Attached files
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File No. ____________
CASINO PLAYERS, INC.
(Exact name of registrant as specified in its charter)
Nevada 54-2156042
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2400 N Commerce Parkway
Suite 105
Weston, Florida 33326
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (954) 684-8288
With Copies to:
Virginia K Sourlis, Esq.
The Sourlis Law Firm
214 Broad Street
Red Bank, New Jersey 07701
Telephone: (732) 530-9007
N/A
(Former name, former address and former
fiscal year, if changed since last report)
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 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.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
[ ] Yes [ ] No
1
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer," "non-
accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: As of November 9, 2009, there
were 30,450,000 shares of common stock, par value $0.0001 per share, of the
Registrant issued and outstanding.
2
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4T. Controls and Procedures 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 28
Item 3. Defaults Upon Senior Securities 29
Item 4. Submission of Matters to a Vote of Security Holders 30
Item 5. Other Information 30
Item 6. Exhibits 30
Item 7. Subsequent Events 30
SIGNATURES 31
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CASINO PLAYERS, INC.
BALANCE SHEETS
September 30, 2009 (Unaudited) and December 31, 2008 (Restated)
ASSETS
September 30, December 31,
2009 2008
(Restated)
--------------- ---------------
Current assets:
Cash and cash equivalents $481 $263
--------------- ---------------
Total current assets 481 263
Property and equipment, net of accumulated depreciation
of $4,375 and $4,000, respectively 5,519 $6,644
--------------- ---------------
$6,000 $6,907
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $43,533 $31,681
Loans from shareholders 25,845 23,221
Accrued compensation 399,900 399,900
--------------- ---------------
Total current liabilities 469,278 454,802
--------------- ---------------
Stockholders' equity (deficit)
Preferred stock, $.0001 par value, 20,000,000 shares
authorized and -0- shares outstanding - -
Common stock, $.0001 par value, 200,000,000
shares authorized, 29,350,000
shares issued and outstanding, respectively 2,935 2,935
Additional paid-in capital 342,613 342,613
Accumulated deficit (808,825) (793,443)
--------------- ---------------
Total stockholders' equity (deficit) (463,277) (447,895)
--------------- ---------------
Total liabilities and stockholders' equity (deficit) $6,000 $6,907
=============== ===============
See accompanying notes to these financial statements
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CASINO PLAYERS, INC.
STATEMENTS OF OPERATIONS
For the Nine Months ended September 30, 2009 and 2008
(Unaudited)
Nine Months Ended September 30, Three Months Ended September 30,
------------------------------- -------------------------------
2009 2008 2009 2008
--------------- --------------- --------------- ---------------
Sales and commissions earned $8,541 $4,200 $4,585 $-
Cost of sales - - - -
--------------- --------------- --------------- ---------------
Gross margin 8,541 4,200 4,585 -
Operating expenses 19,885 34,078 6,501 3,533
--------------- --------------- --------------- ---------------
Income (loss) from operations (11,344) (29,878) (1,916) (3,533)
Other income (expense)
Interest expense (4,038) - - -
--------------- --------------- --------------- ---------------
Net (loss) before provision for income taxes (15,382) (29,878) (1,916) (3,533)
Provision for income taxes - - - -
--------------- --------------- --------------- ---------------
Net (loss) $(15,382) $(29,878) $(1,916) $(3,533)
=============== =============== =============== ===============
Basic and diluted loss per common share $(0.00) $(0.00) $(0.00) $(0.00)
=============== =============== =============== ===============
Weighted average common shares outstanding 29,350,000 29,343,590 29,350,000 29,350,000
=============== =============== =============== ===============
See accompanying notes to these financial statements
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CASINO PLAYERS, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months ended September 30, 2009 and 2008
(Unaudited)
2009 2008
--------------- ---------------
Cash flows from operating activities:
Net income (loss) $(15,382) $(29,878)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,125 1,125
Stock issued for services - 2,500
Changes in assets and liabilities:
Increase in accounts receivable - -
Decrease in other assets - 4,367
Increase in accounts payable and accrued expenses 11,852 14,675
Increase in due from shareholder 2,624 7,178
--------------- ---------------
Cash flows provided from operating activities 219 (33)
--------------- ---------------
Cash flows provided from financing activities:
Proceeds from notes payable - 7,525
Payments of notes payable - (7,525)
--------------- ---------------
Cash flows provided from financing activities - -
--------------- ---------------
Net change in cash and cash equivalents 219 (33)
Cash and cash equivalents, beginning of period 263 138
--------------- ---------------
Cash and cash equivalents, end of period $481 $105
=============== ===============
Supplemental disclosure:
Interest paid $1,125 $-
=============== ===============
Taxes paid $- $-
=============== ===============
See accompanying notes to these financial statements
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CASINO PLAYERS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
Casino Players, Inc. was organized July 20, 2005 under the laws of the State
of Nevada. The Company is a casino representative company offering comp rooms
to rated players. The Company's revenues are a percentage of the amount of
income the casino earns from the rated player. The casino tracks the play of
the rated player to determine its gross income, and the Company then is paid
its contractual percentage based on that income, realized at the time of play.
Basis of Accounting
The accompanying financial statements are prepared using the accrual basis of
accounting where revenues are recognized when earned and expenses are
recognized when incurred. This basis of accounting conforms to generally
accepted accounting principles.
In our opinion, the accompanying balance sheets and related interim statements
of operations and cash flows include the adjustments (consisting of normal and
recurring items) necessary for their fair presentation in conformity with
United States generally accepted accounting principles ("GAAP"). Preparing
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses. Actual
results could differ from these estimates. The unaudited information included
in this statement should be read in conjunction with the Financial Statements
contained in our 2008 Annual Report. Interim results are not necessarily
indicative of results for a full year.
Certain prior period amounts have been reclassified to conform to current-
period presentation. These reclassifications had no effect on net loss for the
periods presented.
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 amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates. The most
significant estimates included in the preparation of the financial statements
are related to asset lives and accruals.
Revenue recognition
The Company derives its revenue from the commissions earned from travel
suppliers, casino resorts and on the direct sale of travel and gaming related
products. The Company has performance contacts with various casinos that,
based upon average play and wagering the Company receives an agreed upon
percentage of the casinos theoretical revenue. No commission is recognized as
revenue until confirmation of receipt of the commission
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
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Fixed assets
Fixed assets are carried at cost. The company provides depreciation over the
estimated useful lives of fixed assets using the straight line method. Upon
retirement or sale of fixed assets, their net book value is removed from the
accounts and the difference between such net book value and proceeds received
is income or loss. Expenditures for maintenance and repairs are charged to
income while renewals and betterment's are capitalized.
Estimated useful lives are as follows:
Furniture 7 years
Office equipment 5 years
Income taxes
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Under SFAS 109, deferred tax assets and
liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and are measured by applying
enacted tax rates and laws to taxable years in which such differences are
expected to reverse.
Earnings Per Share
Basic earnings per share is computed based on the weighted average number of
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average common shares and all potentially dilutive common
shares outstanding during the period.
NOTE 2: GOING CONCERN
The accompanying Financial Statements have been prepared assuming that the
company will continue as a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable period of time. The company has incurred an
operating loss of approximately $808,825 since inception. The future of the
company is dependent on its ability to obtain funding from its anticipated
funding of its S-1 with the Securities and Exchange Commission. Although the
company plans to pursue its equity funding, there can be no assurance that the
Company will be able raise sufficient working capital to maintain its
operations. If the Company is unable to raise the necessary working capital
though the equity funding it will be forced to continue relying on cash from
operations and loans from related parties to satisfy its working capital
needs. There can be no assurance that the company will be able rely on these
sources to maintain its operations.
