Common Stock
We
have certain obligations and the general ability to issue additional shares of
common stock in the future, and such future issuances may depress the price of
our common stock.
We have
various obligations and the ability to issue additional shares of common stock
in the future. These obligations and abilities include the
following:
·
|
Approximately,
185,000 shares of our common stock available for issuance under our 2004
Non-Qualified Stock Plan; and
|
·
|
Options
and warrants to purchase approximately 6.7 million unregistered shares of
common stock had been issued as of the date of this Annual
Report.
|
The
options described above will permit the holders to purchase shares of common
stock at specified prices. These purchase prices may be less than the then
current market price of our common stock. Any shares of common stock issued
pursuant to these options would further dilute the percentage ownership of
existing stockholders. The terms on which we could obtain additional capital
during the life of these options may be adversely affected because of such
potential dilution. Finally, we may issue additional shares in the future other
than as listed above. There are no preemptive rights in connection with our
common stock. Thus, the percentage ownership of existing stockholders may be
diluted if we issue additional shares in the future. For grants of options, our
Board of Directors will determine the timing and size of the grants and the
consideration or services required. Our Board of Directors intends to use its
reasonable business judgment to fulfill its fiduciary obligations to our then
existing stockholders in connection with any such grant. Nonetheless, future
issuances of additional shares pursuant to options granted could cause immediate
and substantial dilution to the net tangible book value of shares of common
stock issued and outstanding immediately before such transaction. Any future
decrease in the net tangible book value of such issued and outstanding shares
could materially and adversely affect the market value of the
shares.
Our
common stock has experienced only extremely limited trading.
Currently,
our common stock is quoted and traded in very limited quantities on the OTC
Electronic Bulletin Board under the trading symbol of "PNTV." There can be no assurance as
to the prices at which the shares of our common stock will trade. Until shares
of our common stock become more broadly held and orderly markets develop and
even thereafter, the price of our common stock may fluctuate significantly. The
Price for our common stock will be determined in the marketplace and may be
influenced by many factors, including the following:
·
|
The
depth and liquidity of the markets for our common
stock;
|
·
|
Investor
perception of us and the industry in which we
participate;
|
·
|
General
economic and market conditions;
|
·
|
Responses
to quarter-to-quarter variations in operating results;
|
·
|
Failure
to meet securities analysts' estimates;
|
·
|
Changes
in financial estimates by securities analysts;
|
·
|
Conditions,
trends or announcements in our industry;
|
·
|
Announcements
of significant acquisitions, strategic alliances, joint ventures or
capital commitments by us or our competitors;
|
·
|
Additions
or departures of key personnel;
|
·
|
Sales
of our common stock;
|
·
|
Accounting
pronouncements or changes in accounting rules that affect our financial
statements; and
|
·
|
Other
factors and events beyond our
control.
|
The
market price of our common stock could experience significant fluctuations
unrelated to our operating performance. As a result, a stockholder (due to
personal circumstances) may be required to sell such stockholder’s shares of our
common stock at a time when our stock price is depressed due to random
fluctuations, possibly based on factors beyond our control.
The
trading price of our common stock may entail additional regulatory requirements,
which may negatively affect such trading price.
The
trading price of our common stock has been and may continue to be below $5.00
per share. As a result of this price level, trading in our common stock is
subject to the requirements of certain rules promulgated under the Exchange Act.
These rules require additional disclosure by broker-dealers in connection with
any trades generally involving any non-NASDAQ equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Such rules
require the delivery, before any penny stock transaction, of a disclosure
schedule explaining the penny stock market and the risks associated therewith,
and impose various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited investors
(generally institutions). For these types of transactions, the broker-dealer
must determine the suitability of the penny stock for the purchaser and receive
the purchaser's written consent to the transaction before sale. The additional
burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in our common stock. As a
consequence, the market liquidity of our common stock could be severely affected
or limited by these regulatory requirements.
Because
our board of directors does not intend to pay dividends on our common stock in
the foreseeable future, stockholders may have to sell their shares of our common
stock to realize a return on their investment in the company.
Holders
of our common stock are entitled to receive dividends when, as and if declared
by our Board of Directors out of funds legally available. To date, we have paid
no dividends. Our Board of Directors does not intend to declare any dividends in
the foreseeable future, but instead intends to retain all earnings, if any, for
use in our business operations. Accordingly, a return on an investment in shares
of our common stock may be realized only through a sale of such shares, if at
all.
ITEM
2. PROPERTIES
We have a
library of over 1,050 gambling and gaming lifestyle videos and we produce an
average of fifteen to twenty new videos per month. We own the intellectual
property rights in the programming and content that we produce. Moreover, 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 “PTO”). The Company has received from the PTO the trademark for
“Players Network” and for the service mark “Players Network.”
The
principal executive office of Players Network is located at 4620 Polaris Avenue,
Las Vegas, Nevada, 89103. Players Network occupies approximately 8,500 square
feet of combined office space, video production soundstage, technical and
administrative operations, and warehouse space at these premises pursuant to a
two year lease that commenced on August 1, 2008. The monthly rent is $6,250. Our
minimum operating lease payments total $74,998 in 2009.
These
properties are in good condition, well maintained and adequate for Players
Network’s current and immediately foreseeable operating needs. Players Network
does not have any policies regarding investments in real estate, securities or
other forms of property.
ITEM
3. LEGAL PROCEEDINGS
From time
to time, we may become involved in various lawsuits and legal proceedings which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are not presently a party
to any material litigation, nor to the knowledge of management is any litigation
threatened against us, which may materially affect us.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did
not submit any matters to a vote of our security holders during the fourth
quarter of the fiscal year 2008.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
(a)
Market Information
The
Company's Common Stock is currently traded on the National Association of
Security Dealers' over-the-counter bulletin board market (OTCBB) under the
symbol PNTV.OB. The following table sets forth the high and low bid prices for
each quarter within the last two fiscal years. The source of these quotations is
the OTCBB Trade Activity Report. The quotations reflect inter-dealer prices,
without retail mark-up, markdown or commission, and may not necessarily
represent actual transactions.
|
|
COMMON STOCK MARKET
PRICE
|
|
|
|
HIGH
|
|
|
LOW
|
|
FISCAL
YEAR ENDED DECEMBER 31, 2008:
|
|
|
|
|
|
|
Fourth
Quarter
|
|
$ |
0.17 |
|
|
$ |
0.01 |
|
Third
Quarter
|
|
$ |
0.08 |
|
|
$ |
0.02 |
|
Second
Quarter
|
|
$ |
0.15 |
|
|
$ |
0.07 |
|
First
Quarter
|
|
$ |
0.22 |
|
|
$ |
0.085 |
|
FISCAL
YEAR ENDED DECEMBER 31, 2007:
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
$ |
0.23 |
|
|
$ |
0.01 |
|
Third
Quarter
|
|
$ |
0.26 |
|
|
$ |
0.13 |
|
Second
Quarter
|
|
$ |
0.32 |
|
|
$ |
0.12 |
|
First
Quarter
|
|
$ |
0.23 |
|
|
$ |
0.12 |
|
(b)
Holders of Common Stock
As
of April 9, 2009, there were approximately 262 holders of record of the
Company's Common Stock. As of April 9, 2009, the closing price of the Company's
shares of common stock was $0.17 per share. Florida Atlantic Stock Transfer
(telephone: (954) 726-4954; facsimile: (954) 726-6305) is the registrar and
transfer agent for our common stock.
(c)
Dividends
Players
Network has never declared or paid dividends on its Common Stock. Players
Network intends to follow a policy of retaining earnings, if any, to finance the
growth of the business and does not anticipate paying any cash dividends in the
foreseeable future. The declaration and payment of future dividends on the
Common Stock will be at sole discretion of the Board of Directors and will
depend on Players Network's profitability and financial condition, capital
requirements, statutory and contractual restrictions, future prospects and other
factors deemed relevant.
(d)
Securities Authorized for Issuance under Equity Compensation Plans
The
following table sets forth information regarding our existing compensation plans
and individual compensation arrangements pursuant to which our equity securities
are authorized for issuance to employees or non-employees (such as directors,
consultants and advisors) in exchange for consideration in the form of
services:
Plan
Category
|
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a)
(c)
|
Equity
Compensation Plans approved by security holders
|
|
--
|
|
|
--
|
|
--
|
Equity
compensation plans not approved by security holders (1)
|
|
6,661,333
|
|
$
|
0.28
|
|
185,000
|
Total:
|
|
6,661,333
|
|
$
|
0.28
|
|
185,000
|
(1) In
2008, the Company issued 1,125,000 options to consultants for services rendered
at a weighted average exercise price of $0.20. As of December 31, 2008, the
Company had options outstanding exercisable for 6,661,333 shares of the
Company’s common stock at a weighted average exercise price of $0.28 that were
issued for services rendered under the Company’s 2004 Non-Qualified Stock Option
Plan.
(e)
Recent Sales of Unregistered Securities
Common
Stock
On
December 8, 2008 the Company issued 60,000 shares of common stock to its CEO for
unpaid compensation. The total fair value of the common stock was
$1,800.
On
December 8, 2008 the Company issued 60,000 shares of common stock to its
President of Programming for unpaid compensation. The total fair value of the
common stock was $1,800.
On
December 8, 2008 the Company issued common stock as compensation for service on
the board of directors to two of its directors totaling 200,000 shares. The fair
value of the common stock was $6,000.
On
December 8, 2008 the Company issued 100,000 shares of common stock to a
consultant for administrative services rendered. The total fair value of the
common stock was $3,000.
On
December 8, 2008 the Company issued 40,000 shares of common stock to a
consultant for services rendered. The total fair value of the common stock was
$1,200.
On
December 8, 2008 the Company issued 20,000 shares of common stock to an employee
as a bonus for services rendered. The total fair value of the common stock was
$600.
On
December 8, 2008 the Company issued 5,000 shares of common stock to a consultant
for administrative services rendered. The total fair value of the common stock
was $150.
On
December 8, 2008 the Company issued 10,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock was $300.
On
December 8, 2008 the Company issued 50,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock was $1,500.
On
December 8, 2008 the Company issued 100,000 shares of common stock to a
consultant for sales & marketing services rendered. The total fair value of
the common stock was $3,000.
On
December 8, 2008 the Company issued 300,000 shares of common stock to a
consultant for prepaid equity promotion and marketing services. The fair market
value of the shares was $10,500. The expense is being amortized over the six
month life of the agreement. At December 31, 2008 $8,750 remained unamortized,
and $1,750 had been expensed as share-based marketing expense.
On
December 8, 2008 the Company issued 300,000 shares of common stock to a
consultant for prepaid equity promotion and marketing services. The fair market
value of the shares was $10,500. The expense is being amortized over the six
month life of the agreement. At December 31, 2008 $8,750 remained unamortized,
and $1,750 had been expensed as share-based marketing expense.
On
December 8, 2008 the Company issued 5,000 shares of common stock to a consultant
for equity promotion & marketing services rendered. The total fair value of
the common stock was $150.
Warrants and
options
On
February 15, 2008 the Company granted cashless options to purchase 250,000
shares of its common stock to the Company’s CEO as a bonus for services
performed at an exercise price of $0.20 per share, exercisable over 36 months
from the grant date. The estimated value using the Black-Scholes pricing Model,
based on a 180% volatility rate and a call option value of $0.09, was
$23,271.
On
February 15, 2008 the Company granted cashless options to purchase 250,000
shares of its common stock to the Company’s President of Programming as a bonus
for services performed at an exercise price of $0.20 per share, exercisable over
36 months from the grant date. The estimated value using the Black-Scholes
pricing Model, based on a 180% volatility rate and a call option value of $0.09,
was $23,271.
On
February 15, 2008 the Company granted cashless options to purchase 100,000
shares of its common stock to a director of the Company in exchange for services
at an exercise price of $0.20 per share, exercisable over 36 months from the
grant date. The estimated value using the Black-Scholes pricing Model was
$9,308.
On
February 15, 2008 the Company granted 100,000 stock options to a consultant for
services as part of a 30 day public relations agreement at an exercise price of
$0.20 per share, exercisable over 36 months from the grant date. The estimated
value using the Black-Scholes pricing Model, based on a 180% volatility rate and
a call option value of $0.09, was $9,308 and will be amortized as the services
are performed. The Company expensed $4,654 in the six months ending June 30,
2008.
On
February 15, 2008 the Company granted 100,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 36
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.09, was
$9,308.
On
February 15, 2008 the Company granted 150,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 12
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.06, was
$8,597.
On
February 15, 2008 the Company granted 50,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 12
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.06, was
$2,866.
On
February 15, 2008 the Company granted cashless options to purchase 25,000 shares
of its common stock to each of all five of the Company’s directors in exchange
for their services as board members. The options carry an exercise price of
$0.20 per share, exercisable over 36 months from the grant date. The estimated
value using the Black-Scholes pricing Model, based on a 180% volatility rate and
a call option value of $0.09, was $2,327 each.
Options and Warrants
Cancelled
No
options or warrants were cancelled during the year ended December 31,
2008.
Options and Warrants
Expired
During
the year ended December 31, 2008, 2,123,500 options and 1,116,666 warrants that
were outstanding as of December 31, 2007 expired. The expiration of the options
and warrants had no impact on the current period operations.
Options
Exercised
No
options were exercised during the years ended December 31, 2008
The
foregoing securities were issued in reliance on Section 4(2) of the Securities
Act of 1933, as amended.
ITEM
6. SELECTED FINANCIAL DATA
Not
Required
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
AND RESULTS OF OPERATION
Overview
and Outlook
Players
Network was incorporated in the State of Nevada in March of 1993. Players
Network is a global media and entertainment company engaged in the development,
production, distribution and marketing of television programs and internet
broadcasting about the Las Vegas and Gaming Lifestyles, and other related
entertainment themes.
With an
emphasis on unique, high-quality programming that captures the excitement,
passion, enjoyment, sex appeal, entertainment, information, celebrity, and the
non-stop adrenaline rush of the Las Vegas Gaming Lifestyle, Players Network’s
content goes beyond poker, casino action, sports betting, and racing, to
lifestyle programs about entertainment and fine living, attracting the young and
the sophisticated viewers who view digital content most.
Much of
Players Network’s programming is educational, involving experts helping viewers
become smarter gaming consumers, so when they visit a casino they have the best
chance possible to win. Many shows are celebrity driven, since so many
celebrities in movies and music, TV and sports come to Las Vegas to
play.
Players
Network programming is conceived and produced to create successful advertising,
cross-promotional and marketing opportunities for distributors and sponsors by
engaging this highly targeted, desirable audience in programming that excites
them.
In 2007
the Company brought on it first major sponsor IGT, who sponsored an original
television series “Winner and Jackpots.” The Company expects the sponsorship to
continue through 2008. The sponsorship included an initial deposit and a per
show production fee. The Company also engaged an advertising agency to act as
the Company’s representative to mainstream sponsors to assist the Company in
creating advertising revenues. The Company signed distribution agreements with
Telco and satellite giants AT&T and Verizon pursuant to which the Company’s
content will be distributed over these companies’ IPTV platforms. The Company
also signed agreements with Direct TV and EchoStar to deliver Players Network
branded VOD channels. Management believes that the addition of these new
distribution platforms will enable the Company to begin to generate revenues
from advertising.
As we
continue to expand our business and implement our business strategy, our current
monthly cash flow requirements will exceed our near term cash flow from
operations. Our available cash resources and anticipated cash flow from
operations are insufficient to satisfy our anticipated costs associated with new
product development. There can be no assurance that we will be able to generate
sufficient cash from operations in future periods to satisfy our capital
requirements. Therefore, we will have to continue to rely on external financing
activities, including the sale of our equity securities, to satisfy our capital
requirements for the foreseeable future. Due, in part, to our lack of historical
earnings, our prior success in attracting additional funding has been limited to
transactions in which our equity is used as currency. In light of the
availability of this type of financing, and the lack of alternative proposals,
our board of directors has determined that the continued use of our equity for
these purposes may be necessary if we are to sustain operations. Equity
financings of the type we have been required to pursue are dilutive to our
stockholders and may adversely impact the market price for our shares. However,
we have no commitments for borrowings or additional sales of equity, the precise
terms upon which we may be able to attract additional funding is not known at
this time, and there can be no assurance that we will be successful in
consummating any such future financing transactions on terms satisfactory to us,
or at all.
Results
of Operations for the Years Ended December 31, 2008 and December 31,
2007:
|
|
December
31,
|
|
|
December 31,
|
|
|
Increase /
|
|
|
|
2008
|
|
|
2007
|
|
|
(Decrease)
|
|
Revenues
|
|
$ |
299,505 |
|
|
$ |
326,159 |
|
|
$ |
(26,654 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating costs
|
|
|
202,335 |
|
|
|
313,938 |
|
|
|
(156,577 |
) |
General
and administrative expenses
|
|
|
348,786 |
|
|
|
322,911 |
|
|
|
25,875 |
|
Bad
debt
|
|
|
8,400 |
|
|
|
2,000 |
|
|
|
6,400 |
|
Salaries
and wages
|
|
|
318,611 |
|
|
|
565,816 |
|
|
|
(247,205 |
) |
Consulting
services
|
|
|
168,614 |
|
|
|
724,277 |
|
|
|
(573,163 |
) |
Rent
|
|
|
76,046 |
|
|
|
69,769 |
|
|
|
6,277 |
|
Depreciation
and amortization
|
|
|
4,934 |
|
|
|
29,702 |
|
|
|
(24,768 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
|
1,127,726 |
|
|
|
2,028,413 |
|
|
|
963,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Operating (Loss)
|
|
|
(828,221 |
) |
|
|
(1,702,254 |
) |
|
|
(936,507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income (expense)
|
|
|
48,272 |
|
|
|
(95,178 |
) |
|
|
(53,474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss)
|
|
$ |
(779,949 |
) |
|
$ |
(1,797,432 |
) |
|
$ |
(1,034,983 |
) |
Revenues:
During
the years ended 2008 and 2007, we received revenues primarily from two sources -
licensing fees from our private networks, including the sale of in-home media,
and advertising fees, and production revenues, which included fees from third
party programming production and sound stage rentals. Aggregate revenues for the
year ended December 31, 2008 were $299,505 compared to revenues of $326,159 in
the year ended December 31, 2007, a decrease in revenues of $26,654, or 8%.
Revenues decreased as a result of a reduction in the amount of revenues received
from stage rentals of $7,713 due to a decrease in demand for stage rentals in
the Las Vegas area, and a reduction of $18,941 in production revenues due to
fewer special video production projects in 2008.
Direct
Operating Costs:
Direct
operating costs were $202,335 for the year ended December 31, 2008 compared to
$313,938 for the year ended December 31, 2007, a decrease of $111,603 or 36%.
Our direct operating costs in 2008 decreased due to our ability to scale back
our development of new video content. In 2008 we continued to develop and
distribute our content, but at a slower rate than in 2007, without maximizing
our sales potential in either year. Direct operating costs are comprised of
video production and distribution costs.
General
and Administrative:
General
and administrative expenses were $348,786 for the year ended December 31, 2008
compared to $322,911 for the year ended December 31, 2007, an increase of
$25,875 or approximately 8%. The increase in general and administrative expense
for the year ended December 31, 2008 compared to 2007 was comprised of
approximately $4,000 in professional fees, and $22,000 in marketing fees. The
increase was due to the Company’s increased efforts to try and promote the
Company.
Bad
debt:
Bad debt
expense was $8,400 for the year ended December 31, 2008 compared to $2,000 for
the year ended December 31, 2007, an increase of $6,400 or 31%. Bad debt expense
increased for the year ended December 31, 2008 compared to 2007 due to the write
off of specific uncollectible debts from a Company that that went out of
business in 2008. Accounts receivable are closely managed and there were no
significant unpaid accounts receivables in 2008.
Salaries
and wages:
Salaries
and wage expense was $318,611 for the year ended December 31, 2008 compared to
$565,816 for the year ended December 31, 2007, a decrease of $247,205 or 44%.
The Company recorded non-cash expenses for salaries and wages totaling $227,615
and $231,971, during the year ended December 31, 2008 and 2007, respectively.
The non-cash expenses consisted of the value of common stock, recorded at fair
value, issued to employees of $181,073 and $301,279 for the years ended December
31, 2008 and 2007, respectively, as well as, common stock options, recorded at
fair value of $46,542 and $-0- for the years ended December 31, 2008 and 2007,
respectively. Salaries and wage expenses decreased for the year ended December
31, 2008 compared to 2007 primarily because of a reduction in the issuance of
common stock options to employees in 2008.
Consulting
services:
Consulting
services expense was $168,614 for the year ended December 31, 2008 compared to
$724,277 for the year ended December 31, 2007, a decrease of $573,163 or 79%,
due to a reduced reliance on outside consultants in 2008. During the years ended
December 31, 2008 and 2007, the Company recorded non-cash expenses for
consulting services totaling $168,614 and $717,157. The non-cash expenses
consisted of the value of common stock and common stock options, recorded at
fair value, issued to service providers.
Rent:
Rent
expense was $76,046 for the year ended December 31, 2008 compared to $69,769 for
the year ended December 31, 2007, an increase of $6,277 or 15%. Rent expense
increased for the year ended December 31, 2008 compared to 2007 due to increases
in the monthly rental rates associated with the new lease
agreement.
Depreciation
and amortization:
Depreciation
and amortization expense was 4,934 for the year ended December 31, 2008 compared
to $29,702 for the year ended December 31, 2007, a decrease of $24,768 or 83%.
The decrease in depreciation and amortization for the year ended December 31,
2008 compared to 2007 was due to the disposal of fixed assets no longer in
service during 2007.
Net
Operating Loss:
Net
operating loss for the year ended December 31, 2008 was $828,221 or ($0.03) per
share compared to a net operating loss of $1,702,254 for the year ended December
31, 2007, or ($0.06) per share, a decrease of $874,033 or 51%. Net operating
loss decreased primarily as a result of our restructuring operations and
revamping cost saving measures which enabled us to greatly reduce our general
and administrative costs, and our reduction in non-cash compensation payments to
our Officers in 2008 compared to 2007.
Net
Loss:
The net
loss for the year ended December 31, 2008 was $779,949, compared to a net loss
of $1,797,432 for the year ended December 31, 2007, a decrease of net loss of
$1,017,483. Net loss decreased primarily as a result of our restructuring
operations and revamping cost saving measures which enabled us to greatly reduce
our general and administrative costs, and our reduction in non-cash compensation
payments to our Officers and consultants in 2008 compared to 2007.
LIQUIDITY
AND CAPITAL RESOURCES
The
following table summarizes total assets, accumulated deficit, stockholders’
equity and working capital at December 31, 2008 compared to December 31,
2007.
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
Total
Assets
|
|
$ |
46,353 |
|
|
$ |
104,944 |
|
|
|
|
|
|
|
|
|
|
Accumulated
(Deficit)
|
|
$ |
(15,899,164 |
) |
|
$ |
(15,119,215 |
) |
|
|
|
|
|
|
|
|
|
Stockholders’
Equity
|
|
$ |
(1,150,767 |
) |
|
$ |
(923,532 |
) |
|
|
|
|
|
|
|
|
|
Working
Capital (Deficit)
|
|
$ |
(1,127,450 |
) |
|
$ |
(583,531 |
) |
Our
principal source of operating capital has been provided from private sales of
our common stock, revenues from operations, and, to a limited extent, debt
financing. At December 31, 2008, we had a negative working capital position of
$(1,127,450). As we continue the shift in our business focus and attempt to
expand operational activities, we expect to continue to experience net negative
cash flows from operations in amounts not now determinable, and will be required
to obtain additional financing to fund operations through common stock offerings
and debt borrowings to the extent necessary to provide working capital. We have
and expect to continue to have substantial capital expenditure and working
capital needs. We do not now have funds sufficient to fund our operations at
their current level for the next 12 months. We need to raise additional cash to
fund our operations and implement our business plan. We expect that the
additional financing will (if available) take the form of a private placement of
equity, although we may be constrained to obtain additional debt financing in
lieu thereof. We are maintaining an on-going effort to locate sources of
additional funding, without which we will not be able to remain a viable entity.
No financing arrangements are currently under contract, and there are no
assurances that we will be able to obtain adequate financing. If we are able to
obtain the financing required to remain in business, eventually achieving
operating profits will require substantially increasing revenues or drastically
reducing expenses from their current levels or both. If we are able to obtain
the required financing to remain in business, future operating results depend
upon a number of factors that are outside of our control.
To
conserve on the Company's capital requirements, the Company has issued shares in
lieu of cash payments to employees and outside consultants, and the Company
expects to continue this practice in 2009. In 2008, the Company issued 5,224,773
shares of common stock and 1,200,000 shares of preferred stock valued at
$319,323 in lieu of cash payments to employees and outside consultants. The
Company is not now in a position to determine an approximate number of shares
that the Company may issue for the preceding purpose in 2009.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
Required
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The
information required by this Item is incorporated by reference to the financial
statements beginning on page F-1.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On
February 13, 2009, we dismissed Weaver & Martin, LLC and appointed M&K CPAS, PLLC, as our
independent accountants for the year ended December 31, 2008. This change in
accountants was recommended and approved by our Executive Management and Board
of Directors. M&K CPAS, PLLC
was engaged by the Registrant on February 13, 2009. During the most
recent two fiscal years and the portion of time preceding the decision to engage
M&K CPAS, PLLC, we have
not, nor has anyone engaged on our behalf, consulted with M&K CPAS, PLLC regarding (i)
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that may be rendered on the
Company’s financial statements, and M&K CPAS, PLLC did not
provide either in a written report or oral advice to the Company that was an
important factor considered by the Company in reaching a decision as to any
accounting, auditing, or financial reporting issue; or (ii) the subject of any
disagreement, as defined in Item 304 (a)(1)(v) of Regulation S-K and the related
instructions, or a reportable event within the meaning set forth in Item 304
(a)(1)(V) of Regulation S-K.
ITEM
9A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
and Procedures.
We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer, of the effectiveness
of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a
– 15(c) and 15d – 15(e)). Based upon that evaluation, our principal
executive officer concluded that, as of the end of the period covered in this
report, our disclosure controls and procedures were not effective to ensure that
information required to be
disclosed in reports filed under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the required time periods
and is accumulated and communicated to our management, including our principal
executive officer, as appropriate to allow timely decisions regarding required
disclosure.
Our
Principal Executive Officer does not expect that our
disclosure controls or internal controls will prevent all error and all fraud.
Although our disclosure controls and procedures were designed to provide
reasonable assurance of achieving their objectives and our principal executive
officer has determined
that our disclosure controls and procedures are effective at doing so, a control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute assurance that the objectives of the system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented if there exists in an individual a
desire to do so. There can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.
Furthermore,
smaller reporting companies face additional limitations. Smaller reporting
companies employ fewer individuals and find it difficult to properly segregate
duties. Often, one or two individuals control every aspect of the Company's
operation and are in a position to override any system of internal control.
Additionally, smaller reporting companies tend to utilize general accounting
software packages that lack a rigorous set of software controls.
Management’s
Annual Report on Internal Control over Financial Reporting.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a- 15(f) under the
Securities Exchange Act, as amended. Management, with the
participation of the Chief Executive, evaluated the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2008. In
making this assessment, management used the criteria set forth by the committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control – Integrated Framework. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the
company’s annual or interim financial statements will not be prevented or
detected on a timely basis. We have identified the following material
weaknesses:
|
1.
|
As
of December 31, 2008, we did not maintain effective controls over the
control environment. Specifically we have not developed and effectively
communicated to our employees its accounting policies and procedures. This
has resulted in
inconsistent practices. Further, the Board of Directors does not
currently have any independent members and no director qualifies as an
audit committee financial expert as defined in Item 407(d)(5)(ii) of
Regulation S-B. Since these entity level programs have a pervasive effect
across the organization, management has determined that these
circumstances constitute e a material
weakness.
|
|
2.
|
As
of December 31, 2008, we did not maintain effective controls over
financial statement disclosure. Specifically, controls were not designed
and in place to ensure that all disclosures required were originally
addressed in our financial
statements. Accordingly, management has determined that this
control deficiency constitutes a material
weakness.
|
|
3.
|
As
of December 31, 2008, we did not maintain effective controls over
financial reporting.
Specifically controls were not designed and in place to ensure that the
financial impact of certain complex equity transactions were appropriately
and correctly reported. The transactions were identified by the auditors
and calculated and reported correctly as of December 31,
2008.
|
Because
of these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2008 based on the criteria established in “Internal Control-Integrated
Framework” issued by the COSO.
Changes
in Internal Control over Financial Reporting
There
have been no changes in the Company’s internal control over financial reporting
through the date of this report or during the quarter ended December 31, 2008,
that materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Independent
Registered Accountant’s Internal Control Attestation
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
ITEM
9B. OTHER INFORMATION
None
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth the names and positions of our executive officers and
directors. Directors will be elected at our annual meeting of stockholders and
serve for one year or until their successors are elected and qualify. Officers
are elected by the Board and their terms of office are, except to the extent
governed by employment contract, at the discretion of the Board.
Name
|
|
Age
|
|
Position
|
|
Director
Since
|
Mark
Bradley
|
|
46
|
|
Chief
Executive Officer, Principal Financial Officer and
Director
|
|
1993
|
Michael
Berk
|
|
62
|
|
President
of Programming and Director
|
|
2000
|
Doug
Miller
|
|
63
|
|
Director
|
|
2005
|
Morden
C. Lazarus *
|
|
64
|
|
Director
|
|
2005
|
Terry
Joseph Debono *
|
|
51
|
|
Director
|
|
2005
|
Leonard
J. Parisi **
|
|
35
|
|
Director
|
|
2008
|
John
J. English **
|
|
47
|
|
Director
|
|
2008
|
*Resigned
December 8, 2008
**Appointed
December 8, 2008
Mark Bradley founded the
Company and has been its Chief Executive Officer and a director since 1993. Mr.
Bradley was a staff producer/director at United Artists where he produced
original programming and television commercials. In 1985 he created the Real
Estate Broadcast Network that was the first 24-hour real estate channel. In 1993
he founded Players Network. Mr. Bradley is a graduate of the Producers Program
at the University of California Los Angeles. Under his direction, Players
Network became the first user of a digital broadcast system for television
programming and the first private label gaming network. Mr. Bradley pioneered,
developed and executive produced the production of Players Network’s unique
gaming-centric programming. Mr. Bradley graduated from the UCLA producer’s
program and became a producer/director at United Artists, where he produced
original programming, television commercials, multi-camera music videos,
live-to-tape sports and a variety show and was studio manager and postproduction
supervisor with United Cable Television in Los Angeles. In this capacity he
engaged in the production, packaging and syndication of television and film
productions for such media venues as HBO, Nickelodeon, Prime Ticket and MTV. As
an independent producer/director, Mr. Bradley created and promoted live
pay-per-view events, negotiated entertainment programming distribution deals,
budgeted and packaged TV programming. In 1985, Mr. Bradley created the Real
Estate Broadcast Network, which was credited as being the first 24-hour real
estate channel.
Michael Berk has been a
director since 2000 and was appointed as the Company's president of programming
on March 22, 2005. He created and Executive Produced “Baywatch,” the most popular
series in television history, and is currently producing a large-budget “Baywatch” feature film for
DreamWorks. Mr. Berk wrote and produced the first three-hour movie ever made for
television, "The Incredible
Journey of Dr. Meg Laurel," the highest-rated movie of the year,
averaging a 42 share over three hours, "The Ordeal of Dr Mudd,"
another three-hour movie that received two Emmy Awards, "The Haunting Passion,"
winner of the Venice Film Festival Award and "The Last Song," recipient of
the Edgar Allan Poe Award for Mystery Writing. Mr. Berk is also a significant
figure in the Las Vegas community. He was a founding Board Member and President
of the highly acclaimed “CineVegas” Film Festival, now in its sixth year at the
Palms Hotel, and was recognized with the prestigious Las Vegas Chamber of
Commerce Community Achievement Award in the category of Entertainment. He also
received the Nevada Film Office/Las Vegas Film Critics Society Silver Spike
Award for his contributions to the film and television industry in Nevada. Mr.
Berk maintains offices both in Hollywood and in Las Vegas.
Douglas R. Miller has been a
member of the Board of Directors of the Company since 2005. Mr. Miller has
served as President, Chief Operating Officer, Secretary and a director of GWIN,
Inc., a publicly traded media and entertainment company focused on sports and
gaming, since its reorganization in July 2001. Mr. Miller has also served as
Gwin’s Chief Financial Officer from November 2001 to April 2003. From 1999 to
2001, Mr. Miller served as President of Gwin’s subsidiary, Global Sports Edge,
Inc. From 1998 to 1999, Mr. Miller was the Chief Financial Officer of Body Code
International, an apparel manufacturer. Mr. Miller holds a B.A. degree in
economics from the University of Nebraska, and an MBA degree from Stanford
University. Mr. Miller serves on the compensation committee of the Company’s
Board of Directors.
Morden C. Lazarus has been a
member of the Board of Directors of the Company since 2005. Mr. Lazarus has been
a principal of the Montreal law firm of Lazarus, Charbonneau since 1967. Mr.