NOTE 3: ACCRUED COMPENSATION
The Company had employment contracts with its two key employees for salaries
of $7,000 per month. Since the Company did not have adequate operations to
pay the salaries, beginning October 1, 2005 the amounts were being accrued and
deferred until adequate operations are achieved. The contracts were canceled
on June 30, 2007. Accrued compensation at June 30, 2009 amounted to $399,900.
NOTE 4: LOANS FROM SHAREHOLDERS
A shareholder has advanced various loans to the Company for the payment of
certain operating expenses. The loans are non-interest bearing and are due on
demand. Loans from shareholders at September 30, 2009 amounted to $25,845.
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NOTE 5: INCOME TAXES
The Company reported no income tax expense or benefit for the six months ended
September 30, 2009 and 2008 due to the net operating losses incurred during
both periods.
Our Federal net operating loss ("NOL") carryforward balance as of December 31,
2008 was approximately $740,000. Our NOL carryforwards are scheduled to expire
between 2009 and 2028. NOL utilization may be subject to a limitation
contained in Internal Revenue Code Section 382.
In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), "Accounting
for Uncertainty in Income Taxes." Previously, the Company had accounted for
contingencies in accordance with Statement of Financial Accounting Standards
No. 5, "Accounting for Contingencies." The interpretation provides guidance on
recognition, classification and disclosure concerning uncertain tax
liabilities. The evaluation of a tax position requires recognition of a tax
benefit if it is 'more-likely-than-not' that it will be sustained upon
examination. For tax positions meeting the 'more-likely-than-not' threshold,
the amount recognized in the financial statements is the largest benefit that
has a greater than 50% likelihood of being realized upon ultimate settlement
with the relevant tax authority. FIN 48 is effective for fiscal years
beginning after December 15, 2006. Accordingly, the Company adopted FIN 48
effective January 1, 2007. At the adoption date, the Company applied FIN 48 to
all positions for which the statute of limitations remained open and
determined that no liability existed for uncertain tax positions. The Company
has updated its FIN 48 assessment through September 30, 2009 and determined
that no adjustments were necessary.
NOTE 6: STOCK BASED COMPENSATION
The Company accounts for employee and non-employee stock awards under SFAS
123(r), whereby equity instruments issued to employees for services are
recorded based on the fair value of the instrument issued and those issued to
non-employees are recorded based on the fair value of the consideration
received or the fair value of the equity instrument, whichever is more
reliably measurable. The Company did not pay any stock-based compensation
during the period presented.
NOTE 7: LEASES
On June 1, 2008 the Company cancelled its office lease for $20,000. There is
$10,000 remaining on this obligation at September 30, 2009 and is included in
accounts payable and accrued expenses on the Balance Sheet.
NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements,"
which defines fair value, provides a framework for measuring fair value, and
expands the disclosures required for fair value measurements. SFAS 157 applies
to other accounting pronouncements that require fair value measurements; it
does not require any new fair value measurements. SFAS 157 was to be effective
for the Company on January 1, 2008. However, in February 2008, the FASB
released a FASB Staff Position (FSP FAS 157-2 - Effective Date of FASB
Statement No. 157) which delayed the effective date of SFAS No. 157 for the
Company to January 1, 2009. We adopted SFAS 157 on January 1, 2009. The
implementation of SFAS 157 in 2009 did not have a significant impact on the
Company's financial position or results of operations.
In December 2007, the FASB issued Statement 141 (revised 2007), "Business
Combinations" (SFAS 141R) to change how an entity accounts for the acquisition
of a business. SFAS 141R will replace existing SFAS 141 in its entirely.
SFAS 141R carries forward the existing requirements to account for all
business combinations using the acquisition method (formerly called the
purchase method). In general, SFAS 141R will require acquisition-date fair
value measurement of identifiable assets acquired, liabilities assumed and
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noncontrolling interests in the acquiree. SFAS 141R will eliminate the current
cost-based purchase method under SFAS 141.
SFAS 141R amends the goodwill impairment test requirements in SFAS 142. For a
goodwill impairment test as of a date after the effective date of SFAS 141R,
the value of the reporting unit and the amount of implied goodwill, calculated
in the second step of the test, will be determined in accordance
with the measurement and recognition guidance on accounting for business
combinations under SFAS 141R. This change could effect the determination of
what amount, if any, should be recognized as an impairment loss for goodwill
recorded before the effective date of SFAS 141R. This accounting will be
required when SFAS 141R becomes effective (January 1, 2009 for the Company)
and applies to goodwill related to acquisitions accounted for originally under
SFAS 141 as well as those accounted for under SFAS 141R.
The Company adopted SFAS 141R effective January 1, 2009 and will apply its
provisions prospectively. The implementation of SFAS 141R in 2009 did not have
a significant impact on the Company's financial position or results of
operations.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Forward-Looking Statements
This Report contains statements that we believe are, or may be considered to
be, "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this Report regarding the prospects of our
industry or our prospects, plans, financial position or business strategy, may
constitute forward-looking statements. In addition, forward-looking statements
generally can be identified by the use of forward-looking words such as "may,"
"will," "expect," "intend," "estimate," "foresee," "project," "anticipate,"
"believe," "plans," "forecasts," "continue" or "could" or the negatives of
these terms or variations of them or similar terms. Furthermore, such forward-
looking statements may be included in various filings that we make with the
SEC or press releases or oral statements made by or with the approval of one
of our authorized executive officers. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot assure you that these expectations will prove to be correct. These
forward-looking statements are subject to certain known and unknown risks and
uncertainties, as well as assumptions that could cause actual results to
differ materially from those reflected in these forward-looking statements.
Readers are cautioned not to place undue reliance on any forward-looking
statements contained herein, which reflect management's opinions only as of
the date hereof. Except as required by law, we undertake no obligation to
revise or publicly release the results of any revision to any forward-looking
statements. You are advised, however, to consult any additional disclosures we
make in our reports to the SEC. All subsequent written and oral forward-
looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained
in this Report.
Unless stated otherwise, the words "we," "us," "our," the "Company," or
"Casino Players, Inc." in this section collectively refer to Casino Players,
Inc. and Casino Rated Players, Inc.
Who We Are
Casino Players, Inc. (the "Company") was incorporated on July 19, 2005 in the
state of Nevada. We are a casino representation company that conducts
business under the trade name and service mark "Casino Rated Players." We
offer free casino resort rooms to qualified gamblers who are approved by the
casino of their choice. Our website is www.CreditRatedPlayers.com. The
contents of our website are not incorporated by reference herein.
We have one subsidiary, Casino Rated Players, Inc. ("CRP"), a casino
representation company ("Rep Company" or "Casino Rep Company"). A Casino Rep
Company is essentially an extension of a casino's marketing department that
markets casino resorts to low and high rollers (gamblers) for which it
receives a commission based on the player's loss or total wagers during the
player's stay at the casino.
We record revenue after a player departs a casino or cruise line if we have
confirmation of commission amount due. Sometimes, however, it can take up to a
week to receive confirmation that a player has qualified for the Company to
receive a commission.
Our casino player is identified when he/she informs the casino dealer/manager
that he/she is a "Casino Rated Player" and shows his/her player identification
card. The casino manager then writes down the start of the player's playing
time and watches to determine average bet and hours played.
11
The tracking procedure is left up to the casino, and we rely on gaming
information provided by the casino's management. In some instances, it has
come to our attention that our players' losses and average bets exceeded those
reported by the casino, thereby reducing our commissions since we make a
commission based on a player's loss at the casino. The Company has no
recourse other than to not return players to that casino.