Lazarus currently serves as President of the International Association of Gaming
Attorneys, for which he has been a member of the Board of Trustees since 1993
and General Counsel since 2001. He was also appointed as Chair of the Gaming Law
Committee of the American Bar Association on September 30, 2004. Mr. Lazarus is
also Chairman and Chief Executive Officer of ISee3D Inc., company whose shares
are publicly traded on the TSX Venture Exchange (a subsidiary of the Toronto
Stock Exchange). He is a member of the Board of Directors of DPC Biosciences
Corporation (a company whose shares are also traded on the TSX Venture
Exchange), and Anchor Gaming (Canada) Inc. (a subsidiary of International Game
Technology, a NYSE-traded company). Mr. Lazarus received his law degree from
McGill University in Montreal. Mr. Lazarus does not currently serve on any
committee of our Board of Directors and is not expected at this time to serve on
any such committee in the foreseeable future.
Terry Joseph Debono was
appointed a member of the Board of Directors of the Company on June 18, 2007.
Mr. Debono has been in the Advertising, Marketing, Television Production,
Broadcasting and Gaming industries for nearly 30 years. His past roster of
clients include MTV, Coca-Cola, General Motors, Budweiser, Nintendo, The
Ontario Lottery and Gaming Corporation and Party Gaming. Mr. Debono has created,
founded, managed, merged, acquired and sold a variety of
business operations involved in the media industry. From April 2006 to
April 2008 Mr. Debono has been a partner with The Debono Group, a media
consulting company. From September 1999 to March 2006 Mr. Debono was the
President of Boardwalk Media, a television and video production company.
Mr. Debono brings integral management skills and an in-depth knowledge of
business operations to Players Network
Leonard J. Parisi currently
serves as Senior Vice President, and partner of Maxim Group LLC, a privately
held financial services firm specializing in investment banking, equity research
& private wealth management. Maxim Group is also registered as a
broker-dealer with the U.S. Securities and Exchange Commission and is a member
of the following: Financial Industry Regulatory Authority (FINRA); Municipal
Securities Rulemaking Board (MSRB); Securities Insurance Protection Corporation
(SIPC); International Securities Exchange (ISE); NASDAQ Stock Market; and NYSE
Arca, Inc. Mr. Parisi has been in the financial services sector for 15 years,
working for firms such as Paine Webber, Barington Capital, Josephthal, and
Investec Ernst & Co. Mr. Parisi graduated Rutgers University with a BS in
Finance, and has a MBA in Financial Management from Southern California
University. Mr. Parisi currently holds licenses in Series 7, 63, 65 and both his
life and health insurance licenses.
John J. English has
served as Las Vegas Gaming, Inc’s Senior Vice President of Creative and Business
Development since 2004. His duties include sports, race, and poker as well as
alternative content development. From 1983-1990, Mr. English was the President
of Lottery Division of Winners Award Center. In 1990, Mr. English co-founded
Pinpoint Direct Incorporated, which became one of the largest direct mail
sweepstakes and gaming providers in the world. In 1998, Mr. English founded
Multimedia Enterprises, which produced innovative gaming content, and Mailworks
International, which provided printing and production services. These companies
maintained distribution offices in Nevada, Arizona, California, New York,
Canada, and Holland. In 2000 Mr. English created Sports Bet Xpress, the first
ever Nevada Gaming Control Board approved remote sports wagering system for
bars, taverns and restaurants. Subsequently, Mr. English co-created Gamblers
Bonus Million Dollar Ticket, the first million dollar jackpot game to be
distributed to restricted gaming locations. Mr. English has created successful
partnering ventures with United Coin Machine Company, American Wagering, Inc.,
VirtGame Corporation, Chan Poker, Harrah’s Entertainment, and MGM
Mirage.
Limitation
of Liability of Directors
Pursuant
to the Nevada General Corporation Law, our Articles of Incorporation exclude
personal liability for our Directors for monetary damages based upon any
violation of their fiduciary duties as Directors, except as to liability for any
breach of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or any transaction
from which a Director receives an improper personal benefit. This exclusion of
liability does not limit any right which a Director may have to be indemnified
and does not affect any Director's liability under federal or applicable state
securities laws. We have agreed to indemnify our directors against expenses,
judgments, and amounts paid in settlement in connection with any claim against a
Director if he acted in good faith and in a manner he believed to be in our best
interests.
Election
of Directors and Officers
Directors
are elected to serve until the next annual meeting of stockholders and until
their successors have been elected and qualified. Officers are appointed to
serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No
Executive Officer or Director of the Corporation has been the subject of any
Order, Judgment, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring, suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry. Or as an affiliated person, director or
employee of an investment company, bank, savings and loan association. Also an
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No
Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding, which is currently pending.
No
Executive Officer or Director of the Corporation is the subject of any pending
legal proceedings.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires our executive officers and directors, and persons who beneficially own
more than ten percent of our common stock, to file initial reports of ownership
and reports of changes in ownership with the SEC. Executive officers, directors
and greater than ten percent beneficial owners are required by SEC regulations
to furnish us with copies of all Section 16(a) forms they file. To our
knowledge, we believe that during 2008 our Directors and executive officers did
not comply with all Section 16(a) filing requirements. Specifically, Mr.
Bradley and Mr. Berk and failed to file Form 4s with respect to the
issuance of Common and Series A Preferred shares for 2008 and Options issued to
the officers for that were granted for prior years. On February 17,
2009 the officers filed Form 5’s to reflect these issuances. Doug
Miller failed to file Form 4’s with respect to the issuance of Common shares and
Options that were granted during 2008. Modern Lazarus failed to file Form
4’s with respect to the issuance of Common shares and Options that were granted
during 2008. Terry Debono failed to file Form 4’s with respect to the
issuance of Common shares and Options that were granted during
2008. Leonard J. Parisi and John J. English were appointed on
December 8, 2008. Form 3’s were not filed with respect to the
issuance of Common shares that were granted to them.
Audit
Committee
We do not
have an Audit Committee, our board of directors acted as the Company's Audit
Committee during fiscal 2008, recommending a firm of independent certified
public accountants to audit the annual financial statements; reviewing the
independent auditors' independence, the financial statements and their audit
report; and reviewing management's administration of the system of internal
accounting controls. The Company does not currently have a written audit
committee charter or similar document.
Our board
of directors has determined that if we were required to have a financial expert
and/or an audit committee, Doug Miller, a Director, would be considered an
“audit committee financial expert,” as defined by applicable Commission rules
and regulations. Based on the definition of “independent” applicable to audit
committee members of Nasdaq-traded companies, our board of directors has further
determined that Mr. Miller is considered to be “independent.”
Code
of Ethics
A code of
ethics relates to written standards that are reasonably designed to deter
wrongdoing and to promote:
·
|
Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
·
|
Full,
fair, accurate, timely and understandable disclosure in reports and
documents that are filed with, or submitted to, the Commission and in
other public communications made by an issuer;
|
·
|
Compliance
with applicable governmental laws, rules and
regulations;
|
·
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and
|
·
|
Accountability
for adherence to the code.
|
On April
7, 2004, the Company adopted a Code of Ethics that applies to the Company's
principal executive officer, principal financial officer and principal
accounting officer. Anyone can obtain a copy of the Code of Ethics by contacting
the Company at the following address: 4620 Polaris Avenue Las Vegas, Nevada
89103, attention: Chief Executive Officer, telephone: (702) 895-8884. The first
such copy will be provided without charge. The Company will post any amendments
to the Code of Ethics, as well as any waivers that are required to be disclosed
by the rules of either the Securities and Exchange Commission or the National
Association of Dealers.
Nominating
Committee
We do not
have a Nominating Committee or Nominating Committee Charter. Our board of
directors performed some of the functions associated with a Nominating
Committee. We have elected not to have a Nominating Committee in that we are
continuously updating our operations and have limited resources with which to
establish additional committees of our board of directors.
Compensation
Committee
At this
time, Mr. Miller is the only member of the committee and has performed in his
role by reviewing our employment agreements with Mr. Bradley and Mr. Berk. The
board of directors intends to add additional members to the compensation
committee and expects it to consist of solely of independent members. Until more
members are appointed to the compensation committee, our entire board of
directors will review all forms of compensation provided to any new executive
officers, directors, consultants and employees, including stock compensation and
options.
ITEM
11. EXECUTIVE COMPENSATION
The
following table sets forth certain information relating to all compensation of
our named executive officers for services rendered in all capacities to the
Company during the years ended December 31, 2008, 2007 and 2006:
Summary
Compensation Table
Name
and
Principal
Position
(a)
|
Year
(b)
|
|
Salary
(c)
$
|
|
|
Stock
Awards
(e)(1)
$
|
|
|
Option
Awards
(f)(1)
$
|
|
|
All
Other Compensation
$
|
|
|
Total
Compensation
$
|
|
Mark
Bradley, CEO
|
2008
|
|
$ |
121,847 |
|
|
$ |
73,360 |
|
|
$ |
25,598 |
|
|
$ |
-0- |
|
|
$ |
220,805 |
|
|
2007
|
|
$ |
94,794 |
|
|
$ |
135,206 |
|
|
$ |
30,821 |
|
|
$ |
-0- |
|
|
$ |
260,821 |
|
|
2006
|
|
$ |
76,500 |
|
|
$ |
118,100 |
|
|
$ |
94,217 |
|
|
$ |
-0- |
|
|
$ |
288,817 |
|
Michael
Berk, President of Programming
|
2008
|
|
$ |
84,238 |
|
|
$ |
102,615 |
|
|
$ |
25,598 |
|
|
$ |
-0- |
|
|
$ |
212,451 |
|
|
2007
|
|
$ |
90,376 |
|
|
$ |
139,624 |
|
|
$ |
30,821 |
|
|
$ |
-0- |
|
|
$ |
260,821 |
|
|
2006
|
|
$ |
37,850 |
|
|
$ |
127,833 |
|
|
$ |
94,217 |
|
|
$ |
-0- |
|
|
$ |
259,900 |
|
(1) The
amounts in columns (e) and (f) reflect the dollar amount recognized for
financial statement reporting purposes for the years ended December 31, 2008,
2007 and 2006, in accordance with SFAS 123(R) of awards of stock and stock
options and thus include amounts from awards granted in and prior to 2006.
Assumptions used in the calculation of this amount are included in Note 3 of our
audited financial statements for the fiscal year ended December 31, 2008
included in Part II, Item 7, Financial Statements and Supplementary Data of this
Annual Report on Form 10-K.
Employment
Agreements
In 2006
we employed Mr. Bradley under an extension of his employment agreement. This
agreement provides that Mr. Bradley is entitled to receive an annual salary of
$150,000. Provided that established criteria are met, Mr. Bradley is also
entitled to 10% of all royalties that we receive from sources directly resulting
from his efforts. He is also entitled to participate in any and all employee
benefit plans established for the employees of the Company. The employment
agreement confers upon Mr. Bradley a right of first refusal with respect to any
proposed sale of all or a substantial portion of the Company's assets. The
employment agreement does not contain a covenant not to compete preventing Mr.
Bradley from competing with the Company after the termination of the employment
agreement.
On
January 1, 2005, we entered into a five-year employment agreement with Mr.
Michael Berk, our President of Programming pursuant to which we agreed to pay
Mr. Berk an annual salary of $150,000 plus 10% of all royalties that we receive
from sources directly resulting from his efforts.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information with respect to the value of all
unexercised options previously awarded to the Named Executive Officers at the
fiscal year ended December 31, 2008.
Name
(a)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)(1)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
|
Option
Exercise
Price
($)
(e)
|
|
Option
Expiration
Date
(f)
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
(f)
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(g)
|
Mark
Bradley
|
|
|
250,000
|
|
—
|
|
|
0.25
|
|
2/25/2009
|
|
|
—
|
|
—
|
|
|
|
250,000
|
|
—
|
|
|
0.20
|
|
02/15/2011
|
|
|
—
|
|
—
|
|
|
|
25000
|
|
—
|
|
|
0.20
|
|
02/15/2011
|
|
|
—
|
|
—
|
Michael
Berk
|
|
|
250,000
|
|
—
|
|
|
0.25
|
|
2/25/2009
|
|
|
—
|
|
—
|
|
|
|
250,000
|
|
—
|
|
|
0.20
|
|
02/15/2011
|
|
|
—
|
|
—
|
|
|
|
25,000
|
|
—
|
|
|
0.20
|
|
02/15/2011
|
|
|
—
|
|
—
|
(1) The
options were fully vested on the date of grant.
Termination
of Employment
Mr.
Bradley and Mr. Berk are each parties to employment agreements with the Company
that provide for severance benefits in the event their employment is terminated
by the Company (other than as a result of death or for cause) or by the employee
as a result of a material breach by the Company of the employment agreement. In
the event of such termination, the employee will be entitled to his base salary
and all benefits for the remainder of the term of the employment agreement plus
a lump sum cash payment in an amount equal to two times his then current base
salary and annual bonus (without regard to the performance requirements
associated with such bonus). In addition, all outstanding stock options will be
immediately vested. If the employee or his family is ineligible under the terms
of any insurance to continue to be covered, the Company will either provide
substantially equivalent coverage or pay the employee a lump sum payment equal
to the value of the continuation of such insurance coverage.
Director
Compensation
The table
below summarizes the compensation that we paid to non-employee directors for the
years ended December 31, 2008.
Name
(a)
|
|
Year
|
|
Stock Awards
($)
(c)
|
|
|
Option
Awards
($)
(d)
|
|
|
All Other
Compensation
($)
(g)(1)
|
|
|
Total
($)
(h)
|
|
Doug
Miller (1)
|
|
2008
|
|
$ |
-0- |
|
|
$ |
2,327 |
|
|
$ |
-0- |
|
|
$ |
2,327 |
|
Morden
C. Lazarus (2)
|
|
2008
|
|
$ |
-0- |
|
|
$ |
2,327 |
|
|
$ |
-0- |
|
|
$ |
2,327 |
|
Terry
Debono (3)
|
|
2008
|
|
$ |
10,000 |
|
|
$ |
11,635- |
|
|
$ |
-0- |
|
|
$ |
21,635 |
|
Leonard
J. Parisi (4)
|
|
2008
|
|
$ |
-0- |
|
|
$ |
3,000 |
|
|
$ |
-0- |
|
|
$ |
3,000 |
|
John
J. English (5)
|
|
2008
|
|
$ |
-0- |
|
|
$ |
3,000 |
|
|
$ |
-0- |
|
|
$ |
3,000 |
|
The
amounts in columns (c) and (d) reflect the dollar amount recognized for
financial statement reporting purposes for the years ended December 31, 2008, in
accordance with SFAS 123(R) of awards of stock and stock options and thus
include amounts from awards granted in and prior to 2008. Assumptions used in
the calculation of this amount are included in Note 3 of our audited financial
statements for the year ended December 31, 2008 included in Part II, Item 8,
Financial Statements and Supplementary Data of this Annual Report on Form
10-K.
(1) On
February 15, 2008 the Company granted Doug Miller cashless options to purchase
25,000 shares of its common stock in exchange for services rendered as a
director. The options carry an exercise price of $0.20 per share, exercisable
over 36 months from the grant date.
(2) On
February 15, 2008 the Company granted former director, Morden Lazarus cashless
options to purchase 25,000 shares of its common stock in exchange for services
rendered as a director. The options carry an exercise price of $0.20 per share,
exercisable over 36 months from the grant date.
(3) On
February 13, 2008 the Company issued 100,000 shares of common stock to its
former director, Terry Debono for consulting services. On February 15, 2008 the
Company granted former director, Terry Debono cashless options to purchase
100,000 shares of its common stock in exchange for services at an exercise price
of $0.20 per share, exercisable over 36 months from the grant
date. On February 15, 2008 the Company granted former director, Terry
Debono cashless options to purchase 25,000 shares of its common stock in
exchange for services rendered as a director. The options carry an exercise
price of $0.20 per share, exercisable over 36 months from the grant
date.
(4) On
December 8, 2008 the Company issued 100,000 shares of common stock as
compensation for service on the board of directors to Leonard
Parisi.