Our business strategy is to utilize the internet to communicate with gamblers
and make them aware of our services to provide free rooms and amenities at
casinos in North America and the Caribbean.
To date, the Company has not had advertising funds to market its
services. We anticipate revenues increasing after marketing dollars are
available to promote the Company's services even though revenues over the past
18 months have been insignificant and the trend has been decreasing. We
estimate that we need $60,000 to commence our marketing strategy.
Our Services
Through our website, www.CasinoRatedPlayers.com (the contents of which are not
incorporated by reference herein), we offer 4 services to gamblers seeking
gambling and entertainment. Applicants complete a reservation form on our
website and indicate his/her dates of travel and first and second place
priority casinos. The Company returns a confirmation to the applicant to
receive a casino rate for his/her room with the betting requirements for the
casino of his/her choice. Applicants are charged a one-time $30 per room
administrative fee after we confirm their casino room rate and qualifications
to earn a free room under "Play to Qualify." We do not charge for any
services other than a "Play to Qualify" reservation. "Play to Qualify" is a
service we offer to players that do not have a history of gaming and want to
qualify for free casino resort rooms. We contact the casino and request a
casino rate for "Play to Qualify" rooms. The casino normally offers a discount
of 50% off of the normal rate. The player uses his/her credit card to check
into the casino and is notified at check out if they qualified for a free
room. If they do not qualify, the casino rate is charged to the player's
credit card. The player pays the Company a service fee of $30 for making the
reservation; and if the player qualifies for a free room, we receive a Casino
Rep commission from the casino.
Below is a description of the 4 services we offer:
(1) Discounted Casino Tour Packages to Non-Qualified players. We create our
own casino tour and travel packages to Las Vegas that include a hotel room, a
transfer from the airport to the hotel, two buffet meals, one ticket to the
show, Jubilee, a $25 match play coupon (the casino provides $25 of gaming
chips to start the player's gaming, after the player puts up $25 cash to buy
$25 in chips), and discounted wine/spa/and other coupons. Las Vegas is the
only destination that we offer gaming tours to non qualified players.
(2) Complimentary Casino Resort Rooms and Suites. We offer complimentary
casino resort rooms and suites to players that qualify based on average bet
and hours of daily playing, confirmed as a qualified player by the casino
resort selected by the player. The player contacts us online requesting a free
room or "Play to Qualify" room, we respond with a confirmation of their
request and follow up with an e-mail, confirming their room after the casino
confirms availability and free room or Play to Qualify room rate.
(3) Poker Cruises to the Caribbean. We are currently negotiating with two
cruise lines to offer "Poker Mini Tournaments" to all passengers. If we are
successful, we will operate the tournaments to all passengers and market poker
cruises to the public, offering discounted cabin pricing.
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(4) Free Cruise Cabins to Qualified Players. We offer qualified players
complimentary cruise cabins to the Caribbean. The player qualifies by playing
casino games for four hours a day with an average bet of $150 or more,
depending on the retail value of the cruise.
The Company sent over 100 gamblers to casino resorts in 2007 and less than 50
in 2008. During the nine months ended September 30, 2009, we have sent 80
gamblers to casinos. They were all "Play to Qualify" players.
Casino Licenses
A Casino Rep Company needs a gaming license from each state that the Casino
Rep Company wants to send players and a casino rep agreement from the relevant
casino. We are licensed in Nevada, New Jersey, the Bahamas, Foxwoods in
Connecticut and Puerto Rico. In granting the licenses in the foregoing
territories, the relative gaming commissions and casino completed a customary
and thorough background check on Joseph Fahoome, the President of Casino Rated
Players. We have a total 25 licenses, 14 of which are with Harrah's casinos.
History:
We have been in business since 2004, operating out of Ft. Lauderdale, Florida,
and Detroit, Michigan. Our President, Joseph Fahoome, has over 25 years
experience in owning and operating a Casino Rep Company in Detroit and
relocated to Ft. Lauderdale in 2004 to operate Casino Rated Players. Mr.
Fahoome owned a Casino Rep business in Detroit for over 25 years, sending
players primarily to Las Vegas and Atlantic City in groups of 10 to 100
players. The marketplace changed in Detroit when three new casinos
simultaneously opened in Detroit, all operating 24 hours a day, 7 days a week
and offering the same games and entertainment Las Vegas and Atlantic City
offered, resulting in dramatic decrease of players' interest in Las Vegas or
Atlantic City.
Offices:
Our offices are located at 2400 North Commerce Parkway, Suite 105, Weston,
Florida 33326 (10 miles west of Ft. Lauderdale). Our telephone number is
(954) 684-8288.
Going Concern
At September 30, 2009, we had $481 in cash on hand and a stockholders' deficit
of $(463,277). In their 2008 audit report, our auditors have expressed their
doubt as to our ability to continue as a going concern. At December 31, 2008,
the Company had $263 in cash and cash equivalents on hand and a net loss of
$(26,345). Since our inception on July 19, 2005, the Company has incurred
$(808,825) in operating losses.
Industry Trends
Our performance depends on the impact of economic conditions on levels of
consumer spending. Recently, the gaming industry has experienced decreasing
revenues and several casinos have filed for bankruptcy protection under
Chapter 11 of the bankruptcy laws. As a result of the credit market crisis,
coupled with declining consumer and business confidence, recession worries,
and other challenges currently affecting the global economy, consumers are
continuing to curb discretionary spending, which is having an effect on our
business.
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Certain of our Casino Rep competitors are much larger and well established and
have significant financing in place for growth. There are over 800 similar
Casino Reps in the marketplace. They may have lower overhead cost structures
and may, therefore, be able to provide their products at lower prices than we
can. We have elected to focus our marketing efforts on a niche of smaller-
stakes players that do not have the financial clout to request free or heavily
discounted rooms at many casino destinations.
Casinos are our strongest competition and spend millions of dollars to
advertise their loyalty programs to past casino players. In addition, they
send direct mailing invitations to our past guests and offer them free rooms
and amenities, which exceed our services. Casinos also have hosts on site to
take care of players and have the ability to offer more complimentary services
then we can offer, which sways the player to go directly to the casino host
for their next trip, versus using us. We expect casinos to increase their
marketing efforts due to the worldwide decrease of gaming revenues due to the
recession.
The Company's success in its business will depend in part upon its continued
ability to enhance its existing products and services, to introduce new
products and services quickly and cost effectively to meet evolving customer
needs, to achieve market acceptance for new product and service offerings and
to respond to emerging industry standards and other technological changes.
There can be no assurance that the Company will be able to respond effectively
to technological changes or new industry standards. Moreover, there can be no
assurance that competitors of the Company will not develop competitive
products, or that any such competitive products will not have an adverse
effect upon the Company's operating results.
Moreover, management intends to continue to implement "best practices" and
other established process improvements in its operations going forward. There
can be no assurance that the Company will be successful in refining, enhancing
and developing its operating strategies and systems going forward, that the
costs associated with refining, enhancing and developing such strategies and
systems will not increase significantly in future periods or that the
Company's existing software and technology will not become obsolete as a
result of ongoing technological developments in the marketplace.
Results of Operations
For the Three Months Ended September 30, 2009 Compared to Three Months Ended
September 30, 2008
Assets
At September 30, 2009, we had total assets of $6,000, compared to $6,907
compared to December 31, 2008. Total assets at September 30, 2009 consisted
of $481 in cash on hand and $5,519 in property and property equipment (net of
$4,375 in depreciation). Total assets at December 31, 2008 consisted of $263
in cash on hand and $6,644 in property and equipment (net of $4,000 in
depreciation).
Liabilities
Our total liabilities were $469,278 at September 30, 2009 compared to $454,802
at December 31, 2008. The increase was primarily due to $2,624 in loans from
shareholders and professional fees of $11,852 accrued.
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Total Stockholders' Deficit
Our stockholders' deficit was $(463,277) at September 30, 2009 compared to
$447,895 at December 31, 2008. The increase was due to an increase in
operating losses of $15,382 for the three quarters ended September 30, 2009.
Revenues
Revenues for the three months ended September 30, 2009 were $4,585 compared to
$0 for the three months ended September 30, 2008. Revenues were generated
from cruise and gaming commissions. To date, the Company has not had
sufficient funds to advertise.
We did not have a 2008 Cruise due to economic problems in Detroit and we have
not nor are we planning on having and in 2009.
Detroit gaming opportunity for the Company decreased further in 2009 as the
auto industry started laying off employees and those working were concerned
they might lose their jobs, deciding not to spend money on Cruises or trips to
Las Vegas. Those that still had the desire to gamble could go to three new
casinos in Detroit thereby decreasing the Company's opportunity to earn
revenues.
Cost of Sales
Cost of Sales for the three month periods ended September 30, 2009 and 2008
were zero. There are no costs of sales in connection with sending gamblers to
casino Resorts.
Expenses
The total General and Administrative (G&A) expenses for the three months ended
September 30, 2009 were $6,501, as compared to $3,533 for the three months
ended September 30, 2008. G&A expenses primarily consist of office rent,
telephone charges and professional fees.
Net Losses
Net losses from operations for the three months ended September 30, 2009 were
$(1,916) and a loss per share of $(0.00) compared to a net loss of $(3,533)
and a loss per share of $(0.00) for the three months ended September 30,
2008.The reduction in losses for the three months ended September 30, 2009 are
due primarily to rent reduction and no salaries paid for the three months
ended September 30, 2009. Since the Company's inception, it has incurred
$(808,825) in net losses. The trend is to continue losing money until funds
for advertising and marketing are available.
For the Nine Months Ended September 30, 2009 Compared to Nine Months Ended
September 30, 2008
Assets
At September 30, 2009, we had total assets of $6,000 compared to $6,907
compared to December 31, 2008. Total assets at September 30, 2009 consisted
of $481 in cash on hand and $5,519 in property and property equipment (net of
$4,375in depreciation). Total assets at December 31, 2008 consisted of $263
in cash on hand and $6,644 in property and equipment (net of $4,000 in
depreciation).
15
Liabilities
Our total liabilities were $469,278 at September 30, 2009 compared to $454,802
at December 31, 2008. The increase was primarily due to $2,624 in loans from
shareholders and professional fees of $11,852 accrued.
Total Stockholders' Deficit
Our stockholders' deficit was $(463,277) at September 30, 2009 compared to
$447,895 at December 31, 2008. The increase was due to an increase in
operating losses of $(15,382) for the three quarters ended September 30, 2009.
Revenues
Revenues for the nine months ended September 30, 2009 were $8,541 compared to
$4,200 for the nine months ended September 30, 2008. Revenues were generated
from cruise and gaming commissions. To date, the Company has not had
sufficient funds to advertise.
We did not have a 2008 Cruise due to economic problems in Detroit and we have
not nor are we planning on having and in 2009.
Detroit gaming opportunity for the Company decreased further in 2009 as the
auto industry started laying off employees and those working were concerned
they might lose their jobs, deciding not to spend money on Cruises or trips to
Las Vegas. Those that still had the desire to gamble could go to three new
casinos in Detroit thereby decreasing the Company's opportunity to earn
revenues.
Cost of Sales
Cost of Sales for the nine month periods ended September 30, 2009 and 2008
were $0. There are no costs of sales in connection with sending gamblers to
casino Resorts.
Expenses
The total General and Administrative (G&A) expenses for the nine months ended
September 30, 2009 were $19,885, as compared to $34,078 for the nine months
ended September 30, 2008. G&A expenses primarily consist of office rent,
telephone charges and professional fees.
Net Losses
Net losses from operations for the nine months ended September 30, 2009 were
$(15,382) and a loss per share of $(0.001) compared to a net loss of $(29,878)
and a loss per share of $(0.001) for the nine months ended September 30,
2008.The reduction in losses for the nine months ended September 30, 2009 are
due primarily to rent reduction and no salaries paid for the nine months ended
September 30, 2009. Since the Company's inception, it has incurred $(808,825)
in net losses. The trend is to continue losing money until funds for
advertising and marketing are available.
16
Liquidity and Capital Resources
At September 30, 2009, we had $481 in cash on hand, liabilities totaling
$469,278 and a stockholders' deficit of $463,277. In their 2008 audit report,
our auditors have expressed their doubt as to our ability to continue as a
going concern. To date, the Company has financed its operations from private
sales of its common stock and from loans totaling $25,845 from the Company's
officers and directors as of September 30, 2009. These loans are not pursuant
to any written agreement. The Company has agreed to repay such loans upon the
receipt of sufficient capital.
On October 28, 2009, the SEC declared our Registration Statement on Form S-1
(File No.: 333-128351) (the "Registration Statement") effective. Pursuant to
the Registration Statement, we registered 12 million shares of common stock to
be offered by us on a "best efforts" basis at a purchase price of $0.25 per
share. We also registered 6,000,000 shares for resale by the selling
stockholders named in the Registration Statement. If we sell all of the 12
million shares offered by us in the offering, of which there can be no
assurances, we will receive gross proceeds of $3,000,000. We will not receive
any proceeds from the resale of shares offered by the selling stockholders
named in the Registration Statement. We will depend on generating sufficient
proceeds from the offering to fund our operations. There is no minimum share
purchase requirement and there is no guarantee as to the amount of proceeds
that will result from the offering, if any. The going concern opinion of the
auditors might negatively impact our ability to raise capital to fund our
operations or pursue our business strategy and our investors' ability to sell
their shares of the Company's common stock. If we do not raise sufficient
amount of funds from the offering and/or subsequent private and public
offerings, we might have to cease operations.
Since the date our Registration Statement was declared effective by the SEC,
we have been searching for a registered broker/dealer to make an application
with the Financial Industry Regulatory Authority (FINRA) to act as a market
maker of our common stock and to have our common stock quoted on the OTC
Bulletin Board (OTCBB). To date, no market maker has been identified and
there can be no assurance that one will be or if identified, that its
application will be approved by FINRA. Even if our common stock is approved
for quotation on the OTCBB, there can be assurance that a market for our
common stock will develop or if developed, be sustained.
At the current time, we do not have enough capital to fund our operations for
the next 12 months. We expect that the net proceeds from the sale of at
least fifty (50%) percent of the shares offered by the Company in the offering
will sustain its operations for a period of twelve months. There is no
assurance that the net proceeds will be received in time to meet our needs.
Our board of directors reserves the right to reallocate the use of proceeds to
meet unforeseen events. Pending their use, we may deposit proceeds in
commercial bank accounts or invest them in money market funds for short-term
government obligations.
Deferred Compensation
At September 30, 2009, Mr. Forhan, our Chief Executive Officer, Chief
Financial Officer and Chairman, is owed $178,900 in deferred compensation and
Mr. Fahoome, our President and Director, is owed $221,000 in deferred
compensation. Management stopped accruing wages June 30, 2007 and will not
receive wages until the Company generates revenue to pay wages. When funds
become available management will pay down the deferred compensation over a
period of twelve months, or longer; depending of working capital available.