(5) On
December 8, 2008 the Company issued 100,000 shares of common stock as
compensation for service on the board of directors to John English.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The
following table presents information, to the best of our knowledge, about the
beneficial ownership of our common stock on April 9, 2009, held by those persons
known to beneficially own more than 5% of our capital stock and by our directors
and executive officers.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the stockholder has sole or shared voting or
investment power. It also includes (unless footnoted) shares of common stock
that the stockholder has a right to acquire within 60 days after April 9, 2009
through the exercise of any option, warrant or other right. The percentage
ownership of the outstanding common stock, however, is based on the assumption,
expressly required by the rules of the Securities and Exchange Commission, that
only the person or entity whose ownership is being reported has converted
options or warrants into shares of our common stock. Unless otherwise indicated,
the address of each listed stockholder is c/o Players Network, 4620 Polaris
Avenue, Las Vegas, NV 89103.
|
|
Common
Stock
|
|
Series
A Preferred Stock
|
|
Name
of Beneficial Owner (1)
|
|
Number
of
Shares
|
|
Percentage
of
Class(2)
|
|
Number
of
Shares
|
|
Percentage
of
Class(3)
|
|
Mark
Bradley, CEO and Director
|
|
|
7,215,252
|
(4)
|
19
|
%
|
1,000,000
|
|
|
50
|
%
|
Michael
Berk, President of Programming and Director
|
|
|
4,441,438
|
(5)
|
11.7
|
%
|
1,000,000
|
|
|
50
|
%
|
Doug
Miller, Director
|
|
|
220,000
|
(6)
|
*
|
|
-
|
|
|
-
|
|
Morden
C. Lazarus, Director
|
|
|
157,000
|
(7)
|
*
|
|
-
|
|
|
-
|
|
Terry
J. Debono, Director
|
|
|
468,000
|
(8)
|
1.2
|
%
|
-
|
|
|
-
|
|
Leonard
Parisi
|
|
|
150,000
|
|
*
|
|
|
|
|
|
|
John
English
|
|
|
150,000
|
|
*
|
|
|
|
|
|
|
Lyle
A Berman Revocable Trust (9)
|
|
|
2,045,000
|
|
5.4
|
%
|
|
|
|
|
|
Directors
and Officers as a Group (7 persons)
|
|
|
15,027,690
|
(10)
|
33.9
|
%
|
2,000,000
|
|
|
100
|
%
|
* less
than 1%
(1)
Except as indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock or Series A
Preferred Stock owned by such person.
(2)
Percentage of beneficial ownership is based upon 37,865,701 shares of Common
Stock outstanding as of April 9, 2009. For each named person, this percentage
includes Common Stock that the person has the right to acquire either currently
or within 60 days of April 9, 2009, including through the exercise of an option;
however, such Common Stock is not deemed outstanding for the purpose of
computing the percentage owned by any other person.
(3)
Percentage of beneficial ownership is based upon 2,000,000 shares of Series A
Preferred Stock outstanding as of April 9, 2009.
(4)
Includes stock options to purchase 1,125,000 shares of Common Stock exercisable
within 60 days of April 9, 2009 and 25,000 shares held for the benefit of Mr.
Bradley’s minor daughter.
(5)
Includes (i) 377,333 shares held by MJB Productions, which is 100% owned by Mr.
Berk, and (ii) options to purchase 1,225,000 shares of Common Stock exercisable
within 60 days of April 9, 2009.
(6)
Includes options to purchase 75,000 shares of Common Stock exercisable within 60
days of April 9, 2009.
(7)
Includes options to purchase 41,000 shares of Common Stock exercisable within 60
days of April 9, 2009.
(8)
Includes options to purchase 175,000 shares of Common Stock exercisable within
60 days April 9, 2009, and includes 34,000 warrants exercisable for 34,000
shares of Common Stock exercisable within 60 days of April 9, 2009.
(9) As
set forth in the Schedule 13G/A filed with the SEC on January 15,
2009.
(10)
Includes options and warrants exercisable for 2,675,000 shares of Common Stock
within 60 days April 9, 2009.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The
Company rented the Company’s soundstage to GWIN, Inc., a company controlled by
David Miller, a director of the Company, for $5,800 and $31,875 during the years
ended 2008 and 2007, respectively.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The
following table shows the fees paid or accrued for the audit and other services
provided by our independent auditors for 2008 and 2007.
|
|
2008
|
|
|
2007
|
|
Audit
fees:
|
|
|
|
|
|
|
Weaver
& Martin, LLC
|
|
$ |
20,000 |
|
|
$ |
13,500 |
|
M&K CPAS,
PLLC
|
|
|
— |
|
|
|
— |
|
Audit-related
fees:
|
|
|
— |
|
|
|
— |
|
Weaver
& Martin, LLC
|
|
|
9,000 |
|
|
|
12,000 |
|
M&K CPAS,
PLLC
|
|
|
— |
|
|
|
— |
|
Tax
fees:
|
|
|
— |
|
|
|
— |
|
All
other fees:
|
|
|
— |
|
|
|
— |
|
Total
fees paid or accrued to our principal accountant
|
|
$ |
29,000 |
|
|
$ |
25,500 |
|
We do not
have an Audit Committee. Our board of directors acted as the Company's Audit
Committee during fiscal 2008, recommending a firm of independent certified
public accountants to audit the annual financial statements; reviewing the
independent auditors’ independence, the financial statements and their audit
report; and reviewing management's administration of the system of internal
accounting controls.
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
3.1(1)
|
Articles
of Incorporation, filed with the Commission on February 7,
2000.
|
|
|
3.2(1)
|
Bylaws
of the Company, filed with the Commission on February 7,
2000.
|
|
|
3.3(4)
|
Certificate
of Amendment of Articles of Incorporation adopting name change to Players
Network filed with the Nevada Secretary of State on June 9,
1994.
|
|
|
3.4(5)
|
Certificate
of Amendment of Articles of Incorporation Increasing the Authorized Stock
filed June 4, 2007
|
|
|
4.1(2)
|
2004
Non-Qualified Stock Option Plan.
|
|
|
4.2(3)
|
2006
Non-Qualified Attorneys & Accountants Stock Compensation
Plan.
|
|
|
4.3
(6)
|
Certificate
of Designation for Series A Preferred Stock filed July 24,
2007.
|
|
|
10.1(4)
|
Distribution
Agreement between the Company and Comcast Programming Development, Inc.
dated October 10, 2005. **
|
|
|
10.2(4)
|
Employment
Agreement dated January 1, 2005 for Mark Bradley
Feldgreber.
|
|
|
10.3(4)
|
Employment
Agreement dated January 1, 2005 for Michael Berk.
|
|
|
10.4(7)
|
Subscription
Agreement dated as of October 10, 2007 by and between the Company and
Timothy Sean Shiah
|
|
|
10.5(8)
|
Distribution
Agreement dated June 5, 2008, between Players Network and MicroPlay, Inc.
**
|
|
|
23.1*
|
Consent
of Weaver & Martin LLC.
|
|
|
31.1*
|
Certification
of Mark Bradley, CEO and Principal Accounting Officer pursuant to Section
302 of the Sarbanes-Oxley Act.
|
|
|
32.1*
|
Certification
of Mark Bradley, CEO and Principal Accounting Officer pursuant to Section
906 of the Sarbanes-Oxley Act.
|
* Filed
herewith
**
Confidential Treatment Requested
(1) Filed as an exhibit to the Company’s
Registration Statement on Form 10-SB filed with the Commission on February 7,
2000.
(2) Filed as an exhibit to the Company's
Registration Statement on Form S-8 filed with the Commission on September 13,
2004.
(3) Filed as an exhibit to the Company's
Registration Statement on Form S-8 filed with the Commission on January 18,
2007.
(4) Filed as an exhibit to the Company's
Form 10-KSB filed with the Commission on April 13, 2007.
(5) Filed as an exhibit to the Company's
Form 8-K filed with the Commission on June 8, 2007.
(6) Filed as an exhibit to the Company's
Form 8-K filed with the Commission on July 26, 2007.
(7) Filed as an exhibit to the Company's
Form 8-K filed with the Commission on December 5, 2007.
(8) Filed as an exhibit to the Company's
Form 8-K filed with the Commission on June 12, 2008
Index to
Financial Statements
Reports
of Independent Registered Public Accounting Firm
|
|
F-1
|
|
|
|
Balance
Sheets as of December 31, 2008 and 2007
|
|
F-3
|
|
|
|
Statements
of Operations for the years ended December 31, 2008 and
2007
|
|
F-4
|
|
|
|
Statements
of Changes in Stockholders' Equity (Deficit) for the years ended December
31, 2008 and 2007
|
|
F-5
|
|
|
|
Statements
of Cash Flow for the years ended December 31, 2008 and
2007
|
|
F-6
|
|
|
|
Notes
to Financial Statements
|
|
F-7
|
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of
Directors
Players
Network
We have audited the accompanying balance
sheet of Players Network as of December 31, 2008 and the related statements of
operations, changes in stockholders' equity (deficit), 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
consolidated financial statements based on our audits. The financial statements
for the period of December 31, 2007 were audited by other auditors whose report
expressed an unqualified opinion on those statements.
We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit 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 Players Network as of December 31, 2008, and the results of its
operations, changes in stockholders' equity (deficit) and cash flows for the
periods then in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 2 to the financial statements, the Company has insufficient
working capital, which raises substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters also are described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ M&K CPAS,
PLLC
www.mkacpas.com
Houston, Texas
April 14,
2009
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and
Stockholders
Players Network
Las Vegas, Nevada
We have audited the accompanying balance
sheets of Players Network, as of December 31, 2007 and the related statements of
operations, stockholders’ equity, and cash flows for the years then ended.
Players Network’s management is responsible for these financial
statements. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. Our audit of the
financial statements include examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and 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 Players Network as of December 31, 2007, and the results of its
operations, stockholders’ equity, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial statements, the
Company has suffered recurring losses from operations. This factor
raises substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans with regard to these matters are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Weaver & Martin,
LLC
Kansas City,
Missouri
March 30, 2008
|
Certified Public Accountants &
Consultants
|
|
411 Valentine, Suite
300
|
|
Kansas City, Missouri
64111
|
|
Phone: (816)
756-5525
|
|
Fax: (816)
756-2252
|
Players
Network
|
|
Balance
Sheets
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
- |
|
|
$ |
69,959 |
|
Accounts
receivable, net of allowance for doubtful
|
|
|
|
|
|
|
|
|
accounts
of $5,000 and $32,947 as of
|
|
|
|
|
|
|
|
|
December
31, 2008 and 2007, respectively
|
|
|
44,670 |
|
|
|
17,852 |
|
Prepaid
expenses and other current assets
|
|
|
- |
|
|
|
11,839 |
|
Total
current assets
|
|
|
44,670 |
|
|
|
99,650 |
|
|
|
|
|
|
|
|
|
|
Fixed
assets, net
|
|
|
1,683 |
|
|
|
5,294 |
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
46,353 |
|
|
$ |
104,944 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Checks
written in excess of available funds
|
|
$ |
2,176 |
|
|
$ |
- |
|
Deferred
revenues
|
|
|
- |
|
|
|
33,333 |
|
Accounts
payable
|
|
|
393,090 |
|
|
|
341,675 |
|
Accrued
expenses
|
|
|
353,551 |
|
|
|
303,173 |
|
Current
maturities of long term debt, net of discount of $26,297
|
|
|
|
|
|
|
|
|
and
$-0- at December 31, 2008 and 2007, respectively
|
|
|
423,303 |
|
|
|
5,000 |
|
Total
current liabilities
|
|
|
1,172,120 |
|
|
|
683,181 |
|
|
|
|
|
|
|
|
|
|
Long
Term Debt, net of discount of $-0- and $84,705
|
|
|
|
|
|
|
|
|
at
December 31, 2008 and 2007, respectively
|
|
|
25,000 |
|
|
|
345,295 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
1,197,120 |
|
|
|
1,028,476 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value, 2,000,000 shares
|
|
|
|
|
|
|
|
|
authorized;
2,000,000 and 800,000 shares issued
|
|
|
|
|
|
|
|
|
and
outstanding at December 31, 2008 and 2007
|
|
|
2,000 |
|
|
|
800 |
|
Common
stock, $0.001 par value, 150,000,000 shares
|
|
|
|
|
|
|
|
|
authorized;
35,092,342 and 29,267,569 shares issued
|
|
|
|
|
|
|
|
|
and
outstanding at December 31, 2008 and 2007
|
|
|
35,092 |
|
|
|
29,267 |
|
Additional
paid-in capital
|
|
|
14,711,305 |
|
|
|
14,165,616 |
|
Accumulated
(deficit)
|
|
|
(15,899,164 |
) |
|
|
(15,119,215 |
) |
Total
Stockholders’ Equity (Deficit)
|
|
|
(1,150,767 |
) |
|
|
(923,532 |
) |
Total
Liabilities and Stockholders’ Equity (Deficit)
|
|
$ |
46,353 |
|
|
$ |
104,944 |
|
The
accompanying notes are an integral part of the financial
statements.
Players
Network
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
For
the years ended
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
|
|
|
|
|
Network
|
|
$ |
54,864 |
|
|
$ |
62,577 |
|
Production
and other
|
|
|
244,641 |
|
|
|
263,582 |
|
Total
revenue
|
|
|
299,505 |
|
|
|
326,159 |
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Direct
operating costs
|
|
|
202,335 |
|
|
|
313,938 |
|
General
and administrative
|
|
|
348,786 |
|
|
|
322,911 |
|
Bad
debt
|
|
|
8,400 |
|
|
|
2,000 |
|
Officer
salaries and wages
|
|
|
257,281 |
|
|
|
460,000 |
|
Salaries
and wages
|
|
|
61,330 |
|
|
|
105,816 |
|
Consulting
services
|
|
|
168,614 |
|
|
|
724,277 |
|
Rent
|
|
|
76,046 |
|
|
|
69,769 |
|
Depreciation
and amortization
|
|
|
4,934 |
|
|
|
29,702 |
|
Total
operating expenses
|
|
|
1,127,726 |
|
|
|
2,028,413 |
|
|
|
|
|
|
|
|
|
|
Net
operating (loss)
|
|
|
(828,221 |
) |
|
|
(1,702,254 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(89,434 |
) |
|
|
(90,226 |
) |
Financing
costs
|
|
|
- |
|
|
|
(63,203 |
) |
Loss
on disposal of fixed assets
|
|
|
- |
|
|
|
(31,477 |
) |
Forgiveness
of debt
|
|
|
137,706 |
|
|
|
89,728 |
|
Total
other income (expense)
|
|
|
48,272 |
|
|
|
(95,178 |
) |
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(779,949 |
) |
|
$ |
(1,797,432 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
|
|
|
shares
outstanding - basic and fully diluted
|
|
|
31,391,891 |
|
|
|
26,330,539 |
|
|
|
|
|
|
|
|
|
|
Net
(loss) per share - basic and fully diluted
|
|
$ |
(0.02 |
) |
|
$ |
(0.07 |
) |
The
accompanying notes are an integral part of the financial
statements.
Players
Network
|
Statements
of Changes in Stockholders' Equity
(Deficit)
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Additional
|
|
|
Stockholders'
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Owed
&
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Unissued
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
- |
|
|
$ |
- |
|
|
|
22,209,351 |
|
|
$ |
22,209 |
|
|
$ |
1,277 |
|
|
$ |
12,409,417 |
|
|
$ |
(13,321,783 |
) |
|
$ |
(888,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
cash
|
|
|
- |
|
|
|
- |
|
|
|
2,481,333 |
|
|
|
2,481 |
|
|
|
- |
|
|
|
469,719 |
|
|
|
- |
|
|
|
472,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
services
|
|
|
- |
|
|
|
- |
|
|
|
2,547,403 |
|
|
|
2,548 |
|
|
|
(610 |
) |
|
|
406,586 |
|
|
|
- |
|
|
|
408,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for compensation,
related party
|
|
|
800,000 |
|
|
|
800 |
|
|
|
1,852,313 |
|
|
|
1,852 |
|
|
|
(667 |
) |
|
|
345,844 |
|
|
|
- |
|
|
|
347,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted for
services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
311,235 |
|
|
|
- |
|
|
|
311,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted for services,
related party
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
79,035 |
|
|
|
- |
|
|
|
79,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants extended, financing
cost
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
63,203 |
|
|
|
- |
|
|
|
63,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt
conversion
|
|
|
- |
|
|
|
- |
|
|
|
177,169 |
|
|
|
177 |
|
|
|
- |
|
|
|
26,398 |
|
|
|
- |
|
|
|
26,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prepaid
share-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
54,179 |
|
|
|
- |
|
|
|
54,179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,797,432 |
) |
|
|
(1,797,432 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
800,000 |
|
|
$ |
800 |
|
|
|
29,267,569 |
|
|
$ |
29,267 |
|
|
$ |
- |
|
|
$ |
14,165,616 |
|
|
$ |
(15,119,215 |
) |
|
$ |
(923,532 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based
compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
96,826 |
|
|
|
- |
|
|
|
96,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
services
|
|
|
- |
|
|
|
- |
|
|
|
2,989,500 |
|
|
|
2,990 |
|
|
|
- |
|
|
|
135,261 |
|
|
|
- |
|
|
|
138,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
compensation
|
|
|
1,200,000 |
|
|
|
1,200 |
|
|
|
2,235,273 |
|
|
|
2,235 |
|
|
|
- |
|
|
|
177,638 |
|
|
|
- |
|
|
|
181,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
debt
|
|
|
- |
|
|
|
- |
|
|
|
600,000 |
|
|
|
600 |
|
|
|
- |
|
|
|
38,400 |
|
|
|
- |
|
|
|
39,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted for
services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
51,022 |
|
|
|
- |
|
|
|
51,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted for compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
46,542 |
|
|
|
- |
|
|
|
46,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(779,949 |
) |
|
|
(779,949 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
2,000,000 |
|
|
$ |
2,000 |
|
|
|
35,092,342 |
|
|
$ |
35,092 |
|
|
$ |
- |
|
|
$ |
14,711,305 |
|
|
$ |
(15,899,164 |
) |
|
$ |
(1,150,767 |
) |
The
accompanying notes are an integral part of the financial
statements.