17
Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations
are based upon the financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
of America. The preparation of financial statements requires management to
make estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and disclosures on the date of the
financial statements.
On an on-going basis, we evaluate our estimates, including, but not limited
to, those related to revenue recognition.
We use authoritative pronouncements, historical experience and other
assumptions as the basis for making judgments. Actual results could differ
from those estimates. Critical accounting policies identified are as follows:
Revenue Recognition
The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services
have been rendered or product delivery has occurred, the sales price to the
customer is fixed or determinable, and collect ability is reasonably assured.
The Company uses these guidelines to recognize revenues from our customers:
Cruise lines and casinos. We record revenue after a player departs a casino or
Cruise line if we have confirmation of commission amount due. Sometimes,
however, it can take up to a week to receive confirmation that a player has
qualified for the Company to receive a commission. We record as accounts
receivable and accrue revenue. The revenue is received in 30 -45 days after
the player departs, and the receivable is adjusted based on the actual check
is received.
Use of Estimates
The Company's significant estimates include allowance for doubtful accounts
and accrued expenses. These estimates and assumptions affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
While the Company believes that such estimates are fair when considered in
conjunction with the financial statements taken as a whole, the actual amounts
of such estimates, when known, will vary from these estimates. If actual
results significantly differ from the Company's estimates, the Company's
financial condition and results of operations could be materially impacted.
Cash and Cash Equivalents
Cash and cash equivalents include all interest-bearing deposits or investments
with original maturities of three months or less.
Fair value of financial instruments
The carrying amounts reported in the balance sheet for cash, accounts
receivable, accounts payable and accrued expenses, debenture and loans payable
approximate their fair market value based on the short-term maturity of these
instruments.
18
Accounts Receivable
The Company extends credit to its customers (casinos and Cruise lines) in the
normal course of business. Further, the Company regularly reviews outstanding
receivables, and provides estimated losses through an allowance for doubtful
accounts. The company generates Accounts Receivable when it delivers players
and the casino or Cruise line qualifies the player and approves payment to the
company. The receivables are normally paid in 30 - 45 days after player
departs the casino or Cruise lines. We have receivables from casino and Cruise
lines when we deliver players, the commissions are accrued revenues and
receivables. We have reduced Accounts Receivables a few times when our
estimated revenues were reduced when actual commissions were received.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets. Machinery and equipment are depreciated
over 3 to 10 years. Furniture and fixtures are depreciated over 7 years.
Accelerated methods of depreciation are generally used for income tax
purposes. Leasehold improvements are amortized on a straight-line basis over
the shorter of the useful life of the improvement or the term of the lease.
The Company performs ongoing evaluations of the estimated useful lives of the
property and equipment for depreciation purposes. The estimated useful lives
are determined and continually evaluated based on the period over which
services are expected to be rendered by the asset. Maintenance and repairs are
expensed as incurred.
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," the Company
periodically reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may
not be fully recoverable. The Company recognizes an impairment loss when the
sum of expected undiscounted future cash flows is less than the carrying
amount of the asset. The amount of impairment is measured as the difference
between the asset's estimated fair value and its book value.
Other Intangible Assets
Acquired intangible assets are separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the Company's intent to do so.
The Company presents "basic" and, if applicable, "diluted" earnings (loss) per
common share pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128") and certain other
financial accounting pronouncements. Basic earnings (loss) per common share
are calculated by dividing net income (loss) by the weighted average number of
common shares outstanding during each period. The calculation of diluted
earnings (loss) per common share is similar to that of basic earnings (loss)
per common share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if all
potentially dilutive common shares, such as those issuable upon the conversion
of debentures, were issued during the period.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts payable and accrued expenses approximate fair value
because of the immediate or short-term maturity of these financial
instruments.
19
Stock Based Compensation
The Company accounts for employee and non-employee stock awards under SFAS
123(r), whereby equity instruments issued to employees for services are
recorded based on the fair value of the instrument issued and those issued to
non-employees are recorded based on the fair value of the consideration
received or the fair value of the equity instrument, whichever is more
reliably measurable. The Company did not pay any stock-based compensation
during the period presented.
Accounting for Warrants and Freestanding Derivative Financial Instruments
The Company evaluates its warrants and other contracts to determine if those
contracts or embedded components of those contracts qualify as derivatives to
be separately accounted for under Statement of Financial Accounting Standards
133 "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133")
and related interpretations including EITF 00-19 "Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock" ("EITF 00-19"). If the warrant is determined to be a derivative, the
fair value of the warrants is marked-to-market each balance sheet date and
recorded as a liability. The change in fair value of the warrants is recorded
in the Statement of Operations as other income or expense. Upon conversion or
exercise of a derivative instrument, the instrument is marked to fair value at
the conversion date and then that fair value is reclassified to equity.
Equity instruments that are initially classified as equity that become subject
to reclassification under FAS 133 are reclassified to liability at the fair
value of the instrument on the reclassification date. In the event that the
warrants are determined to be equity, no value is assigned for financial
reporting purposes.
Intangible Assets and Related Impairment of Long-lived Assets
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an
asset to the undiscounted cash flows expected to result from the use and
eventual disposition of the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of shall be classified as held for sale and are reported at the
lower of the carrying amount or fair value less costs to sell.
Income taxes
The Company accounts for income taxes under the liability method in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Under this method, deferred income tax assets and liabilities
are determined based on differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.
Had income taxes been determined based on an effective tax rate of 37.6%
consistent with the method of SFAS 109, the Company's net losses for all
periods presented would not materially change.
Recent Accounting Pronouncements
In December 2007, the FASB issued FAS No. 141(R) "Applying the Acquisition
Method," which is effective for fiscal years beginning after December 15,
2008. This statement retains the fundamental requirements in FAS 141 that the
20
acquisition method be used for all business combinations and for an acquirer
to be identified for each business combination. FAS 141(R) broadens the scope
of FAS 141 by requiring application of the purchase method of accounting to
transactions in which one entity establishes control over another entity
without necessarily transferring consideration, even if the acquirer has not
acquired 100% of its target. Among other changes, FAS 141(R) applies the
concept of fair value and "more likely than not" criteria to accounting for
contingent consideration, and pre-acquisition contingencies. As a result of
implementing the new standard, since transaction costs would not be an element
of fair value of the target, they will not be considered part of the fair
value of the acquirer's interest and will be expensed as incurred. The Company
does not expect that the impact of this standard will have a significant
effect on its financial condition and results of operations.
In December 2007, the FASB also issued FAS No. 160, "Accounting for
Noncontrolling Interests," which is effective for fiscal years beginning after
December 15, 2008. This statement clarifies the classification of
noncontrolling interests in the consolidated statements of financial position
and the accounting for and reporting of transactions between the reporting
entity and the holders of non-controlling interests.
The Company does not expect that the adoption of this standard will have a
significant impact on its financial condition, results or operations, cash
flows or disclosures.
In February 2007, the FASB issued FAS No. 159, "Fair Value Option" which
provides companies an irrevocable option to report selected financial assets
and liabilities at fair value. The objective is to improve financial reporting
by providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions.
FAS 159 is effective for entities as of the beginning of the first fiscal year
that begins after November 15, 2007. The Company does not expect that the
adoption of this standard will have a significant impact on its financial
condition, results or operations, cash flows or disclosures.
In September 2006, the Financial Accounting Standards Board (FASB) issued FAS
No. 157, "Fair Value Measurements" ("FAS 157"), which establishes a framework
for measuring fair value in accordance with GAAP and expands disclosures about
fair value measurements.
FAS 157 does not require any new fair value measurements but rather eliminates
inconsistencies in guidance found in various prior accounting pronouncements.
FAS 157 is effective for fiscal years beginning after November 15, 2007. The
Company does not expect that the adoption of this standard will have a
significant impact on its financial condition, results or operations, cash
flows or disclosures.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
N/A
Item 4T. Controls and Procedures.
Evaluation of Controls and Procedures.
In accordance with Exchange Act Rules 13a-15 and 15d-15, our management is
required to perform an evaluation under the supervision and with the
participation of the Company's management, including the Company's principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
the end of the period.
21
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
September 30, 2009, our Principal Executive Officer and Principal Financial
Officer have concluded that our disclosure controls and procedures were not
effective to ensure that the information required to be disclosed by us in
this Report was recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and instructions for Form 10-Q.
Our Principal Executive Officer and Principal Financial Officer have concluded
that our disclosure controls and procedures had the following deficiency:
* We were unable to maintain any segregation of duties within our
business operations due to our reliance on a single individual fulfilling the
role of both our Principal Executive Officer and Principal Financial Officer.
While this control deficiency did not result in any audit adjustments to our
interim or annual financial statements, it could have resulted in a material
misstatement that might have been prevented or detected by a segregation of
duties. Accordingly we have determined that this control deficiency
constitutes a material weakness.
To the extent reasonably possible, given our limited resources, our goal is,
upon consummation of a merger with a private operating company, to separate
the responsibilities of principal executive officer and principal financial
officer, intending to rely on two or more individuals. We will also seek to
expand our current board of directors to include additional individuals
willing to perform directorial functions. Since the recited remedial actions
will require that we hire or engage additional personnel, this material
weakness may not be overcome in the near term due to our limited financial
resources. Until such remedial actions can be realized, we will continue to
rely on the advice of outside professionals and consultants.
Changes in Internal Controls.
No change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the
fiscal quarter ended September 30, 2009 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to nor are we threatened with or have any knowledge of any
claims or legal actions that would have a material adverse impact on our
financial position, operations or potential performance.
Item 1A. Risk Factors.
You should carefully consider the risks and uncertainties described below and
the other information in this prospectus. If any of the following risks
actually occur, our business, financial condition and operating results could
be materially adversely affected.
22
Going Concern
At September 30, 2009, we had $481 in cash on hand and stockholders' deficit
of $(463,277). For the nine months ended September 30, 2009, we generated
$8,541 in revenues, compared to $4,200 for the nine months ended September 30,
2008. In our auditors' 2008 audit report, they have expressed their doubt as
to our ability to continue as a going concern. We do not currently have
enough capital to fund our operations for the next 12 months. We estimate
that we will need $500,000 to fund our operations for the next 12 months. The
going concern opinion of the auditors might negatively impact our ability to
raise capital to fund our operations or pursue our business strategy and your
ability to sell your shares of the Company's common stock. If we do not raise
sufficient amount of funds from this offering and/or subsequent private and
public offerings, we might have to cease operations.
You may never realize a return on your investment.
THERE IS NO ASSURANCE THAT A PURCHASER OF SHARES WILL REALIZE A RETURN ON HIS
INVESTMENT OR THAT HE WILL NOT LOSE HIS ENTIRE INVESTMENT IN THE COMPANY. To
date, the Company has limited operations and revenues. We have never earned a
profit and there can be no assurance that we will ever achieve profitable
operations. Our ability to implement our business plan is dependent, among
other things, on the completion of this Offering. If we fail to raise any or a
sufficient amount of money in this offering, we may fail as a business. Even
if we raise sufficient amount of funding in this Offering, there can be no
assurance that our business model will succeed.
Current conditions in the global markets and general economic pressures may
adversely affect consumer spending and our business and results of operations.
Our performance depends on the impact of economic conditions on levels of
consumer spending. Recently, the gaming industry has experienced decreasing
revenues due to the prolonged recession, high unemployment, and decreased
consumer spending and several casinos have cut back on the amount of
complimentary number of rooms and other travel and other complimentaries (also
known in the industry as "comps") and have filed for bankruptcy protection
under Chapter 11 of the bankruptcy laws. As a result of the credit market
crisis, coupled with declining consumer and business confidence, the
recession, high unemployment, comps and other challenges currently affecting
the global economy, consumers are continuing to curb discretionary spending,
which is having an effect on the gaming industry which adversely affects our
business. An extended duration or deterioration in current economic conditions
could have a further material adverse impact on our financial condition and
results of operations.
Casinos have been reducing their complimentaries.
In light of the recession and gamblers' decrease in discretionary income,
casinos have been reducing their comps in order to increase their gross
margins. Since we depend on such comps to pass on to our customer, our
business may be materially adversely affected if cannot require comps and/or
we fail to grow our business, including, but not limited to, acquiring
profitable Casino Rep Companies.
We are dependent on our management team.
We believe that our success will depend on the experience of William Forhan,
our Chief Executive Officer, Chief Financial Officer and Chairman, and Joseph
Fahoome, our President and Director. The loss of their services would have a
materially adverse effect on our business.
23
Local casinos and slot parlors could hurt our business.
We face intense competition. Over the past few years, many states have
permitted and continue to permit casino companies to build and operate slot
parlors and casino resorts in their states in order to provide employment,
tourist dollars and taxes. Many casino resorts and casino parlors have been
marketing their business to gamblers who frequent Las Vegas and/or Atlantic
City. Gamblers who wish to save time and money by frequenting local slot
parlors and casinos, especially in light of the current recession and decrease
in discretionary income, have been adversely affecting casino resorts in Las
Vegas and Atlantic City as well as other destinations. Therefore, competition
in our industry is high and intense and becoming more so. We do not know
when or if, such traditional destinations will return to their prior levels.
Our business and stock price could be adversely be affected by the
proliferation of local casinos and slot parlors.
We do not have any way of collecting commissions in certain instances.
A complimentary room policy is also available directly from the casino resort
since the casino's marketing department is constantly soliciting players to
visit their casino by offering free rooms as a motivation to play at the
casino where they stay instead of going to other casinos. The casinos are
trying to increase their database of players. The Casino Rep's commissions are
protected by the casino if the player was delivered by a Casino Rep and the
player has been to the casino in the past 12 months. Casino contracts are in
writing with all casinos outlining the casino qualifications to earn a free
room and commission paid to the Casino Rep Company. The Company does not have
any way of enforcing a casino contacting a Casino Rep's player before 12
months have elapsed, unless a player advises the Rep Company that he/she was
contacted. The casino does not pay a commission after the 12 month period has
passed. They are then considered the casino's customer unless the Rep Company
sends the player back to the casino before the player accepts a casino
invitation. Our inability to enforce a casino contacting a Casino Rep's player
before 12 months have elapsed, unless the player advises us that he was
contacted, could materially affect our business operations.
Cruise ships might limit our poker tournaments to only those players we bring
on board.
In April 2005, the Company operated one seven night cruise mini poker
tournament (the "Poker Cruise") on a cruise ship before the ship sailed the
Caribbean to the Mediterranean. The poker tournament was to be available to
all passengers on board. However, the cruise line changed its decision once
it departed and only let the Company's 10 poker passengers play, denying that
opportunity to the other 1,800 passengers. The Company did not have a legal
contract signed by the cruise company. We had detailed emails from their
corporate Director of Marketing confirming all passengers could play, but the
ships Chief Operating Officer ignored the emails and restricted passengers
playing. The financial results were disappointing because we had 12 staff
members on board and the tournament was limited to only the ten cruise players
we had brought. The Company had not operated any additional Poker Cruises.