Players
Network
|
|
Statements
of Cash Flows
|
|
|
|
For
the years ended
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(779,949 |
) |
|
$ |
(1,797,432 |
) |
Adjustments
to reconcile net (loss) to
|
|
|
|
|
|
|
|
|
net
cash (used) by operating activities:
|
|
|
|
|
|
|
|
|
Bad
debts expense
|
|
|
8,400 |
|
|
|
2,000 |
|
Depreciation
and amortization expense
|
|
|
4,934 |
|
|
|
29,701 |
|
Loss
on disposal of fixed assets
|
|
|
- |
|
|
|
31,477 |
|
Forgiveness
of debt
|
|
|
(137,706 |
) |
|
|
(89,728 |
) |
Amortization
of beneficial conversion feature
|
|
|
58,408 |
|
|
|
55,168 |
|
Stock
based compensation
|
|
|
96,826 |
|
|
|
- |
|
Stock
issued for services
|
|
|
138,251 |
|
|
|
408,524 |
|
Stock
issued for compensation
|
|
|
181,073 |
|
|
|
347,829 |
|
Options
and warrants granted for services
|
|
|
51,022 |
|
|
|
507,652 |
|
Options
granted for compensation
|
|
|
46,542 |
|
|
|
- |
|
Decrease
(increase) in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(35,218 |
) |
|
|
(15,602 |
) |
Prepaid
expenses and other current assets
|
|
|
11,839 |
|
|
|
(9,974 |
) |
Checks
written in excess of deposits
|
|
|
2,176 |
|
|
|
- |
|
Deferred
revenues
|
|
|
(33,333 |
) |
|
|
33,333 |
|
Accounts
payable
|
|
|
228,121 |
|
|
|
(65,433 |
) |
Accrued
expenses
|
|
|
50,378 |
|
|
|
138,737 |
|
Net
cash (used) in operating activities
|
|
|
(108,236 |
) |
|
|
(423,748 |
) |
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(1,323 |
) |
|
|
- |
|
Net
cash (used) in investing activities
|
|
|
(1,323 |
) |
|
|
- |
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds
from long term debt
|
|
|
39,600 |
|
|
|
12,500 |
|
Repayment
of long term debt
|
|
|
- |
|
|
|
(7,500 |
) |
Proceeds
from sale of common stock
|
|
|
- |
|
|
|
472,200 |
|
Net
cash provided by financing activities
|
|
|
39,600 |
|
|
|
477,200 |
|
|
|
|
|
|
|
|
|
|
Net
decrease (increase) in cash
|
|
|
(69,959 |
) |
|
|
53,452 |
|
Cash
- beginning
|
|
|
69,959 |
|
|
|
16,507 |
|
Cash
- ending
|
|
$ |
- |
|
|
$ |
69,959 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
8,631 |
|
|
$ |
6,792 |
|
Income
taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
Stock
issued for debt
|
|
$ |
39,000 |
|
|
$ |
- |
|
The
accompanying notes are an integral part of the financial
statements.
Players
Network
Notes
to Financial Statements
Note
1 – Summary of Significant Accounting Policies
Company
Background
Players
Network (PNTV) was incorporated in the State of Nevada in March of 1993. Our
business for most of our existence has been the ownership and operation of a
digital 24-hour gaming and entertainment network called “PLAYERS NETWORK,” which
specializes in producing television programming to serve the gaming industry.
Our programming is broadcast directly into the guestrooms of casino and
non-casino hotels on a customized private cable channel. Our format is designed
to educate new players and promote casino games and activities. Our programming
includes shows on basic gaming instruction, news, sports and racing,
entertainment and tournaments.
Although
we will continue the PLAYERS NETWORK, in the future we intend to focus on
distributing our programming through a new Broadband Network, which was launched
near the end of July 2005, and through cable television, broadcast and satellite
television, Video On Demand, Pay-Per-View, DVD distribution, television
syndication, radio, print, and out-of-home media including mobile devices,
additional land-based locations, in-flight venues, and on-board
sources.
Reclassifications
Certain
reclassifications have been made to prior year amounts to conform to the current
year presentation.
Use of
estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash
equivalents
PNTV
maintains cash balances in interest and non-interest-bearing accounts, which do
not currently exceed federally insured limits. For the purpose of the statements
of cash flows, all highly liquid investments with an original maturity of three
months or less are considered to be cash equivalents. As of December 31, 2008
and 2007, there were no cash equivalents.
Income
taxes
PNTV
recognizes deferred tax assets and liabilities based on differences between the
financial reporting and tax basis of assets and liabilities using the enacted
tax rates and laws that are expected to be in effect when the differences are
expected to be recovered. PNTV provides a valuation allowance for deferred tax
assets for which it does not consider realization of such assets to be more
likely than not.
Segment
Reporting
The
Company follows SFAS No. 131 “Disclosures about Segments of an Enterprise and
Related Information”. The Company operates as a single segment and will evaluate
additional segment disclosure requirements as it expands its
operations.
Fair value of Financial
Instruments
The FASB
issued SFAS No. 157, “Fair
Value Measurements” (“SFAS 157”) that defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. This Statement
reaffirms that fair value is the relevant measurement attribute. The adoption of
SFAS No. 157 did not have a material effect on the Company’s consolidated
financial statements as reflected herein. The carrying amounts of cash, accounts
receivable, accounts payable, loan payable and convertible debentures reported
on the balance sheet are estimated by management to approximate fair value
primarily due to the short term nature of the instruments.
Players
Network
Notes
to Financial Statements
Revenue
recognition
For
revenue from product sales, the Company recognizes revenue in accordance with
SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial
Statements” (“SAB 104”). SAB 104 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on management’s judgment regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product has not been delivered or is subject to refund until such time that
the Company and the customer jointly determine that the product has been
delivered or no refund will be required.
Network
revenue consists of monthly network broadcast subscription revenue, which is
recognized as the service is performed. Broadcast television advertising revenue
is recognized when advertisements are aired. Video production revenue is
recognized as digital video film is completed and accepted by the customer.
Stage rentals are recognized during the rental period.
Fixed
assets
Fixed
assets are stated at the lower of cost or estimated net recoverable amount. The
cost of property, plant and equipment is depreciated using the straight-line
method based on the lesser of the estimated useful lives of the assets or the
lease term based on the following life expectancy:
Video
Filming and broadcast
equipment 10 years
Computer
and office
equipment 3-7
years
Repairs
and maintenance expenditures are charged to operations as incurred. Major
improvements and replacements, which have extend the useful life of an asset,
are capitalized and depreciated over the remaining estimated useful life of the
asset. When assets are retired or sold, the cost and related accumulated
depreciation and amortization are eliminated and any resulting gain or loss is
reflected in operations.
Impairment of long-lived
assets
Long-lived
assets held and used by PNTV are reviewed for possible impairment whenever
events or circumstances indicate the carrying amount of an asset may not be
recoverable or is impaired. Recoverability is assessed using undiscounted cash
flows based upon historical results and current projections of earnings before
interest and taxes. Impairment is measured using discounted cash flows of future
operating results based upon a rate that corresponds to the cost of capital.
Impairments are recognized in operating results to the extent that carrying
value exceeds discounted cash flows of future operations. PNTV recognized
impairment losses on the disposal of fixed assets of $-0- and $31,477 during
2008 and 2007, respectively.
Advertising
Costs
The
Company expenses the cost of advertising as incurred. Advertising expense was
$7,965 and $8,090 for the years ended December 31, 2008 and 2007,
respectively.
Players
Network
Notes
to Financial Statements
Allowance for Doubtful
Accounts
We
generate a portion of our revenues and corresponding accounts receivable from
the Casino and Hotel industry. As of December 31, 2008, approximately 55%
of our accounts receivable were attributed to Casinos and Hotels. We evaluate
the collectability of our accounts receivable considering a combination of
factors. In circumstances where we are aware of a specific customer’s inability
to meet its financial obligations to us, we record a specific reserve for bad
debts against amounts due in order to reduce the net recognized receivable to
the amount we reasonably believe will be collected. For all other customers, we
recognize reserves for bad debts based on past write-off experience and the
length of time the receivables are past due. Bad debts expense was $8,400 and
$2,000 for the years ended December 31, 2008 and 2007,
respectively.
Basic and diluted loss per
share
The basic
net loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding. Diluted net loss per common share
is computed by dividing the net loss adjusted on an “as if converted” basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities. For 2008 and 2007, potential dilutive securities had an
anti-dilutive effect and were not included in the calculation of diluted net
loss per common share.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment,
which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees and amends SFAS No. 95, Statement of Cash Flows. Generally, the
approach in SFAS No. 123(R) is similar to the approach described in SFAS No.
123. However, SFAS No. 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. PNTV adopted SFAS No. 123 (R) during the fourth quarter of 2005.
Stock and stock options issued for services, debt, and compensation totaled
$552,713 and $1,200,803 for the years ended December 31, 2008 and 2007,
respectively.
Recently Adopted Accounting
Pronouncements
During September 2006, the FASB issued
Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (“FAS 157”). FAS 157 defines
fair value, establishes a framework for measuring fair value and requires
enhanced disclosures about fair value measurements. FAS 157 requires
companies to disclose the fair value of financial instruments according to a
fair value hierarchy as defined in the standard. In February 2008, the FASB
issued FASB Staff Position 157-1, Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 (“FSP 157-1”) and FSP 157-2,
Effective Date of
FASB Statement No. 157 (“FSP 157-2”). FSP 157-1
amends FAS 157 to remove certain leasing transactions from its scope.
FSP 157-2 delays the effective date of FAS 157 for all non-financial
assets and non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis, until
fiscal years beginning after November 15, 2008. These nonfinancial items
include assets and liabilities such as reporting units measured at fair value in
a goodwill impairment test and nonfinancial assets acquired and liabilities
assumed in a business combination. FAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and
was adopted by the Company, as it applies to its financial instruments,
effective January
1, 2008. The Company has considered the
guidance provided by FSP 157-3 in its determination of estimated fair values as
of December 31, 2008, and assessed there was no impact (See Note
12).
Players
Network
Notes
to Financial Statements
Recently Issued Accounting
Pronouncement
During May 2008, the FASB issued
Statement of Financial Accounting Standards No. 162, The Hierarchy of
Generally Accepted Accounting Principles (“FAS 162”). FAS 162
identifies the sources of accounting principles and the framework for selecting
principles to be used in the preparation and presentation of financial
statements in accordance with generally accepted accounting principles. This
statement will be effective 60 days after the Securities and Exchange
Commission approves the Public Company Accounting Oversight Board’s amendments
to AU Section 411, The Meaning of
‘Present Fairly in Conformity With Generally Accepted Accounting
Principles’. The
adoption of SFAS 162 is not expected to have a material impact on the Company’s
financial position, results of operation or cash flows.
During March 2008, the FASB issued
Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative
Instruments and Hedging Activities — an amendment of FASB Statement
No. 133 (“FAS 161”). This new standard
requires enhanced disclosures for derivative instruments, including those used
in hedging activities. It is effective for fiscal years and interim periods
beginning after November 15, 2008, and will be applicable to the Company in
the first quarter of fiscal 2009. The adoption of SFAS 161 is not
expected to have a material impact on the Company’s financial position, results
of operation or cash flows.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the de-consolidation of a subsidiary. It clarifies that
a non-controlling interest in a subsidiary is equity in the consolidated
financial statements. SFAS No. 160 is effective for fiscal years and interim
periods beginning after December 15, 2008. The adoption of SFAS 160 is not
expected to have a material impact on the Company’s financial position, results
of operation or cash flows.
In
December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”.
SFAS 141 (Revised) establishes principals and requirements for how an acquirer
of a business recognizes and measures in its financial statements, the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree. This statement also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. The
guidance will become effective for the fiscal year beginning after December 15,
2008. The adoption of SFAS 141 is not expected to have a material impact on
the Company’s financial position, results of operation or cash
flows.
Note
2 – Going Concern
As shown
in the accompanying condensed financial statements, the Company has incurred
recurring net losses of $779,949 and $1,797,432 in 2008 and 2007, respectively,
and has an accumulated deficit of $15,899,164 and a working capital deficit of
$1,127,450 as of December 31, 2008. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. Management is actively
pursuing new ventures to increase revenues. In addition, the Company is
currently seeking additional sources of capital to fund short term operations.
The Company, however, is dependent upon its ability to secure equity and/or debt
financing and there are no assurances that the Company will be successful,
therefore, without sufficient financing it would be unlikely for the Company to
continue as a going concern.
Players
Network
Notes
to Financial Statements
The
financial statements do not include any adjustments that might result from the
outcome of any uncertainty as to the Company’s ability to continue as a going
concern. The financial statements also do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
Note
3 – Related Party
In
January 2005 PNTV entered into an employment agreement with its president and
CEO for a period of five years. PNTV agreed to pay an annual salary in the
amount of $150,000. Additional compensation will be paid equal to 10% of royalty
income received by PNTV from sources directly resulting from the CEO’s efforts.
As of December 31, 2008 and 2007, no additional compensation has been recorded
as a result of royalty income. The agreement allows the CEO to elect to receive
restricted stock in exchange for unpaid salaries at a discounted price equal to
80% of the average 30-day trading price prior to each election. The CEO elected
to forego a total of $28,153 in unpaid compensation during the year ended
December 31, 2008 via elections to convert stock at a price in excess of the
fair market value of the common stock at the grant date. The CEO has agreed to
not issue stock in excess of the available authorized shares.
The CEO
accepted 924,000 and 367,647 shares of common stock in exchange for $43,360 and
$55,206 of unpaid salary during the years ended December 31, 2008 and 2007,
respectively, as well as, 600,000 shares of preferred stock with a 1:1
conversion ratio into common stock in exchange for $30,000 of unpaid salary
during the year ended December 31, 2008. During the year ended December 31,
2007, the CEO also received bonuses in the form of 400,000 shares of preferred
stock valued at $80,000 based on the fair market value of the Company’s common
stock at the date of issuance.
The CEO
also received options to purchase 250,000 shares of common stock at an exercise
price of $0.20 with a 3-year life during the year ended December 31, 2008. The
estimated value of the options, using the Black-Scholes pricing model, is
$23,271, which was expensed as share-based compensation in 2008. The CEO also
received options to purchase 25,000 shares of common stock at an exercise price
of $0.20 with a 3-year life for his service on the Board of Directors during the
year ended December 31, 2008. The estimated value of the options, using the
Black-Scholes pricing model, is $2,327, which was expensed as share-based
compensation in 2008.
In
January, 2005 PNTV entered into a five-year employment agreement with its
President of Programming. PNTV agreed to pay an annual salary of $150,000 during
the term of the agreement. Additional compensation will be paid equal to 10% of
royalty income received by PNTV from sources directly resulting from the
President of Programming efforts. As of December 31, 2008, no additional
compensation has been recorded as a result of royalty income. The agreement
allows the President of Programming to elect to receive restricted stock in
exchange for unpaid salaries at a discounted price equal to 80% of the average
30-day trading price prior to each election. The President of Programming
elected to forego a total of $65,762 in unpaid compensation during the year
ended December 31, 2008 via elections to convert stock at a price in excess of
the fair market value of the common stock at the grant date. The President of
Programming has agreed to not issue stock in excess of the available authorized
shares.
Players
Network
Notes
to Financial Statements
The President of Programming accepted 1,231,273 and 397,000 shares
in exchange for $72,615 and $59,624 of unpaid salary during the years ended
December 31, 2008 and 2007, respectively, as well as, 600,000 shares of
preferred stock with a 1:1 conversion ratio into common stock in exchange for
$30,000 of unpaid salary during the year ended December 31, 2008. During the
year ended December 31, 2007, the President of Programming also received bonuses
in the form of 400,000 shares of preferred stock valued at $80,000 based on the
fair market value of the Company’s common stock at the date of issuance.
The
President of Programming also received options to purchase 250,000 shares of
common stock at an exercise price of $0.20 with a 3-year life during the year
ended December 31, 2008. The estimated value of the options, using the
Black-Scholes pricing model, is $23,271, which was expensed as share-based
compensation in 2008. The President of Programming also received options to
purchase 25,000 shares of common stock at an exercise price of $0.20 with a
3-year life for his service on the Board of Directors during the year ended
December 31, 2008. The estimated value of the options, using the Black-Scholes
pricing model, is $2,327, which was expensed as share-based compensation in
2008.
Officer
compensation expense was $257,281 and $460,000 at December 31, 2008 and 2007,
respectively. The balance owed was $-0- and $39,967 at December 31, 2008 and
2007, respectively.
On
February 15, 2008 the Company granted Doug Miller cashless options to purchase
25,000 shares of its common stock in exchange for services as a board member.
The options carry an exercise price of $0.20 per share, exercisable over 36
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.09, was
$2,327.
During
the year ended December 31, 2007 the Company granted Doug Miller, a director of
the Company, options to purchase 50,000 shares of common stock at an exercise
price of $.28 with a three-year life. The estimated value of the options, using
the Black-Scholes pricing model, is $9,148, which was expensed as share-based
consulting expense. The Company also issued Mr. Miller 50,000 and another 30,000
shares of common stock at $0.21 and $0.17 cents per share, respectively, for
services rendered during 2007.
Doug
Miller is also the president of GWIN, Inc; (DBA/ Winning Edge) PNTV generated
revenues from GWIN, Inc. of approximately $5,800 and $31,875 in 2008 and 2007,
respectively.
On
December 8, 2008 the Company issued 100,000 shares of common stock as
compensation for service on the board of directors to John English. The fair
value of the common stock was $3,000.
On
December 8, 2008 the Company issued 100,000 shares of common stock as
compensation for service on the board of directors to Leonard Parisi. The fair
value of the common stock was $3,000.
On
February 15, 2008 the Company granted former director, Morden Lazarus cashless
options to purchase 25,000 shares of its common stock in exchange for services
as a board member. The options carry an exercise price of $0.20 per share,
exercisable over 36 months from the grant date. The estimated value using the
Black-Scholes pricing Model, based on a 180% volatility rate and a call option
value of $0.09, was $2,327.
Players
Network
Notes
to Financial Statements
During
the year ended December 31, 2007 the Company issued Morden Lazarus, a director
of the Company, 16,000 shares of common stock at $.15 per share for services
rendered during 2007. These shares were expensed as a stock-based consulting
expense.
On
February 13, 2008 the Company issued 100,000 shares of common stock to its
former director, Terry Debono for consulting services. The total fair value of
the common stock on February 13, 2008 was $10,000.
On
February 15, 2008 the Company granted former director, Terry Debono cashless
options to purchase 100,000 shares of its common stock in exchange for services
at an exercise price of $0.20 per share, exercisable over 36 months from the
grant date. The estimated value using the Black-Scholes pricing Model was
$9,308.
On
February 15, 2008 the Company granted former director, Terry Debono cashless
options to purchase 25,000 shares of its common stock in exchange for services
as a board member. The options carry an exercise price of $0.20 per share,
exercisable over 36 months from the grant date. The estimated value using the
Black-Scholes pricing Model, based on a 180% volatility rate and a call option
value of $0.09, was $2,327.
During
the year ended December 31, 2007 the Company granted former director, Terry
Debono, a director of the Company, cashless options to purchase 50,000 shares of
common stock at an exercise price of $.25 with a three-year life. The estimated
value of the options, using the Black-Scholes pricing model, is $8,245, which
was expensed as share-based consulting expense. The Company also issued Mr.
Debono 125,000 shares of common stock at $0.20 cents per share for services
rendered during 2007.
Note
4 – Property and Equipment
Property
and equipment consist of the following:
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Computers
and office equipment
|
|
$ |
22,151 |
|
|
$ |
20,828 |
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation
|
|
|
(20,468 |
) |
|
|
(15,534 |
) |
|
|
$ |
1,683 |
|
|
$ |
5,294 |
|
Depreciation
expense totaled $4,934 and $29,702 for 2008 and 2007,
respectively.
Players
Network
Notes
to Financial Statements
Note
5 – Accrued Expenses
As of
December 31, 2008 and 2007 accrued expenses included the following:
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Customer
Deposits
|
|
$ |
13,500 |
|
|
$ |
- |
|
Accrued
Payroll and Payroll Taxes
|
|
|
282,012 |
|
|
|
267,529 |
|
Accrued
Interest
|
|
|
58,039 |
|
|
|
35,644 |
|
|
|
$ |
353,551 |
|
|
$ |
303,173 |
|
Note
6 – Long Term Debt
Long-term
debt consists of the following at December 31, 2008, and December 31,
2007:
|
|
2008
|
|
|
2007
|
|
8%
unsecured convertible debentures, due in September 2011, convertible into
500,000 shares of common stock at any time prior to maturity based on a
conversion price of $0.05 per share. Accrued interest is convertible as
well at a conversion price of $0.05 per share.
|
|
$ |
25,000 |
|
|
$ |
- |
|
8%
unsecured convertible debentures, due in March 2009, convertible into
166,667 shares of common stock at any time prior to maturity based on a
conversion price of $0.06 per share. Accrued interest is convertible as
well at a conversion price of $0.06 per share.
|
|
|
10,000 |
|
|
|
- |
|
5%
unsecured convertible debentures, due in September 2009, convertible into
333,333 shares of common stock at any time prior to maturity based on a
conversion price of $0.15 per share. Accrued interest is convertible as
well at a conversion price of $0.15 per share.
|
|
|
50,000 |
|
|
|
50,000 |
|
5%
unsecured convertible debentures, due in August 2009, convertible into
400,000 shares of common stock at any time prior to maturity based on a
conversion price of $0.15 per share. Accrued interest is convertible as
well at a conversion price of $0.15 per share.
|
|
|
60,000 |
|
|
|
60,000 |
|
5%
unsecured convertible debentures, due in June 2009, convertible into
200,000 shares of common stock at any time prior to maturity based on a
conversion price of $0.15 per share. Accrued interest is convertible as
well at a conversion price of $0.15 per share.
|
|
|
30,000 |
|
|
|
30,000 |
|
5%
unsecured convertible debentures, due in June 2009, convertible into
100,000 shares of common stock at any time prior to maturity based on a
conversion price of $0.15 per share. Accrued interest is convertible as
well at a conversion price of $0.15 per share.
|
|
|
15,000 |
|
|
|
15,000 |
|
5%
unsecured convertible debentures, due in May 2009, convertible into
166,667 shares of common stock at any time prior to maturity based on a
conversion price of $0.15 per share. Accrued interest is convertible as
well at a conversion price of $0.15 per share.
|
|
|
25,000 |
|
|
|
25,000 |
|
5%
unsecured convertible debentures, due in March 2009, convertible into
571,429 shares of common stock at any time prior to maturity based on a
conversion price of $0.35 per share. Accrued interest is convertible as
well at a conversion price of $0.35 per share.
|
|
|
200,000 |
|
|
|
200,000 |
|
5%
unsecured convertible debentures, due in February 2009, convertible into
71,429 shares of common stock at any time prior to maturity based on a
conversion price of $0.35 per share. Accrued interest is convertible as
well at a conversion price of $0.35 per share.
|
|
|
25,000 |
|
|
|
25,000 |
|
5%
unsecured convertible debentures, due in February 2009, convertible into
71,429 shares of common stock at any time prior to maturity based on a
conversion price of $0.35 per share. Accrued interest is convertible as
well at a conversion price of $0.35 per share.
|
|
|
25,000 |
|
|
|
25,000 |
|
Unsecured
demand note, non interest bearing.
|
|
|
4,600 |
|
|
|
- |
|
Unsecured
demand note due to a former Director of the Company. The non interest
bearing debt was converted to stock on January 9, 2009 (See Note
13).
|
|
|
5,000 |
|
|
|
5,000 |
|
Total
debt
|
|
|
474,600 |
|
|
|
435,000 |
|
Less:
current portion
|
|
|
423,303 |
|
|
|
5,000 |
|
Less:
discount on beneficial conversion feature
|
|
|
26,297 |
|
|
|
- |
|
Long-term
debt, less current portion
|
|
|
25,000 |
|
|
|
430,000 |
|
Less:
discount on beneficial conversion feature
|
|
|
- |
|
|
|
84,705 |
|
Long-term
debt, less current portion and discount on BCF
|
|
$ |
25,000 |
|
|
$ |
345,295 |
|
Players
Network
Notes
to Financial Statements
Future
maturities of long-term debt are as follows as of December 31,
2008:
2009
|
|
$ 449,600
|
2010
|
|
-
|
2011
|
|
25,000
|
Thereafter
|
|
-
|
|
|
$
474,600
|
Accrued
interest on the above convertible notes totaled $58,039 and $35,644 at December
31, 2008 and 2007, respectively.
Interest
expense totaled $89,434 and $90,226 for the years ended December 31, 2008 and
2007, respectively, of which $8,631 and $12,664, respectively, was incurred from
credit card finance charges and accounts payable finance charges.
Players
Network
Notes
to Financial Statements
In
addition, in accordance with EITF No. 98-5, “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios”(“EITF 98-5”) and EITF No. 00-27, “Application of Issue No.
98-5 to Certain Convertible Instruments” (“EITF 00-27”), the Company
recognized and measured the embedded beneficial conversion feature present in
the convertible debt, by allocating a portion of the proceeds equal to the
intrinsic value of the feature to additional paid-in-capital. The intrinsic
value of the feature was calculated on the commitment date using the effective
conversion price between the detachable common stock issued and the convertible
debt. This intrinsic value is limited to the portion of the proceeds allocated
to the convertible debt.
The
aforementioned accounting treatment resulted in a total debt discount equal to
($167,952). The discount is amortized over a three-year period, from the date of
issuance until the stated redemption date of the debt.
According
to the terms of the Convertible Promissory Notes, the estimated number of shares
that would be received upon conversion was 2,844,228 shares at December 31,
2008.
During
the years ended December 31, 2008 and 2007, the Company recorded interest
expense in the amount of $58,408 and $55,168, respectively, attributed to the
amortization of the aforementioned debt discount.
Note
7 – Income taxes
The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”), which
requires use of the liability method. SFAS No. 109 provides that deferred tax
assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences.
For the
years ended December 31, 2008 and 2007, the Company incurred a net operating
loss and, accordingly, no provision for income taxes has been recorded. In
addition, no benefit for income taxes has been recorded due to the uncertainty
of the realization of any tax assets. At December 31, 2008, the Company had
approximately $9,400,000 of federal net operating losses. The net operating loss
carry forwards, if not utilized, will begin to expire in 2025.
The
components of the Company’s deferred tax asset are as
follows:
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
Net
operating loss carry forwards
|
|
$ |
3,290,000 |
|
|
$ |
3,115,000 |
|
|
|
|
|
|
|
|
|
|
Net
deferred tax assets before valuation allowance
|
|
|
3,290,000 |
|
|
|
3,115,000 |
|
Less:
Valuation allowance
|
|
|
(3,290,000 |
) |
|
|
(3,115,000 |
) |
Net
deferred tax assets
|
|
$ |
- |
|
|
$ |
- |
|
Players
Network
Notes
to Financial Statements
Based on
the available objective evidence, including the Company’s history of its loss,
management believes it is more likely than not that the net deferred tax assets
will not be fully realizable. Accordingly, the Company provided for a full
valuation allowance against its net deferred tax assets at December 31, 2008 and
2007, respectively.
A
reconciliation between the amounts of income tax benefit determined by applying
the applicable U.S. and State statutory income tax rate to pre-tax loss is as
follows:
|
December
31,
|
|
2008
|
2007
|
|
|
|
Federal
and state statutory rate
|
35%
|
35%
|
Change
in valuation allowance on deferred tax assets
|
(35%)
|
(35%)
|
Note
8 – Stockholders’ equity
On
December 8, 2008 the Company issued 400,000 shares of preferred stock to its CEO
for unpaid compensation. The total fair value of the preferred stock was
$12,000.
On
December 8, 2008 the Company issued 400,000 shares of preferred stock to its
President of Programming for unpaid compensation. The total fair value of the
preferred stock was $12,000.
On April
29, 2008 the Company issued 200,000 shares of preferred stock to its CEO for
unpaid compensation. The total fair value of the preferred stock on April 29,
2008 was $18,000.
On April
29, 2008 the Company issued 200,000 shares of preferred stock to its President
of Programming for unpaid compensation. The total fair value of the preferred
stock on April 29, 2008 was $18,000.
On
September 18, 2007 the board of directors authorized the issuance of 150,000
shares of series-A preferred stock to each of two of the
Company’s Officers as a compensation bonus. The preferred shares carry
preferential voting rights of 25:1 and are convertible to common stock on a 1:1
basis. The total fair value of the common stock on September 18, 2007 was
$60,000. The shares were
issued on October 3, 2007.
On July
24, 2007, the Company designated 2,000,000 shares of its blank check preferred
stock as “Series-A Preferred Stock” with 25:1 preferential voting rights and a
1:1 conversion into common stock feature.
On June
18, 2007 the board of directors authorized the issuance of 250,000 shares of
series-A preferred stock to each of two of the Company’s Officers as a
compensation bonus. The preferred shares carry preferential voting rights of
25:1 and are convertible to common stock on a 1:1 basis. The total fair value of
the common stock on June 18, 2007 was $100,000. The shares were issued on
October 3, 2007.
On
December 8, 2008 the Company issued 60,000 shares of common stock to its CEO for
unpaid compensation. The total fair value of the common stock was
$1,800.
Players
Network
Notes
to Financial Statements
On
December 8, 2008 the Company issued 60,000 shares of common stock to its
President of Programming for unpaid compensation. The total fair value of the
common stock was $1,800.
On
December 8, 2008 the Company issued common stock as compensation for service on
the board of directors to two of its directors totaling 200,000 shares. The fair
value of the common stock was $6,000.
On
December 8, 2008 the Company issued 100,000 shares of common stock to a
consultant for administrative services rendered. The total fair value of the
common stock was $3,000.
On
December 8, 2008 the Company issued 40,000 shares of common stock to a
consultant for services rendered. The total fair value of the common stock was
$1,200.
On
December 8, 2008 the Company issued 20,000 shares of common stock to an employee
as a bonus for services rendered. The total fair value of the common stock was
$600.
On
December 8, 2008 the Company issued 5,000 shares of common stock to a consultant
for administrative services rendered. The total fair value of the common stock
was $150.
On
December 8, 2008 the Company issued 10,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock was $300.
On
December 8, 2008 the Company issued 50,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock was $1,500.
On
December 8, 2008 the Company issued 100,000 shares of common stock to a
consultant for sales & marketing services rendered. The total fair value of
the common stock was $3,000.
On
December 8, 2008 the Company issued 300,000 shares of common stock to a
consultant for prepaid equity promotion and marketing services. The fair market
value of the shares was $10,500. The expense is being amortized over the six
month life of the agreement. At December 31, 2008 $8,750 remained unamortized,
and $1,750 had been expensed as share-based marketing expense.
On
December 8, 2008 the Company issued 300,000 shares of common stock to a
consultant for prepaid equity promotion and marketing services. The fair market
value of the shares was $10,500. The expense is being amortized over the six
month life of the agreement. At December 31, 2008 $8,750 remained unamortized,
and $1,750 had been expensed as share-based marketing expense.
On
December 8, 2008 the Company issued 5,000 shares of common stock to a consultant
for equity promotion & marketing services rendered. The total fair value of
the common stock was $150.
On
November 17, 2008, the Company cancelled 50,000 shares of common stock to a
consultant for services which had not been performed as agreed
upon.
On
September 9, 2008 the Company issued 300,000 shares of common stock to a
consultant for services rendered. The total fair value of the common stock on
September 9, 2008 was $12,000 related to business development
activities.
Players
Network
Notes
to Financial Statements
On
September 9, 2008 the Company issued 300,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock on September 9, 2008 was $12,000.
On
September 9, 2008 the Company issued 200,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock on September 9, 2008 was $8,000.
On
September 9, 2008 the Company issued 20,000 shares of common stock to a
consultant for video production services rendered. The total fair value of the
common stock on September 9, 2008 was $800.
On
September 9, 2008 the Company issued 75,000 shares of common stock to a
consultant for administrative services rendered. The total fair value of the
common stock on September 9, 2008 was $3,000.
On
September 9, 2008 the Company issued 25,000 shares of common stock to an
employee as a bonus for services rendered. The total fair value of the common
stock on September 9, 2008 was $1,000.
On
September 9, 2008 the Company issued 5,000 shares of common stock to a
consultant for administrative services rendered. The total fair value of the
common stock on September 9, 2008 was $200.