The Company is in discussions with another cruise line to lease public space
and offer mini-tournaments to all cruise passengers; and the Company continues
negotiating with the original cruise company for future sailings. The Company
does not intend to use this cruise line without a written and enforceable
contract in place. If we are unable to obtain written contracts with cruise
ships in the future, we will not be able to enforce our agreed upon
arrangements with them and our business could suffer as a result of this.
24
Our limited operating history will make it difficult to evaluate an investment
in our common stock.
Casino Players, Inc. commenced operations in July 2005 which may make it
difficult for you to evaluate our business and prospects based on prior
performance. We have limited revenues, and our business model requires us to
secure working capital for marketing expenses. If our model fails, then we
will fail as a company. While we did purchase assets of our predecessor,
Casino Rated Players, Inc., that business had been dormant from March 2005 to
December 2005 because of lack of working capital to market the services.
Therefore, when we purchased these assets, we had to recommence the business
and attempt to raise necessary working capital to market our services. Unless
we raise sufficient funds in this offering, we won't be able to succeed in our
business model.
We may not be able to retain managers and executives.
We cannot assure you that our systems, procedures and controls will be
adequate to support our operations as they expand. Presently, Mr. William
Forhan, our CEO, CFO and Chairman, and Mr. Joseph Fahoome, our President and a
Director, are the only members of our management team. We do not have any
other employees. If we succeed in raising capital, and if our managers
effectively utilize that capital and we grow quickly, such future growth could
impose significant added responsibilities on them, including the need to
identify, recruit and integrate new senior level managers and executives. We
cannot assure you that such additional management will be identified and
retained by us. If we are unable to manage our growth efficiently and
effectively or are unable to attract and retain additional qualified
management, then there could be a material adverse effect on our financial
condition and results of operations.
We face very strong competition from Casino Representatives (Casino Reps).
Certain of our Casino Rep competitors are much larger and well established and
have significant financing in place for growth. There are over 800 similar
Casino Reps in the marketplace. They may have lower overhead cost structures
and may, therefore, be able to provide their products at lower prices than we
can. We have elected to focus our marketing efforts on a niche of smaller-
stakes players (and their families) that do not have the financial clout to
request free or heavily discounted rooms at many casino destinations.
Therefore, we can give no assurance that we will ever be able to secure long-
term and profitable customer accounts.
We also face very strong competition from casinos.
Casinos are our strongest competition and large sums of money to advertise
their loyalty programs to past and potential casino players. In addition,
they send direct mailing invitations to our past guests and offer them free
rooms and amenities, which exceed our services. Casinos also have hosts on
site to take care of players and have the ability to offer more complimentary
services then we can offer, which sways the player to go directly to the
casino host for their next trip, versus using us.
A majority of our commissions will be from 14 of Harrah's casinos. The loss of
our relationship with Harrah's could have a material adverse effect on our
business operations.
Fourteen of our 25 licenses are with Harrah's casinos. If we were to lose our
licenses with Harrah's, we would seek similar license from competitive casinos
in the marketplaces desired. Our failure to get similar licenses with other
casinos could have a material adverse affect on our business operations.
Player referrals to casinos are currently our only revenue stream.
CRP derives revenues from casino referrals that are paid on the players
betting volume and or losses. The Company faces the risk that a player will
not play as much as is required to qualify for a commission, resulting in the
casino not paying CRP a commission. This could affect the relationship with
25
the casino and the company if it happened on a regular basis. Our business
model requires us to expend significant sums on marketing our web site in
order to attract new players to use our services. player referral to casinos
is the only way in which we create revenue. If we do not raise sufficient
working capital, then we won't be able to compete.
The commissions received from casinos are based upon the players' hours played
per day and amount of the average bet.
The casino will issue a report to us after the player departs, which outlines
the hours played, the amount of wins or losses, and the commission paid for
delivering the player to the casino. We rely on the casinos' reports and do
not have the ability to independently verify or challenge them. There are
times when players have advised us that they lost more than the casino
reported; however, we do not have recourse with the casinos.
The voting control by our directors and officers will make it unlikely for
other stockholders to effect change even if they are dissatisfied with
management's performance.
Our officer and directors beneficially own approximately 68.3% of Casino
Players Inc's currently issued and outstanding shares of common stock. Even if
all 12,000,000 of the shares covered by this Registration Statement are sold,
Mr. Forhan and Mr. Fahoome will continue to own more than 48.4% of all
outstanding shares, and will, as a practical matter, be able to prevent other
stockholders from participating in decisions, such as the election of
directors, which affect our management and business direction.
Our corporate structure has certain anti-takeover aspects.
Under our Certificate of Incorporation, our Board of Directors has the
authority to issue shares of preferred stock in one or more series and to fix
the rights and preferences of the shares of any such series without
stockholder approval. Any series of preferred stock is likely to be senior to
the Common Stock with respect to dividends, liquidation rights and, possibly,
voting rights. In addition, since effective control of the Company is held by
William Forhan and Joseph Fahoome voting together, they can limit or prohibit
others from attempting to take over control of the Company and could have the
effect of discouraging unsolicited acquisition proposals and other attempts to
buy our company. Further, it could be more difficult for a third party to
acquire control of us, even if that change of control might be beneficial to
our shareholders.
We may never pay dividends.
To date, we have not paid any cash dividends on our common stock. Even if we
become profitable in the future, it is likely that we will retain much or all
of our future earnings to finance future growth and expansion.
There is currently no market for our stock, if one ever develops and
maintained and there may only be limited ways to transfer your shares.
There is currently no market for our stock. Since the date our Registration
Statement was declared effective by the SEC on October 28, 2009, we have been
searching for a registered broker/dealer to make an application with the
Financial Industry Regulatory Authority (FINRA) to act as a market maker of
our common stock and to have our common stock quoted on the OTC Bulletin Board
(OTCBB). To date, no market maker has been identified and there can be no
assurance that one will be or if identified, that its application will be
approved by FINRA. Even if our common stock is quoted on the OTCBB, there can
be assurance that a market for our common stock will develop or if developed,
be sustained.
26
State laws may limit re-sales of the Shares.
The holders of our shares of common stock and persons who desire to purchase
them in any trading market that might develop in the future should be aware
that there might be significant state law restrictions upon the ability of
investors to resell our shares. Accordingly, even if we are successful in
having our shares of common stock shares available for trading on the OTCBB,
investors should consider any secondary market for the Company's securities to
be a limited one. We intend to seek coverage and publication of information
regarding the Company in an accepted publication, which permits a "manual
exemption." This manual exemption permits a security to be distributed in a
particular state without being registered if the company issuing the security
has a listing for that security in a securities manual recognized by the
state. However, it is not enough for the security to be listed in a recognized
manual.
The listing entry must contain (1) the names of issuers, officers, and
directors, (2) an issuer's balance sheet, and (3) a profit and loss statement
for either the fiscal year preceding the balance sheet or for the most recent
fiscal year of operations. Furthermore, the manual exemption is a non-issuer
exemption restricted to secondary trading transactions, making it unavailable
for issuers selling newly issued securities. Most of the accepted manuals are
those published in Standard and Poor's, Moody's Investor Service, Fitch's
Investment Service, and Best's Insurance Reports, and many states expressly
recognize these manuals. A smaller number of states declare that they
'recognize securities manuals' but do not specify the recognized manuals. The
following states do not have any provisions and therefore do not expressly
recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky,
Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Sales of a substantial amount our common stock in the future could cause our
stock price to fall.
Some stockholders hold a substantial number of shares of our common stock. If
we are successful in developing a secondary market for our shares, then sales
of a substantial number of shares of our common stock within a short period of
time in the future could impair our ability to raise capital through the sale
of additional debt or stock and/or cause our stock price to fall. Typically,
if the market for a company's stock is not highly liquid and the holder of a
substantial number of shares attempts to sell quickly a large number of
shares, the price for the shares will decrease, sometimes at a rapid rate. In
this situation, potential equity or convertible debt funders to the Company
may be reluctant to provide financing since the value of their equity rights
might decrease substantially. Also, the value of your shares might decrease
substantially.
We plan to use our stock to pay, to a large extent, for future acquisitions
and this would be dilutive to investors.
We plan to use additional stock to pay, to a large extent, for future
acquisitions, and believe that doing so will enable us to retain a greater
percentage of our operating capital to pay for operations and marketing. Price
and volume fluctuations in our stock might negatively impact our ability to
effectively use our stock to pay for acquisitions, or it could cause us to
offer stock as consideration for acquisitions on terms that are not favorable
to us and our shareholders. If we did resort to issuing stock in lieu of cash
for acquisitions under unfavorable circumstances, it would result in increased
dilution to investors.
If we fail to maintain an effective system of internal controls, we may not be
able to detect fraud or report our financial results accurately, which could
harm our business and we could be subject to regulatory scrutiny.
27
Since the effectiveness of the Registration Statement, we have been required
to file periodic and other reports with the SEC. Pursuant to Section 404 of
the Sarbanes-Oxley Act of 2002, referred to as Section 404, we are required to
perform an evaluation of our internal controls over financial reporting in our
annual report on Form 10-K for the fiscal year ended December 31, 2009, and
have our independent registered public accounting firm test and evaluate the
design and operating effectiveness of such internal controls and publicly
attest to such evaluation. We are in the process of preparing an internal
plan of action for compliance with the requirements of Section 404, which
includes a timeline and scheduled activities, although as of the date of this
filing we have not yet completed our effectiveness evaluation. As a result,
we cannot guarantee that we will not have any material weaknesses reported by
our independent registered public accounting firm. Compliance with the
requirements of Section 404 is expected to be expensive and time-consuming.
If we fail to complete this evaluation in a timely manner, or if our
independent registered public accounting firm cannot timely attest to our
evaluation or disagrees with management's report on the Company's internal
control over financial reporting, we could be subject to regulatory scrutiny
and a loss of public confidence in our internal controls. In addition, any
failure to implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating results, cause
us to fail to meet our reporting obligations, and cause potential stockholders
and clients to lose confidence in our financial reporting, which could harm
our business and the value of our common stock. Also, our failure to maintain
effective internal controls may increase our susceptibility to fraud and error
and may also expose our company and its officers and directors to additional
liability.
We are subject to the penny stock rules, which may adversely affect trading in
our common stock.
Currently our common stock is a "low-priced" security under the "penny stock"
rules promulgated under the Securities Exchange Act of 1934, as amended. In
accordance with these rules, broker-dealers participating in transactions in
low-priced securities must first deliver a risk disclosure document that
describes the risks associated with such stocks, the broker-dealers' duties in
selling the stock, the customer's rights and remedies and certain market and
other information. Furthermore, the broker-dealer must make a suitability
determination approving the customer for low-priced stock transactions based
on the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the
customer, obtain specific written consent from the customer, and provide
monthly account statements to the customer. The effect of these restrictions
will probably decrease the willingness of broker-dealers to make a market in
our common stock, decrease liquidity of our common stock and increase
transaction costs for sales and purchases of our common stock as compared to
other securities. Our management is aware of the abuses that have occurred
historically in the penny stock market. Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent abuses normally associated with "low-priced"
securities from being established with respect to our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the past three years, we sold the following securities without
registration:
a) In July 2005, the Company issued 9,000,000 million common shares, valued
at $90,000 to Joseph Fahoome for service on the Board of Directors and
employee compensation. The Company relied on the exemption from the
registration requirements of the Securities Act provided in Section 4(2)
promulgated thereunder, based on the fact that the issuance did not involve a
public offering.
28
b) In July 2005, the Company issued 9,000,000 million common shares, valued
at $90,000 to William Forhan for service on the Board of Directors and
employee compensation. The Company relied on the exemption from the
registration requirements of the Securities Act provided in Section 4(2)
promulgated thereunder, based on the fact that the issuance did not involve a
public offering.
c) On November 29, 2005, the Company issued 200,000 common shares, valued
at $2,000 to David Dreslin for business consulting services. The Company
relied on the exemption from the registration requirements of the Securities
Act provided in Section 4(2) promulgated thereunder, based on the fact that
the issuance did not involve a public offering.
d) On November 19, 2005, the Company issued 4,000,000 common shares, valued
at $40,000 to Invicta Group, Inc. for purchase of assets, including "Casino
Rated Players" name and trademark, web site, and marketing materials and
customer list. The Company relied on the exemption from the registration
requirements of the Securities Act provided in Section 4(2) promulgated
thereunder, based on the fact that the issuance did not involve a public
offering.
e) On November 29, 2005, the Company issued 2,000,000 common shares, valued
at $20,000 to David Scott, for consulting services relating to Internet
marketing strategies. The Company relied on the exemption from the
registration requirements of the Securities Act provided in Section 4(2)
promulgated thereunder, based on the fact that the issuance did not involve a
public offering.
f) The Company had engaged iVest Investments, LLC as counsel to the Company
to prepare this registration statement and to provide 12 months of legal
services after the registration statement was declared effective by the SEC.
In consideration for such services, on November 29, 2005, the Company issued
an aggregate of 2,900,000 shares of common stock of the Company to iVest
Investments, LLC. The Company relied on the exemption from the registration
requirements of the Securities Act provided in Section 4(2) promulgated
thereunder, based on the fact that the issuance did not involve a public
offering.
In May 2007, the Company dismissed iVest Investments LLC; and the Company and
iVest verbally agreed to cancel 1,900,000 shares of the 2,900,000 shares the
Company had originally issued iVest and for iVest to retain the remaining
1,000,000 shares. J. Bennett Grocock has ultimate voting and dispositive
control of the shares held by iVest Investments, LLC.
g) On November 29, 2005, the Company issued 2,200,000 common shares, valued
at $22,000 to Double Diamond Investments, Inc., a Nevada corporation, for
business consulting services performed pursuant to an agreement with a related
company, Big Apple Consulting, U.S.A., Inc., to individuals for service on the
Board of Directors, consulting, investor relations and employee compensation.
The Company relied on the exemption from the registration requirements of the
Securities Act provided in Section 4(2) promulgated thereunder, based on the
fact that the issuance did not involve a public offering.
Item 3. Defaults upon Senior Securities.
None
29
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
On October 30, 2009, the Company filed a Registration Statement on Form S-8
(File No.: 333-162786) wherein the Company registered under the Securities Act
of 1933, as amended, 2,900,000 share of common stock issuable under the
Company's 2009 Incentive Compensation Plan.
Item 6. Exhibits.
Exhibit No.: Description:
31.1 Certification by William G. Forhan, Principal Executive Officer and
Principal Financial and Accounting Officer of Casino Players Inc., pursuant to
Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1 Certification by William G. Forhan, Principal Executive Officer and
Principal Financial and Accounting Officer of Casino Players Inc. pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
30
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized.
CASINO PLAYERS, INC.
By: /s/ William G. Forhan
William G. Forhan, CEO, CFO, and Chairman
(Principal Executive Officer)
(Principal Financial and Accounting Officer)
Date: November 9, 2009