On
September 9, 2008 the Company issued 150,000 shares of common stock to a stock
to a law firm for professional services rendered. The total fair value of the
common stock on September 9, 2008 was $6,000.
On
September 9, 2008 the Company issued 100,000 shares of common stock to a
consultant for web based video production services rendered. The total fair
value of the common stock on September 9, 2008 was $4,000.
On
September 9, 2008 the Company issued 764,000 shares of common stock to its CEO
for unpaid compensation. The total fair value of the common stock on September
9, 2008 was $30,560.
On
September 9, 2008 the Company issued 764,000 shares of common stock to its
President of Programming for unpaid compensation. The total fair value of the
common stock on September 9, 2008 was $30,560.
On July
16, 2008 the Company issued 200,000 shares of common stock to a law firm for
professional services rendered. The total fair value of the common stock on July
16, 2008 was $10,000.
On July
16, 2008 the Company issued 250,000 shares of common stock to a consultant for
services rendered related to business development activities. The total fair
value of the common stock on July 16, 2008 was $12,500.
On July
16, 2008 the Company issued 250,000 shares of common stock to a consultant for
services rendered related to business development activities. The total fair
value of the common stock on July 16, 2008 was $12,500.
On April
29, 2008 the Company issued 200,000 shares of preferred stock to its CEO for
unpaid compensation. The total fair value of the preferred stock on April 29,
2008 was $18,000.
Players
Network
Notes
to Financial Statements
On April
29, 2008 the Company issued 200,000 shares of preferred stock to its President
of Programming for unpaid compensation. The total fair value of the preferred
stock on April 29, 2008 was $18,000.
On April
29, 2008 the Company issued 227,273 shares of common stock to its President of
Programming for unpaid compensation. The total fair value of the common stock on
April 29, 2008 was $20,455.
On April
29, 2008 the Company issued 300,000 shares of common stock to one of its vendors
as partial payment on the Company’s outstanding accounts payable debt. The total
fair value of the common stock on April 29, 2008 was $27,000. The vendor also
agreed to forgive an additional $18,000 of accounts payable debt in accordance
with the issuance.
On March
11, 2008, the Company issued 50,000 shares of common stock to a consultant for
services as part of a public relations agreement. These shares were valued at
$10,000.
On
February 13, 2008 the Company issued 100,000 shares of common stock to its CEO
for unpaid compensation. The total fair value of the common stock on February
13, 2008 was $11,000.
On
February 13, 2008 the Company issued 180,000 shares of common stock to its
President of Programming for unpaid compensation. The total fair value of the
common stock on February 13, 2008 was $19,800.
On
February 13, 2008 the Company issued 100,000 shares of common to one of its
directors for consulting services. The total fair value of the common stock on
February 13, 2008 was $10,000.
On
February 13, 2008, the Company issued 100,000 shares of common stock to a
consultant for services. These shares were valued at $10,000.
On
February 13, 2008, the Company issued 5,000 shares of common stock to a
consultant for commissions related to the Company’s sound stage rentals. These
shares were valued at $500.
On
February 13, 2008, the Company issued 20,000 shares of common stock to an
employee as a bonus for services performed. These shares were valued at
$2,000.
On
February 13, 2008, the Company issued 12,000 shares of common stock to an
employee as a bonus for services performed. These shares were valued at
$1,200.
On
February 13, 2008, the Company issued a total of 27,500 shares of common stock
to four different consultants for services. These shares were valued at
$2,750.
The
Company issued 924,000 shares of common stock and 600,000 shares of preferred
stock to the CEO for compensation for a total value of $73,360 for the year
ended December 31, 2008.
The
Company issued 1,231,273 shares of common stock and 600,000 shares of preferred
stock to the President of programming for compensation for a total value of
$102,615 for the year ended December 31, 2008.
During
the year ended December 31, 2007, the Company cancelled a total of 272,662
shares of common stock to
six different consultants
for services which had not
been performed as agreed upon.
Players
Network
Notes
to Financial Statements
On
December 4, 2007 the Company sold 750,000 shares of common stock, and warrants
to purchase another 750,000 shares at $0.25 per share, to an accredited investor
for $150,000.
On
November 15, 2007 the Company authorized and issued 15,000 shares of restricted
section 144, common stock to an employee for services performed. The common
stock was valued at a total of $2,550.
On
November 15, 2007 the Company authorized and issued 15,000 shares of restricted
section 144, common stock to an employee for services performed. The common
stock was valued at a total of $2,550.
On
November 15, 2007 the Company authorized and issued 102,400 shares of restricted
section 144, common stock to seven different consultants for services performed.
The common stock was valued at a total of $17,408.
On
November 15, 2007 the Company authorized and issued 30,000 shares of restricted
section 144, common stock to a director for services performed. The common stock
was valued at a total of $5,100. (See Note 8)
On
September 18, 2007 the Company authorized and issued 110,000 shares of
restricted section 144, common stock to five different individuals for services
performed. The common stock was valued at a total of $22,000.
On
September 18, 2007 the Company authorized and issued 100,000 shares of
restricted section 144, common stock to an investor relation company as part of
an agreement that also called for the contribution of another 100,000 shares
from a significant shareholder. The 100,000 shares of common stock were recorded
as donated capital and valued at $20,000. The other 100,000 shares of common
stock were also valued at $20,000. The entire expense of $40,000 was amortized
over the 4 month life of the agreement. The unamortized balance was $-0- and
$5,000 at December 31, 2008 and 2007, respectively, and $5,000 and $35,000 had
been expensed as share-based equity marketing and promotions expense at December
31, 2008 and 2007, respectively.
On
September 18, 2007 the Company authorized and issued 150,000 shares of
unrestricted S-8 common stock for future legal services. The common stock was
valued at a total of $30,000. The unamortized balance was $-0- and $22,500 at
December 31, 2008 and 2007, respectively, and $22,500 and $7,500 had been
expensed as share-based consulting expense at December 31, 2008 and 2007,
respectively.
On
September 18, 2007 the Company issued 177,169 shares of restricted section 144,
common stock to a note holder per the conversion terms of the convertible
promissory note. The shares were exchanged for $25,000 of principal and $1,575
of accrued interest.
On July
30, 2007 the Company entered into a consulting agreement for 120,000 shares of
restricted “144” common stock as compensation, as well as the authorization of
an additional 120,000 shares of unrestricted “S-8” common stock which were
subsequently issued in August. These shares were valued at $18,000 and $27,000,
respectively.
Players
Network
Notes
to Financial Statements
On July
26, 2007 the Company sold 34,000 shares of common stock, and warrants to
purchase another 34,000 shares at $0.25 per share, to an individual investor for
$5,100.
On July
20, 2007 the Company sold 1,250,000 shares of common stock, and warrants to
purchase another 1,250,000 shares at $0.25 per share, to an accredited investor
for $250,000.
During
the three months ending June 30, 2007, the Company sold 447,333 shares of common
stock, and warrants to purchase another 447,333 shares at exercise prices
ranging from $0.15 to $0.25 per share, to a total of six accredited investors
for proceeds of $67,100.
During
the three months ending June 30, 2007 the Company authorized and issued 557,500
shares of unrestricted S-8 common stock to twelve different individuals for
services performed. The common stock was valued at a total of
$79,900.
During
the three months ending June 30, 2007 the Company authorized and issued 703,882
shares of restricted section 144, common stock to twelve different individuals
for services performed. The common stock was valued at a total of
$130,409.
On
February 12, 2007, the Company issued 20,000 shares of common stock to a
consultant for services. These shares were valued at $4,000.
On
February 9, 2007, the Company authorized the issuance of a total of 500,000
shares of common stock to two of its officers for unpaid compensation. The total
fair value of the common stock on February 9, 2007 was $75,000.
On
February 9, 2007, the Company authorized the issuance of a total of 405,000
shares of common stock to eight different consultants for services performed.
The fair market value of the stock totaled $60,750 on February 9,
2007.
On
February 9, 2007, the Company also issued common stock as compensation for
services to two of its directors totaling 216,000 shares. The fair value of the
common stock was $32,400.
On
February 9, 2007, the Company issued 110,715 shares of free trading common stock
to a consultant for professional services rendered. The fair market value of the
stock totaled $16,607.
On
February 9, 2007, the Company issued 55,000 shares of free trading common stock
to a consultant for services rendered. The fair market value of the stock
totaled $8,250.
On
January 31, 2007, the Company issued a total of 310,715 shares of free trading
common stock to two different consultants for professional services rendered.
The fair market value of the stock totaled $55,929.
On
January 26, 2007, the Company issued 20,000 shares of common stock to a
consultant for services. These shares were valued at $3,400.
On
January 23, 2007, the Company issued a total of 130,000 shares of common stock
to two different consultants for services. These shares were valued at
$22,100.
Players
Network
Notes
to Financial Statements
On
January 19, 2007, the Company issued a total of 114,500 shares of common stock
to six different consultants for services. These shares were valued at
$19,550.
On
January 19, 2007, the Company issued a total of 666,666 shares of common stock
to two of its officers for services. These shares were valued at
$113,333.
Note
9 – Warrants and options
Options and Warrants Granted
(2008)
Options
issued for Compensation
On
February 15, 2008 the Company granted cashless options to purchase 250,000
shares of its common stock to the Company’s CEO as a bonus for services
performed at an exercise price of $0.20 per share, exercisable over 36 months
from the grant date. The estimated value using the Black-Scholes pricing Model,
based on a 180% volatility rate and a call option value of $0.09, was
$23,271.
On
February 15, 2008 the Company granted cashless options to purchase 250,000
shares of its common stock to the Company’s President of Programming as a bonus
for services performed at an exercise price of $0.20 per share, exercisable over
36 months from the grant date. The estimated value using the Black-Scholes
pricing Model, based on a 180% volatility rate and a call option value of $0.09,
was $23,271.
Options
issued for Services
On
February 15, 2008 the Company granted cashless options to purchase 100,000
shares of its common stock to a director of the Company in exchange for services
at an exercise price of $0.20 per share, exercisable over 36 months from the
grant date. The estimated value using the Black-Scholes pricing Model was
$9,308.
On
February 15, 2008 the Company granted 100,000 stock options to a consultant for
services as part of a 30 day public relations agreement at an exercise price of
$0.20 per share, exercisable over 36 months from the grant date. The estimated
value using the Black-Scholes pricing Model, based on a 180% volatility rate and
a call option value of $0.09, was $9,308 and will be amortized as the services
are performed. The Company expensed $4,654 in the six months ending June 30,
2008.
On
February 15, 2008 the Company granted 100,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 36
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.09, was
$9,308.
On
February 15, 2008 the Company granted 150,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 12
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.06, was
$8,597.
On
February 15, 2008 the Company granted 50,000 stock options to a consultant for
services rendered at an exercise price of $0.20 per share, exercisable over 12
months from the grant date. The estimated value using the Black-Scholes pricing
Model, based on a 180% volatility rate and a call option value of $0.06, was
$2,866.
On
February 15, 2008 the Company granted cashless options to purchase 25,000 shares
of its common stock to each of all five of the Company’s directors in exchange
for their services as board members. The options carry an exercise price of
$0.20 per share, exercisable over 36 months from the grant date. The estimated
value using the Black-Scholes pricing Model, based on a 180% volatility rate and
a call option value of $0.09, was $2,327 each.
Players
Network
Notes
to Financial Statements
Stock
options issued to the CEO for bonus and service on the Board of Directors
totaled 25,598 for the year ended December 31, 2008.
Stock
options issued to the President of programming for bonus and service on the
Board of Directors totaled 25,598 for the year ended December 31,
2008.
Options and Warrants Granted
(2007)
On
November 16, 2007, the Company authorized the extension of expired warrants to
purchase 50,000 shares of its common stock to a previous investor of the
Company. The warrants originally carried a twelve month term with an exercise
price of $0.25 per share. The warrants were extended an additional twelve months
and all other terms remained the same. The estimated value expensed in
accordance with the extension using the Black-Scholes Pricing Model was
$4,193.
On
November 15, 2007, the Company granted 75,000 cashless stock options as part of
a consulting agreement for services rendered. The options are exercisable until
November 15, 2010 at an exercise price of $0.25 per share. The estimated value
using the Black-Scholes Pricing Model was $11,596.
On
November 15, 2007, the Company granted 15,000 cashless stock options to an
employee as a bonus for services rendered. The options are exercisable until
November 15, 2010 at an exercise price of $0.25 per share. The estimated value
using the Black-Scholes Pricing Model was $2,319.
On
November 15, 2007, the Company granted 15,000 cashless stock options to an
employee as a bonus for services rendered. The options are exercisable until
November 15, 2010 at an exercise price of $0.25 per share. The estimated value
using the Black-Scholes Pricing Model was $2,319.
On
November 15, 2007, the Company granted 15,000 stock options to an independent
contractor for services rendered. The options are exercisable until November 15,
2010 at an exercise price of $0.25 per share. The estimated value using the
Black-Scholes Pricing Model was $2,319.
On
November 7, 2007, the Company granted 250,000 stock options as part of a
consulting agreement for services rendered. The options are exercisable until
November 7, 2010 at an exercise price of $0.30 per share. The estimated value
using the Black-Scholes Pricing Model is $45,588 and is being amortized over the
five month life of the agreement.
On
November 1, 2007, the Company authorized the extension of expired warrants to
purchase 125,000 shares of its common stock to two previous investors of the
Company. The warrants originally carried a twelve month term with an exercise
price of $0.25 per share. The warrants were extended an additional twelve months
and all other terms remained the same. The estimated value expensed in
accordance with the extension using the Black-Scholes Pricing Model was
$12,552.
Players
Network
Notes
to Financial Statements
On
October 1, 2007, the Company authorized the extension of expired warrants to
purchase 341,666 shares of its common stock to three previous investors of the
Company. The warrants originally carried a twelve month term with an exercise
price of $0.25 per share. The warrants were extended an additional twelve months
and all other terms remained the same. The estimated value expensed in
accordance with the extension using the Black-Scholes Pricing Model was
$46,458.
On
September 24, 2007, the Company granted 50,000 cashless stock options to a
consultant for services rendered. The options are exercisable until September
23, 2010 at an exercise price of $0.25 per share. The estimated value using the
Black-Scholes Pricing Model was $8,245.
On
September 24, 2007, the Company granted 50,000 cashless stock options to an
employee as a bonus for services rendered. The options are exercisable until
September 23, 2010 at an exercise price of $0.25 per share. The estimated value
using the Black-Scholes Pricing Model was $8,245.
On
September 24, 2007, the Company granted 30,000 cashless stock options to an
employee as a bonus for services rendered. The options are exercisable until
September 23, 2010 at an exercise price of $0.25 per share. The estimated value
using the Black-Scholes Pricing Model was $4,947.
On
September 24, 2007, the Company granted 50,000 cashless stock options to a
director for services rendered. The options are exercisable until September 23,
2010 at an exercise price of $0.25 per share. The estimated value using the
Black-Scholes Pricing Model was $8,245.
On
September 24, 2007, the Company granted 200,000 stock options as part of a
consulting agreement for services rendered. The options are exercisable until
September 23, 2008 at an exercise price of $0.20 per share. The estimated value
using the Black-Scholes Pricing Model is $24,640 and is being amortized over the
four month life of the agreement.
On July
24, 2007, the Company granted 250,000 stock options as part of a consulting
agreement for services rendered. The options are exercisable until July 24, 2010
at an exercise price of $0.30 per share. The estimated value using the
Black-Scholes Pricing Model was $37,829 and is being amortized over the
remaining eight and a half month life of the contract.
On July
23, 2007, the Company granted 25,000 stock options to a consultant for
commissions rendered. The options are exercisable until July 23, 2010 at an
exercise price of $0.30 per share. The estimated value using the Black-Scholes
Pricing Model was $4,957.
On July
23, 2007, the Company granted 50,000 stock options to an employee as a bonus for
services rendered. The options are exercisable until July 23, 2010 at an
exercise price of $0.30 per share. The estimated value using the Black-Scholes
Pricing Model was $9,913.
On July
23, 2007, the Company granted 50,000 stock options to an employee as a bonus for
services rendered. The options are exercisable until July 23, 2010 at an
exercise price of $0.30 per share. The estimated value using the Black-Scholes
Pricing Model was $9,913.
Players
Network
Notes
to Financial Statements
On July
23, 2007, the Company granted 10,000 stock options to a consultant for services
rendered. The options are exercisable until July 23, 2009 at an exercise price
of $0.30 per share. The estimated value using the Black-Scholes Pricing Model
was $1,790.
On May
22, 2007 the Company granted 100,000 warrants to an investor as part of a
subscription agreement in which the investor purchased 100,000 shares of common
stock for $15,000. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.25 per share.
On May
17, 2007 the Company granted 70,000 warrants to an investor as part of a
subscription agreement in which the investor purchased 70,000 shares of common
stock for $10,500. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.15 per share.
On May 1,
2007 the Company granted 93,333 warrants to an investor as part of a
subscription agreement in which the investor purchased 93,333 shares of common
stock for $14,000. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.25 per share.
On April
21, 2007 the Company granted 50,000 warrants to an investor as part of a
subscription agreement in which the investor purchased 50,000 shares of common
stock for $7,500. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.25 per share.
On April
16, 2007, the Company granted 50,000 stock options to a Director for services
rendered. The options are exercisable until April 16, 2010 at an exercise price
of $0.28 per share. The estimated value using the Black-Scholes Pricing Model
was $9,148.
On April
16, 2007, the Company granted 300,000 stock options to a consultant for services
rendered. The options are exercisable until May 16, 2008 at an exercise price of
$0.28 per share. The estimated value using the Black-Scholes Pricing Model was
$41,504.
On April
16, 2007 the Company granted 250,000 stock options to a consultant for services
performed under a new communications contract. The options were earned and
vested on June 30, 2007 and are exercisable until June 30, 2010 at an exercise
price of $0.30 per share. The estimated value using the Black-Scholes Pricing
Model was $56,485 and is being amortized over the remaining 9 and a half month
life of the contract.
On April
16, 2007 the Company granted 50,000 stock options to a consultant as a finder’s
fee for the communications contract. The options were earned and vested on June
30, 2007 and are exercisable until June 30, 2009 at an exercise price of $0.30
per share. The estimated value using the Black-Scholes Pricing Model was $9,821
and is being amortized over the remaining nine and a half month life of the
contract.
On April
11, 2007 the Company granted 34,000 warrants to an investor as part of a
subscription agreement in which the investor purchased 34,000 shares of common
stock for $5,100. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.25 per share.
On April
3, 2007, the Company granted 250,000 stock options to an attorney for
professional services rendered. The options are exercisable until April 3, 2009
at an exercise price of $0.25 per share. The estimated value using the
Black-Scholes Pricing Model was $24,119.
Players
Network
Notes
to Financial Statements
On April
3, 2007, the Company granted 60,000 stock options to a consultant for services
rendered. The options are exercisable until April 3, 2010 at an exercise price
of $0.25 per share. The estimated value using the Black-Scholes Pricing Model
was $6,491.
On April
3, 2007, the Company granted 650,000 stock options to a consultant for services
rendered. The options are exercisable until April 3, 2010 at an exercise price
of $0.50 per share. The estimated value using the Black-Scholes Pricing Model
was $67,521.
On April
2, 2007 the Company granted 100,000 warrants to an investor as part of a
subscription agreement in which the investor purchased 100,000 shares of common
stock for $15,000. The warrants are exercisable for twenty four months from the
date of issuance at a strike price of $0.25 per share.
In
February, 2007, the Company authorized the re-pricing of options to purchase
500,000 shares of its common stock to officers and directors of the Company that
were originally issued in February of 2006 in exchange for services at an
exercise price of $0.50 per share. The estimated value using the Black-Scholes
pricing Model was originally $226,121. The options were re-priced with an
exercise price of $0.25 per share, and all other terms remained the same. The
estimated value expensed in accordance with the re-pricing using the
Black-Scholes Pricing Model was $61,642.
Options and Warrants
Cancelled
No
options or warrants were cancelled during the year ended December 31, 2008.
During the year ended December 31, 2007, the Company cancelled 200,000 options
that were outstanding at December 31, 2006. The cancellation of the options had
no impact on the current period operations.
Options and Warrants
Expired
During
the year ended December 31, 2008, 2,123,500 options and 1,116,666 warrants that
were outstanding as of December 31, 2007 expired. The expiration of the options
and warrants had no impact on the current period operations.
During
the year ended December 31, 2007, 1,183,336 warrants and options that were
outstanding as of December 31, 2006 expired. The expiration of the options had
no impact on the current period operations.
Options
Exercised
No
options were exercised during the years ended December 31, 2008 and
2007.
The
following is a summary of information about the Stock Options outstanding at
December 31, 2008.
|
|
Shares
Underlying
|
Shares
Underlying Options Outstanding
|
|
Options
Exercisable
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Average
|
|
Weighted
|
|
Shares
|
|
Weighted
|
|
|
|
|
Underlying
|
|
Remaining
|
|
Average
|
|
Underlying
|
|
Average
|
Range
of
|
|
Options
|
|
Contractual
|
|
Exercise
|
|
Options
|
|
Exercise
|
Exercise
Prices
|
|
Outstanding
|
|
Life
|
|
Price
|
|
Exercisable
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.15
- 0.78
|
|
|
|
6,661,333
|
|
|
1.58
years
|
|
$
|
0.28
|
|
|
|
6,661,333
|
|
|
$
|
0.28
|
|
Players
Network
Notes
to Financial Statements
The fair
value of each option and warrant grant are estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants under the fixed option plan:
|
|
|
2008
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Average
risk-free interest rates
|
|
|
2.05
|
%
|
|
|
4.20
|
%
|
Average
expected life (in years)
|
|
|
1.58
|
|
|
|
2.44
|
|
Volatility
|
|
|
180
|
|
|
|
203
|
%
|
The
Black-Scholes option valuation model was developed for use in estimating the
fair value of short-term traded options that have no vesting restrictions and
are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including expected stock price volatility.
Because the Company’s employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management’s
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options. During 2008 and 2007, there
were no options granted with an exercise price below the fair value of the
underlying stock at the grant date.
The
weighted average fair value of options granted with exercise prices at the
current fair value of the underlying stock during 2008 was approximately $0.20
per option, and during 2007 was approximately $0.29 per option.
The
following is a summary of activity of outstanding stock options:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Number
|
|
Exercise
|
|
|
of
Shares
|
|
Price
|
|
|
|
|
|
Expired
in 2008
|
|
|
(3,240,166)
|
|
|
|
(0.28)
|
|
Cancelled
in 2008
|
|
|
-0-
|
|
|
|
-0-
|
|
Options
granted
|
|
|
1,125,000
|
|
|
|
0.20
|
|
Options
exercised
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
6,661,333
|
|
|
|
0.28
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
December 31, 2008
|
|
|
6,661,333
|
|
|
$
|
0.28
|
|
Players
Network
Notes
to Financial Statements
Note
10 – Operating Lease
The
Company leases its operating and office facilities under a long-term,
non-cancelable operating lease agreement. The lease expires on July 31, 2010 and
provides for month to month renewal options. In the normal course of business,
it is expected that these lease will be renewed or replaced by a lease on
another property. The monthly base rental amount under the agreement is
$5,241.80 and a monthly common area maintenance charge of $1,008. Lease expense
totaled $76,046 and $69,769 during 2008 and 2007, respectively. The Company is
currently in negotiations with the leaseholder over damages to PNTV’s sound
proofing equipment as a result of a water leak in the roof. As a result PNTV is
behind in their monthly rental payments and $6,584.38 remains unpaid and is
included in the accounts payable balance at December 31, 2008.
The
following is a schedule by year of future minimum rental payments required under
the operating lease agreement:
Year
Ending
December
31,
|
|
Amount
|
2009
|
|
$ 74,998
|
2010
|
|
43,748
|
|
|
|
|
|
$118,746
|
Note
11 – Commitments
On
October 10, 2005 the Company entered into a ten-year distribution agreement with
Comcast Programming Development, Inc (“Comcast”), an affiliated entity of
Comcast Corporation. Pursuant to the terms of the agreement, Comcast will carry
PNTV’s Gaming Channel on its Digital VOD Cable Platform, which will provide
programming directly related to the gaming industry and targeting the existing
approximately $70 billion market. The Company will own and operate the channel
100%. Pursuant to the agreement, the Company formed a wholly owned subsidiary,
Players Network on Demand. Comcast has the option to purchase up to 40% of the
common stock in the subsidiary for fair market value after an eighteen-month
period.
Note
12 – Fair value of financial instruments
The
Company adopted SFAS 157 on January 1, 2008. SFAS 157 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (an
exit price). The standard outlines a valuation framework and creates a fair
value hierarchy in order to increase the consistency and comparability of fair
value measurements and the related disclosures. Under GAAP, certain assets and
liabilities must be measured at fair value, and SFAS 157 details the disclosures
that are required for items measured at fair value.
The
Company has various financial instruments that must be measured under the new
fair value standard including: cash and debt. The Company currently does not
have non-financial assets or non-financial liabilities that are required to be
measured at fair value on a recurring basis, with the exception of intangible
assets. The Company’s financial assets and liabilities are measured using inputs
from the three levels of the fair value hierarchy. The three levels are as
follows:
Players
Network
Notes
to Financial Statements
Level 1 -
Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access at the measurement date.
The fair value of the Company’s cash is based on quoted prices and therefore
classified as Level 1.
Level 2 -
Inputs include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets
that are not active, inputs other than quoted prices that are observable for the
asset or liability (e.g., interest rates, yield curves, etc.), and inputs that
are derived principally from or corroborated by observable market data by
correlation or other means (market corroborated inputs).
Level 3 -
Unobservable inputs that reflect our assumptions about the assumptions that
market participants would use in pricing the asset or liability.
The
following table provides a summary of the fair values of assets and liabilities
under SFAS 157:
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements at
|
|
|
|
|
|
|
December
31, 2008
|
|
|
|
Carrying
Value
December
31,
2008
|
|
|
Level
1
|
|
|
Level
2
|
|
Level
3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checks
written in excess of funds
|
|
$ |
2,176 |
|
|
$ |
2,176 |
|
|
$ |
- |
|
$ |
- |
|
Current
maturities of long term debt
|
|
|
423,303 |
|
|
|
- |
|
|
|
|
|
|
423,303 |
|
Long
term debt
|
|
|
25,000 |
|
|
|
- |
|
|
|
|
|
|
25,000 |
|
Total
|
|
$ |
450,479 |
|
|
$ |
2,176 |
|
|
$ |
- |
|
$ |
448,303 |
|
The
Company believes that the market rate of interest as at December 31, 2008 was
not materially different to the rate of interest at which the debts were issued.
Accordingly, the Company believes that the fair value of the debt approximated
their carrying value at December 31, 2008
Note
13 – Subsequent events
Stock
issuances
On April
1, 2009 the Company issued 150,000 shares of common stock to a consultant for
sales & marketing services rendered. The total fair value of the common
stock was $13,500.
On April
1, 2009 the Company issued 50,000 shares of common stock to a consultant for
administrative services provided. The total fair value of the common stock was
$4,500.
Players
Network
Notes
to Financial Statements
On April
1, 2008 the Company issued 657,859 shares of restricted section 144, common
stock to a note holder per the conversion terms of the convertible promissory
note. The shares were exchanged for a total of $49,629 of accrued
interest.
On March
12, 2009 the Company issued 250,000 shares of common stock, along with warrants
to purchase another 250,000 shares at $0.15 per share and 50,000 shares at $1.00
per share, exercisable for 36 months, in exchange for cash proceeds of
$25,000.
On
February 16, 2009 the Company issued 250,000 shares of common stock, along with
warrants to purchase another 250,000 shares at $0.15 per share, exercisable for
36 months, in exchange for cash proceeds of $25,000.
On
January 9, 2009 the Company issued 12,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $1,560.
On
January 9, 2009 the Company issued 2,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $260.
On
January 9, 2009 the Company issued 120,000 shares of common stock to a debt
holder for payment in lieu of cash on a $5,000 interest free demand note. The
total fair value of the common stock was $15,600. A finance charge was expensed
to account for the $10,600 premium payment in excess of the principal
debt.
On
January 9, 2009 the Company issued 50,000 shares of free trading common stock to
a consultant for accounting services provided. The total fair value of the
common stock was $6,500.
On
January 9, 2009 the Company issued 26,500 shares of free trading common stock to
a consultant for sales & marketing services rendered. The total fair value
of the common stock was $3,445.
On
January 9, 2009 the Company issued 5,000 shares of free trading common stock to
a consultant for website production services rendered. The total fair value of
the common stock was $650.
On
January 9, 2009 the Company issued 50,000 shares of common stock as prepaid
compensation for service on the board of directors in 2009 to each of five of
its directors totaling 250,000 shares. The fair value of the common stock in
total was $32,500 and will be amortized over the 2009 calendar year service
period.
On
January 9, 2009 the Company issued 500,000 shares of common stock to a video
production company for video encoding and production services. The total fair
value of the common stock was $65,000.
On
January 9, 2009 the Company issued 10,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $1,300.
On
January 9, 2009 the Company issued 10,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $1,300.
On
January 9, 2009 the Company issued 10,000 shares of common stock to an employee
as a bonus for services rendered. The total fair value of the common stock was
$1,300.
Players
Network
Notes
to Financial Statements
On
January 9, 2009 the Company issued 5,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $650.
On
January 9, 2009 the Company issued 5,000 shares of common stock to a consultant
for commissions earned on sound stage rentals. The total fair value of the
common stock was $650.
On
January 9, 2009 the Company issued 5,000 shares of common stock to a consultant
for website production services rendered. The total fair value of the common
stock was $650.
On
January 9, 2009 the Company issued 50,000 shares of common stock to a consultant
for accounting services provided. The total fair value of the common stock was
$6,500.
On
January 9, 2009 the Company issued 125,000 shares of common stock to a
consultant for administrative services provided. The total fair value of the
common stock was $16,250.
On
January 9, 2009 the Company issued 100,000 shares of common stock to a
consultant for equity promotion & marketing services rendered. The total
fair value of the common stock was $13,000.
On
January 9, 2009 the Company issued 100,000 shares of common stock to a
consultant for equity promotion & marketing services rendered. The total
fair value of the common stock was $13,000.
On
January 9, 2009 the Company issued 30,000 shares of common stock to a consultant
for video production services rendered. The total fair value of the common stock
was $3,900.
Stock
options
On
January 9, 2009 the Company granted 50,000 cashless stock options as prepaid
compensation for service on the board of directors in 2009 to each of five of
its directors. The options are exercisable until January 8, 2013 at an exercise
price of $0.20 per share. The total estimated value using the Black-Scholes
Pricing Model was $32,372 and will be amortized over the 2009 calendar year
service period.
On
January 9, 2009 the Company granted cashless options to purchase 250,000 shares
of its common stock to the CEO as a bonus for services rendered. The options are
exercisable until January 8, 2013 at an exercise price of $0.20 per share. The
estimated value expensed using the Black-Scholes Pricing Model was
$32,372.
On
January 9, 2009 the Company granted cashless options to purchase 250,000 shares
of its common stock to the President of Programming as a bonus for services
rendered. The options are exercisable until January 8, 2013 at an exercise price
of $0.20 per share. The estimated value expensed using the Black-Scholes Pricing
Model was $32,372.
On
January 9, 2009 the Company granted cashless options to purchase 300,000 shares
of its common stock to the CEO as a bonus for services rendered. The options are
exercisable until January 8, 2012 at an exercise price of $0.20 per share. The
estimated value expensed using the Black-Scholes Pricing Model was
$38,486.
Players
Network
Notes
to Financial Statements
On
January 9, 2009 the Company granted cashless options to purchase 400,000 shares
of its common stock to the President of Programming as a bonus for services
rendered. The options are exercisable until January 8, 2012 at an exercise price
of $0.20 per share. The estimated value expensed using the Black-Scholes Pricing
Model was $51,315.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
PLAYERS
NETWORK
|
|
|
|
|
By:
|
/s/
Mark Bradley
|
Date:
April 20, 2009
|
Mark
Bradley, Chief Executive
Officer
|
POWER
OF ATTORNEY
Each
person whose signature appears below appoints Mark Bradley his attorney in fact,
with full power of substitution and re-substitution, to sign any and all
amendments to this Report on Form 10-K of Players Network, and to file them,
with all their exhibits and other related documents, with the Securities and
Exchange Commission, ratifying and confirming all that their attorney in fact
and agent or his substitute or substitutes may lawfully do or cause to be done
by virtue of this appointment. In accordance with the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Mark Bradley
|
|
Director
& Chief Executive Officer (Principal
|
|
April
20, 2009
|
Mark
Bradley
|
|
Executive
Officer, Principal Financial
Officer
& Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/
Michael Berk
|
|
Director
and President of Programming
|
|
April
20, 2009
|
Michael
Berk
|
|
|
|
|
|
|
|
|
|
/s/
Doug Miller
|
|
Director
|
|
April
20, 2009
|
Doug
Miller
|
|
|
|
|
|
|
|
|
|
/s/
Leonard J. Parisi
|
|
Director
|
|
April
20, 2009
|
Leonard
J. Parisi
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
April
20, 2009
|
John
J. English
|
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